AMENDMENT NO. 1 TO SUPPLY AGREEMENT

                                 AMENDMENT NO. 1
                                       TO
                                SUPPLY AGREEMENT

     Amendment No. 1 , dated as of _____________, 1999, between Xxxxxx & Xxxxx,
Inc., a Delaware corporation having an office located at 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 ("B&N"), and xxxxxxxxxxxxxx.xxx llc, a Delaware limited
liability company having an office located at 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (the "LLC"), amending that certain Supply Agreement dated
as of October 31, 1998, by and between B&N and the LLC (the "Original
Agreement"). Capitalized terms used but not otherwise defined herein shall have
the meanings ascribed to them in the Original Agreement.

     WHEREAS, B&N and the LLC, having previously entered into the Original
Agreement, wish to amend the Original Agreement as set forth herein.

     NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:

     1. Amendments to Original Agreement. Paragraph 4 of the Original Agreement
is hereby deleted and replaced in its entirety by the following language:

     "4. Termination. (a) The LLC, upon approval of a majority of the USO
Directors, may terminate this Agreement on thirty (30) days' prior written
notice to B&N.

          (b) B&N may terminate this Agreement under any of the following
     circumstances:

               (i) the LLC is in default of the terms of this Agreement and such
          default continues for more than thirty (30) days after written notice
          thereof to the LLC;

               (ii) B&N or the LLC shall (A) apply for or consent to the
          appointment of, or the taking possession by, a receiver, custodian,
          trustee, examiner, liquidator or the like of itself or of all or any
          substantial part of its property, (B) make a general assignment for
          the benefit of its creditors, (C) commence a voluntary case under the
          Federal Bankruptcy Code of 1978, as amended, or (D) file a petition as
          a debtor seeking to take advantage of any other law relating to
          bankruptcy, insolvency, reorganization, liquidation, dissolution,
          arrangement or winding-up, or composition or readjustment of its
          debts;





               (iii) a proceeding or case shall be commenced against any of B&N
          or the LLC, without such party's application or consent, seeking (A)
          its reorganization, liquidation, dissolution, arrangement or
          winding-up, or the composition or readjustment of its debts, (B) the
          appointment of a receiver, custodian, trustee, examiner or liquidator
          or the like of such party or of all or any substantial part of its
          property, or (C) similar relief in respect of such party under any law
          relating to bankruptcy, insolvency, reorganization, liquidation,
          dissolution, arrangement or winding-up, or composition or adjustment
          of debts, and such proceeding or case shall continue undismissed, or
          an order, judgment or decree approving or ordering any of the
          foregoing shall be entered and continue unstayed and in effect, for a
          period of 60 or more days; or

               (iv) at any time after June 1, 2004, if BAG or any of its
          Affiliates shall have effected a permitted transfer to any third party
          pursuant to the LLC Agreement or if either B&N or BAG owns less than
          15% of the outstanding Membership Units."

     2. Original Agreement in Full Force and Effect. Except as herein expressly
amended, all of the provisions of the Original Agreement remain unchanged and in
full force and effect.

     3. References in Original Agreement. From and after the date hereof, all
references in the Original Agreement to "this Agreement," "hereof," "herein," or
similar terms, shall mean and refer to the Original Agreement as amended by this
Amendment.

     4. Governing Law. This Amendment shall be construed and interpreted
according to the laws of the State of New York, without regard to the conflicts
of law rules thereof.

     5. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first set forth above.

                                          XXXXXX & NOBLE, INC.


                                          By:________________________
                                             Name:
                                             Title:

                                       -2-



                                          xxxxxxxxxxxxxx.xxx llc


                                          By:________________________
                                             Name:
                                             Title: