BARNES & NOBLE, INC. DEFERRED COMPENSATION PLAN

1.01

“Administrative Committee” shall mean the person or persons appointed by the Compensation Committee of the Board of Directors to administer the Plan as provided in Section 8.01.

1.02

“Associated Company” shall mean (a) any corporation that is a member of a controlled group of corporations (as defined in Code Section 414(b)) that includes the Company, (b) any trade or business (whether or not incorporated) that is under common control (as defined in Code Section 414(c)) with the Company, (c) any member of an affiliated service group (as defined in Code Section 414(m)) that includes the Company; and (d) any other entity required to be aggregated with the Company pursuant to final or temporary regulations under Code Section 414(o).

1.03

“Base Salary” shall mean the annual base fixed compensation paid periodically during the calendar year, determined prior to any pre-tax contributions under a “qualified cash or deferred arrangement” (as defined under Code Section 401(k) and its applicable regulations) or under a “cafeteria plan” (as defined under Code Section 125 and its applicable regulations) and any deferrals under Article 3, but excluding any overtime, bonuses, or any other form of compensation; except to the extent otherwise deemed “Base Salary” for purposes of the Plan under rules as are adopted by the Compensation Committee.

1.04

“Beneficiary” shall mean the person or persons designated by a Participant pursuant to the provisions of Section 5.07 in a time and manner determined by the Administrative Committee to receive the amounts, if any, payable under the Plan upon the death of the Participant.

1.05

“Bonus” shall mean the cash amount, if any, awarded to an employee of the Company under the Company’s executive bonus program, or other compensation program approved by the Compensation Committee as a bonus hereunder.

1.06

“Board of Directors” or “Board” shall mean the Board of Directors of the Corporation.

1.07

“Change of Control” shall mean an event which shall occur if:

(a)

a report on Schedule 13D shall be filed with the Securities and Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of 1934 (the “Act”) disclosing that any person (within the meaning of Section 13(d) of the Act), other than the Corporation or a subsidiary of the Corporation or any employee benefit plan sponsored by the Corporation or a subsidiary of the Corporation or any member of the Riggio Group, is the beneficial owner directly or indirectly of twenty percent or more of the outstanding common stock of the Corporation; (and such person did not have such twenty percent or more beneficial ownership on April 1, 1997).

(b)

the stockholders of the Corporation shall approve (i) any consolidation or merger of the Corporation in which the Corporation is not the continuing or surviving corporation or pursuant to which shares of common stock of the Corporation would be converted into cash, securities or other property, other than a merger of the Corporation (1) in which holders of common stock of the Corporation immediately prior to the merger have substantially the same proportionate ownership of common stock of the surviving corporation immediately after the merger as immediately before or (2) with or into any Corporation which is directly or indirectly controlled by one or more members of the Riggio Group, or (ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets of the Corporation; or

(c)

there shall have been a change in a majority of the members of the Board of Directors within a 12-month period, unless the election or nomination for election by the Corporation’s stockholders of each new director during such 12-month period was approved by the vote of two-thirds of the directors then still in office who were directors at the beginning of such 12-month period.

1.08

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

1.09

“Company” shall mean the Corporation, and any successor thereto, with respect to its employees and any Associated Company authorized by the Compensation Committee to participate in the Plan, with respect to their employees.

1.10

“Compensation Committee” shall mean the Compensation Committee of the Board of Directors.

1.11

“Corporation” shall mean Barnes & Noble, Inc., a Delaware corporation, or any successor by merger, purchase or otherwise.

1.12

“Deferral Account” shall mean the bookkeeping account maintained for each Participant to record the amount of Base Salary and/or Bonus such Participant has elected to defer in accordance with Article 3, adjusted pursuant to Article 4.

1.13

“Deferral Agreement” shall mean the completed agreement, including any amendments, attachments and appendices thereto, in such form approved by the Administrative Committee, between an Eligible Executive and the Company, under which the Eligible Executive agrees to defer a portion of his Base Salary and/or Bonus under the Plan.

1.14

“Deferrals” shall mean the amount of deferrals credited to a Participant pursuant to Section 3.02.

1.15

“Effective Date” shall mean April 1, 1997.

1.16

“Employee” shall mean any person who is employed by the Company.

1.17

“Eligible Executive” shall mean an Employee of the Company who is eligible to participate in the Plan as provided in Section 2.01.

1.18

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time.

1.19

“Participant” shall mean, except as otherwise provided in Article 2, each Eligible Executive who has executed a Deferral Agreement pursuant to the requirements of Section 2.02 and is credited with an amount under Section 3.03.

1.20

“Plan” shall mean the Barnes & Noble, Inc. Deferred Compensation Plan as set forth in this document and the appendices thereto, as it may be amended from time to time.

1.21

“Plan Year” shall mean the 12-month period commencing on any January 1; provided, however, that the first Plan Year shall commence on April 1, 1997 and end on December 31, 1997.

1.22

“Reporting Date” shall mean any day on which the New York Stock Exchange is open.

1.23

“Retirement” shall mean any termination of employment by an Eligible Executive (i) after the date the Eligible Executive has attained age 55 and has completed five “Years of Service” (as such term is defined under the Barnes & Noble, Inc. Retirement Plan as in effect on the date of such termination) or (ii) as a result of his “Total and Permanent Disability” (as such term is defined under the Barnes & Noble, Inc. 401(k) Savings Plan as in effect on the date of such termination).

1.24

“Riggio Group” shall mean Leonard Riggio, his spouse, his siblings and any lineal descendants or ancestors of Leonard Riggio or any of his siblings, any trusts for the benefit of any of the foregoing, and any corporation or other entity directly or indirectly controlled by any of the foregoing.

2.01

Eligibility

(a)

An Employee whose Base Salary as of October 1 of a calendar year exceeds $130,000, shall be an Eligible Executive with respect to the Plan Year following such calendar year and thereby eligible to participate in this Plan and execute a Deferral Agreement authorizing Deferrals under this Plan with respect to his Base Salary or Bonus which would otherwise be payable in the Plan Year following such October 1.

(b)

An Employee who is first employed or reemployed after October 1 of a calendar year, and whose Base Salary on such employment or reemployment date, whichever is applicable, exceeds $130,000 shall be an Eligible Executive with respect to the following Plan Year and thereby eligible to participate in the Plan with respect to his Base Salary or Bonus which is otherwise paid in the Plan Year following his date of employment or reemployment, whichever is applicable.

(c)

Notwithstanding the foregoing, an Employee who is first employed or reemployed on or after January 1, 1997 and whose Base Salary on such date of employment or reemployment, whichever is applicable, exceeds $130,000 shall be an Eligible Executive with respect to the Plan Year in which his date of employment or reemployment occurs and thereby eligible to participate in the Plan with respect to such Plan Year, subject to the provisions of Section 3.01(a)(v).

2.02

In General

(a)

An individual who is determined to be an Eligible Executive with respect to a Plan Year and who desires to have deferrals credited on his behalf pursuant to Article 3 for such Plan Year must execute a Deferral Agreement with the Administrative Committee authorizing Deferrals under this Plan for such year in accordance with the provisions of Sections 3.01 and 3.02.

(b)

The Deferral Agreement shall be in writing and be properly completed upon a form approved by the Administrative Committee, which shall be the sole judge of the proper completion thereof. Such Deferral Agreement shall provide, subject to the provisions of Section 3.02, for the deferral of a portion of the Eligible Executive’s Base Salary and/or Bonus earned after the effective date of the election and shall include such other provisions as the Administrative Committee deems appropriate.

2.03

Termination of Participation

(a)

Participation shall cease when all benefits to which a Participant is entitled to hereunder are distributed to him.

(b)

If a former Participant who has terminated employment with the Company and whose participation in the Plan ceased under Section 2.03(a) is reemployed as an Eligible Executive, the former Participant may again become a Participant in accordance with the provisions of Section 2.01.

3.01

Filing Requirements

(a)

(i)

An Employee who is determined to be an Eligible Executive on the basis of his Base Salary on October 1, 1996 in accordance with Section 2.01(a) may elect, subject to Section 3.02(a), to defer a portion of his Base Salary that is otherwise earned and payable in the 1997 Plan Year by filing a Deferral Agreement with the Administrative Committee prior to the close of business on the fifth business day following the Effective Date. Notwithstanding any other provision to the contrary, an election to defer any part of Base Salary payable in the 1997 Plan Year filed with the Administrative Committee on or before the Effective Date shall be effective only with respect to Base Salary earned and payable on and after the Effective Date.

(ii)

Prior to the close of business on October 1 of any Plan Year commencing on or after the Effective Date, an Employee who is determined to be an Eligible Executive on the basis of his Base Salary on such October 1 in accordance with Section 2.01(b) may elect, subject to Section 3.02(a), to defer a portion of his Base Salary that is otherwise earned and payable in the Plan Year following such October 1 and/or a portion of his Bonus otherwise payable in the Plan Year following such October 1 by filing a Deferral Agreement with the Administrative Committee.

(iii)

In the event October 1 does not fall on a business day, such filing must be made by the close of business on the next business day.

(iv)

Notwithstanding the foregoing, if an Employee becomes an Eligible Executive with respect to a Plan Year pursuant to the provisions of Section 2.01(b) he may elect, subject to Section 3.02(a), to defer a portion of his Base Salary or Bonus which would otherwise be payable in the Plan Year next following his date of employment or reemployment, by filing a Deferral Agreement with the Administrative Committee prior to the close of business on the tenth business day following the date of his employment or reemployment, whichever is applicable; provided, however that the Bonus may be deferred only if the amount otherwise payable in that year has not already been determined by appropriate action of the Company.

(v)

Notwithstanding the foregoing, if an Employee becomes an Eligible Executive with respect to a Plan Year pursuant to the provisions of Section 2.01(c) he may elect, subject to Section 3.02(a), to defer a portion of his Base Salary or Bonus otherwise payable in that Plan Year by filing a Deferral Agreement with the Administrative Committee prior to the close of business on the tenth business day following the date of his employment or reemployment, whichever is applicable. Such Deferral Agreement shall be effective only with respect to Base Salary and Bonus otherwise payable to the Eligible Executive commencing with the first practicable payroll

period following the Administrative Committee’s receipt of the Deferral Agreement; provided however, Bonus may only be deferred if the Bonus otherwise payable in that Plan Year has not already been determined by appropriate action of the Company.

(b)

A Participant’s election to defer a portion of Base Salary or Bonus for any Plan Year shall become irrevocable on the last day the deferral of such Base Salary or Bonus may be elected under Section 3.01(a). A Participant may revoke or change his election to defer a portion of Base Salary or Bonus at any time prior to the date the election becomes irrevocable. Any such revocation or change shall be made in a form and manner determined by the Administrative Committee.

(c)

Except as otherwise provided in Section 3.01(a)(v), a Participant’s Deferral Agreement shall apply only with respect to Base Salary earned in the calendar year following the calendar year in which the Deferral Agreement is filed with the Administrative Committee under Section 3.01(a). A Participant’s Deferral Agreement shall only apply to a Bonus determined after the Deferral Agreement is filed with the Administrative Committee under Section 3.01(a). Subject to the provisions of Section 3.02, an Eligible Executive must file, in accordance with the provisions of Section 3.01(a), a new Deferral Agreement for each Plan Year the Eligible Executive is eligible for and elects to defer a portion of Bonus or Base Salary.

(d)

If a Participant ceases to be an Eligible Executive on the basis of his Base Salary as of October 1 of a calendar year but continues to be employed by the Company, he shall continue to be a Participant and his Deferral Agreement currently in effect for the Plan Year in which such October 1 occurs shall remain in force for the remainder of such Plan Year, but such Participant shall not be eligible to defer any portion of his Base Salary or Bonus earned in a subsequent Plan Year until such time as he shall once again become an Eligible Executive.

3.02

Amount of Deferral

(a)

(i)

(ii)

(b)

The Administrative Committee may establish other maximum or minimum limits on the amount of Base Salary or Bonus which may be deferred and/or the timing of such deferral.

Eligible Executives shall be given written notice of any such limits at least ten business days prior to the date they take effect.

(c)

Notwithstanding anything in this Plan to the contrary, if an Eligible Executive:

(i)

receives a withdrawal of deferred cash contributions on account of hardship from any plan which is maintained by the Company and which meets the requirements of Code Section 401(k) (or any successor thereto); and

(ii)

is precluded from making contributions to such 401(k) plan for at least 12 months after receipt of the hardship withdrawal;

no amounts shall be deferred under this Plan under the Eligible Executive’s Deferral Agreement with respect to Base Salary or Bonus until such time as the Eligible Executive is again permitted to contribute to such 401(k) plan. Any Base Salary or Bonus payment which would have been deferred pursuant to a Deferral Agreement but for the application of this Section 3.02(c) shall be paid to the Eligible Executive as if he had not entered into the Deferral Agreement.

3.03

Crediting to Deferral Account

The amount of Deferrals shall be credited to such Participant’s Deferral Account no later than the first business day of the first calendar month following the date the Base Salary or Bonus would have been paid to the Participant in the absence of a Deferral Agreement.

3.04

Vesting

A Participant shall at all times be 100% vested in his Deferral Account.

4.01

Adjustment of Account

(a)

As of each Reporting Date, each Deferral Account shall be credited or debited with the amount of earnings or losses with which such Deferral Account would have been credited or debited, assuming it had been invested in one or more investment funds, or earned the rate of return of one or more indices of investment performance, designated by the Administrative Committee and elected by the Participant pursuant to Section 4.02 for purposes of measuring the investment performance of his Deferral Account.

(b)

The Administrative Committee shall designate at least one investment fund or index of investment performance and may designate other investment funds or investment indices to be used to measure the investment performance of a Participant’s Deferral Account. The designation of any such investment funds or indices shall not require the Company to invest or