Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
by and among
BARNES & NOBLE, INC.,
B&N.COM HOLDING CORP.,
B&N.COM ACQUISITION CORP.,
and
BARNESANDNOBLE.COM INC.
Dated as of January 8, 2004
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Table of Contents
Page
ARTICLE I. The Merger.........................................................2
Section 1.1. The Merger....................................................2
Section 1.2. Effective Time................................................2
Section 1.3. Closing.......................................................2
Section 1.4. Certificate of Incorporation; By-laws; Directors
and Officers..................................................2
Section 1.5. Effect of Merger on Common Stock..............................3
Section 1.6. Dissenting Shares.............................................4
Section 1.7. Stock Options.................................................4
Section 1.8. Exchange of Certificates; Payment for Class A Common Stock....4
ARTICLE II. Representations and Warranties of the Company.....................7
Section 2.1. Organization of the Companies.................................7
Section 2.2. Capitalization of the Companies...............................8
Section 2.3. Subsidiaries of the Companies.................................9
Section 2.4. Authorization.................................................9
Section 2.5. Opinion of Financial Advisor and Approval by the
Special Committee............................................10
Section 2.6. Brokers and Finders..........................................10
Section 2.7. Proxy Statement; Schedule 13E-3..............................10
Section 2.8. SEC Documents; Financial Statements; Sarbanes-Oxley..........11
Section 2.9. Absence of Certain Changes or Events.........................12
Section 2.10. No Undisclosed Material Liabilities..........................12
Section 2.11. Compliance with Laws and Court Orders........................12
Section 2.12. Litigation and Claims........................................12
Section 2.13. Employee Plans...............................................12
ARTICLE III. Representations and Warranties of the Barnes & Noble Parties....13
Section 3.1. Organization and Qualification...............................13
Section 3.2. Authorization................................................13
Section 3.3. Brokers and Finders..........................................14
Section 3.4. Proxy Statement; Schedule 13E-3..............................14
Section 3.5. Knowledge....................................................14
ARTICLE IV. Certain Covenants and Agreements.................................15
Section 4.1. Certain Actions Pending Merger...............................15
Section 4.2. Proxy Statement..............................................16
Section 4.3. Stockholders' Meeting........................................17
Section 4.4. Reasonable Efforts...........................................18
Section 4.5. Inspection of Records........................................18
Section 4.6. Notification of Certain Matters..............................19
Section 4.7. Disclosure...................................................19
Section 4.8. Directors' and Officers' Indemnification.....................19
Section 4.9. Stockholder Litigation.......................................21
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Section 4.10. Employee Matters.............................................22
ARTICLE V. Conditions Precedent..............................................22
Section 5.1. Conditions to each Party's Obligation to Effect the
Merger.......................................................22
Section 5.2. Conditions to the Obligation of the Company to Effect
the Merger...................................................23
Section 5.3. Conditions to the Obligation of the Barnes & Noble Parties to
Effect the Merger............................................23
ARTICLE VI. Termination, Amendment and Waiver................................24
Section 6.1. Termination..................................................24
Section 6.2. Effect of Termination........................................25
Section 6.3. Amendment....................................................25
Section 6.4. Waiver.......................................................25
ARTICLE VII. Miscellaneous...................................................25
Section 7.1. Definitions..................................................25
Section 7.2. Non-survival of Representations and Warranties...............29
Section 7.3. Expenses.....................................................29
Section 7.4. Applicable Law...............................................29
Section 7.5. Notices......................................................29
Section 7.6. Entire Agreement.............................................30
Section 7.7. Assignment...................................................30
Section 7.8. Headings References..........................................30
Section 7.9. Construction.................................................30
Section 7.10. Counterparts.................................................31
Section 7.11. No Third Party Beneficiaries.................................31
Section 7.12. Actions of the Company.......................................31
Section 7.13. Severability; Enforcement....................................31
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of January 8, 2004 (this
"Agreement"), by and among Barnes & Noble, Inc., a Delaware corporation ("Barnes
& Noble"), B&N.com Holding Corp., a Delaware corporation and a wholly owned
subsidiary of Barnes & Noble ("B&N Holding Corp."), B&N.com Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of B&N Holding Corp. ("B&N
Acquisition Corp."), and barnesandnoble.com inc., a Delaware corporation (the
"Company"). Certain capitalized terms used in this Agreement are defined in
Section 7.1.
RECITALS:
A. Barnes & Noble, through B&N Holding Corp., beneficially owns, within the
meaning of Rule 13d-3 of the Exchange Act, 119,138,502 shares of capital stock
of the Company (the "Capital Stock") 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 & Noble through B&N Holding Corp. consist of the following: (i)
4,138,500 shares of Class A common stock, par value $0.001 per share, of the
Company (the "Class A Common Stock") and (ii) 115,000,002 shares of Class A
Common Stock which B&N Holding Corp. has the right to acquire upon conversion of
its (A) one share of Class B common stock, par value $0.001 per share, of the
Company ("Class B Common Stock"), which represents the only share of Class B
Common Stock issued and outstanding, (B) one share of Class C common stock, par
value $0.001 per share, of the Company ("Class C Common Stock"), which
represents the only share of Class C Common Stock issued and outstanding, and
(C) 115,000,000 membership units (the "Membership Units") in barnesandnoble.com
llc, a Delaware limited liability company whose sole manager is the Company
("B&N LLC").
B. Barnes & Noble, through B&N Acquisition Corp., desires to acquire all of
the shares of Class 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 A Common Stock, by means of a merger of B&N Acquisition Corp. with and
into the Company in accordance with Section 251 of the Delaware General
Corporation Law (the "DGCL"), upon the terms and subject to the conditions of
this Agreement (the "Merger").
C. The respective Boards of Directors of the Company, Barnes & Noble, B&N
Holding Corp. and B&N Acquisition Corp. have (and in the case of the Company,
upon the recommendation of a special committee of its Board of Directors (the
"Special Committee")) 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.
D. In consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth in this Agreement, the Parties
hereby agree as follows:
ARTICLE I.
The Merger
Section 1.1. The Merger. At the Effective Time, upon the terms and subject
to the conditions set forth in this Agreement and in accordance with the DGCL,
B&N Acquisition Corp. will be merged with and into the Company, the separate
existence of B&N Acquisition Corp. will cease, and the Company will continue as
the surviving corporation (the "Surviving Corporation"). The Merger will have
the effects as provided by the DGCL and other applicable law.
Section 1.2. Effective Time. On the Closing Date, B&N Acquisition Corp. and
the Company will file with the Secretary of State of the State of Delaware a
certificate of merger (the "Certificate of Merger") 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 "Effective Time").
Section 1.3. Closing. Unless this Agreement shall have been terminated in
accordance with Section 6.1, the closing of the Merger (the "Closing") will take
place at the offices of Bryan Cave LLP, 1290 Avenue of the Americas, New York,
New York 10104 at 10:00 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 V, or at such other time and place as the Parties may agree
to in writing (the "Closing Date").
Section 1.4. Certificate of Incorporation; By-laws; Directors and Officers.
At the Effective Time:
(a) 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 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;
(b) except as required by Section 4.8(a), the By-laws of B&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
"barnesandnoble.com inc."), until thereafter amended as provided in
the DGCL or in the Certificate of Incorporation or By-laws of the
Surviving Corporation;
(c) the directors of B&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) their death, resignation
or removal or (ii) 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
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(d) the officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation until the earlier
of (i) 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.
Section 1.5. Effect of Merger on Common Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of B&N Acquisition
Corp., the Company or the holders of any shares of Class A Common Stock:
(a) each share of common stock, par value $0.001 per share, of B&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;
(b) subject to Section 1.5(c) and Section 1.6:
(i) each share of Class A Common Stock that is issued and outstanding
immediately prior to the Effective Time (other than shares of
Class A Common Stock held by B&N Holding Corp. and Barnes & Noble
and their respective subsidiaries) will be converted into the
right to receive $3.05 in cash, without interest (the "Merger
Consideration"), and, when so converted, will automatically be
canceled and will cease to exist;
(ii) each holder of a certificate representing any such shares of
Class A Common Stock will cease to have any rights with respect
to such shares of Class A Common Stock to the extent such
certificate represents such shares of Class A Common Stock,
except for the right to receive the Merger Consideration payable
to the shares of Class A Common Stock formerly represented by
such certificate upon surrender of such certificate in accordance
with Section 1.8; and
(iii) in the event that, subsequent to the date of this Agreement but
prior to the Effective Time, the outstanding shares of Class 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
(c) each share of Class A Common Stock, Class B Common Stock and Class C
Common Stock that is owned immediately prior to the Effective Time by
B&N Holding Corp. will be canceled and will cease to exist, no
consideration will be delivered in respect of such shares, and B&N
Holding Corp. will cease to have any rights with respect to any
certificates representing any such shares.
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Section 1.6. Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary, shares of
Class A Common Stock outstanding immediately prior to the Effective
Time and held by a holder who has demanded and perfected such holder's
right to appraisal of such shares in accordance with Section 262 of
the DGCL (the "Dissenting Shares") 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.
(b) If any holder of shares of Class A Common Stock who demands appraisal
of such holder's shares pursuant to the DGCL fails to perfect or
withdraws or otherwise loses such holder's right to appraisal, at the
later of the Effective Time or upon the occurrence of such event, such
holder's Dissenting Shares will be converted into and will represent
the right to receive the Merger Consideration, without interest, in
accordance with Section 1.5(b).
(c) The Company shall give Barnes & Noble:
(i) prompt notice of any written demand for appraisal or payment of
the fair value of any shares of Class A Common Stock, withdrawals
or attempted withdrawals of such demands, and any other
instruments served pursuant to the DGCL received by the Company;
and
(ii) the opportunity to direct all negotiations and proceedings with
respect to demands for appraisal under the DGCL.
(d) The Company shall not, except with the prior written consent of Barnes
& Noble, voluntarily make any payment with respect to any demands for
appraisals of Class A Common Stock, offer to settle or settle any such
demands or approve any withdrawal of any such demands.
Section 1.7. Stock Options. Immediately prior to the Effective Time, each
option to purchase shares of Class 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 "Option") 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) the excess of the Merger
Consideration payable for each share of Class A Common Stock over the exercise
price of each such Option, by (B) the number of shares of Class 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.
Section 1.8. Exchange of Certificates; Payment for Class A Common Stock.
(a) Exchange Agent. Prior to the Effective Time, Barnes & Noble will
appoint a bank or trust company reasonably acceptable to the Company
to act as exchange
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agent (the "Exchange Agent") for the payment of the Merger
Consideration. Immediately prior to the Effective Time, Barnes & Noble
will have deposited, or caused to be deposited, with the Exchange
Agent, for the benefit of the holders of shares of Class A Common
Stock (other than B&N Holding Corp. and Barnes & Noble), the aggregate
amount of cash payable under Section 1.5(b) in exchange for
outstanding shares of Class A Common Stock in accordance with this
Section 1.8 (the "Exchange Fund").
(b) Exchange Procedures.
(i) Promptly after the Effective Time (but no later than five (5)
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 A Common Stock
immediately prior to the Effective Time, whose shares were
converted into the right to receive cash pursuant to Section
1.5(b):
(1) 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 A Common Stock
will pass, only upon delivery of the certificates representing
such shares of Class 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
(2) instructions for use in effecting the surrender of the
certificates representing such shares of Class A Common Stock, in
exchange for the Merger Consideration.
(ii) Upon surrender to, and acceptance in accordance with Section
1.8(b)(iii) below by, the Exchange Agent of a certificate or
certificates formerly representing shares of Class A Common
Stock, the holder will be entitled to the amount of cash into
which the number of shares of Class A Common Stock formerly
represented by such certificate or certificates surrendered have
been converted under this Agreement.
(iii) The Exchange Agent will accept certificates formerly
representing shares of Class 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.
(iv) 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 A Common Stock and if such
certificates are presented to the Company for transfer, they will
be canceled against delivery of the Merger
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Consideration allocable to the shares of Class A Common Stock
represented by such certificate or certificates.
(v) 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:
(1) the certificate so surrendered is properly endorsed,
with signature guaranteed, or otherwise in proper form for
transfer; and
(2) 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.
(vi) Until surrendered as contemplated by this Section 1.8 and at any
time after the Effective Time, each certificate for shares of
Class 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 1.5(b). No interest
will be paid or will accrue on any amount payable as Merger
Consideration.
(c) No Further Ownership Rights in Class A Common Stock. The Merger
Consideration paid upon the surrender for exchange of certificates
formerly representing shares of Class A Common Stock in accordance
with this Section 1.8 will be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Class A Common
Stock formerly represented by such certificates.
(d) Termination of Exchange Fund. 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 A Common Stock upon
expiry of the period of six (6) months following the Effective Time.
Any holders of shares of Class A Common Stock prior to the Merger who
have not complied with this Section 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.
(e) No Liability. 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.
(f) Lost Certificates. If any certificate or certificates formerly
representing shares of Class A Common Stock is lost, stolen or
destroyed, the Exchange Agent will issue the Merger Consideration
deliverable in respect of, and in exchange for,
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such lost, stolen or destroyed certificate, as determined in
accordance with this Section 1.8, only upon:
(i) 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
(ii) 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
(iii) 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.
(g) Withholding Rights. 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 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 A Common Stock in respect of
which such deduction and withholding was made for all purposes of this
Agreement.
ARTICLE II.
Representations and Warranties of the Company
Except as set forth in the Company's disclosure letter delivered to the
Barnes & Noble Parties in connection with this Agreement (the "Company
Disclosure Letter") or the SEC Documents filed prior to the date of this
Agreement, the Company hereby represents and warrants to the Barnes & Noble
Parties as follows:
Section 2.1. Organization of the Companies.
(a) To the Company'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's knowledge B&N LLC is a limited
liability company duly organized, and B&N LLC is 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.
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(b) To the Company'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's knowledge B&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&N
LLC.
Section 2.2. Capitalization of the Companies.
(a) As of the date of this Agreement, the authorized capital stock of the
Company consists of (i) 750,000,000 shares of Class A Common Stock;
(ii) 1,000 shares of Class B Common Stock; (iii) 1,000 shares of Class
C Common Stock; and (iv) 50,000,000 shares of Preferred Stock, par
value $.001 per share (the "Preferred Stock"). As of January 7, 2004,
there were 48,280,087 shares of Class A Common Stock issued and
outstanding, one share of Class B Common Stock issued and outstanding,
one share of Class C Common Stock issued and outstanding and no shares
of Preferred Stock issued and outstanding. As of January 7, 2004,
there were 14,939,905 shares of Class 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.
(b) Except for Class A Common Stock issuable upon (i) the exercise of
outstanding Options and (ii) the conversion of Membership Units, Class
B Common Stock or Class 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.
(c) As of January 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'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.
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Section 2.3. Subsidiaries of the Companies. Other than the Company's
interest in B&N LLC and B&N LLC's 100% interest in BookQuest LLC, the Companies
do not own, directly or indirectly, any equity securities of any other Person.
Section 2.4. Authorization.
(a) 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.
(b) 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.
(c) 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 & 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' rights generally or by general
equitable principles.
(d) Consents.
(i) Assuming that the consents, approvals, qualifications, orders,
authorizations and filings referred to in Section 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:
(1) 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
(2) the Certificate of Incorporation or By-laws of the
Company or the organizational documents of B&N LLC, as amended
and in effect on the date of this Agreement; or
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(3) 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.
(ii) No consent, approval, qualification, order or authorization of,
or filing with, any Governmental Entity is required in connection
with the Company'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) 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) 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.
Section 2.5. Opinion of Financial Advisor and Approval by the Special
Committee.
(a) On or prior to the date of this Agreement, the Special Committee has
(i) approved the terms of this Agreement and the Merger as they relate
to the Public Stockholders, (ii) 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.
(b) 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.
Section 2.6. Brokers and Finders. 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's, finder's or similar fee or commission in
connection with or upon the consummation of the transactions contemplated by
this Agreement.
Section 2.7. Proxy Statement; Schedule 13E-3.
(a) None of the information to be supplied by either of the Companies for
inclusion in the Proxy Statement or the Schedule 13E-3 will, in the
case of the Schedule 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
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amendment thereof or supplement thereto) is filed with the SEC and at
the time the Proxy Statement is mailed to the Company'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.
(b) Each of the Proxy Statement and the Schedule 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.
Section 2.8. SEC Documents; Financial Statements; Sarbanes-Oxley.
(a) To the Company'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 1, 2002 (collectively, the "SEC
Documents").
(b) 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.
(c) The financial statements of the Company included in the SEC Documents
(i) comply as to form in all material respects with applicable
accounting requirements and the applicable published rules and
regulations of the SEC, (ii) 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 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) fairly present in all
material respects the financial position of the Company as of the
respective dates and the Company'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).
(d) The Company maintains "disclosure controls and procedures" (as defined
in Rules 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 302 of the Sarbanes-Oxley Act of 2002. The Company's
"disclosure controls and procedures" 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
11
communicated to the Company'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 303(c) of Regulation S-K promulgated under the Exchange Act).
Section 2.9. Absence of Certain Changes or Events. Since December 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.
Section 2.10. No Undisclosed Material Liabilities. Since September 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:
(a) liabilities or obligations reflected, reserved for or disclosed in the
Company's filed SEC Documents;
(b) 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
(c) liabilities or obligations incurred under this Agreement or in
connection with the transactions contemplated by this Agreement.
Section 2.11. Compliance with Laws and Court Orders. 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.
Section 2.12. Litigation and Claims. 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.
Section 2.13. Employee Plans. 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.
12
ARTICLE III.
Representations and Warranties of the Barnes & Noble Parties
Barnes & Noble, B&N Holding Corp. and B&N Acquisition Corp. (each, a
"Barnes & Noble Party" and together, the "Barnes & Noble Parties") hereby
jointly and severally represent and warrant to the Company as follows:
Section 3.1. Organization and Qualification. Each Barnes & Noble Party is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. B&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&N Acquisition Corp. has not incurred any obligations or
liabilities or engaged in any business activities of any kind prior to the
Closing.
Section 3.2. Authorization.
(a) Each Barnes & 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.
(b) The execution and delivery of this Agreement by each Barnes & Noble
Party and the consummation by each Barnes & Noble Party of the
transactions contemplated by this Agreement have been duly authorized
by all corporate action on the part of each Barnes & Noble Party.
(c) This Agreement has been duly executed and delivered by each Barnes &
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 & Noble Party, enforceable against
each Barnes & Noble Party in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, or similar laws affecting creditors' rights generally
or by general equitable principles.
(d) Consents.
(i) Assuming that the consents, approvals, qualifications, orders,
authorizations and filings referred to in Section 3.2(d)(ii) have
been made or obtained, the execution, delivery and performance by
each Barnes & 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:
(1) any term or provision of any state or federal law,
ordinance, rule or regulation to which any Barnes & 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
13
& Noble Parties, taken as a whole, or prevent the consummation of
the transactions contemplated by this Agreement; or
(2) the Certificate of Incorporation or By-Laws of each
Barnes & 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 & Noble Party is a party or by which any
Barnes & Noble Party is bound, or result in the creation of any
Lien upon any of the properties or assets of any Barnes & Noble
Party, which breach or default would have, together with all such
other breaches and defaults, a Material Adverse Effect on the
Barnes & Noble Parties, taken as a whole, or prevent the
consummation of the transactions contemplated by this Agreement.
(ii) 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 & Noble Party, or the consummation of any
other transaction contemplated on the part of any Barnes & Noble
Party under this Agreement, except (1) 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 (3) approvals, qualifications,
orders, authorizations, or filings, in each case the failure to
obtain which would not have a Material Adverse Effect on the
Barnes & Noble Parties, taken as a whole, or prevent the
consummation of the transactions contemplated by this Agreement.
Section 3.3. Brokers and Finders. Other than Citigroup
Global Markets, Inc., no Barnes & 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's, finder's, or similar fee or commission in
connection with or upon the consummation of the transactions
contemplated by this Agreement.
Section 3.4. Proxy Statement; Schedule 13E-3. None of the
information to be supplied by a Barnes & Noble Party for
inclusion in the Proxy Statement or Schedule 13E-3 will, in the
case of the Schedule 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'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 & Noble Party, in light of the circumstances
under which they are made, not misleading.
Section 3.5. Knowledge. Other than as set forth in the
Company Disclosure Letter, the Barnes & 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.
14
ARTICLE IV.
Certain Covenants and Agreements
Section 4.1. Certain Actions Pending Merger. Prior to the Effective Time
(i) the Companies shall conduct their respective businesses in the ordinary and
usual course of business, consistent with past practice and (ii) neither of the
Companies shall take any of the following actions, except with the prior written
consent of Barnes & Noble or as expressly contemplated or permitted by this
Agreement:
(a) declare, set aside or pay any dividends on or make any other
distribution in respect of any of its capital stock or Membership
Units;
(b) 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;
(c) 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 B Common
Stock or Class 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;
(d) amend its Certificate of Incorporation, By-laws or other
organizational documents in any manner;
(e) 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;
(f) 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;
(g) make or authorize any capital expenditures, other than capital
expenditures that are in the aggregate no greater than (i) $5.0
million from the date of this Agreement through March 31, 2004 and
(ii) $10.0 million from the date of this Agreement through July 15,
2004;
15
(h) except as may be required by changes in applicable law or GAAP, change
any method, practice or principle of accounting;
(i) 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;
(j) 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;
(k) settle or otherwise compromise any material litigation, arbitration or
other judicial or administrative dispute or proceeding relating to
either of the Companies; or
(l) the entering into any agreement to, or the making of any commitment
to, take any of the actions prohibited by this Section 4.1.
Section 4.2. Proxy Statement.
(a) 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' Meeting (together with any
amendments thereof or supplements thereto and any other required proxy
materials, the "Proxy Statement") and a Rule 13E-3 Transaction
Statement on Schedule 13E-3 (together with any amendments thereof or
supplements thereto, the "Schedule 13E-3") 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's stockholders as
promptly as practicable; provided, however, that prior to the filing
of the Proxy Statement and the Schedule 13E-3, the Company will
consult with the Barnes & Noble Parties and their counsel with respect
to such filings and shall afford the Barnes & Noble Parties reasonable
opportunity to review and comment thereon. The Barnes & 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 & 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 13E-3
or for additional information, and will supply the Barnes & 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
16
hand, with respect to the Proxy Statement, the Schedule 13E-3 or the
transactions contemplated hereby. If at any time prior to the Company
Stockholders' 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 13E-3, the Company will prepare
and, if appropriate, mail to its stockholders such amendment or
supplement; provided, however, that prior to such mailing, the Company
will consult with the Barnes & Noble Parties and their counsel with
respect to such amendment or supplement and shall afford the Barnes &
Noble Parties reasonable opportunity to review and comment thereon.
(b) Except under the circumstances described in Section 4.3, the Company
through the Company'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 13E-3.
Section 4.3. Stockholders' Meeting.
(a) 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 "Company Stockholders' Meeting"). The Company
Stockholders' Meeting will be held (on a date selected by the Company
in consultation with the Barnes & Noble Parties) as promptly as
practicable after the mailing of the Proxy Statement to the
stockholders of the Company. Barnes & Noble hereby agrees to cause B&N
Holding Corp. to vote all shares of its Class A Common Stock, Class B
Common Stock and Class 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 &
Noble (an "Adverse Company Board Recommendation").
(b) 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 6(d)(i) (a "Termination Recommendation")
if: (i) any Person makes an Acquisition Proposal; (ii) the Company
provides notice to Barnes & 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) business days after receipt thereof;
and (iii) 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
17
finance the transaction contemplated by the Acquisition Proposal (a
"Superior Proposal").
(c) Notwithstanding anything to the contrary contained herein, at any time
prior to the satisfaction of the conditions set forth in Article 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 "Non-Termination
Recommendation") 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' Meeting for the purpose of
adopting this Agreement and the transactions contemplated hereby, and
nothing contained herein shall relieve the Company of such obligation.
Section 4.4. Reasonable Efforts. Subject to the terms and conditions herein
provided, each of the Parties agrees to (i) 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) 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) 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)
the Exchange Act, and any other applicable federal or state securities laws, and
(B) 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 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.
Section 4.5. Inspection of Records. From the date hereof to the Effective
Time, the Companies shall (i) allow all designated officers, attorneys,
financial advisors, accountants and other representatives of Barnes & 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) make available for
inspection by Barnes & Noble and its counsel, financial advisors, auditors and
other authorized representatives such financial and
18
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
4.5, shall affect any representation or warranty in this Agreement of any Party
or any condition to the obligations of any Party.
Section 4.6. Notification of Certain Matters. From and after the date of
this Agreement until the Effective Time, each Party shall promptly notify the
other Parties of:
(a) 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&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;
(b) 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;
(c) the receipt of any material notice or other material communication
from any Governmental Entity in connection with the transactions
contemplated hereby; and
(d) any actions, suits, claims, investigations or proceedings commenced
or, to the knowledge of the Party, threatened against any Party or B&N
LLC which seeks to prohibit or prevent consummation of the
transactions contemplated hereby;
in each case, to the extent such event or circumstance is or becomes known to
the Party required to give such notice; provided, however, that the delivery of
any notice pursuant to this Section 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.
Section 4.7. Disclosure. 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.
Section 4.8. Directors' and Officers' Indemnification.
(a) 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
19
Company'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) 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&N LLC or served at the
request of the Company or B&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; provided, however, 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.
(b) From the Effective Time through the later of (i) 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 & Noble shall cause the Surviving
Corporation to) indemnify and hold harmless each present and former
officer and director of the Company and B&N LLC, and each person who
served at the request of the Company or B&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
"Indemnified Parties" and each, an "Indemnified Party"), against all
claims, losses, liabilities, damages, judgments, fines, fees, costs or
expenses, including reasonable attorneys' 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 & 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.
(c) The Surviving Corporation shall (and Barnes & Noble shall cause the
Surviving Corporation to) provide, for a period of not less than six
(6) years after the
20
Effective Time, the Company's current and former directors and
officers who are currently covered by the Company'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 "D&O
Insurance") that is no less favorable than the existing policy, or, if
substantially equivalent insurance coverage is unavailable, the most
advantageous D&O Insurance obtainable for an annual premium equal to
300% of the annual premium currently in place for the Company for such
insurance; provided, however, that the Surviving Corporation shall not
be required to pay an annual premium for the D&O Insurance in excess
of 300% of the annual premium currently in place for the Company for
such insurance; provided further, however, that in lieu of the
foregoing, any of the Barnes & Noble Parties shall be permitted to
procure "tail insurance coverage" to cover the Company's current and
former directors and officers who are currently covered by the
Company'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 & Noble shall cause the Surviving Corporation to) maintain such
coverage for a period of not less than six (6) years after the
Effective Time. In the event any claim is made against present or
former directors or officers of the Company or B&N LLC that is covered
or potentially covered by insurance, neither the Surviving Corporation
nor Barnes & Noble shall do anything that would forfeit, jeopardize,
restrict or limit the insurance coverage available for that claim
until the final disposition thereof.
(d) This Section 4.8 shall survive the Effective Time, is intended to
benefit the Surviving Corporation, the Company's current and former
directors and officers who are currently covered by the Company'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) 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 & Noble's option, Barnes & Noble, shall assume the obligations
set forth in this Section 4.8.
Section 4.9. Stockholder Litigation. 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.
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Section 4.10. Employee Matters.
(a) Following the Closing Date until January 31, 2005, Barnes & Noble
shall, or shall cause the Surviving Corporation to, provide employee
benefits to employees of the Company or B&N LLC (collectively,
"Employees") 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 & 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&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 & Noble.
(b) Barnes & Noble shall take all actions necessary to provide that all
Employees participating in an annual bonus plan or policy of the
Company or B&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.
(c) After the Closing Date, Barnes & Noble agrees to assume or guarantee
payment of all obligations of the Company or B&N LLC to Employees
under (i) the B&N LLC Deferred Compensation Plan and (ii) any
employment agreement between any Employee and the Company or B&N LLC.
ARTICLE V.
Conditions Precedent
Section 5.1. Conditions to each Party's Obligation to Effect the Merger.
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):
(a) No Injunctions or Restraints; Illegality. 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 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
22
enforced, which makes the consummation of the Merger illegal or
prevents or prohibits the Merger.
(b) Approval of Stockholders. 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 "Required Company Stockholder Vote").
(c) Consents. 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.
Section 5.2. Conditions to the Obligation of the Company to Effect the
Merger. 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:
(a) Representations and Warranties. The representations and warranties of
each Barnes & 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).
(b) Agreements. Each Barnes & 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.
(c) Certificate. The Company shall have received a certificate of a senior
executive officer of Barnes & Noble, dated the Closing Date,
certifying that the conditions specified in Section 5.2(a) and Section
5.2(b) have been fulfilled.
Section 5.3. Conditions to the Obligation of the Barnes & Noble Parties to
Effect the Merger. The obligation of the Barnes & 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:
(a) Representations and Warranties. 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).
(b) Agreements. 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.
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(c) Certificate. Barnes & 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
5.3(b) have been fulfilled.
(d) Material Adverse Effect. Since the date of this Agreement, there shall
not have occurred any Material Adverse Effect with respect to the
Companies, taken as a whole.
ARTICLE VI.
Termination, Amendment and Waiver
Section 6.1. Termination. This Agreement may be terminated and the Merger
may be abandoned as follows:
(a) at any time prior to adoption of this Agreement by the Required
Company Stockholder Vote, by the mutual written consent of Barnes &
Noble and the Company;
(b) by either Barnes & Noble or the Company, in each case by written
notice to the other, if:
(i) 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 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
(ii) 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.
(c) at any time prior to adoption of this Agreement by the Required
Company Stockholder Vote, by Barnes & Noble upon written notice to the
Company:
(i) if there has occurred an Adverse Company Board Recommendation; or
(ii) 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
5.3(b) shall have become incapable of fulfillment.
(d) at any time prior to adoption of this Agreement by the Required
Company Stockholder Vote, by the Special Committee upon written notice
to Barnes & Noble:
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(i) if there has occurred a Termination Recommendation; provided
that, prior to such termination the Special Committee shall have
given Barnes & Noble no less than five (5) business days notice;
or
(ii) upon a breach of any representation, warranty, covenant or
agreement on the part of a Barnes & Noble Party set forth in this
Agreement such that the conditions set forth in Section 5.2(a) or
Section 5.2(b) shall have become incapable of fulfillment.
Section 6.2. Effect of Termination. If this Agreement is terminated as
provided in Section 6.1, this Agreement will become null and void (except that
the provisions of Sections 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.
Section 6.3. Amendment. 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&N Acquisition Corp. shall be
made without first obtaining such approval.
Section 6.4. Waiver. At any time prior to the Effective Time, whether
before or after the satisfaction of the condition set forth in Section 5.1(b),
any of the Parties may:
(a) 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
(b) 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.
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.
ARTICLE VII.
Miscellaneous
Section 7.1. Definitions. In this Agreement, unless the context otherwise
provides, the following terms have the following meanings:
"Adverse Company Board Recommendation" has the meaning specified in Section
4.3(a).
"Affiliates" means, with respect to any Person, (i) any other Person that
directly or indirectly Controls, is Controlled by or is under common Control
with, such Person, or (ii) any director, officer, partner or member of
management of such Person.
25
"Acquisition Proposal" 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 A Common Stock
owned by the Public Stockholders, (ii) direct or indirect acquisition of all of
the shares of outstanding capital stock or ownership interests of either of the
Companies, (iii) direct or indirect acquisition of all or substantially all of
the assets of either of the Companies, or (iv) merger, consolidation, share
exchange, business combination or similar transaction involving either of the
Companies.
"Barnes & Noble" has the meaning specified in the introductory paragraph of
this Agreement.
"Barnes & Noble Party" and "Barnes & Noble Parties" has the meaning
specified in Article III.
"B&N Acquisition Corp." has the meaning specified in the introductory
paragraph of this Agreement.
"B&N Holding Corp." has the meaning specified in the introductory paragraph
of this Agreement.
"B&N LLC" has the meaning specified in Recital A hereof.
"Capital Stock" has the meaning specified in Recital A.
"Certificate of Merger" has the meaning specified in Section 1.2.
"Class A Common Stock" has the meaning specified in Recital A.
"Class B Common Stock" has the meaning specified in Recital A.
"Class C Common Stock" has the meaning specified in Recital A.
"Closing" has the meaning specified in Section 1.3.
"Closing Date" has the meaning specified in Section 1.3.
"Companies" means the Company and B&N LLC.
"Company" has the meaning specified in the introductory paragraph of this
Agreement.
"Company Disclosure Letter" has the meaning specified in Article II.
"Company Plan" means any "employee benefit plan" (within the meaning of
Section 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.
26
"Company Stockholders' Meeting" has the meaning set forth in Section
4.3(a).
"Contract" means any contract, license, lease, commitment, arrangement,
purchase or sale order, undertaking, understanding or other agreement, whether
written or oral.
"Control" 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.
"DGCL" has the meaning specified in Recital B.
"D&O Insurance" has the meaning specified in Section 4.8(c).
"Dissenting Shares" has the meaning specified in Section 1.6(a).
"Effective Time" has the meaning specified in Section 1.2.
"Employees" has the meaning specified in Section 4.10.
"Exchange Act" 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.
"Exchange Agent" has the meaning specified in Section 1.8(a).
"Exchange Fund" has the meaning specified in Section 1.8(a).
"GAAP" means accounting principles and practices generally accepted from
time to time in the United States.
"Governmental Entity" means a court, legislature or other agency or
instrumentality or political subdivision of federal, state or local government.
"Indemnified Party" has the meaning specified in Section 4.8(b).
"Judgment" means any judgment, order, award, writ, injunction or decree of
any Governmental Entity or arbitrator.
"Lien" 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.
"Material Adverse Effect": An event, fact, violation, breach, inaccuracy,
circumstance or other matter will be deemed to have a "Material Adverse Effect"
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) general economic,
business or industry conditions; (B) the taking of any action permitted or
required by this Agreement or from
27
the announcement or pendency of the Merger; (C) a decline in a Party's stock
price; or (D) the delisting of the Class A Common Stock from the NASDAQ National
Market.
"Membership Units" has the meaning specified in Recital A hereof.
"Merger" has the meaning specified in Recital B.
"Merger Consideration" has the meaning specified in Section 1.5(b)(i).
"Non-Termination Recommendation" has the meaning specified in Section
4.3(c).
"Option" has the meaning specified in Section 1.7.
"Party" means each of Barnes & Noble, B&N Holding Corp., B&N Acquisition
Corp. and the Company, and any other Person that may become a party to this
Agreement from time to time, and "Parties" means all of the foregoing.
"Person" means any individual, corporation, joint venture, partnership,
limited liability company, trust, unincorporated organization, Governmental
Entity or other entity.
"Preferred Stock" has the meaning specified in Section 2.2(a).
"Proxy Statement" has the meaning specified in Section 4.2(a).
"Public Stockholders" means all of the holders of shares of Class A Common
Stock, excluding B&N Holding Corp., Barnes & Noble and their respective
Affiliates and members of management of Barnes & Noble and the Company.
"Required Company Stockholder Vote" has the meaning specified in Section
5.1(b).
"Schedule 13E-3" has the meaning specified in Section 4.2(a).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated under such Act from time to time.
"SEC" means the Securities and Exchange Commission, and any successor or
replacement entity.
"SEC Documents" has the meaning specified in Section 2.8(a).
"Special Committee" has the meaning specified in Recital C.
"Superior Proposal" has the meaning specified in Section 4.3(b).
"Surviving Corporation" has the meaning specified in Section 1.1.
"Taxes" means (i) 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,
28
employment, social security, unemployment, excise, severance, stamp, occupation,
property and estimated taxes, customs duties, fees, assessments and charges of
any kind whatsoever, (ii) all interest, penalties, fines, additions to tax or
additional amounts imposed by any taxing authority in connection with any item
described in clause (i) or this clause (ii), and (iii) any transferee liability
in respect of any items described in clauses (i) and/or (ii).
"Termination Recommendation" has the meaning specified in Section 4.3(b).
Section 7.2. Non-survival of Representations and Warranties. 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 &
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 7.2 will not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time.
Section 7.3. Expenses. 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.
Section 7.4. Applicable Law. This Agreement will be governed by the laws of
the State of Delaware without regard to the conflicts of law principles thereof.
Section 7.5. Notices. 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) if sent by registered or certified mail in the United States,
return receipt requested upon receipt, five business days after being so sent;
(b) if sent by reputable overnight air courier, two business days after being so
sent; (c) if sent by telecopy transmission, with a copy mailed on the same day
in the manner provided in clause (a) or (b) above, when transmitted and receipt
is confirmed by telephone; or (d) if otherwise actually personally delivered,
when delivered, and shall be sent or delivered as follows:
If to the Company, to:
barnesandnoble.com inc.
76 Ninth Avenue
New York, NY 10011
Attention: Ms. Marie Toulantis
Fax: (212) 414-6107
with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, NY 10019
Attention: Morton A. Pierce, Esq.
Jack S. Bodner, Esq.
Fax: (212) 259-6333
29
If to any Barnes & Noble Party, to:
Barnes & Noble, Inc.
122 Fifth Avenue
New York, NY 10011
Attention: Mr. Leonard Riggio
Fax: (212) 675-0413
with a copy to:
Bryan Cave LLP
1290 Avenue of the Americas
New York, NY 10104
Attention: Jay M. Dorman, Esq.
Fax: (212) 541-1418
Such names and addresses may be changed by such notice.
Section 7.6. Entire Agreement. 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.
Section 7.7. Assignment. 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.
Section 7.8. Headings References. 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.
Section 7.9. Construction.
(a) 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.
(b) As used in this Agreement, the words "include" and "including," and
variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without
limitation."
(c) Except as otherwise indicated, all references in this Agreement to
"Section," "Sections," "Article" or "Recital" are intended to refer to
the Section, Sections, Article or Recital, as the case may be, of this
Agreement.
30
Section 7.10. Counterparts. 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.
Section 7.11. No Third Party Beneficiaries. Except as provided in Section
1.8 and Section 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.
Section 7.12. Actions of the Company. The Barnes & 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.
Section 7.13. Severability; Enforcement. 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.
[remainder of this page left intentionally blank]
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<page>
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
date first above written.
BARNES & NOBLE, INC.
By: /s/ Joseph Lombardi
--------------------------------------
Joseph Lombardi
Chief Financial Officer
B&N.COM HOLDING CORP.
By: /s/ Joseph Lombardi
--------------------------------------
Joseph Lombardi
Chief Financial Officer
B&N.COM ACQUISITION CORP.
By: /s/ Joseph Lombardi
--------------------------------------
Joseph Lombardi
Chief Financial Officer
BARNESANDNOBLE.COM INC.
By: /s/ Marie J. Toulantis
--------------------------------------
Marie J. Toulantis
Chief Executive Officer
32