Exhibit 10.42
DATED                                2007
BORDERS INTERNATIONAL SERVICES, INC.
and
BORDERS (UK) LIMIITED
and
BORDERS BOOKS IRELAND LIMITED
 
AGREEMENT
for the provision of transitional services
in connection with the sale of the entire
issued share capital of Borders (UK) Limited
and Borders Books Ireland Limited
 
Baker & McKenzie LLP
London
Ref: GF/RAK/FHT

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CONTENTS

          Clause   Page
 
       
1.   Interpretation
    1  
2.   Provision and duration of Transitional Services
    4  
3.   Co-operation and Management
    5  
4.   Dispute Resolution
    5  
5.   Fees and Other Costs
    5  
6.   Invoicing and Late Payments
    6  
7.   Other Obligations
    6  
8.   Limitation of Liability
    6  
9.   Confidentiality
    7  
10. Assignment and Sub-contracting
    8  
11. Force Majeure
    8  
12. Term & Termination
    8  
13. Notices
    9  
14. Variation, Waiver and Consent
    10  
15. Rights and remedies cumulative
    10  
16. Entire Agreement
    11  
17. Third Party Rights
    11  
18. Severability
    11  
19. Currency Conversion
    11  
20. Counterparts
    11  
21. No Partnership
    11  
22. Liability
    12  
23. Governing Law and Jurisdiction
    12  
 
       
SCHEDULE 1
       
TERM SHEETS
    13  
A — Financial Reporting
    13  
B — Statutory Accounts Reporting
    15  
C — Property Accounting
    16  
D — Accounts Payable (A/P)
    17  
E — Bank Reconciliation
    19  
F — Treasury
    20  
G — Lease Accounting
    21  
H — Merchandise Reporting
    22  
I — Margin Accounting and Reporting
    24  
J — Inventory Accounting and Control
    25  
K — Tax
    26  
L — IT
    27  
M — Merchandising
    30  
N — Merchandise Operations
    31  
O — Transportation
    33  
P— Communications
    34  
Q — Store Operations
    35  
R — Management
    36  

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DATE:
PARTIES:

(1)   BORDERS INTERNATIONAL SERVICES, INC., a corporation incorporated in the
State of Michigan, USA and having its principal place of business at 100 Phoenix
Drive, Ann Arbor, MI 48108 USA (the “Provider”); and

(2)   BORDERS (UK) LIMITED, a company incorporated under the laws of England and
Wales with registered number 01580771, and having its registered office at 120
Charing Cross Road, London, WC2H 0JR;

(3)   BORDERS BOOKS IRELAND LIMITED, a company incorporated in the Republic of
Ireland with registered number 404624, and having its registered office at 70
Sir John Rogerson’s Quay, Dublin 2, together parties (2) and (3) each being (the
“Recipient”).

RECITALS

(A)   The Seller has agreed to sell (and to procure the sale of the Irish
Shares) and the Purchaser has agreed to purchase the Shares and the Irish Shares
on the terms set out in the Sale and Purchase Agreement.

(B)   In connection with the Sale and Purchase of the Shares and the Irish
Shares, the Recipient desires the provision of certain Transitional Services and
the Provider is prepared to provide certain Transitional Services to the
Recipient for a limited period on the terms set out in this Agreement.

IT IS AGREED as follows:

1.   INTERPRETATION

1.1   Defined terms

In this Agreement, the following words and expressions shall have the following
meanings:

     
“Agreement”
  this agreement and the recitals and schedules to it;
 
   
“Brand Licence Agreement”
  the agreement entered into by Borders Properties, Inc., and the Recipient
effecting the grant of a licence to the Recipient to use certain intellectual
property rights of Borders Properties, Inc.;
 
   
“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”
  has the same meaning as in the Sale and Purchase Agreement;
 
   
“Business Day”
  a day (excluding Saturday) on which the banks are generally open for business
in the City of London and New York for the transaction of normal banking
business;
 
   
“Commencement Date”
  has the same meaning as Completion Date in the Sale and

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  Purchase Agreement;
 
   
“Completion”
  has the same meaning as in the Sale and Purchase Agreement;
 
   
“Customer Data”
  means the information contained on the customer database containing details of
the customers of the Recipient currently hosted by Cheetahmail;
 
   
“Deferred Consideration”
  means the amount of additional consideration payable (if any) for the Shares
and the Irish Shares pursuant to schedule 10 of the Share Purchase Agreement;
 
   
“Intra Group Guarantees”
  means:
 
   
 
  (a) the guarantee provided by Borders Group, Inc in relation to the lease
between (1) Dempsey Assets Limited and (2) Borders (UK) Limited relating to the
property at 98 Buchanan Street, Royal Exchange Square, Glasgow, Scotland, G1
3HA;
 
   
 
  (b) the guarantee provided by Borders Group, Inc in relation to the lease
between (1) Standard Life Investment Fund Limited and (2) Borders (UK) Limited
relating to the property at 94-96 Briggate, Leeds, West Yorkshire, LS1 6NP;
 
   
 
  (c) the guarantee provided by Borders Group, Inc in relation to the lease
between (1) Superdrug PLC and (2) Borders (UK) Limited relating to the property
at 203-207 Oxford Street, London, W1D 2LE;
 
   
 
  (d) the guarantee required to be provided by Borders Group, Inc in respect of
the completion of the agreement for lease dated 24 March 2006 between
(1) Cosgrave Property Developments Limited, (2) Joseph Cosgrave, Peter Cosgrave
and Michael Cosgrave and (3) Borders Books Ireland Limited relating to the
property at Unit 3B & 4, West End Retail Park, Blanchardstown, Dublin 15,
Republic of Ireland;
 
   
“Irish Company”
  Borders Books Ireland Limited, a private company limited by shares and
incorporated in the Republic of Ireland;
 
   
“Irish Shares”
  the issued share capital of the Irish Company;
 
   
“Liability”
  liability in or for breach of contract, Breach of Duty, misrepresentation,
restitution or any other cause of action whatsoever relating to or arising under
or in connection with this Agreement, including without limitation liability
expressly provided for under this Agreement or arising by reason of the
invalidity or unenforceability of any term of this Agreement (and for the
purposes of this definition, all references to “this Agreement” shall be deemed
to include any collateral contract);

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“Purchaser”
  means Pimco 2672 Limited, a company incorporated under the laws of England and
Wales with registered number 6301376 and having its registered office at 32
Bedford Row, London WC1R 4HE;
 
   
“Sale and Purchase Agreement”
  the agreement entered into between the Seller and the Purchaser effecting the
sale of the Shares and the Irish Shares;
 
   
“Seller”
  BGI (UK) Limited a company incorporated under the laws of England and Wales
with registered number 3434022 and having its registered office at 100 New
Bridge Street, London EC4V 6JA;
 
   
“Service Managers”
  the respective parties’ representatives responsible for managing a particular
Transitional Service and identified as such by the relevant party;
 
   
“Shares”
  the issued share capital of the Recipient;
 
   
“Tax Deed”
  means the deed relating to Tax in the agreed form between BGI (UK) Limited and
the Purchaser of even date;
 
   
“Term Sheet”
  a particular section of schedule 1 (Term Sheets), identified as such, which
describes particular term(s) relating to a particular Transitional Service(s);
 
   
“Termination Date”
  the date specified as the end date for a particular Transitional Service in
the relevant Term Sheet in schedule 1 (Term Sheets) or, where no date is so
specified, the date specified in clause 12.1 below;
 
   
“Transitional Period”
  the period of time during which a Transitional Service is provided as set out
in the relevant Term Sheet or, where no period of time is specified, the term of
this Agreement; and
 
   
“Transitional Service(s)”
  each of those services described in schedule 1 (Term Sheets).

1.2   Recitals, schedules, etc.

    References to this Agreement include the recitals and schedules which form
part of this Agreement for all purposes. References in this Agreement to the
parties, the recitals, schedules and clauses are references respectively to the
parties and their legal personal representatives, successors and permitted
assigns, the recitals and schedules to and clauses of this Agreement.

1.3   Meaning of references       Save where specifically required or indicated
otherwise:

  (a)   words importing one gender shall be treated as importing any gender,
words importing individuals shall be treated as importing corporations and vice
versa, words importing the singular shall be treated as importing the plural and
vice versa, and

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      words importing the whole shall be treated as including a reference to any
part thereof;     (b)   references to a person shall include any individual,
firm, body corporate, unincorporated association, government, state or agency of
state, association, joint venture or partnership, in each case whether or not
having a separate legal personality. References to a company shall be construed
so as to include any company, corporation or other body corporate wherever and
however incorporated or established;     (c)   references to the word “include”
or “including” (or any similar term) are not to be construed as implying any
limitation and general words introduced by the word “other” (or any similar
term) shall not be given a restrictive meaning by reason of the fact that they
are preceded by words indicating a particular class of acts, matters or things;
    (d)   references to any English statutory provision or legal term for any
action, remedy, method of judicial proceeding, legal document, legal status,
court, official or any other legal concept, state of affairs or thing shall in
respect of any jurisdiction other than England be deemed to include that which
most nearly approximates in that jurisdiction to the English statutory provision
or legal term or other legal concept, state of affairs or thing;     (e)   any
reference to “writing” or “written” includes any method of reproducing words or
text in a legible and non-transitory form but, for the avoidance of doubt, shall
not include e-mail;     (f)   references to “sterling” or “£” or “pounds” are to
the lawful currency of the United Kingdom as at the date of this Agreement.
References to “Euro” or “€” are to the single currency of the European Union
constituted by the Treaty on European Union; and     (g)   references to times
of the day are to that time in London and references to a day are to a period of
24 hours running from midnight to midnight.

1.4   Headings       Clause and paragraph headings and the table of contents are
inserted for ease of reference only and shall not affect construction.

2.   PROVISION AND DURATION OF TRANSITIONAL SERVICES   2.1   The Provider shall
supply or procure the supply of, and the Recipient shall pay for, the
Transitional Services.   2.2   Each Transitional Service shall be provided
during the relevant Transitional Period.   2.3   If during the term of this
Agreement, the Recipient requires additional services from the Provider (other
than the Transitional Services described in schedule 1), the Recipient and the
Provider shall meet and discuss the Recipient’s requirements for such services.
If the Provider agrees to provide such additional services and the Recipient and
Provider agree on the cost of such additional services, the Recipient and the
Provider shall amend this Agreement to incorporate an additional Term Sheet in
schedule 1 that sets out all relevant details of the additional services. The
terms of this Agreement shall apply to the provision and receipt of such
additional services.

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2.4   In addition to the Transitional Services, the Provider, in its absolute
discretion and on such terms at it may determine, may from time to time share
knowledge relating to the Business (including retailing best practices, ways to
exploit new channels to market (e.g. print on demand) and experience with
loyalty schemes) with the Recipient.   2.5   Nothing in this Agreement shall
prevent the Provider from providing services of a similar nature to the
Transitional Services to any other person.   3.   CO-OPERATION AND MANAGEMENT  
    The parties’ Service Managers shall be responsible for the parties’
respective roles and obligations, and the co-ordination of all matters, relating
to the Transitional Services. All communications, documentation and materials
relating to a particular Transitional Service and sent by the parties shall be
sent to both parties’ Service Manager for that Transitional Service.   4.  
DISPUTE RESOLUTION   4.1   In the event of any dispute, disagreement or
difference of opinion arising out of this Agreement, its performance or its
construction the Service Managers of the Provider and the Recipient shall use
all reasonable efforts to negotiate an amicable resolution in good faith within
twenty (20) Business Days of either party notifying the other of such a dispute,
disagreement or difference of opinion.   4.2   If the Service Managers of the
Provider and the Recipient have not met and reached a resolution or otherwise
reached a resolution amicably in accordance with clause 4.1 above, then the
Chief Executives of the Provider and the Recipient shall meet in order to
endeavour to resolve the dispute. If, within twenty (20) Business Days of such
meeting, the parties have failed to reach a settlement, the parties shall be
free to seek resolution of the dispute by the courts of England and Wales in
accordance with clause 23.2 of the Sale and Purchase Agreement.   5.   FEES AND
OTHER COSTS   5.1   Subject to clause 5.4, in consideration for the provision of
the Transitional Services, the Recipient shall pay to the Provider:

  (a)   the fees and other charges, if any, set out in schedule 1 (Term Sheets);
and     (b)   any additional third-party costs incurred by the Provider in
connection with the provision of the Transitional Services by the Provider to
the Recipient.

5.2   Unless otherwise stated, all sums referred to in this Agreement are
exclusive of value added tax which shall be charged, if applicable, at the
appropriate prevailing rate and shall be paid by the Recipient to the Provider.

5.3   In the event that a Transitional Service is terminated other than on the
date in a month which, for the purposes of invoicing the Transitional Service,
is deemed to be the start of the month (the “Invoice Date”), the fee for the
last month of the Transitional Service shall be calculated and invoiced by the
Provider on a pro-rata basis by reference to the number of days elapsed between
the Invoice Date and the date on which the Transitional Service terminated.

5.4   The Recipient shall have a right of set-off in relation to the amounts to
be paid by it under this agreement on the terms set out in clause 8.2 of the
Sale and Purchase Agreement.

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6.   INVOICING AND LATE PAYMENTS   6.1   The Provider will be entitled to
invoice the Recipient on or after the Commencement Date for the fees payable
under clause 5.1 (Fees and Other Costs). Invoices will be issued by the Provider
on a monthly basis in advance for the Transitional Services that will be
provided to the Recipient in the month following the date of the invoice. The
Recipient will pay all invoices within twenty (20) Business Days of receipt.  
6.2   All payments made under this Agreement shall be so made without set-off,
deduction or withholding save as required by law.   6.3   If any party which is
required to pay any sum under this Agreement fails to pay any sum payable by it
under this Agreement on the due date for payment (the “Defaulting Party”), it
shall pay interest on such sum for the period from and including the due date up
to the date of actual payment (after as well as before judgement) in accordance
with clauses 6.4 and 6.5.   6.4   The Defaulting Party shall pay interest at the
annual rate which is the aggregate of 2% per annum and the base rate from time
to time of National Westminster Bank Plc.   6.5   Interest under this clause 6
shall accrue on the basis of the actual number of days elapsed and a 365-day
year and shall be paid by the Defaulting Party on demand. Unpaid interest shall
compound monthly.   7.   OTHER OBLIGATIONS   7.1   Each party undertakes to the
other that it will not alter, corrupt or damage in any way nor extract or add to
in any unauthorised manner any data belonging to another and held on any
computer or other system used for the purposes of supplying or receiving the
Transitional Services.   7.2   The Provider will provide the Transitional
Services with reasonable skill and care.   7.3   The Recipient shall only use
the Transitional Services in relation to the Business9 including where a store
or any other retail channel undergoes a change in name from “Borders” to “Books
Etc”, or vice versa.   7.4   The Recipient shall be responsible for project
managing the orderly transfer of responsibility for the Transitional Services at
the end of the Transitional Period.   8.   LIMITATION OF LIABILITY   8.1   This
clause 8 prevails over all other clauses and schedules in this Agreement and
sets forth the entire liability of the parties, and their sole and exclusive
remedies in respect of:

  (a)   the performance, non-performance, purported performance or delay in
performance of this Agreement; or     (b)   otherwise in relation to this
Agreement or the entering into or performance of this Agreement.

8.2   Nothing in this Agreement shall exclude or limit either party’s Liability
(i) for the tort of deceit; (ii) for death or personal injury caused by its
Breach of Duty; (iii) for any breach of the obligations implied by s.12 Sale of
Goods Act 1979 or s.2 Supply of Goods and Services Act 1982; or (iv) for any
other Liability which cannot be excluded or limited by applicable law.

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8.3   Save as provided in clause 8.2 above, neither party shall have Liability
to the other for (i) loss of revenue; (ii) loss of actual or anticipated
profits; (iii) loss of contracts; (iv) loss of the use of money; (v) loss of
business; (vi) loss of opportunity; (vii) loss of goodwill; (viii) loss of
reputation; or (ix) any indirect or consequential loss, and such Liability is
excluded whether it is foreseeable, known, foreseen or otherwise.   8.4  
Subject to clause 8.2 above, the total aggregate Liability of either party in
connection with the provision of, failure to provide, or delay in providing, a
Transitional Service including, for the avoidance of doubt, where the liability
arises as a result of the provision, failure to provide, or delay in providing a
Transitional Service by a sub-contractor of the Provider (as described in clause
8.5) shall not exceed the aggregate amounts payable in respect of the relevant
Transitional Service. The limitation of Liability under this clause 8.4 has
effect in relation both to any Liability expressly provided for under this
Agreement and to any Liability arising by reason of the invalidity or
unenforceability of any term of this Agreement. This clause 8.4 shall not apply
to the Recipient’s liability to pay the charges pursuant to clause 5.1 (Fees and
Other Costs).   8.5   The parties acknowledge that certain Transitional Services
will be provided by sub-contractors of the Provider under existing contracts
between the Provider and such sub-contractors.   8.6   Notwithstanding clause
14.1 below, in the event that the Recipient fails to notify the Provider of a
breach of this Agreement within five (5) Business Days of becoming aware of the
same, the Recipient shall be deemed to have waived such losses arising from the
breach which arose prior to the date on which the Provider was notified.   9.  
CONFIDENTIALITY   9.1   Each party shall treat as strictly confidential and will
not disclose any information received or obtained by it or its officers,
employees, agents or advisers as a result of entering into or performing this
Agreement which relates to:

  (a)   the provisions of this Agreement, or any document or Agreement entered
into pursuant to this Agreement;     (b)   the negotiations leading up to or
relating to this Agreement; or     (c)   the other party

    (together “Confidential Information”),       provided that these
restrictions shall not apply to any disclosure of information if and to the
extent the disclosure is:

  (i)   required by the law of any jurisdiction;     (ii)   required by any
applicable securities exchange, supervisory or regulatory or governmental body
to which the relevant party is subject or submits, wherever situated, whether or
not the requirement for disclosure has the force of law;     (iii)   made to the
relevant party’s professional advisers, auditors or bankers or the professional
advisers, auditors or bankers of any other member of the relevant party’s group
of companies; or

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  (iv)   of information that has already come into the public domain through no
fault of the relevant party or any other member of that party’s group of
companies.

9.2   Upon termination or expiry of this Agreement (for whatever reason), each
party shall return all Confidential Information of the other party within its
possession, custody or control.   10.   ASSIGNMENT AND SUB-CONTRACTING   10.1  
Subject to clause 10.2 (below), the rights, benefits and obligations of the
parties under this Agreement shall not be assigned, transferred or otherwise
disposed of in whole or in part without the prior written consent of the other
party, such consent not to be unreasonably withheld or delayed.   10.2   The
Provider may sub-contract to a third party to supply the Transitional Services
provided that, subject to clauses 8.3 and 8.4 above, the Provider remains
responsible to the Recipient for its obligations under this Agreement.   11.  
FORCE MAJEURE       The party affected shall be excused performance of its
obligations under or pursuant to this Agreement if, and to the extent that,
performance of such obligations is delayed, hindered or prevented by acts,
events, non-happenings, omissions or accidents (including, without limitation,
acts of God, war, hostilities, riot, fire, explosion, accident, flood, sabotage,
lack of adequate fuel, power, raw materials, containers, transportation or
labour, strike, lock-out or injunction (provided that neither party shall be
required to settle a labour dispute against its own best judgement), changes to
governmental laws, regulations or orders) which affect the performance of this
Agreement and which in each case are beyond the reasonable control of the party
affected.   12.   TERM & TERMINATION   12.1   This Agreement shall commence on
the Commencement Date and, subject to clauses 12.2, and 12.6 below, shall remain
in full force and effect until twelve (12) months from Completion or, if
earlier, the date on which all Transitional Services have been terminated. The
Recipient shall be entitled to terminate each Transitional Service on the notice
period, if any, set out in the relevant Term Sheet, and upon such termination
the fees relating to that Transitional Service shall cease, and an appropriate
adjustment to the amount payable shall be credited to the Recipient.   12.2  
Either party may terminate this Agreement forthwith by written notice to the
other in the event that the other party: becomes insolvent; has a liquidator,
administrator, administrative receiver or receiver appointed in respect of the
whole or any part of its assets; has an order or resolution made or passed for
winding-up; enters into a composition generally with its creditors; takes any
equivalent action, or any equivalent action occurs in any other jurisdiction; or
shall cease to carry on business.   12.3   The Provider may terminate this
Agreement immediately at any time by written notice to the Recipient if:

  (a)   either of the parties constituting the Recipient commits a material
breach of this Agreement (including any breach of its payment obligations under
this Agreement) 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 Purchaser fails to pay any of the Deferred Consideration
properly due under the the Share Purchase Agreement within thirty (30) days of
the due date for payment; or

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  (c)   any of the Intra Group Guarantees are enforced against any member of the
Seller’s Group.

12.4   The right to terminate this Agreement contained in this clause 12 and the
exercise of it shall not prejudice any other right or remedy of either party in
respect of any breaches of this Agreement.

12.5   Termination or expiry of this Agreement (for whatever reason) shall be
without prejudice to the respective rights and liabilities of each of the
parties accrued prior to such termination or expiry.

12.6   All rights and obligations of the parties shall cease to have effect
immediately upon termination or expiry of this Agreement save that:

  (a)   clauses which are expressed to survive its termination or expiry, or
which, from their nature or context, it is contemplated that they are to survive
termination or expiry; and     (b)   any provision of this Agreement necessary
for its interpretation or enforcement, shall continue in force following
termination or expiry of this Agreement (for whatever reason).

12.7   Where this Agreement is terminated in accordance with clause 12.1 the
Provider will arrange for all Customer Data to be transferred to the Recipient
on the date of termination. The Recipient agrees that it will take such steps as
are necessary to ensure that the transfer to and processing by the Recipient of
the Customer Data, will comply with applicable data protection law.

13.   NOTICES

13.1   Any notice, demand or other communication (“Notice”) to be given by any
party under, or in connection with, this Agreement shall be in writing and
signed by or on behalf of the party giving it. Any Notice shall be served by
sending it by fax to the number set out in clause 13.2, or delivering it by hand
to the address set out in clause 13.2 and in each case marked for the attention
of the relevant party set out in clause 13.2 (or as otherwise notified from time
to time in accordance with the provisions of this clause 13). Any Notice so
served by fax or hand shall be deemed to have been duly given or made as
follows:

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

    provided that in each case where delivery by fax or by hand 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.   13.2  
The addresses and fax numbers of the parties for the purpose of clause 13.1 are
as follows:

  (a)   Provider

         
 
  Address:   100 Phoenix Drive
Ann Arbor
MI 48108, USA

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  Fax:   +1 734 477 1370
 
       
 
  For the attention of:   General Counsel

  (b)   Recipient

         
 
  Address:   120 Charing Cross Road
London
WC2H 0JR
 
       
 
  Fax:   020 7831 5099
 
       
 
  For the attention of:   Mark Farrer-Brown/Bobby Hashemi

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

  (a)   the date specified in the notification 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 Business Days after the date on which notice is given, the date
following five Business Days after notice of any change has been given.

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

14.   VARIATION, WAIVER AND CONSENT

14.1   No variation (or waiver of any provision or condition of this Agreement)
shall be effective unless it is in writing and signed by or on behalf of each of
the parties (or, in the case of a waiver, by or on behalf of the party waiving
compliance).

14.2   Unless expressly agreed, no variation or waiver of any provision or
condition of this Agreement shall constitute a general variation or waiver of
any provision or condition of this Agreement, nor shall it affect any rights,
obligations or liabilities under or pursuant to this Agreement which have
already accrued up to the date of variation or waiver, and the rights and
obligations of the parties under or pursuant to this Agreement shall remain in
full force and effect, except and only to the extent that they are so varied or
waived.

14.3   Any consent granted under this Agreement shall be effective only if given
in writing and signed by the consenting party and then only in the instance and
for the purpose for which it was given.

15.   RIGHTS AND REMEDIES CUMULATIVE

15.1   No failure or delay by either party in exercising any right or remedy
provided by law or under or pursuant to this Agreement shall impair such right
or remedy or operate or be construed as a waiver or variation of it or preclude
its exercise at any subsequent time. No single or partial exercise of any right
or remedy by either party shall preclude any other or further exercise of such
right or remedy or the exercise of any other right or remedy.

15.2   The rights, powers and remedies provided by this Agreement are cumulative
and are in addition to any rights, powers and remedies provided by law.

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16.   ENTIRE AGREEMENT   16.1   This Agreement constitutes the entire agreement
between the parties relating to the subject-matter covered and supersedes any
previous agreements, arrangements, undertakings or proposals, written or oral,
between the parties in relation to such matters.   16.2   No statement,
representation, warranty, undertaking or promise will be taken to have been
given or implied from anything said or written in negotiations or otherwise
between the parties prior to the date of this Agreement except as expressly
stated in this Agreement.   16.3   Save for fraudulent misrepresentations, the
parties confirm that in entering into this Agreement, they do not rely on and
will have no remedy in relation to, any statement, representation, warranty,
undertaking or promise (whether negligently or innocently made) of any person
other than as expressly set out in this Agreement.   17.   THIRD PARTY RIGHTS  
    The parties do not intend that any term of this Agreement shall be
enforceable by virtue of the Contracts (Rights of Third Parties) Act 1999 by any
person who is not a party to this Agreement.   18.   SEVERABILITY       If any
provision of this Agreement is held by a court of competent jurisdiction to be
illegal, invalid or unenforceable in any respect under the law of any
jurisdiction, then such provision shall (so far as it is invalid or
unenforceable) be given no effect and shall be deemed not to be included in this
Agreement but without invalidating any of the remaining provisions of this
Agreement. Any provision of this Agreement held invalid or unenforceable only in
part or degree will remain in full force and effect to the extent not held
invalid or unenforceable. The parties shall then use all reasonable endeavours
to replace the invalid or unenforceable provision(s) by a valid and enforceable
substitute provision the effect of which is as close as possible to the intended
effect of the invalid or unenforceable provision.   19.   CURRENCY CONVERSION  
    For the purpose of converting amounts specified in one currency into another
currency where required, the rate of exchange to be used in converting balance
sheet 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. Income statement amounts will be converted
by using the daily average New York closing rates for exchanges between those
currencies quoted in the Wall Street Journal for the period in which the
relevant expense or income applies.   20.   COUNTERPARTS       This Agreement
may be executed in any number of counterparts and by the parties to it on
separate counterparts and each such counterpart shall constitute an original of
this Agreement but all of which together constitute one and the same instrument.
This Agreement shall not be effective until each party has executed at least one
counterpart.   21.   NO PARTNERSHIP       The parties are each independent
contractors and nothing contained in this Agreement shall create or be construed
as creating any partnership, joint venture or similar relationship between them
and/or any other person nor authorising any such party to make any statements

11

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    or enter into any agreement on behalf of any other party, except as
expressly set out in this Agreement.   22.   LIABILITY       The obligations of
each of the parties constituting the Recipient the under this agreement are
joint and several. If any liability of one but not both of the parties
constituting the Recipient is, or becomes, illegal, invalid or unenforceable in
any respect, that shall not affect or impair the liabilities of the other party
constituting the Recipient under this agreement.   23.   GOVERNING LAW AND
JURISDICTION   23.1   The construction, validity and performance of this
Agreement shall be governed by the laws of England and Wales.   23.2   Subject
to clause 4 (Dispute Resolution) above, the parties to this Agreement
irrevocably agree that the courts of England and Wales shall have exclusive
jurisdiction over any claim or matter arising under or in connection with this
Agreement and that accordingly any proceedings in respect of any such claim or
matter may be brought in such court. Governing language

The parties have shown their acceptance of the terms of this Agreement by
executing it at the end of the schedules.

12

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SCHEDULE 1
TERM SHEETS
A — Financial Reporting

     
A.1. Description
  Procuring financial reporting for Borders stores — see below for more detailed
description
 
   
A.2. Location
  Borders US
 
   
A.3. Service Manager
  Anthony Grant
 
   
A.4. Fees/Charges
  $140,000/year
 
   
A.5. Exceptions
  N/A
 
   
A.6 Termination Notice
  Not less than 3 and not more than 6 months written notice

Department: International Finance
Department description: Financial Reporting

              Item   Classification   Re/(O)ccurrence   Item comments
Daily Flash Sales
  Reporting   D   Net sales daily reporting by store
 
           
Maintain FX Rates in
Lawson/EAP
  Task   D   Enter FX rates into Lawson
 
           
Email Collection
  Reporting   D    
 
           
Paperchase Sales
  Reporting   W    
 
           
Fun Learning Sales
  Task   W   Download fun learning sales by category
 
           
Weekly Transactions
  Task   W   Download weekly transactions by store
for UK & IRE
 
           
Category Sales
  Reporting   W   Net sales by category
 
           
Transaction/Units Summary
  Reporting   W   Includes transaction and units counts; Gross Margin,
Discounts, Net Margin per Trans and Unit
 
           
Clearance (Red Dot) Results
  Reporting   W   During the Clearance (Red Dot) Sales
Timing
 
           
Series Code (Promotional) Discounts
  Reporting   W   Sales and units sold by series code
 
           
Coupon Discounts
  Reporting   W    

13

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              Item   Classification   Re/(O)ccurrence   Item comments
Gift Card Sales
  Reporting   M    
 
           
Corporate Sales
  Reporting   M    
 
           
AP165 Reprint
  Reporting   M    
 
           
ACME Returns
  Reporting   M    
 
           
Periodical Sales/Margin
  Reporting   M   by UPC
 
           
Missed Returns
           
 
           
Month End Journal Entries
  Task   M   Datacomm, legal expenses,
Interest, taxes, error suspense,
shrink, markdowns, etc
 
           
VAT Reporting
  Reporting   M    
 
           
Forecasting
  Task   M/Q   Each markets send P&L submissions to be loaded into EAP system
 
           
Over/Short Report
  Task   M   Send over/short amounts to LP team in UK
 
           
Provide Final P&L Statements
  Reporting   M   Send over final P&L statements after all journal entries are
booked
 
           
Store Contribution Reporting
  Reporting   M   Store level P&L’s for Month and YTD
 
           
Account Reconciliations
  Task   M   Various accounts, are completed in the US
 
           
Magazine Subscriptions
  Reporting   W    
 
           
Corporate Customer Sales
Reporting
  Reporting   W    
 
           
Weekly Discount
Reconciliation Reporting
  Reporting   W    
 
           
DVD and Music Promotional Campaign reporting
  Reporting   W    
 
           
Accounts Payable Lag
Reporting
  Reporting   M    

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B — Statutory Accounts Reporting

     
B.1. Description
  Procuring statutory reporting for Borders and Books etc - see below for more
detailed description
 
   
B.2. Location
  Borders US
 
   
B.3. Service Manager
  Anthony Grant
 
   
B.4. Fees/Charges
  $17,500/year
 
   
B.5. Exceptions
  N/A
 
   
B.6 Termination Notice
  Not less than 3 and not more than 6 months written notice

Department: International Finance
Department description: Statutory Accounts Reporting

              Item   Classification   Re/(O)ccurrence   Item comments
Provide Lawson TB’s for all UK companies and Ireland
  Task   Annual    
 
           
Provide letter of support, letter of representation and intercompany
confirmations
  Task   Annual    
 
           
Coordinate EY requests from work
performed by IFD
  Task        
 
           
Provide supporting documents for
accounts managed by IFD
  Task        

15

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C — Property Accounting

     
C.1. Description
  Responsible for Asset Management for Borders stores- see
below for more detailed description
 
   
C.2. Location
  Borders US
 
   
C.3. Service Manager
  Anthony Grant
 
   
C.4. Fees/Charges
  $35,000/year
 
   
C.5. Exceptions
  N/A
 
   
C.6 Termination Notice
  Not less than 3 and not more than 6 months written notice

Department: Property Accounting
Department description: Responsible for Asset Management system, including
Capital spending, depreciation and asset write-offs

              Item   Classification   Re/(O)ccurrence   Item comments
Yearly budgeting of cap-ex and depreciation expense
  Task   Y   Cap-ex submissions from local office, all planning at H.O.
 
           
Monthly forecast
updates
  Task   M   Monthly reforecast depreciation expense and cap-ex, submit into EAP
 
           
Capital Spending
administration
  Task   Ongoing   Responsible for creation and approval, as well as subsequent
tracking of CERs
 
           
Tracking of Capital Projects
  Task   Ongoing    
 
           
Fixed asset accounting
  Task   M   Record all depreciation and asset-related activity
 
           
Monthly Fixed Asset
Reporting
  Reporting   M   Monthly variance to forecast explanations, Asset Registers
 
           
Cap-ex reporting
  Reporting   M   1) Approved vs. Invoiced
 
           
Cap-ex reporting
  Reporting   M   2) Project activity reporting
 
           
Cap-ex reporting
  Reporting   M   3) New Store Cap-Ex
 
           
GL Account Recs
  Task   M   All fixed asset accounts

16

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D — Accounts Payable (A/P)

     
D.1. Description
  Accounts Payable and Accounts Receivable for Borders stores— see below for
more detailed description
 
   
D.2. Location
  Borders US
 
   
D.3. Service Manager
  Anthony Grant
 
   
D.4. Fees/Charges
  $245,000/year
 
   
D.5. Exceptions
  N/A
 
   
Department:
  Accounts Payable
 
   
Department
description:
  Accounts Payable and Accounts Receivable

              Item   Classification   Re/(O)ccurrence   Item comments
EDI and Paper drop ship merchandise invoice processing
  Task   Ongoing    
 
           
Expense invoice
processing
  Task   Ongoing   10% done by IFD
 
           
Warehouse receipt
merchandise invoice
matching
  Task   Ongoing    
 
           
Vendor service
representatives
  Task   Ongoing   Primary contact is IFD
 
           
Vendor account
reconciliations
  Task   Ongoing    
 
           
Vendor set-up
  Task   Ongoing   Includes completion of vendor credit applications
 
           
Debit balance recovery
  Task   Ongoing   Substantial leveraging of UK resources
 
           
AP Audit functions
  Task   Ongoing   Includes but not limited to duplicate payment recovery and
3rd party audit recoveries
 
           
Trade check runs
  Task   M/W   Check runs are run and signed off by IFD
 
           
Expense check runs
  Task   M/W   UK controlled
 
           
Wire transfers
  Task   Ongoing    
 
           
Year-end audit
  Task   Y   Support for auditor requests

17

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              Item   Classification   Re/(O)ccurrence   Item comments
General Ledger
Balance Sheet Account
Reconciliations
  Task   M   All payables accounting
 
           
Reserves Analysis
  Reporting   M   All payables accounting
 
           
Aged Accrual Analysis
  Reporting   M   All payables accounting
 
           
Average Days to Pay
  Reporting   M    
 
           
Non Top Vendor
Activity
  Reporting   M    
 
           
Status of Reconciliations for Top Vendors
  Reporting   M    
 
           
Accounts Payable
Ratio Reporting
  Reporting   M    
 
           
Vendor Debit Balance
Reporting
  Reporting   M    
 
           
Claims on Invoices
Trend Reporting
  Reporting   M    
 
           
AP165 — drop ship merchandise invoices reporting to stores
  Reporting   M    

18

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E — Bank Reconciliation

     
E.1. Description
  Bank Reconciliations for Borders stores— see below for
more detailed description
 
   
E.2. Location
  Borders US
 
   
E.3. Service Manager
  Anthony Grant
 
   
E.4. Fees/Charges
  $21,000/year
 
   
E.5. Exceptions
  N/A
 
   
E.6 Termination Notice
  Not less than 3 and not more than 6 months written notice
 
   
Department:
  Bank Reconciliation
 
   
Department
description:
  Responsible for Reconciliation of all bank/disbursement accounts

              Item   Classification   Re/(O)ccurrence   Item comments
General Ledger
Balance Sheet
Account
Reconciliations
  Task   M   All Cash and Disbursement Accounts

19

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F — Treasury

     
F.1. Description
  Treasury — see below for more detailed description— see below for more
detailed description
 
   
F.2. Location
  Borders US
 
   
F.3. Service Manager
  Anthony Grant
 
   
F.4. Fees/Charges
  $35,000/year
 
   
F.5. Exceptions
  N/A
 
   
F.6 Termination Notice
  Not less than 3 and not more than 6 months written notice  
Department:
Treasury
     
Department
description:
   

              Item   Classification   Re/(O)ccurrence   Item comments
Cash Management
  Task   Ongoing   Includes forecasting, funding,
borrowing, overdraft facility
maintenance
 
           
Month-end close for
bank/cash accounts
  Accounting   Monthly   ID all cash activity (cash, wires, checks etc) and tie
to specific General Ledger code. Monthly upload to Lawson General Ledger of all
activity.
 
           
Foreign currency
transactions for year
end hedging
  Task   Yearly    
 
           
Credit card management
  Accounting, Task,
Reporting   Ongoing   Setting up and managing relationship with credit card
companies, monthly entry of credit card fees, planning for credit card fees,
reporting on credit card fees.
 
           
Bank relationships
  Task   Ongoing   Set-up and management of bank relationships, monthly entry of
bank fees, planning for bank fees.
 
           
Interest
  Accounting   Ongoing   Monthly entry of interest, monthly reconciliations,
forecasting and planning
 
           
Wire Transfer Activity
  Task   Ongoing   Activation of approved wire transfers.

20

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G — Lease Accounting

     
G.1. Description
  Lease Accounting for Borders and Books etc — see below for more detailed
description
 
   
G.2. Location
  Borders US
 
   
G.3. Service Manager
  Anthony Grant
 
   
G.4. Fees/Charges
  $8,750/year
 
   
G.5. Exceptions
  N/A
 
   
G.6 Termination Notice
  Not less than 3 and not more than 6 months written notice
 
   
Department:
  Lease Accounting
 
   
Department
description:
   

              Item   Classification   Re/(O)ccurrence   Item comments
Straight Line Rent
Accounting
  Accounting   On-going   Includes: initial calculation, maintenance, journal
entries, monthly forecasting, yearly planning, and General Ledger
reconciliations of Straight Line Balance Sheet accounts

21

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H — Merchandise Reporting

     
H.1. Description
  Merchandise Reporting for Borders stores — see below for more detailed
description
 
   
H.2. Location
  Borders US
 
   
H.3. Service Manager
  Anthony Grant
 
   
H.4. Fees/Charges
  $70,000/year
 
   
H.5. Exceptions
  N/A
 
   
Department:
  International Finance
 
   
Department
description:
  Reporting on Merchandise
Category Performance

              Item   Classification   Re/(O)ccurrence   Item comments
Weekly Subject Range
Report
  Reporting   W   Weekly sales, store inventory, purchase, pending order, on
order, store returns, and vendor return by subject breaks
 
           
Open to Buy
  Reporting   W   Units on Order (DC and Drop ship) by PO types — Actual vs.
Target by buyers
 
           
Not Yet Published
  Reporting   W   Order of Not Yet Publish Titles by Product line by month
 
           
In Stock
  Reporting   W   Weekly Top Title sales by subject break 100 and In Stock
percentage
 
           
Top Titles
  Reporting   W   Weekly Top 10 sales by product lines comparison TY vs. LY
 
           
Bargain Scorecard
  Reporting   W   Bargain Sales, Shipments, Inventory by Store
 
           
Calendar Scorecard
  Reporting   W   While Calendars are in Stock (Oct-Jan)
 
           
Weekly Kids Sales
  Reporting   W   Kids Subject Code Sales by Store
 
           
US Binc Sales for UK
  Reporting   M   Unit sales by store for US Binc
 
           
Vendor Scorecard
  Reporting   M   Sales, Purchase, Return, Refused Return, and inventory by
vendor level
 
           
Inventory Aging by
Category
  Reporting   M   Aging Inventory bucket by category by store

22

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              Item   Classification   Re/(O)ccurrence   Item comments
Bargain Report
  Reporting   W   Bargain Sales, Rolling 5 weeks Sales, Inventory by store
 
           
Stock Aging
  Reporting   M   Aging of Returnable and Non Returnable Stock by
Category/Product line
 
           
Stock Reserves
  Accounting   M   Reserve Calculations and Accounting Entries for Aged Non
Returnable Stock
 
           
Deadwood Returns
  Reporting   M — as needed   Manual Process
 
           
RPLs
  Reporting   M — as needed   System Process
 
           
Buyer Action Plan
  Reporting   M   Sales, Margin, Inventory, Week of Supply, Stockturn, Purchase
and Vendor Claims by Buyers
 
           
Location Range Report
  Reporting   M   Sales, Inventory, and On Order by Location by Store
 
           
Out of Stock
  Reporting   M   Out of Stock reporting by store by country

23

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I — Margin Accounting and Reporting

     
I.1. Description
  Margin Accounting and Reporting for Borders stores - see below for more
detailed description
 
   
I.2. Location
  Borders US
 
   
I.3. Service Manager
  Anthony Grant
 
   
I.4. Fees/Charges
  $70,000/year
 
   
I.5. Exceptions
  N/A
 
   
Department:
  International Finance
 
   
Department
description:
  Margin Accounting and Reporting

              Item   Classification   Re/(O)ccurrence   Item comments
Preliminary Period
Margin Statements
  Reporting   W   Actual Sales vs. Forecast vs. Plan Analysis
 
           
Final Period Margin
Statements
  Reporting   M   Final reporting of sales, cost, and margin and comparison to
forecast
 
           
Period Cost of Sales
  Accounting   M   Calculate cost of sales for accounting posting
 
           
Period Sales
Adjustments
  Accounting   M   Sales Audit posting
 
           
Vendor Code Sales Mix
  Reporting   M   Sales mix by vendors for the last 6 months with their average
margin rate
 
           
Period Margin by
Vendor Code
  Reporting   M   Avg 6 months period margin sales mix by vendors
 
           
Country Mix - Purchases and Sales
  Reporting   M   Sales and Shipment Mix by country by product line
 
           
New Store Discount
Summary
  Reporting   NYO only    
 
           
Periodicals
  Reporting   M   Mill & Boon, US Periodical, Local Periodical, and Subscription
Sales reporting by stores

24

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J — Inventory Accounting and Control

     
J.1. Description
  Inventory Accounting and Control for Borders stores - see below for more
detailed description
 
   
J.2. Location
  Borders US
 
   
J.3. Service Manager
  Anthony Grant
 
   
J.4. Fees/Charges
  $70,000/year
 
   
J.5. Exceptions
  N/A
 
   
Department:
  Inventory Control
 
   
Department
description:
  Inventory reconciliation of on hand systems to financial systems and inventory
reporting

              Item   Classification   Re/(O)ccurrence   Item comments
Inventory at Retail
  Reporting   W   Classified by Total Stores, FTC, RC
 
           
Warehouse Inventory
Summary
  Reporting   W   Warehouse system weekly processing flow with perpetual
inventory balances.
 
           
Warehouse Overstock Aging and Fill Rates
  Reporting   W   Warehouse system inventory aging with weekly shipping fill
rates.
 
           
Return Center Summary and Claim Aging
  Reporting   W   Return Center system weekly inventory flow, on hand balances,
with aged vendor returns claims.
 
           
Warehouse Receipts and Shipments
  Reporting   W   Warehouse system weekly summary processing. Details are
provided upon request.
 
           
Warehouse
Reconciliations
  Accounting   Q   Reconcile to General Ledger
 
           
Physical Inventory
  Accounting   Per StockTake
Schedule   Includes pre-work, stock takes, post work, reconciliations, and
results reporting by store and category
 
           
Shrink Liabilities
  Accounting   M   Monthly Accruals, Record Results
 
           
Inventory Entries
  Accounting   M    

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K — Tax

     
K.1. Description
  Tax Reporting and Filing for Borders and Books etc — - see below for more
detailed description
 
   
K.2. Location
  Borders US
 
   
K.3. Service Manager
  Anthony Grant
 
   
K.4. Fees/Charges
  $52,500/year
 
   
K.5. Exceptions
  N/A
 
   
K.6 Termination Notice
  Not less than 3 and not more than 6 months written notice

 

*   Tax is fully dependent on transaction data support from the UK team.

     
Department:
  Tax
 
   
Department
   
description:
  Tax Returns

              Item   Classification   Re/(O)ccurrence   Item comments
Provide all information necessary for the submission of tax returns
      Annual    
 
           
Provide VAT reporting
  Report   Periodic    
 
           
Support Statutory
Account Tax
Calculations
  Accounting   Annual    
 
           
Provide tax
depreciation
reporting
  Report   Annual    

26

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L — IT

     
L.1. Description
  Information Technology Support for Borders stores — see below for more
detailed description
 
   
L.2. Location
  Borders US
 
   
L.3. Service Manager
  Anthony Grant
 
   
L.4. Fees/Charges
  $1,750,000 — Less Borders Shared Costs of Migration = $1,088,000/year
 
   
L.5. Exceptions
  N/A
 
   
Department:
  IT
 
   
Department description:
  Support for all Borders proprietary systems, as well as other Borders
integrated systems for merchandising, distribution, stores, and financials.

              Item   Classification   Re/(O)ccurrence   Item comments
Transitional Support
          Tasks provided during the term of the TSA
 
           
Provide BGIA (central stock, supplier and purchase order management) system
functionality and support
  Task   On-going   Provides data on on-hand inventory as well as inventory
transfer data
 
           
Provide BGIB (distribution management, inventory control and subsidiary
financial) system functionality and support
  Task   On-going   Performs AP invoice matching as well.
 
           
Provide CMA (core back-list titles as well as EPOS daily data poll) system
functionality and support
  Task   On-going    
 
           
Provide IMA (in-store inventory management - goods receipt and returns) system
functionality and support
  Task   On-going    
 
           
Provide IT outage alerts
  Task   As needed    

27

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              Item   Classification   Re/(O)ccurrence   Item comments
Provide Lawson (general ledger, asset management, accounts payable) system
functionality and support
  Task   On-going    
 
           
Provide Data Warehouse (business intelligence, the central location for most
business data) functionality and support
  Task   On-going    
 
           
Provide DW Portal (web application to access sales, transactions, and
discounting from POS) system functionality and support
  Task   On-going    
 
           
Provide store detail file transfers (daily FTP of key financial metrics)
functionality and support
  Task   On-going    
 
           
Provide Outlooksoft/EAP systems functionality and support
  Task   On-going   Maintain the query tool for Lawson G/L
 
           
3rd level helpdesk
support
  Task   As needed   For all IT issues that cannot be resolved via the UK IT
group.
 
           
Data back-ups and storage
  Task   On-going    
 
           

     
TOTAL TRANSITIONAL
   
SUPPORT
  $385,000.00

             
Data Migration/IT Transition to UK Ownership
          Project management and task work to migrate data and hardware to UK
ownership
 
           
Project
coordination/management
  Task   On-going   IT point of contact for coordination of transition to new
owner to work with UK team
 
           
Develop process for transition of SCM (product in the pipeline) to UK ownership
  Task   On-going   Co-manage the plan to transition the SCM with a system
implementation to ensure limited disruption to the flow of products
 
           

28

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              Item   Classification   Re/(O)ccurrence   Item comments
Provide final inventory data to UK ownership
  Task   One time    
 
           
Provide final title file assortment data to new ownership
  Task   One time    
 
           
Provide one-time historical
sales/inventory data in
the required format
  Task   One time    
 
           
Update Outlooksoft
dimensions
  Task   One time    
 
           

     
TOTAL MIGRATION AND TRANSITION COSTS
  $702,875.00
 
   
TOTAL IT COSTS
  $1,087,875.00

29

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M — Merchandising

     
M.1. Description
  Book and Non-Book Buying for Borders stores — see below for more detailed
description
 
   
M.2. Location
  Borders US
 
   
M.3. Service Manager
  Anthony Grant
 
   
M.4. Fees/Charges
  $105,000/year
 
   
M.5. Exceptions
  N/A
 
   
M.6 Termination Notice
  Not less than 3 and not more than 6 months written notice  
Department:
  Merchandising  
Department description:
  Book and Non-Book Buying

              Item   Classification   Re/(O)ccurrence   Item comments
Bargain buying,
allocation &
replenishment
  Task   On-going    
 
           
Weekly “big-buy” conference calls for information sharing purposes for Bargain,
Calendars, Multi-media, Trade
  Task & Reporting   W   Other information sharing activities to be negotiated.
 
           
Merch Ops — Vendor Management — Weekly reporting
  Reporting   W   By store listing of total OH, OO, NYP title and unit counts,
retail value

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N — Merchandise Operations

     
N.1. Description
  Product Data and Analysis Support for Borders stores — see below for more
detailed description
 
   
N.2. Location
  Borders US
 
   
N.3. Service Manager
  Anthony Grant
 
   
N.4. Fees/Charges
  $70,000/year
 
   
N.5. Exceptions
  N/A  
Department:
  Merchandising Operations

     
Department
description:
  Title file, vendor management, Point Of Sale promotions,
store planning, merchandise planning

              Item   Classification   Re/(O)ccurrence   Item comments
New store planning/store space and layout planning
      Ongoing    
 
           
Title File Department:
           
 
           
Complete listing of all US titles on BGIA
  Reporting   Weekly    
 
           
Complete listing of all non-US titles on BGIA
  Reporting   Weekly    
 
           
Sales and OH info for all BINCs
  Reporting   Weekly    
 
           
Bowker data — master title file by country
  Reporting   Monthly    
 
           
Title File Updates
  Task   Weekly   Weekly set of macros that cleanse title file data to conform
to BGI standards
 
           
Title File Updates
  Task   Ongoing   Manual maintenance based on vendor or in-country requests
 
           
Title File Updates
  Task   Ongoing   Semi-manual process for mass updates, required by in-country
 
           
Titles changing to OP
  Reporting   Monthly   Reporting on titles changing to out of print status
 
           
Paperchase
maintenance
          Performed by the Paperchase(US) department

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              Item   Classification   Re/(O)ccurrence   Item comments
Marketing: POS
Promotions
           
 
           
Promotional set-up
— CMA
  Task   Ongoing   Set-up all non BGIA promotions in CMA to be sent down to
store POS system
 
           
Promotional set-up
— BGIA
  Task   Ongoing   This department provides support for any changes that need to
be made to these promotions
 
           
Bar-code creation
  Task   Ongoing   Create all barcodes needed for promotions
 
           
Training and Consultation for promotion creation
  Task   Ongoing    
 
           
Merch Planning:
           
 
           
Reporting:
      Weekly   Top 200 items(sales), all stores, by
country by product line
 
           
 
      Weekly   Top items(sales), by country, by product
line, by binc, by store
 
           
 
      Weekly   Same as above, excluding items with
series codes (on promotions) UK only
 
           
 
      Weekly   Same as above, but with one report for
high street stores, one for retail parks
UK only
 
           
 
      Weekly   Sales, On Hands, TY/LY, Turn, Discounts, for Paperchase and
Gifts/Stationary category

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O — Transportation

     
O.1. Description
  Logistics/Shipping for Borders stores — see below for more detailed
description
 
   
O.2. Location
  Borders US
 
   
O.3. Service Manager
  Anthony Grant
 
   
O.4. Fees/Charges
  $21,000/year
 
   
O.5. Exceptions
  N/A  
Department:
  Transportation  
Department description:
  Shipping and logistics

              Item   Classification   Re/(O)ccurrence   Item comments
Ship and ensure any Borders US bought bargain category is shipped to UK docks at
Purchasers expense
  Task   On-going   Once shipments clear customs, Purchaser will be responsible.
 
           
Freight and Distribution Center Reporting
  Reporting   On-going   Weekly, monthly reporting including Costs Per Unit,
Output (units) Per Hour, Distribution Financials, and Freight Operating Review
Meetings
 
           
Freight and DC Planning
  Task   Yearly   Planning at the detail Output Per Hour/ Costs Per Unit
Distribution and Freight Financials

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P — Communications

     
P.1. Description
  Store/field communications for Borders and Books etc — see below for more
detailed description
 
   
P.2. Location
  Borders US
 
   
P.3. Service Manager
  Anthony Grant
 
   
P.4. Fees/Charges
  $11,375/year
 
   
P.5. Exceptions
  N/A
 
   
P.6 Termination Notice
  Not less than 3 and not more than 6 months written notice  
Department:
  Communications  
Department description:
  Store and store manager communications

              Item   Classification   Re/(O)ccurrence   Item comments
Store communications - e-mail box, news/marketing bulletins (promotions) and
e-info updates.
  Task   On-going    
 
           
E-mail communications for Books Etc.
  Task   Daily    
 
           
Store manager specific
communications
  Task   Bi-weekly    
 
           
URL set-up on proxy
server (link
created on e-info)
  Task   As needed    

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Q — Store Operations

     
Q.1. Description
  Store Operational Support for Borders stores — see below for more detailed
description
 
   
Q.2. Location
  Borders US
 
   
Q.3. Service Manager
  Anthony Grant
 
   
Q.4. Fees/Charges
  $35,000/year
 
   
Q.5. Exceptions
  N/A  
Department:
  Store Operations

Department
description:

              Item   Classification   Re/(O)ccurrence   Item comments
Provide store operational support from US.
  Task   On-going    
 
           
New store set-up in
legacy systems
  Task   On-going    

35

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R — Management

     
R.1. Description
  Management of Support Services- see below for more detailed description
 
   
R.2. Location
  Borders US
 
   
R.3. Service Manager
  Anthony Grant
 
   
R.4. Fees/Charges
  $105,000/year
 
   
R.5. Exceptions
  N/A  
Departments:
  Finance, Tax, Merchandising  
Department description:
  Management Oversight of Support Services

              Item   Classification   Re/(O)ccurrence   Item comments
Direction and leadership for support services employees
  Task   Daily    
 
           
Review of support services employee work
  Task   Daily    

36

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SIGNED by
duly authorised for and on behalf
of BORDERS INTERNATIONAL
SERVICES, INC.
  )
)
)    /s/ Edward W. Wilhelm                       
)
 
   
SIGNED by
duly authorised for and on behalf
of BORDERS (UK) LIMITED
  )
)    /s/ Luke Johnson                       
)
 
   
SIGNED by
duly authorised for and on behalf of
BORDERS BOOKS IRELAND LIMITED
  )
)    /s/ Luke Johnson                       
)

37