SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) November 12, 1998
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BARNES & NOBLE, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-12302 06-1196501
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
122 Fifth Avenue, New York, NY 10011
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 633-3300
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(Former Name or Former Address, if Changed Since Last Report)
Item 2. Acquisition or Disposition of Assets.
On November 12, 1998, Barnes & Noble, Inc ( the "Company")
completed the establishment of its previously announced 50%/50% joint venture
with Bertelsmann AG, an Akteingesellschaft organized and existing under the
laws of Germany ("BAG"), to operate the Company's online retail business,
barnesandnoble.com ("barnesandnoble.com").
Under the terms of the Formation Agreement among the Company, BAG
and certain of their respective subsidiaries (the "Formation Agreement"),
effective as of October 31, 1998, the Company established barnesandnoble.com
llc, a Delaware limited liability company (the "LLC"), to own and operate
barnesandnoble.com. BOL US Online, Inc., a Delaware corporation ("USO") and
wholly owned subsidiary of BAG, became a 50% member of the LLC following a
$150 million cash contribution to the LLC and a $75 million cash payment to
the Company. USO has also agreed to contribute an additional $50 million in
capital to the LLC upon the request of the Chairman and Chief Executive
Officer of the LLC. Additionally, USO will pay B&N, at the time of any
initial public offering of the business of the LLC prior to December 31,
2001, an additional amount, not to exceed $25 million, equal to the amount,
if any, by which the value of USO's interest in the LLC at the time of such
offering exceeds the value of USO's total investment in the LLC through the
date of such offering. The Formation Agreement is attached hereto as Exhibit
10.1.
The Amended and Restated Limited Liability Company Agreement (the
"LLC Agreement") sets forth the agreement of the parties as to the operation
and governance of the LLC. Pursuant to the LLC Agreement, the LLC has two
50% members: B&N.com Holding Corp., a wholly owned subsidiary of the Company
("B&N Holding"), and USO. Pursuant to the LLC Agreement the parties have
agreed that, with certain exceptions, the LLC will be the exclusive means
through which they sell English language books on the Internet, and the LLC
Agreement also provides for links between BAG's non-English language sites
and the LLC for the sale of books. The LLC Agreement contains non-compete
provisions which are operative during the term of the joint venture and for a
period of time thereafter. The LLC will be managed by a board of managers
consisting of six managers, with three managers appointed by B&N Holding and
three managers appointed by USO. Leonard Riggio, the Chairman and Chief
Executive Officer of the Company, is the LLC's initial Chairman, and Jonathan
Bulkeley, who has served as head of America Online's United Kingdom
operations for the past three years, will be the LLC's initial Chief
Executive Officer and report to Mr. Riggio. Certain major decisions of the
LLC require the consent of a majority of each of the B&N Holding managers and
the USO managers, certain related party transactions between the LLC and
either B&N or BAG require the consent of a majority of the other party's
managers and other decisions require a majority of all managers. As required
by the Formation Agreement, USO has agreed in the LLC Agreement to make
additional capital contributions to the LLC of up to $50 million. The LLC
Agreement also contains provisions restricting sales and transfers of
membership interests in the LLC. Pursuant to the LLC Agreement the parties
have also agreed to share certain technology. The LLC Agreement is attached
hereto as Exhibit 10.2.
Item 5. Other Events.
On November 6, 1998, the Company announced an agreement to purchase
the Ingram Book Group, a group of privately held subsidiaries of Ingram
Industries Inc., for $600 million, consisting of approximately $200 million
in cash and approximately $400 million in common stock of the Company. The
Ingram Book Group includes: Ingram Book Company, the nation's largest
wholesaler of general trade books; Retailer Services Inc.; Ingram Periodicals
Inc.; Spring Arbor Distributors Inc.; Publisher Resources Inc.; Ingram
International Inc.; Tennessee Book Company; Lighting Print Inc.; and Ingram
Library Services Inc.
The closing of the transaction is subject to satisfaction of
certain conditions, including the expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Upon the completion of the transaction, the Ingram Book Group is
expected to become a major component of the Company's distribution network
through Ingram Book Group's eleven strategically located distribution
centers.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibit 10.1 - Formation Agreement dated November 12, 1998 among
Barnes & Noble, Inc., B&N.com Holding Corp.,
barnesandnoble.com inc., B&N.com Member Corp.,
Bertelsmann AG and BOL.US Online, Inc.
Exhibit 10.2 - Amended and Restated Limited Liability Company
Agreement of barnesandnoble.com llc among Barnes &
Noble, Inc., B&N.com Holding Corp., Bertelsmann AG
and BOL.US Online, Inc.