DATED 2007

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

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

DATE:

PARTIES:

(1)		BGI (UK) LIMITED a company incorporated under the laws of England and Wales with registered number ###-###-#### 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 ###-###-#### 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;

		“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

		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;

		“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

		products, Christmas decorations, partyware, general giftware and any items ancillary thereto, carried on by Paperchase Products Limited (company number ###-###-#### 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.

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

			“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.

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

		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

(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.

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

			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.

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

		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.

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.

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:		+ ###-###-####
		For the attention of:		General Counsel
		With a copy to:
		Address:		100 New Bridge Street
				London
				EC4V 6JA
		Fax:		+ ###-###-####
		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

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.

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.

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

				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 ###-###-#### 71
Status		:		Trading
Direct subsidiaries		:		None

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

VAT registration number		:		IE 6424624H
Status		:		Trading
Direct subsidiaries		:		None

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

		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.

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.

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.

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

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.

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.

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.

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.

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

		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.

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.

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,

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;

	(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.

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.

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

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.

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

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

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.

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

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.

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

Other Properties
44.		St Columb Distribution Centre
Ireland
45.		Borders Blanchardstown

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.

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.

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.

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.

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.

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.

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.

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.

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.