Document:

EX-10.6

 

Exhibit 10.6

EMPLOYMENT AGREEMENT

          THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made as of the Effective Date, by and between
FIRST ALBANY COMPANIES INC., a New York corporation (“Company”) and LEE FENSTERSTOCK (“Executive”).

WITNESSETH:

          WHEREAS, Company desires to employ Executive as its Chairman and Chief Executive Officer, and
Executive desires to be employed in that position;

          NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Company and Executive hereby agree as follows:

     1. Employment and Employment Period.

          (a) The Effective Date of this Agreement shall be the date of closing of the Recapitalization
Transaction that has been agreed to by Company and MatlinPatterson Global Opportunities Partners
II, L.P. and Affiliates (“Recapitalization Transaction”).

          (b) Company agrees to employ Executive and Executive agrees to be employed by Company, on the
terms and conditions set forth in this Agreement, for a period commencing on the Effective Date and
continuing thereafter until the third anniversary thereof, unless sooner terminated pursuant to
Section 5 hereof (the “Employment Period”). The Employment Period shall automatically be extended
for one additional year upon the third anniversary of the Effective Date without the necessity of
any affirmative action by any party, unless either party provides at least six (6) months’ advance
written notice to the other party that the Employment Period will not be extended. Following the
termination of Executive’s employment for any reason, he shall resign any and all officerships and
directorships he then holds with Company or any of its Affiliates (as defined below).

     2. Title and Duties.

          (a) During the Employment Period, Executive shall serve as the Chairman and Chief Executive
Officer of Company. Executive shall have the duties, responsibilities and authority commensurate
with such position and such other duties and responsibilities as may be reasonably assigned to
Executive by Company’s Board of Directors (“Board”) or that are otherwise set forth in Company’s
By-Laws. Within thirty (30) days of the Effective Date, the Board shall appoint Executive as a
member and Chairman of the Board and thereafter shall nominate Executive for election as a member
of the Board when his seat on the Board is up for re-election. Executive shall report to the Board
and shall perform his assigned duties and responsibilities at the offices of Company in New York
City and other locations established by Company; provided, that, Executive may be
required to travel on Company business during the Employment Period.

          (b) During the Employment Period, Executive shall devote substantially all of his working time
and attention during normal working hours to the performance of his duties.

 

 

Notwithstanding the foregoing, nothing in this Agreement shall restrict Executive from
managing his personal investments, personal business affairs and other personal matters, or serving
on civic or charitable boards or committees, if such activities do not interfere with the
performance of his duties hereunder or conflict with the Company’s interests.

     3. Compensation and Benefits. For the services rendered by Executive to Company
during the Employment Period, Company shall pay to Executive the compensation and benefits set
forth in this Section 3.

          (a) Base Salary. As compensation for services performed under and during the
Employment Period, Company shall pay to Executive, in regular periodic installments as in effect
immediately prior to the Effective Date, a base salary (the “Base Salary”) at the rate of Three
Hundred Fifty Thousand Dollars ($350,000) per year. Executive’s Base Salary shall be reviewed by
the Board, and the compensation committee of the Board where appropriate, each year and may be
adjusted upward from time to time at the discretion of the Board or the compensation committee of
the Board.

          (b) Annual Cash Bonus. Executive shall participate in Company’s annual bonus pool for
each fiscal year of Company that begins during the Employment Period; provided,
that ̧ Executive’s bonus with respect to the fiscal year that begins prior to the first
anniversary of the Effective Date shall be pro-rated to correspond to the portion of such fiscal
year that follows the first anniversary of the Effective Date. Executive’s annual bonus will be
paid under terms and conditions developed by the Board after good faith consultation with
Executive.

          (c) Benefits. At all times during the Employment Period, Executive shall be entitled
to receive the employee benefits of Company on such basis as is comparable to those provided to
other senior executives of Company, subject to the terms and conditions of the relevant benefits
plans and policies. Executive shall be entitled to vacation and paid holidays consistent with
Company’s practices as adopted from time to time.

     (d) Restricted Stock Units.

          (i) Company shall grant Restricted Stock Units (“RSUs”) to Executive in accordance
with the following schedule and subject to (A) the terms of the First Albany Companies Inc.
2007 Incentive Compensation Plan and the applicable award agreement (“Incentive Compensation
Plan”) and (B) the conditions noted below:

- 2 -

 

	 	 	 	 	 
	Grant Dates	 	Vesting Dates	 	Settlement Dates
	Upon closing of the Recapitalization Transaction: 1,000,000 shares

	 	10% upon closing of
Recapitalization
Transaction

	 	All shares settle on third anniversary of closing

	 

	 	30% on first anniversary
of closing
	 	 
	 

	 	30% on second anniversary
of closing
	 	 
	 

	 	30% on third anniversary
of closing
	 	 
	 
	 	 	 	 
	June 30, 2008: 250,000 shares

	 	One-third on June 30, 2009
	 	All shares settle on June 30, 2011
	 

	 	One-third on June 30, 2010	 	 
	 

	 	One-third on June 30, 2011	 	 
	 
	 	 	 	 
	January 1, 2009,
Based Upon Achieving
Performance Targets:

	 	One-third on January 1,
2010
	 	All shares settle
on January 1, 2012
	250,000 shares

	 	One-third on January 1,
2011	 	 
	 

	 	One-third on January 1,
2012	 	 
	 
	 	 	 	 
	June 9, 2009: 250,000 shares

	 	One-third on June 30, 2010
	 	All shares settle on June 30, 2012
	 

	 	One-third on June 30, 2011	 	 
	 

	 	One-third on June 30, 2012	 	 
	 
	 	 	 	 
	January 1, 2010, Based Upon Achieving Performance Targets:

	 	One-third on January 1,
2011
	 	All shares settle on January 1, 2013
	250,000 shares

	 	One-third on January 1,
2012	 	 
	 

	 	One-third on January 1,
2013	 	 

          (ii) Performance Targets to which reference is made in Subsection (d)(i) of this
Section 3 shall be determined by the Board in good faith consultation with Executive.

          (iii) No RSUs shall be granted to Executive following the termination of his
employment for any reason; provided, that, RSUs may be granted on the day of
termination as provided in Section 5(d)(iii) of this Agreement.

          (iv) RSUs that have been granted to Executive during the Employment Period but have
not vested prior to the termination of Executive’s employment shall upon such termination be
automatically forfeited and shall never vest, except to the extent that RSUs granted prior
to or upon the termination of Executive’s employment shall vest in

- 3 -

 

accordance with the provisions of Subsection (a), (c), (d), (f), or (g) of Section 5 of
this Agreement.

          (v) All vested RSUs shall be payable in shares of common stock upon the earliest of
(A) the third anniversary of the date of grant of such RSUs, (B) the six-month anniversary
of the date of the termination of Executive’s employment, (C) the date of Executive’s death,
or (D) the date of Executive’s disability (within the meaning of Section 5(g) of this
Agreement), reduced by any amount required for withholding of taxes. All RSUs shall be
structured and paid in a manner that complies with the requirements of Section 409A of the
Internal Revenue Code (“Section 409A”).

     4. Expenses. Subject to the reasonable policies and procedures of Company, Executive
shall be entitled to be fully reimbursed for all reasonable expenses incurred by him in the
performance of his duties hereunder, and Company will reimburse Executive from time to time for all
such reasonable expenses upon presentation of a written itemized account thereof together with such
vouchers, receipts and other evidence of such expenses to the extent applicable as Company may
reasonably deem to be necessary.

     5. Termination and Termination of Benefits. Executive’s employment with Company shall
terminate under the following circumstances:

          (a) Expiration of Employment Period Without Continued Employment of Executive by
Company. Executive’s employment shall terminate as of the last day of the Employment Period.
In such event, and subject to the other provisions of this Section 5, Executive shall be entitled
to the following payments and benefits and Company shall have no further obligations to Executive
under this Agreement:

          (i) Executive shall be entitled to receive any accrued but unpaid Base Salary through
the last day of the Employment Period, and any accrued benefits payable to Executive in
accordance with Company’s benefits policies or the provisions of any benefit plan in which
he is then a participant to the extent provided therein;

          (ii) Company shall pay Executive a pro-rated bonus for the fiscal year in which
termination occurs, to be paid at the time such bonus would have been paid if Executive
remained employed, and shall also pay Executive any other bonus with respect to any other
fiscal year that had been earned at the time of the termination of Executive’s employment,
but not yet paid; and

          (iii) RSUs granted to Executive prior to the termination of his employment shall
continue to vest in accordance with the provisions of the Incentive Compensation Plan and
the schedule set forth in Section 3(d) of this Agreement, on condition that Executive agrees
to remain a member of the Board in good standing and to meet all obligations of a Board
member.

          (b) Termination By Executive Without Good Reason. Executive may resign from Company
at any time upon sixty (60) days’ prior written notice to the Board. In the event of resignation by
Executive under this Subsection (b), the Board may elect to waive the period of notice, or any
portion thereof and thereby accelerate the date of termination. In the

- 4 -

 

event of termination by Executive of his employment under this Subsection (b), Executive shall
be entitled to the following payments and benefits and Company shall have no further obligations to
Executive under this Agreement:

          (i) Executive shall be entitled to receive any accrued but unpaid Base Salary through
the effective date of such termination as soon as practicable following the date of
termination and any accrued benefits payable to Executive in accordance with Company’s
benefits policies or the provisions of any benefit plan in which he is then a participant to
the extent provided therein; and

          (ii) Company shall pay Executive any bonus with respect to any concluded fiscal year
that had been earned at the time of the termination of Executive’s employment, but not yet
paid.

          (c) Termination by Company Without Cause. Executive’s employment under this Agreement
may be terminated by Company without Cause (as defined in Section 5(e) of this Agreement) upon a
vote of the majority of the members of the Board (excluding Executive) and sixty (60) days’ prior
written notice to Executive. In the event of such termination, Executive shall be entitled to the
following payments and benefits and Company shall have no further obligations to Executive under
this Agreement:

          (i) Company shall continue to pay to Executive his Base Salary until the date which is
twelve (12) months following the termination of his employment under this Section 5(c) (the
“Severance Period’’). Company shall also pay Executive a pro-rated bonus for the fiscal
year in which the Severance Period ends, to be paid at the time such bonus would have been
paid if Executive remained employed; and Company shall pay Executive any other bonus with
respect to any other fiscal year that had been earned at the time of the termination of
Executive’s employment, but not yet paid;

          (ii) Company shall maintain in full force and effect, for the continued benefit of
Executive for the Severance Period, the medical, hospitalization and dental insurance plans
and programs in which Executive was participating immediately prior to the date of
termination at the level in effect and upon substantially the same terms and conditions
(including, if applicable, contributions required by Executive for such benefits) as existed
immediately prior to the date of termination; provided, that, if Executive
cannot continue to participate in Company’s plans and programs providing such benefits,
Company shall arrange to provide Executive with the economic equivalent of such benefits
which he otherwise would have been entitled to receive under such plans and programs
(“Continued Benefits”). Such Continued Benefits shall terminate on the date or dates
Executive receives substantially similar coverage and benefits, without waiting period or
pre-existing condition limitations, under the plans and programs of a subsequent employer;
provided, that, the determination of coverage and benefits shall be made on
a plan by plan and benefit by benefit basis and Company’s obligation under this Section 5(c)
shall continue with respect to any plan or benefit that is not substantially similar to
those in effect when Executive’s employment terminated. At the end of the Severance Period,
Executive shall have the right to elect continuation coverage under COBRA to the extent
still eligible under applicable law;

- 5 -

 

          (iii) Subject to Subsection (c)(iv) of this Section 5, Executive shall be paid or
provided any accrued benefits payable to Executive in accordance with Company’s benefits
policies or the provisions of any benefit plan in which he is then a participant to the
extent provided therein; and

          (iv) RSUs granted to Executive prior to the termination of his employment shall
continue to vest under the Incentive Compensation Plan in accordance with the schedule set
forth in Section 3(d) of this Agreement, on condition that Executive executes a settlement
agreement and release in such form as may be requested by Company which includes, without
limitation, a restrictive covenant substantially as set forth in Section 8(a) of this
Agreement, in accordance with and for a term not to exceed eighteen (18) months as provided
by the Incentive Compensation Plan.

          (d) Termination by Executive for Good Reason. Executive may terminate his employment
hereunder for Good Reason by giving written notice to the Board within thirty (30) days after the
occurrence of any one of the events specified in Subsection (d)(i) of this Section 5, without his
prior written consent, specifying that such termination shall occur thirty (30) days after such
notice has been given to the Board, provided, however, that such notice shall not be effective to
cause termination under this Subsection (d) if the specified event is cured by Company within
thirty (30) days of such written notice thereof.

          (i) Only the following shall constitute “Good Reason” for such termination:

          (A) Failure by Company to perform fully the terms of this Agreement, or any
plan or agreement referenced in this Agreement, other than an immaterial and
inadvertent failure not occurring in bad faith and remedied by Company promptly (but
not later than five (5) days) after receiving notice thereof from Executive;

          (B) Any reduction in Executive’s Base Salary or failure to pay any bonuses or
other material amounts due under this Agreement in accordance herewith;

          (C) The assignment to Executive of any duties inconsistent in any material
respect with his position or with his authority, duties or responsibilities as
Chairman and Chief Executive Officer, or any other action by Company which results
in a diminution in such position, authority, duties or responsibilities, excluding
for this purpose any immaterial and inadvertent action not taken in bad faith and
remedied by Company promptly (but not later than ten (10) days after receiving
notice from Executive);

          (D) Any change in the place of Executive’s principal place of employment to a
location outside New York City;

          (E) Any failure by Company to obtain an assumption and agreement to perform
this Agreement by a successor to Company; or

- 6 -

 

          (F) A Change of Control occurs and Executive does not continue thereafter as
the most senior executive officer of the business of the Company as conducted
immediately prior to the Change of Control. For purposes of this Section 5, “Change
of Control” shall mean a transaction or event as a result of which MatlinPatterson
Global Opportunities Partners II, L.P. (and/or one or more of its affiliates) shall
no longer have the right to elect all the members of the Board.

          (ii) In the event of termination by Executive for Good Reason for any of the reasons
set forth in Subsections (d)(i)(A) through (E) of this Section 5, Executive shall be
entitled to the following payments and benefits, and Company shall have no further
obligations under this Agreement:

          (A) Executive shall be entitled to receive any accrued but unpaid Base Salary
through the effective date of such termination as soon as practicable following the
date of termination and any accrued benefits payable to Executive in accordance with
Company’s benefits policies or the provisions of any benefit plan in which he is
then a participant to the extent provided therein;

          (B) Company shall pay Executive a pro-rated bonus for the fiscal year in which
termination occurs, to be paid at the time such bonus would have been paid if
Executive remained employed, and shall also pay Executive any other bonus with
respect to any other fiscal year that had been earned at the time of the termination
of Executive’s employment, but not yet paid; and

          (C) Executive shall receive the benefits set forth in Section 5(c)(iv) of this
Agreement.

          (iii) In the event of termination by Executive for Good Reason for the reason set forth
in Subsection (d)(i)(F) of this Section 5, Executive shall be entitled to the termination
benefits set forth in Subsection (d)(ii)(A) and (B) of this Section 5. In addition: (A)
all RSUs granted to Executive prior to the termination of his employment shall immediately
vest upon termination; and (B) RSUs specified in the schedule set forth in Section 3(d) of
this Agreement that have not yet been granted to Executive, including without limitation all
shares the grant of which is otherwise contingent on achieving Performance Targets, shall be
granted to Executive on the date of his termination and shall immediately vest upon such
date. Benefits pursuant to this Subsection (d)(iii) shall be structured and paid in a
manner that complies with the requirements of Section 409A, including any requirement that
payment be delayed by six (6) months following termination of employment in order to comply
with Section 409A.

          (e) Termination by Company for Cause. Executive’s employment hereunder may be
terminated by Company for Cause, subject to the following conditions:

          (i) Only the following shall constitute Cause for termination:

          (A) Executive’s conviction of, or plea of guilty or “no contest” to, any
felony;

- 7 -

 

          (B) Executive’s conviction of, or plea of guilty or “no contest” to, a
violation of criminal law involving Company and its business;

          (C) Executive’s commission of an act of fraud or theft, or material dishonesty
in connection with his performance of duties to Company; or

          (D) Executive’s willful refusal or gross neglect by Executive to perform the
duties reasonably assigned to him and consistent with his position with Company or
otherwise to comply with the material terms of this Agreement, which refusal or
gross neglect continues for more than fifteen (15) days after Executive receives
written notice thereof from Company providing reasonable detail of the asserted
refusal or gross neglect (and which is not due to a physical or mental impairment).

          (ii) In no event shall Executive’s employment be considered to have been terminated
for Cause unless and until Executive receives a copy of a resolution adopted by the Board
finding that, in the good faith opinion of the Board, Executive is guilty of acts or
omissions constituting Cause, which resolution has been duly adopted by an affirmative vote
of a majority of the Board, excluding Executive and any individual alleged to have
participated in the acts constituting Cause. Any such vote shall be taken at a meeting of
the Board called and held for such purpose, after reasonable written notice is provided to
Executive setting forth in reasonable detail the facts and circumstances claimed to provide
a basis of termination for Cause and Executive is given an opportunity, together with
counsel, to be heard before the Board.

          (iii) In the event Executive is terminated for Cause, Executive shall be entitled only
to the payments and benefits described in Subsection (b) of this Section 5, and Company
shall have no further obligations to Executive under this Agreement.

          (f) Death. Executive’s employment shall terminate upon his death. In such event,
Executive shall be entitled only to the following payments and benefits:

          (i) Executive shall be entitled to receive any accrued but unpaid Base Salary through
the effective date of such termination as soon as practicable following the date of
termination and any accrued benefits payable to Executive in accordance with Company’s
benefits policies or the provisions of any benefit plan in which he is then a participant to
the extent provided therein;

          (ii) Company shall pay Executive a pro-rated bonus for the fiscal year in which
termination occurs, to be paid at the time such bonus would have been paid if Executive
remained employed, and shall also pay Executive any other bonus with respect to any other
fiscal year that had been earned at the time of the termination of Executive’s employment,
but not yet paid; and

          (iii) RSUs granted to Executive prior to the termination of his employment shall vest
upon such termination in accordance with the provisions of the Incentive Compensation Plan.

- 8 -

 

          (g) Disability. In the event that Executive becomes disabled, as determined under
Company’s long-term disability income plan, and receives income replacement benefits under such
plan or another accident and health plan covering employees of Company for a period of not less
than three (3) months, or, in the absence of such plan or plans, by reason of Executive’s inability
to engage in any substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months, Executive’s employment shall be deemed
terminated by reason of disability; provided, that, in no event shall Executive be
terminated by reason of disability unless Executive receives written notice from Company, at least
fifteen (15) days in advance of such termination, stating its intention to terminate Executive by
reason of disability. In the event of termination by reason of disability, Executive shall be
entitled only to the payments and benefits described in Subsection (f) of this Section 5.

     6. Tax Indemnity.

          Anything in this Agreement to the contrary notwithstanding, in the event it is determined that
any payment or distribution by Company to Executive or for his benefit, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or otherwise (a “Payment”)
would be subject to an excise tax under Section 4999 of the Internal Revenue Code of 1986, as
amended (the “Code”) (or any successor provision) (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the “Excise Tax”), Executive shall be
entitled to receive an additional payment (a “Gross-Up Payment”) in an amount that, after payment
by Executive of all taxes (including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payment. Such Gross-Up Payment shall be
made to Executive within thirty (30) days following the date of determination that a Gross-Up
Payment is required to be paid to Executive in accordance with the remaining terms of this Section
6(b). Subject to the provisions of this Section 6(b), all determinations required to be made under
this Section 6, including whether a Gross-Up Payment is required and the amount of such Gross-Up
Payment, shall be made by Company’s principal independent accounting firm at the time such
determination is made (the “Accounting Firm”). Executive agrees to promptly furnish information
requested by the Accounting Firm in connection with such determinations. The Accounting Firm shall
provide detailed supporting calculations both to Company and Executive within thirty (30) days
following the date an event occurs that could give rise to an excise tax on a Payment, or such
earlier time as is requested by Company. Any determination by the Accounting Firm shall be binding
upon Company and Executive except as provided elsewhere in this Section 6. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that a Gross-Up Payment which will not have been
made by Company should have been made (the “Underpayment”), consistent with the calculations
required to be made hereunder. In the event that Company exhausts its remedies pursuant to this
Section 6 and Executive thereafter is required to make a payment of any Excise Tax, the Accounting
Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment,
together with any penalties and interest related to such Underpayment, if any, shall be made
promptly by Company to Executive or for his benefit. Executive shall notify Company in writing of
any claim by the

- 9 -

 

Internal Revenue Service that, if successful, would require the payment by Company of the
Gross-Up Payment. Such notification shall be given as soon as practicable after Executive knows of
such claim and shall apprise Company of the nature of the claim and the date on which the claim is
requested to be paid. Executive shall not pay such claim prior to the expiration of the thirty
(30) day period following the date on which Executive gives such notice to Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim is due). If Company
notifies Executive in writing prior to the expiration of such period that it desires to contest
such claim, Executive shall:

          (i) give Company any information reasonably requested by Company relating to such
claim,

          (ii) take such action in connection with contesting the claim as Company reasonably
requests in writing from time to tune, including, without limitation, accepting legal
representation with regard to the claim by an attorney selected by Company, and acceptable
to Executive,

          (iii) cooperate with Company (at no cost to Executive) in good faith in order
effectively to contest the claim, and

          (iv) permit Company to participate in any proceedings relating the claim;

provided, however, that Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such contest and shall
indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of such representation
and payments of costs and expenses. Without limitation of the foregoing provisions of this Section
6, Company shall control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as
Company determines; provided, further, however, that (A) if Company directs Executive to pay such
claim and sue for a refund, Company shall advance the amount of such payment to Executive on an
interest-free basis and shall indemnify and hold Executive harmless, on an after-tax basis, from
any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with
respect to such advance; and (B) any request by Company that Executive extend the statute of
limitations relating to payment of taxes for his taxable year with respect to which such contested
amount is claimed to be due is limited solely to such contested amount. Furthermore, Company’s
control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing authority. If, after the
receipt by Executive of an amount advanced by Company pursuant to this Section 6, Executive becomes
entitled to receive any refund with respect to such claim, Executive shall (subject to Company’s
complying with the requirements of this Section 6) promptly pay to Company the amount of such
refund (together with any interest paid or credited

- 10 -

 

thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced
by Company pursuant to this Section 6, a determination is made that Executive shall not be entitled
to any refund with respect to such claim and Company does not notify Executive in writing of its
intent to contest such denial of refund prior to the expiration of thirty (30) days after such
determination, then such advance shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

     7. Confidential Information; Removal of Documents; Certain Post-Employment
Undertakings.

          (a) Except (i) as required in order to perform his obligations under this Agreement, (ii) as
may otherwise be required by law or any legal process, or (iii) as is necessary in connection with
any adversarial proceeding against Company (in which case Executive shall use his reasonable best
efforts in cooperating with Company in obtaining a protective order against disclosure by a court
of competent jurisdiction), Executive shall not, without the express prior written consent of
Company, disclose or divulge to any other person or entity, or use or modify for use, directly or
indirectly, in any way, for any person or entity any of Company’s or an Affiliate’s (as defined
below) Confidential Information at any time during or after Executive’s employment. For purposes
of this Agreement, “Confidential Information” shall mean any valuable, competitively sensitive or
proprietary data and information related to business carried on by Company or any Affiliate (the
“Business”), including, without limitation, Trade Secrets (as defined below), that are not
generally known by or readily available to Company’s or any Affiliate’s competitors. “Trade
Secrets” shall mean information or data of Company or any Affiliate in connection with the
Business, including, but not limited to, technical or non-technical data, financial information,
programs, devices, methods, techniques, drawings, processes, financial plans, product plans, or
lists of actual or potential customers or suppliers, that: (A) derive economic value, actual or
potential, from not being generally known to, and not being readily ascertainable by proper means
by, other persons who can obtain economic value from their disclosure or use; and (B) are the
subject of efforts that are reasonable under the circumstances to maintain their secrecy.
“Affiliate” shall mean an entity in control of, controlled by or under common control with Company.

          (b) All records, files, drawings, documents, models, equipment, and the like containing
Confidential Information or needed in the Business over which Executive has control shall not be
removed from Company’s premises without its written consent, unless such removal is in the
furtherance of the Business or is in connection with Executive’s carrying out his duties under this
Agreement and, if so removed, shall be returned to Company promptly after termination of
Executive’s employment hereunder, or otherwise promptly after removal if such removal occurs
following termination of employment. Company shall be the owner of all Trade Secrets and other
products relating to the Business developed by Executive alone or in conjunction with others as
part of his employment with Company.

          (c) In the scope of Executive’s employment with Company, Executive may be requested, alone or
with others, to create, invent, enhance, and modify items which are or could be deemed to be
Confidential Information. Executive acknowledges and agrees that all such information is intended
to be, and will remain, the sole and exclusive property of Company. If

- 11 -

 

Executive’s employment with Company terminates for any reason, he shall promptly and fully
disclose all such property to Company, shall provide Company with any information that it may
reasonably request about such property and shall execute such agreements, assignments or other
instruments as may be reasonably requested by Company to reflect such ownership by Company and
shall fully cooperate with Company to protect the business relationships of Company and to insure
that there will be no unreasonable interference or disruption of such business relationships.

     8. Restrictive Covenants.

          (a) Executive covenants that, during the Employment Period, he will not, without the prior
written consent of Company, participate in the ownership, management, operation or control of a
Competitor or be employed by or perform services for a Competitor in a position substantially
similar to Executive’s position with Company; provided, however, that Executive may own, solely as
a passive investment, securities of any entity traded on any national securities exchange if
Executive is not a controlling person of (nor owns individually or as a member of a group, 5% or
more of) such entity. For purposes of this Section 8, “Competitor” means any broker-dealer or
financial advisory firm whose principal place of business is in the United States.

          (b) Executive covenants that in the event his employment by the Company shall terminate for
any reason, then during a period of twelve (12) months after the date of such termination,
Executive shall not, directly or indirectly, solicit for employment or hire anyone who was an
employee of Company within the period of 180 days prior to such termination.

     9. Remedy.

          (a) Executive acknowledges that: (i) as a result of Executive’s employment by Company,
Executive will obtain Confidential Information; (ii) the Confidential Information has been
developed and created by Company at substantial expense and the Confidential Information
constitutes valuable proprietary assets and Company will suffer substantial damage and irreparable
harm which will be difficult to compute if during the term of employment and thereafter, Executive
should divulge such Confidential Information in violation of the provisions of this Agreement;
(iii) the nature of Company’s business is such that it could be conducted anywhere in the world and
that it is not limited to a geographic scope or region, (iv) Company will suffer substantial damage
which will be difficult to compute if Executive should compete with Company or solicit or interfere
with Company’s employees, customers or clients in violation of this Agreement; (v) the provisions
of this Agreement are reasonable and necessary for the protection of Company’s business; (vi)
Executive will not be unreasonably precluded from earning a living following his termination of
employment if the provisions of Sections 7 and 8 of this Agreement are fully enforced; and (vii)
Company would not have entered into this Agreement unless Executive agreed to be bound by the terms
of Sections 7 and 8 of this Agreement.

          (b) Should Executive engage in or perform any of the acts prohibited by Section 7 or Section 8
hereof, it is agreed that Company shall be entitled to full injunctive relief, to be issued by any
competent court of equity, enjoining and restraining Executive and each and

- 12 -

 

every other person, firm, organization, association, or corporation concerned therein, from
the continuance of such volatile acts.

     10. Assignment. This Agreement shall be binding upon and shall inure to the benefit
of Company, its successors and any person, firm, corporation or other entity that succeeds to all
or substantially all of the business, assets or property of Company. This Agreement may be
assigned, in whole but not in part, by Company to any successor to the Company or its business or
any subsidiary or Affiliate of Company, provided, that, such assignment does not
relieve Company of its obligations under this Agreement if the assignee fails to perform.
Executive may not assign any rights or delegate any duties in or under this Agreement.

     11. Waiver. The waiver by either party of a breach of any provision of this Agreement
shall not operate as or be construed as a waiver of any prior or subsequent breach thereof.

     12. Amendment or Modification. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in writing signed by
Executive and a duly authorized officer of Company (other than Executive) acting on behalf of the
Board.

     13. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to choice or conflict of law principles.

     14. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provisions of this
Agreement, which shall remain in full force and effect.

     15. Notices. Any notices required or permitted to be given hereunder shall be
sufficient if in writing, and if delivered by hand, by courier, by facsimile, or sent by certified
mail, return receipt requested, prepaid, to the address set forth below or such other address as
either party may from time to time designate in writing to the other and shall be deemed given as
of the date of the delivery if delivered by hand or by courier, if mailed, four (4) days after the
date of mailing.

	 	 	 
	If to Executive:

	 	Lee Fensterstock
	 

	 	445 Lafayette Street 
	 

	 	New York, NY 10003

- 13 -

 

	 	 	 
	If to Company:

	 	First Albany Companies Inc.
	 

	 	677 Broadway 
	 

	 	Albany, NY 12207
	 

	 	Attention: Patricia Craig
	 
	 	 
	 

	 	With a copy to:
	 
	 	 
	 

	 	Dewey Ballantine LLP
	 

	 	1301 Avenue of the Americas 
	 

	 	New York, NY 10019
	 

	 	Attention: Christopher P. Peterson

     16. Entire Agreement and Binding Effect. This Agreement contains the entire agreement
of the parties with respect to the subject matter hereof and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto in respect of such subject
matter. This Agreement shall be binding upon and inure to the benefit of the parties hereto and
their respective successors, permitted assigns, and legal representatives.

     17. Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the same instrument, and
in pleading or providing any provision of this Agreement it shall not be necessary to produce more
than one of such counterparts.

     18. Headings. The Section headings appearing in this Agreement are for reference
purposes only and shall not be considered a part of this Agreement or in any way modify, amend or
affect its provisions.

     19. Indemnification. Company will, to the maximum extent permitted under applicable
law and Company’s By-Laws and consistent therewith, indemnify and hold Executive harmless against
expenses and other amounts actually and reasonably incurred in connection with any proceeding
arising by reason of Executive’s employment by Company. In addition, Company shall cover Executive
under directors’ and officers’ liability insurance both during and, while potential liability
exists, after the term of employment in the same amount and to the same extent as Company covers
its other directors and officers.

     20. Drafting. The parties hereto acknowledge and agree that this Agreement has been
drafted jointly by Company and Executive and each has had ample opportunity to review and
understand its provisions and seek competent legal advice.

     21. Dispute Resolution. Except as provided in Section 9 of this Agreement, all
disputes arising out of, or related to, this Agreement, or the breach thereof, shall be settled by
binding arbitration in the City of New York, New York, in accordance with the applicable rules then
in effect of the American Arbitration Association, and the arbitrator’s decision shall be binding
and final, and judgment upon the award rendered may be entered in any court having jurisdiction
thereof.

- 14 -

 

     22. Survival. The respective obligations of, and benefits offered to Executive and
Company as provided in this Agreement shall survive the termination of this Agreement to carry out
their intended purpose.

     23. Compliance with Section 409A. Notwithstanding any provision of this Agreement to
the contrary, no payment or benefit shall be paid at any time or in any manner that would result in
the imposition of additional tax pursuant to Section 409A of the Code. The parties agree that any
such payment or benefit will be restructured in order to comply with the requirements of Section
409A on a basis that preserves to the maximum extent possible the economic rights of Executive
hereunder.

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the 21st
day of September, 2007.

	 	 	 	 	 
	 	FIRST ALBANY COMPANIES INC.

 	 
	 	/s/ Peter McNierney
 	 
	 	By:  Peter McNierney 	 
	 	Title:  	President and Chief Executive Officer 	 
	 
	 	EXECUTIVE:

 	 
	 	/s/ Lee Fensterstock
 	 
	 	LEE FENSTERSTOCK 	 
	 	 	 
	 

- 15 -exv10w39

 

Exhibit 10.39

DATED                                        2007

BGI (UK) LIMITED

and

BOOKSHOP ACQUISITIONS LIMITED

 

AGREEMENT

for the sale and purchase of

the entire issued share capital

of Borders (UK) Limited and Borders Books

Ireland Limited

 

Baker & McKenzie LLP

London

Ref: GF/RAK/CGB

 

 

CONTENTS

	 	 	 	 	 	 	 
	Clause	 	 	 	Page	 
	 
	 	 	 	 	 	 
	1.
	 	Interpretation	 	 	1	 
	2.
	 	Sale and Purchase of Shares and Irish Shares	 	 	7	 
	3.
	 	Consideration	 	 	8	 
	4.
	 	Completion	 	 	9	 
	5.
	 	Post-Completion Obligations	 	 	9	 
	6.
	 	Restrictive Covenants	 	 	9	 
	7.
	 	Warranties	 	 	11	 
	8.
	 	Locked Box	 	 	12	 
	9.
	 	Employee Incentives	 	 	12	 
	10.
	 	Announcements, Confidentiality and Return of Information	 	 	13	 
	11.
	 	Insurance	 	 	15	 
	12.
	 	Counterparts	 	 	15	 
	13.
	 	Further Assurance	 	 	15	 
	14.
	 	Variation, Waiver and Consent	 	 	15	 
	15.
	 	Entire Agreement	 	 	15	 
	16.
	 	Default Interest	 	 	15	 
	17.
	 	Notices	 	 	16	 
	18.
	 	Costs	 	 	17	 
	19.
	 	Third Party Rights	 	 	17	 
	20.
	 	Time of the Essence	 	 	17	 
	21.
	 	Continuing Effect	 	 	17	 
	22.
	 	Assignment	 	 	17	 
	23.
	 	Currency Conversion	 	 	17	 
	24.
	 	Governing Law and Submission to Jurisdiction	 	 	18	 
	25.
	 	Governing language	 	 	18	 

Schedule

	 	 	 	 	 
	SCHEDULE 1
	 	 	 	 
	Part 1: Details of the Company
	 	 	19	 
	Part 2: Details of the Irish Company
	 	 	21	 
	SCHEDULE 2
	 	 	 	 
	Completion
	 	 	23	 
	Part 1: Seller’s Delivery Obligations at Completion
	 	 	23	 
	Part 2: Seller’s Other Obligations at Completion
	 	 	25	 
	Part 3: Purchaser’s Obligations at Completion
	 	 	26	 
	SCHEDULE 3
	 	 	 	 
	Post-Completion Obligations
	 	 	27	 
	SCHEDULE 4
	 	 	 	 
	Warranties
	 	 	29	 
	SCHEDULE 5
	 	 	 	 
	Limitations on Liability
	 	 	39	 
	SCHEDULE 6
	 	 	 	 
	Awareness of Seller
	 	 	44	 
	SCHEDULE 7
	 	 	 	 
	Insurance
	 	 	45	 
	SCHEDULE 8
	 	 	 	 
	Properties
	 	 	46	 
	Part 1: Borders Stores
	 	 	46	 
	Part 2: Books etc. Stores
	 	 	64	 

1

 

	 	 	 	 	 
	Part 3: Airport Concessions
	 	 	76	 
	Part 4: Occupational Concessions
	 	 	79	 
	Part 5: Closed and Disposed Properties
	 	 	81	 
	SCHEDULE 9
	 	 	 	 
	Permitted Leakage
	 	 	87	 
	SCHEDULE 10
	 	 	 	 
	Deferred Consideration
	 	 	88	 

2

 

DATE:

PARTIES:

	(1)	 	BGI (UK) LIMITED a company incorporated under the laws of England and Wales with registered
number 3434022 and having its registered office at 100 New Bridge Street, London EC4V 6JA (the
“Seller”); and
	 
	(2)	 	BOOKSHOP ACQUISITIONS LIMITED a company incorporated under the laws of England and Wales with
registered number 6301376 and having its registered office at 32 Bedford Row, London WC1R 4HE
(the “Purchaser”).

RECITALS:

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

IT IS AGREED as follows:

	1.	 	INTERPRETATION
	 
	1.1	 	Defined terms
	 
	 	 	In this Agreement, the following words and expressions shall have the following meanings:
	 
	 	 	“Accounting Date” means 3 February 2007;
	 
	 	 	“Accounts” means:

	 	(a)	 	the audited balance sheet of the Company as at the Accounting Date; and

	 	(b)	 	the audited profit and loss account and cash flow statement of the Company in
respect of the Financial Year ending on the Accounting Date, 

	 	 	together in each case with all notes, reports and statements required by CA85 to be included
in or annexed to them;
	 
	 	 	“Aggregate Consideration” has the meaning attributed in clause 3.1;
	 
	 	 	“Blanchardstown Property” means Units 3B & 4, West End Retail Park, Blanchardstown, Dublin
15, Republic of Ireland;
	 
	 	 	“BoA Indebtedness” means the aggregate Indebtedness due to the syndicate of banks led by
Bank of America, N.A. (as administrative agent and collateral agent) from the Group as at
Completion together with all accrued interest;
	 
	 	 	“Borders Group” means Borders Group, Inc., a corporation incorporated in Delaware, USA and
having its principal place of business at 100 Phoenix Drive, Ann Arbor, MI 48108 USA;
	 
	 	 	“Borders Irish Pension Scheme” means the personal retirement savings account for the benefit
of the employees of the Irish Company;
	 
	 	 	“Borders UK Pension Scheme” means the occupational money purchase pension scheme for the
benefit of the employees of the Company, details of which are included in the Data Room;
	 
	 	 	“Business” means the business carried on by the Company and the Irish Company as at
Completion;

1

 

	 	 	“Business Day” means a day (excluding Saturday) on which banks generally are open in the
City of London for the transaction of normal banking business;
	 
	 	 	“CA85” means the Companies Act 1985;
	 
	 	 	“CHAPS” means the clearing houses automated payment system or any other method of electronic
transfer for same-day value;
	 
	 	 	“Charges” means the mortgages and charges detailed in part 1 of schedule 1;
	 
	 	 	“Closed Property” means the property at Birmingham Star City listed as a closed property and
short particulars of which are set out in part 5 of schedule 8;
	 
	 	 	“Company” means Borders (UK) Limited, a private company limited by shares and incorporated
in England and Wales, short particulars of which are set out in part 1 of schedule 1;
	 
	 	 	“Completion” means completion of the sale and purchase of the Shares and the Irish Shares in
accordance with clause 4;
	 
	 	 	“Completion Date” means the date upon which Completion is required to take place in
accordance with clause 4.1;
	 
	 	 	“Confidential Information” means know-how, trade secrets and other information of a
confidential nature;
	 
	 	 	“Confidentiality Letter” means the confidentiality letter from Borders Group to Risk Capital
Partners Limited dated 22 May 2007;
	 
	 	 	“Data Room” means the collection of documents, materials and information hosted by
Intralinks and made available for review by the Purchaser and its advisers copies of which
are contained in the CD ROMs that have been initialled by or on behalf of the Seller and the
Purchaser;
	 
	 	 	“Deeds of Covenant” means the deeds to be entered into by the Company and the Irish Company
in favour of Borders Group and containing obligations in respect of the assignment of the
Glasgow Property and the Blanchardstown Property in the agreed form;
	 
	 	 	“Deferred Consideration” means the amount of the additional consideration payable (if any)
for the Shares and the Irish Shares pursuant to clause 3.4;
	 
	 	 	“Directors” means the persons listed as directors of the Company and the Irish Company in
parts 1 and 2 of schedule 1;
	 
	 	 	“Disclosure Letter” means the letter of the same date as this Agreement (including the
contents of any schedule or appendix thereto or attachment thereto) from the Seller to the
Purchaser;
	 
	 	 	“Disposed Properties” means the properties short particulars of which are listed as disposed
properties set out in part 5 of schedule 8;
	 
	 	 	“Domain Names” means borders.co.uk, borders.eu, bordersukltd.com, bordersukltd.net,
bordersuklimited.com, bordersuklimited.net, bordersuk.eu, bordersgroup.info,
borders-group.eu;
	 
	 	 	“Encumbrance” means any encumbrance or security interest of any kind whatsoever including
without limitation a mortgage, charge, pledge, lien, hypothecation, restriction, right

2

 

	 	 	to acquire, right of pre-emption, option, conversion right, third party right or interest,
right of set-off or counterclaim, equities, trust arrangement or any other type of
preferential agreement (such as a retention of title arrangements) having similar effect or
any other rights exercisable by or claims by third parties;
	 
	 	 	“Financial Year” shall, save in relation to schedule 10, be construed in accordance with
s223 CA85;
	 
	 	 	“Fortis Indebtedness” means the aggregate Indebtedness due to Fortis Bank SA-NV from the
Group as at Completion with all accrued interest;
	 
	 	 	“Glasgow Property” means 98 Buchanan Street, Royal Exchange Square, Glasgow G1 3HA;
	 
	 	 	“Group” means the Company and the Irish Company and “member of the Group” shall be construed
accordingly;
	 
	 	 	“Guaranteed Properties” means the Blanchardstown Property and the Glasgow Property and
“Guaranteed Property” means either of them;
	 
	 	 	“Indebtedness” means, in respect of any company, any borrowing or indebtedness in the nature
of borrowing;
	 
	 	 	“Initial Consideration” means the cash, shares and loan notes referred to in clause 3.2;
	 
	 	 	“Intellectual Property” means rights in Confidential Information, patents, registered
designs, copyrights (including rights in computer software), rights in databases, rights in
other protectable lists of information, design rights, rights in know how, utility models,
topography rights, trade marks, domain names, business names, trade names, registrations of
and applications to register any of the aforesaid items and the goodwill attaching to any of
them and rights in the nature of any of the aforesaid items in any country;
	 
	 	 	“Intra-Group Guarantees” means all guarantees, indemnities and counter-indemnities of any
nature whatsoever (i) given to any third party by any member of the Group in respect of a
liability of any member of the Seller’s Group and/or as the context may require; (ii) given
to any third party by any member of the Seller’s Group in respect of a liability of any
member of the Group; and (iii) given by any member of the Seller’s Group after the date of
this agreement in connection with the completion of the agreement for lease dated 24 March
2006 between (1) Cosgrave Property Developments Limited, (2) Joseph Cosgrave, Peter Cosgrave
and Michael Cosgrave and (3) Borders Books Ireland Limited relating to the property at Unit
3B & 4, West End Retail Park, Blanchardstown, Dublin 15, Republic of Ireland;
	 
	 	 	“Intra-Group Indebtedness” means all Indebtedness outstanding between any member of the
Group and any member of the Seller’s Group (other than Intra-Group Trading Indebtedness);
	 
	 	 	“Intra-Group Trading Indebtedness” means all sums owing between any member of the Group and
the any member of the Seller’s Group in respect of intra-group trading activities;
	 
	 	 	“Irish Company” means Borders Books Ireland Limited, a private company limited by shares and
incorporated in the Republic of Ireland, short particulars of which are set out in part 2 of
schedule 1;
	 
	 	 	“Irish Share Consideration” has the meaning given in clause 3.3(b);
	 
	 	 	“Irish Shares” means the issued share capital of the Irish Company as shown in part 2 of
schedule 1;

3

 

	 	 	“Irish Trial Balance” means the draft unaudited trial balance of the Irish Company for the
year ended 3 February 2007 in the agreed form;
	 
	 	 	“Leakage” means:

	 	(a)	 	any dividend or other distribution (whether actual or deemed) to, in the case
of the Company, the Seller or, in the case of the Irish Company, Borders Group;
	 
	 	(b)	 	any payments made, or agreed to be made by any member of the Group, to (or
assets transferred to or liabilities assumed, indemnified, or incurred for the benefit
of) any member of the Seller’s Group (other than in the ordinary and usual course of
business) and any repayment by any member of the Group of any Intra-Group Indebtedness
(provided that the same has not been refunded to the relevant member of the Group
together with accrued interest prior to the date of Completion);
	 
	 	(c)	 	any payments made by any member of the Group to any member of the Seller’s
Group in respect of any share capital or other securities of any member of the Group
being issued, redeemed, purchased or repaid, or any other return of capital; and
	 
	 	(d)	 	the waiver or agreement to waive by any member of the Group of any amount owed
to it by any member of the Seller’s Group;

	 	 	“Lease Guarantee” means any guarantee given by Borders Group in respect of the Company’s
obligations or the Irish Company’s obligations (as applicable) under the lease of a
Guaranteed Property;
	 
	 	 	“Licence” means the agreement relating to the license of the “Borders” brand in the agreed
form;
	 
	 	 	“Licence Consideration” has the meaning given in clause 3.3(c);
	 
	 	 	“Life Assurance Scheme” means the Borders (UK) Limited life assurance scheme (previously
known as the Books Etc Limited life assurance scheme);
	 
	 	 	“Losses” includes, in respect of any matter, event or circumstance, all demands, claims,
actions, proceedings, damages, payments, fines, penalties, losses, costs (including legal
costs), expenses (including taxation), disbursements or other liabilities in any case of any
nature whatsoever;
	 
	 	 	“Management Accounts” means the unaudited management accounts of the Group for the five
month period to the Management Accounts Date;
	 
	 	 	“Management Accounts Date” means 30 June 2007;
	 
	 	 	“Occupational Concessions” means the concessions and licences, short particulars of which
are set out in part 4 of schedule 8;
	 
	 	 	“Other Domain Names” means bordersmobile.co.uk; bordersdirect.co.uk; myborders.co.uk;
bordersmail.co.uk; bordersonline.co.uk;
	 
	 	 	“Paperchase Arrangements” means the arrangements described in the memorandum from David
Roche dated 31 August 2007 as have been initialled for identification purposes only by or on
behalf of the Seller and the Purchaser;
	 
	 	 	“Paperchase Business” means the business of selling blank books, day book diaries,
calendars, stationery, pens, stationers sundries, greeting cards, posters, picture frames,
artists’ materials, leather goods, luggage, home storage products, furniture, toys, games,
paper

4

 

	 	 	products, Christmas decorations, partyware, general giftware and any items ancillary
thereto, carried on by Paperchase Products Limited (company number 3185938 and whose
registered office is at 12 Alfred Place London WC1E 7EB) as at Completion;
	 
	 	 	“Permitted Leakage” means all of the expenses or payments detailed in schedule 9;
	 
	 	 	“Proceedings” means any proceedings, suit or action arising out of or in connection with
this Agreement;
	 
	 	 	“Properties” means the properties short particulars of which are set out in parts 1, 2 and 3
of schedule 8;
	 
	 	 	“Purchaser’s Group” means the group of companies comprising the Purchaser, any holding
company from time to time of the Purchaser and any subsidiary of the Purchaser (including,
following Completion, any member of the Group) or of any such holding company and “member of
the Purchaser’s Group” shall be construed accordingly;
	 
	 	 	“Purchaser’s Solicitors” means Pinsent Masons of City Point, One Ropemaker Street, London
EC2Y 9AH;
	 
	 	 	“Reference Balance Sheet” means the unaudited balance sheet of the Group contained in the
Management Accounts;
	 
	 	 	“Seller’s Group” means the group of companies comprising the Seller, any holding company
from time to time of the Seller and any subsidiary of the Seller or any such holding company
(including, without limitation, Borders Group and its subsidiaries) but excluding each
member of the Group and “member of the Seller’s Group” shall be construed accordingly;
	 
	 	 	“Seller’s Solicitors” means Baker & McKenzie LLP of 100 New Bridge Street, London EC4V 6JA;
	 
	 	 	“Senior Executive” means each of David Roche, Mark Raban, Philip Downer and David Kohn;
	 
	 	 	“Service Document” means a document relating to or in connection with any Proceedings;
	 
	 	 	“Share Consideration” has the meaning given in clause 3.3(a);
	 
	 	 	“Shares” means the issued share capital of the Company as shown in part 1 of schedule 1;
	 
	 	 	“Tax” has the meaning given to that term in the Tax Deed and “Taxes” shall be construed
accordingly;
	 
	 	 	“Tax Deed” means the deed relating to Tax in the agreed form;
	 
	 	 	“Taxation Authority” has the meaning given to that term in the Tax Deed;
	 
	 	 	“Taxes Act” means the Income and Corporation Taxes Act 1988;
	 
	 	 	“Transaction Documents” means this Agreement, the Tax Deed, the Licence and the Transitional
Services Agreement;
	 
	 	 	“Transitional Services Agreement” means the agreement relating to transitional services in
the agreed form; and
	 
	 	 	“Warranties” means the warranties given in clause 7.1 and schedule 4.

5

 

	1.2	 	Statutory provisions
	 
	 	 	All references to statutes, statutory provisions, enactments, EU Directives or EU
Regulations shall include references to any consolidation, re-enactment, modification or
replacement of the same, any statute, statutory provision, enactment, EU Directive or EU
Regulation of which it is a consolidation, re-enactment, modification or replacement and any
subordinate legislation in force under any of the same from time to time except to the
extent that any consolidation, re-enactment, modification or replacement enacted after the
date of this Agreement would extend or increase the liability of either party to the other
under this Agreement.
	 
	1.3	 	Holding company and subsidiary
	 
	 	 	A company or other entity shall be a “holding company” for the purposes of this Agreement if
it falls within either the meaning attributed to that term in ss736 and 736A CA85 or the
meaning attributed to the term “parent undertaking” in s258 CA85, and a company or other
entity shall be a “subsidiary” for the purposes of this Agreement if it falls within either
the meaning attributed to that term in ss736 and 736A CA85 or the meaning attributed to the
term “subsidiary undertaking” in s258 CA85, and the terms “subsidiaries” and “holding
companies” are to be construed accordingly.
	 
	1.4	 	Agreed form
	 
	 	 	Any reference to a document in the “agreed form” is to the form of the relevant document in
the terms agreed between the Seller and the Purchaser prior to the execution of this
Agreement and signed or initialled for identification purposes only by or on behalf of the
Seller and the Purchaser (in each case with such amendments as may be agreed by or on behalf
of the Seller and the Purchaser).
	 
	1.5	 	Recitals, schedules, etc.
	 
	 	 	References to this Agreement include the recitals and schedules which form part of this
Agreement for all purposes. References in this Agreement to the parties, the recitals,
schedules and clauses are references respectively to the parties and their legal personal
representatives, successors and permitted assigns, the recitals and schedules to and clauses
of this Agreement.
	 
	1.6	 	Meaning of references
	 
	 	 	Save where specifically required or indicated otherwise:

	 	(a)	 	words importing one gender shall be treated as importing any gender, words
importing individuals shall be treated as importing corporations and vice versa, words
importing the singular shall be treated as importing the plural and vice versa, and
words importing the whole shall be treated as including a reference to any part
thereof;
	 
	 	(b)	 	references to a person shall include any individual, firm, body corporate,
unincorporated association, government, state or agency of state, association, joint
venture or partnership, in each case whether or not having a separate legal
personality. References to a company shall be construed so as to include any company,
corporation or other body corporate wherever and however incorporated or established;
	 
	 	(c)	 	references to the word “include” or “including” (or any similar term) are not
to be construed as implying any limitation and general words introduced by the word

6

 

	 	 	 	“other” (or any similar term) shall not be given a restrictive meaning by reason of
the fact that they are preceded by words indicating a particular class of acts,
matters or things;
	 
	 	(d)	 	references to any English statutory provision or legal term for any action,
remedy, method of judicial proceeding, legal document, legal status, court, official or
any other legal concept, state of affairs or thing shall in respect of any jurisdiction
other than England be deemed to include that which most nearly approximates in that
jurisdiction to the English statutory provision or legal term or other legal concept,
state of affairs or thing;
	 
	 	(e)	 	any reference to “writing” or “written” includes any method of reproducing
words or text in a legible and non-transitory form but, for the avoidance of doubt,
shall not include e-mail;
	 
	 	(f)	 	references to “sterling” or “£” or “pounds” are to the lawful currency of the
United Kingdom as at the date of this Agreement. References to “Euro” or “€” are to
the single currency of the European Union constituted by the Treaty on European Union;
and
	 
	 	(g)	 	references to times of the day are to that time in London and references to a
day are to a period of 24 hours running from midnight to midnight.

	1.7	 	Headings
	 
	 	 	Clause and paragraph headings and the table of contents are inserted for ease of reference
only and shall not affect construction.
	 
	1.8	 	Connected persons
	 
	 	 	Section 839 Taxes Act is to apply to determine whether one person is connected with another
for the purposes of this Agreement.
	 
	2.	 	SALE AND PURCHASE OF SHARES AND IRISH SHARES
	 
	2.1	 	Sale and purchase of Shares and Irish Shares

	 	(a)	 	The Seller agrees to sell and transfer (and in relation to the Irish Shares to
procure to be sold and transferred) and the Purchaser agrees to purchase the whole of
the legal and beneficial interest in the Shares and the Irish Shares free from any
Encumbrance, as at and with effect from the Completion Date.
	 
	 	(b)	 	The Seller covenants with the Purchaser that it has and will at Completion
have, the right to sell and transfer or procure the sale and transfer of the whole of
the legal and beneficial interest in and title to the Share and the Irish Shares.
	 
	 	(c)	 	The Seller covenants with the Purchaser that the Shares and the Irish Shares
will on Completion be free from all Encumbrances.
	 
	 	(d)	 	The Seller covenants with the Purchaser that the Purchaser will on Completion
be entitled to exercise all rights attached to or accruing to the Shares including,
without limitation, the right to receive all dividends or other distributions or any
return of capital declared, made or paid by the Company on or after Completion.
	 
	 	(e)	 	Part I of the Law of Property (Miscellaneous Provisions) Act 1994 shall not
apply for the purposes of this Agreement.

7

 

	2.2	 	Rights attaching to the Shares and the Irish Shares
	 
	 	 	The Shares and the Irish Shares shall be sold together with all accrued and future rights
now or hereafter attaching to them, including, without limitation, all rights to any
dividend or other distribution declared, made or paid after the date of this Agreement.
	 
	2.3	 	Waiver of restrictions on transfer
	 
	 	 	The Seller hereby irrevocably waives and agrees to procure the waiver of any restrictions on
transfer (including rights of pre-emption) which may exist in relation to the Shares or the
Irish Shares, whether under the articles of association of the Company or the Irish Company
or otherwise.
	 
	2.4	 	Sale of all the Shares and the Irish Shares
	 
	 	 	Neither party shall be obliged to complete the sale and purchase of any of the Shares or the
Irish Shares unless the sale and purchase of all the Shares and all the Irish Shares is
completed simultaneously in accordance with this Agreement.
	 
	3.	 	CONSIDERATION
	 
	3.1	 	Aggregate Consideration
	 
	 	 	The total price payable for the Shares, the Irish Shares and the grant of the Licence is
aggregate of the Initial Consideration and the Deferred Consideration (if any).
	 
	3.2	 	Payments
	 
	 	 	On Completion the Purchaser shall:

	 	(a)	 	procure the repayment by the Company of £10,000,000 to Bank of America, N.A.
(as administrative agent and collateral agent) in accordance with paragraph 1 of part 3
of schedule 2;
	 
	 	(b)	 	issue to the Seller 1999 B Ordinary Shares of £0.01 each in the Purchaser
credited as fully paid up; and
	 
	 	(c)	 	issue to the Seller Fixed Rate Unsecured Loan Notes 2017 in the principal
amount of £1,700,000 (one million and seven hundred thousand pounds).

	3.3	 	Apportionment of Initial Consideration
	 
	 	 	The Initial Consideration shall be apportioned between the Shares, the Irish Shares and the
Licence as follows:

	 	(a)	 	the Shares — £5,999,999, the 1999 B Ordinary Shares in the Purchaser and Fixed
Rate Unsecured Loan Notes 2017 of the Purchaser in the principal amount of £1,700,000
(the “Share Consideration”);
	 
	 	(b)	 	the Irish Shares — £4,000,000 (the “Irish Share Consideration”); and
	 
	 	(c)	 	the Licence — £1 (the “Licence Consideration”).

	3.4	 	Deferred Consideration

8

 

	 	 	The provisions of schedule 10 shall have effect in respect of the Deferred Consideration.
The Deferred Consideration shall be apportioned in the same proportions as the Initial
Consideration.
	 
	4.	 	COMPLETION
	 
	4.1	 	Timing
Completion shall take place immediately after the signing of this Agreement.
	 
	4.2	 	Location
	 
	 	 	Completion shall take place at the offices of the Seller’s Solicitors when all (but not some
only) of the events detailed in this clause 4 shall occur.
	 
	4.3	 	Seller’s obligations at Completion
	 
	 	 	At Completion, the Seller shall:

	 	(a)	 	deliver (or cause to be delivered) to the Purchaser the items listed in part 1
of schedule 2 (the Purchaser receiving those items, where appropriate, as agent of the
Company or the Irish Company); and
	 
	 	(b)	 	procure that all necessary steps are taken properly to effect the matters
listed in part 2 of schedule 2 at board meetings of each member of the Group and
deliver to the Purchaser duly signed minutes of all such board meetings.

	4.4	 	Purchaser’s obligations at Completion
	 
	 	 	At Completion, the Purchaser shall do or deliver (or cause to be delivered) to the Seller
the matters or items listed in part 3 of schedule 2.
	 
	4.5	 	No termination
	 
	 	 	The Purchaser shall not be entitled in any circumstances to rescind or terminate this
Agreement after Completion.
	 
	5.	 	POST-COMPLETION OBLIGATIONS
	 
	 	 	The Purchaser undertakes to the Seller to procure the performance and observance of those
matters listed in schedule 3.
	 
	6.	 	RESTRICTIVE COVENANTS
	 
	6.1	 	Restriction of Seller
	 
	 	 	Subject to clause 6.2, the Seller undertakes with the Purchaser that, except with the
consent in writing of the Purchaser (such consent not to be unreasonably withheld or
delayed):

	 	(a)	 	for the period of two years after Completion, it will not (and will procure
that no member of the Seller’s Group will) in the United Kingdom or the Republic of
Ireland, either on its own account or in conjunction with or on behalf of any other
person, carry on or be engaged, concerned or interested, in any business which directly
competes with the Business (a “Competing Business”) (other than as a holder of not more
than five per cent of the issued shares or debentures of any company carrying on such a
business traded on a recognised investment exchange (as defined in the Financial
Services and Markets Act 2000)); and

9

 

	 	(b)	 	for the period of two years after Completion, it will not (and will procure
that no member of the Seller’s Group will) either on its own account or in conjunction
with or on behalf of any other person solicit, entice away or attempt to solicit or
entice away from the Company or the Irish Company any person employed in a senior or
managerial capacity by the Company or the Irish Company at Completion.

	6.2	 	Exceptions from restrictions
	 
	 	 	Nothing in clause 6.1 shall prevent or restrict the Seller or any member of the Seller’s
Group from:

	 	(a)	 	carrying on or being engaged in any business or providing any goods or services
via the Internet or other electronic media, whether in the United Kingdom, the Republic
of Ireland or elsewhere;
	 
	 	(b)	 	carrying on or being engaged concerned or interested in, anywhere in the world,
any business (not being a Competing Business) which it carries on at Completion or in
which it is at Completion engaged, concerned or interested (or any reasonable extension
or development of any such business);
	 
	 	(c)	 	carrying on the Paperchase Business, whether in the United Kingdom, the
Republic of Ireland or elsewhere;
	 
	 	(d)	 	carrying on or being engaged concerned or interested in any Competing Business
after such time as the Purchaser’s Group ceases to carry on or be engaged, concerned or
interested in such business to any material extent;
	 
	 	(e)	 	acquiring, directly or indirectly, shares in or the whole or any part of the
undertaking or assets of any company which carries on a Competing Business if the
Seller shall cease to carry on or be concerned or interested in the Competing Business
or the company carrying on the same within one year from completion of the relevant
acquisition (but nothing in this clause 6.2(e) shall require the Seller or the relevant
members of the Seller’s Group to cease to carry on the Competing Business or to dispose
of the same within one year as therein provided if such business or interest therein is
acquired as part of a larger acquisition or series of related acquisitions and the
value properly attributable to such part did not at the date of acquisition amount to
more than 10% of the value of such larger acquisition or series of related acquisitions
taken as a whole;
	 
	 	(f)	 	general solicitation to the public of employment with the Seller or any member
of the Seller’s Group and to which any person described in clause 6.1(b) responds
without any other solicitation or prompting;
	 
	 	(g)	 	carrying on the business of selling books, periodicals, CDs and DVDs from the
Oxford St and/or Glasgow Properties in the event that the Seller or any member of the
Seller’s Group takes possession of either or both of such properties in connection with
any call on the guarantees given by Borders Group to the landlords of such properties;
or
	 
	 	(h)	 	carrying on or being engaged in any business or providing any goods or
services, whether in the United Kingdom, the Republic of Ireland or elsewhere which is
not a Competing Business and which incorporates a Starbucks or similar type of
concession arrangement or which provides internet connectivity services whether using
T-Mobile or otherwise.

10

 

	6.3	 	The Seller acknowledges that they consider the undertakings contained in clause 6.1
reasonable and necessary for the proper protection of the business of the Company or the Irish
Company and the legitimate interests of the Purchaser and further acknowledges that damages
would not be an adequate remedy for breach of such undertakings.
	 
	6.4	 	Each of the undertakings in clause 6.1 is separate and severable and shall be construed on
that basis. In the event that any such undertakings are found to be void but would be valid
if some part of it were deleted or if the period or extent were reduced such undertaking shall
apply with such modification as may be necessary to make it valid and effective.
	 
	6.5	 	The restrictions contained in clause 6.1 shall cease to apply in the event that there is a
material breach of the terms of this agreement by the Purchaser including a failure to pay the
Deferred Consideration and failure to comply with paragraph 1.2(a) of schedule 3.
	 
	7.	 	WARRANTIES
	 
	7.1	 	Warranties of the Seller
	 
	 	 	The Seller warrants to the Purchaser in the terms set out in schedule 4 subject to:

	 	(a)	 	any matter disclosed in the Disclosure Letter (or treated by the Disclosure
Letter as being disclosed);
	 
	 	(b)	 	any information obtained by the Purchaser or any of its advisors during the
course of any investigation (whether authorised by the Seller or not) by or on behalf
of the Purchaser into the affairs of the Company or the Irish Company (including,
without limitation to the generality of the foregoing, the information contained in the
Data Room) and any other information of which the Purchaser or any other member of the
Purchaser’s Group may have knowledge, whether actual, implied or constructive. All
such information shall be deemed to be disclosed to the Purchaser; and
	 
	 	(c)	 	the limitations and qualifications set out in schedule 5.

	7.2	 	Accuracy of Disclosure Letter
	 
	 	 	The Seller makes no representation or warranty to the Purchaser as to the completeness,
truth or accuracy of the matters disclosed in the Disclosure Letter.
	 
	7.3	 	Warranties of the Purchaser
	 
	 	 	The Purchaser warrants to the Seller that:

	 	(a)	 	the Purchaser has obtained all corporate authorisations required to empower it
to enter into this Agreement and the Tax Deed and to perform its obligations
thereunder;
	 
	 	(b)	 	neither the entry into this Agreement and the Tax Deed nor the implementation
of the transactions contemplated by this Agreement and the Tax Deed will:

	 	(i)	 	violate or conflict with the provisions of the Purchaser’s
constitutional documents;
	 
	 	(ii)	 	amount to a violation or breach of any applicable laws or
regulations in any relevant jurisdiction;
	 
	 	(iii)	 	amount to a violation or default with respect to any relevant
order, decree or judgment of any court or any governmental or regulatory
authority in any

11

 

	 	 	 	jurisdiction to which the Purchaser is a party or by which the Purchaser is
bound; or
	 
	 	(iv)	 	result in a breach of, or constitute a default under, any
instrument to which the Purchaser is a party or by which the Purchaser is
bound;

	 	(c)	 	the obligations expressed to be assumed by the Purchaser pursuant to this
Agreement and the Tax Deed are legal, valid and binding and enforceable against it in
accordance with the terms of this Agreement and the Tax Deed; and
	 
	 	(d)	 	the Purchaser is not engaged in any material litigation or arbitration or
similar proceedings related to the transactions contemplated by this Agreement and to
the knowledge of the Purchaser, no such litigation, arbitration or proceeding is
threatened against the Purchaser or any member of the Purchaser’s Group.

	8.	 	LOCKED BOX
	 
	8.1	 	The Seller warrants to the Purchaser that since the Reference Balance Sheet Date no Leakage
has occurred, save for Permitted Leakage.
	 
	8.2	 	The Seller undertakes to the Purchaser to pay to the Purchaser on demand, or as it may
direct, the amount of any Leakage, other than Permitted Leakage, received by it or any other
member of the Seller’s Group and to indemnify the Purchaser and keep it indemnified from and
against all Losses incurred by the Purchaser arising out of a breach by the Seller of clause
8.1 and the Purchaser may set off any amounts due under this clause against any payments that
it is due to make to Borders International Services, Inc under the Transitional Services
Agreement by notice to the Seller provided that the such notice is accompanied by the written
opinion of a commercial specialist Queen’s Counsel jointly agreed upon between the Purchaser
and the Seller or (failing such agreement) appointed, at the request of either the Purchaser
or the Seller at any time, by the President from time to time of The Bar Council of England
and Wales, to the effect that the Purchaser is likely to succeed on the claim under the
indemnity in respect of the amount to be set off to the extent of the amount to be set off or,
if less, the amount stated in the opinion and will be entitled to set off the amount so
estimated or stated.
	 
	9.	 	EMPLOYEE INCENTIVES
	 
	9.1	 	This clause 9 shall have effect if, and only to the extent that, the Purchaser or any member
of the Group has any obligation to account for bonuses payable in connection with the
transaction contemplated by this Agreement including, without limitation, any retention,
termination or other bonuses (the “Bonuses”) and income tax and employee’s social security
contributions after Completion under PAYE or any other withholding system arising in respect
of any share incentive, share option or other incentive (including the Bonuses) granted before
Completion (together the “Incentives”) by any member of the Seller’s Group to any employee or
officer or former employee or officer of any member of the Group (a “Relevant Individual”).
	 
	9.2	 	The Seller shall inform the Purchaser of the occurrence of any event whereby income tax and
employee social security contributions are required to be accounted for pursuant to Clause 9.1
(a “Relevant Event”) within 5 Business Days of the Relevant Event, specifying the name of the
Relevant Individual and the amount of employment income arising to the Relevant Individual in
respect of the Relevant Event.
	 
	9.3	 	The Purchaser will provide the Seller with all information reasonably necessary for the
Seller to calculate the amounts that are required to be accounted for pursuant to clauses 9.1
and 9.5 within 2 Business Days of the notification made pursuant to clause 9.2 above.

12

 

	9.4	 	The Seller agrees that it will, to the extent permitted by law, use its reasonable endeavours
to withhold from amounts due to the Relevant Individual or otherwise recover from the Relevant
Individual, an amount equal to the amount of income tax and employee social security
contributions that are required to be accounted for pursuant to clause 9.1 and forward that
amount to either the member of the Group that is the employer of the Relevant Individual or
the Purchaser by the later of (i) the end of 5 Business Days after the relevant event; (ii) 5
Business Days after the notification made pursuant to clause 9.2 above; and (iii) the close of
business on the day that is the latest date on which the income tax or employee social
security contributions (as the case may be) may be paid to a Taxation Authority without a
liability to interest and penalties arising. To the extent that the Seller is unable to
withhold or recover the amounts of income tax and employee social security contributions due
from the Relevant Individual, the Purchaser agrees that it will procure that the member of the
Group that is the employer of the Relevant Individual will use all reasonable endeavours to
recover the amount of income tax and employee social security contributions that are required
to be accounted for pursuant to clause 9.1 by deduction from the salary or other remuneration
of the Relevant Individual or otherwise directly from the Relevant Individual.
	 
	9.5	 	The Seller agrees that the Seller will bear any liability to employer social security
contributions arising in respect of any Incentives granted by any member of the Seller’s Group
or the Group to any Relevant Individual, and shall forward that amount to either the member of
the Group that is the employer of the Relevant Individual or the Purchaser by the later of (i)
the end of 5 Business Days after the relevant event; (ii) 5 Business Days after the
notification made pursuant to clause 9.2 above; and (iii) the close of business on the day
that is the latest date on which the income tax or employee social security contributions (as
the case may be) may be paid to a Taxation Authority without a liability to interest and
penalties arising.
	 
	9.6	 	The Purchaser shall procure that the relevant member of the Group that is the employer of the
Relevant Individual shall account for the amount equal to the amount of income tax and
employee social security contributions that are required to be accounted for pursuant to
clause 9.1, and any employer social security contributions due, to the relevant Taxation
Authority within any required timeframe and procure that, if and to the extent that there has
been an over-recovery of any amount of income tax and employee social security contributions,
the amounts are paid to the Relevant Individual as soon as practicable. The Purchaser shall
provide to the Seller such evidence that the amounts of income tax and employee social
security contributions have been duly accounted to the relevant Taxation Authority as the
Seller may reasonably request.
	 
	9.7	 	The Purchaser shall procure that a member of the Group shall report to the relevant Taxation
Authority any information required to be reported to any such Taxation Authority in relation
to any Relevant Event in connection with any share incentive, share option or other incentive
granted before Completion within the required timeframe. The Purchaser shall provide the
Seller with a copy of any such report within five Business Days of a request being made for
the same.
	 
	9.8	 	The Seller undertakes to pay or put the Purchaser in funds to pay, the Bonuses in time for
payment on their due dates provided that the Purchaser shall have given the Seller not less
than 5 Business Days prior notice that the liability is about to fall due.
	 
	10.	 	ANNOUNCEMENTS, CONFIDENTIALITY AND RETURN OF INFORMATION
	 
	10.1	 	Prior approval of announcements
	 
	 	 	Subject to the provisions of clause 10.2 below, no disclosure or announcement relating to
the existence or subject matter of this Agreement shall be made or issued by or on behalf of
the Seller or the Purchaser or any member of the Purchaser’s Group or any member of the
Group

13

 

	 	 	without the prior written approval of the other party (which approval may be subject to
reasonable conditions but shall otherwise not be unreasonably withheld or delayed) provided
that these restrictions shall not apply to any disclosure or announcement if required by any
law, applicable securities exchange, supervisory, regulatory or governmental body.
	 
	10.2	 	Notices to customers etc.
	 
	 	 	Nothing in this Agreement will prohibit the Purchaser from making or sending after
Completion any announcement to a customer, client or supplier of the Company or the Irish
Company informing it that the Purchaser has purchased the Shares and the Irish Shares.
	 
	10.3	 	Consultation
	 
	 	 	The party making the communication shall use its reasonable endeavours to consult with the
other party in advance as to the form, content and timing of the communication.
	 
	10.4	 	Confidentiality
	 
	 	 	Each party shall treat as strictly confidential and will not disclose any information
received or obtained by it or its officers, employees, agents or advisers as a result of
entering into or performing this Agreement which relates to:

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

	 	 	and the Seller acknowledges that it shall and shall procure that the Seller’s Group shall
treat as strictly confidential all information arising from its ownership of the Company and
the ownership of the Irish Company by Borders Group provided that these restrictions shall
not apply to any disclosure of information if and to the extent the disclosure is:

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

	10.5	 	Return of Information
	 
	 	 	If for any reason whatsoever the transactions contemplated by this Agreement are not
consummated, the Purchaser shall return to the Seller (i) all books and records relating or
belonging to any member of the Group; and (ii) the Disclosure Letter, and the Purchaser
undertakes to comply in all respects with the terms of the Confidentiality Letter.

14

 

	11.	 	INSURANCE
	 
	 	 	The provisions of schedule 7 shall have effect in respect of insurance claims and risk.
	 
	12.	 	COUNTERPARTS
	 
	 	 	This Agreement may be executed in any number of counterparts and by the parties to it on
separate counterparts and each such counterpart shall constitute an original of this
Agreement but all of which together constitute one and the same instrument. This Agreement
shall not be effective until each party has executed at least one counterpart.
	 
	13.	 	FURTHER ASSURANCE
	 
	 	 	Each of the parties agrees to use all reasonable endeavours to perform (or use all
reasonable endeavours to procure the performance of) all further acts and things, and
execute and deliver (or use all reasonable endeavours to procure the execution and delivery
of) such further documents, as the other may reasonably require, whether on or after
Completion, to implement and/or give effect to the Agreement and the transactions
contemplated by this Agreement.
	 
	14.	 	VARIATION, WAIVER AND CONSENT
	 
	14.1	 	No variation (or waiver of any provision or condition of this Agreement) shall be effective
unless it is in writing and signed by or on behalf of each of the parties (or, in the case of
a waiver, by or on behalf of the party waiving compliance).
	 
	14.2	 	Unless expressly agreed, no variation or waiver of any provision or condition of this
Agreement shall constitute a general variation or waiver of any provision or condition of this
Agreement, nor shall it affect any rights, obligations or liabilities under or pursuant to
this Agreement which have already accrued up to the date of variation or waiver, and the
rights and obligations of the parties under or pursuant to this Agreement shall remain in full
force and effect, except and only to the extent that they are so varied or waived.
	 
	14.3	 	Any consent granted under this Agreement shall be effective only if given in writing and
signed by the consenting party and then only in the instance and for the purpose for which it
was given.
	 
	15.	 	ENTIRE AGREEMENT
	 
	 	 	The Transaction Documents, the Confidentiality Letter and the Disclosure Letter together
represent the whole and only agreement between the parties in relation to the sale and
purchase of the Shares and the Irish Shares and supersede any previous agreement (whether
written or oral) between all or any of the parties in relation to the subject matter of any
such document save that nothing in this Agreement shall exclude any liability for, or remedy
in respect of, fraudulent misrepresentation.
	 
	16.	 	DEFAULT INTEREST
	 
	16.1	 	If any party which is required to pay any sum under this Agreement fails to pay any sum
payable by it under this Agreement on the due date for payment (the “Defaulting Party”), it
shall pay interest on such sum for the period from and including the due date up to the date
of actual payment (after as well as before judgement) in accordance with this clause.
	 
	16.2	 	The Defaulting Party shall pay interest at the annual rate which is the aggregate of 2% per
annum and the base rate from time to time of National Westminster Bank Plc.

15

 

	16.3	 	Interest under this clause 16 shall accrue on the basis of the actual number of days elapsed
and a 365-day year and shall be paid by the Defaulting Party on demand. Unpaid interest shall
compound monthly.
	 
	17.	 	NOTICES
	 
	17.1	 	Save as otherwise provided in this Agreement, any notice, demand or other communication
(“Notice”) to be given by any party under, or in connection with, this Agreement shall be in
writing and signed by or on behalf of the party giving it. Any Notice shall be served by
sending it by fax to the number set out in clause 17.2, or delivering it by hand to the
address set out in clause 17.2 and in each case marked for the attention of the relevant party
set out in clause 17.2 (or as otherwise notified from time to time in accordance with the
provisions of this clause 17). Any Notice so served by fax or hand shall be deemed to have
been duly given or made as follows:

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

	 	 	provided that in each case where delivery by fax or by hand occurs after 6pm on a Business
Day or on a day which is not a Business Day, service shall be deemed to occur at 9am on the
next following Business Day.
	 
	 	 	References to time in this clause are to local time in the country of the addressee.
	 
	17.2	 	The addresses and fax numbers of the parties for the purpose of clause 17.1 are as follows:

	 	 	 	 	 
	(a)

	 	Seller
	 	 
	 

	 	Address:
	 	100 Phoenix Drive
	 

	 	 
	 	Ann Arbor MI 48108
	 

	 	 
	 	USA
	 
	 	 	 	 
	 

	 	Fax:
	 	+1 734 477 1370
	 
	 	 	 	 
	 

	 	For the attention of:
	 	General Counsel
	 
	 	 	 	 
	 

	 	With a copy to:	 	 
	 

	 	Address:
	 	100 New Bridge Street
	 

	 	 
	 	London
	 

	 	 
	 	EC4V 6JA
	 
	 	 	 	 
	 

	 	Fax:
	 	+44 207 9191999
	 
	 	 	 	 
	 

	 	For the attention of:
	 	Gabriel Fisher/James Reed

	 	 	 	 	 
	(b)

	 	Purchaser
	 	 
	 

	 	Address:
	 	32 Bedford Row
	 

	 	 	 	London
	 

	 	 	 	WC1R 4HE
	 
	 	 	 	 
	 

	 	Fax:
	 	020 7831 5099
	 
	 	 	 	 
	 

	 	For the attention of:
	 	Luke Johnson

16

 

	17.3	 	A party may notify the other party to this Agreement of a change to its name, relevant
addressee, address or fax number for the purposes of this clause 17, provided that, such
notice shall only be effective on:

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

	17.4	 	In proving service is shall be sufficient to prove that the envelope containing such notice
was properly addressed and delivered to the address shown thereon or that the facsimile
transmission was made and a facsimile confirmation report was received, as the case may be.
	 
	18.	 	COSTS
	 
	 	 	Each of the parties shall be responsible for its own legal, accountancy and other costs,
charges and expenses incurred in connection with the negotiation, preparation and
implementation of this Agreement and any other Agreement incidental to or referred to in
this Agreement.
	 
	19.	 	THIRD PARTY RIGHTS
	 
	 	 	The parties do not intend that any term of this Agreement shall be enforceable by virtue of
the Contracts (Rights of Third Parties) Act 1999 by any person who is not a party to this
Agreement.
	 
	20.	 	TIME OF THE ESSENCE
	 
	 	 	Time shall be of the essence of this Agreement, both as regards times, dates and periods
specified in the Agreement and as to any times, dates or periods that may by Agreement
between the parties be substituted for any of them.
	 
	21.	 	CONTINUING EFFECT
	 
	 	 	Each provision of this Agreement shall continue in full force and effect after Completion,
except to the extent that a provision has been fully performed on or before Completion.
	 
	22.	 	ASSIGNMENT
	 
	 	 	Neither party may assign or transfer all or any of its rights or obligations under this
Agreement or dispose of any right or interest in this Agreement without the prior written
consent of the other party.
	 
	23.	 	CURRENCY CONVERSION
	 
	 	 	For the purpose of converting amounts specified in one currency into another currency where
required, the rate of exchange to be used in converting amounts specified in one currency
into another currency shall be the New York closing rate for exchanges between those
currencies quoted in the Wall Street Journal for the nearest Business Day for which that
rate is so quoted prior to the date of the conversion.

17

 

	24.	 	GOVERNING LAW AND SUBMISSION TO JURISDICTION
	 
	24.1	 	Governing law
	 
	 	 	The construction, validity and performance of this Agreement shall be governed by the laws
of England and Wales.
	 
	24.2	 	Submission to jurisdiction
	 
	 	 	The parties to this Agreement irrevocably agree that the courts of England and Wales shall
have exclusive jurisdiction over any claim or matter arising under or in connection with
this Agreement and that accordingly any proceedings in respect of any such claim or matter
may be brought in such court. Nothing in this clause shall limit the right of the Seller to
take proceedings against any other party in any other court of competent jurisdiction, nor
shall the taking of proceedings in any one or more jurisdiction preclude the taking of
proceedings in any other jurisdictions, whether concurrently or not, to the extent permitted
by the law of such other jurisdiction.
	 
	25.	 	GOVERNING LANGUAGE
	 
	 	 	The official text of the Transaction Documents and any notices given thereunder shall be in
English. In the event of any dispute concerning the construction or interpretation of any
Transaction Document, reference shall be made only to the relevant Transaction Document as
written in English and not to any translation into any other language.

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

18

 

SCHEDULE 1

Part 1: Details of the Company

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Name

	 	:
	 	Borders (UK) Limited

	 
	 	 	 	 	 	 
	Date of Incorporation

	 	:
	 	17 August 1981

	 
	 	 	 	 	 	 
	Place of Incorporation

	 	:
	 	England & Wales

	 
	 	 	 	 	 	 
	Company number

	 	:
	 	01580771

	 
	 	 	 	 	 	 
	Registered office

	 	:
	 	120 Charing Cross Road, London, WC2H 0JR

	 
	 	 	 	 	 	 
	Directors

	 	:
	 	Edward James Jackson

6358 Cherry Tree Court, Rochester

Hills, MI 48306, USA

	 
	 	 	 	 	 	 
	 

	 	 	 	George Lewis Jones

100 Underdown Road, Ann Arbor, MI

48105, USA

	 
	 	 	 	 	 	 
	 

	 	 	 	Edward W Wilhelm

46608 Southview Lane, Plymouth, MI

48170, USA

	 
	 	 	 	 	 	 
	Secretary

	 	:
	 	Thomas D. Carney

2033 Norway, Ann Arbor, MI 48104, USA

	 
	 	 	 	 	 	 
	Authorised share capital

	 	:
	 	£53,711 divided into 499,600 ordinary

shares of £0.10 each, 10 “A” ordinary

shares of £0.10 each and 37,500 7.5%

cumulative convertible redeemable

preference shares of £0.10 each

	 
	 	 	 	 	 	 
	Issued share capital

	 	:
	 	£45,411.30 divided into 454,103

ordinary shares of £0.10 each, and 10

ordinary A shares of £0.10 each

	 
	 	 	 	 	 	 
	Mortgages and charges

	 	:
	 	Fleet Retail Group, Inc.

30/07/04 (created)

09/08/2004 (registered)

	 
	 	 	 	 	 	 
	 

	 	 	 	Guarantee and floating charge over the

whole of the inventory and stock in

trade, all books and other debts, and

monetary claims, by way of security all

agreements and policies of insurance,

any letters of credit.

	 
	 	 	 	 	 	 
	 

	 	 	 	Fleet Retail Group, Inc.

30/07/04 (created)

09/08/2004 (registered)

	 
	 	 	 	 	 	 
	 

	 	 	 	An amended and restated multicurrency

19

 

	 	 	 	 	 	 	 
	 

	 	 	 	revolving credit agreement over all

deposits, credits, collateral and

property now or hereinafter in the

possession, custody, safekeeping or

control of such agent, such issuing

bank, or such lender or any lender

affiliate and their successors.

	 
	 	 	 	 	 	 
	 

	 	 	 	Bank of America, N.A., JP Morgan Chase

Bank, Wells Fargo Retail Finance

31/07/06 (created)

18/08/2006 (registered)

	 
	 	 	 	 	 	 
	 

	 	 	 	An amended and restated multicurrency

revolving credit agreement. A

continuing lien, security interest and

right of set off as security upon all

deposits, credits, collateral and

property. A security interest in all

goods, documents, instruments, and

accounts.

	 
	 	 	 	 	 	 
	Registered shareholders

	 	:
	 	BGI (UK) Limited

100 New Bridge Street, London, EC4V 6JA

10 ordinary A shares

454,103 ordinary shares

	 
	 	 	 	 	 	 
	Accounting reference date

	 	:
	 	25/01

	 
	 	 	 	 	 	 
	Auditors

	 	:
	 	Ernst & Young LLP

	 
	 	 	 	 	 	 
	Tax residence

	 	:
	 	UK

	 
	 	 	 	 	 	 
	VAT registration number

	 	:
	 	GB 650 0723 71

	 
	 	 	 	 	 	 
	Status

	 	:
	 	Trading

	 
	 	 	 	 	 	 
	Direct subsidiaries

	 	:
	 	None

20

 

Part 2: Details of the Irish Company

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Name

	 	:
	 	Borders Books Ireland Limited

	 
	 	 	 	 	 	 
	Date of Incorporation

	 	:
	 	4 July 2005

	 
	 	 	 	 	 	 
	Place of Incorporation

	 	:
	 	Dublin, Ireland

	 
	 	 	 	 	 	 
	Company number

	 	:
	 	404624

	 
	 	 	 	 	 	 
	Registered office

	 	:
	 	70 Sir John Rogerson’s Quay, Dublin 2

	 
	 	 	 	 	 	 
	Directors

	 	:
	 	George L Jones

100 Underwood Road, Ann Arbor, MI, 48105

	 
	 	 	 	 	 	 
	 

	 	:
	 	Robert Heron

44 Avoca Avenue, Blackrock, Co Dublin,

Ireland

	 
	 	 	 	 	 	 
	 

	 	:
	 	Edward W. Wilhelm

46608 Southview Lane, Plymouth MI 48170,

USA

	 
	 	 	 	 	 	 
	 

	 	 	 	Edward James Jackson

6358 Cherry Tree Court, Rochester Hills,

MI 48306, USA

	 
	 	 	 	 	 	 
	Secretary

	 	:
	 	Thomas D. Carney

2033 Norway, Ann Arbor, MI 48104, USA

American

	 
	 	 	 	 	 	 
	Authorised share capital

	 	:
	 	€10,000,000 divided into 10,000,000

ordinary shares of €1 each

	 
	 	 	 	 	 	 
	Issued share capital

	 	:
	 	€31,000 divided into 31,000 ordinary

shares of €1 each

	 
	 	 	 	 	 	 
	Mortgages and charges

	 	:
	 	Bank of America, N.A.

26/01/2007 (created)

13/02/2007 (registered)

Charge on book debts of the Irish Company.

	 
	 	 	 	 	 	 
	Registered shareholder

	 	:
	 	Borders International Services, Inc.

100 Phoenix Drive, Ann Arbor, MI 48108,

USA

31,000 ordinary shares

	 
	 	 	 	 	 	 
	Accounting reference date

	 	:
	 	28/01

	 
	 	 	 	 	 	 
	Auditors

	 	:
	 	Ernst & Young

	 
	 	 	 	 	 	 
	Tax residence

	 	:
	 	Republic of Ireland

21

 

	 	 	 	 	 	 	 
	VAT registration number

	 	:
	 	IE 6424624H

	 
	 	 	 	 	 	 
	Status

	 	:
	 	Trading

	 
	 	 	 	 	 	 
	Direct subsidiaries

	 	:
	 	None

22

 

SCHEDULE 2

Completion

Part 1: Seller’s Delivery Obligations at Completion

At Completion, the Seller shall deliver to the Purchaser:

	1.	 	duly executed transfers of all of the (i) Shares; and (ii) Irish Shares, into the name of the
Purchaser or its nominees together with the relevant share certificates (or indemnities in
respect thereof in the agreed form);
	 
	2.	 	the leasehold deeds to the Properties referred to in parts 1 and 2 of schedule 8 (other than
the leasehold deed relating to the Broadgate, Canary Wharf, Fleet Street and Finchley Road
stores, copies of which will be provided) and the concessions referred to in part 3 of
schedule 8 and the counterparts of the concessions referred to in part 4 of schedule 8, such
delivery to be made by the title deeds being placed at the registered office/principal place
of business of the Company or the Irish Company (as the case may be) or at the premises of the
Company’s property solicitors (a schedule of the solicitors holding such documents having been
provided to the Seller);
	 
	3.	 	all the statutory and other books (duly written up to, but not including, Completion) of the
Company and the Irish Company and their respective certificates of incorporation and common
seals in its possession, such delivery to be made by the statutory records and other books
being placed at the registered office/principal place of business of the Company;
	 
	4.	 	duly executed releases under seal, in the agreed form, releasing the Company from the Charges
together with forms 403a duly completed and sworn in respect of the same;
	 
	5.	 	duly executed releases under seal, in the agreed form, releasing the Irish Company from the
charge dated 26 January 2007 granted to the Bank of America, N.A. together with Form C6 duly
completed and sworn in respect of the same;
	 
	6.	 	a certificate of non-crystallization and release in the agreed form duly executed as a deed
by Fleet Retail Group, Inc. in respect of the floating charge dated 30 July 2004 granted to
the Bank by the Company and others;
	 
	7.	 	certified copies of any powers of attorney under which any of the documents referred to in
this schedule is executed or evidence reasonably satisfactory to the Purchaser of the
authority of any person signing on behalf of the Seller of or any member of the Borders Group;
	 
	8.	 	duly executed irrevocable power of attorney in the agreed form in respect of the Shares
enabling the Purchaser (during the period prior to the registration of the transfer of the
Shares) to exercise all voting and other rights attaching to the Shares;
	 
	9.	 	duly executed irrevocable power of attorney in the agreed form in respect of the Irish Shares
enabling the Purchaser (during the period prior to the registration of the transfer of the
Irish Shares) to exercise all voting and other rights attaching to the Irish Shares;
	 
	10.	 	letters of resignation in the agreed form from each of the Directors and the secretary of the
Company and the Irish Company, such resignations to take effect from the close of the meetings
referred to in part 2 of this schedule 2;
	 
	11.	 	a duly executed release under seal, in the agreed form, releasing the Company and the Irish
Company from any liability whatsoever (whether actual or contingent, but excluding Intra-Group
Trading Indebtedness) which may be owing to any member of the Seller’s Group by

23

 

	 	 	the Company or the Irish Company at Completion or written confirmation being furnished to
the Purchaser that no Intra-Group Indebtedness exists;
	 
	12.	 	the Tax Deed duly executed by the Seller;
	 
	13.	 	the Licence duly executed by Borders Properties, Inc.;
	 
	14.	 	the Transitional Services Agreement duly executed by Borders International Services, Inc.;
	 
	15.	 	a copy of a resolution of the board of directors of the Seller (certified by a duly appointed
officer as true and correct) authorising the execution of and the performance by the Seller of
its obligations under this Agreement and each of the other documents to be executed by the
Seller; and
	 
	16.	 	copies of all existing bank mandates and bank statements showing the current and deposit
account balances of the Company and the Irish Company as at the close of business on the
Business Day preceding Completion which show the repayment of all Leakage except Permitted
Leakage.

24

 

Part 2: Seller’s Other Obligations at Completion

At Completion, the Seller shall:

	1.	 	procure that:
	 
	4.1	 	the balance of the BoA Indebtedness (taking into account the payment to be made by the
Purchaser on behalf of the Company pursuant to paragraph 1 of part 3 of schedule 2) is paid to
Bank of America, N.A. (as administrative agent and collateral agent) by CHAPS to Bank of
America, London (sort code: 16-50-50 account number: 65280027); and
	 
	4.2	 	the Fortis Indebtedness is paid by CHAPS to the Borders UK account at Fortis Bank (sort code:
40-52-62 account number: 1216402-84);
	 
	2.	 	cause the Directors to hold a meeting of the board of the Company and the Irish Company at
which the relevant Directors shall pass resolutions in the agreed form to:
	 
	4.1	 	approve the registration of the Purchaser or its nominees as members of the Company or Irish
Company (as appropriate) subject only to the production of duly stamped and completed
transfers in respect of the Shares or the Irish Shares (as appropriate);
	 
	4.2	 	appoint such persons as the Purchaser may nominate as directors and secretary of the Company
and the Irish Company (as appropriate);
	 
	4.3	 	revoke all authorities to the bankers of the Company and the Irish Company relating to bank
accounts and to give authority to such persons as the Purchaser may nominate to operate the
same;
	 
	4.4	 	do and perform any other business which may be necessary or desirable to give full and valid
effect to the sale and purchase of the Shares and the Irish Shares,
	 
	 	 	and the Seller shall furnish to the Purchaser on Completion duly signed minutes of the
meetings.

25

 

Part 3: Purchaser’s Obligations at Completion

At Completion, the Purchaser shall:

	1.	 	on behalf of the Company, pay the sum of £10,000,000 to Bank of America, N.A. (as
administrative agent and collateral agent) by CHAPS to Bank of America, London (sort code:
16-50-50 account number: 65280027);
	 
	2.	 	issue to the Seller 1999 B Ordinary Shares of £0.01 each and deliver to the Seller a share
certificate in respect thereof;
	 
	3.	 	issue to the Seller Fixed Rate Unsecured Loan Notes 2017 in the principal amount of
£1,700,000 and deliver to the Seller a Loan Note in respect thereof;
	 
	4.	 	deliver to the Seller a counterpart of the Tax Deed duly executed by the Purchaser;
	 
	5.	 	deliver to the Seller a counterpart of the Licence duly executed by the Company and the Irish
Company;
	 
	6.	 	deliver to the Seller a counterpart of the Transitional Services Agreement duly executed by
the Company and the Irish Company;
	 
	7.	 	deliver to the Seller the Deeds of Covenant duly executed by the Company and the Irish
Company;
	 
	8.	 	deliver to the Seller a copy of a resolution of the board of directors of the Purchaser
(certified by a duly appointed officer as true and correct) authorising the execution of and
the performance by the Purchaser of its obligations under this Agreement and each of the other
documents to be executed by the Purchaser; and
	 
	9.	 	deliver to the Seller’s Solicitors certified copies of any powers of attorney under which any
of the Transaction Documents are executed by the Purchaser or other evidence satisfactory to
the Seller of the authority of the person signing on the Purchaser’s behalf.

26

 

SCHEDULE 3

Post-Completion Obligations

	1.	 	Following Completion, the Purchaser undertakes to the Seller:
	 
	4.1	 	to procure the repayment in the ordinary and usual course of business by the relevant
member(s) of the Group of all Intra-Group Trading Indebtedness owed to any member of the
Seller’s Group as at Completion; and
	 
	4.2	 	to use all reasonable endeavours (including the provision of substitute guarantees) to obtain
the release of the Seller and each member of the Seller’s Group from any Intra-Group
Guarantees to which it is a party and, pending such release:

	 	(a)	 	to indemnify the Seller and the relevant member of the Seller’s Group against
all amounts paid by it to any third party pursuant to any Intra-Group Guarantees in
respect of any liability of any member of the Group (and all Losses incurred in
connection with such liability) whether arising before or after Completion; and
	 
	 	(b)	 	not to take any action or allow any event to occur that results in any increase
in the liability of any member of the Seller’s Group under any Intra-Group Guarantee
including, for the avoidance of doubt, extending the term of any of the leases to which
such Intra-Group Guarantees relate.

	2.	 	The parties acknowledge and agree that:
	 
	4.1	 	the Domain Names have been incorrectly registered in the name of the Company and that the
Domain Names should be transferred to their beneficial owner, Borders Properties, Inc. The
parties agree that they will take all actions and execute all documents (and in the case of
the Purchaser, that it will procure that the Company takes all actions and executes all
documents) required to transfer the Domain Names from the Company to Borders Properties, Inc
as soon as reasonably practicable following Completion; and
	 
	4.2	 	the Other Domain Names are currently registered in the name of various third parties. The
Purchaser agrees that it will use (and procure the Company uses) its best endeavours to
procure the transfer of the Other Domain Names to Borders Properties, Inc as soon as
reasonably practicable following Completion.
	 
	3.	 	The Seller agrees that it will use its best endeavours to procure the transfer of the domain
name booksetcltd.co.uk from Borders Properties, Inc. to the Company as soon as reasonably
practicable following Completion
	 
	4.	 	If at any time the Landlord of any Guaranteed Property shall call upon Borders Group to make
good in respect of a Lease Guarantee, and the Purchaser fails to indemnify the Seller and the
relevant member of the Seller’s Group pursuant to paragraph 1.2 of this schedule, then upon
written notice given by Borders Group to the Purchaser, the Purchaser shall:
	 
	4.1	 	procure that the Company or the Irish Company as appropriate shall assign the lease of the
relevant Guaranteed Property as directed by Borders Group;
	 
	4.2	 	use its best endeavours to obtain all necessary consents for such assignment(s);
	 
	4.3	 	be responsible for all its own costs and those of Borders Group and the relevant Landlord in
respect of the assignment and the granting of consent Provided That if the Purchaser does not
promptly pay such costs or procure any necessary undertaking in respect thereof then Borders

27

 

	 	 	Group may elect to pay such costs and/or provide such undertaking and such sums shall be
owed as a debt by the Purchaser to Borders Group.

28

 

SCHEDULE 4

Warranties

	1.	 	THE SHARES
	 
	4.1	 	The Seller is the legal and beneficial owner of the Shares and is entitled to sell the Shares
and to procure the sale of the Irish Shares with full title guarantee on the terms of this
Agreement without the consent of any third party.
	 
	1.1	 	The Shares comprise the whole of the issued and allotted share capital of the Company and all
of the Shares are fully paid or credited as fully paid.
	 
	1.2	 	The Irish Shares comprise the whole of the issued and allotted share capital of the Irish
Company and all of the Irish Shares are fully paid or credited as fully paid.
	 
	4.2	 	There is no Encumbrance on, over or affecting any of the Shares or Irish Shares or any
unissued shares, debentures or other securities of the Company or the Irish Company and no
person has the right (whether exercisable now or in the future and whether contingent or not)
to call for the issue, allotment, conversion, redemption, sale or transfer of any shares,
debentures or other securities of the Company or the Irish Company.

	2.	 	CAPACITY OF SELLER
	 
	4.1	 	The Seller has obtained all corporate authorisations required to empower it to enter into
this Agreement and the Tax Deed and to perform its obligations thereunder in accordance with
their terms.
	 
	4.2	 	The relevant members of the Seller’s Group have obtained all corporate authorisation required
to empower it to enter into the Transaction Documents to which they are a party and to perform
their respective obligations thereunder in accordance with their terms.
	 
	4.3	 	Neither the entry into the Transaction Documents nor the implementation of the transactions
contemplated by the Transaction Documents by the relevant members of the Seller’s Group will:

	 	(a)	 	violate or conflict with the provisions of their constitutional documents;
	 
	 	(b)	 	to the knowledge of the Seller, amount to a violation or breach of any
applicable laws or regulations in any relevant jurisdiction;
	 
	 	(c)	 	to the knowledge of the Seller, amount to a violation or default with respect
to any relevant order, decree or judgment of any court or any governmental or
regulatory authority in any jurisdiction to which the relevant member of the Seller’s
Group is a party or by which the relevant member of the Seller’s Group is bound; or
	 
	 	(d)	 	to the knowledge of the Seller, result in a breach of, or constitute a default
under, any instrument to which the relevant member of the Seller’s Group is a party or
by which the relevant member of the Seller’s Group is bound.

	4.4	 	The Transaction Documents constitute (or will on execution constitute) valid and legally
binding obligations of the relevant members of the Seller’s Group.
	 
	4.5	 	The Seller is not engaged in any material litigation or arbitration or similar proceedings
related to the transactions contemplated by the Transaction Documents and to the knowledge of
the Seller, no such litigation, arbitration or proceeding is threatened against the Seller or
any member of the Seller’s Group.

29

 

	3.	 	THE COMPANY
	 
	4.1	 	The Company is duly incorporated and validly existing under the laws of England and Wales and
has full corporate power and authority to carry on its business as it is now being conducted
and to own the assets it now owns.
	 
	4.2	 	Except as required by this Agreement, there are no agreements or arrangements in force which
provide for the present or future allotment, issue, transfer, redemption or repayment of, or
grant to any person of the right (whether conditional or otherwise) to require the allotment,
issue, transfer, redemption or repayment of, any shares in the Company (including any option
or right of pre-emption or conversion).

	4.	 	THE IRISH COMPANY
	 
	4.1	 	The Irish Company is duly incorporated and validly existing under the laws of Ireland and has
full corporate power and authority to carry on its business as it is now being conducted and
to own the assets it now owns.
	 
	4.2	 	Except as required by this Agreement, to the knowledge of the Seller, there are no agreements
or arrangements in force which provide for the present or future allotment, issue, transfer,
redemption or repayment of, or grant to any person of the right (whether conditional or
otherwise) to require the allotment, issue, transfer, redemption or repayment of, any shares
in the Irish Company (including any option or right of pre-emption or conversion).

	5.	 	SCHEDULES
	 
	 	 	The particulars relating to the Company and the Irish Company set out in schedule 1 are in
all material respects true and accurate.

	 
	6.	 	THE ACCOUNTS
	 
	4.1	 	General

	 	(a)	 	The Accounts have been prepared in accordance with CA85 and audited by a
certified auditor at the time they were audited.
	 
	 	(b)	 	The Accounts give a true and fair view of the state of affairs of the relevant
member of the Group and of the assets and liabilities as at, and the profit and losses
of the relevant member of the Group for the period ended on the Accounting Date, and of
the results of the relevant member of the Group for the Financial Year ended on the
Accounting Date.

	4.2	 	Management Accounts
	 
	 	 	The Management Accounts have been prepared by the Company from the Company’s accounting
records with due care and attention using the same accounting policies as were adopted for
the management accounts for the Financial Year ended on 3 February 2007.
	 
	4.3	 	Irish Trial Balance
	 
	 	 	The Irish Trial Balance has been prepared by the Company from the Irish Company’s accounting
records with due care and attention using the same policies as were adopted for the
management accounts of the Company for the Financial Year ended on 3 February 2007.

30

 

	7.	 	BUSINESS SINCE THE ACCOUNTING DATE
	 
	 	 	Since the Accounting Date:

	 	(a)	 	the businesses of the Company and the Irish Company have been carried on in the
ordinary and usual course;
	 
	 	(b)	 	no material adverse change in the financial position of the Company or the
Irish Company has occurred other than any such material adverse change arising from
changes in the economy generally or in the industry in which the Company and the Irish
Company operate;
	 
	 	(c)	 	the Company and the Irish Company have not declared, paid or made for the
Financial Year ended on the Accounting Date, a dividend or other distribution except to
the extent provided in the relevant Accounts; and
	 
	 	(d)	 	the Company and the Irish Company have not undergone any capital reorganisation
or change in their respective capital structures and the Company and the Irish Company
have not repaid or redeemed share or loan capital, or made (whether or not subject to
conditions) an Agreement or arrangement or undertaken an obligation to do any of those
things.

	4.2	 	The Data Room contains details of all current year disposals of fixed assets (other than
disposals in the ordinary course of business) by the Company having in aggregate a value
exceeding £1,000,000.
	 
	4.3	 	The Data Room contains details of all current year disposals of fixed assets (other than
disposals in the ordinary course of business) by the Irish Company having in aggregate a value
exceeding €100,000.

	8. 	 	CONTRACTUAL MATTERS
	 
	4.1	 	Neither the Company nor the Irish Company is a party to any guarantee or agreement for
indemnity or for suretyship in respect of any Indebtedness, liability or obligation of any
third party otherwise than in the ordinary course of business.
	 
	4.2	 	The Data Room contains details of:

	 	(a)	 	any contract (other than contracts relating to the purchase of products and
services in the ordinary course of business) representing annual income or expenditure
in excess of £1,000,000 in the case of the Company, and €100,000 in the case of the
Irish Company, which cannot be terminated without penalty or other compensation on less
than three months notice;
	 
	 	(b)	 	any agency, distribution, franchising or licensing agreement representing
annual income or expenditure in excess of £1,000,000 in the case of the Company, and
€100,000 in the case of the Irish Company, other than such agreements entered into in
the ordinary course of business, consistent with past practice;
	 
	 	(c)	 	any joint venture, agency, shareholders’ or partnership arrangement or
agreement to which the Company or the Irish Company is a party.

	4.3	 	To the knowledge of the Seller, each of the material contracts to which the Company is party
is in full force and effect and constitutes a legal, valid and binding obligation of the
Company.

31

 

	4.4	 	To the knowledge of the Seller, each of the material contracts to which the Irish Company is
party is in full force and effect and constitutes a legal, valid and binding obligation of the
Irish Company.
	 
	4.5	 	No act or transaction has been effected by the Company (including the sale of the Shares) or
the Irish Company (including the sale of the Irish Shares) in consequence of which the Company
or the Irish Company is liable to refund the whole or part of any investment grant from any
government or quasi-governmental body or other grant received by virtue of any law.
	 
	4.6	 	The Company does not carry on business under any name other than its own and “Borders”,
“Borders Superstores”, “Borders Express” and “Books etc.”.
	 
	4.7	 	The Irish Company does not carry on business under any name other than its own and “Borders”.
	 
	4.8	 	Details of the Indebtedness of the Company in excess of £1,000,000 and any mortgage or charge
relating thereto are contained in the Disclosure Letter.
	 
	4.9	 	Details of the Indebtedness of the Irish Company in excess of €100,000 and any mortgage or
charge relating thereto are contained in the Disclosure Letter.
	 
	4.10	 	The Paperchase Arrangements set out the material terms of the arrangements between the
Company and Paperchase Products Limited.

	 
	9.	 	INDEBTEDNESS
	 
	4.1	 	Neither the Company nor the Irish Company has received any written notice to repay any
Indebtedness which is repayable on demand; and no event of default has occurred and is
outstanding under any agreement relating to any other Indebtedness or other credit facility of
the Company or the Irish Company (as appropriate).
	 
	4.2	 	Neither the Company nor the Irish Company has outstanding loan capital or any money borrowed
or raised (other than under its bank facilities or normal trade credits and in the case of the
Irish Company, other than sums borrowed from the Company).
	 
	4.3	 	Neither the Company nor the Irish Company has lent any money which is due to be repaid and,
as at the date of this Agreement, has not been repaid or owns the benefit of any debt other
than debts accrued in the ordinary course of its business.
	 
	10.	 	ASSETS
	 
	 	 	The Company and the Irish Company each owns or is entitled to use and enjoy all the rights
and assets used in its business as substantially carried on in the Financial Year ended on
the Accounting Date, except for any assets disposed of in the ordinary course of business
since that date.

	11.	 	INSOLVENCY, ETC.
	 
	4.1	 	No order has been made, petition presented or meeting convened for the winding up of the
Company or the Irish Company or for the appointment of any provisional liquidator.
	 
	4.2	 	No petition has been presented for an administration order to be made in relation to the
Company or a court protection order in relation to the Irish Company and no administrator,
examiner or receiver (including, without limitation, any administrative receiver) has been
appointed in respect of the whole or any part of any of the property, assets and/or
undertaking of the Company or the Irish Company nor has any such order been made (including,
in any

32

 

	 	 	relevant jurisdiction, any other order by which, during the period it is in force, the
affairs, business and assets of the Company or the Irish Company are managed by a person
appointed for the purpose by a court, governmental agency or similar body).
	 
	12.	 	LITIGATION AND REGULATORY MATTERS

	4.1	 	Save as disclosed in the Data Room, neither the Company nor the Irish Company is engaged in
any litigation or arbitration or similar proceedings including, for the avoidance of doubt,
any industrial or trade dispute which individually or collectively are regarded or ought
reasonably to be regarded by the Seller as likely to have a material adverse effect on the
financial position of the Company or the Irish Company (as appropriate). To the knowledge of
the Seller, no such proceedings have been threatened in writing against the Company or the
Irish Company.
	 
	4.2	 	To the knowledge of the Seller, there are no unfulfilled or unsatisfied judgments against the
Company or the Irish Company.
	 
	4.3	 	To the knowledge of the Seller, neither the Company nor the Irish Company has received any
written notice that it is the subject of any ongoing official investigation or inquiry or
proceedings brought by any governmental or other administrative authority.
	 
	4.4	 	The Company and the Irish Company have obtained all material licences, permissions,
authorisations and consents required for the carrying on of business now carried on by each of
them in the places and in the manner in which that such businesses are now carried on and such
licences, permissions, authorisations and consents are in full force and effect.
	 
	4.5	 	Neither the Company nor the Irish Company has received written notice that it is in default
under any material licence, permission, authorisation or consent.
	 
	4.6	 	Neither the Company nor the Irish Company has received written notice that it is in violation
of, or in default with respect to, any statute, regulation, order, decree or judgment of any
court or any governmental agency of the jurisdiction in which it is incorporated which could
have a material and adverse effect upon its assets or business.

	 
	13.	 	INSURANCE
	 
	4.1	 	The Data Room contains details of the insurances maintained by or on behalf of the Company
and the Irish Company. There is no material claim outstanding under or in respect of such
policies of insurance.
	 
	4.2	 	To the knowledge of the Seller, such insurances are in full force and effect and there are no
special circumstances which might lead to any liability under such insurances being avoided by
the insurers.

	 
	14.	 	EMPLOYEES
	 
	4.1	 	The Data Room contains a list of all the employees of the Company and the Irish Company
together with details of remuneration and other material conditions of employment.
	 
	4.2	 	There has been made available to the Purchaser copies of all applicable collective bargaining
agreements and where available a copy of the standard terms and conditions of employment of
the Company and the Irish Company.
	 
	4.3	 	Since the Accounting Date, no Senior Executive of the Company or the Irish Company has been
given or received formal written notice terminating his contract of employment.

33

 

	15.	 	INTELLECTUAL PROPERTY
	 
	4.1	 	The Data Room contains details of all registered Intellectual Property which is registered in
or applied for in the name of the Company and the Irish Company and which is material to their
respective businesses and which is owned by the Company or the Irish Company (the “Owned
Intellectual Property”).
	 
	4.2	 	The entity described as the owner or the applicant of the Owned Intellectual Property in the
Data Room is the sole legal and beneficial owner of such rights, free from all security
interests.
	 
	4.3	 	So far as the Seller is aware, there exists no actual or threatened infringement of any of
the Owned Intellectual Property, nor any circumstances likely to give rise to such
infringement.
	 
	4.4	 	So far as the Seller is aware, neither the conduct of the business of the Company or the
Irish Company nor the Owned Intellectual Property Rights or any Intellectual Property used by
them infringe the Intellectual Property of any third party and no notification of any such
infringement has been received.
	 
	4.5	 	In respect of all Owned Intellectual Property registered or applied for on behalf of the
Company or the Irish Company, all application, filing, registration, renewal and other fees
have been paid when due.
	 
	4.6	 	The Data Room contains accurate details of all written licences which have been granted by
the Company or the Irish Company to third parties relating to the Owned Intellectual Property
and which is material to its respective business. Neither the Company nor the Irish Company
has received written notification of any material breach of such licences.
	 
	4.7	 	The Data Room contains accurate details of all written licences granted by third parties to
the Company or the Irish Company relating to the Intellectual Property used in the business of
the Company or the Irish Company (as appropriate) and which is material to such business.
Neither the Company nor the Irish Company has received written notification of any material
breach of such licences.
	 
	4.8	 	To the knowledge of the Seller, neither the Company nor the Irish Company has disclosed to
any person any material part of its Confidential Information except where such disclosure was
properly made in the normal course of its business or was made subject to an agreement under
which the recipient is obliged to maintain its confidentiality or restricted from using it
other than for the purposes for which it was disclosed by the Company or the Irish Company (as
appropriate).

	 
	16.	 	DATA AND RECORDS
	 
	4.1	 	For the purposes of this paragraph, “Data Protection Legislation” means, in relation to the
Company, all applicable UK statutes and enacting instruments concerning the protection and/or
processing of personal data and in relation to the Irish Company all applicable Republic of
Ireland statutes and enacting instruments concerning the protection and/or process of personal
data.
	 
	4.2	 	To the knowledge of the Seller, the Company and the Irish Company have each complied in all
material respects with all applicable Data Protection Legislation.
	 
	4.3	 	To the knowledge of the Seller, the Company has not received any notice from the UK
Information Commissioner alleging non-compliance with any applicable Data Protection
Legislation, requiring the Company to change or delete any data or prohibiting any transfer of
data to a place outside the UK.

34

 

	4.4	 	To the knowledge of the Seller, the Irish Company has not received any notice from the Data
Protection Commissioner alleging non-compliance with any applicable Data Protection
Legislation, requiring the Irish Company to change or delete any data or prohibiting any
transfer of data to a place outside the Republic of Ireland.
	 
	4.5	 	To the knowledge of the Seller, no individual has claimed compensation from the Company or
the Irish Company under any applicable Data Protection Legislation, including for unauthorised
or erroneous processing or loss or unauthorised disclosure of data.
	 
	4.6	 	The Company or the Irish Company is the sole legal and beneficial owner of the customer and
mobile phone database containing details of the customers of the Company or the Irish Company
currently hosted by Cheetahmail and Magnet Harlequin.

	 
	17.	 	PENSIONS
	 
	4.1	 	Other than the Borders UK Pension Scheme and the Borders Irish Pension Scheme (the “Schemes”)
and any mandatory, government or social security pension arrangements, there are no legally
enforceable arrangements or any ex-gratia arrangements whether or not legally enforceable in
existence at the date of this Agreement which the Company or the Irish Company has any
obligation to provide, or which the Company or the Irish Company is legally obliged to
contribute for the provision of any pension, lump sum or other like benefit on retirement or
death or termination of employment which are for the benefit of any employee of the Company or
the Irish Company (or the benefit of persons dependent on any such employee).
	 
	4.2	 	The Data Room contains information relating to the Schemes and the Life Assurance Scheme
which provides all material details of the benefits payable under them.
	 
	4.3	 	The Borders UK Pension Scheme is a registered pension scheme within the meaning of section
150(2) of the Finance Act 2004 and so far as the Seller is aware, there is no reason why this
registration may be withdrawn.
	 
	4.4	 	All benefits provided under the Schemes are money purchase benefits.
	 
	4.5	 	The Schemes have at all times complied in all material respects with their respective terms
and applicable local laws, regulations and other relevant requirements of the appropriate
government bodies or regulatory authorities.
	 
	4.6	 	To the extent that any contributions and premiums are required to be paid by the Company and
the Irish Company under the Schemes and the Life Assurance Scheme at the date of this
Agreement, they have been paid.
	 
	4.7	 	The letter from Aegon Trustee Solutions to Heath Lambert Consulting Limited, dated 30 July
2007 and concerning the Books Etc Limited Pension Scheme, contains a quotation which Scottish
Equitable have confirmed to Heath Lambert Consulting Limited is guaranteed provided it is
accepted by 24 October 2007.

	 
	18.	 	PROPERTIES
	 
	4.1	 	The Properties comprise all the land and buildings in which the Company and the Irish Company
has an interest.
	 
	4.2	 	With the exception of the Blanchardstown Property, the Company has good leasehold title to
the Properties referred to in parts 1 and 2 of schedule 8 and to the Closed Property and the
Company is in or is entitled to exclusive occupation of the Properties free of all leases,

35

 

	 	 	tenancies, third party rights of occupation, charges or mortgages subject only to the
Occupational Concessions.

	4.3	 	The Irish Company has good leasehold title to the Blanchardstown Property and the Irish
Company is in exclusive occupation of the Blanchardstown Property free of all leases,
tenancies, third party rights of occupation, charges or mortgages subject only to the relevant
Occupational Concessions.
	 
	4.4	 	Neither the Company nor the Irish Company has received written notice relating to any
subsisting material and adverse breaches of any applicable law relating to town and country
planning and applicable building regulations and by laws affecting the same, nor any such
notices relating to non compliance with covenants (other than covenants for repair)
restrictions and conditions affecting the Properties and, so far as the Seller is aware, there
are no circumstances likely to give rise to any such notice or breach.
	 
	4.5	 	Neither the Company nor the Irish Company has received written notice relating to any
subsisting material and adverse breaches of any statutory, municipal or other requirements
(including planning consents) involved in the use of the Properties and the conduct of the
business of the Company or the Irish Company (as appropriate) and the Seller is not aware of
any intended or contemplated revocation or refusal of any such licence or consent.
	 
	4.6	 	The Properties referred to in parts 1 and 2 of schedule 8 are served by all necessary
drainage, water, electricity and/or gas services, all of which are connected to the mains
sufficient for their existing uses.
	 
	4.7	 	To the knowledge of the Seller there are no material and adverse disputes affecting the
Properties.
	 
	4.8	 	The means of access to the Properties are over either roads which have been adopted and
maintained by the local authority or under legal easements sufficient for their existing uses.
	 
	4.9	 	Schedule 8 contains an accurate summary of the principal terms of the documents therein
mentioned.
	 
	4.10	 	Part 5 of schedule 8 lists all the properties disposed of or vacated by the Company since 1
January 1998.
	 
	4.11	 	So far as the Seller is aware, the Company has not received notice of any outstanding
liability (other than claims for dilapidations) under the leases of the Disposed Properties
and any claims for dilapidations that have been received by the Company have been settled.

	 
	19.	 	ENVIRONMENTAL MATTERS
	 
	4.1	 	In this paragraph and in schedule 5:

	 	(a)	 	“Environment” means the natural and man-made environment, including all or any
of the following media, namely air, water and land (including air within buildings and
other material or man-made structures above or below the ground) and any living
organisms (including man) or systems supported by those media;
	 
	 	(b)	 	“Environmental Law” means all statutes and regulations concerning the
protection of human health or the environment or the generation, transportation,
storage, treatment or disposal of Hazardous Substances and capable of enforcement by
legal process in the jurisdiction of operation of each Group Company;

36

 

	 	(c)	 	“Environmental Licence” means any permit, licence, authorisation, consent or
other approval required under, or in relation to, any Environmental Law; and
	 
	 	(d)	 	“Hazardous Substances” means any material, substance or organism of whatever
description which, alone or in combination with others, may cause or have a harmful
effect on the Environment or the health of man or any other living organism including,
without limitation, all poisonous, toxic, noxious, dangerous and offensive substances.

	4.2	 	Neither the Company nor the Irish Company has received any written notice or communication
alleging that it is in material violation of any Environmental Law or Environmental Licence
during the period of two years prior to the Completion Date.

	 
	20.	 	TAX
	 
	4.1	 	The Company has in relation to periods commencing on or after the date of acquisition by the
Seller of the Company (the “Relevant Date”) made all returns (and supplied all information and
given all notices to the relevant Taxation Authority as required by law within any requisite
period and all such returns, information and notices were, when given or filed, correct and
accurate in all material respects and are not the subject of any material dispute with any
Taxation Authority.)
	 
	4.2	 	The Irish Company has made all returns (and supplied all information and given all notices to
the relevant Taxation Authority as required by law within any requisite period and all such
returns, information and notices were, when given or filed, correct and accurate in all
material respects and are not the subject of any material dispute with any Taxation
Authority.)
	 
	4.3	 	The Company and the Irish Company have each paid all Tax for which it is liable and which has
fallen due for payment and neither the Company nor the Irish Company has, in the past three
years, been liable to any material penalty or interest in respect of any such Tax.
	 
	4.4	 	Neither the Company nor the Irish Company has within the past twelve months been subject to
and so far as the Seller is aware, neither of them is currently subject to any investigation
or audit by any Taxation Authority.
	 
	4.5	 	No transaction or event has occurred in consequence of which the Company or the Irish Company
is or may be held liable for any Tax where some other company is or may become primarily
liable for the Tax in question by reason of any such company being or having been a member of
the same group of companies.
	 
	4.6	 	Neither the Company nor the Irish Company has disposed of or acquired any asset since the
Accounting Date in circumstances such that the disposal price or acquisition cost of the asset
would be treated for Taxation purposes as being different from the consideration given or
received.
	 
	4.7	 	The Company and the Irish Company have in all material respects properly operated the
relevant system for the deduction of payroll Taxes as required by law.
	 
	4.8	 	Neither the Company nor the Irish Company is treated for any Tax purpose as resident in a
country other than the country of its incorporation.
	 
	4.9	 	The Company and the Irish Company have each made all deductions and withholdings in respect
of or on account of any Tax from all material payments made by it which it is obliged to make
and has accounted to the relevant Taxation Authority for all amounts so deducted or withheld.

37

 

	4.10	 	The Company and the Irish Company are each duly registered for the purposes of value added
tax in its country of incorporation and have complied with all statutory provisions, rules,
regulations, orders and directions concerning value added tax.

38

 

SCHEDULE 5

Limitations on Liability

	 
	1.	 	SCOPE
	 
	4.1	 	Save as otherwise expressly provided in this schedule, the provisions of this schedule shall
operate to limit the liability of the Seller in respect of any claim under or in connection
with the Warranties and where expressly stated to apply, the Tax Deed and references to
“claim” and “claims” shall be construed accordingly.
	 
	4.2	 	Paragraphs 5 to 8 and 14 of this schedule shall not apply to any claim under the Warranties
set out in paragraph 19 of schedule 4 (relating to Tax). Paragraphs 3, 5, 6 and 9 of the Tax
Deed shall apply to claims under the Warranties set out in paragraph 20 of schedule 4 as they
apply to claims under the Tax Deed.

	 
	2.	 	PURCHASER’S KNOWLEDGE
	 
	 	 	The Seller shall have no liability in respect of the Warranties to the extent that the facts
and circumstances giving rise to the claim have been disclosed or referred to in the
Disclosure Letter or this Agreement or in the Data Room or are otherwise known to any member
of the Purchaser’s Group or its advisers at the date hereof.

	 
	3.	 	LIMITATIONS ON QUANTUM
	 
	4.1	 	The maximum aggregate liability of the Seller in respect of all claims under the Warranties
and the Tax Deed shall not exceed the amount of £1,000,000.
	 
	4.2	 	No liability shall attach to the Seller in respect of any claim unless the liability of the
Seller in respect of such claim exceeds £25,000 in which case the Seller shall (subject to
paragraph 3.4) be liable for the whole of such amount and not merely the excess.
	 
	4.3	 	No liability shall attach to the Seller unless the aggregate amount of all claims for which
it would, in the absence of this provision, be liable shall exceed £250,000 and in such event
the Seller shall be liable for the whole of such amount and not merely the excess.
	 
	4.4	 	Paragraphs 3.1 to 3.3 shall not apply to any claim against the Seller to the extent that it
is established that the liability of the Seller in respect of that claim arises from fraud on
the part of the Seller.

	 
	4.	 	TIME LIMITS
	 
	4.1	 	The Seller shall be under no liability in respect of any claim and any such claim shall be
wholly barred and unenforceable unless notice of such claim (stating in reasonable detail the
specific matters in respect of which the claim is made and including so far as reasonably
practicable an estimate of the maximum amount of the claim) shall have been served upon the
Seller by the Purchaser:

	 	(a)	 	in the case of a claim under the Warranties (other than the Warranties relating
to Tax) by no later than 12 months after the date of Completion; or
	 
	 	(b)	 	in the case of a claim under the Warranties relating to Tax by no later than 36
months after the date of Completion,
	 

PROVIDED THAT the liability of the Seller against which any claim specified in such notice
shall have been made shall absolutely determine and cease (if such claim has not been
previously satisfied, settled or withdrawn) if legal proceedings in respect of the claim
shall

39

 

not have been commenced against the Seller by being both properly issued and validly served
on the Seller within three months of the giving of such notice.

	4.2	 	If the Purchaser or any member of the Purchaser’s Group becomes aware of a claim then the
Purchaser shall give written notice of the relevant facts to the Seller as soon as reasonably
practicable and in any event within 60 days (the “Notice Period”) of the Purchaser or the
relevant member of the Purchaser’s Group becoming aware of the claim. A failure by the
Purchaser to provide written notice within the Notice Period shall not prejudice the
Purchaser’s right to bring a claim, but no additional liability shall attach to the Seller to
the extent that the amount of the claim has increased as a result of the failure of the
Purchaser to give written notice within the Notice Period.
	 
	4.3	 	Paragraphs 4.1 and 4.2 shall not apply to any claim against the Seller to the extent that it
is established that the liability of the Seller in respect of that claim arises from fraud on
the part of the Seller.

	 
	5.	 	RECOVERY FROM THIRD PARTIES AND CONDUCT OF CLAIMS
	 
	4.1	 	Paragraph 5.2 shall apply in circumstances where:

	 	(a)	 	any claim is made against any member of the Purchaser’s Group which may give
rise to a claim by the Purchaser against the Seller; or
	 
	 	(b)	 	any member of the Purchaser’s Group is or may be entitled to make recovery from
some other person of any sum in respect of any facts or circumstances by reference to
which the Purchaser has or may have a claim against the Seller; or
	 
	 	(c)	 	the Seller shall have paid to the Purchaser an amount in full settlement of a
claim and subsequent to the making of such payment any member of the Purchaser’s Group
becomes or shall become entitled to recover from some other person a sum which is
referable to that payment.

	4.2	 	The Purchaser shall and shall procure that each other member of the Purchaser’s Group shall:

	 	(a)	 	prior to taking any action against the Seller in respect of any claim in the
case of paragraphs 5.1(a) and 5.1(b) (subject to the Purchaser being indemnified to its
reasonable satisfaction by the Seller against all reasonable costs and expenses which
may properly be incurred by reason of such action) as soon as reasonably practicable
take all such action as the Seller may reasonably request, including the institution of
proceedings and the instruction of professional advisers approved by the Seller to act
on behalf of the relevant member of the Purchaser’s Group, to avoid, dispute, resist,
compromise, defend or appeal against any such claim against the relevant member of the
Purchaser’s Group as is referred to in paragraph 5.1(a) or to make such recovery as is
referred to in paragraphs 5.1(b) or 5.1(c), as the case may be, in accordance with the
reasonable instructions of the Seller; and
	 
	 	(b)	 	not make any admission of liability or settle or compromise any liability or
claim which has given or may give rise to a claim against the Seller without the prior
written consent of the Seller which consent shall not be unreasonably withheld or
delayed; and
	 
	 	(c)	 	in the case of paragraph 5.1(c) only, as soon as reasonably practicable repay
to the Seller an amount equal to the amount so recovered (less the cost of such
recovery) or, if lower, the amount paid by the Seller to the Purchaser.

40

 

	4.3	 	The Purchaser shall as soon as reasonably practicable:

	 	(a)	 	notify the Seller of any claim made against a member of the Purchaser’s Group
as referred to in paragraph 5.1(a), or any right of recovery which is or might be
available, as referred to in paragraphs 5.1(b) and 5.1(c), after any member of the
Purchaser’s Group becomes aware of the same; and
	 
	 	(b)	 	keep the Seller informed as soon as reasonably practicable of all material
developments in relation to any claim, or right of recovery, as referred to in
paragraph 5.3(a); and
	 
	 	(c)	 	provide all such information and documentation (no matter how it is recorded or
stored) as the Seller shall reasonably request in connection with any claim, or right
of recovery, as referred to in paragraph 5.3(a).

	4.4	 	No liability shall attach to the Seller to the extent that a claim has arisen or the amount
of the claim has been increased, or a sum which would otherwise have been recoverable as
referred to in paragraph 5.1(c) has not been recovered, because the Purchaser failed to comply
with paragraphs 5.2(a), 5.2(b) or 5.3 in relation to such claim or, as the case may be, such
amount recoverable.
	 
	4.5	 	The Purchaser shall not be obliged to take any action set out in paragraph 5.2 and 5.3 which,
in the reasonable view of the Purchaser would have a material adverse effect on the goodwill
of the Purchaser or any member of the Purchaser’s Group or their relationship with any third
party with whom any of them has a commercial relationship on an ongoing basis.

	 
	6.	 	NO LIABILITY IF LOSS IS OTHERWISE COMPENSATED
	 
	4.1	 	Provision or reserve in the Reference Balance Sheet
	 
	 	 	No liability shall attach to the Seller in respect of any claim to the extent that
allowance, provision or reserve in respect of the matter or thing giving rise to such claim
has been made in the Reference Balance Sheet.
	 
	4.2	 	Insurance

No liability shall attach to the Seller in respect of any claim if and to the extent that
such claim relates to any loss or damage recoverable by any member of the Purchaser’s Group
under any policy of insurance.

	 
	7.	 	FUTURE ACTS
	 
	4.1	 	Change in Legislation
	 
	 	 	No liability shall attach to the Seller in respect of any claim to the extent that such
claim would not have arisen (or the amount of the claim would not have been increased) but
for a change in legislation made after the date hereof or a change in the interpretation of
the law after the date hereof (whether or not such change purports to be effective
retrospectively in whole or in part) or if such claim would not have arisen (or the amount
of the claim would not have been increased) but for any judgement delivered after the date
hereof.
	 
	4.2	 	Voluntary Acts and Omissions
	 
	 	 	No liability shall attach to the Seller in respect of any claim to the extent that such
claim would not have arisen but for an omission or a voluntary act (other than an omission
or act carried out pursuant to a legally binding obligation created on or before Completion)
of any member of the Purchaser’s Group occurring after Completion and the relevant member of
the

41

 

Purchaser’s Group was actually aware that such act or omission or voluntary act would cause
such a claim to arise.

	 
	8.	 	ACTS APPROVED BY PURCHASER

The Purchaser shall not be entitled to bring any claim in respect of any act or omission
whatsoever carried out at the written request or with the written approval of the Purchaser
or its authorised agent or representative prior to Completion or which is expressly
authorised by this Agreement.

	 
	9.	 	CONTINGENT AND UNQUANTIFIABLE LIABILITIES

No liability shall attach to the Seller in respect of any claim to the extent that the claim
is based upon a liability which is contingent only or is otherwise not capable of being
quantified unless and until such liability ceases to be contingent and becomes an actual
liability or becomes capable of being quantified, as the case may be.

	 
	10.	 	NO DOUBLE RECOVERY

The Purchaser shall not be entitled to recover damages or obtain payment, reimbursement,
restitution or indemnity more than once for the same loss, damage, deficiency or breach.

	 
	11.	 	OPPORTUNITY TO REMEDY

No liability shall attach to the Seller in respect of any claim if and to the extent that
the breach giving rise to such claim is capable of remedy (to the reasonable satisfaction of
the Purchaser and Purchaser’s Group) except to the extent that the relevant breach remains
unremedied (without such cost) after the expiry of 30 days following receipt by the Seller
of notice from the Purchaser giving full particulars of the relevant breach and requiring it
to be so remedied.

	 
	12.	 	EVENTS PRIOR TO SELLER’S OWNERSHIP

No liability shall attach to the Seller in respect of any claim relating to the Company if
and to the extent that the liability or other matter giving rise to such claim is primarily
attributable to any act, event, omission or default which occurred prior to 22 October 1997
unless such act, event, omission or default was known to the Seller at the date hereof.

	 
	13.	 	PURCHASER TO PROVIDE INFORMATION TO SELLER

Upon any claim being made against the Seller the Purchaser shall and shall procure that each
other member of the Purchaser’s Group shall make available to accountants and other
professional advisers appointed by the Seller such access to its personnel and to any
relevant records and information as the Seller may reasonably request in connection with
such claim.

	 
	14.	 	RELIANCE AND REMEDIES

	1.3	 	The Purchaser acknowledges and agrees that, save for the Warranties and where otherwise
provided in this Agreement, it has not relied in relation to the purchase of the Shares or the
Irish Shares on, or been induced to enter into this Agreement by, any information (written or
oral), statements or warranties or representations of any description made, supplied or given
by or on behalf of Borders Group, the Seller, the Company or the Irish Company or the
officers, agents, employees or advisers of any of them in relation to the assets and
liabilities of the Company and the Irish Company, their value or amount, or the businesses or
affairs of the Company and the Irish Company or otherwise.

	4.1	 	Without prejudice to the provisions of paragraph 14.1, the Purchaser irrevocably and
unconditionally waives any right it might have to claim damages for breach of any warranty

42

 

not contained in this Agreement or in respect of any representation not contained in this
Agreement.

	4.2	 	The Purchaser further acknowledges and agrees that the only remedy available to it in respect
of a breach of any provision of this Agreement shall be for damages for breach of contract and
that the Purchaser shall have no claim or remedy in tort in respect of such breach. The
Purchaser shall have no right to rescind this Agreement.
	4.3	 	Nothing in this paragraph 14 shall operate to limit or exclude any liability of the Seller
for, or remedy against the Seller in respect of, any fraudulent misrepresentation on the part
of the Seller.
	 
	15.	 	AWARENESS OF SELLER

Any reference in the Warranties to knowledge or awareness of the Seller shall be deemed to
mean the actual knowledge of the Seller having made enquiry of those persons whose names are
set out in column (1) of schedule 6 in relation to those Warranties set out against those
persons’ names in column (2) of schedule 6.

	 
	16.	 	PAYMENT OF CLAIM TO BE IN REDUCTION OF AGGREGATE CONSIDERATION

If the Seller pays any sum to the Purchaser pursuant to a claim, the Aggregate Consideration
shall be deemed to be reduced by the amount of such payment.

	 
	17.	 	SURVIVAL OF THESE PROVISIONS

The provisions of this schedule 5 apply notwithstanding any other provision of this
Agreement and will not be discharged or cease to have effect in consequence of any
rescission or termination of any other provisions of this Agreement.

	 
	18.	 	MITIGATION NOT AFFECTED

Nothing in this Agreement shall affect the application of the common law rules on mitigation
in respect of any claim or any other matter giving rise to a claim.

	 
	19.	 	PURCHASER WAIVES RIGHT OF SET-OFF

	4.1	 	The Purchaser shall be entitled to exercise a right of set-off against the Seller or any
member of the Seller’s Group but only in the following circumstances:

	 	(a)	 	by agreement with the Seller; or
	 
	 	(b)	 	by notice to the Seller provided that such notice is accompanied by the written
opinion of a commercial specialist Queen’s Counsel jointly agreed upon between the
Purchaser and the Seller or (failing such agreement) appointed, at the request of
either the Purchaser or the Seller at any time, by the President from time to time of
The Bar Council of England and Wales, to the effect that the Purchaser is likely to
succeed on the claim in respect of the amount to be set off to the extent of the amount
to be set off or, if less, the amount stated in the opinion and will be entitled to set
off the amount so estimated or stated; or
	 
	 	(c)	 	in respect of a sum that is the subject of a judgement (in favour of the
Purchaser) of the Supreme Court in England and Wales or other court of competent
jurisdiction in respect of which no right of appeal lies.

43

 

SCHEDULE 6

Awareness of Seller

	 	 	 
	Name	 	Warranties
	 
	 	 
	Ed Wilhelm
	 	All
	 
	 	 
	Tom Carney
	 	All
	 
	 	 
	Jeanne Kemp
	 	5 and 6
	 
	 	 
	Ed Jackson
	 	2 and 19
	 
	 	 
	David Roche
	 	1, 3-19
	 
	 	 
	Mark Raban
	 	1, 3-19
	 
	 	 
	Philip Downer
	 	7
	 
	 	 
	David Kohn
	 	7
	 
	 	 
	Russell Evans
	 	18

44

 

SCHEDULE 7

Insurance

	 
	1.	 	RISK ALLOCATION

The risk of loss or damage to the assets of the Company or the Irish Company remains with
the Seller prior to Completion.

	 
	2.	 	INSURANCE CLAIMS

The Seller shall ensure, or shall procure, that any event or circumstance which gives rise
to an insurance claim under any policy of insurance providing cover for the Company or the
Irish Company or any of its assets and which occurs at any time prior to Completion is the
subject of a claim prior to Completion and is otherwise dealt with in a timely manner and
the Seller shall account to the Company or the Irish Company (as appropriate) in full for
the proceeds of any claim which should properly be received by the Company or the Irish
Company (as appropriate) as soon as reasonably practicable after receipt less any reasonable
costs of recovery of the same.

45

 

SCHEDULE 8

Properties

Part 1: Borders Stores

Table of contents

	 	 	 
	Borders Stores
	1.

	 	Borders Beckton
	2.

	 	Borders Birmingham
	3.

	 	Borders Bournemouth
	4.

	 	Borders Brent Cross
	5.

	 	Borders Brighton
	6.

	 	Borders Bristol
	7.

	 	Borders Cambridge
	8.

	 	Borders Cardiff
	9.

	 	Borders Charing Cross Road
	10.

	 	Borders Cheshire Oaks
	11.

	 	Borders Coventry
	12.

	 	Borders Dundee
	13.

	 	Borders Edinburgh Kinnaird
	14.

	 	Borders Gateshead
	15.

	 	Borders Glasgow City
	16.

	 	Borders Glasgow Fort
	17.

	 	Borders Inverness
	18.

	 	Borders Islington
	19.

	 	Borders Kingston
	20.

	 	Borders Leeds Birstall
	21.

	 	Borders Leeds Briggate
	22.

	 	Borders Leicester
	23.

	 	Borders Llantrisant
	24.

	 	Borders London Colney
	25.

	 	Borders Milton Keynes
	26.

	 	Borders Manchester Fort
	27.

	 	Borders Newbury
	28.

	 	Borders Newcastle Silverlink
	29.

	 	Borders Norwich
	30.

	 	Borders Nottingham
	31.

	 	Borders Oxford City
	32.

	 	Borders Oxford Street
	33.

	 	Borders Preston
	34.

	 	Borders Southampton
	35.

	 	Borders Speke
	36.

	 	Borders Stockport
	37.

	 	Borders Swansea
	38.

	 	Borders Swindon
	39.

	 	Borders Teesside
	40.

	 	Borders Thurrock Lakeside
	41.

	 	Borders Warrington
	42.

	 	Borders Watford
	43.

	 	Borders York

46

 

	 	 	 
	Other Properties
	44.

	 	St Columb Distribution Centre
	Ireland
	45.

	 	Borders Blanchardstown

47

 

Property: 1. Borders Beckton

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Inhoco 3107 Ltd (Standard Life Investments)
	 
	 	 
	Postal Address

	 	Unit 2
	 

	 	Gallions Reach Shopping Park
	 

	 	Beckton
	 

	 	East London E6 7ER
	 
	 	 
	Lease Document Date

	 	19/09/03
	 
	 	 
	Lease Term

	 	15 years from 28/08/03 to 27/08/18
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent at lease start £487,207.50 per annum.

Rent review dates: 28/08/08, 28/08/13.

Property: 2. Borders Birmingham

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Bullring Ltd Partnership
	 
	 	 
	Postal Address

	 	MSU8 & SU33
	 

	 	Bullring Shopping Centre
	 

	 	Birmingham B5 4BE
	 
	 	 
	Lease Document Date

	 	16/11/04
	 
	 	 
	Lease Term

	 	15 years from 24/06/03 to 23/06/18
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent at lease start £635,000 per
annum or 6% of sales if higher (total for
both leases).

Rent review dates: 24/06/08, 24/06/13.

Property: 3. Borders Bournemouth

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Royal London Long Term Fund
	 
	 	 
	Postal Address

	 	11 Bourne Avenue
	 

	 	Bournemouth BH2 6DT
	 
	 	 
	Lease Document Date

	 	21/08/00
	 
	 	 
	Lease Term

	 	15 years from 28/10/99 to 27/10/14
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent at lease start £360,000 per
annum; rent reviewed to £387,500 per annum on
28/10/04.

Rent review dates: 28/10/04, 28/10/09.

48

 

Property: 4. Borders Brent Cross

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Brent Cross Joint Trust in Land
	 
	 	 
	Postal Address

	 	Brent Cross
	 
	 	 
	Lease Document Date

	 	11/02/05
	 
	 	 
	Lease Term

	 	15 years from 15/11/04 to 14/11/19
	 
	 	 
	Rent and Rent Review
Dates

	 	Initial rent at lease start £567,000 per annum.

Rent review dates: 15/11/09, 15/11/14.

Property: 5. Borders Brighton

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Standard life Assurance Co
	 
	 	 
	Postal Address

	 	Unit MSU6
	 

	 	Churchill Square Shopping Centre
	 

	 	Brighton BN1 2EP
	 
	 	 
	Lease Document Date

	 	27/04/00
	 
	 	 
	Lease Term

	 	15 years from 25/03/98 to 24/03/13
	 
	 	 
	Rent and Rent Review
Dates

	 	Initial rent at lease start £320,000 per annum;
rent reviewed to £370,000 per annum on 25/3/03.

Rent review dates: 25/3/03, 25/3/08, 25/3/13.

Property: 6. Borders Bristol

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Legal & General Assurance Society Ltd Linked Life Property Fund
	 
	 	 
	Postal Address

	 	Unit 2/3 Dingles Building
	 

	 	Clifton Promenade
	 

	 	48-56 Queens Road
	 

	 	Clifton
	 

	 	Bristol BS8 1RE
	 
	 	 
	Lease Document Date

	 	17/01/03
	 
	 	 
	Lease Term

	 	25 years from 29/09/02 to 28/09/27
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent at lease start £300,000 per annum; pre agreed
rental increase to £315,000 per annum on 29/09/06.

Rent review dates: 29/09/07, 29/09/12, 29/09/17.

49

 

Property: 7. Borders Cambridge

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	GP Nominees Ltd
	 
	 	 
	Postal Address

	 	12-13 Market Street
	 

	 	Cambridge CB2 3PA
	 
	 	 
	Lease Document Date

	 	05/04/01
	 
	 	 
	Lease Term

	 	25 years from 25/12/00 to 24/12/25
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent at lease start £810,000 per annum; rent
reviewed to £935,000 per annum on 25/12/05.

Rent review dates: 25/12/05, 25/12/10, 25/12/15, 25/12/20.

Property: 8. Borders Cardiff — Not yet open

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Helical (Cardiff) Limited
	 
	 	 
	Postal Address

	 	11-15 Farm Street
	 

	 	London
	 

	 	W1J 5RS
	 
	 	 
	Lease Document Date

	 	20/07/07
	 
	 	 
	Lease Term

	 	15 years from 08/05/07 to 07/05/22.
	 
	 	 
	Rent and Rent Review
Dates

	 	Initial rent at lease start £400,000 per annum.

Rent review dates: 08/05/12 and 08/05/17.

Property: 9. Borders Charing Cross Road

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	GE Pension Ltd
	 
	 	 
	Postal Address

	 	118-124 Charing Cross Road,
	 

	 	London WC2H 0JR
	 
	 	 
	Lease Document Date

	 	31/03/04
	 
	 	 
	Lease Term

	 	20 years from 31/03/04 to 30/03/24
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent at lease start £1,050,000 per annum.
Rent review dates: 31/03/09, 31/03/14, 31/03/19.
On review, the rent will be increased by the great of;
	 

	 	a)   an amount calculated by multiplying the current
rent by the product of the CPI index ratios of each
of the immediately proceeding 5 years.

	 

	 	b)   An amount calculated by increasing the rent
payable for each of the immediately proceeding 5
years by 2.5% per annum.

	 

	 	If any year is greater than 1.05 an index ratio 1.05
shall be deemed to apply.

50

 

Property: 10. Borders Cheshire Oaks

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Equitable Life Assurance Society
	 
	 	 
	Postal Address

	 	Unit R13
	 

	 	34 Coliseum Way
	 

	 	Ellesmere Port
	 

	 	Cheshire CH65 9HD
	 
	 	 
	Lease Document Date

	 	04/07/2000
	 
	 	 
	Lease Term

	 	15 years from 25/12/99 to 24/12/14
	 
	 	 
	Rent and Rent Review
Dates

	 	Initial rent at lease start £400,380 per
annum; rent reviewed to £578,500 per annum on
25/12/04.

Rent review dates: 25/12/04, 25/12/09.

Property: 11. Borders Coventry

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Tesco Stores Limited
	 
	 	 
	Postal Address

	 	Unit 2
	 

	 	Arena Retail Park
	 

	 	Classic Park
	 

	 	Coventry CV6 6AS
	 
	 	 
	Lease Document Date

	 	Agreement for lease dated 15 December 2004. Lease not yet completed.
	 
	 	 
	Lease Term

	 	25 years from 14/02/05 to 13/02/30
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent at lease start £397,500 per annum.

Rent review dates: 14/02/10, 14/02/15, 14/02/20, 14/02/25.

Property: 12. Borders Dundee

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Countrywide Dundee Ltd/Bellshelf Twentynine Ltd
	 
	 	 
	Postal Address

	 	Unit 6
	 

	 	Gallagher Retail Park
	 

	 	East Dock Street
	 

	 	Dundee DD1 3JS
	 
	 	 
	Lease Document Date

	 	Agreement for lease signed 29/06/06 lease not yet completed.
	 
	 	 
	Lease Term

	 	15 years from 17/07/06 to 16 July 2021
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent at lease start £300,000 per annum.

Rent review dates; 17/07/11, 17/07/16.

51

 

Property:
13. Borders Edinburgh Kinnaird

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	RBOS Trust Co (Jersey) & RBSI Trust Co.

	 
	 	 
	Postal Address

	 	Unit 26

Fort Kinnaird

Newcraighall Road

Edinburgh EH15 3RD
	 
	 	 
	Lease Document Date

	 	21 February 2001
	 
	 	 
	Lease Term

	 	15 years from 08/01/01 to 07/01/16
	 
	 	 
	Rent and Rent Review Dates

	 	Initial rent at lease start £227,700 per
annum or 6% of sales if higher (over 4m
only); rent reviewed to on 08/01/06.

Rent review dates: 08/01/06, 08/01/11. Base
rent reviewed to 60% of open market value.
Turnover rent capped at 125% of open market
value.

Property: 14. Borders Gateshead

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Ravenside Investments Ltd
	 
	 	 
	Postal Address

	 	Unit 7C

Retail World

Team Valley

Gateshead
	 
	 	 
	Lease Document Date

	 	21/11/05
	 
	 	 
	Lease Term

	 	15 years from 29/09/05 to 28/09/20
	 
	 	 
	Rent and Rent Review Dates

	 	Initial rent at lease start £341,530 per annum.

Rent review dates: 29/09/10, 29/09/15.

Property: 15. Borders Glasgow City

	 	 	 
	Tenant

	 	Borders (UK) Limited, Tenants obligations
guaranteed by Borders Group Inc. (referred
to in agreement for lease)
	 
	 	 
	Current Landlord

	 	Dempsey Assets Ltd
	 
	 	 
	Postal Address

	 	98 Buchanan St

Royal Exchange Square

Glasgow

Scotland G1 3HA
	 
	 	 
	Lease Document Date

	 	10/09/98
	 
	 	 
	Lease Term

	 	25 years from 18/09/98 to 17/09/23
	 
	 	 
	Rent and Rent Review Dates

	 	Initial rent at lease start £1,400,000 per
annum; rent reviewed to £1,430,000 per
annum on 17/09/03. Rent review dates: 17/09/03, 17/09/08, 17/09/13, 17/09/18.

52

 

Property: 16. Borders Glasgow Fort

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	RBos Trust Co (Jersey) & RBSI Trust Co
	 
	 	 
	Postal Address

	 	390 Provan Walk

Glasgow G34 9DL
	 
	 	 
	Lease Document Date

	 	Missives in relation to an Agreement for Lease
dated 18, 22 and 23 July. 2003.

Lease not yet completed.
	 
	 	 
	Lease Term

	 	15 years from 25/10/04 to 24/10/19
	 
	 	 
	Rent and Rent Review
Dates

	 	Initial rent at lease start £312,500 per annum.

Rent review dates: 25/10/09, 25/10/14.

Property: 17. Borders Inverness

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	RBoS Trust Co (Jersey) & RBSI Trust Co
	 
	 	 
	Postal Address

	 	Unit 1A/B

Eastfield Way

Inverness Retail Park

Inverness

Scotland IV2 7GD
	 
	 	 
	Lease Document Date

	 	17/09/03
	 
	 	 
	Lease Term

	 	19 years from 10/04/03 to 16/11/22
	 
	 	 
	Rent and Rent Review
Dates

	 	Initial rent at lease start £324,378 per annum or
6% of sales, if higher; Rent to be reviewed to 80%
of open market value.

Rent review dates: 10/04/08, 10/04/13, 10/04/18.

Property: 18. Borders Islington

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Metro Nominees
	 
	 	 
	Postal Address

	 	Unit MSU1 & MSU2

26 Parkfield Street

Islington

London N1 0PS
	 
	 	 
	Lease Document Date

	 	19/07/02
	 
	 	 
	Lease Term

	 	25 years from 07/01/02 to 07/01/27
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent at lease start £395,000 per annum.

Rent review dates: 07/01/07, 07/01/12, 07/01/17, 07/01/23.

53

 

Property: 19. Borders Kingston

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Clerical Medical Investment Group Ltd
	 
	 	 
	Postal Address

	 	Unit 1, Charter Quay, Market Place, Kingston Upon

Thames, Surrey KT1 1JT
	 
	 	 
	Lease Document Date

	 	9/07/2001
	 
	 	 
	Lease Term

	 	20 years from 09/07/01 to 08/07/21
	 
	 	 
	Rent and Rent Review
Dates

	 	Initial rent at lease start £350,000 per annum;
rent reviewed on 09/07/06 is currently outstanding
and currently in arbitration Award pending
Rent review dates: 09/07/06, 09/07/11, 09/07/16.

Property: 20. Borders Leeds Birstall

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	National Provident Life Ltd, Henderson Global Investors.
	 
	 	 
	Postal Address

	 	Unit 2

Geldred Road Retail Park

Holden Ing Way,

Birstall,

Leeds,

W Yorkshire WF17 9AE
	 
	 	 
	Lease Document Date

	 	16/03/05
	 
	 	 
	Lease Term

	 	20 years from 04/08/04 to 03/08/24
	 
	 	 
	Rent and Rent
Review Dates

	 	First 5 years have fixed staggered rent.

04/08/04 — 03/08/05 = £361,950 per annum

04/08/05 — 03/08/06 = £370,500 per annum

04/08/06 — 03/08/07 = £379,050 per annum

04/08/07 — 03/08/08 = £387,600 per annum

04/08/08 — 03/08/09 = £396,150 per annum

The rent is then reviewed to open market rent on
04/08/09, 04/08/14, 04/08/19.

54

 

Property: 21. Borders Leeds Briggate

	 	 	 
	Tenant

	 	Borders (UK) Limited, Guaranteed by Borders Group Inc,
until Borders (UK) Limited discloses net assets in excess
of £20 million. This occurred in 2004.
	 
	 	 
	Current Landlord

	 	Standard Life Investment Fund Ltd
	 
	 	 
	Postal Address

	 	94-96 Briggate

Leeds

West Yorkshire LS1 6NP
	 
	 	 
	Lease Document Date

	 	03/02/99
	 
	 	 
	Lease Term

	 	25 years from 26/01/99 to 25/01/24
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent at lease start £560,000 per annum; rent
reviewed to £857,500 on 25/01/04.

Rent review dates: 25/01/04, 25/01/09, 25/01/14, 25/01/19.

Property: 22. Borders Leicester

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	BLCT (27265) Limited
	 
	 	 
	Postal Address

	 	Grove Farm Triangle

Narborough Road

South Enderby

Leicestershire LE19 1WT
	 
	 	 
	Lease Document Date

	 	19/06/02
	 
	 	 
	Lease Term

	 	20 years from 19/6/02 to 19/6/22
	 
	 	 
	Rent and Rent Review Dates

	 	Initial rent at lease start £438,750 per annum.

Rent review dates; 19/06/07, 19/06/12, 19/06/17.

Property: 23. Borders Llantrisant

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	RREEF UK Retail Property Fund
	 
	 	 
	Postal Address

	 	Unit 14

New Park Shopping Centre

Talbot Green

Pontyclun

Llantrisant

Mid Glamorgan CF72 8LW
	 
	 	 
	Lease Document Date

	 	15/06/06
	 
	 	 
	Lease Term

	 	15 years from 13/04/06 to 12/04/21
	 
	 	 
	Rent and Rent Review Dates

	 	Initial rent at lease start £330,000 per annum;

Rent review dates: 13/04/11, 13/04/16.

55

 

Property: 24. Borders London Colney

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Legal & General Assurance Society Ltd
	 
	 	 
	Postal Address

	 	1 Colney Fields Shopping Park

Barnet Road

London Colney

St Albans AL2 1AB
	 
	 	 
	Lease Document Date

	 	22/11/04
	 
	 	 
	Lease Term

	 	15 years from 04/10/04 to 03/10/19
	 
	 	 
	Rent and Rent Review Dates

	 	Initial rent at lease start £500,000 per annum.

Rent review dates: 04/10/09, 04/10/14.

Property: 25. Borders Milton Keynes

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Associated British Foods Pension Trustees Ltd
	 
	 	 
	Postal Address
	 	 
	 
	 	 
	Lease Document Date

	 	13/09/06
	 
	 	 
	Lease Term

	 	15 years from 16/08/06 to 15/08/21
	 
	 	 
	Rent and Rent Review Dates

	 	Initial rent at lease start £387,755 per annum.

Rent review dates: 16/08/11, 16/08/16.

Property: 26. Borders Manchester Fort

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Manchester Fort Shopping Park General
	 
	 	 
	Postal Address

	 	Unit 20

Manchester Fort Shopping Park

Cheetham Hill Road

Cheetham Hill

Greater Manchester M8 8EP
	 
	 	 
	Lease Document Date

	 	20/06/06
	 
	 	 
	Lease Term

	 	15 years from 25/12/05 to 24/12/20
	 
	 	 
	Rent and Rent Review Dates

	 	Initial rent at lease start £288,000 per
annum; or 6% of sales if higher capped at
125% of base rent, personal to Borders (UK)
Limited.

Rent review dates: 25/12/10, 25/12/15.

56

 

Property: 27. Borders Newbury

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	F & C Commercial
	 
	 	 
	Postal Address

	 	Unit 12

Newbury Retail Park

Pinchington Lane

Newbury

Berkshire RG14 7HU
	 
	 	 
	Lease Document Date

	 	Agreement for lease dated 28/04/06.
Lease not yet completed.
	 
	 	 
	Lease Term

	 	15 years from 21/04/06 to 20/04/21
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent at lease start £235,000 per annum; up to 1st term anniversary.

£250,000 per annum from 1st to 3rd term anniversary.

£300,000 per annum from 3rd to 5th term anniversary.

Then reviewed to market rent.

Property: 28. Borders Newcastle Silverlink

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Hercules Unit Trust
	 
	 	 
	Postal Address

	 	Unit F2

Silverlink Retail Park

Coast Road

Wallsend

Tyne and Wear NE28 9ND
	 
	 	 
	Lease Document Date

	 	07/12/04
	 
	 	 
	Lease Term

	 	15 years from 02/08/04 to 01/08/19
	 
	 	 
	Rent and Rent Review Dates

	 	Initial rent at lease start £349,132 per annum.

Rent review dates: 02/08/09, 02/08/14.

Property: 29. Borders Norwich

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Chapelfield Nominee & GP Ltd
	 
	 	 
	Postal Address

	 	Unit MSU 7/8

Chapelfields Shopping Centre

Norwich

Norfolk NR1
	 
	 	 
	Lease Document Date

	 	Leases not yet signed.

Occupation currently under agreement for Lease dated 30 June 2004
	 
	 	 
	Lease Term

	 	15 years from 29/09/05 to 28/09/20
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent at lease start £485,000 per annum (total for 3 leases).

Rent review dates.

57

 

Property: 30. Borders Nottingham — Not yet open

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Helical Retail (RBS) Limited with Helical bar P/C as Landlords
Guarantor.
	 
	 	 
	Postal Address

	 	Unit 1,

Trintity Square,

Nottingham
	 
	 	 
	Lease Document Date

	 	Agreement for lease dated 15/05/2004. Variation agreements
dated 19/11/04 and 25/07/06. Lease not yet completed.
	 
	 	 
	Lease Term

	 	Possession not yet taken due mid 2007, for an October 2007
opening; Term of 15 years to be granted.
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent to be built gross internal area x £21.25 per sq ft.

Subject to total maximum of £550,392.50 per annum.

Plus landlord’s contribution of £1.2 million. Rent reviews due
on 5th & 10th anniversaries of term
commencement.

Property: 31. Borders Oxford City

	 	 	 
	Tenant

	 	Borders (UK) Limited guaranteed by Borders Group
Inc (fell away after 5 years, on 24/03/05).
	 
	 	 
	Current Landlord

	 	Oxford Co-owners Percy Nominees Limited
	 
	 	 
	Postal Address

	 	9 Magdelen Street

Oxford OX1 3AD
	 
	 	 
	Lease Document Date

	 	05/04/02
	 
	 	 
	Lease Term

	 	25 years from 25/03/00 to 24/03/25
	 
	 	 
	Rent and Rent Review
Dates

	 	Initial rent at lease start £639,500 per annum.

Rent review dates: 25/03/05, 25/03/10, 25/03/15.

58

 

Property: 32. Borders Oxford Street

	 	 	 
	Tenant

	 	Books Etc, guaranteed by Borders Group Inc.

Note — Books Etc Ltd and Borders (UK) Limited are the same
company, number 1580771
	 
	 	 
	Current Landlord

	 	Superdrug PLC
	 
	 	 
	Postal Address

	 	203-207 Oxford St

London W1D 2LE
	 
	 	 
	Lease Document Date

	 	16/03/98
	 
	 	 
	Lease Term

	 	25 years from 16/3/98 to 11/4/22
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent at lease start £1,600,000 per annum plus
£375,000 per annum. A premium rent of £375,000 was also
payable. The premium rent fell away at year 5, leaving
£1,600,000 per annum which then had a nil increase. Nil
increase of rent review on 02/02/03.

Rent review dates: 02/02/03, 02/02/08, 02/02/2013, 02/02/2018.

Property: 33. Borders Preston

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Hercules Unit Trust
	 
	 	 
	Postal Address

	 	Unit C1(B)

Deepdale Retail Park

Blackpool Road

Preston PR1 6QY
	 
	 	 
	Lease Document Date

	 	12/08/05
	 
	 	 
	Lease Term

	 	15 years from 24/06/05 to 23/06/20
	 
	 	 
	Rent and Rent Review Dates

	 	Initial rent at lease start £437,300 per annum.

Rent review dates: 24/06/10, 24/06/15.

Property: 34. Borders Southampton

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	CGNU Life Assurance Ltd
	 
	 	 
	Postal Address

	 	Unit 9

West Quay Retail Park

West Quay Road

Southampton SO15 1BA
	 
	 	 
	Lease Document Date

	 	19/10/06
	 
	 	 
	Lease Term

	 	15 years from 24/06/06 to 23/06/21
	 
	 	 
	Rent and Rent Review Dates

	 	Initial rent at lease start £400,000 per
annum or 6% of sales if higher; (note
turnover rent in separate document).

Rent review dates: 24/06/11, 24/06/16.

59

 

Property: 35. Borders Speke

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Speke Unit Trust
	 
	 	 
	Postal Address

	 	Unit L2, New Mersey Retail Park, Speke Road, Speke L24 8QB
	 
	 	 
	Lease Document Date

	 	20/05/03
	 
	 	 
	Lease Term

	 	15 years from 29/09/02 to 28/09/17
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent at lease start £477,000 per annum.

Rent review dates: 29/09/07, 29/09/12.

Property: 36. Borders Stockport

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Peel Investments (North) Limited
	 
	 	 
	Postal Address

	 	Unit 1B

Peel Retail Park

Great Portwood Street

Stockport SK1 2HH
	 
	 	 
	Lease Document Date

	 	03/01/03
	 
	 	 
	Lease Term

	 	15 years from 08/07/02 to 08/07/17
	 
	 	 
	Rent and Rent Review Dates

	 	Initial rent at lease start £342,000 per
annum or 6% of sales, if higher capped to
120% of open market rent.

Rent review dates: 08/07/07.

Property: 37. Borders Swansea

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Henderson UK Retail Warehouse Fund.
	 
	 	 
	Postal Address

	 	Unit 4 & 5

Parc Fforestfach

Pontardulias Road

Swansea SA5 4BA
	 
	 	 
	Lease Document Date

	 	01/04/03
	 
	 	 
	Lease Term

	 	15 years from 04/11/02 to 03/11/17
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent at lease start £379,760 per annum; or 6% of sales, if higher.

Rent review dates: 04/11/07, 04/11/12.

60

 

Property: 38. Borders Swindon

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Cranbell Limited
	 
	 	 
	Postal Address

	 	Unit B1 & 2,

The Orbital Shopping Park

Thamesdown Drive

Swindon

Wiltshire SN25 4BG
	 
	 	 
	Lease Document Date

	 	28/02/03
	 
	 	 
	Lease Term

	 	15 years from 16/11/02 to 15/11/17
	 
	 	 
	Rent and Rent Review Dates

	 	Initial rent at lease start £420,000 per annum.

 Rent review dates: 16/11/07, 16/11/12.

Property: 39. Borders Teesside

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Cleola Limited
	 
	 	 
	Postal Address

	 	Unit 8a

Teesside Retail Park

Middlesborough Road

Stockton-on-Tees

Cleveland
	 
	 	 
	Lease Document Date

	 	23/09/05
	 
	 	 
	Lease Term

	 	15 years from 22/08/05 to 21/08/20
	 
	 	 
	Rent and Rent Review Dates

	 	Initial rent at lease start £385,827 per annum.

 Rent review dates: 22/08/10, 22/08/15.

Property: 40. Borders Thurrock Lakeside

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Ravenside Investments Ltd
	 
	 	 
	Postal Address

	 	Unit 3

Lakeside Retail Park

West Thurrock RM20 3WP
	 
	 	 
	Lease Document Date

	 	15/12/03
	 
	 	 
	Lease Term

	 	15 years from 24/06/02 to 23/06/17
	 
	 	 
	Rent and Rent Review Dates

	 	Initial rent at lease start £390,000.

Rent review dates: 24/06/07, 24/06/12.

61

 

Property: 41. Borders Warrington

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Prudential Property Managers
	 
	 	 
	Postal Address

	 	Unit 4

Riverside Retail Park

Wharf Street

Warrington

Cheshire WA1 2GZ
	 
	 	 
	Lease Document Date

	 	01/08/05
	 
	 	 
	Lease Term

	 	15 years from 01/08/05 to 28/09/20
	 
	 	 
	Rent and Rent Review Dates

	 	Initial rent at lease start £289,409 per annum.

Rent review dates: 29/09/10, 29/09/15.

Property: 42. Borders Watford

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Hercules Unit Trust
	 
	 	 
	Postal Address

	 	Unit F

Waterfields Retail Park

Watford WD17 2EU
	 
	 	 
	Lease Document Date

	 	17/02/03
	 
	 	 
	Lease Term

	 	15 years from 17/04/02 to 16/04/17
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent at lease start £262,360 per annum or 6% of sales if higher.

Rent review dates: 17/04/07, 17/04/12.

Property: 43. Borders York

	 	 	 
	Tenant

	 	Borders (UK) Limited with Borders Group Inc as guarantor.
	 
	 	 
	Current Landlord

	 	Coal Pension Properties Limited
	 
	 	 
	Postal Address

	 	1-5 Davygate

York YO1 8QR
	 
	 	 
	Lease Document Date

	 	13/06/02
	 
	 	 
	Lease Term

	 	25 years from 24/06/99 to 23/06/24
	 
	 	 
	Rent and Rent
Review Dates

	 	Initial rent at lease start £500,000 per annum; rent
reviewed to £591,650 per annum on 24/06/04.

Rent review dates: 24/06/04, 24/06/09, 24/06/14, 24/06/19.

62

 

Property: 44. St Columb Distribution Centre

	 	 	 	 	 
	Tenant

	 	Borders (UK) Limited	 	 
	 
	 	 	 	 
	Current Landlord

	 	1) SWEROP
	 	2) Grazier House Estate Company

New Riverside

439 Lower Broughton Road

Salford M7 2 FX
	 
	 	 	 	 
	Postal Address

	 	Borders (UK) Limited

Units 1 & 2

St Columb Major Industrial Estate

Trekenning

Cornwall

TR9 6SX	 	 
	 
	 	 	 	 
	Lease Document Date

	 	1) 13/05/02
	 	2) 19/10/06
	 
	 	 	 	 
	Lease Term

	 	1) 08/05/02 to
07/05/14 then
reversionary lease
08/05/14 until
09/07/16.
	 	2) 10/07/06 to 09/07/21
	 
	 	 	 	 
	Rent and Rent
Review Dates

	 	1) Initial rent
£162,500, reviewed
to £225,000 on
08/05/05. Rent
review dates
10/07/10; 10/07/16.
	 	2) Initial rent £225,000.
Rent review dates 10/07/11,
10/07/16.

Property: 45. Borders Blanchardstown

	 	 	 
	Tenant

	 	Borders Books (Ireland) Limited

Surety to be provided from Borders Group Inc.
	 
	 	 
	Current Landlord

	 	Joseph Cosgrave, Peter Cosgrave and Michael Cosgrave
	 
	 	 
	Postal Address

	 	Unit 3B & 4

West End Retail Park

Blanchardstown

Dublin 15

Republic of Ireland
	 
	 	 
	Lease Document Date

	 	Lease not yet signed, occupying under Agreement for
Lease dated 24 March 2006 between (1) Cosgrave
Property Developments Limited (2) Joseph Cosgrave,
Peter Cosgrave and Michael Cosgrave and (3) Borders
Books Ireland Limited.
	 
	 	 
	Lease Term

	 	20 years and 1 day from 03/07/06 to 03/07/26
	 
	 	 
	Rent and Rent Review
Dates

	 	Initial rent at lease start €590,888 euro per annum
(based on final measurement).

Rent review dates: 02/07/11, 02/07/16, 02/07/21. No
review on the last day of the term.

63

 

Part 2: Books etc. Stores

Table of Contents

	 	 	 	 	 	 	 	 
	1.	 	 	Books etc. Bicester
	 	 	 	 
	2.	 	 	Books etc. Broadgate
	 	 	 	 
	3.	 	 	Books etc. Canary Wharf
	 	 	 	 
	4.	 	 	Books etc. Cowcross Street
	 	 	 	 
	5.	 	 	Books etc. Croydon
	 	 	 	 
	6.	 	 	Books etc. Finchley Road
	 	 	 	 
	7.	 	 	Books etc. Fleet Street
	 	 	 	 
	8.	 	 	Books etc. Hammersmith
	 	 	 	 
	9.	 	 	Books etc. High Holborn
	 	 	 	 
	10.	 	 	Books etc. Jubilee Place
	 	 	 	 
	11.	 	 	Books etc. London Wall
	 	 	 	 
	12.	 	 	Books etc.Shepherds Bush
	 	 	 	 
	13.	 	 	Books etc. Staines
	 	 	 	 
	14.	 	 	Books etc. Uxbridge
	 	 	 	 
	15.	 	 	Books etc. Victoria Place
	 	 	 	 
	16.	 	 	Books etc. Victoria Street
	 	 	 	 
	17.	 	 	Books etc.Wandsworth
	 	 	 	 
	18.	 	 	Books etc. Wimbledon
	 	 	 	 
	19.	 	 	Books etc. Whiteleys
	 	 	 	 
	Express Stores	 	 	 	 
	20.	 	 	Borders Express Fulham
	 	 	 	 
	21.	 	 	Borders Express Solihull
	 	 	 	 

64

 

Property: 1. Books etc. Bicester

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	Bicester Nominees Ltd & Bicester II Nominees Ltd

c/o Bicester GP Ltd

Chancery Hall

52 Reid Street

Hamilton HM12

Bermuda
	 
	 	 
	Postal Address

	 	Unit 24 Bicester Retail Village

Pringle Drive

Bicester

Oxon OX6 7WD
	 
	 	 
	Lease Date

	 	25 May 2001
	 
	 	 
	Lease Term and
Expiry Date

	 	10 years (25 May 2001 to 24 May 2011)
	 
	 	 
	Rent Review History

	 	The rent shall be the higher of the Base Rent or the Turnover Rent.
The Base Rent shall be:

£39,600 for first and second years of the term

£50,400 for the third, fourth and fifth years of the term

£61,200 for sixth, seventh years of the term

£68,400 for each remaining year of the term

The Turnover Rent shall be a percentage of the Annual Turnover.

The percentages are:

9% for the first, second and third years of the term of this Lease;

10% for the fourth, fifth and sixth years of the term of this Lease;

11% for each remaining year of the term of this Lease.

	 
	 	 
	Rent Review Dates

	 	None

65

 

Property: 2. Books etc. Broadgate

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	B.L.C.T (12702) Limited

c/o British Land PLC

10 Cornwall Terrace

Regents Park

LONDON NW1 4QP
	 
	 	 
	Postal Address

	 	30 Broadgate Circle

London

EC2M 2BL
	 
	 	 
	Lease Date

	 	19 March 1998
	 
	 	 
	Lease Term and
Expiry Date

	 	15 years (25 March 1998 to 24 March 2013)
	 
	 	 
	Rent Review History

	 	The Basic Rent is £225,000 per annum.

Rent reviewed at 25 March 2003 — nil increase, rent remained at £225,000 pa.
	 
	 	 
	Rent Review Dates

	 	25 March 2003, 25 March 2008

Property: 3. Books etc. Canary Wharf

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	Cabot Place Ltd

1 Canada Square

Canary Wharf

London E14 5AB
	 
	 	 
	Postal Address

	 	Cabot Place East

Canary Wharf

London E14 4QT
	 
	 	 
	Lease Date

	 	12 May 1995
	 
	 	 
	Lease Term and
Expiry Date

	 	25 years (1 January 1995 to 31 December 2019).
	 
	 	 
	Rent Review History

	 	Basic Rent and Turnover Rent are payable.

The Basic Rent is:

For the first, second and third years of the Term one
peppercorn per annum. For the fourth and fifth year of
the Term 80% of the Turnover Percentage (6.5%) of the
average Gross Turnover achieved in the second and third
year. Following the 1 January 2000 rent review the Basic
Rent was £76,702.28 pa. Following the 1 January 2005 rent
review the Basic Rent is £110,024pa.

The Turnover Rent is the amount by which the Turnover
Percentage (6.5%) of the Gross Annual Turnover exceeds the
Basic Rent for that year. The Basic Rent will be reviewed
on any assignment.
	 
	 	 
	Rent Review Dates

	 	1 January 2000, 1 January 2005, 1 January 2010, 1 January
2015, 30 December 2019.

66

 

Property: 4. Books etc. Cowcross Street

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	Ransome’s Dock Ltd, Stanny House, High Street, Iken, Woodbridge, Suffolk,
IP12 2EY
	 
	 	 
	Postal Address

	 	9-13 Cowcross St, London, EC1M 6DR
	 
	 	 
	Lease Date

	 	20 April 2000
	 
	 	 
	Lease Term and
Expiry Date

	 	25 years (20 April 2000 to 19 April 2025)
	 
	 	 
	Rent Review History

	 	The rent from 20 October 2000 until the first Review Date was £105,000 pa.

From 20 April 2005, the rent was reviewed to £129,000 pa.
	 
	 	 
	Rent Review Dates

	 	20 April 2005, 20 April 2010, 20 April 2015, 20 April 2020

Property: 5. Books etc. Croydon

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	Whitgift Trust

Jubilee Buildings

Victoria Street

Douglas

Isle of Man IM1 2SH
	 
	 	 
	Postal Address

	 	Unit 1114 Whitgift Centre

Croydon

Surrey CR0 1UZ
	 
	 	 
	Lease Date

	 	5 August 1996
	 
	 	 
	Lease Term and
Expiry Date

	 	15 years (24 June 1996 to 23 June 2011)
	 
	 	 
	Rent Review History

	 	The initial rent was £110,000 p.a..

Following the 24 June 2001 rent review, the rent is £113,000 p.a..
	 
	 	 
	Rent Review Dates

	 	24 June 2001 and 24 June 2006

Property: 6. Books etc. Finchley Road

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current 

Landlord

	 	X-Leisure

10 Lower Grosvenor Place

London SW1W 0EN
	 
	 	 
	Postal Address

	 	Unit 5 Level 1

O2 Centre

255 Finchley Road

London NW3 6LU
	 
	 	 
	Lease Date

	 	24 May 2000
	 
	 	 
	Lease Term and
Expiry Date

	 	25 years (4 December 1998 to 3 December 2023)
	 
	 	 
	Rent Review History

	 	The initial rent was £219,117.15 p.a.. Following the rent review
on 4 December 2003 the rent is now £237,500 per annum.
	 
	 	 
	Rent Review Dates

	 	4 December 2003, 4 December 2008, 4 December 2013, 4 December 2018.

67

 

Property: 7. Books etc. Fleet Street

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	Midtown Ltd

Samuel Harris House

5-11 St George’s St

Douglas

Isle of Man IM99 1SN
	 
	 	 
	Postal Address

	 	176 Fleet Street

London EC4A 2EN
	 
	 	 
	Lease Date

	 	6 April 1989
	 
	 	 
	Lease Term and
Expiry Date

	 	25 years (25 March 1988 to 24 March 2013).
	 
	 	 
	Rent Review History

	 	The initial rent was £85,000 p.a.

Following the 25 March 1998 rent review the rent was
£115,000 pa. Following the 25 March 2003 rent review the
rent is £140,000 pa.
	 
	 	 
	Rent Review Dates

	 	25 March 1993, 25 March 1998, 25 March 2003, 25 March 2008.

Property: 8. Books etc. Fulham (branded as Borders Express)

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Mourant Property Trustees Ltd and Mourant & Co Trustees Ltd.,

Fulham Broadway Unit Trust

c/o William Ewart Properties

Angus House

14 Howard St South

Belfast BT7 1BA
	 
	 	 
	Postal Address

	 	Unit 3 Fulham Broadway Retail Centre

Fulham Road

London SW6 1BW
	 
	 	 
	Lease Date

	 	19 October 2006
	 
	 	 
	Lease Term and
Expiry Date

	 	25 years (7/6/02 to 6/6/27).
	 
	 	 
	Rent and Rent
Review Dates

	 	Principal rent is £345,000 per annum. There have been no
rent reviews to date.
 Rent review dates: 7/6/07, 7/6/12,
7/6/17 and 7/6/22.

68

 

Property: 9. Books etc. Hammersmith

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Landlord

	 	Hammersmith Shopping Centre Ltd

The Management Suite

The Broadway Shopping Centre

Hammersmith

London W6 9YE
	 
	 	 
	Postal Address

	 	28 Broadway Shopping Centre

Hammersmith

London W6 9YD
	 
	 	 
	Lease Date

	 	27 October 1994
	 
	 	 
	Lease Term and
Expiry Date

	 	20 years (4 January 1994 to 3 January 2014)
	 
	 	 
	Rent Review History

	 	Principal Rent and Turnover Rent are payable.

The Principal Rent was £87,500 p.a.. Following the 4
January 2004 rent review, the Principal Rent is £193, 500
per annum.

Whilst Borders is the Tenant, it is only liable to pay 80%
of the Principal Rent, plus a Turnover Rent of 6.75% (the
Turnover Rent Percentage) of the Gross Percentage for the
year. The turnover arrangements will fall away on any
assignment of the Lease (unless to a group company or to
an assignee whose user is the same and who is of equal or
greater financial standing) and the base rent will
increase to 100% of the Principal Rent.
	 
	 	 
	Rent Review Dates

	 	4 January 1999, 4 January 2004, 4 January 2009.

Property: 10. Books etc. Holborn

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	South Yorkshire Pensions Authority

18 Regent Street

Barnsley

South Yorkshire

S70 2HG
	 
	 	 
	Postal Address

	 	263 High Holborn

London WC1V 7EZ
	 
	 	 
	Lease Date

	 	4 August 1987
	 
	 	 
	Lease Term and
Expiry Date

	 	25 years (24 June 1987 to 23 June 12).
	 
	 	 
	Rent Review History

	 	The initial rent was £68,000 p.a.

Following the 24 June 2002 rent review the rent is £95,250 pa.
	 
	 	 
	Rent Review Dates

	 	24 June 1992, 24 June 1997, 24 June 2002, 24 June 2007.

 

69

 

Property: 11. Books etc. Jubilee Place

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	HQCB Properties (RT3) Ltd

1 Canada Square

Canary Wharf

London E14 5AB
	 
	 	 
	Postal Address

	 	45 Bank Street

Canary Wharf

London E14 5NY
	 
	 	 
	Lease Date

	 	30 July 2004
	 
	 	 
	Lease Term and
Expiry Date

	 	15 years from 18 June 2003 to 30 June 2018.
	 
	 	 
	Rent Review History

	 	The yearly rent is the higher of (a) the Turnover Rent
(6.5% of Gross Turnover) and (b) the Base Rent (initially
£140,000 pa).
	 
	 	 
	Rent Review Dates

	 	01 July 2008, 01 July 2013

Property: 12. Books etc. London Wall

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	IVG Asticus Real Estate Ltd

39 St James Street

London

SW1A 1JD
	 
	 	 
	Postal Address

	 	54 London Wall

London EC2M 5RA
	 
	 	 
	Lease Date

	 	16 July 1992
	 
	 	 
	Lease Term and
Expiry Date

	 	25 years (25 December 1991 to 24 December 2016)
	 
	 	 
	Rent Review History

	 	The rent initially payable was the Basic Rent plus the Turnover
Rent. The Basic Rent was initially £70,000 pa but increased to
£215,000 per annum following the Rent Review on 1 February 1998.
The Turnover Rent was the amount by which the Basic Rent exceeds
7.5% of the annual turnover. The Turnover Rent ceased to apply
as from 1 February 1998. The rent was reviewed to £240,000 pa
from 1 February 2003.
	 
	 	 
	Rent Review Dates

	 	1 February 1998, 1 February 2003, 1 February 2008, 1 February 2013

70

 

Property: 13. Books etc. Shepherds Bush

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	Tops Shop Centres Limited

Land Securities

5 Strand

London WC2N 5AF
	 
	 	 
	Postal Address

	 	Unit 4/6

West 12 Shopping Centre

Shepherds Bush

London W12 8PP
	 
	 	 
	Lease Date

	 	10 March 2005
	 
	 	 
	Lease Term and
Expiry Date

	 	15 years (24 June 2001 to 23 June 2016)
	 
	 	 
	Rent Review History

	 	The Basic Rent is:

24 June 2001 to 23 June 2002 — £122,449

24 June 2002 to 23 June 2003 — £122,449

24 June 2003 to 23 June 2004 — £147,010

24 June 2004 to 23 June 2005 — £171,482

24 June 2005 to 23 June 2006 — £195,954

Rent reviewed to nil increase on 24 June 2006.
	 
	 	 
	Rent Review Dates

	 	24 June 2006 and 24 June 2011

Property: 14. Books etc. Solihull (branded as Borders Express)

	 	 	 
	Tenant

	 	Books etc or Borders (UK) Limited (same company)
	 
	 	 
	Current Landlord

	 	Lend Lease Retail Partnership

C/o Bluewater Management Suite

Upper Rose Gallery

Bluewater

Greenhithe

Kent DA9 9ST
	 
	 	 
	Postal Address

	 	Unit 45

Touchwood Centre

Solihull

B91 3GS
	 
	 	 
	Lease Date

	 	11/12/01
	 
	 	 
	Lease Term and Expiry
Date

	 	15 years (24/06/01 to 23/06/16)
	 
	 	 
	Rent Review History

	 	Principal rent is £170,881 per annum. Quote
received for review from 24/06/06 is £320,000 per
annum.
	 
	 	 
	Rent Review dates

	 	24/06/06 and 24/06/11

71

 

Property: 15. Books etc. Staines

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	Arlington Property Investors Ltd Charles House, 5-11 Regent Street, London, SW1Y 4LR
	 
	 	 
	Postal Address

	 	Unit S10, Two Rivers

Mustard Mill Road

Staines

Middlesex

TW18 4WB
	 
	 	 
	Lease Date

	 	25 September 2002
	 
	 	 
	Lease Term and
Expiry Date

	 	15 years (17 December 2001 to 16 December 2016)
	 
	 	 
	Rent Review History

	 	The principal rent was £136,000 per annum for the first
and second years of the term and £150,000 for the third,
fourth and fifth years of the term. No rent reviews to
date.
	 
	 	 
	Rent Review Dates

	 	17 December 2006 and 17 December 2011

Property: 16. Books etc. Uxbridge

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	CSC Uxbridge (Jersey) Limited

c/o CSC Property Management Ltd

40 Broadway

London SW1H 0BU
	 
	 	 
	Postal Address

	 	Unit 240A

The Chimes Shopping Centre

Uxbridge

UB8 1GB
	 
	 	 
	Lease Date

	 	2 December 2002
	 
	 	 
	Lease Term and
Expiry Date

	 	Fifteen and one quarter years (24 June 2001 to 29 September 2016)
	 
	 	 
	Rent Review History

	 	The yearly rent is the higher of (a) the Turnover Rent (9% of Gross
Turnover) and (b) the Base Rent (initially £140,000 per annum). The
landlord has quoted £400,000 pa (£320,000 pa base rent) for the 2006 rent
review. Please refer to rent review schedule for progress.
	 
	 	 
	 

	 	A revised Turnover Percentage will need to be calculated on any assignment.
	 
	 	 
	Rent Review Dates

	 	24 June 2006, 24 June 2011, 24 June 2016

72

 

Property: 17. Books etc. Victoria Place

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	Metro Nominees

22 Grenville Street

St Helier

Jersey, JE4 8TX
	 
	 	 
	Postal Address

	 	Unit SU14

Victoria Place Shopping Centre

115 Buckingham Palace Road

London SW1W 9SJ
	 
	 	 
	Lease Date

	 	1 November 2000
	 
	 	 
	Lease Term and
Expiry Date

	 	15 years (1 November 2000 to 31 October 2015)
	 
	 	 
	Rent Review History

	 	The rent payable is Basic Rent plus Turnover Rent. The
Turnover Rent will cease to apply on the first permitted
underletting, at which point the basic rent will increase
to 120%.
	 
	 	 
	 

	 	Basic Rent was initially £100,000 and Turnover Rent is the
amount that 8% of the Gross Turnover for that year exceeds
the Basic Rent (if any).
	 
	 	 
	 

	 	We have received a quote of £312,000 pa (£249,600 basic)
for the outstanding rent review. We are moving towards
Arbitration as no agreement has been reached. Please note
that these figures apply to Borders occupation only —
please see note above.
	 
	 	 
	Rent Review Dates

	 	1 November 2005, 1 November 2010

Property: 18. Books etc. Victoria Street

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	Land Securities Properties Ltd

5 Strand

London WC2N 5AF
	 
	 	 
	Postal Address

	 	66 Victoria Street

London SW1E 6SQ
	 
	 	 
	Lease Date

	 	10 July 1987
	 
	 	 
	Lease Term and
Expiry Date

	 	25 years (24 June 1987 to 23 June 2012)
	 
	 	 
	Rent Review History

	 	The initial rent was £140,000 p.a.

Following the 24 June 1992 rent review the rent was £210,000 pa.

Following the 24 June 1997 rent review the rent was £277,500 pa.

Following the 24 June 2002 rent review the rent is £414,000 pa.
	 
	 	 
	Rent Review Dates

	 	24 June 1992, 24 June 1997, 24 June 2002, 24 June 2007

73

 

Property: 19. Books etc. Wandsworth

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	Metro Shopping Fund

Land Securities Properties Ltd

5 Strand

London WC2N 5AF
	 
	 	 
	Postal Address

	 	Unit 64 Southside

Wandsworth

London SW18 4TF
	 
	 	 
	Lease Date

	 	14 June 2005
	 
	 	 
	Lease Term and
Expiry Date

	 	15 years (5 March 2004 to 4 March 2019)
	 
	 	 
	Rent Review History

	 	Initial rent is £140,000 per annum. There are no rent reviews to date.
	 
	 	 
	Rent Review Dates

	 	5 March 2009 and 5 March 2014

Property: 20. Books etc. Wimbledon

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	HSBC Bank Plc (as trustee of Hermes Property Unit Trust)

c/o Cushman & Wakefield

43-45 Portman Square

London W1A 3BG
	 
	 	 
	Postal Address

	 	Unit 6, 15-29 The Broadway

Wimbledon

London SW19 1PS
	 
	 	 
	Lease Date

	 	4 February 2002
	 
	 	 
	Lease Term and
Expiry Date

	 	20 years (6 September 1999 to 5 September 2019)
	 
	 	 
	Rent Review History

	 	The initial rent is £235,000 per annum. A nil increase was
agreed at rent review on 6 September 2004, so the rent
remains at £235,000 pa.
	 
	 	 
	Rent Review Dates

	 	6 September 2004, 6 September 2009, 6 September 2014

74

 

Property: 21. Books etc. Whiteleys

	 	 	 
	Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	Standard Life Investments

1 George Street

Edinburgh EN2 2LL
	 
	 	 
	Postal Address

	 	Unit F

Whiteleys of Bayswater

Queensway

London W2 4YQ
	 
	 	 
	Lease Date

	 	10 December 1997
	 
	 	 
	Lease Term and
Expiry Date

	 	26 years (24 June 1997 to 23 June 2023)
	 
	 	 
	Rent Review History

	 	The yearly rent is the higher of (a) the Turnover Rent (8.5% of Gross
Turnover) and (b) the Base Rent (initially £225,000 pa). A nil increase
was agreed for the rent review of 24 June 2002.
	 

	 	A revised turnover percentage will need to be calculated on any assignment.
	 
	 	 
	Rent Review Dates

	 	24 June 2002, 24 June 2007, 24 June 2012, 24 June 2017, 24 June 2022

75

 

Part 3: Airport Concessions

Current Landlord      BAA through various airport companies:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Annual Minimum	 	 
	 	 	 	 	 	 	 	 	 	 	Guarantee	 	 
	 	 	 	 	 	 	 	 	 	 	NB: Calculated on a	 	 
	Property	 	Date	 	Turnover Bands	 	monthly basis	 	Contract Expiry
	Heathrow Airport —

Terminal 2

	 	12/05/03
	 	Up to £600,000; plus
	 	 	20	%	 	Year 1
	 	£224,004
	 	31/03/2008
	 

	 	 	 	In excess of
£600,000 up to
£1,000,000; plus
	 	 	25	%	 	Year 2

Year 3
	 	£232,344

£235,332	 	 
	 

	 	 	 	In excess of
£1,000,000
	 	 	30	%	 	

Year 4

Year 5
	 	

£238,320

£241,344	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Heathrow Airport —

Terminal 3

	 	 	 	For the period of

11/12/01 — 31/12/01
	 	 	30	%	 	 	 	 	 	30/06/2007
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	For the period of
	 	 	 	 	 	From 01/01/02:	 	 	 	 
	 

	 	 	 	01/01/02 — 31/12/03:	 	 	 	 	 	 	 	 	 	 
	 
	 

	 	 	 	Up to £2,500,000;
plus
	 	 	30	%	 	Year 1

Year 2
	 	£621,924

£633,144	 	 
	 
	 

	 	 	 	In excess of
£2,500,000 up to
£2,750,000; plus
	 	 	35	%	 	Year 3

Year 4

	 	£799,248

£805,836	 	 
	 

	 	 	 	In excess of
£2,750,000
	 	 	25	%	 	Year 5

Year 6
	 	£809,832

£809,832	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	For the period of

01/01/04 —
30/06/07:	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Up to £2,500,000;
plus
	 	 	30	%	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	In excess of
£2,500,000 up to
£3,000,000; plus
	 	 	35	%	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	In excess of
£3,000,000
	 	 	25	%	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Heathrow Airport —

Terminal 4

	 	 	 	For the period of

01/08/05 —
31/05/06:
	 	 	 	 	 	For the period of
01/08/05 — 31/05/06
	 	 £709,932
	 	31/05/2012
	 

	 	 	 	Up to £2,000,000;
	 	 	30	%	 	 	 	 	 	 

76

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Annual Minimum	 	 
	 	 	 	 	 	 	 	 	 	 	Guarantee	 	 
	 	 	 	 	 	 	 	 	 	 	NB: Calculated on a	 	 
	Property	 	Date	 	Turnover Bands	 	monthly basis	 	Contract Expiry
	 

	 	 	 	plus	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	In excess of
£2,000,000 up to
£2,300,000; plus
	 	 	35	%	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	In excess of
£2,300,000
	 	 	37	%	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	From 01/06/06:
	 	 	 	 	 	From 01/06/06:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Up to £2,500,000;
plus

In excess of
£2,500,000 up to
£4,000,000; plus 

In excess of
£4,000,000
	 	 	30

35

37	%

%

%	 	Year 1

Year 2

Year 3

Year 4

Year 5

	 	£675,000

£801,000

£446,046.96

£456,192.96

£463,954.56

	 	 
	 

	 	 	 	 	 	 	 	 	 	Year 6
	 	£471,832.80	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	But from 01/04/08 if sales do not exceed £2,000,000 then the Concession Fee shall be 25% of
sales.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stanstead Airport

	 	23/03/03
	 	For the period up

to 31/03/04

For the period of

01/04/04 — 31/03/08:

	 	 	26	%	 	Year 1

Year 2

Year 3

	 	£642,120

£642,120

£725,904

	 	31/03/2008
	 

	 	 	 	Up to £2,750,000;
plus 

In excess of
£2,750,000 up to
£3,750,000; plus

	 	 	27

30	%

%	 	Year 4

Year 5
	 	£779,472

£847,872	 	 
	 

	 	 	 	In excess of
£3,750,000
	 	 	27	%	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Edinburgh Airport

	 	05/09/06
	 	Up to £600,000; plus

	 	 	20	%	 	From 01/02/05
	 	£262,284
	 	31/01/2010
	 

	 	 	 	In excess of
£600,000 up to
£1,100,000; plus

	 	 	26	%	 	From 01/02/06

From 01/02/07

	 	£275,336.04

£285,516

	 	 
	 

	 	 	 	In excess of
£1,100,000
	 	 	30	%	 	From 01/02/08

From
	 	£296,001

£306,801	 	 

77

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Annual Minimum	 	 
	 	 	 	 	 	 	 	 	 	 	Guarantee	 	 
	 	 	 	 	 	 	 	 	 	 	NB: Calculated on a	 	 
	Property	 	Date	 	Turnover Bands	 	monthly basis	 	Contract Expiry
	 

	 	 	 	 	 	 	 	 	 	01/02/09	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gatwick Airport

	 	01/09/06
	 	Up to £2,000,000;
plus

In excess of
£2,000,000 up to
£3,000,000; plus

In excess of
£3,000,000
	 	 	28.5

30

35	%

%

%	 	Year 1

Year 2

Year 3

Year 4

Year 5

	 	£743,102.04

£805,199.04

£824,183.04

£843,546

£863,297.04
	 	30/11/2011
	 

	 	 	 	 	 	 	 	 	 	Year 6
	 	£883,443	 	 

78

 

Part 4: Occupational Concessions

Fun Learning Concessions

	 	 	 	 	 	 	 	 	 
	 Property	 	Document	 	Date	 	Parties	 	Annual rent
	12-13 Market 

Street, Cambridge

	 	Concession

Agreement
	 	20/08/04
	 	Borders (UK)
Limited (1) and Fun
Learning Limited
(2)
	 	(a) 11% of first £150,000

(b) 13.5% of next £100,000

(c) 16% of next £100,000

(d) 18.5% of turnover in excess of
£350,000
	 
	 	 	 	 	 	 	 	 
	9 Magdalen Street, 

Oxford

	 	Concession

Agreement
	 	04/11/05
	 	Borders (UK)
Limited (1) and Fun
Learning Limited
(2)
	 	(a) 12.5% of first £150,000

(b) 17.5% of next £100,000

 

(c) 22.5% of next £100,000

 

(d) 25% of turnover in excess of £350,000

Note: if accounting period is less than
12 months then the turnover bands are
reduced pro rata.
	 
	 	 	 	 	 	 	 	 
	Leicester

	 	Concession

Agreement
	 	08/08/05
	 	Borders (UK)
Limited (1) and Fun
Learning Limited
(2)
	 	(a) 12.5% of first £150,000

(b) 17.5% of next £100,000

(c) 22.5% of next £100,000

(d) 25% of turnover in excess of £350,000

Note: if accounting period is less than
12 months then the turnover bands are
reduced pro rata.

79

 

Starbucks Concessions

	 	 	 	 	 	 	 
	Document	 	Date	 	Parties	 	Annual rent
	Umbrella Agreement

	 	06/10/06
	 	Borders (UK) Limited (1) and
	 	A minimum £45,000 or if higher:
	(“New Form”)

	 	 	 	
	 	(a) 19% of first £400,000
	 
	 	 	 	 	 	 
	 

	 	 	 	Starbucks Coffee

Company (UK)

Limited (2)
	 	(b) 22% of turnover in excess of £400,000

provided that if turnover is less than
£300,000 then limited to 15% of the
turnover.

Note: if accounting period is less than 12
months then the turnover bands are reduced
pro rata.
	 
	 	 	 	 	 	 
	Umbrella Agreement
(“Old Form”)

	 	05/04/02
	 	Borders (UK)
Limited (1) and

Starbucks Coffee
Company (UK)
Limited (2)
	 	19% of turnover subject to a minimum £45,000

Old Form Properties:

Cambridge, Kingston-upon-Thames, Bournemouth, Brighton, Cheshire Oaks, Oxford Street, York, Charing
Cross Road, Glasgow City, Leeds Briggate, Oxford, Islington, Watford, Thurrock Lakeside, Leicester,
Stockport, Speke, Swansea, Bristol, Swindon, Inverness, Birmingham, Beckton, Newcastle Silverlink,
Leeds Birstall, London Colney, Brent Cross, Glasgow Fort, Coventry

New Form Properties:

Preston, Norwich, Teeside, Manchester Fort, Warrington, Gateshead, Newbury, Llantrisant, Milton
Keynes, Southampton, Dundee, Cardiff

	 	 	 	 	 	 	 
	Property	 	Date	 	Parties	 	Annual Rent
	Unit 3B & 4

	 	10/10/06
	 	Borders Books
	 	A minimum €65,250 plus:
	West End Retail
Park,
Blanchardstown,
Dublin 15
Republic of Ireland

	 	 	 	Ireland Limited (1)
and

Starbucks Coffee
Company (Ireland)
Limited (2)
	 	
(a) 19% of first €580,000

(b) 22% of turnover in excess of €580,000

provided that if turnover is less than
€435,000 then limited to 15% of the
turnover.
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Note: if accounting period is less than
12 months then the turnover bands are
reduced pro rata.

80

 

Paperchase Concessions

	 	 	 	 	 	 	 	 	 
	Property	 	Document	 	Date	 	Parties	 	Annual rent
	General

	 	Second Agreement
	 	12/08/99
	 	Borders (UK)
Limited (1) and
Paperchase Products
	 	The following percentages of
the whole turnover, where
turnover is:
	 

	 	 	 	 	 	Limited (2)
	 	

(a) up to £100,000 = 20%

(b) greater than £100,000 but
less than £250,000 = 23%

(c) greater than £100,000 but
less than £250,000 = 23%

(d) in excess of £500,000 = 28%
	 
	 	 	 	 	 	 	 	 
	197-213 Oxford 

Street, London

	 	Licence
	 	12/08/99
	 	Borders (UK)
Limited (1) and
Paperchase Products
Limited (2)
	 	In accordance with the above
	 
	 	 	 	 	 	 	 	 
	General

	 	Third Agreement
	 	 	 	Borders (UK)
Limited (1) and
Paperchase Products
Limited (2)
	 	As contained in the Licences
	 
	 	 	 	 	 	 	 	 
	Various

	 	Licences
	 	 	 	Borders (UK)
Limited (1) and
Paperchase Products
Limited (2)
	 	(a) 20% of first £100,000

(b) 23% of next £150,000

(c) 25% of next £250,000

(d) 28% of turnover in excess
of £500,000

Part 5: Closed and Disposed Properties

Disposed Properties

	1.	 	Books etc. Covent Garden — Floral Street
	 
	2.	 	Books etc. Covent Garden — James Street
	 
	3.	 	Books etc. Cheapside — 70 Cheapside
	 
	4.	 	Books etc. Cheapside — 71 Cheapside
	 
	5.	 	Books etc. King William Street
	 
	6.	 	Books etc. Piccadilly
	 
	7.	 	Books etc. 161-167 Oxford Street
	 
	8.	 	Borders Express Trafford

Property: 1. Books etc. Floral Street, Covent Garden

81

 

	 	 	 
	Former Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	King William Street Nominees
	 
	 	 
	Postal Address

	 	7a Floral Street, London WC2
	 
	 	 
	Lease Date

	 	12 February 1993
	 
	 	 
	Lease Term and Expiry Date

	 	22 years (15 February 1993 to 25 March 2015)

	 
	 	 
	Rent Review History

	 	The initial rent was £42,500 per annum. Following the 25
March 2002 rent review the rent was £84,000 per annum. Rent reviewed to £91,750 per annum from 25/03/2005.
	 
	 	 
	Rent Review Dates

	 	25 March 1996, 25 March 1999, 25 March 2002, 25 March
2005, 25 March 2008, 25 March 2011.

Property assigned to Dune.

Property: 2. Books etc. James Street, Covent Garden

	 	 	 
	Former Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	GRE Linked Life Assurance Limited
	 
	 	 
	Postal Address

	 	25 and 26 James Street, London. WC2
	 
	 	 
	Lease Date

	 	27 March 1990
	 
	 	 
	Lease Term and Expiry Date

	 	25 1/4 years (10 January 1990 to 25 March 2015
	 
	 	 
	Rent Review History

	 	Initial Rent is £210,000 per annum.

Following the 25 March 1999 rent review the rent was
£375,000 per annum. We have no other documentation of
further rent reviews to date.
	 
	 	 
	Rent Review Dates

	 	25 March 1993, 25 March 1996, 25 March 1999, 25 March
2002, 25 March 2005, 25 March 2008, 25 March 2011.

Property assigned to Dune.

82

 

Property: 3. Books etc. 70 Cheapside

	 	 	 
	Former Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	Not known
	 
	 	 
	Postal Address

	 	70 Cheapside, London EC2
	 
	 	 
	Lease Date

	 	22 March 1996
	 
	 	 
	Lease Term and Expiry Date

	 	25 years (25 December 1995 to 24 December 2020)
	 
	 	 
	Rent Review History

	 	The Initial rent was £180,000 per annum. We have no
documentation of any further rent reviews to date.
	 
	 	 
	Rent Review Dates

	 	25 December 2000, 25 December 2005, 25 December 2010, 25
December 2015.

Property assigned to Lloyds Bank.

Property: 4. Book etc. 71 Cheapside

	 	 	 
	Former Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	Not known
	 
	 	 
	Postal Address

	 	71 Cheapside, London EC2
	 
	 	 
	Lease Date

	 	22 March 1996
	 
	 	 
	Lease Term and Expiry Date

	 	25 years (25 December 1995 to 24 December 2020)
	 
	 	 
	Rent Review History

	 	The Initial Rent was £165,000 per annum. We have no
documentation of any further rent reviews to date.
	 
	 	 
	Rent Review Dates

	 	25 December 2000, 25 December 2005, 25 December 2010, 25
December 2015.

Property assigned to Lloyds Bank.

83

 

Property: 5. Books etc. King William Street

	 	 	 
	Former Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	Greycoat Equitable Home Limited
	 
	 	 
	Postal Address

	 	47-51 King William Street, London. EC4
	 
	 	 
	Lease Date

	 	7 February 2000
	 
	 	 
	Lease Term and Expiry Date

	 	15 Years (25 December 1999 to 24 December 2014)
	 
	 	 
	Rent Review History

	 	Initially £200,000 per annum. First review on 25/12/2004
agreed at nil increase.
	 
	 	 
	Rent Review Dates

	 	25 December 2004 and December 2009

Property assigned to Snow and Rock.

Property: 6. Books etc. Piccadilly

	 	 	 
	Former Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	St Martins Property Corporation Limited
	 
	 	 
	Postal Address

	 	23-26 Piccadilly, London W1
	 
	 	 
	Lease Date

	 	23 January 2003
	 
	 	 
	Lease Term and Expiry Date

	 	26 years from 25 March 1997 to 24 March 2023
	 
	 	 
	Rent Review History

	 	Initial rent £270,00 per annum. Reviewed to £335,000 per
annum on 25/03/2002
	 
	 	 
	Rent Review Dates

	 	25/03/2002, 25/03/2007, 25/03/2012, 25/03/2017

Property assigned to Cotswold Outdoor.

84

 

Property: 7. Books etc. 161-167 Oxford Street

	 	 	 
	Former Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	Not known
	 
	 	 
	Postal Address

	 	161-167 Oxford Street, London W1
	 
	 	 
	Lease Date

	 	27 November 1990
	 
	 	 
	Lease Term and Expiry Date

	 	25 years from 29 1990 to 28 November 2015
	 
	 	 
	Rent Review History

	 	Initial rent £430,000 per annum rising to £460,000 in the
fifth year of the term. Last know rent was £597,000 per
annum (in September 2005).
	 
	 	 
	Rent Review Dates

	 	Not recorded

This lease has been assigned to First Sport Limited, with a guarantee from Blacks Leisure.
Currently occupied by Carphone Warehouse ( July 2007).

Property: 8. Borders Express Trafford

	 	 	 
	Former Tenant

	 	Borders (UK) Limited (formerly known as Books etc. Limited)
	 
	 	 
	Current Landlord

	 	The Trafford Centre Limited

The Management Suite

Trafford Centre

Manchester M17 8AA
	 
	 	 
	Postal Address

	 	51 Regent Crescent

Trafford Centre

Barton Dock Road

Manchester M17 8AR
	 
	 	 
	Lease Date

	 	25/06/99
	 
	 	 
	Lease Term and Expiry Date

	 	25 years (29/06/98 to 28/06/23)
	 
	 	 
	Rent Review History

	 	The yearly rent is the higher of the Base Rent and 12% of the annual
turnover. The initial Base Rent was £350,000 per annum.

Following the rent review on 29/06/03 the base rent is now £600,000 per
annum.
A revised Turnover Percentage will need to be calculated on any assignment.
	 
	 	 
	Rent Review Dates

	 	29/06/03, 29/06/08, 29/06/13 and 29/06/18

Property assigned to All Saints Retail.

85

 

Closed Properties

A number of property interests were owned by Borders (UK) Limited (formerly known as Books etc.
Limited) but have either expired, been surrendered or been sold:

Fenchurch Street — Lease expired

Helston DC — Lease expired

Mojo DC — Lease expired

Penryn DC front building — lease terminated by notice

Penryn DC rear building — Freehold sold

Charing Cross Road — Freehold sold (subsequently leased back)

Flitcroft Street — Lease expired

Manchester Printworks — Lease surrendered

Lumley Street — Lease surrendered

Southbank Centre — concession expired

Luton Airport — concession expired.

The lease of Birmingham Star City still subsists, but the property is closed and vacant.

1. Books Etc Birmingham Star City

Property: 1. Books etc. Birmingham Star City

	 	 	 
	Tenant

	 	Borders (UK) Limited
	 
	 	 
	Current Landlord

	 	Star City Trustee.
	 
	 	 
	Postal Address

	 	Unit 14, Star City Birmingham
	 
	 	 
	Lease Date

	 	28th November 2000
	 
	 	 
	Lease Term and Expiry Date

	 	15 years from 24th June 2000 to 23rd June 2015
	 
	 	 
	Rent Review History

	 	£105,000 per annum for the first and second years.

£120,000 per annum for the third year

£130,000 per annum for the fourth year

£140,000 per annum for the fifth year

The landlord has not triggered the rent review on due on 24/06/2005.
	 
	 	 
	Rent Review Dates

	 	24/06/2005, 24/06/2010

This lease still subsists and the rent and service charge is being paid to the landlord, but the
Company has ceased trading from this location and the premises have been stripped back to a shell
to benefit from nil rateable value.

86

 

SCHEDULE 9

Permitted Leakage

Permitted Leakage means all payments by the Company or the Irish Company to members of the Seller’s
Group that relate:

	1.	 	to (i) the reimbursement of payments made by members of the Seller’s Group that relate to
stock purchased on behalf of the Company or the Irish Company; and (ii) associated costs
incurred by members of the Seller’s Group relating to the purchase of stock on behalf of the
Company and the Irish Company (including freight, postage, US distribution centre chargeouts
and others);
	 
	2.	 	to the reimbursement of corporate credit, debit and charge card payments made by members of
the Seller’s Group that relate to expenses incurred by or on behalf of the Company or the
Irish Company (including travel/meals/supplies and other expenses);
	 
	3.	 	to the reimbursement of payments made by members of the Seller’s Group that relate to the
operating expenses of the Company or the Irish Company (including electronic gift card
supplies, data communications, legal and consulting fees, subscriptions, Ireland Paperchase
commissions and others); and
	 
	4.	 	to expenses that have been prepaid by members of the Seller’s Group on behalf of the Company
or the Irish Company (including Taxes (including income, withholding, and other taxes) and
other expenses (including insurance, subscriptions and other expenses)).

Permitted Leakage shall also include the payment of €459,000 made by the Irish Company to Borders
Group Inc in July 2007.

87

 

SCHEDULE 10

Deferred Consideration

	1.	 	INTERPRETATION

In this schedule 10 the following words and expressions shall have the following meanings:

“2008 Accounts” means the unaudited management profit and loss accounts of the Company and
the Irish Company in respect of the Financial Year ending 25 January 2009;

“2009 Accounts” means the unaudited management profit and loss accounts of the Company and
the Irish Company in respect of the Financial Year ending 25 January 2010;

“2010 Accounts” means the unaudited management profit and loss accounts of the Company and
the Irish Company in respect of the Financial Year ending 25 January 2011;

“Affiliate” means, with respect to any person, any other person that, directly or
indirectly, Controls, is Controlled by or is under common Control with such specified person
and “Affiliates” shall be construed accordingly;

“Aggregate Net Revenue” means the aggregate of the Net Revenue for the Company and the
Irish Company;

“Control” means (1) the ownership of or the ability to direct (a) in the case of a
corporation or body corporate (i) a majority of the issued shares entitled to vote for
election of directors (or analogous persons) of such body corporate, (ii) the appointment or
removal of directors having a majority of the voting rights exercisable at meetings of the
board of directors (or analogous body or bodies, including, without limiting the generality
of the foregoing, management boards and supervisory boards) of such body corporate on all or
substantially all matters, or (iii) a majority of the voting rights exercisable at general
meetings of the members of such body corporate on all, or substantially all, matters, or (b)
in the case of any other person, a majority of the voting rights in such person; or (2) in
the case of a corporation or body corporate or any other person, the direct or indirect
possession of the power to direct or cause the direction of the management and policies of
the same (whether through the ownership of voting securities, by contract or howsoever
otherwise) and “Controlled” shall be construed accordingly;

“Deferred Consideration Accounts” means the 2008 Accounts, the 2009 Accounts and the 2010
Accounts;

“Exit Event” means any of the following events:

	 	(a)	 	any resolution being passed for the winding-up of the Purchaser or the Company
save for a winding-up of the Purchaser or the Company for the purposes of
reconstruction or inter-group amalgamation in which the undertaking emerging from such
reconstruction or amalgamation is a substantial entity and takes over the obligations
of the Purchaser or the Company under this agreement;
	 
	 	(b)	 	a scheme of arrangement or reconstruction of the capital of the Purchaser or
the Company (whereby any third party gains control of the majority of the issued
ordinary share capital of the Purchaser or the Company) being approved by the Purchaser
in a general meeting;
	 
	 	(c)	 	an offer being made to the holders (or to all such holders other than the
offeror and/or persons associated or acting in concert with the offeror in respect of
such offer) of

88

 

	 	 	 	ordinary shares in the capital of any member of the Purchaser’s Group or the Company
which, if accepted could vest in the offeror (together with such associates and
concert parties) shares in any member of the Purchaser’s Group or the Company
carrying the right to cast more than 50% of the votes which may be ordinarily cast
upon a poll at any general meeting of the Purchaser or the Company or which would
result in the offeror (together with such associates and concert parties) having
Control over the Purchaser or the Company provided that this shall not apply (1)
where any shares in any member of the Purchaser’s Group are transferred to any
Investor or (2) to a transfer of shares in the Irish Company; or

	 	(d)	 	a sale by the Company of substantially all of its assets other than a sale to
any Investor or any Investor Affiliate which shall be dealt with in accordance with
paragraph 2.2 below;

“Financial Year” shall, for the purpose of this schedule, be deemed to be the financial year
ending on 25 January irrespective of any change to the financial year of the Company or the
Irish Company pursuant to CA85 or other applicable law;

“Investors” means Luke Johnson, Mark Farrer-Brown, Ben Redmond or Bobby Hashemi or any fund
managed by any of them or over which any of them exercise de facto control and “Investor”
means any one of them;

“Investor Affiliate” means, in relation to an Investor (i) any Affiliate of that Investor or
(ii) any fund managed by that Investor or an Affiliate of that Investor;

“Relevant Target Figure” means the target figure detailed against the name of the relevant
Property for the relevant Financial Year of disposal or closure and for future Financial
Years (as applicable);

“Target Figure” means the 07 Payment Target, 08 Payment Target, 08 Target Figure, 09 Target
Figure or the 10 Target Figure (as the case may be);

“08 Target Figure” means the sum of £230,618,675;

“09 Target Figure” means the sum of £236,795,262;

“10 Target Figure” means the sum of £243,969,973;

“Threshold Figure” means the 07 Payment Threshold, 08 Payment Threshold, 08 Threshold
Figure, 09 Threshold Figure or the 10 Threshold Figure (as the case may be);

“08 Threshold Figure” means the sum of £219,087,741;

“09 Threshold Figure” means the sum of £224,955,499;

 

“10 Threshold Figure” means the sum of £231,771,474;

“Net Revenue” means in relation to the Company or the Irish Company the amount derived from
the provision of goods and services, including amounts derived from Paperchase and Fun
Learning, falling within the Company’s or the Irish Company’s ordinary activities, after
deduction of:

	 	(a)	 	customer discounts;
	 
	 	(b)	 	value added tax; and
	 
	 	(c)	 	any other taxes based on the amounts so derived,

89

 

	 	 	but including:

	 	(a)	 	any income derived from Starbucks and any other concessions that may be located in
any of the Properties occupied by the Company or the Irish Company (as appropriate).

“Properties to be Closed” means the Properties at Gallions London E6, Lakeside Thurrock,
Bullring Birmingham and Shepherds Bush;

	2.	 	PREPARATION OF ACCOUNTS

	4.1	 	Aggregate Net Revenue shall be determined in accordance with the provisions of this paragraph
2.
	 
	4.2	 	In the event that the Company or the Irish Company transfers any Property to any Investor
Affiliate after Completion then the provisions of paragraph 5.2 shall not apply but the
Deferred Consideration Accounts shall include the Net Revenue in respect of any such Property
on the same basis as set out in paragraph 2.4.
	 
	4.3	 	The Purchaser will cause the Company to prepare and deliver the Deferred Consideration
Accounts together with a determination from the Company of the amount of the Aggregate Net
Revenue for the relevant Financial Year as soon as practicable following the end of the
Financial Year to which the relevant Deferred Consideration Accounts relate, but in any event
within 2 calendar months after such date. Whilst services continue to be provided under the
Transitional Service Agreement, the Seller shall (and shall procure that the Seller’s Group
shall) take all steps to provide the necessary financial information to the Company so as to
enable the Company to prepare and deliver the Deferred Consideration Accounts together with a
determination from the Company of the amount of the Aggregate Net Revenue in accordance with
this clause.
	 
	4.4	 	The Purchaser shall procure that the Deferred Consideration Accounts will be properly
prepared in accordance with the accounting policies of the Company and the Group and in a
manner consistent with that adopted in the preparation of its management accounts for all
periods ended during the twelve months prior to the date of this agreement.
	 
	4.5	 	Following delivery of the Deferred Consideration Accounts and the determination of the
relevant Aggregate Net Revenue, the Seller will have a period of 10 Business Days (the
“Agreement Period”) in which to review and agree or dispute the Company’s determination of the
relevant Aggregate Net Revenue.
	 
	4.6	 	The Company’s determination of the relevant Aggregate Net Revenue will be deemed to
constitute the final and binding Aggregate Net Revenue for the relevant Financial Year unless
the Seller serves a notice on the Purchaser within the Agreement Period disputing the amount
so determined.
	 
	4.7	 	In the event that the Seller serves a notice disputing the relevant Aggregate Net Revenue or
the relevant Deferred Consideration Accounts within the Agreement Period the determination of
the Aggregate Net Revenue will be referred to a firm of independent chartered accountants (the
“Expert”) jointly agreed upon between the Seller and the Purchaser or (failing such agreement
within 10 Business Days of the expiry of the Agreement Period) appointed, at the request of
either the Purchaser or the Seller, by the President from time to time of the Institute of
Chartered Accountants in England and Wales. In making such determination the Expert will act
as an expert and not as an arbitrator and his decision will be final and binding on the
parties. Each party will bear the costs and expenses of all counsel and other advisers,
witnesses and employees retained by it and the costs and expenses of the Expert will be paid
by the parties as directed by the Expert or, in the absence of direction, equally. Subject to
any rule of law or of any regulatory body the Purchaser will provide to the Expert access to
the Company’s premises, personal papers, books, accounts, records, returns and other documents

90

 

as are in its or the Company’s possession or control as may be required by the Expert to
make his determination.

	4.8	 	The Purchaser will procure that the Company will promptly provide each of the Purchaser and
the Seller and their respective advisers with all information (in its possession or control)
relating to the operations of the Company, including access at all reasonable times to all
books and records, and all co-operation and assistance as may be reasonably required to:

	 	(a)	 	enable the production of the Deferred Consideration Accounts; and
	 
	 	(b)	 	enable any firm of independent chartered accountants appointed pursuant to this
Agreement, and the Seller, to determine the relevant Aggregate Net Revenue.

	4.9	 	For the purpose of converting amounts specified in one currency into another currency where
required under this schedule 10 for the purpose of determining the Aggregate Net Revenue, the
rate of exchange to be used in converting amounts specified in one currency into another
currency shall be the average New York closing rate for exchanges between those currencies
quoted in the Wall Street Journal for the accounting period to which the Aggregate Net Revenue
relates.

	4.10	 	Any revenue in respect of any stores not listed in paragraph 5.2 shall not be included in the
Net Revenue to be calculated pursuant to this schedule.

	3.	 	PAYMENT OF DEFERRED CONSIDERATION

	4.1	 	In the event that the Aggregate Net Revenue for the Financial Year ended 25 January 2009 is:

	 	(a)	 	equal to or in excess of the 08 Threshold Figure but less than the 08 Target
Figure the Purchaser shall pay to the Seller £1,666,666 of the Deferred Consideration;
or
	 
	 	(b)	 	equal to or in excess of the 08 Target Figure the Purchaser shall pay to the
Seller £3,333,333 of the Deferred Consideration.

	4.2	 	In the event that the Aggregate Net Revenue for the Financial Year ended 25 January 2010 is:

	 	(a)	 	equal to or in excess of the 09 Threshold Figure but less than the 09 Target
Figure the Purchaser shall pay to the Seller £1,666,666 of the Deferred Consideration;
or
	 
	 	(b)	 	equal to or in excess of the 09 Target Figure the Purchaser shall pay to the
Seller £3,333,333 of the Deferred Consideration.

	4.3	 	In the event that the Aggregate Net Revenue for the Financial Year ended 25 January 2011 is:

	 	(a)	 	equal to or in excess of the 10 Threshold Figure but less than the 10 Target
Figure the Purchaser shall pay to the Seller £1,666,666 of the Deferred Consideration;
or
	 
	 	(b)	 	equal to or in excess of the 10 Target Figure the Purchaser shall pay to the
Seller £3,333,333 of the Deferred Consideration.

	4.4	 	All payments to be made by the Purchaser to the Seller pursuant to this paragraph 3 shall be
made in cash (on the same basis as that set out in paragraph 1 of part 3 of schedule 2) within
10 Business Days after the date on which the relevant Aggregate Net Revenue pursuant to which
the payment relates shall be agreed or determined pursuant to paragraph 2.

91

 

	4.	 	ACCELERATED PAYMENT BY PURCHASER
	 
	4.1	 	On the occurrence of an Exit Event between the date of this agreement and 25 January 2008 the
amount of the Aggregate Net Revenue for each of the full calendar months (the aggregate number
of such months being defined as the “Multiplier” for the purpose of this paragraph) that have
passed from 1 September 2007 until the Exit Event shall be calculated in accordance with the
principles set out in paragraph 2 (the “2007 Payment Revenue”). The relevant 2007 target
figure (“2007 Payment Target”) shall be calculated by multiplying £18,538,506 by the
Multiplier. If the 2007 Payment Revenue is:

	 	(a)	 	less than the 2007 Payment Target then the amount of any additional Deferred
Consideration payable is zero;
	 
	 	(b)	 	equal to or in excess of the 95% of the 2007 Payment Target (“2007 Payment
Threshold”) but less than the 2007 Payment Target the Purchaser shall pay to the Seller
£5,000,000 of the Deferred Consideration; or
	 
	 	(c)	 	equal to or in excess of the 2007 Payment Target the Purchaser shall pay to the
Seller £10,000,000 of the Deferred Consideration.

	4.2	 	On the occurrence of an Exit Event in the Financial Year ending on 25 January 2009 the amount
of the Aggregate Net Revenue for each of the full calendar months (the aggregate number of
such months being defined as the “Multiplier” for the purpose of this paragraph) that have
passed from 25 January 2008 until the Exit Event shall be calculated in accordance with the
principles set out in paragraph 2 (the “2008 Payment Revenue”). The relevant 2008 target
figure (“2008 Payment Target”) shall be calculated by multiplying £19,218,223 by the
Multiplier. If the 2008 Payment Revenue is:

	 	(a)	 	less than the 2008 Payment Target then the amount of any additional Deferred
Consideration payable is zero;
	 
	 	(b)	 	equal to or in excess of the 95% of the 2008 Payment Target (“2008 Payment
Threshold”) but less than the 2008 Payment Target the Purchaser shall pay to the Seller
£5,000,000 of the Deferred Consideration; or
	 
	 	(c)	 	equal to or in excess of the 2008 Payment Target the Purchaser shall pay to the
Seller £10,000,000 of the Deferred Consideration.

	4.3	 	On the occurrence of an Exit Event after 25 January 2009:

	 	(a)	 	in the event that no part of the Deferred Consideration was or is payable in
respect of the Financial Year preceding the date of the relevant Exit Event, then the
amount of any additional Deferred Consideration payable is zero;
	 
	 	(b)	 	in the event that £1,666,666 of the Deferred Consideration was or is payable in
respect of the Financial Year preceding the date of the relevant Exit Event, then the
50% of the maximum future amounts of Deferred Consideration that may be payable by the
Purchaser to the Seller shall become immediately due and payable by the Purchaser to
the Seller;
	 
	 	(c)	 	in the event that £3,333,333 of the Deferred Consideration was or is payable in
respect of the Financial Year preceding the date of the relevant Exit Event, then the
maximum future amounts of Deferred Consideration that may be payable by the Purchaser
to the Seller shall become immediately due and payable by the Purchaser to the Seller;

92

 

	4.4	 	All payments to be made by the Purchaser to the Seller pursuant to this paragraph 4 shall
be made in cash by CHAPS to the account nominated by the Seller to the Purchaser in writing
prior to the date of payment.
	 
	4.5	 	On the occurrence of an Exit Event in relation to the Irish Company, such event shall be
treated as a disposal of the Property at Blanchardstown in accordance with clause 5.2 and
shall be dealt with in accordance with the provisions at that clause.
	 
	4.6	 	Following an Exit Event, there shall be no further Deferred Consideration payable under
clause 3, other than in respect of any Deferred Consideration earned up to that date but not
yet paid, and for the avoidance of doubt, no Deferred Consideration shall become due in
respect of any subsequent Exit Event.
	 
	5.	 	DISPOSALS OF PROPERTIES
	 
	4.1	 	The Company shall be free to close and dispose of the Properties to be Closed in which case
there shall be no adjustment pursuant to this paragraph in respect of the Properties to be
Closed.
	 
	4.2	 	The Company or the Irish Company (as appropriate) shall be free to close and/or dispose of
any other Property (not being a Property to be Closed) during the Deferred Consideration
Period in which case:

	 	(a)	 	the Target Figures in the Financial Year of such closure and/or disposal and
all future Financial Years shall be reduced by the Relevant Target Figures as set out
in the following table;
	 
	 	(b)	 	the Threshold Figures in the Financial Year of such closure and/or disposal and
all future Financial Years shall be reduced by 95% of the Relevant Target Figures as
set out in the following table; and
	 
	 	(c)	 	the Aggregate Net Revenue for the Financial Year in which such disposal takes
place shall be reduced by the Net Revenue of the store at the Property that is closed
and/or disposed in that Financial Year;

          BORDERS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	OPENING	 	 	 	 	 	 	 	 
	STORE	 	NAME	 	DATE	 	FY07	 	FY08	 	FY09	 	FY10
	268

	 	Oxford Street
	 	31/07/98
	 	 	10,568,938	 	 	 	11,010,368	 	 	 	11,129,361	 	 	 	11,249,988	 
	269

	 	Leeds
	 	29/05/99
	 	 	5,318,161	 	 	 	5,379,093	 	 	 	5,438,413	 	 	 	5,525,068	 
	272

	 	Charing Cross
	 	24/09/99
	 	 	5,828,568	 	 	 	6,123,823	 	 	 	6,218,673	 	 	 	6,315,095	 
	275

	 	Brighton
	 	04/09/98
	 	 	4,389,851	 	 	 	4,437,779	 	 	 	4,485,413	 	 	 	4,555,686	 
	283

	 	Glasgow
	 	30/10/98
	 	 	11,072,362	 	 	 	11,145,952	 	 	 	11,210,231	 	 	 	11,385,366	 
	353

	 	York
	 	12/11/99
	 	 	5,570,868	 	 	 	5,633,065	 	 	 	5,692,951	 	 	 	5,781,611	 
	399

	 	Bournemouth
	 	20/04/00
	 	 	4,687,882	 	 	 	4,742,204	 	 	 	4,794,689	 	 	 	4,894,570	 
	400

	 	Cheshire Oaks
	 	23/03/00
	 	 	6,916,585	 	 	 	7,000,592	 	 	 	7,077,947	 	 	 	7,156,444	 
	409

	 	Oxford
	 	01/09/00
	 	 	6,133,828	 	 	 	6,198,041	 	 	 	6,265,282	 	 	 	6,364,095	 
	468

	 	Kingston
	 	01/11/01
	 	 	4,461,073	 	 	 	4,549,839	 	 	 	4,644,468	 	 	 	4,786,344	 
	469

	 	Cambridge
	 	22/06/01
	 	 	6,201,384	 	 	 	6,527,293	 	 	 	6,598,609	 	 	 	6,670,940	 
	474

	 	Kinnaird
	 	27/04/01
	 	 	5,117,133	 	 	 	5,130,095	 	 	 	5,237,301	 	 	 	5,397,642	 
	505

	 	Islington
	 	02/05/02
	 	 	7,640,580	 	 	 	7,690,703	 	 	 	7,734,173	 	 	 	7,854,281	 
	525

	 	Stockport
	 	11/10/02
	 	 	4,672,201	 	 	 	4,793,259	 	 	 	4,846,850	 	 	 	4,901,260	 
	528

	 	Watford
	 	13/09/02
	 	 	3,150,839	 	 	 	3,162,071	 	 	 	3,168,850	 	 	 	3,175,967	 
	546

	 	Leicester
	 	04/10/02
	 	 	5,108,916	 	 	 	5,175,731	 	 	 	5,235,120	 	 	 	5,295,485	 

93

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	OPENING	 	 	 	 	 	 	 	 
	STORE	 	NAME	 	DATE	 	FY07	 	FY08	 	FY09	 	FY10
	552

	 	Bristol
	 	13/03/03
	 	 	5,394,665	 	 	 	5,457,191	 	 	 	5,516,347	 	 	 	5,603,305	 
	559

	 	Speke
	 	15/02/03
	 	 	4,277,924	 	 	 	4,337,024	 	 	 	4,387,780	 	 	 	4,439,413	 
	561

	 	Swansea
	 	14/03/03
	 	 	4,019,212	 	 	 	4,118,618	 	 	 	4,206,530	 	 	 	4,336,604	 
	577

	 	Swindon
	 	09/05/03
	 	 	3,411,849	 	 	 	3,519,897	 	 	 	3,628,685	 	 	 	3,775,508	 
	578

	 	Inverness
	 	19/07/03
	 	 	3,884,430	 	 	 	3,936,248	 	 	 	3,983,997	 	 	 	4,070,282	 
	627

	 	Birstall (Leeds)
	 	01/11/04
	 	 	3,980,048	 	 	 	4,118,839	 	 	 	4,246,518	 	 	 	4,378,233	 
	628

	 	Silverlink (Newc’)
	 	11/11/04
	 	 	4,457,298	 	 	 	4,603,638	 	 	 	4,745,601	 	 	 	4,892,016	 
	630

	 	Brent Cross
	 	10/02/05
	 	 	3,274,347	 	 	 	3,435,469	 	 	 	3,607,243	 	 	 	3,753,089	 
	635

	 	London Colney
	 	25/02/05
	 	 	3,594,816	 	 	 	3,738,395	 	 	 	3,889,263	 	 	 	4,008,738	 
	617

	 	Glasgow Fort
	 	18/03/05
	 	 	3,391,608	 	 	 	3,495,772	 	 	 	3,602,653	 	 	 	3,712,841	 
	650

	 	Coventry
	 	20/05/05
	 	 	2,855,414	 	 	 	3,005,286	 	 	 	3,126,858	 	 	 	3,223,521	 
	655

	 	Preston
	 	02/09/05
	 	 	3,549,760	 	 	 	3,736,721	 	 	 	3,888,421	 	 	 	4,009,111	 
	639

	 	Norwich
	 	01/10/05
	 	 	4,026,888	 	 	 	4,232,241	 	 	 	4,444,453	 	 	 	4,623,793	 
	579

	 	Manchester Fort
	 	28/10/05
	 	 	2,373,314	 	 	 	2,498,059	 	 	 	2,623,562	 	 	 	2,755,340	 
	670

	 	Teesside
	 	18/11/05
	 	 	3,613,164	 	 	 	3,791,109	 	 	 	3,945,423	 	 	 	4,068,743	 
	675

	 	Warrington
	 	02/12/05
	 	 	3,069,821	 	 	 	3,221,299	 	 	 	3,382,964	 	 	 	3,520,000	 
	671

	 	Gateshead
	 	10/02/06
	 	 	2,748,326	 	 	 	2,884,059	 	 	 	3,028,862	 	 	 	3,151,490	 
	642

	 	Llantrisant
	 	23/06/06
	 	 	3,829,204	 	 	 	4,040,692	 	 	 	4,243,327	 	 	 	4,414,720	 
	157

	 	Newbury
	 	22/09/06
	 	 	3,448,726	 	 	 	3,660,275	 	 	 	3,843,889	 	 	 	3,999,409	 
	158

	 	Southampton
	 	01/12/06
	 	 	3,554,410	 	 	 	3,765,471	 	 	 	3,954,344	 	 	 	4,114,327	 
	159

	 	Milton Keynes
	 	03/11/06
	 	 	3,707,935	 	 	 	3,943,167	 	 	 	4,140,926	 	 	 	4,308,462	 
	161

	 	Dundee
	 	10/11/06
	 	 	3,810,173	 	 	 	4,058,140	 	 	 	4,261,647	 	 	 	4,434,071	 
	156

	 	Blanchardstown
	 	27/10/06
	 	 	4,325,209	 	 	 	4,671,226	 	 	 	4,904,781	 	 	 	5,150,011	 
	 

	 	Cardiff
	 	31/0807
	 	 	2,296,039	 	 	 	3,766,935	 	 	 	4,138,381	 	 	 	4,466,350	 

          BOOKS ETC

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	OPENING	 	 	 	 	 	 	 	 
	 	 	NAME	 	DATE	 	FY07	 	FY08	 	FY09	 	FY10
	15

	 	Gatwick
	 	01/04/1995
	 	 	2,923,688	 	 	 	3,040,636	 	 	 	3,131,855	 	 	 	3,178,833	 
	25

	 	Edinburgh
	 	01/09/1997
	 	 	992,118	 	 	 	1,002,039	 	 	 	1,012,060	 	 	 	1,022,180	 
	24

	 	Stansted Land
	 	12/07/1997
	 	 	982,385	 	 	 	937,669	 	 	 	947,045	 	 	 	956,516	 
	50

	 	Stansted Air
	 	07/03/2003
	 	 	1,505,267	 	 	 	1,520,319	 	 	 	1,535,522	 	 	 	1,550,878	 
	46

	 	LHR T3
	 	11/12/2001
	 	 	3,536,686	 	 	 	3,607,432	 	 	 	3,679,581	 	 	 	3,716,377	 
	20

	 	LHR T4
	 	01/01/1997
	 	 	3,097,196	 	 	 	3,128,168	 	 	 	2,502,534	 	 	 	2,527,559	 
	2

	 	Victoria St
	 	01/11/1981
	 	 	1,511,672	 	 	 	1,534,347	 	 	 	1,549,690	 	 	 	1,565,187	 
	3

	 	Fleet St
	 	01/11/1981
	 	 	621,820	 	 	 	628,038	 	 	 	634,318	 	 	 	640,662	 
	6

	 	Broadgate
	 	01/07/1988
	 	 	923,912	 	 	 	923,912	 	 	 	923,912	 	 	 	933,151	 
	8

	 	High Holborn
	 	01/11/1989
	 	 	664,812	 	 	 	664,812	 	 	 	671,460	 	 	 	678,174	 
	11

	 	Londonwall
	 	01/10/1992
	 	 	1,589,675	 	 	 	1,621,468	 	 	 	1,645,790	 	 	 	1,662,248	 
	16

	 	Canary Wharf
	 	01/05/1995
	 	 	1,697,904	 	 	 	1,731,862	 	 	 	1,766,499	 	 	 	1,784,164	 
	22

	 	Whiteleys
	 	01/10/1997
	 	 	1,774,636	 	 	 	1,774,636	 	 	 	1,774,636	 	 	 	1,792,383	 
	37

	 	Cowcross
	 	15/09/2000
	 	 	723,009	 	 	 	730,239	 	 	 	737,541	 	 	 	744,917	 
	45

	 	Victoria Place
	 	25/01/2001
	 	 	1,009,672	 	 	 	1,029,866	 	 	 	1,040,164	 	 	 	1,050,566	 
	48

	 	Jubilee Place
	 	19/09/2003
	 	 	1,480,634	 	 	 	1,525,053	 	 	 	1,555,554	 	 	 	1,586,665	 
	12

	 	Hammersmith
	 	01/02/1994
	 	 	897,836	 	 	 	897,836	 	 	 	906,814	 	 	 	915,882	 
	18

	 	Croydon (incl

coffee)
	 	01/10/1996
	 	 	808,094	 	 	 	783,852	 	 	 	776,013	 	 	 	776,013	 
	23

	 	Finchley Rd (incl

coffee)
	 	24/11/1998
	 	 	2,219,369	 	 	 	2,263,756	 	 	 	2,309,031	 	 	 	2,332,121	 
	34

	 	Wimbledon (incl

coffee)
	 	18/11/1999
	 	 	1,675,818	 	 	 	1,692,576	 	 	 	1,709,502	 	 	 	1,726,597	 

94

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	OPENING	 	 	 	 	 	 	 	 
	 	 	NAME	 	DATE	 	FY07	 	FY08	 	FY09	 	FY10
	42

	 	Staines
	 	09/05/2001
	 	 	860,250	 	 	 	860,250	 	 	 	860,250	 	 	 	868,852	 
	43

	 	Uxbridge
	 	19/10/2001
	 	 	1,624,041	 	 	 	1,656,522	 	 	 	1,689,652	 	 	 	1,706,549	 
	44

	 	Solihull
	 	05/10/2001
	 	 	1,452,779	 	 	 	1,481,835	 	 	 	1,496,653	 	 	 	1,511,620	 
	47

	 	Fulham
	 	17/10/2002
	 	 	2,129,361	 	 	 	2,182,595	 	 	 	2,204,421	 	 	 	2,226,465	 
	49

	 	Wandsworth
	 	04/05/2004
	 	 	1,182,552	 	 	 	1,194,378	 	 	 	1,206,322	 	 	 	1,218,385	 
	81

	 	Bicester
	 	01/04/1995
	 	 	897,129	 	 	 	968,900	 	 	 	1,007,656	 	 	 	1,027,809	 

95

 

	 	 	 	 	 	 	 
	SIGNED by

	 	 	)	 	 	 
	duly authorised for and on behalf

	 	 	)	 	 	/s/ Edward W. Wilhelm
	 

	 	 	 	 	 	 
	of BGI (UK) LIMITED

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	SIGNED by

	 	 	)	 	 	 
	duly authorised for and on behalf

	 	 	)	 	 	/s/ Luke Johnson
	 

	 	 	 	 	 	 
	of BOOKSHOP ACQUISITIONS LIMITED

	 	 	)	 	 	 

96

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