Document:

ex10-2.htm

    Exhibit
10.2

     

     

    

     

     

     

    March 17,
2010

    

    

    Mr.
Mitchell S. Klipper

    122 Fifth
Avenue

     New
York, NY 10011

    

    Dear Mr.
Klipper:

    

    This
letter agreement (the “Agreement”) is intended to set forth our mutual
understanding regarding your employment as Chief Executive Officer – Barnes
& Noble Retail of Barnes & Noble, Inc. (the “Company”).

    

    Accordingly,
we are pleased to agree as follows:

    

    1.           Duties.  You
agree to be Chief Executive Officer – Barnes & Noble Retail for the term of
this Agreement.  In this capacity, you shall perform such duties and
have such responsibilities as are typically associated with such position,
including such duties and responsibilities as are prescribed by the Board of
Directors of the Company (the “Board”) consistent with such
position.  While you are the Company’s employee, you agree to devote
your full business time and attention to the performance of your duties and
responsibilities hereunder.  You shall report to the Company’s Chief
Executive Officer.

    

    2.           Term.  (a)  The
initial term of this Agreement shall be for a period beginning on March 17, 2010
(the “Effective Date”) and ending on the third anniversary of the Effective Date
or, if earlier, the termination of your employment in accordance with the
provisions set forth below (the “Initial Term”).  At the expiration
(but not earlier termination) of the Initial Term, and any subsequent “Renewal
Term” (as defined below), the term of this Agreement shall automatically renew
for additional periods of one year (each, a “Renewal Term”), unless your
employment has earlier terminated or either party hereto has given the other
party written notice of non-renewal at least 90 days prior to the expiration
date of the Initial Term or the Renewal Term, as applicable.  In the
event that either party has given written notice of non-renewal, and your
employment with the Company continues after the expiration of the Initial Term
or any Renewal Term, such post-expiration employment shall be “at-will” and
either party may terminate such employment with or without notice and for any
reason or no reason.

    

    (b)           Your
employment hereunder shall terminate upon your death and may be terminated by
the Company upon written notice to you following your Disability (as defined
below).  Your employment hereunder may also be terminated by the
Company immediately for Cause (as defined below) or following two weeks written
notice to you for any other reason.  Your employment hereunder may
also be terminated by you following written notice to the Company of your
intention to resign with or without Good Reason (as defined below); provided
that a resignation for Good Reason shall comply with Section
2(c)(iv).

    

    (c)           For
purposes of this Agreement:

    

    (i)           “Cause”
means (A)  your engaging in intentional misconduct or gross negligence
that, in either case, is injurious to Company; (B) your indictment, entry of a
plea of nolo contendere or conviction by a court of competent jurisdiction with
respect to any crime or violation of law involving fraud or dishonesty (with the
exception of misconduct based in good faith on the advice of professional
consultants, such as attorneys and accountants) or any felony (or equivalent
crime in a non-U.S. jurisdiction); (C) any gross negligence, intentional acts or
intentional omissions by you (as determined by a majority vote of the Board in
its reasonable discretion and judgment) that constitute fraud, dishonesty,
embezzlement or misappropriation in connection with the performance of your
employment duties and responsibilities; (D) your engaging in any act of
intentional misconduct or moral turpitude (as determined by a majority vote of
the Board in its reasonable discretion and judgment) reasonably likely to
adversely affect the Company or its business; (E) your abuse of or dependency on
alcohol or drugs (illicit or otherwise) that adversely affects your job
performance; (F) your willful failure or refusal to properly perform (as
determined by a majority vote of the Board in its reasonable discretion and
judgment) the duties, responsibilities or obligations of your employment for
reasons other than Disability or authorized leave, or to properly perform or
follow (as determined by a majority vote of the Board in its reasonable
discretion and judgment) any lawful direction by the Company (with the exception
of a willful failure or refusal to properly perform based in good faith on the
advice of professional consultants, such as attorneys and accountants); or (G)
your material breach of this Agreement or of any other contractual duty to,
written policy of, or written agreement with the Company (with the exception of
a material breach based in good faith on the advice of professional consultants,
such as attorneys and accountants).

     

     

    
      
        
        

      

      
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    (ii)           “Disability”
shall mean a written determination by a majority of three physicians (one of
which shall be your most recent primary care provider) mutually agreeable to the
Company and you (or, in the event of your total physical or mental disability,
your legal representative) that you are physically or mentally unable to perform
your duties as Chief Executive Officer – Barnes & Noble Retail under this
Agreement and that such disability can reasonably be expected to continue for a
period of six consecutive months or for shorter periods aggregating 180 days in
any 12-month period.

    

    (iii)           “Good
Reason” shall mean the occurrence of one or more of the following events without
your written consent:  (A) there shall have been a material diminution
of your authority, duties or responsibilities; (B) there shall have been a
greater than 10% reduction in your Annual Base Salary (as defined below) in
effect as of the Effective Date pursuant to Section 3.1; (C) the principal
executive offices of the Company shall be relocated to a location more than 50
miles from New York City; or (D) the Company fails to make material payments to
you (or provide to you restricted common stock) as required by this
Agreement.

    

    (iv)           You
shall only be deemed to terminate employment for Good Reason if (A) you provide
the Company with written notice of Good Reason within a period not to exceed 90
days after the initial existence of the condition alleged to give rise to Good
Reason, (B) the Company fails to remedy the condition within 30 days of such
notice and (C) your termination is within six months following the initial
existence of the condition alleged to give rise to Good Reason.

    

    3.           Compensation.

    

    3.1.           Annual Base
Salary.  During the Initial Term and any Renewal Term, the
Company shall pay you, for all services you perform hereunder, an annual base
salary of U.S. $900,000.00, or such higher amount as the Compensation Committee
of the Board (the “Compensation Committee”) may determine, payable in accordance
with the Company’s payroll schedule applicable to executive officers of the
Company (“Annual Base Salary”).

    

    3.2.           Bonus
Compensation.  During the Initial Term and any Renewal Term,
the Company shall pay you annual bonus compensation, as determined by the
Compensation Committee, with an annual target amount of not less than 150% of
your Annual Base Salary, which shall be paid in accordance with and subject to
the terms and conditions of the Company’s Executive Performance Plan (as may be
amended from time to time and attached hereto as Exhibit A and incorporated
herein by reference) or such other incentive or compensation plan or arrangement
specified by the Compensation Committee.

    

    3.3.           Employee
Benefits.  During the Initial Term and any Renewal Term, you
shall be eligible to participate in and receive any benefits to which you are
entitled under the employee benefit plans that the Company provides for its
employees generally, as well as any employee benefit plans that the Company
provides for its executive officers generally.

    

    3.4.           Expenses.  During
the Initial Term and any Renewal Term, the Company shall reimburse you for all
expenses incurred by you in the performance of your duties and responsibilities
under this Agreement, including entertainment and travel expenses, in accordance
with the policies and procedures established by the Compensation
Committee.

     

     

    
      
        
        

      

      
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    3.5.           Equity
Awards.  On April 1, 2010, you shall be granted 500,000 shares
of restricted common stock of the Company (the “Stock Grant”) in accordance with
the Company’s 2009 Incentive Plan, vesting in two equal annual installments on
the second and third anniversaries of the Effective Date, except that no
installment shall vest unless you are still employed by the Company at the time
of such vesting.  Notwithstanding the foregoing, the Stock Grant shall
vest immediately (i) upon the occurrence of a Change of Control (as defined
in and pursuant and subject to the terms of Section 3.9 of this Agreement) or
(ii) in the event that, during the Initial Term or any Renewal Term, (x)
your employment is terminated by the Company without Cause or (y) you
voluntarily terminate your employment for Good Reason.   Except
as provided above, the Stock Grant shall be subject to the terms and conditions
set forth in the Company’s customary award agreements.  During the
Initial Term and any Renewal Term, you shall be eligible to receive additional
equity awards of the Company under the terms of the Company’s 2009 Incentive
Plan, as determined by the Compensation Committee.

    

    3.6           Car
Allowance.  During the Initial Term and any Renewal Term, the
Company shall pay you in cash a monthly car allowance of U.S. $1,500.00, or such
higher amount as may be determined by the Compensation Committee.

    

    3.7           Life and Disability
Insurance.  During the Initial Term and any Renewal Term, the
Company shall obtain in your name (a) a life insurance policy providing for a
death benefit of U.S. $1,000,000.00 payable to any beneficiary or beneficiaries
named by you and (b) a disability insurance policy providing for monthly
payments to you of at least U.S. $12,800.00 during the period of any disability
until the earlier of your attaining age 65 or death; provided that the term
“disability” in any such disability insurance policy shall be defined in a
manner consistent with the definition in Section 2(c)(ii).  During the
Initial Term and the Renewal Term, the Company shall pay all premiums due on
such policies.

    

    3.8.           Severance.  In
the event that, during the Initial Term or any Renewal Term, (a) your employment
is terminated by the Company without Cause or (b) you voluntarily terminate your
employment for Good Reason, the Company shall pay you an amount equal to two
times the sum of (i) your then Annual Base Salary, (ii) the average of the
annual bonuses actually paid to you with respect to the three completed years
preceding the date of your termination of employment and (iii) the aggregate
annual dollar amount of the payments made or to be made to you or on your behalf
for purposes of providing you with the benefits set forth in Sections 3.3, 3.6
and 3.7 above, less all applicable withholding and other applicable taxes and
deductions (“Severance Amount”); provided that (x) you execute and deliver to
the Company, and do not revoke, a release of all claims against the Company
substantially in the form attached hereto as Exhibit B (“Release”) and (y) you
have not materially breached as of the date of such termination any provisions
of this Agreement and do not materially breach such provisions at any time
during the Relevant Period (as defined below).  The Company’s
obligation to make such payment shall be cancelled upon the occurrence of any
such material breach and, in the event such payment has already been made, you
shall repay to the Company such payment within 30 days after demand therefore;
provided, however, such repayment shall not be required if the Company shall
have materially breached this Agreement prior to the time of your
breach.  The Severance Amount shall be paid in cash in a single lump
sum on the later of (1) the first day of the month following the month in which
such termination occurs and (2) the date the Revocation Period (as defined in
the Release) has expired.  Notwithstanding anything in this paragraph
to the contrary, if a Release is not executed and delivered to the Company
within 60 days of such termination of employment (or if such Release is revoked
in accordance with its terms), the Severance Amount shall not be
paid.  Upon the expiration of this Agreement due to non-renewal, or
upon the termination of your employment hereunder for Cause or by your death or
Disability, or by your voluntary termination of your employment hereunder
without Good Reason, you shall be entitled only to the payment of such
installments of your Annual Base Salary that have been earned through the date
of such expiration and/or termination.

    

    3.9.           Change of Control
Payments.  (a)  If at any time during the Initial
Term and any Renewal Term (i) there
is a Change of Control (as defined below) and (ii) your employment is terminated
by the Company without Cause or you voluntarily terminate your employment for
Good Reason, in either case, within the greater of two years following the
Change of Control or the remainder of the Initial Term or any Renewal Term, as
applicable, then the Company shall pay you an amount equal to three times the
sum of (a) your then Annual Base Salary, (b) the average of the annual bonuses
actually paid to you with respect to the three completed years preceding the
date of your termination of employment and (c) the aggregate annual dollar
amount of the payments made or to be made by the Company for purposes of
providing you with the benefits set forth in Sections 3.3, 3.6 and 3.7 above,
less all applicable withholding and other applicable taxes and deductions
(“Change of Control Amount”).  The Change of Control Amount shall be
paid to you in cash in a single lump sum within 30 days after the date your
employment terminates.  In the event that it is determined that the
aggregate amount of the payments and benefits that could be considered
“parachute payments” within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (collectively, with the regulations and other
guidance promulgated thereunder, the “Code”; and such payments and benefits, the
“Parachute Payments”) that, but for this Section 3.9 would be payable to you
under this Agreement or any other plan, policy or arrangement of the Company,
exceeds the greatest amount of Parachute Payments that could be paid to you
without giving rise to any liability for any excise tax imposed by
Section 4999 of the Code (the “Excise Tax”), then the aggregate amount of
Parachute Payments payable to you shall not exceed the amount that produces the
greatest after-tax benefit to you after taking into account any Excise Tax to be
payable by you.  Any reduction in Parachute Payments pursuant to the
immediately preceding sentence shall be made in the following
order:  (1) cash payments that do not constitute deferred compensation
within the meaning of Section 409A of the Code, (2) welfare or in-kind benefits,
(3) equity compensation awards and (4) cash payments that do constitute deferred
compensation, in each case, such reductions shall be made in the manner that
maximizes the present value to you of all such payments.  Subject to
the Section 280G limitation referred to above, to the extent that you are not
fully vested in any retirement benefits from any pension, profit-sharing or
other retirement plan or program maintained by the Company and your employment
terminates in the circumstances contemplated by this Section 3.9(a), the Company
shall pay directly to you within 30 days after the date on which your employment
terminates the difference between the amounts that would have been paid to you
had you been fully vested on the date that your employment terminates and the
amounts actually paid or payable to you pursuant to such plans or
programs.  The amounts payable to you under this Section 3.9(a) shall
be in lieu of any amounts payable to you under Section 3.8 above.

     

     

    
      
        
        

      

      
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    (b) As
used herein, “Change of Control” shall mean the occurrence of one or more of
the following
events:

       

    

    (i)  after
the Effective Date hereof, any person, entity or “group” as identified in
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “1934
Act”), other than you or any of your affiliates or Leonard Riggio or any of his
heirs or affiliates, becomes a beneficial owner (as such term is defined in Rule
13d-3 under the 1934 Act), directly or indirectly, of securities of the Company
representing 40% or more of the total number of votes that may be cast for the
election of directors of the Company; or

    

    (ii)  within
two years after a merger, consolidation, liquidation or sale of assets involving
the Company, or a contested election of a Company director, or any combination
of the foregoing, the individuals who were directors of the Company immediately
prior thereto shall cease to constitute a majority of the Board; or

    

    (iii)  within
two years after a tender offer or exchange offer for voting securities of the
Company, the individuals who were directors of the Company immediately prior
thereto shall cease to constitute a majority of the Board.

    

    4.           Non-Competition and
Confidential Information.

    

    4.1.           Non-Competition.  You
agree that during the Initial Term and any Renewal Term and for a period of two
years (the “Relevant Period”) after the termination for any reason of your
employment, you shall not, directly or indirectly, (a) employ or retain, or
induce or cause any other person or entity to employ or retain, any person who
is, or who at any time in the twelve-month period prior to such time had been,
employed or retained by the Company or any of its subsidiaries or affiliates; or
(b) provide services, whether as principal or as agent, officer, director,
employee, consultant, shareholder, or otherwise, alone or in association with
any other person, corporation or other entity, to any Competing Business (as
defined below); provided, however, that you may provide services to a Competing
Business (other than Amazon.com, Inc. and its subsidiaries and affiliates and
their respective successors (collectively, “Amazon”)) that is engaged in one or
more businesses other than the Business Area (as defined below) but only to the
extent that you do not provide services, directly or indirectly, to the segment
of such Competing Business that is engaged in the Business Area.  For
purposes of this Agreement, the term “Competing Business” shall mean (i) Amazon
or (ii) any person, corporation or other entity engaged in the Business
Area.  For purposes of this Agreement, the term “Business Area” shall
mean the sale, distribution or attempted sale or distribution of books,
textbooks, periodicals, newspapers, digital or audio versions of any of the
foregoing or e-reading devices and related software.  Notwithstanding
the foregoing, the restrictions of this Section 4.1 shall not apply to the
placement of general advertisements or the use of general search firm services
with respect to a particular geographic area, but which are not targeted,
directly or indirectly, towards employees of the Company or any of its
subsidiaries.

     

     

    
      
        
        

      

      
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    4.2.           Ownership of Other
Securities.  Nothing in Section 4.1 shall be construed as
denying you the right to own securities of any corporation listed on a national
securities exchange or quoted in the NASDAQ System in an amount up to 5% of the
outstanding number of such securities.

    

    4.3.           Confidential
Information.  (a) You shall use best efforts and diligence both
during and after any employment with the Company, regardless of how, when or why
such employment ends, to protect the confidential, trade secret and/or
proprietary character of all Confidential Information and Trade Secret
Information (as defined below).  You shall not, directly or
indirectly, use (for your benefit or for the benefit of any other person) or
disclose any Confidential Information or Trade Secret Information, for so long
as it shall remain proprietary or protectable, except as may be necessary for
the performance of your duties for the Company.  For purposes of this
Agreement, “Confidential Information” shall mean all confidential information of
the Company, regardless of the form or medium in which it is or was created,
stored, reflected or preserved, information that is either developed by you
(alone or with others) or to which you shall have had access during any
employment with the Company.  Confidential Information includes, but
is not limited to, Trade Secret Information, and also includes information that
is learned or acquired by the Company from others with whom the Company has a
business relationship in which, and as a result of which, such information is
revealed to the Company.  For purposes of this Agreement, “Trade
Secret Information” shall mean all information, regardless of the form or medium
in which it is or was created, stored, reflected or preserved, that is not
commonly known by or generally available to the public and that: 
(i)
derives or creates economic value, actual or potential, from not being generally
known to, and not being readily ascertainable by proper means by, other persons
who can obtain economic value from its disclosure or use; and (ii)
is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.  The Company’s Trade Secret Information may
include, but is not limited to, all confidential information relating to or
reflecting the Company’s research and development plans and activities;
compilations of data; product plans; sales, marketing and business plans and
strategies; pricing, price lists, pricing methodologies and profit margins;
current and planned incentive, recognition and rewards programs and services;
personnel; inventions, concepts, ideas, designs and formulae; current, past and
prospective customer lists; current, past and anticipated customer needs,
preferences and requirements; market studies; computer software and programs
(including object code and source code); and computer and database technologies,
systems, structures and architectures.  You understand that
Confidential Information and/or Trade Secret Information may or may not be
labeled as such, and you shall treat all information that appears to be
Confidential Information and/or Trade Secret Information as confidential unless
otherwise informed or authorized by the Company.  Nothing in this
Agreement shall be construed to mean that Company owns any intellectual property
or ideas that were conceived by you before you commenced employment with Company
and which you have previously disclosed to the Company.  Subject to
Section 4.3(b), nothing in this Section 4.3(a) shall prevent you from complying
with a valid legal requirement (whether by oral questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar process) to disclose any Confidential Information or Trade Secret
Information.

    

    (b)           
You agree that both during and after any employment with the Company, regardless
of how, when or why such employment ends, if you are legally required (whether
by oral questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand or similar process) to disclose any
Confidential Information or Trade Secret Information, you shall promptly notify
the Company of such request or requirement so that the Company may seek to avoid
or minimize the required disclosure and/or to obtain an appropriate protective
order or other appropriate relief to ensure that any information so disclosed is
maintained in confidence to the maximum extent possible by the agency or other
person receiving the disclosure, or, in the discretion of the Company to waive
compliance with the provisions of this Section 4.3.  Thereafter, you
shall use reasonable efforts, in cooperation with the Company or otherwise, to
avoid or minimize the required disclosure and/or to obtain such protective order
or other relief.  If, in the absence of a protective order or the
receipt of a waiver hereunder, you are compelled to disclose the Confidential
Information or Trade Secret Information or else stand liable for contempt or
suffer other sanction, censure or penalty, you shall disclose only so much of
the Confidential Information or Trade Secret Information to the party compelling
disclosure as you believe in good faith on the basis of advice of counsel is
required by law, and you shall give the Company prior notice of the Confidential
Information or Trade Secret Information you believe you are required to
disclose.  The Company shall reimburse any reasonable legal fees and
related expenses you incur in order to comply with this Section 4.3(b).

     

     

    
      
        
        

      

      
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    4.4.           Inventions.  You
shall promptly disclose and provide to the Company, any original works of
authorship, designs, formulas, processes, improvements, compositions of matter,
computer software programs, data, information or databases, methods, procedures
or other inventions, developments or improvements of any kind that you conceive,
originate, develop, improve, modify and/or create, solely or jointly with
others, during the period of your employment, or as a result of such employment
(collectively, “Inventions”), and whether or not any such Inventions also may be
included within “Confidential Information” or “Trade Secret Information” (as
defined under this Agreement), or are patentable, copyrightable or protectable
as trade secrets.  You acknowledge and agree that the Company is and
shall be the exclusive owner of all rights, title and interest in and to the
Inventions and, specifically, that any copyrightable works prepared by you
within the scope of your employment are “works for hire” under the Copyright
Act, that such “works for hire” are Inventions and that the Company shall be
considered the author and owner of such copyrightable works.  In the
event that any Invention is deemed not to be a “work for hire”, or in the event
that you should, by operation of law, be deemed to be entitled to retain any
rights, title or interest in and to any Invention, you hereby irrevocably waive
all rights, title and interest and assign to the Company, without any further
consideration and regardless of any use by the Company of any such Inventions,
all rights, title and interest, if any, in and to such Invention.  You
agree that the Company, as the owner of all Inventions, has the full and
complete right to prepare and create derivative works based upon the Inventions
and to use, reproduce, publish, print, copy, market, advertise, distribute,
transfer, sell, publicly perform and publicly display and otherwise exploit by
all means now known or later developed, such Inventions and derivative works
anywhere throughout the world and at any time during or after your employment
hereunder or otherwise.

    

    4.5.           Return of
Information.  You shall promptly deliver to the Company, upon
the termination for any reason of your employment, or at any other time at the
Company’s request, without retaining any copies, all documents, information and
other material in your possession or control containing, reflecting and/or
relating, directly or indirectly, to any Confidential Information and/or Trade
Secret Information.

    

    4.6           Cooperation.   You
agree that both during and after any employment with the Company, regardless of
how, when or why such employment ends, you shall provide reasonable cooperation
to the Company and its affiliates in connection with any pending or future
lawsuit, arbitration, or proceeding between the Company and/or any affiliate and
any third party, any pending or future regulatory or governmental inquiry or
investigation concerning the Company and/or any affiliate and any other legal,
internal or business matters of or concerning the Company and/or any
affiliate.  Such cooperation shall include meeting with and providing
information the Company, any affiliate and/or their respective attorneys,
auditors or other representatives as reasonably requested by the
Company.  The Company shall reimburse any reasonable legal fees and
related expenses you incur in order to comply with this Section
4.6.

    

    4.7.           Non-Disparagement.  During
and after any employment with the Company, regardless of how, when or why such
employment ends, (a) you shall not make, either directly or by or through
another person, any oral or written negative, disparaging or adverse statements
or representations of or concerning the Company or its subsidiaries or
affiliates, any of their clients or businesses or any of their current or former
officers, directors, employees or shareholders and (b) Company Parties (as
defined below) shall not make any oral or written negative, disparaging or
adverse statements or representations of or concerning you; provided, however,
that nothing herein shall prohibit (i) critical communications between you and
the Company or Company Parties during the Initial Term and any Renewal Term and
in connection with your employment or (ii) you or any Company Party from
disclosing truthful information if legally required (whether by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process).  For purposes of this
Agreement, the term “Company Parties” shall mean the executive officers and
designated spokespersons of the Company.

    

    4.8.           Severability.  If
any of the restrictions in this Section 4 should for any reason whatsoever be
declared invalid, the validity or enforceability of the remainder of this
Agreement shall not be adversely affected thereby.

     

     

    
      
        
        

      

      
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    4.9.           Equitable
Relief.  (a) You acknowledge that your services to the Company
are of a unique character that gives them a special value to the
Company.  You further recognize that any violation of the restrictions
in this Section 4 may give rise to losses or damages for which the Company
cannot be reasonably or adequately compensated in an action at law and that such
violation may result in irreparable and continuing harm to the
Company.  Accordingly, you agree that, in addition to any other remedy
that the Company may have at law or in equity, the Company shall be entitled to
injunctive relief to restrain any violation by you of the restrictions in this
Section 4.

    

    (b)           In
addition, the Company recognizes that any violation of the restrictions in
Section 4.7(b) may give rise to losses or damages for which you cannot be
reasonably or adequately compensated in an action at law and that such violation
may result in irreparable and continuing harm to you.  Accordingly,
the Company agrees that, in addition to any other remedy that you may have at
law or in equity, you shall be entitled to injunctive relief to restrain any
violation by the Company of the restrictions in Section 4.7(b).

    

    4.10.           Reasonableness.  You
acknowledge that the limitations and obligations contained in this
Section 4 are, individually and in the aggregate, reasonable and properly
required by the Company and that in the event that any such limitations are
found to be unreasonable and unenforceable, you shall submit to such limitations
and/or obligations in such form as the arbitrator shall
determine.  You agree that you shall not challenge or contest the
reasonableness, validity or enforceability of any such limitations and
obligations.

    

    5.           Indemnification.  You
shall be indemnified by the Company, as an officer of the Company and its
affiliates, against all actions, suits, claims, legal proceedings and the like
to the fullest extent permitted by law, including advancement of expenses,
partial indemnification, indemnification following the termination of this
Agreement, indemnification of your estate and similar matters.  For
purposes of this Agreement, such indemnification shall extend to, to the fullest
extent permitted by law, legal fees, costs, expenses, judgments, settlements,
claim resolution payments, arbitration fees, arbitrator fees, mediation fees,
negotiation fees and hold harmless obligations.

    

    6.           Miscellaneous.

    

    6.1.           Entire
Agreement.  This Agreement constitutes the entire agreement
between you and the Company with respect to the terms and conditions of your
employment by the Company and supersedes all prior agreements, understandings
and arrangements, oral or written, between you and the Company with respect to
the subject matter hereof.  Upon the Effective Date, this Agreement
shall supersede and replace the letter agreement by and between you and the
Company, dated as of February 18, 2002, and amended as of December 18, 2008, and
you shall have no further rights and the Company shall have no further
obligations thereunder.

    

    6.2.           Binding Effect;
Benefits.  This Agreement shall inure to the benefit of and
shall be binding upon you and the Company and our respective heirs, legal
representatives, successors and assigns.

    

    6.3.           Amendments and
Waivers.  This Agreement may not be amended or modified except
by an instrument or instruments in writing signed by both parties to this
Agreement.  Electronic communications, even if receipt is
acknowledged, shall not constitute an amendment or modification of this
Agreement.

    

    6.4.           Assignment.  Neither
this Agreement nor any rights or obligations that either party may have by
reason of this Agreement shall be assignable by either party without the prior
written consent of the other party.

    

    6.5.           Notices.  Any
notice that may or must be given under this Agreement shall be in writing and
shall be personally delivered or sent by certified or registered mail, postage
prepaid, or reputable overnight courier, addressed to you at the address set
forth on the first page hereof, or to the Company at 122 Fifth Avenue, New York,
NY 10011 to the attention of the Vice President for Human Resources for the
Company (with a copy to the General Counsel for the Company), or to such other
address as you or the Company, as the case may be, may designate in writing in
accordance with the provisions of this section.

    

    6.6.           Section and Other Headings;
Other.  The section and other headings contained in this
Agreement are for reference purposes only and are not deemed to be a part of
this Agreement or to affect the meaning and interpretation of this
Agreement.  For purposes of this Agreement, the term “including” shall
mean “including, without limitation.”

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
 

    6.7.           Governing
Law.  This Agreement shall be construed (both as to validity
and performance) and enforced in accordance with and governed by the laws of the
State of New York applicable to agreements made and to be performed wholly
within the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.  Except as provided in Section 6.9,
exclusive jurisdiction for all disputes or claims arising under or in connection
with this Agreement, and any and all claims by or against you relating to your
employment with the Company, shall lie in any Federal  or state court
located within the County of New York.

    

    6.8.           Survival of Rights and
Obligations.  All rights and obligations arising hereunder
shall continue to have full force and effect after the termination of this
Agreement unless otherwise provided herein to the extent necessary to preserve
the intended benefits of such provisions.  If any section of this
Agreement  is determined to be void, voidable or unenforceable, it
shall have no effect on the remainder of this Agreement, which shall remain in
full force and effect, and the provisions so held invalid or unenforceable shall
be deemed modified as to give such provisions the maximum effect permitted by
applicable law.

    

    6.9.           Arbitration.  The
parties agree that all disputes arising under or in connection with this
Agreement, and any and all claims by you relating to your employment with the
Company, including any claims of discrimination or other employment-related
claims arising under Title VII of the Civil Rights Act of 1964, as amended, the
Age Discrimination in Employment Act, the Americans with Disabilities Act or any
other employment-related Federal, state or local law, shall be submitted to
arbitration before the American Arbitration Association (“AAA”) under its rules
then prevailing for the type of claim in issue before one arbitrator and to be
held at the AAA’s office located in the County of New York.  In any
arbitration hereunder, the arbitrator shall have the power to issue appropriate
injunctive or other non-monetary relief, and award appropriate compensatory
damages.  The parties agree that no damages other than compensatory
damages shall be sought or claimed by either party and each party waives any
claim, right or entitlement to punitive, exemplary or consequential damages, or
any other damages, and each relevant arbitrator is specifically divested of any
power to award any damages in the nature of punitive, exemplary or consequential
damages, or any other damages of any kind or nature in excess of compensatory
damages.  Nothing in this arbitration provision shall preclude, and
the parties expressly acknowledge that either party may seek, temporary
injunctive relief from any Federal or state court located within the County of
New York in connection with or as supplement to an arbitration hereunder,
including regarding any claim under Section 4 of this Agreement.  For
purposes of any such action or proceeding, the parties each hereby specifically
submit to the personal jurisdiction of any Federal or state court located within
the County of New York and further agree that service of process may be made
within or without the State of New York by giving notice in the manner provided
in Section 6.5 of this Agreement.

    

    6.10.           Section 409A of the
Code.  It is intended that the provisions of this Agreement
comply with Section 409A of the Code, and all provisions of this Agreement shall
be construed and interpreted in a manner consistent with the requirements for
avoiding taxes or penalties under Section 409A of the Code.  If, at
the time of your separation from service (within the meaning of Section 409A of
the Code), (a) you shall be a specified employee (within the meaning of Section
409A of the Code and using the identification methodology selected by the
Company from time to time) and (b) the Company shall make a good faith
determination that an amount payable under this Agreement or any other plan,
policy, arrangement or agreement of or with the Company (this Agreement and such
other plans, policies, arrangements and agreements, the “Company Plans”)
constitutes deferred compensation (within the meaning of Section 409A of the
Code) the payment of which is required to be delayed pursuant to the six-month
delay rule set forth in Section 409A of the Code in order to avoid taxes or
penalties under Section 409A of the Code, then the Company shall not pay any
such amount on the otherwise scheduled payment date but shall instead accumulate
such amount and pay it, without interest, on the first day of the seventh month
following such separation from service.  Except as permitted under
Section 409A of the Code, any deferred compensation (within the meaning of
Section 409A of the Code) payable to or for your benefit under any Company Plan
may not be reduced by, or offset against, any amount owing by you to the
Company.  Except as specifically permitted by Section 409A of the
Code, the benefits and reimbursements provided to you under this Agreement and
any Company Plan during any calendar year shall not affect the benefits and
reimbursements to be provided to you under the relevant section of this
Agreement or Company Plan in any other calendar year, and the right to such
benefits and reimbursements cannot be liquidated or exchanged for any other
benefit and shall be provided in accordance with Treas. Reg. Section
1.409A-3(i)(1)(iv) or any successor thereto.  Further, in the case of
reimbursement payments, such payments shall be made to you on or before the last
day of the calendar year following the calendar year in which the underlying
fee, cost or expense is incurred.   Notwithstanding the
preceding, the Company makes no representations concerning the tax consequences
of your participation in this Agreement under Section 409A of the Code or any
other Federal, state or local tax law.  Your tax consequences shall
depend, in part, upon the application of relevant tax law, including Section
409A of the Code, to the relevant facts and circumstances.  You should
consult a competent and independent tax advisor regarding the tax consequences
of this Agreement.

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    

    6.11.           Representations and
Warranties.  You hereby represent and warrant to the Company
that (a) your execution, delivery and performance of this Agreement do not and
shall not conflict with, breach, violate or cause a default under any contract,
agreement, instrument, order, judgment or decree to which you are a party or by
which you are bound; (b) you are not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any other
person or entity that has not been disclosed to the Company prior to the
execution of this Agreement; (c) in the performance of any duties and
responsibilities on behalf of the Company, you shall not divulge or use in any
way any trade secrets or confidential or proprietary information that are within
your possession or knowledge (if any), are owned by any other person or entity
and regardless of whether or not such trade secrets or confidential or
proprietary information are subject to any written agreement; and (d) upon the
execution and delivery of this Agreement, it shall be a valid and binding
obligation, enforceable in accordance with its terms.  You hereby
acknowledge and represent that you fully understand the terms and conditions
contained herein.

    

    6.12.           Counterparts. This
Agreement may be executed in one or more identical counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.

     

     

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    

    If the foregoing accurately reflects
our agreement, kindly sign and return to us the enclosed duplicate copy of this
letter.

     

    
      
        

                   Very
truly yours,

        

        
          	
                  BARNES
      & NOBLE, INC.

                
	 
      
	
                  By:

                	/s/
      Michelle Smith  
	 
      	
                  Name: 
      Michelle Smith

                
	 
      	
                  Title:   
      Vice President, Human Resources

                
	 
      	 
      
	 	 
	 	 
	Date: 	March
      18, 2010 

        

        

         

      

    

     

    
Accepted
and Agreed to:

    

    
      
        	
                MITCHELL
      S. KLIPPER

              
	 
	
                By:

              	/s/  Mitchell
      S. Klipper 
	 
      	
                Name:  Mitchell
      S. Klipper

              

      

       

       

      
        	Date:	March
      17, 2010 
	 	 

      

    

    

      
         

       

      

      

      

      

      

      

      

      
[Signature Page to Employment
Agreement]

       

    

    
      
        
        

      

      
        10

        
          

        

      

      
        EXHIBIT A

      

    

    
 

    BARNES
& NOBLE, INC.

    2009
EXECUTIVE PERFORMANCE PLAN

    

    

    BARNES &
NOBLE, INC., a corporation existing under the laws of the State of Delaware
(the “Company”), hereby establishes and adopts the following 2009 Executive
Performance Plan (the “Plan”). Certain capitalized terms used in the Plan are
defined in Article 2.

    

    RECITALS

    

    WHEREAS, the Company desires
to encourage high levels of performance by those individuals who are key to the
success of the Company, to attract new individuals who are highly motivated and
who are expected to contribute to the success of the Company and to stimulate
the efforts of such individuals to contribute to the continued success and
growth of the Company’s business; and

    

    WHEREAS, to attain these ends,
the Company has formulated the Plan embodied herein to authorize the awarding of
bonuses that are intended to qualify as “performance based compensation” within
the meaning of Section 162(m) of the Code.

    

    NOW, THEREFORE, the Company
hereby constitutes, establishes and adopts the following Plan and agrees to the
following provisions:

    

    ARTICLE
1

    

    PURPOSE
OF THE PLAN

    

    1.1. Purposes. The purposes of the
Plan are to provide personal incentive and financial rewards to senior
management who, because of the extent of their responsibilities, can and do make
significant contributions to the success of the Company by their ability,
industry, loyalty and exceptional services. Making such senior management
participants in that success will advance the interests of the Company and its
stockholders and will assist the Company in attracting and retaining such senior
management.

    

    ARTICLE 2

    

    DEFINITIONS

    

    2.1. “Award” shall mean the amount
of the Incentive Award paid to a Participant pursuant to the Plan.

    

    2.2. “Board” shall mean the board
of directors of the Company.

    

    2.3. “Certification” shall have
the meaning set forth in Section 4.2.

    

    2.4. “Code” shall mean the
Internal Revenue Code of 1986, as amended from time to time, and any successor
thereto.

    

    2.5. “Committee” shall mean the
Compensation Committee of the Board (or such other committee designated by the
Compensation Committee of the Board), consisting of no fewer than two directors,
each of whom is (i) a “Non-Employee Director” within the meaning of
Rule 16b-3 (or any successor rule) of the Exchange Act, (ii) an
“outside director” within the meaning of Section 162(m)(4)(C)(i) of the
Code, and (iii) an “independent director” for purpose of the rules and
regulations of the New York Stock Exchange.

    

    2.6. “Company” has the meaning set
forth in the introductory paragraph of the Plan.

    

    2.7. “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.

     

     

     

     

    
      
        
        

      

      
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          EXHIBIT A

        

      

    

     

    

    2.8. “Incentive Award” shall mean an amount
equal to 1.5% of the Company’s Operating Income for the Performance Period for
each Participant.

    

    2.9. “Operating Income” shall mean
the gross profit minus operating expenses of the Company and its Subsidiaries on
a consolidated basis, before deduction of interest payments and income taxes and
accrual of any amounts for payment under this Plan for the Performance Period,
as reported in the Company’s income statement for the applicable Performance
Period, without regard to items relating to (a) restructurings,
discontinued operations, extraordinary items, and other unusual or non-recurring
charges, (b) an event either not directly related to the operations of the
Company or not within the reasonable control of the Company’s management, or
(c) changes in accounting standards required by generally accepted
accounting principles, in each case as determined in accordance with generally
accepted accounting principles and as reported in (x) the Company’s consolidated
statement of operations, (y) notes to the Company’s consolidated financial
statements or (z) management’s discussion and analysis with respect to the
Company’s consolidated financial statements as filed with the U.S. Securities
and Exchange Commission, in each case for the applicable Performance
Period.

    

    2.10. “Participant” shall mean the
Company’s Chief Executive Officer and each other executive officer of the
Company selected by the Committee pursuant to Section 4.1 to participate in
this Plan with respect to any given Performance Period.

    

    2.11. “Performance Period” shall
mean the Company’s fiscal year or any other period during a fiscal year that the
Committee, in its sole discretion, may determine.

    

    2.12. “Shares” shall mean the
shares of common stock of the Company, par value $0.001 per
share.

    

    2.13. “Subsidiary” shall mean any
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if, at the time of the granting of the Award, each of
the corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in the chain, excluding any such
Subsidiary whose securities are publicly traded.

    

    ARTICLE 3

    

    ELIGIBILITY
AND ADMINISTRATION

    

    3.1. Eligibility. The individuals
eligible to participate in the Plan shall be the Company’s Chief Executive
Officer and any other executive officer of the Company or any Subsidiary
selected by the Committee to participate in the Plan.

    

    3.2. Administration.
 (a)  The Plan shall be administered by the
Committee.  The Committee shall have full power and authority, subject
to the provisions of the Plan and subject to such orders or resolutions not
inconsistent with the provisions of the Plan as may from time to time be adopted
by the Board, to: (i) select the Participants to whom Incentive Awards may
from time to time be granted hereunder; (ii) determine the terms and
conditions of Incentive Awards, not inconsistent with the provisions of the
Plan, and whether an Award shall be paid in cash or Shares; (iii) determine
the time when Incentive Awards will be made and the Performance Period to which
they relate; (iv)  certify the calculation of Operating Income and the
amount of the Incentive Award payable to each Participant in respect of
Performance Periods; (v) in connection with the determination of the amount
of each Award, determine whether and to what extent the Incentive Award shall be
reduced based on such factors as the Committee deems appropriate in its
discretion; (vi) interpret and administer the Plan; (vii) correct any
defect, supply any omission or reconcile any inconsistency in the Plan in the
manner and to the extent that the Committee shall deem desirable to carry it
into effect; (viii) establish such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (ix) make any other determination and take any other action that the
Committee deems necessary or desirable for administration of the
Plan.

    

    (b) Decisions
of the Committee shall be final, conclusive and binding on all persons or
entities, including the Company, any Participant and any person claiming any
benefit or right under an Incentive Award or under the Plan. A majority of the
members of the Committee may determine its actions and fix the time and place of
its meetings.

     

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
          EXHIBIT A

        

      

    

    
 

    (c) To
the extent not inconsistent with the applicable provisions of
Section 162(m) of the Code, applicable law or the rules and regulations of
the New York Stock Exchange, the Committee may delegate to one or more officers
of the Company or any of its Subsidiaries the authority to take actions on its
behalf pursuant to the Plan.

    

    ARTICLE 4

    

    AWARDS

    

    4.1. Performance Period. Not later
than 90 days after the commencement of each fiscal year of the Company, the
Committee shall, in writing, (i) designate one or more Performance Periods for
such fiscal year, provided that any Performance Period of less than one year
shall be designated no later than the date on which 25% of such Performance
Period has lapsed, (ii) determine the Participants for such Performance
Period(s), and (iii) specify any adjustments to Operating Income for the
Performance Period.  If a person becomes eligible to participate in
the Plan after the Committee has made its initial written determination of the
Participants for a Performance Period, such individual may become a Participant
for the Performance Period if so designated by the Committee in
writing.

    

    4.2. Certification. As soon as
reasonably practicable following the conclusion of each Performance Period, the
Committee shall certify, in writing, the amount of Operating Income and the
Incentive Award for each Participant (the “Certification”).

    

    4.3. Payment of Incentive Awards.
Following each Certification, the Committee shall determine the amount of the
Incentive Award actually payable to each Participant in its sole discretion
based on such factors as it deems appropriate, provided that the actual Award
shall not exceed the Incentive Award with respect to such Participant. The Award
amount determined by the Committee for a Performance Period shall, subject to
Section 4.4, be paid to each Participant no later than the fifteenth day of
the third month following the end of the fiscal year of the Company in which the
applicable Performance Period ends. Awards shall be paid in cash or, in the
Committee’s sole discretion, in shares under a shareholder approved stock plan
of the Company or any combination thereof.

    

    4.4. Deferral. A Participant shall
be entitled to elect to defer the payment of any Award payable to such
Participant under the Plan pursuant to a plan or arrangement satisfying the
requirements of Section 409A of the Code.

    

    4.5. Changes in Employment. If a
person becomes a Participant during a Performance Period (pursuant to the last
sentence of Section 4.1 herein) or if a Participant dies or retires or if a
Participant’s employment otherwise ceases during a Performance Period (except
for termination by the Company for cause, as determined by the Committee in its
sole discretion), the Incentive Award payable to such a Participant may be
proportionately reduced based on the period of actual employment during the
applicable Performance Period), as determined by the Committee in its sole
discretion.

    

    ARTICLE 5

    

    GENERALLY
APPLICABLE PROVISIONS

    

    5.1. Amendment and Termination of the
Plan. The Board may, from time to time, alter, amend, suspend or
terminate the Plan as it shall deem advisable, subject to any requirement for
stockholder approval imposed by applicable law, including Section 162(m) of
the Code or by the rules and regulations of the New York Stock
Exchange.

    

    5.2. Section 162(m) of the
Code. Unless otherwise determined by the Committee, the provisions of
this Plan shall be administered and interpreted in accordance with
Section 162(m) of the Code to ensure the deductibility by the Company or
its Subsidiaries of the payment of Awards.

    

    5.3. Tax Withholding. The Company
or any Subsidiary shall have the right to make all payments or distributions
pursuant to the Plan to a Participant, net of any applicable Federal, State and
local taxes required to be paid or withheld. The Company or any Subsidiary shall
have the right to withhold from wages, Awards or other amounts otherwise payable
to such Participant such withholding taxes as may be required by law, or to
otherwise require the Participant to pay such withholding taxes. If the
Participant shall fail to make such tax payments as are required, the Company or
any Subsidiary shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to such Participant or
to take such other action as may be necessary to satisfy such withholding
obligations.

     

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    
 

    5.4. Right of Discharge Reserved; Claims
to Awards. Nothing in the Plan nor the grant of an Award hereunder shall
confer upon any Participant the right to continue in the employment of the
Company or any Subsidiary or affect any right that the Company or any Subsidiary
may have to terminate the employment of (or to demote or to exclude from future
Awards under the Plan) any such Participant at any time for any reason. No
Participant shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment of Participants under the
Plan.

    

    5.5. Other Plans. Nothing
contained in the Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to stockholder approval if such approval is
required; and such arrangements may be either generally applicable or applicable
only in specific cases.

    

    5.6. Severability. If any
provision of the Plan shall be held unlawful or otherwise invalid or
unenforceable in whole or in part by a court of competent jurisdiction, such
provision shall (a) be deemed limited to the extent that such court of
competent jurisdiction deems it lawful, valid and/or enforceable and as so
limited shall remain in full force and effect, and (b) not affect any other
provision of the Plan or part thereof, each of which shall remain in full force
and effect. If the making of any payment or the provision of any other benefit
required under the Plan shall be held unlawful or otherwise invalid or
unenforceable by a court of competent jurisdiction, such unlawfulness,
invalidity or unenforceability shall not prevent any other payment or benefit
from being made or provided under the Plan, and if the making of any payment in
full or the provision of any other benefit required under the Plan in full would
be unlawful or otherwise invalid or unenforceable, then such unlawfulness,
invalidity or unenforceability shall not prevent such payment or benefit from
being made or provided in part, to the extent that it would not be unlawful,
invalid or unenforceable, and the maximum payment or benefit that would not be
unlawful, invalid or unenforceable shall be made or provided under the
Plan.

    

    5.7. Construction. All references
in the Plan to
“Section,” or
“Article” are intended to refer to the Section, Sections or Article, as
the case may be, of the Plan. As used in the Plan, the word  “including,” and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words  “without
limitation.”

    

    5.8. Unfunded Status of the Plan.
The Plan is intended to constitute an “unfunded” plan for incentive
compensation. With respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general creditor of the Company or any
Subsidiary.

    

    5.9. Governing Law. The Plan and
all determinations made and actions taken thereunder, to the extent not
otherwise governed by the Code or the laws of the United States, shall be
governed by the laws of the State of Delaware, without reference to principles
of conflict of laws that might result in the application of the laws of another
jurisdiction, and construed accordingly.

    

    5.10. Effective Date of Plan. The
Plan shall be effective on the date of the approval of the Plan by the holders
of a majority of the shares entitled to vote at a duly constituted meeting of
the stockholders of the Company. The Plan shall be null and void and of no
effect if the foregoing condition is not fulfilled.

    

    5.11. Captions. The captions in the
Plan are for convenience of reference only, and are not intended to narrow,
limit or affect the substance or interpretation of the provisions contained
herein.

     

     

     

     

    
      
        
        

      

      
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          EXHIBIT B

        

      

    

     

     

    GENERAL RELEASE AND
WAIVER

    

    1.           [Name]
(“Employee”) hereby acknowledges and agrees that Employee’s employment with
Barnes & Noble, Inc. (the “Company”) terminated on __________, 20__ (the
“Termination Date”).

    

    2.           Employee
acknowledges and agrees that Employee’s executing this General Release and
Waiver (“Release”) is a condition precedent to the Company’s obligation to pay
(and the Employee’s right to retain) the payments and benefits set forth in
Section 3.8 of the employment letter agreement, dated as of March 17 2010,
between Employee and the Company (such agreement referred to herein as the
“Employment Agreement” and such payments and benefits collectively referred to
herein as the “Separation Benefit”), that the Separation Benefit is adequate
consideration for this Release, and that any monetary or other benefits that,
prior to the execution of this Release, Employee may have earned or accrued, or
to which Employee may have been entitled, have been paid or such payments or
benefits have been released, waived or settled by Releasor (as defined below)
except as expressly provided in this Release.

    

    3.           (a)           THIS
SECTION PROVIDES A COMPLETE RELEASE AND WAIVER OF ALL EXISTING AND POTENTIAL
CLAIMS EMPLOYEE MAY HAVE AGAINST EVERY PERSON AND ENTITY INCLUDED WITHIN THE
DESCRIPTION BELOW OF “RELEASEE.”  BEFORE EMPLOYEE SIGNS THIS RELEASE,
EMPLOYEE MUST READ THIS SECTION CAREFULLY, AND MAKE SURE THAT EMPLOYEE
UNDERSTANDS IT FULLY.

    

     (b)           In
consideration of Employee’s receipt and acceptance of the Separation Benefit
from the Company, and on behalf of the Company and each Releasee (as defined
below), Employee, on Employee’s behalf and on behalf of Employee’s heirs,
executors, administrators, successors and assigns (collectively, “Releasor”),
hereby irrevocably, unconditionally and generally releases the Company, its
current and former officers, directors, shareholders, trustees, parents,
members, managers, affiliates, subsidiaries, branches, divisions, benefit plans,
agents, attorneys, advisors, counselors and employees, and the current and
former officers, directors, shareholders, agents, attorneys, advisors,
counselors and employees of any such parent, affiliate, subsidiary, branch or
division of the Company and the heirs, executors, administrators, receivers,
successors and assigns of all of the foregoing (each, a “Releasee”), from or in
connection with, and hereby waives and/or settles, except as provided in Section
3(c), any and all actions, causes of action, suits, debts, dues, sums of money,
accounts, controversies, agreements, promises, damages, judgments, executions,
or any liability, claims or demands, known or unknown and of any nature
whatsoever, whether or not related to employment, and which Releasor ever had,
now has or hereafter can, shall or may have as of the date of this Release,
including, without limitation, (i) any rights and/or claims arising under any
contract, express or implied, written or oral, including, without limitation,
the Employment Agreement; (ii) any rights and/or claims arising under any
applicable foreign, Federal, state, local or other statutes, orders, laws,
ordinances, regulations or the like, or case law, that relate to employment or
employment practices, including, without limitation, family and medical, and/or,
specifically, that prohibit discrimination based upon age, race, religion, sex,
color, creed, national origin, sexual orientation, marital status, disability,
medical condition, pregnancy, veteran status or any other unlawful bases,
including, without limitation, the Civil Rights Act of 1964, as amended, the
Civil Rights Act of 1991, as amended, the Civil Rights Acts of 1866 and 1871, as
amended, the Age Discrimination in Employment Act of 1967, as amended, the
Americans with Disabilities Act of 1990, as amended, the Family Medical Leave
Act of 1993, as amended, the Employee Retirement Income Security Act of 1974, as
amended, the Vietnam Era Veterans’ Readjustment Assistance Act of 1974, as
amended, the Worker Adjustment and Retraining Notification Act of 1988, as
amended, and any similar applicable statutes, orders, laws, ordinances,
regulations or the like, or case law, of the State of New York and any State in
which any Releasee is subject to jurisdiction, or any political subdivision
thereof, including, without limitation, the New York State Human Rights Law, the
New York State Labor Law and the New York City Human Rights Law, and all
applicable rules and regulations promulgated pursuant to or concerning any of
the foregoing statutes, orders, laws, ordinances, regulations or the like; (iii)
any waivable rights and/or claims relating to wages and hours, including under
state or local labor or wage payment laws; (iv) any rights and/or claims to
benefits that Employee may have or become entitled to receive under any
severance, termination, change of control, bonus or similar policy, plan,
program, agreement or similar or related arrangements, including, without
limitation, any offer letter, letter agreement or employment agreement between
Employee and the Company; (v) any rights and/or claims that Employee may have to
receive any equity in the Company (whether restricted or unrestricted) in the
future; and (vi) and any rights and/or claims for attorneys’
fees.  Employee agrees not to challenge or contest the reasonableness,
validity or enforceability of this Release.

     

     

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
          EXHIBIT B

        

      

    

    
 

    (c)           Notwithstanding
the foregoing, Employee does not release any Releasee from any of the following
rights and/or claims:  (i) any rights and/or claims Employee may have
that arise after the date Employee signs this Release; (ii) any rights and/or
claims that by law cannot be waived by private agreement; (iii) Employee’s right
to file a charge with or participate in any investigation or proceeding
conducted by the U.S. Equal Employment Opportunity Commission (“EEOC”) or
similar government agency; provided that even though Employee can file a charge
or participate in an investigation or proceeding conducted by the EEOC or
similar government agency, by executing this Release, Employee is waiving his
ability to obtain relief of any kind from any Releasee to the extent permitted
by law; (iv) Employee’s non-forfeitable rights to accrued benefits (within the
meaning of Sections 203 and 204 of ERISA); (v) any rights and/or claims to
insurance coverage under any directors’ and officers’ personal liability
insurance or fiduciary insurance policy; and (vi) any rights and/or claims to
enforce the Employment Agreement in accordance with its terms.

    

    4.           Employee
represents and warrants that Employee has not filed or commenced any complaints,
claims, actions or proceedings of any kind against any Releasee with any
Federal, state or local court or any administrative, regulatory or arbitration
agency or body.  Employee hereby waives any right to, and agrees not
to, seek reinstatement or employment of any kind with any Releasee and, without
waiver by any Releasee of the foregoing, the existence of this Release shall be
a valid, nondiscriminatory basis for rejecting any such application or, in the
event Employee obtains such employment, for terminating such
employment.  This Release and the Separation Benefit are not intended
to be, shall not be construed as and are not, an admission or concession by any
Releasee of any wrongdoing or illegal or actionable acts or
omissions.

    

    5.            
(a)           Employee
hereby represents and agrees that Employee shall keep confidential and not
disclose orally or in writing, to any person, except as may be required by law,
any and all information concerning the existence or terms of this Release and
the amount of any payments made hereunder.  Employee further agrees
that, except as shall be required by law, Employee shall keep confidential and
not disclose orally or in writing, directly or indirectly, to any person (except
Employee’s immediate family, attorneys and accountant), any and all information
concerning any facts, claims or assertions relating or referring to any
experiences of Employee or treatment Employee received by or on behalf of any
Releasee through the date of this Release.

    

    (b)           If
Employee is requested or required (by oral questions, interrogatories, requests
for information or documents, subpoena, civil investigative demand or similar
process) to disclose any information covered by Section 5(a), Employee shall
promptly notify the Company of such request or requirement so that the Company
may seek to avoid or minimize the required disclosure and/or to obtain an
appropriate protective order or other appropriate relief to ensure that any
information so disclosed is maintained in confidence to the maximum extent
possible by the agency or other person receiving the disclosure, or, in the
discretion of the Company, to waive compliance with the provisions of this
Release.  Employee shall use reasonable efforts, in cooperation with
the Company or otherwise, to avoid or minimize the required disclosure and/or to
obtain such protective order or other relief.  If, in the absence of a
protective order or the receipt of a waiver hereunder, Employee is compelled to
disclose such information or else stand liable for contempt or suffer other
sanction, censure or penalty, Employee shall disclose only so much of such
information to the party compelling disclosure as he believes in good faith on
the basis of advice of counsel is required by law, and Employee shall give the
Company prior notice of such information he believes he is required to
disclose.

    

    6.            
(a)           Employee
shall not make, either directly or by or through another person, any oral or
written negative, disparaging or adverse statements or representations of or
concerning any Releasee.

    

                   
(b)           Without
limitation to the survival of any other terms of the Employment Agreement
subsequent to the end of Employee’s employment, the expiration or termination of
the Employment Agreement, and/or the execution and effectiveness of this
Release, Employee and the Company expressly acknowledge that the terms of
Sections 4 and 5 of the Employment Agreement survive and shall be in full force
and effect as provided in the Employment Agreement.

     

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
          EXHIBIT B

        

      

    

    
 

    7.           
The covenants, representations and acknowledgments made by Employee in this
Release shall continue to have full force and effect after the execution and
effectiveness of this Release and the delivery of the Separation Benefit, and
this Release shall inure to the benefit of each Releasee, and the successors and
assigns of each of them, to the extent necessary to preserve the intended
benefits of such provisions.  If any section of this Release is
determined to be void, voidable or unenforceable, it shall have no effect on the
remainder of this Release, which shall remain in full force and effect, and the
provisions so held invalid or unenforceable shall be deemed modified as to give
such provisions the maximum effect permitted by applicable
law.  Without limitation to Section 3.8 of the Employment Agreement,
the Company shall be excused and released from any obligation to make payment of
the Separation Benefit, and Employee shall be obligated to return to the Company
the Separation Benefit, in the event that Employee is found to have (a) made a
material misstatement in any term, condition, covenant, representation or
acknowledgment in this Release, or (b) Employee is found to have committed or
commits a material breach of any term, condition or covenant in this
Release.

    

    8.           This
Release and the Employment Agreement constitute the sole and complete agreement
between the parties with respect to the matters set forth therein and supersedes
all prior agreements, understandings and arrangements, oral or written, between
Employee and the Company with respect to the subject matter
thereof.  This Release may not be amended or modified except by an
instrument or instruments in writing signed by the party against whom
enforcement of any such modification or amendment is sought.  Either
party may, by an instrument in writing, waive compliance by the other party with
any term or provision of this Release to be performed or complied with by such
other party.

    

    9.           With
respect to any claims or disputes under or in connection with this Release or
any claims released under Section 3 of this Release, Employee and the Company
hereby acknowledge and agree that Sections 6.7 and 6.9 of the Employment
Agreement shall govern.  Employee acknowledges that a breach or
threatened breach of the provisions of this Release may give rise to losses or
damages for which the Company cannot be reasonably or adequately compensated in
an action at law, and that such violation may result in irreparable and
continuing harm to the Company.  Accordingly, Employee agrees that, in
addition to any other remedy that the Company may have at law or in equity, the
Company shall be entitled to seek equitable relief, including, without
limitation, injunction and specific performance and Employee hereby waives any
requirements for security or posting of any bond in connection with such
relief.  No specification in this Release of any particular remedy
shall be construed as a waiver or prohibition of any other remedies (including
claims for damages) in the event of a breach or threatened breach of this
Release.

    

    10.           Employee
agrees and acknowledges that (a) Employee has had an adequate opportunity to
review this Release and all of its terms, (b) Employee understands all of the
terms of this Release, which are fair, reasonable and are not the result of any
fraud, duress, coercion, pressure or undue influence exercised by or on behalf
of any Releasee and (c) Employee has agreed to and/or entered into this Release
and all of the terms hereof, knowingly, freely and voluntarily.

    

    11.           By executing this Release, Releasor
acknowledges that (a) Employee has been advised by the Company to consult with
an attorney before executing this Release; (b) Employee was provided adequate
time (i.e., at least 21 days) to review this Release and to consider whether to
sign this Release and (c)
Employee has been advised that Employee has 7 days following execution to revoke
this Release (“Revocation Period”).  Notwithstanding anything to the
contrary contained herein or in the Employment Agreement, this Release shall not
be effective or enforceable, and the Separation Benefit is not payable and shall
not be delivered or paid by the Company, until the Revocation Period has expired
and provided that Employee has not revoked this Release.  Employee
agrees that any revocation shall be made in writing and delivered to
____________, Vice President, Human Resources, Barnes & Noble, Inc., 122
Fifth Avenue, NY, NY 10011.  Employee acknowledges that revocation of
this Release shall result in the Company’s not having an obligation to pay the
Separation Benefit.

    

    

    

     

    
      	Signature:   	 	 	 Date:	 	 
	 	         
      [Name]	 	 	 	 

    

     

                       

     

    
      3ex10-3.htm

    Exhibit
10.3

     

     

    
      

       

      March
­­17, 2010

      

      

      Mr.
Joseph J. Lombardi

      122 Fifth
Avenue

      New York, NY 10011

      

      Dear Mr.
Lombardi:

      

      This
letter agreement (the “Agreement”) is intended to set forth our mutual
understanding regarding your employment as Chief Financial Officer of Barnes
& Noble, Inc. (the “Company”).

      

      Accordingly,
we are pleased to agree as follows:

      

      1.           Duties.  You
agree to be Chief Financial Officer for the term of this
Agreement.  In this capacity, you shall perform such duties and have
such responsibilities as are typically associated with such position, including
such duties and responsibilities as are prescribed by the Board of Directors of
the Company (the “Board”) consistent with such position.  While you
are the Company’s employee, you agree to devote your full business time and
attention to the performance of your duties and responsibilities
hereunder.  You shall report to the Company’s Chief Executive
Officer.

      

      2.           Term.  (a)  The
initial term of this Agreement shall be for a period beginning on March 17, 2010
(the “Effective Date”) and ending on the third anniversary of the Effective Date
or, if earlier, the termination of your employment in accordance with the
provisions set forth below (the “Initial Term”).  At the expiration
(but not earlier termination) of the Initial Term, and any subsequent “Renewal
Term” (as defined below), the term of this Agreement shall automatically renew
for additional periods of one year (each, a “Renewal Term”), unless your
employment has earlier terminated or either party hereto has given the other
party written notice of non-renewal at least 90 days prior to the expiration
date of the Initial Term or the Renewal Term, as applicable.  In the
event that either party has given written notice of non-renewal, and your
employment with the Company continues after the expiration of the Initial Term
or any Renewal Term, such post-expiration employment shall be “at-will” and
either party may terminate such employment with or without notice and for any
reason or no reason.

       

                                   
(b)           Your
employment hereunder shall terminate upon your death and may be terminated by
the Company upon written notice to you following your Disability (as defined
below).  Your employment hereunder may also be terminated by the
Company immediately for Cause (as defined below) or following two weeks written
notice to you for any other reason.  Your employment hereunder may
also be terminated by you following written notice to the Company of your
intention to resign with or without Good Reason (as defined below); provided
that a resignation for Good Reason shall comply with Section
2(c)(iv).

       

                                   
(c)           For
purposes of this Agreement:

       

           (i)“Cause” means (A)  your
engaging in intentional misconduct or gross negligence that, in either case, is
injurious to Company; (B) your indictment, entry of a plea of nolo contendere or
conviction by a court of competent jurisdiction with respect to any crime or
violation of law involving fraud or dishonesty (with the exception of misconduct
based in good faith on the advice of professional consultants, such as attorneys
and accountants) or any felony (or equivalent crime in a non-U.S. jurisdiction);
(C) any gross negligence, intentional acts or intentional omissions by you (as
determined by a majority vote of the Board in its reasonable discretion and
judgment) that constitute fraud, dishonesty, embezzlement or misappropriation in
connection with the performance of your employment duties and responsibilities;
(D) your engaging in any act of intentional misconduct or moral turpitude
(as determined by a majority vote of the Board in its reasonable discretion and
judgment) reasonably likely to adversely affect the Company or its business; (E)
your abuse of or dependency on alcohol or drugs (illicit or otherwise) that
adversely affects your job performance; (F) your willful failure or refusal
to properly perform (as determined by a majority vote of the Board in its
reasonable discretion and judgment) the duties, responsibilities or obligations
of your employment for reasons other than Disability or authorized leave, or to
properly perform or follow (as determined by a majority vote of the Board in its
reasonable discretion and judgment) any lawful direction by the Company (with
the exception of a willful failure or refusal to properly perform based in good
faith on the advice of professional consultants, such as attorneys and
accountants); or (G) your material breach of this Agreement or of any other
contractual duty to, written policy of, or written agreement with the Company
(with the exception of a material breach based in good faith on the advice of
professional consultants, such as attorneys and accountants).

       

       

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

                    (ii)          
“Disability” shall mean a written determination by a majority of three
physicians (one of which shall be your most recent primary care provider)
mutually agreeable to the Company and you (or, in the event of your total
physical or mental disability, your legal representative) that you are
physically or mentally unable to perform your duties as Chief Financial Officer
under this Agreement and that such disability can reasonably be expected to
continue for a period of six consecutive months or for shorter periods
aggregating 180 days in any 12-month period.

       

                    (iii)           “Good
Reason” shall mean the occurrence of one or more of the following events without
your written consent:  (A) there shall have been a material diminution
of your authority, duties or responsibilities; (B) there shall have been a
greater than 10% reduction in your Annual Base Salary (as defined below) in
effect as of the Effective Date pursuant to Section 3.1; (C) the principal
executive offices of the Company shall be relocated to a location more than 50
miles from New York City; or (D) the Company fails to make material payments to
you (or provide to you restricted common stock) as required by this
Agreement.

       

                    (iv)           You
shall only be deemed to terminate employment for Good Reason if (A) you provide
the Company with written notice of Good Reason within a period not to exceed 90
days after the initial existence of the condition alleged to give rise to Good
Reason, (B) the Company fails to remedy the condition within 30 days of such
notice and (C) your termination is within six months following the initial
existence of the condition alleged to give rise to Good Reason.

      

      3.           Compensation.

      

      3.1.        Annual Base
Salary.  During the Initial Term and any Renewal Term, the
Company shall pay you, for all services you perform hereunder, an annual base
salary of U.S. $750,000.00, or such higher amount as the Compensation Committee
of the Board (the “Compensation Committee”) may determine, payable in accordance
with the Company’s payroll schedule applicable to executive officers of the
Company (“Annual Base Salary”).

      

      3.2.        Bonus
Compensation.  During the Initial Term and any Renewal Term,
the Company shall pay you annual bonus compensation, as determined by the
Compensation Committee, with an annual target amount of not less than 150% of
your Annual Base Salary, which shall be paid in accordance with and subject to
the terms and conditions of the Company’s Executive Performance Plan (as may be
amended from time to time and attached hereto as Exhibit A and incorporated
herein by reference) or such other incentive or compensation plan or arrangement
specified by the Compensation Committee.

      

      3.3.        Employee
Benefits.  During the Initial Term and any Renewal Term, you
shall be eligible to participate in and receive any benefits to which you are
entitled under the employee benefit plans that the Company provides for its
employees generally, as well as any employee benefit plans that the Company
provides for its executive officers generally.

      

      3.4.        Expenses.  During
the Initial Term and any Renewal Term, the Company shall reimburse you for all
expenses incurred by you in the performance of your duties and responsibilities
under this Agreement, including entertainment and travel expenses, in accordance
with the policies and procedures established by the Compensation
Committee.

       

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      
 

       

      3.5.        Equity
Awards.  On April 1, 2010, you shall be granted 150,000 shares
of restricted common stock of the Company (the “Stock Grant”) in accordance with
the Company’s 2009 Incentive Plan, vesting in two equal annual installments on
the second and third anniversaries of the Effective Date, except that no
installment shall vest unless you are still employed by the Company at the time
of such vesting.  Notwithstanding the foregoing, the Stock Grant shall
vest immediately (i) upon the occurrence of a Change of Control (as defined
in and pursuant and subject to the terms of Section 3.9 of this Agreement) or
(ii) in the event that, during the Initial Term or any Renewal Term, (x)
your employment is terminated by the Company without Cause or (y) you
voluntarily terminate your employment for Good Reason.  Except as
provided above, the Stock Grant shall be subject to the terms and conditions set
forth in the Company’s customary award agreements.  During the Initial
Term and any Renewal Term, you shall be eligible to receive additional equity
awards of the Company under the terms of the Company’s 2009 Incentive Plan, as
determined by the Compensation Committee.

      

      3.6         Car
Allowance.  During the Initial Term and any Renewal Term, the
Company shall pay you in cash a monthly car allowance of U.S. $1,500.00, or such
higher amount as may be determined by the Compensation Committee.

      

      3.7         Life and Disability
Insurance.  During the Initial Term and any Renewal Term, the
Company shall obtain in your name (a) a life insurance policy providing for a
death benefit of U.S. $1,000,000.00 payable to any beneficiary or beneficiaries
named by you and (b) a disability insurance policy providing for monthly
payments to you of at least U.S. $12,800.00 during the period of any disability
until the earlier of your attaining age 65 or death; provided that the term
“disability” in any such disability insurance policy shall be defined in a
manner consistent with the definition in Section 2(c)(ii).  During the
Initial Term and the Renewal Term, the Company shall pay all premiums due on
such policies.

      

      3.8.        Severance.  In
the event that, during the Initial Term or any Renewal Term, (a) your employment
is terminated by the Company without Cause or (b) you voluntarily terminate your
employment for Good Reason, the Company shall pay you an amount equal to two
times the sum of (i) your then Annual Base Salary, (ii) the average of the
annual bonuses actually paid to you with respect to the three completed years
preceding the date of your termination of employment and (iii) the aggregate
annual dollar amount of the payments made or to be made to you or on your behalf
for purposes of providing you with the benefits set forth in Sections 3.3, 3.6
and 3.7 above, less all applicable withholding and other applicable taxes and
deductions (“Severance Amount”); provided that (x) you execute and deliver to
the Company, and do not revoke, a release of all claims against the Company
substantially in the form attached hereto as Exhibit B (“Release”) and (y) you
have not materially breached as of the date of such termination any provisions
of this Agreement and do not materially breach such provisions at any time
during the Relevant Period (as defined below).  The Company’s
obligation to make such payment shall be cancelled upon the occurrence of any
such material breach and, in the event such payment has already been made, you
shall repay to the Company such payment within 30 days after demand therefore;
provided, however, such repayment shall not be required if the Company shall
have materially breached this Agreement prior to the time of your
breach.  The Severance Amount shall be paid in cash in a single lump
sum on the later of (1) the first day of the month following the month in which
such termination occurs and (2) the date the Revocation Period (as defined in
the Release) has expired.  Notwithstanding anything in this paragraph
to the contrary, if a Release is not executed and delivered to the Company
within 60 days of such termination of employment (or if such Release is revoked
in accordance with its terms), the Severance Amount shall not be
paid.  Upon the expiration of this Agreement due to non-renewal, or
upon the termination of your employment hereunder for Cause or by your death or
Disability, or by your voluntary termination of your employment hereunder
without Good Reason, you shall be entitled only to the payment of such
installments of your Annual Base Salary that have been earned through the date
of such expiration and/or termination.

      

      3.9.        Change of Control
Payments.  (a)  If at any time during the Initial
Term and any Renewal Term (i) there
is a Change of Control (as defined below) and (ii) your employment is terminated
by the Company without Cause or you voluntarily terminate your employment for
Good Reason, in either case, within the greater of two years following the
Change of Control or the remainder of the Initial Term or any Renewal Term, as
applicable, then the Company shall pay you an amount equal to three times the
sum of (a) your then Annual Base Salary, (b) the average of the annual bonuses
actually paid to you with respect to the three completed years preceding the
date of your termination of employment and (c) the aggregate annual dollar
amount of the payments made or to be made by the Company for purposes of
providing you with the benefits set forth in Sections 3.3, 3.6 and 3.7 above,
less all applicable withholding and other applicable taxes and deductions
(“Change of Control Amount”).  The Change of Control Amount shall be
paid to you in cash in a single lump sum within 30 days after the date your
employment terminates.  In the event that it is determined that the
aggregate amount of the payments and benefits that could be considered
“parachute payments” within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (collectively, with the regulations and other
guidance promulgated thereunder, the “Code”; and such payments and benefits, the
“Parachute Payments”) that, but for this Section 3.9 would be payable to you
under this Agreement or any other plan, policy or arrangement of the Company,
exceeds the greatest amount of Parachute Payments that could be paid to you
without giving rise to any liability for any excise tax imposed by
Section 4999 of the Code (the “Excise Tax”), then the aggregate amount of
Parachute Payments payable to you shall not exceed the amount that produces the
greatest after-tax benefit to you after taking into account any Excise Tax to be
payable by you.  Any reduction in Parachute Payments pursuant to the
immediately preceding sentence shall be made in the following
order:  (1) cash payments that do not constitute deferred compensation
within the meaning of Section 409A of the Code, (2) welfare or in-kind benefits,
(3) equity compensation awards and (4) cash payments that do constitute deferred
compensation, in each case, such reductions shall be made in the manner that
maximizes the present value to you of all such payments.  Subject to
the Section 280G limitation referred to above, to the extent that you are not
fully vested in any retirement benefits from any pension, profit-sharing or
other retirement plan or program maintained by the Company and your employment
terminates in the circumstances contemplated by this Section 3.9(a), the Company
shall pay directly to you within 30 days after the date on which your employment
terminates the difference between the amounts that would have been paid to you
had you been fully vested on the date that your employment terminates and the
amounts actually paid or payable to you pursuant to such plans or
programs.  The amounts payable to you under this Section 3.9(a) shall
be in lieu of any amounts payable to you under Section 3.8 above.

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
                             
(b)
As used herein, “Change of Control” shall mean the occurrence of one or more of
the following
events:

       

                    (i)  after
the Effective Date hereof, any person, entity or “group” as identified in
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “1934
Act”), other than you or any of your affiliates or Leonard Riggio or any of his
heirs or affiliates, becomes a beneficial owner (as such term is defined in Rule
13d-3 under the 1934 Act), directly or indirectly, of securities of the Company
representing 40% or more of the total number of votes that may be cast for the
election of directors of the Company; or

      

      (ii)  within two years after
a merger, consolidation, liquidation or sale of assets involving the Company, or
a contested election of a Company director, or any combination of the foregoing,
the individuals who were directors of the Company immediately prior thereto
shall cease to constitute a majority of the Board; or

      

      (iii)  within two years after
a tender offer or exchange offer for voting securities of the Company, the
individuals who were directors of the Company immediately prior thereto shall
cease to constitute a majority of the Board.

      

      4.           Non-Competition and
Confidential Information.

      

      4.1.        Non-Competition.  You
agree that during the Initial Term and any Renewal Term and for a period of two
years (the “Relevant Period”) after the termination for any reason of your
employment, you shall not, directly or indirectly, (a) employ or retain, or
induce or cause any other person or entity to employ or retain, any person who
is, or who at any time in the twelve-month period prior to such time had been,
employed or retained by the Company or any of its subsidiaries or affiliates; or
(b) provide services, whether as principal or as agent, officer, director,
employee, consultant, shareholder, or otherwise, alone or in association with
any other person, corporation or other entity, to any Competing Business (as
defined below); provided, however, that you may provide services to a Competing
Business (other than Amazon.com, Inc. and its subsidiaries and affiliates and
their respective successors (collectively, “Amazon”)) that is engaged in one or
more businesses other than the Business Area (as defined below) but only to the
extent that you do not provide services, directly or indirectly, to the segment
of such Competing Business that is engaged in the Business Area.  For
purposes of this Agreement, the term “Competing Business” shall mean (i) Amazon
or (ii) any person, corporation or other entity engaged in the Business
Area.  For purposes of this Agreement, the term “Business Area” shall
mean the sale, distribution or attempted sale or distribution of books,
textbooks, periodicals, newspapers, digital or audio versions of any of the
foregoing or e-reading devices and related software.  Notwithstanding
the foregoing, the restrictions of this Section 4.1 shall not apply to the
placement of general advertisements or the use of general search firm services
with respect to a particular geographic area, but which are not targeted,
directly or indirectly, towards employees of the Company or any of its
subsidiaries.

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      
 

      4.2.        Ownership of Other
Securities.  Nothing in Section 4.1 shall be construed as
denying you the right to own securities of any corporation listed on a national
securities exchange or quoted in the NASDAQ System in an amount up to 5% of the
outstanding number of such securities.

      

      4.3.        Confidential
Information.  (a) You shall use best efforts and diligence both
during and after any employment with the Company, regardless of how, when or why
such employment ends, to protect the confidential, trade secret and/or
proprietary character of all Confidential Information and Trade Secret
Information (as defined below).  You shall not, directly or
indirectly, use (for your benefit or for the benefit of any other person) or
disclose any Confidential Information or Trade Secret Information, for so long
as it shall remain proprietary or protectable, except as may be necessary for
the performance of your duties for the Company.  For purposes of this
Agreement, “Confidential Information” shall mean all confidential information of
the Company, regardless of the form or medium in which it is or was created,
stored, reflected or preserved, information that is either developed by you
(alone or with others) or to which you shall have had access during any
employment with the Company.  Confidential Information includes, but
is not limited to, Trade Secret Information, and also includes information that
is learned or acquired by the Company from others with whom the Company has a
business relationship in which, and as a result of which, such information is
revealed to the Company.  For purposes of this Agreement, “Trade
Secret Information” shall mean all information, regardless of the form or medium
in which it is or was created, stored, reflected or preserved, that is not
commonly known by or generally available to the public and that: (i)
derives or creates economic value, actual or potential, from not being generally
known to, and not being readily ascertainable by proper means by, other persons
who can obtain economic value from its disclosure or use; and (ii) is
the subject of efforts that are reasonable under the circumstances to maintain
its secrecy.  The Company’s Trade Secret Information may include, but
is not limited to, all confidential information relating to or reflecting the
Company’s research and development plans and activities; compilations of data;
product plans; sales, marketing and business plans and strategies; pricing,
price lists, pricing methodologies and profit margins; current and planned
incentive, recognition and rewards programs and services; personnel; inventions,
concepts, ideas, designs and formulae; current, past and prospective customer
lists; current, past and anticipated customer needs, preferences and
requirements; market studies; computer software and programs (including object
code and source code); and computer and database technologies, systems,
structures and architectures.  You understand that Confidential
Information and/or Trade Secret Information may or may not be labeled as such,
and you shall treat all information that appears to be Confidential Information
and/or Trade Secret Information as confidential unless otherwise informed or
authorized by the Company.  Nothing in this Agreement shall be
construed to mean that Company owns any intellectual property or ideas that were
conceived by you before you commenced employment with Company and which you have
previously disclosed to the Company.  Subject to Section 4.3(b),
nothing in this Section 4.3(a) shall prevent you from complying with a valid
legal requirement (whether by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar
process) to disclose any Confidential Information or Trade Secret
Information.

      

      (b)           You
agree that both during and after any employment with the Company, regardless of
how, when or why such employment ends, if you are legally required (whether by
oral questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand or similar process) to disclose any
Confidential Information or Trade Secret Information, you shall promptly notify
the Company of such request or requirement so that the Company may seek to avoid
or minimize the required disclosure and/or to obtain an appropriate protective
order or other appropriate relief to ensure that any information so disclosed is
maintained in confidence to the maximum extent possible by the agency or other
person receiving the disclosure, or, in the discretion of the Company to waive
compliance with the provisions of this Section 4.3.  Thereafter, you
shall use reasonable efforts, in cooperation with the Company or otherwise, to
avoid or minimize the required disclosure and/or to obtain such protective order
or other relief.  If, in the absence of a protective order or the
receipt of a waiver hereunder, you are compelled to disclose the Confidential
Information or Trade Secret Information or else stand liable for contempt or
suffer other sanction, censure or penalty, you shall disclose only so much of
the Confidential Information or Trade Secret Information to the party compelling
disclosure as you believe in good faith on the basis of advice of counsel is
required by law, and you shall give the Company prior notice of the Confidential
Information or Trade Secret Information you believe you are required to
disclose.  The Company shall reimburse any reasonable legal fees and
related expenses you incur in order to comply with this Section
4.3(b).

       

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      
 

      4.4.        Inventions.  You
shall promptly disclose and provide to the Company, any original works of
authorship, designs, formulas, processes, improvements, compositions of matter,
computer software programs, data, information or databases, methods, procedures
or other inventions, developments or improvements of any kind that you conceive,
originate, develop, improve, modify and/or create, solely or jointly with
others, during the period of your employment, or as a result of such employment
(collectively, “Inventions”), and whether or not any such Inventions also may be
included within “Confidential Information” or “Trade Secret Information” (as
defined under this Agreement), or are patentable, copyrightable or protectable
as trade secrets.  You acknowledge and agree that the Company is and
shall be the exclusive owner of all rights, title and interest in and to the
Inventions and, specifically, that any copyrightable works prepared by you
within the scope of your employment are “works for hire” under the Copyright
Act, that such “works for hire” are Inventions and that the Company shall be
considered the author and owner of such copyrightable works.  In the
event that any Invention is deemed not to be a “work for hire”, or in the event
that you should, by operation of law, be deemed to be entitled to retain any
rights, title or interest in and to any Invention, you hereby irrevocably waive
all rights, title and interest and assign to the Company, without any further
consideration and regardless of any use by the Company of any such Inventions,
all rights, title and interest, if any, in and to such Invention.  You
agree that the Company, as the owner of all Inventions, has the full and
complete right to prepare and create derivative works based upon the Inventions
and to use, reproduce, publish, print, copy, market, advertise, distribute,
transfer, sell, publicly perform and publicly display and otherwise exploit by
all means now known or later developed, such Inventions and derivative works
anywhere throughout the world and at any time during or after your employment
hereunder or otherwise.

      

      4.5.        Return of
Information.  You shall promptly deliver to the Company, upon
the termination for any reason of your employment, or at any other time at the
Company’s request, without retaining any copies, all documents, information and
other material in your possession or control containing, reflecting and/or
relating, directly or indirectly, to any Confidential Information and/or Trade
Secret Information.

      

      4.6         Cooperation.  You
agree that both during and after any employment with the Company, regardless of
how, when or why such employment ends, you shall provide reasonable cooperation
to the Company and its affiliates in connection with any pending or future
lawsuit, arbitration, or proceeding between the Company and/or any affiliate and
any third party, any pending or future regulatory or governmental inquiry or
investigation concerning the Company and/or any affiliate and any other legal,
internal or business matters of or concerning the Company and/or any
affiliate.  Such cooperation shall include meeting with and providing
information the Company, any affiliate and/or their respective attorneys,
auditors or other representatives as reasonably requested by the
Company.  The Company shall reimburse any reasonable legal fees and
related expenses you incur in order to comply with this Section
4.6.

      

      4.7.        Non-Disparagement.  During
and after any employment with the Company, regardless of how, when or why such
employment ends, (a) you shall not make, either directly or by or through
another person, any oral or written negative, disparaging or adverse statements
or representations of or concerning the Company or its subsidiaries or
affiliates, any of their clients or businesses or any of their current or former
officers, directors, employees or shareholders and (b) Company Parties (as
defined below) shall not make any oral or written negative, disparaging or
adverse statements or representations of or concerning you; provided, however,
that nothing herein shall prohibit (i) critical communications between you and
the Company or Company Parties during the Initial Term and any Renewal Term and
in connection with your employment or (ii) you or any Company Party from
disclosing truthful information if legally required (whether by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process).  For purposes of this
Agreement, the term “Company Parties” shall mean the executive officers and
designated spokespersons of the Company.

      

      4.8.        Severability.  If
any of the restrictions in this Section 4 should for any reason whatsoever be
declared invalid, the validity or enforceability of the remainder of this
Agreement shall not be adversely affected thereby.

       

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      
 

       

      4.9.        Equitable
Relief.  (a) You acknowledge that your services to the Company
are of a unique character that gives them a special value to the
Company.  You further recognize that any violation of the restrictions
in this Section 4 may give rise to losses or damages for which the Company
cannot be reasonably or adequately compensated in an action at law and that such
violation may result in irreparable and continuing harm to the
Company.  Accordingly, you agree that, in addition to any other remedy
that the Company may have at law or in equity, the Company shall be entitled to
injunctive relief to restrain any violation by you of the restrictions in this
Section 4.

      

      (b)         In
addition, the Company recognizes that any violation of the restrictions in
Section 4.7(b) may give rise to losses or damages for which you cannot be
reasonably or adequately compensated in an action at law and that such violation
may result in irreparable and continuing harm to you.  Accordingly,
the Company agrees that, in addition to any other remedy that you may have at
law or in equity, you shall be entitled to injunctive relief to restrain any
violation by the Company of the restrictions in Section 4.7(b).

      

      4.10.      Reasonableness.  You
acknowledge that the limitations and obligations contained in this
Section 4 are, individually and in the aggregate, reasonable and properly
required by the Company and that in the event that any such limitations are
found to be unreasonable and unenforceable, you shall submit to such limitations
and/or obligations in such form as the arbitrator shall
determine.  You agree that you shall not challenge or contest the
reasonableness, validity or enforceability of any such limitations and
obligations.

      

      5.           Indemnification.  You
shall be indemnified by the Company, as an officer of the Company and its
affiliates, against all actions, suits, claims, legal proceedings and the like
to the fullest extent permitted by law, including advancement of expenses,
partial indemnification, indemnification following the termination of this
Agreement, indemnification of your estate and similar matters.  For
purposes of this Agreement, such indemnification shall extend to, to the fullest
extent permitted by law, legal fees, costs, expenses, judgments, settlements,
claim resolution payments, arbitration fees, arbitrator fees, mediation fees,
negotiation fees and hold harmless obligations.

      

      6.           Miscellaneous.

      

      6.1.        Entire
Agreement.  This Agreement constitutes the entire agreement
between you and the Company with respect to the terms and conditions of your
employment by the Company and supersedes all prior agreements, understandings
and arrangements, oral or written, between you and the Company with respect to
the subject matter hereof.

      

      6.2.        Binding Effect;
Benefits.  This Agreement shall inure to the benefit of and
shall be binding upon you and the Company and our respective heirs, legal
representatives, successors and assigns.

      

      6.3.        Amendments and
Waivers.  This Agreement may not be amended or modified except
by an instrument or instruments in writing signed by both parties to this
Agreement.  Electronic communications, even if receipt is
acknowledged, shall not constitute an amendment or modification of this
Agreement.

      

      6.4.        Assignment.  Neither
this Agreement nor any rights or obligations that either party may have by
reason of this Agreement shall be assignable by either party without the prior
written consent of the other party.

      

      6.5.        Notices.  Any
notice that may or must be given under this Agreement shall be in writing and
shall be personally delivered or sent by certified or registered mail, postage
prepaid, or reputable overnight courier, addressed to you at the address set
forth on the first page hereof, or to the Company at 122 Fifth Avenue, New York,
NY 10011 to the attention of the Vice President for Human Resources for the
Company (with a copy to the General Counsel for the Company), or to such other
address as you or the Company, as the case may be, may designate in writing in
accordance with the provisions of this section.

      

      6.6.        Section and Other Headings;
Other.  The section and other headings contained in this
Agreement are for reference purposes only and are not deemed to be a part of
this Agreement or to affect the meaning and interpretation of this
Agreement.  For purposes of this Agreement, the term “including” shall
mean “including, without limitation.”

       

       

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      
 

       

      6.7.        Governing
Law.  This Agreement shall be construed (both as to validity
and performance) and enforced in accordance with and governed by the laws of the
State of New York applicable to agreements made and to be performed wholly
within the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York.  Except as provided in Section 6.9,
exclusive jurisdiction for all disputes or claims arising under or in connection
with this Agreement, and any and all claims by or against you relating to your
employment with the Company, shall lie in any Federal  or state court
located within the County of New York.

      

      6.8.        Survival of Rights and
Obligations.  All rights and obligations arising hereunder
shall continue to have full force and effect after the termination of this
Agreement unless otherwise provided herein to the extent necessary to preserve
the intended benefits of such provisions.  If any section of this
Agreement  is determined to be void, voidable or unenforceable, it
shall have no effect on the remainder of this Agreement, which shall remain in
full force and effect, and the provisions so held invalid or unenforceable shall
be deemed modified as to give such provisions the maximum effect permitted by
applicable law.

      

      6.9.        Arbitration.  The
parties agree that all disputes arising under or in connection with this
Agreement, and any and all claims by you relating to your employment with the
Company, including any claims of discrimination or other employment-related
claims arising under Title VII of the Civil Rights Act of 1964, as amended, the
Age Discrimination in Employment Act, the Americans with Disabilities Act or any
other employment-related Federal, state or local law, shall be submitted to
arbitration before the American Arbitration Association (“AAA”) under its rules
then prevailing for the type of claim in issue before one arbitrator and to be
held at the AAA’s office located in the County of New York.  In any
arbitration hereunder, the arbitrator shall have the power to issue appropriate
injunctive or other non-monetary relief, and award appropriate compensatory
damages.  The parties agree that no damages other than compensatory
damages shall be sought or claimed by either party and each party waives any
claim, right or entitlement to punitive, exemplary or consequential damages, or
any other damages, and each relevant arbitrator is specifically divested of any
power to award any damages in the nature of punitive, exemplary or consequential
damages, or any other damages of any kind or nature in excess of compensatory
damages.  Nothing in this arbitration provision shall preclude, and
the parties expressly acknowledge that either party may seek, temporary
injunctive relief from any Federal or state court located within the County of
New York in connection with or as supplement to an arbitration hereunder,
including regarding any claim under Section 4 of this Agreement.  For
purposes of any such action or proceeding, the parties each hereby specifically
submit to the personal jurisdiction of any Federal or state court located within
the County of New York and further agree that service of process may be made
within or without the State of New York by giving notice in the manner provided
in Section 6.5 of this Agreement.

      

      6.10.      Section 409A of the
Code.  It is intended that the provisions of this Agreement
comply with Section 409A of the Code, and all provisions of this Agreement shall
be construed and interpreted in a manner consistent with the requirements for
avoiding taxes or penalties under Section 409A of the Code.  If, at
the time of your separation from service (within the meaning of Section 409A of
the Code), (a) you shall be a specified employee (within the meaning of Section
409A of the Code and using the identification methodology selected by the
Company from time to time) and (b) the Company shall make a good faith
determination that an amount payable under this Agreement or any other plan,
policy, arrangement or agreement of or with the Company (this Agreement and such
other plans, policies, arrangements and agreements, the “Company Plans”)
constitutes deferred compensation (within the meaning of Section 409A of the
Code) the payment of which is required to be delayed pursuant to the six-month
delay rule set forth in Section 409A of the Code in order to avoid taxes or
penalties under Section 409A of the Code, then the Company shall not pay any
such amount on the otherwise scheduled payment date but shall instead accumulate
such amount and pay it, without interest, on the first day of the seventh month
following such separation from service.  Except as permitted under
Section 409A of the Code, any deferred compensation (within the meaning of
Section 409A of the Code) payable to or for your benefit under any Company Plan
may not be reduced by, or offset against, any amount owing by you to the
Company.  Except as specifically permitted by Section 409A of the
Code, the benefits and reimbursements provided to you under this Agreement and
any Company Plan during any calendar year shall not affect the benefits and
reimbursements to be provided to you under the relevant section of this
Agreement or Company Plan in any other calendar year, and the right to such
benefits and reimbursements cannot be liquidated or exchanged for any other
benefit and shall be provided in accordance with Treas. Reg. Section
1.409A-3(i)(1)(iv) or any successor thereto.  Further, in the case of
reimbursement payments, such payments shall be made to you on or before the last
day of the calendar year following the calendar year in which the underlying
fee, cost or expense is incurred.  Notwithstanding the preceding, the
Company makes no representations concerning the tax consequences of your
participation in this Agreement under Section 409A of the Code or any other
Federal, state or local tax law.  Your tax consequences shall depend,
in part, upon the application of relevant tax law, including Section 409A of the
Code, to the relevant facts and circumstances.  You should consult a
competent and independent tax advisor regarding the tax consequences of this
Agreement.

       

       

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      
 

      6.11.      Representations and
Warranties.  You hereby represent and warrant to the Company
that (a) your execution, delivery and performance of this Agreement do not and
shall not conflict with, breach, violate or cause a default under any contract,
agreement, instrument, order, judgment or decree to which you are a party or by
which you are bound; (b) you are not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any other
person or entity that has not been disclosed to the Company prior to the
execution of this Agreement; (c) in the performance of any duties and
responsibilities on behalf of the Company, you shall not divulge or use in any
way any trade secrets or confidential or proprietary information that are within
your possession or knowledge (if any), are owned by any other person or entity
and regardless of whether or not such trade secrets or confidential or
proprietary information are subject to any written agreement; and (d) upon the
execution and delivery of this Agreement, it shall be a valid and binding
obligation, enforceable in accordance with its terms.  You hereby
acknowledge and represent that you fully understand the terms and conditions
contained herein.

      

      6.12.      Counterparts. This
Agreement may be executed in one or more identical counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.

       

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      
 

      If the foregoing accurately reflects
our agreement, kindly sign and return to us the enclosed duplicate copy of this
letter.

      

      Very truly yours,

      

      

      
        	
                BARNES
      & NOBLE, INC.

              
	 
	 
      
	
                By:

              	/s/
      Michelle Smith  
	 
      	
                Name: 
      Michelle Smith

              
	 
      	
                Title:    Vice
      President, Human Resources

              
	 
      	 
      
	 	 
	 	 
	Date: 	March
      18, 2010 

      

      

      

      

      
        	
                Accepted
      and Agreed to:

              
	 
	
                JOSEPH
      J. LOMBARDI

              
	 
      
	
                By:

              	/s/
      Joseph J. Lombardi  
	 
      	
                Name:  Joseph
      J. Lombardi

              
	 
      	 
      
	 	 
	 	 
	Date:	March
      18, 2010 	 
	 	 

      

      

      

      

      

       

      

      

      

      

      

      

      

      

      

      

      

      

      

      [Signature Page to Employment
Agreement]

       

       

       

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
            EXHIBIT A

          

        

      

       

       

      BARNES
& NOBLE, INC.

      2009
EXECUTIVE PERFORMANCE PLAN

      

      

      BARNES &
NOBLE, INC., a corporation existing under the laws of the State of Delaware
(the “Company”), hereby establishes and adopts the following 2009 Executive
Performance Plan (the “Plan”). Certain capitalized terms used in the Plan are
defined in Article 2.

      

      RECITALS

      

      WHEREAS, the Company desires
to encourage high levels of performance by those individuals who are key to the
success of the Company, to attract new individuals who are highly motivated and
who are expected to contribute to the success of the Company and to stimulate
the efforts of such individuals to contribute to the continued success and
growth of the Company’s business; and

      

      WHEREAS, to attain these ends,
the Company has formulated the Plan embodied herein to authorize the awarding of
bonuses that are intended to qualify as “performance based compensation” within
the meaning of Section 162(m) of the Code.

      

      NOW, THEREFORE, the Company
hereby constitutes, establishes and adopts the following Plan and agrees to the
following provisions:

      

      ARTICLE
1

      

      PURPOSE
OF THE PLAN

      

      1.1.    Purposes. The purposes of the
Plan are to provide personal incentive and financial rewards to senior
management who, because of the extent of their responsibilities, can and do make
significant contributions to the success of the Company by their ability,
industry, loyalty and exceptional services. Making such senior management
participants in that success will advance the interests of the Company and its
stockholders and will assist the Company in attracting and retaining such senior
management.

      

      ARTICLE 2

      

      DEFINITIONS

      

      2.1.   “Award” shall mean the amount
of the Incentive Award paid to a Participant pursuant to the Plan.

      

      2.2.   “Board” shall mean the board
of directors of the Company.

      

      2.3.   “Certification” shall have
the meaning set forth in Section 4.2.

      

      2.4.   “Code” shall mean the
Internal Revenue Code of 1986, as amended from time to time, and any successor
thereto.

      

      2.5.   “Committee” shall mean the
Compensation Committee of the Board (or such other committee designated by the
Compensation Committee of the Board), consisting of no fewer than two directors,
each of whom is (i) a “Non-Employee Director” within the meaning of
Rule 16b-3 (or any successor rule) of the Exchange Act, (ii) an
“outside director” within the meaning of Section 162(m)(4)(C)(i) of the
Code, and (iii) an “independent director” for purpose of the rules and
regulations of the New York Stock Exchange.

      

      2.6.   “Company” has the meaning set
forth in the introductory paragraph of the Plan.

      

      2.7.   “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.

       

       

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
            EXHIBIT A

          

        

      

      
 

      2.8.   “Incentive Award” shall mean an amount
equal to 1.5% of the Company’s Operating Income for the Performance Period for
each Participant.

      

      2.9.   “Operating Income” shall mean
the gross profit minus operating expenses of the Company and its Subsidiaries on
a consolidated basis, before deduction of interest payments and income taxes and
accrual of any amounts for payment under this Plan for the Performance Period,
as reported in the Company’s income statement for the applicable Performance
Period, without regard to items relating to (a) restructurings,
discontinued operations, extraordinary items, and other unusual or non-recurring
charges, (b) an event either not directly related to the operations of the
Company or not within the reasonable control of the Company’s management, or
(c) changes in accounting standards required by generally accepted
accounting principles, in each case as determined in accordance with generally
accepted accounting principles and as reported in (x) the Company’s consolidated
statement of operations, (y) notes to the Company’s consolidated financial
statements or (z) management’s discussion and analysis with respect to the
Company’s consolidated financial statements as filed with the U.S. Securities
and Exchange Commission, in each case for the applicable Performance
Period.

      

      2.10. “Participant” shall mean the
Company’s Chief Executive Officer and each other executive officer of the
Company selected by the Committee pursuant to Section 4.1 to participate in
this Plan with respect to any given Performance Period.

      

      2.11. “Performance Period” shall
mean the Company’s fiscal year or any other period during a fiscal year that the
Committee, in its sole discretion, may determine.

      

      2.12. “Shares” shall mean the
shares of common stock of the Company, par value $0.001 per
share.

      

      2.13. “Subsidiary” shall mean any
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if, at the time of the granting of the Award, each of
the corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one of the other corporations in the chain, excluding any such
Subsidiary whose securities are publicly traded.

       

      
 

      ARTICLE 3

      

      ELIGIBILITY
AND ADMINISTRATION

      

      3.1.    Eligibility. The individuals
eligible to participate in the Plan shall be the Company’s Chief Executive
Officer and any other executive officer of the Company or any Subsidiary
selected by the Committee to participate in the Plan.

      

      3.2.    Administration.
 (a)  The Plan shall be administered by the
Committee.  The Committee shall have full power and authority, subject
to the provisions of the Plan and subject to such orders or resolutions not
inconsistent with the provisions of the Plan as may from time to time be adopted
by the Board, to: (i) select the Participants to whom Incentive Awards may
from time to time be granted hereunder; (ii) determine the terms and
conditions of Incentive Awards, not inconsistent with the provisions of the
Plan, and whether an Award shall be paid in cash or Shares; (iii) determine
the time when Incentive Awards will be made and the Performance Period to which
they relate; (iv)  certify the calculation of Operating Income and the
amount of the Incentive Award payable to each Participant in respect of
Performance Periods; (v) in connection with the determination of the amount
of each Award, determine whether and to what extent the Incentive Award shall be
reduced based on such factors as the Committee deems appropriate in its
discretion; (vi) interpret and administer the Plan; (vii) correct any
defect, supply any omission or reconcile any inconsistency in the Plan in the
manner and to the extent that the Committee shall deem desirable to carry it
into effect; (viii) establish such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (ix) make any other determination and take any other action that the
Committee deems necessary or desirable for administration of the
Plan.

      

      (b)    
Decisions of the Committee shall be final, conclusive and binding on all persons
or entities, including the Company, any Participant and any person claiming any
benefit or right under an Incentive Award or under the Plan. A majority of the
members of the Committee may determine its actions and fix the time and place of
its meetings.

       

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
            EXHIBIT A

          

        

      

      
 

      (c)    
To the extent not inconsistent with the applicable provisions of
Section 162(m) of the Code, applicable law or the rules and regulations of
the New York Stock Exchange, the Committee may delegate to one or more officers
of the Company or any of its Subsidiaries the authority to take actions on its
behalf pursuant to the Plan.

      

      ARTICLE 4

      

      AWARDS

      

      4.1.   Performance Period. Not later
than 90 days after the commencement of each fiscal year of the Company, the
Committee shall, in writing, (i) designate one or more Performance Periods for
such fiscal year, provided that any Performance Period of less than one year
shall be designated no later than the date on which 25% of such Performance
Period has lapsed, (ii) determine the Participants for such Performance
Period(s), and (iii) specify any adjustments to Operating Income for the
Performance Period.  If a person becomes eligible to participate in
the Plan after the Committee has made its initial written determination of the
Participants for a Performance Period, such individual may become a Participant
for the Performance Period if so designated by the Committee in
writing.

      

      4.2.   Certification. As soon as
reasonably practicable following the conclusion of each Performance Period, the
Committee shall certify, in writing, the amount of Operating Income and the
Incentive Award for each Participant (the “Certification”).

      

      4.3.   Payment of Incentive Awards.
Following each Certification, the Committee shall determine the amount of the
Incentive Award actually payable to each Participant in its sole discretion
based on such factors as it deems appropriate, provided that the actual Award
shall not exceed the Incentive Award with respect to such Participant. The Award
amount determined by the Committee for a Performance Period shall, subject to
Section 4.4, be paid to each Participant no later than the fifteenth day of
the third month following the end of the fiscal year of the Company in which the
applicable Performance Period ends. Awards shall be paid in cash or, in the
Committee’s sole discretion, in shares under a shareholder approved stock plan
of the Company or any combination thereof.

      

      4.4.   Deferral. A Participant shall
be entitled to elect to defer the payment of any Award payable to such
Participant under the Plan pursuant to a plan or arrangement satisfying the
requirements of Section 409A of the Code.

      

      4.5.   Changes in Employment. If a
person becomes a Participant during a Performance Period (pursuant to the last
sentence of Section 4.1 herein) or if a Participant dies or retires or if a
Participant’s employment otherwise ceases during a Performance Period (except
for termination by the Company for cause, as determined by the Committee in its
sole discretion), the Incentive Award payable to such a Participant may be
proportionately reduced based on the period of actual employment during the
applicable Performance Period), as determined by the Committee in its sole
discretion.

      

      ARTICLE 5

      

      GENERALLY
APPLICABLE PROVISIONS

      

      5.1.   Amendment and Termination of the
Plan. The Board may, from time to time,
alter, amend, suspend or terminate the Plan as it shall deem advisable, subject
to any requirement for stockholder approval imposed by applicable law, including
Section 162(m) of the Code or by the
rules and regulations of the New York Stock Exchange.

      

      5.2.   Section 162(m) of the
Code. Unless otherwise determined by the Committee, the provisions of
this Plan shall be administered and interpreted in accordance with
Section 162(m) of the Code to ensure the deductibility by the Company or
its Subsidiaries of the payment of Awards.

      

      5.3.   Tax Withholding. The Company
or any Subsidiary shall have the right to make all payments or distributions
pursuant to the Plan to a Participant, net of any applicable Federal, State and
local taxes required to be paid or withheld. The Company or any Subsidiary shall
have the right to withhold from wages, Awards or other amounts otherwise payable
to such Participant such withholding taxes as may be required by law, or to
otherwise require the Participant to pay such withholding taxes. If the
Participant shall fail to make such tax payments as are required, the Company or
any Subsidiary shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to such Participant or
to take such other action as may be necessary to satisfy such withholding
obligations.

       

       

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
            EXHIBIT A

          

        

      

      
 

      5.4.   Right of Discharge Reserved; Claims
to Awards. Nothing in the Plan nor the grant of an Award hereunder shall
confer upon any Participant the right to continue in the employment of the
Company or any Subsidiary or affect any right that the Company or any Subsidiary
may have to terminate the employment of (or to demote or to exclude from future
Awards under the Plan) any such Participant at any time for any reason. No
Participant shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment of Participants under the
Plan.

      

      5.5.   Other Plans. Nothing
contained in the Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to stockholder approval if such approval is
required; and such arrangements may be either generally applicable or applicable
only in specific cases.

      

      5.6.    Severability. If any
provision of the Plan shall be held unlawful or otherwise invalid or
unenforceable in whole or in part by a court of competent jurisdiction, such
provision shall (a) be deemed limited to the extent that such court of
competent jurisdiction deems it lawful, valid and/or enforceable and as so
limited shall remain in full force and effect, and (b) not affect any other
provision of the Plan or part thereof, each of which shall remain in full force
and effect. If the making of any payment or the provision of any other benefit
required under the Plan shall be held unlawful or otherwise invalid or
unenforceable by a court of competent jurisdiction, such unlawfulness,
invalidity or unenforceability shall not prevent any other payment or benefit
from being made or provided under the Plan, and if the making of any payment in
full or the provision of any other benefit required under the Plan in full would
be unlawful or otherwise invalid or unenforceable, then such unlawfulness,
invalidity or unenforceability shall not prevent such payment or benefit from
being made or provided in part, to the extent that it would not be unlawful,
invalid or unenforceable, and the maximum payment or benefit that would not be
unlawful, invalid or unenforceable shall be made or provided under the
Plan.

      

      5.7.   Construction. All references
in the Plan to
“Section,” or
“Article” are intended to refer to the Section, Sections or Article, as
the case may be, of the Plan. As used in the Plan, the word  “including,” and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words  “without
limitation.”

      

      5.8.   Unfunded Status of the Plan.
The Plan is intended to constitute an “unfunded” plan for incentive
compensation. With respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights
that are greater than those of a general creditor of the Company or any
Subsidiary.

      

      5.9.   Governing Law. The Plan and
all determinations made and actions taken thereunder, to the extent not
otherwise governed by the Code or the laws of the United States, shall be
governed by the laws of the State of Delaware, without reference to principles
of conflict of laws that might result in the application of the laws of another
jurisdiction, and construed accordingly.

      

      5.10. Effective Date of Plan. The
Plan shall be effective on the date of the approval of the Plan by the holders
of a majority of the shares entitled to vote at a duly constituted meeting of
the stockholders of the Company. The Plan shall be null and void and of no
effect if the foregoing condition is not fulfilled.

      

      5.11. Captions. The captions in the
Plan are for convenience of reference only, and are not intended to narrow,
limit or affect the substance or interpretation of the provisions contained
herein.

       

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
            EXHIBIT B

          

        

      

       

       

      GENERAL RELEASE AND
WAIVER

      

      1.           [Name]
(“Employee”) hereby acknowledges and agrees that Employee’s employment with
Barnes & Noble, Inc. (the “Company”) terminated on __________, 20__ (the
“Termination Date”).

      

      2.           Employee
acknowledges and agrees that Employee’s executing this General Release and
Waiver (“Release”) is a condition precedent to the Company’s obligation to pay
(and the Employee’s right to retain) the payments and benefits set forth in
Section 3.8 of the employment letter agreement, dated as of March 17 2010,
between Employee and the Company (such agreement referred to herein as the
“Employment Agreement” and such payments and benefits collectively referred to
herein as the “Separation Benefit”), that the Separation Benefit is adequate
consideration for this Release, and that any monetary or other benefits that,
prior to the execution of this Release, Employee may have earned or accrued, or
to which Employee may have been entitled, have been paid or such payments or
benefits have been released, waived or settled by Releasor (as defined below)
except as expressly provided in this Release.

      

      3.           (a)           THIS
SECTION PROVIDES A COMPLETE RELEASE AND WAIVER OF ALL EXISTING AND POTENTIAL
CLAIMS EMPLOYEE MAY HAVE AGAINST EVERY PERSON AND ENTITY INCLUDED WITHIN THE
DESCRIPTION BELOW OF “RELEASEE.”  BEFORE EMPLOYEE SIGNS THIS RELEASE,
EMPLOYEE MUST READ THIS SECTION CAREFULLY, AND MAKE SURE THAT EMPLOYEE
UNDERSTANDS IT FULLY.

      

       
(b)           In
consideration of Employee’s receipt and acceptance of the Separation Benefit
from the Company, and on behalf of the Company and each Releasee (as defined
below), Employee, on Employee’s behalf and on behalf of Employee’s heirs,
executors, administrators, successors and assigns (collectively, “Releasor”),
hereby irrevocably, unconditionally and generally releases the Company, its
current and former officers, directors, shareholders, trustees, parents,
members, managers, affiliates, subsidiaries, branches, divisions, benefit plans,
agents, attorneys, advisors, counselors and employees, and the current and
former officers, directors, shareholders, agents, attorneys, advisors,
counselors and employees of any such parent, affiliate, subsidiary, branch or
division of the Company and the heirs, executors, administrators, receivers,
successors and assigns of all of the foregoing (each, a “Releasee”), from or in
connection with, and hereby waives and/or settles, except as provided in Section
3(c), any and all actions, causes of action, suits, debts, dues, sums of money,
accounts, controversies, agreements, promises, damages, judgments, executions,
or any liability, claims or demands, known or unknown and of any nature
whatsoever, whether or not related to employment, and which Releasor ever had,
now has or hereafter can, shall or may have as of the date of this Release,
including, without limitation, (i) any rights and/or claims arising under any
contract, express or implied, written or oral, including, without limitation,
the Employment Agreement; (ii) any rights and/or claims arising under any
applicable foreign, Federal, state, local or other statutes, orders, laws,
ordinances, regulations or the like, or case law, that relate to employment or
employment practices, including, without limitation, family and medical, and/or,
specifically, that prohibit discrimination based upon age, race, religion, sex,
color, creed, national origin, sexual orientation, marital status, disability,
medical condition, pregnancy, veteran status or any other unlawful bases,
including, without limitation, the Civil Rights Act of 1964, as amended, the
Civil Rights Act of 1991, as amended, the Civil Rights Acts of 1866 and 1871, as
amended, the Age Discrimination in Employment Act of 1967, as amended, the
Americans with Disabilities Act of 1990, as amended, the Family Medical Leave
Act of 1993, as amended, the Employee Retirement Income Security Act of 1974, as
amended, the Vietnam Era Veterans’ Readjustment Assistance Act of 1974, as
amended, the Worker Adjustment and Retraining Notification Act of 1988, as
amended, and any similar applicable statutes, orders, laws, ordinances,
regulations or the like, or case law, of the State of New York and any State in
which any Releasee is subject to jurisdiction, or any political subdivision
thereof, including, without limitation, the New York State Human Rights Law, the
New York State Labor Law and the New York City Human Rights Law, and all
applicable rules and regulations promulgated pursuant to or concerning any of
the foregoing statutes, orders, laws, ordinances, regulations or the like; (iii)
any waivable rights and/or claims relating to wages and hours, including under
state or local labor or wage payment laws; (iv) any rights and/or claims to
benefits that Employee may have or become entitled to receive under any
severance, termination, change of control, bonus or similar policy, plan,
program, agreement or similar or related arrangements, including, without
limitation, any offer letter, letter agreement or employment agreement between
Employee and the Company; (v) any rights and/or claims that Employee may have to
receive any equity in the Company (whether restricted or unrestricted) in the
future; and (vi) and any rights and/or claims for attorneys’
fees.  Employee agrees not to challenge or contest the reasonableness,
validity or enforceability of this Release.

       

       

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
            EXHIBIT B

          

        

      

       

       

                                   
c)           Notwithstanding
the foregoing, Employee does not release any Releasee from any of the following
rights and/or claims:  (i) any rights and/or claims Employee may have
that arise after the date Employee signs this Release; (ii) any rights and/or
claims that by law cannot be waived by private agreement; (iii) Employee’s right
to file a charge with or participate in any investigation or proceeding
conducted by the U.S. Equal Employment Opportunity Commission (“EEOC”) or
similar government agency; provided that even though Employee can file a charge
or participate in an investigation or proceeding conducted by the EEOC or
similar government agency, by executing this Release, Employee is waiving his
ability to obtain relief of any kind from any Releasee to the extent permitted
by law; (iv) Employee’s non-forfeitable rights to accrued benefits (within the
meaning of Sections 203 and 204 of ERISA); (v) any rights and/or claims to
insurance coverage under any directors’ and officers’ personal liability
insurance or fiduciary insurance policy; and (vi) any rights and/or claims to
enforce the Employment Agreement in accordance with its terms.

      

      4.           Employee
represents and warrants that Employee has not filed or commenced any complaints,
claims, actions or proceedings of any kind against any Releasee with any
Federal, state or local court or any administrative, regulatory or arbitration
agency or body.  Employee hereby waives any right to, and agrees not
to, seek reinstatement or employment of any kind with any Releasee and, without
waiver by any Releasee of the foregoing, the existence of this Release shall be
a valid, nondiscriminatory basis for rejecting any such application or, in the
event Employee obtains such employment, for terminating such
employment.  This Release and the Separation Benefit are not intended
to be, shall not be construed as and are not, an admission or concession by any
Releasee of any wrongdoing or illegal or actionable acts or
omissions.

      

      5.           (a)           Employee
hereby represents and agrees that Employee shall keep confidential and not
disclose orally or in writing, to any person, except as may be required by law,
any and all information concerning the existence or terms of this Release and
the amount of any payments made hereunder.  Employee further agrees
that, except as shall be required by law, Employee shall keep confidential and
not disclose orally or in writing, directly or indirectly, to any person (except
Employee’s immediate family, attorneys and accountant), any and all information
concerning any facts, claims or assertions relating or referring to any
experiences of Employee or treatment Employee received by or on behalf of any
Releasee through the date of this Release.

      

      (b)           If
Employee is requested or required (by oral questions, interrogatories, requests
for information or documents, subpoena, civil investigative demand or similar
process) to disclose any information covered by Section 5(a), Employee shall
promptly notify the Company of such request or requirement so that the Company
may seek to avoid or minimize the required disclosure and/or to obtain an
appropriate protective order or other appropriate relief to ensure that any
information so disclosed is maintained in confidence to the maximum extent
possible by the agency or other person receiving the disclosure, or, in the
discretion of the Company, to waive compliance with the provisions of this
Release.  Employee shall use reasonable efforts, in cooperation with
the Company or otherwise, to avoid or minimize the required disclosure and/or to
obtain such protective order or other relief.  If, in the absence of a
protective order or the receipt of a waiver hereunder, Employee is compelled to
disclose such information or else stand liable for contempt or suffer other
sanction, censure or penalty, Employee shall disclose only so much of such
information to the party compelling disclosure as he believes in good faith on
the basis of advice of counsel is required by law, and Employee shall give the
Company prior notice of such information he believes he is required to
disclose.

      

      6.           (a)           Employee
shall not make, either directly or by or through another person, any oral or
written negative, disparaging or adverse statements or representations of or
concerning any Releasee.

      

      (b)           Without
limitation to the survival of any other terms of the Employment Agreement
subsequent to the end of Employee’s employment, the expiration or termination of
the Employment Agreement, and/or the execution and effectiveness of this
Release, Employee and the Company expressly acknowledge that the terms of
Sections 4 and 5 of the Employment Agreement survive and shall be in full force
and effect as provided in the Employment Agreement.

       

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
            EXHIBIT B

          

        

      

      
 

      7.           The
covenants, representations and acknowledgments made by Employee in this Release
shall continue to have full force and effect after the execution and
effectiveness of this Release and the delivery of the Separation Benefit, and
this Release shall inure to the benefit of each Releasee, and the successors and
assigns of each of them, to the extent necessary to preserve the intended
benefits of such provisions.  If any section of this Release is
determined to be void, voidable or unenforceable, it shall have no effect on the
remainder of this Release, which shall remain in full force and effect, and the
provisions so held invalid or unenforceable shall be deemed modified as to give
such provisions the maximum effect permitted by applicable
law.  Without limitation to Section 3.8 of the Employment Agreement,
the Company shall be excused and released from any obligation to make payment of
the Separation Benefit, and Employee shall be obligated to return to the Company
the Separation Benefit, in the event that Employee is found to have (a) made a
material misstatement in any term, condition, covenant, representation or
acknowledgment in this Release, or (b) Employee is found to have committed or
commits a material breach of any term, condition or covenant in this
Release.

      

      8.           This
Release and the Employment Agreement constitute the sole and complete agreement
between the parties with respect to the matters set forth therein and supersedes
all prior agreements, understandings and arrangements, oral or written, between
Employee and the Company with respect to the subject matter
thereof.  This Release may not be amended or modified except by an
instrument or instruments in writing signed by the party against whom
enforcement of any such modification or amendment is sought.  Either
party may, by an instrument in writing, waive compliance by the other party with
any term or provision of this Release to be performed or complied with by such
other party.

      

      9.           With
respect to any claims or disputes under or in connection with this Release or
any claims released under Section 3 of this Release, Employee and the Company
hereby acknowledge and agree that Sections 6.7 and 6.9 of the Employment
Agreement shall govern.  Employee acknowledges that a breach or
threatened breach of the provisions of this Release may give rise to losses or
damages for which the Company cannot be reasonably or adequately compensated in
an action at law, and that such violation may result in irreparable and
continuing harm to the Company.  Accordingly, Employee agrees that, in
addition to any other remedy that the Company may have at law or in equity, the
Company shall be entitled to seek equitable relief, including, without
limitation, injunction and specific performance and Employee hereby waives any
requirements for security or posting of any bond in connection with such
relief.  No specification in this Release of any particular remedy
shall be construed as a waiver or prohibition of any other remedies (including
claims for damages) in the event of a breach or threatened breach of this
Release.

      

      10.         Employee
agrees and acknowledges that (a) Employee has had an adequate opportunity to
review this Release and all of its terms, (b) Employee understands all of the
terms of this Release, which are fair, reasonable and are not the result of any
fraud, duress, coercion, pressure or undue influence exercised by or on behalf
of any Releasee and (c) Employee has agreed to and/or entered into this Release
and all of the terms hereof, knowingly, freely and voluntarily.

      

      11.         By executing this Release, Releasor
acknowledges that (a) Employee has been advised by the Company to consult with
an attorney before executing this Release; (b) Employee was provided adequate
time (i.e., at least 21 days) to review this Release and to consider whether to
sign this Release and (c)
Employee has been advised that Employee has 7 days following execution to revoke
this Release (“Revocation Period”).  Notwithstanding anything to the
contrary contained herein or in the Employment Agreement, this Release shall not
be effective or enforceable, and the Separation Benefit is not payable and shall
not be delivered or paid by the Company, until the Revocation Period has expired
and provided that Employee has not revoked this Release.  Employee
agrees that any revocation shall be made in writing and delivered to
____________, Vice President, Human Resources, Barnes & Noble, Inc., 122
Fifth Avenue, NY, NY 10011.  Employee acknowledges that revocation of
this Release shall result in the Company’s not having an obligation to pay the
Separation Benefit.

      

      

      

      
        	
                Signature:

              	
                 

              	 	Date:	 	
                 

              
	
                 [Name]

              	 	 
      

      

      
 

       

       

       3

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