-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ljm/EZk/hi8s8IwazsqR6GRToSsYpiEnaS4sMJho8D/lKP7heici83ueheQnb4PS /JrVbq1RhhKePISG/dSvXg== 0000910643-97-000029.txt : 19970320 0000910643-97-000029.hdr.sgml : 19970320 ACCESSION NUMBER: 0000910643-97-000029 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19970319 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: BARNES & NOBLE INC CENTRAL INDEX KEY: 0000890491 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS SHOPPING GOODS STORES [5940] IRS NUMBER: 061196501 STATE OF INCORPORATION: DE FISCAL YEAR END: 0129 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-42707 FILM NUMBER: 97559151 BUSINESS ADDRESS: STREET 1: 122 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10011 BUSINESS PHONE: 2126333300 MAIL ADDRESS: STREET 1: 122 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10011 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BARNES & NOBLE INC CENTRAL INDEX KEY: 0000890491 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS SHOPPING GOODS STORES [5940] IRS NUMBER: 061196501 STATE OF INCORPORATION: DE FISCAL YEAR END: 0129 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 122 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10011 BUSINESS PHONE: 2126333300 MAIL ADDRESS: STREET 1: 122 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10011 SC 13D 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 ____________________________________________________________________________ BARNES & NOBLE, INC. ____________________________________________________________________________ (Name of Issuer) Class A Stock, $.001 par value ____________________________________________________________________________ (Title of Class and Securities) 067774109 ____________________________________________________________________________ (CUSIP Number) Leonard Riggio Barnes & Noble, Inc. 122 Fifth Avenue New York, New York 10011 Tel. No.: (212) 633-3300 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) _________________________________________________________________ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 4, 1997 _________________________________________________________________ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box |__| __ Check the following box if a fee is being paid with the statement |__|. (A fee is not required if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) Note. Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 (the "Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D CUSIP No. 067774109 ----------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON LEONARD RIGGIO - ----------------------------------------------------------------- __ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |__| __ (b) |__| - ----------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------- 4 SOURCE OF FUNDS* BK - ----------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED __ PURSUANT TO ITEMS 2(d) or 2(E) |__| - ----------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES - ----------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 7,671,751 SHARES -------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 720,000 OWNED BY -------------------------------------------------- 9 EACH SOLE DISPOSITIVE POWER 7,671,751 REPORTING PERSON -------------------------------------------------- 10 SHARED DISPOSITIVE POWER 720,000 WITH - ----------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,391,751 - ----------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES __ CERTAIN SHARES* |__| 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 24.8% - ----------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - ---------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. This Amendment No. 3 to Schedule 13D is being filed by Leonard Riggio in connection with his purchase on March 4, 1997 of 1,200,000 shares of common stock, par value $.001 per share, of Barnes & Noble, Inc., a Delaware corporation. In accordance with Rule 101 of Regulation S-T, this Amendment No. 3 amends and restates in its entirety the Schedule 13D of Mr. Riggio dated October 12, 1993, as amended by Amendment No. 1 dated July 18, 1994 and Amendment No. 2 dated November 9, 1995. Item 1. Security and Issuer. This statement relates to the common stock, par value $.001 per share (the "Common Stock"), of Barnes & Noble, Inc., a Delaware corporation (the "Company"), with its principal executive offices at 122 Fifth Avenue, New York, New York 10011. Item 2. Identity and Background. (a) This statement is being filed by Leonard Riggio. (b) Mr. Riggio's business address is 122 Fifth Avenue, New York, New York 10011. (c) Mr. Riggio is the Chairman of the Board and Chief Executive Officer of the Company. (d) and (e) During the last five years, Mr. Riggio has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Mr. Riggio is a citizen of the United States of America. Item 3. Source and Amount of Funds or Other Consideration. On March 4, 1997, Mr. Riggio purchased an aggregate of 1,200,000 shares of Common Stock from Vendex International N.V., a corporation organized under the laws of the Netherlands ("Vendex"), and its wholly owned subsidiary Vendamerica B.V. ("Vendamerica"), for $34.00 per share in a private transaction. The proceeds paid by Mr. Riggio to Vendex and Vendamerica were borrowed from Morgan Guaranty Trust Company of New York ("Morgan Guaranty") pursuant to a demand loan. The loan is secured by Mr. Riggio's pledge of the shares of Common Stock that he directly owns, including the 1,200,000 shares purchased from Vendex and Vendamerica. Item 4. Purpose of Transaction. Mr. Riggio is the founder of the Company and has been its Chairman, Chief Executive Officer and principal stockholder since the Company's inception in 1986. He has acquired the Common Stock as an investment. (a)-(j) Mr. Riggio has no current plans or proposals with respect to any of the items described in (a) through (j) of Item 4. Item 5. Interest in Securities of the Issuer (a) and (b) Mr. Riggio is the beneficial owner of 8,391,751 shares, or 24.8%, of the Common Stock, 659,375 shares of which are issuable upon the exercise of stock options which are exercisable within 60 days after the date of this Amendment. Mr. Riggio is the direct beneficial owner of 6,345,584 shares of Common Stock, including the shares issuable upon the exercise of the aforementioned stock options, all of which shares Mr. Riggio has the sole power to vote and dispose of. Mr. Riggio is the indirect beneficial owner of 1,326,167 shares of Common Stock registered in the name of Barnes & Noble College Bookstores, Inc. ("B&N College"), a New York corporation of which Mr. Riggio directly owns all of the voting securities. As the owner of all of the voting securities of B&N College, Mr. Riggio has the sole power to direct the vote and disposition of the 1,326,167 shares owned by B&N College. Mr. Riggio is the indirect beneficial owner of 720,000 shares of Common Stock as a co-trustee of The Riggio Foundation, a charitable trust. Mr. Riggio shares the power to vote and dispose of such shares with his wife, Louise Riggio, who is the other co-trustee of The Riggio Foundation. (c) On March 4, 1997, Mr. Riggio purchased an aggregate of 1,200,000 shares of Common Stock from Vendex and Vendamerica for $34.00 per share in a private transaction. On February 25, 1997, Mr. Riggio acquired an aggregate of 86,100 shares of Common Stock in open market purchases on the New York Stock Exchange made in accordance with Rule 10b-18 of the Act, at per share prices (including customary broker's commissions) ranging from $30.85 to $31.10. The weighted average per share price (including customary broker's commissions) for such shares was approximately $31.03. Between January 17, 1997 and January 22, 1997, Mr. Riggio acquired an aggregate of 123,300 shares of Common Stock in open market purchases on the New York Stock Exchange made in accordance with Rule 10b-18 of the Act, at per share prices (including customary broker's commissions) ranging from $26.316 to $29.685. The weighted average per share price (including customary broker's commissions) for such shares was approximately $28.85. (d) and (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer The Company, Mr. Riggio, B&N College and Vendex are parties to a Securityholders Agreement, dated as of November 16, 1992 (the "Securityholders Agreement"), which is attached as Exhibit 1 to Amendment No. 2 to this Schedule 13D ("Amendment No. 2") and is incorporated herein by reference. Although most of the provisions of the Securityholders Agreement by their terms are no longer applicable, Section 2.4 of the Securityholders Agreement provides Vendex and certain transferees of Vendex with certain tag along sale rights in the event that either Mr. Riggio or B&N College or certain of their transferees proposes to transfer any shares of Common Stock other than pursuant to a public offering or Rule 144 transaction. On September 28, 1993, the Company issued to Mr. Riggio options to purchase 324,667 shares of Common Stock at $20.25 per share and options to purchase 334,708 shares of Common Stock at $27.00 per share pursuant to Option Certificates attached as Exhibit 2 to Amendment No. 2 and incorporated herein by reference (the "Option Certificates"). The options became effective by their terms on October 26, 1993, and are fully vested. The Company and Mr. Riggio are parties to a Registration Rights Agreement dated October 20, 1994 (the "Registration Rights Agreement") attached as Exhibit 3 to Amendment No. 2 and incorporated herein by reference, pursuant to which Mr. Riggio has demand registration rights with respect to 2,721,235 shares of Common Stock. Pursuant to a letter agreement dated July 19, 1995 attached as Exhibit 4 to Amendment No. 2 and incorporated herein by reference (the "Riggio/Vendex Letter Agreement"), Mr. Riggio agreed that, upon the request of Vendex or Vendamerica, subject to fiduciary duties applicable to directors, he will recommend to the Company's Board of Directors, and support and vote in favor of, granting registration rights to Vendex or Vendamerica for up to 1,000,000 shares of Common Stock. The proceeds paid by Mr. Riggio to Vendex and Vendamerica for his March 4, 1997 purchase of 1,200,000 shares of Common Stock were borrowed from Morgan Guaranty pursuant to a demand loan. The loan is secured by Mr. Riggio's pledge of the shares of Common Stock that he directly owns, including the 1,200,000 shares purchased from Vendex and Vendamerica. The loan is part of an advised line of credit of $100,000,000 in favor of Mr. Riggio and his wife, of which approximately $90,000,000 in principal amount is currently outstanding. The letter agreement, Demand Note and Pledge Agreements relating to the aforementioned loan and line of credit are attached hereto as Exhibits 5 through 8 and are incorporated herein by reference. Item 7. Material to be Filed as Exhibits 1. The Securityholders Agreement. 2. The Option Certificates. 3. The Registration Rights Agreement. 4. The Riggio/Vendex Letter Agreement. 5. Letter Agreement dated as of March 3, 1997 between Morgan Guaranty and Mr. and Mrs. Riggio. 6. Demand Note dated as of March 3, 1997 from Mr. Riggio to Morgan Guaranty. 7. Pledge Agreement dated as of March 3, 1997 between Mr. Riggio and Morgan Guaranty. 8. Pledge Agreement dated as of March 3, 1997 between Mr. and Mrs. Riggio and Morgan Guaranty. Exhibits 1 through 4 listed above were previously filed with Amendment No. 2 and have been omitted from this filing pursuant to Rule 13d-2(c) of the Act. Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and accurate. Dated: March 14, 1997 /s/Leonard Riggio ____________________________________ Leonard Riggio EX-5 2 March 3, 1997 Mr. and Mrs. Leonard Riggio 733 Park Avenue 17th Floor New York, New York 10021 Dear Mr. and Mrs. Riggio: Reference is made to the advised line of credit (the "Line of Credit") in the amount of $100,000,000 that Morgan Guaranty Trust Company of New York ("Morgan") has agreed to extend to you. This is to confirm our agreement that: - - Subject to its availability, the Line of Credit may be utilized by your obtaining loans thereunder, each in principal amount of at least $500,000. - - You shall give Morgan notice not later than (i) 12:00 p.m. (New York City time) on the date of each Domestic Loan and (ii) the third business day (as defined in the note evidencing loans under the Line of Credit) before each Eurodollar Loan specifying (a) the date of such Loan, (b) the principal amount of such Loan, (c) whether the Loan is to be a Domestic Loan or a Eurodollar Loan and (d) if a Loan is a Eurodollar Loan, the duration of the interest period elected with regard to the loan (one, three, six or twelve months). - - Repayments of loans must be in the minimum amount of $500,000. - - So long as you shall be indebted to Morgan with regard to any loans extended under the Line of Credit or the Line of Credit shall be in existence: - You shall maintain on deposit in your custody account no. 89318 (the "Custody Account") at Morgan Guaranty collateral acceptable to Morgan having a lending value, as established by Morgan in its sole discretion, at least equal to your outstanding obligations with regard to the Line of Credit. - You shall furnish to Morgan such information concerning your financial condition as Morgan shall reasonably request, including but not limited to financial statements on an annual basis. - You shall not create any indebtedness to other than Morgan in addition to that shown on your financial statement dated December 31, 1995 that you have delivered to Morgan other than (i) $1,000,000 in aggregate indebtedness from time to time outstanding and (ii) indebtedness secured by a residential mortgage not exceeding $7,000,000 in aggregate amount. - Shares of Barnes & Noble, Inc. purchased using the proceeds of the initial loan under the Line of Credit shall be held in the Custody Account and shall be registered for resale under the Securities Act of 1933 by not later than July 15, 1997. - - Loans under the Line of Credit shall be subject to Morgan's demand and the demand tenor thereof shall not be affected by this letter. The Line of Credit is not a committed lending facility and its availability shall be subject to Morgan's discretion. Please confirm your agreement with the contents of this letter by signing the enclosed copy of this letter in the space below and returning it to the undersigned. Very truly yours, Morgan Guaranty Trust Company of New York By: _________________________ Jeffrey Westcott, Vice President Agreed to: ________________________ LEONARD RIGGIO ________________________ LOUISE RIGGIO EX-6 3 DEMAND NOTE U.S. $100,000,000 March 3, 1997 FOR VALUE RECEIVED, LEONARD RIGGIO and LOUISE RIGGIO (collectively, the "Borrowers") promise to pay to the order of MORGAN GUARANTY TRUST COMPANY OF NEW YORK (the "Bank") ON DEMAND at its office at 60 Wall Street, New York, New York 10260-0060, U.S.A., for the account of its Lending office (as hereinafter defined), in lawful money of the United States of America in same day funds (or in such funds as may from time to time become customary for the settlement of international transactions in U.S. dollars), the lesser of (i) U.S. $100,000,000 or (ii) the then-outstanding principal amount of each loan (the "Loan" or "Loans") made by the Bank from time to time to the Borrowers hereunder. The Borrowers shall pay interest on the unpaid principal amount of such Loan until maturity on the dates and at a rate per annum as hereinafter set forth. As used herein, "Lending Office" means, (i) with regard to Loans bearing interest based on the Base Rate (as hereinafter defined) (collectively, "Domestic Loans"), the office of the Bank located at 60 Wall Street, New York, New York or such other office as the Bank may designate, and (ii) with regard to Loans bearing interest based on the Eurodollar Rate (as hereinafter defined) (collectively, "Eurodollar Loans"), the Nassau (Bahamas) office of the Bank or such other office as the Bank may designate. Interest based on the Base Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year) and paid for actual days elapsed (including the first day but excluding the last day). Interest based on the Eurodollar Rate shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed {including the first day but excluding the last day), Each Eurodollar Loan shall bear interest at a rate per annum (the "Eurodollar Rate") equal to the Adjusted Eurodollar Rate (as hereinafter defined) plus (i) 1 and 3/4% so long as the principal amount of outstanding Loans hereunder shall be greater than $50,000,000 and (ii) 1% at all other times {the "Eurodollar Margin"), payable on the last day of the Interest Period applicable thereto and, if such Interest Period is longer than three months, at intervals of three months after the first day thereof. The "Adjusted Eurodollar Rate" applicable to any Interest Period (as hereinafter defined) means a rate per annum equal to the quotient obtained (rounded upwards, if necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable London Interbank Offered Rate by (ii) 1.00 minus the Eurodollar Reserve Percentage. The "London Interbank Offered Rate" applicable to any Interest Period means the rate per annum at which deposits in U.S. dollars are offered to the Bank in the London interbank market at approximately 11:00 a.m. (London time) two business days prior to the first day of such Interest Period in an amount approximately equal to the principal amount of the Loan to which such Interest Period applies and for the period of time comparable to such Interest Period. The "Eurodollar Reserve Percentage" means for any day that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement for a member bank of the Federal Reserve System in New York City with deposits exceeding five billion dollars in respect of "Eurocurrency liabilities" (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on the Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United states office of the Bank to United States residents) The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Eurodollar Reserve Percentage. As used herein, the term "Interest Period" means the period beginning on the date of each Eurodollar Loan and ending on the numerically corresponding day in the calendar month one, three, six, or twelve months after such date: provided, that if ah Interest Period would otherwise end on a day which is not a business day it shall be extended to the next succeeding business day unless such business day falls in the next calendar month, in which case the Interest Period shall end on the next preceding business day; provided, further, that if the Bank shall not have received written notice to the contrary from the Borrowers at least five business days prior to the end of an Interest Period the Borrowers shall be deemed to have requested to select an Interest Period with a duration equal to that then ending. As used herein, the term "business day" means any day on which dealings in U.S, dollar deposits are carried on in the London interbank market and on which commercial banks are open for domestic and foreign exchange business in London and New York City. Notice by the Bank to the Borrowers of the rate of interest so determined shall be binding and conclusive upon the Borrowers in the absence of manifest error. Each Domestic Loan shall bear interest payable on the last day of each month at a rate per annum (the "Base Rate") for each day equal to the higher of (i) the rate of interest publicly announced by the Bank in New York City from time to time as its Prime Rate (the "Prime Rate") and (ii) the sum of l/2 of 1% plus the Federal Funds Rate (as defined below) for such day. "Federal Funds Rate" means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the business day next succeeding such day; provided that (i) if such day is not a business day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding business day as so published on the next succeeding business day, and (ii) if no such rate is so published on such next succeeding business day, the Federal Funds Rate for such day shall be the average rate quoted to the Bank on such day on such transactions as determined by the Bank. The Borrowers shall pay interest on the unpaid principal amount of each Loan after the maturity thereof and, to the extent permitted by law, on accrued and unpaid interest until paid at a rate per annum equal to the sum of 2% plus the Base Rate. If after the date of this Note the adoption of, or any change in, any applicable rule, executive order, decree, regulation or interpretation is amended, modified, enacted or promulgated by any government or governmental authority which (i) changes the basis of taxation of payments to the Bank or the Lending Office of the Bank extending a Eurodollar Loan (the "Eurodollar Lending Office") in respect to the principal of and interest on any Eurodollar Loan (except for changes in the rate of taxation on the overall net income of the Bank by the United States of America or the Eurodollar Lending Office of the Bank by the jurisdiction in which such Lending Office is located), or (ii) imposes, modifies or deems applicable any reserve, special deposit or similar requirement against any of the assets of, deposits with or for the account of, or credit extended by the Bank's Eurodollar Lending Office, or (iii) imposes on the Bank (or its Eurodollar Lending Office) or the London interbank market any other conditions affecting any Loan, the Loans or this Note, and the result of any of the foregoing is to increase the cost to the Bank (or its Eurodollar Lending Office) of agreeing to make or making, funding or maintaining any Loan evidenced by this Note or would have the effect of reducing the rate of return on the capital of the Bank of any entity controlling the Bank (its "Parent") as a consequence of agreeing to make any Loan, or to reduce the amount of any sum receivable by the Bank (or its Eurodollar Lending Office) on this Note, then the Borrowers shall pay to the Bank or its Parent upon demand such amount as will compensate the Bank or its Parent for such additional cost or reduction in return. A certificate of the Bank setting forth the basis for the determination of any amount necessary to compensate the Bank or its Parent as aforesaid shall be conclusive as to the determination of such amount in the absence of manifest error. If, after the date of this Note, the introduction of, or any change in, any applicable law, rule or regulation or in the interpretation or administration thereof by any governmental authority charged with the interpretation or administration thereof or compliance by the Bank (or its Eurodollar Lending Office) with any request or directive (whether or not having the force of law) of any such authority shall make it unlawful or impossible for the Bank (or its Eurodollar Lending Office) to make, maintain or fund its Eurodollar Loans, the Bank forthwith shall so notify the Borrowers. Upon receipt of such notice, the Borrowers shall prepay in full the then outstanding principal amount of each Eurodollar Loan, together with accrued interest thereon, on either (a) the last day of the Interest Period applicable thereto if the Bank may lawfully continue to maintain and fund such Loan to such day or (b) immediately if the Bank may not lawfully continue to fund and maintain such Loan to such day. Eurodollar Loans may not be repaid at the Borrowers' option on a date other than the last day of an Interest Period. If, however, the Borrowers make any payment of principal of any Eurodollar Loan on any day other than the last day of the Interest Period applicable thereto, the Borrowers shall reimburse the Bank on demand for any loss or expense incurred by it as a result of the timing of such payment, including (without limitation) any loss incurred in obtaining, liquidating or employing deposits from third parties, provided that the Bank shall have delivered to the Borrowers a certificate as to the amount of such loss, which certificate shall be conclusive in the absence of manifest error. Domestic Loans may be prepaid at any time without penalty or premium. The Borrowers hereby waive diligence, presentment, demand, protest and notice of any kind whatsoever, The non-exercise by the Bank of its rights hereunder in any particular instance shall not constitute a waiver of any right in any subsequent instance. The holder of this Note shall, and is hereby authorized by the Borrowers to, endorse on the schedule forming a part hereof appropriate notations evidencing the date and the amount of each Loan made by the Bank, the date and amount of each payment of principal, whether such Loan is a Domestic or Eurodollar Loan and, in the case of Eurodollar Loans, the Eurodollar Rate applicable thereto. If this Note is not Paid in full when due the Borrowers agree to pay all costs and expenses of collection, including reasonable attorneys' fees. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. The Borrowers hereby submit to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State Court sitting in New York City for purposes of all legal, proceedings arising out of or relating to this Note or any agreement received by the Bank in connection herewith. The Borrowers irrevocably waive, to the fullest extent permitted by law, any objection which the Borrowers may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in inconvenient forum. The Borrowers hereby irrevocably waive any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or any agreement received by the Bank in connection herewith. The obligations of the Borrowers hereunder shall be joint and several. ______________________________ LEONARD RIGGIO ______________________________ LOUISE RIGGIO LOANS AND PAYMENTS OF PRINCIPAL Amount Type Amount of of of Principal Maturity Notation Date Loan Loan Repaid Date* Made By - ---- ------ ---- --------- -------- -------- *Subject to Prior Demand EX-7 4 PLEDGE AGREEMENT PLEDGE AGREEMENT, dated as of March 3, 1997 between LEONARD RIGGIO (the "Pledgor") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK (the "Bank"). WHEREAS, the Bank may extend and has already extended loans or other credit facilities or financial accommodations (collectively, the "Loans") to or on behalf of the Pledgor from time to time; NOW, THEREFORE, to induce the Bank to extend the Loans and to secure his obligations (collectively, the "Secured Obligations") with regard thereto, and for other good consideration, the receipt and adequacy of which are hereby acknowledged, the Pledgor and the Bank agree as follows: 1. As collateral security for the performance of the Secured Obligations, the Pledgor hereby pledges and assigns to the Bank, and grants to the Bank a security interest in, those securities identified in Exhibit A hereto, all proceeds and products thereof and distributions thereon, and all other shares of Barnes & Noble, Inc. from time to time maintained by him in custody with the Bank (collectively, the "Collateral. 2. The Pledgor represents and warrants that: (i) all of the Collateral is and will be validly and duly pledged to the Bank in accordance with law, and agrees to defend the Bank's right, title, lien and security interest in and to the Collateral against the claims and demands of all persons whomsoever, (ii) he has, and will have upon deposit with the Bank, title to all of the Collateral, free and clear of all claims, mortgages, pledges, liens, encumbrances and security interests of every nature whatsoever, and that no consent or approval of any person, entity or governmental or regulatory authority, or of any securities exchange was or is necessary to the validity of this pledge, (iii) the information set forth in Exhibit A is true and correct and (iv) no liens, security interests or adverse claims other than in favor of the Bank exist upon any of the Collateral. 3. The Pledgor will faithfully preserve and protect the Bank's security interest in the Collateral and will do all such acts and things and execute and deliver all such documents and instruments, including without limitation further pledges, assignments, financing statements and continuation statements, as the Bank in its sole discretion may reasonably deem necessary or advisable from time to time in order to preserve, protect and perfect such security interest. The Pledgor hereby authorizes the Bank to sign and file financing and continuation statements without the signature of the Pledgor. 4. The Pledgor will not permit any liens, security interests or adverse claims other than in favor of the Bank to exist upon any of the Collateral and will not, without the prior express written consent of the Bank, pledge any additional shares of the Corporation (as defined in Exhibit A) to any person or entity other than the Bank. 5. The Pledgor will not take any action that could in any way limit or adversely affect the ability of the Bank to realize upon its rights on the collateral. 6. The Pledgor agrees to notify the Bank: (a) at least 72 hours prior to donating, or committing any other act with respect to any securities of the same class (or convertible into) shares of the Corporation which might render the Collateral not salable; and (b) immediately of any development or occurrence which to his knowledge would render any of the Collateral not readily saleable under Rules 144 or 145(d) or the Securities Act of 1933, whichever is applicable. 7. If any time the Secured Obligations shall be in default the Bank may cause all or any of the Collateral to be transferred to or registered in its name or the name of its nominee or nominees. 8. In the event the Secured Obligations shall be in default (i) all dividends, interest and other distributions at any time and from time to time declared or paid upon any of the Collateral shall become part of the Collateral and (ii) the Bank shall be entitled to exercise all voting power with respect to the Collateral. 9. If any of the Secured Obligations shall not be performed forthwith when due in accordance with their terms, the Bank, without obligation to resort to other security, shall have the right at any time and from time to time to sell, resell, assign and deliver, in its discretion, all or any of the Collateral, in one or more parcels at the same or different times, and all right, title and interest, claim and demand therein and right of redemption thereof, on any securities exchange on which the Collateral or any of it may be listed, or at public or private sale, for cash, upon credit or for future delivery, and in connection therewith the Bank may grant options, the Pledgor hereby waiving and releasing any and all equity or right of redemption. If any of the Collateral is sold by the Bank upon credit or for future delivery, the Bank shall not be liable for the failure of the purchaser to purchase or pay for the same and, in the event of any such failure, the Bank may resell such Collateral. In no event shall the Pledgor be credited with any part of the proceeds of sale of any Collateral until cash payment thereof has actually been received by the Bank. In addition, should any portion of the Collateral consist of a time deposit or deposits with a financial institution, the Bank may terminate such deposit or deposits prior to the maturity thereof and any penalties payable in connection therewith shall be for the sole account of the Pledgor. 10. No demand, advertisement or notice, all of which are hereby expressly waived, shall be required in connection with any sale or other disposition of any part of the Collateral which threatens to decline speedily in value or which is of a type customarily sold on a recognized market; otherwise the Bank shall give the Pledgor at least five business days' prior notice of the time and place of any public sale and of the time after which any private sale or other disposition is to be made, which notice the Pledgor agrees is reasonable, all other demands, advertisements and notices being hereby waived. The Bank shall not be obligated to make any sale of Collateral if it shall determine not to do so, regardless of the fact that notice of sale may have been given. The Bank may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In the case of all sales of Collateral, public or private, the Pledgor shall pay all costs and expenses of every kind for sale or delivery, including brokers' and attorneys' fees, and after deducting such costs and expenses from the proceeds of sale, the Bank shall apply any residue to the payment of principal, interest and other amounts owed with regard to the Loans. The balance, if any, remaining after payment in full of all such amounts shall be paid to the Pledgor, subject to any duty of the Bank imposed by law to the holder of any subordinate security interest in the Collateral known to the Bank. 11. The Pledgor recognizes that the Bank may be unable to effect a public sale of all or a part of the Collateral by reason of certain prohibitions contained in the Securities Act of 1933, as amended, as now or hereafter in effect, or in applicable Blue Sky or other state securities laws, as now or hereafter in effect, but may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such Collateral for their own account, for investment and not with a view to the distribution or resale thereof. The Pledgor agrees that private sales so made may be at prices and other terms less favorable to the seller than if such Collateral were sold at public sales, and that the Bank has no obligation to delay sale of any such Collateral for the period of time necessary to permit the issuer of such Collateral, even if such issuer would agree, to register such Collateral for public sale under such applicable securities laws. The Pledgor agrees that private sales made under the foregoing circumstances shall be deemed to have been made in a commercially reasonable manner. 12. The remedies provided herein in favor of the Bank shall not be deemed exclusive, but shall be cumulative, and shall be in addition to all other remedies in favor of the Bank existing at law or in equity. 13. The Bank shall have the right, for and in the name, place and stead of the Pledgor, to execute endorsements, assignments or other instruments of conveyance or transfer with respect to all or any of the Collateral. 14. The Bank shall have no duty as to the collection or protection of the Collateral or any income thereon or as to the preservation of any rights pertaining thereto, beyond the safe custody of any thereof actually in its possession. With respect to any maturities, calls, conversions, exchanges, redemptions, offers, tenders or similar matters relating to any of the Collateral (herein called "events"), the Bank's duty shall be fully satisfied if (i) the Bank exercises reasonable care to ascertain the occurrence and to give reasonable notice to the Pledgor of any events applicable to any Collateral which is registered and held in the name of the Bank or its nominee, (ii) the Bank gives the Pledgor reasonable notice of the occurrence of any events, of which the Bank has received actual knowledge, as to any securities which are in bearer form or are not registered and held in the name of the Bank or its nominee (the Pledgor agreeing to give the Bank reasonable notice of the occurrence of any events applicable to any securities in the possession of the Bank of which the Pledgor has received knowledge), and (iii) in the exercise of its sole discretion (a) the Bank endeavors to take such action with respect to any of the events as the Pledgor may reasonably and specifically request in writing in sufficient time for such action to be evaluated and taken or (b) if the Bank determines that the action requested might adversely affect the value of the Collateral as collateral, the collection of the Loans, or otherwise prejudice the interests of the Bank, the Bank gives reasonable notice to the Pledgor that any such requested action will not be taken and if the Bank makes such determination or if the Pledgor fails to make such timely request, the Bank takes such other action as it deems advisable in the circumstances. Except as hereinabove specifically set forth, the Bank shall have no further obligation to ascertain the occurrence of, or to notify the Pledgor with respect to, any events and shall not be deemed to assume any such further obligation as a result of the establishment by the Bank of any internal procedures with respect to any securities in its possession. The Pledgor releases the Bank from any claims, causes of action and demands at any time arising out of or with respect to this Agreement, the Collateral and/or any actions, taken or omitted to be taken by the Bank with respect thereto, and the Pledgor hereby agrees to hold the Bank harmless from and with respect to any and all such claims, causes of action and demands. 15. The Pledgor hereby irrevocably appoints the Bank as the Pledgor's attorney-in-fact for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument which either may deem necessary or advisable to accomplish the purposes hereof. Without limiting the generality of the foregoing, the Bank shall have the right and power to receive, endorse and collect all checks and other orders for the payment of money made payable to the Pledgor representing any interest or dividend or other distribution payable in respect of the Collateral or any part thereof and to give full discharge for the same. 16. No delay on the part of the Bank in exercising any of its options, powers or rights, or partial or single exercise thereof, shall constitute a waiver thereof. The pledge of the Collateral hereby shall not in any way preclude or restrict any recourse by the Bank against the Borrower or any other person or entity liable with regard to the Secured Obligations or any other collateral therefor. 17. Upon the repayment in full of all principal, interest and other amounts that may be payable with regard to the Loans, the Pledgor shall be entitled to the return of all of the Collateral and of all other property and cash which have not been used or applied toward the payment of such principal, interest and other amounts free and clear of all liens in favor of the Bank or any encumbrances imposed by the Bank. Except as aforesaid, the assignment by the Bank to the Pledgor of such Collateral and other property shall be without representation or warranty of any nature whatsoever and wholly without recourse. 18. Any notice or demand upon the Pledgor shall be deemed to have been sufficiently given for all purposes thereof if mailed, postage prepaid, by registered or certified mail, return receipt requested, or if delivered, to the Pledgor at the address specified below, or at such other address as the Pledgor may theretofore have designated in writing and given in like manner to the Bank. 19. Any waiver, permit, consent or approval of any kind or character on the part of the Bank of any breach or default under this Agreement or any such waiver of any provision or condition of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. 20. This Agreement and the rights and obligations of the Bank and the Pledgor hereunder shall be construed in accordance with and governed by the laws of the State of New York, cannot be changed orally and shall bind and inure to the benefit of the Pledgor and the Bank and their respective successors and assigns, and all subsequent holders of the Secured Obligations. 21. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instrument. 22. This Agreement replaces all prior agreements between the Pledgor and the Bank relating to the Collateral contained in any promissory note delivered to the Bank by the Pledgor. 23. The Pledgor agrees to pay the Bank on demand all costs, including legal fees, incurred by the Bank in connection with the administration and enforcement of this Agreement. IN WITNESS WHEREOF, the Pledgor and the Bank have caused this Agreement to be duly executed as of the day and year first above written. _____________________________ LEONARD RIGGIO Address: 733 Park Avenue, 17th Floor New York, New York 10021 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By: _________________________ Jeffrey Westcott, Vice President Address: 9 West 57th Street New York, New York 10019 Attention: Jeffrey Westcott Exhibit A THE COLLATERAL Name of Issuer of Pledged Shares (the "Corporation") No. of Shares Class of Shares Certificate No. Barnes & Noble, Inc. (SEE ATTACHED SCHEDULE) Date of Acquisition Nature of Acquisition Date on which Shares of Shares of Shares fully paid for NUMBER OF SHARES OF THE CORPORATION OWNED BY PLEDGOR The Pledgor represents that: (a) the total number of shares that he directly owns of the class of security of the Corporation hereby being pledged is 4,486,209, and (b) the total number of all other classes of the securities of the Corporation directly or indirectly owned by the Pledgor is NONE SALES BY PLEDGOR OF STOCK OF THE CORPORATION The Pledgor represents to the Bank that during the last three months he, or any person(s) who Pledgor must aggregate his sales with under Rule 144 of the Securities Act of 1933, as amended, (a) has sold 0 shares of the Corporation; and (b) has sold 0 convertible securities which are convertible into shares of the Corporation. In addition, the Pledgor and such person(s) currently have no sale orders open with any broker and that he and they will not place any such sale orders to sell shares of the Corporation or such convertible securities without the prior express written consent of the Bank. EXISTING PLEDGES TO OTHERS OF STOCK OF THE CORPORATION No. of Pledged Shares Date of Pledge Pledgee NONE BARNES & NOBLE, INC. COMMON STOCK --------------------------------- ACQUISITON AND NATURE OF CERT NO. NO. OF SHARES FULL PAYMENT DATE ACQUISITION - -------- ------------- ----------------- ------------ 4 100 12/30/86 Original Issue 7 106 12/30/86 Original Issue 12 283 12/30/86 Original Issue 90 1,194,915 12/30/86 Original Issue 243 727,800 12/30/86 Original Issue 412 630,000 12/30/86 Original Issue 485 398,769 11/16/92 Original Issue 607 491,167 12/30/86 Original Issue 758 833,669 11/16/92 Original Issue 23,300 1/17/97 Open Market Purchase 25,000 1/21/97 Open Market Purchase 10,000 1/21/97 Open Market Purchase 7,000 1/21/97 Open Market Purchase 5,000 1/21/97 Open Market Purchase 24,900 1/22/97 Open Market Purchase 22,600 1/22/97 Open Market Purchase 5,500 1/22/97 Open Market Purchase 10,000 2/25/97 Open Market Purchase 26,100 2/25/97 Open Market Purchase 50,000 2/25/97 Open Market Purchase EX-8 5 PLEDGE AGREEMENT PLEDGE AGREEMENT, dated as of March 3, 1997 between LEONARD RIGGIO AND LOUISE RIGGIO (the "Pledgors") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK (the "Bank"). WHEREAS, the Bank may extend loans or other credit facilities or financial accommodations (collectively, the "Loans") to or on behalf of either or both of the Pledgors; NOW, THEREFORE, to induce the Bank to extend the Loans and to secure their obligations (collectively, the "Secured Obligations") with regard thereto, for good consideration, the receipt and adequacy of which are hereby acknowledged, the Pledgors and the Bank agree as follows: 1. As collateral security for the performance of the Secured Obligations, the Pledgors hereby pledge and assign to the Bank, and grant to the Bank a security interest in, all assets and property now and hereafter maintained on deposit by the Pledgors in Custody Account No. 89318 at the Bank (such assets and property being hereinafter referred to as the "Collateral" and such account being hereinafter referred to as the "Collateral Account"). Upon the consent of the Bank the Pledgors may from time to time withdraw portions of the Collateral and substitute other property acceptable to the Bank therefor, which substituted property shall then be deemed to constitute a portion of the Collateral, provided, that the Pledgors shall at all times maintain Collateral in the Collateral Account having a lending value, as determined by the Bank in its sole discretion, at least equal to the Dollar amount of the Secured Obligations. 2. A. The Pledgors represent and warrant that all of the contents of the Collateral Account are and will be validly and duly pledged to the Bank in accordance with law, and agree to defend the Bank's right, title, lien and security interest in and to the Collateral against the claims and demands of all persons whomsoever. The Pledgors also represent and warrant to the Bank that they have, and will have upon deposit with the Bank, title to all of the contents of the Collateral Account, free and clear of all claims, mortgages, pledges, liens, encumbrances and security interests of every nature whatsoever, and that no consent or approval of any governmental or regulatory authority, or of any securities exchange, was or is necessary to the validity of this pledge. B. The Pledgors will faithfully preserve and protect the Bank's security interest in the Collateral and will do all such acts and things and execute and deliver all such documents and instruments, including without limitation further pledges, assignments, financing statements and continuation statements, as the Bank in its sole discretion may reasonably deem necessary or advisable from time to time in order to preserve, protect and perfect such security interest. The Pledgors hereby authorize the Bank to sign and file financing and continuation statements without the signature of the Pledgors. C. The Pledgors represent and warrant that no liens, security interests or adverse claims other than in favor of the Bank exist upon any of the contents of the Collateral Account. The Pledgors will not permit any liens, security interests or adverse claims other than in favor of the Bank to exist upon any of the contents of the Collateral Account. The Pledgors shall not enter into any agreement imposing any restrictions on the transferability of the Collateral or that would otherwise lessen in any way its value as collateral. 3. If at any time the Secured Obligations shall be in default the Bank may cause all or any of the Collateral to be transferred to or registered in its name or the name of its nominee or nominees. 4. In the event the Secured Obligations shall be in default (i) all dividends, interest and other distributions at any time and from time to time declared or paid upon any of the Collateral shall become part of the Collateral and (ii) the Bank shall be entitled to exercise all voting power with regard to the Collateral. 5. If any of the Secured Obligations shall not be performed forthwith as and when due in accordance with their terms, the Bank, without obligation to resort to other security, shall have the right at any time and from time to time to sell, resell, assign and deliver, in its discretion, all or any of the Collateral, in one or more parcels at the same or different times, and all right, title and interest, claim and demand therein and right of redemption thereof, on any securities exchange on which the Collateral or any of it may be listed, or at public or private sale, for cash, upon credit or for future delivery, and in connection therewith the Bank may grant options, the Pledgors hereby waiving and releasing any and all equity or right of redemption. If any of the Collateral is sold by the Bank upon credit or for future delivery, the Bank shall not be liable for the failure of the purchaser to purchase or pay for the same and, in the event of any such failure, the Bank may resell such Collateral. In no event shall the Pledgors be credited with any part of the proceeds of sale of any Collateral until cash payment thereof has actually been received by the Bank. In addition, should any portion of the Collateral consist of a time deposit or deposits with a financial institution, the Bank may terminate such deposit or deposits prior to the maturity thereof and any penalties payable in connection therewith shall be for the sole account of the Pledgors. 6. No demand, advertisement or notice, all of which are hereby expressly waived, shall be required in connection with any sale or other disposition of any part of the Collateral which threatens to decline speedily in value or which is of a type customarily sold on a recognized market; otherwise the Bank shall give the Pledgors at least five business days' prior notice of the time and place of any public sale and of the time after which any private sale or other disposition is to be made, which notice the Pledgors agree is reasonable, all other demands, advertisements and notices being hereby waived. The Bank shall not be obligated to make any sale of Collateral if it shall determine not to do so, regardless of the fact that notice of sale may have been given. The Bank may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, be made at the time and place to which the same was so adjourned. In the case of all sales of Collateral, public or private, the Pledgors shall pay all costs and expenses of every kind for sale or delivery, including brokers' and attorneys' fees, and after deducting such costs and expenses from the proceeds of sale, the Bank shall apply any residue to the payment of principal, interest and other amounts owed with regard to the Secured Obligations. The balance, if any, remaining after payment in full of all such amounts shall be paid to the Pledgors, subject to any duty of the Bank imposed by law to the holder of any subordinate security interest in the Collateral known to the Bank. 7. The Pledgors recognize that the Bank may be unable to effect a public sale of all or a part of the Collateral by reason of certain prohibitions contained in the Securities Act of 1933, as amended, as now or hereafter in effect, or in applicable Blue Sky or other state securities laws, as now or hereafter in effect, but may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such Collateral for their own account, for investment and not with a view to the distribution or resale thereof. The Pledgors agree that private sales so made may be at prices and other terms less favorable to the seller than if such Collateral were sold at public sales, and that the Bank has no obligation to delay sale of any such Collateral for the period of time necessary to permit the issuer of such Collateral, even if such issuer would agree, to register such Collateral for public sale under such applicable securities laws. The Pledgors agree that private sales made under the foregoing circumstances shall be deemed to have been made in a commercially reasonable manner. 8. The remedies provided herein in favor of the Bank shall not be deemed exclusive, but shall be cumulative, and shall be in addition to all other remedies in favor of the Bank existing at law or in equity. 9. The Bank shall have the right, for and in the name, place and stead of the Pledgors, to execute endorsements, assignments or other instruments of conveyance or transfer with respect to all or any of the Collateral. 10. The Bank shall have no duty as to the collection or protection of the Collateral or any income thereon or as to the preservation of any rights pertaining thereto, beyond the safe custody of any thereof actually in its possession. With respect to any maturities, calls, conversions, exchanges, redemptions, offers, tenders or similar matters relating to any of the Collateral (herein called "events"), the Bank's duty shall be fully satisfied if (i) the Bank exercises reasonable care to ascertain the occurrence and to give reasonable notice to the Pledgors of any events applicable to any Collateral which is registered and held in the name of the Bank or its nominee, (ii) the Bank gives the Pledgors reasonable notice of the occurrence of any events, of which the Bank has received actual knowledge, as to any securities which are in bearer form or are not registered and held in the name of the Bank or its nominee (the Pledgors agreeing to give the Bank reasonable notice of the occurrence of any events applicable to any securities in the possession of the Bank of which the Pledgors have received knowledge), and (iii) in the exercise of its sole discretion (a) the Bank endeavors to take such action with respect to any of the events as the Pledgors may reasonably and specifically request in writing in sufficient time for such action to be evaluated and taken or (b) if the Bank determines that the action requested might adversely affect the value of the Collateral as collateral, the collection of the Loans, or otherwise prejudice the interests of the Bank, the Bank gives reasonable notice to the Pledgors that any such requested action will not be taken and if the Bank makes such determination or if the Pledgors fail to make such timely request, the Bank takes such other action as it deems advisable in the circumstances. Except as hereinabove specifically set forth, the Bank shall have no further obligation to ascertain the occurrence of, or to notify the Pledgors with respect to, any events and shall not be deemed to assume any such further obligation as a result of the establishment by the Bank of any internal procedures with respect to any securities in its possession. The Pledgors release the Bank from any claims, causes of action and demands at any time arising out of or with respect to this Agreement, the Collateral and/or any actions, taken or omitted to be taken by the Bank with respect thereto, and the Pledgors hereby agree to hold the Bank harmless from and with respect to any and all such claims, causes of action and demands. 11. The Pledgors hereby irrevocably appoint the Bank as their attorney-in-fact for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument which either may deem necessary or advisable to accomplish the purposes hereof. Without limiting the generality of the foregoing, the Bank shall have the right and power to receive, endorse and collect all checks and other orders for the payment of money made payable to the Pledgors representing any interest or dividend or other distribution payable in respect of the Collateral or any part thereof and to give full discharge for the same. 12. No delay on the part of the Bank in exercising any of its options, powers or rights, or partial or single exercise thereof, shall constitute a waiver thereof. 13. Upon the repayment in full of all principal, interest and other amounts that may be payable with regard to the Loans and the Bank's having determined that no contingent obligations of either Pledgors that it wishes to remain secured hereunder shall exist, the Pledgors shall be entitled to the return of all of the Collateral and of all other property and cash which have not been used or applied toward the payment of such principal, interest and other amounts free and clear of all liens in favor of the Bank or any encumbrances imposed by the Bank. Except as aforesaid, the assignment by the Bank to the Pledgors of such Collateral and other property shall be without representation or warranty of any nature whatsoever and wholly without recourse. 14. Any notice, demand or service of process upon the Pledgors shall be deemed to have been sufficiently given for all purposes thereof if mailed, postage prepaid, by registered or certified mail, return receipt requested, or if delivered, to the Pledgors at the address specified below, or at such other address as the Pledgors may theretofore have designated in writing and given in like manner to the Bank. 15. Any waiver, permit, consent or approval of any kind or character on the part of the Bank of any breach or default under this Agreement or any such waiver of any provision or condition of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. 16. This Agreement and the rights and obligations of the Bank and the Pledgors hereunder shall be construed in accordance with and governed by the laws of the State of New York, cannot be changed orally and shall bind and inure to the benefit of the Pledgors and the Bank and their respective successors and assigns, all subsequent holders of the Secured Obligations and to the Pledgors' heirs, executors and legal representatives. The Pledgors hereby submit to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State Court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Agreement or any agreement received by the Bank in connection herewith. The Pledgors irrevocably waive, to the fullest extent permitted by law, any objection which they may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. The Pledgors hereby irrevocably waive any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or any agreement received by the Bank in connection herewith. 17. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instrument. 18. This Agreement replaces all prior agreements between the Pledgors and the Bank relating to the Collateral contained in any promissory note delivered to the Bank by the Pledgors. 19. The Pledgors agree to pay the Bank on demand all costs, including legal fees, incurred by the Bank in connection with the administration and enforcement of this Agreement. 20. The Pledgors shall be jointly and severally liable. IN WITNESS WHEREOF, the Pledgors and the Bank have caused this Agreement to be duly executed as of the day and year first above written. _____________________________ Leonard Riggio _____________________________ Louise Riggio Address: 733 Park Avenue, 17th Floor New York, New York 10021 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By: _________________________ Jeffrey B. Westcott Vice President Address: 9 West 57th Street New York, New York 10019 Attention: Jeffrey B. Westcott -----END PRIVACY-ENHANCED MESSAGE-----