Barnes and Noble 2014 Annual Report Download - page 25

The Agreement has a two year term, with certain termina-
tion rights, including termination (i) by NOOK Media Sub
for a Samsung material default; (ii) by Samsung for a NOOK
Media Sub material default; (iii) by NOOK Media Sub 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.
On August , , the Company entered into an invest-
ment agreement between the Company and Liberty pursu-
ant to which the Company issued and sold to Liberty, and
Liberty purchased, , shares of the Company’s Series
J Preferred Stock, par value . per share (Preferred
Stock), for an aggregate purchase price of . million in
a private placement exempt from the registration require-
ments of the  Act. The shares of Preferred Stock will
be convertible, at the option of the holders, into shares of
Common Stock, representing . of the Common Stock
outstanding as of August , , (after giving pro forma
effect to the issuance of the Preferred Stock), based on the
initial conversion rate. The initial conversion rate reflects
an initial conversion price of . and is subject to
adjustment in certain circumstances. The initial dividend
rate for the Preferred Stock is equal to . per annum
of the initial liquidation preference of the Preferred Stock
to be paid quarterly and subject to adjustment in certain
circumstances.
On April , , Liberty sold the majority of its shares
to qualified institutional buyers in reliance on Rule A
under the Securities Act and has retained an approximate
 percent stake of its initial investment. As a result,
Liberty will no longer have the right to elect two preferred
stock directors to the Company’s Board. Additionally, the
consent rights and pre-emptive rights to which Liberty was
previously entitled ceased to apply.
On September , , in connection with the closing
of the acquisition of B&N College (the Acquisition), the
Company issued the sellers (i) a senior subordinated note
(the Senior Seller Note) in the principal amount of .
million, with interest of  per annum payable on the
unpaid principal amount, which was paid on December ,
 in accordance to its scheduled date, and (ii) a junior
subordinated note (the Junior Seller Note) in the princi-
pal amount of . million, payable in full on the fifth
anniversary of the closing of the Acquisition, with interest
of  per annum payable on the unpaid principal amount.
Pursuant to a settlement agreed to on June , , the
sellers have agreed to waive their right to receive .
million in principal amount (and interest on such principal
amount) of the Junior Seller Note. The net short-term pay-
able of . million is due September ,  and has
been reclassified to a short-term liability accordingly.
The Company is party to an amended and restated credit
facility with Bank of America, N.A., as administrative
agent, collateral agent and swing line lender, and other
lenders, dated as of April ,  (as amended and
modified to date, the Credit Facility), consisting of up to
 billion in aggregate commitments under a five-year
asset-backed revolving credit facility expiring on April ,
, which is secured by eligible inventory and accounts
receivable with the ability to include eligible real estate
and related assets. Borrowings under the Credit Facility
are limited to a specified percentage of eligible invento-
ries and accounts receivable and accrued interest, at the
election of the Company, at Base Rate or LIBO Rate, plus,
in each case, an Applicable Margin (each term as defined
in the Credit Facility). In addition, the Company has the
option to request an increase in commitments under the
Credit Facility by up to  million, subject to certain
restrictions.
The Credit Facility requires Availability (as defined in the
Credit Facility) to be greater than the greater of (i)  of
the Loan Cap (as defined in the Credit Facility) and (ii) 
million. In addition, the Credit Facility contains covenants
that limit, among other things, the Company’s ability to
incur indebtedness, create liens, make investments, make
restricted payments, merge or acquire assets, and contains
default provisions that are typical for this type of financing,
among other things. Proceeds from the Credit Facility are
used for general corporate purposes, including seasonal
working capital needs.
2014 Annual Report 23