Document:

exv10w40

 

Exhibit 10.40

DATED                     2007

BGI (UK) LIMITED

and

BOOKSHOP ACQUISITIONS LIMITED

 

DEED OF TAX COVENANT

 

Baker & McKenzie LLP

London

Ref: AFC/JS/HXB

 

 

CONTENTS

	 	 	 	 	 	 	 
	Clause	 	 	 	Page	 
	 
	 	 	 	 	 	 
	1.
	 	Definitions and Interpretation	 	 	1	 
	2.
	 	Covenants	 	 	4	 
	3.
	 	Limitations	 	 	4	 
	4.
	 	Due Date for Payment	 	 	7	 
	5.
	 	Overprovisions and Savings	 	 	7	 
	6.
	 	Recoveries from Third Parties	 	 	8	 
	7.
	 	Gross Up	 	 	9	 
	8.
	 	Compliance Issues	 	 	9	 
	9.
	 	Claims	 	 	12	 
	10.
	 	Group Relief	 	 	13	 
	11.
	 	Transfer Pricing	 	 	14	 
	12.
	 	Counter Covenant	 	 	14	 
	13.
	 	Refunds	 	 	15	 
	14.
	 	Third Party Rights	 	 	15	 
	15.
	 	General	 	 	15	 

Schedule

	 	 	 	 	 
	SCHEDULE 1
	 	 	 	 
	The Companies
	 	 	   16	 

 

 

THIS DEED OF TAX COVENANT is made this           day of           2007

BETWEEN:

	(1)	 	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 (the
“Covenantor”); and
	 
	(2)	 	BOOKSHOP ACQUISITIONS 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 (the “Purchaser”).

WHEREAS:

This Deed of Covenant is entered into pursuant to the terms and conditions of the share sale and
purchase agreement of even date herewith (the “Agreement”) pursuant to which the Covenantor agreed
to sell the entire issued share capital of Borders UK Limited and procure the sale of Borders Books
Ireland Limited to the Purchaser.

NOW THIS DEED WITNESSES as follows:

	1.	 	DEFINITIONS AND INTERPRETATION.
	 
	1.1	 	Words and expressions which are defined in the Agreement but which are not defined in this
Deed shall have the meanings set out in the Agreement.
	 
	1.2	 	In this Deed unless the context otherwise requires:
	 
	 	 	“Company” means each, any or all of the companies whose respective names, registered numbers
and registered offices are set out in schedule 1 as the context shall require;
	 
	 	 	“Covenantor Associate” means:

	 	(a)	 	the Covenantor;
	 
	 	(b)	 	any company or person (other than the Company) that may be treated for the
purposes of any Taxation at any time (whether before, on or after Completion) as being
either a member of the same group of companies as the Covenantor or otherwise
associated with the Covenantor; and
	 
	 	(c)	 	any company or person (other than the Company) that may be treated for the
purposes of any Taxation as being at any time prior to Completion either a member of
the same group of companies as the Company or otherwise associated with the Company;

“Dispute” means any Tax Claim where conduct is delegated to the Covenantor pursuant to
clause 9.2 of this Deed or where the Company is requested to take any action pursuant to
clause 9.3 of this Deed;

“Event” means any transaction (including the execution and completion of the Agreement),
payment, event, act, or omission whatsoever, and reference to an Event occurring on or
before a particular date shall include an Event or Events which for Tax purposes are deemed
to have, or are treated or regarded as having, occurred on or before that date;

“Group Relief” means any Relief eligible for surrender or transfer by one company to another
as a result of those companies forming a group for Tax purposes including (without
limitation):

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	 	(a)	 	relief surrendered or claimed pursuant to Chapter IV Part X Taxes Act (Group
relief); and/or
	 
	 	(b)	 	the surrender or transfer of a Tax refund under the provisions of Section 102
FA 1989 (Surrender of company tax refund etc within a group);

“Group Reallocation” means:

	 	(a)	 	the notional transfer of any asset in accordance with section 171A of the TCGA;
and/or
	 
	 	(b)	 	the reallocation of any gain or loss accruing under section 179 of the TCGA in
accordance with section 179A of the TCGA; and/or
	 
	 	(c)	 	the reallocation of a degrouping charge pursuant to paragraph 66 of Schedule 29
to the Finance Act 2002; and/or
	 
	 	(d)	 	the rollover of any gain or loss accruing under section 179 of the TCGA in
accordance with section 179B of the TCGA; and/or the rollover of any gain or loss
pursuant to section 175 of the TCGA;

“Independent Accountant” means an independent firm of Chartered Accountants appointed by
agreement between the Covenantor and the Purchaser, or, if the parties are unable to agree,
an independent firm of Chartered Accountants nominated by the President for the time being
of the Institute of Chartered Accountants in England & Wales at the request of either the
Covenantor or the Purchaser;

“Overprovision” means, applying the accounting policies, principles and practices adopted in
relation to the preparation of the Accounts, the amount by which any contingency, provision
or reserve in the Accounts relating to Tax is overstated;

“Purchaser Associate” means:

	 	(a)	 	the Purchaser;
	 
	 	(b)	 	the Company; and
	 
	 	(c)	 	any company or person (other than the Company) that may be treated for the
purposes of any Taxation as being at any time after Completion either a member of the
same group of companies as the Purchaser or the Company or otherwise associated with
the Purchaser or the Company;

“Purchaser’s Relief” means any Relief arising to the Company which is not available on or
before the Accounting Date but which arises in respect of an Event occurring after the
Accounting Date;

“Refund” means any refund, credit or repayment of Taxation which has arisen or will have
arisen, whether before, on or after Completion, in respect of (i) any gross receipts,
income, profits or gains earned, accrued or received by the Company on or before the
Accounting Date or (ii) any Event occurring on or before the Accounting Date (and, for the
avoidance of doubt, a Refund shall include an amount or amounts that are due to be paid by
H.M. Revenue & Customs to Borders (UK) Limited in respect of tax that was withheld from
interest paid to US resident banks prior to the Accounting Date by Borders (UK) Limited and
paid over to HM Revenue & Customs by BGP (UK) Limited on behalf of Borders (UK) Limited (to
the extent that Borders (UK) Limited has not already paid amounts to BGP (UK) Limited in
respect of such payments by HM Revenue & Customs) in circumstances where Borders (UK)

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Limited was contractually obliged to gross up the interest payments to the US resident banks
but the US resident banks have assigned their right to be refunded the tax to Borders (UK)
Limited);

“Relief” means (without limitation) any relief, loss, allowance, credit, set off, deduction
or exemption for any Tax purpose and any right to repayment of Tax and:

	 	(a)	 	any reference to the use or set off of a Relief shall be construed accordingly
and shall include use or set off in part; and
	 
	 	(b)	 	any reference to the loss of a Relief shall include the absence, non-existence
or cancellation of any such Relief, or to such Relief being available only in a reduced
amount;

“Saving” means that any Tax Liability or other liability which has resulted in a payment
being made or becoming due from the Covenantor under this Deed or in respect of the Tax
Warranties has given or will give rise to a repayment, Relief or tax saving for the Company
or a Purchaser Associate (or would have given rise to a repayment, Relief or tax saving but
for it being set-off against another liability) and that the repayment, Relief or tax saving
is attributable to the Liability for Taxation or other liability in question and which would
not otherwise have arisen;

“Tax” includes (without limitation) all taxes, duties, levies, imposts, withholdings, social
security contributions, deductions or amounts in the nature of taxation, whenever and by
whatever authority imposed and whether of the United Kingdom or elsewhere, irrespective of
the person against or to whom the same are directly or primarily chargeable, together with
all interest, fines, penalties, surcharges, imposed pursuant to any legislation relating
thereto other than to the extent attributable to the unreasonable delay or default of the
Company or the Purchaser after Completion or the failure of the Purchaser to comply with its
obligations under the Agreement or this Deed;

“Tax Authority” means any person, body, authority or institution which seeks to impose,
assess, enforce, administer or collect any Tax whether in the United Kingdom or elsewhere;

“Tax Claim” means:

	 	(a)	 	any claim, notice, demand, assessment, letter or other document issued, or
action taken, by or on behalf of any Tax Authority or person; or
	 
	 	(b)	 	the preparation or submission of any notice, return, assessment, letter or
other document by the Purchaser, the Company, or any other person,

from which it appears that the Purchaser could make a claim under this Deed or the Tax
Warranties and, for this purpose, the limitations in clauses 3.2 to 3.4 of this Deed shall
be disregarded;

“Tax Liability” shall mean not only any liability to make actual payments of Tax but shall
also include the loss or reduction in the amount, or the setting off against income, profits
or gains earned, accrued or received on or before the Completion Date, or against any Tax
liability, of any Purchaser’s Relief where, but for such loss, reduction or setting off, the
Company would have had a liability to make a payment of or in respect of Taxation for which
the Purchaser would have been able to make a claim under this Deed, in which case the amount
of the Tax Liability shall be the amount of Tax saved or relieved by the Company as a result
of such set off or use of any Purchaser’s Relief PROVIDED THAT, for the purposes of this
Deed, it shall be assumed that other Reliefs are, to the extent allowed by law, set-off or
used in priority to any Purchaser’s Relief and if it cannot be determined whether a
Purchaser’s

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Relief or another Relief is used it shall be assumed that another Relief is used in priority
to a Purchaser’s Relief; and

“Tax Warranty” means the Warranties relating to Tax set out in paragraph 20 of schedule 4 of
the Agreement.

	1.3	 	Reference to income, profits or gains earned, accrued or received shall include income,
profits or gains deemed to have been or treated as or regarded as earned, accrued or received
for the purposes of any legislation relating to Tax.
	 
	1.4	 	References to schedules, clauses are to schedules and clauses of this Deed unless the context
otherwise requires.
	 
	2.	 	COVENANTS
	 
	2.1	 	The Covenantor hereby covenants with the Purchaser to pay to the Purchaser an amount equal
to:

	 	(a)	 	any Tax Liability of the Company resulting from or by reference to any income,
profits or gains earned, accrued or received on or before the Completion Date or any
Event occurring on or before the Completion Date; and
	 
	 	(b)	 	any Tax Liability of the Company resulting from or by reference to any income,
profits or gains earned, accrued or received after the Completion Date as a result of
an act, omission or transaction by a person other than the Company and which liability
to Tax falls upon the Company as a result of its having been affiliated, connected
with, or in the same group for Tax purposes as that person at any time before the
Completion Date; and
	 
	 	(c)	 	(without prejudice to the generality of clause 2.1(a) above), any Tax Liability
of the Company that arises as a result of, in consequence of or in connection with the
pre-sale reorganisation identified in the “Proposed Strategic Alternative” paper dated
13 June 2007 and referred to in Ernst & Young’s Vendor Due Diligence Report (22 June
2007 draft) (the “Pre Sale Reorganisation”); and
	 
	 	(d)	 	any Tax Liability of the Company resulting from or by reference to the release
or elimination of the principal amount of any debt owed by the Company to Borders
Group, Inc or BGI (UK) Limited prior to Completion, or the transfer of the benefit of
any such debt to the Company prior to Completion; and
	 
	 	(e)	 	all reasonable third party costs and expenses which are properly incurred by
the Purchaser or the Company in making a successful claim under this Deed.

	3.	 	LIMITATIONS
	 
	3.1	 	The Covenantor shall not be liable under the covenants contained in clause 2 of this Deed for
any Tax Liability or other liability to the extent that:

	 	(a)	 	provision or reserve for the liability is made in the Accounts, or the payment
or discharge of the liability is taken into account, or the liability is otherwise
taken into account, in the Accounts or to the extent that the liability is specifically
referred to in the notes thereto; or
	 
	 	(b)	 	such liability was discharged (whether by payment or by the use or set-off of
any Relief) on or before Completion; or

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	 	(c)	 	such liability arises or is increased or that any provision or reserve which
has been made in the Accounts is insufficient by reason only of

	 	(i)	 	any increase in rates of Tax or variation in the method of
applying or calculating the rate of Tax; or
	 
	 	(ii)	 	any change made or announced in law (including the enactment
after the Completion Date of any legislation relating to Tax and the imposition
after the Completion Date of any new Tax); or
	 
	 	(iii)	 	any change in the published practice or procedure of the
relevant Tax Authority,

in all cases being an increase or change first announced after the Completion Date,
whether or not that change purports to be effective retrospectively in whole or in
part; or

	 	(d)	 	such liability would not have arisen but for a change of accounting policy or
practice after the Completion Date (except where such change is necessary so as to
ensure compliance with generally accepted accounting principles) or in the length of
any accounting period of any Purchaser Associate after the Completion Date; or
	 
	 	(e)	 	such liability would not have arisen or would have been reduced or eliminated
but for a voluntary act, transaction, omission or arrangement after Completion of any
Purchaser Associate or any officers, agents and employees thereof but excluding any
act, transaction or arrangement:

	 	(i)	 	required by law (except where there is a change in law within
the meaning of clause 3.1(c)(ii)); or
	 
	 	(ii)	 	carried out pursuant to an obligation of the Company entered
into prior to Completion; or
	 
	 	(iii)	 	carried out in the ordinary course of business of the Company
as carried on at Completion; or

	 	(f)	 	such liability arises in respect of any income, profits or gains earned,
accrued or received between the Accounting Date and the Completion Date in the ordinary
course of business of the Company to which the liability relates, provided this clause
3.1(f) shall not apply to the covenant in clause 2.1(d); or
	 
	 	(g)	 	the liability arises in respect of any Event occurring between the Accounting
Date and the Completion Date in the ordinary course of business of the Company,
provided this clause 3.1(g) shall not apply to the covenant in clause 2.1(d); or
	 
	 	(h)	 	such liability would not have arisen but for some act, transaction, omission or
arrangement carried out at the request of, or with the approval of the Purchaser or its
authorised representatives prior to Completion excluding the Pre-Sale Reorganisation,
provided this clause 3.1(h) shall not apply to the covenant in clause 2.1(d); or
	 
	 	(i)	 	such liability arises or is increased as a result of any failure by the
Purchaser to comply with any of its obligations under the Agreement or this Deed
including for the avoidance of doubt the Purchaser’s obligations to procure that the
Company carries out any act or does any thing; or

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	 	(j)	 	such liability arises as a result of the sale of an asset or as a result of any
other Event (including the expiry of a time period) that causes the crystallisation of
a chargeable or other capital gain by any Purchaser Associate, at any time after
Completion; or
	 
	 	(k)	 	any Relief (other than a Purchaser’s Relief) is available, or is for no
consideration made available by any Covenantor Associate, to the Company to set
against, reduce or eliminate the Tax Liability (and any Relief that is so available in
relation to more than one Tax Liability to which this Deed applies shall be deemed, so
far as possible, to be used in such a way as to reduce to the maximum extent possible
the Covenantor’s total liability hereunder); or
	 
	 	(l)	 	such liability has been satisfied at no expense to the Purchaser; or
	 
	 	(m)	 	such liability would not have arisen or would have been reduced or eliminated
but for a disclaimer, surrender, claim or election made or notice or consent given or
by virtue of any other thing done after Completion by or on behalf of any Purchaser
Associate otherwise than at the request of the Covenantor under the provisions of this
Deed or where the making giving or doing of which was taken into account or assumed in
computing the provision for Tax (including the provision for deferred Tax) in the
Accounts; or
	 
	 	(n)	 	such liability would not have arisen or would have been reduced or eliminated
but for a failure or omission by the Company to make any claim, election, surrender or
disclaimer or give any notice or consent or do any other thing after Completion the
making giving or doing of which was taken into account or assumed in computing the
provision for Tax (including the provision for deferred Tax) in the Accounts; or
	 
	 	(o)	 	such liability comprises interest or penalties arising by virtue of any
underpayment of Tax prior to Completion, insofar as such underpayment would not have
been an underpayment but for a bona fide estimate made prior to Completion of the
amount of income, profits or gains to be earned, accrued or received after Completion
proving to be incorrect, or but for any other Event or Events occurring after
Completion; or
	 
	 	(p)	 	such liability is covered by insurance of which the Purchaser or the Company is
the beneficiary or which would have been covered had the Purchaser maintained in force
insurance policies at Completion; or
	 
	 	(q)	 	such liability would not have arisen but for a cessation, or any change in the
nature or conduct, of any trade or business carried on by the Company at Completion,
being a cessation or change occurring on or after Completion or the payment of any
unusual or abnormal dividend by the Company after Completion; or
	 
	 	(r)	 	to the extent that any income, profits or gains to which such liability is
attributable were earned or received by the Company or accrued to the Company but were
not reflected in the Accounts or to the extent that the liability arises because the
assets of the Company are greater than, or the liabilities are less than, those taken
into account in computing the provision or reserve for Taxation in the Accounts,
provided that this clause 3.1(r) shall not apply to the covenant in clause 2.1(d).

	3.2	 	The Covenantor shall have no liability in respect of any claim under this Deed and any such
claim shall be wholly barred and unenforceable unless notice of such claim (stating in
reasonable detail the specific matters in respect of which the claim is made and so far as is
reasonably practicable including an estimate of the amount of the claim) shall have been
served upon the Covenantor by the Purchaser by no later than, in the case of a claim relating
to the matters referred to in clause 2.1(d) above, 10 February 2014, or, in relation to any
other claim under this Deed, 21 September 2010, and in each case in relation to which legal

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	 	 	proceedings have been commenced against the Covenantor within the three months of the giving
of such notice.
	 
	3.3	 	The Purchaser shall not be entitled to claim or recover more than once under this Deed and/or
the Agreement in respect of any liability or liabilities caused by or attributable to the same
fact, matter, Event, or circumstance.
	 
	3.4	 	The limitations set out in clause 3.1 shall also operate to limit or reduce the liability of
Covenantor in respect of claims for breach of the Tax Warranties.
	 
	3.5	 	The maximum aggregate liability of the Covenantor in respect of all claims under this Deed
and the Agreement (with the exception of claims under clause 2.1(d) of this Deed) shall not
exceed the amount of £1,000,000.
	 
	3.6	 	The maximum aggregate liability of the Covenantor in respect of all claims under clause
2.1(d) of this Deed shall not exceed the amount of £5,100,000.
	 
	3.7	 	No liability shall attach to the Covenantor in respect of any claim unless the liability of
the Covenantor in respect of such claim exceeds £25,000 in which case the Covenantor shall
(subject to clause 3.4) be liable for the whole of such amount and not merely the excess.
	 
	3.8	 	No liability shall attach to the Covenantor unless the aggregate amount of all claims for
which it would, in the absence of this provision, be liable shall exceed £250,000 and in such
event the Covenantor shall be liable for the whole of such amount and not merely the excess.
	 
	4.	 	DUE DATE FOR PAYMENT
	 
	4.1	 	A payment to be made by the Covenantor under this Deed shall be made (i) within 10 Business
Days after the date on which written notice setting out the amount due is received by the
Covenantor from the Purchaser or the Company; or (ii) if later:

	 	(a)	 	in the case of an actual payment of Tax, on the date which is 2 Business Days
before the last day on which that payment of Tax is due to be made in order to avoid
incurring a liability to interest or penalties; and
	 
	 	(b)	 	in the case of the use or set off of a Purchaser’s Relief, the date which is 2
Business Days before the last day on which the Company would have been due to make an
actual payment of Tax, without incurring a liability to interest or penalties, had it
not been for the use or set off of the Purchaser’s Relief.

	4.2	 	If any payment due to be made under this Deed is not made on the due date for payment
thereof, then, except to the extent that in the case of a payment to the Purchaser where the
Covenantor’s liability under clause 2 compensates the Purchaser by virtue of it extending to
interest and penalties, the payer shall pay interest on such sum for the period from and
including the due date up to the date of actual payment in accordance with this clause. The
payer 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. Interest under this clause
shall accrue on the basis of the actual number of days elapsed and a 365-day year and shall be
compounded monthly.
	 
	5.	 	OVERPROVISIONS AND SAVINGS
	 
	5.1	 	If the Purchaser or any Company discovers that there has been an Overprovision or Saving, the
Purchaser shall as soon as reasonably practicable give written notice thereof to the
Covenantor such notice to include reasonably sufficient details of such Overprovision or
Saving.

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	5.2	 	The Covenantor may request that the auditors of the Company for the time being (the
“Auditors”) determine in writing whether there has been an Overprovision or Saving, and the
Purchaser will use its reasonable endeavours to procure that the Auditors deal expeditiously
with a request for a determination as to whether an Overprovision or Saving has arisen or will
arise and will procure that the Company provides all assistance, documents and other
information as may be reasonably required by the Auditors for that purpose.
	 
	5.3	 	The amount of the Overprovision or Saving less any reasonable third party costs properly
incurred by the Company or the Purchaser in obtaining the Overprovision or Saving shall be:

	 	(a)	 	set off against any payment then due from the Covenantor under this Deed or for
breach of any Tax Warranty;
	 
	 	(b)	 	to the extent there is an excess, a refund shall be made to the Covenantor of
any previous payments by the Covenantor under this Deed or for breach of any Tax
Warranty (and not previously refunded under this clause 5) up to the amount of the
excess;
	 
	 	(c)	 	to the extent there is an excess, be carried forward and set-off against any
future payment or payments that become due from the Covenantor under this Deed or in
respect of the Tax Warranties; and
	 
	 	(d)	 	to the extent that, at a time when there is both no outstanding claim and no
further claims which can be made by the Purchaser against the Covenantor under this
Deed, there is an excess, it shall forthwith be repaid to the Covenantor.

	5.4	 	If any dispute arises as to whether there is or has been any Overprovision or Saving, such
dispute shall be referred for determination to a firm of chartered accountants agreed between
the Covenantor and the Purchaser (or failing such agreement to a firm of independent
accountants nominated by the President for the time being of the Institute of Chartered
Accountants of England and Wales), who shall act as expert and not as arbitrator (the costs of
that determination being shared equally by the Covenantor and the Purchaser).
	 
	5.5	 	If it is determined pursuant to clause 5.4 that an amount previously determined should be
amended, that amended amount shall be substituted for the purposes of clause 5.2 in place of
the amount originally determined, and such adjusting payment (if any) as may be required by
virtue of the above mentioned substitution shall be made as soon as practicable by the
Purchaser or the Covenantor as the case may be.
	 
	5.6	 	The Purchaser shall procure that all reasonable steps are taken within a reasonable time to
maximise any Overprovision or Saving. The Purchaser shall procure that any Overprovision or
Saving is used in priority to any other Relief, and in the absence of any evidence of the same
it shall be deemed to be so used.
	 
	6.	 	RECOVERIES FROM THIRD PARTIES
	 
	6.1	 	If the Purchaser or the Company is or may be entitled to recover from a person (including any
Tax Authority) a sum in respect of any matter giving rise to a liability on the part of the
Covenantor under this Deed or under the Tax Warranties, then:

	 	(a)	 	the Purchaser shall procure that full details of the entitlement are given to
the Covenantor as soon as reasonably practicable and if so required by the Covenantor
shall take (or shall procure that the Company shall take) at the Covenantor’s expense
such action as the Covenantor may reasonably request to recover or to procure the
recovery of the sum (keeping the Covenantor fully informed of the progress of any

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	 	 	 	action taken and providing it with copies of all relevant correspondence and
documentation); and

	 	(b)	 	the Purchaser shall procure that, as soon as possible (and in any event within
5 Business Days of the date when the sum is recovered benefit is received or saving in
question is made) any payment already made by the Covenantor in respect of the claim
which gave rise to the entitlement is forthwith repaid to the Covenantor up to the
amount of the benefit or saving (less any reasonable costs properly incurred by the
Company in obtaining it but including any repayment supplement or interest or
equivalent sum); and
	 
	 	(c)	 	any amount of the sum recovered that is not so paid to the Covenantor shall be
carried forward and set off against any future claims under this Deed or under the Tax
Warranties.

	7.	 	GROSS UP
	 
	7.1	 	All sums payable under this Deed shall be paid free and clear of all deductions unless the
deduction or withholding is required by law, in which event (and other than in respect of
interest paid pursuant to clause 4.2) the payer shall pay such additional amount as shall be
required to ensure that the net amount received under this Deed will equal the full amount
which would have been received had no such deduction or withholding been required to be made.
	 
	7.2	 	If any Tax Authority brings into charge to Tax any sum paid under this Deed (other than in
respect of interest paid pursuant to clause 4.2), then the payer shall pay such additional
amount as shall be required to ensure that the total amount paid, less the Tax chargeable on
such amount, is equal to the amount that would otherwise be payable under this Deed.
	 
	7.3	 	To the extent that any deduction, withholding or tax in respect of which an additional amount
has been paid under clause 7.1 or 7.2 above results in the payee obtaining a Relief (all
reasonable endeavours having been used to obtain such Relief) the payee shall pay to the
payer, within 10 Business Days of obtaining the benefit of the Relief, an amount equal to the
lesser of the value of the Relief obtained and the additional sum paid under paragraph 7.1 or
7.2 above.
	 
	7.4	 	Paragraph 7.1 and 7.2 above shall not apply to the extent that the deduction, withholding or
tax would not have arisen but for:

	 	(a)	 	the payee not being tax resident in the United Kingdom, or having some
connection with a territory outside the United Kingdom; or
	 
	 	(b)	 	an assignment by the payee of any of its rights under this Deed; or
	 
	 	(c)	 	a change in law after Completion.

	8.	 	COMPLIANCE ISSUES
	 
	8.1	 	The Covenantor or its duly authorised agents shall at the Company’s cost and expense be
responsible for, and have the sole conduct of preparing, submitting and agreeing all Tax
returns and computations of the Company (including, without limitation, claims and/or
surrenders in relation to Group Relief) for all accounting periods of the Company ending on or
before Completion and in connection therewith:

	 	(a)	 	all returns, computations, documents and substantive correspondence relating
thereto shall be submitted in draft form by the Covenantor to the Purchaser or its duly

9

 

	 	 	 	authorised agents for comment at least 30 days before the date upon which it is
required to be filed with the applicable Taxation Authority without incurring
interest and penalties;

	 	(b)	 	the Purchaser or its duly authorised agents shall comment in writing within 21
Business Days of such submission but if the Covenantor has not received any comments
within 21 Business Days, the Purchaser shall be deemed to have approved such draft
documents;
	 
	 	(c)	 	the Covenantor shall take account of all reasonable comments made by the
Purchaser or its duly authorised agents;
	 
	 	(d)	 	the Covenantor shall be provided promptly with any information received by the
Purchaser or the Company, or of which the Purchaser or the Company otherwise becomes
aware, which may be relevant to such Tax returns and computations, and with such
assistance (including assistance from employees of the Purchaser or the Company) and
access to such documents and records of, or relating to, the Company, as the Covenantor
may reasonably require in connection with such Tax returns and computations; and
	 
	 	(e)	 	the Purchaser undertakes to procure that the Company shall at the request of
the Covenantor sign and submit to the relevant Tax Authority all such notices of claim,
surrender or consent to surrender (including provisional or protective notices of
claim, surrender or consent to surrender in cases where any relevant Tax computations
have not yet been agreed) and all such other documents and returns as the Covenantor
shall reasonably request to give effect to the foregoing provisions.

	8.2	 	The Purchaser or its duly authorised agents shall be responsible for, and have the conduct of
preparing, submitting and agreeing all Tax returns and computations of the Company for the
accounting period of the Company commencing before Completion but ending after Completion and
shall procure that such returns and computations are, so far as it is reasonable to do so,
prepared on a basis that is consistent with the manner in which the returns and computations
of the Company were prepared for accounting periods ending prior to Completion and in
connection therewith:

	 	(a)	 	all returns, computations, documents and substantive correspondence relating
thereto shall be submitted in draft form by the Purchaser to the Covenantor or its duly
authorised agents for comment at least 30 days before the date upon which it is
required to be filed with the applicable Taxation Authority without incurring interest
and penalties;
	 
	 	(b)	 	the Covenantor or its duly authorised agents shall comment in writing within 21
Business Days of such submission but if the Purchaser has not received any comments
within 21 Business Days, the Covenantor shall be deemed to have approved such draft
documents;
	 
	 	(c)	 	the Purchaser shall incorporate all reasonable comments made by the Covenantor
or its duly authorised agents;
	 
	 	(d)	 	the Purchaser shall procure that all such returns, computations, documents or
other correspondence are promptly executed and submitted;
	 
	 	(e)	 	the Covenantor shall be provided promptly with any information received by the
Purchaser or the Company, or of which the Purchaser or the Company otherwise becomes
aware, which may be relevant to such Tax returns and computations, and with such
assistance (including assistance from employees of the Purchaser or the

10

 

	 	 	 	Company) and access to such documents and records of, or relating to, the Company,
as the Covenantor may reasonably require in connection with such Tax returns and
computations;
	 
	 	(f)	 	the Purchaser undertakes to procure that the Company shall at the request of
the Covenantor sign and submit to the relevant Tax Authority all such notices of claim,
surrender or consent to surrender (including provisional or protective notices of
claim, surrender or consent to surrender in cases where any relevant Tax computations
have not yet been agreed) and all such other documents and returns as the Covenantor
shall reasonably request to give effect to the foregoing provisions;

	8.3	 	Notwithstanding any other provision in this clause 8 and save always as may be required by
law, the Purchaser shall not and shall procure that no Purchaser Associate or any of its
directors, employees or agents shall, without the prior written consent of the Covenantor (not
to be unreasonably withheld or delayed), submit any correspondence or return or send any other
document to a Taxation Authority or do any other thing where any Purchaser Associate or any of
its directors, employees or agents is aware or could reasonably be expected to be aware that
submitting such correspondence or return or sending such document or doing such other thing
will or is likely to:

	 	(a)	 	give rise to, or increase, a claim under this Deed; or
	 
	 	(b)	 	prejudice or reduce the availability of any Group Relief surrendered or to be
surrendered by any Covenantor Associate,

without first affording the Covenantor a reasonable opportunity to comment thereon and
without taking account of any comments received so far as it is reasonable to do so.

	8.4	 	The Purchaser undertakes that it shall procure that the Company shall prepare and submit the
Tax returns and computations of the Company for the accounting period of the Company
commencing before Completion but ending after Completion and any subsequent accounting periods
of the Company on the basis that the principal amount of any debt owed by the Company to any
Covenantor’s Associate which was released prior to Completion shall not be treated as a
receipt of the trade carried on by the Company. The Purchaser further undertakes that it
shall procure that the Company shall not amend any such Tax returns or computations of the
Company on the basis that any amount of such debts is a receipt of the trade carried on by the
Company. For the avoidance of doubt, the Covenantor and the Purchaser acknowledge and confirm
that they believe that the submission of such Tax returns and computations on the basis that
the release of such debts prior to Completion should not be treated as giving rise to a
receipt of the Company’s trade is correct to the best of their knowledge. Nothing in this
clause 8.4 shall require the Company to submit any Tax return or computation which it
reasonably believes is inaccurate or misleading, nor prevent the Company from correcting any
Tax return or computation which it reasonably believes is inaccurate or misleading, provided
that before doing so the Purchaser shall consult with the Covenantor and shall take account of
any reasonable representations it shall make. If, having consulted with the Covenantor and
taken account of its reasonable representations, the Purchaser and the Covenantor are unable
to agree on the correct basis on which any such Tax return or computation should be submitted
or amended, the Company shall only be entitled to submit or amend the Tax return or
computation on the basis that the Independent Accountant, jointly instructed by the Purchaser
and the Covenantor and acting as an expert and not as arbitrator, considers correct and
complete having duly considered the representations of both the Purchaser and the Covenantor.
	 
	8.5	 	For the avoidance of doubt, this clause 8 shall not apply or shall cease to apply to any
matter that is or becomes the subject of a Tax Claim and that is therefore governed by clause
9 of this Deed.

11

 

	9.	 	CLAIMS
	 
	9.1	 	If the Purchaser or the Company become aware of any Tax Claim, the Purchaser shall give
written notice thereof to the Covenantor (including reasonably sufficient details of such Tax
Claim, the due date for any payment, the time limits for any appeal, and so far as reasonably
practicable an estimate of the amount of the claim) as soon as reasonably practicable (and in
any event not later than 15 Business Days prior to any deadline for appeal).
	 
	9.2	 	If the Covenantor so directs in writing, the conduct of a Tax Claim shall be delegated to the
Covenantor upon such terms as may be agreed from time to time between the Purchaser and the
Covenantor PROVIDED THAT, unless the Purchaser and the Covenantor specifically agree otherwise
in writing, the following terms shall be deemed to be incorporated into any such agreement:

	 	(a)	 	all written communications pertaining to the Dispute which are transmitted to
or by the relevant Taxation Authority shall be copied to the Purchaser;
	 
	 	(b)	 	the Purchaser shall procure that the Company gives to such person or persons as
may for the time being be nominated by the Covenantor authority to conduct the Dispute
and confirms such authority to any relevant Taxation Authority;
	 
	 	(c)	 	the Purchaser shall and shall procure that the Company and its agents, officers
or employees shall give (without charge) the Covenantor or its agents all such
assistance as may reasonably be required to conduct the Dispute, including (without
limitation) providing access to the personnel, books, accounts and records of the
Company, providing copies of relevant documentation and requiring personnel to provide
statements and proofs of evidence and to attend at any trial or hearing to give
evidence or otherwise.

	9.3	 	Where conduct of a Dispute is not delegated to the Covenantor pursuant to sub-clause 9.2
above, the Purchaser shall take such action and procure that the Company shall take such
action as the Covenantor may reasonably request to avoid, dispute, resist, appeal, compromise
or defend the Tax Claim.
	 
	9.4	 	The Covenantor shall reimburse to the Purchaser and the Company their reasonable costs and
expenses properly incurred in connection with any such action as is referred to in clauses 9.2
or 9.3 above.
	 
	9.5	 	If the Covenantor does not request that conduct of a Tax Claim be delegated to the Covenantor
in accordance with sub-clause 9.2 and does not request that the Purchaser or the Company take
any action under sub-clause 9.3 of this Deed within a period of time that is reasonable having
regard to the nature of the Tax Claim and the existence of any time limit in relation to
avoiding, disputing, defending, resisting, appealing or compromising such Tax Claim or if the
Covenantor notifies the Purchaser or the Company to the effect that it no longer wishes to
pursue the Dispute, the Purchaser shall have the conduct of a Tax Claim and shall be free to
reach a reasonable settlement or compromise PROVIDED THAT the Covenantor shall promptly be
sent a copy of all correspondence and documentation relating to the Tax Claim.
	 
	9.6	 	The Purchaser and the Company shall procure that no Tax Claim is settled or otherwise
compromised without the prior written consent of the Covenantor, such consent not to be
unreasonably withheld or delayed, and, subject to clause 8.4 and 9.2 of this Deed, the
Purchaser shall not, and shall procure that the Company shall not, without first affording the
Covenantor a reasonable opportunity to comment and without first taking account of such
comments so far as it is reasonable to do so, submit any correspondence or return or send any
other document to any Tax Authority where the Purchaser or the Company is aware or could

12

 

	 	 	reasonably be expected to be aware that the effect of submitting such correspondence or
return or sending such document would or could:

	 	(a)	 	put such Tax Authority on notice of any matter which could give rise to, or
could increase, a claim under this Deed or for breach of any Tax Warranty; or
	 
	 	(b)	 	prejudice or reduce the availability of any Group Relief surrendered or to be
surrendered by any Covenantor Associate.

	10.	 	GROUP RELIEF
	 
	10.1	 	Notwithstanding the generality of this clause 10, if the Covenantor shall become liable to
make any payment under clause 2 of this Deed or in respect of the Tax Warranties, the
Covenantor may at its option surrender or procure the surrender, (without payment) to the
Company of Group Relief or make or procure a Group Reallocation or make or procure a payment
of an amount not exceeding the “available compensating adjustment” determined in accordance
with paragraph 7A(3) of Schedule 28AA to the Taxes Act. To the extent that the Tax Liability
giving rise to the liability under clause 2 of this Deed is reduced or eliminated thereby or
to the extent that a payment is made, there shall be a corresponding reduction or elimination
of the Covenantor’s liability under clause 2 of this Deed. The Purchaser shall procure that
the Company shall promptly (and in any event within any applicable statutory time limit) take
such steps as may reasonably be required by the Covenantor to facilitate or permit such a
surrender of Group Relief, Group Reallocation or payment.
	 
	10.2	 	Subject to the following provisions of this clause 10 and without prejudice to the generality
of clause 8 the Purchaser shall procure that the Company shall, in respect of any time or
period falling prior to Completion (which for the purposes of this clause 10 shall include for
the avoidance of doubt any overlapping period pursuant to section 403A of the Taxes Act), make
or give any claim, election, surrender, notice or consent (whether unconditional or
conditional, whether or not forming part of any other return or tax document, whether
provisional or final, and including amendment to or withdrawal of any earlier claim, election,
surrender, notice or consent) as the Covenantor shall direct in connection with any surrender
of Group Relief by or to any Covenantor Associate to or by (as the case may be) the Company.
	 
	10.3	 	Where the Company enters into any Group Relief arrangement (an “Arrangement”) pursuant to
sub-clause 10.2 and makes a saving of Taxation or otherwise receives a Taxation benefit or
Relief that would not have arisen but for the Arrangement in question then, other than to the
extent that such saving, benefit or Relief was treated as an asset or was assumed in computing
the Accounts, the Covenantor may require the Company to make a payment to the relevant
Covenantor Associate in relation to the Arrangement up to a maximum amount as leaves the
Company in the same net after-Tax position as if the Arrangement had not been entered into.
The Covenantor shall specify the due date for the making of any such payment by the Company
PROVIDED THAT the specified due date must not be such as to leave the Company in a cashflow
position that is worse than if the Arrangement in question had not been entered into.
	 
	10.4	 	Where the Company enters into any Arrangement pursuant to sub-clause 10.2 and has a Taxation
liability that would not have arisen but for the Arrangement in question (or a Relief that
would have been available to the Company but for the Arrangement in question ceases to be
available or is reduced) then, other than to the extent that such Taxation liability or the
unavailability or reduction in the Relief was assumed in computing the Accounts, the
Covenantor shall make or shall procure that the relevant Covenantor Associate makes a payment
to the Company in relation to the Arrangement of a minimum amount as leaves the Company in the
same net after-Tax position as if the Arrangement had not been entered into. The Covenantor
shall specify the due date for the making of any such payment to the

13

 

	 	 	Company PROVIDED THAT the specified due date must not be such as to leave the Company in a
cashflow position that is worse than if the Arrangement in question had not been entered
into.

	10.5	 	Clause 5 shall not apply to any Taxation refund to the extent that a payment is made under
this clause 10 to any Covenantor Associate that is attributable to that Taxation refund.
	 
	11.	 	TRANSFER PRICING
	 
	11.1	 	If:

	 	(a)	 	any Taxation Authority determines that the provisions of Schedule 28AA of the
Taxes Act (“Schedule 28AA”) apply to any transaction or series of transactions between
the Company and a Covenantor Associate; and
	 
	 	(b)	 	paragraph 6(1) of Schedule 28AA would apply to the relevant transaction or
series of transactions; and
	 
	 	(c)	 	the Company would be the “disadvantaged person” as defined in paragraph 6(1)(b)
of Schedule 28AA in relation to such transaction or series of transactions,

then the Purchaser shall procure that the Company pays to the Covenantor (on behalf of the
relevant Covenantor Associate) by way of balancing payment an amount determined in
accordance with clause 11.2 below on the date determined in accordance with clause 11.2
below.

	11.2	 	The amount payable to the Covenantor shall be an amount equal to any repayment of Tax or
reduction in the Company’s Tax Liability, and the time for payment under this clause 11.2
shall be the date the Purchaser Associate receives the benefit of such repayment or reduction.
	 
	11.3	 	Where any amount has been determined in accordance with clause 11.2 above, the Covenantor or
the Purchaser may request the Auditors (at the expense of the party making the request) to
review such determination in the light of all relevant circumstances including facts which
have become known only since such determination and to determine whether such determination
remains correct and whether the amount that was the subject of such determination should be
amended. If the Auditors shall determine that the amount should be amended, an adjusting
payment shall be made as soon as practicable by the Covenantor or (as the case may be) to the
Covenantor.
	 
	12.	 	COUNTER COVENANT
	 
	12.1	 	The Purchaser hereby covenants with the Covenantor to pay to the Covenantor an amount equal
to:

	 	(a)	 	any Tax Liability for which the Company is liable but for which the Covenantor
becomes liable as a result of the failure by the Company to discharge it; and
	 
	 	(b)	 	all reasonable costs and expenses incurred by the Covenantor in connection with
any Tax Liability in respect of which the Covenantor can bring a claim under this
clause 12.1.

	12.2	 	The provisions of clause 4 (Due Date for Payment), clause 7 (Gross Up) and clause 9 (Claims)
shall apply to this clause as if the same were set out herein but replacing references to the
Covenantor with the Purchaser (and vice versa) and making any other necessary modifications.

14

 

	12.3	 	The covenants contained in clause 12.1 shall not apply to a Tax Liability to the extent that
the Covenantor is liable to make or has made a payment in respect of that Tax Liability under
clause 2.1 of this Deed.
	 
	12.4	 	Any payment made by the Purchaser to the Covenantor under this clause 12 shall be applied to
discharge the Tax Liability giving rise to the claim under this clause 12. The Covenantor
shall not enforce any statutory right of recovery against the Purchaser in respect of a Tax
Liability to the extent that it has already made a recovery in respect of that liability under
this clause 12 and the Covenantor shall not be entitled to make a claim under this clause 12
in respect of a Tax Liability to the extent that it has already made a recovery in respect of
that liability under any statutory right or otherwise.
	 
	13.	 	REFUNDS
	 
	13.1	 	The Purchaser shall promptly notify the Covenantor of any Refund to which the Company is or
becomes entitled or receives where or to the extent that such Refund was not recognised in the
Accounts as an asset and does not arise from the use of a Purchaser’s Relief and is not a
payment or Relief to which clause 5 applies.
	 
	13.2	 	Any Refund actually obtained before, on or after Completion, whether by repayment or set off
(and less any reasonable third party costs properly incurred in obtaining it but including any
repayment supplement or interest or equivalent sum) shall be:

	 	(a)	 	set off against any payment then due from the Covenantor under this Deed or for
breach of any Tax Warranty;
	 
	 	(b)	 	to the extent there is an excess, it shall forthwith be repaid to the
Covenantor.

	14.	 	THIRD PARTY RIGHTS
	 
	 	 	Nothing in this Deed is intended to confer on any person any right to enforce any term of
this Deed which that person would not have had but for the Contracts (Rights of Third
Parties) Act 1999.

	15.	 	GENERAL
	 
	15.1	 	Any payment made by the Covenantor under this Deed shall (so far as possible) be by way of
reduction in, and repayment of, the consideration for the Shares or the Irish Shares (as
appropriate) under the Agreement. Any payment made by the Purchaser under this Deed shall (so
far as possible) be by way of an increase in the consideration for the Shares or the Irish
Shares (as appropriate) under the Agreement.
	 
	15.2	 	The provisions of the following clauses of the Agreement shall have effect as if incorporated
into this Deed mutatis mutandis with references to this Agreement being replaced with
references to this Deed and with any other necessary modifications:
	 
	 	 	clause 1 (Interpretation), clause 11 (Counterparts), clause 13 (Variation, Waiver and
Consent), clause 16 (Notices), clause 17 (Costs), clause 21 (Assignment) and clause 23
(Governing Law and Submission to Jurisdiction).
	 
	15.3	 	For the purposes of determining whether a Tax Liability or a Relief relates to a pre or post
Completion period, an accounting period of the Company shall be deemed to have ended on
Completion.

IN WITNESS whereof the parties hereto have duly executed and delivered this Deed on the day and
year first before written.

15

 

SCHEDULE 1

The Companies

	 	 	 	 	 
	Name	 	Registered/Company Number	 	Registered Office
	Borders (UK) Limited
	 	01580771	 	120 Charing Cross Road, 

	 
	 	 	 	London WC2H 0JR            

	 
	 	 	 	United Kingdom
	 
	 	 	 	 
	Borders Books Ireland Limited
	 	404624	 	70 Sir John Rogerson’s Quay,
	 
	 	 	 	Dublin 2

Signatures to this Deed begin on the next page.

16

 

	 	 	 	 	 	 	 	 	 
	EXECUTED as a DEED by

	 	 	)	 	 	/s/ Edward W. Wilhelm	 	 
	BGI (UK) LIMITED

	 	 	)	 	 	 	 	 
	acting by two directors or a director and the

	 	 	)	 	 	 	 	 
	company secretary

	 	 	)	 	 	/s/ George L. Jones	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	EXECUTED as a DEED by

	 	 	)	 	 	 	 	 
	BOOKSHOP ACQUISITIONS LIMITED

	 	 	)	 	 	/s/ Luke Johnson	 	 
	acting by two directors or a director and the

	 	 	)	 	 	 	 	 
	company secretary

	 	 	)	 	 	/s/
Mark Farrer - Brown	 	 

17exv10w41

 

Exhibit 10.41

DATED                          2007

BORDERS PROPERTIES, INC.

and

BORDERS (UK) LIMITED

and

BORDERS BOOKS IRELAND LIMITED

 

BRAND LICENCE AGREEMENT

 

Baker & McKenzie LLP

London

Ref: MLH/MLD/KLM

0

 

DATE:

PARTIES:

	(1)	 	BORDERS PROPERTIES, INC., a company incorporated in the State of Delaware, USA and having its
principal place of business at 100 Phoenix Drive, Ann Arbor, MI 48108, USA (“Licensor”); and
	 
	(2)	 	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; and
	 
	(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 “Licencee”).

RECITALS:

	(A)	 	Licensor is the registered proprietor of, or has the right to license and/or sub-license, the
Trade Marks (as defined below).
	 
	(B)	 	Pursuant to an agreement between BGI (UK) Limited and Bookshop Acquisitions Limited (the
“Purchaser”) of the same date as this agreement for the sale and purchase of the entire issued
share capital of Borders (UK) Limited (the “Company”) and Borders Books Ireland Limited (the
“Share Purchase Agreement”), Licensor has agreed to license Licensee to use the Trade Marks on
the terms of this Agreement.
	 
	(C)	 	Licensor has registered the Domain Names (as defined below) and holds all right, title and
interest in and to the registration of such Domain Names.
	 
	(D)	 	Licensor has agreed to provide a licence to Licensee to make use of the Domain Names on the
terms set out in this Agreement.

TERMS AGREED:

	1.	 	DEFINITIONS AND INTERPRETATION

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

	 	 	 
	 
	 	 
	“Borders Store”

	 	a physical retail outlet operated by the Licensee

under the Trade Marks in relation to the sale of

Goods and the provision of Services;
	 
	 	 
	“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;
	 
	 	 
	“Competitor”

	 	a company engaged in business relating to the 

manufacture and supply of books, music and other 

media;
	 
	 	 
	“Control”

	 	in relation to a body corporate, the power of a person

to secure that the affairs of the body corporate are

1

 

	 	 	 
	 

	 	conducted in accordance with the wishes of that

person:
	 
	 	 
	 

	 	(a)     by means of the holding of shares, or the

          exercise of voting power, in or in relation to

          that or any other body corporate, or
	 
	 	 
	 

	 	(b)     by virtue of any powers conferred by the

          constitutional or corporate documents,

          regulating that or any other body corporate, or

          any other document,
	 
	 	 
	 

	 	and a “Change of Control”, in relation to that body

corporate, occurs if a person who Controls it ceases

to do so or if another person acquires Control of

it;
	 
	 	 
	“Confidential Information”

	 	in relation to either party, information (whether in 

written, electronic or oral form) belonging or relating 

to that party or, in the case of Licensor, belonging to 

a member of Licensor’s Group, relating to its or their

business, affairs, activities, products or services

which is not in the public domain and which (i)

either party has marked as proprietary or 

confidential; (ii) either party, orally or in writing, has

advised the other party is of a confidential nature; or 

(iii) due to its character or nature, a reasonable

person in a like position to the recipient of such 

information under this Agreement, and under like 

circumstances, would treat as confidential;
	 
	 	 
	“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;
	 
	 	 
	“Domain Names”

	 	the domain names
	 
	 	 
	 

	 	“borders.co.uk”;

“bordersstores.co.uk”;

“bordersmobile.co.uk”;

“bordersrewards.co.uk”;

“borders.ie”;

“bordersstores.ie”;

“bordersrewards.ie” ;

and any other “.co.uk” or “.ie” domain name

incorporating any of the Trade Marks owned by a

member of the Licensor’s Group as at the date of

signing this Agreement;
	 
	 	 
	“Effective Date”

	 	the date of this Agreement;
	 
	 	 
	“Goods and Services”

	 	the goods and services set out in Schedule 2 to this

Agreement for which the Trade Marks are registered;
	 
	 	 
	“Holding Company”

	 	a company that falls within either the meaning

attributed to that term in ss736 and 736A Companies

2

 

	 	 	 
	 

	 	Act 1985 or the meaning attributed to the term

“parent undertaking” in s258 Companies Act 1985;
	 
	 	 
	“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;
	 
	 	 
	“Investor Affiliate”

	 	has the meaning given in schedule 10 of the Share

Purchase Agreement;
	 
	 	 
	“Licensor’s Group”

	 	the group of companies comprising Licensor, any 

Holding Company from time to time of Licensor and 

any Subsidiary of Licensor or any such Holding 

Company and “member of Licensor’s Group” shall

be construed accordingly;
	 
	 	 
	“Licensed Products”

	 	all Goods and Services sold or offered for sale or

supply under the Trade Marks, including the

provision of such goods and services using the

Domain Names or corresponding website addresses;
	 
	 	 
	“Sub-Licensee”

	 	the beneficiary of any sub-license granted pursuant

to Clause 8.3;
	 
	 	 
	“Subsidiary”

	 	a company or other entity that falls within either

the meaning attributed to that term in ss736 and 736A 

Companies Act 1985 or the meaning attributed to the

term “subsidiary undertaking” in s258 Companies Act 1985;

3

 

	 	 	 
	“Tax Deed”

	 	means the deed relating to Tax in the agreed form 

between BGI (UK) Limited and the Purchaser of

even date;
	 
	 	 
	“Territory”

	 	United Kingdom and the Republic of Ireland;
	 
	 	 
	“Trade Marks”

	 	the trade marks short particulars of which are set out

in Schedule 1 to this Agreement;
	 
	 	 
	“Transitional Services Agreement”

	 	the agreement entered between Borders International

Services, Inc. and the Company in relation to the

provision of certain services; and
	 
	 	 
	“Year”

	 	the period from the Effective Date to midnight on the

following 31 December, and any subsequent period 

of twelve (12) months commencing the following 1 

January or any anniversary of that date while this

Agreement remains in force (provided that the final

Year of this Agreement may be a shorter period 

ending on the effective date of
termination of this Agreement).

	1.2	 	Interpretation
	 
	 	 	In this Agreement:

	 	(a)	 	clause headings do not form part of or affect the interpretation;
	 
	 	(b)	 	references to any legislation shall include any statutory or other re-enactment
or modification thereof (whether before or after the date of this Agreement);
	 
	 	(c)	 	where the context requires, words denoting the singular include the plural and
vice versa and words denoting any gender include all genders;
	 
	 	(d)	 	references to Clause and Schedule numbers are to Clauses and Schedules in this
Agreement so numbered;
	 
	 	(e)	 	references to parties include references to their respective successors in
title, permitted assigns and novatees; and
	 
	 	(f)	 	in the case of any conflict or ambiguity between any provision contained in the
body of this Agreement and any provision contained in any Schedule to it, the
provisions of this Agreement shall prevail.

	2.	 	GRANT OF RIGHTS
	 
	2.1	 	Subject to the terms and conditions of this Agreement, in consideration of the payment of £1
Licensor grants to Licensee, with effect from the Effective Date and without limit of period,
an exclusive:

	 	(a)	 	licence in the Territory to use and apply the Trade Marks on and in relation to
the sale of Goods and the provision of Services in physical retail outlets or using the
Domain Names or corresponding website address, including, without limitation, in
connection with the marketing, use, distribution, sale and disposal of the Goods and
Services as aforesaid. Such licence does not permit Licensee, and Licensee is
prohibited, to use and apply the Trade Marks on or in relation to the provision of any
goods or services

4

 

	 	 	 	via the Internet using any domain name or other electronic media save as aforesaid;
and
	 
	 	(b)	 	worldwide right to use the Domain Names in relation to the Goods and Services,
including, without limitation, in connection with the development, manufacture,
marketing, use, distribution, sale and disposal of the Goods and Services. The right
to use the Domain Names in this context means the right to use the Domain Names in any
manner whatsoever including the right to establish uniform resource locators within the
Domain Names, to display at such uniform resource locators such content relating to the
Goods and Services as Licensee shall determine in its absolute discretion and to
establish email addresses using the Domain Names.

	2.2	 	Notwithstanding clause 2.1(b), Licensee shall not under the Trade Marks actively solicit
orders for the Licensed Products outside the Territory but it shall not be prohibited from
accepting any unsolicited orders for the Licensed Products which it may receive from any other
country in the European Economic Area.
	 
	2.3	 	Licensor reserves the right itself to use and to license others to use the Trade Marks on or
in relation to goods or services (other than the Goods and Services) in the Territory without
recourse to Licensee.
	 
	2.4	 	Licensee shall at the request of Licensor pay any fees and costs necessary in connection with
the registration, maintenance and renewal of the Trade Marks and Domain Names in the Territory
(in respect of those Trade Marks and Domain Names which are registered or the subject of an
application for registration on the date of this Agreement).
	 
	2.5	 	In the event that any Trade Mark is capable of protection by registration, and is not already
the subject of an application or applications for registration in any country within the
Territory, Licensee shall on Licensor’s written request, at its own cost, be responsible for
the filing and prosecution of such applications in the name of Licensor and the maintenance
and renewal of any resulting Trade Mark registrations in such countries within the Territory
as it shall nominate. If and to the extent that Licensee does procure such Trade Mark
registrations in the name of Licensor, the rights granted to Licensee under this Clause 2
shall be deemed to include the right to use and apply the same subject to the terms of this
Agreement.
	 
	2.6	 	Licensor agrees to amend, or procure the amendment of, the registration for the Domain Names
within fourteen (14) days of the Effective Date so as to associate the Domain Names with the
relevant domain name server and to make such further amendments to the registration for the
Domain Names as are necessary from time to time in order to associate the Domain Names with
any further or other domain name servers notified to Licensor by Licensee at any time.
Licensor agrees that any such further amendments to the registration for the Domain Names
shall be effected within fourteen (14) days of such a request being made by Licensee.

	3.	 	LICENSEE OBLIGATIONS

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

	3.1	 	use the Trade Marks only in the form, colour, design, style and manner directed or approved
by Licensor as specified in Schedule 3 and/or as communicated by Licensor in writing from time
to time, and with appropriate legends as directed or approved by Licensor in writing clearly
identifying Licensor as the owner of the Trade Marks and indicating, in the form and manner
directed by Licensor, that the Trade Marks are used under licence from Licensor;

5

 

	3.2	 	at Licensee’s reasonable expense, ensure that all manufacturing, packaging, storage,
marketing and supply operations by which the Goods and Services are manufactured, packaged,
stored, marketed or supplied under this Agreement are conducted to a standard consistent with
good manufacturing, packaging, storage, marketing and sales practice and in accordance with
such other reasonable standards, specifications and procedures as specified in Schedule 4
and/or as communicated by Licensor in writing from time to time;
	 
	3.3	 	at Licensee’s reasonable expense, provide Licensor, at its reasonable request, with samples
of the goods comprised in the Licensed Products and promptly comply with all instructions and
directions issued by Licensor following examination of the same. Without limitation, samples
of such Licensed Products proposed to be marketed or sold by Licensee or any Sub-Licensee
shall be submitted to Licensor for approval before first commercial production and Licensee
shall (i) not market or sell any such Licensed Products; and (ii) procure that any
Sub-Licensee(s) shall not market or sell any such Licensed Products, before Licensee has
received Licensor’s prior written approval, it being understood by Licensee that the giving of
such approval shall in no way dilute or diminish Licensee’s obligations and liabilities with
respect to such Licensed Products it markets or sells and Services it supplies. Licensee
shall (i) not make any changes to any such Licensed Products; and (ii) procure that any
Sub-Licensee(s) shall not make any changes to any such Licensed Products, approved by Licensor
without first seeking the further approval of Licensor pursuant to this Clause 3.3;
	 
	3.4	 	at Licensee’s expense, submit all proposed (whether by Licensee or any Sub-Licensee)
advertising copy and all other proposed promotional or marketing materials regarding the
Licensed Products and other materials featuring the Trade Marks, including, without
limitation, stationery, wrappings, packaging, point of purchase materials, product catalogues
and television commercials, to Licensor, at its request, for its written approval prior to
publication or use by Licensee or Sub-Licensee (as appropriate) and not proceed, or allow
Sub-Licensee to proceed) with publication or use without such approval having first been
obtained (such approval not to be unreasonably withheld or delayed);
	 
	3.5	 	not use the Trade Marks or Domain Names on or in relation to any goods or services (other
than the Goods and Services) without the Licensor’s prior consent;
	 
	3.6	 	not use on or in relation to any goods or services any mark or name confusingly similar to
the Trade Marks;
	 
	3.7	 	not, without Licensor’s prior written consent, use or apply on or in relation to the Licensed
Products (including as or as part of a corporate, business or trading name) any other trade
mark, logo, domain name or other proprietary or commercial name or designation, excluding the
trade mark “Books Etc”;
	 
	3.8	 	not make any representation or do any act which may be taken to indicate that it has any
right, title or interest in or to the ownership or use of any of the Trade Marks or Domain
Names other than under the terms of this Agreement;
	 
	3.9	 	not do, cause or authorise to be done anything which will or may impair, damage or be
detrimental to the reputation or goodwill associated with Licensor or the Trade Marks or
Domain Names, which will or may adversely affect the value or validity of the Trade Marks or
Domain Names, which may bring the Trade Marks or Domain Names into disrepute or which might
jeopardise or invalidate any registration or application for registration of the Trade Marks
or Domain Names or Licensor’s title to the Trade Marks or Domain Names (save that Licensor’s
remedy for any challenge by Licensee to Licensor’s ownership of the Trade Marks or Domain
Names shall be as set out in Clause 9.2(d));
	 
	3.10	 	not register, in the Territory or elsewhere, the Domain Names, Trade Marks or any other trade
mark or domain name which is in Licensor’s reasonable opinion identical or confusingly

6

 

	 	 	similar to the Trade Marks or Domain Names or that constitutes any translation thereof into
any language spoken in the Territory;
	 
	3.11	 	upon Licensor’s request, provide all information or assistance, and execute any instrument,
that may be necessary or appropriate to register, maintain or renew the registration of the
Trade Marks or Domain Names in Licensor’s (or its nominee’s) name in the Territory, and shall
keep Licensor regularly informed of any costs incurred, or likely to be incurred, in
connection with the same; and
	 
	3.12	 	indemnify Licensor and each member of the Licensor’s Group and each of their respective
directors, officers and employees from and against any and all claims, liabilities,
proceedings, costs, damages, losses and expenses (including legal expenses) incurred by any of
them as a result of or in connection with (i) Licensee’s performance of this Agreement or the
breach of any term of this Agreement; (ii) the performance by any Sub-Licensee of the relevant
sub-licence granted pursuant to this Agreement or the breach of any term of such sub-licence;
(iii) or any other negligent or wrongful act by Licensee or any Sub-Licensee, or any of their
respective directors, officers, employees, agents or contractors (including, without
limitation, any liability incurred in connection with any claim brought under the Consumer
Protection Act 1987 or equivalent legislation in any part of the Territory).

	4.	 	PAYMENTS AND RECORDS
	 
	 	 	All sums payable under this Agreement:

	 	(a)	 	are quoted exclusive of any value added tax or other relevant sales taxes which
shall be paid in addition upon the provision by the Licensor of a valid tax invoice;
and
	 
	 	(b)	 	shall be made in pounds sterling to the credit of a bank account to be
designated in writing by the Licensor.

	4.2	 	If the Licensee fails to pay any sum due under this Agreement by the due date, the Licensor
shall be entitled to charge interest on that sum at the rate of 2% above the base lending rate
from time to time of National Westminster Bank Plc. Such interest shall accrue on a daily
basis and be compounded quarterly.
	 
	4.3	 	Licensee shall permit Licensor by its duly authorised representatives once a Year on a date
agreed between Licensor and Licensee to enter upon any premises where the Goods are being
manufactured, packaged or stored or from which the Services are being provided and to have
access to (including the right to review and take copies of) all relevant books, records,
accounts and other information necessary or appropriate to enable Licensor to verify that
Licensee is in due compliance with its obligations under this Agreement, and comply promptly
with all instructions and directions issued by Licensor (or its representatives) on the basis
of such inspection to ensure such compliance. Such records shall, for the avoidance of doubt,
constitute Confidential Information of Licensee (or any Sub-Licensee, as appropriate).

	5.	 	INTELLECTUAL PROPERTY RIGHTS
	 
	5.1	 	Ownership

	 	(a)	 	Licensee acknowledges Licensor’s ownership of and/or right to license the Trade
Marks and the Domain Names, and acknowledges that Licensee’s use of the Trade Marks and
Domain Names pursuant to this Agreement shall not give Licensee any right, title or
interest in or to the same, save the right to use the same as expressly permitted by
this Agreement. Without limitation to the foregoing, Licensee acknowledges and agrees
that all goodwill in or associated with the Trade Marks and the Domain Names, including
any goodwill generated or arising by or through

7

 

	 	 	 	Licensee’s activities under this Agreement, shall accrue for the benefit of and
shall belong exclusively to Licensor.

	5.2	 	Infringement of the Trade Marks and Domain Names

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

	6.	 	LIABILITY
	 
	6.1	 	This Clause 6 prevails over all other Clauses and sets forth the entire liability of
Licensor, and the sole and exclusive remedies of Licensee in respect of the performance,
non-performance, purported performance or delay in performance of this Agreement or otherwise
in relation to this Agreement or the entering into or performance of this Agreement.
	 
	6.2	 	Nothing in this Agreement shall limit or exclude Licensor’s liability for the tort of deceit
or for death or personal injury caused by its own negligence, any liability under s2 Consumer
Protection Act 1987 or any other liability if and to the extent that the same may not be
limited or excluded by applicable law.
	 
	6.3	 	Save as provided in Clause 6.2 Licensor shall not have any liability for any loss of revenue,
loss of actual or anticipated profit (including loss of profits on contracts), loss of the use
of

8

 

	 	 	money, loss of anticipated savings, loss of business, loss of opportunity, loss of goodwill,
loss of reputation or for any indirect or consequential loss or damage (whether any such
loss or damage was foreseen, foreseeable, known or otherwise) arising out of or relating to
this Agreement or any collateral contract (including any liability expressly provided for
under this Agreement or arising by reason of the invalidity or unenforceability of any term
of this Agreement), whether such liability arises in contract, tort (including negligence)
or otherwise.

	7.	 	CONFIDENTIALITY
	 
	7.1	 	Each party shall maintain the confidentiality of the other party’s Confidential Information
and shall not, without the prior written consent of the other, use, disclose, copy or modify
the other party’s Confidential Information (or permit others to do so) other than as necessary
for the performance of its rights and obligations under this Agreement.
	 
	7.2	 	Each party undertakes to disclose the other party’s Confidential Information only to those of
its officers, employees, agents and contractors to whom, and to the extent to which, such
disclosure is necessary for the performance of its rights and obligations under this Agreement
and to procure that such persons are made aware of and agree in writing to observe the
obligations in this Clause 7.
	 
	7.3	 	Each party shall give notice to the other of any unauthorised use or disclosure, or misuse,
theft or other loss, of the other party’s Confidential Information immediately upon becoming
aware of the same.
	 
	7.4	 	The provisions of this Clause 7 shall not apply to information which:

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

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

	8.	 	ASSIGNMENT AND SUB-LICENSING

	8.1	 	Licensor may freely assign or otherwise transfer or deal with any or all of its rights or
obligations under this Agreement without recourse to the Licensee save that Licensor shall
ensure that any purchaser of the Trade Marks or Domain Names shall take an assignment of this
Agreement.
	 
	8.2	 	Save as provided in clause 8.3, Licensee shall not assign, transfer, encumber or otherwise
deal with or transfer any of its rights or obligations under this Agreement without the prior
written consent of Licensor.
	 
	8.3	 	Licensee may sub-license to any of its Holding or Subsidiary Companies any or all of the
rights and licences granted to it under this Agreement provided that:

9

 

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

	9.	 	TERM AND TERMINATION

	9.1	 	This Agreement shall commence on the Effective Date and, unless earlier terminated in
accordance with this Clause 9, shall continue in full force and effect without limit of
period.
	 
	9.2	 	Licensor may terminate this Agreement immediately at any time by written notice to Licensee
if:

	 	(a)	 	either of the parties constituting the Licensee 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 Share Purchase Agreement within thirty (30) days of the due date for payment;
	 
	 	(c)	 	any of the Intra Group Guarantees are enforced against any member of the
Seller’s Group;
	 
	 	(d)	 	either of the parties constituting the Licensee ceases to do business, becomes
unable to pay its debts as they fall due, becomes or is deemed insolvent, has a
receiver, manager, administrator, administrative receiver or similar officer appointed
in respect of the whole or any part of its assets or business, makes any composition or
arrangement with its creditors, takes or suffers any similar action in consequence of
debt, an order or resolution is made for its dissolution or liquidation (other than for
the purpose of solvent amalgamation or reconstruction), enters into liquidation whether
compulsorily or voluntarily or any equivalent or similar action or proceeding is taken
or suffered in any jurisdiction;
	 
	 	(e)	 	either of the parties constituting the Licensee challenges or disputes the
validity or ownership of, or takes any step inconsistent with, any of the Trade Marks
or Domain Names, including by taking any action either directly or indirectly to oppose
the renewal of or to cancel any registration of the Trade Marks or Domain Names;
	 
	 	(f)	 	either of the parties constituting the Licensee ceases to use the Trade Marks
or Domain Names in relation to the Goods and Services in the Territory or ceases to
operate ten (10) or more Borders Stores in the Territory for a continuous period of
twelve (12) months;
	 
	 	(g)	 	either of the parties constituting the Licensee acts in a manner which results
in material damage to the reputation of the Trade Marks or Domain Names;

10

 

	 	(h)	 	the Company undergoes a Change of Control except in relation to a transfer to
an Investor Affiliate;
	 
	 	(i)	 	a Competitor of the Licensor acquires a legal or beneficial interest of 20% or
more in either of the parties constituting the Licensee without the Licensor’s prior
written consent; or
	 
	 	(j)	 	any Sub-Licensee either (i) does any act or fails to take any action if such
act or omission would constitute a material breach of this Agreement if taken by, or
was the responsibility of (as appropriate), Licensee; or (ii) commits a material breach
of its sub-licence which is not remediable or, if remediable, Sub-Licensee has failed
to remedy within thirty (30) days of Licensor notifying Licensee of the relevant
breach.

	9.3	 	This Agreement shall immediately terminate in relation to Borders Books Ireland Limited if
Borders Books Ireland Limited undergoes a Change of Control except in relation to a transfer
to an Investor Affiliate. A termination in such circumstances shall not affect the terms of
this Agreement with Borders (UK) Limited which shall continue on the terms set out herein.
	 
	9.4	 	Upon expiry or termination of this Agreement for any reason:

	 	(a)	 	all rights and licences granted to Licensee under this Agreement shall within
90 days cease immediately, and Licensee shall, subject to the remainder of this Clause
9.3, cease all activities authorised by this Agreement and Licensee shall not
thereafter use or apply the Domain Names or any of the Trade Marks or any marks or
domain names which are confusingly similar, and shall procure that any Sub-Licensee(s)
do likewise;
	 
	 	(b)	 	Licensee shall ensure that all references to the Trade Marks or Domain Names on
its or its Sub-Licensee’s premises, vehicles, business documents or other documents or
materials of any nature are removed and shall remove any reference to the Trade Marks
in its company and/or trading name; and
	 
	 	(c)	 	each party shall promptly return and procure the return to the other party, or,
at the other party’s direction, destroy, all property of the other party (including
without limitation, all Confidential Information) then in its possession, custody or
control and shall not retain any copies of the same.

	9.5	 	Termination of this Agreement for any reason shall not give either party the right to claim
any compensation, indemnity or reimbursement whatsoever from the other by reason of such
termination, but termination shall be without prejudice to any rights or remedies available
to, or any obligations or liabilities accrued to, either party at the effective date of
termination and (subject to clause 8.3(c)) shall not affect any sub-licences granted by
Licensee pursuant to the terms of this Agreement.

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

	11.	 	FURTHER ASSURANCE
	 
	 	 	The parties shall do and execute all such further acts, things and documents as are
reasonably required to give full effect to this Agreement.

11

 

	12.	 	VARIATION, WAIVER AND CONSENT

	12.1	 	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).
	 
	12.2	 	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.
	 
	12.3	 	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.
	 
	13.	 	RIGHTS AND REMEDIES CUMULATIVE
	 
	13.1	 	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.
	 
	13.2	 	The rights, powers and remedies provided by this Agreement are cumulative and are in addition
to any rights, powers and remedies provided by law.
	 
	14.	 	ENTIRE AGREEMENT
	 
	14.1	 	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.
	 
	14.2	 	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.
	 
	14.3	 	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.
	 
	15.	 	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.
	 
	16.	 	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

12

 

	 	 	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.

	17.	 	NOTICES

	17.1	 	Any notice, demand or other communication (“Notice”) to be given by one party to the other
party under this Agreement shall be in writing and signed by or on behalf of the party giving
it. It shall be served by sending it by fax to the number set out in Clause 17.2 or
delivering it by hand, or sending it by pre-paid recorded delivery or special delivery, to the
address set out in Clause 17.2 and in each case marked for the attention of the relevant
addressee set out in Clause 17.2 (or as otherwise notified from time to time in accordance
with the provisions of this Clause 17). Any notice so served by hand, fax or post shall be
deemed to have been duly given:
	 
	 	 	(a)in the case of delivery by hand, when delivered;
	 
	 	 	(b)in the case of fax, at the time of transmission;
	 
	 	 	provided that in each case where delivery by hand or by fax occurs after 6pm on a Business
Day or on a day which is not a Business Day, service shall be deemed to occur at 9am on the
next following Business Day.
	 
	 	 	References to time in this clause are to local time in the country of the addressee.
	 
	17.2	 	The address and fax numbers of the parties for the purpose of Clause 17.1 are as follows:

	 	 	 	 	 
	 

	 	Licensor	 	 
	 
	 	 	 	 
	 

	 	Address:
	 	100 Phoenix Drive

Ann Arbor

MI 48108, USA
	 
	 	 	 	 
	 

	 	Fax:
	 	+1 734 477 1370
	 
	 	 	 	 
	 

	 	For the attention of:
	 	General Counsel
	 
	 	 	 	 
	 

	 	Licensee	 	 
	 
	 	 	 	 
	 

	 	Address:
	 	120 Charing Cross Road

London

WC2H 0JR
	 
	 	 	 	 
	 

	 	Fax:
	 	020 7831 5099
	 
	 	 	 	 
	 

	 	For the attention of:
	 	Mark Farrer-Brown/Bobby Hashemi

	17.3	 	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 17 provided that, such notice
shall only be effective on:

	 	(a)	 	the date specified in the notice as the date on which the change is to take
place; or

13

 

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

	17.4	 	In proving such service it shall be sufficient to prove that the envelope containing such
notice was properly addressed and delivered either to the address shown thereon or that the
facsimile transmission was made and a facsimile confirmation report was received, as the case
may be.
	 
	18.	 	THIRD PARTY RIGHTS
	 
	 	 	Other than Clauses 1.2(e) and 3.12, 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.
	 
	19.	 	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
or enter into any agreement on behalf of any other party, except as expressly set out in
this Agreement.
	 
	20.	 	LIABILITY
	 
	 	 	The obligations of each of the parties constituting the Licensee the under this agreement
are joint and several. If any liability of one but not both of the parties constituting the
Licensee is, or becomes, illegal, invalid or unenforceable in any respect, that shall not
affect or impair the liabilities of the other party constituting the Licensee under this
agreement.
	 
	21.	 	DISPUTES
	 
	21.1	 	The construction, validity and performance of this Agreement shall be governed by the laws of
England and Wales.
	 
	21.2	 	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.

	 	 	 	 	 	 	 
	SIGNED by

	 	 	)	 	 	 
	duly authorised for and on behalf

	 	 	)	 	 	/s/ Edward W. Wilhelm
	 

	 	 	 	 	 	 
	of BORDERS PROPERTIES, INC.

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	SIGNED by

	 	 	)	 	 	 
	duly authorised for and on behalf

	 	 	)	 	 	/s/ Luke Johnson
	 

	 	 	 	 	 	 
	of BORDERS (UK) LIMITED

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	SIGNED by

	 	 	)	 	 	 
	duly authorised for and on behalf of

	 	 	)	 	 	/s/ Luke Johnson
	 

	 	 	 	 	 	 
	BORDERS BOOKS IRELAND LIMITED

	 	 	)	 	 	 

14

 

SCHEDULE 1

THE TRADE MARKS

	 	 	 	 	 	 	 	 	 
	Country	 	Mark	 	Class	 	Reg/Appln No.	 	Appln/Renewal Date
	UK
	 	BORDERS	 	9, 16	 	1549748	 	06/10/10
	UK
	 	BORDERS	 	35, 42	 	2033339	 	13/09/15
	UK
	 	BORDERS	 	41	 	2068567	 	12/04/16
	UK
	 	BORDERS BOOKS AND MUSIC	 	9, 16	 	1550504	 	13/10/10
	UK
	 	BORDERS EXPRESS	 	35	 	Pending	 	13/08/07
	IRELAND
	 	BORDERS	 	9, 16, 42	 	201836	 	01/07/16
	IRELAND
	 	BORDERS	 	42	 	202047	 	01/07/16
	CTM
	 	BORDERS	 	9, 16, 35, 42	 	38034	 	01/04/16
	CTM
	 	BORDERS	 	35	 	2197143	 	27/04/11
	CTM
	 	BORDERS EXPRESS	 	35	 	6194245	 	13/08/07

15

 

SCHEDULE 2

GOODS AND SERVICES

	1.	 	Retail book store services.
	 
	2.	 	Retail music store services.
	 
	3.	 	Retail of books and printed materials (excluding, for the avoidance of doubt, publishing of
books and printed materials).
	 
	4.	 	Multimedia products.
	 
	5.	 	Tote bags.
	 
	6.	 	Online services enabling customers to view and purchase books, printed materials and
music-related products from Internet websites using the Domain Names (as defined in this
Agreement).
	 
	7.	 	Queue line products such as gifts and board games that are ancillary to the sale of the items
listed in paragraphs 1-5 above.
	 
	8.	 	Toys (for example, Fun Learning) that are ancillary to the sale of the items listed in
paragraphs 1-5 above.
	 
	9.	 	Water/confectionary goods that are ancillary to the sale of the items listed in paragraphs
1-5 above.

16

 

SCHEDULE 3

LICENSOR’S TRADE MARK USAGE CRITERIA

(as referred to in clause 3.1).

17

 

SCHEDULE 4

LICENSOR’S OPERATIONAL CRITERIA

(as referred to in clause 3.2)

18

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00130-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00130-of-00352.parquet"}]]