Document:

Exhibit 10.3

 

EMPLOYEE MATTERS AGREEMENT

By and Between

BARNES & NOBLE, INC.

and

BARNES & NOBLE EDUCATION, INC.

Dated as of August 2, 2015

 

  

TABLE OF CONTENTS

Page

	
ARTICLE I

	 
	
Definitions

	 
	
SECTION 1.01.

	
Definitions

	
1

	
SECTION 1.02.

	
Glossary of Defined Terms

	
4

	 	 	 
	
ARTICLE II

	 
	
General Principles

	 
	
SECTION 2.01.

	
BNED Employees

	
4

	
SECTION 2.02.

	
Transferred to BNED Employees

	
5

	
SECTION 2.03.

	
Collectively Bargained Employees

	
5

	
SECTION 2.04.

	
Liabilities

	
5

	
SECTION 2.05.

	
Benefit Plans

	
5

	
SECTION 2.06.

	
Payroll Services

	
6

	 	 	 
	
ARTICLE III

	 
	
Bonuses

	 
	
SECTION 3.01.

	
BNED Employee Annual Bonuses

	
6

	
SECTION 3.02.

	
BNED Employee Retention Bonuses

	
6

	 	 	 
	
ARTICLE IV

	 
	
Service Credit

	 
	
SECTION 4.01.

	
B&N Benefit Plans

	
6

	
SECTION 4.02.

	
BNED Benefit Plans

	
6

	 	 	 
	
ARTICLE V

	 
	
Severance

	 
	
SECTION 5.01.

	
Post-Distribution Severance

	
7

	
SECTION 5.02.

	
Transferred To BNED Employees

	
7

	 	 	 

	
ARTICLE VI

	 
	
Certain Welfare Benefit Plan Matters

	 
	
SECTION 6.01.

	
BNED Welfare Plans

	
7

	
SECTION 6.02.

	
Allocation of Welfare Benefit Claims

	
7

	
SECTION 6.03.

	
Workers’ Compensation Claims

	
8

	
SECTION 6.04.

	
COBRA

	
8

	 	 	 
	
ARTICLE VII

	 
	
Defined Benefit Pension Plan

	 
	
SECTION 7.01.

	
B&N Defined Benefit Pension Plan

	
9

	 	 	 
	
ARTICLE VIII

	 
	
Defined Contribution Plan

	 
	
SECTION 8.01.

	
BNED 401(k) Plan

	
9

	
SECTION 8.02.

	
Trust-to-Trust Transfer

	
9

	
SECTION 8.03.

	
Employer 401(k) Plan Contributions

	
10

	
SECTION 8.04.

	
Limitation of Liability

	
10

	 	 	 
	
ARTICLE IX

	 
	
Nonqualified Deferred Compensation

	 
	
SECTION 9.01.

	
B&N Deferred Compensation Plan

	
10

	
SECTION 9.02.

	
Section 409A

	
10

	 	 	 
	
ARTICLE X

	 
	
Flexible Spending Arrangements; Transportation Reimbursement Arrangements

	 
	
SECTION 10.01.

	
Flexible Spending Arrangements

	
11

	
SECTION 10.02.

	
Transportation Reimbursement Arrangements

	
11

	 	 	 
	
ARTICLE XI

	 
	
Vacation

	 
	
SECTION 11.01.

	
Vacation

	
12

ii

	
ARTICLE XII

	 
	
B&N Equity Compensation Awards

	 
	
SECTION 12.01.

	
Treatment of Outstanding B&N Stock Options

	
13

	
SECTION 12.02.

	
Treatment of Outstanding B&N Restricted Stock Units

	
13

	
SECTION 12.03.

	
Treatment of Outstanding B&N Restricted Shares

	
13

	 	 	 
	
ARTICLE XIII

	 
	
Benefit Plan Reimbursements

	 
	
SECTION 13.01.

	
Pre-Separation Benefit Plan Matters

	
14

	 	 	 
	
ARTICLE XIV

	 
	
Cooperation; Access to Information; Litigation; Confidentiality

	 
	
SECTION 14.01.

	
Cooperation

	
14

	
SECTION 14.02.

	
Access to Information; Litigation; Confidentiality

	
15

	 	 	 
	
ARTICLE XV

	 
	
Reimbursements

	 
	
SECTION 15.01.

	
Reimbursements by the BNED Group

	
15

	
SECTION 15.02.

	
Invoices

	
15

	 	 	 
	
ARTICLE XVI

	 
	
Termination

	 
	
SECTION 16.01.

	
Termination

	
15

	
SECTION 16.02.

	
Effect of Termination

	
15

	 	 	 
	
ARTICLE XVII

	 
	
Indemnification

	 
	
SECTION 17.01.

	
Incorporation of Indemnification Provisions of Separation Agreement

	
15

iii

	
ARTICLE XVIII

	 
	
Further Assurances; Tax Treatment of Certain Amounts Paid Pursuant to this Agreement

	 
	
SECTION 18.01.

	
Further Assurances

	
15

	
SECTION 18.02.

	
Tax Treatment of Certain Amounts Paid Pursuant to this Agreement

	
16

	 	 	 
	
ARTICLE XIX

	 
	
Miscellaneous

	 
	
SECTION 19.01.

	
Administration

	
17

	
SECTION 19.02.

	
Employment Tax Reporting Responsibility

	
17

	
SECTION 19.03.

	
Confidentiality

	
17

	
SECTION 19.04.

	
Additional Provisions

	
18

iv

EMPLOYEE MATTERS AGREEMENT (this “Agreement”), dated as of August 2, 2015, by and between BARNES & NOBLE, INC., a Delaware corporation (“B&N”), and BARNES & NOBLE EDUCATION, INC., a Delaware corporation (“BNED”, and together with B&N, the “Parties”).

R E C I T A L S

WHEREAS the Parties have entered into the Separation and Distribution Agreement (the “Separation Agreement”) dated as of July 14, 2015, pursuant to which B&N intends to effect the Distribution; and

WHEREAS the Parties wish to set forth their agreements as to certain matters regarding employment, compensation and employee benefits as well as arrangements with certain non-employee service providers.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

Definitions

SECTION 1.01.       Definitions.  For purposes of this Agreement, the following terms shall have the following meanings.  All capitalized terms used but not defined herein shall have the meanings assigned to them in the Separation Agreement unless otherwise indicated.

“Benefit Plan” shall mean any plan, program, policy, agreement, arrangement or understanding that is an employment, consulting, deferred compensation, executive compensation, incentive bonus or other bonus, employee pension, profit sharing, savings, retirement, supplemental retirement, stock option, stock purchase, stock appreciation right, restricted stock, restricted stock unit, deferred stock unit, other equity-based compensation, severance pay, retention, change in control, salary continuation, life, death benefit, health, hospitalization, workers’ compensation, sick leave, vacation pay, disability or accident insurance or other employee benefit plan, program, agreement or arrangement, including any “employee benefit plan” (as defined in Section 3(3) of ERISA) (whether or not subject to ERISA) sponsored or maintained by such entity or to which such entity is a party.

“BNED Benefit Plan” shall mean any Benefit Plan sponsored or maintained by any member of the BNED Group or to which any member of the BNED Group is a party.

“BNED Employee” shall mean, as of any applicable date, each Employee employed by a member of the BNED Group, including any individual who is not actively at work due to a leave of absence (including vacation, holiday, illness, injury, short-term

disability or long-term disability) from which such employee is permitted to return to active employment in accordance with the BNED Group’s personnel policies, but excluding any Former BNED Employee.

“BNED Service Provider” shall mean, as of an applicable date, each Service Provider providing services to a member of the BNED Group.

“B&N Benefit Plan” shall mean any Benefit Plan sponsored or maintained by any member of the B&N Group or to which any member of the B&N Group is a party.

“B&N Benefit Plan Costs Reimbursement Amounts” shall mean, with respect to any calendar month ending at or after the Distribution, the amount, if any, of the B&N Benefit Plan Costs plus the B&N COBRA Costs incurred by the members of the B&N Group during such calendar month (in each case, as set forth in Section 13.01), which amount shall be paid pursuant to Section 15.01.

“B&N Service Provider” shall mean, as of an applicable date, each Service Provider providing services to a member of the B&N Group.

“B&N Welfare Plan” shall mean each Welfare Plan sponsored or maintained by a member of the B&N Group.

“COBRA” shall mean the U.S. Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and any applicable similar state or local laws.

“Code” shall mean the U.S. Internal Revenue Code of 1986, as amended.

“Employee” shall mean any individual employed by another Person.

“Employment Taxes” shall mean all fees, Taxes, social insurance payments or similar contributions to a fund of a Governmental Authority with respect to wages or other compensation of an Employee or Service Provider.

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

“Fair Market Value” of a share of B&N Common Stock or BNED Common Stock shall mean, with respect to any given date, the per share closing price of the shares of B&N Common Stock or BNED Common Stock, respectively, as reported on the New York Stock Exchange on that date (or if there was no reported closing price on such date, on the last preceding date on which the closing price was reported) or, if such stock is not then listed on the New York Stock Exchange, the per share closing price of such stock as reported on an established securities market (within the meaning of Treasury Regulations Section 1.897-1(m)) on which the shares of such stock are traded.  If the B&N Common Stock or BNED Common Stock on any such date is not listed on an established securities market (within the meaning of Treasury Regulations Section 1.897-1(m)), the Fair Market Value of a share of such stock shall be determined by the Compensation Committee of B&N or BNED, as applicable, in its sole discretion using

2

appropriate criteria.  Notwithstanding the foregoing, the Fair Market Value of shares of B&N Common Stock or BNED Common Stock shall, in all events, be determined in accordance with Code Section 409A.

“Former BNED Employee” shall mean, as of any applicable date, each individual who (a) as of immediately prior to such individual’s termination of employment with a member of the B&N Group or the BNED Group was an Employee of the BNED Group and (b) as of such applicable date, is not an Employee of any member of the B&N Group or the BNED Group.

“Former BNED Service Provider” shall mean each individual that is a former Service Provider of a member of the BNED Group.

“Regular Trading Hours” shall mean the period beginning at 9:30 A.M. New York City time and ending at 4:00 P.M. New York City time.

“Service Provider” shall mean any individual providing services for another Person, whether as an independent contractor or other similar role (other than as an Employee).

“Subsidiary” of any Person shall mean any corporation or other organization whether incorporated or unincorporated of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries; provided, however, that, solely for purposes of this Agreement, BNED and its Subsidiaries shall not be considered Subsidiaries of B&N (or members of the Barnes & Noble Group) prior to, on or following the Distribution.

“Taxing Authority” shall have the meaning set forth in the TMA.

“Tax Return” shall have the meaning set forth in the TMA.

“Trading Day” shall mean the period of time during any given calendar day, commencing with the determination of the opening price on the New York Stock Exchange and ending with the determination of the closing price on the New York Stock Exchange.

“Welfare Plan” shall mean each Benefit Plan that provides life insurance, health care, dental care, accidental death and dismemberment insurance, disability, severance, vacation or other group welfare or fringe benefits.

“Workers’ Compensation Event” shall mean the event, injury, illness or condition giving rise to a workers compensation claim with respect to a BNED Employee.

“Workers’ Compensation Reimbursement Amounts” shall mean the amount, if any, by which (i) the amount actually payable by the members of the B&N

3

Group in respect of the participation of BNED Employees and Former BNED Employees in the B&N Workers Compensation Plan for any period prior to the Distribution exceeds (ii) the amount that the B&N Group charged the members of the BNED Group in respect of such period of participation.

SECTION 1.02.       Glossary of Defined Terms.  The following terms shall have the meanings set forth in the Sections set forth below:

	
Definition

	
Section

	
Agreement

	
Preamble

	
BNED

	
Preamble

	
BNED 401(k) Plan

	
8.01

	
BNED Cafeteria Plan

	
10.01(a)

	
BNED Restricted Share

	
12.03

	
BNED Transportation Plan

	
10.02(a)

	
BNED Welfare Plans

	
6.01

	
BNED Workers’ Compensation Plan

	
6.03

	
B&N

	
Preamble

	
B&N 401(k) Plan

	
8.01

	
B&N Benefit Plan Costs

	
13.01

	
B&N Cafeteria Plan

	
10.01(a)

	
B&N COBRA Costs

	
13.01

	
B&N Deferred Compensation Plan

	
9.01

	
B&N Option

	
12.01

	
B&N Pension Plan

	
7.01

	
B&N Restricted Share

	
12.03

	
B&N RSU

	
12.02

	
B&N Transportation Plan

	
10.02(a)

	
B&N Workers’ Compensation Plan

	
6.03

	
Claiming Party

	
18.02(f)

	
Converted BNED RSUs

	
12.02

	
Other Party

	
18.02(g)

	
Parties

	
Preamble

	
Separation Agreement

	
Recitals

	
Specified Welfare Plan Date

	
6.01

	
Transferred to BNED Employee

	
2.02

ARTICLE II

General Principles

SECTION 2.01.       BNED Employees.  All BNED Employees as of immediately prior to the Distribution shall continue to be employees of the BNED Group immediately following the Distribution.

4

SECTION 2.02.       Transferred to BNED Employees.  Prior to the Distribution, B&N shall, or shall cause its Subsidiaries to, transfer or cause to be transferred to a member of the BNED Group the employment of each Employee set forth on Schedule 2.02, effective as of the Distribution, such that these individuals are not Employees of the B&N Group at the time of the Distribution.  Schedule 2.02 may be updated by mutual agreement of B&N and BNED from time to time prior to the Distribution.  Each Employee who is transferred to the BNED Group pursuant to this Section 2.02 is referred to herein as a “Transferred to BNED Employee”.  Following the transfer of a Transferred to BNED Employee to a member of the BNED Group, such Transferred to BNED Employee shall be deemed a BNED Employee for purposes of this Agreement.

SECTION 2.03.       Collectively Bargained Employees.  All provisions contained in this Agreement shall apply equally to any Employee who is covered by a collective bargaining or other labor union agreement, except to the extent that any such agreement specifically provides for the benefit contemplated by such provision and, in each such case, the agreement shall apply rather than the terms of this Agreement.

SECTION 2.04.       Liabilities.  Except as otherwise provided in this Agreement, the members of the BNED Group shall be responsible for all actual or potential employment Liabilities with respect to BNED Employees and Former BNED Employees arising prior to, on or following the Distribution relating to periods during which such BNED Employees and Former BNED Employees were employed by the BNED Group.  Notwithstanding the immediately preceding sentence, except as otherwise specifically provided in this Agreement, effective as of the Distribution, (a) the members of the B&N Group shall be responsible for such Liabilities with respect to Transferred to BNED Employees arising prior to the Distribution during which such Transferred to BNED Employees were employed by the B&N Group and (b) the members of the BNED Group shall be responsible for all such Liabilities arising at or after the Distribution during which such Transferred to BNED Employees were employed by the BNED Group.  Except as otherwise specifically provided in this Agreement, the provisions of this Agreement do not apply to BNED Service Providers and Former BNED Service Providers and the members of the BNED Group shall be responsible for all actual or potential Liabilities relating to services provided by BNED Service Providers and Former BNED Service Providers to members of the BNED Group during any period, including (i) Liabilities relating to the misclassification of any Person as a Service Provider and not as an Employee of a member of the BNED Group, (ii) Liabilities for Taxes (including any Employment Taxes) with respect to services provided by such BNED Service Provider or Former BNED Service Provider to any member of the BNED Group, (iii) accounts payable owed to any BNED Service Provider or Former BNED Service Provider by any member of the BNED Group and (iv) any claims made by any BNED Service Provider or Former BNED Service Provider with respect to benefits under any Benefit Plan accrued with respect to services provided to any member of the BNED Group.

SECTION 2.05.       Benefit Plans.  Except as otherwise specifically provided in this Agreement, as of the Distribution, each BNED Employee (and each of

5

their respective dependents and beneficiaries) shall cease active participation in, and each member of the BNED Group shall cease to be a participating employer in, all B&N Benefit Plans, including the B&N Benefit Plans listed on Schedule 2.05, and, as of such time, BNED shall, or shall cause its Subsidiaries to, have in effect such corresponding BNED Benefit Plans as are necessary to comply with its obligations pursuant to this Agreement.  As of immediately following the Distribution, except as otherwise specifically provided in this Agreement, (a) B&N shall, or shall cause one or more members of the B&N Group to, retain, pay, perform, fulfill and discharge all Liabilities arising out of or relating to all B&N Benefit Plans, and (b) BNED shall, or shall cause one of the members of the BNED Group to, retain, pay, perform, fulfill and discharge all Liabilities arising out of or relating to all BNED Benefit Plans.

SECTION 2.06.       Payroll Services.  Subject to the Transition Services Agreement, prior to, upon and after the Distribution, the BNED Group shall be solely responsible for providing payroll services to the BNED Employees and Former BNED Employees, and BNED shall be solely responsible for any Liabilities with respect to garnishments of the salary and wages of the BNED Employees.

ARTICLE III

Bonuses

SECTION 3.01.       BNED Employee Annual Bonuses.  On or following the Distribution, BNED shall retain all Liabilities with respect to the payment of any annual bonus awards to each eligible BNED Employee, including, for the avoidance of doubt, with respect to the year in which the Distribution occurs.

SECTION 3.02.       BNED Employee Retention Bonuses.  On or following the Distribution, BNED shall assume or retain all Liabilities with respect to the payment of any retention bonus awards to each eligible BNED Employee as set forth on Schedule 3.02, including, for the avoidance of doubt, with respect to any retention bonuses pursuant to plans, agreements or arrangements sponsored by any member of the B&N Group or to which any member of the B&N Group is a party.

ARTICLE IV

Service Credit

SECTION 4.01.       B&N Benefit Plans.  From and after the Distribution, service of BNED Employees with any member of the BNED Group or any other employer, as applicable, other than any member of the B&N Group shall not be taken into account for any purpose under the corresponding B&N Benefit Plan.

SECTION 4.02.       BNED Benefit Plans.  Unless prohibited by applicable law, BNED shall, and shall cause its Subsidiaries to, credit service accrued by each BNED Employee with, or otherwise recognized for benefit plan purposes by, any member of the B&N Group or the BNED Group at the time of or prior to the Distribution

6

for all purposes, including for purposes of (a) eligibility and vesting under each BNED Benefit Plan under which service is relevant in determining eligibility or vesting, (b) determining the amount of severance payments and benefits (if any) payable under each BNED Benefit Plan that provides severance payments or benefits and (c) determining the number of vacation days to which each such Employee will be entitled following the Distribution, in the case of clauses (a), (b) and (c), (i) to the same extent recognized by the relevant members of the B&N Group or BNED Group or the corresponding B&N Benefit Plan or BNED Benefit Plan immediately prior to the Distribution Date and (ii) except to the extent such credit would result in a duplication of benefits for the same period of service.

ARTICLE V

Severance

SECTION 5.01.       Post-Distribution Severance.  The BNED Group shall be solely responsible for all severance or other separation payments and benefits relating to the termination or alleged termination of any BNED Employee’s employment that occurs at the time of or following the Distribution.

SECTION 5.02.       Transferred To BNED Employees.  Unless required by applicable law or by the terms of any individual agreement, none of the Transferred To BNED Employees shall be deemed to have terminated employment for purposes of determining eligibility for severance or other separation payments and benefits as a result of the transfers contemplated by Section 2.02 of this Agreement; provided, however, that in the event such transfers result in severance or other separation payments or benefits to any Transferred To BNED Employee, the B&N Group shall be solely responsible for all such Liabilities.

ARTICLE VI

Certain Welfare Benefit Plan Matters

SECTION 6.01.       BNED Welfare Plans.  Notwithstanding Section 2.05, effective as of the end of the calendar month in which the Distribution occurs (such date, the “Specified Welfare Plan Date”), BNED will establish the Welfare Plans listed on Schedule 6.01 (collectively, the “BNED Welfare Plans”) to provide welfare benefits to the BNED Employees (and their dependents and beneficiaries) and as of the Specified Welfare Plan Date, each BNED Employee (and his or her dependants and beneficiaries) will cease active participation in the corresponding B&N Welfare Plan.  For the avoidance of doubt, for purposes of this Article VI, BNED Employees shall include any Former BNED Employee who was receiving severance payments from a member of the B&N Group or the BNED Group as of the Distribution.

SECTION 6.02.       Allocation of Welfare Benefit Claims.  Notwithstanding Section 2.05, (a) the members of the B&N Group shall retain Liability and responsibility in accordance with the applicable B&N Welfare Plan for all

7

reimbursement claims (such as medical and dental claims) for expenses incurred and for all non-reimbursement claims (such as life insurance claims) incurred by BNED Employees and Former BNED Employees (and their dependents and beneficiaries) under such plans on or prior to the Specified Welfare Plan Date and (b) the members of the BNED Group shall retain Liability and responsibility in accordance with the BNED Welfare Plans for all reimbursement claims (such as medical and dental claims) for expenses incurred and for all non-reimbursement claims (such as life insurance claims) incurred by BNED Employees (and their dependents and beneficiaries) following the Specified Welfare Plan Date.  Notwithstanding the foregoing, BNED shall be obligated to reimburse B&N for the B&N Benefit Plan Costs as provided in Section 13.01.  For purposes of this Section 6.02, a benefit claim shall be deemed to be incurred as follows:  (i) health, dental, vision, employee assistance program and prescription drug benefits (including in respect of any hospital confinement), upon provision of such services, materials or supplies; and (ii) life, accidental death and dismemberment and business travel accident insurance benefits, upon the death, cessation of employment or other event giving rise to such benefits.

SECTION 6.03.       Workers’ Compensation Claims.  Notwithstanding Section 2.05, in the case of any workers’ compensation claim of any BNED Employee or Former BNED Employee who participates in a workers’ compensation plan of a member of the B&N Group (a “B&N Workers’ Compensation Plan”), such claim shall be covered (a) under such B&N Workers’ Compensation Plan if the Workers’ Compensation Event occurred prior to the Distribution, and (b) under a workers’ compensation plan of the BNED Group (each, a “BNED Workers’ Compensation Plan”) if the Workers’ Compensation Event occurs on or after the Distribution.  If the Workers’ Compensation Event occurs over a period both preceding and following the Distribution, the claim shall be covered jointly under the B&N Workers’ Compensation Plan and the BNED Workers’ Compensation Plan and shall be equitably apportioned between them based upon the relative periods of time that the Workers’ Compensation Event transpired preceding and following the Distribution.  Notwithstanding the foregoing, BNED shall be obligated to reimburse B&N for the Workers’ Compensation Reimbursement Amounts in accordance with Section 15.01.

SECTION 6.04.       COBRA.  Notwithstanding Section 2.05, in the event that a BNED Employee or Former BNED Employee (a) was receiving, or was eligible to receive, continuation health coverage pursuant to COBRA on or prior to the Specified Welfare Plan Date, B&N and the B&N Welfare Plans shall be responsible for all Liabilities to such Employee (or his or her eligible dependents) in respect of COBRA; and (b) becomes eligible to receive continuation health coverage pursuant to COBRA following the Specified Welfare Plan Date, BNED and the BNED Welfare Plans shall be responsible for all Liabilities to such Employee (or his or her eligible dependents) in respect of COBRA.  Notwithstanding the foregoing, BNED shall be obligated to reimburse B&N for the B&N COBRA Costs as provided in Section 13.01.  BNED shall indemnify, defend and hold harmless the members of the B&N Group from and against any and all Liabilities relating to, arising out of or resulting from COBRA provided by BNED, or the failure of BNED to meet its COBRA obligations, to BNED Employees, Former BNED Employees and their respective eligible dependents.

8

ARTICLE VII

Defined Benefit Pension Plan

SECTION 7.01.       B&N Defined Benefit Pension Plan.  Notwithstanding Section 2.05 or any other provision of this Agreement to the contrary, following the Distribution, the B&N Group shall retain sponsorship of the B&N, Inc. Employees’ Retirement Plan (the “B&N Pension Plan”) and all assets and Liabilities arising out of or relating to the B&N Pension Plan.  The obligations of the members of the BNED Group to provide information to the members of the B&N Group in connection with the payment of benefits to the BNED Employees and Former BNED Employees pursuant to the B&N Pension Plan are set forth in Section 14.01.

ARTICLE VIII

Defined Contribution Plan

SECTION 8.01.       BNED 401(k) Plan.  Effective as of the Distribution, BNED will establish a defined contribution plan that includes a qualified cash or deferred arrangement within the meaning of Section 401(k) of the Code (the “BNED 401(k) Plan”) providing benefits to the BNED Employees participating in any tax-qualified defined contribution plan sponsored by any member of the B&N Group (the “B&N 401(k) Plan”) as of the Distribution.

SECTION 8.02.       Trust-to-Trust Transfer.  As of the Distribution, a member of the B&N Group shall cause to be transferred from the B&N 401(k) Plan to the BNED 401(k) Plan the assets and liabilities relating to the account balances of the BNED Employees (whether vested or unvested) in accordance with the applicable requirements of all applicable laws, including the Code.  From and after the time that the transfer is complete, as described in the immediately preceding sentence, a member of the BNED Group shall administer the accounts of BNED Employees in the BNED 401(k) Plan in accordance with all applicable laws, including the Code.  Except as otherwise provided for in this Section 8.02, such transfer of assets shall consist of cash, cash equivalents or participant loan receivables equal to all the accrued benefit Liabilities relating to all account balances referred to in the first sentence of this Section 8.02, including such Liabilities for the beneficiaries of the BNED Employees and including such accrued benefit Liabilities arising under any applicable qualified domestic relations order.  As of the Distribution, a member of the BNED Group shall direct the trustee of the BNED 401(k) Plan to accept such transfers of assets and Liabilities from the B&N 401(k) Plan.  No later than 30 days prior to the date of the transfer of assets and Liabilities pursuant to this Section 8.02, B&N shall, to the extent necessary and with the cooperation of BNED as necessary, file Internal Revenue Service Form 5310-A regarding such transfer of assets and Liabilities from the B&N 401(k) Plan to the BNED 401(k) Plan, as described in this Section 8.02.  Following the foregoing transfer, the BNED Group and/or the BNED 401(k) Plan shall assume all Liabilities of the B&N Group under the B&N 401(k) Plan with respect to all participants in the B&N 401(k) Plan whose balances were transferred to the BNED 401(k) Plan and their beneficiaries pursuant to such transfer, and

9

the B&N Group and the B&N 401(k) Plan shall have no Liabilities to provide such participants with benefits under the B&N 401(k) Plan following such transfer.  B&N and BNED shall use reasonable efforts to minimize the duration of any “blackout period” imposed in connection with each transfer of account balances from the B&N 401(k) Plan to the BNED 401(k) Plan.  BNED will cooperate with B&N in effecting a transition of all outstanding 401(k) loans of BNED Employees in a manner designed to prevent a deemed distribution.  BNED shall indemnify, defend and hold harmless the members of the B&N Group from and against any and all Liabilities relating to, arising out of or resulting from the transfers described in this Section 8.02.  For the avoidance of doubt, this Section 8.02 does not apply to the account balance of any Former BNED Employee in the B&N 401(k) Plan, and prior to, on and following the Distribution the B&N 401(k) Plan shall retain all assets and Liabilities with respect to the account balance of any Former BNED Employee, and the B&N Group and the B&N 401(k) Plan shall retain responsibility to provide any such Former BNED Employee with benefits under the B&N 401(k) Plan.

SECTION 8.03.       Employer 401(k) Plan Contributions.  The B&N Group shall remain responsible for employer contributions under the B&N 401(k) Plan with respect to any BNED Employees relating to periods prior to the Distribution.  On and following the Distribution, the BNED Group will be responsible for all employer contributions under the BNED 401(k) Plan with respect to any BNED Employees.

SECTION 8.04.       Limitation of Liability.  For the avoidance of doubt, (a) B&N shall have no responsibility for any failure of BNED to properly administer the BNED 401(k) Plan in accordance with its terms and applicable law, including any failure to properly administer the accounts of BNED Employees and their beneficiaries in such BNED 401(k) Plan and (b) B&N shall have no responsibility for any failure of B&N to properly administer the accounts of BNED Employees and their beneficiaries in the B&N 401(k) Plan prior to the Distribution.

ARTICLE IX

Nonqualified Deferred Compensation

SECTION 9.01.       B&N Deferred Compensation Plan.  Effective as of the Distribution, the participation of any BNED Employee or Former BNED Employee in the B&N, Inc. Deferred Compensation Plan (the “B&N Deferred Compensation Plan”) will terminate, and B&N will accelerate in accordance with Treasury Regulation Section 1.409A-3(j)(4)(v) all payments and benefits owed to the BNED Employees and Former BNED Employees pursuant to the B&N Deferred Compensation Plan.  Following the payment or distribution of such amounts to the BNED Employees, the members of the B&N Group shall have no actual or potential Liabilities relating to, arising out of or resulting from the participation of the BNED Employees and Former BNED Employees in the B&N Deferred Compensation Plan.

SECTION 9.02.       Section 409A.  B&N and BNED shall cooperate in good faith and use reasonable best efforts to ensure that that the transactions contemplated by this Agreement and the Separation Agreement will not result in adverse

10

tax consequences under Section 409A of the Code to any BNED Employee or Former BNED Employee (or any of their respective beneficiaries), in respect of their respective benefits under any Benefit Plan.

ARTICLE X

Flexible Spending Arrangements; Transportation Reimbursement Arrangements

SECTION 10.01.       Flexible Spending Arrangements.  (a)  Effective as of the Distribution, BNED Employees will cease participation in the flexible spending arrangements under each cafeteria plan qualifying under Section 125 of the Code sponsored by any member of the B&N Group (the “B&N Cafeteria Plan”).  Effective as of the Distribution, BNED or its Subsidiaries will establish flexible spending arrangements under a cafeteria plan qualifying under Section 125 of the Code (the “BNED Cafeteria Plan”).

(b)       Promptly following the Distribution, with respect to each BNED Employee who has a flexible spending arrangement under the B&N Cafeteria Plan, B&N shall, or shall cause its Subsidiaries to, transfer to BNED or its Subsidiaries all relevant records relating to the flexible spending arrangements of such BNED Employee under the B&N Cafeteria Plan and any other information necessary for the administration of the BNED Cafeteria Plan with respect to such flexible spending arrangements.  Promptly following the Distribution, BNED shall, or shall cause its Subsidiaries to, cause the BNED Cafeteria Plan to accept a spin-off with respect to the flexible spending arrangement of each individual who is a BNED Employee and who has a flexible spending arrangement under the B&N Cafeteria Plan from the account for the BNED Group in the B&N Cafeteria Plan and to honor and continue, through the end of the plan year in which the Distribution occurs, the elections made by such employee with respect to a flexible spending arrangement under the B&N Cafeteria Plan for such plan year.  For the avoidance of doubt, neither Party shall be obligated to make any additional payment to the other Party with respect to any overfunding or underfunding of the account for the BNED Group in the B&N Cafeteria Plan at the time of the spin-off described in the immediately preceding sentence because such account is held separate from the accounts relating to other members of the B&N Group in the B&N Cafeteria Plan.  On and after the Distribution, the BNED Group shall assume and be solely responsible for all claims by BNED Employees under the B&N Cafeteria Plan, whether incurred prior to, on or after the Distribution, that have not been paid in full as of the Distribution, and following the Distribution BNED shall indemnify, defend and hold harmless the members of the B&N Group from and against any and all Liabilities relating to, arising out of or resulting from claims for reimbursement under the B&N Cafeteria Plan with respect to BNED Employees that are not paid in full as of the Distribution.

SECTION 10.02.       Transportation Reimbursement Arrangements.  (a)  Effective as of the Distribution, BNED Employees will cease participation in the transportation reimbursement account plan sponsored by any member of the B&N Group (the “B&N Transportation Plan”).  Effective as of the Distribution, BNED or its

11

Subsidiaries will establish a transportation reimbursement account plan (the “BNED Transportation Plan”).

(b)       Promptly following the Distribution, with respect to each BNED Employee who has a transportation reimbursement account under the B&N Transportation Plan, B&N shall, or shall cause its Subsidiaries to, transfer to BNED or its Subsidiaries all relevant records relating to the transportation reimbursement account of such BNED Employee under the B&N Transportation Plan and any other information necessary for the administration of the BNED Transportation Plan with respect to such transportation reimbursement account.  Promptly following the Distribution, BNED shall, or shall cause its Subsidiaries to, cause the BNED Transportation Plan to accept a spin-off with respect to the transportation reimbursement account of each individual who is a BNED Employee and who has a transportation reimbursement account under the B&N Transportation Plan from the account for the BNED Group in the B&N Transportation Plan and to honor and continue, through the end of the plan year in which the Distribution occurs, the elections made by such employee with respect to a transportation reimbursement account under the B&N Transportation Plan for such plan year.  For the avoidance of doubt, neither Party shall be obligated to make any additional payment to the other Party with respect to any overfunding or underfunding of the account for the BNED Group in the B&N Transportation Plan at the time of the spin-off described in the immediately preceding sentence because such account is held separate from the accounts relating to other members of the B&N Group in the B&N Transportation Plan.  On and after the Distribution, the BNED Group shall assume and be solely responsible for all claims by BNED Employees under the B&N Transportation Plan, whether incurred prior to, on or after the Distribution, that have not been paid in full as of the Distribution, and following the Distribution BNED shall indemnify, defend and hold harmless the members of the B&N Group from and against any and all Liabilities relating to, arising out of or resulting from claims for reimbursement under the B&N Transportation Plan with respect to BNED Employees that are not paid in full as of the Distribution.

ARTICLE XI

Vacation

SECTION 11.01.       Vacation.  The BNED Group shall retain all Liability for vacation accruals and benefits with respect to each BNED Employee and Former BNED Employee; provided, however, that with respect to each Transferred To BNED Employee, (a) for purposes of determining the number of vacation days to which such Employee shall be entitled following the Distribution, BNED and its Subsidiaries shall assume and honor all vacation days accrued or earned but not yet taken by such Employee, if any, as of the Distribution, and (b) to the extent such Employee is entitled under any applicable law or any policy of his or her respective employer that is a member of the B&N Group, as the case may be, to be paid for any vacation days accrued or earned but not yet taken by such Employee as of the Distribution, BNED shall discharge the Liability for such vacation days.

12

ARTICLE XII

B&N Equity Compensation Awards

SECTION 12.01.       Treatment of Outstanding B&N Stock Options.  Notwithstanding any provision of this Agreement or the Separation Agreement to the contrary, at the time of the Distribution, each outstanding option to purchase B&N Common Stock (each, a “B&N Option”) that was granted under or pursuant to any equity compensation plan of B&N, and that, at the time of the Distribution, is held by any BNED Employee, will vest as of the Distribution, and the employment with B&N of any BNED Employee who holds any such B&N Option will be treated as terminated for purposes of exercising such B&N Option.  Each such Employee may exercise any B&N Option during the 180-day period following the Distribution (or, if earlier, until the expiration of such B&N Option), and will receive the number of shares of B&N common stock underlying the exercised portion of such B&N Option less the number of shares having a Fair Market Value equal to the (a) applicable exercise price of such B&N Option and (b) the employee-paid portion of any Taxes (including Employment Taxes) required to be withheld, if any, upon exercise or settlement of such B&N Option.

SECTION 12.02.       Treatment of Outstanding B&N Restricted Stock Units.  In connection with the Distribution, all outstanding restricted stock units payable in shares of B&N Common Stock or the value of which is determined by reference to the value of shares of B&N Common Stock that were granted under or pursuant to any equity compensation plan of B&N (each, a “B&N RSU”) held by any BNED Employee shall be adjusted as necessary to provide that, as of the Distribution, each B&N RSU held by a BNED Employee will be converted into a restricted stock unit award on the same terms and conditions as were applicable under such B&N RSU immediately prior to the Distribution, with respect to a number of shares of BNED Common Stock with a Fair Market Value equal to the aggregate value of such B&N RSUs as of immediately prior to the Distribution (determined based on the Fair Market Value of a share of B&N Common Stock as of immediately prior to the Distribution) (the “Converted BNED RSUs”).  As of the Distribution, the BNED Group shall assume all the obligations of B&N with respect to the Converted BNED RSUs and the agreements evidencing the grants thereof, and shall take all corporate action necessary to reserve for issuance a sufficient number of shares of BNED Common Stock for delivery upon settlement of the Converted BNED RSUs.

SECTION 12.03.       Treatment of Outstanding B&N Restricted Shares.  In connection with the Distribution, each B&N Service Provider who holds restricted shares of B&N Common Stock (each, a “B&N Restricted Share”) will receive, as of the time of the Distribution, restricted shares of BNED Common Stock (each, a “BNED Restricted Share”) in accordance with the terms and conditions of the award agreements for such B&N Restricted Shares, in an amount determined in the same manner as for other shareholders of B&N Common Stock based on a distribution ratio to be determined by B&N in its sole discretion, rounded down to the nearest whole number of shares.  The treatment of any fractional shares in respect of such BNED Restricted Shares will be treated in accordance with Section 5.02 of the Separation Agreement.  Such BNED 

13

 

Restricted Shares shall be subject to the same vesting requirements and dates and other terms and conditions as the B&N Restricted Shares to which they relate (including the right to receive dividends or other distributions paid on B&N Common Stock).

ARTICLE XIII

Benefit Plan Reimbursements

SECTION 13.01.       Pre-Separation Benefit Plan Matters.  Following the Distribution, the members of the BNED Group shall remain responsible for reimbursing the members of the B&N Group for costs (a) relating to compensation and benefits provided to the BNED Employees and Former BNED Employees as a result of participation in the B&N Benefit Plans set forth on Schedule 13.01 prior to the Distribution, or with respect to any B&N Welfare Plan, on or prior to the Specified Welfare Plan Date (such costs, the “B&N Benefit Plan Costs”); and (b) relating to compensation and benefits provided to BNED Employees or Former BNED Employees pursuant to the B&N Welfare Plans in respect of COBRA (such costs, the “B&N COBRA Costs”), in each case, that are not charged directly to the members of the BNED Group in the ordinary course of business consistent with past practice; provided, however, that, except as otherwise specifically provided in this Agreement, in no event shall any member of the BNED Group be required to reimburse any member of the B&N Group for the cost of any Benefit Plan related Liabilities for which the B&N Group remains ultimately responsible pursuant to this Agreement.

ARTICLE XIV

Cooperation; Access to Information; Litigation; Confidentiality

SECTION 14.01.       Cooperation.  Following the date of this Agreement, the Parties shall, and shall cause their respective Subsidiaries to, use commercially reasonable efforts to cooperate with respect to any Employee compensation or benefits matters that either Party reasonably determines require the cooperation of the other Party in order to accomplish the objectives of this Agreement.  Without limiting the generality of the preceding sentence, (a) B&N and BNED shall cooperate in connection with any audits of any Benefit Plan with respect to which such Party may have Information, (b) B&N and BNED shall cooperate in connection with any audits of their respective payroll services (whether by a Governmental Authority in the U.S. or otherwise) in connection with the services provided by one Party to the other Party, (c) B&N and BNED shall cooperate in administering the B&N Pension Plan and (d) B&N and BNED shall cooperate in good faith in connection with the notification and consultation with labor unions and other employee representatives of Employees of the B&N Group and the BNED Group.  The obligations of the B&N Group and the BNED Group to cooperate pursuant to this Section 14.01 shall remain in effect until the later of (i) the date all audits of all Benefit Plans with respect to which a Party may have Information have been completed or (ii) the date the applicable statute of limitations with respect to such audits has expired.

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SECTION 14.02.       Access to Information; Litigation; Confidentiality.  Article VII of the Separation Agreement is hereby incorporated into this Agreement mutatis mutandi.

ARTICLE XV

Reimbursements

SECTION 15.01.       Reimbursements by the BNED Group.  Promptly following the last business day of each calendar month following the Distribution, B&N shall provide BNED with one or more invoices that set forth the aggregate (a) Workers’ Compensation Reimbursement Amounts and (b) B&N Benefit Plan Costs Reimbursement Amounts incurred by a member of the B&N Group during such calendar quarter.  Within 30 days following BNED’s receipt of each such invoice, BNED shall pay B&N an amount in cash equal to the aggregate amounts set forth on such invoice.

SECTION 15.02.       Invoices.  All invoices provided pursuant to this Article XIV shall be denominated in U.S. dollars.

ARTICLE XVI

Termination

SECTION 16.01.       Termination.  This Agreement may be terminated by B&N at any time, in its sole discretion, prior to the Distribution; provided, however, that this Agreement shall automatically terminate upon the termination of the Separation Agreement in accordance with its terms.

SECTION 16.02.       Effect of Termination.  In the event of any termination of this Agreement prior to the Distribution, none of the Parties (or any of its directors or officers) shall have any Liability or further obligation to any other Party under this Agreement.

ARTICLE XVII

Indemnification

SECTION 17.01.       Incorporation of Indemnification Provisions of Separation Agreement.  In addition to the specific indemnification provisions in this Agreement, Article VI of the Separation Agreement is hereby incorporated into this Agreement mutatis mutandi.

ARTICLE XVIII

Further Assurances; Tax Treatment of Certain Amounts Paid Pursuant to this Agreement

SECTION 18.01.       Further Assurances.  Article X of the Separation Agreement is hereby incorporated into this Agreement mutatis mutandi.

15

SECTION 18.02.       Tax Treatment of Certain Amounts Paid Pursuant to this Agreement.  (a)  With respect to any B&N Option held by BNED Employees and Former BNED Employees that is exercised or canceled after the date of the Distribution:

(i)       BNED or one of its Subsidiaries, as applicable, shall claim any U.S. Federal, state and local income Tax deduction arising as a result of such exercise or cancellation and B&N and its Subsidiaries shall not claim such deduction;

(ii)       Without limiting the generality of Section 2.06, BNED or one of its Subsidiaries (as applicable) shall be responsible for remitting all Taxes required to be withheld upon such exercise, including all payroll or employment Taxes, to the appropriate Taxing Authority and shall be responsible for all obligations relating to the reporting of income producing such Taxes to the Taxing Authority, and B&N and its Subsidiaries shall not be responsible for such withholding and reporting;

(iii)       The Parties shall cooperate to cause the proceeds of the sale of any shares of B&N Common Stock withheld pursuant to Section 12.01 in respect of Taxes described in Section 18.02(a)(ii) above to be deposited in a bank account of BNED; and

(iv)       The intent of the Parties is for BNED and its Subsidiaries to receive the benefit of any deduction and to bear the responsibility for all Tax withholding and reporting with respect to such B&N Options, and this Agreement shall be construed (and the Parties shall cooperate) to effect such intent.

(b)       Any U.S. Federal, state and local income Tax deduction arising as a result of the vesting and settlement of any Converted BNED RSU held by BNED Employees and Former BNED Employees shall, in each case, be claimed (if and when permitted by applicable Law) by BNED or one of its Subsidiaries, as applicable.

(c)       Any U.S. Federal, state and local income Tax deduction arising as a result of the payment of any annual bonus award or retention bonus award to BNED Employees and Former BNED Employees pursuant to Section 3.01 or Section 3.02, respectively, shall, in each case, be claimed (if and when permitted by applicable Law) by BNED or one of its Subsidiaries, as applicable and, subject to Section 18.02(g), B&N shall not so claim.

(d)       Any U.S. Federal, state and local income Tax deduction arising as a result of the vesting of any B&N Restricted Shares or BNED Restricted Shares held by an individual who is a B&N Service Provider following the Distribution shall, in each case, be claimed (if and when permitted by applicable Law) by B&N or one of its Subsidiaries, as applicable and, subject to Section 18.02(g), BNED shall not so claim.

(e)       Any U.S. Federal, state and local income Tax deduction arising as a result of the vesting of any B&N Restricted Shares or BNED Restricted Shares held by an individual who is a BNED Service Provider following the Distribution shall, in each

16

case, be claimed (if and when permitted by applicable Law) by BNED or one of its Subsidiaries, as applicable.

(f)       B&N, if respect to an individual that is a B&N Service Provider following the Distribution, or one of its Subsidiaries, or BNED, if respect to an individual that is a BNED Service Provider following the Distribution, or one of its Subsidiaries shall be responsible for all obligations relating to the reporting of income resulting from the vesting of any B&N Restricted Shares or BNED Restricted Shares.

(g)       Notwithstanding Sections 18.02(a)(i), (b), (c), (d) and (e), if a deduction claimed by the party with the right to claim the deduction pursuant to such Section  (the “Claiming Party”) or one of its Subsidiaries is disallowed by a Taxing Authority for any reason, the party other than the Claiming Party (the “Other Party”) or one of its Subsidiaries, as applicable, shall amend its applicable Tax Return to claim such deduction and pay to the Claiming Party an amount equal to the Tax benefit actually realized by the Other Party or any of its Subsidiaries resulting from such deduction; provided, however, that the Claiming Party, upon the request of the Other Party, shall repay any amount paid to the Claiming Party under this Section 18.02(g) (plus any penalties, interest or other charges imposed by the relevant Taxing Authority) in the event the Other Party or its Subsidiary, as applicable, is required to surrender such Tax benefit.

ARTICLE XIX

Miscellaneous

SECTION 19.01.       Administration.  BNED hereby acknowledges that B&N has provided administration services for certain BNED Benefit Plans and BNED agrees to assume responsibility for the administration and administration costs of such plans and each other BNED Benefit Plan.  The Parties shall cooperate in good faith to complete such transfer of responsibility on commercially reasonable terms and conditions effective no later than the Distribution.

SECTION 19.02.       Employment Tax Reporting Responsibility.  To the extent applicable, the Parties hereby agree to follow the alternate procedure for U.S. employment tax withholding as provided in Section 5 of Rev. Proc. 2004-53, I.R.B. 2004-35.  Accordingly, the members of the B&N Group shall not have any employment tax reporting responsibilities, and the members of the BNED Group shall have full employment tax reporting responsibilities, for BNED Employees from and after the Distribution.

SECTION 19.03.       Confidentiality.  (a)  Each of B&N and BNED, on behalf of itself and each Person in its respective Group, shall, and shall cause its respective directors, officers, Employees, agents, accountants, counsel and other advisors and representatives to, hold, in strict confidence and not release or disclose, with at least the same degree of care, but no less than a reasonable degree of care, that it applies to its own confidential and proprietary Information pursuant to policies in effect as of the Distribution, all Information concerning the other Group or its business that is either in its

17

possession (including Information in its possession prior to the Distribution) or furnished by the other Group or its respective directors, officers, Employees, agents, accountants, counsel and other advisors and representatives at any time pursuant to this Agreement and shall not use any such Information other than for such purposes as shall be expressly permitted hereunder, except, in each case, to the extent that such Information is (i) in the public domain through no fault of any member of the B&N Group or the BNED Group, as applicable, or any of its respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives, (ii) later lawfully acquired from other sources by any of B&N, BNED or its respective Group, Employees, directors or agents, accountants, counsel and other advisors and representatives, as applicable, which sources are not themselves bound by a confidentiality obligation to the knowledge of any of B&N, BNED or Persons in its respective Group, as applicable, (iii) independently generated without reference to any proprietary or confidential Information of the B&N Group or the BNED Group, as applicable, or (iv) required to be disclosed by law; provided, however, that the Person required to disclose such Information gives the applicable Person prompt, and to the extent reasonably practicable, prior notice of such disclosure and an opportunity to contest such disclosure and shall use commercially reasonable efforts to cooperate, at the expense of the requesting Person, in seeking any reasonable protective arrangements requested by such Person.  In the event that such appropriate protective order or other remedy is not obtained, the Person that is required to disclose such Information shall furnish, or cause to be furnished, only that portion of such Information that is legally required to be disclosed and shall take commercially reasonable steps to ensure that confidential treatment is accorded such Information.  Notwithstanding the foregoing, each of B&N and BNED may release or disclose, or permit to be released or disclosed, any such Information concerning the other Group (A) to their respective directors, officers, Employees, agents, accountants, counsel and other advisors and representatives who need to know such Information (who shall be advised of the obligations hereunder with respect to such Information) and (B) to any nationally recognized statistical rating agency as it reasonably deems necessary, solely for the purpose of obtaining a rating of securities upon normal terms and conditions; provided, however, that the Party whose Information is being disclosed or released to such rating agency is promptly notified thereof.

(b)       Without limiting the foregoing, when any Information concerning the other Group or its business is no longer needed for the purposes contemplated by this Agreement, each of B&N and BNED will, promptly after request of the other Party, either return all Information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or certify to the other Party, as applicable, that it has destroyed such Information (and used commercially reasonable efforts to destroy all such Information electronically preserved or recorded within any computerized data storage device or component (including any hard-drive or database)).

SECTION 19.04.       Additional Provisions.  Sections 12.01 to 12.14 of the Separation Agreement are hereby incorporated into this Agreement mutatis mutandi.

[SIGNATURE PAGE TO FOLLOW]

18

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives.

 

	 	BARNES & NOBLE, INC.	 
	 	 	 	 
	
 

	
By: 

	 /s/ Bradley A. Feuer	 
	 	 	Name:  Bradley A. Feuer	 
	 	 	Title:    Vice President, General Counsel and Corporate Secretary	 
	 	 	 	 

 

 

 

	 	BARNES & NOBLE EDUCATION, INC.	 
	 	 	 	 
	
 

	
By: 

	 /s/ Michael P. Huseby	 
	 	 	Name:  Michael P. Huseby	 
	 	 	Title:    Executive Chairman	 
	 	 	 	 

 

 

SCHEDULE 2.02

	
1.

	
Carolyn Brown

	 	
	
2.

	
Thomas Donohue

	 	
	
3.

	
Lisa Feldstein

	 	
	
4.

	
Tapan Garg

	 	
	
5.

	
Michael P. Huseby

	 	
	
6.

	
Kanuj Malhotra

	 	
	
7.

	
Philip O’Reilly

 

 

SCHEDULE 2.05

	
1.

	
Barnes & Noble Education, Inc. 401(k) Plan

	 	 
	
2.

	
Barnes & Noble Education, Inc. Comprehensive Medical & Dental Plan *

	 	 
	
3.

	
Barnes & Noble Education, Inc. Life Insurance and AD&D Plan

	 	 
	
4.

	
Barnes & Noble Education, Inc. Business Travel Accident Plan

	 	 
	
5.

	
Barnes & Noble Education, Inc. HMO Plans (Kaiser; HMSA)

	 	 
	
6.

	
Barnes & Noble Education, Inc. Long-Term Disability Plan

	 	 
	
7.

	
Barnes & Noble Education, Inc. Short-Term Disability Plan*

	 	 
	
8.

	
Barnes & Noble Education, Inc. Healthcare Flexible Spending Account Plan

	 	 
	
9.

	
Vacation Policy

	 	 
	
10.

	
Sick Day Policy

	 	 
	
11.

	
Personal Day Policy

	 	 
	
12.

	
Bereavement Policy

	 	 
	
13.

	
Jury Duty Policy

	 	 
	
14.

	
Continuing Education / Tuition Assistance

	 	 
	
15.

	
Transit Program

	 	 
	
16.

	
Employee Assistance Program

	 	 
	
17.

	
Premium Conversion Plan

	 	 
	
18.

	
Merchandise Discounts

	 	 
	
19.

	
Workers Compensation

	 	 
	
20.

	
Amended and Restated Barnes & Noble, Inc. 2009 Incentive Plan

  

SCHEDULE 3.02

	
1.

	
Retention Bonus Agreements dated February 7, 2014, between Barnes & Noble, Inc. and the following:

	 	 
	 	
a.

	
Barry Brover

	 	 	 
	 	
b.

	
Stephen Culver

	 	 	 
	 	
c.

	
Thomas Donohue

	 	 	 
	 	
d.

	
Joel Friedman

	 	 	 
	 	
e.

	
Joanne Magill

	 	 	 
	 	
f.

	
Lisa Malat

	 	 	 
	 	
g.

	
Kanuj Malhotra

	 	 	 
	 	
h.

	
Patrick Maloney

	 	 	 
	 	
i.

	
Philip O’Reilly

	 	 	 
	
2.

	
Retention Bonus Agreements dated July 1, 2014, between Barnes & Noble College Booksellers, LLC and the following:

	 	 
	 	
a.

	
Ann Fraley

	 	 	 
	 	
b.

	
Paul Maloney

	 	 	 
	 	
c.

	
Kim Otte

	 	 	 
	 	
d.

	
Chris Peterson

	 	 	 
	 	
e.

	
Brian Stark

	 	 	 
	
3.

	
Retention Bonus Agreement dated October 1, 2014, between Barnes & Noble, Inc. and Tapan Garg

SCHEDULE 6.01

	
1.

	
Barnes & Noble Education, Inc. Comprehensive Medical & Dental Plan

	 	 
	
2.

	
Barnes & Noble Education, Inc. Life Insurance and AD&D Plan

	 	 
	
3.

	
Barnes & Noble Education, Inc. Business Travel Accident Plan

	 	 
	
4.

	
Barnes & Noble Education, Inc. HMO Plans (Kaiser; HMSA)

	 	 
	
5.

	
Barnes & Noble Education, Inc. Long-Term Disability Plan

	 	 
	
6.

	
Barnes & Noble Education, Inc. Short-Term Disability Plan

	 	 
	
7.

	
Barnes & Noble Education, Inc. Healthcare Flexible Spending Account Plan

	 	 
	
8.

	
Vacation Policy

	 	 
	
9.

	
Sick Day Policy

	 	 
	
10.

	
Personal Day Policy

	 	 
	
11.

	
Bereavement Policy

	 	 
	
12.

	
Jury Duty Policy

	 	 
	
13.

	
Continuing Education / Tuition Assistance

	 	 
	
14.

	
Transit Program

	 	 
	
15.

	
Employee Assistance Program

	 	 
	
16.

	
Premium Conversion Plan

	 	 
	
17.

	
Merchandise Discounts

SCHEDULE 13.01

Reference is made to the B&N Benefit Plans marked with an asterisk (*) on Schedule 2.05.Exhibit 10.4

 

 

TRADEMARK LICENSE AGREEMENT

 

This Trademark License Agreement (this “Agreement”) is entered into as of August 2, 2015 (“Effective Date”), by and between Barnes & Noble, Inc. (“B&N”) and Barnes & Noble Education, Inc. (“BNED”), each a “Party” and, collectively, the “Parties”.  Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Separation Agreement (as defined below).

WHEREAS, B&N and BNED are parties to a Separation and Distribution Agreement, dated as of July 14, 2015 (the “Separation Agreement”), providing for, among other things, the transfer of assets and liabilities among B&N and BNED, the termination of intercompany agreements, BNED’s access to various B&N systems and distribution facilities and the use of B&N gift cards by BNED.

WHEREAS, in connection with the consummation of the Separation Agreement, B&N has agreed to grant to BNED a license to use the Licensed Marks (as defined below) on the following terms and conditions.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which each Party hereby acknowledges and in consideration of the premises, and the representations, warranties, covenants and agreements contained in this Agreement and the Separation Agreement, the Parties agree as follows:

I.            DEFINITIONS

1.1.            “B&N Competitor” means Amazon.com, Inc. and its affiliates or any of its or their successors and assigns.

1.2.            “B&N Format” means bookstore and café operations that adhere to the look and feel of B&N retail stores owned and operated by B&N and cafés located within such stores, respectively, in each case as exemplified by B&N retail stores in existence as of the date of this Agreement.  B&N shall be permitted to reasonably update the B&N Format from time to time, however, BNED shall not be obligated to modify any particular store significantly so long as such store generally adheres to the B&N Format in effect as of the date hereof, it being understood that all B&N Format stores shall undergo general maintenance and normal upkeep.

1.3.            “BNED Competitor” means Amazon.com, Inc. and its affiliates or any of its or their successors and assigns.

1.4.             “Exclusively Licensed Marks” means “Barnes & Noble College”, “B&N College”, “Barnes & Noble Education” and “B&N Education”.

1.5.            “Field of Use” means (a) the contract management of college and university bookstores and other bookstores associated with academic institutions and related websites and (b) education products and services (including digital education products and services) and related websites.

 

 

B-1

  

1.6.            The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.

1.7.            “Licensed Marks” means the Exclusively Licensed Marks together with the Non-Exclusively Licensed Marks.

1.8.            “Non-Exclusively Licensed Marks” means “Barnes & Noble”, “B&N” and “BN”.

1.9.            “Ownership Affiliate” means a person or group (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) that becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”), directly or indirectly, of more than 20.0% of the voting stock of a Party).

1.10.            “U.S.” means the United States of America.

II.            LICENSE

2.1.            Subject to the terms and conditions of this Agreement, B&N hereby grants BNED:

(a)            an exclusive (even as to B&N), perpetual, fully paid-up, non-transferable, non-assignable (except as provided in Section 9.10), non-sublicensable (except as provided in Section 2.4), license to use and display the Exclusively Licensed Marks in the U.S. in connection with BNED’s products and services solely within the Field of Use; and

(b)            a non-exclusive, perpetual, fully paid-up, non-transferable, non-assignable (except as provided in Section 9.10), non-sublicensable, license to use and display the Non-Exclusively Licensed Marks in the U.S. in connection with BNED’s products and services solely within the Field of Use, and, further, solely as follows:

(i)            used with “at [college / university name]” or with another name at the request of any other facility that is either controlled by a university or affiliated with a university (e.g., “Barnes & Noble at Campustown”);

(ii)          in connection with BNED’s stores as set forth on Exhibit A (which Exhibit shall be updated from time to time in accordance with Section 2.2);

(iii)         in connection with Barnes & Noble Cafés operated at BNED’s stores (which shall not include convenience stores);

(iv)        on consumables (e.g., shopping bags) existing as of the Distribution Date on which the Non-Exclusively Licensed Mark “Barnes & Noble” is printed or otherwise 

 

 

2

                appears until such consumables are used through, except as otherwise agreed by B&N; and

  

(v)          if a particular store is identified solely by a Non-Exclusively Licensed Mark because it existed as such prior to the Distribution Date and was identified on Exhibit A, then the signage, labels or other identifiers inside the store shall either use solely the Exclusive Licensed Marks or otherwise comply with clause (i) above.

2.2.              BNED will have the right to reasonably request that additional use cases be added to Section 2.1(b) for the use of the Non-Exclusively Licensed Marks within the Field of Use.  Upon B&N’s reasonable approval, this Agreement shall be amended to reflect such additional use cases.

2.3.              Except as expressly set forth in subsections 2.1(b)(i)-(iv) above or as otherwise agreed by B&N, BNED must modify the Non-Exclusively Licensed Marks it uses to conform them to the Exclusively Licensed Marks.

2.4.              BNED may sub-license its rights to use the Exclusively Licensed Marks in the U.S. to third parties solely in connection with marketing and promotional activities for BNED’s products and services in the Field of Use, and provided that:

(a)            all such sub-licensed use must comply with the terms and conditions of this Agreement, and

(b)            BNED includes terms in its agreements with all sub-licensees, expressly and immediately terminating all rights of its sub-licensees to use the Exclusive Licensed Marks in the event that BNED’s rights to use the Exclusively Licensed Marks are terminated pursuant to this Agreement or if B&N reasonably objects to the use by any such sub-licensees.

2.5.             In the event that BNED wishes after the date hereof to expand the scope of the license granted hereby to cover one or more jurisdictions outside the U.S., BNED may make a request to do so by delivering a written addendum to this Agreement (a) specifying the Licensed Marks it wishes to license and the jurisdiction in which it wishes to use such Licensed Marks and (b) agreeing to comply with all of the provisions of this Agreement with respect to the usage of such Licensed Marks in such jurisdiction.  Upon receipt by B&N of an addendum in compliance with this Section 2.5, the license shall be extended to cover such Licensed Marks in such jurisdiction to the extent that on the date of such addendum B&N has the right to license such Licensed Marks to BNED in such jurisdiction.  If the jurisdiction is one in which B&N does not as of such time have a validly existing trademark, B&N will have the opportunity to either register the relevant trademarks in that jurisdiction or allow BNED to register those trademarks in that jurisdiction and use them within the Field of Use. The filing costs and attorney’s fees of such registration shall be paid by B&N if it chooses to register the trademarks and by BNED if it registers the trademarks upon B&N’s authorization to do so. If BNED registers the trademarks, it shall grant B&N a license for use outside the Field of Use. Nothing in this Agreement or any addendum delivered under this Section 2.5 shall require B&N to obtain or maintain rights to any Licensed Marks outside the U.S.

 

 

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2.6.              BNED agrees that it:

(a)            shall use the Licensed Marks in a manner that is consistent in all respects with the high standards, value, reputation and prestige associated with the use of the Licensed Marks on and prior to the Distribution Date by B&N;

(b)            shall not use the Licensed Marks in any manner that (i) is deceptive or misleading, (ii) would diminish the value of or goodwill symbolized by the Licensed Marks, (iii) tarnishes, blurs or dilutes the Licensed Marks, (iv) compromises or reflects unfavorably upon the goodwill, good name, reputation or image of B&N or the Licensed Marks, or (v) might jeopardize or limit B&N’s proprietary interest therein;

(c)            shall not (i) misrepresent to any person the scope of the license granted under this Agreement, (ii) incur or authorize any expenses or liabilities chargeable to B&N, or (iii) take any actions that would impose upon B&N any obligation or liability to a third party other than (x) obligations under this Agreement, or (y) other obligations which B&N expressly approves in writing for BNED to incur on its behalf;

(d)            shall be responsible for non-conformance with the terms of this Agreement by any third party to which BNED sub-licenses its rights to use the Exclusively Licensed Marks;  and

(e)            shall not use Non-Exclusively Licensed Marks in any manner which is inconsistent with Section 2.1(b) above without the prior written consent of B&N; provided that no such consent shall be required for the use of the marks “bncollege”, “barnesandnoblecampus”, “barnesandnoblecollege”, “barnesandnobletextbook”, “barnesandnoblerental”, “bndigitallist”, “bncampus”, “bnknowledge”, “bnlearning”, “bnoncampus”, “bnschooling” “bnstudentvoice”, “bnteaching”, “bntextbook”, “bntextbookrental”, “bntextrent”, “bntheknow” or “bntraining” as part or of all of a domain name or URL actually used by BNED as of the date hereof.

2.7.              Except for materials that are co-branded or jointly marketed with BNED, or as otherwise pre-approved in writing by BNED, B&N and its affiliates shall not use the Exclusively Licensed Marks and shall not license the Exclusively Licensed Marks to any other third party.

2.8.              BNED shall have the right to use and enjoy the goodwill associated with the license to the Exclusively Licensed Marks and to the Licensed Marks as a whole, in the format and as provided in Section 2.1(b)(i)-(iii), for the duration of the license.  For clarity, BNED shall not be entitled to any goodwill associated with the name “Barnes & Noble” itself.  Subject to the foregoing, all goodwill associated with Licensed Marks is and shall remain the property of B&N and any goodwill attached to, that becomes attached to, or is created through BNED’s use of the Licensed Marks shall inure to the benefit of B&N.

2.9.            All rights in and to the Licensed Marks not expressly granted to BNED under this Agreement are hereby reserved to B&N.  BNED agrees that nothing in this Agreement shall give BNED any right, title or interest in the Licensed Marks, subject to BNED’s right to use the Licensed Marks in accordance with the licenses granted in this Agreement.

 

 

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2.10.            No other right or license is granted by B&N to BNED or by BNED to B&N, either express or implied, with respect to any other trademark, trade name, service mark or other intellectual property right owned or licensed by or to B&N or BNED. BNED shall not use the Licensed Marks in any manner not specifically authorized by this Agreement.

2.11.            If BNED sub-licenses, or B&N licenses, any Licensed Marks to a third party, BNED shall include in the sub-license agreement an obligation by the sub-licensee to use the sub-license, and B&N shall include in the license agreement an obligation by the licensee to use the license, in a manner consistent with the terms of this Agreement.

III.            TRADEMARK USAGE GUIDELINES AND QUALITY CONTROL

3.1.              BNED shall:

(a)            use the Licensed Marks in a manner consistent with B&N’s use prior to the Distribution Date, including the look and feel of B&N’s use of the Licensed Marks as may be updated from time to time;

(b)            use the Licensed Marks in a manner that protects B&N’s ownership interest therein and is designed to maintain the high quality of the Licensed Marks;

(c)            maintain at least substantially the same overall standards with respect to the quality of products and services (including any advertising and promotional materials) rendered in connection with the Licensed Marks as B&N has historically maintained;

(d)            comply in all material respects with all applicable laws, rules, and regulations in connection with the use of the Licensed Marks and the offering of products or services in connection with the Licensed Marks; and

(e)            use commercially reasonable efforts to promptly comply with reasonable more specific or additional brand usage guidelines and quality control measures as B&N may specify in writing from time to time (the “Guidelines and Standards”).

3.2.            B&N shall:

(a)            use the Licensed Marks in a manner that protects B&N’s ownership interest therein and is designed to maintain the high quality, high standards, value, reputation and prestige associated with the use of the Licensed Marks on and prior to the Distribution Date by B&N;

(b)            maintain at least substantially the same overall standards with respect to the quality of products and services (including any advertising and promotional materials) rendered in connection with the Licensed Marks as B&N has historically maintained;

(c)            comply in all material respects with all applicable laws, rules, and regulations in connection with the use of the Licensed Marks and the offering of products or services in connection with the Licensed Marks; and

 

  

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(d)           not use the Licensed Marks in any manner that (i) is deceptive or misleading, (ii) would diminish the value of or goodwill symbolized by the Licensed Marks, (iii) tarnishes, blurs or dilutes the Licensed Marks, (iv) compromises or reflects unfavorably upon the goodwill, good name, reputation or image of B&N or the Licensed Marks, or (v) might jeopardize or limit B&N’s proprietary interest therein.

3.3.            If at any time B&N determines, in its sole discretion, that BNED is not complying with any Guidelines and Standards, B&N shall notify BNED in writing, setting forth in reasonable detail a description of the noncompliance and any reasonably requested action for curing such noncompliance.  Upon receipt of such notice, BNED shall use commercially reasonable efforts to cure such noncompliance.

3.4.            Upon B&N’s written request, BNED shall provide B&N with a reasonable number of samples of the products or other materials bearing the Licensed Marks in order for B&N to verify compliance with the Guidelines and Standards.

  IV.            PROTECTION OF LICENSED MARKS

4.1.            BNED acknowledges that B&N is the exclusive owner of all right, title and interest in the Licensed Marks and will not at any time take or cause to be taken any act contesting or in any way impairing or tending to impair any part of such right, title and interest.  BNED expressly acknowledges that its use of the Licensed Marks hereunder shall not confer on BNED any proprietary rights to the Licensed Marks, which shall at all times remain with B&N.  BNED shall claim no interest in the Licensed Marks except the right to use them on the terms and conditions set forth herein, and shall not attempt to register the Licensed Marks on its own behalf.

4.2.            BNED shall not challenge the ownership or validity of the Licensed Marks in the U.S. during the Term (as defined below) of this Agreement.

4.3.            BNED shall not use or register in any jurisdiction any trademark, service mark or Internet domain name that would result in a likelihood of confusion with any of the Licensed Marks.

4.4.            BNED shall cooperate with B&N, at B&N’s expense, in the execution, filing and prosecution of any trademark applications in the U.S. with respect to the Licensed Marks that B&N may desire to file, and for that purpose BNED will supply to B&N, upon B&N’s written request and at B&N’s expense, such graphics, renderings, screen shots, high resolution files, packaging, labels and similar materials as may be reasonably required.

4.5.            B&N shall use commercially reasonable efforts to protect and maintain the Licensed Marks.  At B&N’s request and expense (except as provided in Section 4.6 below), BNED shall assist B&N in taking any action reasonably necessary to procure, protect, vest, or maintain B&N’s rights in and to the Licensed Marks.  BNED shall execute all documents reasonably requested by B&N to effectuate or confirm B&N’s rights in the Licensed Marks, including registration, maintenance or renewal of the Licensed Marks, recordation of the license relationship between B&N and BNED, and recordation of BNED as a registered user in the U.S.  If BNED fails to execute any such document that is necessary, BNED appoints B&N as its 

 

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attorney-in-fact to do so in BNED’s name and on BNED’s behalf.

  

4.6.            B&N shall be initially responsible for payment but shall have the right to charge back to BNED all costs to apply for and maintain any registrations of the Exclusively Licensed Marks in the U.S.

4.7.            BNED shall cause to appear on all products and Materials marked with the Licensed Marks, such legends, markings and notices as may be required by applicable law or reasonably requested by B&N.  BNED is not required to use ® or TM in connection with the Licensed Marks unless specifically requested by B&N or as provided in the Guidelines and Standards.

4.8.            In connection with each use of the Licensed Marks, BNED shall include the following notice, as B&N may amend from time to time, in a commercially reasonable manner that is at least as prominent as BNED’s trademark notices with respect to its own trademarks:

 

“Barnes & Noble, Barnes & Noble College, and Barnes & Noble Education are trademarks of Barnes & Noble, Inc. or its affiliates in the U.S. and other countries.”

  V.            INFRINGEMENT

5.1.            In the event that, during the Term of this Agreement, BNED learns of any infringement or threatened infringement of the Licensed Marks, or dilution by a third party in the U.S. with respect to the Licensed Marks, BNED shall promptly notify B&N or its authorized representative giving particulars thereof.  Notwithstanding the foregoing, BNED is not obligated to monitor or police unauthorized use of the Licensed Marks by third parties to which it has not granted a sub-license with respect to the Exclusively Licensed Marks.

5.2.            With respect to any infringement or threatened infringement, or dilution by a third party with respect to the Exclusively Licensed Marks, BNED may request that B&N bring litigation, opposition, cancellation or related legal proceedings (collectively, “Enforcement Proceedings”) or provide prior written consent to the initiation of Enforcement Proceedings by BNED (which consent shall not be unreasonably withheld, conditioned or delayed if B&N elects not to initiate Enforcement Proceedings).  Any such Enforcement Proceedings brought by B&N at BNED’s request shall be at the expense of BNED, and the Parties shall equally share in the recovery of damages or compensation resulting from such Enforcement Proceedings.  If B&N initiates Enforcement Proceedings and BNED declines to bear the expense, any resulting damages or compensation shall belong solely to B&N.  In any such Enforcement Proceedings, BNED shall nevertheless provide necessary information and assistance to B&N or its authorized representatives at B&N’s expense, including to join or be joined as a party if such joinder is required in order to confer jurisdiction in the jurisdiction in which the Enforcement Proceedings are to be brought.  If B&N brings any such Enforcement Proceedings that are not at BNED’s request, and BNED does not consent to participate and bear the expense and is joined to such Enforcement Proceedings solely to confer jurisdiction in the jurisdiction in which the Enforcement Proceedings are to be brought, B&N agrees to defend, indemnify and hold harmless BNED for all losses, costs, liabilities and expenses arising out of or related to the bringing of such Enforcement Proceedings.  In addition, if B&N elects to bring Enforcement Proceedings, 

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whether at BNED’s request or otherwise, B&N shall have exclusive control of the Enforcement Proceedings, including any decision to maintain or settle such proceedings.  If B&N does not elect to initiate Enforcement Proceedings after receiving BNED’s written request but consents to the initiation of Enforcement Proceedings by BNED, then (i) BNED may initiate such proceedings, (ii) shall have exclusive control of the Enforcement Proceedings, (iii) any decision to maintain or settle any such Enforcement Proceedings shall be at the exclusive option and expense of BNED, and (iv) all recoveries shall belong exclusively to BNED, subject to the following:  (x) B&N shall not have any obligation to be joined as a party plaintiff in any Enforcement Proceedings without its prior written consent, which may be granted or withheld in its sole discretion, unless such joinder is required in order to confer jurisdiction in the jurisdiction in which the Enforcement Proceedings are to be brought, (y) if BNED brings any such Enforcement Proceedings and B&N is joined to such Enforcement Proceedings without its consent solely to confer jurisdiction in the jurisdiction in which the Enforcement Proceedings are to be brought, BNED agrees to defend, indemnify and hold harmless B&N for all losses, costs, liabilities and expenses arising out of or related to the bringing of such Enforcement Proceedings, and (z) BNED shall not take any action, or make any admissions, that may affect the validity of any registration of the Exclusively Licensed Marks, without the prior written consent of B&N.

 

5.3.            With respect to any infringement or threatened infringement, or dilution by a third party with respect to the Non-Exclusively Licensed Mark, B&N shall have exclusive control of any Enforcement Proceedings relating to the Non-Exclusively Licensed Mark. The decision whether to bring, maintain or settle any such Enforcement Proceedings shall be at the exclusive option and expense of B&N, and all recoveries shall belong exclusively to B&N.  BNED shall not and shall have no right to initiate any such Enforcement Proceedings in its own name, and BNED shall provide necessary information and assistance to B&N or its authorized representatives at B&N’s expense in the event that B&N decides that such Enforcement Proceedings should be commenced, including to join or be joined as a party in any action taken by B&N to enforce its rights in the Non-Exclusively Licensed Mark against a third party if such joinder is required in order to confer jurisdiction in the jurisdiction in which the Enforcement Proceedings are to be brought.  If B&N brings any such Enforcement Proceedings, and BNED is joined to such Enforcement Proceedings solely to confer jurisdiction in the jurisdiction in which the Enforcement Proceedings are to be brought, B&N agrees to defend, indemnify and hold harmless BNED for all losses, costs, liabilities and expenses arising out of or related to the bringing of such Enforcement Proceedings.

5.4.            B&N shall incur no liability to BNED under any legal theory by reason of B&N’s failure or refusal to prosecute or otherwise commence Enforcement Proceedings with respect to, any alleged infringement or dilution of the Licensed Marks by third parties, nor by reason of any settlement to which B&N may agree, provided such settlement does not require a payment of money by BNED.

  VI.            TERM AND TERMINATION; FUNDAMENTAL CHANGE

6.1.            The term of this Agreement shall be in perpetuity subject to the termination provisions set forth below (the “Term”).

 

 

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6.2.            BNED may terminate this Agreement and the license and rights granted to it hereunder by B&N upon written notice to B&N.  Such notice shall specify the effective date of such termination.

6.3.            B&N may terminate this Agreement upon written notice to BNED if BNED has materially breached any provision of this Agreement and has not cured such breach within thirty (30) days after written notice of such breach has been given by B&N to BNED.  Additionally, B&N may terminate this Agreement immediately in the event BNED (a) no longer continues to operate as a going concern, (b) no longer continues to operate in the Field of Use or (c) changes its name such that it no longer includes “Barnes & Noble” or the abbreviation “B&N”, or otherwise ceases to use the Licensed Marks in identifying its business.

6.4.            B&N may terminate this Agreement if BNED transfers all or substantially all of its assets to a B&N Competitor or if a B&N Competitor becomes an Ownership Affiliate of BNED (either occurrence, a “BNED Fundamental Change”).

6.5.            Upon termination or expiration of this Agreement, all of the rights of BNED under this Agreement shall terminate and shall revert automatically to B&N and BNED and any of its sub-licensees shall cease all use of the Licensed Marks.  BNED shall use commercially reasonable efforts to wind down and to cease its and its sub-licensees’ use of the Licensed Marks on all materials existing as of the date of termination or expiration as soon as commercially practicable but in no event later than one hundred and eighty (180) days from the date of such termination or expiration, which shall be thirty (30) days in the event of a Sale to a B&N Competitor.

6.6.             If B&N transfers all or substantially all of its assets to a BNED Competitor or if a BNED Competitor becomes an Ownership Affiliate of B&N, then B&N will not be permitted to use the Licensed Marks (a) in the contract management of college and university bookstores and other bookstores associated with academic institutions and related websites or (b) otherwise in stores and on websites a majority of the revenues of which are derived from the sale of education products and services (including digital education products and services).

6.7.            BNED shall promptly correct any deviations from the B&N “look and feel” upon written notice by B&N of any such deviations; provided, however, in the event that B&N substantially changes the “look and feel” of Retail Stores as of the date of this Agreement, BNED may choose at its sole discretion to either adhere to the “look and feel” of B&N Retail Stores existing as of the date of this Agreement or the “look and feel” of B&N Retail Stores existing as of the date such changes take effect.  If at any time B&N ceases to operate substantially as a bookstore business, BNED shall no longer be required to adhere to the B&N Format, provided that it continues to comply with Articles II, III, IV, V, VIII and XI  and any alternative “look and feel” of BNED’s shall remain subject to the reasonable review and approval of B&N.

   VII.            REPRESENTATIONS AND WARRANTIES

7.1.            Each party represents and warrants that it has the authority and right to enter into this Agreement and to agree to the terms and conditions herein.

 

 

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7.2.            B&N represents and warrants that it has the right and authority to grant the licenses granted hereunder, and B&N has not assigned any exclusive rights or granted any exclusive licenses in the Exclusively Licensed Marks to any third party.

7.3.            B&N represents and warrants that as of the date hereof, it has no knowledge of any notice or claim asserted or threatened by a third party alleging that the Licensed Marks infringe any trademark, trade name or service mark of such third party.

  VIII.            INDEMNIFICATION

8.1.            BNED agrees that it will defend, hold harmless, and indemnify B&N from and against any charges, suits, damages, costs, expenses, judgments, penalties, claims, liabilities, or losses of any kind or nature whatsoever, including reasonable attorney fees and expenses, that may be sustained or suffered by or secured against B&N:  (a) based on or arising out of any manufacture, sale, or use of BNED’s products or services produced or marketed by BNED, except to the extent the claim relates to a matter for which B&N is obligated to indemnify BNED under Section 8.2 of this Agreement, (b) based on or arising out of any violation of this Agreement by BNED or any of its employees, affiliates and sub-licensees or (c) based on or arising out of any breach of any of the representations and warranties made by BNED under this Agreement.

8.2.            B&N agrees that it will defend, hold harmless, and indemnify BNED from and against  any  charges,  suits,  damages, costs, expenses (including attorneys’ fees), judgments, penalties, claims, liabilities, or losses of any kind or nature whatsoever which may be sustained or suffered by or secured against BNED:  (a) based on or arising out of any third-party claim that BNED’s use of the Licensed Marks (excluding any Licensed Marks BNED obtains under Section 2.5) in accordance with this Agreement but outside the Field of Use constitutes trademark infringement, or (b) based on or arising out of any breach of any of the representations and warranties made by B&N under this Agreement.

8.3.            IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL OR PUNITIVE DAMAGES (INCLUDING BUSINESS INTERRUPTION, LOSS OF FUTURE REVENUE, PROFITS OR INCOME OR LOSS OF BUSINESS REPUTATION OR OPPORTUNITY), HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS ARTICLE VIII, WHETHER OR NOT A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

IX.            MISCELLANEOUS PROVISIONS

9.1.            Nothing contained in this Agreement shall be construed as conferring any rights by implication, estoppel or otherwise, under any intellectual property right, other than the rights expressly granted in this Agreement with respect to the Licensed Marks.

9.2.            This Article IX and the agreements and obligations of BNED and B&N contained in Sections 4.1, 4.2, 4.3, 4.7 and 4.8 and Articles V, VI, VII and VIII shall survive the termination of this Agreement.  All other representations, warranties, covenants and agreements in this 

 

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  Agreement shall not survive the termination of this Agreement.

 

9.3.            This Agreement may not be amended except by an instrument in writing signed on behalf of both of the Parties or waived except by an instrument in writing signed by the Party against whom enforcement is sought. Any agreement on the part of a Party to any such waiver shall be valid only if set forth in an instrument in writing signed on behalf of such Party referring expressly to the provisions hereof being waived.

9.4.            This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.

9.5.            This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby will be governed by, and construed in accordance with, the laws of the State of New York (excluding its choice of law rules).  Each party submits to jurisdiction in the State of New York and further agrees that any cause of action arising under this Agreement shall be brought exclusively in a court in New York, New York.

9.6.            All notices and other communications hereunder shall be in writing and shall be in accordance with Section 12.05 of the Separation Agreement.

9.7.            This Agreement, which includes all Exhibits hereto, and the Separation Agreement constitute the entire agreement, and supersede all prior agreements and understandings, both written and oral, between the Parties with respect to the subject matter of this Agreement.

9.8.            This Agreement shall be binding upon and inure solely to the benefit of each of the Parties and their respective successors and assigns, and nothing in this Agreement, express or implied, is intended to or confers upon any Person other than the Parties and their respective successors and permitted assigns any legal or equitable right, benefit, or remedy of any nature under or by reason of this Agreement.  Nothing contained in this Agreement shall be deemed or construed to create a partnership or joint venture, to create the relationships of employee/employer or principal/agent, or otherwise create any liability whatsoever of either Party with respect to the indebtedness, liabilities, obligations or actions of the other or any of their respective officers, directors, employees, stockholders, agents or representatives, or any other person or entity.

9.9.            Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein, so long as the economic and legal substance of the transactions contemplated hereby are not affected in a manner materially adverse to either Party hereto.

9.10.          BNED may not assign this Agreement or any of its rights and obligations hereunder by 

 

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operation of law or otherwise without the prior written consent of B&N.  Any attempted assignment in violation of this Section 9.10 shall be void.

  

9.11.          B&N may assign this Agreement, any rights or obligations hereunder, or any of the Licensed Marks to any third party; provided, however, that such third party agrees in writing prior to any such assignment to comply with the terms and conditions of this Agreement. Any attempted assignment in violation of this Section 9.11 shall be void.

9.12.          The Parties agree that irreparable damage may occur in the event that any of the provisions of this Agreement were not performed by them in accordance with the terms hereof, and that each Party may be entitled to specific performance of the terms hereof in addition to any other remedy at law or equity. Each Party agrees that, prior to seeking any remedy at law or equity (other than specific performance), it will submit its claim against the other Party to a private and confidential mediation process to be conducted by a single mediator (the “Mediator”) in New York City, New York, agreed upon in good faith by the Parties. Each Party will only seek other remedies if the Parties are unable to resolve the claim in the mediation process within sixty (60) days after the initial mediation meeting with the Mediator, or longer if deemed necessary by the Mediator.

9.13.          In the event of a dispute arising out of or relating to this Agreement or the transactions contemplated hereby, each Party agrees to designate a senior employee at the vice president level or higher to meet in person with the other Party’s designee in an attempt to resolve the dispute.  The discussion at such meeting shall be a confidential settlement communication protected by Federal Rule of Evidence 408 and its equivalents.  This clause shall not prevent either Party from initiating litigation or commencing other formal proceedings, subject to Section 9.12 above, in parallel, but the initiation of litigation or such other proceedings shall not be used as a basis to decline to hold the in-person meeting required by this paragraph.

9.14.          Headings/Construction.

  Section headings contained in this Agreement are for convenient reference only, and shall not in any way affect the meaning or interpretation of this Agreement.  The language used in this Agreement will be deemed the language chosen by the Parties to express their mutual intent, and no rule of strict construction will apply against any Person. The term “or” is not exclusive.

[Remainder of page intentionally left blank]

 

 

 

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the Parties hereto as of the date of this Agreement.

 

 

 

	
LICENSOR:

	
LICENSEE:

	 	
	 	
	BARNES & NOBLE, INC.	BARNES & NOBLE EDUCATION, INC.
	 	

 

 

 

 

	
By:

	 /s/ Bradley A. Feuer		
By:

	 /s/ Michael P. Huseby
	 	
	 	
	Name:	 Bradley A. Feuer		Name:	 Michael P. Huseby
	 	
	 	
	Title:	 Vice President, General Counsel and Corporate Secretary		Title:	 Executive Chairman

 

 

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Exhibit A

Existing Stores operated by BNED solely under name “Barnes & Noble”

None.

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