Document:

EX-10.5: EMPLOYMENT AGREEMENT WITH STEPHEN RIGGIO

 

Exhibit 10.5

BARNES & NOBLE, INC.

122 Fifth Avenue

New York, New York 10011

As of February 18, 2002

Mr. Stephen Riggio

81 Post Kunhardt Road

Bernardsville, New Jersey 07924

Dear Mr. Riggio:

          This letter agreement is intended to set forth our mutual understanding
regarding your employment as Chief Executive Officer of Barnes & Noble, Inc.
(the “Company”). Accordingly, we are pleased to agree as follows:

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

          2.     Term. (a) Unless terminated earlier in accordance with the provisions
set forth below, the term of this Agreement will be for a period beginning on
the date hereof and ending on the third anniversary of the date hereof. At the
expiration (but not earlier termination) of the term (including any renewal
term), the term of this Agreement shall automatically renew for an additional
period of one year, unless either party has given the other party written
notice of non-renewal at least one year prior to such renewal.

               (b) This Agreement shall terminate upon your death and may be terminated
by the Company by written notice to you following your Disability (as defined
below). This Agreement may also be terminated by the Company for Cause (as
defined below) upon written notice to you. This Agreement may also be
terminated by you for Good Cause (as defined below) upon written notice to the
Company.

               (c) For purposes of this Agreement:

		
	 	     (i) “Cause” shall mean (A) your final conviction of a felony
impacting on the performance of your duties or involving a crime of moral
turpitude, or (B) misappropriation or embezzlement in the performance of
your duties as an employee of the Company, or (C) willfully engaging in
conduct materially injurious to the Company and in violation of your
obligations under this Agreement, which violation continues for at least
30 days after written notice thereof from the Company to you specifying
such violation in reasonable detail.

 

 

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

          3.     Compensation.

               3.1.     Salary. The Company will pay you, for all services you perform
hereunder, an annual salary of $650,000, or such higher amount as the
Compensation Committee of the Board (the “Compensation Committee”) may
determine, payable in accordance with the Company’s payroll schedule applicable
to executive officers of the Company.

               3.2.     Bonus Compensation. In addition to your above-mentioned salary, we
will pay you, within 90 days following the end of each fiscal year of the
Company during the term of your employment, annual bonus compensation in an
amount determined in accordance with the Company’s Supplemental Compensation
Plan. We agree that for the entire term hereof, you shall be entitled to
participate in that plan.

               3.3.     Employee Benefits. During the term of your employment, you will
participate in and receive any benefits to which you are entitled under
employee benefit plans which the Company provides for all employees, as well as
all benefits which the Company provides, or may at any time in the future
provide, for its executive officers.

               3.4.     Expenses; Car Allowance. During the term of your employment, we
will: (a) pay you a car allowance per month of $1,500, or such higher amount
as may be determined by the Compensation Committee; and (b) reimburse you for
all expenses incurred by you in the performance of your duties and
responsibilities under this Agreement, including, without limitation,
entertainment and travel expenses, in accordance with the policies and
procedures established by the Compensation Committee.

               3.5.     Life and Disability Insurance. In addition to the foregoing, we will
obtain in your name a life insurance policy providing for a death benefit of
$1,000,000 payable to any beneficiary or beneficiaries named by you, and, at
your request, a disability insurance policy providing for monthly payments to
you of at least $12,800 during the period of any disability until the earlier
of your attaining age 65 or death. During the term of your employment, we will
pay all premiums due on such policies.

               3.6.     Severance. In the event of the expiration or termination of the term
of your employment (other than for Cause, your death or Disability, or your
voluntary termination of your employment, whether through resignation,
non-renewal or otherwise), we will pay you a lump sum, within 30 days following
such expiration or termination, equal to (a) the sum of (i) your then annual
salary, (ii) your annual bonus for the then most recently completed fiscal year
of the Company, and (iii) the then aggregate annual dollar amount of the
payments made or to be made by the Company for purposes of providing you with
the benefits set forth in paragraphs 3.3 through 3.5 above, multiplied by (b)
the greater of (i) two or (ii) the number of months remaining in the term of
this Agreement divided by 12. You shall be under no duty to mitigate damages
and the amount paid to you under this paragraph 3.6 shall not be diminished in
any way by your earnings or income from any other sources.

 

 

                3.7.     Stock Options. Contemporaneously with the execution of this
Agreement, the Company has acknowledged and approved the Agreement between you
and Leonard Riggio regarding his grant of options to you of certain rights with
respect to his options to purchase 2,000,000 shares of Common Stock of the
Company.

               3.8.     Change of Control Payments. (a) If at any time during the term of
this Agreement there is a Change of Control and (i) your employment is
terminated by the Company for any reason (other than for Cause) or (ii) you
voluntarily terminate your employment for Good Cause, in either case within the
greater of two years following the Change of Control or the remaining term of
this Agreement, the Company shall pay to you the following amount: (A) the sum
of (x) your then annual salary, (y) your then most recent annual bonus, and (z)
the then aggregate annual dollar amount of the payments made or to be made by
the Company for purposes of providing you with the benefits set forth in
paragraphs 3.3 through 3.6 above, multiplied by (B) the greater of (x) three or
(y) the number of months remaining in the term of this Agreement divided by 12;
provided that the maximum amount payable pursuant to this Section 3.8 shall be
the maximum amount payable to the Executive without triggering an excise tax
under Section 280G of the Internal Revenue Code of 1986, as amended, or any
successor provision thereto. The amount due under this Section 3.8 shall be
paid to you in one lump sum within 30 days after the date your employment
terminates. Subject to the Section 280G limitation referred to above, to the
extent that you are not fully vested in any retirement benefits from any
pension, profit-sharing or other retirement plan or program maintained by the
Company, the Company shall pay directly to you the difference between the
amounts which would have been paid to you had you been fully vested on the date
that your employment terminates and the amounts actually paid or payable to you
pursuant to such plans or programs. The amounts payable to you under this
Section 3.8 shall be in lieu of any amounts payable to you under Section 3.6
above.

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

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

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

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

               (c) As used herein, “Good Cause” shall mean the occurrence of one or more
of the following events within two years after a Change of Control:

		
	 	     (i) there shall have been a material modification of your duties,
title or direct reports;

 

 

		
	 	     (ii) there shall have been a material reduction in the compensation
and benefits you receive from the Company; or

		
	 	     (iii) the principal executive offices of the Company shall be
relocated to a location outside of the New York City metropolitan area.

          4.     Non-Competition.

               4.1.     Covenant. You agree that so long as you are employed by the Company
and for a period of two years thereafter, you will not directly or indirectly,
either as principal, agent, stockholder, employee or in any other capacity,
engage in or have a financial interest in any business that is competitive with
the businesses operated by the Company or any of its subsidiaries. The
foregoing provision shall cease to apply after: (i) you voluntary terminate
your employment for Good Cause within two years following a Change of Control;
or (ii) your employment terminates involuntarily, other than for Cause prior to
a Change of Control.

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

               4.3.     Reasonableness. You acknowledge that the foregoing limitations are
reasonable and properly required by the Company and that in the event that any
such limitations are found to be unreasonable by a court of competent
jurisdiction, you will submit to the reduction of such limitations as the court
shall find reasonable.

               4.4.     Severability. If any of the restrictions in paragraph 4.1 should for
any reason whatsoever be declared invalid by a court of competent jurisdiction,
the validity or enforceability of the remainder of this Agreement will not be
adversely affected thereby.

               4.5.     Equitable Relief. You acknowledge that your services to the Company
are of a unique character which give them a special value to the Company. You
further recognize that any violation of the restrictions in paragraph 4.1 may
give rise to losses or damages for which the Company cannot be reasonably or
adequately compensated in an action at law and that such violation may result
in irreparable and continuing harm to the Company. Accordingly, you agree
that, in addition to any other remedy which the Company may have at law or in
equity, the Company shall be entitled to injunctive relief to restrain any
violation by you of the restrictions in paragraph 4.1.

          5.     Indemnification. You shall be indemnified by the Company, as an
officer and director of the Company and its affiliates, against all actions,
suits, claims, legal proceedings and the like to the fullest extent permitted
by law, including advancement of expenses, partial indemnification,
indemnification following the termination of this Agreement, indemnification of
your estate and similar matters.

          6.     Miscellaneous.

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

 

 

arrangements, oral or written, between you and the Company with respect to
your employment by the Company, including the agreement between us dated as of
January 1, 2000.

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

               6.3.     Amendments and Waivers. This Agreement may not be amended or
modified except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought.
Either party may, by an instrument in writing, waive compliance by the other
party with any term or provision of this Agreement to be performed or complied
with by such other party.

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

               6.5.     Litigation Expenses. The Company will pay any actual expenses for
reasonable attorneys’ fees and disbursements incurred by you, or your personal
representative, in seeking to obtain or enforce any right or benefit under this
Agreement, if you or your representative is the prevailing party.

               6.6.     No Mitigation. In the event of termination of this Agreement by you
as a result of the breach by the Company of any of its obligations hereunder,
or in the event of the termination of your employment by the Company in breach
of this Agreement, you shall not be required to seek other employment in order
to mitigate damages hereunder.

               6.7.     Notices. Any notice which may or must be given under this Agreement
shall be in writing and shall be personally delivered or sent by certified or
registered mail, postage prepaid, or reputable overnight courier, addressed to
you or the Company, as the case may be, at the address set forth on the first
page hereof, or to such other address as you or the Company, as the case may
be, may designate in writing in accordance with the provisions of this
paragraph.

               6.8.     Section and Other Headings. The section and other headings contained
in this Agreement are for reference purposes only and are not deemed to be a
part of this Agreement or to affect the meaning and interpretation of this
Agreement.

               6.9.     Governing Law. This Agreement shall be construed (both as to
validity and performance) and enforced in accordance with and governed by the
laws of the State of New York applicable to agreements made and to be performed
wholly within the State of New York.

               6.10.     Survival of Rights and Obligations. All rights and obligations of
you and the Company arising during the term of this Agreement shall continue to
have full force and effect after the termination of this Agreement unless
otherwise provided herein.

 

 

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

	 	 	 
	 	 	
Very truly yours,
	 	 	 
	 	 	
BARNES & NOBLE, INC.
	 	 	 
	 	 	
By: /s/Lawrence S. Zilavy
	 	 	

	 	 	
       Name: Lawrence S. Zilavy

       Title: Chief Financial Officer

	 
	ACCEPTED AND AGREED TO:
	 
	/s/ Stephen Riggio

Stephen Riggio<PAGE>
                                                                     Exhibit 4.1

LOGO

COMMON STOCK

IP

$.01 PAR VALUE

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

SEE REVERSE FOR CERTAIN DEFINITIONS

CUSIP 46262E 10 5

THIS CERTIFIES THAT

IS THE OWNER OF

FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF

iPAYMENT, Inc.

transferable on the books of the Corporation in person or by duly authorized
attorney, upon the surrender of this certificate properly endorsed. This
certificate is not valid unless countersigned by the Transfer Agent and
registered by the Registrar. Witness the facsimile seal of the Corporation and
the facsimile signatures of its duly authorized officers.

Dated:

SD/-

SECRETARY

SD/-

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

SEAL

COUNTERSIGNED AND REGISTERED:

WACHOVIA BANK, N.A.
  (CHARLOTTE, NC)                 TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED SIGNATURE

<PAGE>

iPayment, Inc.

The Corporation will furnish without charge to each shareholder who so requests
a statement or summary of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof which the Corporation is authorized to issue and of the qualifications,
limitations or restrictions of such preferences and/or rights. Such request may
be made to the office of the Secretary of the Corporation or the Transfer Agent
named on the face of this Certificate.

The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM
TEN ENT
JT TEN

as tenants in common
as tenants by the entireties
as joint tenants with right of
survivorship and not as tenants
in common

UNIF GIFT MIN ACT-                    Custodian
                                                    (Cust)
(Minor)
                                 under Uniform Gifts to Minors
                                 Act
(State)

Additional abbreviations may also be used though not in the above list.

For value received,                        hereby sell, assign and transfer
unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

Shares
<PAGE>

of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint

Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated

NOTICE:

THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER.

SIGNATURE(S) GUARANTEED:

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.

KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR
DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.

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