ex4-1.htm


     

    Exhibit 4.1

     

     

    
 

     

     

     

     

     

     

    RIGHTS
AGREEMENT

     

    dated as
of November 17, 2009

     

    between

     

    BARNES
& NOBLE, INC.

     

    and

     

    MELLON
INVESTOR SERVICES LLC,

     

    as Rights
Agent

     

     

     

     

     

     

    


    


    
      
        
          
             

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    Table of
Contents

     

    Page

     

     

     

     

     

    
      	
              SECTION
      1.

            	
              Certain
      Definitions 

            	
              1

            


    

    
      	
              SECTION
      2.

            	
              Appointment
      of Rights Agent 

            	
              11

            


    

    
      	
              SECTION
      3.

            	
              Issue
      of Rights and Right Certificates 

            	
              12

            


    

    
      	
              SECTION
      4.

            	
              Form
      of Right Certificates 

            	
              15

            


    

    
      	
              SECTION
      5.

            	
              Execution,
      Countersignature and Registration 

            	
              16

            


    

    
      	
              SECTION
      6.

            	
              Transfer,
      Split-Up, Combination and Exchange of Right Certificates; Mutilated,
      Destroyed, Lost or Stolen Right Certificates; Uncertificated
      Rights 

            	16


    

    
      	
              SECTION
      7.

            	
              Exercise
      of Rights; Expiration Date of Rights 

            	18


    

    
      	
              SECTION
      8.

            	
              Cancelation
      and Destruction of Right Certificates 

            	21


    

    
      	
              SECTION
      9.

            	
              Reservation
      and Availability of Preferred Shares 

            	21


    

    
      	
              SECTION
      10.

            	
              Preferred
      Shares Record Date 

            	23


    

    
      	
              SECTION
      11.

            	
              Adjustments
      in Rights After There Is an Acquiring Person; Exchange of Rights for
      Shares; Business Combinations 

            	24


    

    
      	
              SECTION
      12.

            	
              Certain
      Adjustments 

            	30


    

    
      	
              SECTION
      13.

            	
              Certificate
      of Adjustment 

            	31


    

    
      	
              SECTION
      14.

            	
              Additional
      Covenants 

            	33


    

    
      	
              SECTION
      15.

            	
              Fractional
      Rights and Fractional Shares 

            	33


    

    
      	
              SECTION
      16.

            	
              Rights
      of Action 

            	35


    

    
      	
              SECTION
      17.

            	
              Transfer
      and Ownership of Rights and Right Certificates 

            	37


    

    
      	
              SECTION
      18.

            	
              Right
      Certificate Holder Not Deemed a Stockholder 

            	37


    

    
      	
              SECTION
      19.

            	
              Concerning
      the Rights Agent 

            	38


    

    
      	
              SECTION
      20.

            	
              Merger
      or Consolidation or Change of Rights Agent 

            	38


    

    
      	
              SECTION
      21.

            	
              Duties
      of Rights Agent 

            	39


    

    
      	
              SECTION
      22.

            	
              Change
      of Rights Agent 

            	44


    

    
      	
              SECTION
      23.

            	
              Issuance
      of Additional Rights and Right Certificates 

            	46


    

    
      	
              SECTION
      24.

            	
              Redemption
      and Termination 

            	47


    

    
      	
              SECTION
      25.

            	
              Notices 

            	47


    

    
      	
              SECTION
      26.

            	
              Supplements
      and Amendments 

            	49


    

    
      	
              SECTION
      27.

            	
              Successors 

            	50


    

    
      	
              SECTION
      28.

            	
              Benefits
      of Rights Agreement; Determinations and Actions by the Board,
      etc 

            	50


    

    
      	
              SECTION
      29.

            	
              Severability 

            	51


    

    
      	
              SECTION
      30.

            	
              Governing
      Law 

            	51


    

    
      	
              SECTION
      31.

            	
              Counterparts;
      Effectiveness 

            	51


    

    
      	
              SECTION
      32.

            	
              Descriptive
      Headings 

            	51


    

     

    Exhibits

     

    A      Certificate
of Designation

    B      Form
of Right Certificate

    C      Summary
of Rights

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    RIGHTS
AGREEMENT dated as of November 17, 2009 (the “Rights Agreement”),
between BARNES & NOBLE, INC., a Delaware corporation (the “Company”), and MELLON
INVESTOR SERVICES LLC, a New Jersey limited liability company, as Rights Agent
(the “Rights
Agent”).

     

    The Board
of Directors of the Company (the “Board”) has
authorized and declared a dividend of one Right (as hereinafter defined) for
each share of Common Stock, par value $0.001 per share, of the Company (the
“Common Stock”)
outstanding at the Close of Business (as hereinafter defined) on November 27,
2009 (the “Record
Date”), and has authorized the issuance of one Right (as such number may
hereafter be adjusted pursuant to the provisions of this Rights Agreement) with
respect to each share of Common Stock that shall become outstanding (whether
originally issued or delivered from the Company’s treasury) between the Record
Date and the earliest of the Distribution Date, the Redemption Date or the
Expiration Date (as such terms are hereinafter defined); provided, however, that Rights
may be issued with respect to shares of Common Stock that shall become
outstanding after the Distribution Date (whether originally issued or delivered
from the Company’s treasury) and prior to the earlier of the Redemption Date or
the Expiration Date only in accordance with the provisions of
Section 23.  Each Right shall initially represent the right to
purchase one one-thousandth (1/1,000th) of a share of Series I Preferred Stock,
par value $0.001 per share, of the Company (the “Preferred Shares”),
having the powers, rights and preferences set forth in the Certificate of
Designation attached hereto as Exhibit A.

     

    Accordingly,
in consideration of the premises and the mutual agreements herein set forth, the
parties hereby agree as follows:

     

    SECTION
1.  Certain
Definitions.  For
purposes of this Rights Agreement, the following terms have the meanings
indicated:

     

    “Acquiring Person”
shall mean any Person who or which, alone or together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of more than 20% of the
Common Shares then outstanding, but not including (a) the Company, any
Subsidiary of the Company, any employee benefit or compensation plan of the
Company or of any of its Subsidiaries or any Person organized, appointed or
established by the Company and holding Common Shares for or pursuant to the
terms of any such employee benefit or compensation plan, (b) any such
Person who or which, alone or together with all Affiliates and Associates of
such Person, has become and is the Beneficial Owner of more than 20% of the
Common Shares at the time outstanding solely as the result of (i) a change
in the aggregate number of Common Shares outstanding since the last date on
which such Person acquired Beneficial Ownership of any Common Shares or
(ii) the acquisition by such Person or one or more of its Affiliates or
Associates of Beneficial Ownership of additional Common Shares if the Board
determines that such acquisition was made in good faith without the knowledge by
such Person or one or more of its Affiliates or Associates that such Person
would thereby become an Acquiring Person, which determination of the Board shall
be conclusive and binding on such Person, the Rights Agent, the holders of the
Rights and all other Persons, (c) any such Person who would, as of the Close of
Business on the date hereof, be an “Acquiring Person” pursuant to the foregoing
provisions of this definition (an “Excluded Person”),
unless and until such Excluded Person shall acquire after the date hereof,
without the prior approval of the Board, Beneficial Ownership of any additional
Common Shares (other than any such ownership resulting from the exercise of any
options or the vesting of any restricted shares, in each case, granted prior to
or after the date hereof to such Excluded Person under any employee benefit or
compensation plan of the Company or any of its Subsidiaries) and (d) (i) any
Person who is an immediate family member of an Excluded Person and any trust for
the benefit of (or the trustees of which include) such immediate family member
or such Excluded Person, which Person or trust acquires from such Excluded
Person Common Shares (such shares, “Excluded Shares”) and
(ii) any executor or trustee for the estate of an Excluded Person or of such
immediate family member, unless and until, in the case of clause (i) and (ii),
such Person, trust, executor or trustee, together with all Affiliates and
Associates of such Person, trust, executor or trustee, shall become the
Beneficial Owner of 20% or more of the Common Shares not including Excluded
Shares.

     

    


    
      
        
          
             

          

           


        

        
          
          

          
            

          

        

        
           


        

      

    

    


    


     

    Notwithstanding
clause (b)(ii) of the prior sentence, if any Person that is not an Acquiring
Person due to such clause (b)(ii) does not reduce its percentage of
Beneficial Ownership of Common Shares to 20% or less by the Close of Business on
the tenth calendar day after notice from the Company (the date of notice being
the first day) that such Person’s Beneficial Ownership of Common Shares would
make it an Acquiring Person, such Person shall, at the end of such ten calendar
day period, become an Acquiring Person (and such clause (b)(ii) shall no longer
apply to such Person).

     

    “Affiliate” and “Associate”, when used
with reference to any Person, shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Rights Agreement.

     

    A Person
shall be deemed the “Beneficial Owner” of,
and shall be deemed to “beneficially own”,
and shall be deemed to have “Beneficial Ownership”
of, any securities:

     

    (a)  which
such Person or any of such Person’s Affiliates or Associates is deemed to “beneficially own”
within the meaning of Rule 13d-3 of the General Rules and Regulations under
the Exchange Act, as in effect on the date of this Rights
Agreement;

     

    (b)  which
such Person or any of such Person’s Affiliates or Associates has, directly or
indirectly: (i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (written or oral), or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights), warrants or
options, or otherwise; provided, however, that a
Person shall not be deemed under this clause (i) to be the Beneficial Owner
of, or to beneficially own, or to have Beneficial Ownership of, any securities
tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person’s Affiliates or Associates until such tendered
securities are accepted for purchase or exchange thereunder or cease to be
subject to withdrawal by the tendering security holder; or (ii) the right
to vote or dispose of, including pursuant to any agreement, arrangement or
understanding (written or oral); provided, however, that a
Person shall not be deemed under this clause (ii) to be the Beneficial
Owner of, or to beneficially own, or to have Beneficial Ownership of, any
security if (A) the agreement, arrangement or understanding (written or
oral) to vote such security arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent solicitation made
generally to all holders of Common Shares of the Company pursuant to, and in
accordance with, the applicable rules and regulations under the Exchange Act and
(B) the beneficial ownership of such security is not also then reportable
on Schedule 13D or 13G under the Exchange Act (or any comparable or
successor report);

     

    


    
      
        
           


        

        
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    (c)  which
are beneficially owned, directly or indirectly, by any other Person (or an
Affiliate or Associate thereof) with which such Person (or any of such Person’s
Affiliates or Associates) has (i) any agreement, arrangement or
understanding (written or oral) for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the proviso to
clause (b)(ii) of this definition) or disposing of any voting securities of
the Company or (ii) any agreement, arrangement or understanding (written or
oral) to cooperate in obtaining, changing or influencing the control of the
Company; or

     

    (d)  which
are the subject of, or the reference securities for, or that underlie, any
Derivative Interest of such Person or any of such Person’s Affiliates or
Associates, with the number of Common Shares deemed Beneficially Owned being the
notional or other number of Common Shares specified in the documentation
evidencing the Derivative Interest as being subject to be acquired upon the
exercise or settlement of the Derivative Interest or as the basis upon which the
value or settlement amount of such Derivative Interest is to be calculated in
whole or in part or, if no such number of Common Shares is specified in such
documentation, as determined by the Board in its sole discretion to be the
number of Common Shares to which the Derivative Interest relates.

     

    Notwithstanding
the foregoing, nothing contained in this definition shall cause a Person
ordinarily engaged in business as an underwriter of securities to be deemed the
“Beneficial
Owner” of, or to “beneficially own”, or
to have “Beneficial
Ownership” of, any securities acquired in a bona fide firm commitment
underwriting pursuant to an underwriting agreement with the
Company.

     

    “Board” shall have the
meaning set forth in the introductory paragraph of this Rights
Agreement.

     

    “Book Value”, when
used with reference to Common Shares issued by any Person, shall mean the amount
of equity of such Person applicable to each Common Share, determined (a) in
accordance with generally accepted accounting principles in effect on the date
as of which such Book Value is to be determined, (b) using all the
consolidated assets and all the consolidated liabilities of such Person on the
date as of which such Book Value is to be determined, except that no value shall
be included in such assets for goodwill arising from consummation of a business
combination, and (c) after giving effect to (i) the exercise of all
rights, options and warrants to purchase such Common Shares (other than the
Rights), and the conversion of all securities convertible into such Common
Shares, at an exercise or conversion price, per Common Share, which is less than
such Book Value before giving effect to such exercise or conversion (whether or
not exercisability or convertibility is conditioned upon occurrence of a future
event), (ii) all dividends and other distributions on the capital stock of
such Person declared prior to the date as of which such Book Value is to be
determined and to be paid or made after such date, and (iii) any other
agreement, arrangement or understanding (written or oral), or transaction or
other action contemplated prior to the date as of which such Book Value is to be
determined that would have the effect of thereafter reducing such Book
Value.

     

    


    
      
        
           


        

        
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    “Business Combination”
shall have the meaning set forth in Section 11(c)(i).

     

    “Business Day” shall
mean each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on
which banking institutions in the Borough of Manhattan, the City of
New York, or the State of New Jersey are authorized or obligated by law or
executive order to close.

     

    “Certificate of
Designation” shall mean the Certificate of Designation of the Preferred
Shares, a copy of which is attached hereto as Exhibit A.

     

    “Close of Business” on
any given date shall mean 5:00 p.m., New York City time, on such date;
provided, however, that, if
such date is not a Business Day, “Close of Business”
shall mean 5:00 p.m., New York City time, on the next succeeding Business
Day.

     

    “Common Shares”, when
used with reference to the Company prior to a Business Combination, shall mean
the shares of Common Stock or any other shares of capital stock of the Company
into which the Common Stock shall be reclassified or changed.  “Common Shares”, when
used with reference to any Person (other than the Company prior to a Business
Combination), shall mean shares of capital stock of such Person (if such Person
is a corporation) of any class or series, or units of equity interests in such
Person (if such Person is not a corporation) of any class or series, the terms
of which do not limit (as a maximum amount and not merely in proportional terms)
the amount of dividends or income payable or distributable on such class or
series or the amount of assets distributable on such class or series upon any
voluntary or involuntary liquidation, dissolution or winding up of such Person
and do not provide that such class or series is subject to redemption at the
option of such Person, or any shares of capital stock or units of equity
interests into which the foregoing shall be reclassified or changed, and if
there shall be more than one class or series of such shares of capital stock or
units of equity interests of such Person, then “Common Shares” of
such Person shall mean the class or series of capital stock of such Person or
units of equity interests in such Person having voting power (being the power
under ordinary circumstances (and not merely upon the happening of a
contingency) to vote in the election of directors of such Person (if such Person
is a corporation) or to participate in the management and control of such Person
(if such Person is not a corporation)), or in the case of multiple classes or
series having voting power, having the greatest voting power.

     

    


    
      
        
           


        

        
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    “Common Stock” shall
have the meaning set forth in the introductory paragraph of this Rights
Agreement.

     

    “Company” shall have
the meaning set forth in the heading of this Rights Agreement; provided, however, that if
there is a Business Combination, “Company” shall have
the meaning set forth in Section 11(c)(iii).

     

    The term
“control” with
respect to any Person shall mean the power to direct the management and policies
of such Person, directly or indirectly, by or through stock ownership, agency or
otherwise, or pursuant to or in connection with an agreement, arrangement or
understanding (written or oral) with one or more other Persons by or through
stock ownership, agency or otherwise; and the terms “controlling” and
“controlled”
shall have meanings correlative to the foregoing.

     

    “Distribution Date”
shall have the meaning set forth in Section 3(b).

     

    “Derivative Interest”
shall mean any derivative securities (as defined under Rule 16a-1 under the
Exchange Act) that increase in value as the value of the underlying equity
increases, including, but not limited to, a long convertible security, a long
call option and a short put option position, in each case, regardless of whether
(x) such interest conveys any voting rights in such security, (y) such
interest is required to be, or is capable of being, settled through delivery of
such security or (z) transactions hedge the economic effect of such
interest.

     

    “Exchange Act” shall
mean the Securities Exchange Act of 1934, as in effect on the date in question,
unless otherwise specifically provided.

     

    “Exchange
Consideration” shall have the meaning set forth in
Section 11(b)(i).

     

    “Expiration Date”
shall mean the Close of Business on the third anniversary of the date of
this Rights Agreement.

     

    “including” shall mean
including, without limitation.

     

    “Major Part”, when
used with reference to the assets of the Company and its Subsidiaries as of any
date, shall mean assets (a) having a fair market value aggregating 50% or
more of the total fair market value of all the assets of the Company and its
Subsidiaries (taken as a whole) as of the date in question, (b) accounting
for 50% or more of the total value (net of depreciation and amortization) of all
the assets of the Company and its Subsidiaries (taken as a whole) as would be
shown on a consolidated or combined balance sheet of the Company and its
Subsidiaries as of the date in question, prepared in accordance with generally
accepted accounting principles then in effect, or (c) accounting for 50% or
more of the total amount of earnings before interest, taxes, depreciation and
amortization or of the revenues of the Company and its Subsidiaries (taken as a
whole) as would be shown on, or derived from, a consolidated or combined
statement of income or net earnings of the Company and its Subsidiaries for the
period of 12 months ending on the last day of the Company’s monthly
accounting period next preceding the date in question, prepared in accordance
with generally accepted accounting principles then in effect.

     

    


    
      
        
           


        

        
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    “Market Value”, when
used with reference to Common Shares on any date, shall mean the average of the
daily closing prices, per share, of such Common Shares for the period which is
the shorter of (a) 30 consecutive Trading Days ending on the Trading
Day immediately prior to the date in question or (b) the number of
consecutive Trading Days beginning on the Trading Day immediately after the date
of the first public announcement of the event requiring a determination of the
Market Value of Common Shares and ending on the Trading Day immediately prior to
the record date of such event.  The closing price for each Trading Day
shall be the closing price quoted on the composite tape for securities listed on
the New York Stock Exchange, or, if such securities are not quoted on such
composite tape or if such securities are not listed on such exchange, on the
principal United States securities exchange registered under the Exchange Act
(or any recognized foreign stock exchange) on which such securities are listed,
or, if such securities are not listed on any such exchange, the closing price
(or, if no sale takes place on such Trading Day, the average of the closing bid
and asked prices on such Trading Day) as quoted on any reputable quotations
system specified by the Board, or if no such quotations are available, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in such securities selected by the Board, or if on
any such Trading Day no market maker is making a market in such securities, the
closing price of such securities on such Trading Day shall be deemed to be the
fair value of such securities as determined in good faith by the
Board (whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent, the holders of Rights and
all other Persons); provided, however, that if a
Trading Day occurs during a period following an announcement of any action of
the type described in Section 12(a) that would require an adjustment
thereunder by the issuer of the securities the closing price of which is to be
determined, then, and in each such case, the closing price of such securities
shall be appropriately adjusted to reflect the effect of such action on the
market price of such securities; and provided further,
however, that
for the purpose of determining the closing price of the Preferred Shares for any
Trading Day on which there is no market maker for the Preferred Shares, the
closing price on such Trading Day shall be deemed to be the Formula Number (as
defined in the Certificate of Designation) multiplied by the closing price of
the Common Shares of the Company on such Trading Day.

     

    “Person” shall mean an
individual, firm, corporation, partnership, limited liability company, joint
venture, association, trust, unincorporated organization or other entity, and
shall include any successor (by merger or otherwise) thereof or
thereto.

     

    


    
      
        
           


        

        
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    “Post Transferee”
shall have the meaning set forth in Section 7(e).

     

    “Preferred Shares”
shall have the meaning set forth in the introductory paragraph of this Rights
Agreement.  Any reference in this Rights Agreement to Preferred Shares
shall be deemed to include any authorized fraction of a Preferred Share, unless
the context otherwise requires.

     

    “Principal Party”
shall mean the Surviving Person in a Business Combination; provided, however, that,
(i) if such Surviving Person is a direct or indirect Subsidiary of any
other Person, “Principal Party”
shall mean the Person which is the ultimate parent of such Surviving Person, and
(ii) in the event ultimate control of such Surviving Person is shared by
two or more Persons, “Principal Party”
shall mean that Person that is immediately controlled by such two or more
Persons.

     

    “Prior Transferee”
shall have the meaning set forth in Section 7(e).

     

    “Purchase Price” with
respect to each Right shall mean $100.00, as such amount may from time to time
be adjusted as provided in this Rights Agreement, and shall be payable in lawful
money of the United States of America.  All references herein to the
Purchase Price shall mean the Purchase Price as in effect at the time in
question.

     

    “Record Date” shall
have the meaning set forth in the introductory paragraph of this Rights
Agreement.

     

    “Redemption Date”
shall have the meaning set forth in Section 24(a).

     

    “Redemption Price”
with respect to each Right shall mean $0.001, as such amount may from time to
time be adjusted in accordance with Section 12.  All references
herein to the Redemption Price shall mean the Redemption Price as in effect at
the time in question.

     

    “Registered Common
Shares” shall mean Common Shares that are, as of the date of consummation
of a Business Combination, and have continuously been for the 12 months
immediately preceding such date, registered under Section 12 of the
Exchange Act, and if a Person has multiple classes or series of Registered
Common Shares outstanding, “Registered Common
Shares” of such Person shall mean the class or series of Registered
Common Shares of such Person having voting power (being the power under ordinary
circumstances (and not merely upon the happening of a contingency) to vote in
the election of directors of such Person (if such Person is a corporation) or to
participate in the management and control of such Person (if such Person is not
a corporation)), or in the case of multiple classes or series having voting
power, having the greatest voting power.

     

    “Right Certificate”
shall mean a certificate evidencing a Right in substantially the form attached
hereto as Exhibit B.

     

    “Rights” shall mean
the rights to purchase Preferred Shares (or other securities) as provided in
this Rights Agreement.

     

    


    
      
        
           


        

        
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    “Securities Act” shall
mean the Securities Act of 1933, as in effect on the date in question, unless
otherwise specifically provided.

     

    “Subsidiary” shall
mean a Person, at least a majority of the total outstanding voting power (being
the power under ordinary circumstances (and not merely upon the happening of a
contingency) to vote in the election of directors of such Person (if such Person
is a corporation) or to participate in the management and control of such Person
(if such Person is not a corporation)) of which is owned, directly or
indirectly, by another Person or by one or more other Subsidiaries of such other
Person or by such other Person and one or more other Subsidiaries of such other
Person.

     

    “Surviving Person”
shall mean (a) the Person which is the continuing or surviving Person in a
consolidation or merger specified in Section 11(c)(i)(A)
or 11(c)(i)(B) or (b) the Person to which the Major Part of the assets
of the Company and its Subsidiaries is sold, leased, exchanged or otherwise
transferred or disposed of in a transaction specified in
Section 11(c)(i)(C); provided, however, that, if the
Major Part of the assets of the Company and its Subsidiaries is sold, leased,
exchanged or otherwise transferred or disposed of in one or more related
transactions specified in Section 11(c)(i)(C) to more than one Person, the
“Surviving
Person” in such case shall mean the Person that acquired assets of the
Company and/or its Subsidiaries with the greatest fair market value in such
transaction or transactions.

     

    “Trading Day” shall
mean a day on which the principal national securities exchange (or principal
recognized foreign stock exchange, as the case may be) on which any securities
or Rights, as the case may be, are listed or admitted to trading is open for the
transaction of business or, if the securities or Rights in question are not
listed or admitted to trading on any national securities exchange (or recognized
foreign stock exchange, as the case may be), a Business Day.

     

    SECTION
2.  Appointment of Rights
Agent.  The Company hereby appoints the Rights Agent to act as
agent for the Company in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment.  The Company may
from time to time appoint one or more co-Rights Agents as it may deem necessary
or desirable (the term “Rights Agent” being
used herein to refer, collectively, to the Rights Agent together with any such
co-Rights Agents).  In the event the Company appoints one or more
co-Rights Agents, the respective duties of the Rights Agent and any co-Rights
Agents shall be as the Company shall determine, and shall be provided in writing
to the Rights Agent and any such co-Rights Agent.  Subject to Section
21(c), the Rights Agent shall have no duty to supervise and shall not be liable
for the acts or omissions of any such co-Rights Agents.

     

    


    
      
        
           


        

        
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    SECTION
3.  Issue of
Rights and Right Certificates.  (a)  One Right shall
be associated with each Common Share outstanding on the Record Date, each
additional Common Share that shall become outstanding between the Record Date
and the earliest of the Distribution Date, the Redemption Date or the Expiration
Date and each additional Common Share with which Rights are issued after the
Distribution Date but prior to the earlier of the Redemption Date or the
Expiration Date as provided in Section 23, subject to adjustment as
provided in this Rights Agreement.

     

    (b)  Until
the earlier of (i) such date on which the Company learns that a Person has
become an Acquiring Person and (ii) such date, if any, as may be designated
by the Board following the commencement of, or first public disclosure of an
intent to commence, a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit or compensation
plan of the Company or of any of its Subsidiaries, or any Person organized,
appointed or established by the Company and holding Common Shares for or
pursuant to the terms of any such employee benefit or compensation plan) for
outstanding Common Shares, if upon consummation of such tender or exchange offer
such Person could be the Beneficial Owner of more than 20% of the outstanding
Common Shares (the Close of Business on the earlier of such dates being the
“Distribution
Date”), (x) the Rights shall, except as otherwise provided in
Section 3(c), be evidenced by the certificates for Common Shares registered
in the names of the holders thereof, or, in the case of Common Shares held in
uncertificated form, by the transaction statement or other record of ownership
of such Common Shares, and not by separate Right Certificates, and (y) the
Rights, including the right to receive Right Certificates, shall be transferable
only in connection with the transfer of the underlying Common
Shares.  As soon as practicable after the Distribution Date, the
Company shall prepare and execute, the Rights Agent shall countersign, and the
Company will send or cause to be sent (and the Rights Agent shall, if requested
and provided with all necessary information, send) by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company or the transfer agent or registrar for the Common Shares,
one or more Right Certificates evidencing one whole Right for each Common Share
held by such record holder, subject to the provisions of Section 15 and to
adjustment as provided in this Rights Agreement.  As of and after the
Distribution Date, the Rights shall be evidenced solely by such Right
Certificates.  The Company shall, as promptly as practicable, notify
the Rights Agent in writing upon the occurrence of the Distribution Date and, if
such notification is given orally, the Company shall confirm same in writing on
or prior to the Business Day next following.  Until such notice is
received by the Rights Agent, the Rights Agent may presume conclusively for all
purposes that the Distribution Date has not occurred.

     

    


    
      
        
           


        

        
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    (c)  As
soon as practicable after the Record Date, the Company will send a copy of a
Summary of Rights to Purchase Preferred Shares, in substantially the form
attached hereto as Exhibit C (the “Summary of Rights”),
by first-class, postage-prepaid mail, to each record holder of Common Shares as
of the Close of Business on the Record Date at the address of such holder shown
on the records of the Company or the transfer agent or registrar for the Common
Shares.  With respect to any Common Shares outstanding as of the
Record Date, and until the earliest of the Distribution Date, the Redemption
Date or the Expiration Date, (i) in the case of certificated shares, (A) the
Rights associated with the Common Shares represented by any certificate shall be
evidenced by such certificate for the Common Shares with a copy of the Summary
of Rights attached thereto and the registered holders of the Common Shares shall
also be the registered holders of the associated Rights and (B) the surrender
for transfer of any such certificate, even without a copy of the Summary of
Rights attached thereto, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby, and (ii) in the case of
Common Shares held in uncertificated form, (A) the Rights associated with the
Common Shares shall be evidenced by the balances indicated in the book-entry
account system of the transfer agent for such Common Shares and the registered
holders of the Common Shares shall also be the registered holders of the
associated Rights and (B) the transfer of any Common Shares in the book-entry
account system of the transfer agent for such Common Shares shall also
constitute the transfer of the Rights associated with such Common
Shares.

     

    (d)  In
the case of certificated Common Shares, certificates issued for Common Shares
after the Record Date (including upon transfer or exchange of outstanding Common
Shares), but prior to the earliest of the Distribution Date, the Redemption Date
or the Expiration Date, shall have printed on, written on or otherwise affixed
to them a legend in substantially the following form:

     

    This
certificate also evidences and entitles the holder hereof to certain Rights as
set forth in a Rights Agreement dated as of November 17, 2009 (as it may be
amended from time to time (the “Rights Agreement”)), between BARNES & NOBLE,
INC. (the “Company”) and MELLON INVESTOR SERVICES LLC, as Rights Agent (the
“Rights Agent”), the terms of which (including restrictions on the transfer of
such Rights) are hereby incorporated herein by reference and a copy of which is
on file at the principal executive offices of the Company.  Under
certain circumstances, as set forth in the Rights Agreement, such Rights shall
be evidenced by separate certificates and shall no longer be evidenced by this
certificate.  The Company shall mail to the holder of this certificate
a copy of the Rights Agreement without charge after receipt of a written request
therefor.  RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR
AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND
BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS ARE NULL AND VOID AND
NONTRANSFERABLE.

     

    Notwithstanding
this Section 3(d), neither the omission of a legend nor the inclusion of a
legend that makes reference to a rights agreement other than the Rights
Agreement shall affect the enforceability of any part of this Rights Agreement
or the rights of any holder of Rights.

     

    


    
      
        
           


        

        
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    (e)  In
the case of Common Shares held in uncertificated form, the Company shall cause
the confirmation and account statements sent to holders of Common Shares in
book-entry form (including upon transfer or exchange of outstanding Common
Shares) prior to the earliest of the Distribution Date, the Redemption Date or
the Expiration Date to bear a legend in substantially the following
form:

     

    Each
share of Common Stock, par value $0.001 per share, of BARNES & NOBLE, INC.
(the “Company”) entitles the holder thereof to certain Rights as set forth in a
Rights Agreement dated as of November 17, 2009 (as it may be amended from
time to time (the “Rights Agreement”)), between the Company and MELLON INVESTOR
SERVICES LLC, as Rights Agent (the “Rights Agent”), the terms of which
(including restrictions on the transfer of such Rights) are hereby incorporated
herein by reference and a copy of which is on file at the principal executive
offices of the Company.  Under certain circumstances, as set forth in
the Rights Agreement, such Rights shall be evidenced by separate certificates
and shall no longer be evidenced by the shares to which this statement
relates.  The Company shall mail to the holder of shares to which this
statement relates a copy of the Rights Agreement without charge after receipt of
a written request therefor.  RIGHTS BENEFICIALLY OWNED BY ACQUIRING
PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS ARE NULL AND VOID
AND NONTRANSFERABLE.

     

    Notwithstanding
this Section 3(e), neither the omission of a legend nor the inclusion of a
legend that makes reference to a rights agreement other than the Rights
Agreement shall affect the enforceability of any part of this Rights Agreement
or the rights of any holder of Rights.

     

    SECTION
4.  Form of
Right Certificates.  The Right Certificates (and the form of
election to purchase and form of assignment to be printed on the reverse side
thereof) shall be in substantially the form set forth as Exhibit B hereto
and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
(but which do not affect the rights, duties or responsibilities of the Rights
Agent) and as are not inconsistent with the provisions of this Rights Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage.  Subject to the other provisions of this Rights Agreement
(including Sections 7, 11 and 23), the Right Certificates, whenever
issued, shall be dated as of the Distribution Date and shall entitle the holders
thereof to purchase such number of Preferred Shares as shall be set forth
therein for the Purchase Price set forth therein, subject to adjustment as
provided in this Rights Agreement.

     

    


    
      
        
           


        

        
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    SECTION
5.  Execution, Countersignature
and Registration.  (a)  The Right Certificates shall
be executed on behalf of the Company by (x) the Chairman, or any Vice
President, and by the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer or (y) any two officers designated by the Board, either
manually or by facsimile signature, and may have affixed thereto the Company’s
seal or a facsimile thereof.  The Right Certificates shall be
countersigned by the Rights Agent either manually or, at the Company’s option,
by facsimile signature, and shall not be valid or obligatory for any purpose
unless so countersigned.  In the event that any officer of the Company
who shall have signed any of the Right Certificates shall cease to be such an
officer of the Company before countersignature by the Rights Agent and issuance
and delivery by the Company, such Right Certificates may nevertheless be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed such Right
Certificates had not ceased to be such an officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of execution of such Right Certificate, shall be a proper officer of
the Company to sign such Right Certificate, although at the date of execution of
this Rights Agreement any such person was not such an officer of the
Company.

     

    (b)  Following
the Distribution Date, the Rights Agent shall keep or cause to be kept, at its
office designated for such purpose, books for registration and transfer of the
Right Certificates issued hereunder.  Such books shall show the names
and addresses of the respective holders of the Right Certificates, the number of
Rights evidenced by each of the Right Certificates, the certificate number of
each of the Right Certificates and the date of each of the Right
Certificates.

     

    SECTION
6.  Transfer, Split-Up,
Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates; Uncertificated
Rights.  (a)  Subject to Sections 7(e)
and 15, at any time after the Distribution Date, and at or prior to the
Close of Business on the earlier of the Redemption Date or the Expiration Date,
any Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become null and void pursuant to Section 7(e)) may
be transferred, split-up, combined or exchanged for another Right Certificate or
Right Certificates representing, in the aggregate, the same number of Rights as
the Right Certificate or Right Certificates surrendered then
represented.  The Right Certificates are transferable only on the
registry books of the Rights Agent.  Any registered holder desiring to
transfer, split-up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the Rights Agent
and shall surrender the Right Certificate or Right Certificates to be
transferred, split-up, combined or exchanged at the office of the Rights Agent
designated for such purpose; provided, however, that neither
the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any Right Certificate surrendered for
transfer until the registered holder shall have properly completed and duly
signed the certification contained in the form of assignment on the reverse side
of such Right Certificate and shall have provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company or the Rights Agent shall reasonably
request.  Thereupon the Rights Agent shall, subject to
Sections 7(e) and 15, countersign and deliver to the Person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as so
requested.  The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split-up, combination or exchange of Right Certificates.  If
and to the extent the Company does require payment of any such taxes or charges,
the Company shall give the Rights Agent prompt written notice thereof and the
Rights Agent shall not deliver any Right Certificate unless and until it is
satisfied that all such payments have been made, and the Rights Agent shall
promptly forward any such sum collected by it to the Company or to such Persons
as the Company may specify by written notice.

     

    


    
      
        
           


        

        
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    (b)  Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a valid Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company’s request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancelation of
the Right Certificate if mutilated, the Company shall execute a new Right
Certificate of like tenor and deliver such new Right Certificate to the Rights
Agent for countersignature and delivery to the registered owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.

     

    (c)  Notwithstanding
any other provision hereof, the Company and the Rights Agent may amend this
Rights Agreement to provide for uncertificated Rights in addition to or in place
of Rights evidenced by Right Certificates.

     

    SECTION
7.  Exercise
of Rights; Expiration Date of Rights.  (a)  Subject
to the other provisions of this Rights Agreement (including Section 7(e)
and Section 11), each Right shall entitle the registered holder thereof,
upon exercise thereof as provided in this Rights Agreement, to purchase for the
Purchase Price, at any time after the Distribution Date and at or prior to the
earlier of (i) the Expiration Date and (ii) the Redemption Date,
one one-thousandth (1/1,000th) of a Preferred Share, subject to adjustment
as provided in this Rights Agreement.

     

    (b)  Subject
to the other provisions of this Rights Agreement (including Section 7(e)),
the registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided in this Rights Agreement) in whole or in
part at any time after the Distribution Date, upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
properly completed and duly executed, to the Rights Agent at the office of the
Rights Agent designated for such purpose, together with payment of the Purchase
Price for each one one-thousandth (1/1,000th) of a Preferred Share (as such
fraction may be adjusted as provided in this Rights Agreement) as to which the
Rights are exercised, at or prior to the earlier of (i) the Expiration Date
and (ii) the Redemption Date.

     

    (c)  Subject
to the other provisions of this Rights Agreement (including Section 7(e)),
upon receipt of a Right Certificate representing exercisable Rights, with the
form of election to purchase properly completed and duly executed, accompanied
by payment of the Purchase Price for the Preferred Shares to be purchased
together with an amount equal to any applicable transfer tax, in lawful money of
the United States of America, in cash or by certified check or money order
payable to the order of the Company, the Rights Agent shall thereupon promptly
(i) either (A) requisition from any transfer agent of the Preferred
Shares (or make available, if the Rights Agent is the transfer agent for such
shares) certificates for the total number of Preferred Shares to be purchased
and the Company hereby irrevocably authorizes its transfer agent to comply with
all such requests or (B) if the Company shall have elected to deposit the
Preferred Shares with a depositary agent under a depositary arrangement,
requisition from the depositary agent depositary receipts representing the
number of one one-thousandths (1/1,000ths) of a Preferred Share (as such
fraction may be adjusted as provided in this Rights Agreement) to be purchased
(in which case certificates for the Preferred Shares to be represented by such
receipts shall be deposited by the transfer agent with the depositary agent) and
the Company shall direct the depositary agent to comply with all such requests,
(ii) when necessary to comply with this Rights Agreement (or otherwise when
appropriate, as determined by the Company with notice to the Rights Agent),
requisition from the Company the amount of cash, if any, to be paid in lieu of
issuance of fractional shares in accordance with Section 15,
(iii) after receipt of such certificates or depositary receipts, cause the
same to be delivered to or, upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by such
holder and (iv) when necessary to comply with this Rights Agreement (or
otherwise when appropriate, as determined by the Company with notice to the
Rights Agent), after receipt thereof, deliver such cash, if any, to or upon the
order of the registered holder of such Right Certificate.

     

    


    
      
        
           


        

        
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    (d)  In
case the registered holder of any Right Certificate shall exercise fewer than
all the Rights evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent and delivered to the registered holder of such Right Certificate or to
such holder’s duly authorized assigns, subject to the provisions of
Section 15.

     

    (e)  Notwithstanding
anything in this Rights Agreement to the contrary, any Rights that are at any
time beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any Associate or Affiliate of such Acquiring Person) who becomes a
transferee after the Acquiring Person becomes such (a “Post Transferee”),
(iii) a transferee of an Acquiring Person (or of any Associate or Affiliate
of such Acquiring Person) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person
(or from such Affiliate or Associate) to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person (or such
Affiliate or Associate) has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the
Board has determined is part of a plan, arrangement or understanding which has
as a primary purpose or effect the avoidance of this Section 7(e) (a “Prior Transferee”),
or (iv) any subsequent transferee receiving transferred Rights from a Post
Transferee or a Prior Transferee, either directly or through one or more
intermediate transferees, shall become null and void without any further action
and no holder of such Rights shall have any rights whatsoever with respect to
such Rights, whether under any provision of this Rights Agreement or
otherwise.  The Company shall use all reasonable efforts to ensure
that the provisions of this Section 7(e) are complied with, but shall have
no liability to any holder of any Right Certificate or any other Person as a
result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliate or Associate, or any transferee thereof,
hereunder.  The Company shall give the Rights Agent written notice of
the identity of any Acquiring Person, Associate or Affiliate known to it, or the
nominee of any of the foregoing, and the Rights Agent may rely on such notice in
carrying out its duties under this Agreement and shall be deemed not to have any
knowledge of the identity of any such Acquiring Person, Associate or Affiliate,
or the nominee of any of the foregoing unless and until it shall have received
such notice.

     

     

     

    


    
      
        
           


        

        
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    (f) 
Notwithstanding anything in this Rights Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder of any Right Certificates upon the occurrence of
any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) properly completed and duly signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such exercise and
(ii) provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request.

     

    SECTION
8.  Cancelation and Destruction
of Right Certificates.  All Right Certificates surrendered or
presented for the purpose of exercise, transfer, split-up, combination or
exchange shall, and any Right Certificate representing Rights that have become
null and void and nontransferable pursuant to Section 7(e) surrendered or
presented for any purpose shall, if surrendered or presented to the Company or
to any of its agents, be delivered to the Rights Agent for cancelation or in
canceled form, or, if surrendered or presented to the Rights Agent, shall be
canceled by it, and no Right Certificates shall be issued in lieu thereof except
as expressly permitted by this Rights Agreement.  The Company shall
deliver to the Rights Agent for cancelation and retirement, and the Rights Agent
shall so cancel and retire, any Right Certificate purchased or acquired by the
Company.  The Rights Agent shall deliver all canceled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.

     

    SECTION
9.  Reservation and Availability
of Preferred Shares.  (a)  The Company shall cause to
be reserved and kept available out of its authorized and unissued Preferred
Shares or any authorized and issued Preferred Shares held in its treasury, free
from preemptive rights or any right of first refusal, a number of Preferred
Shares sufficient to permit the exercise in full of all outstanding
Rights.

     

    (b)  If
there are not sufficient Preferred Shares issued but not outstanding or
authorized but unissued to permit the exercise or exchange of Rights in
accordance with this Rights Agreement, the Company shall take all such action as
may be necessary to authorize additional Preferred Shares for issuance upon the
exercise or exchange of Rights pursuant to this Rights Agreement; provided, however, that if the
Company is unable to cause the authorization of additional Preferred Shares,
then the Company shall, or, if action by the Company’s stockholders is necessary
to cause such authorization, in lieu of seeking any such authorization, the
Company may, to the extent necessary and permitted by applicable law and any
agreements or instruments in effect prior to the Distribution Date to which it
is a party, (i) upon surrender of a Right, pay cash equal to the Purchase
Price in lieu of issuing Preferred Shares and requiring payment therefor,
(ii) upon due exercise of a Right and payment of the Purchase Price for
each Preferred Share as to which such Right is exercised, issue common stock or
other equity and/or debt securities having a value equal to the value of the
Preferred Shares that otherwise would have been issuable pursuant to this Rights
Agreement, which value shall be determined by a nationally recognized investment
banking firm selected by the Board, or (iii) upon due exercise of a Right
and payment of the Purchase Price for each Preferred Share as to which such
Right is exercised, distribute a combination of Preferred Shares, cash and/or
other equity and/or debt securities having an aggregate value equal to the value
of the Preferred Shares that otherwise would have been issuable pursuant to this
Rights Agreement, which value shall be determined by a nationally recognized
investment banking firm selected by the Board.  To the extent that any
legal or contractual restrictions (pursuant to agreements or instruments in
effect prior to the Distribution Date to which it is party) prevent the Company
from paying the full amount payable in accordance with the foregoing sentence,
the Company shall pay to holders of the Rights as to which such payments are
being made all amounts that are not then restricted on a pro rata basis as such
payments become permissible under such legal or contractual restrictions until
such payments have been paid in full.

     

    


    
      
        
           


        

        
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    (c)  The
Company shall take all actions as may be necessary to ensure that all Preferred
Shares delivered upon exercise or exchange of Rights shall, at the time of
delivery of the certificates for such Preferred Shares (subject to payment of
the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable shares.

     

    (d)  The
Company shall pay when due and payable any and all Federal and state transfer
taxes and charges which may be payable in respect of the issuance or delivery of
Right Certificates or of any Preferred Shares or Common Shares or other
securities upon the exercise or exchange of the Rights.  The Company
shall not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Right Certificates to a Person other
than, or in respect of the issuance or delivery of certificates or depositary
receipts for the Preferred Shares or Common Shares or other securities, as the
case may be, in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or exchange or to issue
or deliver any certificates or depositary receipts for Preferred Shares or
Common Shares or other securities, as the case may be, upon the exercise or
exchange of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company’s satisfaction that no such tax
is due.

     

     

     

    


    
      
        
           


        

        
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    SECTION 10.  Preferred
Shares Record Date.  Each Person in whose name any
certificate for Preferred Shares or Common Shares or other securities is issued
upon the exercise or exchange of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares or Common Shares or other
securities, as the case may be, represented thereby on, and such certificate
shall be dated, the date on which the Right Certificate evidencing such Rights
was duly surrendered and payment of any Purchase Price (and any applicable
transfer taxes) was made; provided, however, that, if the
date of such surrender and payment is a date upon which the transfer books of
the Company for the Preferred Shares or Common Shares or other securities, as
the case may be, are closed, such Person shall be deemed to have become the
record holder of such Preferred Shares or Common Shares or other securities, as
the case may be, on, and such certificate shall be dated, the next succeeding
Business Day on which the transfer books of the Company for the Preferred Shares
or Common Shares or other securities, as the case may be, are open.

     

    SECTION
11.  Adjustments in Rights After
There Is an Acquiring Person; Exchange of Rights for Shares; Business
Combinations.  (a)  Subject to the other provisions
of this Rights Agreement (including the definition of Acquired Person and
Section 7(e)), upon a Person becoming an Acquiring Person, each holder of a
Right shall thereafter have a right to receive, upon exercise thereof for the
Purchase Price in accordance with the terms of this Rights Agreement, such
number of one one-thousandths (1/1,000ths) of a Preferred Share (as such
fraction may be adjusted as provided in this Rights Agreement) as shall equal
the result obtained by multiplying the Purchase Price by a fraction, the
numerator of which is the number of one one-thousandths (1/1,000ths) of a
Preferred Share (as such fraction may be adjusted as provided in this Rights
Agreement) for which such Right is then exercisable and the denominator of which
is 50% of the Market Value of the Common Shares on the date on which such Person
became an Acquiring Person.

     

    (b)  (i)  The
Board may, at its option, at any time after a Person becomes an Acquiring
Person, mandatorily exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that shall have become null and void and
nontransferable pursuant to Section 7(e)) for consideration per Right
consisting of either (A) one-half of the securities that would be issuable
at such time upon the exercise of one Right in accordance with
Section 11(a) or, if applicable, Section 9(b)(ii) or 9(b)(iii) or
(B) if applicable, the cash consideration specified in Section 9(b)(i) (the
consideration issuable per Right pursuant to this Section 11(b)(i) being
the “Exchange
Consideration”), provided that the Board shall, subject to applicable
law, elect to exchange all the Rights for Exchange Consideration (payable in the
form of Common Shares) if and to the extent necessary to avoid any default under
any agreements or instruments in effect prior to the Distribution
Date.  The Board may, at its option, issue a number of Common Shares
in lieu of each Preferred Share equal to the Formula Number (as defined in the
Certificate of Designation) if there are sufficient Common Shares issued but not
outstanding or authorized but unissued.  If the Board elects to
exchange all the Rights for Exchange Consideration pursuant to this
Section 11(b)(i) prior to the physical distribution of the Right
Certificates, the Company may distribute the Exchange Consideration in lieu of
distributing Right Certificates, in which case for purposes of this Rights
Agreement holders of Rights shall be deemed to have simultaneously received and
surrendered for exchange Right Certificates on the date of such
distribution.  Notwithstanding the foregoing, the Board may not effect
such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company or any employee benefit plan of the Company or any of
its Subsidiaries or any Person holding Common Shares for or pursuant to the
terms of any such employee benefit or compensation plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of more
than 50% of the Common Shares then outstanding.

     

    


    
      
        
           


        

        
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    (ii)  Any
action of the Board ordering the exchange of any Rights pursuant to
Section 11(b)(i) shall be irrevocable and, immediately upon the taking of
such action and without any further action and without any notice, the right to
exercise any such Right so exchanged pursuant to Section 11(a) shall
terminate and the only right thereafter of a holder of such Right shall be to
receive the Exchange Consideration in exchange for each such Right held by such
holder or, if the Exchange Consideration shall not have been paid or issued, to
exercise any such Right pursuant to Section 11(c)(i).  The
Company shall promptly give public notice of any such exchange (with prompt
written notice thereof to the Rights Agent); provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange.  The Company shall promptly mail a notice of any such
exchange to all holders of the Rights to be exchanged at their last addresses as
they appear upon the registry books of the Rights Agent.  Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice.  Each such notice of exchange
shall state the method by which the exchange of the Rights for the Exchange
Consideration will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged.  Any partial exchange shall
be effected pro rata based on the number of Rights (other than Rights which
shall have become null and void and nontransferable pursuant to the provisions
of Section 7(e)) held by each holder of Rights.

     

    (c)  (i)  In
the event that, directly or indirectly, any transactions specified in the
following clause (A), (B) or (C) of this Section 11(c)(i) (each
such transaction being a “Business
Combination”) shall be consummated:

     

    (A)  the
Company shall consolidate with, or merge with and into, any Acquiring Person or
any Affiliate or Associate of an Acquiring Person;

     

    (B)  any
Acquiring Person or any Affiliate or Associate of an Acquiring Person shall
merge with and into the Company and, in connection with such merger, all or part
of the outstanding Common Shares of the Company shall be changed into or
exchanged for capital stock or other securities of the Company or of any
Acquiring Person or Affiliate or Associate of an Acquiring Person or cash or any
other property; or

     

    


    
      
        
           


        

        
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    (C)  the
Company shall sell, lease, exchange or otherwise transfer or dispose of (or one
or more of its Subsidiaries shall sell, lease, exchange or otherwise transfer or
dispose of), in one or more transactions, the Major Part of the assets of the
Company and its Subsidiaries to any Acquiring Person or any Affiliate or
Associate of an Acquiring Person,

     

    then, in
each such case, proper provision shall be made so that each holder of a Right,
except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, the securities specified below (or, at such
holder’s option, the securities specified in Section 11(a) if the Company
is the surviving corporation in such Business Combination):

     

    (1)  if
the Principal Party in such Business Combination has Registered Common Shares
outstanding, each Right shall thereafter represent the right to receive, upon
the exercise thereof for the Purchase Price in accordance with the terms of this
Rights Agreement, such number of Registered Common Shares of such Principal
Party, free and clear of all liens, encumbrances or other adverse claims, as
shall have an aggregate Market Value as of the time of exercise thereof equal to
the result obtained by multiplying the Purchase Price by two;

     

    (2)  if
the Principal Party involved in such Business Combination does not have
Registered Common Shares outstanding, each Right shall thereafter represent the
right to receive, upon the exercise thereof for the Purchase Price in accordance
with the terms of this Rights Agreement, at the election of the holder of such
Right at the time of the exercise thereof, any of:

     

    (i)  such
number of Common Shares of the Surviving Person in such Business Combination (if
the Principal Party is also the Surviving Person in such Business Combination)
as shall have an aggregate Book Value immediately after giving effect to such
Business Combination equal to the result obtained by multiplying the Purchase
Price by two;

     

    (ii)  such
number of Common Shares of the Principal Party in such Business Combination (if
the Principal Party is not also the Surviving Person in such Business
Combination) as shall have an aggregate Book Value immediately after giving
effect to such Business Combination equal to the result obtained by multiplying
the Purchase Price by two; or

     

    (iii)  if
the Principal Party in such Business Combination is an Affiliate of one or more
Persons that has Registered Common Shares outstanding, such number of Registered
Common Shares of whichever of such Affiliates of the Principal Party has
Registered Common Shares with the greatest aggregate Market Value on the date of
consummation of such Business Combination as shall have an aggregate Market
Value on the date of such Business Combination equal to the result obtained by
multiplying the Purchase Price by two.

     

    


    
      
        
           


        

        
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    (ii)  The
Company shall not consummate any Business Combination unless each issuer of
Common Shares for which Rights may be exercised, as set forth in this
Section 11(c), shall have sufficient authorized Common Shares that have not
been issued or reserved for issuance (and which shall, when issued upon exercise
thereof in accordance with this Rights Agreement, be validly issued, fully paid
and nonassessable and free of preemptive rights, rights of first refusal or any
other restrictions or limitations on the transfer or ownership thereof) to
permit the exercise in full of the Rights in accordance with this
Section 11(c) and unless prior thereto:

     

    (A)  a
registration statement under the Securities Act on an appropriate form, with
respect to the Rights and the Common Shares of such issuer purchasable upon
exercise of the Rights, shall be effective under the Securities Act;
and

     

    (B)  the
Company and each such issuer shall have:

     

    (1)  executed
and delivered to the Rights Agent a supplemental agreement providing for the
assumption by such issuer of the obligations set forth in this
Section 11(c) (including the obligation of such issuer to issue Common
Shares upon the exercise of Rights in accordance with the terms set forth in
Sections 11(c)(i) and 11(c)(iii)) and further providing that such
issuer, at its own expense, shall use its best efforts to:

     

    (i)  cause
a registration statement under the Securities Act on an appropriate form, with
respect to the Rights and the Common Shares of such issuer purchasable upon
exercise of the Rights, to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration
Date;

     

    (ii)  qualify
or register the Rights and the Common Shares of such issuer purchasable upon
exercise of the Rights under the blue sky or securities laws of such
jurisdictions as may be necessary or appropriate; and

     

    (iii)  list
the Rights and the Common Shares of such issuer purchasable upon exercise of the
Rights on each national securities exchange on which the Common Shares were
listed prior to the consummation of the Business Combination or, if the Common
Shares were not listed on a national securities exchange prior to the
consummation of the Business Combination, on a national securities
exchange;

     

    


    
      
        
           


        

        
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    (2)  furnished
to the Rights Agent a written opinion of independent counsel stating that such
supplemental agreement is a valid, binding and enforceable agreement of such
issuer; and

     

    (3)  filed
with the Rights Agent a certificate of a nationally recognized firm of
independent accountants setting forth the number of Common Shares of such issuer
that may be purchased upon the exercise of each Right after the consummation of
such Business Combination.

     

    (iii)  After
consummation of any Business Combination and subject to the provisions of
Section 11(c)(ii), (A) each issuer of Common Shares for which Rights
may be exercised as set forth in this Section 11(c) shall be liable for,
and shall assume, by virtue of such Business Combination, all the obligations
and duties of the Company pursuant to this Rights Agreement, (B) the term
“Company” shall
thereafter be deemed to refer to such issuer, (C) each such issuer shall
take such steps in connection with such consummation as may be necessary to
assure that the provisions of this Rights Agreement (including
Sections 11(a) and 11(c)) shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights, (D) the number of Common Shares of each such
issuer thereafter receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11 and 12 and (E) the
other provisions of this Rights Agreement (including Sections 7, 9
and 10) with respect to the Preferred Shares shall apply, as nearly as
reasonably may be, on like terms to any such Common Shares.

     

    SECTION
12.  Certain
Adjustments.  (a)  To preserve the actual or
potential economic value of the Rights, if at any time after the date of this
Rights Agreement there shall be any change in the Common Shares or the Preferred
Shares, whether by reason of stock dividends, stock splits, reclassifications,
recapitalizations, mergers, consolidations, combinations or exchanges of
securities, split-ups, split-offs, spin-offs, liquidations, other similar
changes in capitalization, any distribution or issuance of cash, assets,
evidences of indebtedness or subscription rights, options or warrants to holders
of Common Shares, or Preferred Shares, as the case may be (other than
distribution of the Rights or regular quarterly cash dividends), or otherwise,
then, in each such event the Board shall make such appropriate adjustments in
the number of Preferred Shares (or the number and kind of other securities)
issuable upon exercise of each Right, the Purchase Price and Redemption Price in
effect at such time and the number of Rights outstanding at such time (including
the number of Rights or fractional Rights associated with each Common Share)
such that following such adjustment such event shall not have had the effect of
reducing or limiting the benefits the holders of the Rights would have had
absent such event.

     

    


    
      
        
           


        

        
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    (b)  If,
as a result of an adjustment made pursuant to Section 12(a), the holder of
any Right thereafter exercised shall become entitled to receive any securities
other than Preferred Shares, thereafter the number of such securities so
receivable upon exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions of Sections 11 and 12 and the other provisions of this
Rights Agreement (including Sections 7, 9 and 10) with respect to the
Preferred Shares shall apply, as nearly as reasonably may be, on like terms to
any such other securities.

     

    (c)  All
Rights originally issued by the Company subsequent to any adjustment made to the
amount of Preferred Shares or other securities relating to a Right shall
evidence the right to purchase, for the Purchase Price, the adjusted number and
kind of securities purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided in this Rights
Agreement.

     

    (d)  Irrespective
of any adjustment or change in the Purchase Price or the number of Preferred
Shares or number or kind of other securities issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to
express the terms that were expressed in the initial Right Certificates issued
hereunder.

     

    (e)  In
any case in which action taken pursuant to Section 12(a) requires that an
adjustment be made effective as of a record date for a specified event, the
Company may elect to defer (with prompt written notice thereof to the Rights
Agent) until the occurrence of such event the issuing to the holder of any Right
exercised after such record date the Preferred Shares and/or other securities,
if any, issuable upon such exercise over and above the Preferred Shares and/or
other securities, if any, issuable before giving effect to such adjustment;
provided, however, that the
Company shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder’s right to receive such additional securities upon the
occurrence of the event requiring such adjustment.

     

    SECTION
13.  Certificate of
Adjustment.  Whenever an adjustment is made or any event occurs
affecting the Rights or their exercisability (including an event which causes
the Rights to become null and void) as provided in Section 11 or 12,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment or describing such event and a brief, reasonably detailed statement
of the facts, computations and methodology accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for
the Preferred Shares, a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate (or, if prior to the
Distribution Date, to each holder of Common Shares) in accordance with
Section 25, provided that the failure to prepare, file or mail such
certificate or summary shall not affect the validity of such
adjustment.  The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment or statement therein contained and,
subject to Section 21(c) shall have no duty or liability with respect to, and
shall not be deemed to have knowledge of, any adjustment or any such event
unless it shall have received such a certificate.

     

    


    
      
        
           


        

        
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    SECTION
14.  Additional
Covenants.  (a)  Notwithstanding any other provision
of this Rights Agreement, no adjustment to the number of Preferred Shares (or
fractions of a share) or other securities for which a Right is exercisable or
the number of Rights outstanding or associated with each Common Share or any
similar or other adjustment shall be made or be effective if such adjustment
would have the effect of reducing or limiting the benefits the holders of the
Rights would have had absent such adjustment, including the benefits under
Sections 11 and 12, unless the terms of this Rights Agreement are amended so as
to preserve such benefits.

     

    (b)  The
Company covenants and agrees that, after the Distribution Date, except as
permitted by Section 26, it shall not take (or permit any Subsidiary of the
Company to take) any action if at the time such action is taken it is intended
or reasonably foreseeable that such action will reduce or otherwise limit the
benefits the holders of Rights would have had absent such action, including the
benefits under Sections 11 and 12.  Any action taken by the
Company during any period after any Person becomes an Acquiring Person but prior
to the Distribution Date shall be null and void unless such action could be
taken under this Section 14(b) from and after the Distribution
Date.  The Company shall not consummate any Business Combination if
any issuer of Common Shares for which Rights may be exercised after such
Business Combination in accordance with Section 11(c) shall have taken any
action that reduces or otherwise limits the benefits the holders of Rights would
have had absent such action, including the benefits under Sections 11
and 12.

     

    SECTION
15.  Fractional Rights and
Fractional Shares.  (a)  The Company may, but shall
not be required to, issue fractions of Rights or distribute Right Certificates
which evidence fractional Rights.  In lieu of such fractional Rights,
the Company may pay to the registered holders of the Right Certificates with
regard to which such fractional Rights would otherwise be issuable an amount in
cash equal to the same fraction of the current market value of a whole
Right.  For purposes of this Section 15(a), the current market
value of a whole Right shall be the closing price of the Rights (as determined
pursuant to the second sentence of the definition of Market Value contained in
Section 1) for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable.

     

    (b)  The
Company may, but shall not be required to, issue fractions of Preferred Shares
upon exercise of the Rights or distribute certificates that evidence fractional
Preferred Shares.  In lieu of fractional Preferred Shares, the Company
may elect to (i) utilize a depository arrangement as provided by the terms
of the Preferred Shares or (ii) in the case of a fraction of a Preferred
Share (other than one one-thousandths (1/1,000ths) of a Preferred Share (as
such fraction may adjusted as provided in this Rights Agreement) or any integral
multiple thereof), pay to the registered holders of Right Certificates at the
time such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Preferred Share, if any are
outstanding and publicly traded (or the same fraction of the current market
value of one Common Share times the Formula Number (as defined in the
Certificate of Designation) if the Preferred Shares are not outstanding and
publicly traded).  For purposes of this Section 15(b), the
current market value of a Preferred Share (or Common Share) shall be the closing
price of a Preferred Share (or Common Share) (as determined pursuant to the
second sentence of the definition of Market Value contained in Section 1)
for the Trading Day immediately prior to the date of such
exercise.  If, as a result of an adjustment made pursuant to
Section 12(a), the holder of any Right thereafter exercised shall become
entitled to receive any securities other than Preferred Shares, the provisions
of this Section 15(b) shall apply, as nearly as reasonably practicable, on
like terms to such other securities.

     

    


    
      
        
           


        

        
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    (c)  The
Company may, but shall not be required to, issue fractions of Common Shares upon
exchange of Rights pursuant to Section 11(b), or to distribute certificates
that evidence fractional Common Shares.  In lieu of such fractional
Common Shares, the Company may pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares would otherwise
be issuable an amount in cash equal to the same fraction of the current Market
Value of one Common Share as of the date on which a Person became an Acquiring
Person.

     

    (d)  Each
holder of Rights by the acceptance of such Rights expressly waives such holder’s
right to receive any fractional Rights or any fractional shares upon exercise of
a Right except as provided in this Section 15.

     

    (e)  Whenever
a payment for fractional Rights or fractional shares is to be made by the Rights
Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent a
certificate setting forth in reasonable detail the facts related to such
payments and the prices and/or formulas utilized in calculating such payments,
and (ii) provide sufficient monies to the Rights Agent in the form of fully
collected funds to make such payments.  The Rights Agent shall be
fully protected in relying upon such a certificate and shall have no duty with
respect to, and shall not be deemed to have knowledge of any payment for
fractional Rights or fractional shares under any Section of this Agreement
relating to the payment of fractional Rights or fractional shares unless and
until the Rights Agent shall have received such a certificate and sufficient
monies.

     

    SECTION
16.  Rights
of Action.  (a)  All rights of action in respect of
this Rights Agreement, excepting the rights of action given to the Rights Agent
under Sections 19 and 21, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered holders
of the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Common Shares) may, in such holder’s own behalf
and for such holder’s own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, such holder’s right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this Rights
Agreement.  Without limiting the foregoing or any remedies available
to the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this Rights
Agreement and shall be entitled to specific performance of the obligations of
any Person under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Rights
Agreement.  Notwithstanding anything in this Rights Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Rights Agreement by reason of any preliminary
or permanent injunction or other order, judgment decree or ruling (whether
interlocutory or final) issued by a court of competent jurisdiction or by a
governmental, regulatory, self-regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company
must use reasonable efforts to have any such injunction, order, judgment, decree
or ruling lifted or otherwise overturned as soon as possible.

     

    


    
      
        
           


        

        
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    (b)  Any
holder of Rights who prevails in an action to enforce the provisions of this
Rights Agreement shall be entitled to recover the reasonable costs and expenses,
including attorneys’ fees, incurred in such action.

     

    SECTION
17.  Transfer and Ownership of
Rights and Right Certificates.  (a)  Prior to the
Distribution Date, the Rights shall be transferable only in connection with the
transfer of the Common Shares and the Right associated with each such Common
Share shall be automatically transferred upon the transfer of each such Common
Share.

     

    (b)  After
the Distribution Date, the Right Certificates shall be transferable, subject to
Section 7(e), only on the registry books of the Rights Agent if surrendered
at the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate forms and certificates
properly completed and duly executed.

     

    (c)  The
Company and the Rights Agent may deem and treat the Person in whose name a Right
Certificate (or, prior to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated certificate for Common Shares made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary.

     

    SECTION
18.  Right
Certificate Holder Not Deemed a Stockholder.  No holder, as
such, of any Right Certificate shall be entitled to vote or receive dividends or
other distributions or be deemed, for any purpose, the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights of a stockholder of
the Company, including any right to vote for the election of directors or upon
any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders, or to receive dividends or other
distributions or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with
the provisions hereof.

     

    


    
      
        
           


        

        
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    SECTION
19.  Concerning the Rights
Agent.  (a)  The Company agrees to pay to the Rights
Agent reasonable compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the preparation, negotiation,
delivery, amendment, administration and execution of this Rights Agreement and
the exercise and performance of its duties hereunder, including any taxes or
governmental charges imposed as a result of the action taken by it hereunder
(other than any taxes on the fees payable to it). The provisions of this Section
19 and Section 21 below shall survive the termination of this Agreement, the
exercise or expiration of the Rights and the resignation, replacement or removal
of the Rights Agent.

     

    (b)  The
Rights Agent shall be protected and shall incur no liability for or in respect
of any action taken, suffered or omitted by it in connection with its acceptance
and administration of this Rights Agreement and the exercise and performance of
its duties hereunder (other than matters arising out of or resulting from a
conflict of interest of the Rights Agent or other business interests of the
Rights Agent) in reliance upon any Right Certificate or certificate for the
Common Shares, or for other securities of the Company, instrument of assignment
or transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or document believed
by it to be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons, or upon the written advice or
opinion of counsel as set forth in Section 21.  The Rights Agent shall
not be deemed to have knowledge of any event of which it was supposed to receive
notice thereof hereunder and, subject to Section 21(c), the Rights Agent shall
be fully protected and incur no liability for failing to take action in
connection therewith unless and until it has received such notice in
writing.

     

    SECTION
20.  Merger
or Consolidation or Change of Rights Agent.

     

    (a)  Any
Person into which the Rights Agent or any successor Rights Agent may be merged
or with which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall be a
party, or any Person succeeding to the shareholder services or stock transfer or
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Rights Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; provided, however, that such
Person would be eligible for appointment as a successor Rights Agent under the
provisions of Section 22.  In case, at the time such successor
Rights Agent shall succeed to the agency created by this Rights Agreement, any
of the Right Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Right Certificates so countersigned; and, in case
at that time any of the Right Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.

     

    


    
      
        
           


        

        
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    (b)  In
case at any time the name of the Rights Agent shall be changed and at such time
any of the Right Certificates shall have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and deliver
Right Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, the Rights Agent may countersign
such Right Certificates either in its prior name or in its changed name; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Rights Agreement.

     

    SECTION
21.  Duties
of Rights Agent.  The Rights Agent undertakes to perform only
the duties and obligations expressly imposed by this Rights Agreement (and no
implied duties) upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates (or, prior to the Distribution
Date, of the Common Shares), by their acceptance thereof, shall be
bound:

     

    (a)  The
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company or legal counsel for the Rights Agent), and the written advice or
opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent and, subject to Section 21(c), the Rights Agent shall incur
no liability for or in respect of any action taken, suffered or omitted by
it  in accordance with such written advice or opinion.

     

    (b)  Whenever
in the performance of its duties under this Rights Agreement the Rights Agent
shall deem it necessary or desirable that any fact or matter (including the
identity of any Acquiring Person and the determination of the current per share
market price of any security) be proved or established by the Company prior to
taking, suffering or omitting to take any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
any corporate officer of the Company having the rank of Vice President or above
and delivered to the Rights Agent; and such certificate shall be full and
complete authorization and protection to the Rights Agent and, subject to
Section 21(c), the Rights Agent shall incur no liability for or in respect of
any action taken, suffered or omitted by it in reliance upon such
certificate.

     

    (c)  The
Rights Agent shall be liable hereunder to the Company and any other Person only
for its own gross negligence, bad faith or intentional misconduct (which gross
negligence, bad faith or willful misconduct must be determined by a final,
non-appealable judgment of a court of competent
jurisdiction).  Anything to the contrary notwithstanding, in no event
shall the Rights Agent be liable for special, punitive, indirect, consequential
or incidental loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage.

     

    


    
      
        
           


        

        
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    (d)  Subject
to Section 21(c), the Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Rights Agreement or in
the Right Certificates (except as to its countersignature thereof) or be
required to verify the same, and all such statements and recitals are and shall
be deemed to have been made by the Company only.

     

    (e)  The
Rights Agent shall not be under any responsibility in respect of the validity of
this Rights Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or execution
of any Right Certificate (except its countersignature thereof) and, subject to
Section 21(c), shall have no liability therefor; nor shall it be responsible for
any breach by the Company of any covenant or condition contained in this Rights
Agreement or in any Right Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including the Rights becoming null
and void pursuant to Section 7(e)) or any change or adjustment in the terms of
Rights as required under the provisions of Section 11 or 12 or responsible
for the manner, method or amount of any such change or adjustment or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after actual notice of any such adjustment pursuant to Section 13);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares or
Common Shares to be issued pursuant to this Rights Agreement or any Right
Certificate or as to whether any Preferred Shares or Common Shares will, when so
issued, be validly authorized and issued, fully paid and
nonassessable.

     

    (f)  The
Company agrees that it shall perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the provisions
of this Rights Agreement.

     

    (g)  The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any corporate officer of
the Company having the rank of Vice President or above in connection with its
duties and such instructions shall be full authorization and protection to the
Rights Agent and, subject to Section 21(c), the Rights Agent shall not be liable
for or in respect of any action taken, suffered or omitted by it in accordance
with any such instructions or for any delay in acting while waiting for such
instructions.  In the event of any conflict or inconsistency between
or among any such instructions, the later in time shall govern.  Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken, suffered or omitted by the Rights
Agent under this Agreement and the date on and/or after which such action shall
be taken or suffered or such omission shall be effective.  Subject to
Section 21(c), the Rights Agent shall not be liable for any action taken or
suffered by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date
any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to the
later of (i) the expiry of such five Business Day period and (ii) the Right’s
Agent taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received either a written instructions in response
to such application specifying the action to be taken, suffered or omitted, or a
written or oral objection by the Company to such proposal.

     

    


    
      
        
           


        

        
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    (h)  The
Rights Agent and any stockholder, affiliate, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company or its Subsidiaries may be interested, or contract with or lend money to
the Company or its Subsidiaries or otherwise act as fully and freely as though
it were not the Rights Agent under this Rights Agreement.  Nothing
herein shall preclude the Rights Agent or any stockholder, affiliate, director,
officer or employee from acting in any other capacity for the Company or for any
other Person.

     

    (i)  If,
with respect to any Right Certificate surrendered to the Rights Agent for
exercise or transfer, the certificate contained in the form of assignment or the
form of election to purchase set forth on the reverse thereof, as the case may
be, has either not been properly completed or indicates an affirmative response
to any clause thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with the
Company.

     

    (j)  The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself (through its directors,
officers and employees) or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct, provided that
reasonable care was exercised in the selection and continued employment
thereof.

     

    (k)  The
Company shall indemnify the Rights Agent for, and hold the Rights Agent harmless
against, any loss, liability, damage, claim or expense (including reasonable
fees and expenses of legal counsel) that the Rights Agent may incur resulting
from any action taken, suffered or omitted by the Rights Agent in connection
with the acceptance, administration, exercise and performance of its duties
under this Rights Agreement (other than matters arising out of or resulting from
a conflict of interest of the Rights Agent or other business interests of the
Rights Agent); provided, however, that the
Rights Agent shall not be indemnified or held harmless with respect to any such
loss, liability, damage or expense incurred by the Rights Agent as a result of,
or arising out of, its own gross negligence, bad faith or intentional
misconduct.  In no case shall the Company be liable with respect to
any action, proceeding, suit or claim against the Rights Agent unless the Rights
Agent shall have notified the Company, by letter or by facsimile confirmed by
letter, of the assertion of any action, proceeding, suit or claim against the
Rights Agent, promptly after the Rights Agent shall have notice of any such
assertion of an action, proceeding, suit or claim or have been served with the
summons or other first legal process giving information as to the nature and
basis of the action, proceeding, suit or claim.  The Company shall be
entitled to participate at its own expense in the defense of any such action,
proceeding, suit or claim, and, if the Company so elects, the Company shall
assume the defense of any such action, proceeding, suit or claim.  In
the event that the Company assumes such defense, the Company shall not
thereafter be liable for the fees and expenses of any additional counsel
retained by the Rights Agent, so long as the Company shall retain counsel
satisfactory to the Rights Agent, in the exercise of its reasonable judgment, to
defend such action, proceeding, suit or claim.  The Rights Agent
agrees not to settle any litigation in connection with any action, proceeding,
suit or claim with respect to which it may seek indemnification from the Company
without the prior written consent of the Company.  If a final,
non-appealable judgment of a court of competent jurisdiction shall be issued in
favor of the Rights Agent in respect of an action by the Rights Agent to enforce
the indemnification provisions of this Section 21(k), then the Company shall
reimburse the Rights Agent’s for its costs and expenses in enforcing such
indemnification provisions.

     

    


    
      
        
           


        

        
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    (l)  No
provision of this Agreement shall require the Rights Agent to expend or risk its
own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder or in the exercise of its rights if it believes that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.

     

    SECTION
22.  Change
of Rights Agent.  The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Rights Agreement
upon 30 days’ notice in writing mailed to the Company and to each transfer
agent of the Common Shares and the Preferred Shares known to the Rights Agent,
after due inquiry, by registered or certified mail, and to the holders of the
Right Certificates (or, prior to the Distribution Date, of the Common Shares) by
first-class mail.  The Company may remove the Rights Agent or any
successor Rights Agent upon 30 days’ notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Shares and the Preferred Shares by registered or certified
mail, and to the holders of the Right Certificates (or, prior to the
Distribution Date, of the Common Shares) by first-class mail.  If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent.  If
the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (or, prior to the Distribution Date, of the
Common Shares) (who shall, with such notice, submit such holder’s Right
Certificate or, prior to the Distribution Date, the certificate representing
such holder’s Common Shares, for inspection by the Company), then the registered
holder of any Right Certificate (or, prior to the Distribution Date, of the
Common Shares) may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent.  Any successor Rights Agent,
whether appointed by the Company or by such a court, shall be a Person organized
and doing business under the laws of the United States or of the State of New
York (or of any other state of the United States so long as such entity is
authorized to conduct a stock transfer or corporate trust business in the State
of New York), in good standing, which is authorized under such laws to exercise
stock transfer or corporate trust powers and is subject to supervision or
examination by Federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$100,000,000; provided, however, that the
principal transfer agent for the Common Shares shall in any event be qualified
to be the Rights Agent.  After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the
purpose.  Not later than the effective date of any such appointment,
the Company shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Shares and the Preferred Shares, and
mail a notice thereof in writing to the registered holders of the Right
Certificates (or, prior to the Distribution Date, of the Common
Shares).  Failure to give any notice provided for in this
Section 22, however, or any defect therein shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.

     

    


    
      
        
           


        

        
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    SECTION
23.  Issuance of Additional
Rights and Right Certificates.  Notwithstanding any of the
provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board to reflect any adjustment or change
made in accordance with the provisions of this Rights Agreement.  In
addition, in connection with the issuance or sale of Common Shares following the
Distribution Date and prior to the earlier of the Redemption Date and the
Expiration Date, the Company (a) shall, with respect to Common Shares so
issued, granted or sold pursuant to the exercise of stock options or under any
employee plan or arrangement (whether or not subject to vesting or other
restrictions), or upon the exercise, conversion or exchange of securities, notes
or debentures issued by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by the Board, issue Right Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that
(i) no such Right Certificate shall be issued if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued, (ii) no such Right
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof and (iii) no
such Right Certificate shall be issued to an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.

     

    


    
      
        
           


        

        
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    SECTION
24.  Redemption and
Termination.  (a)  The Board may, at its option, at
any time prior to the earlier of (i) the Distribution Date and
(ii) the Expiration Date, order the redemption of all, but not fewer than
all, the then outstanding Rights at the Redemption Price (the date of such
redemption being the “Redemption Date”),
and the Company, at its option, may pay the Redemption Price either in cash or
Common Shares or other securities of the Company deemed by the Board, in the
exercise of its sole discretion, to be at least equivalent in value to the
Redemption Price.

     

    (b)  Immediately
upon the action of the Board ordering the redemption of the Rights, and without
any further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price.  Promptly after the action of the Board
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common
Shares.  Each such notice of redemption shall state the method by
which payment of the Redemption Price will be made.  The notice, if
mailed in the manner herein provided, shall be conclusively presumed to have
been duly given, whether or not the holder of Rights receives such
notice.  In any case, failure to give such notice by mail, or any
defect in the notice, to any particular holder of Rights shall not affect the
sufficiency of the notice to other holders of Rights.  Neither the
Company nor any of its Affiliates or Associates may redeem, acquire or purchase
for value any Rights at any time in any manner except as specifically set forth
in this Section or in Section 11(b) or in connection with the purchase of
Common Shares prior to the Distribution Date.

     

    SECTION
25.  Notices.  Notices
or demands authorized by this Rights Agreement to be given or made by the Rights
Agent or by the holder of a Right Certificate (or, prior to the Distribution
Date, of the Common Shares) to or on the Company shall be sufficiently given or
made if sent by first-class mail, postage-prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:

     

    Barnes
& Noble, Inc.

    122 Fifth
Avenue

    New York,
New York 10111

    Attention:
Director of Investor Relations

     

    


    
      
        
           


        

        
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    Subject
to the provisions of Section 22, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of a Right
Certificate (or, prior to the Distribution Date, of the Common Shares) to or on
the Rights Agent shall be sufficiently given or made if sent by first-class
mail, postage-prepaid, addressed (until another address is filed in writing with
the Company) as follows:

     

    Mellon
Investor Services LLC

    Newport
Office Center VII

    480
Washington Boulevard

    Jersey
City, New Jersey  07310

    Attention:  Relationship
Manager

     

    with a
copy to:

     

    Mellon
Investor Services LLC

    Newport
Office Center VII

    480
Washington Boulevard

    Jersey
City, New Jersey  07310

    Attention:  General
Counsel

    


    Notices
or demands authorized by this Rights Agreement to be given or made by the
Company or the Rights Agent to any holder of a Right Certificate (or, prior to
the Distribution Date, of the Common Shares) shall be sufficiently given or made
if sent by first-class mail, postage-prepaid, addressed to such holder at the
address of such holder as shown on the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Shares.

     

    SECTION
26.  Supplements and
Amendments.  At any time prior to the time any Person becomes
an Acquiring Person, and subject to the last sentence of this Section 26,
the Company may, and the Rights Agent shall if the Company so directs,
supplement or amend any provision of this Rights Agreement in any manner which
the Company may deem necessary or desirable (including the date on which the
Distribution Date or Expiration Date shall occur, the amount of the Purchase
Price, the definition of “Acquiring Person” or the time during which the Rights
may be redeemed pursuant to Section 24) without the approval of any holder
of the Rights.  From and after the Distribution Date, and subject to
applicable law, the Company may, and the Rights Agent shall if the Company so
directs, amend this Rights Agreement without the approval of any holders of
Right Certificates (a) to cure any ambiguity or to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provision of this Rights Agreement or (b) to otherwise change or
supplement any other provisions in this Rights Agreement in any matter which the
Company may deem necessary or desirable and which does not adversely affect the
interests of the holders of Right Certificates (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person), any such supplement
or amendment to be evidenced in writing.  Any supplement or amendment
adopted during any period after any Person has become an Acquiring Person but
prior to the Distribution Date shall be null and void unless such supplement or
amendment could have been adopted under the prior sentence from and after the
Distribution Date.  Any supplement or amendment to this Rights
Agreement duly approved by the Company that does not affect the Rights Agent’s
own rights, duties, obligations or immunities under this Rights Agreement shall
become effective immediately upon execution by the Company, whether or not also
executed by the Rights Agent.  Upon
delivery of a certificate from an appropriate officer of the Company that states
that the proposed supplement or amendment complies with this Section 26, the
Rights Agent shall execute such supplement or amendment.  Notwithstanding anything to the contrary contained in
this Rights Agreement, the Rights Agent may, but shall not be obligated to,
enter into any supplement or amendment that affects the Rights Agent’s own
rights, duties, obligations or immunities under this Rights
Agreement.  In addition, notwithstanding anything to the
contrary contained in this Rights Agreement, no supplement or amendment to this
Rights Agreement shall be made which extends the date on which the Expiration
Date shall occur or reduces the Redemption Price (except as required by
Section 12(a)).

     

    


    
      
        
           


        

        
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    SECTION
27.  Successors.  All
the covenants and provisions of this Rights Agreement by or for the benefit of
the Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.

     

    SECTION
28.  Benefits of Rights
Agreement; Determinations and Actions by the Board,
etc.  (a)  Nothing in this Rights Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, of the Common Shares) any legal or equitable right, remedy or claim under
this Rights Agreement; but this Rights Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, of the Common
Shares).

     

    (b)  Except
as explicitly otherwise provided in this Rights Agreement, the Board shall have
the exclusive power and authority to administer this Rights Agreement and to
exercise all rights and powers specifically granted to the Board or to the
Company, or as may be necessary or advisable, in the administration of this
Rights Agreement, including the right and power to (i) interpret the
provisions of this Rights Agreement and (ii) make all determinations deemed
necessary or advisable for the administration of this Rights Agreement
(including a determination to redeem or not redeem the Rights or to amend this
Rights Agreement and a determination of whether there is an Acquiring
Person).

     

    (c)  Nothing
contained in this Rights Agreement shall be deemed to be in derogation of the
obligation of the Board to exercise its fiduciary duty.  Without
limiting the foregoing, nothing contained herein shall be construed to suggest
or imply that the Board shall not be entitled to reject any tender offer or
other acquisition proposal, or to recommend that holders of Common Shares reject
any tender offer, or to take any other action (including the commencement,
prosecution, defense or settlement of any litigation and the submission of
additional or alternative offers or other proposals) with respect to any tender
offer or other acquisition proposal that the Board believes is necessary or
appropriate in the exercise of such fiduciary duty.

     

    


    
      
        
           


        

        
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    SECTION
29.  Severability.  If
any term, provision, covenant or restriction of this Rights Agreement is held by
a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Rights Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated; provided, however, that if the
absence of such excluded provision shall, in the reasonable judgment of the
Rights Agent, materially and adversely its rights, immunities, duties or
obligations under this Rights Agreement, the Rights Agent shall be entitled to
resign on the next Business Day.

     

    SECTION
30.  Governing
Law.  This Rights Agreement and each Right Certificate issued
hereunder shall be deemed to be a contract made under the law of the State of
Delaware and for all purposes shall be governed by and construed in accordance
with the law of such State applicable to contracts to be made and performed
entirely within such State; provided, however, that all
provisions regarding the rights, duties and obligations of the Rights Agent
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made to be performed entirely within such
State.

     

    SECTION
31.  Counterparts;
Effectiveness.  This Rights Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.  This Rights Agreement shall be
effective as of the Close of Business on the date hereof.

     

    SECTION
32.  Descriptive
Headings.  Descriptive headings of the several Sections of this
Rights Agreement are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions of this Rights
Agreement.

     

    SECTION
33.  Force
Majeure.  Notwithstanding
anything to the contrary contained herein, the Rights Agent shall not be liable
for any delays or failures in performance resulting from acts beyond its
reasonable control including acts of God, terrorist acts, shortage of supply,
breakdowns or malfunctions, interruptions or malfunctions of computer
facilities, or loss of data due to power failures or mechanical difficulties
with information storage or retrieval systems, labor difficulties, war or civil
unrest.

     

    


     

    


    
      
        
           


        

        
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    IN
WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to be duly
executed as of the day and year first above written.

     

     

    

      
        	 	
                BARNES
      & NOBLE, INC.,

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Joseph
      J. Lombardi	 
	 	 	Name:
      Joseph J. Lombardi	 
	 	 	Title: Chief
      Financial Officer	 
	 	 	 	 


      

    

     

     

     

    
      
        	 	
                MELLON
      INVESTOR SERVICES LLC, as Rights Agent

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/
      Stephen Jones 	 
	 	 	Name:
      Stephen Jones 	 
	 	 	Title:
      Vice President	 
	 	 	 	 


      

    

     

     

    


    
      
        
          
             

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
A

     

    CERTIFICATE
OF THE

    DESIGNATIONS,
PREFERENCES AND RELATIVE

    PARTICIPATING,
OPTIONAL AND OTHER SPECIAL

    RIGHTS
AND QUALIFICATIONS, LIMITATIONS

    OR
RESTRICTIONS OF SERIES I

    PREFERRED
STOCK OF

    BARNES
& NOBLE, INC.

     

     

    Pursuant
to Section 151 of the General Corporation Law of the State of Delaware, BARNES
& NOBLE, INC., a corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the provisions of
Section 103 thereof, DOES HEREBY CERTIFY:

     

    That,
pursuant to the authority conferred upon the Board of Directors (the “Board”) of BARNES
& NOBLE, INC. (the “Company”) by Article
FOURTH, paragraph (b), of the Amended and Restated Certificate of
Incorporation of the Company, the Board on November 17, 2009, adopted the
following resolution designating a new series of preferred stock as Series I
Preferred Stock:

     

    RESOLVED,
that, pursuant to the authority vested in the Board of Directors (the “Board”) of BARNES
& NOBLE, INC. (the “Company”) in
accordance with the provisions of the Amended and Restated Certificate of
Incorporation of the Company (the “Certificate”) and the
provisions of Section 151(g) of the General Corporation Law of the State of
Delaware, a series of preferred stock of the Company is hereby authorized, and
the designation and number of shares thereof, and the preferences and relative,
participating, optional and other special rights, and the qualifications,
limitations or restrictions thereof, shall be as follows (in addition to any
preferences and relative, participating, optional and other special rights, and
the qualifications, limitations or restrictions thereof, set forth in the
Certificate which are applicable to shares of Preferred Stock, par value $0.001
per share of the Company (the “Preferred
Stock”)):

     

    SECTION
1.  Designation and Number of
Shares.  The shares of such series shall be designated as
“Series I Preferred Stock” (the “Series I Preferred
Stock”).  The number of shares initially constituting the
Series I Preferred Stock shall be 300,000; provided, however, that, if
more than a total of 300,000 shares of Series I Preferred Stock shall be
issuable upon the exercise of Rights (the “Rights”) issued
pursuant to the Rights Agreement dated as of November 17, 2009, between the
Company and Mellon Investor Services LLC, a New Jersey limited liability
company, as Rights Agent (the “Rights Agreement”),
the Board, pursuant to Section 151(g) of the General Corporation Law of the
State of Delaware, shall direct by resolution or resolutions that a certificate
be properly executed, acknowledged, filed and recorded, in accordance with the
provisions of Section 103 thereof, providing for the total number of shares of
Series I Preferred Stock authorized to be issued to be increased (to the extent
that the Certificate then permits) to the largest number of whole shares
(rounded up to the nearest whole number) issuable upon exercise of such
Rights.

     

    


    
      
        
          
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    SECTION
2.  Dividends or
Distributions.  (a)  Subject to the superior rights
of the holders of shares of any other series of Preferred Stock or other class
of capital stock of the Company ranking superior to the shares of Series I
Preferred Stock with respect to dividends, the holders of shares of Series I
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board, out of the assets of the Company legally available therefor, (1)
quarterly dividends payable in cash on the last day of each fiscal quarter in
each year, or such other dates as the Board shall approve (each such date being
referred to herein as a “Quarterly Dividend Payment
Date”), commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or a fraction of a share of Series I Preferred Stock,
in the amount of $0.25 per whole share (rounded to the nearest cent) less the
amount of all cash dividends declared on the Series I Preferred Stock pursuant
to the following clause (2) since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series I
Preferred Stock (the total of which shall not, in any event, be less than zero)
and (2) dividends payable in cash on the payment date for each cash dividend
declared on the shares of Common Stock, par value $0.001 per share, of the
Company (the “Common
Stock”) in an amount per whole share (rounded to the nearest cent) equal
to the Formula Number (as hereinafter defined) then in effect times the cash
dividends then to be paid on each share of Common Stock.  In addition,
if the Company shall pay any dividend or make any distribution on the Common
Stock payable in assets, securities or other forms of noncash consideration
(other than dividends or distributions solely in shares of Common Stock), then,
in each such case, the Company shall simultaneously pay or make on each
outstanding whole share of Series I Preferred Stock a dividend or distribution
in like kind equal to the Formula Number then in effect times such dividend or
distribution on each share of Common Stock.  As used herein, the
“Formula
Number” shall be 1,000; provided, however, that, if at
any time after November 17, 2009, the Company shall (i) declare or pay any
dividend on the Common Stock payable in shares of Common Stock or make any
distribution on the Common Stock in shares of Common Stock, (ii) subdivide
(by a stock split or otherwise) the outstanding shares of Common Stock into a
larger number of shares of Common Stock or (iii) combine (by a reverse stock
split or otherwise) the outstanding shares of Common Stock into a smaller number
of shares of Common Stock, then in each such event the Formula Number shall be
adjusted to a number determined by multiplying the Formula Number in effect
immediately prior to such event by a fraction, the numerator of which is the
number of shares of Common Stock that are outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
are outstanding immediately prior to such event (and rounding the result to the
nearest whole number); and provided further
that, if at any time after November 17, 2009, the Company shall issue any
shares of its capital stock in a merger, reclassification, or change of the
outstanding shares of Common Stock, then in each such event the Formula Number
shall be appropriately adjusted to reflect such merger, reclassification or
change so that each share of Preferred Stock continues to be the economic
equivalent of a Formula Number of shares of Common Stock prior to such merger,
reclassification or change.

     

    


    
      
        
           


        

        
          2

          
            

          

        

        
           


        

      

    

    


    (b)  The
Company shall declare a cash dividend on the Series I Preferred Stock as
provided in Section 2(a) immediately prior to or at the same time it declares a
cash dividend on the Common Stock; provided, however, that, in the
event no cash dividend shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, during the period between the first issuance of any share or
fraction of a share of Series I Preferred Stock, a dividend of $0.25 per whole
share on the Series I Preferred Stock shall nevertheless accrue on such
subsequent Quarterly Dividend Payment Date or the first Quarterly Dividend
Payment Date, as the case may be.  The Board may fix a record date for
the determination of holders of shares of Series I Preferred Stock entitled to
receive a dividend or distribution declared thereon, which record date shall be
the same as the record date for any corresponding dividend or distribution on
the Common Stock.

     

    (c)  Dividends
shall begin to accrue and be cumulative on outstanding shares of Series I
Preferred Stock from and after the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue and be
cumulative from and after the date of issue of such shares, or unless the date
of issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series I Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from and after such Quarterly Dividend Payment Date.  Accrued but
unpaid dividends shall not bear interest.  Dividends paid on the
shares of Series I Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding.

     

    (d)  So
long as any shares of Series I Preferred Stock are outstanding, no dividends or
other distributions shall be declared, paid or distributed, or set aside for
payment or distribution, on the Common Stock unless, in each case, the dividend
required by this Section 2 to be declared on the Series I Preferred Stock
shall have been declared and set aside.

     

    (e)  The
holders of shares of Series I Preferred Stock shall not be entitled to receive
any dividends or other distributions except as herein provided.

     

    SECTION
3.  Voting
Rights.  No voting rights shall attach to the Series I
Preferred Stock.

     

    


    
      
        
           


        

        
          3

          
            

          

        

        
           


        

      

    

    


    SECTION
4.  Certain
Restrictions.  (a)  Whenever quarterly dividends or
other dividends or distributions on the Series I Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series I Preferred
Stock outstanding shall have been paid in full, the Company shall
not:

     

    (i)  declare
or pay dividends on, make any other distributions on, or redeem or purchase or
otherwise acquire for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding up) to the Series I
Preferred Stock;

     

    (ii)  declare
or pay dividends on or make any other distributions on any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series I Preferred Stock, except dividends paid ratably on
the Series I Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled;

     

    (iii)  redeem
or purchase or otherwise acquire for consideration shares of any stock ranking
on a parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Series I Preferred Stock; provided, however, that the
Company may at any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the Company ranking junior
(either as to dividends or upon dissolution, liquidation or winding up) to the
Series I Preferred Stock; or

     

    (iv)  purchase
or otherwise acquire for consideration any shares of Series I Preferred Stock,
or any shares of stock ranking on a parity with the Series I Preferred Stock,
except in accordance with a purchase offer made in writing or by publication (as
determined by the Board) to all holders of such shares upon such terms as the
Board, after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.

     

    (b)  The
Company shall not permit any subsidiary of the Company to purchase or otherwise
acquire for consideration any shares of stock of the Company unless the Company
could, under Section 4(a), purchase or otherwise acquire such shares at such
time and in such manner.

     

    SECTION
5.  Liquidation
Rights.  Upon the liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, no distribution shall be made
(1) to the holders of any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series I
Preferred Stock unless, prior thereto, the holders of shares of Series I
Preferred Stock shall have received an amount equal to the accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus an amount equal to the greater of (x) $1,000 per whole share
or (y) an aggregate amount per share equal to the Formula Number then in effect
times the aggregate amount to be distributed per share to holders of Common
Stock or (2) to the holders of any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up) with the Series
I Preferred Stock, except distributions made ratably on the Series I Preferred
Stock and all other such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up; provided, that no
holder of any Series I Preferred Stock shall be authorized or entitled to
receive upon involuntary liquidation of the Company an amount in excess of
$100.00 per share of Series I Preferred Stock.

     

    


    
      
        
           


        

        
          4

          
            

          

        

        
           


        

      

    

    


    SECTION
6.  Consolidation, Merger,
etc.  In case the Company shall enter into any consolidation,
merger, combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash or any other
property, then in any such case the then outstanding shares of Series I
Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share equal to the Formula Number then in effect times the aggregate
amount of stock, securities, cash or any other property (payable in kind), as
the case may be, into which or for which each share of Common Stock is exchanged
or changed.  In the event both this Section 6 and Section 2 appear to
apply to a transaction, this Section 6 will control.

     

    SECTION
7.  No
Redemption; No Sinking Fund.  (a)  The shares of
Series I Preferred Stock shall not be subject to redemption by the Company or at
the option of any holder of Series I Preferred Stock; provided, however, that,
subject to Section 4(a)(iv), the Company may purchase or otherwise acquire
outstanding shares of Series I Preferred Stock in the open market or by offer to
any holder or holders of shares of Series I Preferred Stock.

     

    (b)  The
shares of Series I Preferred Stock shall not be subject to or entitled to the
operation of a retirement or sinking fund.

     

    SECTION
8.  Ranking.  The
Series I Preferred Stock shall rank junior to all other series of Preferred
Stock of the Company unless the Board shall specifically determine otherwise in
fixing the powers, preferences and relative, participating, optional and other
special rights of the shares of such series and the qualifications, limitations
and restrictions thereof.

     

    SECTION
9.  Fractional
Shares.  The Series I Preferred Stock shall be issuable upon
exercise of the Rights issued pursuant to the Rights Agreement in whole shares
or in any fraction of a share that is one one-thousandth of a share (as
such fraction may be adjusted as provided in the Rights Agreement) or any
integral multiple of such fraction which shall entitle the holder, in proportion
to such holder’s fractional shares, to receive dividends, participate in
distributions and to have the benefit of all other rights of holders of Series I
Preferred Stock.  In lieu of fractional shares, the Company, prior to
the first issuance of a share or a fraction of a share of Series I Preferred
Stock, may elect (a) to make a cash payment as provided in the Rights Agreement
for fractions of a share other than one one-thousandths of a share (as such
fraction may be adjusted as provided in the Rights Agreement) or any integral
multiple thereof or (b) to issue depository receipts evidencing such
authorized fraction of a share of Series I Preferred Stock pursuant to an
appropriate agreement between the Company and a depository selected by the
Company; provided, however, that such
agreement shall provide that the holders of such depository receipts shall have
all the rights, privileges and preferences to which they are entitled as holders
of the Series I Preferred Stock.

     

    


    
      
        
           


        

        
          5

          
            

          

        

        
           


        

      

    

    


    SECTION
10.  Reacquired
Shares.  Any shares of Series I Preferred Stock purchased or
otherwise acquired by the Company in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof.  All such shares
shall upon their cancelation become authorized but unissued shares of Preferred
Stock, without designation as to series until such shares are once more
designated as part of a particular series by the Board pursuant to the
provisions of the Certificate.

     

    SECTION
11.  Amendment.  So
long as any shares of Series I Preferred Stock shall be outstanding,
(i) none of the powers, preferences and relative, participating, optional
and other special rights of the Series I Preferred Stock as herein provided
shall be amended in any manner which would alter or change the powers,
preferences, rights or privileges of the holders of Series I Preferred Stock so
as to affect them adversely and (ii) no amendment, alteration or repeal of
the Certificate or of the By-laws of the Company shall be effected so as to
affect adversely any of such powers, preferences, rights or
privileges.

     

    IN
WITNESS WHEREOF, the Company has caused this Certificate to be duly executed in
its corporate name on this 17th day of November, 2009.

     

    
      
        	 	BARNES
      & NOBLE, INC.,	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 


      

    

     

     

    


    
      
        
           


        

        
          6

          
            

          

        

        
           


        

      

    

    


    EXHIBIT
B

     

    [Form of
Right Certificate]

     

    Certificate
No. [R]-                                                                       ___________
Rights

     

    NOT
EXERCISABLE AFTER NOVEMBER 17, 2012, OR EARLIER IF REDEEMED BY THE
COMPANY.  THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.001 PER RIGHT, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.  RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS ARE NULL AND VOID
AND NONTRANSFERABLE.

     

    Right
Certificate

     

    BARNES
& NOBLE, INC.

     

    This
certifies that
                    ,
or registered assigns, is the registered owner of the number of Rights set forth
above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement dated as of November 17,
2009 as it may be amended from time to time (the “Rights Agreement”),
between BARNES & NOBLE, INC., a Delaware corporation (the “Company”), and MELLON
INVESTOR SERVICES LLC, as Rights Agent (the “Rights Agent”),
unless the Rights evidenced hereby shall have been previously redeemed or
exchanged by the Company, to purchase from the Company at any time after the
Distribution Date (as defined in the Rights Agreement) and prior to
5:00 p.m., New York City time, on the third anniversary of the
date of the Rights Agreement (the “Expiration Date”), at
the office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one one-thousandth (1/1,000th) of a fully paid,
nonassessable share of Series I Preferred Stock, par value $0.001 per share, of
the Company (the “Preferred Shares”),
at a purchase price per one one-thousandth (1/1,000th) of a share equal to
$100.00 (the “Purchase
Price”) payable in cash, upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed.

     

    The
Purchase Price and the number and kind of shares which may be purchased upon
exercise of each Right evidenced by this Right Certificate, as set forth above,
are the Purchase Price and the number and kind of shares which may be so
purchased as of November 17, 2009.  As provided in the Rights
Agreement, the Purchase Price and the number and kind of shares which may be
purchased upon the exercise of each Right evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain
events.

     

    


    
      
        
          
            \

          

           


        

        
          
          

          
            

          

        

        
           


        

      

    

    


    If the
Rights evidenced by this Right Certificate are at any time beneficially owned by
an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement), such Rights shall be null and void
and nontransferable and the holder of any such Right (including any purported
transferee or subsequent holder) shall not have any right to exercise or
transfer any such Right.

     

    This
Right Certificate is subject to all the terms, provisions and conditions of the
Rights Agreement, which terms, provisions and conditions are hereby incorporated
herein by reference and made a part hereof and to which reference to the Rights
Agreement is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Right Certificates.  Copies of the
Rights Agreement are on file at the above-mentioned office of the Rights Agent
and are also available from the Company upon written request.

     

    This
Right Certificate, with or without other Right Certificates, upon surrender at
the office of the Rights Agent designated for such purpose, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number and
kind of shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to
purchase.  If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not
exercised.

     

    Subject
to the provisions of the Rights Agreement, the Rights evidenced by this Right
Certificate may be redeemed by the Company at its option at a redemption price
(in cash or shares of Common Stock, par value $0.001 per share, of the Company
or other securities of the Company deemed by the Board of Directors of the
Company to be at least equivalent in value) of $0.001 per Right (which amount
shall be subject to adjustment as provided in the Rights Agreement) at any time
prior to the earlier of (i) the Distribution Date and (ii) the
Expiration Date.

     

    The
Company may, but shall not be required to, issue fractions of Preferred Shares
or distribute certificates which evidence fractions of Preferred Shares upon the
exercise of any Right or Rights evidenced hereby.  In lieu of issuing
fractional shares, the Company may elect to make a cash payment as provided in
the Rights Agreement for fractions of a share other than
one one-thousandth (1/1,000th) of a share (as such fraction may be
adjusted as provided in the Rights Agreement) or any integral multiple thereof
or to issue certificates or utilize a depository arrangement as provided in the
terms of the Rights Agreement and the Preferred Shares.

     

    No holder
of this Right Certificate shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of the Preferred Shares or of any other
securities of the Company which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company, including, without limitation, any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or other
distributions or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in
accordance with the provisions of the Rights Agreement.

     

    


    
      
        
           


        

        
          2

          
            

          

        

        
           


        

      

    

    


    


     

    This
Right Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned by an authorized signatory of the Rights
Agent.

     

    WITNESS
the facsimile signature of the proper officers of the Company and its corporate
seal.

     

    Dated as
of:

     

    
      
        	 	BARNES & NOBLE, INC.,	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 


      

    

     

     

    
       

      
        	Attest:	 
	 	 
	Name:	 
	Title:	 


      

       

    

    Date of
countersignature:

     

    Countersigned:

     

    MELLON
INVESTOR SERVICES LLC,

    as Rights
Agent,

     

    
    

     

    
      	 	by	 	 
	 	 	 	 
	 	 	 Authorized
      Signatory	 


    

     

    


    
      
        
           


        

        
          3

          
            

          

        

        
           


        

      

    

    [On
Reverse Side of Right Certificate]

     

    FORM OF
ELECTION TO PURCHASE

     

    (To be
executed by the registered holder if

    such
holder desires to exercise the Rights

    represented
by this Right Certificate.)

     

    To the
Rights Agent:

     

    The
undersigned hereby irrevocably elects to exercise           
Rights represented by this Right Certificate to purchase the Preferred Shares
(or other shares) issuable upon the exercise of such Rights and requests that
certificates for such shares be issued in the name of:

    


    Please
insert social security

    or other
identifying number

     

    
    

     

    
      	 
	 (Please print
      name and address)


    

     

     

    If such
number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:

    


    Please
insert social security

    or other
identifying number

    
       

      
        	 
	 (Please print
      name and address)


      

       

    

    Dated:             ,

     

     

     


       

      
        	 
	Signature


      

    

                                                                        Signature

     

    Signature
Guaranteed:

     

    Signatures
must be guaranteed by a participant in the Securities Transfer Agent Medallion
Program, the Stock Exchanges Medallion Program or the New York Stock Exchange,
Inc. Medallion Signature Program.

     

    The
undersigned hereby certifies that (1) the Rights evidenced by this Right
Certificate are not being exercised by or on behalf of a person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such terms are defined
in the Rights Agreement) and (2) after due inquiry and to the best
knowledge of the undersigned, the undersigned did not acquire the Rights
evidenced by this Right Certificate from any person who is or was an Acquiring
Person or an Affiliate or Associate thereof.

     

    


    
      
        
           


        

        
          4

          
            

          

        

        
           


        

      

    

     

     

    
    

     

    
      	 Dated:
    	 	 ,	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 Signature	 	 


    

     

    Signature
Guaranteed:

     

    Signatures
must be guaranteed by a participant in the Securities Transfer Agent Medallion
Program, the Stock Exchanges Medallion Program or the New York Stock Exchange,
Inc. Medallion Signature Program.

     

    


    
      
        
           


        

        
          5

          
            

          

        

        
           


        

      

    

    


    


     

    FORM OF
ASSIGNMENT

     

    (To be
executed by the registered holder if such

    holder
desires to transfer the Right Certificate.)

     

    FOR VALUE
RECEIVED _______________________________ hereby sells, assigns and transfer unto
______________________________________________
____________________________________________________________

    (Please
print name and address of transferee)

     

    ____________________________________________________________________________________________________________

     

    this
Right Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ______________ Attorney, to transfer
the within Right Certificate on the books of the within-named Corporation, with
full power of substitution.

     

    Dated:  ____________,
____

     

    ______________________________

    Signature

     

    Signature
Guaranteed:

     

    Signatures
must be guaranteed by a participant in the Securities Transfer Agent Medallion
Program, the Stock Exchanges Medallion Program or the New York Stock Exchange,
Inc. Medallion Signature Program.

     

    The
undersigned hereby certifies that (1) the Rights evidenced by this Right
Certificate are not being sold, assigned or transferred by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate or Associate thereof
(as such terms are defined in the Rights Agreement), (2) this Right
Certificate is not being sold, assigned or transferred to or on behalf of any
such Acquiring Person, Affiliate or Associate and (3) after inquiry and to
the best knowledge of the undersigned, the undersigned did not acquire the
Rights evidenced by this Right Certificate from any Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement).

     

    ______________________________

    Signature

     

    


    
      
        
           


        

        
          6

          
            

          

        

        
           


        

      

    

    


    NOTICE

     

    The
signature on the foregoing Form of Election to Purchase or Form of Assignment
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change
whatsoever.

    


    


    
      
        
           


        

        
          7

          
            

          

        

        
           


        

      

    

    


    EXHIBIT
C

     

    RIGHTS
BENEFICIALLY OWNED BY ANY ACQUIRING PERSONS OR THEIR AFFILIATES OR ASSOCIATES
AND BY ANY SUBSEQUENT HOLDER OF SUCH RIGHTS ARE NULL AND VOID AND
NONTRANSFERABLE.

    SUMMARY
OF RIGHTS TO PURCHASE

     

    SERIES I
PREFERRED STOCK

     

    OF BARNES
& NOBLE, INC.

     

    On
November 17, 2009, the Board of Directors (the “Board”) of BARNES
& NOBLE, INC., a Delaware corporation (the “Company”), declared a
dividend of one right (collectively, the “Rights”) for each
outstanding share of Common Stock, par value $0.001 per share, of the Company
(the “Common
Shares”).  The Rights will be issued to the holders of record
of Common Shares outstanding at November 27, 2009 (the “ Record Date”) and
with respect to Common Shares issued thereafter until the Distribution Date (as
defined below).  Each Right, when it becomes exercisable as described
below, will entitle the registered holder to purchase from the Company
one one-thousandth (1/1,000th) of a share of Series I Preferred Stock,
par value $0.001 per share, of the Company (the “Preferred Shares”) at
a price of $100.00 (the “Purchase
Price”).  The description and terms of the Rights are set forth
in a Rights Agreement dated as of November 17, 2009 as it may be amended
from time to time (the “Rights Agreement”),
between the Company and Mellon Investor Services LLC, a New Jersey limited
liability company, as Rights Agent (the “Rights
Agent”).

    


    
      
        
           


        

        
          
          

          
            

          

        

        
           


        

      

    

    


    Until the
earlier of (i) such time as the Company learns that a person or group
(including any affiliate or associate of such person or group), other than any
person or group with beneficial ownership of more than 20% of the outstanding
Common Stock as of November 17, 2009 (only so long as such person or group
does not increase its beneficial ownership of Common Stock, subject to certain
exceptions), has acquired, or obtained the right to acquire, beneficial
ownership of more than 20% of the outstanding Common Shares (any such person or
group being called an “Acquiring Person”)
and (ii) such date, if any, as may be designated by the Board following the
commencement of, or first public disclosure of an intention to commence, a
tender or exchange offer for outstanding Common Shares which could result in
such person or group becoming the beneficial owner of more than 20% of the
outstanding Common Shares (the earlier of such dates being called the “Distribution Date”),
the Rights will be evidenced by certificates for Common Shares registered in the
names of the holders thereof, or, in the case of Common Shares held in
uncertificated form, by the transaction statement or other record of ownership
of such Common Shares, and not by separate Right Certificates.  With
respect to any Common Shares outstanding as of the Record Date, until the
earliest of the Distribution Date, the Redemption Date or the Expiration Date,
(i) in the case of certificated shares, the Rights associated with the Common
Shares represented by a certificate shall be evidenced by such certificate along
with a copy of this Summary of Rights, and the surrender for transfer of any
such certificate shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby, and (ii) in the case of Common
Shares held in uncertificated form, the Rights associated with the Common Shares
shall be evidenced by the balances indicated in the book-entry account system of
the transfer agent for the Common Shares, and the transfer of any Common Shares
in the book-entry account system of the transfer agent for such Common Shares
shall also constitute the transfer of the Rights associated with such Common
Shares.  Therefore, until the Distribution Date, the Rights may be
transferred with and only with the underlying Common Shares.

    


    
      
        
           


        

        
          2

          
            

          

        

        
           


        

      

    

    


    As soon
as practicable following the Distribution Date, separate certificates evidencing
the Rights (“Right
Certificates”) will be mailed to holders of record of the Common Shares
as of the close of business on the Distribution Date, and such separate Right
Certificates alone will thereafter evidence the Rights.

    The Rights are not
exercisable until the Distribution Date and will expire at
5:00 p.m., New York City time, on November 17, 2012 (the “Expiration Date”),
unless earlier redeemed or exchanged by the Company as described
below.

    The
number of Preferred Shares or other securities issuable upon exercise of the
Rights is subject to adjustment by the Board in the event of any change in the
Common Shares or Preferred Shares, whether by reason of stock dividends, stock
splits, reclassifications, recapitalizations, mergers, consolidations,
combinations or exchanges of securities, split-ups, split-offs, spin-offs,
liquidations, other similar changes in capitalization, any distribution or
issuance of assets, evidences of indebtedness or subscription rights, options or
warrants to holders of Common Shares or Preferred Shares or
otherwise.  The Purchase Price and the number of Preferred Shares or
other securities issuable upon exercise of the Rights are subject to adjustment
from time to time in the event of the declaration of a stock dividend on the
Common Shares payable in Common Shares or a subdivision or combination of the
Common Shares prior to the Distribution Date.

    


    
      
        
           


        

        
          3

          
            

          

        

        
           


        

      

    

    


    The
Preferred Shares are authorized to be issued in fractions which are an integral
multiple of one one-thousandth (1/1,000th) of a Preferred
Share.  The Company may, but is not required to, issue fractions of
shares upon the exercise of Rights, and in lieu of fractional shares, the
Company may make a cash payment based on the market price of such shares on the
first trading date prior to the date of exercise or utilize a depositary
arrangement as provided by the terms of the Preferred Shares.

    Subject
to the right of the Board to redeem or exchange the Rights as described below,
at such time as there is an Acquiring Person, the holder of each Right will
thereafter have the right to receive, upon exercise thereof, for the Purchase
Price, that number of one one-thousandths (1/1,000ths) of a Preferred
Share equal to the number of Common Shares which at the time of such transaction
would have a market value of twice the Purchase Price.  Any Rights
that are or were beneficially owned by an Acquiring Person on or after the
Distribution Date will become null and void and will not be subject to the
“flip-in” provision.

    


    
      
        
           


        

        
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    In the
event the Company is acquired in a merger or other business combination by an
Acquiring Person that has common shares publicly traded in the United States or
50% or more of the Company’s assets or assets representing 50% or more of the
Company’s earning power are sold, leased, exchanged or otherwise transferred (in
one or more transactions) to an Acquiring Person that has common shares publicly
traded in the United States, proper provision must be made so that each Right
will entitle its holder to purchase, for the Purchase Price, that number of
common shares of such entity which at the time of the transaction would have a
market value of twice the Purchase Price.  In the event the Company is
acquired in a merger or other business combination by an Acquiring Person that
does not have common shares publicly traded in the United States or 50% or more
of the Company’s assets or assets representing 50% or more of the earning power
of the Company are sold, leased, exchanged or otherwise transferred (in one or
more transactions) to an Acquiring Person that does not have common shares
publicly traded in the United States, proper provision must be made so that each
Right will entitle its holder to purchase, for the Purchase Price, at such
holder’s option, (i) that number of common shares of the surviving
corporation in the transaction with such entity which at the time of the
transaction would have a book value of twice the Purchase Price, (ii) that
number of common shares of such entity which at the time of the transaction
would have a book value of twice the Purchase Price or (iii) if such entity
has an affiliate which has common shares publicly traded in the United States,
that number of common shares of such affiliate which at the time of the
transaction would have a market value of twice the Purchase
Price.  The “flip-over” provision only applies to a merger or similar
business combination with an Acquiring Person.

    ANY
RIGHTS THAT ARE OR WERE, AT ANY TIME ON OR AFTER THE DATE AN ACQUIRING PERSON
BECOMES SUCH, BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ANY AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (OR A TRANSFEREE THEREOF) WILL BECOME NULL AND
VOID AND ANY HOLDER OF ANY SUCH RIGHT (INCLUDING ANY SUBSEQUENT HOLDER) WILL BE
UNABLE TO EXERCISE ANY SUCH RIGHT.

    The
Rights are redeemable by the Board at a redemption price of $0.001 per Right
(the “Redemption
Price”) any time prior to the earlier of (i) the Distribution Date
and (ii) the Expiration Date (the date of such redemption being the “Redemption
Date”).  Immediately upon the action of the Board electing to
redeem the Rights, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.

    


    
      
        
           


        

        
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    After
there is an Acquiring Person the Board may elect to exchange each Right (other
than Rights owned by an Acquiring Person) for consideration per Right consisting
of (i) one-half of the securities that would be issuable at such time upon
the exercise of one Right pursuant to the terms of the Rights Agreement or
(ii) cash in an amount equal to the Purchase
Price.  Notwithstanding the foregoing, the Board is not empowered to
effect such exchange at any time after any person (other than the Company, any
subsidiary of the Company, any employee benefit plan of the Company or any such
subsidiary, or any entity holding Common Shares for or pursuant to the terms of
any such plan), together with all affiliates and associates of such person,
becomes the beneficial owner of 50% or more of the Common Shares then
outstanding.

    At any
time prior to such time as there shall be an Acquiring Person, the Company may,
without the approval of any holder of the Rights, supplement or amend any
provision of the Rights Agreement (including the date on which the Distribution
Date will occur, the amount of the Purchase Price or the definition of
“Acquiring Person”), except that no supplement or amendment may be made that
extends the Expiration Date or reduces the Redemption Price.

    Until a
Right is exercised, the holder thereof, as such, will have no rights as a
stockholder of the Company, including, without limitation, the right to vote or
to receive dividends.

    A copy of
the Rights Agreement, including the terms of the Preferred Shares, will be filed
with the Securities and Exchange Commission as an Exhibit to a Registration
Statement on Form 8-A.  A copy of the Rights Agreement is
available free of charge from the Company upon written request.  This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.

     

     

     

     

    6