Operating Agreement - VarsityBooks.com Inc. and Baker & Taylor Inc.


                              OPERATING AGREEMENT

     THIS OPERATING AGREEMENT (this "Agreement"), effective as of October 1,
1999 (the "Effective Date"), is made by and between VARSITYBOOKS.COM INC., a
Delaware corporation, and its permitted successors and assigns (the "Company"),
and BAKER & TAYLOR, INC., a Delaware corporation ("B&T") and its permitted
successors and assigns.

                              W I T N E S S E T H:

     WHEREAS, the Company has established an Internet site and operates as an
Internet supplier of textbooks ("Textbooks") to students at private high
schools that require their students to purchase their textbooks, students at
colleges and universities and students in distance learning programs located in
the United States (the "Market");

     WHEREAS, B&T is engaged in the business of acting as a distributor for a
range of information and entertainment products, including books that are
distributed by B&T to bookstores, schools, and public and university libraries
worldwide;

     WHEREAS, the Company and B&T are parties to that certain Equity Investment
and Operating Agreement dated July 10, 1998 (the "Original Investment
Agreement") as amended by the First Amendment to Equity Investment and
Operating Agreement and License Agreement by and between the Company and B&T
dated October 9, 1998 (the "First Amendment").  The Original Investment
Agreement as amended by the First Amendment thereto shall be known as the
"Investment Agreements";

     WHEREAS, the Company and B&T have executed the Investment Agreements and
desire to further amend and restate certain provisions thereof as set forth
herein;

     WHEREAS, the Company and B&T also are parties to that certain Amended and
Restated Drop Ship Agreement of even date herewith, attached hereto as Exhibit
A (the "Drop Ship Agreement");

     WHEREAS, the Company and B&T also are parties to that certain Amended and
Restated Database License Agreement of even date herewith, attached hereto as
Exhibit B (the "License Agreement"),

     WHEREAS, the Company and B&T also are parties to that certain Promotional
and Customer Services Agreement of even date herewith attached hereto as
Exhibit C (the "Promotional Agreement", together with the License Agreement and
the Drop Ship Agreement, the "Related Agreements"); and

     WHEREAS, B&T has transferred all of its rights and interests as a holder
of equity and equity interests in the Company in a non-cash transfer to its
stockholders and such interests are held by B&T Enterprises, L.L.C., a Delaware
limited liability company ("B&T Enterprises").

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     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained in this Agreement, the parties, intending to be legally bound, agree
as follows:

                                   ARTICLE 1
                              SERVICE OBLIGATIONS

     Section 1.1          Inventory.

         (a)         The Company will provide B&T with a written estimate of
    titles and estimated quantities of Textbooks required (the "Textbook
    Request") on or about April 15th and October 15th of each year (or such
    other dates as the Company and B&T shall mutually agree to by written
    consent) for the next following semester (each, a "Request Date"). Fifteen
    business days after receiving the Textbook Request, B&T will provide the
    Company with a written report indicating title availability, current
    publisher, suggested list price, if any, and the prices B&T will charge the
    Company for such titles. Prices are subject to change upon notice to the
    Company by B&T delivered in accordance with Section 5.7.  The Company and
    B&T shall negotiate in good faith on the quantities presented in the
    Textbook Request and the number agreed shall be the "Inventory Amount".

         (b)         The Company may submit additional requests after the
    applicable Request Date (the "Additional Requests"). B&T will use
    commercially reasonable efforts to obtain the titles in the Additional
    Requests and to fulfill such requests within the time requested by the
    Company. Failure by B&T to obtain the items requested pursuant to the
    Additional Request shall in no way be deemed to be a default under this
    Agreement.

         (c)         Subject to the availability of Textbooks requested by the
    Company, B&T will use commercially reasonable efforts to stock the titles
    requested (the "Inventory") in quantities reasonably sufficient to support
    the Company's projected sales to the Market.  B&T will use reasonable
    efforts to maintain adequate inventory of Textbooks to meet the reasonable
    forecasted demand of the Company's Market.  B&T will use commercially
    reasonable efforts to provide the Company with hourly updates, subject to
    technical specifications, of the Inventory status of titles so that the
    Company's customers may be apprised of available books prior to ordering;
    provided that if, at any time, B&T becomes able to deliver such information
    to the Company in real-time on a commercially reasonable basis (as mutually
    determined by the Company and B&T), B&T agrees to provide that information
    to the Company upon mutually agreeable terms and conditions.

     Section 1.2          B&T Fulfillment Services.  Subject to B&T's continued
performance under this Agreement, the Company agrees to use B&T as its
principal supplier of Textbooks and fulfillment services for its Textbooks that
are drop-shipped to the Company's Market. B&T and the Company have entered into
the Drop Ship Agreement that sets forth the terms under which such drop ship
service shall be performed.  B&T reserves the right to not stock or supply
titles ("Rejected Titles")

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contained in the Textbook Request, which in the opinion of B&T, are not
economically feasible to carry in its inventory, subject to the terms and scope
of the letter agreement between the parties dated June 1, 1999, a copy of which
is attached hereto as Exhibit D.  The Company may use other sources of supply
for such Rejected Titles that B&T does not stock or supply. Notwithstanding
anything contained herein to the contrary, the Company agrees that it shall not
use any other supplier ("Other Supplier") of Textbooks (other than with respect
to the Rejected Titles), by drop ship service, without giving B&T the right of
first refusal to supply the Textbooks proposed to be supplied by the Other
Supplier on substantially the same terms and conditions proposed by the Other
Supplier.

     Section 1.3          Material Changes.  If the Company materially changes
its method of sourcing Textbooks to the detriment of B&T or if B&T's ability to
source Textbooks materially changes to the detriment of the Company, then the
parties reserve the right to re-negotiate the terms of this Agreement and the
Related Agreements.

     Section 1.4          Pricing.  B&T and the Company shall determine the
prices at which B&T will sell Textbooks to the Company in accordance with
Schedule 1.4 attached hereto.  The parties by mutual written agreement may
update Schedule 1.4 from time to time in accordance with Section 5.9 of this
Agreement.

     Section 1.5          Limited Exclusive.

         (a)         Until March 8, 2001 (the "Initial Period"), and during any
    Renewal Period (as defined below), B&T agrees that it will not provide drop
    ship services to a Competitor of the Company.  A "Competitor" shall be
    defined as a person or entity that, in the reasonable opinion of the Board
    of Directors of the Company, has as its principal business activities, the
    sale of textbooks at discounted prices, via the Internet to the Company's
    Market.  Notwithstanding the foregoing, this Limited Exclusive shall not
    apply to, and shall not limit B&T's ability to drop ship to companies
    ("Excluded Companies"), or their customers, whose principal business
    activity is the sale of books, goods or services of professional
    disciplines (including, without limitation, legal, business and medical,
    even if such items, including textbooks, are shipped to the Company's
    Customers).  B&T may sell, through its drop ship services, to retailers
    (other than to the Company's Competitors) engaged in the sale of books and
    textbooks via the Internet and to customers of B&T as of July 10, 1998 (the
    "Existing Customers") even though such Existing Customers may now or in the
    future be considered a Competitor of the Company.  B&T will continue to
    offer this Limited Exclusive to the Company, and the Company shall continue
    to use B&T as its principal supplier of Textbooks as set forth herein,
    provided that the parties mutually agree in writing as to the Inventory
    Amount for a semester.  If the parties so agree, the terms contained in
    this Section 1.5(a) shall be extended to cover a period that is six months
    from the date of such determination (a "Renewal Period").  If the parties
    fail to agree upon the Inventory Amount for a particular semester, the
    terms of this Section 1.5(a) shall automatically expire at the end of the
    later of the Initial Period or any Renewal Period.  This Section 1.5(a)
    describes the Company's "Limited Exclusive."

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         (b)         The expiration or termination of the Limited Exclusive
    shall not terminate or affect any other agreement or obligations between
    the parties.

         (c)         B&T covenants with the Company that in the event that B&T
    offers its drop ship services to Excluded Companies that B&T will not
    exclude the Company from services it may provide to any such Excluded
    Companies.

                                   ARTICLE 2
                                CONFIDENTIALITY.

     Section 2.1          The parties acknowledge that each may be exposed to
confidential information and trade secrets relating to the other party's
business under this Agreement, including, but not limited to, the terms of this
Agreement, quantities of products, dollar volumes, revenues of products,
wholesale prices and similar information.  The parties agree that, during the
term of this Agreement, and for a period of two (2) years after the Termination
Date (as defined below), neither party will disclose to any third party any
confidential information without the prior written consent of the other party,
except to employees, agents, auditors, contractors, directors and similar
entities as long as such third parties agree to be bound by the confidentiality
provisions hereof. Except as expressly provided herein, neither party will use,
disclose or transfer the trade secrets of the other party so long as such
information constitutes a trade secret under applicable law.  The
confidentiality obligations between the parties will not apply to any
information (a) which is in the public domain or which becomes part of the
public domain through no fault of the receiving party; (b) which is known to
the receiving party prior to the disclosure thereof by the disclosing party (as
established by documentary evidence); (c) which is lawfully received by the
receiving party from a third party who provided such information without breach
of any separate confidentiality obligation owed to the disclosing party; or (d)
which is independently developed by personnel having no access to the
disclosing party's confidential information (as established by documentary
evidence).  Notwithstanding the foregoing, the parties agree that either party
may describe the terms, and include a copy, of this Agreement and the exhibits
hereto in any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended.

                                   ARTICLE 3
                            LIMITATION OF WARRANTIES

     Section 3.1          NOTWITHSTANDING ANYTHING CONTAINED HEREIN OR IN ANY
RELATED DOCUMENT, NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY HEREUNDER FOR
ANY INDIRECT, CONSEQUENTIAL, PUNITIVE OR INCIDENTAL DAMAGES ARISING OUT OF THIS
AGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.

     Section 3.2          The provisions of this Article 3 shall survive the
termination or expiration of this Agreement.

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                                   ARTICLE 4
                              FINANCIAL STATEMENTS

     Section 4.1          The Company agrees to furnish its quarterly financial
statements to B&T within 45 days of the end of each of its first three fiscal
quarters each year and to furnish its annual financial statements to B&T within
90 days of the end of each fiscal year.

                                   ARTICLE 5
                                 MISCELLANEOUS

     Section 5.1          Entire Agreement.  This Agreement, including the
exhibits and schedules attached hereto, amends and replaces Sections 1.2, 5.1
and 6.3 through 6.15 of the Investment Agreements, and constitutes the sole and
entire agreement of the parties with respect to the subject matter hereof.
Except as amended hereby, the terms, provisions, conditions and agreements of
the Investment Agreements are hereby ratified and confirmed and shall remain in
full force and effect.  Section 6.2 of the Original Investment Agreement
related to arbitration is incorporated herein by this reference.

     Section 5.2          Publicity.  All general notices, releases, statements
and communications to employees, suppliers, distributors and customers of a
party and to the general public and the press relating to the transactions
covered by this Agreement or the Related Agreements shall be made by such party
hereto only at such times and in such manner as may be mutually agreed upon by
the Company and B&T, except as may be required by any applicable law and
regulation.  Either party may describe the terms, and include a copy, of this
Agreement and the exhibits hereto in any filing under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended.

     Section 5.3          Expenses. Each party hereto shall be solely
responsible for its respective expenses in connection with the negotiation,
preparation and performance of this Agreement (including, without limitation,
all legal and accounting expenses).

     Section 5.4          Parties in Interest.  All obligations and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and permitted
assigns of the parties hereto, whether so expressed or not.  Except as
otherwise expressly provided herein, nothing in this Agreement is intended to
confer upon any other person or entity any rights or remedies hereunder.

     Section 5.5          Further Assurances.  B&T affirms the Limited
Exclusive granted to the Company pursuant to the Original Investment Agreement
and offers the further assurances set forth in Schedule 5.5 attached hereto.

     Section 5.6          Condition Precedent. The Company shall have delivered
to B&T Enterprises the outstanding Warrants due to B&T pursuant to the Series B
Preferred Stock notes and offering.

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     Section 5.7          Notices.  All notices, requests, consents, and other
communications hereunder shall be in writing and shall be deemed effectively
given and received upon delivery in person, or one business day after delivery
by national overnight courier service or by telecopier transmission with
acknowledgment of transmission receipt, or three business days after deposit
via certified or registered mail, return receipt requested, in each case
addressed as follows:

         (a)     if to the Company:        VarsityBooks.com Inc.
                                           1050 Thomas Jefferson Street, N.W.
                                           Suite 525
                                           Washington, D.C. 20007
                                           Attention: Mr. Eric J. Kuhn
                                           Telephone: (202) 667-3400

                 with a copy to:           Shaw Pittman
                                           1676 International Drive
                                           14th Floor
                                           McLean, Virginia  22102-4835
                                           Attention: Andrew M. Tucker
                                           Telephone: (703) 790-7900
                                           Fax:       (703) 790-7901

         (b)     if to B&T:                Baker & Taylor, Inc.
                                           Five LakePointe Plaza
                                           Suite 500
                                           2709 Water Ridge Parkway
                                           Charlotte, North Carolina 28217
                                           Attention: James S. Ulsamer, 
                                                      Executive Vice President
                                           Fax:  (704) 329-9105

                 with copy to:             Dow, Lohnes & Albertson, PLLC
                                           1200 New Hampshire Avenue, N.W.
                                           Suite 800
                                           Washington, DC 20036-6802
                                           Attention:  Bradley Jacobsen
                                           Telephone: (202) 776-2234
                                           Fax: (202) 776-2222

     or, in any such case, at such other address or addresses as shall have
been furnished in writing by such party to the others.

     Section 5.8          Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THAT STATE'S PROVISIONS OF CONFLICT OF LAWS.

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     Section 5.9          Counterparts.  This Agreement may be executed in one
or more counterparts by facsimile or original signature, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

     Section 5.10         No Waivers;  Amendments.  No failure or delay on the
part of any party in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to any party at law or in equity or otherwise.  Any provision of this
Agreement may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by the Company and B&T.

     Section 5.11         Severability.  If any provision of this Agreement
shall be declared void or unenforceable by a judicial or administrative
authority, the validity of any other provision and of the entire Agreement
shall not be affected thereby.

     Section 5.12         Gender.  All pronouns and all variations thereof
shall be deemed to refer to the masculine, feminine or neuter, singular or
plural, as the identity of the person or persons, thing or entity may require.

     Section 5.13         Headings.  The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

     Section 5.14         Termination. Except as provided in Section 1.5(a),
this Agreement shall expire on October 1, 2002; provided that this Agreement
shall be automatically extended for an additional year if either party shall
not have provided the other party with 180 days written notice of its intention
to allow this Agreement to expire.  The earlier to occur of October 1, 2002 or
the expiration of this Agreement as described in the foregoing sentence shall
be referred to as the "Termination Date". In addition, either the Company or
B&T may terminate this Agreement upon 30 days written notice in the event that
the other party (the "Defaulting Party") materially defaults under this
Agreement (an "Event of Default") and such Defaulting Party has not cured such
Event of Default within 30 days.  The written notice shall specify in
reasonable detail the facts supporting the declaration of an Event of Default.

                  [remainder of page intentionally left blank]

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     Section 5.15      Assignment. Neither party hereto shall assign its rights
or obligations hereunder without the prior written consent of the other party
hereto, which consent shall not be unreasonably withheld or delayed; provided,
however, that the Company may assign its rights and obligations hereunder and
under the Related Agreements to CollegeOps LLC, a Delaware limited liability
company and wholly-owned subsidiary of the Company.  Unless otherwise provided
in a writing signed by the Company and B&T, such assignment shall not relieve
the Company of any of its obligations hereunder or under the Related Agreements.


     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.


 The Company:                                    B&T:
 VARSITYBOOKS.COM INC.                           BAKER & TAYLOR, INC.


 By: /s/ Eric J. Kuhn                            By: /s/ James S. Ulsamer
    ----------------------------                    ----------------------------
 Name:  Eric J. Kuhn                             Name: James S. Ulsamer
 Title:  Chief Executive Officer                 Title: Executive Vice President



                     SIGNATURE PAGE TO OPERATING AGREEMENT




EX-10.4

11

DATABASE LICENSE AGREEMENT



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                                                                    EXHIBIT 10.4


                              AMENDED AND RESTATED
                           DATABASE LICENSE AGREEMENT
                              (IN-HOUSE/INTERNET)

     THIS AMENDED AND RESTATED DATABASE LICENSE AGREEMENT (this "Agreement") is
effective this 1st day of October, 1999 (the "Effective Date") by and between
VARSITYBOOKS.COM INC. (f/k/a The Textbook Club, Inc.), a Delaware corporation
("Retailer"), and BAKER & TAYLOR, INC., a Delaware corporation ("B&T"). This
Agreement amends, restates and supersedes in its entirety that certain Database
License Agreement by and between the parties dated July 10, 1998 (the "Prior
Agreement").

                              W I T N E S S E T H:

     WHEREAS, B&T and Retailer had entered into the Prior Agreement; and

     WHEREAS, the parties desire to amend and restate the Prior Agreement as set
forth below;

     ACCORDINGLY, in consideration of the covenants, promises and undertakings
provided for herein and for other valuable consideration, the receipt and legal
sufficiency of which the parties acknowledge, the parties agree as follows:

     1.0         DEFINITIONS 

     As used throughout this Agreement the following terms have the following
meanings:

     1.01        "CD-EXPORT" means B&T's specialized software application which
allows Retailer to search the Database without using any other application
screen interfaces.

     1.02        "Database" means B&T's complete title file database containing
the bibliographic records consisting of, among other things, the Licensed Data
or any portion thereof, as the same from time to time may be modified by B&T
during the Term of this Agreement (hereinafter defined), for books and spoken
word audio products (sometimes hereinafter collectively referred to as "Books
products").

     1.03        "Licensed Data" means (a) the data elements in electronic
database form which are more particularly set forth on Schedule 1.03 attached
hereto and made a part hereof, for each title on the Database, (b) any updates
provided by B&T to such data elements from time to time, and (c) such other
data elements as B&T at its sole discretion from time to time hereafter may
agree to add without further consideration by Retailer.

     1.04        "Operating Agreement" means that that certain Equity
Investment and Operating Agreement dated July 10, 1998, as amended by the First
Amendment to Equity Investment and Operating Agreement and License Agreement by
and between Retailer and B&T dated October 9, 1998 and as further amended by
that certain Operating Agreement of even date herewith.



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     2.0         LICENSE

     2.01        Subject to the terms and conditions of this Agreement and
extent of the license which Retailer is granted hereby, and based upon B&T's
receipt of its license fee payments then currently due, B&T hereby grants to
Retailer and Retailer hereby accepts from B&T a non-exclusive, nontransferable
(except as provided in Section 9.5 below) license:

     (a)         to display all or a portion of the Licensed Data on Retailer's
Internet web site for viewing by users in "read only" access;

     (b)         to use CD-EXPORT solely for the purpose of utilizing the
Licensed Data or any portion thereof at Retailer's Internet web site; and

     (c)         to display all or a portion of the Licensed Data on Retailer's
in-house database system at any of Retailer's locations for viewing by users at
such location(s).

The foregoing license grant shall be irrevocable as long as B&T retains an
equity investment in Retailer pursuant to the Operating Agreement between the
parties of even date herewith, and further provided that an Event of Default
under this Agreement has not occurred.  Retailer will not make all or any
portion of the Database, the Licensed Data and/or CD-EXPORT accessible to any
persons other than persons specifically authorized by Retailer for the purposes
above.  Retailer will use its best efforts to take all reasonable steps to
prevent or restrict the downloading, transmission, display or copying of the
information contained on all or any portion of the Database and/or the Licensed
Data to a degree which is not necessary for purposes of ordering or processing
orders for the products listed thereon.  Such steps may include, but will not
be limited to, the following, the use of passwords, encryption/de-encryption
algorithms used in the security process and similar tools.  The license granted
hereby is personal to the Retailer.  Retailer may use the license solely for
the purposes specified above.  Nothing contained in this Agreement will, or
will be deemed to, convey any title or ownership interest in all or any portion
of the Database, the Licensed Data and/or CD-EXPORT regardless of whether any
portion thereof is used by Retailer or other users.

     2.02        B&T reserves all rights with respect to all or any portion of
the Database, the Licensed Data and/or CD-EXPORT not expressly granted to
Retailer, nor expressly contemplated, herein.  This reservation specifically
applies, but is not limited, to any media, mode or method of distribution or
transmission or other technology that may be commercialized or developed in the
future.

     3.0         TERM

     3.01        (a)      Subject to the terms and conditions hereof, this
Agreement will be effective for a period (the "Term") beginning on the
Effective Date and ending upon the earlier of the date of termination of the
Operating Agreement.

     (b)         Despite the statements in the preceding clause (a) of this
Section 3.01, Retailer may terminate this Agreement for any reason whatsoever
during the Term by giving notice to B&T not less than thirty (30) days prior to
the date on which Retailer wishes to terminate this


                                       2

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Agreement.  In such an event, this Agreement automatically will terminate on
the date set forth in Retailer's notice as if it were the Termination Date.  If
Retailer wishes to terminate this Agreement pursuant to this clause (b), none
of the annual licensee fees payable with respect to the period of time after
which this Agreement is terminated will be refunded to Retailer.

     3.02        Immediately upon termination of this Agreement, whether or not
pursuant to this Article, the following will occur:

     (a)         all rights and licenses granted to Retailer hereunder
automatically will terminate;

     (b)         Retailer promptly will permanently delete all or any portion
of the Database, the Licensed Data and/or CD-EXPORT and any copies thereof from
all computers, all database and other systems and/or any storage medium of
Retailer in any location, whether backup or otherwise (including persons and/or
entities within Retailer's direct control, such as non-Internet users having
access by, through or under Retailer);

     (c)         Retailer will not use, or permit any user having access by,
through or under Retailer to use, all or any portion of the Database, the
Licensed Data and/or CD-EXPORT in any way; and

     (d)         Retailer will return all Database, Licensed Data and/or
CD-EXPORT media received from B&T, together with any copies made from the same.
For a period of not less than ten (10) consecutive days immediately following
the date on which this Agreement terminates, Retailer will post the following
notice at Retailer's Internet web site so that it is visible by all users
thereof: "Effective immediately, [insert Retailer's then current trade name
used on its web site] will no longer be using Baker & Taylor, Inc.'s database
of books and spoken word audio products at this web site." Retailer will
certify in writing that the terms contained in the preceding clauses (a)-(d)
have been complied with.

     4.0         THE PARTIES' OBLIGATIONS

     4.01        Retailer will:

     (a)         pay B&T according to the terms of this Agreement;

     (b)         not directly or indirectly duplicate, copy, transmit, publish,
provide access to (by electronic or any other means) exchange, throw away, or
incorporate with, or as part of another database, package, program, record or
system, all or any portion of the Database, the Licensed Data and/or CD-EXPORT
for any purpose except as provided in Section 2.01 of this Agreement;

     (c)         use its best efforts to take all reasonably necessary steps to
ensure compliance with Retailer's obligations under this Agreement by users of
its Internet web site and its employees, agents, representatives and customers.
Such best efforts will include, but not be limited to, taking such steps as
directed pursuant to this Agreement and pursuant to any instruction made by B&T
at any time during the effective period and after termination of this
Agreement;


                                       3

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     (d)         except to display the same as expressly provided herein at
Retailer's Internet web site and/or on Retailer's in-house database system at a
single location for viewing by users at such location, not sell, offer for
re-sale, distribute, rent, sublicense or lease all or any portion of the
Database, the Licensed Data and/or CD-EXPORT, nor use all or any portion of the
Database, the Licensed Data and/or CD-EXPORT in an external network (i.e., a
network accessible to third parties) timesharing or service bureau arrangement,
or other third-party multi-user arrangement;

     (e)         not combine or incorporate all or any portion of the Database,
the Licensed Data and/or CD-EXPORT with any other program, database, record or
system which will be sold, offered for re-sale, distributed, rented,
sublicensed or leased;

     (f)         not utilize all or any portion of the Database and/or the
Licensed Data in connection with any sales by Retailer, by any partner or
affiliate of Retailer or by any enterprise or entity in which Retailer has any
interest, except for sales to retail consumers;

     (g)         pay all sales, use, value-added, excise or similar taxes
associated with Retailer's or its users' use of all or any portion of the
Database, the Licensed Data and/or CD-EXPORT;

     (h)         reproduce, incorporate and maintain each and every B&T
proprietary, trade secret or copyright notice in any copy or partial copy of
all or any portion of the Database, the Licensed Data and/or CD-EXPORT or in
any database containing any element of the Database and/or the Licensed Data,
and not remove or obscure any B&T proprietary, trade secret or copyright notice
or other legend with respect to all or any portion of the Database, the
Licensed Data and/or CD-EXPORT;

     (i)         comply with all laws and regulations relating to or pertaining
to the sale, distribution, export or use of all or any portion of the Database,
the Licensed Data and/or CD-EXPORT and maintain high quality and standards
associated with B&T;

     (j)         promptly notify B&T in writing if Retailer becomes aware of
the unauthorized reproduction, manufacture or sale of, or of any acts that are
prohibited in this section with respect to, all or any portion of the Database,
the Licensed Data and/or CD-EXPORT by anyone having access to the Licensed Data
or any portion thereof by means of Retailer's Internet web site or Retailer's
in-house database system.

         4.02    B&T will deliver CD-EXPORT to Retailer contemporaneously with
the software which contains the Database and any updates to the Database so
that Retailer may access the Licensed Data from the Database.

     5.0         DEFAULT AND REMEDIES

     5.01        The following will be an Event of Default: Either party's
failure to perform any of its obligations, or failure to comply with any of its
agreements, hereunder which failure is not cured within thirty (30) days (or
within ten (10) days if such failure on the part of Retailer and relates to
Retailer's use of all or any portion of the Licensed Data and/or CD EXPORT in a
manner or form not expressly authorized by this Agreement) after notice from
the other party.


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     5.02        If an Event of Default occurs, B&T will have all rights and
remedies available to it under applicable law or in equity.  In addition to
such rights and remedies, B&T also may:

     (a)         declare this Agreement and the license granted herein
immediately terminated;

     (b)         sue Retailer for the fulfillment of its obligations under this
Agreement; and/or

     (c)         seek an injunction against Retailer to compel Retailer to
comply with the terms of this Agreement and/or to cease activities which
constitute a default of Retailer's obligations hereunder.

     In addition to B&T's rights set forth above in subsections (a)-(c),
Retailer also will cease use and/or display of all or any portion of the
Licensed Data within 36 hours after receipt of B&T's notice that an event of
Default has occurred.

     5.03        If an Event of Default occurs in which Retailer is either
using, or providing access to, all or any portion of the Database, the Licensed
Data and/or the CD-EXPORT, in breach of the terms of this Agreement then, in
addition to any other remedies which B&T may seek hereunder, Retailer will be
obligated to promptly pay B&T, as and for liquidated damages, an amount equal
to the product of $10,000 and each day in which such Event of Default remains
unremedied.  For the purposes of calculating liquidated damages under this
Section 5.03, a portion of a day will constitute a full day.

     6.0         NO WARRANTY

     6.01        THE DATABASE, THE LICENSED DATA OR ANY PORTION THEREOF AND/OR
CD-EXPORT ARE PROVIDED "AS IS" WITHOUT WARRANTY, EXPRESS OR IMPLIED, OF ANY
KIND.  EXPRESSLY EXCLUDED ARE ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
A PARTICULAR PURPOSE.  Retailer will advise all users that B&T makes no
warranties with respect to the Database, the Licensed Data or any portion
thereof and/or CD- EXPORT.

     6.02        NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY B&T, ITS
AGENTS OR EMPLOYEES WILL CREATE A WARRANTY AND LICENSEE MAY NOT RELY ON ANY
SUCH INFORMATION OR ADVICE.

     6.03        B&T's sole liability and Retailer's exclusive remedy with
respect to a defect in the medium on which the Database and/or the Licensed
Data is delivered to Retailer will be replacement of such medium, as long as
the defective medium is returned to B&T with a copy of the receipt which
accompanied delivery of the medium to Retailer.  If failure of the medium
results from accident, abuse or misapplication, B&T will have no responsibility
to replace the medium.


                                       5

   6
     7.0         INDEMNIFICATION

     7.01        A long as Retailer promptly notifies B&T in writing of such a
claim, B&T at its own expense will defend any action brought and pay any final
judgement against Retailer to the extent that such action is based on a claim
that all or any portion of the Database, the Licensed Data and/or CD-EXPORT
infringes any copyright or subscription rights in existence as of the effective
date of this Agreement.  B&T will have the right to control the defense of all
such claims, lawsuits or proceedings without Retailer's prior written approval.
If, because of any claim of infringement against any copyright or subscription
right which is based on a claim that all or any portion of the Database, the
Licensed Data and/or CD-EXPORT infringes any copyright or subscription rights,
either B&T or Retailer is enjoined from using all or any portion of the
Database, the Licensed Data and/or CD- EXPORT, or if B&T believes that all or
any portion of the Database, the Licensed Data and/or CD-EXPORT is likely to
become the subject of such a claim of infringement, B&T may, at its sole option
and expense, may do the following: (a) obtain the right for Retailer to
continue to use the Database, the Licensed Data or any portion thereof and/or
CD-EXPORT; or (b) replace or modify all or any portion of the Database, the
Licensed Data and/or CD-EXPORT so as to make it non-infringing.  If neither of
these two options is reasonably practicable, B&T may terminate this Agreement
by written notice to Retailer.  The foregoing states the entire liability of
B&T with respect to infringement of any copyright or subscription rights by the
Database or the Licensed Data.

     7.02        The indemnity set forth in Section 7.01 will not extend to any
claims of infringement resulting from (i) modification of all or any portion of
the Database, the Licensed Data and/or CD- EXPORT by Retailer or any user
having access to the same, (ii) modification of all or any portion of the
Licensed Data and/or CD- EXPORT by, through or under Retailer, (iii) the use of
all or any portion of the Database, the Licensed Data and/or CD-EXPORT in
combination with any other software, hardware or server, if such infringement
would have been avoided without the use of such software, hardware or server or
(iv) the use of the same by Retailer or any user in a manner for which all or
any portion of the Database, the Licensed Data and/or CD-EXPORT are not
designed, or from any product which incorporates any of the modifications noted
above.

     7.03        Retailer will indemnify and hold harmless B&T, its officers,
employees and directors from any loss, liability, damage, cost or expense,
including reasonable attorneys' fees and expenses, arising out of (a)
Retailer's breach of its obligations under this Agreement; and/or (b) any
modifications, however slight, made by or on behalf of Retailer (other than
modifications made by B&T) to all or any portion of the Database, the Licensed
Data and/or CD-EXPORT.  Retailer expressly acknowledges that B&T will not be
liable to Retailer or any of its customers for any damage incurred by any of
them arising from such modifications.

     8.0         NOTICES

         All communications, notices, and the like required or given pursuant
to any provision of this Agreement, must be given by Express Mail or by
Certified Mail, Return Receipt Request and will be deemed to have been properly
made or given, if by Express Mail, when received by


                                       6

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the addressee and, if by certified mail, five (5) days after deposit, postage
prepaid, with the U.S. Postal Service, addressed as follows:

         (a)     if to Retailer:           VarsityBooks.com Inc.
                                           1050 Thomas Jefferson Street, N.W.
                                           Suite 525
                                           Washington, D.C. 20007
                                           Attention:  Mr. Eric J. Kuhn
                                           Telephone:  (202) 667-3400
                 with a copy to:           Shaw Pittman
                                           1676 International Drive
                                           14th Floor
                                           McLean, Virginia  22102-4835
                                           Attention:  Andrew M. Tucker
                                           Telephone:  (703) 790-7900
                                           Fax:        (703) 790-7901

         (b)     if to B&T:                Baker & Taylor, Inc.
                                           Five LakePointe Plaza
                                           Suite 500
                                           2709 Water Ridge Parkway
                                           Charlotte, North Carolina 28217
                                           Attention:   James S. Ulsamer, 
                                                        Executive Vice President
                                           Fax:  (704) 329-9105

                 with copy to:             Dow, Lohnes & Albertson, PLLC
                                           1200 New Hampshire Avenue, N.W.
                                           Suite 800
                                           Washington, DC 20036-6802
                                           Attention:  Bradley Jacobsen
                                           Telephone:  (202) 776-2234
                                           Fax:  (202) 776-2222

Either party may change its address as set forth above by notification in
writing to the other party, however any such notification will only become
effective upon actual receipt thereof.

     9.0         MISCELLANEOUS

     9.01        The waiver or failure of either party hereto to exercise in
any respect any right provided for herein will not be deemed a waiver of any
further right hereunder.

     9.02        Dates or terms by which either party is required to perform
under this Agreement will be postponed automatically to the extent that either
party is prevented from meeting them by causes beyond its reasonable control
and for the duration of any such cause.


                                       7

   8
     9.03        (a)      This Agreement and the transactions provided for
herein will be governed, construed and enforced according to the laws of the
State of New York (excluding any conflict of law provisions thereof).

     (b)         Retailer and B&T hereby agree to bring any dispute,
controversy or claim arising out of this Agreement or the matters provided for
in this Agreement and which has not been resolved by the parties through an
informal process within 45 days after either party notifies the other that a
matter is in dispute, for settlement in Newark, New Jersey in accordance with
the Rules of American Arbitration Association (the "Rules").  Each party will
bear its own legal expenses, attorneys' fees and disbursements and costs of all
experts and witnesses.  However, if the claim of either party is upheld by the
arbitrators in all material respects, then the prevailing party will be
promptly reimbursed by the other party for its legal expenses, attorneys' fees
and disbursements and costs of its experts and witnesses and the non-prevailing
party also will pay all fees, costs and expenses of the arbitration.  Any award
rendered will be final and conclusive upon the parties.  Any judgment thereon
may be enforced in any court having jurisdiction.  Both parties will continue
to perform their respective obligations under this Agreement during any
arbitration proceedings.  Notwithstanding the Rules, the arbitrator's
determination will only be in favor of one party's position.

     9.04        For a period of time not to exceed two (2) years after the
date on which this Agreement expires or terminates, Retailer will maintain
accurate records at one office of Retailer within the continental United States
concerning Retailer's use of, including without limitation all records of
access to, all or any portion of the Database, the Licensed Data and/or
CD-EXPORT under this Agreement.  During the Term, and for a two (2) year period
after the date on which Agreement expires or terminates, on five (5) business
days prior notice to Retailer and during Retailer's normal business hours, B&T
will have the right to audit Retailer's records with respect to such use and
with respect to Retailer's compliance with the terms hereof.  As soon as
Retailer uses any portion of the Licensed Data at its Internet web site,
Retailer also will provide B&T at no expense to B&T with any passwords and
access codes necessary to enable B&T to have access to the same in order to
confirm Retailer's compliance with the terms of this Agreement.

     9.05        Retailer agrees in advance that this Agreement may be assigned
by B&T.  Retailer shall not assign its rights or obligations hereunder without
the prior written consent of B&T, which consent shall not be unreasonably
withheld or delayed; provided, however, that Retailer may assign its rights and
obligations hereunder and under the Related Agreements to CollegeOps LLC, a
Delaware limited liability company and wholly-owned subsidiary of the Retailer.
Unless otherwise provided in a writing signed by Retailer and B&T, such
assignment shall not relieve Retailer of any of its obligations hereunder.

     9.06        English will be the official text for this Agreement.  No
translation will be used to construe the meaning or intent hereof.

     9.07        If any of the terms or provisions of this Agreement are ruled
to be invalid or unenforceable in an arbitration proceeding or by a court or
administrative bureau of competent jurisdiction, the remainder of the Agreement
will not be affected thereby.  If


                                       8

   9
an arbitrator, court or bureau does not replace a provision in this Agreement
ruled to be invalid or unenforceable with a valid and enforceable one which
accomplishes the same general purpose to the maximum extent possible, the
parties will reasonably try to negotiate a replacement for the provision which
accomplishes the same general purpose to the maximum extent possible.

                  [remainder of page intentionally left blank]



                                       9

   10
     9.08        This Agreement constitutes the complete and exclusive
statement of the terms and conditions between the parties and supersedes and
merges all prior proposals, understandings and all other agreements, oral and
written, between the parties relating to the subject matter of this Agreement.
This Agreement may not be modified or altered except by written instrument duly
executed by both parties.  This Agreement will be binding upon, and will inure
to the benefit of, the parties hereto and their respective successors,
permitted assigns and legal representatives.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.


 Retailer:                                       B&T:
 VARSITYBOOKS.COM INC.                           BAKER & TAYLOR, INC.


 By: /s/ Eric J. Kuhn                            By: /s/ James S. Ulsamer
    -----------------------------                   ----------------------------
 Name:  Eric J. Kuhn                             Name: James S. Ulsamer
 Title:  Chief Executive Officer                 Title: Executive Vice President



                               SIGNATURE PAGE TO
                AMENDED AND RESTATED DATABASE LICENSE AGREEMENT




EX-10.5

12

DROP SHIP AGREEMENT



   1
                                                                    EXHIBIT 10.5


                    AMENDED AND RESTATED DROP SHIP AGREEMENT

     THIS AMENDED AND RESTATED DROP SHIP AGREEMENT (this "Agreement"), effective
as of the 1st day of October, 1999 (the "Effective Date"), is entered into by
and between VARSITYBOOKS.COM INC. (f/k/a The Textbook Club, Inc.), a Delaware
corporation ("Retailer"), and BAKER & TAYLOR, INC., a Delaware corporation
("B&T"). This Agreement amends, restates and supersedes in its entirety that
certain Drop Ship Agreement by and between the parties dated July 10, 1998 (the
"Prior Agreement").

                              W I T N E S S E T H:

     For valuable consideration, the receipt and legal sufficiency of which are
hereby acknowledged, the parties agree as follows:

1.  DEFINITIONS

     As used throughout this Agreement the following terms have the following
meanings:

     1.1.        "EDI" means electronic data interchange, using BISAC or X.12
formats.

     1.2.        "Expiration Date" means the day on which the Operating
Agreement is terminated in accordance with its terms.

     1.3.        "Customers" means customers of Retailer within the United
States who order Products (hereinafter defined) from Retailer and to whom
Retailer wishes B&T to ship Products directly from B&T's distribution
facilities.

     1.4.        "Operating Agreement" means that that certain Equity
Investment and Operating Agreement dated July 10, 1998, as amended by the First
Amendment to Equity Investment and Operating Agreement and License Agreement by
and between Retailer and B&T dated October 9, 1998 and as further amended by
that certain Operating Agreement of even date herewith.

     1.5.        "Products" means books, spoken word audio products and
calendars.

2.  SCOPE OF AGREEMENT.  The services to be provided by B&T herein are also
subject to the terms and conditions set forth in the Methodology and
Requirements Document attached to, and made a part of, this Agreement as
Exhibit A.

3.  TERM.  This Agreement will begin on the Effective Date and will expire on
the Expiration Date, unless terminated on an earlier date pursuant to the
express terms of this Agreement.

4.  ORDER FULFILLMENT.

     4.1.        Upon receipt of an order for one or more Products from
Customers, Retailer will transmit the order to B&T's EDI mailbox location by
means of a mutually acceptable form of EDI.  Each order transmitted by Retailer
to B&T will contain the following information: (a) the Customer's name and
shipping address, (b) the method by which Products ordered must be shipped to
the Customer, (c) whether or not the order may be fulfilled in multiple
shipments of




   2
Products to the Customer or if the order may only be fulfilled when B&T has all
Products ordered in stock, (d) the text of any standard retail messages and/or
special messages to the Customer, (e) instructions concerning specific package
inserts to be included in the order, and (f) instructions concerning gift
wrapping and gift cards.

     4.2.        If Retailer wishes B&T to include package inserts with orders
to Customers, Retailer will deliver to B&T a quantity of package inserts to be
included with orders to Customers in sufficient quantity to supply to Customers
as directed by Retailer to B&T.  Within five (5) business days after inquiry
from Retailer, B&T will notify of the quantity of the various package inserts
on hand at B&T's facilities.  B&T will use reasonable commercial efforts to
assure that an adequate quantity of package inserts is maintained at each B&T
facility from which Products are being shipped to Customers.  Retailer will
give B&T not less than five (5) business days' prior notice to include, or to
cease inclusion of, a particular package insert in shipments of orders to
Customers.

     4.3.        After receipt of an order, B&T will (a) fill the order from
inventory of Products in stock at B&T's facilities, (b) gift wrap any Products
as instructed by Retailer, (c) print the text of any standard retailer message
and/or any special message requested by Retailer on the packing slip or on a
separate gift card included in the order, (d) include in the order up to three
(3) package inserts requested by Retailer, (e) pursuant to Retailer's
instructions, and based upon availability of Products in stock, ship the order
to the Customer either as a multiple shipment or as one shipment, (f) pursuant
to Retailer's instructions, promptly place any Products ordered by Retailer
which B&T does not have in stock on a backorder report for review by B&T's
account manager for, after which time such Products will be promptly ordered by
B&T (collectively, "Backordered Products") and (g) ship any Backordered
Products, when received by B&T, pursuant to the terms of the preceding clauses
(a) - (e) and the following two sentences.  For all Products which B&T then has
in stock, B&T will use commercially reasonable efforts to fulfill on the same
day all orders received from Retailer not later than 12:00 P.M. Central time
for orders received Monday through Friday.  If B&T from time to time is unable
to meet the schedule specified in the preceding sentence, B&T promptly will
notify Retailer of the same.  Any orders received by B&T after such times will
be fulfilled on the following business day.  Notwithstanding the foregoing, if
any orders are received on a day which is not a business day will be fulfilled
on the following business day.  As used in this Agreement, "business day" means
any day which is not a recognized holiday on which B&T and the approved carrier
or shippers providing services under this Agreement are open for business.

     4.4.        B&T will acknowledge receipt of orders to Retailer via EDI at
Retailer's EDI mailbox location.  The first acknowledgment will be made
promptly after an order is received and will identify Products as being in
stock and/or backordered and/or as for which the order is being canceled.  The
second acknowledgment will be made at the time an order is ready to be shipped
to a Customer and will contain the shipper's tracking number if provided by the
shipper to B&T.  Each such acknowledgment is referred to herein as an "ASN".

     4.5.        B&T will use commercially reasonable efforts to fulfill orders
from Retailer.  Retailer acknowledges that it does not expect B&T to maintain
in stock a complete inventory of all Products that may be ordered by Customers.



                                       2

   3
     4.6.        B&T will transmit all invoices to Retailer via EDI to
Retailer's mailbox location.

     4.7.        B&T will not be liable for delays arising from the failure of
any freight carrier to meet its respective delivery standards.

5.  RETURNS

     5.1.        Each shipment of Products to Customers will include Retailer's
return center address and Customers will be instructed to make returns of
Products to such address.  Retailer will forward all such returns to B&T on a
weekly basis and will pay the freight costs for the same.  B&T will process all
returns of Products within five (5) business days of its receipt of the same.
B&T will not be obligated to accept any returns made more than 60 days after
shipment of the Product to a Customer.  Retailer agrees to comply with the
terms of B&T's then current published returns policy, as long as B&T has
provided the same to Retailer.

     5.2.        (a)      As used in this Agreement:

                 (i)      "Defective Products" means Products which contain
manufactured defects which prevent them from being used for their intended
purpose;

                 (ii)     "Damaged Products" means Products which are damaged
during shipment to Customers which prevent them from being used for their
intended purpose; and

                 (iii)    "Unmerchandisable Products" means Products which are
shopworn and/or soiled.

                 (b)      Retailer promptly will reimburse B&T for any freight
costs incurred for Products returns, except for returns of Defective Products,
Unmerchandisable Products (if shipped in that condition by B&T), Damaged
Products (if improperly packaged by B&T) and/or Products shipped erroneously to
Customers (collectively, "Free Return Products").  B&T promptly will issue a
credit to Retailer equal to the charge for shipment from Customers to B&T by
the means used by Customer of Free Return Products and B&T will be responsible
for freight costs to ship replacement Products to Customers for Free Return
Products.  B&T will also reimburse Retailer for a stocking fee set forth in
Schedule 5.2 attached hereto for each Free Return Product.

6.  PRICING AND PAYMENT TERMS.

     6.1.        (a)      Retailer will pay B&T for all Products ordered by
Customers, and will pay all fees and reimbursables payable to B&T herein,
within 30 days from the date of delivery of B&T's detailed invoice therefor.
All payments made to B&T will be in good funds and delivered by check or wire
transfer to the order of B&T pursuant to B&T's instructions.  Retailer may not
reduce and set off amounts payable hereunder against any indebtedness or any
other claim that may have against B&T, however or whenever arising.

                 (b)      The price charged by B&T to Retailer for Products
purchased from B&T will be expressed on the basis of a discount from the
publishers' list prices for the same as of the date of shipment of Products to
Customers, and as set forth on Schedule 6.2.  Publishers' list



                                       3

   4
prices for Products are displayed on B&T' s title database of Products, which
presently is available for license by B&T to third parties (including
Retailer).  Retailer acknowledges and agrees that publishers' list prices for
Products may be subject to change without notice.  Retailer acknowledges and
agrees that it is Retailer's responsibility to determine the pricing of
Products to Customers and that B&T is not responsible if Retailer sells
Products at prices which result in a lower selling margin than may be desired
by Retailer.

     6.2.        (a)      Retailer will be responsible for the payment of its
EDI transmissions to B&T.

                 (b)      Retailer will pay the prices, charges and fees to B&T
for books that are not Textbooks (as such term is defined in the Operating
Agreement) as more particularly set forth on Schedule 6.2 attached hereto and
made a part hereof.  The prices of Textbooks will be determined as set forth in
the Operating Agreement.

     6.3     Retailer will pay all freight costs for all Product shipments
to, and Product returns from, Customers.  Freight costs shall be as set forth
in Schedule 6.2.

7.  WARRANTIES.

     7.1.        B&T warrants that it has good title to the Products delivered
to Customers pursuant to this Agreement.  EXCEPT FOR THE FOREGOING WARRANTY,
THERE ARE NO OTHER EXPRESS WARRANTIES, AND THERE ARE NO IMPLIED WARRANTIES.
EXPRESSLY EXCLUDED ARE ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.  NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY B&T OR
ITS AGENTS OR EMPLOYEES WILL CREATE A WARRANTY OR IN ANY WAY INCREASE THE SCOPE
OF THE FOREGOING WARRANTY.

     7.2.        NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY FOR ANY
INDIRECT CONSEQUENTIAL, OR INCIDENTAL DAMAGES (INCLUDING DAMAGES FOR BUSINESS
INTERRUPTION, AND THE LIKE) ARISING OUT OF THIS AGREEMENT, EVEN IF SUCH PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  The only liability B&T
will have with respect to any Defective Products, Unmerchandisable Products
and/or Damaged Products will be the return rights of Customers described
herein.  Retailer will indemnify and hold harmless B&T, its officers, employees
and agents, for any loss, claim, cost or expense (including reasonable
attorneys' fees and expenses) incurred by reason of any claim made by a
Customer concerning any matter to which the preceding limitation of liability
may apply.

     7.3.        The provisions of this Section shall survive the termination
or expiration of this Agreement.

8.  TERMINATION.

     8.1.        (a)      Either party may terminate this Agreement upon the
occurrence of an Event of Default by the other party if the Operating Agreement
is terminated.  An Event of Default under this Agreement shall be deemed to be
Event of Default under the Operating



                                       4

   5
Agreement.  An "Event of Default" is hereby defined to mean the defaulting
party's failure to cure, (a) after receipt of 30 days' written notice from the
non-defaulting party, of any of the following:  (i) failure of the defaulting
party to observe or perform any material condition or obligation imposed under
this Agreement on the defaulting party not relating to the payment of money,
(ii) breach of any warranty made by the defaulting party under this Agreement,
(iii) filing of a voluntary petition in bankruptcy or having a involuntary
petition filed against it, the appointment of a receiver or trustee, the
execution of an assignment for the benefit of creditors; and (b) after receipt
of 10 days' written notice from the non-defaulting party of the failure of the
defaulting party to make any payments when due hereunder.  The option to
terminate this Agreement shall be in addition to, and not in lieu of, any other
remedy available to the terminating party under this Agreement or at law or
equity, all such remedies being cumulative.

                 (b)      In addition to the preceding remedies, upon the
occurrence of an Event of Default by Retailer hereunder at any time and from
time to time, B&T may require Retailer to reduce its account balance with B&T
to a level determined by B&T in its sole discretion (up to and including an
account balance of $0).

     8.2.        Termination of this Agreement upon either party's default, or
the expiration of this Agreement will not affect:

                 (a)      the rights of either party with respect to any breach
of this Agreement, or

                 (b)      the obligations of either party already accrued prior
to the effective date of expiration or termination (including obligations with
respect to returned Products).

                 (c)      those obligations of the parties that, by their
terms, survive termination or expiration of this Agreement.

     8.3.        In the event of the expiration or a termination of this
Agreement, Retailer promptly will reconcile accounts payable and receivable
with B&T and bring the balance owed, if any, current and up-to-date.

9.  CONFIDENTIALITY.

         The parties acknowledge that each may be exposed to confidential
information and trade secrets relating to the other party's business under this
Agreement, including, but not limited to, the terms of this Agreement,
quantities of products, dollar volumes, revenues of products, wholesale prices
and similar information.  The parties agree that, during the term of this
Agreement, and for a period of two (2) years after the Expiration Date, neither
party will disclose to any third party any confidential information without the
prior written consent of the other party, except to employees, agents,
auditors, contractors, directors and similar entities as long as such third
parties agree to be bound by the confidentiality provisions hereof. Except as
expressly provided herein, neither party will use, disclose or transfer the
trade secrets of the other party so long as such information constitutes a
trade secret under applicable law.  The confidentiality obligations between the
parties will not apply to any information (a) which is in the public domain or
which becomes part of the public domain through no fault of the receiving
party; (b) which is known to the receiving party prior to the disclosure
thereof by the disclosing party (as established by documentary evidence); (c)
which is lawfully received by the receiving party from



                                       5

   6
a third party who provided such information without breach of any separate
confidentiality obligation owed to the disclosing party; or (d) which is
independently developed by personnel having no access to the disclosing party's
confidential information (as established by documentary evidence).
Notwithstanding the foregoing, the parties agree that either party may describe
the terms, and include a copy, of this Agreement and the exhibits hereto in any
filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended.

10. MISCELLANEOUS.

     10.1.       The risk of parcel loss or damage shall pass from B&T to
Retailer when the parcels containing Products are tendered to Retailer's
carriers for shipment to Customers.  Title to Products shall transfer from B&T
to Retailer when the parcels containing Products are tendered to Retailer's
carriers for shipment to Customers.  Retailer will be liable for any Products
for which shipments are damaged, lost and/or misdirected by Retailer's carrier
and/or refused by Customers.

     10.2.       B&T will not be liable for any sales and related tax liability,
if any, associated with the sale to Customers of Products. Retailer will
indemnify and hold harmless B&T for any claim for payment of sales tax made upon
B&T by any state or other governmental authority for sales of Products to
Customers hereunder.

     10.3.       Neither party will be liable for any failure to perform, or
delay in the performance of, any of its obligations hereunder (nor will the
same constitute an Event of Default) if and to the extent the failure or delay
is caused, directly or indirectly, by events beyond its control, such as acts
of God, acts of the public enemy, acts of any governmental body in its
sovereign or contractual capacity, fires, floods, epidemics, quarantine
restrictions, strikes or other labor disputes (except strikes or labor disputes
that are not industry wide but are brought against Retailer or B&T solely),
freight embargoes, and/or unusually severe weather.  Lack of funds by either
party will not excuse its timely performance of its obligations hereunder.  In
the event of an occurrence described in the first sentence, the non-performing
party affected will be excused from further performance or observance of the
obligation(s) so affected for as long as such circumstances prevail and if the
party continues to use its best efforts to recommence performance or observance
whenever and to whatever extent possible without delay.

     10.4.       Retailer agrees to furnish its quarterly financial statements
to B&T within 45 days of the end of each of its first three fiscal quarters
each year and to furnish its annual financial statements to B&T within 90 days
of the end of each fiscal year.  Retailer will deliver such financial
statements to B&T at its address at 501 South Gladiolus Street, Momence,
Illinois 60954-1799, Attn.: Credit Manager.  Such statements will contain
sufficient detail for B&T to determine Retailer's creditworthiness to perform
its obligations hereunder.  At any time and from time to time during the Term,
B&T may require Retailer to reduce its account balance with B&T to a level
determined by B&T in its sole discretion (up to and including an account
balance of $0), based upon B&T's determination that Retailer's financial
condition warrants the same.

     10.5.       This Agreement shall be construed in accordance with the laws
of the State of New York, without giving effect to the conflict of laws
provisions thereof.



                                       6

   7
     10.6.       No representation, promise, inducement or agreement relating
to the transactions contemplated by this Agreement has been made by either
party that is not set forth in this Agreement, and neither party shall be bound
by or liable for any representations promise, inducement or agreement not so
set forth.

     10.7.       All notices, requests, consents, and other communications
hereunder shall be in writing and shall be deemed effectively given and
received upon delivery in person, or one business day after delivery by
national overnight courier service or by telecopier transmission with
acknowledgment of transmission receipt, or three business days after deposit
via certified or registered mail, return receipt requested, in each case
addressed as follows:

         (a)     if to Retailer:           VarsityBooks.com Inc.
                                           1050 Thomas Jefferson Street, N.W.
                                           Suite 525
                                           Washington, D.C. 20007
                                           Attention:  Mr. Eric J. Kuhn
                                           Telephone:  (202) 667-3400

                 with a copy to:           Shaw Pittman
                                           1676 International Drive
                                           14th Floor
                                           McLean, Virginia  22102-4835
                                           Attention:  Andrew M. Tucker
                                           Telephone:  (703) 790-7900
                                           Fax:        (703) 790-7901

         (b)     if to B&T:                Baker & Taylor, Inc.
                                           Five LakePointe Plaza
                                           Suite 500
                                           2709 Water Ridge Parkway
                                           Charlotte, North Carolina 28217
                                           Attention:  James S. Ulsamer, 
                                                       Executive Vice President
                                           Fax:  (704) 329-9105

                 with copy to:             Dow, Lohnes & Albertson, PLLC
                                           1200 New Hampshire Avenue, N.W.
                                           Suite 800
                                           Washington, DC 20036-6802
                                           Attention:  Bradley Jacobsen
                                           Telephone: (202) 776-2234
                                           Fax: (202) 776-2222

     or, in any such case, at such other address or addresses as shall have
been furnished in writing by such party to the others.  All notices given by
courier or by telecopy will be deemed received at the notice address and all
notices given by registered or certified mail will be deemed delivered five (5)
days after deposit with the U.S. Postal Service.  Either party may change is
notice address from time to time by notification in writing to the other party,
however any such notification will not be deemed given until actually received
by the recipient party.



                                       7

   8
     10.8.       The waiver or failure of either party to exercise in any
respect any right provided for herein will not be deemed a waiver of any
further right hereunder.

     10.9.       The provisions of this Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and each of their respective
successors and assigns. Neither party hereto shall assign its rights or
obligations hereunder without the prior written consent of the other party
hereto, which consent shall not be unreasonably withheld or delayed; provided,
however, that Retailer may assign its rights and obligations hereunder to
CollegeOps LLC, a Delaware limited liability company and wholly-owned
subsidiary of Retailer.  Unless otherwise provided in a writing signed by
Retailer and B&T, such assignment shall not relieve Retailer of any of its
obligations hereunder.

     10.10.      Nothing contained in this Agreement shall be deemed or
construed to create a partnership or joint venture of or between and B&T, or to
create any other relationship between the parties other than that of
independent contractors.

     10.11.      The captions used herein are for convenience of reference only
and are not part of this Agreement, and shall in no way be deemed to define,
limit, describe, or modify the meaning of any provision of this Agreement.

     10.12.      If any term or provision of this Agreement or applications
thereof to any person or circumstances is, to any extent, held to be invalid or
unenforceable, the remaining terms and provisions of this Agreement, or the
applications of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, will not be affected
thereby, and each term and provision of this Agreement will be valid and
enforced to the fullest extent permitted by law.

     10.13.      If Retailer fails to make any payment due hereunder to B&T
within 30 days after receipt of B&T's invoice therefore, then Retailer will pay
B&T the amount due, together with interest thereon until paid, calculated at
the rate of eighteen percent (18%) per annum, unless otherwise agreed to in
writing by both parties.

     10.14.      This Agreement and the Related Agreements (as such term is
defined in the Operating Agreement) contains and embodies the entire agreement
of the parties here to, and no representations, inducements, or agreements,
oral or otherwise between the parties not contained in this Agreement, if any,
will be of any force or effect.  This Agreement may not be modified, changed or
terminated in whole or in part in any manner other than by an agreement in
writing duly signed by both parties.

                  [remainder of page intentionally left blank]



                                       8

   9
     10.15.      This Agreement may be signed in counterparts both of which
taken together shall be deemed one original.  Telecopied facsimiles of a signed
counterpart of this Agreement from one party to the other will be deemed to be
delivery of a signed counterpart by the party sending the telecopied facsimile.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.

 Retailer:                                       B&T:

 VARSITYBOOKS.COM INC.                           BAKER & TAYLOR, INC.


 By: /s/ Eric J. Kuhn                            By: /s/ James S. Ulsamer
    ----------------------------                    ----------------------------
 Name:  Eric J. Kuhn                             Name: James S. Ulsamer
 Title:  Chief Executive Officer                 Title: Executive Vice President


                               SIGNATURE PAGE TO
                    AMENDED AND RESTATED DROP SHIP AGREEMENT




EX-10.6

13

PROMOTIONAL AND CUSTOMER SERVICES AGREEMENT



   1
                                                                    EXHIBIT 10.6


                   PROMOTIONAL AND CUSTOMER SERVICES AGREEMENT


         THIS PROMOTIONAL AND CUSTOMER SERVICES AGREEMENT (this "Agreement"),
effective as of October 1, 1999, is made by and between VARSITYBOOKS.COM INC., a
Delaware corporation, and its permitted successors and assigns (the "Company"),
and BAKER & TAYLOR, INC., a Delaware corporation, and its permitted successors
and assigns ("B&T").

         WHEREAS, the Company operates as an Internet supplier of textbooks
("Textbooks") and B&T provides Textbooks to customers of the Company and
performs a variety of promotional and customer services functions for the
Company in connection therewith;

         WHEREAS, the Company and B&T are parties to that certain Equity
Investment and Operating Agreement dated July 10, 1998, as amended by the First
Amendment to Equity Investment and Operating Agreement and License Agreement by
and between the Company and B&T dated October 9, 1998 and as further amended by
that certain Operating Agreement dated October 1, 1999 (the "Operating
Agreement");

         WHEREAS, the Company and B&T also are parties to that certain Amended
and Restated Drop Ship Agreement of even date herewith (the "Drop Ship
Agreement");

         WHEREAS, the Company and B&T also are parties to that certain Amended
and Restated Database License Agreement of even date herewith (the "License
Agreement", together with this Agreement, the Operating Agreement and the Drop
Ship Agreement, the "Related Agreements"); and

         WHEREAS, the Company and B&T now desire to enter into this Agreement to
describe certain additional services to be provided by B&T to the Company;

         NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained in this Agreement, the parties, intending to be legally
bound, agree as follows:


I.       PRODUCT AND WEB SITE DEVELOPMENT. B&T will continue to assist the 
Company in developing the Company's product and customer base. Such assistance
may include providing guidance to the Company in its efforts at identifying
appropriate titles to offer, and licensing to the Company the following data
elements, where available to B&T, for display by the Company on the Company's
Internet web site (the "Web Site"): (i) bibliographic and other limited product
information about the selected Textbook titles; (ii) scanned images of Textbook
jacket art; (iii) table of contents; and (iv) updated Inventory status. Subject
to the terms and conditions of the License Agreement, B&T will provide the
Company (x) available scanned images of jacket art and (y) table of contents on
items that B&T has designated in the Database (as defined in the License
Agreement) as either in stock or on order at the Investor's Momence, Illinois
location or at such other of B&T's locations as the Company and B&T have agreed
may be used for fulfillment services. Such information will be updated from time
to time as additional information becomes available.


                                       1

   2
II.      ADDITIONAL SERVICES

         In addition, B&T agrees to provide additional services to the Company,
including but not limited to the following (the "Additional Services"):  (i)
add titles and other information for new Textbooks into the Database; (ii)
procure shipping boxes customized with the Company's name and logo; (iii)
restock and replace damaged and returned books pursuant to the Drop Ship
Agreement; (iv) maintain and license the Licensed Data to the Company pursuant
to the License Agreement; (v) maintain and use EDI protocol to transmit
invoices, orders, reports and other information to the Company; and (vi)
perform additional marketing and other services for the Company as the parties
may agree from time to time.  The cost of the Additional Services is set forth
in Schedule I attached hereto.  The parties may amend Schedule I by mutual
agreement from time to time.

III.     LIMITATION OF WARRANTIES

         A.      NOTWITHSTANDING ANYTHING CONTAINED HEREIN OR IN ANY RELATED
DOCUMENT, NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY HEREUNDER FOR ANY
INDIRECT, CONSEQUENTIAL, PUNITIVE OR INCIDENTAL DAMAGES ARISING OUT OF THIS
AGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.

         B.      The provisions of this Article 3 shall survive the termination
or expiration of this Agreement.

IV.      MISCELLANEOUS

         A.      Entire Agreement.  This Agreement constitutes the sole and
entire agreement of the parties with respect to the subject matter hereof.

         B.      Publicity.  All general notices, releases, statements and
communications to employees, suppliers, distributors and customers of a party
and to the general public and the press relating to the transactions covered by
the Operating Agreement or any Related Agreement shall be made by such party
hereto only at such times and in such manner as may be mutually agreed upon by
the Company and B&T, except as may be required by any applicable law and
regulation.  Either party may describe the terms, and include a copy, of this
Agreement and the exhibits hereto in any filing under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended.

         C.      Expenses. Each party hereto shall be solely responsible for
its respective expenses in connection with the negotiation, preparation and
performance of this Agreement (including, without limitation, all legal and
accounting expenses).

         D.      Parties in Interest.  All obligations and agreements contained
in this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and permitted assigns of the
parties hereto, whether so expressed or not.  Except as otherwise expressly
provided herein, nothing in this Agreement is intended to confer upon any other
person or entity any rights or remedies hereunder.


                                       2

   3
         E.      Notices.  All notices, requests, consents, and other
communications hereunder shall be in writing and shall be deemed effectively
given and received upon delivery in person, or one business day after delivery
by national overnight courier service or by telecopier transmission with
acknowledgment of transmission receipt, or three business days after deposit
via certified or registered mail, return receipt requested, in each case
addressed as follows:

         if to the Company:       VarsityBooks.com Inc.
                                  1050 Thomas Jefferson Street, N.W.
                                  Suite 525
                                  Washington, D.C. 20007
                                  Attention:  Mr. Eric J. Kuhn
                                  Telephone:  (202) 667-3400

         with a copy to:          Shaw Pittman
                                  1676 International Drive
                                  14th Floor
                                  McLean, Virginia  22102-4835
                                  Attention:  Andrew M. Tucker
                                  Telephone:  (703) 790-7900
                                  Fax:        (703) 790-7901

         if to B&T:               Baker & Taylor, Inc.
                                  Five LakePointe Plaza
                                  Suite 500
                                  2709 Water Ridge Parkway
                                  Charlotte, North Carolina 28217
                                  Attention:  James S. Ulsamer, Executive 
                                              Vice President
                                  Fax:  (704) 329-9105

         with copy to:            Dow, Lohnes & Albertson, PLLC
                                  1200 New Hampshire Avenue, N.W.
                                  Suite 800
                                  Washington, DC 20036-6802
                                  Attention:  Bradley Jacobsen
                                  Telephone:  (202) 776-2234
                                  Fax:  (202) 776-2222

         or, in any such case, at such other address or addresses as shall have
been furnished in writing by such party to the others.

         F.      Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THAT STATE'S PROVISIONS OF CONFLICT OF LAWS.


                                       3

   4
         G       Counterparts.  This Agreement may be executed in one or more
counterparts by facsimile or original signature, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.

         H.      No Waivers;  Amendments.  No failure or delay on the part of
any party in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to any
party at law or in equity or otherwise.  Any provision of this Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and
is signed by the Company and B&T.

         I.      Severability.  If any provision of this Agreement shall be
declared void or unenforceable by a judicial or administrative authority, the
validity of any other provision and of the entire Agreement shall not be
affected thereby.

         J.      Gender.  All pronouns and all variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the person or persons, thing or entity may require.

         K.      Headings.  The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

         L.      Termination. This Agreement shall terminate upon the
termination or expiration of the Operating Agreement.


                                       4

   5
         M.      Assignment. Neither party hereto shall assign its rights or
obligations hereunder without the prior written consent of the other party
hereto, which consent shall not be unreasonably withheld or delayed; provided,
however, that the Company may assign its rights and obligations hereunder to
CollegeOps LLC, a Delaware limited liability company and wholly-owned
subsidiary of the Company.  Unless otherwise provided in a writing signed by
the Company and B&T, such assignment shall not relieve the Company of any of
its obligations hereunder.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.

 The Company:                                    B&T:

 VARSITYBOOKS.COM INC.                           BAKER & TAYLOR, INC.


 By: /s/ Eric J. Kuhn                            By: /s/ James S. Ulsamer
    -----------------------------                   ----------------------------
 Name:  Eric J. Kuhn                             Name: James S. Ulsamer
 Title:  Chief Executive Officer                 Title: Executive Vice President



                               SIGNATURE PAGE TO
                                  PROMOTIONAL


                                      I-1




EX-10.7

14

EMPLOYMENT AGREEMENT - ERIC J. KUHN



   1
                                                                    EXHIBIT 10.7


                                   AGREEMENT

     THIS AGREEMENT (the "Agreement") made as of the 24th day of August, 1999 by
and between VARSITYBOOKS.COM INC., a Delaware corporation (the "Company"), and
ERIC J. KUHN (the "Executive").

     The Executive is presently employed by the Company as its President and
Chief Executive Officer.

     The Board of Directors of the Company desires to set forth the nature and
amount of compensation and other benefits to be provided to the Executive and
any of the rights of the Executive in the event of his termination of employment
with the Company. The Executive is willing to commit himself to continue to
serve the Company, on the terms and conditions herein provided.

     In order to effect the foregoing, the Company and the Executive wish to
enter into this Agreement under the terms and conditions set forth below.
Accordingly, in consideration of the promises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:

     1. Employment. The Company hereby agrees to continue to employ the
Executive, and the Executive hereby agrees to continue to serve the Company, on
the terms and conditions set forth herein.

     2. Term. The term of Executive's employment under Section 1 will terminate
upon the termination of Executive's employment with the Company for any reason
whatsoever. No such termination shall affect any of the Company's other
obligations under this Agreement arising at or after such termination of
employment.

     3. Position and Duties. The Executive shall serve as President and Chief
Executive Officer of the Company and shall have such responsibilities and
authority as may normally be exercised by a person in such positions at a
company.

     4. Place of Performance. The Executive shall be based at the current or
future headquarters of the Company, provided that any future headquarters is not
more than twenty-five (25) miles from the location of the Company's headquarters
on the date hereof.

     5. Compensation and Related Matters.

          (a) Base Salary. During the Executive's employment with the Company,
the Company shall pay to the Executive a salary at a rate of not less than One
Hundred Sixty Thousand Dollars ($160,000) per annum in equal installments as
nearly as practicable on the normal payroll periods for employees of the Company
generally (the "Base Salary"). The Base Salary may be increased from time to
time and, if so increased, shall not thereafter be decreased during the term of
this Agreement.

          (b) Bonus. The Executive shall be eligible to receive an annual bonus
equal to twenty-five percent (25%) of Executive's Base Salary (the "Annual
Bonus") payable in



   2
accordance with goals to be developed by the Company's Compensation Committee
in accordance with Executive on an annual basis.

          (c) Expenses. During the term of the Executive's employment hereunder,
the Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in performing services hereunder,
including all expenses of travel and living expenses while away from home on
business or at the request of and in the service of the Company, provided that
such expenses are incurred and accounted for in accordance with the policies and
procedures established by the Company.

          (d) Benefits. During the term of the Executive's employment hereunder,
the Company shall maintain in full force and effect, and the Executive shall be
entitled to continue to participate in, all of its employee benefit plans and
arrangements in effect on the date hereof in which the Executive participates or
receives benefits, or plans or arrangements providing the Executive with at
least equivalent benefits thereunder. The Company shall not make any changes in
such plans and arrangements which would adversely affect the Executive's rights
or benefits thereunder, unless such change occurs pursuant to a program
applicable to all officers of the Company and does not result in a
proportionately greater reduction in the rights of or benefits to the Executive
as compared with any other officers of the Company. The Executive shall be
entitled to participate in or receive benefits under any employee benefit plan
or arrangement made available by the Company in the future to its officers and
key management employees, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and arrangements. Nothing
paid to the Executive under any plan or arrangement presently in effect or made
available in the future shall be deemed to be in lieu of any amounts payable to
the Executive pursuant to this Section 5.

     6. Termination and Definitions.

          (a) Cause. The Executive's rights under Section 5 of this Agreement
shall immediately be terminated if the Executive's employment is terminated for
Cause.

          (b) Termination by the Executive. The Executive may terminate his
employment hereunder for Good Reason.

          (c) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive shall be communicated by written
Notice of Termination to the other party hereto.

          (d) Definitions.

               (i)    For purposes of this Agreement, termination "for Cause" 
shall arise where termination results from (A) conviction of, or the pleading of
nolo contendere to, a felony; (B) a material breach of this Agreement which
materially and adversely affects the Company's business and operations; (C) the
failure of Executive for any reason, within ten (10) days after receipt by
Executive of written notice thereof from the Company, to correct, cease or
otherwise alter any failure to comply with instructions or other action or
omission to act which will materially or adversely affect its business or
operations; (D) misconduct by Executive which is of such a serious and
substantial nature that a reasonable likelihood exists that such misconduct


                                      -2-

   3
will materially injure the reputation of the Company if Executive was to remain
employed by the Company; and (E) proven gross negligence.

               (ii)   For purposes of this Agreement, "Good Reason" shall mean 
(A) the termination of Executive's employment with the Company other than for
Cause, (B) Executive's voluntary termination of employment with the Company
within ninety (90) days following any of (i) a decrease in Executive's base
salary below its level in effect on the date prior to such termination, (ii) a
material reduction in Executive's job responsibilities without Executive's
consent, or (iii) a geographical relocation of the Executive more than
twenty-five (25) miles from the current location of the Company without his
consent, or (C) a Change of Control of the Company followed, within two years
after such Change of Control, by (i) the termination of Executive's employment
with the Company other than for Cause, or (ii) the Executive's voluntary
termination of employment with the Company within ninety (90) days following any
of (x) a decrease in Executive's base salary below its level in effect on the
date prior to such termination, (y) a material reduction in Executive's job
responsibilities without Executive's consent, or (z) a geographical relocation
of the Executive more than twenty-five (25) miles from the current location of
the Company without his consent.

               (iii)  For purposes of this Agreement, a "Change in Control" of 
the Company shall be deemed to have occurred if (A) any "person" (as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company (not including any securities acquired directly from the Company)
representing more than 50% of the combined voting power of the Company's then
outstanding securities; (B) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (i) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company in which no person acquires more
than 50% of the combined voting power of the Company and outstanding securities;
or (C) the shareholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.

               (iv)   For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.

     7. Compensation upon Termination.

          (a) Termination for Cause or Resignation Without Good Reason. If (i)
the Executive's employment shall be terminated for Cause, or (ii) the Executive
voluntarily resigns from the employ of the Company and Good Reason shall not
have occurred, then the Company shall pay the Executive his Base Salary through
the date of delivery to him of a Notice of 


                                      -3-

   4
Termination at the rate then in effect at the time and date the Notice of
Termination is delivered, and the Company shall have no further obligations to
the Executive under this Agreement.

          (b) Termination Without Cause or Resignation for Good Reason. If the
Company shall terminate the Executive's employment other than pursuant to
Section 6(a) hereof (it being understood that a purported termination pursuant
to Section 6(a) hereof, which is disputed and finally determined not to have
been pursuant to Section 6(a) shall be a termination by the Executive pursuant
to Section 6(b)) or if the Executive terminates his employment for Good Reason,
then:

               (i)    the Company shall pay to the Executive, upon his 
termination, his Base Salary through the date of termination at the rate in
effect at the time Notice of Termination is delivered, together the Executive's
pro-rata bonus under Section 5(b) hereof; and

               (ii)   in lieu of any further salary or bonus payments to the 
Executive for periods subsequent to the date of termination, the Company shall
pay, as severance pay to the Executive, an amount equal to one hundred percent
(100%) of the Executive's Base Salary in effect as of the date of termination,
payable monthly in twelve (12) equal installments after termination of
employment.

          (c) Termination Upon a Change in Control. If there is a Change in
Control of the Company or there has been a public announcement of a Change in
Control of the Company (provided, however, that consummation of the Change in
Control of the Company shall be a condition precedent to the effectiveness of
this provision) and at any time thereafter the employment of the Executive under
this Agreement is terminated other than pursuant to Section 6(a) hereof by the
Company or a successor entity or is terminated with Good Reason by the
Executive, then:

               (i)    the Company shall pay to the Executive, upon his 
termination, his Base Salary through the date of termination at the rate in
effect at the time Notice of Termination is given together with pro-rata bonus;
and

               (ii)   in lieu of any further salary or bonus payments to the 
Executive for periods subsequent to the date of termination, the Company shall
pay on the date of termination, as severance pay to the Executive, a lump sum
payment in an amount equal to one hundred fifty percent (150%) of the
Executive's Base Salary in effect as of the date of termination.

          (d) Continuation of Benefit Plans. Upon any termination of the
Executive's employment, other than pursuant to Section 6(a) hereof or by the
Executive without Good Reason, the Company shall maintain in full force and
effect for the continued benefit of the Executive for twelve (12) months, or
eighteen (18) months if there has previously occurred a Change in Control of the
Company, all employee benefit plans and programs in which the Executive was
entitled to participate.

          (e) Participation in Benefit Plans after Termination of Employment.
The Executive shall be entitled to continue to participate in any benefit plan
or program of the


                                      -4-

   5
Company for twelve (12) months after the expiration of the period provided for
in Section 7(d), provided, that the Executive pays the direct cost of any such
benefit plan or program.

     8. Successors; Binding Agreement.

          (a) Successors. The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 8 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law.

          (b) Binding Agreement. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts would still be payable to him hereunder if he had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such designee, to the Executive's estate.

     9. Notice.  For the purposes of this Agreement, notices, demands and all 
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or (unless otherwise specified)
mailed by United States registered mail, return receipt requested, postage
prepaid, addressed, if to the Executive, to his address as it appears in the
records of the Company, or if to the Company, as follows:

                               VarsityBooks.com Inc.
                               1050 Thomas Jefferson Street, NW
                               Suite 525
                               Washington, DC  20007

or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

     10. Prior Agreement.  All prior agreements between the Company and the 
Executive with respect to the employment of the Executive including, without
limitation, the Key Employee Agreement dated July 27, 1998 are hereby
superseded and terminated effective as of the date hereof and shall be without
further force or effect.

     11. Counsel Fees.  In the event that (i) the Company terminates, or seeks 
to terminate, this Agreement, alleging as justification for such termination a
material breach by Executive or a Cause, or Causes, set out in Section 6 hereof;
Executive disputes such termination or attempted termination; and Executive
prevails, or (ii) Executive elects to terminate his service hereunder pursuant
to Section 6 of this Agreement; the Company disputes its obligation to pay to
Executive his Base Salary or Annual Bonus as provided in Section 5; and
Executive prevails; the Company


                                      -5-

   6
shall pay, or reimburse to Executive, all reasonable costs incurred by him in
such dispute, including attorneys' fees and costs.

     12. Miscellaneous.  No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and duly authorized officer of the Company. No
waiver by either party hereto at any time of any breach by the other hereto of,
or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the District of
Columbia

     13. Validity.  The invalidity or unenforceability of any provision or 
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.


                                      -6-

   7
     IN WITNESS WHEREOF, the parties have executed this Agreement effective as 
of the date and year first above written.

                                    VARSITYBOOKS.COM INC.



                                    By: /s/ VarsityBooks.com Inc.
                                       -----------------------------------------



                                    EXECUTIVE:


                                    /s/ Eric J. Kuhn
                                    --------------------------------------------
                                    Eric J. Kuhn



                                      -7-