Document:

Exhibit 10.1

 

TRANSITION SERVICES AGREEMENT

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.  Defined Terms

	
1

	 	 
	
ARTICLE II

	 
	 	 
	
Services to be Provided

	 
	 	 
	
SECTION 2.01.  Provision of Services

	
2

	
SECTION 2.02.  Agreement Coordinators

	
2

	
SECTION 2.03.  Performance Standard

	
3

	
SECTION 2.04.  Warranty Disclaimer

	
3

	
SECTION 2.05.  Consents

	
3

	 	 
	
ARTICLE III

	 
	 	 
	
Term; Fees Reports

	 
	 	 
	
SECTION 3.01.  Service Term

	
3

	
SECTION 3.02.  Early Termination

	
4

	
SECTION 3.03.  Fees and Costs

	
4

	 	 
	
ARTICLE IV

	 
	 	 
	
Monthly Statements; Audits; Disagreements; Taxes

	 
	 	 
	
SECTION 4.01.  Monthly Statements

	
4

	
SECTION 4.02.  Books and Records; Audits

	
5

	
SECTION 4.03.  Disagreements

	
5

	
SECTION 4.04.  Taxes

	
6

	 	 
	
ARTICLE V

	 
	 	 
	
Recipient Assistance

	 
	 	 
	
SECTION 5.01.  Recipient Assistance

	
7

	 	 
	
ARTICLE VI

	 
	 	 
	
Limitation on Liability

	 
	 	 
	
SECTION 6.01.  Limitation on Liability

	
7

 

  

i

	
ARTICLE VII

	 
	 	 
	
Force Majeure

	 
	 	 
	
SECTION 7.01.  Force Majeure

	
8

	 	 
	
ARTICLE VIII

	 
	 	 
	
Miscellaneous

	 
	 	 
	
SECTION 8.01.  Entire Agreement; Third Party Beneficiaries

	
8

	
SECTION 8.02.  Notices

	
8

	
SECTION 8.03.  Successors and Assignment

	
9

	
SECTION 8.04.  Amendment

	
9

	
SECTION 8.05.  Waivers

	
9

	
SECTION 8.06.  Books and Records

	
9

	
SECTION 8.07.  Governing Law; Submission to Jurisdiction; Waiver of

	
10

	 	
Jury Trial

	 
	
SECTION 8.08.  Severability

	
11

	
SECTION 8.09.  Counterparts

	
11

	
SECTION 8.10.  Headings

	
11

	
SECTION 8.11.  Interpretation

	
11

	 	 

 

EXHIBITS

	Exhibit A	Transitional Services

ii

 

TRANSITION SERVICES AGREEMENT (this “Agreement”) dated as of August 2, 2015, is between Barnes & Noble, Inc., a Delaware corporation (“B&N”), and Barnes & Noble Education, Inc., a Delaware corporation (“BNED” or “Recipient”, together with B&N, the “Parties” and each, a “Party”).

WHEREAS, in connection with a spin-off of BNED by B&N and concurrently with the execution of this Agreement, B&N and BNED are entering into a Separation and Distribution Agreement (the “Separation Agreement”);

WHEREAS, BNED desires to obtain certain of the transition services pursuant to the terms and conditions hereunder from B&N and any of B&N’s Affiliates or third parties (B&N and each such Affiliate of B&N and third party providing such services are hereinafter sometimes referred to as a “Service Provider”); and

WHEREAS, B&N is willing to provide to BNED the Services (as defined herein) in order to facilitate BNED’s operation of BNED Business after the date of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and undertakings contained herein, and subject to and on the terms and conditions herein set forth, the Parties hereto agree as follows:

ARTICLE I

Definitions

SECTION 1.01.  Defined Terms.  Each capitalized term used and not defined in this Agreement shall have the meaning assigned to it in the Separation Agreement.  For purposes of this Agreement, the following words and phrases shall have the following meanings:

“Damages” means losses, liabilities, damages, deficiencies, costs and expenses directly incurred or suffered (and, if applicable, reasonable attorneys’ fees associated therewith), but shall not include indirect, incidental, consequential or special damages, or punitive damages of any kind, whether or not foreseen, in each case, whether or not based on contract, tort, warranty claims or otherwise (unless any such damages are components of any third-party claim), in connection with this Agreement.

“Field of Use” has the meaning set forth in the Separation Agreement.

“Pass-Through Cost”, with respect to any Service provided by a Service Provider, means the sum of (i) the direct cost to such Service Provider of providing such Service plus (ii) an allocation of the related employee overhead (including compensation and benefit costs) calculated in good faith based on reasonable and rational 

 

methodologies chosen by the Service Provider, which methodologies shall be provided to the Recipient upon such request from the Recipient.

“Service Fee”, with respect to a Service, means (a) the fee specified on Exhibit A with respect to such Service or (b) if no such fee is specified, the Pass-Through Cost with respect to such Service.

“Taxes” means all goods and services, value added, sales, use, gross receipts, business, consumption and other similar taxes, levies and charges (other than income taxes), including interest and penalties, imposed by applicable taxing authorities.

ARTICLE II

Services to be Provided

SECTION 2.01.  Provision of Services.  (a)   Pursuant to the terms and conditions of this Agreement (including the Exhibit and Schedule hereto), B&N hereby agrees to furnish BNED, directly or through one or more Subsidiaries, certain services relating to the BNED Business (the “Services” as set forth in Exhibit A).

(b)  In the event that Recipient reasonably requests upon reasonable advance notice, and Service Provider elects to provide, any support or service not identified in Exhibit A (including in respect of any increase in the scope of any Service), such support or service shall be provided at the Pass-Through Cost.  If Recipient requests that Exhibit A be amended so that the level or volume of any Service be increased or that the manner in which any Service is provided be changed such that an amendment to such Exhibit would be required, Service Provider will not be required to increase the level or volume of such Service or change the manner in which such Service is provided unless and until such an amendment is agreed to by Service Provider.  If Service Provider agrees to amend the applicable Exhibit to increase the level or volume of such Service or change the manner in which such Service is provided as contemplated by the immediately preceding sentence, such support or service shall be provided at the Pass-Through Cost.

(c)  Designation of Subsidiaries.  Recipient may designate, with the consent of Service Provider (such consent to not be unreasonably withheld, conditioned or delayed), one or more Subsidiaries to receive Services, in which event all references herein to Recipient will be deemed to refer to such Subsidiaries, as appropriate; provided, however, that no such designation will in any event limit or affect the obligations of Recipient under this Agreement to the extent not performed by such Subsidiaries.

SECTION 2.02.  Agreement Coordinators.  Each Party shall designate in writing a representative to act as the primary contact person with respect to all issues relating to the provision of Services pursuant to this Agreement (each, an “Agreement Coordinator”) and may determine to designate from time to time additional functional experts for each of Recipient and Service Provider for specific Services to facilitate knowledge transfer and act as contact persons.  The Agreement Coordinators and any functional experts so designated shall hold review meetings with each other by telephone 

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or in person, as mutually agreed upon, on a semi-annual basis to discuss (i) issues relating to the provision of the Services, (ii) any problems identified with the provision of Services and (iii) to the extent Service changes are agreed upon, the implementation of such changes.  Each Party may replace its appointed Agreement Coordinator at any time upon written notice to the other Party; provided, however, that each Party shall use commercially reasonable efforts to preserve continuity of such Party’s Agreement Coordinator.

SECTION 2.03.  Performance Standard.  Service Provider shall perform, or shall cause one or more of its Service Providers to perform, each Service to be provided by such Service Provider in compliance with applicable Law and (a) if such Service has been provided by B&N or a Subsidiary thereof prior to the date of this Agreement, at a quality level and in the same manner as such Service has been provided in the 12-month period prior to the date hereof and (b) if such Service has not been so provided, at a quality level and in a manner that is commercially reasonable, unless, in each case under this Section 2.03, a different or additional standard of performance is specified in Exhibit A, with respect to such Service.

SECTION 2.04.  Warranty Disclaimer.  EXCEPT AS SET FORTH IN SECTION 2.03, SERVICE PROVIDER MAKES NO IMPLIED REPRESENTATION OR WARRANTY CONCERNING THE SERVICES, INCLUDING ANY APPLICABLE IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND SERVICE PROVIDER HEREBY EXPRESSLY DISCLAIMS ANY APPLICABLE IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE SERVICES.

SECTION 2.05.  Consents.  Recipient shall pay any reasonable fee, cost or expense incurred by Service Provider in connection with Service Provider’s obtaining any consent, approval, permit, license or authorization required for the provision of any Service.  To the extent reasonably practical, Service Provider shall provide advance notice to Recipient prior to Service Provider incurring any such cost, fee or expense; it being understood that such Service Provider’s obligation to provide any such Service is conditioned upon it obtaining such required consent, approval, permit, license or authorization.  If any such consent, approval or authorization is not obtained promptly after the date of this Agreement, Service Provider shall notify Recipient and the Parties shall cooperate in good faith to devise an alternative arrangement for the provision of such Service.  Service Provider shall perform such mutually satisfactory alternative arrangement and Recipient shall bear any reasonable additional costs and expenses incurred in the performance of such alternative arrangement.

ARTICLE III

Term; Fees Reports

SECTION 3.01.  Service Term.  The term of provision of each Service is as set forth in Exhibit A (the “Service Period”).  At least 30 days prior to the end of any 

3

 

applicable Service Period, Recipient may request and Service Provider, in its sole discretion may agree to provide, an additional extension for the provision of any Service beyond the applicable Service Period.  If Service Provider agrees, in its sole discretion, to grant such an additional extension, such agreement must be in writing.

SECTION 3.02.  Early Termination.  (a)  Either Party may immediately terminate this Agreement upon the material breach of this Agreement by the other Party if such material breach is not cured within 30 days after written notice thereof to the Party in material breach.

(b)  Except as otherwise agreed to by the Parties or as otherwise provided in Exhibit A, Recipient may terminate any Service in whole but not in part, as long as Recipient provides Service Provider written notice of such termination at least 30 days prior to any such termination.

(c)  B&N may terminate this Agreement immediately in the event BNED (i) no longer continues to operate as a going concern, (ii) no longer continues to operate in the Field of Use, (iii) changes its name such that it no longer includes “Barnes & Noble” or the abbreviation “B&N”, or otherwise ceases to use the Licensed Marks (as defined in the TLA) or (iv) upon a termination of the TLA in connection with a BNED Fundamental Change (as defined in the TLA) (each event described in this paragraph, a “Termination Event”).  Upon the occurrence of a Termination Event described in clause (i), (ii) or (iii) hereof, B&N shall continue to provide each Service to BNED until the earlier of (A) the end of the Service Period and (B) the 180th day after the occurrence of such Termination Event.  Upon the occurrence of a Termination Event described in clause (iv) hereof, B&N and BNED shall cooperate in good faith with respect to the transition.

SECTION 3.03.  Fees and Costs.  In consideration for rendering the applicable Services, Service Provider shall be entitled to receive a service fee equal to the Service Fee.  In the event that the Service Fee for a Service is not based on Pass-Through Cost and the cost to Service Provider of providing such Service increases, the Parties will discuss in good faith whether an adjustment to such Service Fee is appropriate under the circumstances, unless a review and adjustment mechanism is specified in the Exhibit in which such Service is described.

ARTICLE IV

Monthly Statements; Audits; Disagreements; Taxes

SECTION 4.01.  Monthly Statements.  Within 15 days following the end of each calendar month, Service Provider shall provide to Recipient (x) an invoice (the “Monthly Statement”) setting forth the Service Fees, relating to the immediately preceding calendar month.  Recipient shall remit the amount set forth on the Monthly Statement within 45 days of receipt thereof.

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SECTION 4.02.  Books and Records; Audits.  (a)  During the Term and for a period of at least seven years thereafter, each of the parties will keep and maintain, and will require each of its Affiliates to keep and maintain, complete and accurate books and records related to its compliance with all terms and conditions of this Agreement (collectively, “Audit Information”).

(b)  For the purpose of ensuring the accuracy and completeness of the amounts charged hereunder for any monthly period during the Term (including the calculation of Service Fees and Pass-Through Costs), upon not less than 30 days’ advance written notice from a party desiring to conduct an audit (“Auditing Party”) of another party’s (the “Audited Party”) Audit Information, the Audited Party will make such Audit Information available for audit by an independent certified public accounting firm (together with independent technical personnel if and as reasonably required for such accountant to perform the audit) designated by the Auditing Party and approved by the Audited Party, which approval will not be unreasonably withheld.  Unless otherwise agreed by the Auditing Party and the Audited Party, any such audit will be conducted during regular business hours, at the Audited Party’s principal place of business, not more frequently than once in any period of 12 consecutive months and in a manner that does not unreasonably interfere with the Audited Party’s normal course of business.  Notwithstanding the foregoing, the Auditing Party may conduct more than one audit within a 12-month period if, in the Auditing Party’s good faith judgment, the Auditing Party has a bona fide basis for any failure of the Audited Party to comply with its obligations under this Agreement.  If any audit reveals an overpayment by the Audited Party, then the Audited Party will receive a credit, in the amount of such overpayment, that will be applied only against future amounts owing by the Audited Party under this Agreement.  If any audit reveals an underpayment by the Audited Party, then the Audited Party will pay the amount of the underpayment within 45 days after the date of the auditor’s report.  Further, if any audit reveals an underpayment of more than 5% of the total amount subject to the audit, then the Audited Party will reimburse the Auditing Party within 30 days after the Auditing Party’s request, for all costs and expenses reasonably incurred by the Auditing Party to conduct the audit.

SECTION 4.03.  Disagreements.  (a)  In the event it disagrees with any Monthly Statement, Recipient shall give Service Provider written notice thereof (the “Notice of Disagreement”) as to any of the Monthly Statements or amounts set forth therein.  The Notice of Disagreement shall specify in reasonable detail the nature and amount of any disagreement so asserted.  If a timely Notice of Disagreement is received by Service Provider, then the Monthly Statement(s) (as revised in accordance with clause (x) or (y) below), as the case may be, shall become final and binding upon the Parties on the earlier of (x) the date the Parties hereto resolve any differences they have with respect to any matter specified in the Notice of Disagreement or (y) the date any matters in dispute are resolved by an accounting firm (in accordance with the procedure set forth in this Section 4.03) selected by Service Provider and Recipient in writing or, if the Parties are unable to agree, an independent accounting firm selected by Service Provider’s and Recipient’s independent accounting firms (such firm, the “Accounting Firm”).

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(b)  Recipient and Service Provider acknowledge and agree that, so long as both Parties are in compliance with the provisions of this Section 4.03, Sections 9.05 and 9.07 of the Separation Agreement and the provisions of Article VI of this Agreement shall not apply to any dispute described in this Section 4.03.  During the 30-day period immediately following the delivery of the Notice of Disagreement, Service Provider and Recipient shall seek in good faith to resolve in writing any differences they may have with respect to any matter specified in the Notice of Disagreement.  At the end of such 30-day period, Service Provider and Recipient shall submit for review and resolution by the Accounting Firm any and all matters which remain in dispute and which were included in the Notice of Disagreement, and the Accounting Firm shall make a final determination of the amounts set forth on the Monthly Statement(s) and shall use such determination to prepare the revised Monthly Statement(s), which determination shall be binding on the Parties, it being understood that any such values shall be only within the range of the amounts proposed by Recipient and Service Provider; provided, however, the scope of such determination by the Accounting Firm shall be limited to:  (i) those matters that remain in dispute and that were included in the Notice of Disagreement, (ii) whether, for each calculation on the Monthly Statement(s), such calculation was prepared in accordance with this Agreement, and (iii) whether there were mathematical errors in the Monthly Statement(s), and the Accounting Firm is not authorized or permitted to make any other determination.  Without limiting the generality of the foregoing, the Accounting Firm is not authorized or permitted to make any determination as to compliance by Service Provider with any of the covenants in this Agreement or any Transaction Agreement (other than this Section 4.03).

(c) Any revised Monthly Statement(s) shall become final and binding on Recipient and Service Provider on the date the Accounting Firm delivers such revised Monthly Statement(s) to the Parties.  If the amount shown on any such revised Monthly Statement(s) indicates that a Party has overpaid or underpaid the other Party for the applicable period, then the applicable Party shall promptly reimburse such overpaid or underpaid amount, or, in the case of an overpayment, receive a credit against future amounts owing by such overpaying Party, at such Party’s option.  The fees and expenses of the Accounting Firm pursuant to this Section 4.03 with respect to any Monthly Statement shall be paid by Recipient unless the amount shown on any Monthly Statement exceeds the amount paid pursuant to such Monthly Statement by 5%, in which case Service Provider will pay the reasonable fees and expenses of the Accounting Firm.

SECTION 4.04.  Taxes.  (a)  Recipient shall be responsible for Taxes attributable to the supply of Services to Recipient or any payment hereunder.  If Service Provider is required to pay any part of such Taxes, Recipient shall reimburse Service Provider for such Taxes.  In the event that applicable Law requires that an amount in respect of any taxes, levies or charges be withheld from any payment by Recipient to Service Provider under this Agreement, the amount payable to Service Provider shall be increased as may be necessary so that, after Recipient has withheld amounts required by applicable Law, Service Provider receives an amount equal to the amount it would have received had no such withholding been applicable, and Recipient shall withhold such adjusted amounts and pay such withheld amounts over to the applicable taxing authority in accordance with the requirements of the applicable Law.

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(b)  In the event applicable Law requires the charging of any Tax in connection with the Services hereunder, invoices issued with respect to such Services may include additional amounts charging such Taxes.  If sums invoiced without Taxes become subject to Taxes, then those invoices shall be deemed to be exclusive of Taxes and the party receiving the invoice shall, in addition to the sums payable, pay the invoicing party the full amount of Taxes chargeable thereon.

ARTICLE V

Recipient Assistance

SECTION 5.01.  Recipient Assistance.  The timely completion of Services by Service Provider may depend upon the provision of certain materials and information and the taking of certain actions by Recipient, and Service Provider shall not be responsible for the failure to provide Services to the extent that such failure results from the failure of Recipient to provide such materials or information or take such actions.  Recipient shall provide to Service Provider (a) information reasonably necessary to the performance of the Services by Service Provider hereunder, (b) any necessary specific written authorizations and consents and (c) reasonable access to Recipient’s books and records necessary in Recipient’s reasonable opinion for the performance of the Services by Service Provider hereunder.  Recipient will execute such documents evidencing the authority for Service Provider and its Affiliates to represent Recipient and its Affiliates as may be reasonably necessary to the performance of the Services hereunder.

ARTICLE VI

Limitation on Liability

SECTION 6.01.  Limitation on Liability.  (a)  Except as contemplated by Section 4.03, Service Provider’s maximum liability (including any liability for the acts and omissions of any of its Affiliates or any of its or their respective directors, officers, employees, Affiliates, agents, consultants, subcontractors or representatives) to the Recipient for matters arising out of this Agreement shall be limited to the aggregate amount of the Service Fees received; provided  that the foregoing shall not (i) impair the ability of the Recipient to seek any remedy of injunctive relief or specific performance against Service Provider or (ii) limit any claim of fraud or intentional or willful misrepresentation by Service Provider.  In no event shall any Party or any of its Affiliates have any liability for special, punitive, exemplary, multiplied, indirect, incidental or consequential damages, including loss of profit damages, or for attorneys’ fees and costs and prejudgment interest, in each case as a result of provision of or failure to provide the Services under the terms of this Agreement; provided, however, that the foregoing shall not be construed to preclude recovery of any such Damages that are actually recovered by third parties in connection with losses indemnified hereunder.

(b)  Notwithstanding anything to the contrary contained herein, (i) nothing herein shall limit or exclude any damages or claims to the extent resulting from a Party’s gross negligence, fraud, intentional breach or willful misconduct and (ii) neither Service 

7

Provider nor any of its Affiliates shall have any liability relating to the implementation, execution or use by Recipient or any of its Affiliates of the Services provided under the terms of this Agreement, except in the case of any gross negligence, fraud, intentional misrepresentation or willful misconduct.

ARTICLE VII

Force Majeure

SECTION 7.01.  Force Majeure.  The Parties shall be relieved of their obligations hereunder, if and to the extent that any of the following events hinder, limit or make impracticable the performance by any Party of any of its obligations hereunder:  war, terrorist act, riot, fire, explosion, accident, flood, sabotage, compliance with Law, orders or actions, national defense requirements, labor strike, lockout or injunction, or any other event beyond the reasonable control and without the fault or negligence of such Party.  The Party thus hindered or whose performance is otherwise affected shall promptly give the other Party written notice thereof and shall use commercially reasonable efforts to remove or otherwise address the impediment to action and to resume performance of its affected obligations as soon as practicable; provided that neither Party shall be required to settle a labor dispute other than as it may determine in its sole judgment.

ARTICLE VIII

Miscellaneous

SECTION 8.01.  Entire Agreement; Third Party Beneficiaries.  This Agreement constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior agreements, understandings and negotiations, both written and oral, between the Parties with respect to the subject matter hereof.  This Agreement is not intended to confer upon any Person, other than the Parties to this Agreement, any rights or remedies hereunder.

SECTION 8.02.  Notices.  Any notice, instruction, direction or demand under the terms of this Agreement will be duly given upon delivery, if delivered by hand, facsimile transmission or mail, to the following addresses:

(a)  If to BNED, to:

Barnes & Noble Education, Inc.

120 Mountain View Blvd

Basking Ridge, NJ 07920

Attention:  General Counsel

(b)  If to B&N, to:

 

8

 

Barnes & Noble, Inc.

122 Fifth Avenue

New York, NY 10011

Attention:  General Counsel

Facsimile:  (212) 463-5683

or to such other address as any person shall specify by written notice so given, and such notice shall be deemed to have been delivered as of the date so telecommunicated, personally delivered or scheduled to be received if sent by overnight delivery service.  Any party to this Agreement may notify any other party of any changes to the address or any of the other details specified in this paragraph; provided, however, that such notification shall only be effective on the date specified in such notice or five Business Days after the notice is given, whichever is later.  Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice as of the date of such rejection, refusal or inability to deliver.

SECTION 8.03.  Successors and Assignment.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.  This Agreement may not be assigned by either Party by operation of law or otherwise without the express written consent of the other Party, which consent may be granted or withheld by such Party in its sole discretion.  Any such assignment made without such consent shall be null and void for all purposes.

SECTION 8.04.  Amendment.  This Agreement may only be amended by a written agreement executed by both Parties.

SECTION 8.05.  Waivers.  The observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) by the Party entitled to enforce such term, but such waiver shall be effective only if it is in writing signed by a duly authorized officer of the Party against which such waiver is to be asserted.  Unless otherwise expressly provided in this Agreement, no delay or omission on the part of any Party in exercising any right or privilege under this Agreement shall operate as a waiver thereof, nor shall any waiver on the part of any Party of any right or privilege under the Agreement operate as a waiver of any other right or privilege under this Agreement, nor shall any single or partial exercise of any right or privilege preclude any other or future exercise thereof or the exercise of any other right or privilege under this Agreement.  No failure by either Party to take any action or assert any right or privilege hereunder shall be deemed to be a waiver of such right or privilege in the event of the continuation or repetition of the circumstances giving rise to such right unless expressly waived in writing by the Party against whom the existence of such waiver is asserted.

SECTION 8.06.  Books and Records.  Upon the expiration of the Agreement or upon the termination of a Service or Services with respect to which Service Provider holds books, records, files or any other documents of Recipient, Service 

9

Provider will return such books, records, files and any other documents of Recipient that Service Provider has in its possession as soon as reasonably practicable.

 

SECTION 8.07.  Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.  (a)    This Agreement shall be construed in accordance with and governed by the substantive internal laws of the State of New York.

(b)  Each of the Parties hereto irrevocably agrees that any legal action or proceeding with respect to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder, brought by the other Party hereto or its successors or assigns shall be brought and determined exclusively in any state or federal court in the City of New York, Borough of Manhattan, so long as one of such courts shall have subject matter jurisdiction over such legal action or proceeding, and that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the state of New York.  Each of the parties hereto hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the aforesaid courts.  Each of the Parties hereto hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement, (1) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason, (2) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (3) to the fullest extent permitted by the applicable law, any claim that (a) the suit, action or proceeding in such court is brought in an inconvenient forum, (b) the venue of such suit, action or proceeding is improper or (c) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.  Each Party hereto hereby irrevocably consents to the service of process in any action, suit or other proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement, on behalf of itself or its property, by U.S. registered mail to such party’s respective address set forth below, and nothing in this Section 8.07(b) shall affect the right of any Party to serve legal process in any other manner permitted by law.

(c)  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.  EACH PARTY HERETO (1) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (2) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, 

10

 

AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 8.07(c).

 

SECTION 8.08.  Severability.  If any provision of this Agreement shall be invalid or unenforceable, such invalidity or unenforceability shall not render the entire Agreement invalid.  Rather, the Agreement shall be construed as if not containing the particular invalid or unenforceable provision, and the rights and obligations of each Party shall be construed and enforced accordingly.

SECTION 8.09.  Counterparts.  This Agreement may be executed in separate counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one agreement.

SECTION 8.10.  Headings.  The article, section and other headings contained in this Agreement are inserted for the convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

SECTION 8.11.  Interpretation.  The Parties have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.  Any reference to any federal, state, local or foreign Law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise.  When a reference is made in this Agreement to a Party or to a Section or Exhibit, such reference shall be to a Party to, a Section of, or an Exhibit to, this Agreement, unless otherwise indicated.  All terms defined in this Agreement shall have their defined meanings when used in any Exhibit to this Agreement or any certificate or other document made or delivered pursuant hereto, unless otherwise defined therein.  Whenever the words “include”, “includes”, “including” or “such as” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The word “or” when used in this Agreement is not exclusive.  The word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”.  Whenever used in this Agreement, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders.  Any agreement, instrument or statute defined or referred to herein means such agreement, instrument or statute as from time to time amended, supplemented or modified, including (i) (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and (ii) all attachments thereto and instruments incorporated therein.  The words “asset” and “property” shall be construed to have the same meaning and effect.  References to a Person are also to its permitted successors and permitted assigns.

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IN WITNESS WHEREOF, the Parties have each caused this Agreement to be executed by its duly authorized representative as of the day and year first above written.

 

 

	 	
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	 
	 	 	 	 

 

  

[Signature Page to the Transition Services Agreement]

 

EXHIBIT A

 

 

Human Resources

	
Description of Service:

	
End Date:

	
Fee:

	
HR Administration:  B&N shall provide BNED general advice, consultation for benefits administration, timekeeping and processing for payroll services.

	
December 31, 2016.

 

BNED has the option to extend the end date of payroll processing service to December 31, 2017.

	
Pro rata share of HR service center costs (based upon average employee count).

 

Pass-Through Cost for all other HR Administration services.

	
Learning and Development (Navex Global):  B&N shall provide BNED access to the Preventing Workplace Harassment course from the Navex Global, provided such vendors consent to B&N’s provision of such access to BNED.

	
February 4, 2017

	
No cost.

	
Learning and Development (Trivantis):  B&N shall provide BNED access to the LMS by Trivantis, provided such vendors consent to B&N’s provision of such access to BNED.

	
The first anniversary of the date of this Agreement.

	
20% of B&N’s Annual payment to Trivantis.

 

  

A-1

 

 

Finance and Travel

	
Description of Service:

	
End Date:

	
Fee:

	
Expenses:  B&N shall continue to make available to BNED its expense payment services provided by Concur under contract.

	
The first anniversary of the date of this Agreement.

	
Pass-Through Cost.

	
Travel Services:  B&N shall continue to make available to BNED its travel services provided by American Express Company under contract, provided such vendor permits B&N’s provision of such services to BNED.

	
The second anniversary of the date of this Agreement.

	
Pass-Through Cost.

 

  

A-2

 

 

Digital Content Services

	
Description of Service:

	
End Date:

	
Fee:

	
Metadata Feed for Digital Trade Books:  B&N will make available metadata relating to digital trade books.

	
The six-month anniversary of the date of this Agreement.

	
$30,000 per month.

	
Customer Service:  B&N will provide staffing oversight of third party customer service agents, review and analyze consolidated reports from third party and audit third party invoicing.  B&N will also host and maintain the customer service toll-free lines staffed by third party.

	
The two-year anniversary of the date of this Agreement.

	
$2,000 per month plus Pass-Through Costs.

A-3

 

 

General Oversight and Consultation

	
Description of Service:

	
End Date:

	
Fee:

	
Legal:  General legal advice and services.

 

 

	
The six-month anniversary of the date of this Agreement.

	
For services provided by B&N employees:  Pass-Through Cost.

 

For outside Service Providers, all direct costs to B&N relating to such Service directly attributable to BNED.

	
Treasury:  General advice and consultation in the areas of cash management, management of bank lines, and management of cash investments.

 

	
The six-month anniversary of the date of this Agreement.

	
Investor Relations:  General advice and consultation in the areas of investor relations, investor website management, investor webcast and quarterly conference call preparation, Annual Report preparation and press release preparation and dissemination.

	
The 60th day after the date of this Agreement.

	
PR:  Assistance with public relations and media strategy, issuing press releases, organizing and holding briefings, author launch events, device launch events and other launch events and general media and public relations services, including through the use of and provision of access to outside public relations firms and other relevant external service providers.

	
The 60th day after the date of this Agreement.

	
SEC Reporting:  General advice and consultation relating to SEC reporting obligations, including advice on filing through EDGAR.

	
The 90th day after the date of this Agreement.

	
Tax:  General advice and consultation in the areas of federal and state tax planning and compliance, management of open audits, tax accounting, general advice on audit dispute resolution, calculation of estimated tax payments, tax compliance software selection, and preparation, review and filing of all tax returns.

	
The 18-month anniversary of the date of this Agreement.

A-4

	
Insurance/Risk Management:  General advice, consultation and performance of duties in the areas of broker selection, review of bids, selection and monitoring of insurers/underwriters, communications with brokers and underwriters, claims management and reporting, and interpretation of reports inclusive of Worker’s Compensation plans and vendors.

 

	
The six-month anniversary of the date of this Agreement.

	
For services provided by B&N employees:  Pass-Through Cost.

 

For outside Service Providers, all direct costs to B&N relating to such Service directly attributable to BNED.

 

	
Payments Administration under Certain Insurance Policies:  B&N shall manage and administer payments on Pre-Separation Insurance Claims under the insurance policies identified in Section 8.01(c) of the Separation Agreement on behalf of BNED in accordance with the Separation Agreement.  BNED shall pay B&N for such management and administration on a monthly basis.

	
Until such Pre-Separation Insurance Claims are resolved.

	
Pass-Through Cost.

	
Internal Audit: General advice and consultation regarding internal audit procedures.

	
The six-month anniversary of the date of this Agreement.

	
Pass-Through Cost.

 

  

A-5

 

 

IT Systems Infrastructure

	
Description of Service:

	
End Date:

	
Fee:

	
Reflexis Eplanner System:  The hosting of the Reflexis eplanner system, provided such vendor permits B&N’s provision of such services to BNED.

	
The first anniversary of the date of this Agreement.

	
$1,667 per month.

	
Datacenter Monitoring:  B&N will monitor the uptime and performance of the datacenter during off-hours when BNED does not have staff to undertake such monitoring.

	
The first anniversary of the date of this Agreement.

	
$1,667 per month.

	
Payroll Processing: B&N will provide BNED with continued access to and use of the Payroll and HR/Benefits System provided by Peoplesoft’s online self-service system.  The services provided include printing payroll checks, direct deposit advices, and W-2s.  Incremental vendor costs, if any, shall be born by BNED.

	
December 31, 2016.

 

BNED has the option to extend the end date to December 31, 2017.

	
$2.50 per BNED employee per month.

 

  

A-6

 

 

 

Freight Claims

	
Description of Service:

	
End Date:

	
Fee:

	
Freight Claims:  B&N shall process the freight claims arising out of or relating to the daily operation of BNED Business on behalf of BNED.

 

	
The first anniversary of the date of this Agreement.

	
Pass-Through Cost.

 

 

  

A-7Exhibit 10.2

 

 

 

  

TAX 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.

	
Definition of Terms

	
2

	 	 	 
	
ARTICLE II

 

Allocation of Tax Liabilities and Tax Benefits

	 
	
SECTION 2.01.

	
B&N Indemnification of BNED

	
6

	
SECTION 2.02.

	
BNED Indemnification of B&N

	
6

	
SECTION 2.03.

	
Allocation of Transfer Taxes

	
7

	
SECTION 2.04.

	
Refunds, Credits and Offsets

	
7

	
SECTION 2.05.

	
Carrybacks

	
7

	 	 	 
	
ARTICLE III

 

Tax Returns, Tax Contests and Other Administrative Matters

	 
	
SECTION 3.01.

	
Responsibility for Preparing Tax Returns

	
7

	
SECTION 3.02.

	
Information Packages

	
8

	
SECTION 3.03.

	
Filing of Tax Returns and Payment of Taxes

	
8

	
SECTION 3.04.

	
Tax Contests

	
9

	
SECTION 3.05.

	
Expenses and Applicability

	
9

	 	 	 
	
ARTICLE IV

 

Tax Matters Relating to the Transactions

	 	 	 
	
SECTION 4.01.

	
Mutual Representations

	
10

	
SECTION 4.02.

	
Mutual Covenants

	
10

	
SECTION 4.03.

	
Restricted Actions

	
10

	
SECTION 4.04.

	
Consent to Take Certain Restricted Actions

	
11

	
SECTION 4.05.

	
Procedures Regarding Opinions and Rulings

	
12

	
SECTION 4.06.

	
Notification and Certification Regarding Certain Acquisition Transactions

	
12

	
SECTION 4.07.

	
Reporting

	
13

	
SECTION 4.08.

	
Tax Treatment of Certain Amounts Paid Pursuant to the EMA

	
13

 

 

 

	
ARTICLE V

 

Procedural Matters

	 
	
SECTION 5.01.

	
Cooperation

	
13

	
SECTION 5.02.

	
Interest

	
13

	
SECTION 5.03.

	
Indemnification Claims and Payments

	
13

	
SECTION 5.04.

	
Amount of Indemnity Payments

	
14

	
SECTION 5.05.

	
Treatment of Indemnity Payments

	
14

	
SECTION 5.06.

	
Tax Disputes

	
14

	 	 	 
	
ARTICLE VI

 

Miscellaneous

	 	 	 
	
SECTION 6.01.

	
Termination

	
15

	
SECTION 6.02.

	
Survival

	
15

	
SECTION 6.03.

	
Separation Agreement

	
15

	
SECTION 6.04.

	
Confidentiality

	
15

	
SECTION 6.05.

	
Counterparts; Entire Agreement; Indemnification

	
15

	
SECTION 6.06.

	
Governing Law; Jurisdiction

	
15

	
SECTION 6.07.

	
Waiver of Jury Trial

	
16

	
SECTION 6.08.

	
Assignability

	
16

	
SECTION 6.09.

	
Third‐Party Beneficiaries

	
16

	
SECTION 6.10.

	
Notices

	
16

	
SECTION 6.11.

	
Severability

	
17

	
SECTION 6.12.

	
Headings

	
17

	
SECTION 6.13.

	
Waivers of Default

	
17

	
SECTION 6.14.

	
Specific Performance

	
17

	
SECTION 6.15.

	
Amendments

	
18

	
SECTION 6.16.

	
Interpretation

	
18

	
SECTION 6.17.

	
Compliance by Subsidiaries

	
18

 

 

 

TAX 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”).

W I T N E S S E T H :

WHEREAS BNED is a wholly-owned subsidiary of B&N and a member of the affiliated group of which B&N is the common parent;

WHEREAS, pursuant to the Separation Agreement, B&N and BNED have effected or agreed to effect (i) the distribution by BNED of all of the interests of NOOK Digital LLC, a Delaware limited liability company (“Digital”), to Barnes & Noble Booksellers, Inc., a Delaware corporation (“Booksellers”) (the “Digital Distribution”); (ii) the distribution by Booksellers of all of its shares of BNED common stock to B&N (the “Internal Distribution”);  and (iii) the distribution by B&N to its shareholders all of the shares of BNED common stock received from Booksellers (the “External Distribution”, and together with the Digital Distribution and the Internal Distribution, the “Transactions”); and

WHEREAS the Parties intend that, for U.S. Federal income Tax purposes, (i) no gain or loss be recognized by BNED on the Digital Distribution; (ii) no gain or loss be recognized by, and no amount otherwise be included in the income of, Booksellers upon receipt of all of the interests of Digital in the Digital Distribution; (iii) no gain or loss be recognized by Booksellers on the Internal Distribution; (iv) no gain or loss be recognized by, and no amount otherwise be included in the income of, B&N upon receipt of all of the common stock of BNED in the Internal Distribution; (v) no gain or loss be recognized by B&N on the External Distribution; (vi) no gain or loss be recognized by, and no amount will otherwise be included in the income of, U.S. Holders upon receipt of the common stock of BNED in the External Distribution; (vii) U.S. Holders who receive cash in lieu of a fractional share of BNED common stock deemed received in the External Distribution recognize gain or loss measured by the difference between the basis of such fractional share and the amount of cash received therefor; (viii) each U.S. Holder’s aggregate adjusted basis in B&N common stock immediately prior to the External Distribution be allocated between such shareholder’s BNED common stock received in the External Distribution and the B&N common stock with respect to which such BNED common stock was received in proportion to the fair market values of each immediately following the External Distribution (subject to reduction upon the deemed sale of any fractional shares); and (ix) each U.S. Holder’s holding period in the BNED common stock received in the External Distribution include the holding period of the B&N common stock with respect to which the distribution of the BNED common stock is made, provided that the B&N common stock is held as a capital asset on the date of the External Distribution (clauses (i) through (ix), the “Intended Tax Treatment”);

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the Parties hereby agree as follows:

 

  

ARTICLE I

Definitions

SECTION 1.01.  Definition of Terms.  The following terms shall have the following meanings.  Capitalized terms used but not defined in this Agreement shall have the meanings ascribed to them in the Separation Agreement.

“10% Acquisition Transaction” has the meaning set forth in Section 4.06.

“Active Trade or Business” means the active conduct (determined in accordance with Section 355(b) of the Code) of the trade or business described in the Tax Opinion Representations for purposes of satisfying the requirements of Section 355(b) of the Code as it applies to the External Distribution with respect to BNED.

“Agreement” has the meaning set forth in the preamble.

“B&N” has the meaning set forth in the preamble.

“B&N Consolidated Group” means any consolidated, combined, unitary or similar group of which (i) any member of the B&N Tax Group is or was a member and (ii) any member of the BNED Tax Group is or was a member.

“B&N Subsidiary” means, at any time, any Subsidiary of B&N, including, before the External Distribution, BNED and any BNED Subsidiary.

“B&N Tax Group” means the following Persons, taken together: (i) B&N and (ii) any Person, other than a Member of the BNED Tax Group, that is or was a Subsidiary of B&N as of the External Distribution or at any time prior to the External Distribution.

“BNED” has the meaning set forth in the preamble.

“BNED Capital Stock” means (i) all classes or series of capital stock of BNED, (ii) all options, warrants and other rights to acquire interests described in clause (i) and (iii) all other instruments properly treated as equity of BNED for U.S. Federal income Tax purposes.

“BNED Subsidiary” means any Subsidiary of BNED, excluding Digital or any Subsidiary of Digital.

“BNED Tax Group” means the following Persons, taken together: (i) BNED, (ii) any BNED Subsidiary and (iii) any Person that was an BNED Subsidiary at any time prior to the External Distribution.

“Booksellers” has the meaning set forth in the recitals.

“Code” means the Internal Revenue Code of 1986, as amended.

 

2

 

“Determination” means (i) any final determination of liability in respect of a Tax that, under applicable Law, is not subject to further appeal, review or modification through proceedings or otherwise (including the expiration of a statute of limitations or period for the filing of claims for refunds, amended Tax Returns or appeals from adverse determinations), including a “determination” as defined in Section 1313(a) of the Code or execution of an IRS Form 870AD, or (ii) the payment of Tax by a Party (or its Subsidiary) that is responsible for payment of that Tax under applicable Law, with respect to any item disallowed or adjusted by a Taxing Authority, as long as the responsible Party determines that no action should be taken to recoup that payment and the other Party agrees.

“Digital” has the meaning set forth in the recitals.

“Digital Distribution” has the meaning set forth in the recitals.

“EMA” means the Employee Matters Agreement dated as of the date of this Agreement by and between B&N and BNED, including the Schedules thereto.

“Existing Ruling” means the Ruling issued to B&N and dated as of April 28, 2015.

“External Distribution” has the meaning set forth in the recitals.

“Indemnifying Party” means a Party that has an obligation to make an Indemnity Payment.

“Indemnitee” means a Party that is entitled to receive an Indemnity Payment.

“Indemnity Payment” means an indemnity payment under the Separation Agreement, this Agreement or any other Ancillary Agreement.

“Intended Tax Treatment” has the meaning set forth in the recitals.

“Internal Distribution” has the meaning set forth in the recitals.

“IRS” means the U.S. Internal Revenue Service.

“Ordinary Course of Business” means an action taken by a Person only if such action is taken in the ordinary course of the normal day-to-day operations of such Person.

“Ordinary Taxes” means Taxes other than (i) Transaction Taxes and (ii) Transfer Taxes described in Section 2.03.

“Other Transactions” means the Digital Distribution, the Internal Distribution and, in each case, any transfer of assets or Liabilities related thereto.

“Parties” has the meaning set forth in the preamble.

3

 

“Partnership Returns” mean the partnership Tax Returns (IRS Form 1065 or any foreign, state or local equivalent) of B&N Education, LLC, a Delaware limited liability company.

“Pre-Distribution Tax Period” means any taxable period (or portion thereof) that ends on or before the date of the External Distribution.

“Proposed Acquisition Transaction” has the meaning set forth in Section 4.03(b).

“Records” has the meaning set forth in Section 5.01.

“Refund Recipient” has the meaning set forth in Section 2.04.

“Regulations” means the Treasury regulations promulgated under the Code.

“Restricted Period” has the meaning set forth in Section 4.03(a).

“Ruling” means a private letter ruling (including any supplemental ruling) issued by the IRS in connection with the Transactions, whether granted prior to, on or after the date hereof.

“Satisfactory Guidance” has the meaning set forth in Section 4.04(b).

“Separate BNED Return” means any Tax Return relating to Taxes described in Section 2.02(a) for taxable periods ending after the date of the External Distribution.

“Separation Agreement” means the Separation and Distribution Agreement dated as of July 14, 2015, by and between B&N and BNED, including the Schedules thereto.

“Subsidiary” of any Person means any corporation or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or interests having by their terms 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 by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries.

“Tax Advisor” means (i) for purposes of Section 5.06, a local Tax counsel or accountant of recognized national standing in the relevant jurisdiction and (ii) for all other purposes of this Agreement, a U.S. Tax counsel of recognized national standing.

“Tax Attribute” has the meaning set forth in Section 2.05(a).

“Tax Contest” means an audit, review, examination or other administrative or judicial proceeding, in each case by any Taxing Authority or relating to Taxes.

“Tax Dispute” has the meaning set forth in Section 5.06.

4

 

“Tax Opinion Representations” means reasonable and customary representations requested by Cravath, Swaine & Moore LLP and KPMG LLP regarding certain facts in existence at the applicable time made by B&N and BNED that serve as a basis for the Tax Opinions.

“Tax Opinions” means the written opinions of Cravath, Swaine & Moore LLP and KPMG LLP, in each case issued to B&N and BNED, to the effect that each step of the Transactions will qualify for its Intended Tax Treatment.

“Tax Opinions/Rulings” means (i) any Ruling and (ii) any opinion of a Tax Advisor relating to the Transactions, including those issued on the date of the External Distribution or to allow a party to take actions otherwise prohibited under Section 4.03(a) of this Agreement.

“Tax Return” means any return, declaration, statement, report, form, estimate or information return relating to Taxes, including any amendments thereto and any related or supporting information, required or permitted to be filed with any Taxing Authority.

“Tax Return Preparer” means (i) with respect to any Tax Return that B&N is responsible for preparing under Section 3.01(a), B&N, and (ii) with respect to any Tax Return that BNED is responsible for preparing under Section 3.01(b), BNED.

“Taxes” means all forms of taxation or duties imposed by any Governmental Authority, or required by any Governmental Authority to be collected or withheld, including charges, together with any related interest, penalties and other additional amounts.

“Taxing Authority” means any Governmental Authority charged with the determination, collection or imposition of Taxes.

“Transaction Tax Contest” means a Tax Contest with the purpose or effect of determining or redetermining Transaction Taxes.

“Transaction Taxes” means all (i) Taxes imposed on B&N, BNED or any of their respective Subsidiaries resulting from the failure of any step of the Transactions to qualify for its Intended Tax Treatment, (ii) Taxes imposed on any third party resulting from the failure of any step of the Transactions to qualify for its Intended Tax Treatment for which B&N, BNED or any of their respective Subsidiaries is or becomes liable for any reason and (iii) reasonable, out-of-pocket legal, accounting and other advisory or court fees incurred in connection with liability for Taxes described in clause (i) or (ii).

“Transactions” has the meaning set forth in the recitals.

“Transfer Taxes” means all transfer, sales, use, excise, stock, stamp, stamp duty, stamp duty reserve, stamp duty land, documentary, filing, recording, registration, value-added and other similar Taxes (excluding, for the avoidance of doubt, any income, gains, profit or similar Taxes, however assessed) incurred by the B&N Tax Group and BNED Tax Group as a result of the Separation or the Other Transactions.

“U.S. Holder” has the meaning ascribed to such term in the Form S-1.

5

 

“Unqualified Tax Opinion” has the meaning set forth in Section 4.04(c).

ARTICLE II

Allocation of Tax Liabilities and Tax Benefits

SECTION 2.01.  B&N Indemnification of BNED.  After the External Distribution, B&N shall be liable for, and shall indemnify and hold BNED harmless from, the following Taxes, whether incurred directly by BNED or indirectly through an BNED Subsidiary:

(a)  Ordinary Taxes of B&N and B&N Subsidiaries for any taxable period;

(b)  Transfer Taxes that B&N is required to pay under Section 2.03; and

(c)  Transaction Taxes;

in each case, other than Taxes for which BNED is liable under Section 2.02.

SECTION 2.02.  BNED Indemnification of B&N.  After the External Distribution, BNED shall be liable for, and shall indemnify and hold B&N harmless from, the following Taxes, whether incurred directly by B&N or indirectly through a B&N Subsidiary:

(a)  Ordinary Taxes of BNED or any BNED Subsidiary (or a consolidated, combined, unitary or similar group, other than a B&N Consolidated Group, of which BNED or an BNED Subsidiary is a member);

(b)  Transfer Taxes that BNED is required to pay under Section 2.03; and

(c)  Transaction Taxes attributable to:

(i) any action or omission taken after the External Distribution by BNED or any BNED Subsidiary in breach of the covenants set forth herein (including those in Section 4.03), in any other Ancillary Agreement or in the Separation Agreement;

(ii) the application of Section 355(e) or 355(f) of the Code to any of the Transactions by virtue of any acquisition of BNED Capital Stock or assets of BNED or any BNED Subsidiary made after the External Distribution; or

(iii) any other action or omission taken after the External Distribution by BNED or any BNED Subsidiary that could give rise to Transaction Taxes, except to the extent such action or omission is otherwise expressly required or permitted by this Agreement (other than under Section 4.04), any other Ancillary Agreement or the Separation Agreement;

provided, that Transaction Taxes that are described in Section 2.02 but also would not have been imposed but for an action, omission or acquisition taken or omitted after the External Distribution by any member of the B&N Tax Group, such Transaction Taxes shall be allocated between B&N and BNED in proportion to the relative degree of fault of the members of the

 

6

 

B&N Tax Group (and such members’ Affiliates and counterparties to any consummated Proposed Acquisition Transactions of B&N), on the one hand, and the members of the BNED Tax Group (and such members’ Affiliates and counterparties to any consummated Proposed Acquisition Transactions of BNED), on the other hand.  In determining the relative degree of fault for purposes of the immediately preceding proviso, only actions, omissions or acquisitions occurring after the External Distribution shall be taken into account.

SECTION 2.03.  Allocation of Transfer Taxes.  B&N and BNED shall each pay 50% of all Transfer Taxes; provided, that if applicable Law imposes any Transfer Taxes solely on one or more members of the B&N Tax Group, B&N shall pay 100% of such Transfer Taxes, and if applicable Law imposes any Transfer Taxes solely on one or more members of the BNED Tax Group, BNED shall pay 100% of such Transfer Taxes.

SECTION 2.04.  Refunds, Credits and Offsets.  Subject to Section 2.05, if B&N, BNED or any of their respective Subsidiaries receives any refund of any Taxes for which the other Party is liable under this Article II (a “Refund Recipient”), such Refund Recipient shall pay to the other Party the entire amount of the refund (including interest, but net of any Taxes imposed with respect to such refund) within 10 business days of receipt or accrual; provided, however, that the other Party, upon the request of such Refund Recipient, shall repay the amount paid to the other Party (plus any penalties, interest or other charges imposed by the relevant Taxing Authority) in the event such Refund Recipient is required to repay such refund.  In the event a Party would be a Refund Recipient but for the fact it elected to apply a refund to which it would otherwise have been entitled against a Tax liability arising in a subsequent taxable period, then such Party shall be treated as a Refund Recipient and the economic benefit of so applying the refund shall be treated as a refund, and shall be paid within 10 business days of the due date of the Tax Return to which such refund is applied to reduce the subsequent Tax liability.

SECTION 2.05.  Carrybacks.  If a Tax Return of BNED or any of its Subsidiaries for any taxable period ending after the date of the External Distribution reflects any net operating loss, net capital loss, excess Tax credit or other Tax attribute (a “Tax Attribute”), then BNED or its applicable Subsidiary shall waive the right to carry back any such Tax Attribute to a Pre-Distribution Tax Period to the extent permissible under applicable Law.  In the event that BNED or any of its Subsidiaries does carry back a Tax Attribute to a Pre-Distribution Tax Period, then (i) no payment with respect to such carryback shall be due to BNED or any of its Subsidiaries from B&N and (ii) if BNED or any of its Subsidiaries receives any refund, credit or offset of any Taxes in connection with such carryback, BNED shall promptly pay to B&N the full amount of such refund or the economic benefit of the credit or offset (including interest, but net of any Taxes imposed with respect to such refund).

ARTICLE III

Tax Returns, Tax Contests and Other Administrative Matters

SECTION 3.01.  Responsibility for Preparing Tax Returns.  (a)  Except as provided in Section 3.01(b), B&N shall timely prepare any Tax Returns of the B&N Tax Group and the BNED Tax Group for any taxable period beginning before the date of the External Distribution.  If BNED is responsible for filing any such Tax Return under Section 3.03(a), B&N

 

7

 

shall, subject to Section 3.01(c), promptly deliver such prepared Tax Return to BNED reasonably in advance of the applicable filing deadline.

(b)  BNED shall timely prepare (i) any Partnership Return, and (ii) any Separate BNED Return.  If B&N is responsible for filing any such Tax Return under Section 3.03(a), BNED shall, subject to Section 3.01(c), promptly deliver such prepared Tax Return to B&N reasonably in advance of the applicable filing deadline.

(c)  Except as otherwise described on Schedule 3.01(c), to the extent that any Tax Return described in Section 3.01(a) or (b) directly relates to matters for which another Party may have an indemnification obligation to the Tax Return Preparer, or that may give rise to a refund to which that other Party would be entitled under this Agreement, the Tax Return Preparer shall (i) prepare the relevant portions of the Tax Return on a basis consistent with past practice (or refrain from amending such Tax Return if it has already been filed with the Taxing Authority), except (A) as required by applicable Law or to correct any clear error, (B) as a result of changes or elections made on any Tax Return of a B&N Consolidated Group that do not relate primarily to the BNED Tax Group or (C) as mutually agreed by the Parties; (ii) notify the other Party of any such portions not prepared on a basis consistent with past practice; (iii) provide the other Party a reasonable opportunity to review the relevant portions of the Tax Return; and (iv) consider in good faith any reasonable comments made by the other Party.  The Parties shall attempt in good faith to resolve any issues arising out of the review of any such Tax Return.

SECTION 3.02.  Information Packages.  Each Party (i) shall provide to the other Party (in the format reasonably determined by the other Party) all information and assistance requested by the other Party as reasonably necessary to prepare any Tax Return described in Section 3.01(a) or 3.01(b) on a timely basis consistent with the current practices of B&N and its Subsidiaries in preparing Tax Returns and (ii) in so providing such information and assistance, shall use any systems and third party service providers as are consistent with the current practices of B&N and its Subsidiaries in preparing Tax Returns.

SECTION 3.03.  Filing of Tax Returns and Payment of Taxes.  (a)  Each Party shall execute and timely file each Tax Return that it is responsible for filing under applicable Law and shall timely pay to the relevant Taxing Authority any amount shown as due on each such Tax Return; provided, that neither BNED nor any of its Subsidiaries shall file, amend, withdraw, revoke or otherwise alter any Tax Return of any B&N Consolidated Group, in each case without the prior written consent of B&N, which shall not be unreasonably withheld or delayed.  The obligation to make payments pursuant to this Section 3.03(a) shall not affect a Party’s right, if any, to receive payments under Section 3.03(b) or otherwise be indemnified under this Agreement.

(b)  In addition to its obligations under Section 3.01(c), the relevant Tax Return Preparer shall, no later than 5 business days before the due date (including extensions) of any Tax Return described in Section 3.01(a) or 3.01(b), notify the other Party of any amount (or any portion of any such amount) shown as due on that Tax Return for which the other Party must indemnify the Tax Return Preparer under this Agreement.  The other Party shall pay such amount to the Tax Return Preparer no later than the due date (including extensions) of the relevant Tax Return.  A failure by an Indemnitee to give notice as provided in this

 

8

 

Section 3.03(b) shall not relieve the Indemnifying Party’s indemnification obligations under this Agreement, except to the extent that the Indemnifying Party shall have been actually prejudiced by such failure.

SECTION 3.04.  Tax Contests.  (a)  B&N or BNED, as applicable, shall, within 10 business days of becoming aware of any Tax Contest (including a Transaction Tax Contest) that could reasonably be expected to cause the other Party to have an indemnification obligation under this Agreement, notify the other Party of such Tax Contest and thereafter promptly forward or make available to the Indemnifying Party copies of notices and communications relating to the relevant portions of such Tax Contest.  A failure by an Indemnitee to give notice as provided in this Section 3.04(a) (or to promptly forward any such notices or communications) shall not relieve the Indemnifying Party’s indemnification obligations under this Agreement, except to the extent that the Indemnifying Party shall have been actually prejudiced by such failure.

(b)  B&N and BNED each shall have the exclusive right to control the conduct and settlement of any Tax Contest, other than a Transaction Tax Contest, relating to any Tax Return that it is responsible for preparing pursuant to Section 3.01.  Notwithstanding the foregoing, if the conduct or settlement of any portion or aspect of any such Tax Contest could reasonably be expected to cause a Party to have an indemnification obligation under this Agreement, then (i) the Indemnifying Party shall have the right to share joint control over the conduct and settlement of that portion or aspect and (ii) whether or not the Indemnifying Party exercises that right, the Indemnitee shall not accept or enter into any settlement without the consent of the Indemnifying Party, which shall not be unreasonably withheld or delayed.

(c)  B&N and BNED shall have the right to control jointly the conduct and settlement of any Transaction Tax Contest.  Notwithstanding the foregoing, B&N shall be entitled to control exclusively the conduct and settlement of any Transaction Tax Contest if B&N notifies BNED that (notwithstanding the rights and obligations of the Parties under this Agreement) B&N agrees to pay (and indemnify BNED against) any Transaction Taxes resulting from such Transaction Tax Contest.

(d)  In any case where the Parties control jointly the conduct and settlement of any Tax Contest (or portion or aspect thereof):  (i) neither Party shall accept or enter into any settlement of such Tax Contest (or the relevant portion or aspect thereof) without the consent of the other Party, which shall not be unreasonably withheld or delayed, (ii) both Parties shall have a right to review and consent, which consent shall not be unreasonably withheld or delayed, to any correspondence or filings to be submitted to any Taxing Authority with respect to such Tax Contest (or the relevant portion or aspect thereof) and (iii) both Parties shall have the right to attend any formally scheduled meetings with any Taxing Authority or hearings or proceedings before any judicial authority, in each case with respect to such Tax Contest (or the relevant portion or aspect thereof).

SECTION 3.05.  Expenses and Applicability.  (a)  Each Party shall bear its own expenses in the course of any Tax Contest, other than expenses included in the definition of Transaction Taxes, which shall be governed by Article II.

(b)  This Article III shall not apply before the External Distribution.

 

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ARTICLE IV

Tax Matters Relating to the Transactions

SECTION 4.01.  Mutual Representations.  Each Party represents that it knows of no fact, and has no plan or intention to take any action, that it knows or reasonably should expect, after consultation with a Tax Advisor, is inconsistent with the qualification of any step of the Transactions for its Intended Tax Treatment.

SECTION 4.02.  Mutual Covenants.  (a)  Each Party shall use its reasonable best efforts to cause the Tax Opinions to be issued, including by executing the Tax Opinion Representations.

(b)  Except as otherwise expressly required or permitted by the Separation Agreement, this Agreement or any other Ancillary Agreement, after the External Distribution neither Party shall take or fail to take, or cause or permit its respective Subsidiaries to take or fail to take, any action, if such action or omission would be inconsistent with its Tax Opinion Representations, the Intended Tax Treatment or the Existing Ruling.

SECTION 4.03.  Restricted Actions.  (a)  Subject to Section 4.04, during the period beginning on the date of the External Distribution and ending on, and including, the last day of the two-year period following the date of the External Distribution (the “Restricted Period”), BNED shall not (and shall not cause or permit any of its Subsidiaries to), in a single transaction or a series of transactions:

(i) enter into any Proposed Acquisition Transaction;

(ii) take any affirmative action that permits a Proposed Acquisition Transaction to occur by means of an agreement to which neither BNED nor any of its Subsidiaries is a party (including by (A) redeeming rights under a shareholder rights plan, (B) making a determination that a tender offer is a “permitted offer” under any such plan or otherwise causing any such plan to be inapplicable or neutralized with respect to any Proposed Acquisition Transaction or (C) approving any Proposed Acquisition Transaction, whether for purposes of Section 203 of the Delaware General Corporate Law or any similar corporate statute, any “fair price” or other provision of BNED’s charter or bylaws or otherwise);

(iii) liquidate or partially liquidate BNED, whether by merger, consolidation or otherwise;

(iv) cause or permit BNED to cease to engage in the Active Trade or Business;

(v) sell or transfer 50% or more of the gross assets of the Active Trade or Business or 50% or more of the consolidated gross assets that BNED held immediately before the External Distribution; or

 

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(vi) redeem or otherwise repurchase (directly or indirectly) any BNED Capital Stock, except to the extent such redemptions or repurchases meet the requirements of Section 4.05(1)(b) of Revenue Procedure 96-30 (as in effect prior to its amendment by Revenue Procedure 2003-48).

(b)  (i) For purposes of this Agreement, “Proposed Acquisition Transaction” means any transaction or series of transactions (or any agreement, understanding or arrangement to enter into a transaction or series of transactions) as determined for purposes of Section 355(e) of the Code, in connection with which one or more Persons would (directly or indirectly) acquire, or have the right to acquire, from any other Person or Persons, an interest in BNED Capital Stock that, when combined with any other acquisitions of BNED Capital Stock that occur after the External Distribution (but excluding any other acquisition described in clause (ii)) comprises 25% or more of the value or the total combined voting power of all interests that are treated as outstanding equity in BNED for U.S. Federal income Tax purposes immediately after such transaction or, in the case of a series of related transactions, immediately after any transaction in such series.  For this purpose, any recapitalization, repurchase or redemption of BNED Capital Stock and any amendment to the certificate of incorporation (or other organizational documents) of BNED shall be treated as an indirect acquisition of BNED Capital Stock by any shareholder to the extent such shareholder’s percentage interest in interests that are treated as outstanding equity in BNED for U.S. Federal income Tax purposes increases by vote or value.

(ii) Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include (x) the adoption by BNED of a shareholder rights plan that meets the requirements of IRS Revenue Ruling 90-11, (y) transfers on an established market of BNED Capital Stock that are described in Safe Harbor VII of Section 1.355-7(d) of the Regulations or (z) issuances of BNED Capital Stock that satisfy Safe Harbor VIII (relating to acquisitions in connection with a Person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Section 1.355-7(d) of the Regulations; provided, that such transaction or series of transactions shall constitute a Proposed Acquisition Transaction if meaningful factual diligence is necessary to establish that Section 4.03(b)(ii)(x), (y) or (z) applies.

 

(c)  If BNED merges or consolidates with another entity to form a new entity, references in this Agreement to BNED shall be to that new entity and BNED Capital Stock shall refer to the capital stock or other relevant instruments or rights of that new entity.

(d)  The provisions of this Section 4.03, including the definition of “Proposed Acquisition Transaction”, are intended to monitor compliance with Section 355 of the Code and shall be interpreted accordingly.  Any clarification of, or change in, Section 355 of the Code or the Regulations thereunder shall be incorporated into this Section 4.03 and its interpretation.

SECTION 4.04.  Consent to Take Certain Restricted Actions.  (a)  BNED may (and may cause or permit its Subsidiaries to) take an action otherwise prohibited under Section 4.03(a) if B&N consents.  B&N shall consent if BNED has provided it with Satisfactory Guidance.

 

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(b)  For purposes of this Agreement, “Satisfactory Guidance” means either a Ruling or an Unqualified Tax Opinion, at the election of BNED, in either case reasonably satisfactory to B&N in both form and substance, including with respect to any underlying assumptions or representations and any legal analysis contained therein, and concluding that the proposed action will not cause any step of the Transactions to fail to qualify for its Intended Tax Treatment.

(c)  For purposes of this Agreement, “Unqualified Tax Opinion” means an unqualified “will” opinion of a Tax Advisor that permits reliance by B&N.  The Tax Advisor, in issuing its opinion, shall be permitted to rely on the validity and correctness, as of the date given, of any previously issued Tax Opinions/Rulings, unless such reliance would be unreasonable under the circumstances, and shall assume that each step of the Transactions would have qualified for its Intended Tax Treatment if the action in question did not occur.

SECTION 4.05.  Procedures Regarding Opinions and Rulings.  (a)  If BNED notifies B&N that it wishes to take a restricted action described in Section 4.03(a) and seeks Satisfactory Guidance for purposes of Section 4.04, B&N, at the request of BNED, shall use commercially reasonable efforts to expeditiously obtain, or assist BNED in obtaining, such Satisfactory Guidance.  Notwithstanding the foregoing, B&N shall not be required to take any action pursuant to this Section 4.05(a) if, upon request, BNED fails to certify that all information and representations relating to BNED or any Subsidiary of BNED in the relevant documents are true, correct and complete or fails to obtain certification from any counterparty to any Proposed Acquisition Transaction that all information and representations relating to such counterparty in the relevant documents are true, correct and complete.  BNED shall reimburse B&N for all reasonable out-of-pocket costs and expenses incurred by B&N or any Subsidiary of B&N in obtaining Satisfactory Guidance within 10 business days after receiving an invoice from B&N therefor.

(b)  Notwithstanding anything herein to the contrary, BNED shall not seek a ruling with respect to a Pre-Distribution Tax Period (whether or not relating to the Transactions) if B&N determines that there is a reasonable possibility that such action could have a significant adverse impact on B&N or any Subsidiary of B&N.

SECTION 4.06.  Notification and Certification Regarding Certain Acquisition Transactions.  If BNED proposes to enter into any 10% Acquisition Transaction or take any affirmative action to permit any 10% Acquisition Transaction to occur at any time during the 30-month period following the date of the External Distribution, BNED shall undertake in good faith to provide B&N, no later than 10 business days following the signing of any written agreement with respect to such 10% Acquisition Transaction or obtaining knowledge of the occurrence of any such 10% Acquisition Transaction that takes place without written agreement, with a written description of such transaction (including the type and amount of BNED Capital Stock to be acquired) and a brief explanation as to why BNED believes that such transaction does not result in the application of Section 355(e) or 355(f) of the Code to the Transactions.  For purposes of this Section 4.06, “10% Acquisition Transaction” means any transaction or series of transactions that would be a Proposed Acquisition Transaction if the percentage specified in the definition of Proposed Acquisition Transaction were 10% instead of 25%.

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SECTION 4.07.  Reporting.  B&N and BNED shall (i) timely file any appropriate information and statements (including as required by Section 6045B of the Code and Section 1.355-5 of the Regulations) to report each step of the Transactions as qualifying for its Intended Tax Treatment and (ii) absent a change of Law or an applicable Determination otherwise, not take any position on any Tax Return that is inconsistent with such qualification.

SECTION 4.08.  Tax Treatment of Certain Amounts Paid Pursuant to the EMA.  Section 18.02 of the EMA is incorporated by reference.

ARTICLE V

Procedural Matters

SECTION 5.01.  Cooperation.  Each Party shall cooperate with reasonable requests from the other Party in matters covered by this Agreement, including in connection with the preparation and filing of Tax Returns, the calculation of Taxes, the determination of the proper financial accounting treatment of Tax items and the conduct and settlement of Tax Contests.  Such cooperation shall include:

(i) retaining until the expiration of the relevant statute of limitations (including extensions) records, documents, accounting data, computer data and other information (“Records”) necessary for the preparation, filing, review, audit or defense of all Tax Returns relevant to an obligation, right or liability of either Party under this Agreement;

(ii) providing the other Party reasonable access to Records and to its personnel (ensuring their cooperation) and premises during normal business hours to the extent relevant to an obligation, right or liability of the other Party under this Agreement or otherwise reasonably required by the other Party to complete Tax Returns or to compute the amount of any payment contemplated by this Agreement; and

(iii) notifying the other Party prior to disposing of any relevant Records and affording the other Party the opportunity to take possession or make copies of such Records at its discretion.

SECTION 5.02.  Interest.  Any payments required pursuant to this Agreement that are not made within the time period specified in this Agreement shall bear interest from the end of that period.  Interest required to be paid pursuant to this Agreement shall, unless otherwise specified, be computed at the rate and in the manner provided in the Code for interest on underpayments and overpayments, as applicable, for the relevant period.

SECTION 5.03.  Indemnification Claims and Payments.  (a)  An Indemnitee shall be entitled to make a claim for payment with respect to Taxes under this Agreement when the Indemnitee determines that it is entitled to such payment and is able to calculate with reasonably accuracy the amount of such payment.  Except as otherwise provided in Sections 3.03(b) and 3.04, the Indemnitee shall provide to the Indemnifying Party notice of such claim within 60 business days of the first date on which it so becomes entitled to make such claim.  Such notice shall include a description of such claim and a detailed calculation of the amount claimed.

 

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(b)  Except as otherwise provided in Section 3.03(b) and Section 3.04, the Indemnifying Party shall make the claimed payment to the Indemnitee within 30 business days after receiving such notice, unless the Indemnifying Party reasonably disputes its liability for, or the amount of, such payment.

(c)  A failure by an Indemnitee to give notice as provided in Section 3.03(b), 3.04 or 5.03(a) shall not relieve the Indemnifying Party’s indemnification obligations under this Agreement, except to the extent that the Indemnifying Party shall have been actually prejudiced by such failure.

(d)  Nothing in this Section 5.03 shall prejudice a Party’s right to receive payments pursuant to Section 3.03(b) or 3.04.

SECTION 5.04.  Amount of Indemnity Payments.  The amount of any Indemnity Payment shall be (i) reduced to take into account any Tax benefit actually realized by the Indemnitee resulting from the incurrence of the liability in respect of which the Indemnity Payment is made and (ii) increased to take into account any Tax cost actually realized by the Indemnitee resulting from the receipt of the Indemnity Payment (including any Tax cost arising from such Indemnity Payment having resulted in income or gain to either Party, for example, under Section 1.1502-19 of the Regulations, and any Taxes imposed on additional amounts payable pursuant to this clause (ii)).

SECTION 5.05.  Treatment of Indemnity Payments.  Any Indemnity Payment (other than any portion of a payment that represents interest accruing after the date of the External Distribution) shall be treated by B&N and BNED for all Tax purposes as a distribution from BNED to B&N immediately prior to the External Distribution (if made by BNED to B&N) or as a contribution from B&N to BNED immediately prior to the External Distribution (if made by B&N to BNED), except as otherwise required by applicable Law or a Determination.

SECTION 5.06.  Tax Disputes.  Notwithstanding Section 6.06, this Section 5.06 shall govern the resolution of any dispute arising between the Parties in connection with this Agreement, other than a dispute (i) relating to liability for Transaction Taxes or (ii) in which the amount of liability in dispute exceeds $20 million (a “Tax Dispute”).  The Parties shall negotiate in good faith to resolve any Tax Dispute for 45 calendar days (unless earlier resolved).  Upon notice of either Party after 45 calendar days, the matter will be referred to a Tax Advisor acceptable to both Parties.  The Tax Advisor may, in its discretion, obtain the services of any third party necessary to assist it in resolving the Tax Dispute.  The Parties shall instruct the Tax Advisor to furnish notice to each Party of its resolution of the Tax Dispute as soon as practicable, but in any event no later than 60 calendar days after its acceptance of the matter for resolution.  Any such resolution by the Tax Advisor will be binding on the Parties and the Parties shall take, or cause to be taken, any action necessary to implement the resolution.  All fees and expenses of the Tax Advisor shall be shared equally by the Parties.  If, having determined that a Tax Dispute must be referred to a Tax Advisor, after 45 calendar days the Parties are unable to find a Tax Advisor willing to adjudicate the Tax Dispute in question and that the Parties in good faith find acceptable, then this Section 5.06 shall cease to apply to that Tax Dispute.

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ARTICLE VI

Miscellaneous

SECTION 6.01.  Termination.  This Agreement will terminate without further action at any time before the External Distribution upon termination of the Separation Agreement.  If terminated, no Party will have any Liability of any kind to the other Party or any other Person on account of this Agreement, except as provided in the Separation Agreement.

SECTION 6.02.  Survival.  Except as expressly set forth in this Agreement, the covenants and indemnification obligations in this Agreement shall survive the Spin-Off and shall remain in full force and effect.

SECTION 6.03.  Separation Agreement.  The Parties agree that, in the event of a conflict between the terms of this Agreement and the Separation Agreement with respect to the subject matter hereof, the terms of this Agreement shall govern.

SECTION 6.04.  Confidentiality.  Each Party hereby acknowledges that confidential Information of such Party or its Subsidiaries may be exposed to employees and agents of the other Party or its Subsidiaries as a result of the activities contemplated by this Agreement.  Each Party agrees, on behalf of itself and its Subsidiaries, that such Party’s obligations with respect to Information and data of the other Party or its Subsidiaries shall be governed by Section 7.09 of the Separation Agreement.

SECTION 6.05.  Counterparts; Entire Agreement; Indemnification.  (a)  This Agreement may be executed in one or more counterparts, all of which counterparts shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each Party and delivered to the other Party.  This Agreement may be executed by facsimile or PDF signature and a facsimile or PDF signature shall constitute an original for all purposes.

(b)  This Agreement, the Separation Agreement, the other Ancillary Agreements and the Appendices, Exhibits and Schedules hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof and supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the Parties with respect to the subject matter hereof other than those set forth or referred to herein or therein (including, for the avoidance of doubt, the Tax Sharing Agreement dated as of October 4, 2014 by and among B&N, BNED and the other wholly-owned subsidiaries of B&N).

SECTION 6.06.  Governing Law; Jurisdiction.  This Agreement shall be governed by, and construed in accordance with, the Laws of the State of New York, regardless of the Laws that might otherwise govern under applicable principles of conflicts of laws thereof.  Subject to Section 5.06, each Party irrevocably consents to the exclusive jurisdiction, forum and venue of the Commercial Division of the Supreme Court of the State of New York, New York County and the United States District Court for the Southern District of New York over any and all claims, disputes, controversies or disagreements between the Parties or any of their respective

 

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Subsidiaries, Affiliates, successors and assigns under or related to this Agreement or any document executed pursuant to this Agreement or any of the transactions contemplated hereby or thereby.

SECTION 6.07.  Waiver of Jury Trial.  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY WOULD NOT, IN THE EVENT OF ANY LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.07.

SECTION 6.08.  Assignability.  Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by either Party without the prior written consent of the other Party.  Any purported assignment without such consent shall be void.  Subject to the preceding sentences, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and assigns.  Notwithstanding the foregoing, either Party may assign this Agreement without consent in connection with (a) a merger transaction in which such Party is not the surviving entity and the surviving entity acquires or assumes all or substantially all of such Party’s assets, or (b) the sale of all or substantially all of such Party’s assets; provided, however, that the assignee expressly assumes in writing all of the obligations of the assigning Party under this Agreement, and the assigning Party provides written notice and evidence of such assignment and assumption to the non-assigning Party.  No assignment permitted by this Section 6.08 shall release the assigning Party from liability for the full performance of its obligations under this Agreement.

SECTION 6.09.  Third-Party Beneficiaries.  (a)  The provisions of this Agreement are solely for the benefit of the Parties hereto and are not intended to confer upon any Person except the Parties hereto any rights or remedies hereunder and (b)  there are no third-party beneficiaries of this Agreement and this Agreement shall not provide any third Person with any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement.

SECTION 6.10.  Notices.  All notices or other communications under this Agreement shall be in writing and shall be provided in the manner set forth in Section 12.05 of the Separation Agreement.  In addition, copies of all documents mentioned in the preceding sentence shall also be sent to the address set forth below:

 

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If to B&N, to:

Barnes & Noble, Inc.

122 Fifth Avenue

New York, NY 10019

 Attn:    General Counsel

If to BNED, to:

Barnes & Noble Education, Inc.

120 Mountain View Boulevard

Basking Ridge, NJ 07920

Attn:     General Counsel

Either Party may, by notice to the other Party, change the address to which such copies of documents are to be given.

SECTION 6.11.  Severability.  If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party.  Upon any such determination, any such provision, to the extent determined to be invalid, void or unenforceable, shall be deemed replaced by a provision that such court determines is valid and enforceable and that comes closest to expressing the intention of the invalid, void or unenforceable provision.

SECTION 6.12.  Headings.  The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

SECTION 6.13.  Waivers of Default.  No failure or delay of either Party (or the applicable member of its Group) in exercising any right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power.  Waiver by either Party of any default by the other Party of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default.

SECTION 6.14.  Specific Performance.  In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, B&N shall have the right to specific performance and injunctive or other equitable relief of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.  BNED shall not oppose the granting of such relief on the basis that money damages are an adequate remedy.  The Parties agree that the

 

17

 

remedies at law for any breach or threatened breach hereof, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived.  Any requirements for the securing or posting of any bond with such remedy are waived.  The Parties acknowledge and agree that the right of specific enforcement is an integral part of this Agreement and without that right, neither B&N nor BNED would have entered into this Agreement.

SECTION 6.15.  Amendments.  No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by either Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of each Party.

SECTION 6.16.  Interpretation.  The rules of interpretation set forth in Section 12.14 of the Separation Agreement shall be incorporated by reference to this Agreement, mutatis mutandis.  NOTWITHSTANDING THE FOREGOING, THE PURPOSE OF ARTICLE IV IS TO ENSURE THAT EACH STEP OF THE TRANSACTIONS QUALIFY FOR ITS INTENDED TAX TREATMENT AND, ACCORDINGLY, THE PARTIES AGREE THAT THE LANGUAGE THEREOF SHALL BE INTERPRETED IN A MANNER THAT SERVES THIS PURPOSE TO THE GREATEST EXTENT POSSIBLE.

SECTION 6.17.  Compliance by Subsidiaries.  The Parties shall cause their respective Subsidiaries to comply with this Agreement.

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.

 

 

	 	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	 
	 	 	 	 

 

 

19

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