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I would recommend you an iPad (even the 1st generation, is cheaper now) with the GoodReader application on it. It supports TOC or if absent, let you create one. It supports, annotations: text boxes, popup comments ("sticky notes"), text highlights, freehand drawings, lines, arrows, rectangles, ovals, cloudy shapes, text underlines, strikeouts, text insertion marks. You can even zoom 50x. Unbeatable on my opinion.
For linear PDF files or if annotations is not important for you, Kindle DXG.
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