Document:

exv10w42

Exhibit 10.42

Transition Services Agreement

Borders International Services, Inc.

Borders Australia Pty Ltd

Borders New Zealand Limited

Borders Pte. Ltd

Spine Newco Pty Limited

Spine Newco (NZ) Limited

For the provision of transitional services in

connection with the sale of the entire issued

share capital of Borders Australia Pty Ltd,

Borders New Zealand Limited and Borders Pte. Ltd

Baker & McKenzie

Solicitors

Level 27, AMP Centre

50 Bridge Street

SYDNEY NSW 2000

Tel: (02) 9225-0200

Fax: (02) 9225-1595

 

 

CONTENTS

	 	 	 	 	 	 	 
	Clause	 	 	 	Page
	1.

	 	Interpretation
	 	 	3	 
	2.

	 	Provision and duration of Transitional Services and Recipient Services
	 	 	7	 
	3.

	 	Co-operation and Management
	 	 	7	 
	4.

	 	Dispute Resolution
	 	 	8	 
	5.

	 	Fees and Other Costs
	 	 	8	 
	6.

	 	Invoicing and Late Payments
	 	 	9	 
	7.

	 	Other Obligations
	 	 	10	 
	8.

	 	Limitation of Liability
	 	 	10	 
	9.

	 	Confidentiality
	 	 	12	 
	10.

	 	Assignment and Sub-contracting
	 	 	12	 
	11.

	 	Force Majeure
	 	 	13	 
	12.

	 	Term AND Termination
	 	 	13	 
	13.

	 	Notices
	 	 	15	 
	14.

	 	Invalid or unenforceable provisions
	 	 	16	 
	15.

	 	Waiver and exercise of rights
	 	 	16	 
	16.

	 	Amendment
	 	 	16	 
	17.

	 	Counterparts
	 	 	16	 
	18.

	 	Further assurances
	 	 	17	 
	19.

	 	Assignment
	 	 	17	 
	20.

	 	Entire agreement
	 	 	17	 
	21.

	 	Rights cumulative
	 	 	17	 
	22.

	 	Consents and Approvals
	 	 	17	 
	23.

	 	Jurisdiction
	 	 	17	 
	24.

	 	Service of process
	 	 	17	 
	25.

	 	Currency Conversion
	 	 	18	 
	26.

	 	Governing Law
	 	 	18	 

	 	 	 	 	 
	SCHEDULE 1
	 	 	 	 
	TERM SHEETS

	 	 	19	 
	A — Financial Reporting

	 	 	19	 
	B — Statutory Accounts Reporting

	 	 	21	 
	C — Property Accounting

	 	 	22	 
	D — Accounts Payable (A/P)

	 	 	23	 
	E — Bank Reconciliation

	 	 	25	 
	F — Treasury

	 	 	26	 
	G — Lease Accounting

	 	 	27	 
	H — Merchandise Reporting

	 	 	28	 
	I — Margin Accounting and Reporting

	 	 	30	 
	J — Inventory Accounting and Control

	 	 	31	 
	K — Tax

	 	 	32	 
	L — IT

	 	 	33	 
	M — Merchandising

	 	 	35	 
	N — Merchandise Operations

	 	 	36	 
	O — Transportation

	 	 	38	 
	P— Communications

	 	 	39	 
	Q — Store Operations

	 	 	40	 
	R — Management

	 	 	41	 
	SCHEDULE 2
	 	 	 	 
	RECIPIENT SERVICES

	 	 	42	 

 

 

DATE:

PARTIES:

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

	(2)	 	BORDERS AUSTRALIA PTY LTD (ABN 31 082 194 287), a company incorporated under the laws of
Australia and having its registered office c/o Baker & McKenzie, Level 27, AMP Centre, 50
Bridge Street, Sydney NSW 2000 (“Borders Australia”);

	(3)	 	BORDERS NEW ZEALAND LIMITED, a company incorporated under the laws of New Zealand and having
its registered office c/o Minter Ellison Rudd Watts, Lumley Centre, 88 Shortland Street,
Auckland, New Zealand (“Borders NZ”); and

	(4)	 	BORDERS PTE. LTD., a company incorporated under the laws of Singapore with registered number
199705017Z and having its registered office at 60B Martin Road, 02 08B Singapore Trademart 239
067, Singapore (“Borders Singapore”);

	(5)	 	SPINE NEWCO PTY LIMITED, a company incorporated under the laws of Australia ACN 127 667 314
and having its registered office at Level 31, 126 Phillip Street, Sydney, NSW 2000 (the “First
Purchaser”); and

	(6)	 	SPINE NEWCO (NZ) LIMITED, a company incorporated under the laws of New Zealand NZ Company
Number 2010994 and having its registered office at c/o Quigg Partners, Level 7, 28 Brandon
Street, Wellington, New Zealand (the “Second Purchaser”).
	 
	 	 	(First Purchaser and Second Purchaser being each a “Purchaser” and collectively the
“Purchasers”)

RECITALS

	(A)	 	The Seller has agreed to sell and the Purchasers have agreed to purchase the Shares on the
terms set out in the Sale and Purchase Agreement.

	(B)	 	In connection with the sale and purchase of the Shares, the Recipients desire the provision
of certain Transitional Services and the Provider is prepared to provide certain Transitional
Services to the Recipients for a limited period on the terms set out in this Agreement.

	(C)	 	Further, the Providers desire the provision of certain Recipient Services and the Recipients
are prepared to provide certain Recipients Services to the Provider and/or the Seller for a
limited period on the terms set out in this Agreement.

IT IS AGREED as follows:

	1.	 	INTERPRETATION

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

	 	 	 
	“Agreement”

	 	this agreement and the recitals and Schedules to it;
	 
	 	 
	“ARW”

	 	has the same meaning as in the Purchasing Agreement;

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	“Brand Licence Deed”

	 	the deed entered into by Borders Properties, Inc.,
and the First Purchaser effecting the grant of a
licence to the First Purchaser to use certain
intellectual property rights of Borders Properties,
Inc.;
	 
	 	 
	“Breach of Duty”

	 	the breach of any (i) obligation arising from the
express or implied terms of a contract to take
reasonable care or exercise reasonable skill in the
performance of the contract; or (ii) common law
duty to take reasonable care or exercise reasonable
skill (but not any stricter duty);
	 
	 	 
	“Business”

	 	has the same meaning as in the Sale and Purchase
Agreement;
	 
	 	 
	“Business Day”

	 	a day (excluding Saturday and Sunday) on which the
banks are generally open for business in Ann Arbor,
Michigan, Sydney, Auckland and Singapore for the
transaction of normal banking business;
	 
	 	 
	“Commencement Date”

	 	has the same meaning as Completion Date in the Sale
and Purchase Agreement;
	 
	 	 
	“Completion”

	 	has the same meaning as in the Sale and Purchase
Agreement;
	 
	 	 
	“Control”

	 	has the same meaning as in section 50AA of the
Corporations Act 2001 (Cth);
	 
	 	 
	“Encumbrances”

	 	means any mortgage, charge, pledge, lien,
encumbrance, assignment, hypothecation, security
interest, title retention, preferential right,
trust arrangement, contractual right of setoff or
any other security agreement or arrangement in
favour of any person.
	 
	 	 
	“GST”

	 	with respect to Australia has the meaning given to
it in the A New Tax System (Goods and Services Tax)
Act 1999 (Cth) or any like tax and with respect to
New Zealand or Singapore means the tax payable
pursuant to the Goods and Services Tax Act 1985
(NZ) and the Goods and Services Tax Act, Chapter
117A of Singapore respectively and any like tax;
	 
	 	 
	“Intra-Group Guarantees”

	 	has the same meaning as in the Sale and Purchase
Agreement;
	 
	 	 
	“Liability”

	 	liability in or for breach of contract, Breach of
Duty, misrepresentation, restitution or any other
cause of action whatsoever relating to or arising
under or in connection with this Agreement,
including without limitation liability expressly
provided for under this Agreement or arising by
reason of the invalidity or unenforceability of any
term of this Agreement (and for the purposes of
this definition, all references to “this Agreement”
shall be deemed to include any collateral
contract);
	 
	“Provider Competing

	 	has the meaning given to that term in the Purchasing

4

 

	 	 	 
	Business”

	 	Agreement;
	 
	 	 
	“Purchasing Agreement”

	 	has the same meaning as in the Sale and Purchase
Agreement;
	 
	 	 
	“Recipients”

	 	Borders Australia, Borders NZ and Borders Singapore;
	 
	 	 
	“Recipient Service Period”

	 	the period set out in Item 5 of Schedule 2;
	 
	 	 
	“Recipient Services”

	 	the services set out in Schedule 2;
	 
	 	 
	“Sale and Purchase
Agreement”

	 	the agreement entered into between the Seller and
the Purchasers effecting the sale of the Shares;
	 
	 	 
	“Seller”

	 	Borders Group, Inc, a company incorporated under
the laws of Michigan, USA and having its registered
office at 100 Phoenix Drive, Ann Arbor, Michigan
48108 USA;
	 
	 	 
	“Seller’s Group”

	 	has the same meaning as in the Sale and Purchase
Agreement;
	 
	 	 
	“Service Managers”

	 	the respective parties’ representatives responsible
for managing a particular Transitional Service or
the Recipient Services and identified as such by
the relevant party;
	 
	 	 
	“Shares”

	 	the issued share capital of the Recipients;
	 
	 	 
	“Term Sheet”

	 	a particular section of Schedule 1 (Term Sheets),
identified as such, which describes particular
term(s) relating to a particular Transitional
Service(s);
	 
	 	 
	“Transaction Document”

	 	has the same meaning as in the Sale and Purchase
Agreement;
	 
	 	 
	“Transitional Period”

	 	means the term of this Agreement; and
	 
	 	 
	“Transitional Service(s)”

	 	each of those services described in Schedule 1
(Term Sheets).

	1.2	 	In this Agreement, unless the context otherwise requires:

	 	  (a)	 	a reference:

	 	(i)	 	to the singular includes the plural and the other way round;
	 
	 	(ii)	 	to a gender includes all genders;
	 
	 	(iii)	 	to a document (including this Agreement) is a reference to
that document (including any Schedules and Annexures,) as amended,
consolidated, supplemented, novated or replaced;
	 
	 	(iv)	 	to an agreement includes any deed, agreement or legally
enforceable arrangement or understanding whether written or not;

5

 

	 	(v)	 	to parties means the parties to this Agreement and to a party
means a party to this Agreement;
	 
	 	(vi)	 	to a notice means all notices, approvals, demands, requests,
nominations or other communications given by one party to another under or in
connection with this Agreement;
	 
	 	(vii)	 	to a person (including a party) includes:

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

	 	(viii)	 	to a law:

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

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

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

6

 

	 	 (h)	 	this Agreement must not be construed adversely to a party solely because that
party was responsible for preparing it;
	 
	 	 (i)	 	to $ of dollars are references to the lawful currency of the United States of
America at the date of this Agreement.

	2.	 	PROVISION AND DURATION OF TRANSITIONAL SERVICES AND RECIPIENT SERVICES

	2.1	 	The Provider shall supply or procure the supply of, and the Recipients shall pay for, the
Transitional Services.

	2.2	 	Each Transitional Service shall be provided during the Transitional Period (unless terminated
earlier in accordance with clause 12) provided that the Recipients and the Purchaser shall use
their reasonable endeavours to transition the Transitional Services away from the Provider as
soon as possible and in any event before the end of the Transitional Period.

	2.3	 	If during the term of this Agreement, the Recipients require additional services from the
Provider (other than the Transitional Services described in Schedule 1), the Recipients and
the Provider shall meet and discuss the Recipients’ requirements for such services. If the
Provider agrees to provide such requested services and the Recipients and Provider agree on
the cost of such additional services, the Recipients and the Provider shall amend this
Agreement to incorporate an additional Term Sheet in Schedule 1 that sets out all relevant
details of the additional services. The terms of this Agreement shall apply to the provision
and receipt of such additional services.

	2.4	 	In addition to the Transitional Services, the Provider, in its absolute discretion and on
such terms as it may determine, may from time to time share knowledge relating to the Business
(including retailing best practices, ways to exploit new channels to market (e.g. print on
demand) and experience with loyalty schemes) with the Recipients.

	2.5	 	Nothing in this Agreement shall prevent the Provider from providing services of a similar
nature to the Transitional Services to any other person.

	2.6	 	From the Commencement Date for the Recipient Service Period, the Recipients shall supply or
procure the supply of, and the Provider shall pay for, the Recipient Services to the Provider
and the Seller. The Provider and the relevant Recipients shall meet and discuss, as soon as
reasonably practicable before the end of the Recipient Service Period, any continuing
requirements of the Provider and/or the Seller’s for the Recipient Services and the services
contemplated under section 2.7 below and, if the relevant Recipients agree, the terms on which
such services will be provided after the Recipient Service Period ends.

	2.7	 	If during the term of this Agreement, the Provider and/or the Seller requires additional
services from the Recipients (other than the Recipient Services described in Schedule 2), the
Recipients and the Provider shall meet and discuss the Provider’s and/or Seller’s requirements
for such services. If the Recipients agree to provide such requested services and the
Recipients and Provider agree on the cost of such additional services, the Recipients and the
Provider shall amend this Agreement to incorporate additional wording in Schedule 2 that sets
out all relevant details of the additional services. The terms of this Agreement shall apply
to the provision and receipt of such additional services.

	3.	 	CO-OPERATION AND MANAGEMENT

	3.1	 	The parties’ Service Managers shall be responsible for the parties’ respective roles and
obligations, and the co-ordination of all matters, relating to the Transitional Services and
the Recipient Services. All communications, documentation and materials relating to a
particular

7

 

	 	 	Transitional Service or the Recipient Services and sent by the parties shall be sent to both
parties’ Service Manager for that Transitional Service or the Recipient Services.

	4.	 	DISPUTE RESOLUTION

	4.1	 	In the event of any dispute, disagreement or difference of opinion arising out of this
Agreement, its performance or its construction the Service Managers of the Provider and the
Recipients shall use all reasonable efforts to negotiate an amicable resolution in good faith
within twenty (20) Business Days of either party notifying the other of such a dispute,
disagreement or difference of opinion.

	4.2	 	If the Service Managers of the Provider and the Recipients have not met and reached a
resolution or otherwise reached a resolution amicably in accordance with clause 4.1 above,
then the Chief Executives of the Provider and the Recipients shall meet in order to endeavour
to resolve the dispute.

	4.3	 	If the Chief Executives of the Provider and the Recipients are unable to resolve the dispute
within twenty (20) Business Days after meeting, or such other period agreed by the parties in
writing, either party may submit the dispute to arbitration under the Rules for Conduct of
Commercial Arbitration of the Institute of Arbitrators of Australia applicable at the time of
submission.

	4.4	 	The Parties agree that:

	 	(a)	 	everything that occurs before the arbitrator will be in confidence and in
closed session; and
	 
	 	(b)	 	the arbitrator’s determination will be final and binding on the parties.

	5.	 	FEES AND OTHER COSTS

	5.1	 	In consideration for the provision of the Transitional Services, the Recipients shall pay to
the Provider:

	 	(a)	 	the fees and other charges, if any, set out in Schedule 1 (Term Sheets); and
	 
	 	(b)	 	any reasonable additional third-party costs incurred by the Provider in
connection with the provision of the Transitional Services by the Provider to the
Recipients provided that:

	 	(i)	 	the Provider must seek the approval of the Recipients prior to
incurring any individual third-party cost of greater than $5,000;
	 
	 	(ii)	 	the Provider must act reasonably in retaining documentary
evidence (such as receipts) of third-party costs incurred; and
	 
	 	(iii)	 	if the relevant Recipient does not give its approval the
Provider shall immediately be released from any obligation to provide the
relevant Transitional Services to the extent the Provider is not able to
perform the relevant Transitional Services without incurring the third party
costs.

	5.2	 	In consideration for the provision of the Recipient Services, the Provider shall pay to the
Recipients:

	 	(a)	 	the fees and other charges, if any, set out in Schedule 2 (Recipient Services);
and

8

 

	 	 (b)	 	any additional third-party costs incurred on behalf of the Provider or by the
Recipients in connection with the provision of the Recipient Services by the Recipients
to the Provider provided that:

	 	(i)	 	the Recipient must seek the approval of the Provider prior to
incurring any individual third-party cost of greater than $5,000;
	 
	 	(ii)	 	the Recipient must act reasonably in retaining documentary
evidence (such as receipts) of third-party costs incurred; and
	 
	 	(iii)	 	if the Provider does not give its approval the relevant
Recipient shall immediately be released from any obligation to provide the
relevant Recipient Services to the extent the relevant Recipient is not able to
perform the relevant Recipient Services without incurring the third party
costs.

	5.3	 	Unless otherwise stated, all sums referred to in this Agreement are exclusive of GST. If GST
is payable as a consequence of any supply made (or deemed to be made) by one party to the
other in connection with this Agreement, the party receiving the supply must pay to the party
making the supply an amount equal to the GST payable in respect of the supply (“GST Amount”),
in addition to the consideration required to be paid under any other provision of this
Agreement and the supplier will provide the recipient with a tax invoice for the GST Amount at
the time the supplier issues the invoice for the consideration for the relevant supply. Each
party must ensure that each invoice it presents to another party under this Agreement in
respect of any GST Amount is a valid tax invoice.

	5.4	 	Terms used in clause 5.3 (including “supply”, “consideration” and “tax invoice”) have the
same meaning as defined in the A New Tax System (Goods and Services Tax) Act 1999 (Cth).

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

	6.	 	INVOICING AND LATE PAYMENTS

	6.1	 	The Provider will be entitled to invoice the Recipients on or after the Commencement Date for
the fees payable under clause 5.1 (Fees and Other Costs). Invoices will be issued by the
Provider on a monthly basis in advance for the Transitional Services that will be provided to
the Recipients in the month following the date of the invoice. The Recipients will pay all
invoices within forty (40) days of receipt. For the avoidance of doubt, unless otherwise
specified in this Agreement, all invoices and payments will be in US dollars.

	6.2	 	The Recipients will be entitled to invoice the Provider for the fees payable under clause 5.2
(Fees and Other Costs). Invoices will be issued by the Recipients on a monthly basis in
advance for the Recipient Services that will be provided to the Provider and/or the Seller in
the month following the date of the invoice. The Provider will pay all invoices within forty
(40) days of receipt.

	6.3	 	All payments made under this Agreement shall be so made without set-off, deduction or
withholding save as required by law, other than in respect of the fees payable by the Provider
in relation to the Recipient Services, which may be set off against fees owed by the
Recipients to the Provider in relation to the Transitional Services.

9

 

	6.4	 	If any party which is required to pay any sum under this Agreement fails to pay any sum
payable by it under this Agreement on the due date for payment (the “Defaulting Party”), it
shall pay interest on such sum for the period from and including the due date up to the date
of actual payment (after as well as before judgement) in accordance with clauses 6.5 and 6.6.

	6.5	 	The Defaulting Party shall pay interest at the annual rate which is the aggregate of 2% per
annum and the base rate from time to time of Australia and New Zealand Banking Group Limited.

	6.6	 	Interest under this clause 6 shall accrue on the basis of the actual number of days elapsed
and a 365-day year and shall be paid by the Defaulting Party on demand. Unpaid interest shall
compound monthly.

	7.	 	OTHER OBLIGATIONS

	7.1	 	Each party undertakes to the other that it will not alter, corrupt or damage in any way nor
extract or add to in any unauthorised manner any data belonging to another and held on any
computer or other system used for the purposes of supplying or receiving the Transitional
Services or Recipient Services.

	7.2	 	The Provider will provide the Transitional Services with reasonable skill and care.
	 
	7.3	 	The Recipients will provide the Recipient Services with reasonable skill and care.
	 
	7.4	 	The Recipients shall only use the Transitional Services in relation to the Business.

	7.5	 	The Recipients shall be responsible for project managing the orderly transfer of
responsibility for the Transitional Services at the end of the Transitional Period.

	7.6	 	The Provider agrees to use all reasonable endeavours to assist the Recipient with the
transfer of the Transitional Services contemplated in clause 7.5

	8.	 	LIMITATION OF LIABILITY

	8.1	 	This clause 8 prevails over all other clauses and Schedules in this Agreement and sets forth
the entire liability of the parties, and their sole and exclusive remedies in respect of:

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

	8.2	 	Nothing in this Agreement shall exclude or limit any party’s Liability (i) for fraud or tort
of deceit; (ii) for death or personal injury in Australia caused by its Breach of Duty; (iii)
for any other Liability which cannot be excluded or limited by applicable law.

	8.3	 	Subject to clause 8.2 and to the extent permitted by law, the Provider acknowledges and
agrees that any Liability of the Recipients in respect of the provision of, or failure to
provide, the Recipient Services howsoever arising is excluded unless and to the extent that
any insurance operates to, and does, indemnify the Provider for such liability.

	8.4	 	To the full extent permitted by law, the Provider and the Recipients exclude all
representations, warranties, terms and conditions, whether express or implied (and including
those implied by statute, custom, law or otherwise), except as expressly set out in this
Agreement. Certain legislation, including the Trade Practices Act 1974 (Cth), may imply
warranties or conditions or impose obligations upon the Provider or the Recipients which

10

 

	 	 	cannot be excluded, restricted or modified or cannot be excluded, restricted or modified
except to a limited extent. This Agreement must be read subject to these statutory
provisions. If these statutory provisions apply, to the extent to which the Provider and
the Recipients are entitled to do so, the Provider or the Recipient (as the case may be)
limits its liability in respect of any claim under those provisions to:

	 	(a)	 	in the case of goods, at the Provider’s or the Recipients’ option (as the case
may be):

	 	(i)	 	the replacement of the goods or the supply of equivalent goods;
	 
	 	(ii)	 	the repair of the goods;
	 
	 	(iii)	 	the payment of the cost of replacing the goods or of acquiring
equivalent goods; or
	 
	 	(iv)	 	the payment of the cost of having the goods repaired; and

	 	(b)	 	in the case of services, at the Provider’s or the Recipients’ option (as the
case may be):

	 	(i)	 	the supplying of the services again; or
	 
	 	(ii)	 	the payment of the cost of having the services supplied again.

	8.5	 	Save as provided in clauses 8.2 and 8.4 above, neither the Provider nor the Recipients shall
have Liability to the other for (i) loss of actual or anticipated profits; (ii) loss of
contracts; (iii) loss of the use of money; (iv) loss of opportunity; (v) loss of goodwill;
(vi) loss of reputation; or (vii) any indirect or consequential loss, and such Liability is
excluded whether it is foreseeable, known, foreseen or otherwise. For the avoidance of doubt,
clauses 8.5(i)- 8.5(vii) apply whether such losses are direct, indirect, consequential or
otherwise.

	8.6	 	Subject to clauses 8.2 and 8.4 above, the total aggregate Liability of the Provider in
connection with the provision of, failure to provide, or delay in providing, a Transitional
Service including, for the avoidance of doubt, where the liability arises as a result of the
provision, failure to provide, or delay in providing a Transitional Service by a
sub-contractor of the Provider (as described in clause 8.7) shall not exceed the aggregate
amounts payable in respect of the relevant Transitional Service. Subject to clauses 8.2 and
8.4 above, the total aggregate Liability of the Recipients in connection with the provision
of, failure to provide, or delay in providing, the Recipient Services shall not exceed the
aggregate amounts payable in respect of the Recipient Services. The limitation of Liability
under this clause 8.6 has effect in relation both to any Liability expressly provided for
under this Agreement and to any Liability arising by reason of the invalidity or
unenforceability of any term of this Agreement. This clause 8.6 shall not apply to the
Provider’s or the Recipients’ liability to pay the charges pursuant to clause 5.1 (Fees and
Other Costs).

	8.7	 	The parties acknowledge that certain Transitional Services will be provided by
sub-contractors of the Provider under existing contracts between the Provider and such
sub-contractors.

	8.8	 	Notwithstanding clause 15 below, in the event that the Provider or the Recipients fail to
notify the other party of a breach of this Agreement within five (5) Business Days of becoming
aware of the same, the Providers or the Recipients (as the case may be) shall be deemed to
have waived their entitlement to claim for losses arising from the breach to the extent that
the failure to notify the other party of the breach within the time specified has prejudiced
the ability of the other party to rectify the breach and to minimize any loss suffered by the
Provider or the Recipients (as the case may be).

11

 

	8.9	 	The Transitional Services provided to Borders NZ pursuant to this Agreement are for business
purposes and that the parties exclude the application of the Consumer Guarantees Act 1993
(NZ).

	9.	 	CONFIDENTIALITY

	9.1	 	Each party shall treat as strictly confidential and will not disclose any information
received or obtained by it or its officers, employees, agents or advisers as a result of
entering into or performing this Agreement which relates to:

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

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

	 	(i)	 	required by the law of any jurisdiction;
	 
	 	(ii)	 	required by any applicable securities exchange, supervisory or
regulatory or governmental body to which the relevant party is subject or
submits, wherever situated, whether or not the requirement for disclosure has
the force of law provided that in the case of a requirement for disclosure that
does not have the force of law, legal counsel deems the disclosure to be
appropriate;
	 
	 	(iii)	 	made to the relevant party’s shareholders, professional
advisers, auditors or bankers or the professional advisers, auditors or bankers
of any other member of the relevant party’s group of companies; or
	 
	 	(iv)	 	of information that has already come into the public domain
through no fault of the relevant party or any other member of that party’s
group of companies.

	9.2	 	Upon termination or expiry of this Agreement (for whatever reason), each party shall return
all Confidential Information of the other parties within its possession, custody or control.

	9.3	 	Notwithstanding clause 9.2, each party may retain such Confidential Information that it is
required to do so by law and to the extent such Confidential Information forms part of board
or investment committee papers.

	10.	 	ASSIGNMENT AND SUB-CONTRACTING

	10.1	 	Subject to clause 10.2 and 10.3 (below), the rights, benefits and obligations of the parties
under this Agreement shall not be assigned, transferred or otherwise disposed of in whole or
in part without the prior written consent of the other parties, such consent not to be
unreasonably withheld or delayed.

	10.2	 	The Provider may sub-contract to a third party to supply the Transitional Services provided
that, subject to clause 8.7 above, the Provider remains responsible to the Recipients for its
obligations under this Agreement.

12

 

	10.3	 	The Recipients may sub-contract to a third party to supply the Recipient Services provided
that the Recipients remain responsible to the Provider for their obligations under this
Agreement.

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

	11.	 	FORCE MAJEURE

	11.1	 	The party affected shall be excused performance of its obligations under or pursuant to this
Agreement if, and to the extent that, performance of such obligations is delayed, hindered or
prevented by acts, events, non-happenings, omissions or accidents (including, without
limitation, acts of God, war, hostilities, riot, fire, explosion, accident, flood, sabotage,
lack of adequate fuel, power, raw materials, containers, transportation or labour, strike,
lock-out or injunction (provided that neither party shall be required to settle a labour
dispute against its own best judgement), changes to governmental laws, regulations or orders)
which affect the performance of this Agreement and which in each case are beyond the
reasonable control of the party affected.

	12.	 	TERM AND TERMINATION

	12.1	 	This Agreement shall commence on the Commencement Date and, subject to clauses 12.2 and 12.3
below, shall remain in full force and effect until twelve (12) months from Completion or, if
earlier, the date on which all Transitional Services have been terminated.

	12.2	 	Notwithstanding clause 12.1, the Recipient may terminate each Transitional Service in
accordance with the relevant termination notice provision in Schedule 1.

	12.3	 	Upon such termination contemplated in clause 12.2 the fees relating to that Transitional
Service shall cease, and an appropriate adjustment to the amount payable shall be credited to
the Recipients.

	12.4	 	The Provider shall be entitled to terminate the Recipient Services on the notice period set
out in Schedule 2, and upon such termination the fees relating to the Recipient Services shall
cease, and an appropriate adjustment to the amount payable shall be credited to the Provider.

	12.5	 	The Provider may terminate this Agreement forthwith by written notice to the other parties in
the event that a Purchaser or a Recipient: becomes insolvent; has a liquidator, administrator,
administrative receiver, receiver or any similar official appointed in respect of the whole or
any part of its assets; has an order or resolution made or passed for winding-up; enters, or
resolves to enter into, an arrangement, compromise or composition generally with its
creditors; takes any equivalent action, or any equivalent action occurs in any other
jurisdiction; or shall cease to carry on business.

	12.6	 	The Purchaser and/or a Recipient may terminate this Agreement forthwith by written notice to
the Provider in the event that the Provider: becomes insolvent; has a liquidator,
administrator, administrative receiver, receiver or any similar official appointed in respect
of the whole or any part of its assets; has an order or resolution made or passed for
winding-up; enters, or resolves to enter into, an arrangement, compromise or composition
generally with its creditors; takes any equivalent action, or any equivalent action occurs in
any other jurisdiction; or shall cease to carry on business.

	12.7	 	The Provider may terminate this Agreement immediately at any time by written notice to the
Recipients if:

13

 

	 	(a)	 	a Recipient commits a material breach of this Agreement (including any breach
of its payment obligations under this Agreement) which is not remediable, or if
remediable, it has failed to remedy within thirty (30) days of receiving written notice
requiring it to do so;
	 
	 	(b)	 	a failure by a Recipient to pay any undisputed fee or charge under this
Agreement within 30 days of the date that it falls due under the terms of this
Agreement;
	 
	 	(c)	 	a Recipient commits a material breach of the Purchasing Agreement or the Sale
and Purchase Agreement (including any breach of its payment obligations thereunder)
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 by Borders Group, Inc;
	 
	 	(d)	 	Borders Properties, Inc terminates the Brand Licence Deed pursuant to clause
9.2 of the Brand Licence Deed;
	 
	 	(e)	 	an obligation arises on the part of a member of the Seller’s Group to make
payment (which, for the avoidance of doubt, shall not include any payment made by a
member of the Seller’s Group in connection with the granting of a release of the
relevant member of the Seller’s Group from any Intra-Group Guarantee) under an
Intra-Group Guarantee provided that the Provider may not terminate this Agreement
pursuant to this clause 12.7(e) if the relevant member of the Seller’s Group is paid by
a Purchaser under the indemnity in paragraph 2 of Schedule 3 to the Sale and Purchase
Agreement;
	 
	 	(f)	 	at any time there is a change in Control of any of Borders Australia, Borders
NZ, Borders Singapore, ARW or any Purchaser, other than as contemplated by a
Transaction Document or where:

	 	(i)	 	the relevant change of Control does not result in a Provider
Competing Business acquiring Control of any of Borders Australia, Borders NZ,
Borders Singapore, ARW or any Purchaser; or
	 
	 	(ii)	 	where the Provider has provided its prior written consent to
the change in Control; or

	 	(g)	 	a Provider Competing Business acquires (directly or indirectly) a legal or
beneficial interest of 20% or more in any of Borders Australia, Borders NZ, Borders
Singapore, ARW or any Purchaser without the Provider’s prior written consent.

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

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

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

          shall continue in force following termination or expiry of this Agreement (for whatever
reason).

14

 

	13.	 	NOTICES

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

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

	 	 	provided that in each case where delivery by fax or by hand occurs after 6pm on a Business
Day or on a day which is not a Business Day, service shall be deemed to occur at 9am on the
next following Business Day.
	 
	 	 	References to time in this clause are to local time in the country of the addressee.
	 
	13.2	 	The addresses and fax numbers of the parties for the purpose of clause 13.1 are as follows:

	 	 	 	 	 	 	 
	 

	 	(a)
	 	Provider	 	 
	 

	 	 	 	Address:
	 	100 Phoenix Drive
	 

	 	 	 	 	 	Ann Arbor MI 48108
	 

	 	 	 	 	 	United States of America
	 
	 	 	 	 	 	 
	 

	 	 	 	Fax:
	 	+1 734 477 1370
	 
	 	 	 	 	 	 
	 

	 	 	 	For the attention of:
	 	General Counsel
	 
	 	 	 	 	 	 
	 

	 	 	 	With a copy to:
	 	Baker &McKenzie
	 

	 	 	 	Address:
	 	Level 27, 50 Bridge Street
	 

	 	 	 	 	 	Sydney NSW 2000
	 
	 	 	 	 	 	 
	 

	 	 	 	Fax:
	 	+61 2 9225 1595
	 
	 	 	 	 	 	 
	 

	 	 	 	For the attention of:
	 	Steven Glanz
	 
	 	 	 	 	 	 
	 

	 	(b)
	 	Recipients	 	 
	 

	 	 	 	Address:
	 	Level 14, 379 Collins Street
	 

	 	 	 	 	 	Melbourne, Victoria 3000
	 

	 	 	 	 	 	Australia
	 
	 	 	 	 	 	 
	 

	 	 	 	Fax:
	 	+61 3 8623 1149
	 
	 	 	 	 	 	 
	 

	 	 	 	For the attention of:
	 	the Managing Director
	 
	 	 	 	 	 	 
	 

	 	 	 	With a copy to:
	 	Clayton Utz
	 
	 	 	 	 	 	 
	 

	 	 	 	Address:
	 	Level 19, 1 O’Connell Street
	 

	 	 	 	 	 	Sydney NSW 2000
	 
	 	 	 	 	 	 
	 

	 	 	 	Fax:
	 	+61 2 8220 6700
	 
	 	 	 	 	 	 
	 

	 	 	 	For the attention of:
	 	Philip Kapp

15

 

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

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

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

	14.	 	INVALID OR UNENFORCEABLE PROVISIONS
	 
	14.1	 	If a provision of this Agreement is invalid or unenforceable in a jurisdiction:

	 	(a)	 	it is to be read down or severed in that jurisdiction to the extent of the
invalidity or unenforceability; and
	 
	 	(b)	 	it does not affect the validity or enforceability of:

	 	(i)	 	that provision in another jurisdiction; or
	 
	 	(ii)	 	the remaining provisions.

	15.	 	WAIVER AND EXERCISE OF RIGHTS

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

	16.	 	AMENDMENT
	 
	16.1	 	This Agreement may be amended only by a document signed by all parties.
	 
	17.	 	COUNTERPARTS
	 
	17.1	 	This Agreement may be signed in counterparts and all counterparts taken together constitute
one document.

16

 

	18.	 	FURTHER ASSURANCES

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

	19.	 	ASSIGNMENT

	19.1	 	Subject to clause 19.2, a party must not transfer, assign, create an interest in or deal in
any other way with any of its rights under this Agreement without the prior written consent of
the other parties.

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

	20.	 	ENTIRE AGREEMENT

	20.1	 	This Agreement represents the whole and only agreement between the parties in relation to the
provision of the Transitional Services and the Recipient Services and supersede any previous
agreement (whether written or oral) between all or any of the parties in relation to the
subject matter of any such document save that nothing in this Agreement shall exclude any
liability for, or remedy in respect of, fraudulent misrepresentation.

	21.	 	RIGHTS CUMULATIVE

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

	22.	 	CONSENTS AND APPROVALS

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

	23.	 	JURISDICTION

23.1 Each party irrevocably and unconditionally:

	 	(a)	 	submits to the non-exclusive jurisdiction of the courts of New South Wales; and
	 
	 	(b)	 	waives any claim or objection based on absence of jurisdiction or inconvenient
forum.

	24.	 	SERVICE OF PROCESS

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

	 	(a)	 	if originating process or a subpoena to be served on a company or registered
body by being sent by post to or left at its registered office, and in all other cases
at its address for service of notices under clause 13; or
	 
	 	(b)	 	in any other way permitted by law.

17

 

	25.	 	CURRENCY CONVERSION

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

	26.	 	GOVERNING LAW
	 
	26.1	 	This Agreement is governed by the laws of New South Wales, Australia.

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

18

 

SCHEDULE 1

TERM SHEETS

A — Financial Reporting

	 	 	 
	A.1. Description

	 	Procuring financial reporting for the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	$140,000/year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	3 months

Department: International Finance

	 	 	 
	Department description:

	 	Financial Reporting

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	Daily Flash Sales
	 	Reporting	 	D	 	Net sales daily reporting by store
	 
	Maintain FX Rates
in Lawson/EAP
	 	Task	 	D	 	Enter FX rates into Lawson
	 
	Email
Collection/Cashier
	 	Reporting	 	D	 	 
	 
	Email Collection
	 	Reporting	 	D	 	 
	 
	Paperchase Sales
and Commission
Reporting
	 	Reporting	 	W	 	 
	 
	 	 	 	 	 	 
	Weekly Transactions
	 	Task	 	W	 	 
	 
	 	 	 	 	 	 
	Category Sales
	 	Reporting	 	W	 	Net sales by category
	 
	 	 	 	 	 	 
	Transaction/Units
Summary
	 	Reporting	 	W	 	Includes transaction and units counts; Gross Margin, Discounts, Net Margin per Trans and Unit
	 
	 	 	 	 	 	 
	Clearance (Red Dot)
Results
	 	Reporting	 	W	 	During the Clearance (Red Dot) Sales Timing
	 
	Series Code
(Promotional)
Discounts
	 	Reporting	 	W	 	Sales and units sold by series code
	 
	 	 	 	 	 	 
	Coupon Discounts
	 	Reporting	 	W	 	 
	 
	 	 	 	 	 	 
	Gift Card Sales
	 	Reporting	 	M	 	 
	 
	 	 	 	 	 	 
	Corporate Sales
	 	Reporting	 	M	 	 
	 
	 	 	 	 	 	 
	AP165 Reprint
	 	Reporting	 	M	 	 

19

 

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	ACME Returns
	 	Reporting	 	M	 	 
	 
	 	 	 	 	 	 
	Periodical
Sales/Margin
	 	Reporting	 	M	 	by UPC
	 
	 	 	 	 	 	 
	Missed Returns
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Month End Journal Entries
	 	Task	 	M	 	Datacomm, legal expenses, Interest, taxes,
error suspense, shrink, markdowns, etc
	 
	 	 	 	 	 	 
	GST Reporting
	 	Reporting	 	M	 	 
	 
	 	 	 	 	 	 
	Forecasting
	 	Task	 	M/Q	 	Each markets send P&L submissions to be loaded into EAP system
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Over/Short Report
	 	Task	 	M	 	 
	 
	 	 	 	 	 	 
	Provide Final P&L Statements
	 	Reporting	 	M	 	Send over final P&L statements after all
journal entries are booked
	 
	 	 	 	 	 	 
	Store Contribution
Reporting
	 	Reporting	 	M	 	Store level P&L's for Month and YTD
	 
	 	 	 	 	 	 
	Account Reconciliations
	 	Task	 	M	 	Various accounts, are completed in the US
	 
	 	 	 	 	 	 
	Corporate Customer
Sales Reporting
	 	Reporting	 	W	 	 
	 
	 	 	 	 	 	 
	Weekly Discount
Reconciliation
Reporting
	 	Reporting	 	W	 	 
	 
	 	 	 	 	 	 
	Accounts Payable
Lag Reporting
	 	Reporting	 	M	 	 
	 
	 	 	 	 	 	 
	Payroll and Sales
Management Reports
	 	Task	 	W	 	 

20

 

B — Statutory Accounts Reporting

	 	 	 
	A.1. Description

	 	Prepare statutory reporting for the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	$17,500/year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	3 months

Department: International Finance

Department description: Statutory Accounts Reporting

	 	 	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments	 
	Provide letter of support,
letter of representation and
intercompany confirmations
	 	Task	 	Annual	 	 	 	 
	 
	Coordinate EY requests from work
performed by IFD
	 	Task	 	 	 	 	 	 
	 
	Provide supporting documents for
accounts managed by IFD
	 	Task	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Prepare statutory accounts
	 	Task	 	Annual	 	 	 	 

21

 

C — Property Accounting

	 	 	 
	A.1. Description
	 	Responsible for Asset Management for the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	$35,000/year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	3 months

	 	 	 
	
Department:
	  	Property Accounting
	 
	Department description:
	  	Responsible for Asset Management system, including

Capital spending, depreciation and asset write-offs

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	Yearly budgeting of
cap-ex and depreciation
expense

	 	Task
	 	Y
	 	Cap-ex submissions from local
office, all planning at H.O.
	 
	Monthly forecast
updates

	 	Task
	 	M
	 	Monthly reforecast
depreciation expense and
cap-ex, submit into EAP
	 
	Capital Spending
administration

	 	Task
	 	Ongoing
	 	Responsible for creation and
approval, as well as
subsequent tracking of CERs
	 
	Tracking of
Capital Projects

	 	Task
	 	Ongoing	 	 
	 
	Fixed asset accounting

	 	Task
	 	M
	 	Record all depreciation and
asset-related activity
	 
	 	 	 	 	 	 
	Monthly Fixed
Asset Reporting

	 	Reporting
	 	M
	 	Monthly variance to forecast
explanations, Asset Registers
	 
	 	 	 	 	 	 
	Cap-ex reporting

	 	Reporting
	 	M
	 	1)  Approved vs. Invoiced

	 
	 	 	 	 	 	 
	Cap-ex reporting

	 	Reporting
	 	M
	 	2)   Project activity reporting

	 
	 	 	 	 	 	 
	Cap-ex reporting

	 	Reporting
	 	M
	 	3)   New Store Cap-Ex

	 
	 	 	 	 	 	 
	GL Account Recs

	 	Task
	 	M
	 	All fixed asset accounts

22

 

D — Accounts Payable (A/P)

	 	 	 
	A.1. Description

	 	Accounts Payable and Accounts Receivable for the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	$210,000/year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	Terminates in line with this Agreement

	 	 	 
	Department:

	 	Accounts Payable
	 
	  	 
	Department description:

	 	Accounts Payable and Accounts Receivable

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	EDI and Paper drop
ship merchandise
invoice processing

	 	Task
	 	Ongoing	 	 
	 
	 	 	 	 	 	 
	Expense invoice
processing

	 	Task
	 	Ongoing
	 	10% done by IFD
	 
	 	 	 	 	 	 
	Warehouse receipt
merchandise invoice matching

	 	Task
	 	Ongoing	 	 
	 
	 	 	 	 	 	 
	Vendor service representatives

	 	Task
	 	Ongoing
	 	Primary contact is IFD
	 
	 	 	 	 	 	 
	Vendor account
reconciliations

	 	Task
	 	Ongoing	 	 
	 
	 	 	 	 	 	 
	Vendor set-up

	 	Task
	 	Ongoing
	 	Includes completion of
vendor credit applications
	 
	 	 	 	 	 	 
	Debit balance recovery

	 	Task
	 	Ongoing
	 	Substantial leveraging of
Australian resources
	 
	 	 	 	 	 	 
	AP Audit functions

	 	Task
	 	Ongoing
	 	Includes but not limited to
duplicate payment recovery
and 3rd party
audit recoveries
	 
	 	 	 	 	 	 
	Trade check runs

	 	Task
	 	M/W
	 	Check runs are run and
signed off by IFD
	 
	 	 	 	 	 	 
	Wire transfers

	 	Task
	 	Ongoing	 	 
	 
	 	 	 	 	 	 
	Year-end audit

	 	Task
	 	Y
	 	Support for auditor requests
	 
	 	 	 	 	 	 
	General Ledger
Balance Sheet Account Reconciliations

	 	Task
	 	M
	 	All payables accounting
	 
	 	 	 	 	 	 
	Reserves Analysis

	 	Reporting
	 	M
	 	All payables accounting
	 
	 	 	 	 	 	 
	Aged Accrual Analysis

	 	Reporting
	 	M
	 	All payables accounting
	 
	 	 	 	 	 	 
	Average Days to Pay

	 	Reporting
	 	M	 	 

23

 

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	Non Top Vendor
Activity

	 	Reporting
	 	M	 	 
	 
	 	 	 	 	 	 
	Status of
Reconciliations for
Top Vendors

	 	Reporting
	 	M	 	 
	 
	 	 	 	 	 	 
	Accounts Payable
Ratio Reporting

	 	Reporting
	 	M	 	 
	 
	 	 	 	 	 	 
	Vendor Debit Balance
Reporting

	 	Reporting
	 	M	 	 
	 
	 	 	 	 	 	 
	Claims on Invoices
Trend Reporting

	 	Reporting
	 	M	 	 
	 
	 	 	 	 	 	 
	AP165 — drop ship
merchandise invoices
reporting to stores

	 	Reporting
	 	M	 	 

24

 

E — Bank Reconciliation

	 	 	 
	A.1. Description

	 	Bank Reconciliations for the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	$21,000/year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	3 months

	 	 	 
	Department:

	 	Bank Reconciliation
	 
	  	 
	Department description:

	 	Responsible for Reconciliation of all bank/disbursement accounts

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	General Ledger Balance Sheet Account Reconciliations

	 	Task
	 	M
	 	All Cash and
Disbursement
Accounts

25

 

F — Treasury

	 	 	 
	A.1. Description

	 	Treasury support services to the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	$35,000/year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	3 months

Department:

Treasury

Department
description:

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	Cash Management
	 	Task	 	Ongoing	 	Includes forecasting, funding,
borrowing, overdraft facility
maintenance
	 
	 	 	 	 	 	 
	Month-end close
for
bank/cash accounts
	 	Accounting	 	Monthly	 	ID all cash activity (cash, wires,

checks etc) and tie to specific
General Ledger code. Monthly
upload to Lawson General Ledger of
all activity.
	 
	 	 	 	 	 	 
	Foreign
currency
transactions for year end
hedging
	 	Task	 	Yearly	 	 
	 
	 	 	 	 	 	 
	Credit card management
	 	Accounting,
Task,
Reporting	 	Ongoing	 	Setting up and managing relationship
with credit card companies, monthly

entry of credit card fees, planning for

credit card fees, reporting on credit
card fees.
	 
	 	 	 	 	 	 
	Bank relationships

	 	Task	 	Ongoing	 	Set-up and management of bank

relationships, monthly entry of bank

fees, planning for bank fees.
	 
	 	 	 	 	 	 
	Interest
	 	Accounting	 	Ongoing	 	Monthly entry of interest, monthly

reconciliations, forecasting and
planning
	 
	 	 	 	 	 	 
	Wire Transfer Activity

	 	Task
	 	Ongoing
	 	Activation of
approved wire
transfers.

26

 

G — Lease Accounting

	 	 	 
	A.1. Description

	 	Lease Accounting for the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	$8,750/year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	3 months

Department: Lease Accounting

Department
description:

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	Straight Line Rent
Accounting

	 	Accounting
	 	On-going
	 	Includes: initial
calculation,
maintenance,
journal entries,
monthly
forecasting, yearly
planning, and
General Ledger
reconciliations of
Straight Line
Balance Sheet
accounts
	 
	 	 	 	 	 	 
	Wire Transfers

	 	Task
	 	Monthly
	 	Initiate wire
transfers for
rental payments for
all APAC stores

27

 

H — Merchandise Reporting

	 	 	 
	A.1. Description

	 	Merchandise Reporting for the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	$70,000/year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	Terminates in line with this Agreement

	 	 	 
	Department:
	 	International Finance
	 
	 	 
	Department description:

	 	Reporting on Merchandise
Category Performance

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	Weekly Subject Range
Report

	 	Reporting
	 	W
	 	Weekly sales, store
inventory,
purchase, pending
order, on order,
store returns, and
vendor return by
subject breaks
	 
	 	 	 	 	 	 
	Open to Buy

	 	Reporting
	 	W
	 	Units on Order (DC
and Drop ship) by
PO types – Actual
vs. Target by
buyers
	 
	 	 	 	 	 	 
	Not Yet Published

	 	Reporting
	 	W
	 	Order of Not Yet
Publish Titles by
Product line by
month
	 
	 	 	 	 	 	 
	In Stock

	 	Reporting
	 	W
	 	Weekly Top Title
sales by subject
break 100 and In
Stock percentage
	 
	 	 	 	 	 	 
	Top Titles

	 	Reporting
	 	W
	 	Weekly Top 10 sales
by product lines
comparison TY vs.
LY
	 
	 	 	 	 	 	 
	Bargain Scorecard

	 	Reporting
	 	W
	 	Bargain Sales,
Shipments,
Inventory by Store
	 
	 	 	 	 	 	 
	Calendar Scorecard

	 	Reporting
	 	W
	 	While Calendars are
in Stock (Oct-Jan)
	 
	 	 	 	 	 	 
	Weekly Kids Sales

	 	Reporting
	 	W
	 	Kids Subject Code
Sales by Store
	 
	 	 	 	 	 	 
	Vendor Scorecard

	 	Reporting
	 	M
	 	Sales, Purchase,
Return, Refused
Return, and
inventory by vendor
level
	 
	 	 	 	 	 	 
	Inventory Aging by 

Category

	 	Reporting
	 	M
	 	Aging Inventory
bucket by category
by store
	 
	 	 	 	 	 	 
	Bargain Report

	 	Reporting
	 	W
	 	Bargain Sales,
Rolling 5 weeks
Sales, Inventory by
store
	 
	 	 	 	 	 	 
	Stock Aging

	 	Reporting
	 	M
	 	Aging of Returnable
and Non Returnable
Stock by
Category/Product
line
	 
	 	 	 	 	 	 
	Stock Reserves

	 	Accounting
	 	M
	 	Reserve
Calculations and
Accounting Entries
for Aged Non
Returnable Stock
	 
	 	 	 	 	 	 
	Deadwood Returns

	 	Reporting
	 	M – as needed
	 	Manual Process

28

 

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	RPLs

	 	Reporting
	 	M – as needed
	 	System Process
	 
	 	 	 	 	 	 
	Buyer Action Plan

	 	Reporting
	 	M
	 	Sales, Margin,
Inventory, Week of
Supply, Stockturn,
Purchase and Vendor
Claims by Buyers
	 
	 	 	 	 	 	 
	Location Range Report

	 	Reporting
	 	M
	 	Sales, Inventory,
and On Order by
Location by Store
	 
	 	 	 	 	 	 
	Out of Stock

	 	Reporting
	 	M
	 	Out of Stock
reporting by store
by country

29

 

I — Margin Accounting and Reporting

	 	 	 
	A.1. Description

	 	Margin Accounting and Reporting for the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	$70,000/year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	Terminates in line with this Agreement

	 	 	 
	Department:

	 	International Finance
	 
	 	 
	Department
description:

	 	Margin Accounting and
Reporting

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	Preliminary Period 

Margin Statements

	 	Reporting
	 	W
	 	Actual Sales vs.
Forecast vs. Plan
Analysis
	 
	 	 	 	 	 	 
	Final Period Margin 

Statements

	 	Reporting
	 	M
	 	Final reporting of
sales, cost, and
margin and
comparison to
forecast
	 
	 	 	 	 	 	 
	Period Cost of Sales

	 	Accounting
	 	M
	 	Calculate cost of
sales for
accounting posting
	 
	 	 	 	 	 	 
	Period Sales
Adjustments

	 	Accounting
	 	M
	 	Sales Audit posting
	 
	 	 	 	 	 	 
	Vendor Code Sales Mix

	 	Reporting
	 	M
	 	Sales mix by
vendors for the
last 6 months with
their average
margin rate
	 
	 	 	 	 	 	 
	Period Margin by 

Vendor Code

	 	Reporting
	 	M
	 	Avg 6 months period
margin sales mix by
vendors
	 
	 	 	 	 	 	 
	Country Mix –
Purchases 

and Sales

	 	Reporting
	 	M
	 	Sales and Shipment
Mix by country by
product line
	 
	 	 	 	 	 	 
	New Store Discount 

Summary

	 	Reporting
	 	NYO only
	 	 
	 
	 	 	 	 	 	 
	Periodicals

	 	Reporting
	 	M
	 	Mill & Boon, US
Periodical, Local
Periodical, and
Subscription Sales
reporting by stores

30

 

J — Inventory Accounting and Control

	 	 	 
	A.1. Description

	 	Inventory Accounting and Control for the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	$70,000/year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	Terminates in line with this Agreement

	 	 	 
	Department:

	 	Inventory Control
	 
	 	 
	Department
description:

	 	Inventory reconciliation of on hand systems to financial systems and inventory
reporting

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	Inventory at Retail

	 	Reporting
	 	W
	 	Classified by Total Stores, FTC, RC
	 
	 	 	 	 	 	 
	Warehouse Inventory 

Summary

	 	Reporting
	 	W
	 	Warehouse system weekly processing
flow with perpetual inventory
balances.
	 
	 	 	 	 	 	 
	Warehouse Overstock
Aging and Fill
Rates

	 	Reporting
	 	W
	 	Warehouse system inventory aging
with weekly shipping fill rates.
	 
	 	 	 	 	 	 
	Return Center
Summary and Claim
Aging

	 	Reporting
	 	W
	 	Return Center system weekly
inventory flow, on hand balances,
with aged vendor returns claims.
	 
	 	 	 	 	 	 
	Warehouse Receipts
and Shipments

	 	Reporting
	 	W
	 	Warehouse system weekly summary
processing. Details are provided
upon request.
	 
	 	 	 	 	 	 
	Warehouse 

Reconciliations

	 	Accounting
	 	Q
	 	 Reconcile to General Ledger
	 
	 	 	 	 	 	 
	Physical Inventory

	 	Accounting
	 	Per StockTake

Schedule
	 	Includes pre-work, stock takes,
post work, reconciliations, and
results reporting by store and
category
	 
	 	 	 	 	 	 
	Shrink Liabilities

	 	Accounting
	 	M
	 	Monthly Accruals, Record Results
	 
	 	 	 	 	 	 
	Inventory Entries

	 	Accounting
	 	M
	 	 

31

 

K — Tax

	 	 	 
	A.1. Description

	 	Tax Reporting and Filing for the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	$52,500/year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	3 months

 

			
	*	 	Tax is fully dependent on transaction data support from the Australia/New Zealand team.

	 	 	 
	Department:

	 	Tax
	 
	 	 
	Department description:

	 	Tax Returns

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	Provide all
information
necessary for the
submission of tax
returns

	 	 
	 	Annual
	 	 
	 
	 	 	 	 	 	 
	Provide GST reporting

	 	Report
	 	Periodic
	 	 
	 
	 	 	 	 	 	 
	Support Statutory 

Account Tax 

Calculations

	 	Accounting
	 	Annual	 	 
	 
	 	 	 	 	 	 
	Provide tax 

depreciation 

reporting

	 	Report
	 	Annual
	 	 
	 
	 	 	 	 	 	 
	Maintain and
provider accurate
tax depreciation
schedules

	 	Report
	 	Annual	 	 

32

 

L — IT

	 	 	 
	A.1. Description

	 	Information Technology Support for the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	 $1,340,000/ year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	Terminates in line with this Agreement

	 	 	 
	Department:
	 	IT
	 
	 	 	Support for all Borders proprietary systems, as well as other
	 
	Department description:
	 	Borders integrated systems for merchandising, distribution, stores, and financials.

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	Transitional Support

	 	 
	 	 
	 	Tasks provided during the term of the TSA
	 
	 	 	 	 	 	 
	Provide BGIA (central
stock, supplier and
purchase order
management) system
functionality and
support

	 	Task
	 	On-going
	 	Provides data on on-hand inventory as well

as inventory transfer data
	 
	 	 	 	 	 	 
	Provide BGIB
(distribution
management, inventory
control and subsidiary
financial) system
functionality and
support

	 	Task
	 	On-going
	 	Performs AP invoice matching as well.
	 
	 	 	 	 	 	 
	Provide CMA (core
back-list titles as
well as EPOS daily data
poll) system
functionality and
support

	 	Task
	 	On-going
	 	 
	 
	 	 	 	 	 	 
	Provide IMA (in-store
inventory management –
goods receipt and
returns) system
functionality and
support

	 	Task
	 	On-going
	 	 
	 
	 	 	 	 	 	 
	Provide IT outage alerts

	 	Task
	 	As needed
	 	 
	 
	 	 	 	 	 	 
	Provide Lawson (general
ledger, asset
management, accounts
payable) system
functionality and
support

	 	Task
	 	On-going
	 	 
	 
	 	 	 	 	 	 
	Provide Data Warehouse
(business intelligence,
the central location
for most business data)
functionality and
support

	 	Task
	 	On-going
	 	 

33

 

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	Provide DW Portal (web
application to access
sales, transactions,
and discounting from
POS) system
functionality and
support

	 	Task
	 	On-going
	 	 
	 
	 	 	 	 	 	 
	Provide store detail
file transfers (daily
FTP of key financial
metrics) functionality
and support

	 	Task
	 	On-going
	 	 
	 
	 	 	 	 	 	 
	Provide Outlooksoft/EAP
systems functionality
and support

	 	Task
	 	On-going
	 	Maintain the query tool for Lawson G/L
	 
	 	 	 	 	 	 
	Helpdesk support

	 	Task
	 	As needed
	 	For all IT issues that cannot be resolved
via the ANZ IT technicians.
	 
	 	 	 	 	 	 
	Data back-ups and
storage

	 	Task
	 	On-going
	 	 
	 
	 	 	 	 	 	 
	New Store set-up in 

legacy system

	 	Task
	 	As needed	 	 
	 
	 	 	 	 	 	 
	TOTAL TRANSITIONAL 

SUPPORT

	 	 
	 	 
	 	 $ 140,000.00
	 

	 	 
	 	 
	 	 
	Data Migration/IT
Transition to ANZ
Ownership

	 	 
	 	 
	 	Project management and task work to migrate
data and hardware to ANZ ownership
	 
	 	 	 	 	 	 
	Project 

coordination/management

	 	Task
	 	On-going
	 	IT point of contact for coordination of
transition to new owner to work with ANZ
team
	 
	 	 	 	 	 	 
	Develop process for
transition of SCM
(product in the
pipeline) to ANZ
ownership

	 	Task
	 	On-going
	 	Co-manage the plan to transition the SCM
with a system implementation to ensure
limited disruption to the flow of products
	 
	 	 	 	 	 	 
	Provide final inventory
data to ANZ ownership

	 	Task
	 	One time
	 	 
	 
	 	 	 	 	 	 
	Provide final title
file assortment data to
new ownership

	 	Task
	 	One time
	 	 
	 
	 	 	 	 	 	 
	Provide one-time 

historical 

sales/inventory data in 

the required format

	 	Task
	 	One time
	 	 
	 
	 	 	 	 	 	 
	Update Outlooksoft 

dimensions

	 	Task
	 	One time
	 	 
	 
	 	 	 	 	 	 
	TOTAL MIGRATION AND 

TRANSITION COSTS

	 	 
	 	 
	 	 $ 1,200,000.00
	 
	 	 	 	 	 	 
	TOTAL IT COSTS

	 	 
	 	 
	 	 $ 1,340,000.00

34

 

M — Merchandising

	 	 	 
	A.1. Description

	 	Book and Non-Book Buying for the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	$105,000/year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	3 months

	 	 	 
	Department:

	 	Merchandising
	 
	 	 
	Department description:

	 	Book and Non-Book Buying

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	Merchandise buying, 

allocation &

replenishment

	 	Task
	 	On-going
	 	 
	 
	 	 	 	 	 	 
	Weekly “big-buy”
conference calls
for information
sharing purposes
for Merchandise

	 	Task & Reporting
	 	W
	 	Other information
sharing activities
to be negotiated.
	 
	 	 	 	 	 	 
	Merch Ops – Vendor 

Management – Weekly 

reporting

	 	Reporting
	 	W
	 	By store listing of
total OH, OO, NYP
title and unit
counts, retail
value

35

 

N — Merchandise Operations

	 	 	 
	A.1. Description

	 	Product Data and Analysis Support for the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	$70,000/year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	Terminates in line with this Agreement

	 	 	 
	Department:
Operations
	 	Merchandising
	 
	 	 
	Department description:

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

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	New store
planning/store
space and layout
planning

	 	 
	 	Ongoing	 	 
	 
	 	 	 	 	 	 
	Title File
Department:

	 	 	 	 
	 	 
	 
	 	 	 	 	 	 
	Complete listing of
all US titles on
BGIA

	 	Reporting
	 	Weekly
	 	 
	 
	 	 	 	 	 	 
	Complete listing of
all non-US titles
on BGIA

	 	Reporting
	 	Weekly
	 	 
	 
	 	 	 	 	 	 
	Sales and OH info
for all BINCs

	 	Reporting
	 	Weekly
	 	 
	 
	 	 	 	 	 	 
	Bowker data –

master title file 

by country

	 	Reporting
	 	Monthly	 	 
	 
	 	 	 	 	 	 
	Title File Updates

	 	Task
	 	Weekly
	 	Weekly set of
macros that cleanse
title file data to
conform to BGI
standards
	 
	 	 	 	 	 	 
	Title File Updates

	 	Task
	 	Ongoing
	 	Manual maintenance
based on vendor or
in-country requests
	 
	 	 	 	 	 	 
	Title File Updates

	 	Task
	 	Ongoing
	 	Semi-manual process
for mass updates,
required by
in-country
	 
	 	 	 	 	 	 
	Changes to title
file report

	 	Reporting
	 	Weekly
	 	Shows all changes
to title file in
the last week
	 
	 	 	 	 	 	 
	Titles changing to
OP

	 	Reporting
	 	Monthly
	 	Reporting on titles
changing to out of
print status
	 
	 	 	 	 	 	 
	Paperchase
maintenance

	 	 
	 	 
	 	Performed by the
Paperchase(US)
department

36

 

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	Marketing: POS 

Promotions

	 	 	 	 
	 	 
	 
	 	 	 	 	 	 
	Promotional set-up

– CMA

	 	Task
	 	Ongoing
	 	Set-up all non BGIA
promotions in CMA
to be sent down to
store POS system
	 
	 	 	 	 	 	 
	Promotional set-up

– BGIA

	 	Task
	 	Ongoing
	 	This department
provides support
for any changes
that need to be
made to these
promotions
	 
	 	 	 	 	 	 
	Bar-code creation

	 	Task
	 	Ongoing
	 	Create all barcodes
needed for
promotions
	 
	 	 	 	 	 	 
	Training and
Consultation for
promotion creation

	 	Task
	 	Ongoing
	 	 
	 
	 	 	 	 	 	 
	Merch Planning

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	Reporting:

	 	 
	 	Weekly
	 	Top 200
items(sales), all
stores, by country
by product line
	 
	 	 	 	 	 	 
	 

	 	 
	 	Weekly
	 	Top items(sales),
by country, by
product line, by
binc, by store
	 
	 	 	 	 	 	 
	 

	 	 
	 	Weekly
	 	Sales, On Hands,
TY/LY, Turn,
Discounts, for
Paperchase and
Gifts/Stationary
category

37

 

O — Transportation

	 	 	 
	A.1. Description

	 	Logistics/Shipping for the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	$49,000/year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	Terminates in line with this Agreement

	 	 	 
	Department:

	 	Transportation
	 
	 	 
	Department description:

	 	Shipping and logistics

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	Ship and ensure any
Borders US bought
product is shipped
to ANZ at
Purchasers expense

	 	Task
	 	On-going	 	 
	 
	 	 	 	 	 	 
	Freight and
Distribution Center
Reporting

	 	Reporting
	 	On-going
	 	Weekly, monthly
reporting including
Costs Per Unit,
Output (units) Per
Hour, Distribution
Financials, and
Freight Operating
Review Meetings
	 
	 	 	 	 	 	 
	Freight and DC
Planning

	 	Task
	 	Yearly
	 	Planning at the
detail Output Per
Hour/ Costs Per
Unit Distribution
and Freight
Financials

38

 

P — Communications

	 	 	 
	A.1. Description

	 	Store/field communications for the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	$11,375/year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	3 months

	 	 	 
	Department:

	 	Communications
	 
	 	 
	Department description:

	 	Store and store manager communications

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	Store
communications –
e-mail box,
news/marketing
bulletins
(promotions) and
e-info updates.

	 	Task
	 	On-going
	 	 
	 
	 	 	 	 	 	 
	Store manager 

specific 

communications

	 	Task
	 	Bi-weekly
	 	 
	 
	 	 	 	 	 	 
	URL set-up on proxy 

server (link 

created on e-info)

	 	Task
	 	As needed
	 	 

39

 

Q — Store Operations

	 	 	 
	A.1. Description

	 	Store Operational Support for the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	$35,000/year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	Terminates in line with this Agreement

	 	 	 
	Department:

	 	Store Operations
	 
	 	 
	Department
description:
	 	 

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	Provide store
operational support
from US.

	 	Task
	 	On-going
	 	 
	 
	 	 	 	 	 	 
	New store set-up in 

legacy systems

	 	Task
	 	On-going
	 	 

40

 

R — Management

	 	 	 
	A.1. Description

	 	Management of Support Services for the Recipients
	A.2. Location

	 	Borders US
	A.3. Service Manager

	 	TBD
	A.4. Fees/Charges

	 	$105,000/year
	A.5. Exceptions

	 	N/A
	A.6 Termination Notice

	 	Terminates in line with this Agreement

	 	 	 
	Departments:

	 	Finance, Tax, Merchandising
	 
	 	 
	Department
description:

	 	Management Oversight of Support
Services

	 	 	 	 	 	 	 
	Item	 	Classification	 	Re/(O)ccurrence	 	Item comments
	Direction and
leadership for
support services
employees

	 	Task
	 	Daily
	 	 
	 
	 	 	 	 	 	 
	Review of support
services employee
work

	 	Task
	 	Daily
	 	 

41

 

SCHEDULE 2

RECIPIENT SERVICES

	 	 	 	 	 	 	 	 	 
	1. Description	 	 	The services to be provided by the Recipients
in relation to the oversight of, and
assistance in relation to:
	 
	 	 	 	 	 	 	 	 
	 

	 	 	(1	)	 	 	 	opening of new Borders Group, Inc company
owned and franchise stores in Malaysia and
GCC, including:
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	•
	 	Fit out
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	•
	 	Stocking of store/purchasing
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	•
	 	Promotions/marketing
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	•
	 	IT/systems
	 
	 

	 	 	 	 	 	•
	 	HR/training
	 
	 

	 	 	(2	)	 	 	 	Borders Group, Inc franchise operations in
Malaysia, UAE, Qatar, Bahrain, Kuwait and Oman, including the following functions:
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	•
	 	HR
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	•
	 	Finance
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	•
	 	Operations
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	•
	 	Purchasing
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	•
	 	Promotion/marketing
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	•
	 	Distribution centre oversight
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	•
	 	Merchandising
	 
	 	 	 	 	 	 	 	 
	2. Location
	 	 	 	 	 	 	 	 
	3. Service Manager
	 	 	 	 	 	 	 	 
	4. Pricing /Charges	 	$20,000 per month
	5. Recipient Service Period	 	9 months from the Commencement Date
	6. Termination Notice	 	10 Business Days

42

 

Signed for and on behalf of

Borders International Services, Inc.

by its duly authorised representative

in the presence of:

	 	 	 	 	 	 	 
	 
	 

Signature of witness

	 	 	 	 

Signature of authorised representative
	 	 
	 
	 	 	 	 	 	 
	 
	 

Name of witness (please print)

	 	 	 	 

Name of authorised representative
	 	 
	 

	 	 	 	(please print)	 	 

Signed for and on behalf of

Borders Australia Pty Ltd.

by its duly authorised representative

in the presence of:

	 	 	 	 	 	 	 
	 
	 

Signature of witness

	 	 	 	 

Signature of authorised representative
	 	 
	 
	 	 	 	 	 	 
	 
	 

Name of witness (please print)

	 	 	 	 

Name of authorised representative
	 	 
	 

	 	 	 	(please print)	 	 

Signed for and on behalf of

Borders New Zealand Limited

by its duly authorised representative

in the presence of:

	 	 	 	 	 	 	 
	 
	 

Signature of witness

	 	 	 	 

Signature of authorised representative
	 	 
	 
	 	 	 	 	 	 
	 
	 

Name of witness (please print)

	 	 	 	 

Name of authorised representative
	 	 
	 

	 	 	 	(please print)	 	 

43

 

Signed for and on behalf of

Borders Pte. Ltd.

by its duly authorised representative

in the presence of:

	 	 	 	 	 	 	 
	 
	 

Signature of witness

	 	 	 	 

Signature of authorised representative
	 	 
	 
	 	 	 	 	 	 
	 
	 

Name of witness (please print)

	 	 	 	 

Name of authorised representative
	 	 
	 

	 	 	 	(please print)	 	 

44

 

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

	 	 	 
	 

Signature of Attorney

	 	 

	 	 	 	 	 	 	 
	 

Signature of Witness

	 	 	 	 

Name of Attorney in full
	 	 
	 
	 	 	 	 	 	 
	 
	 

Name of Witness in full

	 	 	 	 	 	 

Signed for and on behalf of Spine Newco (NZ)
Limited Company No. 2010994 by its Attorney under
a Power of Attorney dated 4 June 2008, and the
Attorney declares that the Attorney has not
received any notice of the revocation of such
Power of Attorney, in the presence of:

	 	 	 
	 

Signature of Attorney

	 	 

	 	 	 	 	 	 	 
	 

Signature of Witness

	 	 	 	 

Name of Attorney in full
	 	 
	 
	 	 	 	 	 	 
	 
	 

Name of Witness in full

	 	 	 	 	 	 

45exv10w1

Exhibit 10.1

Form of Phantom Unit Award

Copano Energy, L.L.C.

Long-Term Incentive Plan

Grant of Phantom Units

With DERs

Grantee:                    

Grant Date:                    

	1.	 	Grant of Phantom Units with DERs. Copano Energy, L.L.C. (the “Company”) hereby
grants to you ___Phantom Units under the Copano Energy, L.L.C. Long-Term Incentive Plan,
as amended (the “Plan”) on the terms and conditions set forth herein and in the Plan, which is
incorporated herein by reference as a part of this Agreement. This grant of Phantom Units
includes a tandem Distribution Equivalent Right (“DER”) grant with respect to each Phantom
Unit. The Company shall establish a DER bookkeeping account for you with respect to each
Phantom Unit granted hereunder that shall be credited with an amount equal to any cash
distributions made by the Company on a Unit during the period such Phantom Unit is
outstanding. In the event of any conflict between the terms of this Agreement and the Plan,
the Plan shall control. Capitalized terms used in this Agreement but not defined herein shall
have the meanings ascribed to such terms under the Plan, unless the context requires
otherwise.

	2.	 	Regular Vesting. Except as otherwise provided in Paragraph 3 below, the Phantom
Units granted hereunder shall become vested in accordance with the following schedule:

	 	 	 
	 	 	Cumulative
	Vesting Dates	 	Vested Percentage
	 

	 	 
	 

	 	 
	 

	 	 
	 

	 	 
	 
	 	 

	 	 	Tandem DERs shall be subject to vesting and forfeiture under the same terms and conditions
as apply to the Phantom Units to which they correspond and, to the extent vested, will be
paid at the time of payment of the vested Phantom Units to which they correspond. If a
Phantom Unit is forfeited, the amount credited to your tandem DER account with respect to
such Phantom Unit shall be similarly forfeited.
	 
	3.	 	Events Occurring Prior to Regular Vesting.

	 	(a)	 	Death or Disability. If, prior to becoming fully vested in the Phantom
Units hereby granted, you cease to be an employee of the Company or an Affiliate as a
result of your death or a disability that entitles you to benefits under the Company’s
or an Affiliate’s

 

 

Exhibit 10.1

Form of Phantom Unit Award

	 	 	 	long-term disability plan, the Phantom Units then held by you automatically will
become fully vested on the Designated Vesting Date (as defined below) that coincides
with or immediately follows such termination.
	 
	 	(b)	 	Other Terminations. If your employment with the Company or an
Affiliate terminates for any reason other than as provided in Paragraph 3(a) above, all
unvested Phantom Units then held by you automatically shall be forfeited.
	 
	 	(c)	 	Copano Operations Ceases to be an Affiliate. If (i) Copano Operations
ceases to be an Affiliate, (ii) you are an employee of Copano Operations on that date,
and (iii) your employment is not transferred to the Company or an Affiliate, the
Phantom Units then held by you automatically will become fully vested on the Designated
Vesting Date (as defined below) that coincides with or immediately follows the date
Copano Operations ceases to be an Affiliate.
	 
	 	(d)	 	Change of Control. All outstanding Phantom Units held by you
automatically shall become fully vested upon a Change of Control.

	 	 	For purposes of this Agreement, (i) “employment with the Company” or being an “employee of
the Company” shall include being an employee, consultant or a director of the Company or an
Affiliate and (ii) the “Designated Vesting Dates” shall be February 15, May 15, August 15 or
November 15.
	 
	4.	 	Payment. As soon as administratively practicable after the vesting of a Phantom
Unit, but not later than five business days thereafter, you shall be paid a Unit; provided,
however, the Committee may, in its sole discretion, direct that a cash payment be made to you
in lieu of the delivery of such Unit. Any such cash payment shall be equal to the Fair Market
Value of the Unit on the date of vesting of the Phantom Unit. If more than one Phantom Unit
vests at the same time, the Committee may elect to pay such vested Award in Units, cash or any
combination thereof, in its discretion. In addition, upon payment of a vested Phantom Unit,
you shall be paid in cash the amount credited to your tandem DER account with respect to such
vested Phantom Unit, without interest.
	 
	5.	 	Limitations Upon Transfer. All rights under this Agreement shall belong to you alone
and may not be transferred, assigned, pledged, or hypothecated by you in any way (whether by
operation of law or otherwise), other than by will or the laws of descent and
distribution and shall not be subject to execution, attachment, or similar process. Upon any
attempt by you to transfer, assign, pledge, hypothecate, or otherwise dispose of such rights
contrary to the provisions in this Agreement or the Plan, or upon the levy of any attachment
or similar process upon such rights, such rights shall immediately become null and void.
	 
	6.	 	Restrictions. By accepting this grant, you agree that any Units which you may acquire
upon vesting of this award will not be sold or otherwise disposed of in any manner which would
constitute a violation of any applicable federal or state securities laws. You also agree
that (i) any certificates representing the Units acquired under this award may bear such
legend or legends as the Committee deems appropriate in order to assure compliance with
applicable securities laws, (ii) the Company may refuse to register the transfer of the Units
acquired under this award on the transfer records of the Company if such proposed transfer
would in the opinion of counsel satisfactory to the Company constitute a violation of any
applicable securities law, and (iii) the

 

 

Exhibit 10.1

Form of Phantom Unit Award

	 	 	Company may give related instructions to its transfer agent, if any, to stop registration of
the transfer of the Units to be acquired under this award.
	 
	7.	 	Withholding of Tax. To the extent that the grant, vesting or payment of a Phantom
Unit results in the receipt of compensation by you with respect to which the Company or its
Affiliate has a tax withholding obligation pursuant to applicable law, the Company or its
Affiliate is authorized to withhold from any payment due under this Agreement or from any
compensation or other amount owing to you the amount (in cash or Units that would otherwise be
issued or delivered to you) of any applicable taxes payable in respect of the lapse of
restrictions hereon and to take such other action as may be necessary in the opinion of the
Company or its Affiliate to satisfy its withholding obligations for the payment of such taxes.
	 
	8.	 	Insider Trading Policy. The terms of the Company’s Insider Trading Policy are
incorporated herein by reference.
	 
	9.	 	Binding Effect. This Agreement shall be binding upon and inure to the benefit of any
successor or successors of the Company and upon any person lawfully claiming under you.
	 
	10.	 	Entire Agreement. This Agreement constitutes the entire agreement of the parties
with regard to the subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with respect to the Phantom
Units granted hereby. Without limiting the scope of the preceding sentence, all prior
understandings and agreements, if any, among the parties hereto relating to the subject matter
hereof are hereby null and void and of no further force and effect.
	 
	11.	 	Modifications. Except as provided below, any modification of this Agreement shall be
effective only if it is in writing and signed by both you and an authorized officer of the
Company. Notwithstanding anything in the Plan or this Agreement to the contrary, (a) if the
Committee determines that the terms of this grant do not, in whole or in part, satisfy the
requirements of new Section 409A of the Internal Revenue Code, the Committee, in its sole
discretion, may unilaterally modify this Agreement in such manner as it deems appropriate to
cause this Award to comply with or be treated as exempt from such section and any regulations
and guidance issued thereunder, and (b) the Committee, in its sole discretion, may
unilaterally modify this Agreement in any manner that does not materially reduce your benefit.
	 
	12.	 	Governing Law. This grant shall be governed by, and construed in accordance with,
the laws of the State of Texas, without regard to conflicts of laws principles thereof.

	 	 	 	 	 
	 	Copano Energy, L.L.C.

 	 
	 	By:  	 	 
	 	 	Name:  	Douglas L. Lawing 	 
	 	 	Title:  	Senior Vice President and General Counsel

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