Document:

ex10-3.htm

CONFIDENTIAL TREATMENT REQUESTED.  INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND MARKED WITH "[***]".   AN UNREDACTED VERSION OF THE DOCUMENT HAS ALSO BEEN FURNISHED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION AS REQUIRED BY RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.  

 

Exhibit 10.3

 

 

CONFIDENTIAL SETTLEMENT AND PATENT LICENSE AGREEMENT

 

This Confidential Settlement and Patent License Agreement, by and between Barnes & Noble, Inc., a Delaware corporation having a principal place of business at 122 Fifth Avenue, New York, New York 10011 (“Barnes&Noble”), and barnesandnoble.com llc, a Delaware limited liability corporation having a principal place of business at 76 Ninth Avenue, New York, New York 10011, Microsoft Corporation, a Washington corporation having a primary place of business at One Microsoft Way, Redmond, Washington 98052 (“MICROSOFT”), and Microsoft Corporation’s Subsidiary, Microsoft Licensing GP, a Nevada general partnership, with offices at 6100 Neil Road, Suite 210, Reno NV 89511-137 (“MLGP”), is effective as of April 27, 2012 (“Effective Date”).  MICROSOFT and Barnes&Noble (individually, a “Party”; collectively, the “Parties”) agree as follows.

 

Whereas, MICROSOFT filed a complaint instituting Investigation No. 337-TA-769 in the U.S. International Trade Commission against Barnes&Noble, barnesandnoble.com llc and other respondents seeking to forbid entry and prohibit importation of certain devices alleged to infringe certain MICROSOFT patents, and filed a complaint in Action No. 2:11-cv-00485 RAJ in the U.S. District Court for the Western District of Washington alleging infringement of the same MICROSOFT patents (“Litigations”);

 

Whereas, Barnes&Noble and barnesandnoble.com llc filed responses to MICROSOFT’s complaints in the U.S. International Trade Commission investigation and the Western District of Washington action alleging, inter alia, that the asserted patents were invalid, not infringed, and unenforceable on various grounds;

 

Whereas, in consideration of the mutual covenants contained herein, the Parties seek to settle these disputes and enter into an agreement as set forth herein:

 

Section 1.      Definitions

 

“Affiliate” means, for any given entity at any relevant time, any other entity Controlling, Controlled by or under common Control with such given entity.

 

“Commercial Agreement” means the Commercial Agreement dated as of the date hereof between MICROSOFT, Barnes&Noble and NewCo.

 

“Consumer Device Business” means substantially the entirety of Barnes&Noble’s business of the Sale of Covered Products, but not including the sale of Covered Products in retail stores.

 

“Control” means direct or indirect (i) ownership of more than fifty percent (50%) of the outstanding shares representing the right to vote for members of the board of directors or other managing officers of an entity, or (ii) for an entity that does not have outstanding shares, more than fifty percent (50%) of the ownership interest representing the right to make decisions for such entity.

 

“Covenant” means the covenant granted by MICROSOFT under Section 3.2 of this Agreement.

 

 

 

  

  

  

 

 

“Covenanted Supplier” means an entity that (i) manufactures a Covered Product or any component thereof for or on behalf of Barnes&Noble or its Affiliates or (ii) directly or indirectly supplies such Covered Product or any component thereof to Barnes&Noble or its Affiliates, at any time during the Term.  For the avoidance of doubt, Covenanted Supplier does not include Barnes&Noble or its Affiliates.

 

“Covered Patents” means all Patents owned by MICROSOFT or its Affiliates entitled to an effective filing date on or before the end of the Term.

 

“Covered Products” means any and all [***] that are Sold by Barnes&Noble or its Affiliates.  [***]

 

“Customer” means a Distributor or end user of a Covered Product.

 

“Device Fee” means the fees set forth below for each unit of a Covered Product in the specified Transfer Price range:

 

	
Transfer Price

	
eReader

	
Other Consumer Device

	
[***]

	
[***]

	
[***]

“Display” means any kind of display or monitor, including a single display or multiple integrated displays that are capable of being used together to present a unified image.

 

“Distributors” means resellers and distributors of Barnes&Noble to the extent they are authorized by Barnes&Noble (directly or indirectly) to resell, license, supply, distribute or otherwise make available Covered Products.

 

“Excluded Technologies” means [***].

 

“eReader” means [***].

 

“General Purpose Computing Device” means any general purpose computing device (e.g. server product, personal computer, desktop, laptop, netbook, slate or tablet), including any device that is designed as, marketed as, or capable (through docking or otherwise) of performing the functions of, such general purpose computing devices, and any replacement for any of the foregoing. General Purpose Computing Devices include, for example, versions of the NOOK Tablet available as of the Effective Date.

 

“[***]-Based Functionality” means (i) a system that includes [***] for the purpose of [***], (ii) logic (whether hardware, software or a combination thereof) for the foregoing system [***], or combinations of (i) and (ii).  For clarification, “[***]-Based Functionality” does not include software or hardware that [***].

 

[***]

 

“[***] Software” means software, products or services that provide [***] functionality [***], whether provided as software or a service), as well as any [***] functionality associated with the foregoing.  Notwithstanding the foregoing, [***] Software does not include [***].

 

 

 

  

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“Keyboard” means any kind of keyboard or keypad, including touch screen, projected and other types of mechanical and non-mechanical keyboards.

 

“License” means the license granted by MICROSOFT to Barnes&Noble under Section 3.1 of this Agreement.

 

“[***] Functionality” means functionality that (i) associates [***] displays [***] or (ii) [***] and displays [***].

 

“NewCo” means an existing or newly formed Affiliate of Barnes&Noble to which Barnes&Noble assigns the Consumer Device Business, consistent with the Separation.

 

“Other Consumer Device” means [***].

 

“Patents” means any and all patents, letters patents, utility models, patent registrations, equivalent rights, applications, provisional applications and non-provisional applications in all countries of the world, including all continuations, continuations-in-part, divisionals, substitute applications, reissues, reexaminations, renewals and extensions, and all related patents and applications claiming priority from such patents, letters patents, utility models, patent registrations, equivalent rights, applications, provisional applications and non-provisional applications.  Patents do not include design patents, design registrations or trade dress rights.

 

“Pre-Installed Software” means [***].

 

“Quarter” means each calendar quarter (January 1 through March 31, April 1 through June 30, July 1 through September 30, and October 1 through December 31).

 

“Royalty Period” means each Quarter during the Term, except (i) the first Royalty Period shall commence on the earlier of (A) the commercial release of a NOOK Metro style application for Windows 8 pursuant to the Commercial Agreement, or (B) December 31, 2012, (the earlier of (A) or (B), the “Start Date”) and (ii) the last Royalty Period shall end on the last day of the Term.

 

“Separation” means the assignment to NewCo of the Consumer Device Business, consistent with the separation principles approved by the Board of Directors of Barnes&Noble and provided to MICROSOFT on April 11, 2012.

 

“Subsidiary” means an Affiliate Controlled by Barnes&Noble.

 

“Third Party Software” means [***].

 

“Transfer Price” means the average selling price during the Royalty Period that is charged by Barnes&Noble and its Affiliates in an arms-length transaction for a given brand and model of a Covered Product entering their distribution channel; provided, however, in no event shall the Transfer Price be less than the costs incurred by the manufacturer for buying or creating the components that comprise the Covered Product.

 

 

 

  

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“[***] Functionality” means (i) a [***] system with one or more [***] that are able to [***]; (ii) software that [***]; or (iii) any combination of (i) and (ii), or portions thereof, wherein the primary function of the foregoing (i), (ii) or (iii) is to [***].

 

“Windows Product” means a Covered Product that runs solely on a Windows Operating System licensed separately by MICROSOFT to Barnes&Noble or its Affiliates.

 

Section 2.      Releases

 

2.1           Subject to Section 3.5 and Dismissal under Section 3.6, MICROSOFT, on behalf of itself and its current and future Affiliates, hereby releases and forever discharges Barnes&Noble, its past and current Affiliates and their respective employees, officers, directors, principals, Covenanted Suppliers and Customers, acting as such, from any and all claims, actions, causes of action, suits, damages, injuries, duties, rights, obligations, liabilities, adjustments, responsibilities, judgments, trespasses, and demands, whatsoever, in law or in equity, whether known or unknown, suspected to exist or unsuspected to exist, which were made or could have been made by MICROSOFT alleging infringement (whether direct infringement, contributory infringement or induced infringement) of the Covered Patents based upon (1) the manufacture, use, importation, or sale by Barnes&Noble or its current and past Affiliates of any Covered Products sold by Barnes&Noble or its current or past Affiliates at any time prior to the Effective Date, or (2) the manufacture, use, importation or sale by Covenanted Suppliers, on behalf of Barnes&Noble or its current or past Affiliates of any Covered Products or any component thereof sold by Barnes&Noble or its current or past Affiliates at any time prior to the Effective Date.For purposes of Sections 3.1 and 3.2, any activity (including but not limited to making, having made, using, importation, offering for sale or sale) of Barnes & Noble, its current or past Affiliates or its Covenanted Suppliers, with respect to a unit of a Covered Product sold during the Term (or any component thereof), shall be deemed to have been performed during the Term.

 

2.2           Subject to Section 3.5 and Dismissal under Section 3.6, MICROSOFT and Barnes&Noble, on behalf of themselves and their current and future Affiliates, hereby release and forever discharge each other and their past and current Affiliates, and their respective employees, officers, directors, and principals, acting as such, from all claims, counterclaims, defenses, actions, causes of action, suits, damages, injuries, duties, rights, obligations, liabilities, adjustments, responsibilities, judgments, trespasses, and demands, whatsoever, in law or in equity, whether known or unknown, suspected to exist or unsuspected to exist, which were made or could have been made, of any kind or nature arising from or relating in any way to the actions alleged in the Litigations occurring before the Effective Date.

 

2.3           The Parties and their Affiliates expressly waive all rights under any statutes (such as, for example, California Civil Code § 1542), legal decisions, or common law principles providing that releases of the type extended in Sections 2.1 and 2.2 do not or may not extend to claims which are unknown, unanticipated, or unsuspected at the time such releases are executed.

 

 

 

  

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Section 3.      License, Covenant Not to Sue and Dismissal of Lawsuits

 

3.1           License.  Subject to Section 3.5, Dismissal under Section 3.6 and the royalty payments in Section 4 below, and in consideration for such royalty payments, MICROSOFT, on behalf of itself and its current and future Affiliates, hereby grants to Barnes&Noble and its  current Affiliates, effective as of the Effective Date, a worldwide, nonexclusive, nontransferable (except as specifically provided for in Section 7.6) and nonsublicensable license under the Covered Patents to make, have made (solely for sale by, for or on behalf of Barnes&Noble or its current Affiliates), use, sell, offer for sale, import, export, lease, distribute or otherwise transfer (collectively, “Sell, “Sold” or “Sale”) Covered Products during the Term.

 

3.1.1 Future Subsidiary License.  Without limiting Section 7.6, if Barnes&Noble forms or acquires a Subsidiary after the Effective Date, the License granted under this Section 3.1 and the Covenant granted under Section 3.2 shall extend to such Subsidiary, but effective only as of the date of formation or acquisition of such Subsidiary.

 

3.2           Covenants Not to Sue. Solely with respect to the Covered Products as licensed under the foregoing Section 3.1 and, for the avoidance of doubt, without expanding, increasing or otherwise augmenting the license rights provided therein, MICROSOFT, on behalf of itself and its current and future Affiliates, hereby covenants not to sue for patent infringement under any Covered Patent (i) any Covenanted Supplier for its manufacture and supply of a Covered Product or any component thereof to Barnes&Noble or its current Affiliates, (ii) any Distributor for its distribution of a Covered Product Sold by, for or on behalf of Barnes&Noble or its current Affiliates, and (iii) any end user for its use of a Covered Product Sold by, for or on behalf of Barnes&Noble or its current Affiliates.  For specific units of Covered Products Sold during the Term, the foregoing covenants will continue for the useful life of the Covered Products.  Notwithstanding anything in this Agreement to the contrary, no Covered Product sold after the Start Date is covered under the License or Covenant of this Agreement unless a Device Fee for such Covered Product is paid as a Royalty pursuant to Section 4.

 

3.3           Former Affiliate License.  If an Affiliate of Barnes&Noble ceases to be an Affiliate after the Effective Date, any License or Covenant granted to such Affiliate pursuant to this Agreement shall terminate on the date such Affiliate is no longer an Affiliate (“Spin-out Date”); provided, however, that any License or Covenant applicable to specific units of Covered Products Sold by such Affiliate prior to the Spin-out Date shall continue for the useful life of such Covered Products.  Nothing in this Section 3.3 shall limit the ability to assign pursuant to Section 7.6.

 

3.4           Defensive Termination Rights.  [***]

 

3.5           Reservation of Rights.  MICROSOFT reserves all rights (and no one receives any rights) not expressly granted by the License and Covenant.  No additional rights (including any implied patent licenses, covenants, releases or other rights) are granted by the License or Covenant through implication, estoppel or otherwise.  Notwithstanding anything to the contrary in this Agreement, MICROSOFT is not bound by, and does not grant any license, covenant or other right or incur any other obligations as a result of, the terms of any license or other agreement with a third party to which Barnes&Noble may be subject.  Without limiting the generality of the foregoing, the License and Covenant do not include any license, right or covenant (a) to distribute source code; (b) to any features or functionality not covered by the Covered Patents (e.g. related or enabling technologies); (c) to encumber, license or sublicense the Covered Patents under the terms of any Excluded License or otherwise; or (d) under any patents other than the Covered Patents.

 

 

 

  

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3.6           Dismissal of Litigations.  MICROSOFT, Barnes&Noble and  barnesandnoble.com llc agree that (1) within four (4) business days of the Effective Date, MICROSOFT will file a notice of voluntary dismissal without prejudice under Rule 41(a) (1) (A) (i) as to MICROSOFT’s claims against Inventec Corporation in the U.S. District Court for the Western District of Washington, No. 2:11-cv-00485 RAJ; (2) within four (4) business days of the Effective Date, MICROSOFT,  Barnes&Noble and barnesandnoble.com llc will file a joint motion to stay and to refrain from issuing final initial determination of investigation No. 337-TA-769 in the U.S. International Trade Commission (the “769 ITC Investigation”) that represents that MICROSOFT, Barnes&Noble and barnesandnoble.com llc have entered into a settlement agreement that resolves the dispute before the ITC in the 769 ITC Investigation in its entirety and require additional time to prepare a motion to terminate as to all respondents; (3) within five (5) business days of the Effective Date, MICROSOFT, Barnes&Noble and barnesandnoble.com llc will file a joint motion to terminate the 769 ITC Investigation after working in good faith to prepare appropriately redacted versions of all agreements relating to the subject matter of the 769 ITC Investigation that are required to be filed with the motion to terminate; and (4) within five (5) business days after the ITC issues a notice of final determination of termination, MICROSOFT, Barnes&Noble and barnesandnoble.com llc will file a motion to lift the stay of the action in the U.S. District Court for the Western District of Washington, No. 2:11-cv-00485 RAJ, and a joint motion to dismiss MICROSOFT’s claims against Barnes&Noble and barnesandnoble.com llc in that action, with prejudice, and also to dismiss Barnes&Noble and barnesandnoble.com llc’s defenses and counterclaims in that action, with prejudice (termination of such ITC claims and dismissal of such District Court claims,  “Dismissal”).

 

3.6.1           The Parties agree that they and their Affiliates shall bear their own costs and attorneys’ fees relating to the Litigations, their dismissals and the negotiation of this Agreement.

 

Section 4.      Payments

 

4.1           Royalty Payments.

 

4.1.1           Royalties. For each unit of a Covered Product sold (net of returns) by, for or on behalf of Barnes&Noble or any of its Affiliates worldwide during the applicable Royalty Period, Barnes&Noble will pay MICROSOFT the applicable Device Fee for each such Covered Product unit (“Royalties”). For the avoidance of doubt, for each Covered Product unit sold, a single Device Fee will be paid by Barnes&Noble, or by a party succeeding to Barnes&Noble’s rights and obligations under this Agreement pursuant to Section 7.6 [***].

 

4.1.2           Royalty Report and Invoice.  Within [***] days after the end of each Royalty Period, whether or not any Royalties are due for the applicable Royalty Period, Barnes&Noble shall submit to MICROSOFT, at its address for notices under Section 7.4 of this Agreement (with a copy by email to IPNotice@microsoft.com), a completed and accurate royalty report in the form attached as Exhibit A, as the same may be updated from time to time by MICROSOFT (“Royalty Report”).  Such Royalty Report will include for each category of Covered Products and each brand name and model number in such category:  (i) the number of units of Covered Products sold during the Royalty Period, (ii) the average Transfer Price of the Covered Products sold during the Royalty Period, and (iii) the total amount of Royalties owed by Barnes&Noble for the Royalty Period.  MICROSOFT shall thereafter invoice Barnes&Noble for payment. Within [***] days after the date of receipt of MICROSOFT’S invoice, Barnes&Noble  shall pay to MICROSOFT the amount invoiced for Royalties owed during such Royalty Period.

 

 

 

 

  

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4.1.3           Records.  During the Term and for a period of at least [***] years thereafter, Barnes&Noble shall keep and maintain, and shall require each of its Affiliates to keep and maintain, complete and accurate books and records of the number of Covered Products and the Transfer Prices for each model and each category of Covered Products sold by or through Barnes&Noble or any of its Affiliates during the Term.  Upon not less than [***] days advance written notice from MICROSOFT, Barnes&Noble shall make such books and records 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 MICROSOFT and approved by Barnes&Noble, which approval shall not be unreasonably withheld.  Unless otherwise agreed by MICROSOFT and Barnes&Noble, any such audit shall be conducted during regular business hours, at Barnes&Noble’s principal place of business, not more frequently than once in any period of twelve (12) consecutive months and in a manner that does not unreasonably interfere with Barnes&Noble’s normal course of business. Notwithstanding the foregoing, MICROSFT may conduct more than one audit within a 12 month period if, in MICROSOFT’s good faith judgment, MICROSOFT has a bona fide basis for a Royalty Dispute with Barnes&Noble.

 

4.1.4           Discrepancies.  If any audit reveals an overpayment, then Barnes&Noble shall receive a credit, in the amount of such overpayment, that will be applied only against future Royalties payable under this Section 4.1.  If any audit reveals an underpayment, then Barnes&Noble shall pay MICROSOFT the amount of the underpayment, together with interest as provided for in Section 4.5, within [***] days after the date of the auditor’s report.  Further, if any audit reveals an underpayment of more than [***] of the Royalties owed for the Royalty Period(s) subject to the audit, then Barnes&Noble shall reimburse MICROSOFT within [***] days, upon request, for all costs and expenses reasonably incurred by MICROSOFT to conduct the audit.

 

4.2           Method of Payment.  Barnes&Noble shall make any and all payments to MICROSOFT under this Agreement in currency of the United States of America without any withholding, deduction, offset, setoff or other charge.  Barnes&Noble shall make such payments in immediately available funds by wire transfer to the account MICROSOFT specifies in its invoice to Barnes&Noble.  Barnes&Noble shall also send notification of such wire transfer to spagpay@MICROSOFT.com and IPNotice@MICROSOFT.com.

 

 

 

  

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4.3           Taxes.  Except as otherwise specified herein, amounts payable to MICROSOFT under this Agreement exclude any and all taxes (including sales, use, income and value added taxes), duties, levies, fees, excises or tariffs (“Taxes”) imposed on any activities of Barnes&Noble, its Affiliates or Customers in connection with this Agreement.

 

4.5           Delinquent Payment.  Any fee, royalty or other amount not paid when due and otherwise in accordance with this Section 4 shall bear interest at the rate of [***] per month or the highest rate permitted by applicable usury law, whichever is less, calculated on a daily basis and compounded on the first day of each calendar month, from the date due until the date received by MICROSOFT in accordance with Section 4.3.  This Section 4.5 does not authorize late payments, and the payment of interest hereunder shall not be in lieu of or prejudice any other right or remedy that MICROSOFT may have on account of Barnes&Noble’s failure to make any payment in accordance with this Section 4.

 

4.6           Royalty Arbitration.  The Parties will use the Royalty Arbitration Processes in Exhibit C for escalation and resolution of issues and disputes relating to payment under this Section 4 (including with respect to Device Fees, Covered Product units and allocation of products into Covered Product categories) that may arise during the performance of this Agreement (“Royalty Disputes”).

 

4.7           Royalty Payment Deferral.

 

(a) If MICROSOFT fails to pay any undisputed payment when due under the Commercial Agreement, then Barnes&Noble may withhold and defer payment of any and all amounts otherwise due or becoming due to MICROSOFT under this Agreement until such amount is paid in full to Barnes&Noble, and Barnes&Noble will give MICROSOFT written notice of such deferral; provided that the amount subject to deferral shall not exceed the amount that MICROSOFT has failed to pay under the Commercial Agreement; and

 

(b) If MICROSOFT or Barnes&Noble provides written notice of a dispute to the other Party regarding any payment obligation of MICROSOFT under the Commercial Agreement, then, unless otherwise agreed by the parties:

 

(i) those Parties will promptly submit the dispute to expedited arbitration under the Commercial Agreement;

 

(ii) Barnes&Noble may withhold and defer payment of any and all amounts otherwise becoming due to MICROSOFT under this Agreement beginning after a determination, by final order in such expedited arbitration or by agreement of the parties, that all or any portion of a disputed payment obligation is in fact due by MICROSOFT; provided that the amount subject to deferral shall not exceed the amount that MICROSOFT has failed to pay under the Commercial Agreement; and

 

(iii) Barnes&Noble may continue to withhold and defer such payment until satisfaction in full of such payment obligation by MICROSOFT.

 

 

 

  

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Section 5.      Term  and Termination

 

5.1           General.  The term of this Agreement (“Term”) shall commence as of the Effective Date and terminate upon the first of the following dates to occur:  (a) the fifth (5th) anniversary of the Start Date; (b) the date Barnes&Noble provides MICROSOFT written notice of termination in accordance with Sections 3.4, 5.2 or 7.6 of this Agreement and such termination occurs; or (c) the date MICROSOFT provides Barnes&Noble (or the Acquiring Third Party pursuant to Section 7.7) written notice of termination in accordance with Sections 5.2, 7.6 or 7.7 of this Agreement and such termination occurs.

 

5.2           Early Termination.

 

5.2.1.           Either Party may immediately terminate the Agreement by giving the other Party written notice of termination in the event that:

 

	
(a)

	
the other Party commits any material breach of this Agreement and fails to cure such breach within thirty (30) days after receipt of written notice of such breach;

	
(b)

	
[***];

	
(c)

	
[***];

	
(d)

	
Dismissal pursuant to Section 3.6 is not granted; or

	
(e)

	
the Commercial Agreement is terminated in accordance with its terms other than for Material Default by NewCo.

 

5.2.2.           Termination by Barnes&Noble.  Barnes&Noble may terminate this Agreement by giving MICROSOFT written notice of termination in the event that the Investment Agreement is terminated in accordance with Section 5.01(b)(i) or 5.01(b)(ii) thereof and at the time of such termination MICROSOFT is in material breach of any of its representations, warranties, covenants or agreements contained in the Investment Agreement.

 

5.2.3.           Termination by MICROSOFT.  This Agreement shall automatically terminate in the event that the Investment Agreement is terminated by MICROSOFT in accordance with Section 5.01(b)(i)(A)(1) or Section 5.01(b)(i)(A)(2)(x).

 

5.3           Effect of Expiration or Termination.  Sections 2, 3.1*, 3.2*, 3.5, 4*, 5.3, 6 and 7 of this Agreement shall survive the expiration or termination of this Agreement.  Sections denoted with an asterisk (*) only survive with respect to specific units of Covered Products distributed during the Term for which Device Fees were paid.

 

 

Section 6.      Representations, Warranties and Liabilities

 

6.1           No Admission of Infringement or Liability.  The terms (including Device Fees), provisions and payments set forth in this Agreement are not, and shall not be construed as, an admission by either Party of the infringement, validity or enforceability of the Covered Patents or of any liability arising out of or relating to the Litigations or that the Device Fees set by this Agreement do or do not represent the royalty rates that would result from a Georgia-Pacific analysis.  Additionally, the Parties agree that the Device Fees shall not be relied upon by either Party in any subsequent negotiations regarding a renewal of this Agreement or for any purpose in any future litigation between the Parties other than for breach of payment obligations under this Agreement.

 

 

 

 

  

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6.2           No Breach of Other Agreement or Obligation.  Each Party represents and warrants that the terms of this Agreement do not breach the terms of any other agreement to which the Party is a party, and that the terms of this Agreement do not breach any obligations that the Party owes to any third party.

 

6.3           DISCLAIMER OF WARRANTIES.  MICROSOFT DISCLAIMS ANY AND ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT OR SUITABILITY FOR ITS INTENDED PURPOSE.  FURTHER, MICROSOFT HAS NOT MADE, AND DOES NOT MAKE, ANY REPRESENTATION OR WARRANTY: WITH REGARD TO THE SCOPE, COVERAGE, VALIDITY OR ENFORCEABILITY OF ANY OF THE COVERED PATENTS; THAT THE COVERED PATENTS APPLY WORLDWIDE; OR THAT ANY COVERED PRODUCT MADE, USED, SOLD, OFFERED FOR SALE OR IMPORTED UNDER THE LICENSE OR COVENANT IS OR WILL BE FREE FROM INFRINGEMENT OF ANY PATENT OR OTHER INTELLECTUAL PROPERTY RIGHT OF ANY THIRD PARTY.

 

6.4           Proper Authority.  Each Party represents and warrants on behalf of itself and its Affiliates that it has full right, power, and authority to (a) enter into this Agreement, and (b) bind its Affiliates to the terms of this Agreement.  Each Party also covenants that it will obtain, maintain and exercise all rights necessary to bind any Affiliate that becomes affiliated after the Effective Date to all applicable terms of this Agreement.  For purposes of this Agreement, Barnes&Noble represents and warrants that barnesandnoble.com llc is as of the date hereof an Affiliate of Barnes&Noble.

 

6.5           Limitation of Liability.  EXCEPT FOR ROYALTY PAYMENTS UNDER SECTION 4, IN NO EVENT SHALL MICROSOFT OR BARNES&NOBLE, OR THEIR RESPECTIVE AFFILIATES, BE LIABLE FOR ANY DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT IN EXCESS OF ANY PAYMENTS MADE BY BARNES&NOBLE TO MICROSOFT UNDER THIS AGREEMENT, AND NO PARTY WILL HAVE ANY LIABILITY FOR ANY CONSEQUENTIAL DAMAGES, INCIDENTAL DAMAGES, INDIRECT DAMAGES, SPECIAL DAMAGES OR LOST PROFITS ARISING OUT OF OR RELATING TO THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF ANY SUCH DAMAGES. THESE LIMITATIONS APPLY REGARDLESS OF WHETHER SUCH CLAIM IS BASED ON TORT, CONTRACT, WARRANTY, STRICT LIABILITY OR ANY OTHER THEORY.

 

Section 7.      Miscellaneous

 

7.1           No Right to Technology.  MICROSOFT shall not have any obligation under this Agreement to disclose or otherwise make available to Barnes&Noble or its Affiliates any software, programs, specifications, designs, technical data, know how or other technology, whether or not the same may be required for the exercise or commercial exploitation of any License, covenant or other rights provided herein.

 

7.2           Confidentiality.  The Parties agree to the prompt publication of the joint press release provided in Exhibit B hereof.  The mere existence of this Agreement and the identification of the Parties and the Covered Products are not confidential.  However, the specific terms and conditions of this Agreement (including the amount of any Royalties payable to MICROSOFT under this Agreement) are confidential and shall not be disclosed by either Party except: (a) as may be required by applicable law; (b) as may be required by judicial or governmental order or rule (provided that for both (a) & (b), the disclosing Party either gives the other Party reasonable notice to enable it to seek a protective order or uses reasonable measures to seek an appropriate protective order itself); (c) in confidence to a Party’s accountants, tax advisors, auditors and/or attorneys for purposes of seeking professional services; and (d) by written consent of the other Party and only under terms of confidentiality.

 

 

 

  

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7.3           Entire Agreement, Modifications and Waiver.  This Agreement, together with the Commercial Agreement and Investment Agreement, constitutes the entire agreement between the Parties with respect to its subject matter and supersedes all prior and contemporaneous agreements, whether written or oral.  This Agreement shall not be modified except by a written agreement signed by an authorized representative of the Party against whom such modification is sought to be enforced.  Failure by either Party to enforce any provision of this Agreement shall not be deemed a waiver of future enforcement of that provision.

 

7.4           Notices.  Except as otherwise specified in Sections 4.1.2 and 4.2 or otherwise agreed in writing by the Parties, any notices given under this Agreement shall be delivered either by messenger or overnight delivery service, or sent by facsimile with a confirmation sent via certified or registered mail, postage prepaid and return receipt requested, and shall be deemed to have been given on the day when received by the Party to whom the notice is given.

 

Any notices to Barnes&Noble shall be addressed to:

 

Barnes & Noble, Inc.

Attn:  General Counsel

122 Fifth Avenue

New York, NY  10011

Facsimile No.:  212-463-5683

Any notices to MICROSOFT shall be addressed to:

 

Microsoft Licensing GP

Attn: Special Agreements

Dept. 551, Volume Licensing

6100 Neil Road, Suite 210

Reno, Nevada  89511

Facsimile No.:  775-823-5600

With a copy to:

 

Microsoft Corporation

Attn:  Corporate Vice President, Intellectual Property & Licensing Group

Legal and Corporate Affairs

One Microsoft Way

Redmond, WA  98052-6399

Facsimile No.:  425-936-7329 (Attn: IPLG)

 

 

 

  

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7.5           Jurisdiction and Governing Law.  This Agreement and all disputes arising out of or related to this Agreement shall be governed by the laws of the State of New York, without reference to conflict of laws principles.  Except as set forth in Section 4.6, any and all claims, lawsuits or disputes of any kind between the Parties arising out of or relating to this Agreement shall be resolved in federal or state courts in the State of New York within the Southern District of New York.  The Parties hereby waive any challenge to the jurisdiction or venue of such courts over such claims, lawsuits or disputes.

 

7.6           Assignment.  MICROSOFT shall not assign, sell or otherwise transfer any of its Covered Patents which are (at the time of the assignment, sale or other transfer) subject to the rights of Barnes&Noble and its Affiliates under this Agreement, unless such assignment, sale or other transfer is made subject to, and the transferee is bound by, the release, License, and Covenant set forth in Sections 2.1, 3.1 and 3.2 with respect to such Covered Patents.  Except as expressly provided in this Section 7.6, the Parties may not transfer or assign the License, Covenant, this Agreement or any rights or obligations hereunder to any third party, whether by Acquisition, operation of contract, law or otherwise (including in connection with insolvency or bankruptcy), except with the express prior written consent of the other Party.  MICROSOFT may assign this entire Agreement (including the release, License, Covenant and all rights and obligations hereunder) in the case of a merger or sale of all or substantially all of the assets or stock of MICROSOFT.  Subject to the terms and conditions of Section 7.7, Barnes&Noble may assign this entire Agreement  (including the release, License, Covenant and all rights and obligations hereunder including Section 3.4) to an Acquiring Third Party that is Acquiring Barnes&Noble; provided that with respect to all Covered Products sold by, for or on behalf of Barnes&Noble or its Affiliates prior to the date of such assignment, Barnes&Noble and its Affiliates shall also retain the release, License and Covenant set forth in Sections 2.1, 3.1 and 3.2 with respect to Covered Patents along with all other associated rights including under Sections 3.4 and 5.2.  Subject to the terms and conditions of Section 7.7, Barnes&Noble shall assign (and shall cause assumption of) this entire Agreement (including the release, License, Covenant and all rights and obligations hereunder including Section 3.4) to an Acquiring Third Party that is Acquiring the Consumer Device Business, if that Acquiring Third Party is not Acquiring Barnes&Noble as part of that Acquisition, upon which assignment the Acquiring Third Party shall be substituted for Barnes&Noble under all provisions of this Agreement with effect from and after the date of such assignment and in connection with such assignment. Barnes&Noble shall also assign (and shall cause assumption of) this entire Agreement (including the release, License, Covenant and all its rights and obligations hereunder including Section 3.4) to NewCo in conjunction with and effective upon Separation, upon which assignment NewCo shall be substituted for Barnes&Noble under all provisions of this Agreement with effect from and after the date of such assignment and in connection with such assignment; provided that such assignment shall not reduce or impair the protections afforded to Barnes&Noble under this Agreement with respect to conduct prior to the date of such assignment.  Any attempted transfer or assignment in violation of this section shall be void; and, in the event of any such assignment or attempted assignment by a Party, the other Party shall have the right to immediately terminate this Agreement by giving written notice to such Party.

 

 

 

  

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7.7           Change of Control.

 

(a)  If Barnes&Noble or its Consumer Device Business (“Acquired Entity”) is Acquired directly or indirectly by a third party (“Acquiring Third Party”), then each of the following subsections shall apply.

 

(i) Barnes&Noble shall promptly give notice of such Acquisition to MICROSOFT.

 

(ii) Such Acquisition shall not affect any releases, warranties, representations or other rights granted by Barnes&Noble or its Affiliates to MICROSOFT, its Affiliates or their customers.

 

(iii) The releases granted to Barnes&Noble and its Affiliates in Section 2 shall survive as to Covered Products of the Acquired Entity and its Then-Existing Affiliates, but no releases, licenses or covenants shall extend to any software, products or services of the Acquiring Third Party or any of its Affiliates.

 

(iv) Section 5.2.1(c) shall be automatically deleted from this Agreement and shall no longer apply.

 

(v) [***]

 

(vi) MICROSOFT shall have the right to terminate this Agreement at any point after the Acquisition (or any subsequent Acquisition) by providing written notice of termination to the Acquiring Third Party with such termination being effective one hundred eighty (180) days after receipt by Barnes&Noble of such notice.

 

(b)  An “Acquisition” means any transaction or series of related transactions involving Barnes&Noble or the Consumer Device Business resulting in (i) a person or entity acquiring, directly or indirectly, beneficial ownership of  securities thereof having more than 50% of the total voting power for the election of directors or other managing authority of Barnes&Noble or  the Consumer Device Business, respectively, after such transaction(s), (ii) a  liquidation or reorganization of Barnes&Noble or the Consumer Device Business, or (iii) an entity or entities or person or persons which did not direct the management and operations of Barnes&Noble or the Consumer Device Business before such transaction(s) otherwise acquiring the right to direct the management and operations of Barnes&Noble or the Consumer Device Business, respectively, after such transaction(s).  If Barnes&Noble or the Consumer Device Business is the subject of any of the foregoing transactions, then it is deemed “Acquired”.  “Then-Existing Affiliates” means Affiliates of Barnes&Noble before such Acquisition.

 

7.8           No Third Party Beneficiaries.  This Agreement is for the benefit of the Parties, their Affiliates and Covenanted Suppliers only, and shall be enforceable by the Parties, their Affiliates and Covenanted Suppliers only; provided, however, no action may be commenced or prosecuted against a Party by any third party claiming as a third-party beneficiary of this Agreement or the License or covenants provided herein, except that a Covenanted Supplier may rely upon this Agreement solely in defending actions commenced against them by a Party or its Affiliates.

 

7.9           Construction.  As used in this Agreement, (i) the words “include” and “including” and variations thereof, will not be deemed to be terms of limitation, but rather will be deemed to be followed by the words “without limitation,” (ii) unless the context otherwise requires, the word “or” shall be deemed to be an inclusive “or” and shall have the meaning equivalent to “and/or”, and (iii) “past” shall mean any time before the Effective Date, “current” shall mean as of the Effective Date, and “future” shall mean any time after the Effective Date.

 

 

 

 

  

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7.10           Counterparts and Facsimile.  This Agreement may be executed on facsimile copies or in counterparts, each counterpart of which shall be deemed an original and all of which together shall constitute one and the same Agreement.  Notwithstanding the foregoing, if requested by a Party, the other Party shall deliver original executed copies of this Agreement to such requesting Party as soon as practicable following execution thereof.

 

7.11           Successors and Assigns.  This Agreement shall be binding upon and shall inure to the benefit of a Party’s successors and permitted assigns.

 

 

 

 

  

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be made and executed by duly authorized officers.

 

	
Microsoft Corporation

 

 

	By: 	/s/ Steven A. Ballmer
	Name: 	Steven A. Ballmer
	Title: 	Chief Executive Officer
	Date Signed:	
4/27/2012

 

 

 

 

 

 

[Signature Page to the Patent License Agreement]

 

  

  

  

 

 

 

	
Microsoft Licensing GP

 

 

	By: 	/s/ Hugh Aitken
	Name: 	Hugh Aitken
	Title: 	General Manager
	Date Signed: 	
4/27/2012

 

 

 

 

[Signature Page to the Patent License Agreement]

  

  

  

 

 

 

	
barnesandnoble.com llc

  

  

 

 

	By: 	/s/ Eugene V. DeFelice 
	Name: 	
Eugene V. DeFelice

	Title: 	Vice President, General Counsel & Secretary 
	Date Signed: 	
4/27/2012

 

 

 

 

 

[Signature Page to the Patent License Agreement]

 

  

  

  

 

 

 

	
Barnes & Noble, Inc.

  

 

 

	By: 	/s/ Eugene V. DeFelice 
	Name: 	
Eugene V. DeFelice

	Title: 	Vice President, General Counsel & Secretary 
	Date Signed:	
4/27/2012

 

 

 

 

 

 

[Signature Page to the Patent License Agreement]

 

  

  

  

 

 

 

CONFIDENTIAL SETTLEMENT AND PATENT LICENSE AGREEMENT

 

EXHIBIT A

 

 

ROYALTY REPORT

 

Microsoft Licensing GP – IP&L Report

 

 

Licensee:  Barnes & Noble, Inc.

Agreement Number:  ________________________________________

Report for the Royalty Period Beginning/Ending:  _________________________________________

Send completed form to ipnotice@microsoft.com

	
Covered 

Products

	
Category of

Covered

Products

	
Royalty-

Bearing Units

Sold this 

Royalty Period

	
Transfer 

Price

	
Device Fee

	
Royalties

(Units x Device Fee)

	 	 	 	 	 	 
	
[Brand/Model No. 1]

	  	  	  	  	  
	
[Brand/Model No. 2]

	  	  	  	  	  
	
[Make additional rows for other Covered Products, as needed.]

	  	  	  	  	  
	 	 	 	 	 	 
	
TOTAL AMOUNT DUE:   $ ____________

The undersigned, by signing his/her name below, hereby certifies that he/she is duly authorized by Licensee to complete this Royalty Report, that the title listed below is his/her true and correct title, that this report is complete and correct, and that Licensee is in compliance with the Royalty Report reporting requirements of the Agreement.

 

	 	 	
Signature

	 	 	
Printed Name

	 	 	
Title

	 	 	
Date

 

 

 

 

  

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CONFIDENTIAL SETTLEMENT AND PATENT LICENSE AGREEMENT

 

EXHIBIT B

 

 

JOINT PRESS RELEASE

 

Barnes & Noble and Microsoft Form Strategic Partnership to

Advance World-Class Digital Reading Experiences for Consumers

 

Newly Formed Subsidiary to Include NOOK® Digital and College Businesses

 

New York, NY and Redmond, WA (April 30, 2012) – Barnes & Noble Inc. (NYSE: BKS) and Microsoft (NASDAQ: MSFT) today announced the formation of a strategic partnership in a new Barnes & Noble subsidiary, which will build upon the history of strong innovation in digital reading technologies from both companies. The partnership will accelerate the transition to e-reading, which is revolutionizing the way people consume, create, share and enjoy digital content.

 

The new subsidiary, referred to in this release as Newco, will bring together the digital and College businesses of Barnes & Noble. Microsoft will make a $300 million investment in Newco at a post-money valuation of $1.7 billion in exchange for an approximately 17.6% equity stake. Barnes & Noble will own approximately 82.4% of the new subsidiary, which will have an ongoing relationship with the company’s retail stores. Barnes & Noble has not yet decided on the name of Newco.

 

One of the first benefits for customers will be a NOOK application for Windows 8, which will extend the reach of Barnes & Noble’s digital bookstore by providing one of the world’s largest digital catalogues of e-Books, magazines and newspapers to hundreds of millions of Windows customers in the U.S. and internationally.

 

The inclusion of Barnes & Noble’s College business is an important component of Newco’s strategic vision. Through the newly formed Newco, Barnes & Noble’s industry leading NOOK Study software will provide students and educators the preeminent technology platform for the distribution and management of digital education materials in the market.

 

 

  

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“The formation of Newco and our relationship with Microsoft are important parts of our strategy to capitalize on the rapid growth of the NOOK business, and to solidify our position as a leader in the exploding market for digital content in the consumer and education segments,” said William Lynch, CEO of Barnes & Noble. “Microsoft’s investment in Newco, and our exciting collaboration to bring world-class digital reading technologies and content to the Windows platform and its hundreds of millions of users, will allow us to significantly expand the business.”

 

“The shift to digital is putting the world's libraries and newsstands in the palm of every person's hand, and is the beginning of a journey that will impact how people read, interact with and enjoy new forms of content,” said Andy Lees, President at Microsoft. “Our complementary assets will accelerate e-reading innovation across a broad range of Windows devices, enabling people to not just read stories, but to be part of them. We’re on the cusp of a revolution in reading.”

 

Barnes & Noble and Microsoft have settled their patent litigation, and moving forward, Barnes & Noble and Newco will have a royalty-bearing license under Microsoft’s patents for its NOOK eReader and Tablet products. This paves the way for both companies to collaborate and reach a broader set of customers.

 

NewCo

 

On January 5, Barnes & Noble announced that it was exploring the strategic separation of its digital business in order to maximize shareholder value. Barnes & Noble is actively engaged in the formation of Newco, which will include Barnes & Noble's digital and College businesses. The company intends to explore all alternatives for how a strategic separation of Newco may occur. There can be no assurance that the review will result in a strategic separation or the creation of a stand-alone public company, and there is no set timetable for this review. Barnes & Noble does not intend to comment further regarding the review unless and until a decision is made.

 

  

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Additional information will be contained in a Current Report on Form 8-K to be filed by Barnes & Noble.

 

Barnes & Noble and Microsoft will host an investor call and webcast beginning at 8:30 A.M. ET on Monday, April 30, 2012. To join the webcast, please visit: www.barnesandnobleinc.com/webcasts.

 

Media Contacts

 

	
For Barnes & Noble:

 

Mary Ellen Keating

Senior Vice President

Corporate Communications

Barnes & Noble, Inc.

(212) 633-3323

mkeating@bn.com

	
For Microsoft:

 

Rapid Response Team

Waggener Edstrom Worldwide

(503) 443-7070

rrt@waggeneredstrom.com

Investor Contact

	
For Barnes & Noble:

 

Andy Milevoj

Director of Investor Relations

Barnes & Noble, Inc.

(212) 633-3489

amilevoj@bn.com

	

  

About Barnes & Noble, Inc.

 

Barnes & Noble, Inc. (NYSE:BKS), the world’s largest bookseller and a Fortune 500 company, operates 691 bookstores in 50 states. Barnes & Noble College Booksellers, LLC, a wholly-owned subsidiary of Barnes & Noble, also operates 641 college bookstores serving over 4.6 million students and faculty members at colleges and universities across the United States. Barnes & Noble conducts its online business through BN.com (www.bn.com), one of the Web’s largest e-commerce sites, which also features more than two million titles in its NOOK BookstoreTM (www.bn.com/ebooks). Through Barnes & Noble’s NOOKTM eReading product offering, customers can buy and read digital books and content on the widest range of platforms, including NOOK devices, partner company products, and the most popular mobile and computing devices using free NOOK software. Barnes & Noble is proud to be named a J.D. Power and Associated 2012 Customer Service Champion and is only one of 50 U.S. companies so named.

 

 

  

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General information on Barnes & Noble, Inc. can be obtained via the Internet by visiting the company’s corporate website: www.barnesandnobleinc.com.

 

NOOK®, NOOK TabletTM, NOOK Simple Touch with GlowLightTM , NOOK Simple Touch TM, NOOK ColorTM, Reader’s TabletTM, Best-TextTM, NOOK StoreTM, NOOK BookstoreTM, NOOK MagazinesTM, VividViewTM, NOOK NewspapersTM, FREE NOOK Reading AppsTM, NOOK KidsTM, NOOK Digital ShopTM, Read In StoreTM, More In StoreTM, LendMe®, NOOK LibraryTM, NOOK Books en españolTM, NOOK StudyTM, Lifetime LibraryTM and Read What You Love. Anywhere You LikeTM are trademarks of Barnes & Noble, Inc. Other trademarks referenced in this release are the property of their respective owners.

 

Follow Barnes & Noble on Twitter (www.bn.com/twitter), Facebook (http://www.facebook.com/barnesandnoble) and YouTube (http://www.youtube.com/user/bnstudio).

 

About Microsoft

 

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

 

FORWARD LOOKING STATEMENTS

 

This press release contains certain forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) and information that are based on the beliefs of the management of Microsoft or Barnes & Noble, as applicable, as well as assumptions made by and information currently available to such management. When used in this press release, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “will” and similar expressions, as they relate to Barnes & Noble, Newco or Microsoft or the management of Barnes & Noble or Microsoft, identify forward-looking statements.

 

Such statements reflect the current views of the relevant entities with respect to future events, the outcome of which is subject to certain risks, including, among others, the risk that the transactions contemplated by this press release, including with respect to any spin-off, split-off or other disposition by Barnes & Noble of its interest in Newco, are not able to be implemented on the terms described or at all, the risk that the transactions do not achieve the expected benefits for the parties including the risk that Newco’s applications are not commercially successful or that the expected distribution of those applications is not achieved, the risk that the separation of the digital and college businesses or any subsequent spin-off, split-off or other disposition by Barnes & Noble of its interest in Newco results in adverse impacts on Barnes & Noble or Newco (including as a result of termination of agreements and other adverse impacts), the potential impact on Barnes & Noble’s retail business of the separation, the risk that the international expansion contemplated by the relationship is not successful, the potential tax consequences for Barnes & Noble and its shareholders of a subsequent spin-off, split-off or other disposition by Barnes & Noble of its interest in Newco and the risk that Newco is not able to perform its obligations under the commercial agreement, including with respect to the development of applications and international expansion, and the consequences thereof and general risks related to the businesses that will become part of Newco, including those risks discussed in detail in Item 1A, “Risk Factors,” in Barnes & Noble’s Annual Report on Form 10-K and Form 10-K/A, and in Barnes & Noble’s other filings made hereafter from time to time with the SEC.

 

  

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Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described as anticipated, believed, estimated, expected, intended or planned. Subsequent written and oral forward-looking statements attributable to Barnes & Noble or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. The parties undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this communication.

 

  

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CONFIDENTIAL SETTLEMENT AND PATENT LICENSE AGREEMENT

 

EXHIBIT C

 

EXPEDITED ARBITRATION OF ROYALTY DISPUTES

 

C-1           Good Faith Negotiations. In the event of a Royalty Dispute, a Party may initiate this process by providing written notice to the other Party.  Within 20 calendar days of the date such notice is received by the other Party, the Parties will discuss in good faith to resolve such dispute. If the dispute is not resolved through such discussion, each party will within 20 days deliver to the other party a detailed memorandum setting forth its positions and the contractual and factual analysis therefor. Within 20 calendar days following exchange of such memoranda, the parties will meet again in an attempt to resolve their disagreements.  Thereafter either party may serve a notice of arbitration.

 

C-2           Submission to Arbitration. If the parties are unable to resolve any Royalty Dispute pursuant to Section C-1, the parties agree to exclusively settle such dispute by binding arbitration administered by JAMS in accordance with its Comprehensive Arbitration Rules and Procedures (“JAMS Rules”) and the Expedited Procedures set out in Section 16.2 thereof, subject to the provisions of this Exhibit C, to be held in San Francisco, California.

 

C-3           Selection of Arbitrator. The arbitration will be held before one (1) neutral arbitrator selected in accordance with the JAMS Rules, or as otherwise agreed by the parties. The arbitrator will not be a current or former employee, agent, consultant or representative of any party or any of its Affiliates.

 

C-4           Schedule and Discovery.  Discovery will be conducted pursuant to the Expedited Procedures set out in Rule 16.2 of the JAMS Rules, further provided that:

 

(a)           The parties shall agree to shortened periods for discovery and commencement of the hearing, and in all respects will use good faith efforts to expedite a ruling on the dispute as quickly as possible.

 

(b)           The parties will complete an informal exchange of non-privileged documents they believe are or may be material to the dispute, and the names of their own witnesses they intend to call in the arbitration, within 14 calendar days after the service of a notice of arbitration.

 

(c)           Any further discovery of documents authorized by the arbitrator shall be strictly limited to that which is likely to be material to the outcome as agreed upon by the parties or, failing such agreement, as determined by the arbitrator.

 

 

 

 

  

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(d)           The Arbitrator may require a party to provide information to assist in the identification of appropriate custodians for purposes of a search for responsive electronic documents.

 

(e)           Each party shall in no event be entitled to more than three discovery depositions.

 

(f)           The results of any audit pursuant to Section 4.1.3, or of any internal audit conducted by or on behalf of Barnes&Noble or MICROSOFT, shall be admissible in the arbitration.

 

(h)           Each party will be entitled to designate up to two in-house attorneys who shall be entitled to have access to confidential information produced by the opposing party subject to reasonable confidentiality provisions to prevent disclosure to party employees not entitled to such access, which confidentiality provisions shall be enforceable against such in-house attorneys however, such access would not extend to source code.  The inclusion of this provision relating to access to confidential information by in-house counsel in this Exhibit C Expedited Arbitration agreement but not in the accompanying Settlement and Patent License Agreement shall not result in or be relied on as supporting any implication that similar access to confidential information by designated in-house counsel would or would not be appropriate in connection with the litigation of a dispute under the Patent License Agreement that is not covered by this Exhibit C.

 

C-5           Decision. Any arbitration decision will be final and binding on the parties, and will not be subject to any appeal or proceeding to vacate, except on the grounds set forth in the Federal Arbitration Act, 9 U.S.C. 1 et seq. The award rendered by the arbitrators may be entered into any court having jurisdiction, or application may be made to such court for judicial acceptance of the award and an order of enforcement, as the case may be. Such court proceeding will disclose only the minimum amount of information concerning the arbitration as is required to obtain such acceptance or order.

 

C-6           Costs. The arbitrators’ fees and the administrative expenses of the arbitration will be paid equally by the parties, and each party will pay its own costs and expenses (including attorneys’ fees) in connection with the arbitration.

 

C-7           Confidentiality of Proceeding. Except as required by law, no party or the arbitrator may disclose the existence, content or results of the arbitration. The dispute resolution set forth in this Section will supersede any other dispute resolution provisions in this Agreement with respect to Royalty Disputes described in Section C-1, except that before initiating dispute resolution under this Section C, the parties will first comply with Formal Escalation (as defined in Exhibit B of the Commercial Agreement).

 

 

 

 

 22ex10-4.htm

 

Exhibit 10.4

 

FIRST AMENDMENT TO AMENDED AND RESTATED

CREDIT AGREEMENT AND SECURITY AGREEMENT

 

This FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND SECURITY AGREEMENT (this “Amendment”), dated as of April 27, 2012, is by and among BARNES & NOBLE, INC., a Delaware corporation (“Lead Borrower”), the other Persons party hereto as borrowers (collectively, together with the Lead Borrower, the “Borrowers”), BANK OF AMERICA, N.A., as Administrative Agent (the “Administrative Agent”) and Collateral Agent (the “Collateral Agent”), and each of the Lenders party hereto.

 

RECITALS:

 

A.           The Borrowers, the guarantors from time to time party thereto, the lenders from time to time party thereto (the “Lenders”), the Administrative Agent and the Collateral Agent, and the other agents party thereto, are parties to that certain Amended and Restated Credit Agreement, dated as of April 29, 2011 (as amended, restated, supplemented or modified prior to the date hereof, the “Existing Credit Agreement” and as amended hereby and as otherwise amended, restated, supplemented or modified from time to time, the “Credit Agreement”). Capitalized terms used herein but not otherwise defined herein shall have the respective meanings given such terms in the Credit Agreement.

 

B.           The Lead Borrower has informed the Administrative Agent that the Lead Borrower proposes to form a new Subsidiary which will be a Delaware limited liability company (“NewCo”), for the purpose of consummating the Digital Restructuring (as defined below).

 

C.           The Lead Borrower has further informed the Administrative Agent that in connection with the consummation of the Digital Restructuring, NewCo desires to issue up to $300 million in NewCo Preferred Shares (as defined below) to a Person identified by the Lead Borrower to the Administrative Agent (the “Investor”), and in connection therewith one or more of the Investor Parties (as defined below) and NewCo shall enter into the Digital Investment Agreements (as defined below) pursuant to which, among other things, NewCo shall agree to apply the proceeds of the NewCo Preferred Shares to the development and expansion of the NewCo Assets (as defined below), one or more of the Investor Parties will agree to pay to NewCo certain non-refundable advances (subject to the right of the Investor Party to receive its “Revenue Share Service Fee” under and as defined in the Digital Commercial Agreement (as defined below) from time to time against total revenues of NewCo during the term of the Digital Investment Agreements, and NewCo and one or more of the Investor Parties will split the net revenues of the NewCo Assets upon the terms and conditions set forth in the Digital Investment Agreements (collectively, the transactions effected by the NewCo Investment Agreements, together with the Digital Restructuring and all transactions arising therefrom, the “Digital Transactions”).

 

D.           In order to consummate the Digital Transactions, the Borrowers desire to amend the Existing Credit Agreement and the Security Agreement as set forth in this Amendment.

 

 

 

  

  

  

 

 

E.           The undersigned Agents and Lenders are willing to amend the Existing Credit Agreement for the foregoing purposes and in accordance with the terms and conditions of this Amendment.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto agree as follows:

 

SECTION 1.01.        Amendments to Existing Credit Agreement.

 

(a)           Amendments to Existing Defined Terms.  (i) The definitions of “Excluded Assets” and “Prepayment Event” set forth in Section 1.01 of the Existing Credit Agreement are hereby deleted in their entirety and replaced by the following (which shall be inserted in alphabetical order):

 

“Excluded Assets” shall mean (a) Equity Interests in the Lead Borrower and its Subsidiaries, (b) all Intellectual Property and Licenses of the Grantors (subject to the rights of the Collateral Agent under the Collateral License), (c) all furniture and Equipment of the Grantors, (d) General Intangibles, Instruments and Documents not evidencing, governing, securing, arising from or otherwise related to the Collateral, (e) the Excluded NewCo Investment Accounts and (f) for the avoidance of doubt, the Digital Investment Agreements.

 

“Prepayment Event” means:

 

(a)           Any Disposition of any Inventory, Accounts or Mortgaged Property of a Loan Party, other than (i) sales of Inventory in the ordinary course of business, (ii) the transfer or other Dispositions of property from any Loan Party to any NewCo Loan Party in connection with the Digital Restructuring, and (iii) so long as no Trigger Period exists, a Disposition (or series of related dispositions) of Inventory, Accounts or Mortgaged Property resulting in Net Proceeds of $15,000,000 or less;

 

(b)           Any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any Mortgaged Real Estate of a Loan Party, unless (i) the proceeds therefrom are required to be paid to the holder of a Lien on such property or asset having priority over the Lien of the Collateral Agent; or (ii) other than during a Trigger Period, the proceeds therefrom are utilized for purposes of replacing or repairing the assets in respect of which such proceeds, awards or payments were received within 270 days of the occurrence of the damage to or loss of the assets being repaired or replaced; or

 

(c)           The issuance by a Loan Party other than the Lead Borrower of any Equity Interests, other than any such issuance of Equity Interests (i) to a Loan Party, (ii) as consideration for a Permitted Acquisition, (iii) constituting the NewCo Preferred Shares or issuance of common Equity Interests of NewCo in connection with the conversion of the NewCo Preferred Shares into such common Equity Interests in accordance with the NewCo LLC Agreement or (iv) as a compensatory issuance or in connection with any employee retention program, plan or agreement to any employee, director, or consultant (including under any option plan), in each case under this clause (iv), in the ordinary course of business.

 

 

  

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(b)           New Defined Terms.  Section 1.01 of the Existing Credit Agreement is hereby amended by inserting the following new defined terms in alphabetical order:

 

“Digital Commercial Agreement” means that certain Commercial Agreement, dated as of [·], among the Lead Borrower, NewCo and each Investor Party that is party thereto.

 

“Digital Investment Agreements” means (a) the Digital Commercial Agreement, (b) that certain Confidential Settlement and Patent License Agreement, dated as of [·], among the Lead Borrower, each Investor Party thereto NewCo and the other parties thereto, (c) the Investment Agreement, dated as of [·], among the Lead Borrower and each Investor Party thereto, and (d) all other contracts, documents and instruments entered into between NewCo and any Investor Party from time to time in connection with the foregoing or with respect to the NewCo Assets or any other assets of NewCo.

 

“Digital Restructuring” means the formation of NewCo and the transfer on or promptly after the First Amendment Effective Date to NewCo or any other NewCo Loan Party by the Lead Borrower and its other Subsidiaries of all their rights, title and interests in and to, and all their liabilities arising from, their respective NewCo Assets.

 

“Excluded NewCo Investment Accounts” means the deposit accounts and/or securities accounts described on Schedule 1.05 hereto, as such schedule may be updated by the Lead Borrower from time to time, in which the proceeds of the NewCo Preferred Shares and any advances from any Investor Party to NewCo will be held until such funds are released for use by any of the NewCo Loan Parties in accordance with the NewCo Investment Agreements.

 

“First Amendment” means that certain First Amendment to Amended and Restated Credit Agreement and Security Agreement, dated as of April 27, 2012, among the Loan Parties and the Agents and Lenders party thereto.

 

“First Amendment Effective Date” has the meaning given to such term in Section 1.03 of the First Amendment.

 

“First Amendment Investment Covenant Effective Date” has the meaning given to such term in Section 1.03 of the First Amendment.

 

“Investor” has the meaning given such term in the First Amendment.

 

 

 

  

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“Investor Party” means the Investor and each Affiliate thereof that is a party to any Digital Investment Agreement.

 

“Maximum NewCo Advance Amount” means the maximum aggregate amount of “Advances” permitted under and in accordance with the Digital Commercial Agreement as in effect as of the First Amendment Effective Date.

 

“NewCo” has the meaning given such term in the First Amendment.

 

“NewCo Assets” means (a) all digital device, digital content, eCommerce and nook.com businesses and all related intellectual property and other related assets transferred from the Lead Borrower or any of its Subsidiaries to any Newco Loan Party in connection with the Digital Restructuring, (b) the college bookstore businesses and related assets transferred from the Lead Borrower or any of its Subsidiaries to any Newco Loan Party in connection with the Digital Restructuring and (c) any other property and assets of any kind or nature, whether now existing or hereafter developed or arising, of any Newco Loan Party.

 

“NewCo Blocked Account” means any Blocked Account of any NewCo Loan Party (other than the BNCB Loan Parties), which, for the avoidance of doubt, shall include the NewCo Collection Account but shall not include the Excluded NewCo Investment Account or the BNCB Blocked Accounts.

 

“NewCo Collection Account” has the meaning specified in the NewCo Depositary Agreement.

 

“NewCo Depositary Agreement” means the depositary agreement, dated as of the First Amendment Effective Date, substantially in the form of Exhibit N hereto.

 

“NewCo Holdings” means NewCo Inc., a Delaware corporation.

 

“NewCo LLC Agreement” means that certain Amended and Restated Limited Liability Company Agreement of NewCo, dated as of the date of the closing of the Digital Transactions.

 

“NewCo Loan Party” means NewCo Holdings, NewCo and each Subsidiary thereof that is a Loan Party.

 

“NewCo Preferred Shares” means the Series A Convertible Preferred Shares issued by NewCo on or after the First Amendment Effective Date to one or more of the Investor Parties in accordance with the NewCo Investment Agreements and the NewCo LLC Agreement, each of which shares shall be convertible into one share of common Equity Interests in NewCo at the option of the holder thereof in accordance with the NewCo LLC Agreement.

 

 

  

4

  

 

 

 

(c)           Amendment of Notice Requirements.  Section 6.03 of the Existing Credit Agreement is hereby amended by (i) replacing the period at the end of clause (l) with “; and” and (ii) inserting the following new clause (m):

 

(m)           of any notice of a default or event of default on the part of any NewCo Loan Party or any Investor Party under any Digital Investment Agreement, of the conversion or redemption of all or any material portion of the NewCo Preferred Shares, of any amendment to the terms relating to the sharing of “Net Revenue” under and as defined in the Digital Commercial Agreement.

 

(d)           Amendment of Cash Management Provisions.  Section 6.13 of the Existing Credit Agreement is hereby amended by (i) inserting “and the NewCo Loan Parties” immediately after “other than the BNCB Loan Parties” in the first sentence of clause (c) thereof, (ii) inserting “or any NewCo Blocked Account” in the first parenthetical after “any BNCB Blocked Account” in the first sentence of clause (c) thereof, and (iii) inserting the following new clause (j):

 

(j)           During any Trigger Period, with respect to NewCo Blocked Accounts, amounts on deposit in NewCo Blocked Accounts shall be subject to the terms and conditions of the NewCo Depositary Agreement.

 

(e)           Amendment of Lien Covenant.  Section 7.01 of the Existing Credit Agreement is hereby amended by (i) replacing the period at the end of clause (v) with “; and” and (ii) inserting the following new clause (w):

 

(w)           subject in all respects to the Liens described in Section 7.01(a), the Investor Party’s right under the Digital Commercial Agreement to receive its “Revenue Share Service Fee” as defined therein in accordance with the terms thereof.

 

(f)           Amendment of Investment Covenant.  Section 7.02(l) of the Existing Credit Agreement is hereby deleted in its entirety and replaced with the following:

 

(l)           Investments in Immaterial Subsidiaries made after the Closing Date (in addition to any Investments permitted pursuant to clause (h) above) in an aggregate amount invested at any time during the term of the Credit Agreement not to exceed (i) $75,000,000 prior to the First Amendment Effective Date or (ii) $125,000,000 on or after the First Amendment Effective Date.

 

(g)           Amendment of Indebtedness Covenant.  Section 7.03 of the Existing Credit Agreement is hereby amended by (i) replacing the period at the end of clause (m) with “; and” and (ii) inserting the following new clauses (n) and (o):

 

(n)           issuance of the NewCo Preferred Shares to one or more Investor Parties in an aggregate amount of up to $300,000,000 in accordance with the Digital Investment Agreements and the NewCo LLC Agreement; and

 

(o)           obligations in respect of the payment to any Investor Party of its “Revenue Share Service Fee” under and as defined in the Digital Commercial Agreement (with the aggregate amount of the “Advances” (as so defined) component thereof not to exceed the Maximum NewCo Advance Amount).

 

 

 

  

5

  

 

 

(h)           Amendment of Disposition Covenant.  Section 7.05 of the Existing Credit Agreement is hereby amended by (i) replacing the period at the end of clause (l) with “; and” and (ii) inserting the following new clauses (m), (n) and (o):

 

(m)           issuance of the NewCo Preferred Shares to one or more Investor Parties in an aggregate amount of up to $300,000,000 in accordance with the Digital Investment Agreements and the NewCo LLC Agreement;

 

(n)           sales, transfers and dispositions (including the licensing of any Intellectual Property) by any Loan Party to any NewCo Loan Party in connection with the Digital Restructuring; and

 

(o)           the licensing of any Intellectual Property by NewCo to any Investor Party under the NewCo Commercial Agreement.

 

(i)           Amendment of Restricted Payments Covenant.  Section 7.06 of the Existing Credit Agreement is hereby amended by (i) replacing the period at the end of clause (d) with “; and” and (ii) inserting the following new clause (e):

 

(e)           NewCo may make Restricted Payments with respect to the NewCo Preferred Shares in accordance with the NewCo LLC Agreement (subject in the case of any redemption to the requirements set forth in Section 7.06(d)).

 

(j)           Amendment of Affiliate Transaction Covenant.  Section 7.09 of the Existing Credit Agreement is hereby amended by deleting the proviso thereto in its entirety and replacing it with the following:

 

provided, that the foregoing restriction shall not apply to (i) a transaction between or among the Loan Parties not prohibited hereunder or (ii) transactions under any transition services agreement or otherwise between or among any of the Loan Parties and the NewCo Loan Parties in connection with the Digital Restructuring, or (iii) transactions between or among any of the NewCo Loan Parties, on the one hand, and any of the Investor Parties, on the other hand, under and in accordance with the Digital Investment Agreements, including, without limitation, the sharing of “Net Revenue” under and as defined in the Digital Commercial Agreement.

 

(k)           Amendment of Burdensome Agreement Covenant.  Section 7.10 of the Existing Credit Agreement is hereby amended by inserting the following new clause (w) in the last proviso thereof, immediately before clause (x) of such proviso:

 

“(w) the foregoing shall not apply to the Investor’s consent rights contained in Section 4.03 of the NewCo LLC Agreement as in effect on the First Amendment Effective Date,”

 

 

  

6

  

 

 

 

(l)           Amendment of Maximum Cash Covenant.  Section 7.16 of the Existing Credit Agreement is hereby deleted in its entirety and replaced with the following:

 

Maximum Cash and Cash Equivalents. So long as any Loans are outstanding, allow the aggregate amount of cash and Cash Equivalents held by (a) the Loan Parties and their Subsidiaries (other than (i) “store” cash, cash in transit between stores and deposit accounts and cash receipts from sales in the process of inter-account transfers, in each case in the ordinary course operations of the Loan Parties and their Subsidiaries, (ii) cash necessary to satisfy in the ordinary course of their business, the current liabilities incurred by the Loan Parties in the ordinary course of business and without acceleration of the satisfaction of such current liabilities, and (iii) cash being held in connection with the imminent consummation of a pending acquisition, distribution, investment or similar transaction by a Loan Party permitted hereunder) to exceed (x) $100,000,000 for a period of more than five (5) consecutive calendar days and (y) $150,000,000 at any time (or, in each case, such greater amount as allowed by the Administrative Agent in its reasonable discretion) or (b) all the Foreign Subsidiaries, in the aggregate (other than (i) “store” cash, cash in transit between stores and deposit accounts and cash receipts from sales in the process of inter-account transfers, in each case in the ordinary course operations of the Foreign Subsidiaries, (ii) cash necessary to satisfy in the ordinary course of their business, the current liabilities incurred by the Foreign Subsidiaries in the ordinary course of business and without acceleration of the satisfaction of such current liabilities, and (iii) cash being held in connection with the imminent consummation of a pending acquisition, distribution, investment or similar transaction by a Foreign Subsidiary permitted hereunder) to exceed (x) during the period commencing on the First Amendment Investment Covenant Effective Date and ending on the first to occur of the First Amendment Effective Date and the Maturity Date, $15,000,000 at any time, and (y) at any time on or after the First Amendment Effective Date, $25,000,000 at any time (or, in each case, such greater amount as allowed by the Administrative Agent in its reasonable discretion) (the parties hereto agreeing that the Lenders shall have no obligation to make any Committed Loans if, after giving effect to any Committed Borrowing and the application of the proceeds of any Committed Borrowing, any such excess described in either of the foregoing clauses (a) or (b) shall exist); provided, that the proceeds of the issuance of the NewCo Preferred Shares, the proceeds of any “Advances” made by any of the Investor Parties to any NewCo Loan Party under and as defined in the Digital Commercial Agreement, the proceeds of any other investment or operating expense payment by any of the Investor Parties in the NewCo Loan Parties and the amounts on deposit in the Excluded NewCo Investment Accounts and/or the NewCo Collection Account shall be excluded from the calculation of cash and Cash Equivalents for purposes of Section 7.16(a).

 

SECTION 1.02.        Amendment of the Security Agreement.  Section 1.1 of the Security Agreement is hereby amended by deleting the definition of “Excluded Assets” and replacing it with the following:

 

 

 

  

7

  

 

 

“Excluded Assets” has the meaning specified in the Credit Agreement.

 

SECTION 1.03.        Effectiveness.  Clauses (f) and (l) of Section 1.01 of this Amendment, together with each defined term set forth in clause (b) of Section 1.01 of this Amendment as may be necessary in connection with the effectiveness of the amendments in clauses (f) and (l) (collectively, the “Foreign Investment Amendments”) shall become effective, so long as no Default has occurred and is continuing on such date, on the date (the “First Amendment Investment Covenant Effective Date”) on which the Administrative Agent has received executed signature pages hereto from the Loan Parties, the Agents and the Required Lenders. The remaining provisions of this Amendment shall become effective on the date (the “First Amendment Effective Date”) on which the Administrative Agent has received evidence of the satisfaction of all of the other conditions precedent set forth on Exhibit A hereto.

 

SECTION 1.04.        Cross-References.  References in this Amendment to any Section are, unless otherwise specified, to such Section of this Amendment.

 

SECTION 1.05.       Instrument Pursuant to Credit Agreement.  This Amendment is a Loan Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions of the Credit Agreement.

 

SECTION 1.06.        Governing Law.  THIS AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO NATIONAL BANKS).

 

SECTION 1.07.        Counterparts.  This Amendment may be executed in any number of counterparts (including by telecopy, PDF, electronic mail or other electronic means) and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

 

SECTION 1.08.        Severability.  In case any provision in or obligation under this Amendment or the other Loan Documents shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

SECTION 1.09.        Benefit of Agreement.  This Amendment shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto; provided that no Borrower may assign or transfer any of its interest hereunder without the prior written consent of the Administrative Agent and each Lender.

 

SECTION 1.10.       Integration.  This Amendment represents the agreement of the Borrowers, the Administrative Agent, the Collateral Agent, and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties relative to the subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.

 

 

  

8

  

 

 

 

SECTION 1.11.       Confirmation.  Except as expressly amended by the terms hereof, all of the terms of the Credit Agreement, the Security Agreement and the other Loan Documents shall continue in full force and effect and are hereby ratified and confirmed in all respects.

 

SECTION 1.12.        Loan Documents.  Except as expressly set forth herein, the amendments provided herein shall not by implication or otherwise limit, constitute a waiver of, or otherwise affect the rights and remedies of the Lenders, the Administrative Agent or the Collateral Agent under the Existing Credit Agreement, the Credit Agreement, the Security Agreement or any other Loan Document, nor shall they constitute a waiver of any Default or Event of Default, nor shall they alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement, the Security Agreement or any other Loan Document. Each of the amendments, waivers and consents provided herein shall apply and be effective only with respect to the provisions of the Existing Credit Agreement or the Security Agreement specifically referred to by such amendment, waiver or consent (as the case may be). As used in the Credit Agreement or the Security Agreement, the terms “Agreement”, “herein”, “hereinafter”, “hereunder”, “hereto” and words of similar import shall mean, from and after the date hereof, the Credit Agreement or the Security Agreement as amended hereby, as the case may be.

 

(Signature Pages Follow)

 

 

 

 

  

9

  

 

 

IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written.

 

                                 BORROWERS:

 

	
BARNES & NOBLE, INC.

	  
	By: 	 /s/ Michael P. Huseby
	
Name:

	
Michael P. Huseby

	
Title:

	
Vice President, Chief Financial Officer

	
BARNES & NOBLE BOOKSELLERS, INC.

BARNES & NOBLE INTERNATIONAL LLC

BARNES & NOBLE MARKETING SERVICES CORP.

BARNES & NOBLE MARKETING SERVICES LLC

BARNES & NOBLE PURCHASING, INC.

BARNES & NOBLE SERVICES, INC.

BARNESAND NOBLE.COM LLC

STERLING PUBLISHING CO., INC.

	  
	By: 	/s/ Michael P. Huseby 
	
Name:

	
Michael P. Huseby

	
Title:

	
Vice President, Chief Financial Officer

	
BARNES & NOBLE COLLEGE BOOKSELLERS, LLC

	  
	By: 	/s/ Michael P. Huseby 
	
Name:

	
Michael P. Huseby

	
Title:

	
Vice President, Finance

 

 

 

 

First Amendment to Amended and Restated Credit Agreement and Security Agreement

Signature Page

  

  

 

 

                                 AGENTS AND LENDERS:

	
BANK OF AMERICA, N.A.,

as Administrative Agent and as Collateral Agent

	  
	By: 	/s/ Joseph Becker 
	
Name:

	
Joseph Becker

	
Title:

	
Managing Director

 

 

First Amendment to Amended and Restated Credit Agreement and Security Agreement

Signature Page

  

  

 

	
BANK OF AMERICA, N.A.,

as a Lender, LC Issuer and Swing Line Lender

	  
	By: 	/s/ Joseph Becker 
	
Name:

	
Joseph Becker

	
Title:

	
Managing Director

 

 

 

 

First Amendment to Amended and Restated Credit Agreement and Security Agreement

Signature Page

  

  

 

	
JPMORGAN CHASE BANK, N.A.,

as a Lender and LC Issuer

	  
	By: 	/s/ Kelly G. Maier 
	
Name:

	
Kelly G. Maier

	
Title:

	
Authorized Officer

 

 

First Amendment to Amended and Restated Credit Agreement and Security Agreement

Signature Page

  

  

 

 

	
WELLS FARGO BANK, NATIONAL ASSOCIATION

as a Lender and LC Issuer

	  
	By: 	/s/ Danielle Baldinelli 
	
Name:

	
Danielle Baldinelli

	
Title:

	
Vice President

 

 

First Amendment to Amended and Restated Credit Agreement and Security Agreement

Signature Page

  

  

 

 

	
SUNTRUST BANK,

as a Lender

	  
	By: 	/s/ Nigel Fabien 
	
Name:

	
Nigel Fabien

	
Title:

	
Vice President

 

 

First Amendment to Amended and Restated Credit Agreement and Security Agreement

Signature Page

  

  

 

	
U.S. BANK NATIONAL ASSOCIATION,

as a Lender

	  
	By: 	/s/ Matthew Kasper 
	
Name:

	
Matthew Kasper

	
Title:

	
Vice President

 

 

 

First Amendment to Amended and Restated Credit Agreement and Security Agreement

Signature Page

  

  

 

	
REGIONS BANK,

as a Lender

	  
	By: 	/s/ Louis Alexander 
	
Name:

	
Louis Alexander

	
Title:

	
Attorney in Fact

 

 

 

First Amendment to Amended and Restated Credit Agreement and Security Agreement

Signature Page

  

  

	
CAPITAL ONE LEVERAGE FINANCE CORP.,

as a Lender

	  
	By: 	Julianne Low 
	
Name:

	
Julianne Low

	
Title:

	
Vice President

 

 

First Amendment to Amended and Restated Credit Agreement and Security Agreement

Signature Page

  

  

 

 

	
COLE TAYLOR BANK,

as a Lender

	  
	By: 	/s/ Richard A. Simons 
	
Name:

	
Richard A. Simons

	
Title:

	
Grp Senior Vice President

 

 

First Amendment to Amended and Restated Credit Agreement and Security Agreement

Signature Page

  

  

 

 

	
SIEMENS FINANCIAL SERVICES, INC.,

as Administrative Agent and as Collateral Agent

	  
	By: 	/s/ Anthony Casciano
	
Name:

	
Anthony Casciano

	
Title:

	
Vice President

	  
	  
	
By:

	
/s/ Michael Kunst

	
Name:

	
Michael Kunst

	
Title:

	
Vice President

 

 

 

First Amendment to Amended and Restated Credit Agreement and Security Agreement

Signature Page

  

  

 

	
COMPASS BANK,

as a Lender

	  
	By: 	/s/ Michael Shoff 
	
Name:

	
Michael Shoff

	
Title:

	
Senior Vice President

 

 

 

First Amendment to Amended and Restated Credit Agreement and Security Agreement

Signature Page

  

  

 

 

EXHIBIT A

 

Conditions to Effectiveness of this Amendment

 

(a)           The Administrative Agent shall have received Uniform Commercial Code, tax lien searches for NewCo and any other NewCo Loan Party, each in form and substance and with results reasonably acceptable to the Administrative Agent.

 

(b)           The Loan Parties shall have executed and delivered a Borrowing Base Certificate dated as of the First Amendment Effective Date and calculated after giving effect to the Digital Transactions and in the updated manner agreed by the Lead Borrower and the Administrative Agent. Each NewCo Loan Party shall have executed and delivered a Joinder Agreement and shall have executed and delivered and caused to have been executed and delivered by any applicable third party such control agreements as the Administrative Agent may reasonably require.

 

(c)           The Administrative Agent shall have received (i) such customary corporate resolutions, certificates and other corporate documents and certificates with respect to the Loan Parties (including NewCo and the other NewCo Loan Parties) as the Administrative Agent shall reasonably request, (ii) a reasonably detailed memorandum setting forth all steps in order to consummate the Digital Restructuring, and (iii) fully executed copies of all the Digital Investment Agreements and the NewCo Depositary Agreement.

 

(d)           As of the First Amendment Investment Covenant Effective Date, the Administrative Agent and the Required Lenders party to this Amendment shall be reasonably satisfied with the final terms and conditions of the Digital Transactions, including the Digital Investment Agreements and all schedules and exhibits thereto, subject to any amendments, revisions or other modifications thereto after the First Amendment Investment Covenant Effective Date but on or prior to the First Amendment Effective Date as may be approved by the Administrative Agent, and, with respect to any material amendments or changes, the Required Lenders party to this Amendment, in each case acting reasonably.

 

(e)           The Digital Transactions shall have been consummated substantially concurrently with the consummation of this Amendment on the First Amendment Effective Date (the “Closing”) in accordance with the terms of the Digital Investment Agreements (and the Administrative Agent shall have received reasonably satisfactory written evidence of the satisfaction or waiver of all conditions to the effectiveness of the Digital Investment Agreements and consummation of the Digital Transactions in accordance therewith), this Amendment and in compliance with applicable law and regulatory approvals.

 

(f)           All of the representations and warranties in the Loan Documents, as amended on the First Amendment Effective Date, shall be true and correct in all material respects, or if such representation and warranty is subject to a materiality standard or material adverse effect provision, such representation and warranty shall be true and correct in all respects, in each case as of the First Amendment Effective Date (except in the case of any representation or warranty that applies as of a specific date or dates, in which case such representation or warranty shall have been true and correct in all material respects as of such date or dates).

 

(g)           Immediately before and after giving effect to the consummation of the Digital Transactions, no Default shall have occurred or be continuing.

 

 

First Amendment to Amended and Restated Credit Agreement and Security Agreement

  

  

 

 

 

SCHEDULE 1.05

 

Excluded NewCo Investment Accounts

 

[Account information to be provided prior to the First Amendment Effective Date]

 

 

 

 

First Amendment to Amended and Restated Credit Agreement and Security Agreement

  

  

 

 

EXHIBIT N

 

Form of NewCo Depositary Agreement

 

[See Attached]

 

 

 

First Amendment to Amended and Restated Credit Agreement and Security Agreement

  

  

 

 

EXHIBIT N

 

Form of NewCo Depositary Agreement

 

DEPOSITARY AGREEMENT

 

This Agreement is entered into as of                                                                           , 2012, among [NEWCO] (“Company”), BANK OF AMERICA, N.A., as administrative agent and collateral agent (“Agent”), and  ________________ (“Bank”) with respect to the following (all references herein to the “UCC” refer to the Uniform Commercial Code as in effect from time to time in the State of New York; terms defined in the UCC have the same meanings when used herein):

 

A.           Barnes & Noble, Inc. (“Barnes & Noble”), certain subsidiaries of Barnes & Noble, including, without limitation, the Company, as borrowers and/or guarantors (collectively, together with Barnes & Noble and the Company, the “Loan Parties”), the financial institutions party thereto from time to time as lenders and/or agents, and the Agent, as administrative agent and collateral agent, are parties to that certain Amended and Restated Credit Agreement, dated as of April 29, 2011 (as amended, restated, supplemented or modified from time to time, the “Credit Agreement”).

 

B.           In connection with the Credit Agreement, the Company is party to (i) the Security Agreement dated as of September 30, 2009 (as such agreement may be amended and/or supplemented from time to time, the “Security Agreement”) and (ii) the Joinder Agreement, dated as of the date hereof (the “NewCo Joinder Agreement”), in connection with which the Company has granted Agent, for the benefit of the Secured Parties, a continuing security interest (the “Transaction Lien”) in all right, title and interest of the Company in the Collateral, including, without limitation, the NewCo Collection Account (as hereinafter defined).

 

C.           The Company and its Subsidiaries are parties to the Digital Commercial Agreement and certain other Digital Investment Agreements, pursuant to which, among other things, the Company and its Subsidiaries have agreed to share “Net Revenue” (as defined in the Digital Commercial Agreement, “NewCo Net Revenue”)) with the Investor Parties party to the Digital Investment Agreements.

 

D.           In accordance with Section 6.13 of the Credit Agreement, the Company has established with Bank, and Bank has agreed to maintain for Company, deposit account number ___________ (the “NewCo Collection Account”).

 

E.           The Company is Bank’s customer (as defined in Section 4-104(1)(e) of the UCC) with respect to the NewCo Collection Account. Bank confirms that: (i) Bank has established the NewCo Collection Account in the name of “____________”; (ii) the NewCo Collection Account is a “deposit account” as defined in Section 9-102(a)(29) of the UCC; and (iii) Bank is a “bank” (as defined in section 9-102 of the UCC) and is acting in such capacity in respect of the NewCo Collection Account.

 

 

 

  

N-1

  

 

 

F.           It was a condition of the consent of the Required Lenders to the entry into and performance by the NewCo Loan Parties of the Digital Investment Agreements and the transactions contemplated thereby that the Company enter into this Depositary Agreement.

 

Accordingly, Company, Agent and Bank agree as follows:

 

1.           Defined Terms. Capitalized terms used herein but not defined herein shall have the meanings given such terms in the Credit Agreement. In addition, the following terms shall have the following meanings:

 

“Agent” has the meaning specified in the first paragraph hereof.

 

“Bank” has the meaning specified in the first paragraph hereof.

 

“Barnes & Noble” has the meaning specified in the Recitals hereto.

 

“Collection Event” means any Trigger Event that has not resulted in a Remedy Event.

 

“Company” has the meaning specified in the first paragraph hereof.

 

“Credit Agreement” has the meaning specified in the Recitals hereto.

 

“Loan Parties” has the meaning specified in the Recitals hereto.

 

“NewCo Collection Account” has the meaning specified in the Recitals hereto.

 

“NewCo Joinder Agreement” has the meaning specified in the Recitals hereto.

 

“NewCo Net Revenue” has the meaning specified in the Recitals hereto.

 

“Primary Quarterly Transfer Date” means each regularly scheduled quarterly payment date on which NewCo Net Revenue is required to be paid to or for the Investor Parties in accordance with the Digital Commercial Agreement, which shall occur no more than once per fiscal quarter of the Company.

 

“Quarterly Investor Distribution Amount” means, as of any Quarterly Transfer Date, the amount of NewCo Net Revenue due and payable to the Investor Parties as of such Quarterly Transfer Date under and in accordance with the Digital Commercial Agreement, as specified by the Company in a Quarterly Transfer Date Certificate.

 

“Quarterly Transfer Date” means the Primary Quarterly Transfer Date and the Quarterly True-Up Transfer Date, or either of them.

 

“Quarterly Transfer Date Certificate” means a certificate substantially in the form of Exhibit A hereto.

 

“Quarterly True-Up Transfer Date” means each date on which any payment (each, a “True-Up Payment”) is required to be paid to or for the Investor Parties in respect of each such fiscal quarter pursuant to any true-up mechanism established as contemplated by the Digital Commercial Agreement.

 

 

 

  

N-2

  

 

 

“Remedy Event” means the exercise of any remedies by the Agent (including at the request of the Required Lenders) under and in accordance with Section 8.02 of the Credit Agreement.

 

“Security Agreement” has the meaning specified in the Recitals hereto.

 

“Transferrable Cash” means all cash receipts and collections, including, without limitation, (a) all available cash receipts from the sale of Inventory and other Collateral, (b) all proceeds of collections of Accounts, (c) all Net Proceeds, and all other cash payments received by a Loan Party from any Person or from any source or on account of any sale or other transaction or event, including, without limitation, a Prepayment Event, (d) the proceeds of all credit card charges and (e) the then contents of each DDA (net of any minimum balance, not to exceed the Maximum DDA Balance, as may be required to be kept in the subject DDA by the depository institution at which such DDA is maintained).

 

“Transaction Lien” has the meaning specified in the Recitals hereto.

 

“True-Up Payment” has the meaning specified in the definition of Quarterly Transfer Date.

 

2.           NewCo Collection Account Generally.

 

(a)           The NewCo Collection Account is a special, segregated account at Bank, in the name of the Company. No cash will be deposited in or withdrawn from the NewCo Collection Account, except in accordance with this Agreement.

 

(b)           This Agreement evidences Agent’s control over the NewCo Collection Account. Notwithstanding anything to the contrary in the underlying agreement between Bank and Company governing the NewCo Collection Account, during any Trigger Period, Bank will comply with instructions originated by Agent as set forth herein directing the disposition of funds in the NewCo Collection Account without further consent of the Company.

 

(c)           Company represents and warrants to Agent and Bank that it has not assigned or granted a security interest in the NewCo Collection Account or any amount deposited in the NewCo Collection Account, other than the Transaction Lien.

 

(d)           Except as expressly permitted by Section 7 hereof, Company will not permit the NewCo Collection Account to become subject to any other pledge, assignment, lien, charge or encumbrance of any kind, other than (i) Agent’s security interest referred to herein and (ii) any non-consensual pledges, assignments, liens, charges or encumbrances arising by operation of law.

 

(e)           At all times during any Trigger Period, so long as no Remedy Event has occurred and is continuing, the Company shall deliver or cause to be delivered to Bank and the Agent, no later than five (5) Business Days prior to each Quarterly Transfer Date occurring during such Trigger Period, or such later date to which Agent may reasonably consent, a duly completed Quarterly Transfer Date Certificate, duly executed by a Responsible Officer of the Company. The Quarterly Investor Distribution Amount set forth on such Quarterly Transfer Date Certificate shall be conclusive, absent manifest error.

 

 

  

N-3

  

 

 

 

(f)           The Agent may provide written notice to the Bank from time to time of the occurrence, continuation or termination of a Trigger Event, Trigger Period, Collection Event or Remedy Event, as the case may be, in each case in accordance with the terms of the Credit Agreement.

 

3.           Deposits in the NewCo Collection Account. Upon the occurrence and during the continuation of a Trigger Event, notwithstanding anything to the contrary in any Loan Document or any Digital Investment Agreement, all Transferrable Cash in each NewCo Blocked Account shall be transferred by ACH or wire transfer no less frequently than daily (and whether or not there are then any outstanding Secured Obligations) to the NewCo Collection Account. All amounts on deposit at any time in the NewCo Collection Account shall be applied by the Bank, as set forth in Section 4 hereof. The Bank shall maintain books of account on a cash basis and record therein all deposits into and transfers to and from the NewCo Collection Account. The Bank shall make such books of account available during normal business hours for inspection and audit by the Agent and the Borrower and their respective representatives upon reasonable prior notice.

 

4.           Allocations from the NewCo Collection Account. The Bank shall transfer funds available in the NewCo Collection Account as follows:

 

(a)           During any Trigger Period, so long as no Remedy Event has occurred, on each Quarterly Transfer Date on which any amount is on deposit in the NewCo Collection Account, the Bank shall transfer an amount equal to the lesser of (i) the Quarterly Investor Distribution Amount or the True-Up Amount, as applicable, specified in the applicable Quarterly Transfer Date Certificate and (ii) 100% of the amount then on deposit in the NewCo Collection Account, to the Investor Parties in accordance with the directions supplied in the Quarterly Transfer Date Certificate for such Quarterly Transfer Date; provided, that if the Company has failed to deliver a Quarterly Transfer Date Certificate prior to such Quarterly Transfer Date, or such later date to which Agent may reasonably consent (as contemplated in Section 2(e) above), the amount transferred to the Investor Parties under this clause (a) on such Quarterly Transfer Date shall be zero.

 

(b)           During any Trigger Period, so long as no Remedy Event has occurred, on each Primary Quarterly Transfer Date on which any amount is on deposit in the NewCo Collection Account (after giving effect to any transfer made in accordance with Section 4(a) hereof), the Bank shall transfer an amount equal to 100% of the amount then remaining on deposit in the NewCo Collection Account to a Concentration Account specified in writing by the Agent (for application in accordance with Section 6.13(h) of the Credit Agreement).

 

 

 

  

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(c)           Upon the first Business Day occurring immediately after the end of any Trigger Period, so long as no Remedy Event has occurred, the Bank shall transfer an amount equal to 100% of the amount then on deposit in the NewCo Collection Account to one or more NewCo Blocked Accounts as specified in writing by the Company. Agent shall promptly notify Bank upon the termination of each Trigger Period.

 

(d)           Notwithstanding anything herein to the contrary, upon written notice from the Agent to the Bank of the occurrence of a Remedy Event, the Bank shall transfer an amount equal to 100% of the amount then remaining on deposit in the NewCo Collection Account to a Concentration Account specified in writing by the Agent (for application in accordance with Section 8.03 of the Credit Agreement).

 

(e)           Upon written notice from the Agent of the satisfaction in full of all Obligations of the Loan Parties under and pursuant to the Loan Documents and termination of the Transaction Lien, 100% of the amount then on deposit in the NewCo Collection Account shall be transferred to an account or accounts as directed in writing by NewCo.

 

5.           No Withdrawals.  Except for distributions at the direction of the Company permitted in Section 4 hereof, Bank shall prevent Company from making any withdrawals from the NewCo Collection Account. Company hereby covenants to Agent that until the Transaction Lien has been terminated in accordance with the Security Agreement, it will not close the NewCo Collection Account without the prior written consent of Agent. Bank shall have no liability in the event Company breaches this covenant to Agent.

 

6.           No Offset.  Bank agrees it shall not offset, charge, deduct or otherwise withdraw funds from the NewCo Collection Account, except as permitted by Section 7 hereof, until it has been advised in writing by Agent that the Transaction Lien has been terminated in accordance with the Security Agreement.

 

7.           Permitted Bank Charges. (a) Bank is permitted to charge the NewCo Collection Account:

 

(i)           for its normal and customary fees and charges relating to the NewCo Collection Account or associated with this Agreement; and

 

(ii)           for any account adjustments as it relates to encoding errors or other adjustments as a result of customary banking practices.

 

(b)           If the balances in the NewCo Collection Account are not sufficient to compensate Bank for any fees, account adjustments or charges due Bank in connection therewith, Company agrees to pay Bank on demand the amount due Bank. If Company fails to so pay Bank within five days after such demand, Agent agrees to pay Bank such amount within five Business Days after Bank’s demand to Agent. The failure to so pay Bank shall constitute a breach of this Agreement.

 

 

 

  

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(c)           Company hereby authorizes Bank, without prior notice, from time to time to debit any other account Company may have with Bank for the amount or amounts due Bank under subsection 7(a).

 

8.           Bank Statements.  (a) Bank will send information regarding deposits to the NewCo Collection Account to the address specified below for Company or as otherwise specified in writing by Company to Bank.

 

(b)           In addition to the original Bank statement provided to Company, Bank will provide Agent with a duplicate of such statement.

 

9.           Bank Liabilities. (a) Bank will not be liable to Company or Agent for any expense, claim, loss, damage or cost (“Damages”) arising out of or relating to its performance under this Agreement other than those Damages which result directly from its acts or omissions constituting gross negligence or intentional misconduct.

 

(b)           In no event will Bank be liable for any special, indirect, exemplary or consequential damages, including but not limited to lost profits.

 

(c)           Bank will be excused from failing to act or delay in acting, and no such failure or delay shall constitute a breach of this Agreement or otherwise give rise to any liability of Bank, if (i) such failure or delay is caused by circumstances beyond Bank’s reasonable control, including but not limited to legal constraint, emergency conditions, action or inaction of governmental, civil or military authority, fire, strike, lockout or other labor dispute, war, riot, theft, flood, earthquake or other natural disaster, breakdown of public or private or common carrier communications or transmission facilities, equipment failure, or negligence or default of Company or Agent or (ii) such failure or delay resulted from Bank’s reasonable belief that the action would have violated any guideline, rule or regulation of any governmental authority.

 

(d)           Bank shall have no duty to inquire or determine whether Company’s obligations to Agent are in default or whether Agent is entitled to provide any notice to Bank. Bank may rely on notices and communications it believes in good faith to be genuine and given by the appropriate party.

 

(e)           Notwithstanding any of the other provisions in this Agreement, in the event of the commencement of a case pursuant to Title 11, United States Code, filed by or against Company, or in the event of the commencement of any similar case under then applicable federal or state law providing for the relief of debtors or the protection of creditors by or against Company, Bank may act as Bank deems necessary to comply with all applicable provisions of governing statutes and shall not be in violation of this Agreement as a result.

 

(f)           Bank shall be permitted to comply with any writ, levy order or other similar judicial or regulatory order or process concerning the NewCo Collection Account and shall not be in violation of this Agreement for so doing.

 

10.           Indemnity.  Company and Agent shall jointly and severally indemnify Bank against, and hold it harmless from, any and all liabilities, claims, costs, expenses and damages of any nature (including but not limited to reasonable and documented allocated costs of staff counsel, other reasonable and documented attorney’s fees and any reasonable and documented fees and expenses) in any way arising out of or relating to disputes or legal actions concerning Bank’s provision of the services described in this Agreement. This section does not apply to any cost or damage attributable to the gross negligence or intentional misconduct of Bank. Company’s and Agent’s obligations under this section shall survive termination of this Agreement.

 

 

 

  

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11.           Costs. Company and Agent shall jointly and severally pay to Bank, upon receipt of Bank’s invoice, all reasonable and documented costs, expenses and attorneys’ fees (including allocated costs for in-house legal services) incurred by Bank in connection with the enforcement of this Agreement and any instrument or agreement required hereunder, including but not limited to any such reasonable costs, expenses and fees arising out of the resolution of any conflict, dispute, motion regarding entitlement to rights or rights of action, or other action to enforce Bank’s rights in a case arising under Title 11, United States Code. Company agrees to pay Bank, upon receipt of Bank’s invoice, all reasonable costs, expenses and attorneys’ fees (including allocated costs for in-house legal services) incurred by Bank in the preparation and administration of this Agreement (including any amendments hereto or instruments or agreements required hereunder).

 

12.           Termination and Assignment. Termination and Assignment of this Agreement shall be as follows:

 

(a)           Agent may terminate this Agreement by providing notice to Company and Bank that the Transaction Lien has been terminated in accordance with the Security Agreement. Agent may also terminate or it may assign this Agreement upon 30 day’s prior written notice to Company and Bank; provided, however that any such assignment shall only be to a replacement Collateral Agent under and in accordance with the Credit Agreement. Bank may terminate this Agreement upon 30 days’ prior written notice to Company and Agent. Company may not terminate this Agreement except with the prior written consent of Agent and upon prior written notice to Bank.

 

(b)           Notwithstanding subsection 12(a), Bank may terminate this Agreement at any time by written notice to Company and Agent if either Company or Agent breaches any of the terms of this Agreement, or any other agreement with Bank.

 

13.           Representations and Warranties.  (a)  Each party represents and warrants to the other parties that (i) this Agreement constitutes its duly authorized, legal, valid, binding and enforceable obligation; (ii) the performance of its obligations under this Agreement and the consummation of the transactions contemplated hereunder will not (A) constitute or result in a breach of its certificate or articles of incorporation, by-laws or partnership agreement, as applicable, or the provisions of any material contract to which it is a party or by which it is bound or (B) result in the violation of any law, regulation, judgment, decree or governmental order applicable to it; and (iii) all approvals and authorizations required to permit the execution, delivery, performance and consummation of this Agreement and the transactions contemplated hereunder have been obtained.

 

 

 

  

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(b)           The parties each agree that it shall be deemed to make and renew each representation and warranty in subsection 13(a) on and as of each day on which Company uses the services set forth in this Agreement.

 

(c)           Bank represents that: (i) the NewCo Collection Account has been established as set forth in paragraph D above and will be maintained in the manner set forth herein until this Agreement is terminated; and (ii) neither the NewCo Collection Account nor any funds or deposits at any time held therein or credited thereto is or will be evidenced by any instrument (as defined in Section 9-102 of the UCC) or constitutes or will constitute investment property (as defined in Section 9-102 of the UCC).

 

14.           Miscellaneous.  (a)  This Agreement may be amended only by a writing signed by Company, Agent and Bank; except that Bank’s charges are subject to change by Bank upon 30 days’ prior written notice to Company.

 

(b)           This Agreement may be executed in counterparts; all such counterparts shall constitute but one and the same agreement.

 

(c)           This Agreement controls in the event of any conflict between this Agreement and any other document or written or oral statement. This Agreement supersedes all prior understandings, writings, proposals, representations and communications, oral or written, of any party relating to the subject matter hereof.

 

(d)           This Agreement shall be interpreted in accordance with the laws of the State of New York, without reference to that state’s principles of conflicts of law. The State of New York shall be deemed to be Bank’s jurisdiction (as defined in Section 9-304 of the UCC) with respect to the NewCo Collection Account.

 

15.           Notice.  Any written notice or other written communication to be given under this Agreement shall be addressed to each party at its address set forth on the signature page of this Agreement or to such other address as a party may specify in writing. Except as otherwise expressly provided herein, any such notice shall be effective upon receipt.

 

16.           No Relationship.  Nothing contained in the Agreement shall create any agency, fiduciary, joint venture or partnership relationship between Bank and Company or Agent. Company and Agent agree that nothing contained in this Agreement, nor any course of dealing among the parties to this Agreement, shall constitute a commitment or other obligation on the part of Bank to extend credit to Company or Agent.

 

17.           Loan Documents.  This Agreement is a Loan Document as defined in the Credit Agreement and as such subject to the terms and provisions of the Credit Agreement.

 

[Signature Page Follows]

 

 

  

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In Witness Whereof, the parties hereto have executed this Agreement by their duly authorized officers as of the day and year first above written.

 

	
[NEWCO]

(“Company”)

	  	  
	
By:

	  	  	
Address for notices:

	
Name:

	  	  	  
	
Title:

	  	  	  
	  	  	  
	
BANK OF AMERICA, N.A., as administrative agent and collateral agent

(“Agent”)

	  	  
	
By:

	  	  	
Address for notices:

	
Name:

	  	  	  
	
Title:

	  	  	  
	  	  	  
	
(“Bank”)

	  	  
	
By:

	  	  	
Address for notices:

	
Name:

	  	  	  
	
Title:

	  	  	  

 

 

 

 

  

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EXHIBIT A

DEPOSITARY AGREEMENT

 

Form of Quarterly Transfer Date Certificate

 

Date of Certificate: __________________

 

 

To:         [Bank ]

[Address]

 

Ladies and Gentlemen:

 

Reference is made to the Depositary Agreement dated as of  _______, 2012 (as amended, amended and restated, modified, supplemented or restated from time to time, the “Depositary Agreement”) among [NewCo], Bank of America, N.A., as administrative agent and collateral agent and [Bank]. All capitalized terms used in this Quarterly Transfer Date Certificate and not otherwise defined herein shall have the same meanings herein as in the Depositary Agreement.

 

The undersigned, in his capacity as a duly authorized and acting Responsible Officer of the Company, hereby certifies on behalf of the Company as of the date hereof the following:

 

	
1.

	
The applicable Quarterly Transfer Date is _____________________

	
.

 

	
2.

	
The [Quarterly Investor Distribution Amount][True-Up Amount] as of the applicable Quarterly Transfer Date is $________________

	
.

 

	
3.

	
The calculations evidencing the [Quarterly Investor Distribution Amount][True-Up Amount] shown on the attached Appendix I are true and correct.

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

  

A-1

  

 

 

 

IN WITNESS WHEREOF, a duly authorized and acting Responsible Officer of the Company, has duly executed this Quarterly Transfer Date Certificate as of

 

_________, 2__.

 

	
[NEWCO]

 

	
By:

	  
	
Name:

	  
	
Title:

	  

 

 

 

 

  

A-2

  

 

 

 

APPENDIX I

 

[Insert Calculations for Quarterly Investor Distribution Amount or True-

Up Amount, as applicable]

 

 

 

 A-3

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