exv10w42



 





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.




4









 












	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.




5









 












	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.




6









 












	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




7









 












	 	(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




8









 












	 	(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






9









 






	 	 	 	 	 
	 

	 	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.




10









 












	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









 












	 	 	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









 








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









 






	 	 	 	 	 	 	 
	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	 	 






14









 






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









 






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









 





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









 






	 	 	 	 	 	 	 
	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









 






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









 






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









 






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









 






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









 






	 	 	 	 	 	 	 
	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









 






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









 






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	 	 






25









 






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









 






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









 






	 	 	 	 	 	 	 
	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









 






	 	 	 	 	 	 	 
	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









 




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






30









 






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






31









 






	 	 	 	 	 	 	 
	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






32









 






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






33









 






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	 	 






34









 






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









 






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









 






	 	 	 
	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