Barnes and Noble 2015 Annual Report Download - page 58

company (NOOK Member Two), Pearson Education,
Inc. (Pearson Education) and Pearson Inc., pursuant to
which Barnes & Noble Education and NOOK Member Two
purchased from Pearson Education all of its convertible
Series B preferred limited liability company interest in the
LLC and all of its warrants to purchase additional Series B
preferred limited liability company interests, in exchange
for an aggregate purchase price equal to (i) , in cash
and (ii) , shares of common stock, par value .
per share, of Barnes & Noble. The transactions under
the Pearson Purchase Agreement closed on December
, . The Company accounted for this transaction in
accordance with ASC - and accordingly was reflected
as an equity transaction. As a condition to closing, the par-
ties entered into an amended and restated Digital Business
Contingent Payment Agreement, pursuant to which a
Digital Business Contingent Payment Agreement dated as
of December , , by and between Barnes & Noble, the
LLC and Pearson, was amended and restated to include
provisions consistent with the Digital Business Contingent
Payment Agreement entered into with Morrison on
December , .
13. SAMSUNG COMMERCIAL AGREEMENT
On June , , NOOK Digital, LLC (NOOK Digital)
(formerly barnesandnoble.com llc), a wholly owned sub-
sidiary of B&N Education as of such date and a subsidiary
of Barnes & Noble, entered into a commercial agreement
(Agreement) with Samsung Electronics America, Inc.
(Samsung) relating to tablets.
Pursuant to the Agreement, NOOK Digital, after good faith
consultations with Samsung and subject to Samsung’s
agreement, selected Samsung tablet devices under devel-
opment to be customized and co-branded by NOOK Digital.
Such devices are produced by Samsung. The co-branded
NOOK® tablet devices are sold by NOOK Digital through
Barnes & Noble retail stores, www.barnesandnoble.com,
www.nook.com and other Barnes & Noble and NOOK Media
websites. NOOK Digital and Samsung agreed to develop
co-branded Samsung Galaxy Tab®  NOOK® tablets as the
initial co-branded devices pursuant to the Agreement.
Under the Agreement, NOOK Digital committed to pur-
chase a minimum of ,, NOOK®-Samsung co-
branded devices from Samsung within  months after
the launch of the initial co-branded device, which launch
occurred on August , . The -month period was
automatically extended by three months due to the quantity
of sales of such co-branded devices through December ,
, and the period was further extended until June ,
 by an amendment executed by the parties on March ,
.
NOOK Digital and Samsung have agreed to coordinate
customer service for the co-branded NOOK® devices and
have both agreed to a license of intellectual property to
promote and market the devices. Additionally, Samsung
has agreed to fund a marketing fund for the co-branded
NOOK® devices at the initial launch and for the duration of
the Agreement.
The Agreement has a two year term, with certain termina-
tion rights, including termination (i) by NOOK Digital for
a Samsung material default; (ii) by Samsung for a NOOK
Digital material default; (iii) by NOOK Digital if Samsung
fails to meet its shipping and delivery obligations in any
material respect on a timely basis; and (iv) by either party
upon insolvency or bankruptcy of the other party.
The companies introduced the Samsung Galaxy Tab® 
NOOK® in a -inch version in the U.S. in August  and
a -inch version in October . The co-branded device
combines the popular Samsung Galaxy Tab®  hardware
with customized NOOK® software to give customers power-
ful, full-featured tablets that are designed for reading, with
easy access to Barnes & Noble’s expansive digital collection
of approximately four million eBooks, digital magazines
and newspapers.
14. TIKATOK IMPAIRMENT CHARGE
During fiscal , the Company decided to shut down
the operations of Tikatok. Tikatok was an online platform
where parents and their children and others can write,
illustrate and publish stories into hardcover and paperback
books. This decision resulted in an impairment charge of
,, including the write-off of goodwill of , and
intangible assets of  during the second quarter of fiscal
. The effect of Tikatok operations is not material to the
overall results of the Company.
15. PALO ALTO LEASE
On June , , the Company entered into an Assignment
of Lease for its , square foot Palo Alto, California
campus. Employees were relocated to new state-of-the art
facilities totaling , square feet. NOOK employees
were moved to a new facility in Santa Clara, California,
while Barnes & Noble College’s digital education employees
were relocated to a facility in Mountain View, California.
The relocations occurred during the first quarter of fiscal
56 Barnes & Noble, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued