Document:

exv10w1

Exhibit 10.1

FORM OF

CONTRIBUTION, CONVEYANCE AND ASSUMPTION

AGREEMENT

By and Among

OILTANKING PARTNERS, L.P.

OTLP GP, LLC

OILTANKING HOLDING AMERICAS, INC.

OTB HOLDCO, LLC

OILTANKING BEAUMONT GP, L.L.C.

OILTANKING BEAUMONT PARTNERS, L.P.

OTB GP, LLC

OILTANKING HOUSTON, L.P.

and

OTH GP, LLC

Dated as of July ____, 2011

 

 

CONTRIBUTION, CONVEYANCE AND ASSUMPTION

AGREEMENT

     This Contribution, Conveyance and Assumption Agreement, dated as of July __, 2011 (this
“Agreement”), is by and among Oiltanking Partners, L.P., a Delaware limited partnership (the
“Partnership”), OTLP GP, LLC, a Delaware limited liability company (the “General Partner”),
Oiltanking Holding Americas, Inc., a Delaware corporation (“OTA”), Oiltanking Beaumont Partners,
L.P., a Delaware limited partnership (“OTB”), OTB Holdco, LLC, a Delaware limited liability company
(“OTB Holdco”), OTB GP, LLC, a Delaware limited liability company (“OTB GP”), Oiltanking Beaumont
GP, L.L.C., a Delaware limited liability company (“OTB LLC”), Oiltanking Houston, L.P., a Texas
limited partnership (“OTH”) and OTH GP, LLC, a Texas limited liability company (“OTH GP”). The
above-named entities are sometimes referred to in this Agreement each as a “Party” and collectively
as the “Parties.” Capitalized terms used herein shall have the meanings assigned to such terms in
Article I.

RECITALS

     WHEREAS, the General Partner and OTA have formed the Partnership, pursuant to the Delaware
Revised Uniform Limited Partnership Act (the “Delaware LP Act”), for the purpose of engaging in any
business activity that is approved by the General Partner and that lawfully may be conducted by a
limited partnership organized pursuant to the Delaware LP Act.

     WHEREAS, in order to accomplish the objectives and purposes in the preceding recital, each of
the following actions has been taken prior to the date hereof:

	 	1.	 	OTA formed the General Partner under the terms of the Delaware Limited
Liability Company Act (the “Delaware LLC Act”) and contributed $1,000 in exchange for
all of the member interests in the General Partner.
	 
	 	2.	 	The General Partner and OTA formed the Partnership under the terms of the
Delaware LP Act and contributed $20 and $980, respectively, in exchange for a 2%
general partner interest and a 98% limited partner interest, respectively, in the
Partnership.
	 
	 	3.	 	OTB LLC formed OTB GP under the terms of the Delaware LLC Act and contributed
$[•] in exchange for all of the membership interests in OTB GP.
	 
	 	4.	 	OTA formed OTB Holdco under the terms of the Delaware LLC Act and contributed
$[•] in exchange for all of the membership interests in OTB Holdco.

     WHEREAS, concurrently with the consummation of the transactions contemplated hereby, each of
the following transactions shall occur in the following order:

	 	1.	 	OTH will make a check-the-box election to be disregarded as an entity separate
from OTA.
	 
	 	2.	 	OTB LLC will contribute its 1% general partner interests in OTB to OTB GP.

 

 

	 	3.	 	OTA will contribute its 99% limited partner interest in OTB to OTB Holdco.
	 
	 	4.	 	OTB LLC will contribute 100% of the member interests in OTB GP to OTB Holdco in
exchange for a 1% member interest in OTB Holdco.
	 
	 	5.	 	OTH will distribute all of its cash and accounts receivable as of the Effective
Time to OTA and OTH GP, and OTH GP will in turn distribute those accounts receivable to
OTA.
	 
	 	6.	 	OTB will distribute its $15,900,000 cash deposit (the “Finance Deposit”) with
Oiltanking Finance B.V., a Dutch Besloten Vennootschap (“Finance”) to OTB Holdco, and
OTB GP will in turn distribute those accounts receivable to OTB Holdco.
	 
	 	7.	 	OTB Holdco will guarantee certain debts of OTH and OTB to Finance (the
“Continuing Loans”).
	 
	 	8.	 	OTA will assign and contribute (on behalf of the General Partner) a portion of
its limited partner interest in OTH with a value equal to 2% of the equity value of the
Partnership immediately after the Effective Time (the “GP 2% Contribution Interests”)
to the Partnership, in exchange for (i) the issuance of 793,874 notional general
partner units in the Partnership to the General Partner, representing a continuation of
its 2% general partner interest in the Partnership and (ii) the issuance of the
Incentive Distribution Rights to the General Partner.
	 
	 	9.	 	OTA will assign and contribute its remaining limited partner interest in OTH
(which excludes the interest contributed as the GP 2% Contribution Interests) and its
100% member interest in OTH GP (collectively, the “OTA Contribution Interests”) to the
Partnership in exchange for (i) 3,581,032 Common Units representing a 9.0217% limited
partner interest in the Partnership (based upon the number of Common Units expected to
be outstanding following the expiration of the Over-Allotment Option period), (ii)
10,457,842 Subordinated Units representing a 26.3464% limited partner interest in the
Partnership (based upon the number of Common Units expected to be outstanding following
the expiration of the Over-Allotment Option period), (iii) a right to receive a $[•]
distribution from the Partnership reimbursing OTA for pre-formation capital
expenditures with respect to the OTH Assets, and (iv) the right to receive, upon the
earlier to occur of the expiration of the Over-Allotment Option period or the exercise
in full of the Over-Allotment Option, (A) a number of additional Common Units that is
equal to the excess, if any, of (x) 1,500,000 over (y) the aggregate number of Common
Units, if any, actually purchased by and issued to the Underwriters pursuant to the
exercise of the Over-Allotment Option on the Option Closing Date(s), and (B) a
reimbursement of pre-formation capital expenditures in an amount equal to the aggregate
amount of cash, if any, contributed by the Underwriters to the Partnership on the
Option Closing Date(s) with respect to Common Units purchased by and issued to the
Underwriters pursuant to each exercise of the Over-Allotment Option, if any.

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	 	10.	 	OTB Holdco will assign and contribute its 100% member interest in OTB GP and
its 99% limited partner interest in OTB to the Partnership (the “OTB Holdco
Contribution Interests”) in exchange for (i) 4,368,869 Common Units representing a
11.0065% limited partner interest in the Partnership (based upon the number of Common
Units expected to be outstanding following the expiration of the Over-Allotment Option
period), (ii) 8,992,059 Subordinated Units representing a 22.6536% limited partner
interest in the Partnership and (iii) a right to receive a $[•] distribution from the
Partnership reimbursing OTA for pre-formation capital expenditures with respect to the
OTB Assets.

     WHEREAS, at the Effective Time, the public, through the Underwriters, will purchase from the
Partnership for $[•] million in cash, less the amount of $[•] payable to the Underwriters after
taking into account the Underwriters’ discount of [•]% and the structuring fee of $[•] payable to
Citigroup Global Markets Inc., 10,000,000 Common Units (representing a 25.1929% limited partner
interest in the Partnership, based upon the number of Common Units expected to be outstanding
following the expiration of the Over-Allotment Option period).

     NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and
agreements herein contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

     The terms set forth below in this Article I shall have the meanings ascribed to them below or
in the part of this Agreement referred to below:

     “Agreement” has the meaning assigned to such term in the preamble.

     “Common Units” means the common units representing limited partner interests in the
Partnership.

     “Commission” means the U.S. Securities and Exchange Commission.

     “Continuing Loans” has the meaning assigned to such term in the recitals.

     “Delaware LLC Act” has the meaning assigned to such term in the recitals.

     “Delaware LP Act” has the meaning assigned to such term in the recitals.

     “Effective Time” means immediately prior to the closing of the initial public offering
pursuant to the Underwriting Agreement.

     “Finance” has the meaning assigned to such term in the recitals.

     “Finance Deposit” has the meaning assigned to such term in the recitals.

     “General Partner” has the meaning assigned to such term in the preamble.

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     “GP 2% Contribution Interests” has the meaning assigned to such term in the recitals.

     “Incentive Distribution Rights” has the meaning assigned to such term in the
Partnership Agreement.

     “Option Closing Date” has the meaning assigned to such term in the Underwriting
Agreement.

     “OTA” has the meaning assigned to such term in the preamble.

     “OTA Assets” means the assets owned by OTA.

     “OTA Contribution Interests” has the meaning assigned to such term in the recitals.

     “OTB” has the meaning assigned to such term in the preamble.

     “OTB Assets” means the assets owned by OTB.

     “OTB GP” has the meaning assigned to such term in the preamble.

     “OTB Holdco” has the meaning assigned to such term in the preamble.

     “OTB Holdco Contribution Interests” has the meaning assigned to such term in the
recitals.

     “OTB LLC” has the meaning assigned to such term in the preamble.

     “OTH” has the meaning assigned to such term in the preamble.

     “OTH GP” has the meaning assigned to such term in the preamble.

     “Over-Allotment Option” has the meaning assigned to such term in the Partnership
Agreement.

     “Partnership” has the meaning assigned to such term in the preamble.

     “Partnership Agreement” means the First Amended and Restated Agreement of Limited
Partnership of the Partnership dated as of July [•], 2011.

     “Registration Statement” means the Registration Statement on Form S-1 filed with the
Commission (Registration No. 333-173199), as amended and effective at the Effective Time.

     “Spread” has the meaning assigned to such term in Section 2.13.

     “Subordinated Units” has the meaning assigned to such term in the Partnership
Agreement.

     “Securities Act” means the Securities Act of 1933, as amended.

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     “Underwriters” means those underwriters listed in the Underwriting Agreement.

     “Underwriting
Agreement” means that certain Underwriting Agreement between
OTA, the Partnership, the General Partner and the Underwriters, dated as of July [•], 2011.

ARTICLE II

CONTRIBUTION, ACKNOWLEDGEMENTS AND DISTRIBUTIONS

     Section 2.1 Election to Treat OTH as an Entity that is Disregarded as Separate from
OTA. The Parties acknowledge that on or before the date hereof, OTH has filed a valid election
on Internal Revenue Service Form 8832 for OTH to be treated for U.S. federal income tax purposes as
an entity that is disregarded as separate from its owner, effective two days prior to the Effective
Time.

     Section 2.2 Conveyance of OTB General Partner Interest to OTB GP. OTB LLC hereby
grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to OTB GP, its
successors and assigns, for its and their own use forever, all right, title and interest in and to
its entire general partner interest in OTB, as a capital contribution, and OTB GP hereby accepts
such general partner interest in OTB as a contribution to the capital of OTB GP.

     Section 2.3 Conveyance of OTB Limited Partner Interest to OTB Holdco. OTA hereby
grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to OTB Holdco,
its successors and assigns, for its and their own use forever, all right, title and interest in and
to its entire limited partner interest in OTB, as a capital contribution, and OTB Holdco hereby
accepts such limited partner interest in OTB as a contribution to the capital of OTB Holdco.

     Section 2.4 Conveyance of OTB GP Membership Interests to OTB Holdco. OTB LLC hereby
grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to OTB Holdco,
its successors and assigns, for its and their own use forever, all right, title and interest in and
to its entire membership interest in OTB GP, as a capital contribution, and OTB Holdco hereby
accepts such membership interest in OTB GP as a contribution to the capital of OTB Holdco in
exchange for a 1% membership interest in OTB Holdco.

     Section 2.5 Distribution of Working Capital Assets by OTH. OTH hereby
grants, bargains, conveys, assigns, transfers, sets over and delivers to OTA and OTH GP and
their respective successors and assigns, for their use forever, pro rata in accordance with their
respective equity interests in OTH, all of its cash and accounts receivable as of the Effective
Time. Each of OTA and OTH GP hereby accept such cash and accounts receivable received by such party
as a distribution.

     Section 2.6 Distribution of Working Capital Assets by OTH GP. OTH GP hereby grants,
bargains, conveys, assigns, transfers, sets over and delivers to OTA and its successors and
assigns, for its use forever, all of the cash and accounts receivable it received as a distribution
from OTH pursuant to Section 2.5. OTA hereby accepts such cash and accounts receivable as a
distribution.

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     Section 2.7 Distribution of Working Capital Assets by OTB. OTB hereby
grants, bargains, conveys, assigns, transfers, sets over and delivers to OTB Holdco and OTB GP
and their respective successors and assigns, for their use forever, pro rata in accordance with
their respective equity interests in OTB, the Finance Deposit. Each of OTB Holdco and OTB GP hereby
accept such cash and accounts receivable received by such party as a distribution.

     Section 2.8 Distribution of Working Capital Assets by OTB GP. OTB GP hereby grants,
bargains, conveys, assigns, transfers, sets over and delivers to OTB Holdco and its successors and
assigns, for its use forever, the portion of the Finance Deposit it received as a distribution from
OTB pursuant to Section 2.7. OTB Holdco hereby accepts such cash and accounts receivable as
a distribution.

     Section 2.9 OTB Holdco Guaranty of Certain OTH and OTB Debts. The Parties acknowledge
that OTB Holdco has executed that certain Guaranty Agreement pursuant to which OTB Holdco has
guaranteed certain debt obligations of OTH and OTB to Finance.

     Section 2.10 Contribution of GP 2% Contribution Interests to Partnership. OTA hereby
grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to the
Partnership, its successors and assigns, for its and their own use forever, all right, title and
interest in and to the GP 2% Contribution Interests as a contribution of capital to the Partnership
in exchange for (i) the issuance of 793,874 notional general partner units in the Partnership to
the General Partner, representing a continuation of its 2% general partner interest in the
Partnership and (ii) the issuance of the Incentive Distribution Rights to the General Partner. The
Partnership hereby accepts the GP Contribution Interests as a contribution to the capital of the
Partnership.

     Section 2.11 Contribution of OTA Contribution Interests to Partnership. OTA hereby
grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to the
Partnership, its successors and assigns, for its and their own use forever, all right, title and
interest in and to the OTA Contribution Interests as a contribution of capital to the Partnership
in exchange for (i) 3,581,032 Common Units representing a 9.0217% limited partner interest in the
Partnership (based upon the number of Common Units expected to be outstanding following the
expiration of the Over-Allotment Option period), (ii) 10,457,842 Subordinated Units representing a
26.3464% limited partner interest in the Partnership (based upon the number of Common Units
expected to be outstanding following the expiration of the Over-Allotment Option period), (iii) a
right to receive a $[•] distribution from the Partnership reimbursing OTA for pre-formation capital
expenditures with respect to the OTH Assets, and (iv) the right to receive, upon the earlier to
occur of the expiration of the Over-Allotment Option period or the exercise in full of the
Over-Allotment Option, (A) a number of additional Common Units that is equal to the excess, if any,
of (x) 1,500,000 over (y) the aggregate number of Common Units, if any, actually purchased by and
issued to the Underwriters pursuant to the exercise of the Over-Allotment Option on the Option
Closing Date(s), and (B) a reimbursement of pre-formation capital expenditures in an amount equal
to the aggregate amount of cash, if any, contributed by the Underwriters to the Partnership on the
Option Closing Date(s) with respect to Common Units purchased by and issued to the Underwriters
pursuant to each exercise of the Over-Allotment Option, if any. The Partnership hereby accepts the
OTA Contribution Interests as a contribution to the capital of the Partnership.

6

 

     Section 2.12 Contribution of OTB Holdco Contribution Interests. OTB Holdco hereby
grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to the
Partnership, its successors and assigns, for its and their own use forever, all right, title and
interest in and to the OTB Holdco Contribution Interests as a contribution of capital to the
Partnership in exchange for (i) 4,368,869 Common Units representing a 11.0065% limited partner
interest in the Partnership (based upon the number of Common Units expected to be outstanding
following the expiration of the Over-Allotment Option period), (ii) 8,992,059 Subordinated Units
representing a 22.6536% limited partner interest in the Partnership (based upon the number of
Common Units expected to be outstanding following the expiration of the Over-Allotment Option
period) and (iii) a right to receive a $[•] distribution from the Partnership reimbursing OTA for
pre-formation capital expenditures with respect to the OTB Assets. The Partnership hereby accepts
the OTB Holdco Contribution Interests as a contribution to the capital of the Partnership.

     Section 2.13 Underwriters’ Cash Contribution. The Parties acknowledge that the
Underwriters have, pursuant to the Underwriting Agreement, made a capital contribution to the
Partnership of $[•] in cash ($[•] net to the Partnership after the underwriting discount (the
“Spread”) of $[•] and the structuring fee of $[•] payable to Citigroup Global Markets Inc.) in
exchange for the issuance by the Partnership to the Underwriters of 10,000,000 Common Units,
representing a 25.1929% limited partner interest in the Partnership (based upon the number of
Common Units expected to be outstanding following the expiration of the Over-Allotment Option
period).

     Section 2.14 Payment of Transaction Expenses and Distribution by the Partnership. The
Parties acknowledge (a) the payment by the Partnership, in connection with the transactions
contemplated hereby, of estimated transaction expenses in the amount of approximately $[•]
(inclusive of the Spread and the structuring fee), (b) the replenishment of $[•] of working capital
of OTH and OTB, respectively, by the Partnership with a portion of the net proceeds from the
Offering, (c) the distribution by the Partnership of $[•] and $[•] of the net proceeds of the
Offering to OTA and OTB Holdco, respectively, as a reimbursement for certain pre-formation capital
expenditures, (d) a payment of $119.5 million from the net proceeds of the Offering to Finance, in
repayment of a portion of the debts owed by OTH and OTB to Finance and (e) a payment of
approximately $7.1 million to reimburse OT Finance for breakage costs incurred with the repayment
of the debts referred to in clause (d).

     Section 2.15 Redemption of the Initial Partner Interests in the Partnership and the Return
of Initial Capital Contributions. The Partnership (a) hereby redeems (i) the 98% limited
partner interest in the Partnership held by OTA and (ii) the 2% general partner interest in the
Partnership held by the General Partner and (b) hereby refunds and distributes (i) to OTA the
initial capital contribution made by it to the Partnership along with 98% of any interest or other
profit that resulted from the investment or other use of such initial capital contribution and (ii)
to the General Partner the initial capital contribution made by it to the Partnership along with 2%
of any interest or other profit that resulted from the investment or other use of such initial
capital contribution.

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ARTICLE III

ADDITIONAL TRANSACTIONS

     Section 3.1 Purchase of Additional Common Units. If the Over-Allotment Option is
exercised in whole or in part, the Underwriters will contribute additional cash to the Partnership
in exchange for up to an additional 1,500,000 Common Units on the basis of the initial public
offering price per Common Unit set forth in the Registration Statement.

     Section 3.2 Issuance of Additional Common Units. Upon the earlier to occur of the
expiration of the Over-Allotment Option period or the exercise in full of the Over-Allotment
Option, the Partnership will issue to OTA a number of additional Common Units that is equal to the
excess, if any, of (x) 1,500,000 over (y) the aggregate number of Common Units, if any, actually
purchased by and issued to the Underwriters pursuant to the exercise of the Over-Allotment Option
on the Option Closing Date(s), and OTA will receive a cash distribution equal to the aggregate
amount of cash, if any, contributed by the Underwriters to the Partnership on the Option Closing
Date(s) pursuant to Section 3.1 hereof, less the amount of the underwriting discounts and
the additional structuring fee.

ARTICLE IV

FURTHER ASSURANCES

     From time to time after the Effective Time, and without any further consideration, the Parties
agree to execute, acknowledge and deliver all such additional deeds, assignments, bills of sale,
conveyances, instruments, notices, releases, acquittances and other documents, and to do all such
other acts and things, all in accordance with applicable law, as may be necessary or appropriate
(a) more fully to assure that the applicable Parties own all of the properties, rights, titles,
interests, estates, remedies, powers and privileges granted by this Agreement, or which are
intended to be so granted, (b) more fully and effectively to vest in the applicable Parties and
their respective successors and assigns beneficial and record title to the interests contributed
and assigned by this Agreement or intended to be so and (c) more fully and effectively to carry out
the purposes and intent of this Agreement.

ARTICLE V

EFFECTIVE TIME

     Notwithstanding anything contained in this Agreement to the contrary, none of the provisions
of Article II of this Agreement shall be operative or have any effect until the Effective Time, at
which time all the provisions of Article II of this Agreement shall be effective and operative in
accordance with Article VI, without further action by any Party hereto.

ARTICLE VI

MISCELLANEOUS

     Section 6.1 Order of Completion of Transactions. The transactions provided for in
Article II and Article III of this Agreement shall be completed immediately following the Effective
Time in the following order: first, the transactions provided for in Article II shall be completed
in the order set forth therein; and second, following the completion of the transactions

8

 

provided for in Article II, the transactions provided for in Article III, if they occur, shall
be completed.

     Section 6.2 Headings; References; Interpretation. All Article and Section headings in
this Agreement are for convenience only and shall not be deemed to control or affect the meaning or
construction of any of the provisions hereof. The words “hereof,” “herein” and “hereunder” and
words of similar import, when used in this Agreement, shall refer to this Agreement as a whole,
including, without limitation, all Schedules and Exhibits attached hereto, and not to any
particular provision of this Agreement. All references herein to Articles, Sections, Schedules and
Exhibits shall, unless the context requires a different construction, be deemed to be references to
the Articles and Sections of this Agreement and the Schedules and Exhibits attached hereto, and all
such Schedules and Exhibits attached hereto are hereby incorporated herein and made a part hereof
for all purposes. All personal pronouns used in this Agreement, whether used in the masculine,
feminine or neuter gender, shall include all other genders, and the singular shall include the
plural and vice versa. The use herein of the word “including” following any general statement, term
or matter shall not be construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or matters, whether or not
non-limiting language (such as “without limitation”, “but not limited to”, or words of similar
import) is used with reference thereto, but rather shall be deemed to refer to all other items or
matters that could reasonably fall within the broadest possible scope of such general statement,
term or matter.

     Section 6.3 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Parties and their respective successors and assigns.

     Section 6.4 No Third Party Rights. The provisions of this Agreement are intended to
bind the Parties as to each other and are not intended to and do not create rights in any other
person or confer upon any other person any benefits, rights or remedies, and no person is or is
intended to be a third party beneficiary of any of the provisions of this Agreement.

     Section 6.5 Counterparts. This Agreement may be executed in any number of counterparts
with the same effect as if all signatory Parties had signed the same document. All counterparts
shall be construed together and shall constitute one and the same instrument.

     Section 6.6 Choice of Law. This Agreement shall be subject to and governed by the laws
of the State of Texas. Each Party hereby submits to the jurisdiction of the state and federal
courts in the State of Texas and to venue in Houston, Texas.

     Section 6.7 Severability. If any of the provisions of this Agreement are held by any
court of competent jurisdiction to contravene, or to be invalid under, the laws of any political
body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not
invalidate the entire Agreement. Instead, this Agreement shall be construed as if it did not
contain the particular provisions or provisions held to be invalid and an equitable adjustment
shall be made and necessary provision added so as to give effect to the intention of the Parties as
expressed in this Agreement at the time of execution of this Agreement.

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     Section 6.8 Amendment or Modification. This Agreement may be amended or modified from
time to time only by the written agreement of all the Parties. Each such instrument shall be
reduced to writing and shall be designated on its face as an amendment to this Agreement.

     Section 6.9 Integration. This Agreement and the instruments referenced herein
supersede all previous understandings or agreements among the Parties, whether oral or written,
with respect to the subject matter of this Agreement and such instruments. This Agreement and such
instruments contain the entire understanding of the Parties with respect to the subject matter
hereof and thereof. No understanding, representation, promise or agreement, whether oral or
written, is intended to be or shall be included in or form part of this Agreement unless it is
contained in a written amendment hereto executed by the parties hereto after the date of this
Agreement.

     Section 6.10 Deed; Bill of Sale; Assignment. To the extent required and permitted by
applicable law, this Agreement shall also constitute a “deed,” “bill of sale” or “assignment” of
the assets and interests referenced herein.

[Signature Pages Follow]

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     IN WITNESS WHEREOF, the parties to this Agreement have caused it to be duly executed as of the
date first above written.

	 	 	 	 	 

	 	 	OILTANKING PARTNERS, L.P.
	 
	 	 	 	 
	 

	 	By:
	 	OTLP GP, LLC,
	 

	 	 	 	its general partner
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
 Name: Carlin
G. Conner
	 

	 	 	 	Title: President and Chief Executive Officer
	 
	 	 	 	 
	 	 	OTLP GP, LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
 Name: Carlin
G. Conner
	 

	 	 	 	Title: President and Chief Executive Officer
	 
	 	 	 	 
	 	 	OILTANKING HOLDING AMERICAS, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
 Name: Carlin
G. Conner
	 

	 	 	 	Title: President
	 
	 	 	 	 
	 	 	OTB HOLDCO, LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
 Name:
Carlin G. Conner
	 

	 	 	 	Title: President and Chief
Executive Officer
	 
	 	 	 	 
	 	 	OILTANKING BEAUMONT GP, L.L.C.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
 Name:
Carlin G. Conner
	 

	 	 	 	Title: President

Signature Page to Contribution, Conveyance and Assumption Agreement

11

 

	 	 	 	 	 

	 	 	OILTANKING BEAUMONT PARTNERS, L.P.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	OILTANKING BEAUMONT GP, L.L.C.,
	 

	 	 	 	its general partner
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
 Name: Carlin
G. Conner
	 

	 	 	 	Title: President
	 
	 	 	 	 
	 	 	OTB GP, LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
 Name:
Carlin G. Conner
	 

	 	 	 	Title: President and Chief
Executive Officer
	 
	 	 	 	 
	 	 	OILTANKING HOUSTON, L.P.
	 
	 	 	 	 
	 

	 	By:
	 	OTH GP, LLC,
	 

	 	 	 	its general partner
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
 Name: Carlin
G. Conner
	 

	 	 	 	Title: President
	 
	 	 	 	 
	 	 	OTH GP, LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
 Name: Carlin
G. Conner
	 

	 	 	 	Title: President

Signature Page to Contribution, Conveyance and Assumption Agreement

12exv10w1

Exhibit 10.1

ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (this “Agreement”), is entered into this 30th day of
June, 2011, by and among (a) BORDERS GROUP, INC., a corporation formed under the laws of the State
of Michigan (“Parent”), and BORDERS, INC., a corporation formed under the laws of the State
of Colorado (the “Company” and, together with Parent, the “Sellers,” and each,
individually, a “Seller”), and (b) BB Brands, LLC, a limited liability company formed under
the laws of the State of Delaware (the “Buyer”). The Sellers and the Buyer are referred to
herein individually as a “Party” and collectively as the “Parties.”

RECITALS

     WHEREAS, the Sellers and certain of their domestic subsidiaries (together with the Sellers,
the “Seller Group”) filed a voluntary petition for relief under Chapter 11 of Title 11 of
the United States Code (the “Bankruptcy Code”) on February 16, 2011 in the United States
Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), and such
bankruptcy cases are being jointly administered under Case No. 11-10614 (MG) and are hereinafter
referred to collectively as the “Cases;” and

     WHEREAS, each of the Sellers wishes to sell, transfer, convey, assign and deliver to the
Buyer, and the Buyer wishes to purchase, assume and acquire, in accordance with Sections 363 and
365 and the other applicable provisions of the Bankruptcy Code, the Assets (as hereinafter
defined), together with the Assumed Liabilities (as hereinafter defined), upon the terms and
subject to the conditions set forth in this Agreement; and

     WHEREAS, subject to the Bankruptcy Court’s entry of the Sale Order (as hereinafter defined),
the Buyer shall purchase from the Sellers, and the Sellers shall sell, transfer, convey, assign and
deliver to the Buyer, the Assets together with the Assumed Liabilities, upon the terms and subject
to the conditions set forth in this Agreement; and

     WHEREAS, prior to the Closing Date (as hereinafter defined), (i) the Sellers, the Buyer and
Hilco Merchant Resources, LLC (the “Agent”) shall enter into a Going Concern Agency Agreement (as
amended and modified from time to time, the “Going Concern Agency Agreement”), or (ii) the
Buyer shall execute a joinder to the Backstop Agency Agreement among the Sellers, the Agent and
certain other agents (as amended and modified from time to time, the “Backstop Agency
Agreement,” and together with the Going Concern Agency Agreement, the “Agency
Agreements”), in each case pursuant to which the Agent (and such other agents, in the case of
the Backstop Agency Agreement) shall be retained as exclusive agent in connection with the
disposition of certain of the assets of the Seller Group in accordance with the terms and
conditions set forth therein.

AGREEMENT

     NOW, THEREFORE, in consideration of the mutual promises and agreements herein contained and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties mutually agree as follows:

 

 

ARTICLE 1

PURCHASE AND SALE OF ASSETS

     1.1 Defined Terms. All capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings set forth for such terms in Article 13.

     1.2 Purchase and Sale. Subject to the terms and conditions set forth in this
Agreement, the Sellers hereby agree that at the Closing, or such other date or dates provided in
Section 1.4, they shall, and shall cause the other members of the Seller Group to, sell, transfer,
convey and assign to the Buyer, free and clear of all Liens (except for Permitted Liens), and the
Buyer shall purchase, assume and acquire from the Seller Group, all right, title and interest of
the Seller Group in, to and under all of the business, properties, assets and goodwill of whatever
kind and nature, real or personal, tangible or intangible, actual or contingent, which are owned or
held by the Seller Group, other than the Excluded Assets (collectively, the “Assets”),
including the following:

          (a) All of the interest of the Seller Group in and to the Real Property Leases set forth on
Schedule 1.2(a) that are designated by the Buyer to be assumed by the Seller Group and
assigned to the Buyer in accordance with Section 1.4 (the “Assumed Real Property Leases”);

          (b) All of the interest of the Seller Group in and to the Contracts set forth on Schedule
1.2(b) that are designated by the Buyer to be assumed by the Seller Group and assigned to the
Buyer in accordance with Section 1.4 (the “Assumed Contracts”);

          (c) All of the interest of the Seller Group in and to all Equipment and leasehold improvements
in the Transferred Stores and Distribution Centers (the “Transferred Equipment and
Improvements”);

          (d) All Licenses (to the extent such Licenses are freely transferable), other than Licenses
relating exclusively to any Excluded Leased Property (the “Excluded Licenses”);

          (e) All of the interest of the Seller Group in Intellectual Property;

          (f) All of the interest of the Seller Group in and to all Inventory other than Inventory
located at the Store Closing Locations (the “Transferred Inventory”);

          (g) All security and other deposits and advances and all pre-paid expenses maintained by the
Seller Group, other than the deposits, advances and pre-paid expenses relating exclusively to any
Excluded Leased Property (the “Excluded Deposits”);

          (h) All Accounts Receivable arising from sales of Inventory prior to the Closing Date (the
“Transferred Accounts Receivable”);

          (i) Subject to Section 2.9, all right, title and interest in and to the equity interest (the
“Kobo Interest”) in Kobo, Inc. (“Kobo”) held by the Seller Group;

          (j) All goodwill of the Seller Group associated with the Business as a going concern;

          (k) All of the Sellers’ books, records, files, documents and other written or electronic
materials, including customer lists, except those related to the Excluded Assets or the Excluded
Liabilities or expressly included in the Excluded Assets pursuant to Section 1.3;

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          (l) All Cash;

          (m) The Disposition Rights; and

          (n) All franchisor rights with respect to the foreign operations of the Seller Group,
including all rights to receive franchise fees.

     1.3 Excluded Assets. Notwithstanding anything to the contrary contained herein,
expressly excluded from the Assets are all of the right, title and interest of the Seller Group in
and to the following (collectively, the “Excluded Assets”):

          (a) All corporate and Tax records of the Seller Group and any foreign subsidiaries of the
Seller Group, including corporate charters, corporate minute and stock books and records, and other
documents and instruments relating solely to the organization, maintenance and existence of the
Seller Group or such foreign subsidiaries or the Taxes of the Seller Group or such foreign
subsidiaries;

          (b) All claims (including any litigation or arbitration claims and any refunds and deposits),
rights, rights of offset or causes of action that the Seller Group or their Affiliates may have
against or from any Person relating to any of the Excluded Assets or the Excluded Liabilities;

          (c) All refunds, pre-payments, net operating losses and claims relating to federal, state or
municipal income Taxes of the Seller Group or their Affiliates for any period, or portion of any
period, ending on or prior to the Closing Date;

          (d) The capital stock of the Seller Group and each of their subsidiaries and all equity
securities owned or held by any Seller Group or any of their subsidiaries, other than the Seller
Group’s right, title and interest in and to the Kobo Interest, subject to Section 2.9;

          (e) All causes of action and claims that may be asserted against the Buyer and all rights of
the Sellers under this Agreement or any Ancillary Agreement or any other agreements or instruments
otherwise delivered in connection with this Agreement or any Ancillary Agreement;

          (f) All of the interest of the Seller Group in and to all Real Property Leases other than the
Assumed Real Property Leases (the “Excluded Real Property Leases”);

          (g) All of the interest of the Seller Group in and to all Contracts other than the Assumed
Contracts (the “Excluded Contracts”);

          (h) All Equipment and leasehold improvements in the Store Closing Locations;

          (i) All Excluded Licenses;

          (j) All Inventory located at the Store Closing Locations;

          (k) All Excluded Deposits;

          (l) All confidential personnel and medical records of employees who do not become Transferred
Employees;

          (m) All assets, properties or rights relating to any Employee Plan of the Seller Group;

          (n) All Avoidance Actions;

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          (o) All assets and other rights relating to the Business sold or otherwise transferred or
disposed of during the period from the date of this Agreement through and including the Closing
Date, in any event in accordance with the provisions of this Agreement; and

          (p) All of the other assets, rights and properties set forth on Schedule 1.3(p).

     1.4 Assumed and Rejected Leases and Contracts; Inventory Liquidation.

          (a) The Buyer shall have the right, exercisable without limitation at any time and from time
to time prior to the applicable Designation Deadline, to notify the Sellers in writing of the
Buyer’s election to treat each Real Property Lease set forth on Schedule 1.2(a) as either
an Assumed Real Property Lease or an Excluded Real Property Lease.

          (b) The Buyer shall have the right, exercisable without limitation at any time and from time
to time prior to the applicable Designation Deadline, to notify the Sellers in writing of the
Buyer’s election to treat each Contract set forth on Schedule 1.2(b) as either an Assumed
Contract or an Excluded Contract.

          (c) Promptly following delivery of each notice by the Buyer pursuant to Section 1.4(a) or
1.4(b) or, in the case of any notice delivered prior to the Closing Date, as of or promptly
following the Closing Date, the Sellers shall or shall cause (i) each Real Property Lease or
Contract that the Buyer has elected to treat as Assumed Real Property Lease or Assumed Contract to
be assumed and assigned to the Buyer in accordance with Section 365 of the Bankruptcy Code and the
Sale Order and (ii) each Real Property Lease or Contract that the Buyer has elected to treat as an
Excluded Real Property Lease or Excluded Contract to be rejected in accordance with Section 365 of
the Bankruptcy Code and the Sale Order. The Sellers shall timely file appropriate motions and take
such other actions as may be necessary to assume and assign to the Buyer the Assumed Real Property
Leases and Assumed Contracts, and the Sale Order shall authorize such assumption and assignment.
On the date of the assignment thereof to the Buyer, the Seller Group shall be released from any
further liability under the Assumed Real Property Leases and Assumed Contracts. On the date of the
assignment of any Assumed Real Property Lease to the Buyer, all right, title and interest of the
Seller Group in and to any Assets located at any Store subject to such Assumed Real Property Lease
shall be deemed sold, transferred, conveyed and assigned to the Buyer.

          (d) To the extent that any Assumed Real Property Lease or Assumed Contract is subject to a
cure (pursuant to Section 365 of the Bankruptcy Code and described in any Order of the Bankruptcy
Court relating to such cure liability), the Buyer shall be obligated to pay such Cure Costs as a
condition to such assumption and assignment to the Buyer. A good faith estimate of such Cure
Costs, determined as of the date of this Agreement, is attached as Schedule 1.4(d).

          (e) If the Buyer fails for any reason to notify the Sellers in writing prior to the applicable
Designation Deadline with respect to any Real Property Lease or Contract of the Buyer’s election
pursuant to Section 1.4(a) or 1.4(b), then such Real Property Lease or Contract shall be deemed to
be an Excluded Real Property Lease or Excluded Contract and the provisions of Section 1.4(c)(ii)
shall apply.

          (f) Subject to entry by the Bankruptcy Court of the Sale Order, the Agent shall act as the
exclusive agent of the Sellers and the Buyer for the purpose of liquidating the Inventory and
Equipment and leasehold improvements at the Leased Real Property subject to all Real Property
Leases that are designated as Excluded Real Property Leases in accordance with this Section 1.4
(such locations, the “Store Closing Locations”) through the conduct of GOB Sales.
Notwithstanding designation of a

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Real Property Lease as an Excluded Real Property Lease, the Buyer
may deliver notice to the Agent to
defer commencement of a GOB Sale at such Store Closing Location; provided that the Buyer may
not defer the commencement of any Pre-Closing GOB Sale. The terms, conditions and procedures
applicable to the conduct of the GOB Sales in the Store Closing Locations are set forth in the
applicable Agency Agreement. After the Closing Date, the Buyer or its parent may have
representatives present at Store Closing Locations during GOB Sales to sell Direct Brands club
memberships, provided such activities do not adversely impact the conduct of the GOB Sales.

ARTICLE 2

PURCHASE PRICE AND PAYMENT

     2.1 Initial Purchase Price. The aggregate consideration to be paid by the Buyer
or by the Agent pursuant to the applicable Agency Agreement for the sale of the Assets and for the
right of the Agent to conduct the GOB Sales pursuant to the terms of the Agency Agreement shall
consist of (a) $215,100,000 (the “Initial Purchase Price”), subject to adjustment in
accordance with Sections 2.2 and 2.3, and (b) the assumption by the Buyer of the Assumed
Liabilities. At the Closing, $17,000,000 of the Initial Purchase Price (the “Escrow
Amount”) shall be delivered by the Buyer to the Escrow Agent by wire transfer of immediately
available funds in accordance with instructions given by the Escrow Agent. The balance of the
Initial Purchase Price, as adjusted in accordance with Section 2.2, shall be paid to the Sellers at
the Closing by wire transfer of immediately available funds in accordance with instructions given
by the Sellers to the Buyer.

     2.2 Adjustments to the Initial Purchase Price.

          (a) No later than three (3) Business Days prior to the Closing Date, the Sellers shall prepare
and deliver to the Buyer a statement setting forth in reasonable detail the Sellers’ calculation of
the Net Working Capital as of the close of business on the Closing Date (the “Estimated Closing
Net Working Capital”). The Sellers’ calculation of the Estimated Closing Net Working Capital
shall be made on an estimated basis using the same accounting methodologies and procedures used to
calculate the Reference Closing Net Working Capital as set forth on Schedule 2.2(a). An
appropriate dollar-for-dollar adjustment shall be made in the Estimated Closing Net Working Capital
to take into account any Pre-Closing GOB Sales.

          (b) If the Estimated Closing Net Working Capital is less than the Reference Closing Net
Working Capital, the Initial Purchase Price shall be decreased dollar-for-dollar by the absolute
value of the deficiency. If the Estimated Closing Net Working Capital is greater than the Reference
Closing Net Working Capital, the Initial Purchase Price shall be increased dollar-for-dollar by the
absolute value of the excess.

          (c) Within fifteen (15) days after the first full monthly accounting period (or four or five
weeks, as the case may be) following the Closing Date, the Buyer shall prepare and deliver to the
Sellers written notice (the “Adjustment Notice”) containing (i) the Buyer’s calculation in
reasonable detail of the Net Working Capital as of the close of business on the Closing Date (the
“Final Closing Net Working Capital”) and (ii) the Buyer’s calculation of the amount of any
payments required pursuant to Section 2.2(h) (the “Adjustment Calculation”). The Buyer’s
calculation of the Final Closing Net Working Capital shall be made based on the financial books and
records of the Business as of the close of business on the Closing Date using the same accounting
methodologies and procedures used to calculate the Reference Closing Net Working Capital as set
forth in Schedule 2.2(a). An appropriate dollar-for-dollar adjustment shall be made in the
Final Closing Net Working Capital to take into account any Pre-Closing GOB Sales. With respect to
any Store Closing Locations at which a physical inventory has been

5

 

conducted in accordance with the
applicable Agency Agreement prior to the delivery of the Adjustment Notice, the Final Closing Net
Working Capital shall take into account the results of such physical
inventory applying the valuation methodologies, as applicable, set forth in the applicable
Agency Agreement. The Buyer shall include with the Adjustment Notice delivered to the Sellers
copies of all inventory and valuation reports prepared in connection with such physical
inventories.

          (d) Within thirty (30) days after delivery of the Adjustment Notice, the Sellers shall deliver
to the Buyer a written response in which the Sellers shall either (i) agree in writing with the
Adjustment Calculation, in which case such calculation shall be final and binding on the parties
for purposes of Section 2.2(h), or (ii) dispute the Adjustment Calculation by delivering to the
Buyer a written notice (a “Dispute Notice”) setting forth in reasonable detail the basis
for each such disputed item.

          (e) If the Sellers fail to take either of the foregoing actions within 30 days after delivery
of the Adjustment Notice, then the Sellers shall be deemed to have irrevocably accepted the
Adjustment Calculation, in which case, the Adjustment Calculation shall be final and binding on the
Parties for purposes of Section 2.2(h).

          (f) If the Sellers timely deliver a Dispute Notice to the Buyer, then the Buyer and the
Sellers shall attempt in good faith, for a period of thirty (30) days, to agree on the Adjustment
Calculation for purposes of Section 2.2(h). Any resolution by the Buyer and the Sellers during
such thirty (30) day period as to any disputed items shall be final and binding on the Parties for
purposes of Section 2.2(h). If the Buyer and the Sellers do not resolve all disputed items within
thirty (30) days after the date of delivery of the Dispute Notice, then the Buyer and the Sellers
shall submit the remaining items in dispute to PriceWaterhouseCoopers LLP (the “Independent
Accounting Firm”) for resolution. The Buyer and the Sellers shall instruct the Independent
Accounting Firm to render its determination with respect to the items in dispute in a written
report that specifies the conclusions of the Independent Accounting Firm as to each item in dispute
and the resulting Adjustment Calculation. The Buyer and the Sellers shall each use their
reasonable best efforts to cause the Independent Accounting Firm to render its determination within
thirty (30) days after referral of the items to such firm or as soon thereafter as reasonably
practicable. The Independent Accounting Firm’s determination of the Adjustment Calculation as set
forth in its report shall be final and binding on the Parties for purposes of Section 2.2(h). The
Buyer shall revise the calculation of the Final Closing Net Working Capital as appropriate to
reflect the resolution of the issues in dispute pursuant to this Section 2.2(f). The fees and
expenses of the Independent Accounting Firm shall be shared by the Buyer and the Sellers in inverse
proportion to the relative amounts of the disputed amount determined to be for the account of the
Buyer and the Sellers, respectively.

          (g) For purposes of complying with this Section 2.2, the Buyer and the Sellers shall furnish
to each other and to the Independent Accounting Firm such work papers and other documents and
information relating to the disputed items as the Independent Accounting Firm may request and are
available to that party (or its independent public accountants) and shall be afforded the
opportunity to present to the Independent Accounting Firm any material related to the disputed
items and to discuss the items with the Independent Accounting Firm. If the Buyer elects to
conduct a physical inventory in connection with its calculation of the Final Closing Net Working
Capital, the Buyer shall notify the Sellers in advance of such inventory, shall permit
representatives of the Sellers to be present during such inventory and shall provide to the Sellers
copies of all reports and other records and information produced in connection with such inventory.

          (h) If the Final Closing Net Working Capital, as finally determined pursuant to this Section
2.2, is greater than the Estimated Closing Net Working Capital, then the Sellers shall be entitled
to receive a distribution of the Escrow Amount and the Buyer shall pay to the Sellers an amount
equal to

6

 

such excess. If the Final Closing Net Working Capital, as finally determined pursuant to
this Section 2.2, is less than the Estimated Closing Net Working Capital, then the Buyer shall be
entitled to receive a distribution of a portion of the Escrow Amount equal to the amount of such
shortfall, and the Sellers shall
be entitled to receive a distribution of the balance, if any, of the Escrow Amount. If the
Escrow Amount is not sufficient to cover the amount the Sellers are required to pay to the Buyer
pursuant to the preceding sentence, the Sellers shall pay the shortfall to the Buyer.

          (i) All distributions and payments pursuant to Section 2.2(h) shall be made within five
Business Days following the final determination of the Final Closing Net Working Capital in
accordance with this Section 2.2; provided that if the Sellers deliver a Dispute Notice to the
Buyer in accordance with Section 2.2(f) and the aggregate value of all disputed items is less than
the Escrow Amount, the Sellers and the Buyer shall promptly instruct the Escrow Agent in writing to
distribute to the Sellers the portion of the Escrow Amount that is not in dispute and to retain the
balance of the Escrow Amount pending final resolution of such disputes in accordance with Section
2.2(f).

          (j) The Initial Purchase Price as adjusted in accordance with this Section 2.2 is referred to
in this Agreement as the “Purchase Price.”

     2.3 Assumed Liabilities and Excluded Liabilities

          (a) Subject to the terms and conditions set forth in this Agreement, the Buyer hereby agrees
that at the Closing, or such other date or dates provided in Section 1.4, it shall assume and
become responsible for the following liabilities and obligations of the Seller Group existing as of
such time and arising from the operation of the Business prior to the Closing or the other date or
dates provided in Section 1.4, as applicable (collectively, the “Assumed Liabilities”):

     (i) All liabilities and obligations under the Assumed Real Property Leases and Assumed
Contracts that are assumed and assigned to the Buyer in accordance with Section 1.4, whether
at the Closing or thereafter, including all related Cure Costs;

     (ii) All liabilities and obligations with respect to any gift cards outstanding on the
Closing Date, and in the event that the Going Concern Agency Agreement is executed, all
liabilities with respect to other loyalty programs outstanding on the Closing Date;

     (iii) All liabilities and obligations with respect to Inventory returned to the Stores
after the Closing Date;

     (iv) All liabilities and obligations with respect to the Transferred Employees, to the
extent set forth in Section 7.6;

     (v) All liabilities and obligations of the Seller Group relating to real property,
personal property, sales and use and other accrued and unpaid Taxes taken into account in
the calculation of the Final Closing Net Working Capital;

     (vi) All post-petition trade and other accounts payable and other accrued liabilities
taken into account in the calculation of the Final Closing Net Working Capital;

     (vii) All obligations under the letters of credit set forth on Schedule
2.3(a)(vii) (the “Assumed Letters of Credit”); and

     (viii) All Wind Down Obligations in accordance with Section 2.4.

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          (b) Except for the Assumed Liabilities, the Buyer shall not be subject to and shall not assume
nor be liable for any liabilities of any kind or nature, whether absolute, contingent, accrued,
known or unknown, of the Seller Group or related to the Assets or the Business, including the
following (collectively, the “Excluded Liabilities”):

     (i) Any obligation or liability in respect of Outstanding Indebtedness, other than the
Assumed Letters of Credit;

     (ii) Subject to Section 2.3(a)(v) and Section 2.6, any obligation or liability of the
Seller Group for Taxes;

     (iii) Any pre-petition obligation or liability of the Seller Group and any obligation
or liability of the Seller Group that constitutes a claim or interest against the Seller
Group under Sections 502 or 503 of the Bankruptcy Code to the extent not specifically
included in the Assumed Liabilities;

     (iv) Any obligation or liability under the Excluded Real Property Leases or the
Excluded Contracts;

     (v) Any obligation or liability in respect of professional fees and expenses incurred
by the Sellers prior to the Closing Date;

     (vi) Any obligation or liability in respect of any contingent or success-based fees
payable by the Sellers in connection with the Closing pursuant to any Contract entered into
by the Sellers prior to the Closing Date;

     (vii) Any obligation or liability in respect of the Sellers’ Key Employee Retention
Plan, Key Employee Incentive Plan or any grant or award under either such Plan;

     (viii) Any obligation or liability of the Seller Group to their respective shareholders
or equity holders or Affiliates of the Seller Group;

     (ix) Any obligation or liability relating to any current or former employee of the
Seller Group, or their dependents and beneficiaries, other than the obligations and
liabilities set forth in Section 7.6.

     2.4 Wind Down Obligations.

          (a) From and after the Closing Date, the Buyer shall, on behalf of the Seller Group, pay,
perform or otherwise satisfy when and as due all of the obligations, liabilities and expenses as
provided in the Transition Agreement (collectively, the “Wind Down Obligations”), including
the following:

     (i) All compensation (including any severance compensation) and benefits (including
group medical, dental and life insurance benefits) paid or provided by the Seller Group to
current or former employees of the Seller Group (other than employees employed at Store
Closing Locations the costs of which are the responsibility of the Agent under the
applicable Agency Agreement), or their dependents and beneficiaries;

     (ii) All rents (including holiday closing payments), real and personal property and use
taxes and assessments, maintenance and cleaning costs, insurance premiums, utility costs and

8

 

other costs and expenses arising from the operation of the Headquarters Building, the
Distribution Centers and the Stores (other than such costs relating to Store Closing
Locations which are the responsibility of the Agent under the applicable Agency Agreement)
by the Seller Group;

     (iii) All property, casualty and other insurance premiums, fees and expenses payable in
connection with the operations of the Seller Group;

     (iv) All professional fees and expenses, court costs and fees, appraisal and valuation
expenses and other costs and expenses arising in connection with the Cases (or any successor
liquidating trust or similar arrangement); and

     (v) All other obligations, liabilities and expenses that are reasonably incurred by the
Seller Group in connection with the performance of this Agreement or the orderly winding
down and termination of the Seller Group’s business.

          (b) Notwithstanding Section 2.4(a), the aggregate amount of Wind Down Obligations set forth in
Sections 2.4(a)(iv) and 2.4(a)(v) for which the Buyer shall be responsible shall not exceed
$15,000,000.

          (c) Prior to the Closing Date, the Parties shall agree upon and document mutually acceptable
arrangements with respect to the incurrence and payment for Wind Down Obligations, including
arrangements reasonably satisfactory to the Buyer with respect to minimizing to the extent
practicable the Wind Down Obligations for which it is responsible.

          (d) In order to ensure the payment, performance and satisfaction in full of the Wind Down
Obligations by the Buyer, the Buyer hereby covenants and agrees that until the final discharge of
all of the Wind Down Obligations, without the prior written consent of the Sellers, the Buyer shall
not (i) declare or pay any dividend or make any distribution of cash or other property, including
any Assets, or repurchase or redeem for value any of its outstanding debt or equity securities, or
(ii) directly or indirectly assign or otherwise transfer to any Affiliate of the Buyer any interest
in assets of the Buyer, including the Assets.

     2.5 Non-Assignable Assets. If any Asset is by its terms or by Applicable Law
non-assignable or non-transferable, to the extent such terms are not superseded by the terms of the
Sale Order, the Sellers shall use their reasonable best efforts to obtain, or cause to be obtained,
on or prior to the Closing, any approvals or consents necessary to convey to the Buyer the benefit
thereof. The Buyer shall cooperate with the Sellers in such manner as may be reasonably requested
in connection therewith. In the event any consent or approval to an assignment contemplated hereby
is not obtained on or prior to the Closing Date, the Sellers shall continue to use reasonable best
efforts to obtain any such approval or consent after the Closing Date and the Sellers agree to
enter into any appropriate and commercially reasonable arrangement to provide that the Buyer shall
receive the Seller Group’s interest in the benefits under any such Asset; provided that the Buyer
shall undertake to pay or satisfy the corresponding liabilities for the enjoyment of such benefit
to the extent the Buyer would have been responsible therefor if such consent or approval had been
obtained.

     2.6 Transfer Taxes. To the extent the transactions contemplated hereby are not exempt
under Section 1146 of the Bankruptcy Code, the Buyer shall be liable for and pay any sales and
transfer Taxes, filing fees, documentary fees or other Taxes payable in connection with the
purchase, sale or transfer of the Assets to, and the assumption of the Assumed Liabilities by, the
Buyer pursuant to this Agreement. The Buyer and the Sellers shall use reasonable best efforts to
minimize the amount of all the foregoing Taxes and shall cooperate in providing each other with any
appropriate resale exemption certifications,

9

 

Tax clearance certificates and other similar
documentation. The Party that is required by Applicable Law to make the filings, reports, or
returns and to handle any audits or controversies with respect to any of the foregoing Taxes shall
do so, and the other Party shall cooperate (and make reimbursement) with respect thereto as
necessary.

     2.7 Allocation of Purchase Price. No later than ninety (90) days after the Closing
Date, the Buyer and the Sellers shall mutually agree upon a Tax allocation of the Purchase Price,
applicable Assumed Liabilities and other relevant items among the Assets in accordance with Section
1060 of the Tax Code and the regulations thereunder and any comparable provision of state or local
law. Each of the Parties agrees that it or they shall file a statement (on IRS Form 8594 or other
applicable form) setting forth such allocation with its or their federal and applicable state
income Tax returns and shall also file such further information or take such further actions as may
be necessary to comply with the Treasury Regulations that have been promulgated pursuant to Section
1060 of the Tax Code and similar applicable state laws and regulations.

     2.8 Deposit. The Buyer shall, within two (2) Business Days after the date of this
Agreement, deposit with a mutually acceptable independent escrow agent (the “Escrow Agent”)
an amount equal to $15,000,000 (the “Deposit”), pursuant to an escrow agreement in
customary commercial form (the “Escrow Agreement”). If the Closing takes place as
provided herein, then the Deposit shall be credited against the Initial Purchase Price pursuant to
Section 2.1 and paid by the Escrow Agent to the Sellers at the Closing. If this Agreement is
terminated in accordance with Article 10 for any reason other than pursuant to Section 10.1(g),
then the Escrow Agent shall promptly return the Deposit to the Buyer. If this Agreement is
terminated pursuant to Section 10.1(g), the Escrow Agent shall retain the Deposit pending a
determination of actual damages pursuant to Section 12.14.

     2.9 Kobo Interest. The Buyer acknowledges that the assignment and transfer of the
Kobo Interest by the Seller Group to the Buyer pursuant to this Agreement are subject to certain
transfer restrictions, first refusal rights and participation rights under the organizational
documents and shareholders agreement of Kobo. Prior to the Closing, the Sellers shall obtain a
waiver of the foregoing restrictions and rights from Kobo and its shareholders or shall otherwise
cause such restrictions and rights not to be applicable to the assignment and transfer of the Kobo
Interest to the Buyer pursuant to this Agreement. The Buyer shall cooperate with the reasonable
requests of the Sellers in connection with the assignment and transfer of the Kobo Interest,
including executing at Closing a joinder agreement or similar instrument pursuant to which it
agrees to become a party to and bound by the Kobo shareholders agreement and any other agreements
to which the shareholders of Kobo, including the Sellers, are party as of the date of this
Agreement.

     2.10 Second Escrow.

          (a) On the Closing Date, the Buyer shall fund a second escrow with the Escrow Agent in the
amount of $7,500,000 (the “Second Escrow Amount”), pursuant to an escrow agreement in
customary commercial form (the “Second Escrow Agreement”). If the Sellers have
insufficient assets after the Closing to pay all allowed administrative expenses pursuant to
Section 503(b) and allowed priority tax claims pursuant to Section 507(a)(8) of the Bankruptcy Code
that were incurred and unpaid as of the Closing Date, excluding any and all of such expenses that
will be paid by the Buyer or the Agent hereunder or pursuant to the applicable Agency Agreement,
then the Sellers may from time to time provide written notice of the deficiency to the Buyer (the
“Second Escrow Claim Notice”). The Second Escrow Claim Notice shall be accompanied by
reasonable supporting documentation setting forth the amount and nature of any allowed
administrative expenses or allowed priority tax claims for which a deficiency exists and the amount
of the deficiency. A copy of the Second Escrow Claim Notice shall also be provided by the Sellers
to the Escrow Agent. The Second Escrow Claim Notice shall be final and

10

 

binding on the Buyer unless
within ten (10) days following receipt thereof, the Buyer disputes any calculation thereon by
delivering a written notice to the Seller and the Escrow Agent (the “Second Escrow Dispute
Notice”).

          (b) If the Buyer does not timely provide a Second Escrow Dispute Notice, or if the Buyer
affirmatively accepts the Second Escrow Claim Notice, the Buyer and the Sellers shall instruct the
Escrow Agent to transfer to the Sellers the amount set forth in the Second Escrow Claim
Notice. If the Buyer disputes only a portion of the Second Escrow Claim Notice in its Second
Escrow Dispute Notice, the Buyer and the Sellers shall jointly instruct the Escrow Agent to release
to the Sellers the undisputed amount.

          (c) Any dispute with respect to a Second Escrow Claim Notice shall be resolved by an action in
the Bankruptcy Court. Upon resolution of such dispute, if additional amounts are payable to the
Seller, the Buyer and the Sellers shall mutually instruct the Escrow Agent to pay such amounts.

          (d) The escrow contemplated by this Section 2.10 shall terminate on the earlier of January 31,
2012 or sixty (60) days after the effective date of a plan of reorganization, and the remaining
balance paid by the Escrow Agent to the Buyer; provided that any amount subject to dispute not
resolved by such time shall remain in the escrow until the dispute is resolved.

          (e) Any payments to the Sellers under this Section 2.10 shall be treated as an increase to the
Purchase Price.

ARTICLE 3

CLOSING

     3.1 Closing. Consummation of the transactions contemplated hereby (the
“Closing”) shall occur as soon as practicable on such date as is specified by the Buyer,
but in any event not later than two (2) Business Days after the date the conditions to Closing set
forth in this Agreement are satisfied or waived (other than those conditions that by their nature
are to be satisfied at the Closing), at the offices of Kasowitz, Benson, Torres & Friedman LLP, New
York, New York, or at such time and place as the Buyer and the Sellers may otherwise agree. The
date on which the Closing actually takes place is referred to in this Agreement as the “Closing
Date.” Notwithstanding anything herein to the contrary, the Buyer shall be entitled to direct
the Agent to conduct GOB Sales on the terms set forth in the applicable Agency Agreement commencing
on the first day following the entry of the Sale Order.

     3.2 Deliveries by the Sellers at Closing. At the Closing, the Sellers shall each
execute, acknowledge and deliver to the Buyer the following (which events shall occur, each being
deemed to have occurred simultaneously with the others):

          (a) A Bill of Sale in a form reasonably satisfactory to the Buyer and its counsel and the
Sellers and their counsel;

          (b) An Assignment and Assumption Agreement in a form reasonably satisfactory to the Buyer and
its counsel and the Sellers and their counsel, pursuant to which the Buyer shall be assigned and
shall assume the Assumed Real Property Leases, Assumed Contracts and Assumed Liabilities from the
Seller Group (the “Assignment and Assumption Agreement”);

          (c) A copy of the Sale Order;

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          (d) Trademark, patent and domain name assignments in a form reasonably satisfactory to the
Buyer and its counsel and the Sellers and their counsel, pursuant to which the Seller Group shall
assigned the Transferred Intellectual Property to the Buyer (the “IP Assignments”);

          (e) The Escrow Agreement and the Second Escrow Agreement, each in a form reasonably
satisfactory to the Buyer and its counsel and the Sellers and their counsel;

          (f) The applicable Agency Agreement in a form reasonably satisfactory to the Sellers, the
Buyer and the Agent;

          (g) A copy of the resolutions adopted by the Sellers’ Boards of Directors authorizing the
transactions contemplated hereby and the consummation thereof, certified by a secretary or
assistant secretary of the Sellers to be a true and correct copy;

          (h) A certificate of incumbency as to those officers of the Sellers executing instruments in
connection with this Agreement; and

          (i) All other documents, certificates, instruments or writings, including the Ancillary
Agreements, reasonably requested by the Buyer in connection herewith.

     3.3 Deliveries by the Buyer at Closing. At the Closing, the Buyer shall execute,
acknowledge and deliver to the Sellers the following (which events shall occur, each being deemed
to have occurred simultaneously with the others):

          (a) A duly executed Assignment and Assumption Agreement;

          (b) The Bill of Sale and the IP Assignments, if any, that call for a signature by the Buyer;

          (c) The Escrow Agreement and the Second Escrow Agreement, each in a form reasonably
satisfactory to the Buyer and its counsel and the Sellers and their counsel;

          (d) The Initial Purchase Price, as adjusted in accordance with Section 2.2(b), to the Sellers
by wire transfer in immediately available funds;

          (e) A copy of the resolutions adopted by the Buyer’s Board of Directors authorizing the
transactions contemplated hereby and the consummation thereof, certified by a secretary or
assistant secretary of the Buyer to be a true and correct copy;

          (f) A certificate of incumbency as to those officers of the Buyer executing instruments in
connection with this Agreement; and

          (g) All other documents, certificates, instruments or writings, including the Ancillary
Agreements, reasonably requested by the Sellers in connection herewith.

     3.4 Deemed Consents and Cures. The Sellers shall be deemed to have obtained all
required consents, as applicable, in respect of the assignment of any of the Assumed Real Property
Leases and Assumed Contracts and all defaults thereunder shall be deemed to have been cured if,
and to the extent that, pursuant to the Sale Order or another Order of the Bankruptcy Court, the
Seller Group is authorized to assume and assign any such Assume Real Property Leases and Assumed
Contracts to the Buyer pursuant to Section 365 of the Bankruptcy Code.

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     3.5 Subsequent Documentation; Further Assurances. The Buyer and the Sellers shall, at
any time and from time to time after the Closing Date, upon the reasonable request of the other,
execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, all such
further (a) assignments, transfers and conveyances as may be required for assigning, transferring,
granting, conveying and confirming the transactions contemplated hereby, including aiding and
assisting the Buyer in collecting and reducing to possession any or all of the Assets and (b)
documents and instruments as may be reasonably necessary for the further completion of any of the
transactions contemplated hereby.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

     The Sellers, jointly and severally, represent that the following are true and correct as of
the date hereof and shall be true and correct at the date of the Closing after giving effect to the
Sale Order:

     4.1 Organization and Power. Each Seller (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of its organization, (b) has all
requisite corporate power and authority to carry on its Business as currently conducted, and (c)
has the requisite corporate power and authority to own, lease, operate or hold the applicable
Assets.

     4.2 Authority; No Conflicts. Subject to Bankruptcy Court approval and entry of an
Order of the Bankruptcy Court approving the terms of this Agreement, each Seller has the authority
to enter into and consummate this Agreement and the Ancillary Agreements, and to consummate the
transactions contemplated hereby and thereby. Subject to the approval of the Bankruptcy Court
pursuant to the Sale Order and except for the requirements of the HSR Act, the execution, delivery
and performance by each Seller of this Agreement and of the Ancillary Agreements to which it is a
party (a) do not and shall not violate or conflict with any provision of the certificate or
articles of incorporation or bylaws of such Seller, (b) do not and shall not violate any provision
of any Applicable Law or any order, judgment or decree of any Governmental Entity or any
Governmental Authority, (c) do not and shall not violate or result in a material breach of or
constitute (with due notice or lapse of time or both) a material default under any Assumed Contract
that is a Material Contract, (d) shall not result in the creation or imposition of any material
Lien (other than Permitted Liens) upon any of the Assets, and (e) shall not result in the
cancellation, modification, revocation or suspension of any material Permit.

     4.3 Execution and Delivery. Subject to the approval of the Bankruptcy Court pursuant
to the Sale Order, the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by the Sellers have been duly authorized by all necessary
corporate action, and the execution and performance of the Ancillary Agreements by the Sellers has
been or shall be authorized by all necessary corporate action prior to the Closing Date. Subject
to Bankruptcy Court approval and entry of an Order of the Bankruptcy Court approving the terms of
this Agreement, this Agreement constitutes, and upon execution of each of the Ancillary Agreements
such agreements shall constitute, valid and binding obligations of the Sellers, enforceable against
the Sellers in accordance with their respective terms.

     4.4 Sale Free and Clear of Liens. On the Closing Date or such other applicable date
as provided in Section 1.4, after giving effect to the Sale Order, (a) the Assets shall be
transferred to the Buyer free and clear of all Liens other than Permitted Liens and (b) the Buyer
shall obtain good title to the Assets free and clear of all Liens other than Permitted Liens.

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     4.5 Ownership of Assets; Condition; Sufficiency; Subsidiaries.

          (a) Except as set forth on Schedule 4.5(a), the Seller Group collectively has good
title to, or valid leasehold interest in, the Assets.

          (b) The Equipment included in the Assets and the other tangible Assets are in good operating
condition, reasonable wear and tear excepted, suitable and usable for the purposes for which they
have been used by the Seller Group in the Business.

          (c) The entities listed on Schedule 4.5(c) represent all of the subsidiaries of the
Sellers (collectively, the “Borders Subsidiaries”). Each Borders Subsidiary is an entity
duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its organization.
Each Borders Subsidiary is duly authorized to conduct business and is in good standing under the
laws of each jurisdiction where such qualification is required, except where the lack of such
qualification would not have a Material Adverse Effect. Except as set forth on Schedule
4.5(c), neither Seller has any equity participation in any Person that is not another Seller or
a Borders Subsidiary.

          (d) Except for those restrictions and rights provided in the organizational documents and
shareholders’ agreement of Kobo, the Seller Group owns the Kobo Interest free and clear of all
Liens, and have not granted to any Person other than the Buyer a preferential right to acquire such
equity interest.

     4.6 Taxes. Except as set forth on Schedule 4.6:

          (a) All material ad valorem and other property Taxes relating to the Assets have been fully
paid for all Tax years ending on or before the Closing and there are no material delinquent
property Tax Liens or assessments; and

          (b) The Sellers have filed all required Tax returns and have paid (or shall pay on or before
the Closing) all Taxes of whatever kind pertaining to the Assets and the Business and required to
be paid by the Sellers for all periods up to and including the Closing Date.

     4.7 Litigation. Except as set forth on Schedule 4.7, and except for the
Cases, there is no claim, litigation, action, arbitration or legal proceeding pending before a
Governmental Entity or, to the Sellers’ Knowledge, threatened against the Sellers, affecting (a)
the Sellers’ ability to perform their obligations hereunder, (b) the rights granted under the
Material Contracts, or (c) the ownership, use, maintenance or operation of the Assets and the
Business, including the Stores, in each case that would not, individually or in the aggregate,
materially and adversely affect the Buyer, the Assets or the Business. Except with respect to
claims filed in connection with the Cases, and subject to all of the provisions of the Bankruptcy
Code, neither the Business nor the Assets are subject to any order, writ, judgment, award,
injunction or decree of any Governmental Entity that has had or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

     4.8 Material Contracts. Each Assumed Contract that is a Material Contract is valid,
binding and enforceable against the Sellers, as applicable, in accordance with its terms, and is in
full force and effect on the date of this Agreement. The Seller Group has performed in all
material respect the obligations required to be performed by the Seller Group to date under, and is
not in default or delinquent in the performance in connection with, any Assumed Contract that is a
Material Contract, or, upon entry and effectiveness of the Sale Order, which would not preclude the
Seller Group from assigning such Assumed Contract to the Buyer, subject to payment of the
applicable Cure Amount as provided in this Agreement. No other party to any Assumed Contract that
is a Material Contract is in material default in respect thereof, and no event has occurred which,
with due notice or lapse of time or both, would constitute such a material default by any such
other party. Excepted from the representations in this

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Section 4.8 related to the absence of
default or delinquent performance under Assumed Contracts that are Material Contracts are those
obligations that are deemed to be Cure Costs, which shall be paid under the terms of the Sale
Order.

     4.9 Permits; Compliance with Laws.

          (a) The Sellers possess all permits, Licenses, approvals, authorizations, consents or filings
with Governmental Authorities necessary for the conduct of the Business (the “Permits”)
other than Permits that (a) are not customarily required to be obtained in connection with
businesses having operations similar to those of the Business, (b) could, in the reasonable
judgment of the Sellers, be
obtained in the ordinary course of business after Closing through routine, administrative
filings, and (c) if not obtained, would not, individually or in the aggregate, materially and
adversely affect the Buyer, the Assets or the Business. All material Permits issued to the Sellers
are in full force and effect, and no proceeding is pending or, to the Knowledge of the Sellers,
threatened to revoke, withdraw or limit any such Permit. Except as set forth on Schedule
4.9, to the Knowledge of the Sellers, no outstanding material violations are or have been
recorded in respect of any material Permits.

          (b) The operation of the Business by the Sellers complies in all material respects with all
Applicable Laws and the requirements and conditions of all Permits, including all applicable
operating certificates and authorities, and all other rules, regulations, directives and policies
of all Governmental Authorities having jurisdiction over the Business. There is no unresolved
written notice from any Governmental Authority that the Assets or the operations of the Business
are not being conducted in accordance with all Applicable Laws and orders and other requirements of
Governmental Entities and Governmental Authorities having jurisdiction over either Seller and/or
the Assets, except for matters that would not, individually or in the aggregate, materially and
adversely affect the Buyer, the Assets or the Business.

     4.10 Broker or Finder. Except as set forth on Schedule 4.10, no Person
assisted in or brought about the negotiation of this Agreement, or the subject matter of the
transactions contemplated hereby, in the capacity of broker, agent, or finder or in any similar
capacity on behalf of the Sellers.

     4.11 Third Party Approvals. Except for (a) entry of the Sale Order, (b) compliance
with the HSR Act, and (c) approvals or consents set forth on Schedule 4.11, the execution,
delivery and performance by the Sellers of this Agreement and the consummation of the transactions
contemplated hereby do not require any material consent, waiver, authorization or approval of, or
filings with, any Person (including any Governmental Authority) that has not been obtained or is
not deemed to be superseded by applicable provisions of the Bankruptcy Code (the matters described
in this Section 4.11, collectively referred to as the “Consents”).

     4.12 Real Estate.

          (a) Except as set forth on Schedule 4.12(a), the Seller Group has, and at Closing
shall transfer to the Buyer, a valid leasehold interest in the premises subject to the Assumed Real
Property Leases, free and clear of any Liens other than Permitted Liens. Except as set forth on
Schedule 4.12(a), the Seller Group as of the date of this Agreement enjoys peaceful and
undisturbed possession under all premises subject to the Assumed Real Property Leases.

          (b) Except as set forth on Schedule 4.12(b), as of the date of this Agreement, the
Seller Group has not received any notice of any pending, threatened or contemplated condemnation
proceeding affecting any of the premises subject to the Assumed Real Property Leases or any
material

15

 

part thereof or any proposed termination or impairment of any parking at any of such
premises or of any sale or other disposition of any of such premises or any part thereof in lieu of
condemnation.

          (c) The Seller Group has not assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered any interest in the premises subject to the Assumed Real Property Leases, except for
assignments, transfers, conveyances, mortgages, deeds of trust or other encumbrances that shall be
released or terminated at Closing.

     4.13 Labor and Employment Matters.

          (a) The Seller Group (i) has withheld all amounts required by Applicable Law or by agreement
to be withheld from the wages, salaries and other payments to its employees and (ii) is not
liable for any arrears of wages or any Taxes or any penalty for failure to comply with any of
the foregoing. Without limiting the generality of the foregoing, the Seller Group has timely paid
or adequately accrued to be paid to any unemployment compensation fund or other fund to which the
Seller Group is required to contribute under Applicable Laws through the Closing.

          (b) Except as set forth on Schedule 4.13(b), the Seller Group is not a party to a
collective bargaining agreement (including side letters or agreements, supplemental agreements or
memorandum of understanding that would materially alter a collective bargaining agreement) covering
any employees, nor, to the Knowledge of the Sellers, are there currently any union organizing
efforts by or with respect to any such employees. The Seller Group with respect to the Business
has not experienced any actual or, to the Sellers’ Knowledge, threatened employee strike or
employee related work stoppage, slowdown or lockout, except for matters that would not,
individually or in the aggregate, materially and adversely affect the Buyer, the Assets or the
Business.

          (c) The Seller Group does not have any employment agreements with any of its employees that
are not terminable at will without material cost or expense at the election of the Seller Group,
except for those previously identified in writing to the Buyer. The Seller Group is not party to
any change of control severance agreements, except for those previously identified in writing to
the Buyer.

          (d) Except as set forth in Schedule 4.13(d) and except for matters that would not,
individually or in the aggregate, materially and adversely affect the Buyer, the Assets or the
Business (i) there are no administrative charges or court complaints against either Seller
concerning alleged employment discrimination or other employment related matters that are pending
or, to the Knowledge of the Sellers, threatened before the U.S. Equal Employment Opportunity
Commission, the U.S. Department of Labor or any other Governmental Authority and (ii) the Seller
Group is in compliance with all Applicable Laws relating to employment and employment practices,
wages, hours, and terms and conditions of employment, including all immigration laws.

     4.14 Benefit Matters.

          (a) Except as provided on Schedule 4.14(a) and except for health continuation coverage
as required by Section 4980B of the Code or Part 6 of Title I of ERISA, the Seller Group does not
have any liability for life, health, medical or other welfare benefits to former employees or
beneficiaries or dependents thereof that shall affect the Buyer or the Assets. There is no health
care plan sponsored or maintained by the Seller Group that provides health or dental coverage or
benefits to any current or future retiree of the Seller Group or their spouses or dependents.

          (b) Schedule 4.14(b) contains a list of all material Employee Plans sponsored,
maintained or contributed to by the Seller Group, or to which the Seller Group has an obligation to

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contribute. With respect to any Employee Plan that is sponsored, maintained, or contributed to (or
to which there is an obligation to contribute), or has been sponsored, maintained, or contributed
to (or to which there has been an obligation to contribute) within six (6) years prior to the
Closing Date, by the Seller Group, or any corporation, trade, business, or entity under common
control with either Seller, within the meaning of Section 414(b), (c), (in) or (o) of the Code or
Section 4001 of ERISA (“Commonly Controlled Entity”), except as set forth on Schedule
4.14(b) (i) no withdrawal liability, within the meaning of Section 4201 of ERISA, has been
incurred, which withdrawal liability has not been satisfied in full, (ii) no liability to the
Pension Benefit Guaranty Corporation has been incurred by the Seller Group or any Commonly
Controlled Entity, which liability has not been satisfied in full, (iii) no Tax under Section 4971
of the Code has been incurred for failure to satisfy the minimum funding requirements, (iv) all
contributions (including employer contributions and employee elective deferred contributions) that
are due have been timely paid to the Savings Plans and all contributions (including installments)
to such plan (other than the Savings Plans) required by Sections 302, 303 and 304 of ERISA and
Sections 412, 430,
431 and 432 of the Code have been timely made and all contributions for any period ending
before the Closing Date that are not yet due have been paid up to and including the Closing Date to
any such Employee Plan which is subject to Section 302 of ERISA or Section 412 of the Code, or
accrued on the books of the Sellers or any Commonly Controlled Entity, (v) no liability under
Sections 302, 303 or 304 of ERISA, Sections 412, 430, 431 or 432 of the Code or Title IV of ERISA
has been incurred by either Seller or any Commonly Controlled Entity that could become a Liability
of the Buyer or any of its Affiliates and (vi) no Employee Plan is a Multiemployer Plan or is
subject to Title IV of ERISA.

     4.15 Intellectual Property.

          (a) Schedule 4.15(a) includes a listing of all of the patents, trademark, service mark
and copyright registrations, domain names and the pending patent, trademark and copyright
applications for Intellectual Property that are owned by the Seller Group.

          (b) Schedule 4.15(b) also includes a listing of all licenses and other agreements to
which the Seller Group is a party that are material to the operation of the Business and pursuant
to which the Seller Group authorizes any other Person to use any Intellectual Property, and also
includes a listing of all licenses and other agreements pursuant to which Intellectual Property
that is used in and material to the operation of the Business and owned by Persons other than the
Seller Group is licensed to the Seller Group.

          (c) Each material item of Transferred Intellectual Property owned by the Seller Group (i) is
valid, subsisting and in full force and effect and (ii) has not been abandoned or passed into the
public domain. Except as set forth on Schedule 4.15(c), the Seller Group has not been
notified in writing prior to the date of this Agreement that it is or may be infringing any
patents, trade secrets, trademarks, trade names, service marks, service names, copyrights or other
Intellectual Property of any third party and, to the Knowledge of the Sellers, there is no
continuing infringement of the Transferred Intellectual Property by other Persons. Except as set
forth on Schedule 4.15(c), the Seller Group as of the date of this Agreement is not bound
by any outstanding judgment, injunction, order or decree restricting the use of the Transferred
Intellectual Property, or restricting the licensing thereof by the Seller Group to any Person, and
the issued patents and the issued trademark, service mark and copyright registrations and URLs
listed on Schedule 4.15(a) have not lapsed, expired or been cancelled. The Seller Group
has taken reasonable measures to protect and maintain all of the Seller Group’s rights in the
Transferred Intellectual Property.

     4.16 Absence of Certain Changes or Events. Except as set forth in Schedule 4.16(a),
since April 1, 2011, there has not been any uninsured loss, damage, destruction or other casualty
to the Assets

17

 

that would, individually or in the aggregate, materially and adversely affect the
Buyer, the Assets or the Business.

     4.17 Financial Assurance Instruments. Schedule 4.17 contains an accurate and
complete list of all outstanding financial assurance instruments related to the Business, including
performance bonds, letters of credit and surety bonds. True and complete copies of such financial
assurance instruments have been provided to the Buyer.

     4.18 Insurance. Schedule 4.18 contains an accurate and complete list of all
material policies or binders of property, general liability, workmen’s compensation, automobile
liability and pollution legal liability insurance held by or on behalf of the Seller Group in
connection with the Business. As of the date of this Agreement., the Seller Group has not received
notice of cancellation or non-renewal of any policy of insurance, nor been refused any insurance,
nor has their coverage been limited by any carrier, in each case in connection with the Seller
Group’s ownership of the Assets and operation of the Business.

     4.19 Accounts Receivable and Accounts Payable. All Transferred Receivables represent
bona fide transactions and have arisen in the ordinary course of business, are valid and not
subject to material set off or counterclaim, except for customary allowances and reserves in the
ordinary course of business and subject to allowances for doubtful receivables recorded in the
financial records of the Seller Group in the ordinary course of business, consistent with past
practice. All of the post-petition accounts payable, including post-petition trade accounts
payable, included in the Assumed Liabilities represent bona fide transactions and have arisen in
the ordinary course of business, taking into account the pendency of the Cases, and no material
such account payable is delinquent by more than thirty (30) days in its payment.

     4.20 Disclaimer of Representations and Warranties; Schedules. NEITHER THE SELLERS NOR
ANY EMPLOYEES, DIRECTORS, OFFICERS, SHAREHOLDERS OR REPRESENTATIVES OF THE SELLERS HAVE MADE ANY
REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, RELATING TO THE
SELLER GROUP OR ITS BUSINESS OPERATIONS OR PROSPECTS OR OTHERWISE, INCLUDING, WITHOUT LIMITATION,
WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OTHER THAN THOSE EXPRESSLY MADE IN THIS AGREEMENT OR
ANY SCHEDULE HERETO OR ANY ANCILLARY AGREEMENT.

     4.21 Termination of Representations and Warranties Upon Closing. The representations
and warranties of the Sellers in this Agreement and each Ancillary Agreement shall not survive the
Closing Date and shall be null and void ab initio and of no further force or effect immediately
after the Closing Date.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF THE BUYER

     The Buyer represents and warrants to the Sellers that the following are true and correct as of
the date hereof and shall be true and correct at the date of the Closing:

     5.1 Organization and Power. The Buyer (a) is a duly organized, validly existing
entity under the laws and in good standing in the state of its organization, (b) has all requisite
power and authority to carry on the business in which it is now engaged, and (c) has taken all
action required by Applicable Law, and by the Buyer’s organizational documents, to authorize the
execution and delivery of this Agreement

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and the purchase of the Assets and assumption of the
Assumed Liabilities in accordance with this Agreement.

     5.2 Authority; No Conflicts. The Buyer has the requisite power and authority
(including full limited liability company power and authority) to execute this Agreement and each
Ancillary Agreement to which the Buyer is a party and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance by the Buyer of this Agreement and
each Ancillary Agreement to which the Buyer is a party (a) do not and shall not violate or conflict
with any provision of the certificate of formation or limited liability company agreement of the
Buyer, and (b) do not and shall not violate any provision of any Applicable Law or any order,
judgment or decree of any Governmental Entity or any Governmental Authority.

     5.3 Execution and Delivery. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby has been duly authorized by all necessary
limited liability company action on the part of the Buyer, and the execution and performance of
each Ancillary Agreement to which the Buyer is a party has been or shall be authorized by all
necessary limited liability company action on the part of the Buyer prior to the Closing Date.
This Agreement constitutes, and upon
execution by the Buyer of each of the Ancillary Agreements to which it is a party, such
agreements shall constitute, valid and binding obligations of the Buyer, enforceable against the
Buyer in accordance with their respective terms.

     5.4 Litigation. There is no claim, litigation, action or legal proceeding before a
Governmental Entity or, to the Buyer’s knowledge, threatened against the Buyer, adversely affecting
the Buyer’s ability to perform its obligations hereunder. There are no bankruptcy, reorganization
or arrangement proceedings pending, being contemplated by or, to the Buyer’s knowledge, threatened
against the Buyer.

     5.5 No Brokers. The Buyer has not utilized the services of or contracted or dealt
with a broker or finder in connection with any of the transactions contemplated by this Agreement,
including the Buyer’s purchase of the Assets or any portion thereof, and no commission or other
compensation is or shall be due or owed from the Buyer to any Person with respect to the purchase
and sale of the Assets.

     5.6 Termination of Representations and Warranties Upon Closing. The representations
and warranties of the Buyer in this Agreement and each Ancillary Agreement to which the Buyer is a
party shall not survive the Closing Date and shall be null and void ab initio and of no further
force or effect immediately after the Closing Date.

ARTICLE 6

COVENANTS OF THE SELLERS

     Each Seller covenants and agrees with the Buyer that:

     6.1 Access. Prior to the Closing, the Sellers shall afford to the authorized
representatives of the Buyer reasonable access during normal business hours to the business, Leased
Real Property, facilities, books and records (regardless of form or medium, which shall include
source code and related documentation, databases, and other electronic media), and senior
management so as to afford the Buyer reasonable opportunity to make such review, examination and
investigation of the Business as the Buyer reasonably determine is necessary in connection with the
consummation of the transactions contemplated hereby and the financing thereof, and during such
period the Sellers shall furnish, as reasonably promptly as practical, to the Buyer and its
representatives any information they may reasonably request; provided

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that (a) the Buyer shall
provide the Sellers with sufficient advance notice of such access (which shall be no less than two
(2) Business Days) to permit the Sellers to designate a party to accompany the Buyer when they are
visiting the Sellers’ facilities should they so desire, and (b) the foregoing right of access shall
not be exercisable in such a manner as to interfere in a material way with the normal operations
and business of the Sellers. The Buyer shall be permitted to make extracts from or to make copies
of such books and records as may be reasonably necessary in connection therewith; provided that in
the event that either Seller has executed an agreement with a third party providing that any
information in its possession from such third party is covered by confidentiality protections, such
Seller shall not provide access to such information to the Buyer until such Seller has obtained the
necessary waivers from such third party to permit the disclosure to the Buyer of such information
and such Seller shall use its reasonable best efforts to obtain such waivers. All requests for
information pursuant to this Section 6.1 shall be directed to any of the persons listed on
Schedule 6.1 hereto or any other such additional person as may be designated by the
Sellers. All information received pursuant to this Section 6.1 shall be governed by the terms of
that confidentiality letter between the Buyer’s Affiliate Direct Brands, Inc. and the Sellers,
dated March 25, 2011 (the “Confidentiality Agreement”).

     6.2 Reasonable Best Efforts. Each Seller shall use its reasonable best efforts to
cause, to the extent within such Sellers’ control, the conditions set forth in Article 8 to be
satisfied and to facilitate and cause the consummation of the transactions contemplated hereby.

     6.3 Notice to the Buyer. Each Seller agrees to promptly notify the Buyer in writing
of any information it obtains or becomes aware of that would indicate that a representation and
warranty of the Sellers made herein or in any Schedule hereto is not correct in all material
respects or that any of the conditions to Closing shall not be satisfied.

     6.4 New Commitments. Without the prior written consent of the Buyer (which shall not
be unreasonably withheld), neither Seller shall prior to the Closing (a) other than in accordance
with the Bid Procedures Order, enter into any new agreement or commitment with respect to the
Assets or the Business other than in the ordinary course operation of the Business, (b) modify or
terminate any existing agreements relating to the Assets other than in the ordinary course
operation of the Business, or (c) encumber, sell or otherwise dispose of any of the Assets other
than personal property that is replaced by equivalent property or consumed in the normal, ordinary
course operation of the Business, except for any commitment as set forth on Schedule 6.4
sought pursuant to motions pending with or approved by the Bankruptcy Court as of the date hereof.

     6.5 Maintenance of Interests. The Seller shall use their reasonable best efforts from
the date of execution of this Agreement until the Closing to maintain and operate the Business and
Assets (or cause the Business and Assets to be maintained and operated) in the ordinary course of
business consistent with past practice, in a reasonable and prudent manner, in full compliance with
Applicable Law, to maintain insurance now in force with respect to the Assets, and, subject to
applicable bankruptcy law, to pay when due all costs and expenses coming due and payable in
connection with the normal maintenance and operation of the Assets. Without limiting the
generality of the foregoing and without the prior written consent of the Buyer, neither Seller
shall, except for any of the following, as set forth on Schedule 6.5, being sought pursuant
to motions pending with or approved by the Bankruptcy Court as of the date hereof: (a) introduce
any materially new or different method of maintenance, operation or accounting with respect to the
Business and the Assets, (b) incur any liabilities other than in the ordinary course of business,
(c) enter into, amend or terminate any employment, bonus, severance or retirement contract or
arrangement, nor increase any salary or other form of compensation payable or to become payable to
any executives or employees of the Business (except for the payment of a sale bonus as may be
approved pursuant to the motion filed with the Bankruptcy Court), or (d) sell, lease or otherwise
dispose

20

 

of or agree to sell, lease or otherwise dispose of, any of its assets, properties, rights
or claims, except for sales of inventory in the ordinary course of business consistent with past
practice.

     6.6 Reports and Information. Each Seller shall, promptly on receipt, deliver to the
Buyer copies of all notices, reports, demands, claims, appraisals, and similar information supplied
by any Person asserting a Lien or by any Governmental Authority respecting the Assets, or their
ownership or operation. Prior to Closing, the Sellers shall deliver to the Buyer monthly financial
statements within thirty (30) days of the applicable month-end, which financial statements shall be
similar in scope to and shall be prepared on a consistent basis with, the monthly financial
statements previously provided to the Buyer.

     6.7 Consents and Approvals.

          (a) The Sellers shall use their reasonable best efforts to obtain all Consents required by the
Bankruptcy Code or other Applicable Law to be obtained by the Sellers to effect the transactions
contemplated hereby. Without limiting the foregoing, as soon as practicable after the date of this
Agreement, the Sellers shall make or cause to be made all such further filings and submissions, and
take or cause to be taken such further action, as may reasonably be required in connection
therewith on a timely basis.

          (b) Without limiting the generality of Section 6.7(a), the Sellers and the Buyer shall comply
fully with all applicable notification, reporting and other requirements of the HSR Act. The
Sellers and the Buyer, within five (5) Business Days after the date of this Agreement, shall file
the required notifications with the Federal Trade Commission (the “FTC”) and the Antitrust
Division of the Department of Justice (the “Antitrust Division”) pursuant to and in
compliance with the HSR Act, and seek early termination of the waiting period thereunder. The
Buyer and the Sellers shall each pay fifty percent (50%) the applicable HSR Act filing fee. The
Sellers and the Buyer shall use reasonable best efforts to cooperate with each other with respect
to such filing, and shall respond as promptly as reasonably practicable to any inquiries received
from the FTC or the Antitrust Division for additional information or documentation and to all
inquiries and requests received from any other Governmental Authority in connection therewith.
Each Party shall (i) subject to Applicable Laws, promptly notify the other Party of any written
communication to that Party from the FTC, the Antitrust Division or any other Governmental
Authority relating to this Agreement and, subject to Applicable Laws, permit the other Party to
review in advance any proposed written communication to any of the foregoing relating to this
Agreement; (ii) to the extent permitted by Applicable Laws, not agree to participate in any
substantive meeting or discussion with any Governmental Authority in respect of any filings,
investigation or inquiry concerning this Agreement unless it consults with the other Party in
advance and, to the extent permitted by such Governmental Authority, gives the other Party the
opportunity to attend and participate thereat; and (iii) to the extent permitted by Applicable
Laws, furnish the other Party with copies of all correspondence, filings and communications between
such Party and its Affiliates and their respective representatives on the one hand, and any
Governmental Authority or their respective staffs on the other hand, with respect to this Agreement
and the transactions contemplated hereby.

     6.8 Employee and Employee Benefits Obligations. Other than the liabilities and
obligations with respect to the Transferred Employees that the Buyer has expressly agreed to
assume, perform and become responsible for in accordance with Section 7.6, the Seller Group shall,
subject to Section 2.4, retain and be responsible for all liabilities and obligations with respect
to its current and former employees and their dependents and beneficiaries, including all
liabilities and obligations arising under any Employee Plan, including any Savings Plan, sponsored,
maintained or contributed to (or to which there has been an obligation to contribute) at any time
by the Seller Group or any Commonly Controlled Entity.

21

 

ARTICLE 7

COVENANTS OF THE BUYER

     The Buyer covenants and agrees with the Sellers that:

     7.1 Reasonable Best Efforts. The Buyer shall use its reasonable best efforts to
cause, to the extent within the Buyer’s control, the conditions set forth in Article 8 to be
satisfied and to facilitate and cause the consummation of the transactions contemplated hereby.

     7.2 Notice to the Sellers. The Buyer agrees to promptly notify the Sellers in writing
of any information the Buyer obtains or becomes aware of that would indicate that a representation
and warranty of the Buyer made herein or in any Schedule hereto is not correct in all material
respects.

     7.3 Bankruptcy Court Approval and Related Matters. The Buyer acknowledges and agrees
to Article 11 and shall use reasonable best efforts to assist the Sellers in obtaining any orders
necessary to consummate the transactions contemplated hereby and any orders ancillary hereto and
agree to provide the Sellers with information necessary to obtain such orders.

     7.4 Confidentiality. The Buyer shall maintain the Confidential Information in
accordance with the terms of the Confidentiality Agreement. In the event the Closing does not
occur for any reason, the Buyer shall immediately return to the Sellers or destroy all copies and
recordings of the Confidential Information in their possession or under their control in accordance
with the Confidentiality Agreement.

     7.5 Transition Agreement. The Buyer and the Sellers shall negotiate in good faith and
execute an agreement (the “Transition Agreement”) at Closing pursuant to which, inter alia,
the Seller Group shall be entitled to use without cost the Transferred Intellectual Property
(including the name “Borders”) following the Closing to the extent reasonably required in
connection with the performance of this Agreement by the Sellers.

     7.6 Transferred Employees.

          (a) At least five (5) days prior to (i) the Closing Date with respect to those Stores or
Distribution Centers subject to Assumed Real Property Leases to be assigned to the Buyer on the
Closing Date or (ii) the expected assignment date with respect to those Stores and Distribution
Centers subject to Assumed Real Property Leases to be assigned to the Buyer after the Closing Date
in accordance with Section 1.4, the Buyer shall deliver, in writing individually or generally, an
offer of employment commencing on the Closing Date or assignment date, as applicable, and
contingent upon the Closing or such assignment, on an at-will basis (except to the extent otherwise
expressly agreed in a writing signed by the Buyer and such employee), to substantially all of the
employees who remain employed by the Seller Group and are employed at the applicable Store or
Distribution Center. In addition, the Buyer may deliver such offers of employment to other
employees of the Seller Group, including employees employed at the Headquarters Building, at the
sole discretion of the Buyer. Offers of employment extended by the Buyer to non-managerial
employees in accordance with this Section 7.6(a) shall be for positions with job duties
substantially similar to the job duties of the position that the employees held immediately prior
to the Closing Date and on at least the same terms and conditions with respect to base salary or
hourly wages as those in effect immediately prior to the Closing Date. The Buyer shall extend an
offer of employment to employees normally employed at the Stores and Distribution Centers subject
to Assumed Real Property Leases who are on an approved leave of absence for workers compensation,
disability, military, family illness or parental leave as of the Closing Date or applicable
assignment date to at least the same extent, if any, as such employees would be entitled to
reemployment under either

22

 

Applicable Law or the Seller Group’s policies and procedures in existence immediately prior to
the Closing Date. The individuals who accept offers of employment extended by the Buyer pursuant
to this Section 7.6(a) are hereinafter referred to as the “Transferred Employees.”

          (b) The Buyer shall assume and be responsible for the payment of (i) all wages due to the
Transferred Employees accrued since the last regular payroll date prior to the Closing Date or
assignment date, as applicable, (ii) all amounts due to the Transferred Employees (or to service
providers for benefits provided to Transferred Employees or their dependents) under the employment
policies and Employee Plans (other than accrued benefits under the Savings plan as of the Closing
Date or assignment date, as applicable or benefits which are fully insured) of the Seller Group
immediately prior to the Closing Date or assignment date, as applicable, with respect to all
benefits provided under the Employee Plans, including accrued and unused vacation, sick days and
personal days, medical and dental (including incurred but not reported claims and claims reported
but not yet paid) and earned but unpaid bonuses as shown on Schedule 7.6(b), (iii) all
workers’ compensation liabilities relating to the Transferred Employees (including incurred but not
reported claims and claims reported but not yet paid) as shown on Schedule 7.6(b), and (iv)
all severance obligations with respect to the Transferred Employees whose employment with the Buyer
or its Affiliates terminates for any reason other than cause from and after the Closing Date or
assignment date, as applicable. All such liabilities shall be deemed to be Assumed Liabilities.
The Buyer shall be responsible for all compensation and benefits payable or provided to the
Transferred Employees and any other employees of the Buyer or its Affiliates from and after the
Closing Date or applicable assignment date. Application of the foregoing to Employee Plans
providing medical and dental benefits shall be subject to the terms of the Transition Agreement.

          (c) Except as otherwise provided in the Transition Agreement, Transferred Employees shall
cease participation in all Employee Plans effective as of the Closing Date or assignment date, as
applicable. To the extent that service is relevant for purposes of eligibility, vesting or benefit
accrual under any employee benefit plan, program or arrangement established or maintained by the
Buyer for the benefit of Transferred Employees, such plan, program or arrangement shall credit the
Transferred Employees for service on or prior to the Closing with the Seller Group.

          (d) The Transition Agreement shall include provisions reasonably acceptable to the Sellers and
the Buyer with respect to transitional coverage of the Transferred Employees under the group
medical and dental plans of the Seller Group.

     7.7 Agency Agreements. On or before July 22, 2011, the Parties shall complete
negotiation of the Going Concern Agency Agreement or a joinder to the Back Stop Agency Agreement to
be executed by the Buyer, in each case in form and substance reasonably satisfactory to each Party,
and the Buyer shall irrevocably notify the Sellers of its determination, in its sole and absolute
discretion, to either enter into the Going Concern Agency Agreement or execute such joinder to the
Back Stop Agency Agreement at the Closing (subject to satisfaction of the conditions set forth in
Section 8.2).

     7.8 Financing Commitments. If the Buyer has notified the Sellers of its
determination to enter into the Going Concern Agency Agreement in accordance with Section 7.7, on
or before July 14, 2011, the Buyer shall deliver on a confidential basis to the financial advisor
to the Sellers (i) an executed written commitment, in form and substance reasonably acceptable to
such advisor, from or on behalf of Buyer’s parent Direct Brands, Inc., to provide equity financing
in an amount and on terms reasonably satisfactory to the Sellers, and (ii) one or more additional
executed written commitments, in form and substance reasonably satisfactory to such advisor, for
all additional financing necessary to permit the Buyer to pay the Purchase Price and to perform its
other obligations under this Agreement and the Ancillary Agreements, and the Buyer shall have
available as of the Closing Date (either from its immediately available cash or from the foregoing
commitments or a combination thereof) funds sufficient

23

 

to pay the Purchase Price and to perform its other obligations under this Agreement and the
Ancillary Agreements.

ARTICLE 8

CONDITIONS TO CLOSING

     8.1 Sellers’ Conditions to Closing. The obligations of the Sellers at the Closing are
subject, at the option of the Sellers, to the satisfaction at or prior to the Closing of the
following conditions:

          (a) All representations and warranties of the Buyer contained in this Agreement shall be true
in all material respects at and as of the Closing and the Buyer shall have performed and satisfied
all material obligations in all material respects required by this Agreement to be performed and
satisfied by the Buyer at or prior to the Closing. The Buyer shall have provided the Sellers with
certificates executed by a responsible officer of the Buyer to such effect;

          (b) No stay or injunction shall have been obtained by a court of competent jurisdiction
restraining, prohibiting or declaring illegal the purchase and sale contemplated by this Agreement;

          (c) The entry by the Bankruptcy Court of the Sale Order;

          (d) All material Consents legally required to be obtained by the Sellers for the Closing shall
have been obtained, and any waiting period (including any extension thereof) applicable to the
transactions contemplated hereby under the HSR Act shall have expired or been terminated; and

          (e) The Buyer shall have executed and delivered the documents required to be executed and
delivered pursuant to Section 3.3.

     8.2 Buyer’s Conditions to Closing. The obligations of the Buyer to consummate the
transactions contemplated hereby at the Closing are subject, at the option of the Buyer, to the
satisfaction at or prior to the Closing of the following conditions:

          (a) All representations and warranties of the Sellers contained in this Agreement and the
Ancillary Agreements shall be true in all material respects at and as of the Closing and the
Sellers shall have performed and satisfied in all material respects all obligations required by
this Agreement and the Ancillary Agreements to be performed and satisfied by the Sellers at or
prior to the Closing. The Sellers shall have provided the Buyer with certificates executed by a
responsible officer of the Sellers to such effect;

          (b) No stay or injunction shall have been obtained by a court of competent jurisdiction
restraining, prohibiting or declaring illegal the purchase and sale contemplated by this Agreement;

          (c) The entry by the Bankruptcy Court of the Sale Order;

          (d) All material Consents legally required to be obtained by the Sellers for the Closing shall
have been obtained, and any waiting period (including any extension thereof) applicable to the
transactions contemplated hereby under the HSR Act shall have expired or been terminated; and

24

 

          (e) The Sellers shall have executed and delivered the documents required to be executed and
delivered pursuant to Section 3.2.

ARTICLE 9

ADDITIONAL OBLIGATIONS AFTER CLOSING

     The Parties shall have the following additional obligations after the Closing:

     9.1 Execution; Delivery of Instruments and Assistance. The Sellers and the Buyer
shall each execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such instruments and take such other actions as may be necessary or advisable to carry out their
obligations under this Agreement and the Agency Agreement and under any document, certificate or
other instrument delivered pursuant hereto or thereto or required by Applicable Law.

     9.2 Name Change. From and after the Closing Date, the Sellers shall cause each entity
in the Seller Group to change its names to a name that is not (and that is not confusingly similar
to) “Borders,” subject to their obligations to operate and conclude the Cases, it being the intent
of the Parties that from and after the Closing, the Buyer shall have the sole right to conduct
business under such name, subject to the rights of the Seller Group under the Transition Agreement.

     9.3 Access to Records. From and after the Closing Date, the Seller Group on the one
hand and the Buyer on the other hand shall afford each other and their respective counsel,
accountants and other representatives such access to records in respect of the Seller Group’s
businesses which, after the Closing, are in the custody or control of the other Party and which
such Party reasonably requires, including in order to comply with its obligations under Applicable
Law, including, but not limited to, audits by Tax authorities, or which the Buyer reasonably
requires to comply with its material obligations under the Assumed Liabilities or the Assumed
Contracts. Each Party may require the other Party or its representatives to enter into a
confidentiality agreement in customary form in connection with providing access to the records of
such Party.

     9.4 Accounts Receivable/Collections. The Sellers shall promptly deliver to the Buyer
any cash, checks or other property they may receive after the Closing in respect of the Transferred
Accounts Receivable, including any credit card receipts.

     9.5 Privacy. On or prior to the Closing Date, the Buyer shall adopt a written policy
with respect to protection of the confidentially of personally identifiable information regarding
the customers and employees of the Business and other Persons not affiliated with the Seller Group
that initially includes provisions substantially similar to those included in the written privacy
policies of the Seller Group in effect as of the date of this Agreement. From and after the
Closing Date, the Buyer shall comply with such policy, or such successor policies adopted by Buyer
from time to time, and Applicable Law with respect to the protection of such personally
identifiable information.

ARTICLE 10

TERMINATION

     10.1 Termination. This Agreement may be terminated as follows:

          (a) At any time by the mutual written agreement of the Sellers and the Buyer;

25

 

          (b) By the Buyer, at its sole election, in the event that the Sale Motion or the Bid
Procedures Motion has not been filed with the Bankruptcy Court within the time period required in
Section 11.1; provided that the Buyer shall not be entitled to terminate this Agreement pursuant to
this Section 10.1(b) if the failure to file the Sale Motion or Bid Procedures Motion within such
time period results primarily from the Buyer itself materially breaching any representation,
warranty or covenant contained in this Agreement;

          (c) Automatically, upon the consummation of any Acquisition Transaction between the Sellers
and a party other than the Buyer;

          (d) By the Buyer, at its sole election, in the event that the Closing shall not have occurred
on or before August 5, 2011; provided that the Buyer shall not be entitled to terminate this
Agreement pursuant to this Section 10.1(d) if the failure of the Closing to occur on or prior to
such date results primarily from the Buyer itself materially breaching any representation, warranty
or covenant contained in this Agreement;

          (e) By the Sellers, at their sole election, in the event that the Closing shall not have
occurred on or before August 5, 2011; provided that the Sellers shall not be entitled to terminate
this Agreement pursuant to this Section 10.1(e) if the failure of the Closing to occur on or prior
to such date results primarily from the Sellers themselves materially breaching any representation,
warranty or covenant contained in this Agreement;

          (f) By the Buyer, at its sole election, in the event of a material breach of this Agreement by
the Sellers that has not been cured, or if any representation or warranty of the Seller shall have
become untrue in any material respect, in either case such that such breach or untruth is incapable
of being cured, by August 5, 2011;

          (g) By the Sellers, at their sole election, in the event of a material breach of this
Agreement by the Buyer that has not been cured, or if any representation or warranty of the Buyer
shall have become untrue in any material respect, in either case such that such breach or untruth
is incapable of being cured, by August 5, 2011;

          (h) By the Buyer, at its sole election, upon the granting of any motion for relief from the
automatic stay which would have a Material Adverse Effect, the conversion of any of the Cases to a
case under Chapter 7 of the Bankruptcy Code, the dismissal of any of the Cases, the filing of any
plan of reorganization by any party in interest that does not incorporate this Agreement, the
filing of any motion by a party in interest in the Cases to liquidate the Assets or any similar
commencement of liquidation proceedings relating to Sellers, other than as contemplated herein, in
each case which are not dismissed within thirty (30) days, or upon the commencement of any similar
actions or proceedings in or by any foreign court with respect to any Seller, which are not
dismissed within thirty (30) days; or

          (i) By the Buyer upon the entry of an order by the Bankruptcy Court for the appointment of a
trustee or examiner with managerial powers, other than at the request of the Buyer, and such
trustee or examiner takes any action to interfere with or impair the transaction contemplated by
this Agreement.

     10.2 Effect of Termination. Upon the termination of this Agreement in accordance with
Section 10.1, the Parties shall be relieved of any further obligations or liability under this
Agreement other than (a) confidentiality obligations contained in Section 7.4, (b) any obligations
for material breach of this Agreement occurring prior to such termination, (c) obligations
contained in Section 2.8 and (d) any obligations contained in Article 11.

26

 

ARTICLE 11

CHAPTER 11 BANKRUPTCY PROCEEDING

     11.1 Bankruptcy Court Approval of the Buyer as Initial Bidder. Within ten (10) days
following the date of the execution of this Agreement, the Sellers shall file a motion with the
Bankruptcy Court pursuant to Section 363 and Section 365 of the Bankruptcy Code (the “Sale
Motion”) seeking (a) approval of the provisions of this Agreement and the Agency Agreement and
the transactions contemplated hereby and thereby under Section 363 of the Bankruptcy Code, (b)
assumption and assignment of the Assumed Real Property Leases and Assumed Contracts from the
Sellers to the Buyers under Section 365 of the Bankruptcy Code, and (c) entry of the Sale Order.
The Sale Motion shall seek the designation of the Buyer as the “Initial Bidder” for the Assets
under the terms of this Agreement and shall seek Bankruptcy Court approval of the provisions set
forth in this Agreement, including the payment of the Break Up Fee described in Section 11.4.
Simultaneously with the filing of the Sale Motion, the Sellers shall file a motion with the
Bankruptcy Court (the “Bid Procedures Motion”) seeking entry of the Bid Procedures Order.
The Bid Procedures Order shall not be modified without the consent of the Buyer.

     11.2 Motions and Notices Regarding Sale of Assets and Assumption and Assignment of Assumed
Real Estate Leases and Assumed Contracts.

          (a) Sellers shall seek prompt entry of the Sale Order pursuant to the Sale Motion after
sufficient notice has been given, which Sale Order shall include, among other things, findings of
fact and conclusions of law that the Buyer is not a successor in interest to the Sellers or any
Affiliate of Sellers and that the Buyer is a good faith purchaser pursuant to Bankruptcy Code
Section 363(m).

          (b) The Sellers covenant that, to the extent that they have not done so prior to the date of
this Agreement, they shall promptly serve the third parties who are parties to Assumed Real Estate
Leases and Assumed Contracts (such third parties being “Cure Obligees”) with written notice
of proposed cures on the Assumed Real Estate Leases and Assumed Contracts (such notice being the
“Proposed Cure Notice”), which Proposed Cure Notice shall be provided to the Buyer within
the time periods provided by the Bid Procedures Order. The Proposed Cure Notice shall, as set
forth in the Bid Procedures Order, establish a deadline reasonably in advance of the Closing Date
by which Cure Obligees must object to respective proposed cures or be deemed to have waived any
such objection.

     11.3 Requests for Information. From the date of the approval of the Bid Procedures
Order (a) if the Sellers supply any information regarding the Business to a potential bidder not
heretofore given to the Buyer, the Sellers shall further provide the Buyer with a copy of such
information within 24 hours of providing that information to any other potential bidder; and (b)
with respect to any bid, term sheet, or written expression of interest by any other party for any
asset or assets of any Seller, or any other reorganization proposal, submitted prior to the bid
deadline established in the Bid Procedures Order, the Sellers shall provide the Buyer with prompt
notice of such proposal and a copy of such proposal within 48 hours of either Sellers’ receipt
thereof.

     11.4 Break Up Fee. If this Agreement is terminated for any reason except pursuant to
Section 10.1(a) or (g), then in consideration of the real and substantial benefits conferred by the
Buyer upon the Sellers’ bankruptcy estates by providing a minimum floor bid upon which the Sellers,
their creditors and the other bidders were able to rely and in consideration of the time, expense
and risks associated with serving as the “Initial Bidder,” including legal fees and expenses,
overhead costs, due diligence expenses and other similar expenses related to the negotiation and
preparation of this Agreement and of all related transactional documentation, due diligence and
representation, the Sellers shall pay to the Buyer at the time of the closing of the sale of the
Assets to the successful bidder for the Assets, provided that the

27

 

Buyer is not then in material default of its obligations under this Agreement, an amount equal
to $6,450,000, subject to the approval of the Bankruptcy Court (the “Break Up Fee”). The
Sellers and Buyer agree and stipulate that the Buyers have provided a mutual benefit to the
Sellers’ estates by increasing the likelihood that the best possible price for the Assets shall be
received and that the Break Up Fee is reasonable and appropriate in light of the size and nature of
the proposed sale transactions and comparable transactions, the commitments that have been made and
the efforts that have and shall be expended by the Buyer and were necessary to induce the Buyer to
pursue the transactions contemplated hereby under the terms of this Agreement. The Break Up Fee
also shall serve as liquidated damages with respect to any claims the Buyer may have against the
Sellers in connection with the Sellers’ failure to close the sale of the Assets to the Buyer as
contemplated by this Agreement and Buyers shall provide a release to the Sellers of any and all
such claims upon payment of the Break Up Fee.

     11.5 Defense of Orders. The Sellers, at their sole cost and expense, shall diligently
defend the Bid Procedures Order and the Sale Order in the event that any motion for reconsideration
or appeal of such Orders is filed.

ARTICLE 12

GENERAL PROVISIONS

     12.1 Notice. All notices hereunder shall be in writing, dated and signed by the Party
giving the same. Each notice shall be either (a) delivered in person to the address of the Party
for whom it is intended at the address of such Party as shown below, (b) delivered to the United
States Postal Service in a secure and sealed envelope or other suitable wrapper addressed to the
Party for whom it is intended at the address of such Party as provided below, with sufficient
postage affixed, certified or registered mail, return receipt requested, (c) sent by facsimile with
a confirmation sheet, or (d) delivered to a nationally recognized overnight courier service that
traces any such notice. The effective date of such notice shall be the date of delivery in the
event of delivery in accordance with (a) or (c) and five (5) days after deposit in the U.S. Mail in
the event of delivery in accordance with (b). The address at which any Party hereto is to receive
notice may be changed from time to time by such Party by giving notice of the new address to all
other parties hereto. The addresses of the Parties, until changed in accordance with the
foregoing, are:

	 	 	 

	The Sellers:

	 	Borders Group, Inc. 

100 Phoenix Drive 

Ann Arbor, Michigan 48108

Attn: Matthew A. Chosid, Esq.

Facsimile: (734) 477-1370
	 
	 	 
	And copies (which 

shall not constitute 

notice) to:

	 	Kasowitz, Benson, Torres & Friedman LLP 

1633 Broadway 

New York, New York 10019

Attn: Andrew K. Glenn, Esq. 

Facsimile: (212) 506-1800
	 
	 	 
	 

	 	Baker & McKenzie LLP 

One Prudential Plaza 

130 East Randolph Drive 

Chicago, Illinois 60601

Attn: Craig A. Roeder, Esq.
	 

	 	Facsimile: (312) 698-2365

28

 

	 	 	 

	The Buyer:

	 	BB Brands, LLC 

c/o Najafi Companies, LLC 

2525 East Camelback Road, Suite 850

Phoenix, Arizona 85016

Attn: Jahm Najafi 

Facsimile: (602) 476-0625
	 
	 	 
	And copies (which 

shall not constitute 

notice) to:

	 	Ballard Spahr LLP 

1 East Washington Street, Suite 2300

Phoenix, Arizona 85004

Attn: Karen C. McConnell, Esq. 

Facsimile: (602) 798-5595
	 
	 	 
	 

	 	Debevoise & Plimpton LLP 

919 Third Avenue 

New York, New York 10022

Attn: Richard F. Hahn, Esq. 

Facsimile: (212) 521-7236

     12.2 Amendment. This Agreement may not be amended nor any rights hereunder waived
except by an instrument in writing signed by the Parties.

     12.3 Payment of Costs. Except as otherwise set forth herein, the Parties shall each
pay their own costs incurred in negotiating this Agreement and in consummating the transactions
contemplated hereby, including any fees or commission payable to any party representing them in
connection with arranging or negotiating this Agreement and transactions contemplated hereby.

     12.4 Headings. The headings of the sections of this Agreement are for convenience or
reference only and shall not affect any of the provisions of this Agreement.

     12.5 References. References made in this Agreement, including use of a pronoun, shall
be deemed to include, where applicable, masculine, feminine, singular or plural, individuals,
partnerships or corporations.

     12.6 Applicable Law. This Agreement and the transactions contemplated hereby shall be
construed in accordance with and governed by the laws of the State of New York. Each of the
Parties agrees that any proceeding brought to enforce the rights and obligations of any Party under
this Agreement (including the schedules attached hereto) or any Ancillary Agreement shall be
commenced and maintained exclusively in the Bankruptcy Court and that the Bankruptcy Court shall
have exclusive jurisdiction over any such proceeding.

     12.7 Entire Agreement. This Agreement, the Schedules attached hereto, and the
Ancillary Agreements (in each case incorporated herein by this reference) contain the entire
agreement and understanding of the Parties hereto with respect to the transactions contemplated
hereby, and supersede any and all prior agreement, arrangements, and understandings, whether oral
or written, between the Parties.

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     12.8 Authorization of Parent as Representative of the Sellers.

          (a) By entering into and executing this Agreement, the Sellers irrevocably appoint Parent as
their agent, effective as of the date hereof, and authorize and empower Parent to fulfill the role
of the Sellers’ representative hereunder, and each Seller appoints Parent as such Person’s true and
lawful attorney in fact and agent, for all purposes necessary or desirable in order for Parent to
take all actions contemplated by this Agreement, with the ability to execute and deliver all
instruments, certificates and other documents of every kind incident to the foregoing to all
intents and purposes and with the same effect as such Seller could do personally, including to give
and receive notices and communications; to object to such deliveries, to agree to, negotiate, enter
into settlements and compromises of, and comply with orders of courts with respect to such claims;
and to take all actions necessary or appropriate in the judgment of Parent for the accomplishment
of the foregoing. The power of attorney granted in this Section 12.8 is coupled with an interest
and is irrevocable.

          (b) The Buyer shall be entitled to rely exclusively upon any communication given or other
action taken by Parent pursuant to this Agreement, and shall not be liable for any action taken or
not taken in good faith reliance on a communication or other instruction from Parent.

     12.9 Binding Effect. This Agreement shall be binding upon and shall inure to the
benefit of the Parties and, except as otherwise prohibited, their respective successors and
assigns. Nothing contained in this Agreement, or implied herefrom, is intended to confer upon any
Person other than the Parties any benefits, rights, or remedies.

     12.10 Assignment. No Party may assign all or any portion of its respective rights or
delegate any portion of its duties hereunder without (a) the approval of the Bankruptcy Court and
(b) the written consent of the other Parties; provided that (i) the Buyer may collaterally assign
this Agreement to its lenders without the consent of the Sellers, (ii) the Buyer may assign its
right to take title to the Kobo Interest to an Affiliate, and (iii) the Buyer may assign this
Agreement in whole or in part to any direct or indirect subsidiary of the Buyer so long as the
Buyer retains its obligations under this Agreement, subject to the terms and conditions hereof, to
effect the consummation of the transactions contemplated hereby. All of the terms, provisions and
conditions of this Agreement shall be binding upon and shall inure to the benefit of the Parties
hereto and their respective successors, assigns and legal representatives.

     12.11 Severability. If a court of competent jurisdiction determines that any
provision of this Agreement is void, illegal or unenforceable, the other provisions of this
Agreement shall remain in full force and effect and the provisions that are determined to be void,
illegal or unenforceable shall be limited so that they shall remain in effect to the extent
permissible by Applicable Law.

     12.12 Publicity. Prior to the Closing, no Party shall issue any press release or
similar public announcement concerning the transactions contemplated hereby or the contents of this
Agreement without the prior written consent of the other Parties, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, nothing in this Section 12.12
shall preclude any Party (or Person controlling such Party) from making disclosures required by
Applicable Law or Governmental Authority (or of any applicable stock or securities exchange or
otherwise), or appropriate filings with the Bankruptcy Court in connection with the Cases or
necessary and proper in conjunction with the filing of any Tax return or other document required to
be filed with any Governmental Authority; provided that the Party required to make the release or
statement shall allow the other Party reasonable time to comment on such release or statement in
advance of such issuance.

     12.13 Construction. The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall

30

 

be construed as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local or foreign statute shall be deemed to
refer to such statute as amended and to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The word “include” or “including” means include or including,
without limitation. All references in this Agreement to Sections and Schedules shall be deemed
references to Sections of, and Schedules to, this Agreement unless the context shall otherwise
require.

     12.14 Specific Performance. Each Party acknowledges that irreparable damage would
occur in the event that any of the provisions of this Agreement were not performed by such Party in
accordance with their specific terms or were otherwise breached by such Party. Each Party
accordingly agrees that, prior to the termination of this Agreement pursuant to Article 10, in
addition to any other remedy to which the other Parties are entitled at law or in equity, the other
Parties are entitled to injunctive relief to prevent breaches of this Agreement by such Party and
otherwise to enforce specifically the provisions of this Agreement against such Party. Each Party
expressly waives any requirement that any other Party obtain any bond or provide any indemnity in
connection with any action seeking injunctive relief or specific enforcement of the provisions of
this Agreement. If the Sellers assert a claim for actual damages against the Buyer based on an
alleged breach, the Sellers must bring an action against the Buyer in Bankruptcy Court seeking
recovery of actual damages, and the Deposit will be held by the Escrow Agent pending a final
resolution of such claims. Actual damages shall include the reasonable legal fees and expenses
incurred by the Sellers in connection with the action in Bankruptcy Court described in the
preceding sentence. To the extent required to compensate the Sellers for any actual damages
awarded by final order of the Bankruptcy Court, the Deposit will be used for such purpose. To the
extent not required for the payment of such award, the Deposit or any balance thereof will be
returned to the Buyer.

ARTICLE 13

DEFINITIONS

     “Accounts Receivable” shall mean all accounts and notes receivable of the Seller
Group.

     “Acquisition Transaction” shall mean any sale, transfer or other disposition (not
involving the Buyer or its Affiliates), in one transaction or a series of transactions, of all or
any substantial portion of the Assets or the Business, whether proposed to be effected pursuant to
a merger, consolidation, tender offer, exchange offer, share exchange, amalgamation, stock
acquisition, asset acquisition, business combination, restructuring, recapitalization, liquidation,
dissolution, joint venture or similar transaction, whether or not proposed or advanced by the
Sellers.

     “Adjustment Calculation” shall have the meaning set forth in Section 2.2(c).

     “Adjustment Notice” shall have the meaning set forth in Section 2.2(c).

     “Affiliate” shall mean, with respect to any Person, any direct or indirect subsidiary
or such Person, and any other Person that directly, or through one or more intermediaries, controls
or is controlled by or is under common control with such first Person.

     “Agency Agreements” shall have the meaning set forth in the Recitals.

     “Agent” shall have the meaning set forth in the Recitals.

     “Agreement” shall have the meaning set forth in the Preamble.

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     “Ancillary Agreements” shall mean any ancillary agreements hereto to which each Party
is or may be a party, including the Agency Agreement actually executed by the Buyer and the
Transition Agreement.

     “Antitrust Division” shall have the meaning set forth in Section 6.7(b).

     “Applicable Law” shall mean, with respect to any Person, any federal, state or local
law (including common law), statute, code, ordinance, rule, regulation, or other requirement
enacted, promulgated, issued or entered by a Governmental Authority, that is applicable to such
Person or its business, properties or assets.

     “Assets” shall have the meaning set forth in Section 1.2.

     “Assignment and Assumption Agreement” shall have the meaning set forth in Section
3.2(b).

     “Assumed Contracts” shall have the meaning set forth in Section 1.2(b).

     “Assumed Letters of Credit” shall have the meaning set forth in Section 2.3(a).

     “Assumed Liabilities” shall have the meaning set forth in Section 2.3(a).

     “Assumed Real Property Leases” shall have the meaning set forth in Section 1.2(a).

     “Avoidance Actions” shall mean any and all actions which a trustee,
debtor-in-possession or other appropriate party in interest may assert on behalf of the Sellers or
their estate under applicable state statute or Chapter 5 of the Bankruptcy Code, including actions
under one or more provisions of Sections 542, 543, 544, 545, 546, 547, 548, 549, 550, 551 and 553.

     “Backstop Agency Agreement” shall have the meaning set forth in the Recitals.

     “Bankruptcy Code” shall have the meaning set forth in the Recitals.

     “Bankruptcy Court” shall have the meaning set forth in the Recitals.

     “Bid Procedures Motion” shall have the meaning set forth in Section 11.1.

     “Bid Procedures Order” shall mean an Order of the Bankruptcy Court that (a) is in
substantially the form set forth as Exhibit A to this Agreement or otherwise in a form
reasonably satisfactory to the Sellers and acceptable to the Buyer in its sole discretion, and (b)
approves procedures for the solicitation and consideration of competitive bids for the Assets under
the terms and conditions of this Agreement and authorizing the protections set forth in Article 11
for the Buyer.

     “Borders Subsidiaries” shall have the meaning set forth in Section 4.5(c).

     “Break Up Fee” shall have the meaning set forth in Section 11.4.

     “Business” shall mean the business conducted by the Seller Group utilizing the Assets
and the Assumed Liabilities.

     “Business Day” shall mean any day other than Saturday, Sunday or any day on which
banking institutions in the United States are closed either under Applicable Law or action of any
Governmental Authority.

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     “Buyer” shall have the meaning set forth in the Preamble.

     “Cases” shall have the meaning set forth in the Recitals.

     “Cash” shall mean all cash and cash equivalents (including marketable securities and
short-term investments) calculated in accordance with GAAP applied on a basis consistent with the
financial statements of the Seller Group.

     “Closing” shall have the meaning set forth in Section 3.1.

     “Closing Date” shall have the meaning set forth in Section 3.1.

     “Commitment Letters” shall have the meaning set forth in Section 5.6.

     “Commonly Controlled Entity” shall have the meaning set forth in Section 4.14(b).

     “Company” shall have the meaning set forth in the Preamble.

     “Confidentiality Agreement” shall have the meaning set forth in Section 6.1.

     “Confidential Information” shall have the meaning set forth for “Evaluation Material”
as such term is defined in the Confidentiality Agreement.

     “Consents” shall have the meaning set forth in Section 4.11.

     “Contract” shall mean any agreement, arrangement, contract, lease, purchase order,
sale order or commitment, or any series of related agreements, arrangements, contracts, leases,
purchase orders, sale orders, or commitments.

     “Cure Costs” shall mean, in the aggregate, any and all costs and expenses for any
available cures (pursuant to Section 365 of the Bankruptcy Code and described in any Order of the
Bankruptcy Court relating to such cure liability) of any Assumed Real Property Leases or Assumed
Contacts.

     “Cure Obligees” shall have the meaning set forth in Section 11.2(b).

     “Deposit” shall have the meaning set forth in Section 2.8.

     “Designation Deadline” shall mean (a) with respect to each Real Property Lease subject
to an assumption/rejection deadline prior to September 30, 2011, 5:00 p.m., New York City time, on
July 22, 2011, (b) with respect to each Real Property Lease relating to a Distribution Center, 5:00
p.m., New York City time, on October 31, 2011, (c) with respect to each other Real Property Lease,
5:00 p.m., New York City time, on the date that is five (5) Business Days prior to the applicable
assumption/rejection deadline with respect to such Real Property Lease set forth on Schedule
1.2(a) and (d) with respect to each Contract, 5:00 p.m., New York City time, on October 31,
2011, in each case or such later date as the Seller and the Buyer may agree and as the Bankruptcy
Court may authorize pursuant to the terms of the Sale Order or otherwise.

     “Disposition Rights” shall mean the right to direct the disposition of the Inventory
and other property to be disposed of pursuant to the Agency Agreement and to receive and retain the
proceeds thereof on the terms provided therein.

     “Dispute Notice” shall have the meaning set forth in Section 2.2(d).

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     “Distribution Centers” shall mean the distribution centers operated by the
Seller Group located at Mira Loma, California, Carlisle, Pennsylvania and Lavergne, Tennessee.

     “Employee Plans” shall mean each plan, program, agreement or other arrangement,
whether or not set forth in a collective bargaining agreement, providing for employment,
compensation, pension, profit-sharing, retirement savings, vacation, sick leave, health, life
insurance, scholarship, tuition reimbursement, welfare benefits, deferred compensation, severance,
termination pay, performance awards, bonus, commission, incentive compensation, equity or
equity-related awards, change in control, retention, or employee benefits, including each “employee
benefit plan” within the meaning of Section 3(3) of ERISA.

     “Equipment” shall mean (a) the furniture, machinery, equipment, tables, chairs, cash
registers, computer equipment and license of related software, display cases, shelves, lights,
uniforms, signs, cabinets, racks, ornaments and (b) any of the foregoing which are leased by the
Sellers pursuant to the Equipment Leases.

     “Equipment Leases” shall mean all agreements or documents under which the Seller Group
claims or holds a leasehold or other interest or right to the use Equipment.

     “Estimated Closing Net Working Capital” shall have the meaning set forth in Section
2.2(a).

     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

     “Escrow Agent” shall have the meaning set forth in Section 2.8.

     “Escrow Agreement” shall have the meaning set forth in Section 2.8.

     “Escrow Amount” shall have the meaning set forth in Section 2.1.

     “Excluded Assets” shall have the meaning set forth in Section 1.3.

     “Excluded Contracts” shall have the meaning set forth in Section 1.3(g).

     “Excluded Deposits” shall have the meaning set forth in Section 1.2(g).

     “Excluded Liabilities” shall have the meaning set forth in Section 2.3(b).

     “Excluded Licenses” shall have the meaning set forth in Section 1.2(d).

     “Excluded Leased Property” shall mean the Headquarters Building or any Store or
Distribution Center that is not a premises subject to an Assumed Real Property Lease. To the
extent any such premises becomes subject to an Assumed Real Property Lease after the Closing Date
in accordance with Section 1.4, such premises shall cease to be an Excluded Leased Property as of
the date of the assignment of such Assumed Real Property Lease to the Buyer pursuant to Section
1.4.

     “Excluded Real Property Leases” shall have the meaning set forth in Section 1.3(f).

     “Final Closing Net Working Capital” shall have the meaning set forth in Section
2.2(c).

     “FTC” shall have the meaning set forth in Section 6.7(b).

     “GAAP” shall mean United States generally accepted accounting principles.

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     “GOB Sales” shall mean those “store closing” or other similarly themed sales conducted
by the Agent pursuant to the Agency Agreements and the Sale Order.

     “Going Concern Agency Agreement” shall have the meaning set forth in the Recitals.

     “Governmental Approvals” shall mean those approvals, authorizations, confirmations,
consents, exemptions and orders from Governmental Authorities and the making of all necessary
registrations and filings (including filings with Governmental Authorities) and the taking of all
reasonable steps as may be necessary (a) to consummate the transactions contemplated hereby under
Applicable Law or (b) for the Buyer to operate the Business after Closing, including approvals
under the HSR Act.

     “Governmental Authority” shall mean any national, federal, state, provincial, local or
foreign government, or any subdivision, agency, instrumentality, authority, department, commission,
board or bureau thereof, or any federal, state, provincial, local or foreign court, tribunal, or
arbitrator, including the Bankruptcy Court.

     “Governmental Entity” shall mean any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign.

     “Headquarters Building” means the corporate headquarters building of the Sellers
located in Ann Arbor, Michigan.

     “HSR Act” shall mean the Hart Scott Rodino Antitrust Improvements Act of 1976, as
amended.

     “Independent Accounting Firm” shall have the meaning set forth in Section 2.2(f).

     “Initial Purchase Price” shall have the meaning set forth in Section 2.1.

     “Intellectual Property” shall mean all patents, trademarks, trade names, service
marks, trade dress, copyrights, applications for registration of any of the foregoing, and brand
names, inventions, processes, know how, trade secrets, all databases, data collections, source
code, all domain names and websites and related URLs, any moral and economic rights of authors and
inventors, however denominated, throughout the world, and any similar or equivalent rights to any
of the foregoing anywhere in the world. Without limiting the generality of the foregoing, the
Intellectual Property includes the name “Borders” and all rights to the website borders.com.

     “Inventory” shall mean all inventories of the Seller Group, including all Merchandise,
as of the Closing Date.

     “IP Assignments” shall have the meaning set forth in Section 3.2(d).

     “Kobo” shall have the meaning set forth in Section 1.2(i).

     “Kobo Interest” shall have the meaning set forth in Section 1.2(i).

     “Knowledge of the Sellers” (or “the Sellers’ Knowledge”) shall mean the actual
knowledge of the officers of the Sellers listed on Schedule 13.1, after reasonable inquiry.

     “Leased Real Property” shall mean each parcel of real estate leased by the Seller
Group or in which the Seller Group has a leasehold, subleaseholder or other interest, including (a)
those on which a store of the Sellers is located and (b) those used in connection with the
Business.

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     “Licenses” shall mean all business licenses, occupancy permits and other permits,
authorizations on approvals held by the Seller Group.

     “Liens” shall mean any liens (including any inchoate liens and any liens for Taxes,
materialmen, laborer, or mechanics’ liens, judgment liens, liens imposed by operation of law,
contractual liens, and liens arising out of or resulting from any employment agreements, employee
benefits plans or laws, or collective bargaining agreements), encumbrances, burdens, claims,
demands, judgments, orders, writs, injunctions, decrees, and arbitral awards, attachments, charges,
security interests, mortgages, deeds of trust, pledges, hypothecations, adverse claims of title,
preferential rights of purchase and/or first refusal rights, options, contracts for sale, transfer,
or other disposition, and any claims or rights of any kind, description or nature whatsoever of or
in favor of any creditors, Governmental Entities, or other Persons, whether or not any of the above
arose, accrued, or relate to any time periods before or after the filing of the Cases, and whether
or not a Chapter 11 or Chapter 7 trustee is hereafter appointed in the Cases for any reason.

     “Material Adverse Effect” shall mean with respect to the Seller Group, the Assets or
the Business, as the context requires, any event or occurrence which shall materially affect the
business, operations, properties, Assumed Liabilities, as the case may be, taken in each case as a
whole; provided that any (a) change in general economic or industry-wide conditions that does not
effect the Business disproportionately, (b) change in law or accounting standards or
interpretations thereof that is of general application, or (c) adverse effect that is solely the
result of the execution or announcement of this Agreement or the transactions contemplated hereby
or the consummation thereof, shall not be taken into account for purposes of determining a Material
Adverse Effect hereunder.

     “Material Contracts” shall mean (a) any Contract requiring payments by the Seller
Group, or resulting in receipts or disbursements by the Seller Group of amounts, in excess of
$100,000 during any twelve (12) month period, (b) any Contract that is material to the operation of
the Business, (c) all agreements evidencing any warranty obligation of the Seller Group with
respect to goods sold or leased by it, (d) all agreements imposing on the Seller Group any
non-competition or similar obligation, (e) any employment contract or agreement with any current
employee of the Seller Group, that is currently in effect, in whole or in part, under which the
employment of such employee (i) is not “at will” or requires any payment by the Seller Group to
such employee on termination of employment or a change of control of the Seller Group, or (ii)
cannot be cancelled by the Seller Group without penalty, (f) each contract or agreement with any
retired employee, or consulting contract or agreement which in such case cannot be cancelled by the
Seller Group without penalty or liability and upon not more than sixty (60) days notice, (g) any
joint venture Contract or other Contract that has involved or is expected to involve a sharing of
profits with other Persons, (h) any agreement of indemnification, (i) any Contract relating to the
disposition or acquisition of assets by the Seller Group having a value in excess of $25,000 (other
than Contracts for the sale of Inventory in the ordinary course of business), (j) all insurance
policies, and (k) all software licenses or other licenses or agreements relating to the use of
Intellectual Property.

     “Merchandise” shall have the meaning set forth in the Agency Agreement.

     “Multiemployer Plan” shall mean a multiemployer plan, as defined in Section 4001(a)(3)
of ERISA.

     “Net Working Capital” shall mean the net working capital of the Business, calculated
based on the categories of current assets and liabilities set forth on Schedule 2.2(a)
using the same accounting methodologies and procedures used to calculate the Reference Closing Net
Working Capital.

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     “Order” shall mean any writ, judgment, decree, injunction or similar order, writ,
ruling, directive or other requirement of any Governmental Entity (in each case whether preliminary
or final).

     “Outstanding Indebtedness” shall mean (a) all debts, liabilities, losses, bank
indebtedness, mortgages and guarantees, (b) all other obligations for borrowed money, (c) all
obligations evidenced by bonds, debentures, notes, or other similar instruments, (d) all
reimbursement or other obligations in respect of letters of credit, bankers’ acceptances, interest
rate swaps, or other financial products, (e) all obligations under capital leases (other than the
Assumed Real Property Leases), (f) any other obligation guaranteeing or intended to guarantee any
obligation or liability, (g) all obligations of the types described in the foregoing (a) through
(d) that are secured by a Lien, or (h) interest, fees, fines, pre-payment penalties or other
similar payments related to the foregoing (a) through (g).

     “Parent” shall have the meaning set forth in the Preamble.

     “Party” and “Parties” shall have the meanings set forth in the Preamble.

     “Permits” shall have the meaning set forth in Section 4.9.

     “Permitted Liens” shall mean (a) mechanics’, materialmen’s, warehousemen’s, carriers’,
workers’, or repairmen’s liens or other similar common law or statutory encumbrances arising or
incurred in the ordinary course and that are for amounts (i) that are not material in amount or
effect and (ii) that are either not yet due or delinquent or are otherwise being contested
in good faith by appropriate proceedings, (b) liens for Taxes, assessments and other governmental
charges for amounts (i) that are not material in amount or effect and (ii) that are either
not due or payable or are being contested in good faith by appropriate proceedings, (c) zoning
restrictions, easements, licenses, reservations, provisions, covenants, waivers, rights-of-way,
restrictions, minor irregularities of title (and with respect to Real Property Leases, mortgages,
obligations, Liens and other encumbrances incurred, created, assumed or permitted to exist and
arising by, through or under a landlord, ground lessor or owner of the leased property, with or
without consent of the lessee) and other similar charges or encumbrances with respect to real
property not interfering in any material respect with the ordinary conduct of the business of the
Sellers and which do not secure obligations for payment of money, (d) Liens incurred in the
ordinary course of business for amounts (i) that are not material in amount or effect and
(ii) that are either not yet due or delinquent or are otherwise being contested in good faith
by appropriate proceedings, and (e) liens or encumbrances imposed by any contract or any Applicable
Law governing a License for amounts (i) that are not material in amount or effect and (ii)
that are either not yet due or delinquent or are otherwise being contested in good faith by
appropriate proceedings.

     “Person” shall mean any individual, corporation, partnership, joint venture, trust,
limited liability company, business association, Governmental Entity or other entity.

     “Pre-Closing GOB Sale” shall mean a GOB Sale that is commenced prior to the Closing
Date with respect to a Real Property Lease described in clause (a) of the definition of the term
Designation Deadline.

     “Proceeds” shall mean the aggregate of (a) the total amount (in dollars) of all sales
of Merchandise made under the Agency Agreement, exclusive of Sales Taxes and (b) all proceeds of
the Sellers’ insurance for loss or damage to Merchandise or loss of cash arising from events
occurring during the Sale Term. Proceeds shall also include any and all proceeds received by Agent
from the disposition, in a commercially reasonable manner, of unsold Merchandise at the end of the
GOB Sales, whether through salvage, bulk sale or otherwise.

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     “Proposed Cure Notice” shall have the meaning set forth in Section 11.2(b).

     “Purchase Price” shall have the meaning set forth in Section 2.2(j).

     “Real Property Leases” shall mean all agreements or documents under which the Seller
Group claims or holds a leasehold, subleasehold or other interest or right to the use of the Leased
Real Property.

     “Reference Closing Net Working Capital” shall mean $390,200,000.

     “Sale Motion” shall have the meaning set forth in Section 11.1.

     “Sale Order” shall mean an Order of the Bankruptcy Court entered pursuant to
Bankruptcy Code Sections 363 and 365 that (a) is in substantially the form set forth as Exhibit
B to this Agreement or otherwise in a form reasonably satisfactory to the Sellers and
satisfactory to the Buyer in its sole discretion, (b) approves the sale of the Assets to the Buyer
pursuant to the terms of this Agreement and the provisions of the Bankruptcy Code (including
Bankruptcy Code Section 363), and (c) approves the Seller Group’s assignment of the Assumed
Contracts to the Buyer pursuant to Section 365 of the Bankruptcy Code.

     “Sales Taxes” shall have the meaning set forth in the Agency Agreement.

     “Savings Plans” shall mean the Borders Group, Inc. Savings Plan and the Borders Group,
Inc. Savings Plan for Employees Working in Puerto Rico, as each may be amended from time to time,
and any successor plan thereto.

     “Second Escrow Agreement” shall have the meaning set forth in Section 2.10(a).

     “Second Escrow Amount” shall have the meaning set forth in Section 2.10(a).

     “Second Escrow Claim Notice” shall have the meaning set forth in Section 2.10(a).

     “Second Escrow Dispute Notice” shall have the meaning set forth in Section 2.10(a).

     “Seller” or “Sellers” shall have the meaning set forth in the Preamble.

     “Seller Group” shall have the meaning set forth the Recitals.

     “Store Closing Locations” shall have the meaning set forth in Section 1.4(f).

     “Stores” shall mean the retail book stores that are operated at the leased premises
subject to the Real Property Leases.

     “Tax” or “Taxes” shall mean (a) all taxes, charges, fees, levies, penalties or
other assessments of any kind whatsoever imposed by an federal, state, local or foreign taxing
authority, including, but not limited to, income, excise, property, sales, transfer, franchise,
payroll, withholding, social security or other taxes, whether computed on a separate or
consolidated, unitary or combined basis or in any other manner, including any interest, penalties
or additions attributable thereto or (b) liability for the payment of any amounts of the type
described in clause (a) above as a result of being a party to any agreement or any express or
implied obligation to indemnify or otherwise succeed to the liability of any other Person.

     “Tax Code” shall mean the Internal Revenue Code of 1986, as it has been and may be
amended.

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     “Transferred Accounts Receivable” shall have the meaning set forth in Section 1.2(h).

     “Transferred Inventory” shall have the meaning set forth in Section 1.2(f).

     “Transferred Employees” shall have the meaning set forth in Section 7.6(a).

     “Transferred Equipment and Improvements” shall have the meaning set forth in Section
1.2(c).

     “Transferred Intellectual Property” shall mean all of the interest of the Seller Group
in Intellectual Property.

     “Transferred Stores” shall mean Stores that are operated at leased premises subject to
Assumed Real Property Leases.

     “Transition Agreement” shall have the meaning set forth in Section 7.5.

     “Transition Services” shall have the meaning set forth in Section 7.5.

     “Treasury Regulations” shall mean the federal income Tax regulations promulgated under
the Tax Code, as amended, including any temporary and proposed regulations.

     “Wind Down Obligations” shall have the meaning set forth in Section 2.4(a).

Remainder of Page Intentionally Left Blank.

Signature Pages Follow.

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     This Asset Purchase Agreement is executed by the Parties on the date set forth above.

	 	 	 	 	 
	SELLERS: 	BORDERS GROUP, INC.

 	 
	 	By:  	/s/ Scott D. Henry	 
	 	Name:  	Scott D. Henry	 
	 	Title:  	Executive Vice President and Chief Financial Officer	 
	 
	 	BORDERS, INC.

 	 
	 	By:  	/s/ Scott D. Henry	 
	 	Name:  	Scott D. Henry	 
	 	Title:  	Executive Vice President and Chief Financial Officer	 
	 
	BUYER: 	BB BRANDS, LLC

 	 
	 	By:  	/s/ J. Jahm Najafi	 
	 	Name:  	J. Jahm Najafi	 
	 	Title:  	Authorized Agent

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00191-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00191-of-00352.parquet"}]]