Agency Licensing Agreement

§ 7.34 Form: Agency Licensing Agreement

THIS AGREEMENT (the "Agreement") is made and entered into as of , 20 , by and between COMPUBOOKS INC., a Delaware corporation, with offices at 1 Dartmouth Street, Boston, Massachusetts ("CompuBooks"), and BOOK SELLERS CO., a New York corporation, with offices at 1 Union Square, New York, New York ("Agent").

1. System and Software

1.1 CompuBooks Database

"CompuBooks Database" shall mean the computerized database of book titles compiled, maintained and updated by and for CompuBooks consisting of the information categories of books and related data described in Schedule A annexed hereto. "Books" shall include print publication editions, including but not limited to such formats as hardcover editions, mass market paperbacks and trade paperbacks.

1.2 BookNet System

"BookNet System" shall consist of the CompuBooks Database, the Updates and the Software (as hereinafter defined) developed, marketed and licensed by CompuBooks and operated through the use of computer equipment having the minimum specifications described in Schedule B annexed hereto.

1.3 Update

"Updates" shall mean updates of the CompuBooks Database supplied by CompuBooks to each licensee thereof in accordance with its License Agreement with such licensee.

1.4 Software

"Software" shall mean the CompuBooks proprietary computer software installed in the BookNet System, which permits the retrieval of specific data contained in the CompuBooks Database.

2. Agency Agreement

2.1 Nonexclusive Agency Appointment

CompuBooks hereby appoints Agent on a nonexclusive basis as one of its authorized licensing agents to solicit nonexclusive, nontransferable licenses for the installation and use of BookNet Systems at sites located in the Territory, provided that in no event shall Agent permit the BookNet System to be subject to the uses set forth in Section 8.

2.2 Territory

"Territory" shall mean the United States.

2.3 Limitations on Agent's Rights

Agent shall not solicit the licensing of BookNet Systems from prospective licensees if Agent knows or has reason to believe that such prospective licensee intends to transfer any BookNet System outside the Territory. Agent shall not have any right to receive any compensation with respect to BookNet Systems sold to licensees in the Territory by CompuBooks itself or by third parties under authority from CompuBooks.

3. License Fees

As to each BookNet System licensed with respect to each authorized site by CompuBooks to licensees solicited by Agent hereunder, Agent, on behalf of such licensees, shall pay to CompuBooks an annual fee equal to dollars ($ ). "Contract Year" shall mean each period of twelve (12) consecutive calendar months during the term of this Agreement commencing on the Effective Date or an anniversary thereof and ending on the day immediately preceding the next anniversary of the Effective Date. "Effective Date" shall mean the date as of which this Agreement is entered into as first set forth above.

4. Licensing of BookNet Systems

4.1. License Agreement

"License Agreement" shall mean the BookNet System Site License Agreement in the form of Exhibit A annexed hereto. CompuBooks shall have the absolute right to veto, without cause and at its sole discretion, any License Agreement proposed by Agent without liability to Agent of any kind.

4.2 Orders

With respect to each BookNet System license solicited by Agent, Agent shall forward to CompuBooks:

(i) a BookNet System Order Placement Form, in the form attached hereto as Exhibit B, duly completed by the prospective licensee; and

(ii) the License Agreement duly executed and delivered by the prospective licensee.

4.3 Payment

With respect to each BookNet System license solicited by Agent, Agent shall pay to CompuBooks the license fee provided for under Section 3. Such payment shall be made by wire transfer in same day funds to CompuBooks' account at MB Bank, as set forth in Exhibit B-1, hereto.

4.4 BookNet System Shipment

Upon Agent's compliance with paragraphs 4.2 and 4.3, CompuBooks shall ship to Agent, at Agent's cost, the CompuBooks Database and Software necessary to operate the BookNet System via an overnight freight shipping service using Agent's account with such shipping service. Upon receipt of the CompuBooks Database and Software from CompuBooks, Agent shall provide the same to the subject licensee for installation by the subject licensee in accordance with its License Agreement with CompuBooks.

4.5 Sales and Use Taxes

Agent shall, in addition to the other amounts payable under this Agreement, pay all sales or other use taxes, which are levied or imposed by reason of the transactions contemplated by this Agreement. Without limiting the foregoing, Agent shall promptly pay to CompuBooks an amount equal to any such items actually paid, or required to be collected or paid by CompuBooks.

5. CompuBooks Disclaimer of Warranties

CompuBooks makes and Agent receives no express or implied warranty. All warranties of merchantability and fitness for particular purpose, with respect to the BookNet System, are expressly excluded. CompuBooks shall have no liability under this Agreement for any consequential, indirect exemplary or incidental damages even if CompuBooks has been advised of the possibility of such damages.

6. Minimum Performance Standards

During the first Contract Year, Agent shall pay to CompuBooks aggregate license fees equal to at least dollars ($ ). During the second Contract Year, Agent shall pay to CompuBooks aggregate license fees equal to at least dollars ($ ).

7. Agent Compensation/License Fees

Agent shall have the right to retain all annual license fees paid by the licensee under each License Agreement to the extent the same exceed the amounts to be paid to CompuBooks in accordance with Section 3 hereof.

CompuBooks shall not have any obligations to reimburse Agent for any expenses which Agent might incur in connection with its performance under this Agreement.

8. Agent Responsibilities

8.1 Computer Hardware

Agent shall ensure that the BookNet System is installed and used on computer hardware solely dedicated to use of the BookNet System. The computer equipment used must, at a minimum, meet the specifications set forth in Schedule B annexed hereto.

8.2 Servicing of BookNet Systems

Agent shall employ competent and experienced service personnel so as to render prompt and adequate service to the Users of the BookNet Systems. "User" shall mean any customer, employee, agent or invitee of Agent.

8.3 Credit/Collection Services

Agent shall, at the request of CompuBooks, assist CompuBooks with credit, collection and other similar functions. Agent shall receive no additional compensation for performing such functions.

8.4 Reports

Agent shall report to CompuBooks any inquiries, leads or other information regarding potential licensing of the BookNet Systems outside the Territory. Agent also shall provide CompuBooks with written monthly reports which shall include customer call reports, business trends, market forecasts and other reports reasonably requested by CompuBooks. Such reports shall be provided free of charge to CompuBooks.

9. Limitation of Uses

Agent covenants to CompuBooks that it shall not:

(i) modify, copy, duplicate, disclose, disseminate or translate or permit anyone else to modify, copy, duplicate, disclose, disseminate or translate any version of the CompuBooks Database, in any electronic, print or any other medium, either in whole or in part;

(ii) create or attempt to create, or permit anyone else to create or attempt to create, by reverse engineering or otherwise, the source code, or any part thereof, of the BookNet System;

(iii) utilize, or permit the utilization of, the BookNet System for any purpose other than as contemplated by this Agreement;

(iv) combine, interface, incorporate or network the BookNet System with any other computer software or system or permit the combination, interface, incorporation or networking of the BookNet System with any other computer software or system;

(v) license, or permit the license of, the BookNet System or any part thereof other than as contemplated by this Agreement;

(vi) publish, sell or otherwise exploit, or permit the publication, sale or exploitation of, the information contained in the CompuBooks Database;

(vii) utilize, sell, transfer, publish or duplicate, or permit the utilization, sale, transfer, publication or duplication of, any of the data produced as a result of the use of the BookNet System; or

(viii) install or use, or permit the installation or use of, the BookNet System in any manner, except as permitted by this Agreement.

The limitations set forth in this Section 9 shall survive the expiration or prior termination of this Agreement.

10. Promotional Materials

CompuBooks shall provide, in its discretion, appropriate quantities of marketing catalogues, service manuals and other descriptive literature to Agent. CompuBooks and Agent shall agree in writing on CompuBooks' compensation for providing such materials prior to CompuBooks' commencement of delivery of such materials.

11. CompuBooks' Trademark

Agent may use CompuBooks' Trademark in the Territory on a nonexclusive basis only during the term of this Agreement and solely for advertising purposes in connection with soliciting licenses for the BookNet System in accordance with this Agreement. "Trademark" shall mean the trademark/trade name CompuBooks and any and all trademarks, trade names, designs and other commercial symbols used in conjunction with the trademark "CompuBooks," and all jurisdictional transliterations thereof and all future additions thereto and modifications, derivations and variations thereof.

Agent shall not at any time do or permit to be done any act that may in any way impair the rights of CompuBooks in the Trademark. In order to comply with CompuBooks' quality control standards, Agent shall:

(i) use the Trademark in compliance with all relevant laws and regulations;

(ii) accord CompuBooks the right to inspect during normal business hours, without prior advance notice, any facility used by Agent in connection with its efforts to solicit orders for the BookNet System in order to confirm that Agent's use of the Trademark is in compliance with this provision; and

(iii) not modify the Trademark in any way and not use the Trademark other than as permitted by this Agreement.

If Agent fails to use the Trademark in compliance with this provision, such failure shall be deemed a breach of one of Agent's material obligations under this Agreement, for the purposes of possible termination of this Agreement by CompuBooks under Section 16.3 hereof. Agent shall not make any claims with respect to the Trademark and shall not, during or after the termination of this Agreement, contest the validity of the registration of the Trademark.

12. Title to BookNet System

The CompuBooks Database, and Software and Updates, and all copies thereof furnished to Agent pursuant to this Agreement, are proprietary to CompuBooks and all right, title and interest thereto are and shall remain in CompuBooks. All applicable rights to patents, copyrights, trademarks and trade secrets in the BookNet System, CompuBooks Database, Software and Updates are and shall remain the property of CompuBooks. Agent shall not sell, transfer, publish, disclose, display or otherwise make available the BookNet System, the Software, CompuBooks Database or the updates to others.

13. Confidentiality

Agent shall use its best efforts to ensure that all of Agent's employees, agents, contractors and customers abide by the terms and conditions of this Agreement, including without limitation, not knowingly permitting anyone to appropriate any portion of the CompuBooks Database, Software and Updates. In the event Agent becomes aware that the BookNet System is being used by such persons, Agent shall immediately use all reasonable efforts to have such unauthorized use immediately cease. Agent shall notify CompuBooks in writing of any and all such unauthorized use promptly after Agent has become aware thereof. The provisions of this Section shall survive the expiration or termination of this Agreement.

14. Covenant Not To Compete

During the term of this Agreement, and for ( ) year(s) thereafter, Agent shall not solicit orders directly or indirectly in the Territory for any systems that are competitive with the BookNet System.

15. Indemnification

15.1 Indemnification by Agent

Agent shall indemnify, defend and hold harmless CompuBooks, its officers, directors, shareholders, employees, agents and affiliates from and against any claims, losses, damages, liabilities or expenses (including, without limitation, reasonable attorneys' fees and expenses) resulting from or arising out of Agent's misuse or unauthorized use of the BookNet System or any part thereof.

15.2 Indemnification by CompuBooks

CompuBooks shall indemnify, defend and hold harmless Agent, its officers, directors, shareholders, employees, agents and affiliates from and against any claim, suit or proceeding based upon an allegation that the CompuBooks Database or Software (or any portion thereof) infringes upon or misappropriates any copyright, patent or trade secret of any third party, provided that CompuBooks is notified promptly of such claim, suit or proceeding in writing and is given authority, control and full and proper information and assistance in the defense and settlement of such claim, suit or proceeding. If the CompuBooks Database or Software is finally determined by a court of competent jurisdiction to constitute an infringement of any patent in the country of Agent, copyright or other trade secret of a third party and its use is enjoined, CompuBooks shall either:

(i) procure the right for Agent to continue to use the CompuBooks Database or Software under this Agreement; or

(ii) replace or modify the CompuBooks Database or Software with a version of the CompuBooks Database or Software that is not infringing and that satisfies this provision of this Agreement.

16. Term and Termination

16.1 Term

The term of this Agreement, unless sooner terminated as provided herein, shall commence on the Effective Date and shall terminate on the day immediately preceding the second anniversary thereof.

16.2 Termination by CompuBooks

CompuBooks shall have the right to terminate this Agreement pursuant to this Section 16.

16.3 CompuBooks Termination for Breach

CompuBooks shall have the right to terminate this Agreement upon ( ) days' written notice, in the event that Agent, its officers, directors or employees violate any material provision of this Agreement, including, but not limited to, confidentiality or unauthorized copying of the CompuBooks Database, Updates or Software.

16.4 CompuBooks Termination for Bankruptcy or Insolvency

CompuBooks shall have the right to terminate this Agreement, such termination immediately effective upon the giving of such notice of termination, upon the filing of a petition in bankruptcy, insolvency or reorganization against or by Agent, or Agent becoming subject to a composition for creditors, whether by law or agreement, or Agent going into receivership or otherwise becoming insolvent.

16.5 CompuBooks Termination for Change in Control

Upon the occurrence of a change in control or management or operating personnel of Agent, then Agent shall promptly notify CompuBooks in writing within ( ) days. If, in the reasonable opinion of CompuBooks, such change in control or management or operating personnel of Agent could have a material adverse effect on the business, prospects or operations of Agent and if Agent fails to promptly pursue (within [ ] days after receiving written notice thereof from CompuBooks) a remedy designed to cure (in the sole judgment of CompuBooks) CompuBooks' objections to such change, Compubooks may terminate this Agreement by giving written notice of termination to Agent. Such termination shall be immediately effective upon the giving of such notice. For the purposes of this provision, control shall mean direct or indirect control or ownership of a majority of the voting shares of CompuBooks by an organization.

16.6 Effect of Termination

Upon the expiration or prior termination of this Agreement, all rights, privileges and licenses granted hereunder shall immediately cease and Agent shall have no further rights with respect to the BookNet System. Upon expiration or termination of this Agreement pursuant to this Section 16, CompuBooks shall not have any obligation to Agent for compensation or for damages of any kind, whether on account of Agent's loss of present or prospective investments, compensation or goodwill.

17. Survival

Notwithstanding anything else in this Agreement to the contrary, the parties agree that Sections 9, 11, 13, 14, and 15.1 shall survive the expiration or termination of this Agreement, as the case may be, to the extent required for the full observation and performance by either or both of the parties hereto. Any accrued but unsatisfied obligations of Agent hereunder shall survive the expiration or termination of this Agreement until discharged or satisfied in full.

18. General

18.1 Entire Agreement

Each party acknowledges that it has read this Agreement, understands it, and agrees to be bound by its terms. Each party further agrees that this is the complete and exclusive statement of the agreement between the parties, which supersedes and merges all prior proposals, understandings and all other agreements, oral or written, between the parties relating to this Agreement. This Agreement may not be modified or altered except by written instrument duly executed by both parties.

18.2 Compliance With Applicable Law

Agent covenants that all of its activities under or pursuant to this Agreement shall comply with all applicable laws, rules and regulations. In particular, but without limitation, Agent shall be responsible for obtaining all licenses, permits and approvals that are necessary or advisable for the solicitation of licenses of the BookNet System in the Territory and for the performance of its obligations and responsibilities hereunder.

18.3 Governing Law

This Agreement and performance hereunder shall be governed by the laws of the State of New York without reference to the conflicts of law principles thereof.

18.4 Limitation of Actions

No action, regardless of form, arising out of this Agreement shall be brought by Agent more than ( ) years after the cause of action has arisen.

18.5 Validity

If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated. The parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction held to be invalid, void or unenforceable. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such which may hereafter be declared invalid, void or unenforceable.

18.6 Assignment

Agent may not assign or otherwise transfer, whether voluntarily, involuntarily, by operation of law, by merger, by transfer directly or indirectly of a majority of the issued and outstanding capital stock of Agent or otherwise, without, in each instance, obtaining the prior written consent of Licensor, its rights, duties or obligations under this Agreement to any person or entity, either in whole or in part.

18.7 Enforcement Expenses

CompuBooks shall have the right to collect from Agent its reasonable expenses incurred in enforcing this Agreement, including attorneys' fees and expenses.

18.8 Waiver

None of the conditions or provisions of this Agreement shall be deemed waived by an act of or knowledge on the part of either party, except by an instrument in writing signed by a duly authorized officer or representative of such party. Further, the waiver by either party of any right hereunder or the failure to enforce at any time any of the provisions of this Agreement, or any rights with respect thereto, shall not be deemed a waiver of any other rights hereunder or with respect to any breach or failure of performance of the other party.

18.9 Notices

All notices, requests, consents and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given ( ) day(s) after delivery by hand, or upon receipt if mailed first class, postage prepaid, by registered or certified mail, return receipt requested, or ( ) day(s) after depositing with an overnight courier service, or ( ) day(s) after delivery by telecopier (receipt confirmed) to the other party at its address and telecopy number first set forth above. Either party may change its address and/or telecopy number for purposes of notice in the manner set forth herein.

18.10 No Rights by Implication

No rights with respect to the BookNet System or the Trademark are granted or deemed granted hereunder or in connection herewith, other than those rights expressly granted in this Agreement.

18.11 Relationship of Parties

Nothing herein contained shall be deemed to create a joint venture or partnership relationship between the parties hereto. Neither party shall have any power to enter into any contracts or commitments in the name of, or on behalf of, the other party, or to bind the other party in any respect whatsoever. Without limiting the generality of the foregoing, Agent in no event shall be authorized to execute on behalf of CompuBooks, or otherwise bind CompuBooks with respect to, any such License Agreement.

18.12 Force Majeure

Neither CompuBooks nor Agent shall be liable in damages, or shall be subject to termination of this Agreement by the other party, for any delay or default in performing any obligation hereunder if that delay or default is due to any cause beyond its reasonable control and without the fault of negligence of that party. However, to excuse its delay of default hereunder, such party shall notify the other party of the occurrence or the cause, specifying the nature and particulars thereof and the expected duration thereof; and, within ( ) weeks after the termination of such occurrence or cause, such party shall give notice to the other party specifying the date of termination of such occurrence or cause. All obligations of both parties shall resume in full force and effect upon the termination of such occurrence or cause (including without limitation any payment which became due and payable hereunder prior to the termination of such occurrence or cause). For the purposes of this Section 18.12, a "cause beyond the reasonable control" of a party shall include, without limiting the generality of the phrase, any act of God, or of any government or other authority or statutory undertaking, industrial dispute, fire, explosion, accident, power failure, blood, riot or war (declared or undeclared).

18.13 Publicity

Agent agrees that any publicity or advertising which shall be released by it in which CompuBooks or the BookNet System is identified shall be in accordance with the terms of this Agreement and with any information or data which CompuBooks has furnished in connection with this Agreement. Copies of all such publicity and advertising shall be forwarded promptly to CompuBooks.

18.14 Counterparts

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

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their respective duly authorized representatives as of the date first above written.