{"id":42638,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/operating-agreement-varsitybooks-com-inc-and-baker-amp.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"operating-agreement-varsitybooks-com-inc-and-baker-amp","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/operations\/operating-agreement-varsitybooks-com-inc-and-baker-amp.html","title":{"rendered":"Operating Agreement – VarsityBooks.com Inc. and Baker & Taylor Inc."},"content":{"rendered":"
\n                              OPERATING AGREEMENT\n\n     THIS OPERATING AGREEMENT (this \"Agreement\"), effective as of October 1,\n1999 (the \"Effective Date\"), is made by and between VARSITYBOOKS.COM INC., a\nDelaware corporation, and its permitted successors and assigns (the \"Company\"),\nand BAKER & TAYLOR, INC., a Delaware corporation (\"B&T\") and its permitted\nsuccessors and assigns.\n\n                              W I T N E S S E T H:\n\n     WHEREAS, the Company has established an Internet site and operates as an\nInternet supplier of textbooks (\"Textbooks\") to students at private high\nschools that require their students to purchase their textbooks, students at\ncolleges and universities and students in distance learning programs located in\nthe United States (the \"Market\");\n\n     WHEREAS, B&T is engaged in the business of acting as a distributor for a\nrange of information and entertainment products, including books that are\ndistributed by B&T to bookstores, schools, and public and university libraries\nworldwide;\n\n     WHEREAS, the Company and B&T are parties to that certain Equity Investment\nand Operating Agreement dated July 10, 1998 (the \"Original Investment\nAgreement\") as amended by the First Amendment to Equity Investment and\nOperating Agreement and License Agreement by and between the Company and B&T\ndated October 9, 1998 (the \"First Amendment\").  The Original Investment\nAgreement as amended by the First Amendment thereto shall be known as the\n\"Investment Agreements\";\n\n     WHEREAS, the Company and B&T have executed the Investment Agreements and\ndesire to further amend and restate certain provisions thereof as set forth\nherein;\n\n     WHEREAS, the Company and B&T also are parties to that certain Amended and\nRestated Drop Ship Agreement of even date herewith, attached hereto as Exhibit\nA (the \"Drop Ship Agreement\");\n\n     WHEREAS, the Company and B&T also are parties to that certain Amended and\nRestated Database License Agreement of even date herewith, attached hereto as\nExhibit B (the \"License Agreement\"),\n\n     WHEREAS, the Company and B&T also are parties to that certain Promotional\nand Customer Services Agreement of even date herewith attached hereto as\nExhibit C (the \"Promotional Agreement\", together with the License Agreement and\nthe Drop Ship Agreement, the \"Related Agreements\"); and\n\n     WHEREAS, B&T has transferred all of its rights and interests as a holder\nof equity and equity interests in the Company in a non-cash transfer to its\nstockholders and such interests are held by B&T Enterprises, L.L.C., a Delaware\nlimited liability company (\"B&T Enterprises\").\n\n   2\n     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants\ncontained in this Agreement, the parties, intending to be legally bound, agree\nas follows:\n\n                                   ARTICLE 1\n                              SERVICE OBLIGATIONS\n\n     Section 1.1          Inventory.\n\n         (a)         The Company will provide B&T with a written estimate of\n    titles and estimated quantities of Textbooks required (the \"Textbook\n    Request\") on or about April 15th and October 15th of each year (or such\n    other dates as the Company and B&T shall mutually agree to by written\n    consent) for the next following semester (each, a \"Request Date\"). Fifteen\n    business days after receiving the Textbook Request, B&T will provide the\n    Company with a written report indicating title availability, current\n    publisher, suggested list price, if any, and the prices B&T will charge the\n    Company for such titles. Prices are subject to change upon notice to the\n    Company by B&T delivered in accordance with Section 5.7.  The Company and\n    B&T shall negotiate in good faith on the quantities presented in the\n    Textbook Request and the number agreed shall be the \"Inventory Amount\".\n\n         (b)         The Company may submit additional requests after the\n    applicable Request Date (the \"Additional Requests\"). B&T will use\n    commercially reasonable efforts to obtain the titles in the Additional\n    Requests and to fulfill such requests within the time requested by the\n    Company. Failure by B&T to obtain the items requested pursuant to the\n    Additional Request shall in no way be deemed to be a default under this\n    Agreement.\n\n         (c)         Subject to the availability of Textbooks requested by the\n    Company, B&T will use commercially reasonable efforts to stock the titles\n    requested (the \"Inventory\") in quantities reasonably sufficient to support\n    the Company's projected sales to the Market.  B&T will use reasonable\n    efforts to maintain adequate inventory of Textbooks to meet the reasonable\n    forecasted demand of the Company's Market.  B&T will use commercially\n    reasonable efforts to provide the Company with hourly updates, subject to\n    technical specifications, of the Inventory status of titles so that the\n    Company's customers may be apprised of available books prior to ordering;\n    provided that if, at any time, B&T becomes able to deliver such information\n    to the Company in real-time on a commercially reasonable basis (as mutually\n    determined by the Company and B&T), B&T agrees to provide that information\n    to the Company upon mutually agreeable terms and conditions.\n\n     Section 1.2          B&T Fulfillment Services.  Subject to B&T's continued\nperformance under this Agreement, the Company agrees to use B&T as its\nprincipal supplier of Textbooks and fulfillment services for its Textbooks that\nare drop-shipped to the Company's Market. B&T and the Company have entered into\nthe Drop Ship Agreement that sets forth the terms under which such drop ship\nservice shall be performed.  B&T reserves the right to not stock or supply\ntitles (\"Rejected Titles\")\n\n   3\ncontained in the Textbook Request, which in the opinion of B&T, are not\neconomically feasible to carry in its inventory, subject to the terms and scope\nof the letter agreement between the parties dated June 1, 1999, a copy of which\nis attached hereto as Exhibit D.  The Company may use other sources of supply\nfor such Rejected Titles that B&T does not stock or supply. Notwithstanding\nanything contained herein to the contrary, the Company agrees that it shall not\nuse any other supplier (\"Other Supplier\") of Textbooks (other than with respect\nto the Rejected Titles), by drop ship service, without giving B&T the right of\nfirst refusal to supply the Textbooks proposed to be supplied by the Other\nSupplier on substantially the same terms and conditions proposed by the Other\nSupplier.\n\n     Section 1.3          Material Changes.  If the Company materially changes\nits method of sourcing Textbooks to the detriment of B&T or if B&T's ability to\nsource Textbooks materially changes to the detriment of the Company, then the\nparties reserve the right to re-negotiate the terms of this Agreement and the\nRelated Agreements.\n\n     Section 1.4          Pricing.  B&T and the Company shall determine the\nprices at which B&T will sell Textbooks to the Company in accordance with\nSchedule 1.4 attached hereto.  The parties by mutual written agreement may\nupdate Schedule 1.4 from time to time in accordance with Section 5.9 of this\nAgreement.\n\n     Section 1.5          Limited Exclusive.\n\n         (a)         Until March 8, 2001 (the \"Initial Period\"), and during any\n    Renewal Period (as defined below), B&T agrees that it will not provide drop\n    ship services to a Competitor of the Company.  A \"Competitor\" shall be\n    defined as a person or entity that, in the reasonable opinion of the Board\n    of Directors of the Company, has as its principal business activities, the\n    sale of textbooks at discounted prices, via the Internet to the Company's\n    Market.  Notwithstanding the foregoing, this Limited Exclusive shall not\n    apply to, and shall not limit B&T's ability to drop ship to companies\n    (\"Excluded Companies\"), or their customers, whose principal business\n    activity is the sale of books, goods or services of professional\n    disciplines (including, without limitation, legal, business and medical,\n    even if such items, including textbooks, are shipped to the Company's\n    Customers).  B&T may sell, through its drop ship services, to retailers\n    (other than to the Company's Competitors) engaged in the sale of books and\n    textbooks via the Internet and to customers of B&T as of July 10, 1998 (the\n    \"Existing Customers\") even though such Existing Customers may now or in the\n    future be considered a Competitor of the Company.  B&T will continue to\n    offer this Limited Exclusive to the Company, and the Company shall continue\n    to use B&T as its principal supplier of Textbooks as set forth herein,\n    provided that the parties mutually agree in writing as to the Inventory\n    Amount for a semester.  If the parties so agree, the terms contained in\n    this Section 1.5(a) shall be extended to cover a period that is six months\n    from the date of such determination (a \"Renewal Period\").  If the parties\n    fail to agree upon the Inventory Amount for a particular semester, the\n    terms of this Section 1.5(a) shall automatically expire at the end of the\n    later of the Initial Period or any Renewal Period.  This Section 1.5(a)\n    describes the Company's \"Limited Exclusive.\"\n\n   4\n         (b)         The expiration or termination of the Limited Exclusive\n    shall not terminate or affect any other agreement or obligations between\n    the parties.\n\n         (c)         B&T covenants with the Company that in the event that B&T\n    offers its drop ship services to Excluded Companies that B&T will not\n    exclude the Company from services it may provide to any such Excluded\n    Companies.\n\n                                   ARTICLE 2\n                                CONFIDENTIALITY.\n\n     Section 2.1          The parties acknowledge that each may be exposed to\nconfidential information and trade secrets relating to the other party's\nbusiness under this Agreement, including, but not limited to, the terms of this\nAgreement, quantities of products, dollar volumes, revenues of products,\nwholesale prices and similar information.  The parties agree that, during the\nterm of this Agreement, and for a period of two (2) years after the Termination\nDate (as defined below), neither party will disclose to any third party any\nconfidential information without the prior written consent of the other party,\nexcept to employees, agents, auditors, contractors, directors and similar\nentities as long as such third parties agree to be bound by the confidentiality\nprovisions hereof. Except as expressly provided herein, neither party will use,\ndisclose or transfer the trade secrets of the other party so long as such\ninformation constitutes a trade secret under applicable law.  The\nconfidentiality obligations between the parties will not apply to any\ninformation (a) which is in the public domain or which becomes part of the\npublic domain through no fault of the receiving party; (b) which is known to\nthe receiving party prior to the disclosure thereof by the disclosing party (as\nestablished by documentary evidence); (c) which is lawfully received by the\nreceiving party from a third party who provided such information without breach\nof any separate confidentiality obligation owed to the disclosing party; or (d)\nwhich is independently developed by personnel having no access to the\ndisclosing party's confidential information (as established by documentary\nevidence).  Notwithstanding the foregoing, the parties agree that either party\nmay describe the terms, and include a copy, of this Agreement and the exhibits\nhereto in any filing under the Securities Act of 1933, as amended, or the\nSecurities Exchange Act of 1934, as amended.\n\n                                   ARTICLE 3\n                            LIMITATION OF WARRANTIES\n\n     Section 3.1          NOTWITHSTANDING ANYTHING CONTAINED HEREIN OR IN ANY\nRELATED DOCUMENT, NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY HEREUNDER FOR\nANY INDIRECT, CONSEQUENTIAL, PUNITIVE OR INCIDENTAL DAMAGES ARISING OUT OF THIS\nAGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH\nDAMAGES.\n\n     Section 3.2          The provisions of this Article 3 shall survive the\ntermination or expiration of this Agreement.\n\n   5\n                                   ARTICLE 4\n                              FINANCIAL STATEMENTS\n\n     Section 4.1          The Company agrees to furnish its quarterly financial\nstatements to B&T within 45 days of the end of each of its first three fiscal\nquarters each year and to furnish its annual financial statements to B&T within\n90 days of the end of each fiscal year.\n\n                                   ARTICLE 5\n                                 MISCELLANEOUS\n\n     Section 5.1          Entire Agreement.  This Agreement, including the\nexhibits and schedules attached hereto, amends and replaces Sections 1.2, 5.1\nand 6.3 through 6.15 of the Investment Agreements, and constitutes the sole and\nentire agreement of the parties with respect to the subject matter hereof.\nExcept as amended hereby, the terms, provisions, conditions and agreements of\nthe Investment Agreements are hereby ratified and confirmed and shall remain in\nfull force and effect.  Section 6.2 of the Original Investment Agreement\nrelated to arbitration is incorporated herein by this reference.\n\n     Section 5.2          Publicity.  All general notices, releases, statements\nand communications to employees, suppliers, distributors and customers of a\nparty and to the general public and the press relating to the transactions\ncovered by this Agreement or the Related Agreements shall be made by such party\nhereto only at such times and in such manner as may be mutually agreed upon by\nthe Company and B&T, except as may be required by any applicable law and\nregulation.  Either party may describe the terms, and include a copy, of this\nAgreement and the exhibits hereto in any filing under the Securities Act of\n1933, as amended, or the Securities Exchange Act of 1934, as amended.\n\n     Section 5.3          Expenses. Each party hereto shall be solely\nresponsible for its respective expenses in connection with the negotiation,\npreparation and performance of this Agreement (including, without limitation,\nall legal and accounting expenses).\n\n     Section 5.4          Parties in Interest.  All obligations and agreements\ncontained in this Agreement by or on behalf of any of the parties hereto shall\nbind and inure to the benefit of the respective successors and permitted\nassigns of the parties hereto, whether so expressed or not.  Except as\notherwise expressly provided herein, nothing in this Agreement is intended to\nconfer upon any other person or entity any rights or remedies hereunder.\n\n     Section 5.5          Further Assurances.  B&T affirms the Limited\nExclusive granted to the Company pursuant to the Original Investment Agreement\nand offers the further assurances set forth in Schedule 5.5 attached hereto.\n\n     Section 5.6          Condition Precedent. The Company shall have delivered\nto B&T Enterprises the outstanding Warrants due to B&T pursuant to the Series B\nPreferred Stock notes and offering.\n\n   6\n     Section 5.7          Notices.  All notices, requests, consents, and other\ncommunications hereunder shall be in writing and shall be deemed effectively\ngiven and received upon delivery in person, or one business day after delivery\nby national overnight courier service or by telecopier transmission with\nacknowledgment of transmission receipt, or three business days after deposit\nvia certified or registered mail, return receipt requested, in each case\naddressed as follows:\n\n         (a)     if to the Company:        VarsityBooks.com Inc.\n                                           1050 Thomas Jefferson Street, N.W.\n                                           Suite 525\n                                           Washington, D.C. 20007\n                                           Attention: Mr. Eric J. Kuhn\n                                           Telephone: (202) 667-3400\n\n                 with a copy to:           Shaw Pittman\n                                           1676 International Drive\n                                           14th Floor\n                                           McLean, Virginia  22102-4835\n                                           Attention: Andrew M. Tucker\n                                           Telephone: (703) 790-7900\n                                           Fax:       (703) 790-7901\n\n         (b)     if to B&T:                Baker & Taylor, Inc.\n                                           Five LakePointe Plaza\n                                           Suite 500\n                                           2709 Water Ridge Parkway\n                                           Charlotte, North Carolina 28217\n                                           Attention: James S. Ulsamer, \n                                                      Executive Vice President\n                                           Fax:  (704) 329-9105\n\n                 with copy to:             Dow, Lohnes & Albertson, PLLC\n                                           1200 New Hampshire Avenue, N.W.\n                                           Suite 800\n                                           Washington, DC 20036-6802\n                                           Attention:  Bradley Jacobsen\n                                           Telephone: (202) 776-2234\n                                           Fax: (202) 776-2222\n\n     or, in any such case, at such other address or addresses as shall have\nbeen furnished in writing by such party to the others.\n\n     Section 5.8          Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY\nAND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT\nREGARD TO THAT STATE'S PROVISIONS OF CONFLICT OF LAWS.\n\n   7\n     Section 5.9          Counterparts.  This Agreement may be executed in one\nor more counterparts by facsimile or original signature, each of which shall be\ndeemed an original, but all of which together shall constitute one and the same\ninstrument.\n\n     Section 5.10         No Waivers;  Amendments.  No failure or delay on the\npart of any party in exercising any right, power or remedy hereunder shall\noperate as a waiver thereof, nor shall any single or partial exercise of any\nsuch right, power or remedy preclude any other or further exercise thereof or\nthe exercise of any other right, power or remedy. The remedies provided for\nherein are cumulative and are not exclusive of any remedies that may be\navailable to any party at law or in equity or otherwise.  Any provision of this\nAgreement may be amended or waived if, but only if, such amendment or waiver is\nin writing and is signed by the Company and B&T.\n\n     Section 5.11         Severability.  If any provision of this Agreement\nshall be declared void or unenforceable by a judicial or administrative\nauthority, the validity of any other provision and of the entire Agreement\nshall not be affected thereby.\n\n     Section 5.12         Gender.  All pronouns and all variations thereof\nshall be deemed to refer to the masculine, feminine or neuter, singular or\nplural, as the identity of the person or persons, thing or entity may require.\n\n     Section 5.13         Headings.  The section headings contained in this\nAgreement are for reference purposes only and shall not affect in any way the\nmeaning or interpretation of this Agreement.\n\n     Section 5.14         Termination. Except as provided in Section 1.5(a),\nthis Agreement shall expire on October 1, 2002; provided that this Agreement\nshall be automatically extended for an additional year if either party shall\nnot have provided the other party with 180 days written notice of its intention\nto allow this Agreement to expire.  The earlier to occur of October 1, 2002 or\nthe expiration of this Agreement as described in the foregoing sentence shall\nbe referred to as the \"Termination Date\". In addition, either the Company or\nB&T may terminate this Agreement upon 30 days written notice in the event that\nthe other party (the \"Defaulting Party\") materially defaults under this\nAgreement (an \"Event of Default\") and such Defaulting Party has not cured such\nEvent of Default within 30 days.  The written notice shall specify in\nreasonable detail the facts supporting the declaration of an Event of Default.\n\n                  [remainder of page intentionally left blank]\n\n   8\n\n     Section 5.15      Assignment. Neither party hereto shall assign its rights\nor obligations hereunder without the prior written consent of the other party\nhereto, which consent shall not be unreasonably withheld or delayed; provided,\nhowever, that the Company may assign its rights and obligations hereunder and\nunder the Related Agreements to CollegeOps LLC, a Delaware limited liability\ncompany and wholly-owned subsidiary of the Company.  Unless otherwise provided\nin a writing signed by the Company and B&T, such assignment shall not relieve\nthe Company of any of its obligations hereunder or under the Related Agreements.\n\n\n     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day\nand year first above written.\n\n\n The Company:                                    B&T:\n VARSITYBOOKS.COM INC.                           BAKER & TAYLOR, INC.\n\n\n By: \/s\/ Eric J. Kuhn                            By: \/s\/ James S. Ulsamer\n    ----------------------------                    ----------------------------\n Name:  Eric J. Kuhn                             Name: James S. Ulsamer\n Title:  Chief Executive Officer                 Title: Executive Vice President\n\n\n\n                     SIGNATURE PAGE TO OPERATING AGREEMENT\n\n\n\n\nEX-10.4\n\n11\n\nDATABASE LICENSE AGREEMENT\n\n\n\n   1\n                                                                    EXHIBIT 10.4\n\n\n                              AMENDED AND RESTATED\n                           DATABASE LICENSE AGREEMENT\n                              (IN-HOUSE\/INTERNET)\n\n     THIS AMENDED AND RESTATED DATABASE LICENSE AGREEMENT (this \"Agreement\") is\neffective this 1st day of October, 1999 (the \"Effective Date\") by and between\nVARSITYBOOKS.COM INC. (f\/k\/a The Textbook Club, Inc.), a Delaware corporation\n(\"Retailer\"), and BAKER & TAYLOR, INC., a Delaware corporation (\"B&T\"). This\nAgreement amends, restates and supersedes in its entirety that certain Database\nLicense Agreement by and between the parties dated July 10, 1998 (the \"Prior\nAgreement\").\n\n                              W I T N E S S E T H:\n\n     WHEREAS, B&T and Retailer had entered into the Prior Agreement; and\n\n     WHEREAS, the parties desire to amend and restate the Prior Agreement as set\nforth below;\n\n     ACCORDINGLY, in consideration of the covenants, promises and undertakings\nprovided for herein and for other valuable consideration, the receipt and legal\nsufficiency of which the parties acknowledge, the parties agree as follows:\n\n     1.0         DEFINITIONS \n\n     As used throughout this Agreement the following terms have the following\nmeanings:\n\n     1.01        \"CD-EXPORT\" means B&T's specialized software application which\nallows Retailer to search the Database without using any other application\nscreen interfaces.\n\n     1.02        \"Database\" means B&T's complete title file database containing\nthe bibliographic records consisting of, among other things, the Licensed Data\nor any portion thereof, as the same from time to time may be modified by B&T\nduring the Term of this Agreement (hereinafter defined), for books and spoken\nword audio products (sometimes hereinafter collectively referred to as \"Books\nproducts\").\n\n     1.03        \"Licensed Data\" means (a) the data elements in electronic\ndatabase form which are more particularly set forth on Schedule 1.03 attached\nhereto and made a part hereof, for each title on the Database, (b) any updates\nprovided by B&T to such data elements from time to time, and (c) such other\ndata elements as B&T at its sole discretion from time to time hereafter may\nagree to add without further consideration by Retailer.\n\n     1.04        \"Operating Agreement\" means that that certain Equity\nInvestment and Operating Agreement dated July 10, 1998, as amended by the First\nAmendment to Equity Investment and Operating Agreement and License Agreement by\nand between Retailer and B&T dated October 9, 1998 and as further amended by\nthat certain Operating Agreement of even date herewith.\n\n\n\n   2\n     2.0         LICENSE\n\n     2.01        Subject to the terms and conditions of this Agreement and\nextent of the license which Retailer is granted hereby, and based upon B&T's\nreceipt of its license fee payments then currently due, B&T hereby grants to\nRetailer and Retailer hereby accepts from B&T a non-exclusive, nontransferable\n(except as provided in Section 9.5 below) license:\n\n     (a)         to display all or a portion of the Licensed Data on Retailer's\nInternet web site for viewing by users in \"read only\" access;\n\n     (b)         to use CD-EXPORT solely for the purpose of utilizing the\nLicensed Data or any portion thereof at Retailer's Internet web site; and\n\n     (c)         to display all or a portion of the Licensed Data on Retailer's\nin-house database system at any of Retailer's locations for viewing by users at\nsuch location(s).\n\nThe foregoing license grant shall be irrevocable as long as B&T retains an\nequity investment in Retailer pursuant to the Operating Agreement between the\nparties of even date herewith, and further provided that an Event of Default\nunder this Agreement has not occurred.  Retailer will not make all or any\nportion of the Database, the Licensed Data and\/or CD-EXPORT accessible to any\npersons other than persons specifically authorized by Retailer for the purposes\nabove.  Retailer will use its best efforts to take all reasonable steps to\nprevent or restrict the downloading, transmission, display or copying of the\ninformation contained on all or any portion of the Database and\/or the Licensed\nData to a degree which is not necessary for purposes of ordering or processing\norders for the products listed thereon.  Such steps may include, but will not\nbe limited to, the following, the use of passwords, encryption\/de-encryption\nalgorithms used in the security process and similar tools.  The license granted\nhereby is personal to the Retailer.  Retailer may use the license solely for\nthe purposes specified above.  Nothing contained in this Agreement will, or\nwill be deemed to, convey any title or ownership interest in all or any portion\nof the Database, the Licensed Data and\/or CD-EXPORT regardless of whether any\nportion thereof is used by Retailer or other users.\n\n     2.02        B&T reserves all rights with respect to all or any portion of\nthe Database, the Licensed Data and\/or CD-EXPORT not expressly granted to\nRetailer, nor expressly contemplated, herein.  This reservation specifically\napplies, but is not limited, to any media, mode or method of distribution or\ntransmission or other technology that may be commercialized or developed in the\nfuture.\n\n     3.0         TERM\n\n     3.01        (a)      Subject to the terms and conditions hereof, this\nAgreement will be effective for a period (the \"Term\") beginning on the\nEffective Date and ending upon the earlier of the date of termination of the\nOperating Agreement.\n\n     (b)         Despite the statements in the preceding clause (a) of this\nSection 3.01, Retailer may terminate this Agreement for any reason whatsoever\nduring the Term by giving notice to B&T not less than thirty (30) days prior to\nthe date on which Retailer wishes to terminate this\n\n\n                                       2\n\n   3\nAgreement.  In such an event, this Agreement automatically will terminate on\nthe date set forth in Retailer's notice as if it were the Termination Date.  If\nRetailer wishes to terminate this Agreement pursuant to this clause (b), none\nof the annual licensee fees payable with respect to the period of time after\nwhich this Agreement is terminated will be refunded to Retailer.\n\n     3.02        Immediately upon termination of this Agreement, whether or not\npursuant to this Article, the following will occur:\n\n     (a)         all rights and licenses granted to Retailer hereunder\nautomatically will terminate;\n\n     (b)         Retailer promptly will permanently delete all or any portion\nof the Database, the Licensed Data and\/or CD-EXPORT and any copies thereof from\nall computers, all database and other systems and\/or any storage medium of\nRetailer in any location, whether backup or otherwise (including persons and\/or\nentities within Retailer's direct control, such as non-Internet users having\naccess by, through or under Retailer);\n\n     (c)         Retailer will not use, or permit any user having access by,\nthrough or under Retailer to use, all or any portion of the Database, the\nLicensed Data and\/or CD-EXPORT in any way; and\n\n     (d)         Retailer will return all Database, Licensed Data and\/or\nCD-EXPORT media received from B&T, together with any copies made from the same.\nFor a period of not less than ten (10) consecutive days immediately following\nthe date on which this Agreement terminates, Retailer will post the following\nnotice at Retailer's Internet web site so that it is visible by all users\nthereof: \"Effective immediately, [insert Retailer's then current trade name\nused on its web site] will no longer be using Baker & Taylor, Inc.'s database\nof books and spoken word audio products at this web site.\" Retailer will\ncertify in writing that the terms contained in the preceding clauses (a)-(d)\nhave been complied with.\n\n     4.0         THE PARTIES' OBLIGATIONS\n\n     4.01        Retailer will:\n\n     (a)         pay B&T according to the terms of this Agreement;\n\n     (b)         not directly or indirectly duplicate, copy, transmit, publish,\nprovide access to (by electronic or any other means) exchange, throw away, or\nincorporate with, or as part of another database, package, program, record or\nsystem, all or any portion of the Database, the Licensed Data and\/or CD-EXPORT\nfor any purpose except as provided in Section 2.01 of this Agreement;\n\n     (c)         use its best efforts to take all reasonably necessary steps to\nensure compliance with Retailer's obligations under this Agreement by users of\nits Internet web site and its employees, agents, representatives and customers.\nSuch best efforts will include, but not be limited to, taking such steps as\ndirected pursuant to this Agreement and pursuant to any instruction made by B&T\nat any time during the effective period and after termination of this\nAgreement;\n\n\n                                       3\n\n   4\n     (d)         except to display the same as expressly provided herein at\nRetailer's Internet web site and\/or on Retailer's in-house database system at a\nsingle location for viewing by users at such location, not sell, offer for\nre-sale, distribute, rent, sublicense or lease all or any portion of the\nDatabase, the Licensed Data and\/or CD-EXPORT, nor use all or any portion of the\nDatabase, the Licensed Data and\/or CD-EXPORT in an external network (i.e., a\nnetwork accessible to third parties) timesharing or service bureau arrangement,\nor other third-party multi-user arrangement;\n\n     (e)         not combine or incorporate all or any portion of the Database,\nthe Licensed Data and\/or CD-EXPORT with any other program, database, record or\nsystem which will be sold, offered for re-sale, distributed, rented,\nsublicensed or leased;\n\n     (f)         not utilize all or any portion of the Database and\/or the\nLicensed Data in connection with any sales by Retailer, by any partner or\naffiliate of Retailer or by any enterprise or entity in which Retailer has any\ninterest, except for sales to retail consumers;\n\n     (g)         pay all sales, use, value-added, excise or similar taxes\nassociated with Retailer's or its users' use of all or any portion of the\nDatabase, the Licensed Data and\/or CD-EXPORT;\n\n     (h)         reproduce, incorporate and maintain each and every B&T\nproprietary, trade secret or copyright notice in any copy or partial copy of\nall or any portion of the Database, the Licensed Data and\/or CD-EXPORT or in\nany database containing any element of the Database and\/or the Licensed Data,\nand not remove or obscure any B&T proprietary, trade secret or copyright notice\nor other legend with respect to all or any portion of the Database, the\nLicensed Data and\/or CD-EXPORT;\n\n     (i)         comply with all laws and regulations relating to or pertaining\nto the sale, distribution, export or use of all or any portion of the Database,\nthe Licensed Data and\/or CD-EXPORT and maintain high quality and standards\nassociated with B&T;\n\n     (j)         promptly notify B&T in writing if Retailer becomes aware of\nthe unauthorized reproduction, manufacture or sale of, or of any acts that are\nprohibited in this section with respect to, all or any portion of the Database,\nthe Licensed Data and\/or CD-EXPORT by anyone having access to the Licensed Data\nor any portion thereof by means of Retailer's Internet web site or Retailer's\nin-house database system.\n\n         4.02    B&T will deliver CD-EXPORT to Retailer contemporaneously with\nthe software which contains the Database and any updates to the Database so\nthat Retailer may access the Licensed Data from the Database.\n\n     5.0         DEFAULT AND REMEDIES\n\n     5.01        The following will be an Event of Default: Either party's\nfailure to perform any of its obligations, or failure to comply with any of its\nagreements, hereunder which failure is not cured within thirty (30) days (or\nwithin ten (10) days if such failure on the part of Retailer and relates to\nRetailer's use of all or any portion of the Licensed Data and\/or CD EXPORT in a\nmanner or form not expressly authorized by this Agreement) after notice from\nthe other party.\n\n\n                                       4\n\n   5\n     5.02        If an Event of Default occurs, B&T will have all rights and\nremedies available to it under applicable law or in equity.  In addition to\nsuch rights and remedies, B&T also may:\n\n     (a)         declare this Agreement and the license granted herein\nimmediately terminated;\n\n     (b)         sue Retailer for the fulfillment of its obligations under this\nAgreement; and\/or\n\n     (c)         seek an injunction against Retailer to compel Retailer to\ncomply with the terms of this Agreement and\/or to cease activities which\nconstitute a default of Retailer's obligations hereunder.\n\n     In addition to B&T's rights set forth above in subsections (a)-(c),\nRetailer also will cease use and\/or display of all or any portion of the\nLicensed Data within 36 hours after receipt of B&T's notice that an event of\nDefault has occurred.\n\n     5.03        If an Event of Default occurs in which Retailer is either\nusing, or providing access to, all or any portion of the Database, the Licensed\nData and\/or the CD-EXPORT, in breach of the terms of this Agreement then, in\naddition to any other remedies which B&T may seek hereunder, Retailer will be\nobligated to promptly pay B&T, as and for liquidated damages, an amount equal\nto the product of $10,000 and each day in which such Event of Default remains\nunremedied.  For the purposes of calculating liquidated damages under this\nSection 5.03, a portion of a day will constitute a full day.\n\n     6.0         NO WARRANTY\n\n     6.01        THE DATABASE, THE LICENSED DATA OR ANY PORTION THEREOF AND\/OR\nCD-EXPORT ARE PROVIDED \"AS IS\" WITHOUT WARRANTY, EXPRESS OR IMPLIED, OF ANY\nKIND.  EXPRESSLY EXCLUDED ARE ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR\nA PARTICULAR PURPOSE.  Retailer will advise all users that B&T makes no\nwarranties with respect to the Database, the Licensed Data or any portion\nthereof and\/or CD- EXPORT.\n\n     6.02        NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY B&T, ITS\nAGENTS OR EMPLOYEES WILL CREATE A WARRANTY AND LICENSEE MAY NOT RELY ON ANY\nSUCH INFORMATION OR ADVICE.\n\n     6.03        B&T's sole liability and Retailer's exclusive remedy with\nrespect to a defect in the medium on which the Database and\/or the Licensed\nData is delivered to Retailer will be replacement of such medium, as long as\nthe defective medium is returned to B&T with a copy of the receipt which\naccompanied delivery of the medium to Retailer.  If failure of the medium\nresults from accident, abuse or misapplication, B&T will have no responsibility\nto replace the medium.\n\n\n                                       5\n\n   6\n     7.0         INDEMNIFICATION\n\n     7.01        A long as Retailer promptly notifies B&T in writing of such a\nclaim, B&T at its own expense will defend any action brought and pay any final\njudgement against Retailer to the extent that such action is based on a claim\nthat all or any portion of the Database, the Licensed Data and\/or CD-EXPORT\ninfringes any copyright or subscription rights in existence as of the effective\ndate of this Agreement.  B&T will have the right to control the defense of all\nsuch claims, lawsuits or proceedings without Retailer's prior written approval.\nIf, because of any claim of infringement against any copyright or subscription\nright which is based on a claim that all or any portion of the Database, the\nLicensed Data and\/or CD-EXPORT infringes any copyright or subscription rights,\neither B&T or Retailer is enjoined from using all or any portion of the\nDatabase, the Licensed Data and\/or CD- EXPORT, or if B&T believes that all or\nany portion of the Database, the Licensed Data and\/or CD-EXPORT is likely to\nbecome the subject of such a claim of infringement, B&T may, at its sole option\nand expense, may do the following: (a) obtain the right for Retailer to\ncontinue to use the Database, the Licensed Data or any portion thereof and\/or\nCD-EXPORT; or (b) replace or modify all or any portion of the Database, the\nLicensed Data and\/or CD-EXPORT so as to make it non-infringing.  If neither of\nthese two options is reasonably practicable, B&T may terminate this Agreement\nby written notice to Retailer.  The foregoing states the entire liability of\nB&T with respect to infringement of any copyright or subscription rights by the\nDatabase or the Licensed Data.\n\n     7.02        The indemnity set forth in Section 7.01 will not extend to any\nclaims of infringement resulting from (i) modification of all or any portion of\nthe Database, the Licensed Data and\/or CD- EXPORT by Retailer or any user\nhaving access to the same, (ii) modification of all or any portion of the\nLicensed Data and\/or CD- EXPORT by, through or under Retailer, (iii) the use of\nall or any portion of the Database, the Licensed Data and\/or CD-EXPORT in\ncombination with any other software, hardware or server, if such infringement\nwould have been avoided without the use of such software, hardware or server or\n(iv) the use of the same by Retailer or any user in a manner for which all or\nany portion of the Database, the Licensed Data and\/or CD-EXPORT are not\ndesigned, or from any product which incorporates any of the modifications noted\nabove.\n\n     7.03        Retailer will indemnify and hold harmless B&T, its officers,\nemployees and directors from any loss, liability, damage, cost or expense,\nincluding reasonable attorneys' fees and expenses, arising out of (a)\nRetailer's breach of its obligations under this Agreement; and\/or (b) any\nmodifications, however slight, made by or on behalf of Retailer (other than\nmodifications made by B&T) to all or any portion of the Database, the Licensed\nData and\/or CD-EXPORT.  Retailer expressly acknowledges that B&T will not be\nliable to Retailer or any of its customers for any damage incurred by any of\nthem arising from such modifications.\n\n     8.0         NOTICES\n\n         All communications, notices, and the like required or given pursuant\nto any provision of this Agreement, must be given by Express Mail or by\nCertified Mail, Return Receipt Request and will be deemed to have been properly\nmade or given, if by Express Mail, when received by\n\n\n                                       6\n\n   7\nthe addressee and, if by certified mail, five (5) days after deposit, postage\nprepaid, with the U.S. Postal Service, addressed as follows:\n\n         (a)     if to Retailer:           VarsityBooks.com Inc.\n                                           1050 Thomas Jefferson Street, N.W.\n                                           Suite 525\n                                           Washington, D.C. 20007\n                                           Attention:  Mr. Eric J. Kuhn\n                                           Telephone:  (202) 667-3400\n                 with a copy to:           Shaw Pittman\n                                           1676 International Drive\n                                           14th Floor\n                                           McLean, Virginia  22102-4835\n                                           Attention:  Andrew M. Tucker\n                                           Telephone:  (703) 790-7900\n                                           Fax:        (703) 790-7901\n\n         (b)     if to B&T:                Baker & Taylor, Inc.\n                                           Five LakePointe Plaza\n                                           Suite 500\n                                           2709 Water Ridge Parkway\n                                           Charlotte, North Carolina 28217\n                                           Attention:   James S. Ulsamer, \n                                                        Executive Vice President\n                                           Fax:  (704) 329-9105\n\n                 with copy to:             Dow, Lohnes & Albertson, PLLC\n                                           1200 New Hampshire Avenue, N.W.\n                                           Suite 800\n                                           Washington, DC 20036-6802\n                                           Attention:  Bradley Jacobsen\n                                           Telephone:  (202) 776-2234\n                                           Fax:  (202) 776-2222\n\nEither party may change its address as set forth above by notification in\nwriting to the other party, however any such notification will only become\neffective upon actual receipt thereof.\n\n     9.0         MISCELLANEOUS\n\n     9.01        The waiver or failure of either party hereto to exercise in\nany respect any right provided for herein will not be deemed a waiver of any\nfurther right hereunder.\n\n     9.02        Dates or terms by which either party is required to perform\nunder this Agreement will be postponed automatically to the extent that either\nparty is prevented from meeting them by causes beyond its reasonable control\nand for the duration of any such cause.\n\n\n                                       7\n\n   8\n     9.03        (a)      This Agreement and the transactions provided for\nherein will be governed, construed and enforced according to the laws of the\nState of New York (excluding any conflict of law provisions thereof).\n\n     (b)         Retailer and B&T hereby agree to bring any dispute,\ncontroversy or claim arising out of this Agreement or the matters provided for\nin this Agreement and which has not been resolved by the parties through an\ninformal process within 45 days after either party notifies the other that a\nmatter is in dispute, for settlement in Newark, New Jersey in accordance with\nthe Rules of American Arbitration Association (the \"Rules\").  Each party will\nbear its own legal expenses, attorneys' fees and disbursements and costs of all\nexperts and witnesses.  However, if the claim of either party is upheld by the\narbitrators in all material respects, then the prevailing party will be\npromptly reimbursed by the other party for its legal expenses, attorneys' fees\nand disbursements and costs of its experts and witnesses and the non-prevailing\nparty also will pay all fees, costs and expenses of the arbitration.  Any award\nrendered will be final and conclusive upon the parties.  Any judgment thereon\nmay be enforced in any court having jurisdiction.  Both parties will continue\nto perform their respective obligations under this Agreement during any\narbitration proceedings.  Notwithstanding the Rules, the arbitrator's\ndetermination will only be in favor of one party's position.\n\n     9.04        For a period of time not to exceed two (2) years after the\ndate on which this Agreement expires or terminates, Retailer will maintain\naccurate records at one office of Retailer within the continental United States\nconcerning Retailer's use of, including without limitation all records of\naccess to, all or any portion of the Database, the Licensed Data and\/or\nCD-EXPORT under this Agreement.  During the Term, and for a two (2) year period\nafter the date on which Agreement expires or terminates, on five (5) business\ndays prior notice to Retailer and during Retailer's normal business hours, B&T\nwill have the right to audit Retailer's records with respect to such use and\nwith respect to Retailer's compliance with the terms hereof.  As soon as\nRetailer uses any portion of the Licensed Data at its Internet web site,\nRetailer also will provide B&T at no expense to B&T with any passwords and\naccess codes necessary to enable B&T to have access to the same in order to\nconfirm Retailer's compliance with the terms of this Agreement.\n\n     9.05        Retailer agrees in advance that this Agreement may be assigned\nby B&T.  Retailer shall not assign its rights or obligations hereunder without\nthe prior written consent of B&T, which consent shall not be unreasonably\nwithheld or delayed; provided, however, that Retailer may assign its rights and\nobligations hereunder and under the Related Agreements to CollegeOps LLC, a\nDelaware limited liability company and wholly-owned subsidiary of the Retailer.\nUnless otherwise provided in a writing signed by Retailer and B&T, such\nassignment shall not relieve Retailer of any of its obligations hereunder.\n\n     9.06        English will be the official text for this Agreement.  No\ntranslation will be used to construe the meaning or intent hereof.\n\n     9.07        If any of the terms or provisions of this Agreement are ruled\nto be invalid or unenforceable in an arbitration proceeding or by a court or\nadministrative bureau of competent jurisdiction, the remainder of the Agreement\nwill not be affected thereby.  If\n\n\n                                       8\n\n   9\nan arbitrator, court or bureau does not replace a provision in this Agreement\nruled to be invalid or unenforceable with a valid and enforceable one which\naccomplishes the same general purpose to the maximum extent possible, the\nparties will reasonably try to negotiate a replacement for the provision which\naccomplishes the same general purpose to the maximum extent possible.\n\n                  [remainder of page intentionally left blank]\n\n\n\n                                       9\n\n   10\n     9.08        This Agreement constitutes the complete and exclusive\nstatement of the terms and conditions between the parties and supersedes and\nmerges all prior proposals, understandings and all other agreements, oral and\nwritten, between the parties relating to the subject matter of this Agreement.\nThis Agreement may not be modified or altered except by written instrument duly\nexecuted by both parties.  This Agreement will be binding upon, and will inure\nto the benefit of, the parties hereto and their respective successors,\npermitted assigns and legal representatives.\n\n     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day\nand year first above written.\n\n\n Retailer:                                       B&T:\n VARSITYBOOKS.COM INC.                           BAKER & TAYLOR, INC.\n\n\n By: \/s\/ Eric J. Kuhn                            By: \/s\/ James S. Ulsamer\n    -----------------------------                   ----------------------------\n Name:  Eric J. Kuhn                             Name: James S. Ulsamer\n Title:  Chief Executive Officer                 Title: Executive Vice President\n\n\n\n                               SIGNATURE PAGE TO\n                AMENDED AND RESTATED DATABASE LICENSE AGREEMENT\n\n\n\n\nEX-10.5\n\n12\n\nDROP SHIP AGREEMENT\n\n\n\n   1\n                                                                    EXHIBIT 10.5\n\n\n                    AMENDED AND RESTATED DROP SHIP AGREEMENT\n\n     THIS AMENDED AND RESTATED DROP SHIP AGREEMENT (this \"Agreement\"), effective\nas of the 1st day of October, 1999 (the \"Effective Date\"), is entered into by\nand between VARSITYBOOKS.COM INC. (f\/k\/a The Textbook Club, Inc.), a Delaware\ncorporation (\"Retailer\"), and BAKER & TAYLOR, INC., a Delaware corporation\n(\"B&T\"). This Agreement amends, restates and supersedes in its entirety that\ncertain Drop Ship Agreement by and between the parties dated July 10, 1998 (the\n\"Prior Agreement\").\n\n                              W I T N E S S E T H:\n\n     For valuable consideration, the receipt and legal sufficiency of which are\nhereby acknowledged, the parties agree as follows:\n\n1.  DEFINITIONS\n\n     As used throughout this Agreement the following terms have the following\nmeanings:\n\n     1.1.        \"EDI\" means electronic data interchange, using BISAC or X.12\nformats.\n\n     1.2.        \"Expiration Date\" means the day on which the Operating\nAgreement is terminated in accordance with its terms.\n\n     1.3.        \"Customers\" means customers of Retailer within the United\nStates who order Products (hereinafter defined) from Retailer and to whom\nRetailer wishes B&T to ship Products directly from B&T's distribution\nfacilities.\n\n     1.4.        \"Operating Agreement\" means that that certain Equity\nInvestment and Operating Agreement dated July 10, 1998, as amended by the First\nAmendment to Equity Investment and Operating Agreement and License Agreement by\nand between Retailer and B&T dated October 9, 1998 and as further amended by\nthat certain Operating Agreement of even date herewith.\n\n     1.5.        \"Products\" means books, spoken word audio products and\ncalendars.\n\n2.  SCOPE OF AGREEMENT.  The services to be provided by B&T herein are also\nsubject to the terms and conditions set forth in the Methodology and\nRequirements Document attached to, and made a part of, this Agreement as\nExhibit A.\n\n3.  TERM.  This Agreement will begin on the Effective Date and will expire on\nthe Expiration Date, unless terminated on an earlier date pursuant to the\nexpress terms of this Agreement.\n\n4.  ORDER FULFILLMENT.\n\n     4.1.        Upon receipt of an order for one or more Products from\nCustomers, Retailer will transmit the order to B&T's EDI mailbox location by\nmeans of a mutually acceptable form of EDI.  Each order transmitted by Retailer\nto B&T will contain the following information: (a) the Customer's name and\nshipping address, (b) the method by which Products ordered must be shipped to\nthe Customer, (c) whether or not the order may be fulfilled in multiple\nshipments of\n\n\n\n\n   2\nProducts to the Customer or if the order may only be fulfilled when B&T has all\nProducts ordered in stock, (d) the text of any standard retail messages and\/or\nspecial messages to the Customer, (e) instructions concerning specific package\ninserts to be included in the order, and (f) instructions concerning gift\nwrapping and gift cards.\n\n     4.2.        If Retailer wishes B&T to include package inserts with orders\nto Customers, Retailer will deliver to B&T a quantity of package inserts to be\nincluded with orders to Customers in sufficient quantity to supply to Customers\nas directed by Retailer to B&T.  Within five (5) business days after inquiry\nfrom Retailer, B&T will notify of the quantity of the various package inserts\non hand at B&T's facilities.  B&T will use reasonable commercial efforts to\nassure that an adequate quantity of package inserts is maintained at each B&T\nfacility from which Products are being shipped to Customers.  Retailer will\ngive B&T not less than five (5) business days' prior notice to include, or to\ncease inclusion of, a particular package insert in shipments of orders to\nCustomers.\n\n     4.3.        After receipt of an order, B&T will (a) fill the order from\ninventory of Products in stock at B&T's facilities, (b) gift wrap any Products\nas instructed by Retailer, (c) print the text of any standard retailer message\nand\/or any special message requested by Retailer on the packing slip or on a\nseparate gift card included in the order, (d) include in the order up to three\n(3) package inserts requested by Retailer, (e) pursuant to Retailer's\ninstructions, and based upon availability of Products in stock, ship the order\nto the Customer either as a multiple shipment or as one shipment, (f) pursuant\nto Retailer's instructions, promptly place any Products ordered by Retailer\nwhich B&T does not have in stock on a backorder report for review by B&T's\naccount manager for, after which time such Products will be promptly ordered by\nB&T (collectively, \"Backordered Products\") and (g) ship any Backordered\nProducts, when received by B&T, pursuant to the terms of the preceding clauses\n(a) - (e) and the following two sentences.  For all Products which B&T then has\nin stock, B&T will use commercially reasonable efforts to fulfill on the same\nday all orders received from Retailer not later than 12:00 P.M. Central time\nfor orders received Monday through Friday.  If B&T from time to time is unable\nto meet the schedule specified in the preceding sentence, B&T promptly will\nnotify Retailer of the same.  Any orders received by B&T after such times will\nbe fulfilled on the following business day.  Notwithstanding the foregoing, if\nany orders are received on a day which is not a business day will be fulfilled\non the following business day.  As used in this Agreement, \"business day\" means\nany day which is not a recognized holiday on which B&T and the approved carrier\nor shippers providing services under this Agreement are open for business.\n\n     4.4.        B&T will acknowledge receipt of orders to Retailer via EDI at\nRetailer's EDI mailbox location.  The first acknowledgment will be made\npromptly after an order is received and will identify Products as being in\nstock and\/or backordered and\/or as for which the order is being canceled.  The\nsecond acknowledgment will be made at the time an order is ready to be shipped\nto a Customer and will contain the shipper's tracking number if provided by the\nshipper to B&T.  Each such acknowledgment is referred to herein as an \"ASN\".\n\n     4.5.        B&T will use commercially reasonable efforts to fulfill orders\nfrom Retailer.  Retailer acknowledges that it does not expect B&T to maintain\nin stock a complete inventory of all Products that may be ordered by Customers.\n\n\n\n                                       2\n\n   3\n     4.6.        B&T will transmit all invoices to Retailer via EDI to\nRetailer's mailbox location.\n\n     4.7.        B&T will not be liable for delays arising from the failure of\nany freight carrier to meet its respective delivery standards.\n\n5.  RETURNS\n\n     5.1.        Each shipment of Products to Customers will include Retailer's\nreturn center address and Customers will be instructed to make returns of\nProducts to such address.  Retailer will forward all such returns to B&T on a\nweekly basis and will pay the freight costs for the same.  B&T will process all\nreturns of Products within five (5) business days of its receipt of the same.\nB&T will not be obligated to accept any returns made more than 60 days after\nshipment of the Product to a Customer.  Retailer agrees to comply with the\nterms of B&T's then current published returns policy, as long as B&T has\nprovided the same to Retailer.\n\n     5.2.        (a)      As used in this Agreement:\n\n                 (i)      \"Defective Products\" means Products which contain\nmanufactured defects which prevent them from being used for their intended\npurpose;\n\n                 (ii)     \"Damaged Products\" means Products which are damaged\nduring shipment to Customers which prevent them from being used for their\nintended purpose; and\n\n                 (iii)    \"Unmerchandisable Products\" means Products which are\nshopworn and\/or soiled.\n\n                 (b)      Retailer promptly will reimburse B&T for any freight\ncosts incurred for Products returns, except for returns of Defective Products,\nUnmerchandisable Products (if shipped in that condition by B&T), Damaged\nProducts (if improperly packaged by B&T) and\/or Products shipped erroneously to\nCustomers (collectively, \"Free Return Products\").  B&T promptly will issue a\ncredit to Retailer equal to the charge for shipment from Customers to B&T by\nthe means used by Customer of Free Return Products and B&T will be responsible\nfor freight costs to ship replacement Products to Customers for Free Return\nProducts.  B&T will also reimburse Retailer for a stocking fee set forth in\nSchedule 5.2 attached hereto for each Free Return Product.\n\n6.  PRICING AND PAYMENT TERMS.\n\n     6.1.        (a)      Retailer will pay B&T for all Products ordered by\nCustomers, and will pay all fees and reimbursables payable to B&T herein,\nwithin 30 days from the date of delivery of B&T's detailed invoice therefor.\nAll payments made to B&T will be in good funds and delivered by check or wire\ntransfer to the order of B&T pursuant to B&T's instructions.  Retailer may not\nreduce and set off amounts payable hereunder against any indebtedness or any\nother claim that may have against B&T, however or whenever arising.\n\n                 (b)      The price charged by B&T to Retailer for Products\npurchased from B&T will be expressed on the basis of a discount from the\npublishers' list prices for the same as of the date of shipment of Products to\nCustomers, and as set forth on Schedule 6.2.  Publishers' list\n\n\n\n                                       3\n\n   4\nprices for Products are displayed on B&T' s title database of Products, which\npresently is available for license by B&T to third parties (including\nRetailer).  Retailer acknowledges and agrees that publishers' list prices for\nProducts may be subject to change without notice.  Retailer acknowledges and\nagrees that it is Retailer's responsibility to determine the pricing of\nProducts to Customers and that B&T is not responsible if Retailer sells\nProducts at prices which result in a lower selling margin than may be desired\nby Retailer.\n\n     6.2.        (a)      Retailer will be responsible for the payment of its\nEDI transmissions to B&T.\n\n                 (b)      Retailer will pay the prices, charges and fees to B&T\nfor books that are not Textbooks (as such term is defined in the Operating\nAgreement) as more particularly set forth on Schedule 6.2 attached hereto and\nmade a part hereof.  The prices of Textbooks will be determined as set forth in\nthe Operating Agreement.\n\n     6.3     Retailer will pay all freight costs for all Product shipments\nto, and Product returns from, Customers.  Freight costs shall be as set forth\nin Schedule 6.2.\n\n7.  WARRANTIES.\n\n     7.1.        B&T warrants that it has good title to the Products delivered\nto Customers pursuant to this Agreement.  EXCEPT FOR THE FOREGOING WARRANTY,\nTHERE ARE NO OTHER EXPRESS WARRANTIES, AND THERE ARE NO IMPLIED WARRANTIES.\nEXPRESSLY EXCLUDED ARE ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A\nPARTICULAR PURPOSE.  NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY B&T OR\nITS AGENTS OR EMPLOYEES WILL CREATE A WARRANTY OR IN ANY WAY INCREASE THE SCOPE\nOF THE FOREGOING WARRANTY.\n\n     7.2.        NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY FOR ANY\nINDIRECT CONSEQUENTIAL, OR INCIDENTAL DAMAGES (INCLUDING DAMAGES FOR BUSINESS\nINTERRUPTION, AND THE LIKE) ARISING OUT OF THIS AGREEMENT, EVEN IF SUCH PARTY\nHAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  The only liability B&T\nwill have with respect to any Defective Products, Unmerchandisable Products\nand\/or Damaged Products will be the return rights of Customers described\nherein.  Retailer will indemnify and hold harmless B&T, its officers, employees\nand agents, for any loss, claim, cost or expense (including reasonable\nattorneys' fees and expenses) incurred by reason of any claim made by a\nCustomer concerning any matter to which the preceding limitation of liability\nmay apply.\n\n     7.3.        The provisions of this Section shall survive the termination\nor expiration of this Agreement.\n\n8.  TERMINATION.\n\n     8.1.        (a)      Either party may terminate this Agreement upon the\noccurrence of an Event of Default by the other party if the Operating Agreement\nis terminated.  An Event of Default under this Agreement shall be deemed to be\nEvent of Default under the Operating\n\n\n\n                                       4\n\n   5\nAgreement.  An \"Event of Default\" is hereby defined to mean the defaulting\nparty's failure to cure, (a) after receipt of 30 days' written notice from the\nnon-defaulting party, of any of the following:  (i) failure of the defaulting\nparty to observe or perform any material condition or obligation imposed under\nthis Agreement on the defaulting party not relating to the payment of money,\n(ii) breach of any warranty made by the defaulting party under this Agreement,\n(iii) filing of a voluntary petition in bankruptcy or having a involuntary\npetition filed against it, the appointment of a receiver or trustee, the\nexecution of an assignment for the benefit of creditors; and (b) after receipt\nof 10 days' written notice from the non-defaulting party of the failure of the\ndefaulting party to make any payments when due hereunder.  The option to\nterminate this Agreement shall be in addition to, and not in lieu of, any other\nremedy available to the terminating party under this Agreement or at law or\nequity, all such remedies being cumulative.\n\n                 (b)      In addition to the preceding remedies, upon the\noccurrence of an Event of Default by Retailer hereunder at any time and from\ntime to time, B&T may require Retailer to reduce its account balance with B&T\nto a level determined by B&T in its sole discretion (up to and including an\naccount balance of $0).\n\n     8.2.        Termination of this Agreement upon either party's default, or\nthe expiration of this Agreement will not affect:\n\n                 (a)      the rights of either party with respect to any breach\nof this Agreement, or\n\n                 (b)      the obligations of either party already accrued prior\nto the effective date of expiration or termination (including obligations with\nrespect to returned Products).\n\n                 (c)      those obligations of the parties that, by their\nterms, survive termination or expiration of this Agreement.\n\n     8.3.        In the event of the expiration or a termination of this\nAgreement, Retailer promptly will reconcile accounts payable and receivable\nwith B&T and bring the balance owed, if any, current and up-to-date.\n\n9.  CONFIDENTIALITY.\n\n         The parties acknowledge that each may be exposed to confidential\ninformation and trade secrets relating to the other party's business under this\nAgreement, including, but not limited to, the terms of this Agreement,\nquantities of products, dollar volumes, revenues of products, wholesale prices\nand similar information.  The parties agree that, during the term of this\nAgreement, and for a period of two (2) years after the Expiration Date, neither\nparty will disclose to any third party any confidential information without the\nprior written consent of the other party, except to employees, agents,\nauditors, contractors, directors and similar entities as long as such third\nparties agree to be bound by the confidentiality provisions hereof. Except as\nexpressly provided herein, neither party will use, disclose or transfer the\ntrade secrets of the other party so long as such information constitutes a\ntrade secret under applicable law.  The confidentiality obligations between the\nparties will not apply to any information (a) which is in the public domain or\nwhich becomes part of the public domain through no fault of the receiving\nparty; (b) which is known to the receiving party prior to the disclosure\nthereof by the disclosing party (as established by documentary evidence); (c)\nwhich is lawfully received by the receiving party from\n\n\n\n                                       5\n\n   6\na third party who provided such information without breach of any separate\nconfidentiality obligation owed to the disclosing party; or (d) which is\nindependently developed by personnel having no access to the disclosing party's\nconfidential information (as established by documentary evidence).\nNotwithstanding the foregoing, the parties agree that either party may describe\nthe terms, and include a copy, of this Agreement and the exhibits hereto in any\nfiling under the Securities Act of 1933, as amended, or the Securities Exchange\nAct of 1934, as amended.\n\n10. MISCELLANEOUS.\n\n     10.1.       The risk of parcel loss or damage shall pass from B&T to\nRetailer when the parcels containing Products are tendered to Retailer's\ncarriers for shipment to Customers.  Title to Products shall transfer from B&T\nto Retailer when the parcels containing Products are tendered to Retailer's\ncarriers for shipment to Customers.  Retailer will be liable for any Products\nfor which shipments are damaged, lost and\/or misdirected by Retailer's carrier\nand\/or refused by Customers.\n\n     10.2.       B&T will not be liable for any sales and related tax liability,\nif any, associated with the sale to Customers of Products. Retailer will\nindemnify and hold harmless B&T for any claim for payment of sales tax made upon\nB&T by any state or other governmental authority for sales of Products to\nCustomers hereunder.\n\n     10.3.       Neither party will be liable for any failure to perform, or\ndelay in the performance of, any of its obligations hereunder (nor will the\nsame constitute an Event of Default) if and to the extent the failure or delay\nis caused, directly or indirectly, by events beyond its control, such as acts\nof God, acts of the public enemy, acts of any governmental body in its\nsovereign or contractual capacity, fires, floods, epidemics, quarantine\nrestrictions, strikes or other labor disputes (except strikes or labor disputes\nthat are not industry wide but are brought against Retailer or B&T solely),\nfreight embargoes, and\/or unusually severe weather.  Lack of funds by either\nparty will not excuse its timely performance of its obligations hereunder.  In\nthe event of an occurrence described in the first sentence, the non-performing\nparty affected will be excused from further performance or observance of the\nobligation(s) so affected for as long as such circumstances prevail and if the\nparty continues to use its best efforts to recommence performance or observance\nwhenever and to whatever extent possible without delay.\n\n     10.4.       Retailer agrees to furnish its quarterly financial statements\nto B&T within 45 days of the end of each of its first three fiscal quarters\neach year and to furnish its annual financial statements to B&T within 90 days\nof the end of each fiscal year.  Retailer will deliver such financial\nstatements to B&T at its address at 501 South Gladiolus Street, Momence,\nIllinois 60954-1799, Attn.: Credit Manager.  Such statements will contain\nsufficient detail for B&T to determine Retailer's creditworthiness to perform\nits obligations hereunder.  At any time and from time to time during the Term,\nB&T may require Retailer to reduce its account balance with B&T to a level\ndetermined by B&T in its sole discretion (up to and including an account\nbalance of $0), based upon B&T's determination that Retailer's financial\ncondition warrants the same.\n\n     10.5.       This Agreement shall be construed in accordance with the laws\nof the State of New York, without giving effect to the conflict of laws\nprovisions thereof.\n\n\n\n                                       6\n\n   7\n     10.6.       No representation, promise, inducement or agreement relating\nto the transactions contemplated by this Agreement has been made by either\nparty that is not set forth in this Agreement, and neither party shall be bound\nby or liable for any representations promise, inducement or agreement not so\nset forth.\n\n     10.7.       All notices, requests, consents, and other communications\nhereunder shall be in writing and shall be deemed effectively given and\nreceived upon delivery in person, or one business day after delivery by\nnational overnight courier service or by telecopier transmission with\nacknowledgment of transmission receipt, or three business days after deposit\nvia certified or registered mail, return receipt requested, in each case\naddressed as follows:\n\n         (a)     if to Retailer:           VarsityBooks.com Inc.\n                                           1050 Thomas Jefferson Street, N.W.\n                                           Suite 525\n                                           Washington, D.C. 20007\n                                           Attention:  Mr. Eric J. Kuhn\n                                           Telephone:  (202) 667-3400\n\n                 with a copy to:           Shaw Pittman\n                                           1676 International Drive\n                                           14th Floor\n                                           McLean, Virginia  22102-4835\n                                           Attention:  Andrew M. Tucker\n                                           Telephone:  (703) 790-7900\n                                           Fax:        (703) 790-7901\n\n         (b)     if to B&T:                Baker & Taylor, Inc.\n                                           Five LakePointe Plaza\n                                           Suite 500\n                                           2709 Water Ridge Parkway\n                                           Charlotte, North Carolina 28217\n                                           Attention:  James S. Ulsamer, \n                                                       Executive Vice President\n                                           Fax:  (704) 329-9105\n\n                 with copy to:             Dow, Lohnes & Albertson, PLLC\n                                           1200 New Hampshire Avenue, N.W.\n                                           Suite 800\n                                           Washington, DC 20036-6802\n                                           Attention:  Bradley Jacobsen\n                                           Telephone: (202) 776-2234\n                                           Fax: (202) 776-2222\n\n     or, in any such case, at such other address or addresses as shall have\nbeen furnished in writing by such party to the others.  All notices given by\ncourier or by telecopy will be deemed received at the notice address and all\nnotices given by registered or certified mail will be deemed delivered five (5)\ndays after deposit with the U.S. Postal Service.  Either party may change is\nnotice address from time to time by notification in writing to the other party,\nhowever any such notification will not be deemed given until actually received\nby the recipient party.\n\n\n\n                                       7\n\n   8\n     10.8.       The waiver or failure of either party to exercise in any\nrespect any right provided for herein will not be deemed a waiver of any\nfurther right hereunder.\n\n     10.9.       The provisions of this Agreement shall be binding upon, and\nshall inure to the benefit of, the parties hereto and each of their respective\nsuccessors and assigns. Neither party hereto shall assign its rights or\nobligations hereunder without the prior written consent of the other party\nhereto, which consent shall not be unreasonably withheld or delayed; provided,\nhowever, that Retailer may assign its rights and obligations hereunder to\nCollegeOps LLC, a Delaware limited liability company and wholly-owned\nsubsidiary of Retailer.  Unless otherwise provided in a writing signed by\nRetailer and B&T, such assignment shall not relieve Retailer of any of its\nobligations hereunder.\n\n     10.10.      Nothing contained in this Agreement shall be deemed or\nconstrued to create a partnership or joint venture of or between and B&T, or to\ncreate any other relationship between the parties other than that of\nindependent contractors.\n\n     10.11.      The captions used herein are for convenience of reference only\nand are not part of this Agreement, and shall in no way be deemed to define,\nlimit, describe, or modify the meaning of any provision of this Agreement.\n\n     10.12.      If any term or provision of this Agreement or applications\nthereof to any person or circumstances is, to any extent, held to be invalid or\nunenforceable, the remaining terms and provisions of this Agreement, or the\napplications of such term or provision to persons or circumstances other than\nthose as to which it is held invalid or unenforceable, will not be affected\nthereby, and each term and provision of this Agreement will be valid and\nenforced to the fullest extent permitted by law.\n\n     10.13.      If Retailer fails to make any payment due hereunder to B&T\nwithin 30 days after receipt of B&T's invoice therefore, then Retailer will pay\nB&T the amount due, together with interest thereon until paid, calculated at\nthe rate of eighteen percent (18%) per annum, unless otherwise agreed to in\nwriting by both parties.\n\n     10.14.      This Agreement and the Related Agreements (as such term is\ndefined in the Operating Agreement) contains and embodies the entire agreement\nof the parties here to, and no representations, inducements, or agreements,\noral or otherwise between the parties not contained in this Agreement, if any,\nwill be of any force or effect.  This Agreement may not be modified, changed or\nterminated in whole or in part in any manner other than by an agreement in\nwriting duly signed by both parties.\n\n                  [remainder of page intentionally left blank]\n\n\n\n                                       8\n\n   9\n     10.15.      This Agreement may be signed in counterparts both of which\ntaken together shall be deemed one original.  Telecopied facsimiles of a signed\ncounterpart of this Agreement from one party to the other will be deemed to be\ndelivery of a signed counterpart by the party sending the telecopied facsimile.\n\n     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day\nand year first above written.\n\n Retailer:                                       B&T:\n\n VARSITYBOOKS.COM INC.                           BAKER & TAYLOR, INC.\n\n\n By: \/s\/ Eric J. Kuhn                            By: \/s\/ James S. Ulsamer\n    ----------------------------                    ----------------------------\n Name:  Eric J. Kuhn                             Name: James S. Ulsamer\n Title:  Chief Executive Officer                 Title: Executive Vice President\n\n\n                               SIGNATURE PAGE TO\n                    AMENDED AND RESTATED DROP SHIP AGREEMENT\n\n\n\n\nEX-10.6\n\n13\n\nPROMOTIONAL AND CUSTOMER SERVICES AGREEMENT\n\n\n\n   1\n                                                                    EXHIBIT 10.6\n\n\n                   PROMOTIONAL AND CUSTOMER SERVICES AGREEMENT\n\n\n         THIS PROMOTIONAL AND CUSTOMER SERVICES AGREEMENT (this \"Agreement\"),\neffective as of October 1, 1999, is made by and between VARSITYBOOKS.COM INC., a\nDelaware corporation, and its permitted successors and assigns (the \"Company\"),\nand BAKER & TAYLOR, INC., a Delaware corporation, and its permitted successors\nand assigns (\"B&T\").\n\n         WHEREAS, the Company operates as an Internet supplier of textbooks\n(\"Textbooks\") and B&T provides Textbooks to customers of the Company and\nperforms a variety of promotional and customer services functions for the\nCompany in connection therewith;\n\n         WHEREAS, the Company and B&T are parties to that certain Equity\nInvestment and Operating Agreement dated July 10, 1998, as amended by the First\nAmendment to Equity Investment and Operating Agreement and License Agreement by\nand between the Company and B&T dated October 9, 1998 and as further amended by\nthat certain Operating Agreement dated October 1, 1999 (the \"Operating\nAgreement\");\n\n         WHEREAS, the Company and B&T also are parties to that certain Amended\nand Restated Drop Ship Agreement of even date herewith (the \"Drop Ship\nAgreement\");\n\n         WHEREAS, the Company and B&T also are parties to that certain Amended\nand Restated Database License Agreement of even date herewith (the \"License\nAgreement\", together with this Agreement, the Operating Agreement and the Drop\nShip Agreement, the \"Related Agreements\"); and\n\n         WHEREAS, the Company and B&T now desire to enter into this Agreement to\ndescribe certain additional services to be provided by B&T to the Company;\n\n         NOW, THEREFORE, in consideration of the foregoing and the mutual\ncovenants contained in this Agreement, the parties, intending to be legally\nbound, agree as follows:\n\n\nI.       PRODUCT AND WEB SITE DEVELOPMENT. B&T will continue to assist the \nCompany in developing the Company's product and customer base. Such assistance\nmay include providing guidance to the Company in its efforts at identifying\nappropriate titles to offer, and licensing to the Company the following data\nelements, where available to B&T, for display by the Company on the Company's\nInternet web site (the \"Web Site\"): (i) bibliographic and other limited product\ninformation about the selected Textbook titles; (ii) scanned images of Textbook\njacket art; (iii) table of contents; and (iv) updated Inventory status. Subject\nto the terms and conditions of the License Agreement, B&T will provide the\nCompany (x) available scanned images of jacket art and (y) table of contents on\nitems that B&T has designated in the Database (as defined in the License\nAgreement) as either in stock or on order at the Investor's Momence, Illinois\nlocation or at such other of B&T's locations as the Company and B&T have agreed\nmay be used for fulfillment services. Such information will be updated from time\nto time as additional information becomes available.\n\n\n                                       1\n\n   2\nII.      ADDITIONAL SERVICES\n\n         In addition, B&T agrees to provide additional services to the Company,\nincluding but not limited to the following (the \"Additional Services\"):  (i)\nadd titles and other information for new Textbooks into the Database; (ii)\nprocure shipping boxes customized with the Company's name and logo; (iii)\nrestock and replace damaged and returned books pursuant to the Drop Ship\nAgreement; (iv) maintain and license the Licensed Data to the Company pursuant\nto the License Agreement; (v) maintain and use EDI protocol to transmit\ninvoices, orders, reports and other information to the Company; and (vi)\nperform additional marketing and other services for the Company as the parties\nmay agree from time to time.  The cost of the Additional Services is set forth\nin Schedule I attached hereto.  The parties may amend Schedule I by mutual\nagreement from time to time.\n\nIII.     LIMITATION OF WARRANTIES\n\n         A.      NOTWITHSTANDING ANYTHING CONTAINED HEREIN OR IN ANY RELATED\nDOCUMENT, NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY HEREUNDER FOR ANY\nINDIRECT, CONSEQUENTIAL, PUNITIVE OR INCIDENTAL DAMAGES ARISING OUT OF THIS\nAGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH\nDAMAGES.\n\n         B.      The provisions of this Article 3 shall survive the termination\nor expiration of this Agreement.\n\nIV.      MISCELLANEOUS\n\n         A.      Entire Agreement.  This Agreement constitutes the sole and\nentire agreement of the parties with respect to the subject matter hereof.\n\n         B.      Publicity.  All general notices, releases, statements and\ncommunications to employees, suppliers, distributors and customers of a party\nand to the general public and the press relating to the transactions covered by\nthe Operating Agreement or any Related Agreement shall be made by such party\nhereto only at such times and in such manner as may be mutually agreed upon by\nthe Company and B&T, except as may be required by any applicable law and\nregulation.  Either party may describe the terms, and include a copy, of this\nAgreement and the exhibits hereto in any filing under the Securities Act of\n1933, as amended, or the Securities Exchange Act of 1934, as amended.\n\n         C.      Expenses. Each party hereto shall be solely responsible for\nits respective expenses in connection with the negotiation, preparation and\nperformance of this Agreement (including, without limitation, all legal and\naccounting expenses).\n\n         D.      Parties in Interest.  All obligations and agreements contained\nin this Agreement by or on behalf of any of the parties hereto shall bind and\ninure to the benefit of the respective successors and permitted assigns of the\nparties hereto, whether so expressed or not.  Except as otherwise expressly\nprovided herein, nothing in this Agreement is intended to confer upon any other\nperson or entity any rights or remedies hereunder.\n\n\n                                       2\n\n   3\n         E.      Notices.  All notices, requests, consents, and other\ncommunications hereunder shall be in writing and shall be deemed effectively\ngiven and received upon delivery in person, or one business day after delivery\nby national overnight courier service or by telecopier transmission with\nacknowledgment of transmission receipt, or three business days after deposit\nvia certified or registered mail, return receipt requested, in each case\naddressed as follows:\n\n         if to the Company:       VarsityBooks.com Inc.\n                                  1050 Thomas Jefferson Street, N.W.\n                                  Suite 525\n                                  Washington, D.C. 20007\n                                  Attention:  Mr. Eric J. Kuhn\n                                  Telephone:  (202) 667-3400\n\n         with a copy to:          Shaw Pittman\n                                  1676 International Drive\n                                  14th Floor\n                                  McLean, Virginia  22102-4835\n                                  Attention:  Andrew M. Tucker\n                                  Telephone:  (703) 790-7900\n                                  Fax:        (703) 790-7901\n\n         if to B&T:               Baker & Taylor, Inc.\n                                  Five LakePointe Plaza\n                                  Suite 500\n                                  2709 Water Ridge Parkway\n                                  Charlotte, North Carolina 28217\n                                  Attention:  James S. Ulsamer, Executive \n                                              Vice President\n                                  Fax:  (704) 329-9105\n\n         with copy to:            Dow, Lohnes & Albertson, PLLC\n                                  1200 New Hampshire Avenue, N.W.\n                                  Suite 800\n                                  Washington, DC 20036-6802\n                                  Attention:  Bradley Jacobsen\n                                  Telephone:  (202) 776-2234\n                                  Fax:  (202) 776-2222\n\n         or, in any such case, at such other address or addresses as shall have\nbeen furnished in writing by such party to the others.\n\n         F.      Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND\nCONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD\nTO THAT STATE'S PROVISIONS OF CONFLICT OF LAWS.\n\n\n                                       3\n\n   4\n         G       Counterparts.  This Agreement may be executed in one or more\ncounterparts by facsimile or original signature, each of which shall be deemed\nan original, but all of which together shall constitute one and the same\ninstrument.\n\n         H.      No Waivers;  Amendments.  No failure or delay on the part of\nany party in exercising any right, power or remedy hereunder shall operate as a\nwaiver thereof, nor shall any single or partial exercise of any such right,\npower or remedy preclude any other or further exercise thereof or the exercise\nof any other right, power or remedy. The remedies provided for herein are\ncumulative and are not exclusive of any remedies that may be available to any\nparty at law or in equity or otherwise.  Any provision of this Agreement may be\namended or waived if, but only if, such amendment or waiver is in writing and\nis signed by the Company and B&T.\n\n         I.      Severability.  If any provision of this Agreement shall be\ndeclared void or unenforceable by a judicial or administrative authority, the\nvalidity of any other provision and of the entire Agreement shall not be\naffected thereby.\n\n         J.      Gender.  All pronouns and all variations thereof shall be\ndeemed to refer to the masculine, feminine or neuter, singular or plural, as\nthe identity of the person or persons, thing or entity may require.\n\n         K.      Headings.  The section headings contained in this Agreement\nare for reference purposes only and shall not affect in any way the meaning or\ninterpretation of this Agreement.\n\n         L.      Termination. This Agreement shall terminate upon the\ntermination or expiration of the Operating Agreement.\n\n\n                                       4\n\n   5\n         M.      Assignment. Neither party hereto shall assign its rights or\nobligations hereunder without the prior written consent of the other party\nhereto, which consent shall not be unreasonably withheld or delayed; provided,\nhowever, that the Company may assign its rights and obligations hereunder to\nCollegeOps LLC, a Delaware limited liability company and wholly-owned\nsubsidiary of the Company.  Unless otherwise provided in a writing signed by\nthe Company and B&T, such assignment shall not relieve the Company of any of\nits obligations hereunder.\n\n     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day\nand year first above written.\n\n The Company:                                    B&T:\n\n VARSITYBOOKS.COM INC.                           BAKER & TAYLOR, INC.\n\n\n By: \/s\/ Eric J. Kuhn                            By: \/s\/ James S. Ulsamer\n    -----------------------------                   ----------------------------\n Name:  Eric J. Kuhn                             Name: James S. Ulsamer\n Title:  Chief Executive Officer                 Title: Executive Vice President\n\n\n\n                               SIGNATURE PAGE TO\n                                  PROMOTIONAL\n\n\n                                      I-1\n\n\n\n\nEX-10.7\n\n14\n\nEMPLOYMENT AGREEMENT - ERIC J. KUHN\n\n\n\n   1\n                                                                    EXHIBIT 10.7\n\n\n                                   AGREEMENT\n\n     THIS AGREEMENT (the \"Agreement\") made as of the 24th day of August, 1999 by\nand between VARSITYBOOKS.COM INC., a Delaware corporation (the \"Company\"), and\nERIC J. KUHN (the \"Executive\").\n\n     The Executive is presently employed by the Company as its President and\nChief Executive Officer.\n\n     The Board of Directors of the Company desires to set forth the nature and\namount of compensation and other benefits to be provided to the Executive and\nany of the rights of the Executive in the event of his termination of employment\nwith the Company. The Executive is willing to commit himself to continue to\nserve the Company, on the terms and conditions herein provided.\n\n     In order to effect the foregoing, the Company and the Executive wish to\nenter into this Agreement under the terms and conditions set forth below.\nAccordingly, in consideration of the promises and the respective covenants and\nagreements of the parties herein contained, and intending to be legally bound\nhereby, the parties hereto agree as follows:\n\n     1. Employment. The Company hereby agrees to continue to employ the\nExecutive, and the Executive hereby agrees to continue to serve the Company, on\nthe terms and conditions set forth herein.\n\n     2. Term. The term of Executive's employment under Section 1 will terminate\nupon the termination of Executive's employment with the Company for any reason\nwhatsoever. No such termination shall affect any of the Company's other\nobligations under this Agreement arising at or after such termination of\nemployment.\n\n     3. Position and Duties. The Executive shall serve as President and Chief\nExecutive Officer of the Company and shall have such responsibilities and\nauthority as may normally be exercised by a person in such positions at a\ncompany.\n\n     4. Place of Performance. The Executive shall be based at the current or\nfuture headquarters of the Company, provided that any future headquarters is not\nmore than twenty-five (25) miles from the location of the Company's headquarters\non the date hereof.\n\n     5. Compensation and Related Matters.\n\n          (a) Base Salary. During the Executive's employment with the Company,\nthe Company shall pay to the Executive a salary at a rate of not less than One\nHundred Sixty Thousand Dollars ($160,000) per annum in equal installments as\nnearly as practicable on the normal payroll periods for employees of the Company\ngenerally (the \"Base Salary\"). The Base Salary may be increased from time to\ntime and, if so increased, shall not thereafter be decreased during the term of\nthis Agreement.\n\n          (b) Bonus. The Executive shall be eligible to receive an annual bonus\nequal to twenty-five percent (25%) of Executive's Base Salary (the \"Annual\nBonus\") payable in\n\n\n\n   2\naccordance with goals to be developed by the Company's Compensation Committee\nin accordance with Executive on an annual basis.\n\n          (c) Expenses. During the term of the Executive's employment hereunder,\nthe Executive shall be entitled to receive prompt reimbursement for all\nreasonable expenses incurred by the Executive in performing services hereunder,\nincluding all expenses of travel and living expenses while away from home on\nbusiness or at the request of and in the service of the Company, provided that\nsuch expenses are incurred and accounted for in accordance with the policies and\nprocedures established by the Company.\n\n          (d) Benefits. During the term of the Executive's employment hereunder,\nthe Company shall maintain in full force and effect, and the Executive shall be\nentitled to continue to participate in, all of its employee benefit plans and\narrangements in effect on the date hereof in which the Executive participates or\nreceives benefits, or plans or arrangements providing the Executive with at\nleast equivalent benefits thereunder. The Company shall not make any changes in\nsuch plans and arrangements which would adversely affect the Executive's rights\nor benefits thereunder, unless such change occurs pursuant to a program\napplicable to all officers of the Company and does not result in a\nproportionately greater reduction in the rights of or benefits to the Executive\nas compared with any other officers of the Company. The Executive shall be\nentitled to participate in or receive benefits under any employee benefit plan\nor arrangement made available by the Company in the future to its officers and\nkey management employees, subject to and on a basis consistent with the terms,\nconditions and overall administration of such plans and arrangements. Nothing\npaid to the Executive under any plan or arrangement presently in effect or made\navailable in the future shall be deemed to be in lieu of any amounts payable to\nthe Executive pursuant to this Section 5.\n\n     6. Termination and Definitions.\n\n          (a) Cause. The Executive's rights under Section 5 of this Agreement\nshall immediately be terminated if the Executive's employment is terminated for\nCause.\n\n          (b) Termination by the Executive. The Executive may terminate his\nemployment hereunder for Good Reason.\n\n          (c) Notice of Termination. Any termination of the Executive's\nemployment by the Company or by the Executive shall be communicated by written\nNotice of Termination to the other party hereto.\n\n          (d) Definitions.\n\n               (i)    For purposes of this Agreement, termination \"for Cause\" \nshall arise where termination results from (A) conviction of, or the pleading of\nnolo contendere to, a felony; (B) a material breach of this Agreement which\nmaterially and adversely affects the Company's business and operations; (C) the\nfailure of Executive for any reason, within ten (10) days after receipt by\nExecutive of written notice thereof from the Company, to correct, cease or\notherwise alter any failure to comply with instructions or other action or\nomission to act which will materially or adversely affect its business or\noperations; (D) misconduct by Executive which is of such a serious and\nsubstantial nature that a reasonable likelihood exists that such misconduct\n\n\n                                      -2-\n\n   3\nwill materially injure the reputation of the Company if Executive was to remain\nemployed by the Company; and (E) proven gross negligence.\n\n               (ii)   For purposes of this Agreement, \"Good Reason\" shall mean \n(A) the termination of Executive's employment with the Company other than for\nCause, (B) Executive's voluntary termination of employment with the Company\nwithin ninety (90) days following any of (i) a decrease in Executive's base\nsalary below its level in effect on the date prior to such termination, (ii) a\nmaterial reduction in Executive's job responsibilities without Executive's\nconsent, or (iii) a geographical relocation of the Executive more than\ntwenty-five (25) miles from the current location of the Company without his\nconsent, or (C) a Change of Control of the Company followed, within two years\nafter such Change of Control, by (i) the termination of Executive's employment\nwith the Company other than for Cause, or (ii) the Executive's voluntary\ntermination of employment with the Company within ninety (90) days following any\nof (x) a decrease in Executive's base salary below its level in effect on the\ndate prior to such termination, (y) a material reduction in Executive's job\nresponsibilities without Executive's consent, or (z) a geographical relocation\nof the Executive more than twenty-five (25) miles from the current location of\nthe Company without his consent.\n\n               (iii)  For purposes of this Agreement, a \"Change in Control\" of \nthe Company shall be deemed to have occurred if (A) any \"person\" (as such term\nis used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as\namended (the \"Exchange Act\")), is or becomes the \"beneficial owner\" (as defined\nin Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of\nthe Company (not including any securities acquired directly from the Company)\nrepresenting more than 50% of the combined voting power of the Company's then\noutstanding securities; (B) the shareholders of the Company approve a merger or\nconsolidation of the Company with any other corporation, other than (i) a merger\nor consolidation which would result in the voting securities of the Company\noutstanding immediately prior thereto continuing to represent (either by\nremaining outstanding or by being converted into voting securities of the\nsurviving entity) at least 50% of the combined voting power of the voting\nsecurities of the Company or such surviving entity outstanding immediately after\nsuch merger or consolidation, or (ii) a merger or consolidation effected to\nimplement a recapitalization of the Company in which no person acquires more\nthan 50% of the combined voting power of the Company and outstanding securities;\nor (C) the shareholders of the Company approve a plan of complete liquidation of\nthe Company or an agreement for the sale or disposition by the Company of all or\nsubstantially all the Company's assets.\n\n               (iv)   For purposes of this Agreement, a \"Notice of Termination\"\nshall mean a notice which shall indicate the specific termination provision in\nthis Agreement relied upon and shall set forth in reasonable detail the facts\nand circumstances claimed to provide a basis for termination of the Executive's\nemployment under the provision so indicated.\n\n     7. Compensation upon Termination.\n\n          (a) Termination for Cause or Resignation Without Good Reason. If (i)\nthe Executive's employment shall be terminated for Cause, or (ii) the Executive\nvoluntarily resigns from the employ of the Company and Good Reason shall not\nhave occurred, then the Company shall pay the Executive his Base Salary through\nthe date of delivery to him of a Notice of \n\n\n                                      -3-\n\n   4\nTermination at the rate then in effect at the time and date the Notice of\nTermination is delivered, and the Company shall have no further obligations to\nthe Executive under this Agreement.\n\n          (b) Termination Without Cause or Resignation for Good Reason. If the\nCompany shall terminate the Executive's employment other than pursuant to\nSection 6(a) hereof (it being understood that a purported termination pursuant\nto Section 6(a) hereof, which is disputed and finally determined not to have\nbeen pursuant to Section 6(a) shall be a termination by the Executive pursuant\nto Section 6(b)) or if the Executive terminates his employment for Good Reason,\nthen:\n\n               (i)    the Company shall pay to the Executive, upon his \ntermination, his Base Salary through the date of termination at the rate in\neffect at the time Notice of Termination is delivered, together the Executive's\npro-rata bonus under Section 5(b) hereof; and\n\n               (ii)   in lieu of any further salary or bonus payments to the \nExecutive for periods subsequent to the date of termination, the Company shall\npay, as severance pay to the Executive, an amount equal to one hundred percent\n(100%) of the Executive's Base Salary in effect as of the date of termination,\npayable monthly in twelve (12) equal installments after termination of\nemployment.\n\n          (c) Termination Upon a Change in Control. If there is a Change in\nControl of the Company or there has been a public announcement of a Change in\nControl of the Company (provided, however, that consummation of the Change in\nControl of the Company shall be a condition precedent to the effectiveness of\nthis provision) and at any time thereafter the employment of the Executive under\nthis Agreement is terminated other than pursuant to Section 6(a) hereof by the\nCompany or a successor entity or is terminated with Good Reason by the\nExecutive, then:\n\n               (i)    the Company shall pay to the Executive, upon his \ntermination, his Base Salary through the date of termination at the rate in\neffect at the time Notice of Termination is given together with pro-rata bonus;\nand\n\n               (ii)   in lieu of any further salary or bonus payments to the \nExecutive for periods subsequent to the date of termination, the Company shall\npay on the date of termination, as severance pay to the Executive, a lump sum\npayment in an amount equal to one hundred fifty percent (150%) of the\nExecutive's Base Salary in effect as of the date of termination.\n\n          (d) Continuation of Benefit Plans. Upon any termination of the\nExecutive's employment, other than pursuant to Section 6(a) hereof or by the\nExecutive without Good Reason, the Company shall maintain in full force and\neffect for the continued benefit of the Executive for twelve (12) months, or\neighteen (18) months if there has previously occurred a Change in Control of the\nCompany, all employee benefit plans and programs in which the Executive was\nentitled to participate.\n\n          (e) Participation in Benefit Plans after Termination of Employment.\nThe Executive shall be entitled to continue to participate in any benefit plan\nor program of the\n\n\n                                      -4-\n\n   5\nCompany for twelve (12) months after the expiration of the period provided for\nin Section 7(d), provided, that the Executive pays the direct cost of any such\nbenefit plan or program.\n\n     8. Successors; Binding Agreement.\n\n          (a) Successors. The Company will require any successor (whether direct\nor indirect, by purchase, merger, consolidation or otherwise) to all or\nsubstantially all of the business and\/or assets of the Company, by agreement in\nform and substance satisfactory to the Executive, to expressly assume and agree\nto perform this Agreement in the same manner and to the same extent that the\nCompany would be required to perform it if no such succession had taken place.\nAs used in this Agreement, \"Company\" shall mean the Company as hereinbefore\ndefined and any successor to its business and\/or assets as aforesaid which\nexecutes and delivers the agreement provided for in this Section 8 or which\notherwise becomes bound by all the terms and provisions of this Agreement by\noperation of law.\n\n          (b) Binding Agreement. This Agreement and all rights of the Executive\nhereunder shall inure to the benefit of and be enforceable by the Executive's\npersonal or legal representatives, executors, administrators, successors, heirs,\ndistributees, devisees and legatees. If the Executive should die while any\namounts would still be payable to him hereunder if he had continued to live, all\nsuch amounts, unless otherwise provided herein, shall be paid in accordance with\nthe terms of this Agreement to the Executive's devisee, legatee, or other\ndesignee or, if there be no such designee, to the Executive's estate.\n\n     9. Notice.  For the purposes of this Agreement, notices, demands and all \nother communications provided for in the Agreement shall be in writing and shall\nbe deemed to have been duly given when delivered or (unless otherwise specified)\nmailed by United States registered mail, return receipt requested, postage\nprepaid, addressed, if to the Executive, to his address as it appears in the\nrecords of the Company, or if to the Company, as follows:\n\n                               VarsityBooks.com Inc.\n                               1050 Thomas Jefferson Street, NW\n                               Suite 525\n                               Washington, DC  20007\n\nor to such other address as any party may have furnished to the other in\nwriting in accordance herewith, except that notices of change of address shall\nbe effective only upon receipt.\n\n     10. Prior Agreement.  All prior agreements between the Company and the \nExecutive with respect to the employment of the Executive including, without\nlimitation, the Key Employee Agreement dated July 27, 1998 are hereby\nsuperseded and terminated effective as of the date hereof and shall be without\nfurther force or effect.\n\n     11. Counsel Fees.  In the event that (i) the Company terminates, or seeks \nto terminate, this Agreement, alleging as justification for such termination a\nmaterial breach by Executive or a Cause, or Causes, set out in Section 6 hereof;\nExecutive disputes such termination or attempted termination; and Executive\nprevails, or (ii) Executive elects to terminate his service hereunder pursuant\nto Section 6 of this Agreement; the Company disputes its obligation to pay to\nExecutive his Base Salary or Annual Bonus as provided in Section 5; and\nExecutive prevails; the Company\n\n\n                                      -5-\n\n   6\nshall pay, or reimburse to Executive, all reasonable costs incurred by him in\nsuch dispute, including attorneys' fees and costs.\n\n     12. Miscellaneous.  No provisions of this Agreement may be modified, waived\nor discharged unless such waiver, modification or discharge is agreed to in\nwriting signed by the Executive and duly authorized officer of the Company. No\nwaiver by either party hereto at any time of any breach by the other hereto of,\nor compliance with, any condition or provision of this Agreement to be performed\nby such other party shall be deemed a waiver of similar or dissimilar provisions\nor conditions at the same or at any prior or subsequent time. No agreements or\nrepresentations, oral or otherwise, express or implied, with respect to the\nsubject matter hereof have been made by either party which are not set forth\nexpressly in this Agreement. The validity, interpretation, construction and\nperformance of this Agreement shall be governed by the laws of the District of\nColumbia\n\n     13. Validity.  The invalidity or unenforceability of any provision or \nprovisions of this Agreement shall not affect the validity or enforceability of\nany other provision of this Agreement, which shall remain in full force and\neffect.\n\n\n                                      -6-\n\n   7\n     IN WITNESS WHEREOF, the parties have executed this Agreement effective as \nof the date and year first above written.\n\n                                    VARSITYBOOKS.COM INC.\n\n\n\n                                    By: \/s\/ VarsityBooks.com Inc.\n                                       -----------------------------------------\n\n\n\n                                    EXECUTIVE:\n\n\n                                    \/s\/ Eric J. Kuhn\n                                    --------------------------------------------\n                                    Eric J. Kuhn\n\n\n\n                                      -7-\n\n<\/description><\/sequence><\/type><\/description><\/sequence><\/type><\/description><\/sequence><\/type><\/description><\/sequence><\/type><\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6835],"corporate_contracts_industries":[],"corporate_contracts_types":[9613,9620],"class_list":["post-42638","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-baker---taylor-corp","corporate_contracts_types-operations","corporate_contracts_types-operations__services"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/42638","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=42638"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=42638"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=42638"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=42638"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}