<SUBMISSION>
<ACCESSION-NUMBER>0000950123-04-000185
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>4
<PERIOD>20040108
<ITEMS>5
<ITEMS>7
<FILING-DATE>20040109
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>BARNESANDNOBLE COM INC
<CIK>0001069665
<ASSIGNED-SIC>5735
<IRS-NUMBER>134048787
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>0131
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>8-K
<ACT>34
<FILE-NUMBER>000-26063
<FILM-NUMBER>04516525
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>76 NINTH AVE
<STREET2>11TH FL
<CITY>NEW YORK
<STATE>NY
<ZIP>10011
<PHONE>2124146000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>76 NINTH AVE
<STREET2>11TH FL
<CITY>NEW YORK
<STATE>NY
<ZIP>10011
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>y93070e8vk.htm
<DESCRIPTION>BARNESANDNOBLE.COM INC.
<TEXT>
<HTML>
<HEAD>
<TITLE>BARNESANDNOBLE.COM INC.</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center"><FONT size="4"><B>SECURITIES AND EXCHANGE COMMISSION</B></FONT>

<DIV align="center"><FONT size="3"><B>WASHINGTON, D.C. 20549</B>
</FONT></DIV>

<P align="center"><FONT size="5"><B>FORM 8-K</B></FONT>


<P align="center"><FONT size="2">CURRENT REPORT PURSUANT
<br>TO SECTION 13 OR 15(D) OF THE
<br>SECURITIES EXCHANGE ACT OF 1934
</FONT>


<P align="center"><FONT size="2">Date of Report (Date of earliest event reported): January&nbsp;8, 2004
</FONT>

<P align="center"><FONT size="6"><B>barnesandnoble.com inc.</B></FONT>

<P align="center"><HR align="center" size="1" noshade width="50%">

<P align="center"><FONT size="2">(Exact Name of Registrant as Specified in its Charter)
</FONT>

<P align="center"><FONT size="2">Delaware
</FONT>

<P align="center"><HR align="center" size="1" noshade width="35%">

<P align="center"><FONT size="2">(State or Other Jurisdiction of Incorporation)
</FONT>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">0-26063</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
13-4048787</FONT></TD>
</TR>
<TR>
    <TD align="center" valign="top"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<HR size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">(Commission File Number)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
(IRS Employer Identification No.)</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">76 Ninth Avenue, New York, NY</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
10011</FONT></TD>
</TR>
<TR>
    <TD align="center" valign="top"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
<HR size="1" noshade></FONT></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><FONT size="2">(Address of Principal Executive Offices)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top"><FONT size="2">
(Zip Code)</FONT></TD>
</TR>
</TABLE>
</DIV>


<P align="center"><FONT size="2">Registrant&#146;s Telephone Number,
Including Area Code <u>(212)&nbsp;414-6000</u>
</FONT>


<P align="center"><HR align="center" size="1" noshade width="50%">

<DIV align="center"><FONT size="2">(Former Name or Former Address, if Changed Since Last Report)
</FONT>
</DIV>

<P align="center"><HR align="center" size="1" noshade width="50%">


<P align="center"><FONT size="2">&nbsp;
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>




<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Item&nbsp;5. Other Events and Required FD Disclosure</B>
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;8, 2004, barnesandnoble.com inc. (the &#147;Company&#148;) entered into
an Agreement and Plan of Merger (the &#147;Merger Agreement&#148;), which sets forth the
terms and conditions of the proposed acquisition of the Company by B&#038;N.com
Acquisition Corp., a newly formed Delaware corporation wholly owned by Barnes &#038;
Noble, Inc. (&#147;Barnes &#038; Noble&#148;). The Merger Agreement provides that at the
closing of the merger, the holders of the Company&#146;s outstanding common stock,
other than Barnes &#038; Noble, B&#038;N.com Holding Corp. and their respective
subsidiaries, will receive $3.05 per share in cash for their shares, and the
Company will become a privately held company, wholly owned by Barnes &#038; Noble.
The closing of the merger is expected in the late first quarter or early second
quarter of fiscal 2004, with the exact timing dependent on the review and
clearance of necessary filings by the Securities and Exchange Commission. The
foregoing description of the merger does not purport to be complete and is
qualified in its entirety by reference to the complete text of the Merger
Agreement, which is filed as Exhibit&nbsp;2.1 hereto and is incorporated herein by
reference.
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with entering into the Merger Agreement, on January&nbsp;8, 2004
Barnes &#038; Noble settled the shareholder lawsuits previously filed against the
Company and Barnes &#038; Noble with respect to the proposed merger, subject to
customary conditions, including court approval.
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company issued a press release dated January&nbsp;8, 2004, which is filed
as Exhibit&nbsp;99.1 hereto and incorporated herein by reference, announcing the
execution of the Merger Agreement and settlement of the shareholder lawsuits.
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Item&nbsp;7. </B>Financial Statements, Financial Information and Exhibits
</FONT>


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="9%" nowrap align="right"><FONT size="2">(c)</FONT></TD>
 <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">Exhibits
</FONT></TD>
</TR>
</TABLE>

<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="9%" nowrap align="right"><FONT size="2">2.1</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">Agreement and Plan of Merger, dated as of January&nbsp;8, 2004, by and
among Barnes &#038; Noble, Inc., B&#038;N.com Holding Corp., B&#038;N.com Acquisition Corp.
and barnesandnoble.com inc.
</FONT></TD>
</TR>
</TABLE>

<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="9%" nowrap align="right"><FONT size="2">99.1</FONT></TD>
 <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
 <TD><FONT size="2">Press Release of barnesandnoble.com inc., dated January&nbsp;8, 2004.
</FONT></TD>
</TR>
</TABLE>


<P align="center"><FONT size="2">&nbsp;
</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>




<P align="center"><FONT size="2"><B>SIGNATURE</B>
</FONT>


<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
</FONT>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="7" valign="top" align="left"><FONT size="2">barnesandnoble.com inc.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="7" valign="top" align="left"><FONT size="2">(Registrant)<BR>
&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">/s/ Kevin M. Frain</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><HR size="1" noshade></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Name:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Kevin M. Frain</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Title:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chief Financial Officer</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">Date:&nbsp;January&nbsp;8, 2004</FONT></TD>
</TR>

</TABLE>
</DIV>




<P align="center"><FONT size="2">&nbsp;
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>




<P align="center"><FONT size="2"><B>EXHIBIT INDEX</B>
</FONT>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="79%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><FONT size="1"><B>Exhibit No.</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><FONT size="1"><B>Description of Exhibit</B></FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR  valign="bottom">
    <TD nowrap align="left"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD nowrap align="center"><HR size="1" noshade></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
    <TD><FONT size="1">&nbsp;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">2.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Agreement and Plan of Merger, dated as of January&nbsp;8, 2004, by
and among Barnes &#038; Noble, Inc., B&#038;N.com</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Holding Corp., B&#038;N.com
Acquisition Corp. and barnesandnoble.com inc.
</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
&nbsp;</FONT></TD>
</TR>



<TR valign="bottom">
    <TD valign="top"><FONT size="2">99.1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Press Release of barnesandnoble.com inc., dated January&nbsp;8, 2004.</FONT></TD>
</TR>
</TABLE>
</DIV>




<P align="center"><FONT size="2">&nbsp;
</FONT>


</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.1
<SEQUENCE>3
<FILENAME>y93070exv2w1.htm
<DESCRIPTION>AGREEMENT AND PLAN OF MERGER
<TEXT>
<HTML>
<HEAD>
<TITLE>AGREEMENT AND PLAN OF MERGER</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="right"><FONT size="2"><B>Exhibit&nbsp;2.1</B></FONT>
<p>&nbsp;
<p>&nbsp;

<P align="right"><FONT size="2"><B>EXECUTION COPY</B></FONT>
<p>&nbsp;
<p>&nbsp;

<P align="center"><FONT size="2"><B>AGREEMENT AND PLAN OF MERGER</B>
</FONT>

<P align="center"><FONT size="2"><B>by and among</B>
</FONT>

<P align="center"><FONT size="2"><B>BARNES &#038; NOBLE, INC.,</B>
</FONT>

<P align="center"><FONT size="2"><B>B&#038;N.COM HOLDING CORP.,</B>
</FONT>

<P align="center"><FONT size="2"><B>B&#038;N.COM ACQUISITION CORP.,</B>
</FONT>

<P align="center"><FONT size="2"><B>and</B>
</FONT>

<P align="center"><FONT size="2"><B>BARNESANDNOBLE.COM INC.</B>
</FONT>

<P align="center"><FONT size="2"><B>Dated as of January&nbsp;8, 2004</B>
</FONT>

<P align="center"><FONT size="2">&nbsp;</FONT>
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<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD colspan="9"><A HREF="#000">ARTICLE I. The Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#001">Section&nbsp;1.1. The Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#002">Section&nbsp;1.2. Effective Time</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#003">Section&nbsp;1.3. Closing</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#004">Section&nbsp;1.4. Certificate of Incorporation; By-laws; Directors and Officers</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#005">Section&nbsp;1.5. Effect of Merger on Common Stock</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#006">Section&nbsp;1.6. Dissenting Shares</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#007">Section&nbsp;1.7. Stock Options</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#008">Section&nbsp;1.8. Exchange of Certificates; Payment for Class&nbsp;A Common Stock</A></TD></TR>
<TR><TD colspan="9"><A HREF="#009">ARTICLE II. Representations and Warranties of the Company</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#010">Section&nbsp;2.1. Organization of the Companies</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#011"> Section&nbsp;2.2. Capitalization of the Companies</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#012">Section&nbsp;2.3. Subsidiaries of the Companies</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#013">Section&nbsp;2.4. Authorization</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#014">Section&nbsp;2.5. Opinion of Financial Advisor and Approval by the Special Committee</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#015">Section&nbsp;2.6. Brokers and Finders</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#016">Section&nbsp;2.7. Proxy Statement; Schedule&nbsp;13E-3</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#017">Section&nbsp;2.8. SEC Documents; Financial Statements; Sarbanes-Oxley</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#018">Section&nbsp;2.9. Absence of Certain Changes or Events</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#019">Section&nbsp;2.10. No Undisclosed Material Liabilities</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#020">Section&nbsp;2.11. Compliance with Laws and Court Orders</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#021">Section&nbsp;2.12. Litigation and Claims</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#022">Section&nbsp;2.13. Employee Plans</A></TD></TR>
<TR><TD colspan="9"><A HREF="#023">ARTICLE III. Representations and Warranties of the Barnes &#038; Noble Parties</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#024">Section&nbsp;3.1. Organization and Qualification</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#025">Section&nbsp;3.2. Authorization</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#026">Section&nbsp;3.3. Brokers and Finders</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#027">Section&nbsp;3.4. Proxy Statement; Schedule&nbsp;13E-3</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#028">Section&nbsp;3.5. Knowledge</A></TD></TR>
<TR><TD colspan="9"><A HREF="#029">ARTICLE IV. Certain Covenants and Agreements</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#030">Section&nbsp;4.1. Certain Actions Pending Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#031">Section&nbsp;4.2. Proxy Statement</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#032">Section&nbsp;4.3. Stockholders&#146; Meeting</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#033">Section&nbsp;4.4. Reasonable Efforts</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#034">Section&nbsp;4.5. Inspection of Records</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#035">Section&nbsp;4.6. Notification of Certain Matters</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#036">Section&nbsp;4.7. Disclosure</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#037">Section&nbsp;4.8. Directors&#146; and Officers&#146; Indemnification</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#038">Section&nbsp;4.9. Stockholder Litigation</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#039">Section&nbsp;4.10. Employee Matters</A></TD></TR>
<TR><TD colspan="9"><A HREF="#040">ARTICLE V. Conditions Precedent</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#041">Section&nbsp;5.1. Conditions to each Party&#146;s Obligation to Effect the Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#042">Section&nbsp;5.2. Conditions to the Obligation of the Company to Effect the Merger</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#043">Section&nbsp;5.3. Conditions to the Obligation of the Barnes &#038; Noble Parties to Effect the Merger</A></TD></TR>
<TR><TD colspan="9"><A HREF="#044">ARTICLE VI. Termination, Amendment and Waiver</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#045">Section&nbsp;6.1. Termination</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#046">Section&nbsp;6.2. Effect of Termination</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#047">Section&nbsp;6.3. Amendment</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#048">Section&nbsp;6.4. Waiver</A></TD></TR>
<TR><TD colspan="9"><A HREF="#049">ARTICLE VII. Miscellaneous</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#050">Section&nbsp;7.1. Definitions</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#051">Section&nbsp;7.2. Non-survival of Representations and Warranties</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#052">Section&nbsp;7.3. Expenses</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#053">Section&nbsp;7.4. Applicable Law</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#054">Section&nbsp;7.5. Notices</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#055">Section&nbsp;7.6. Entire Agreement</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#056">Section&nbsp;7.7. Assignment</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#057">Section&nbsp;7.8. Headings References</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#058">Section&nbsp;7.9. Construction</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#059">Section&nbsp;7.10. Counterparts</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#060">Section&nbsp;7.11. No Third Party Beneficiaries</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#061">Section&nbsp;7.12. Actions of the Company</A></TD></TR>
<TR><TD></TD><TD colspan="8"><A HREF="#062">Section&nbsp;7.13. Severability; Enforcement</A></TD></TR>
<TR><TD colspan="9"><A HREF="y93070exv2w1.htm">AGREEMENT AND PLAN OF MERGER</A></TD></TR>
<TR><TD colspan="9"><A HREF="y93070exv99w1.htm">PRESS RELEASE</A></TD></TR>
</TABLE>
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<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P align="center"><FONT size="2"><B>Table of Contents</B>
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<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top" colspan="5"><FONT size="2">ARTICLE I.



 The Merger
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    <TD align="right" valign="top"><FONT size="2">2</FONT></TD>
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Section&nbsp;1.1.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">The Merger
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">2</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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Section&nbsp;1.2.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Effective Time
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">2</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;1.3.
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Closing
</FONT></TD>
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    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">2</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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Section&nbsp;1.4.
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    <TD align="left" valign="top"><FONT size="2">Certificate of Incorporation; By-laws; Directors and Officers
</FONT></TD>
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    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">2</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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Section&nbsp;1.5.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Effect of Merger on Common Stock
</FONT></TD>
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    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">3</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;1.6.
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Dissenting Shares
</FONT></TD>
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    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">4</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;1.7.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Stock Options
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">4</FONT></TD>
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Section&nbsp;1.8.
</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">Exchange of Certificates; Payment for Class&nbsp;A Common Stock
</FONT></TD>
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    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">4</FONT></TD>
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    <TD valign="top" colspan="5"><FONT size="2">ARTICLE II.



Representations and Warranties of the Company
</FONT></TD>
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    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">7</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;2.1.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Organization of the Companies
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">7</FONT></TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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Section&nbsp;2.2.
</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">Capitalization of the Companies
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">8</FONT></TD>
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Section&nbsp;2.3.
</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">Subsidiaries of the Companies
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">9</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;2.4.
</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">Authorization
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">9</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;2.5.
</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">Opinion of Financial Advisor and Approval by the Special Committee
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">10</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;2.6.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Brokers and Finders
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">10</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;2.7.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Proxy Statement; Schedule&nbsp;13E-3
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">10</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;2.8.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">SEC Documents; Financial Statements; Sarbanes-Oxley
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">11</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;2.9.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Absence of Certain Changes or Events
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">12</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;2.10.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">No Undisclosed Material Liabilities
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">12</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;2.11.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Compliance with Laws and Court Orders
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">12</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;2.12.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Litigation and Claims
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">12</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;2.13.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Employee Plans
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">12</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="bottom">
    <TD valign="top" colspan="5"><FONT size="2">ARTICLE III.
Representations and Warranties of the Barnes &#038; Noble Parties
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">13</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;3.1.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Organization and Qualification
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">13</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;3.2.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Authorization
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">13</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;3.3.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Brokers and Finders
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">14</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;3.4.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Proxy Statement; Schedule&nbsp;13E-3
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">14</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;3.5.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Knowledge
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">14</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="bottom">
    <TD valign="top" colspan="5"><FONT size="2">ARTICLE IV.
Certain Covenants and Agreements
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">15</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;4.1.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Certain Actions Pending Merger
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">15</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;4.2.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Proxy Statement
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">16</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;4.3.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Stockholders&#146; Meeting
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">17</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;4.4.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Reasonable Efforts
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">18</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;4.5.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Inspection of Records
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">18</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;4.6.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Notification of Certain Matters
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">19</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;4.7.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Disclosure
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">19</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;4.8.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Directors&#146; and Officers&#146; Indemnification
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">19</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;4.9.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Stockholder Litigation
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">21</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">i</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<CENTER>

<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="64%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;4.10.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Employee Matters
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">22</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
   <TD valign="top" colspan="5"><FONT size="2">ARTICLE V.
Conditions Precedent
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">22</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;5.1.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Conditions to each Party&#146;s Obligation to Effect the Merger
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">22</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;5.2.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Conditions to the Obligation of the Company to Effect the Merger
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">23</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;5.3.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Conditions to the Obligation of the Barnes &#038; Noble
Parties to Effect the Merger
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">23</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top" colspan="5"><FONT size="2">ARTICLE VI.


Termination, Amendment and Waiver
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">24</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;6.1.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Termination
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">24</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;6.2.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Effect of Termination
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">25</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;6.3.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Amendment
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">25</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;6.4.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Waiver
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">25</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top" colspan="5"><FONT size="2">ARTICLE VII.
Miscellaneous
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">25</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;7.1.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Definitions
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">25</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;7.2.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Non-survival of Representations and Warranties
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">29</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;7.3.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Expenses
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">29</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;7.4.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Applicable Law
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">29</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;7.5.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Notices
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">29</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;7.6.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Entire Agreement
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">30</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;7.7.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Assignment
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">30</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;7.8.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Headings References
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">30</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;7.9.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Construction
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">30</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;7.10.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Counterparts
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">31</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;7.11.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">No Third Party Beneficiaries
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">31</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;7.12.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Actions of the Company
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">31</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#eeeeee">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Section&nbsp;7.13.
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Severability; Enforcement
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD nowrap align="right" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">31</FONT></TD>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">ii</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P align="center"><FONT size="2"><B>AGREEMENT AND PLAN OF MERGER</B>
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>THIS AGREEMENT AND PLAN OF MERGER</B>, dated as of January&nbsp;8, 2004 (this
&#147;Agreement&#148;), by and among Barnes &#038; Noble, Inc., a Delaware corporation
(&#147;Barnes &#038; Noble&#148;), B&#038;N.com Holding Corp., a Delaware corporation and a wholly
owned subsidiary of Barnes &#038; Noble (&#147;B&#038;N Holding Corp.&#148;), B&#038;N.com Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of B&#038;N Holding
Corp. (&#147;B&#038;N Acquisition Corp.&#148;), and barnesandnoble.com inc., a Delaware
corporation (the &#147;Company&#148;). Certain capitalized terms used in this Agreement
are defined in Section&nbsp;7.1.
</FONT>
<P align="center"><FONT size="2">RECITALS:
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Barnes &#038; Noble, through B&#038;N Holding Corp., beneficially owns, within
the meaning of Rule&nbsp;13d-3 of the Exchange Act, 119,138,502 shares of capital
stock of the Company (the &#147;Capital Stock&#148;) representing approximately 74.6% of
the outstanding equity interest and approximately 96.6% of the voting interest
in the Company as of the date hereof. The shares of Capital Stock beneficially
owned by Barnes &#038; Noble through B&#038;N Holding Corp. consist of the following:
(i)&nbsp;4,138,500 shares of Class&nbsp;A common stock, par value $0.001 per share, of
the Company (the &#147;Class&nbsp;A Common Stock&#148;) and (ii)&nbsp;115,000,002 shares of Class&nbsp;A
Common Stock which B&#038;N Holding Corp. has the right to acquire upon conversion
of its (A)&nbsp;one share of Class&nbsp;B common stock, par value $0.001 per share, of
the Company (&#147;Class&nbsp;B Common Stock&#148;), which represents the only share of Class
B Common Stock issued and outstanding, (B)&nbsp;one share of Class&nbsp;C common stock,
par value $0.001 per share, of the Company (&#147;Class&nbsp;C Common Stock&#148;), which
represents the only share of Class&nbsp;C Common Stock issued and outstanding, and
(C)&nbsp;115,000,000 membership units (the &#147;Membership Units&#148;) in barnesandnoble.com
llc, a Delaware limited liability company whose sole manager is the Company
(&#147;B&#038;N LLC&#148;).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Barnes &#038; Noble, through B&#038;N Acquisition Corp., desires to acquire all
of the shares of Class&nbsp;A Common Stock not owned by it, directly or indirectly,
and to provide for the payment of $3.05 per share in cash for all such shares
of Class&nbsp;A Common Stock, by means of a merger of B&#038;N Acquisition Corp. with and
into the Company in accordance with Section&nbsp;251 of the Delaware General
Corporation Law (the &#147;DGCL&#148;), upon the terms and subject to the conditions of
this Agreement (the &#147;Merger&#148;).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The respective Boards of Directors of the Company, Barnes &#038; Noble, B&#038;N
Holding Corp. and B&#038;N Acquisition Corp. have (and in the case of the Company,
upon the recommendation of a special committee of its Board of Directors (the
&#147;Special Committee&#148;)) approved this Agreement and declared it advisable and in
the best interests of their respective companies and stockholders to consummate
the Merger on the terms and subject to the conditions set forth herein.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth in this Agreement, the Parties
hereby agree as follows:
</FONT>

<P align="center"><FONT size="2">&nbsp;</FONT>



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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "ARTICLE I. The Merger" -->
<DIV align="left"><A NAME="000"></A></DIV>
<P align="center"><FONT size="2">ARTICLE I.
</FONT>

<P align="center"><FONT size="2">The Merger
</FONT>

<!-- link2 "Section&nbsp;1.1. The Merger" -->
<DIV align="left"><A NAME="001"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.1.
<u>The Merger</u>. At the Effective Time, upon the terms and
subject to the conditions set forth in this Agreement and in accordance with
the DGCL, B&#038;N Acquisition Corp. will be merged with and into the Company, the
separate existence of B&#038;N Acquisition Corp. will cease, and the Company will
continue as the surviving corporation (the &#147;Surviving Corporation&#148;). The
Merger will have the effects as provided by the DGCL and other applicable law.
</FONT>
<!-- link2 "Section&nbsp;1.2. Effective Time" -->
<DIV align="left"><A NAME="002"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.2.
<u>Effective Time</u>. On the Closing Date, B&#038;N Acquisition Corp.
and the Company will file with the Secretary of State of the State of Delaware
a certificate of merger (the &#147;Certificate of Merger&#148;) executed in accordance
with the relevant provisions of the DGCL. The Merger will become effective at
such time as the Certificate of Merger is duly filed with the Secretary of
State of the State of Delaware, or at such other time as is permissible in
accordance with the DGCL and as the Parties may agree, as specified in the
Certificate of Merger (the time the Merger becomes effective, the &#147;Effective
Time&#148;).
</FONT>
<!-- link2 "Section&nbsp;1.3. Closing" -->
<DIV align="left"><A NAME="003"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.3.
<u>Closing</u>. Unless this Agreement shall have been terminated in
accordance with Section&nbsp;6.1, the closing of the Merger (the &#147;Closing&#148;) will
take place at the offices of Bryan Cave LLP, 1290 Avenue of the Americas, New
York, New York 10104 at 10:00&nbsp;a.m. (eastern standard time) on a date to be
mutually agreed to by the Parties, which date shall be no later than the third
business day after the satisfaction of the conditions (other than conditions
that by their nature are to be satisfied at the Closing but subject to such
conditions) provided in Article&nbsp;V, or at such other time and place as the
Parties may agree to in writing (the &#147;Closing Date&#148;).
</FONT>
<!-- link2 "Section&nbsp;1.4. Certificate of Incorporation; By-laws; Directors and Officers" -->
<DIV align="left"><A NAME="004"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.4.
<u>Certificate of Incorporation; By-laws; Directors and Officers</u>. At the Effective Time:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the Amended and Restated Certificate of Incorporation of the
Surviving Corporation shall be amended in the Merger to read in its
entirety as set forth in Exhibit&nbsp;A hereto and, until thereafter
amended in accordance with its terms and as provided by the DGCL,
shall be the Amended and Restated Certificate of Incorporation of
the Surviving Corporation;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">except as required by Section&nbsp;4.8(a), the By-laws of B&#038;N
Acquisition Corp. as in effect immediately prior to the Effective
Time shall be the By-laws of the Surviving Corporation following the
Merger (except that the name of the Surviving Corporation shall be
&#147;barnesandnoble.com inc.&#148;), until thereafter amended as provided in
the DGCL or in the Certificate of Incorporation or By-laws of the
Surviving Corporation;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the directors of B&#038;N Acquisition Corp. immediately prior to
the Effective Time shall be the directors of the Surviving
Corporation following the Merger until the earlier of (i)&nbsp;their
death, resignation or removal or (ii)&nbsp;such time as their respective
successors are duly elected or appointed as provided in the
Certificate of Incorporation or By-laws of the Surviving
Corporation; and</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">2</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(d)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation
until the earlier of (i)&nbsp;their death, resignation or removal or (ii)
such time as their respective successors are duly elected as
provided in the Certificate of Incorporation or By-laws of the
Surviving Corporation.</FONT></TD>
</TR>
</TABLE>
<!-- link2 "Section&nbsp;1.5. Effect of Merger on Common Stock" -->
<DIV align="left"><A NAME="005"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.5.
<u>Effect of Merger on Common Stock</u>. At the Effective Time, by
virtue of the Merger and without any action on the part of B&#038;N Acquisition
Corp., the Company or the holders of any shares of Class&nbsp;A Common Stock:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">each share of common stock, par value $0.001 per share, of
B&#038;N Acquisition Corp. that is issued and outstanding immediately
prior to the Effective Time shall be converted into and become one
share of common stock, par value $0.001 per share, of the Surviving
Corporation;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">subject to Section&nbsp;1.5(c) and Section&nbsp;1.6:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="7%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">(i)</FONT></TD>
    <TD width="89%"><FONT size="2">each share of Class&nbsp;A Common Stock that is issued
and outstanding immediately prior to the Effective Time (other
than shares of Class&nbsp;A Common Stock held by B&#038;N Holding Corp.
and Barnes &#038; Noble and their respective subsidiaries) will be
converted into the right to receive $3.05 in cash, without
interest (the &#147;Merger Consideration&#148;), and, when so converted,
will automatically be canceled and will cease to exist;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">(ii)</FONT></TD>
    <TD width="96%"><FONT size="2">each holder of a certificate representing any
such shares of Class&nbsp;A Common Stock will cease to have any
rights with respect to such shares of Class&nbsp;A Common Stock to
the extent such certificate represents such shares of Class&nbsp;A
Common Stock, except for the right to receive the Merger
Consideration payable to the shares of Class&nbsp;A Common Stock
formerly represented by such certificate upon surrender of
such certificate in accordance with Section&nbsp;1.8; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">(iii)</FONT></TD>
    <TD width="96%"><FONT size="2">in the event that, subsequent to the date of
this Agreement but prior to the Effective Time, the
outstanding shares of Class&nbsp;A Common Stock shall have been
changed into a different number of shares of a different class
as a result of a stock split, reverse stock split, stock
dividend, subdivision, reclassification, split, combination,
exchange, recapitalization or other similar transaction, the
Merger Consideration shall be appropriately adjusted; and</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">each share of Class&nbsp;A Common Stock, Class&nbsp;B Common Stock and
Class&nbsp;C Common Stock that is owned immediately prior to the
Effective Time by B&#038;N Holding Corp. will be canceled and will cease
to exist, no consideration will be delivered in respect of such
shares, and B&#038;N Holding Corp. will cease to have any rights with
respect to any certificates representing any such shares.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">3</FONT>
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<!-- link2 "Section&nbsp;1.6. Dissenting Shares" -->
<DIV align="left"><A NAME="006"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.6.
<U>Dissenting Shares</U>.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Notwithstanding anything in this Agreement to the contrary,
shares of Class&nbsp;A Common Stock outstanding immediately prior to the
Effective Time and held by a holder who has demanded and perfected
such holder&#146;s right to appraisal of such shares in accordance with
Section&nbsp;262 of the DGCL (the &#147;Dissenting Shares&#148;) will not be
converted into or represent the right to receive the Merger
Consideration, but their holder will instead be entitled to such
rights as are afforded under the DGCL with respect to Dissenting
Shares, unless such holder fails to perfect or withdraws or
otherwise loses its right to appraisal.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">If any holder of shares of Class&nbsp;A Common Stock who demands
appraisal of such holder&#146;s shares pursuant to the DGCL fails to
perfect or withdraws or otherwise loses such holder&#146;s right to
appraisal, at the later of the Effective Time or upon the occurrence
of such event, such holder&#146;s Dissenting Shares will be converted
into and will represent the right to receive the Merger
Consideration, without interest, in accordance with Section&nbsp;1.5(b).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The Company shall give Barnes &#038; Noble:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="7%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">(i)</FONT></TD>
    <TD width="89%"><FONT size="2">prompt notice of any written demand for appraisal
or payment of the fair value of any shares of Class&nbsp;A Common
Stock, withdrawals or attempted withdrawals of such demands,
and any other instruments served pursuant to the DGCL received
by the Company; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">(ii)</FONT></TD>
    <TD width="96%"><FONT size="2">the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the
DGCL.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(d)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The Company shall not, except with the prior written consent
of Barnes &#038; Noble, voluntarily make any payment with respect to any
demands for appraisals of Class&nbsp;A Common Stock, offer to settle or
settle any such demands or approve any withdrawal of any such
demands.</FONT></TD>
</TR>
</TABLE>
<!-- link2 "Section&nbsp;1.7. Stock Options" -->
<DIV align="left"><A NAME="007"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.7.
<U>Stock Options</U>. Immediately prior to the Effective Time, each
option to purchase shares of Class&nbsp;A Common Stock granted under any stock
option plan or purchase plan, program or similar arrangement that is
outstanding immediately prior to the Effective Time (each, an &#147;Option&#148;) shall,
whether vested or not vested, be converted into and become the right to receive
from the Surviving Corporation, promptly following the Effective Time, an
amount in cash equal to the
product obtained by multiplying (A)&nbsp;the excess of the Merger Consideration
payable for each share of Class&nbsp;A Common Stock over the exercise price of each
such Option, by (B)&nbsp;the number of shares of Class&nbsp;A Common Stock for which such
Option was exercisable immediately prior to the Effective Time, and when so
converted, will automatically be cancelled and retired and will cease to exist.
</FONT>
<!-- link2 "Section&nbsp;1.8. Exchange of Certificates; Payment for Class&nbsp;A Common Stock" -->
<DIV align="left"><A NAME="008"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;1.8.
<U>Exchange of Certificates; Payment for Class&nbsp;A Common Stock</U>.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><U>Exchange Agent</U>. Prior to the Effective Time, Barnes &#038; Noble
will appoint a bank or trust company reasonably acceptable to the
Company to act as exchange</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">4</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">agent (the &#147;Exchange Agent&#148;) for the
payment of the Merger Consideration. Immediately prior to the
Effective Time, Barnes &#038; Noble will have deposited, or caused to be
deposited, with the Exchange Agent, for the benefit of the holders
of shares of Class&nbsp;A Common Stock (other than B&#038;N Holding Corp. and
Barnes &#038; Noble), the aggregate amount of cash payable under Section
1.5(b) in exchange for outstanding shares of Class&nbsp;A Common Stock in
accordance with this Section&nbsp;1.8 (the &#147;Exchange Fund&#148;).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><u>Exchange Procedures</u>.</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="7%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">(i)</FONT></TD>
    <TD width="89%"><FONT size="2">Promptly after the Effective Time (but no later
than five (5)&nbsp;business days after the Effective Date), the
Exchange Agent will mail to each holder of record of a
certificate or certificates, which represented outstanding
shares of Class&nbsp;A Common Stock immediately prior to the
Effective Time, whose shares were converted into the right to
receive cash pursuant to Section&nbsp;1.5(b):</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;a letter of transmittal (which will be in customary
form and reviewed by the Company prior to delivery thereof)
specifying that delivery will be effected, and risk of loss
and title to the certificates representing such shares of
Class&nbsp;A Common Stock will pass, only upon delivery of the
certificates representing such shares of Class&nbsp;A Common Stock
to the Exchange Agent, which certificates must be in such
form and have such other provisions as the Exchange Agent may
reasonably specify; and</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;instructions for use in effecting the surrender of
the certificates representing such shares of Class&nbsp;A Common
Stock, in exchange for the Merger Consideration.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="7%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">(ii)</FONT></TD>
    <TD width="89%"><FONT size="2">Upon surrender to, and acceptance in accordance
with Section&nbsp;1.8(b)(iii) below by, the Exchange Agent of a
certificate or certificates formerly representing shares of
Class&nbsp;A Common Stock, the holder will be entitled to the
amount of cash into which the number of shares of Class&nbsp;A
Common Stock formerly represented by such certificate or
certificates surrendered have been converted under this
Agreement.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">(iii)</FONT></TD>
    <TD width="96%"><FONT size="2">The Exchange Agent will accept certificates
formerly representing shares of Class&nbsp;A Common Stock upon
compliance with such reasonable terms and conditions as the
Exchange Agent may impose to effect an orderly exchange of the
certificates in accordance with normal exchange practices.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">(iv)</FONT></TD>
    <TD width="96%"><FONT size="2">After the Effective Time, no further transfers
may be made on the records of the Company or its transfer
agent of certificates representing shares of Class&nbsp;A Common
Stock and if such certificates are presented to the Company
for transfer, they will be canceled against delivery of the
Merger</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">5</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="7%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="89%"><FONT size="2">Consideration allocable to the shares of Class&nbsp;A Common
Stock represented by such certificate or certificates.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">(v)</FONT></TD>
    <TD width="96%"><FONT size="2">If any Merger Consideration is to be remitted to
a name other than that in which the certificate for the Class
A Common Stock surrendered for exchange is registered, no
Merger Consideration may be paid in exchange for such
certificate unless:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;the certificate so surrendered is properly endorsed,
with signature guaranteed, or otherwise in proper form for
transfer; and</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;the Person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to
a Person other than the registered holder of such certificate
or establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not payable.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="7%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">(vi)</FONT></TD>
    <TD width="89%"><FONT size="2">Until surrendered as contemplated by this Section
1.8 and at any time after the Effective Time, each certificate
for shares of Class&nbsp;A Common Stock (other than Dissenting
Shares) will be deemed to represent only the right to receive
upon such surrender the Merger Consideration allocable to the
shares represented by such certificate as contemplated by
Section&nbsp;1.5(b). No interest will be paid or will accrue on
any amount payable as Merger Consideration.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><U>No Further Ownership Rights in
Class&nbsp;A Common Stock</U>. The
Merger Consideration paid upon the surrender for exchange of
certificates formerly representing shares of Class&nbsp;A Common Stock in
accordance with this Section&nbsp;1.8 will be deemed to have been paid in
full satisfaction of all rights pertaining to the shares of Class&nbsp;A
Common Stock formerly represented by such certificates.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(d)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><U>Termination of Exchange Fund</U>. The Exchange Agent will
deliver to the Surviving Corporation any portion of the Exchange
Fund (including any interest and other income received by the
Exchange Agent in respect of all such funds) which remains
undistributed to the holders of the certificates formerly
representing shares of Class&nbsp;A Common Stock upon expiry of the
period of six (6)&nbsp;months following the Effective Time. Any holders
of shares of Class&nbsp;A Common Stock prior to the Merger who have not
complied with this Section&nbsp;1.8 prior to
such time, may look only to the Surviving Corporation for payment
of their claim for Merger Consideration to which such holders may
be entitled.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(e)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><U>No Liability</U>. No Party will be liable to any Person in
respect of any amount from the Exchange Fund delivered to a public
official in accordance with any applicable abandoned property,
escheat or similar law.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(f)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><U>Lost Certificates</U>. If any certificate or certificates
formerly representing shares of Class&nbsp;A Common Stock is lost, stolen
or destroyed, the Exchange Agent will issue the Merger Consideration
deliverable in respect of, and in exchange for,</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">6</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">such lost, stolen or
destroyed certificate, as determined in accordance with this Section
1.8, only upon:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="7%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">(i)</FONT></TD>
    <TD width="89%"><FONT size="2">the making of an affidavit of such loss, theft or
destruction by the Person claiming such certificate or
certificates to be lost, stolen or destroyed; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">(ii)</FONT></TD>
    <TD width="96%"><FONT size="2">if required by the Surviving Corporation, the
posting by such Person of a bond in such reasonable amount as
the Surviving Corporation may reasonably require as indemnity
against any claim that may be made against it with respect to
such certificate; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">(iii)</FONT></TD>
    <TD width="96%"><FONT size="2">if required by the Surviving Corporation, the
entering into an indemnity agreement by such Person reasonably
satisfactory to the Surviving Corporation to indemnify the
Surviving Corporation against any claim that may be made
against it with respect to such certificate.</FONT></TD>
</TR>
</TABLE>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(g)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><U>Withholding Rights</U>. The Surviving Corporation may deduct and
withhold, or may instruct the Exchange Agent to deduct and withhold,
from the consideration otherwise payable under this Agreement to any
holder of shares of Class&nbsp;A Common Stock such amounts as the
Surviving Corporation is required to deduct and withhold under the
United States Internal Revenue Code of 1986, as amended, or any
similar provision of state, local or foreign tax law with respect to
the making of such payment. Any amounts so deducted and withheld by
the Surviving Corporation or the Exchange Agent will be treated as
having been paid to the holder of the shares of Class&nbsp;A Common Stock
in respect of which such deduction and withholding was made for all
purposes of this Agreement.</FONT></TD>
</TR>
</TABLE>
<!-- link1 "ARTICLE II. Representations and Warranties of the Company" -->
<DIV align="left"><A NAME="009"></A></DIV>
<P align="center"><FONT size="2">ARTICLE II.
</FONT>

<P align="center"><FONT size="2">Representations and Warranties of the Company
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as set forth in the Company&#146;s disclosure letter delivered to the
Barnes &#038; Noble Parties in connection with this Agreement (the &#147;Company
Disclosure Letter&#148;) or the SEC Documents filed prior to the date of this
Agreement, the Company hereby represents and warrants to the Barnes &#038; Noble
Parties as follows:
</FONT>
<!-- link2 "Section&nbsp;2.1. Organization of the Companies" -->
<DIV align="left"><A NAME="010"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.1. <U>Organization of the Companies</U>.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">To the Company&#146;s knowledge
the Company is a corporation duly organized, and the Company is validly existing
and in good standing under the laws of its jurisdiction of
organization and has all the requisite corporate power and authority
to carry on its business as now being conducted and to own, lease,
use and operate the properties owned and used by it. To the
Company&#146;s knowledge B&#038;N LLC is a
limited liability company duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization and
has all the requisite limited liability company power and authority
to carry on its business as now being conducted and to own, lease,
use and operate the properties owned and used by it.</FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">7</FONT>




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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">To the Company&#146;s knowledge, the Company is qualified and in good standing to do business
in each jurisdiction in which the nature of its business requires it
to be so qualified, except to the extent the failure to be so
qualified would not reasonably be expected to have a Material
Adverse Effect on the Company. To the Company&#146;s knowledge, B&#038;N LLC is qualified and in good
standing to do business in each jurisdiction in which the nature of
its business requires it to be so qualified, except to the extent
the failure to be so qualified would not reasonably be expected to
have a Material Adverse Effect on B&#038;N LLC.</FONT></TD>
</TR>
</TABLE>

<!-- link2 " Section&nbsp;2.2. Capitalization of the Companies" -->
<DIV align="left"><A NAME="011"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.2.
<u>Capitalization of the Companies</u>.
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">As of the date of this Agreement, the authorized capital
stock of the Company consists of (i)&nbsp;750,000,000 shares of Class&nbsp;A
Common Stock; (ii)&nbsp;1,000 shares of Class&nbsp;B Common Stock; (iii)&nbsp;1,000
shares of Class&nbsp;C Common Stock; and (iv)&nbsp;50,000,000 shares of
Preferred Stock, par value $.001 per share (the &#147;Preferred Stock&#148;).
As of January&nbsp;7, 2004, there were 48,280,087 shares of Class&nbsp;A
Common Stock issued and outstanding, one share of Class&nbsp;B Common
Stock issued and outstanding, one share of Class&nbsp;C Common Stock
issued and outstanding and no shares of Preferred Stock issued and
outstanding. As of January&nbsp;7, 2004, there were 14,939,905 shares of
Class&nbsp;A Common Stock issuable upon the exercise of issued and
outstanding Options. All of the issued and outstanding shares of
capital stock of the Company are duly authorized, validly issued,
fully paid and non-assessable. No shares of capital stock of the
Company are held in the treasury of the Company as of the date of
this Agreement.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Except for Class&nbsp;A Common Stock issuable upon (i)&nbsp;the
exercise of outstanding Options and (ii)&nbsp;the conversion of
Membership Units, Class&nbsp;B Common Stock or Class&nbsp;C Common Stock,
there are no outstanding options, warrants or other rights of any
kind issued or granted by the Company to acquire (including
preemptive rights) from the Company any additional shares of capital
stock of the Company or securities convertible into or exchangeable
for, or which otherwise confer on the holder thereof any right to
acquire, any such additional shares from the
Company, nor is the Company committed to issue any such option,
warrant, right or security.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">As of January&nbsp;7, 2004, there are issued and outstanding
163,280,087 Membership Units and the Company is the record and
beneficial owner of 48,280,089 Membership Units, which are, to the
Company&#146;s knowledge, free and clear of any Liens. All of the issued
and outstanding Membership Units are duly authorized, validly issued
and fully paid. There are no outstanding options, warrants or other
rights of any kind issued or granted by either of the Companies to
acquire (including preemptive rights) from either of the Companies
any Membership Units or securities convertible into or exchangeable
for, or which otherwise confer on the holder thereof any right to
acquire, any such Membership Units, nor are either of the Companies
committed to issuing any such option, warrant, right or security.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">8</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<!-- link2 "Section&nbsp;2.3. Subsidiaries of the Companies" -->
<DIV align="left"><A NAME="012"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.3.
<u>Subsidiaries of the Companies</u>. Other than the Company&#146;s
interest in B&#038;N LLC and B&#038;N LLC&#146;s 100% interest in BookQuest LLC, the Companies
do not own, directly or indirectly, any equity securities of any other Person.
</FONT>
<!-- link2 "Section&nbsp;2.4. Authorization" -->
<DIV align="left"><A NAME="013"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.4.
<u>Authorization</u>.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The Company has all requisite corporate power and authority
to enter into this Agreement and, subject to any necessary approval
of this Agreement by the stockholders of the Company, to carry out
its obligations under this Agreement and to consummate the
transactions contemplated by this Agreement.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated
by this Agreement have been duly authorized by all requisite
corporate action on the part of the Company (other than the approval
of this Agreement by the stockholders of the Company and filing of
the Certificate of Merger with the Secretary of State of the State
of Delaware as required by the DGCL). Upon the recommendation of
the Special Committee, the Board of Directors of the Company has in
accordance with the requirements of the DGCL unanimously approved
and declared advisable this Agreement and has determined that the
terms of the Merger are fair to, and in the best interests of, the
Company and the Public Stockholders.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">This Agreement has been duly executed and delivered by the
Company and, assuming the due authorization, execution and delivery
of this Agreement by each Barnes &#038; Noble Party, constitutes the
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors&#146; rights generally or by general
equitable principles.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(d)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><u>Consents</u>.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="89%"><FONT size="2">Assuming that the consents, approvals,
qualifications, orders, authorizations and filings referred to
in Section&nbsp;2.4(d)(ii) have been made or obtained, the
execution, delivery and performance by the Company of this
Agreement will not result in any violation of or be in
conflict with, or result in a breach of, or constitute a
default under:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;any term or provision of any state or federal law,
ordinance, rule or regulation to which either of the
Companies is subject, except for such violations, breaches or
defaults that would not have, together with all such other
violations, breaches and defaults, a Material Adverse Effect
on the Companies, taken as a whole, or prevent the
consummation of the transactions contemplated by this
Agreement; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;the Certificate of Incorporation or By-laws of the
Company or the organizational documents of B&#038;N LLC, as
amended and in effect on the date of this Agreement; or</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">9</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="11%"></TD>
    <TD width="89%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;any Contract or Judgment to which either of the
Companies is a party or by which either of the Companies is
bound, or result in the creation of any Lien upon any of the
properties or assets of either of the Companies, except for
such violations, breaches, defaults or Liens that would not
have, together with all such other violations, breaches,
defaults and Liens, a Material Adverse Effect on the
Companies, taken as a whole, or prevent the consummation of
the transactions contemplated by this Agreement.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="89%"><FONT size="2">No consent, approval, qualification, order or
authorization of, or filing with, any Governmental Entity is
required in connection with the Company&#146;s valid execution,
delivery or performance of this Agreement, or the consummation
of any other transaction contemplated on the part of the
Company under this Agreement, except (1)&nbsp;in connection, or in
compliance, with the Securities Act and the Exchange Act, (2)
the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and appropriate documents with
the relevant authorities of other states in which either of
the Companies is qualified to do business, and (3)&nbsp;approvals,
qualifications, orders, authorizations, or filings, in each
case, the failure to obtain which would not have a Material
Adverse Effect on the Companies, taken as a whole, or prevent
the consummation of the transactions contemplated by this
Agreement.</FONT></TD>
</TR>
</TABLE>
<!-- link2 "Section&nbsp;2.5. Opinion of Financial Advisor and Approval by the Special Committee" -->
<DIV align="left"><A NAME="014"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.5.
<u>Opinion of Financial Advisor and Approval by the Special
Committee</u>.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">On or prior to the date of this Agreement, the Special
Committee has (i)&nbsp;approved the terms of this Agreement and the
Merger as they relate to the Public
Stockholders, (ii)&nbsp;determined that the Merger is fair to and in the
best interest of the Company and the Public Stockholders, and (iii)
recommended that the Board of Directors of the Company approve this
Agreement and the Merger.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The Special Committee has received an opinion of Credit
Suisse First Boston LLC to the effect that, as of the date of such
opinion, the Merger Consideration is fair, from a financial point of
view, to the Public Stockholders.</FONT></TD>
</TR>
</TABLE>

<!-- link2 "Section&nbsp;2.6. Brokers and Finders" -->
<DIV align="left"><A NAME="015"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.6.
<u>Brokers and Finders</u>. Other than Credit Suisse First Boston
LLC, neither of the Companies has employed any broker, finder, advisor or
intermediary in connection with the transactions contemplated by this Agreement
that would be entitled to a broker&#146;s, finder&#146;s or similar fee or commission in
connection with or upon the consummation of the transactions contemplated by
this Agreement.
</FONT>

<!-- link2 "Section&nbsp;2.7. Proxy Statement; Schedule&nbsp;13E-3" -->
<DIV align="left"><A NAME="016"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.7.
<u>Proxy Statement; Schedule&nbsp;13E-3</u>.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">None of the information to be supplied by either of the
Companies for inclusion in the Proxy Statement or the Schedule&nbsp;13E-3
will, in the case of the Schedule&nbsp;13E-3, as of the date thereof and
the date of any amendment thereto and, in the case of the Proxy
Statement, as of the time the Proxy Statement (or any</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">10</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">amendment
thereof or supplement thereto) is filed with the SEC and at the time
the Proxy Statement is mailed to the Company&#146;s stockholders, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under
which they are made, not misleading.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Each of the Proxy Statement and the Schedule&nbsp;13E-3 will, as
of its first date of use, comply as to form in all material respects
with the provisions of the Exchange Act.</FONT></TD>
</TR>
</TABLE>
<!-- link2 "Section&nbsp;2.8. SEC Documents; Financial Statements; Sarbanes-Oxley" -->
<DIV align="left"><A NAME="017"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.8.
<u>SEC Documents; Financial Statements; Sarbanes-Oxley</U>.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">To the Company&#146;s knowledge, the Company has filed with the SEC all reports, schedules,
forms, statements and other documents required to be filed with the
SEC since January&nbsp;1, 2002 (collectively, the &#147;SEC Documents&#148;).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">As of the respective dates that they were filed, the SEC
Documents complied as to form in all material respects with all
applicable requirements of the Securities Act and the Exchange Act,
as the case may be. Except to the extent that information contained
in any SEC Document has been revised or superseded by a later filed
SEC Document, none of the SEC Documents, at the time filed,
contained any untrue statement of a material fact or omitted to
state any material fact required to
be stated in or necessary in order to make the statements in the
SEC Documents, in light of the circumstances under which they were
made, not misleading.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The financial statements of the Company included in the SEC
Documents (i)&nbsp;comply as to form in all material respects with
applicable accounting requirements and the applicable published
rules and regulations of the SEC, (ii)&nbsp;have been prepared in
accordance with GAAP (except, in the case of unaudited statements,
as permitted by applicable instructions or regulations of the SEC
relating to the preparation of quarterly reports on Form&nbsp;10-Q)
applied on a consistent basis during the period involved (except as
may be indicated in the notes to the financial statements), and
(iii)&nbsp;fairly present in all material respects the financial position
of the Company as of the respective dates and the Company&#146;s results
of operations and cash flows for the periods then ended except as
otherwise noted therein (subject, in the case of unaudited
statements, to normal year-end audit adjustments).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(d)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The Company maintains &#147;disclosure controls and procedures&#148;
(as defined in Rules&nbsp;13a-15(e) and 15d-15(e) of the Exchange Act)
required in order for the Chief Executive Officer and Chief
Financial Officer of the Company to engage in the review and
evaluation process mandated by Section&nbsp;302 of the Sarbanes-Oxley Act
of 2002. The Company&#146;s &#147;disclosure controls and procedures&#148; are
reasonably designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of
the SEC, and that all such information is accumulated and</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">11</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">communicated to the Company&#146;s management as appropriate to allow
timely decisions regarding required disclosure. Neither of the
Companies is a party to any off-balance sheet arrangements (as
defined in Item&nbsp;303(c) of Regulation&nbsp;S-K promulgated under the
Exchange Act).</FONT></TD>
</TR>
</TABLE>
<!-- link2 "Section&nbsp;2.9. Absence of Certain Changes or Events" -->
<DIV align="left"><A NAME="018"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.9.
<U>Absence of Certain Changes or Events</U>. Since December&nbsp;31,
2002, the Companies have conducted their respective businesses only in the
ordinary course of such businesses, and there has not been any event, fact,
violation, circumstance or other matter that has or have had, or would
reasonably be expected to, either individually or in the aggregate, have a
Material Adverse Effect on the Companies, taken as a whole.
</FONT>
<!-- link2 "Section&nbsp;2.10. No Undisclosed Material Liabilities" -->
<DIV align="left"><A NAME="019"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.10. <U>No Undisclosed Material Liabilities</U>. Since September&nbsp;30,
2003, the Companies have not incurred any liabilities of any kind whatsoever,
whether accrued, contingent, absolute or otherwise, which would be required to
be reflected, reserved for or disclosed under GAAP in the consolidated
financial statements of the Company, other than:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">liabilities or obligations reflected, reserved for or
disclosed in the Company&#146;s filed SEC Documents;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">liabilities or obligations which would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect on the Companies, taken as a whole; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">liabilities or obligations incurred under this Agreement or
in connection with the transactions contemplated by this Agreement.</FONT></TD>
</TR>
</TABLE>
<!-- link2 "Section&nbsp;2.11. Compliance with Laws and Court Orders" -->
<DIV align="left"><A NAME="020"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.11. <U>Compliance with Laws and Court Orders</U>. Each of the
Companies is in compliance with and, to the knowledge of each of the Companies,
has not been given notice of any violation of any applicable law, rule
regulation, judgment, injunction, order or decree of any Governmental Entity
applicable to either of the Companies, except for such violations as would not
reasonably be expected to, either individually or in the aggregate, have a
Material Adverse Effect on the Companies, taken as a whole.
</FONT>
<!-- link2 "Section&nbsp;2.12. Litigation and Claims" -->
<DIV align="left"><A NAME="021"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.12. <U>Litigation and Claims</U>. Neither of the Companies is subject
to any continuing order of, or written agreement or memorandum of understanding
with, any Governmental Entity or any judgment, order, writ, injunction, decree,
or award of any Governmental Entity or any court or arbitrator, and there is no
claim, action, suit, litigation, proceeding, or arbitration pending or, to the
knowledge of either of the Companies, threatened, except for matters which
would not reasonably be expected to, either individually or in the aggregate,
have a Material Adverse Effect on the Companies, taken as a whole.
</FONT>
<!-- link2 "Section&nbsp;2.13. Employee Plans" -->
<DIV align="left"><A NAME="022"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;2.13. <U>Employee Plans</U>. No Company Plan or Contract exists that
could result in the payment to any present or former employee of either of the
Companies of any money or other property or accelerate or provide any other
rights or benefits to any present or former employee of either of the Companies
as a result of the Merger.
</FONT>

<P align="center"><FONT size="2">12</FONT>




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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<!-- link1 "ARTICLE III. Representations and Warranties of the Barnes &#038; Noble Parties" -->
<DIV align="left"><A NAME="023"></A></DIV>
<P align="center"><FONT size="2">ARTICLE III.<BR><BR>
Representations and Warranties of the Barnes &#038; Noble Parties
</FONT>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Barnes &#038; Noble, B&#038;N Holding Corp. and B&#038;N Acquisition Corp. (each, a
&#147;Barnes &#038; Noble Party&#148; and together, the &#147;Barnes &#038; Noble Parties&#148;) hereby
jointly and severally represent and warrant to the Company as follows:
</FONT>

<!-- link2 "Section&nbsp;3.1. Organization and Qualification" -->
<DIV align="left"><A NAME="024"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.1.
<U>Organization and Qualification</U>. Each Barnes &#038; Noble Party is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. B&#038;N Acquisition Corp. has been incorporated
solely for the purpose of merging with and into the Company and taking action
incident to the Merger. Except for obligations or liabilities and activities
contemplated by this Agreement, B&#038;N Acquisition Corp. has not incurred any
obligations or liabilities or engaged in any business activities of any kind
prior to the Closing.
</FONT>
<!-- link2 "Section&nbsp;3.2. Authorization" -->
<DIV align="left"><A NAME="025"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.2.
<U>Authorization</U>.
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Each Barnes &#038; Noble Party has all corporate power and
authority to enter into this Agreement, to perform its obligations
under this Agreement and to consummate the transactions contemplated
by this Agreement.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The execution and delivery of this Agreement by each Barnes &#038;
Noble Party and the consummation by each Barnes &#038; Noble Party of the
transactions contemplated by this Agreement have been duly
authorized by all corporate action on the part of each Barnes &#038;
Noble Party.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">This Agreement has been duly executed and delivered by each
Barnes &#038; Noble Party and, assuming the due authorization, execution
and delivery of this Agreement by the Company, constitutes the valid
and binding obligation of each Barnes &#038; Noble Party, enforceable
against each Barnes &#038; Noble Party in accordance with its terms,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, or similar laws affecting
creditors&#146; rights generally or by general equitable principles.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(d)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><U>Consents</U>.</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top" align="left"><FONT size="2">(i)</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Assuming that the consents, approvals,
qualifications, orders, authorizations and filings referred to
in Section&nbsp;3.2(d)(ii) have been made or obtained, the
execution, delivery and performance by each Barnes &#038; Noble
Party of this Agreement will not result in any violation of or
be in conflict with, or result in a breach of, or constitute a
default under:</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;any term or provision of any state or federal law,
ordinance, rule or regulation to which any Barnes &#038; Noble
Party is subject and which violation, breach or default would
have, together with all such other violations, breaches and
defaults, a Material Adverse Effect on the Barnes</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">13</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#038; Noble Parties, taken as a whole, or prevent the
consummation of the transactions contemplated by this
Agreement; or</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;the Certificate of Incorporation or By-Laws of each
Barnes &#038; Noble Party, as amended and in effect on the date of
this Agreement or the Closing Date, or any Contract or
Judgment to which any Barnes &#038; Noble Party is a party or by
which any Barnes &#038; Noble Party is bound, or result in the
creation of any Lien upon any of the properties or assets of
any Barnes &#038; Noble Party, which breach or default would have,
together with all such other breaches and defaults, a
Material Adverse Effect on the Barnes &#038; Noble Parties, taken
as a whole, or prevent the consummation of the transactions
contemplated by this Agreement.</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD valign="top" align="left"><FONT size="2">(ii)</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
No consent, approval, qualification, order or
authorization of, or filing with, any Governmental Entity is
required in connection with the valid execution, delivery or
performance of this Agreement by any Barnes &#038; Noble Party, or
the consummation of any other transaction contemplated on the
part of any Barnes &#038; Noble Party under this Agreement, except
(1)&nbsp;in connection, or in compliance, with the Securities Act
and the Exchange Act, (2)&nbsp;the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware,
and (3)&nbsp;approvals, qualifications, orders, authorizations, or
filings, in each case the failure to obtain which would not
have a Material Adverse Effect on the Barnes &#038; Noble Parties,
taken as a whole, or prevent the consummation of the
transactions contemplated by this Agreement.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<!-- link2 "Section&nbsp;3.3. Brokers and Finders" -->
<DIV align="left"><A NAME="026"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.3.
<U>Brokers and Finders</U>. Other than Citigroup Global Markets,
Inc., no Barnes &#038; Noble Party has employed any broker, finder, advisor or
intermediary in connection with the transactions contemplated by this Agreement
that would be entitled to a broker&#146;s, finder&#146;s, or similar fee or commission in
connection with or upon the consummation of the transactions contemplated by
this Agreement.
</FONT>
<!-- link2 "Section&nbsp;3.4. Proxy Statement; Schedule&nbsp;13E-3" -->
<DIV align="left"><A NAME="027"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.4.
<U>Proxy Statement; Schedule&nbsp;13E-3</U>. None of the information to
be supplied by a Barnes &#038; Noble Party for inclusion in the Proxy Statement or
Schedule&nbsp;13E-3 will, in the case of the Schedule&nbsp;13E-3, as of the date thereof
and the date of any amendment thereto and, in the case of the Proxy Statement,
as of the time the Proxy Statement (or any amendment thereof or supplement
thereto) is filed with the SEC and at the time the Proxy Statement is mailed to
the Company&#146;s stockholders, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein with respect to the information provided
by a Barnes &#038; Noble Party, in light of the circumstances under which they are
made, not misleading.
</FONT>
<!-- link2 "Section&nbsp;3.5. Knowledge" -->
<DIV align="left"><A NAME="028"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;3.5.
<U>Knowledge</U>. Other than as set forth in the Company Disclosure
Letter, the Barnes &#038; Noble Parties are not aware of any facts or circumstances
which would cause the representations and warranties of the Company contained
in this Agreement to be untrue or incorrect in any material respect.
</FONT>
<P align="center"><FONT size="2">14</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<!-- link1 "ARTICLE IV. Certain Covenants and Agreements" -->
<DIV align="left"><A NAME="029"></A></DIV>
<P align="center"><FONT size="2">ARTICLE IV.<BR><BR>
Certain Covenants and Agreements
</FONT>

<!-- link2 "Section&nbsp;4.1. Certain Actions Pending Merger" -->
<DIV align="left"><A NAME="030"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.1. <U>Certain Actions Pending Merger</U>. Prior to the Effective Time
(i)&nbsp;the Companies shall conduct their respective businesses in the ordinary and
usual course of business, consistent with past practice and (ii)&nbsp;neither of the
Companies shall take any of the following actions, except with the prior
written consent of Barnes &#038; Noble or as expressly contemplated or permitted by
this Agreement:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">declare, set aside or pay any dividends on or make any other
distribution in respect of any of its capital stock or Membership
Units;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">split, combine or reclassify any of its capital stock or
Membership Units or issue or authorize or propose the issuance or
authorization of any other securities in respect of, in lieu of, or
in substitution for shares of its capital stock or Membership Units
or repurchase, redeem or otherwise acquire any shares of its capital
stock or Membership Units;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">issue, deliver, pledge, encumber or sell, or authorize the
issuance, delivery, pledge, encumbrance or sale of, or purchase or
propose the purchase of, any shares of its capital stock or
Membership Units or securities convertible into, or rights, warrants
or options to acquire, any such shares of capital stock or
Membership Units or other convertible securities (other than the
issuance upon the exercise of outstanding Options in effect on the
date of this Agreement or the exchange or conversion of Membership
Units or shares of Class&nbsp;B Common Stock or Class&nbsp;C Common Stock, in
each case in accordance with their respective present terms),
authorize or propose any change in its equity capitalization, or
amend any of the financial or other economic terms of such
securities or the financial or other economic terms of any agreement
to which either of the Companies is a party relating to such
securities;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(d)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">amend its Certificate of Incorporation, By-laws or other
organizational documents in any manner;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(e)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">merge or consolidate with any other Person, or acquire any
assets or capital stock of any other Person, other than acquisitions
of assets in the ordinary course of business;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(f)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">incur any indebtedness for money borrowed or guarantee any
such indebtedness of another Person other than pursuant to any
current agreement relating to indebtedness for money borrowed or
other than in the ordinary course of business;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(g)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">make or authorize any capital expenditures, other than
capital expenditures that are in the aggregate no greater than (i)
$5.0&nbsp;million from the date of this Agreement through March&nbsp;31, 2004
and (ii) $10.0&nbsp;million from the date of this Agreement through July
15, 2004;</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">15</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(h)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">except as may be required by changes in applicable law or
GAAP, change any method, practice or principle of accounting;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">enter into any new employment agreements with, or increase
the compensation of, any officer (vice president or above) or
director of either of the Companies (including entering into any
bonus, severance, change of control, termination, reduction-in-force
or consulting agreement or other employee benefits arrangement or
agreement pursuant to which such person has the right to any form of
compensation from either of the Companies), other than as required
by law or by written agreements in effect on or prior to the date
hereof with such person, or otherwise amend in any material respect
any existing agreements with any such person or use its discretion
to amend any Company Plan or accelerate the vesting or any payment
under any Company Plan;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(j)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">enter into any transaction with any officer (vice president
or above) or director of either of the Companies, other than as
provided for in the terms of any agreement in effect on or prior to
the date hereof;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(k)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">settle or otherwise compromise any material litigation,
arbitration or other judicial or administrative dispute or
proceeding relating to either of the Companies; or</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(l)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">&nbsp;the entering into any agreement to, or the making of any
commitment to, take any of the actions prohibited by this Section
4.1.</FONT></TD>
</TR>
</TABLE>
<!-- link2 "Section&nbsp;4.2. Proxy Statement" -->
<DIV align="left"><A NAME="031"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.2. <U>Proxy Statement</U>.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">As soon as reasonably practicable after the date of this
Agreement, the Company will prepare and file with the SEC, a proxy
statement relating to the Company Stockholders&#146; Meeting (together
with any amendments thereof or supplements thereto and any other
required proxy materials, the &#147;Proxy Statement&#148;) and a Rule&nbsp;13E-3
Transaction Statement on Schedule&nbsp;13E-3 (together with any
amendments thereof or supplements thereto, the &#147;Schedule&nbsp;13E-3&#148;)
relating to the transactions contemplated by this Agreement and will
use its reasonable efforts to respond to any comments of the SEC and
to cause the Proxy Statement to be mailed to the Company&#146;s
stockholders as promptly as practicable; <I>provided, however, </I>that
prior to the filing of the Proxy Statement and the Schedule&nbsp;13E-3,
the Company will consult with the Barnes &#038; Noble Parties and their
counsel with respect to such filings and shall afford the Barnes &#038;
Noble Parties reasonable opportunity to review and comment thereon.
The Barnes &#038; Noble Parties will provide the Company with any
information for inclusion in the Proxy Statement and the Schedule
13E-3 which may be required under applicable law and which is
reasonably requested by the Company. The Company will promptly
notify the Barnes &#038; Noble Parties of the receipt of any comments
from the SEC and of any request by the SEC for amendments or
supplements to the Proxy Statement or the Schedule&nbsp;13E-3 or for
additional information, and will supply the Barnes &#038; Noble Parties
with copies of all correspondence between the Company and any of its
representatives, on the one hand, and the SEC or members of its
staff, on the other</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">16</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">hand, with respect to the Proxy Statement, the Schedule&nbsp;13E-3 or
the transactions contemplated hereby. If at any time prior to the
Company Stockholders&#146; Meeting any event should occur which is
required by applicable law to be set forth in an amendment of, or a
supplement to, the Proxy Statement or the Schedule&nbsp;13E-3, the
Company will prepare and, if appropriate, mail to its stockholders
such amendment or supplement; <I>provided, however, </I>that prior to such
mailing, the Company will consult with the Barnes &#038; Noble Parties
and their counsel with respect to such amendment or supplement and
shall afford the Barnes &#038; Noble Parties reasonable opportunity to
review and comment thereon.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Except under the circumstances described in Section&nbsp;4.3, the
Company through the Company&#146;s Board of Directors (acting upon the
recommendation of the Special Committee) shall recommend to its
Public Stockholders the adoption of this Agreement and the
transactions contemplated hereby and such recommendation shall be
included in the Proxy Statement and the Schedule&nbsp;13E-3.</FONT></TD>
</TR>
</TABLE>
<!-- link2 "Section&nbsp;4.3. Stockholders&#146; Meeting" -->
<DIV align="left"><A NAME="032"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.3. <U>Stockholders&#146; Meeting</U>.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The Company will call and hold a meeting of the stockholders of the
Company for the purpose of voting upon the adoption and approval of
this Agreement and the transactions contemplated by this Agreement
(such meeting, the &#147;Company Stockholders&#146; Meeting&#148;). The Company
Stockholders&#146; Meeting will be held (on a date selected by the
Company in consultation with the Barnes &#038; Noble Parties) as
promptly as practicable after the mailing of the Proxy Statement to
the stockholders of the Company. Barnes &#038; Noble hereby agrees to
cause B&#038;N Holding Corp. to vote all shares of its Class&nbsp;A Common
Stock, Class&nbsp;B Common Stock and Class&nbsp;C Common Stock in favor of
the adoption and approval of this Agreement and the transactions
contemplated by this Agreement. Neither the Board of Directors of
the Company nor any committee thereof (including the Special
Committee) shall, except as expressly permitted by this Section
4.3, withdraw, qualify or modify its approval or recommendation of
the approval of this Agreement and the transactions contemplated
hereby in a manner adverse to Barnes &#038; Noble (an &#147;Adverse Company
Board Recommendation&#148;).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Notwithstanding anything to the contrary contained herein, at
any time prior to the adoption of this Agreement by the Required
Company Stockholder Vote, the Board of Directors of the Company
(acting upon the recommendation of the Special Committee) or the
Special Committee may make an Adverse Company Board Recommendation
and terminate this Agreement pursuant to Section&nbsp;6(d)(i) (a
&#147;Termination Recommendation&#148;) if: (i)&nbsp;any Person makes an
Acquisition Proposal; (ii)&nbsp;the Company provides notice to Barnes &#038;
Noble to the effect that it received such Acquisition Proposal as
soon as practicable after receipt thereof, but in no event later
than two (2)&nbsp;business days after receipt thereof; and (iii)&nbsp;the
Special Committee determines in good faith (after consultation with
its legal and financial advisors) that such Acquisition Proposal is
more favorable to the Public Stockholders than the Merger and made
by a Person which is reasonably able to</FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">17</FONT>




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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">finance the transaction
contemplated by the Acquisition Proposal (a &#147;Superior Proposal&#148;).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Notwithstanding anything to the contrary contained herein, at
any time prior to the satisfaction of the conditions set forth in
Article&nbsp;V, the Board of Directors of the Company (acting upon the
recommendation of the Special Committee) or the Special Committee
may make an Adverse Company Board Recommendation (other than a
Termination Recommendation) (any such Adverse Company Board
Recommendation, a &#147;Non-Termination Recommendation&#148;) if the Special
Committee determines in good faith (after consultation with its
outside legal counsel) that the Non-Termination Recommendation is
necessary in order for the Special Committee to comply with its
fiduciary obligations to the Public Stockholders under applicable
law. Notwithstanding any Non-Termination Recommendation, this
Agreement shall be submitted to the stockholders of the Company at
the Company Stockholders&#146; Meeting for the purpose of adopting this
Agreement and the transactions contemplated hereby, and nothing
contained herein shall relieve the Company of such obligation.</FONT></TD>
</TR>
</TABLE>
<!-- link2 "Section&nbsp;4.4. Reasonable Efforts" -->
<DIV align="left"><A NAME="033"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.4.
<U>Reasonable Efforts</U>. Subject to the terms and conditions
herein provided, each of the Parties agrees to (i)&nbsp;use its reasonable efforts
to take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations or
required to be taken by any Governmental Entity or otherwise to consummate and
make effective the transactions contemplated by this Agreement as promptly as
practicable, (ii)&nbsp;obtain from any Governmental Entity any consents, licenses,
permits, waivers, approvals, authorizations or orders required to be obtained
or made by any Party in connection with the authorization, execution and
delivery of this Agreement and the consummation of the Merger, and (iii)&nbsp;as
promptly as practicable, make all necessary filings, and thereafter make any
other required submissions, with respect to this Agreement and the Merger
required under (A)&nbsp;the Exchange Act, and any other applicable federal or state
securities laws, and (B)&nbsp;any other applicable law; provided that the Parties
shall cooperate with each other in connection with the making of all such
filings, including providing copies of all such documents to the non-filing
party and its advisors prior to filing and, if requested, to accept all
reasonable additions, deletions or changes suggested in connection therewith.
The Parties shall use reasonable efforts to furnish to each other all
information required for any application or other filing to be made pursuant to
the rules and regulations of any applicable law (including all information
required to be included in the Proxy Statement and the Schedule&nbsp;13E-3) in
connection with the transactions contemplated by this Agreement. In case at
any time after the Effective Time any further action is necessary or desirable
to carry out the purposes of this Agreement, the proper officers and directors
of each Party to this Agreement shall take all such necessary or desirable
action.
</FONT>
<!-- link2 "Section&nbsp;4.5. Inspection of Records" -->
<DIV align="left"><A NAME="034"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.5. <U>Inspection of Records</U>. From the date hereof to the Effective
Time, the Companies shall (i)&nbsp;allow all designated officers, attorneys,
financial advisors, accountants and other representatives of Barnes &#038; Noble
reasonable access at all reasonable times to the offices, records and files,
correspondence, audits and properties, as well as to all information relating
to commitments, contracts, titles and financial position, or otherwise
pertaining to the business and affairs, of the Companies and (ii)&nbsp;make
available for inspection by Barnes &#038; Noble and its counsel, financial
advisors, auditors and other authorized representatives such financial and
</FONT>
<P align="center"><FONT size="2">18</FONT>
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<P align="left"><FONT size="2">operating data and other information as such persons may reasonably request to
the extent such information is readily available. No investigation by any
Party, whether prior to the execution of this Agreement or pursuant to this
Section&nbsp;4.5, shall affect any representation or warranty in this Agreement of
any Party or any condition to the obligations of any Party.
</FONT>
<!-- link2 "Section&nbsp;4.6. Notification of Certain Matters" -->
<DIV align="left"><A NAME="035"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.6. <u>Notification of Certain Matters</u>. From and after the date of
this Agreement until the Effective Time, each Party shall promptly notify the
other Parties of:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any change or event, or series of changes or events, having,
or which would reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on it or B&#038;N LLC or would
be reasonably likely to cause any of the conditions in Article V
not to be satisfied or to cause the satisfaction thereof to be
materially delayed;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the receipt of any material notice or other material
communication from any Person alleging that the consent of such
Person is or may be required in connection with the transactions
contemplated hereby;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">the receipt of any material notice or other material
communication from any Governmental Entity in connection with the
transactions contemplated hereby; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(d)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">any actions, suits, claims, investigations or proceedings
commenced or, to the knowledge of the Party, threatened against any
Party or B&#038;N LLC which seeks to prohibit or prevent consummation of
the transactions contemplated hereby;</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">in each case, to the extent such event or circumstance is or becomes known to
the Party required to give such notice; <i>provided, however</i>, that the delivery of
any notice pursuant to this Section&nbsp;4.6 shall not be deemed to be an amendment
of this Agreement and shall not cure any breach of any representation or
warranty requiring disclosure of such matter prior to the date of this
Agreement.
</FONT>
<!-- link2 "Section&nbsp;4.7. Disclosure" -->
<DIV align="left"><A NAME="036"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.7. <u>Disclosure</u>. None of the Parties or their respective
Affiliates will issue any press release or otherwise make any public statement
with respect to this Agreement and the transactions contemplated by this
Agreement without the prior consent of the other Party (which consent will not
be unreasonably withheld), except as may be required by applicable law or stock
exchange regulation. The Parties will consult (to the extent reasonably
practicable if disclosure is required by law) with each other before issuing,
and provide each other the opportunity to review and comment upon, any such
press release or other public statement with respect to this Agreement and the
transactions contemplated by this Agreement, whether or not required by law.
The Parties shall agree on the text of a joint press release by which the
Parties will announce the execution of this Agreement.
</FONT>
<!-- link2 "Section&nbsp;4.8. Directors&#146; and Officers&#146; Indemnification" -->
<DIV align="left"><A NAME="037"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.8. <u>Directors&#146; and Officers&#146; Indemnification</u>.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The Certificate of Incorporation and the By-laws of the
Surviving Corporation will contain the provisions with respect to
indemnification, advancement of expenses and limitation of liability
of directors and officers set forth in the</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">19</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Company&#146;s Amended and
Restated Certificate of Incorporation and By-laws on the date of
this Agreement. These provisions may not be amended, repealed or
otherwise modified for a period of six (6)&nbsp;years following the
Effective Time in any manner that would adversely affect the rights
under the Amended and Restated Certificate of Incorporation and
By-laws of individuals who on or prior to the Effective Time were
directors or officers of the Company or B&#038;N LLC or served at the
request of the Company or B&#038;N LLC as a director or officer of
another corporation, partnership, joint venture, trust, pension or
other employee benefit plan or enterprise, unless such modification
is required by law and then only to the maximum extent required by
such applicable law, and except to make changes permitted by
applicable law that would enlarge the exculpation, rights of
indemnification or advancement of expenses thereunder; <I>provided,
however</I>, that if any claims are asserted or made within such
six-year period, all rights to indemnification (and to advancement
of expenses) hereunder in respect of such claims shall continue,
without diminution, until disposition of all such claims.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">From the Effective Time through the later of (i)&nbsp;the sixth
anniversary of the date on which the Effective Time occurs and (ii)
the expiration of any statute of limitations applicable to any
claim, action, suit, proceeding or investigation referred to below,
the Surviving Corporation shall (and Barnes &#038; Noble shall cause the
Surviving Corporation to) indemnify and hold harmless each present
and former officer and director of the Company and B&#038;N LLC, and each
person who served at the request of the Company or B&#038;N LLC as a
director or officer of another corporation, partnership, joint
venture, trust, pension or other employee benefit plan or
enterprise, including each person controlling any of the foregoing
persons (collectively, the &#147;Indemnified Parties&#148; and each, an
&#147;Indemnified Party&#148;), against all claims, losses, liabilities,
damages, judgments, fines, fees, costs or expenses, including
reasonable attorneys&#146; fees and disbursements, incurred in connection
with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or
pertaining to matters existing or occurring at or prior to the
Effective Time (including this Agreement and the transactions and
actions contemplated hereby), whether asserted or claimed prior to,
at or after the Effective Time, to the fullest extent permitted
under applicable law and the Certificate of Incorporation or By-laws
of the Company or indemnification agreements in effect on the date
hereof, including provisions relating to advancement of expenses
incurred in the defense of any claim, action, suit, proceeding or
investigation. Without limiting the foregoing, in the event that
any claim, action, suit, proceeding or investigation is brought
against an Indemnified Party (whether arising before or after the
Effective Time), the Indemnified Party may retain counsel reasonably
satisfactory
to the Surviving Corporation, and the Surviving Corporation shall
(and Barnes &#038; Noble shall cause the Surviving Corporation to)
advance the fees and expenses of such counsel for the Indemnified
Party in accordance with the Certificate of Incorporation or
By-laws of the Company in effect on the date of this Agreement.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The Surviving Corporation shall (and Barnes &#038; Noble shall
cause the Surviving Corporation to) provide, for a period of not
less than six (6)&nbsp;years after the</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">20</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Effective Time, the Company&#146;s
current and former directors and officers who are currently covered
by the Company&#146;s existing director and officer insurance policy with
an insurance policy (including by arranging for run-off coverage, if
necessary) that provides coverage for events occurring at or prior
to the Effective Time (the &#147;D&#038;O Insurance&#148;) that is no less
favorable than the existing policy, or, if substantially equivalent
insurance coverage is unavailable, the most advantageous D&#038;O
Insurance obtainable for an annual premium equal to 300% of the
annual premium currently in place for the Company for such
insurance; <I>provided, however</I>, that the Surviving Corporation shall
not be required to pay an annual premium for the D&#038;O Insurance in
excess of 300% of the annual premium currently in place for the
Company for such insurance; <I>provided further, however</I>, that in lieu of
the foregoing, any of the Barnes &#038; Noble Parties shall be permitted
to procure &#147;tail insurance coverage&#148; to cover the Company&#146;s current
and former directors and officers who are currently covered by the
Company&#146;s existing director and officer insurance policy that
provides coverage for events occurring at or prior to the Effective
Time, which coverage shall be no less favorable than the existing
director and officer insurance policy, and the Surviving Corporation
shall (and Barnes &#038; Noble shall cause the Surviving Corporation to)
maintain such coverage for a period of not less than six (6)&nbsp;years
after the Effective Time. In the event any claim is made against
present or former directors or officers of the Company or B&#038;N LLC
that is covered or potentially covered by insurance, neither the
Surviving Corporation nor Barnes &#038; Noble shall do anything that
would forfeit, jeopardize, restrict or limit the insurance coverage
available for that claim until the final disposition thereof.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(d)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">This Section&nbsp;4.8 shall survive the Effective Time, is
intended to benefit the Surviving Corporation, the Company&#146;s current
and former directors and officers who are currently covered by the
Company&#146;s existing director and officer insurance policy and shall
be enforceable by such persons, their heirs, assigns and
representatives and are in addition to, and not in substitution for,
any other rights to indemnification or contribution that any such
person may have by contract or otherwise. In the event the
Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such
consolidation or merger, or (ii)&nbsp;transfers or conveys all or
substantially all of its properties and assets to any Person, then,
and in each such case, proper provision shall be made so that the
successors and assigns of the Surviving Corporation, or at Barnes &#038;
Noble&#146;s option, Barnes &#038; Noble, shall assume the obligations set
forth in this Section&nbsp;4.8.</FONT></TD>
</TR>
</TABLE>
<!-- link2 "Section&nbsp;4.9. Stockholder Litigation" -->
<DIV align="left"><A NAME="038"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.9. <U>Stockholder Litigation</U>. Each of the Parties shall give the other the reasonable opportunity to
participate in the defense of any stockholder litigation against any Party or
their respective directors and officers, as applicable, relating to this
Agreement and the transactions contemplated hereby.
</FONT>
<P align="center"><FONT size="2">21</FONT>
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<!-- link2 "Section&nbsp;4.10. Employee Matters" -->
<DIV align="left"><A NAME="039"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;4.10. <U>Employee Matters</U>.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Following the Closing Date until January&nbsp;31, 2005, Barnes &#038;
Noble shall, or shall cause the Surviving Corporation to, provide
employee benefits to employees of the Company or B&#038;N LLC
(collectively, &#147;Employees&#148;) that are comparable in the aggregate to
the employee benefits provided to Employees immediately prior to the
Closing Date. To the extent that service is relevant for purposes
of eligibility or vesting under any plan, program or arrangement
established or maintained by Barnes &#038; Noble for the benefit of
Employees that is comparable to a plan, program or arrangement in
which any such Employee was entitled to participate prior to the
Closing Date, such plan, program or arrangement shall credit such
Employees for service on or prior to the Closing with the Company or
B&#038;N LLC, as the case may be, for purposes of eligibility or vesting,
but not for benefit accrual or level of benefits. Following the
Closing Date, matching contributions on behalf of the Employees
shall be invested in the same manner as such contributions are
invested on behalf of similarly situated employees of Barnes &#038;
Noble.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Barnes &#038; Noble shall take all actions necessary to provide
that all Employees participating in an annual bonus plan or policy
of the Company or B&#038;N LLC for the 2003 calendar year be paid the
portion of such annual bonus under the terms of the applicable plan
or policy as in effect immediately prior to the Closing Date.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">After the Closing Date, Barnes &#038; Noble agrees to assume or
guarantee payment of all obligations of the Company or B&#038;N LLC to
Employees under (i)&nbsp;the B&#038;N LLC Deferred Compensation Plan and (ii)
any employment agreement between any Employee and the Company or B&#038;N
LLC.</FONT></TD>
</TR>
</TABLE>
<!-- link1 "ARTICLE V. Conditions Precedent" -->
<DIV align="left"><A NAME="040"></A></DIV>
<P align="center"><FONT size="2">ARTICLE V.
</FONT>

<P align="center"><FONT size="2">Conditions Precedent
</FONT>

<!-- link2 "Section&nbsp;5.1. Conditions to each Party&#146;s Obligation to Effect the Merger" -->
<DIV align="left"><A NAME="041"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.1. <U>Conditions to each Party&#146;s Obligation to Effect the Merger</U>.
The respective obligation of each Party to effect the Merger is subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions (any of which may be waived by the Parties in writing, in whole or
in part, to the extent permitted by applicable law):
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><U>No Injunctions or Restraints; Illegality</U>. No temporary
restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger
shall be in effect (each Party agreeing to use its reasonable
efforts (as set forth in Section&nbsp;4.4 hereof) to have any restraining
order, injunction or other order or legal restraint or prohibition
lifted) nor shall any proceeding brought by an administrative agency
or commission or other governmental authority or instrumentality
seeking any of the foregoing be pending; and there shall not be any
action taken, or any statute, rule, regulation or order (whether
temporary, preliminary or permanent) enacted, entered or</FONT></TD>
</TR>
</TABLE>

<P align="center"><FONT size="2">22</FONT>




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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">enforced, which makes the consummation of the Merger illegal or prevents or
prohibits the Merger.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><u>Approval of Stockholders</u>. The adoption of this Agreement
shall have been approved by the requisite vote of the stockholders
of the Company in accordance with the DGCL (the &#147;Required Company
Stockholder Vote&#148;).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><u>Consents</u>. Other than the filing of the Certificate of
Merger, all material consents, approvals and authorizations of and
filings with Governmental Entities required for the consummation of
the Merger must have been obtained or effected.</FONT></TD>
</TR>
</TABLE>
<!-- link2 "Section&nbsp;5.2. Conditions to the Obligation of the Company to Effect the Merger" -->
<DIV align="left"><A NAME="042"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.2.
<u>Conditions to the Obligation of the Company to Effect the
Merger</u>. The obligation of the Company to effect the Merger is further subject
to the satisfaction or waiver of each of the following conditions prior to or
at the Closing Date:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><u>Representations and
Warranties</u>. The representations and
warranties of each Barnes &#038; Noble Party contained in this Agreement
shall be true and correct in all material respects (other than
representations and warranties that are qualified as to materiality
or Material Adverse Effect, which representations and warranties
shall be true and correct in all respects) at and as of the Closing
Date as though made at and as of the Closing Date (except to the
extent that such representations and warranties speak as of a
specific date, in which case such representations and warranties
shall be true and correct as of such date).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><u>Agreements</u>. Each Barnes &#038; Noble Party shall have performed
and complied in all material respects with all its undertakings and
agreements required by this Agreement to be performed or complied
with by it prior to or at the Closing Date.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><u>Certificate</u>. The Company shall have received a certificate
of a senior executive officer of Barnes &#038; Noble, dated the Closing
Date, certifying that the conditions specified in Section&nbsp;5.2(a) and
Section&nbsp;5.2(b) have been fulfilled.</FONT></TD>
</TR>
</TABLE>
<!-- link2 "Section&nbsp;5.3. Conditions to the Obligation of the Barnes &#038; Noble Parties to Effect the Merger" -->
<DIV align="left"><A NAME="043"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;5.3.
<u>Conditions to the Obligation of the Barnes &#038; Noble Parties to
Effect the Merger</u>. The obligation of the Barnes &#038; Noble Parties to effect the
Merger is further subject to the satisfaction or waiver of each of the
following conditions prior to or at the Closing Date:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><u>Representations and
Warranties</u>. The representations and
warranties of the Company contained in this Agreement shall be true
and correct in all material respects (other than representations and
warranties that are qualified as to materiality or Material Adverse
Effect, which representations and warranties shall be true and
correct in all respects) at and as of the Closing Date as though
made at and as of the Closing Date (except to the extent that such
representations and warranties speak as of a specific date, in which
case such representations and warranties shall be true and correct
as of such date).</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><u>Agreements</u>. The Company must have performed and complied in
all material respects with all of its undertakings and agreements
required by this Agreement to be performed or complied with by it
prior to or at the Closing Date.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">23</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><u>Certificate</u>. Barnes &#038; Noble shall have received a
certificate of a senior executive officer of the Company, dated the
Closing Date, certifying that the conditions specified in Section
5.3(a) and Section&nbsp;5.3(b) have been fulfilled.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(d)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2"><u>Material Adverse Effect</u>. Since the date of this Agreement,
there shall not have occurred any Material Adverse Effect with
respect to the Companies, taken as a whole.</FONT></TD>
</TR>
</TABLE>

<!-- link1 "ARTICLE VI. Termination, Amendment and Waiver" -->
<DIV align="left"><A NAME="044"></A></DIV>
<P align="center"><FONT size="2">ARTICLE VI.
</FONT>

<P align="center"><FONT size="2">Termination, Amendment and Waiver
</FONT>

<!-- link2 "Section&nbsp;6.1. Termination" -->
<DIV align="left"><A NAME="045"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.1.
<u>Termination</u>. This Agreement may be terminated and the Merger
may be abandoned as follows:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">at any time prior to adoption of this Agreement by the
Required Company Stockholder Vote, by the mutual written consent of
Barnes &#038; Noble and the Company;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">by either Barnes &#038; Noble or the Company, in each case by
written notice to the other, if:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">at any time prior to adoption of this Agreement
by the Required Company Stockholder Vote, the Merger has not
been consummated on or prior to July&nbsp;15, 2004; provided that
the right to terminate this Agreement under this Section
6.1(b)(i) will not be available to any Party whose failure to
fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Merger to occur on or
prior to such date; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">at any time prior to the Effective Date, an
administrative agency or commission or other governmental
authority or instrumentality shall have issued a final
nonappealable injunction, order, decree, judgment or ruling,
permanently enjoining or otherwise prohibiting the Merger.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">at any time prior to adoption of this Agreement by the
Required Company Stockholder Vote, by Barnes &#038; Noble upon written
notice to the Company:</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">if there has occurred an Adverse Company Board
Recommendation; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in
this Agreement such that the conditions set forth in Section
5.3(a) or Section&nbsp;5.3(b) shall have become incapable of
fulfillment.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(d)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="96%"><FONT size="2">at any time prior to adoption of this Agreement by the
Required Company Stockholder Vote, by the Special Committee upon
written notice to Barnes &#038; Noble:</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">24</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">if there has occurred a Termination
Recommendation; <I>provided that</I>, prior to such termination the
Special Committee shall have given Barnes &#038; Noble no less than
five (5)&nbsp;business days notice; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">upon a breach of any representation, warranty,
covenant or agreement on the part of a Barnes &#038; Noble Party
set forth in this Agreement such that the conditions set forth
in Section&nbsp;5.2(a) or Section&nbsp;5.2(b) shall have become
incapable of fulfillment.</FONT></TD>
</TR>
</TABLE>
<!-- link2 "Section&nbsp;6.2. Effect of Termination" -->
<DIV align="left"><A NAME="046"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.2.
<u>Effect of Termination</u>. If this Agreement is terminated as
provided in Section&nbsp;6.1, this Agreement will become null and void (except that
the provisions of Sections&nbsp;4.7, 6.2, 7.3 and 7.4 will survive any termination
of this Agreement), and there will be no liability on the part of any Party or
any of their Affiliates; provided that nothing in this Agreement will relieve
any party from any liability or obligation with respect to any breach of this
Agreement prior to such termination.
</FONT>
<!-- link2 "Section&nbsp;6.3. Amendment" -->
<DIV align="left"><A NAME="047"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.3.
<u>Amendment</u>. This Agreement may be amended only by an
agreement in writing executed by all of the Parties. After the approval of the
adoption of this Agreement by the stockholders of the Company, no amendment
requiring approval of the stockholders of the Company and B&#038;N Acquisition Corp.
shall be made without first obtaining such approval.
</FONT>
<!-- link2 "Section&nbsp;6.4. Waiver" -->
<DIV align="left"><A NAME="048"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;6.4.
<u>Waiver</u>. At any time prior to the Effective Time, whether
before or after the satisfaction of the condition set forth in Section&nbsp;5.1(b),
any of the Parties may:
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">extend the time for the performance of any of the obligations
or other acts of any of the other Party or Parties, as the case may
be; or</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">waive compliance with any of the agreements of the other
Party or Parties, as the case may be, or fulfillment of any
conditions to its own obligations under this Agreement.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">Any agreement on the part of a Party to any such extension or waiver will be
valid only if set forth in an instrument in writing signed on behalf of such
Party by a duly authorized officer.
</FONT>
<!-- link1 "ARTICLE VII. Miscellaneous" -->
<DIV align="left"><A NAME="049"></A></DIV>
<P align="center"><FONT size="2">ARTICLE VII.
</FONT>

<P align="center"><FONT size="2">Miscellaneous
</FONT>

<!-- link2 "Section&nbsp;7.1. Definitions" -->
<DIV align="left"><A NAME="050"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.1.
<u>Definitions</u>. In this Agreement, unless the context otherwise
provides, the following terms have the following meanings:
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Adverse Company Board Recommendation&#148; has the meaning specified in
Section&nbsp;4.3(a).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Affiliates&#148; means, with respect to any Person, (i)&nbsp;any other Person that
directly or indirectly Controls, is Controlled by or is under common Control
with, such Person, or (ii)&nbsp;any director, officer, partner or member of
management of such Person.
</FONT>
<P align="center"><FONT size="2">25</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Acquisition Proposal&#148; means a bona fide, unsolicited, proposal from any
Person (whether or not in writing) which is not withdrawn relating to any (i)
direct or indirect acquisition of all of the shares of Class&nbsp;A Common Stock
owned by the Public Stockholders, (ii)&nbsp;direct or indirect acquisition of all of
the shares of outstanding capital stock or ownership interests of either of the
Companies, (iii)&nbsp;direct or indirect acquisition of all or substantially all of
the assets of either of the Companies, or (iv)&nbsp;merger, consolidation, share
exchange, business combination or similar transaction involving either of the
Companies.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Barnes &#038; Noble&#148; has the meaning specified in the introductory paragraph
of this Agreement.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Barnes &#038; Noble Party&#148; and &#147;Barnes &#038; Noble Parties&#148; has the meaning
specified in Article&nbsp;III.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;B&#038;N Acquisition Corp.&#148; has the meaning specified in the introductory
paragraph of this Agreement.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;B&#038;N Holding Corp.&#148; has the meaning specified in the introductory
paragraph of this Agreement.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;B&#038;N LLC&#148; has the meaning specified in Recital A hereof.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Capital Stock&#148; has the meaning specified in Recital A.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Certificate of Merger&#148; has the meaning specified in Section&nbsp;1.2.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Class&nbsp;A Common Stock&#148; has the meaning specified in Recital A.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Class&nbsp;B Common Stock&#148; has the meaning specified in Recital A.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Class&nbsp;C Common Stock&#148; has the meaning specified in Recital A.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Closing&#148; has the meaning specified in Section&nbsp;1.3.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Closing Date&#148; has the meaning specified in Section&nbsp;1.3.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Companies&#148; means the Company and B&#038;N LLC.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Company&#148; has the meaning specified in the introductory paragraph of this
Agreement.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Company Disclosure Letter&#148; has the meaning specified in Article&nbsp;II.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Company Plan&#148; means any &#147;employee benefit plan&#148; (within the meaning of
Section&nbsp;3(3) of the Employee Retirement Income Security Act of 1974, as
amended), and any severance, change in control or employment plan, program or
agreement, and vacation, incentive, bonus, stock option, stock purchase, and
restricted stock plan, program or policy and any other employee benefit plan,
agreement, program or other arrangement sponsored or maintained by either of
the Companies, in which present or former employees thereof participate or
either of the Companies has any present or future liability.
</FONT>
<P align="center"><FONT size="2">26</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Company Stockholders&#146; Meeting&#148; has the meaning set forth in Section
4.3(a).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Contract&#148; means any contract, license, lease, commitment, arrangement,
purchase or sale order, undertaking, understanding or other agreement, whether
written or oral.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Control&#148; means the power to direct or cause the direction of management
or policies of a Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;DGCL&#148; has the meaning specified in Recital B.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;D&#038;O Insurance&#148; has the meaning specified in Section&nbsp;4.8(c).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Dissenting Shares&#148; has the meaning specified in Section&nbsp;1.6(a).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Effective Time&#148; has the meaning specified in Section&nbsp;1.2.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Employees&#148; has the meaning specified in Section&nbsp;4.10.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Exchange Act&#148; means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated under such Act from time to
time.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Exchange Agent&#148; has the meaning specified in Section&nbsp;1.8(a).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Exchange Fund&#148; has the meaning specified in Section&nbsp;1.8(a).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;GAAP&#148; means accounting principles and practices generally accepted from
time to time in the United States.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Governmental Entity&#148; means a court, legislature or other agency or
instrumentality or political subdivision of federal, state or local government.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Indemnified Party&#148; has the meaning specified in Section&nbsp;4.8(b).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Judgment&#148; means any judgment, order, award, writ, injunction or decree of
any Governmental Entity or arbitrator.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Lien&#148; means any mortgage, pledge, lien, charge, restriction, claim or
encumbrance of any nature whatsoever, other than Liens for or with respect to
Taxes that are not yet due and payable or delinquent, including any restriction
on use, transfer, voting or other exercise of any attributes of ownership.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Material Adverse Effect&#148;: An event, fact, violation, breach, inaccuracy,
circumstance or other matter will be deemed to have a <I>&#147;Material Adverse Effect&#148;</I>
on a Party if such event, fact, violation, breach, inaccuracy, circumstance or
other matter had or would reasonably be expected to have a material adverse
effect on the business, financial condition or results of operations of the
Party, other than any event or condition resulting from: (A)&nbsp;general economic,
business or industry conditions; (B)&nbsp;the taking of any action permitted or
required by this Agreement or from
</FONT>

<P align="center"><FONT size="2">27</FONT>



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<P align="left"><FONT size="2">the announcement or pendency of the Merger;
(C)&nbsp;a decline in a Party&#146;s stock price; or (D)&nbsp;the delisting of the Class&nbsp;A
Common Stock from the NASDAQ National Market.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Membership Units&#148; has the meaning specified in Recital A hereof.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Merger&#148; has the meaning specified in Recital B.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Merger Consideration&#148; has the meaning specified in Section&nbsp;1.5(b)(i).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Non-Termination Recommendation&#148; has the meaning specified in Section
4.3(c).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Option&#148; has the meaning specified in Section&nbsp;1.7.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Party&#148; means each of Barnes &#038; Noble, B&#038;N Holding Corp., B&#038;N Acquisition
Corp. and the Company, and any other Person that may become a party to this
Agreement from time to time, and &#147;Parties&#148; means all of the foregoing.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Person&#148; means any individual, corporation, joint venture, partnership,
limited liability company, trust, unincorporated organization, Governmental
Entity or other entity.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Preferred Stock&#148; has the meaning specified in Section&nbsp;2.2(a).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Proxy Statement&#148; has the meaning specified in Section&nbsp;4.2(a).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Public Stockholders&#148; means all of the holders of shares of Class&nbsp;A Common
Stock, excluding B&#038;N Holding Corp., Barnes &#038; Noble and their respective
Affiliates and members of management of Barnes &#038; Noble and the Company.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Required Company Stockholder Vote&#148; has the meaning specified in Section
5.1(b).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Schedule&nbsp;13E-3&#148; has the meaning specified in Section&nbsp;4.2(a).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Securities Act&#148; means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated under such Act from time to time.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;SEC&#148; means the Securities and Exchange Commission, and any successor or
replacement entity.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;SEC Documents&#148; has the meaning specified in Section&nbsp;2.8(a).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Special Committee&#148; has the meaning specified in Recital C.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Superior Proposal&#148; has the meaning specified in Section&nbsp;4.3(b).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Surviving Corporation&#148; has the meaning specified in Section&nbsp;1.1.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Taxes&#148; means (i)&nbsp;all federal, state, local or foreign taxes, charges,
fees, imposts, levies or other assessments, including all net income, gross
receipts, capital, sales, use, ad valorem, value added, transfer, franchise,
profits, inventory, capital stock, license, withholding, payroll,
</FONT>
<P align="center"><FONT size="2">28</FONT>
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<P align="left"><FONT size="2">employment,
social security, unemployment, excise, severance, stamp, occupation, property
and estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever, (ii)&nbsp;all interest, penalties, fines, additions to tax or additional
amounts imposed by any taxing authority in connection with any item described
in clause (i)&nbsp;or this clause (ii), and (iii)&nbsp;any transferee liability in
respect of any items described in clauses (i)&nbsp;and/or (ii).
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Termination Recommendation&#148; has the meaning specified in Section&nbsp;4.3(b).
</FONT>
<!-- link2 "Section&nbsp;7.2. Non-survival of Representations and Warranties" -->
<DIV align="left"><A NAME="051"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.2.
<U>Non-survival of Representations and Warranties</U>. None of the
representations and warranties in this Agreement or in any instrument delivered
under this Agreement will survive the Effective Time, and none of the Barnes &#038;
Noble Parties and the Company, their respective Affiliates and any of the
officers, directors, employees or stockholders of any of the foregoing, will
have any liability whatsoever with respect to any such representation or
warranty after such time. This Section&nbsp;7.2 will not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time.
</FONT>
<!-- link2 "Section&nbsp;7.3. Expenses" -->
<DIV align="left"><A NAME="052"></A></DIV>

<!-- link2 "Section&nbsp;7.4. Applicable Law" -->
<DIV align="left"><A NAME="053"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.3.
<U>Expenses</U>. Except as contemplated by this Agreement, all
costs and expenses incurred in connection with the Agreement and the
consummation of the transactions contemplated by this Agreement will be the
obligation of the Party incurring such expenses.
</FONT>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.4.
<U>Applicable Law</U>. This Agreement will be governed by the laws
of the State of Delaware without regard to the conflicts of law principles
thereof.
</FONT>
<!-- link2 "Section&nbsp;7.5. Notices" -->
<DIV align="left"><A NAME="054"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.5.
<U>Notices</U>. All notices and other communications under this
Agreement must be in writing and will be deemed to have been duly given or made
as follows: (a)&nbsp;if sent by registered or certified mail in the United States,
return receipt requested upon receipt, five business days after being so sent;
(b)&nbsp;if sent by reputable overnight air courier, two business days after being
so sent; (c)&nbsp;if sent by telecopy transmission, with a copy mailed on the same
day in the manner provided in clause (a)&nbsp;or (b)&nbsp;above, when transmitted and
receipt is confirmed by telephone; or (d)&nbsp;if otherwise actually personally
delivered, when delivered, and shall be sent or delivered as follows:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="91%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
If to the Company, to:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
barnesandnoble.com inc.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
76 Ninth Avenue</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
New York, NY 10011</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Attention: Ms.&nbsp;Marie Toulantis</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Fax: (212)&nbsp;414-6107</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
with a copy to:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Dewey Ballantine LLP</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
1301 Avenue of the Americas</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
New York, NY 10019</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Attention:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Morton A. Pierce, Esq.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Jack S. Bodner, Esq.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Fax: (212)&nbsp;259-6333</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">29</FONT>
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<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="91%">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
If to any Barnes &#038; Noble Party, to:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Barnes &#038; Noble, Inc.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
122 Fifth Avenue</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
New York, NY 10011</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Attention: Mr.&nbsp;Leonard Riggio</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Fax: (212)&nbsp;675-0413</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
with a copy to:</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Bryan Cave LLP</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
1290 Avenue of the Americas</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
New York, NY 10104</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Attention: Jay M. Dorman, Esq.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Fax: (212)&nbsp;541-1418</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="left"><FONT size="2">Such names and addresses may be changed by such notice.
</FONT>
<!-- link2 "Section&nbsp;7.6. Entire Agreement" -->
<DIV align="left"><A NAME="055"></A></DIV>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.6.
<u>Entire Agreement</u>. This Agreement (including the documents
and instruments referred to in this Agreement) contains the entire
understanding of the Parties with respect to the subject matter hereof, and
supersedes and cancels all prior agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written, respecting
such subject matter.
</FONT>
<!-- link2 "Section&nbsp;7.7. Assignment" -->
<DIV align="left"><A NAME="056"></A></DIV>

<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.7.
<u>Assignment</u>. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned by any Party
(whether by operation of law or otherwise) without the prior written consent of
the other Party or Parties, as the case may be.
</FONT>
<!-- link2 "Section&nbsp;7.8. Headings References" -->
<DIV align="left"><A NAME="057"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.8.
<u>Headings References</u>. The article, section and paragraph
headings contained in this Agreement are for reference purposes only and will
not affect in any way the meaning or interpretation of this Agreement.
</FONT>
<!-- link2 "Section&nbsp;7.9. Construction" -->
<DIV align="left"><A NAME="058"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.9.
<u>Construction</u>.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">The Parties agree that any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this
Agreement.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">As used in this Agreement, the words &#147;<I>include</I>&#148; and
&#147;<I>including</I>,&#148; and variations thereof, shall not be deemed to be terms
of limitation, but rather shall be deemed to be followed by the
words &#147;<I>without limitation</I>.&#148;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="93%"><FONT size="2">Except as otherwise indicated, all references in this
Agreement to &#147;<I>Section,</I>&#148; &#147;<I>Sections,</I>&#148; &#147;<I>Article</I>&#148; or &#147;<I>Recital</I>&#148; are
intended to refer to the Section, Sections, Article or Recital, as
the case may be, of this Agreement.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">30</FONT>
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<!-- link2 "Section&nbsp;7.10. Counterparts" -->
<DIV align="left"><A NAME="059"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.10.
<U>Counterparts</U>. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original but all of which
will be considered one and the same agreement.
</FONT>
<!-- link2 "Section&nbsp;7.11. No Third Party Beneficiaries" -->
<DIV align="left"><A NAME="060"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.11.
<U>No Third Party Beneficiaries</U>. Except as provided in Section
1.8 and Section&nbsp;4.8, nothing in this Agreement, express or implied, is intended
to confer upon any Person not a party to this Agreement any rights or remedies
under or by reason of this Agreement.
</FONT>
<!-- link2 "Section&nbsp;7.12. Actions of the Company" -->
<DIV align="left"><A NAME="061"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.12.
<U>Actions of the Company</U>.
The Barnes &#038; Noble Parties agree that any action, approval, authorization,
waiver or consent taken, given or made by the Company (including the Board of
Directors of the Company) in respect of this Agreement or the Merger, prior to
the Effective Date, shall not be effective unless such action, approval,
authorization, waiver or consent shall have received the prior approval of the
Special Committee.
</FONT>
<!-- link2 "Section&nbsp;7.13. Severability; Enforcement" -->
<DIV align="left"><A NAME="062"></A></DIV>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;7.13.
<U>Severability; Enforcement</U>. Any term or provision of this
Agreement that is held invalid or unenforceable in any jurisdiction by a court
of competent jurisdiction will, as to that jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or unenforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be held unenforceable by a court of competent jurisdiction, such
provision shall be interpreted to be only so broad as is enforceable.
</FONT>
<P align="center"><FONT size="2">&#091;remainder of this page left intentionally blank&#093;
</FONT>

<P align="center"><FONT size="2">31</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of
the date first above written.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
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    <TD width="1%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">BARNES &#038; NOBLE, INC.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">/s/ Joseph Lombardi</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><HR align="left" size="1" width="70%" noshade></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Joseph Lombardi</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chief Financial Officer</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">B&#038;N.COM HOLDING CORP.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">/s/ Joseph Lombardi</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><HR align="left" size="1" width="70%" noshade></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Joseph Lombardi</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chief Financial Officer</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">B&#038;N.COM ACQUISITION CORP.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">/s/ Joseph Lombardi</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><HR align="left" size="1" width="70%" noshade></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Joseph Lombardi</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chief Financial Officer</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">BARNESANDNOBLE.COM INC.</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
By:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">/s/ Marie J. Toulantis</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><HR align="left" size="1" width="70%" noshade></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Marie J. Toulantis</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Chief Executive
Officer</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">32</FONT>



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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>4
<FILENAME>y93070exv99w1.htm
<DESCRIPTION>PRESS RELEASE
<TEXT>
<HTML>
<HEAD>
<TITLE>PRESS RELEASE</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<P align="right"><FONT size="2"><B>Exhibit 99.1</B>
</FONT>


<P align="left"><FONT size="2"><IMG src="y93070y9307000.gif" alt="(BARNES &#038; NOBLE LOGO)">
</FONT>


<P align="left"><FONT size="2"><B>FOR IMMEDIATE RELEASE</B>
</FONT>


<P align="left"><FONT size="2"><b>C<SMALL>ONTACT</SMALL>:</b>
</FONT>


<P align="left"><FONT size="2">Kevin Frain<BR>
Chief Financial Officer<BR>
Barnes &#038; Noble.com<BR>
212-414-6093<BR>
kfrain@book.com
</FONT>


<P align="center"><FONT size="2"><B>BARNES &#038; NOBLE.COM AGREES TO<BR>
GOING PRIVATE TRANSACTION AT $3.05 PER SHARE</B>
</FONT>

<P align="left"><FONT size="2"><B>NEW YORK, NY </B>(January&nbsp;8, 2004) &#151; Barnes &#038; Noble.com (NASDAQ: BNBN) announced
today that it has signed a definitive merger agreement with Barnes &#038; Noble,
Inc. (NYSE: BKS). Under the terms of the merger, the holders of Barnes &#038;
Noble.com outstanding common stock, other than Barnes &#038; Noble, B&#038;N.com Holding
Corp. and their respective subsidiaries, will receive $3.05 per share in cash
for their shares, and Barnes &#038; Noble.com will become a privately held company,
wholly owned by Barnes &#038; Noble. The aggregate consideration payable in the
merger (including consideration in respect of &#147;in-the-money&#148; options) would be
approximately $150&nbsp;million, which places the total equity value of Barnes &#038;
Noble.com at approximately $513&nbsp;million.
</FONT>

<P align="left"><FONT size="2">The transaction has been unanimously approved by the board of directors of
Barnes &#038; Noble.com, following the unanimous recommendation of a special
committee of independent directors of the board. During the course of its
deliberations, the special committee has been advised by Dewey Ballantine LLP
as legal advisor and Credit Suisse First Boston LLC as financial advisor.
</FONT>

<P align="left"><FONT size="2">Barnes &#038; Noble.com also announced today that, in connection with entering into
the merger agreement, the shareholder lawsuits previously filed against Barnes
&#038; Noble.com and Barnes &#038; Noble with respect to the proposed merger have been
settled, subject to customary conditions, including court approval.
</FONT>

<P align="left"><FONT size="2">The closing of the merger is expected in late first quarter or early second
quarter of fiscal 2004, with the exact timing dependent on the review and
clearance of necessary filings by the Securities and Exchange Commission (the
&#147;SEC&#148;). Barnes &#038; Noble.com will file proxy materials with the SEC for a
special meeting of stockholders to vote on the proposed merger. Barnes &#038;
Noble, which controls approximately 96.6% of the voting power of Barnes &#038;
Noble.com, has committed to vote in favor of the merger.
</FONT>

<P align="left"><FONT size="2">The announcement of the merger agreement described above is neither a
solicitation of a proxy, an offer to purchase nor a solicitation of an offer to
sell shares to Barnes &#038; Noble.com. Barnes &#038; Noble.com intends to file and
deliver all forms, proxy statements, notices and documents required under state
and federal law regarding the proposed acquisition. Barnes &#038; Noble.com will be
filing preliminary proxy materials with the SEC for the special meeting of
stockholders to be held to vote on the proposed merger. Upon satisfactory
completion of the SEC&#146;s review and comment on the
</FONT>

<P align="center"><FONT size="2">&nbsp;
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="left"><FONT size="2">preliminary proxy materials,
Barnes &#038; Noble.com will call a special meeting of its
stockholders to vote on the merger and will file with the SEC and mail to Barnes &#038; Noble.com&#146;s
stockholders definitive proxy materials. Before making any voting or
investment decisions, investors and security holders of Barnes &#038; Noble.com are
urged to read the definitive proxy materials regarding the acquisition
carefully in their entirety, when they become available, because they will
contain important information about the proposed transaction, including, among
other things, the recommendation of Barnes &#038; Noble.com&#146;s board of directors in
respect of the merger. Copies of the definitive proxy materials and any
amendments or supplements thereto may be obtained without charge, as they
become available, at the SEC&#146;s website at http://www.sec.gov or at Barnes &#038;
Noble.com&#146;s website at http://www.barnesandnoble.com/ir. Investors and
stockholders also may obtain a free copy of the definitive proxy statement,
when it becomes available, and other documents filed with, or furnished to, the
SEC from Barnes &#038; Noble.com by directing a written request to Barnes &#038;
Noble.com, 76 Ninth Avenue, New York, NY 10011; Attn. Investor Relations, Kevin
M. Frain.
</FONT>

<P align="left"><FONT size="2">Barnes &#038; Noble.com, its directors, executive officers and certain members of
management and employees may be deemed to be participants in the solicitation
of proxies from Barnes &#038; Noble.com&#146;s stockholders in favor of the approval of
the transaction. Information regarding such officers and directors and their
ownership of Barnes &#038; Noble.com common stock is set forth in Barnes &#038;
Noble.com&#146;s Proxy Statement on Schedule&nbsp;14A for its 2003 Annual Meeting of
shareholders, filed with the SEC on June&nbsp;6, 2003.
</FONT>

<P align="left"><FONT size="2"><B>ABOUT BARNES &#038; NOBLE.COM</B>
</FONT>

<P align="left"><FONT size="2">Barnes &#038; Noble.com is a leading Internet-based retailer of books, music,
DVD/video and online courses. Since opening its online store (www.bn.com) in
March&nbsp;1997, Barnes &#038; Noble.com has attracted more than 15.8&nbsp;million customers
in 230 countries. Barnes &#038; Noble.com&#146;s bookstore includes the largest in-stock
selection of in-print book titles with access to approximately one million
titles for immediate delivery, supplemented by more than 30&nbsp;million listings
from its nationwide network of out-of-print, rare and used book dealers.
Barnes &#038; Noble.com offers its customers fast delivery, easy and secure
ordering, and rich editorial content.
</FONT>

<P align="left"><FONT size="2"><B>FORWARD-LOOKING STATEMENTS</B>
</FONT>

<P align="left"><FONT size="2">This release may contain forward-looking statements regarding expectations of
the company. These statements are based on the beliefs of the management of
the company as well as assumptions made by and information currently available
to the management of the company. Such statements reflect the current views of
the company with respect to future events, the outcomes of which are subject to
certain risks, including among others general economic and market conditions,
changes in product demand, the growth rate of Internet usage and e-commerce,
possible disruptions in the company&#146;s computer or telephone systems, possible
increases in shipping rates or interruptions in shipping service, effects of
competition, the level and volatility of interest rates, the performance of the
company&#146;s new product initiatives, the successful integration of acquired
businesses, unanticipated adverse litigation results or effects, product
shortages, changes in tax and other governmental rules and regulations
applicable to the company and other factors, risks and uncertainties more
specifically set forth in the company&#146;s public filings with the SEC. The
forward-looking statements herein speak only as of the date of this release.
The company expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statement included in
this release to reflect any changes in the company&#146;s expectations or any
changes in events, conditions, or circumstances on which any such statement is
based. 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 herein.
</FONT>




<P align="center"><FONT size="2">&nbsp;
</FONT>


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`
end

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</DOCUMENT>
</SUBMISSION>
