Exhibit 10.2
SENIOR SUBORDINATED SELLER
NOTE
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$ 100,000,000
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September
30, 2009
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1. FOR
VALUE RECEIVED, the undersigned, BARNES &
NOBLE, INC. , a Delaware
corporation (the “ Company ”), hereby
promises to pay to the order of Leonard Riggio and Louise Riggio
(each a “ Payee ”) the principal amount of One
Hundred Million Dollars ($100,000,000) or, if less, the aggregate
unpaid principal amount of this Note, on the Maturity Date (or, if
such day is not a Business Day, on the immediately preceding
Business Day), subject to the provisions herein. The Issuer further
promises to pay interest on the unpaid principal amount of this
Note from time to time at a rate per annum equal to
8.0%. Interest on this Note shall be due and payable in
arrears in cash on each December 29 and June 30 of each calendar
year, provided that if any such day is not a Business Day,
payment shall be made on the immediately preceding Business Day.
Payments of principal hereof and interest hereon shall be made in
Dollars in immediately available funds to such account of the
Noteholder located in New York, New York, as the Noteholder may
designate in writing to the Issuer.
2.
Prepayments.
(a)
Optional Prepayment . Subject to the provisions herein
(including, without limitation, the restrictions on payment
contained in Section 3 and the subordination provisions contained
in Section 4), the Issuer may, at any time prior to the Maturity
Date and so long as such prepayment is not prohibited under the
Senior Debt Documents, prepay the principal amount of this Note, in
whole or in part, without penalty or premium, on any Business
Day. Prepayments of this Note must be accompanied by
payment of accrued and unpaid interest on the principal amount
prepaid to and including the date of payment.
(b)
Change of Control Payment . Subject to the provisions herein
(including, without limitation, the restrictions on payment
contained in Section 3 and the subordination provisions contained
in Section 4):
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upon a Change of Control, the
Noteholder shall have the right to require the Issuer to repurchase
this Note at a repurchase price in cash equal to 100% of the
principal amount thereof plus accrued and unpaid interest if any,
to the date of repurchase, in accordance with the terms
contemplated in clause (ii) below;
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within 10 Business Days following
any Change of Control, the Issuer shall notify the Noteholder that
a Change of Control has occurred. Such notice shall provide that
the Noteholder has the right to require the Issuer to repurchase
this Note at a repurchase price in cash equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any,
to the date of repurchase and
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set forth the proposed date of
repurchase (which shall be a Business Day and shall in no event be
earlier than 10 Business Days from the date of such notice (such
date, the “ Repurchase Date ”));
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the Noteholder shall notify the
Issuer of its election to tender the Note for purchase by the
Issuer on the terms set forth in the notice by no later than 10
Business Days after receipt of such notice, which election shall be
irrevocable and shall be in respect of not less than the entire
Note. If the Noteholder shall not have informed the Issuer of its
election at the expiration of such 10 Business Day period, the
Noteholder shall be deemed conclusively not to have elected to
tender the Note for purchase by the Issuer; and
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on the Repurchase Date, the
Noteholder shall tender the Note to the Issuer against the deposit
by the Issuer in the Noteholder’s account (which account
shall be the same account as set forth in Section 1 above) of funds
sufficient to pay the purchase price of the Note so
tendered. Upon repurchase of the Note by the Issuer
pursuant to this Section 2(b), the Note shall be cancelled and all
obligations of the Issuer thereunder shall be
terminated.
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3.
Other Payment Provisions. Notwithstanding anything to
the contrary herein, no payment or prepayment of principal of or
interest on this Note (including, without limitation, under Section
2 or Section 8 hereof) may be made, directly or indirectly to the
Noteholder (and shall instead be paid over to the Senior Debt Agent
under Section 4(b) to the extent permitted by applicable law),
if:
(i) the
Issuer or its properties is subject to any Insolvency
Proceeding;
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a payment default shall have
occurred and be continuing with respect to any Senior Obligations;
or
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a Payment Blockage Period shall have
occurred and be continuing.
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Subordination
Provisions.
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(a)
Subordination. Payment of this Note (including, without
limitation, under Section 2 or Section 8 hereof) is and shall be
expressly subordinate and junior in right of payment to the prior
payment in full in cash of the Senior Obligations to the extent and
in the manner set forth herein, and this Note is hereby so
subordinated as a claim against the Issuer or any of the assets of
the Issuer, whether such claim be made (i) in the event of any
Insolvency Proceeding, or (ii) other than in connection with an
Insolvency Proceeding, prior to the Senior Obligations being Paid
in Full.
(b)
Payment Over. If the Noteholder shall receive any payment
(including, without limitation, under Section 2 or Section 8
hereto) in violation of the terms hereof, it shall hold
such payment in trust for the benefit of the Senior Creditors and
forthwith pay it over to the Senior Debt Agent, for application in
accordance with the Senior Debt Documents. In the event
that any payment hereunder shall be due and, at such time, the
Issuer shall be prohibited by the terms of this Note from making
such payment to the Noteholder, the Issuer shall instead, to the
extent permitted by applicable law, make such payment to the Senior
Debt Agent to the extent the Senior Debt Obligations have not been
Paid In Full.
(c)
Insolvency Proceedings; Acceleration of Senior Obligations .
(i) In the event of any Insolvency Proceeding relative
to the Issuer or any Guarantor or its properties or any
acceleration of any Senior Obligations, then all of the Senior
Obligations shall first be Paid in Full before the Noteholder may
receive and retain any payment upon this Note, and in any such
proceedings any payment or distribution of any kind or character,
whether in cash or property or securities, which may be payable or
deliverable in respect of this Note shall be paid or delivered
directly to the Senior Debt Agent to the extent of any unpaid
Senior Obligations, unless and until all such Senior Obligations
are Paid in Full, and the Noteholder hereby irrevocably authorizes
the Senior Debt Agent, as attorney-in-fact for such Noteholder, to
prove any claim in such proceedings on this Note, and to demand,
sue for, collect and receive any such payment or distribution, and
to apply such payment or distribution to the payment of the then
unpaid Senior Obligations, and to take such other action (including
acceptance or rejection of any plan of reorganization in any
Insolvency Proceeding) in the name of such Noteholder or of the
relevant Senior Creditors as the Senior Debt Agent may deem
necessary or advisable for the enforcement of the provisions
hereof. The Noteholder shall execute and deliver such
other and further powers of attorney, assignments, proofs of claim
or other instruments as may be requested by the Senior Debt Agent
in order to accomplish the foregoing, but only with respect to such
Noteholder’s capacity as a Noteholder hereunder and not in
respect of any other relationship between such Noteholder and the
Issuer.
(ii) In
the event that, notwithstanding the foregoing, upon any such
Insolvency Proceeding, any payment or distribution of the assets of
the Issuer of any kind or character, whether in cash, property or
securities, shall be received by the Noteholder in respect of this
Note before all Senior Obligations are Paid in Full, such payment
or distribution shall be held in trust for the Senior Creditors and
shall forthwith be paid over to the Senior Debt Agent to the extent
any Senior Obligations have not been Paid in Full after giving
effect to any concurrent payment or distribution to the Senior Debt
Agent.
(iii) In
the event of any Insolvency Proceeding against the Issuer or any
Guarantor or any of their assets, the Noteholder hereby agrees not
to contest and hereby waives any right to object to and expressly
consents to (A) any post-petition financing of or use of cash
collateral by Issuer or any Guarantor, to the extent approved or
provided by the Senior Debt Agent, and the granting by Issuer or
any Guarantor to Senior Debt Agent of senior liens and priorities
in connection therewith and (B) any sale or other disposition of
any property securing all of any part of the Senior Obligations
free and clear of security interests, liens or other claims of
Noteholder under Section 363 of the
Bankruptcy Code or any other
provision of the Bankruptcy Code if the Senior Debt Agent has
approved or consented to such sale or disposition.
(d)
Standstill; Certain Other Agreements.
(i) The Noteholder agrees that, until the earlier
to occur of the Maturity Date or the date the Senior Obligations
are Paid in Full (A) if a payment default shall have occurred and
be continuing with respect to any Senior Obligations or a Payment
Blockage Period shall have occurred and be continuing or if an
Insolvency Proceeding shall have commenced, it will not take,
demand or receive, or take any action to accelerate or collect, any
payment of all or any part of this Note and (B) it will not file,
join in or facilitate any petition or proceeding seeking the
involuntary bankruptcy of the Issuer or any Guarantor.
(ii) The
Noteholder further agrees (A) that it shall not request, seek,
obtain or maintain any lien on or security interest in any
property, tangible or intangible, of the Issuer or any Guarantor as
security for payment of the obligation under this Note and that it
shall not attach or levy or take any action against any property,
tangible or intangible, of the Issuer or any Guarantor under any
circumstances and (B) that it shall not take, nor consent to or
acquiesce in the taking of, any action to set aside, challenge or
otherwise dispute the existence, validity or priority of the Senior
Obligations or the creation, attachment, validity, perfection,
priority or continuation of any lien or security interest of the
Senior Debt Agent or the Senior Creditors in any property, tangible
or intangible, of the Issuer, any Guarantor or any of their
Subsidiaries.
(iii) The
Senior Creditors, or any of them, may, at any time and from time to
time, without the consent of or notice to the Noteholder, without
incurring any responsibility to the Noteholder, and without
impairing or releasing any of the rights of any of the Senior
Creditors, or any of the obligations of the Noteholder:
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change the amount (subject to
Section 6(b)) or terms of or renew or extend any Senior Obligations
or amend any Senior Debt Document, as the case may be, in any
manner or enter into or amend in any manner any other agreement
relating to any Senior Obligations;
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sell, exchange, release or otherwise
deal with any property at any time pledged or mortgaged or subject
to any lien to secure any Senior Obligations;
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release anyone liable in any manner
for the payment or collection of any Senior Obligations;
and
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exercise or refrain from exercising
any rights against the Issuer, any Guarantor or any other Person
(including the Noteholder).
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(e)
Certain Waivers.
(i) The
Noteholder hereby waives notice of or proof of reliance by any
Senior Creditor upon the provisions hereof, and the Senior
Obligations shall
conclusively be deemed to have been
created, contracted, incurred and maintained in reliance upon the
provisions hereof.
(ii) The
Issuer hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The non-exercise by the
Noteholder of any of its rights hereunder in any particular
instance shall not constitute a waiver thereof in that or any
subsequent instance.
(f)
Acknowledgement of Subordination and Payment Restrictions.
The subordination provisions contained herein and the provisions
contained in Section 3 hereof are for the benefit of the Senior
Debt Agent, Senior Creditors and their respective successors and
assigns and may not be rescinded or cancelled or modified in any
way without the prior written consent of the Senior Debt Agent.
The Noteholder hereby expressly
acknowledges and agrees to the subordination provisions and payment
restrictions contained herein.
5.
Affirmative Covenants. So long as any principal
of and interest on this Note or any other amount payable hereunder
remains unpaid or unsatisfied:
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Information.
The Issuer shall deliver
to the Noteholder:
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as soon as available, but in any
event within 90 days after the end of each fiscal year of the
Issuer, a consolidated balance sheet of the Issuer and its
Subsidiaries as at the end of such fiscal year, and related
consolidated statements of income, operations, shareholders’
equity and cash flows for such fiscal year, all in reasonable
detail and prepared in accordance with GAAP, setting forth in each
case in comparative form the figures for the previous fiscal year
and audited and accompanied by a report and opinion of a firm of
independent public accountants of recognized national standing
(without a “going concern” or like
qualification or exception and without any qualification or
exception as to the scope of audit) as presenting fairly in all
material respects, the financial position, results of operations
and cash flows of the Issuer and its Subsidiaries on a consolidated
basis in accordance with GAAP;
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as soon as available, but in any
event within 45 days after the end of each of the first three
fiscal quarters of each fiscal year of the Issuer, a consolidated
balance sheet of the Issuer and its Subsidiaries as at the end of
such fiscal quarter and the related statements of operations,
stockholders’ equity and cash flows for such fiscal quarter
and for the then elapsed portion of such fiscal year, setting forth
in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by a
Responsible Officer as presenting fairly in all material respects
the financial position, results of operations and cash flows of the
Issuer and its Subsidiaries on a consolidated basis in
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accordance with GAAP, subject to
normal year-end adjustments and the absence of
footnotes;
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within 5 Business Days after the
occurrence of any Default of which a Responsible Officer has
obtained knowledge, a notice setting forth such Default and stating
what action the Issuer has taken or proposes to take with respect
thereto; and
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within 5 Business Days of the
occurrence of any matter that has resulted or could reasonably be
expected to result in a Material Adverse Effect, including the
commencement of any material litigation or proceeding affecting the
Issuer or any Material Subsidiary, a notice setting forth such
event and actions taken (if any) with respect thereto.
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(b)
Preservation of Existence, Etc. The Issuer shall (i)
preserve, renew and maintain in full force and effect its legal
existence under the laws of the jurisdiction of its organization
except in a transaction permitted hereunder and (ii) take all
reasonable action to maintain all rights, privileges, permits,
licenses and franchises necessary or desirable in any material
respect in the normal conduct of its business, except to the extent
that failure to do so could not be reasonably be expected to have a
Material Adverse Effect.
(c)
Maintenance of Properties. The Issuer shall, and shall cause
each of its Subsidiaries, to maintain, preserve and protect all of
its material properties and equipment necessary in the operation of
its business in good working order and condition, except where the
failure to do so could not reasonably be expected to have a
Material Adverse Effect.
(d)
Compliance with Law. The Issuer shall, and shall cause each
of its Subsidiaries to, comply in all material respects with the
requirements of all laws and all orders, writs, injunctions and
decrees applicable to it or to its business or property, except in
such instances in which (x) such requirement of law or order,
injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (y) the failure to
comply therewith could not be reasonable be expected to have a
Material Adverse Effect.
(e)
Maintenance of Books and Records. The Issuer shall, and
shall cause each of its Subsidiaries to, maintain proper books of
record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all
financial transactions and matters involving the assets and
business of the Issuer or such Subsidiary, as the case may
be.
6.
Negative Covenants. So long as any principal of
and interest on this Note or any other amount payable hereunder
remains unpaid or unsatisfied:
(a)
Mergers and Consolidations. The Issuer shall not merge
or consolidate with or into any Person or sell all or substantially
all of its assets, except that so long as both prior to and
subsequent to such merger or consolidation, no Event of Default has
occurred and is continuing, the Issuer may merge or consolidate
with any Person, provided that (x) the Issuer
shall be the continuing or surviving
Person or (y) if the Issuer shall not be the surviving Person, such
surviving Person shall have assumed the obligations of the Issuer
hereunder pursuant to documentation in form and substance
reasonably satisfactory to the Noteholder (each such merger or
consolidation, a “ Permitted Merger
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(b)
Indebtedness.
(i) The
Issuer shall not, and shall not permit any of its Subsidiaries to,
Incur any Indebtedness; provided , however , that the
Issuer or any Subsidiary may Incur Indebtedness, if the Interest
Charge Coverage Ratio for the Measurement Period immediately
preceding the date on which such additional Indebtedness is
Incurred would have been at least 2 to 1, determined on a pro
forma basis (including a pro forma application of the
net proceeds therefrom), as if the additional Indebtedness had been
Incurred at the beginning of such Measurement Period.
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Notwithstanding Section 6(b)(i)
above, the Issuer and the Subsidiaries may Incur the following
Indebtedness:
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(A) Credit
Facility Indebtedness in an aggregate outstanding principal amount
not to exceed $2,000,000,000;
(B) Guarantees
by the Issuer and its Subsidiaries in respect of Indebtedness
otherwise permitted hereunder of the Issuer or any of its
Subsidiaries;
(C) Indebtedness
of the Issuer or any Subsidiary owing to the Issuer or any other
Subsidiary;
(D) Indebtedness
in respect of Capitalized Leases and Indebtedness Incurred in
financing the acquisition, construction, repair, replacement or
improvement of fixed or capital assets by the Issuer or any
Subsidiary;
(E) Indebtedness
of the Issuer or any Subsidiary (I) assumed in connection with or
(II) Incurred to finance, in each case, any acquisition of property
and assets or businesses of any Person or of assets constituting a
business unit, a line of business or division of such Person, or
Equity Interests in a Person;
(F) Indebtedness
representing deferred compensation to employees of the Issuer and
its Subsidiaries incurred in the ordinary course of
business;
(G) Indebtedness
to current or former officers, directors, managers, consultants and
employees, their respective estates, spouses or former spouses to
finance the purchase or redemption of Equity Interests of the
Issuer (or any direct or indirect parent thereof);
(H) Indebtedness
Incurred by the Issuer or any Subsidiary in an acquisition, or any
disposition of assets, in each case to the extent constituting
indemnification obligations or obligations in respect of purchase
price (including earn-outs) or other similar
adjustments;
(I) Indebtedness
consisting of obligations of the Issuer and any Subsidiary under
deferred compensation or other similar arrangements incurred by
such Person in connection with (I) the transactions contemplated by
the Stock Purchase Agreement, or (II) other acquisitions or
dispositions of assets;
(J) Cash
Management Obligations and other Indebtedness in respect of netting
services, automatic clearinghouse arrangements, overdraft
protections, employee credit card programs and other cash
management and similar arrangements in the ordinary course of
business and any guarantees thereof;
(K) Indebtedness
consisting of (I) the financing of insurance premiums or (II)
take-or-pay obligations contained in supply arrangements, in each
case, in the ordinary course of business;
(L) Indebtedness
incurred by the Issuer or any Subsidiary in respect of letters of
credit, bank guarantees, bankers’ acceptances, warehouse
receipts or similar instruments issued or created in the ordinary
course of business or consistent with past practice, including in
respect of workers compensation claims, health, disability or other
employee benefits or property, casualty or liability insurance or
self-insurance or other Indebtedness with respect to
reimbursement-type obligations regarding workers compensation
claims;
(M) obligations
in respect of performance, bid, appeal and surety bonds and
performance and completion guarantees and similar obligations
provided by the Issuer or any Subsidiary or obligations in respect
of letters of credit, bank guarantees or similar instruments
related thereto, in each case in the ordinary course of business or
consistent with past practice;
(N) all
premiums (if any), interest (including post-petition interest),
fees, expenses, charges and additional or contingent interest on
obligations described in clauses (A) through (M) above and (O)
through (R) below;
(O) Guarantees
Incurred in the ordinary course of business in respect of
obligations to suppliers, customers, franchisees, lessors and
licensees;
(P) Indebtedness
Incurred in the ordinary course of business in respect of
obligations of the Issuer or any Subsidiary to pay the deferred
purchase
price of goods or services or
progress payments in connection with such goods and
services;
(Q) Indebtedness
resulting from the refinancing, refunding, replacement, renewal or
extension of Indebtedness described in clauses (A) through (P)
above; and
(R) Indebtedness
resulting from the refinancing, refunding, replacement, renewal or
extension of Indebtedness described in Section 6(b)(i)
above.
(c)
Liens. The Issuer shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or
hereafter acquired to secure Pari Passu/Junior Indebtedness,
without making, or causing such Subsidiary to make effective
provision for securing this Note equally and ratably with such Pari
Passu/Junior Indebtedness or in the event such Pari Passu/Junior
Indebtedness is subordinate in right of payment to this Note, prior
to such Indebtedness, as to such property or assets for so long as
such Pari Passu/Junior Indebtedness shall be secured. The foregoing
restrictions shall not apply to the following Liens:
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Liens existing on the date
hereof;
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Liens securing any Senior
Obligations;
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Liens for taxes, assessments or
governmental charges that are not overdue for a period of more than
120 days or that are being contested in good faith and by
appropriate proceedings for which appropriate reserves have been
established in accordance with GAAP;
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statutory or common law Liens of
landlords, carriers, warehousemen, mechanics, materialmen,
repairmen, construction contractors or other like Liens arising in
the ordinary course of business, so long as, in each case, such
Liens arise in the ordinary course of business;
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(I) pledges or deposits in the
ordinary course of business in connection with workers’
compensation, unemployment insurance and other social security
legislation and (II) pledges and deposits in the ordinary course of
business securing liability for reimbursement or indemnification
obligations of (including obligations in respect of letters of
credit or bank guarantees for the benefit of) insurance carriers
providing property, casualty or liability insurance to the Issuer
or any Subsidiary;
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deposits to secure the performance
of bids, trade contracts, governmental contracts and leases (other
than Indebtedness for borrowed money), statutory obligations,
surety, stay, customs and appeal bonds, performance bonds and other
obligations of a like nature (including those to secure health,
safety and environmental obligations) incurred in the ordinary
course of business;
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Liens securing Cash Management
Obligations, Hedging Agreements and other Indebtedness in respect
of netting services, automatic clearinghouse arrangements,
overdraft protections, employee credit card programs and other cash
management and similar arrangements in the ordinary course of
business and any guarantees thereof;
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easements, rights-of-way,
restrictions (including zoning restrictions), encroachments,
protrusions and other similar encumbrances and minor title defects
affecting real property that, in the aggregate, do not in any case
materially interfere with the ordinary conduct of the business of
the Issuer and its Subsidiaries, taken as a whole, and any
exception on the title policies issued in connection with the
mortgaged property;
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Liens arising from judgments or
orders for the payment of money;
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Liens securing Indebtedness
permitted under Section 6(b)(ii)(D);
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leases, licenses, subleases or
sublicenses granted to others in the ordinary course of
business;
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Liens in favor of customs and
revenue authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods in the
ordinary course of business;
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Liens (I) of a collection bank
arising under Section 4-210 of the Uniform Commercial Code on the
items in the course of collection, (II) attaching to commodity
trading accounts or other commodities brokerage accounts incurred
in the ordinary course of business and (III) in favor of a banking
or other financial institution arising as a matter of law
encumbering deposits or other funds maintained with a financial
institution (including the right of set off) and that are within
the general parameters customary in the banking
industry;
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Liens (I) on cash advances in favor
of the seller of any property to be acquired in an investment to be
applied against the purchase
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price for such investment or (II)
consisting of an agreement to dispose of any property;
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Liens in favor of the Issuer or a
Subsidiary securing Indebtedness permitted under Section
6(b)(ii)(C);
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Liens existing on property at the
time of its acquisition or existing on the property of any Person
at the time such Person becomes a Subsidiary and the Indebtedness
secured thereby is permitted under Section 6(b)(ii)(D) or
(E);
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any interest or title of a lessor,
sublessor, licensor or sublicensor or secured by a lessor’s,
sublessor’s, licensor’s or sublicensor’s interest
under leases or licenses entered into by the Issuer or any
Subsidiary in the ordinary course of business;
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