NETLIBRARY.COM LIBRARY AGREEMENT

(International Library Customer)

THIS NETLIBRARY.COM LIBRARY AGREEMENT (this “Agreement”) dated ______, 1999 is between ______(“Customer”) and netLibrary, Inc., a Delaware corporation (“NL”).

Recitals

A.NL has designed and developed certain computer software and an Internet web site, as well as related business relationships, concepts, plans and ideas, for an electronic “library” service known as netLibrary.com (“netLibrary.com”) for hosting electronic versions of books, journals, research publications and other materials (“eBooks”) over the Internet.

B.Customer desires to purchase licenses to certain eBooks and to have NL provide Customer access to eBooks and certain netLibrary.com Services (as defined below) upon the terms and conditions described herein.

In connection of the mutual covenants and obligations set forth below, the parties agree as follows:

Agreement

1.netLibrary.com Services. During the term of this Agreement, NL shall license certain eBooks to Customer and shall establish and administer, using NL’s existing electronic bookshelf technology, an electronic library (the “Customer netLibrary.com”) providing Customer and its Patrons (as defined below) with access via Customer’s internet connection, to and management of eBooks for which Customer has purchased licenses and paid the applicable Access Fees (as described below). Exhibit A describes the principal features of “Customer netLibrary.com,” and the associated services to be provided to Customer by NL. The parties acknowledge and agree that unless NL notifies Customer of a change in arrangements, Customer netLibrary.com shall be maintained on computer equipment located in the United States, and the services provided under this Agreement shall be deemed to have been provided in the United States.

2.Fees. In consideration for the netLibrary.com Services, Customer shall pay to NL the appropriate fees as described on the attached Exhibit B as may be amended from time to time(the “Fees”) including the license fee for each Book (i.e., list price) minus any applicable discounts as described on Exhibit B, the applicable Access Fee (Annual or Prepayment) for each eBook for as long as Customer desires access to each such eBook, and applicable Reinstatement Fees (for annual Access Fee option only). Payment terms for all fees are 30 days from date of invoice. NL has the right to charge 1.5% interest on unpaid invoices. Payment shall be made in U.S. dollars, without any deduction or offset. All Fees under this Agreement are net of, and Customer agrees to pay and hold harmless NL on account of, any taxes or other governmental charges that may be imposed by any government having jurisdiction over Customer (other than U.S. taxes imposed on NL’s net income) on the execution or delivery of this Agreement or any transactions or payments hereunder. Customer shall bear and pay any such taxes or other charges, and to the extent NL is required to pay or Customer is required to withhold any such taxes or other charges, Customer will pay promptly to NL funds in the amount required to be paid or withheld.

  1. Term.

(a)Except as otherwise provided in this paragraph 3, the term of this Agreement shall commence upon the effective date hereof and shall terminate, one year from the effective date. Thereafter, this Agreement shall automatically renew for additional one year terms unless either party gives written notice to the other party at least 60 days prior to expiration of the then current term of its election to terminate this Agreement.

(b)With respect to any eBook licensed by Customer, NL shall continue to provide the services for the Customer netLibrary.com until Customer elects to remove the eBook from Customer netLibrary.com or cease paying Access Fees, even though this Agreement may be terminated as to future purchases of eBooks.

(c)If government approval is required before this Agreement is enforceable by NL, then Customer shall be responsible for obtaining such approval, and such government approval is a condition precedent to the validity of this Agreement. NL shall have no obligations under this Agreement until such government approval has been obtained and evidence of such approval has been received by NL. To the extent that any governmental entity requires changes to be made to the terms of this Agreement or the relationship between the parties, either party may, on ten (10) days’ written notice, terminate this Agreement without liability.

  1. Patron Usage.

(a)Customer will be solely responsible for determining which of Customer’s patrons, members, students, faculty and/or users (collectively, “Patrons”) will have access to Customer netLibrary.com under the terms of this Agreement.

(b)The use of netLibrary.com by Customer and Patrons shall be governed by the netLibrary.com online Terms of Usage as amended from time to time. NL reserves the right to terminate any Patron’s access to and usage of netLibrary.com in the event that such Patron violates the Terms of Usage. NL shall notify Customer of any violation by a Patron of the Terms of Usage, and Customer shall have 3 days to attempt to correct the violation. NL will not terminate any Patron's usage if the violation is corrected within the 3-day period. Repeated violations of the Terms of Use by Customer or by Patrons may be cause for termination of this Agreement.

5.Termination. A party (the non-breaching party) may terminate this Agreement at any time after providing the other party 60 days prior written notice of the occurrence of any of the following events, unless such event is capable of cure or remedy and is cured or remedied within the 60-day period following receipt of such written notice (provided that a ten day notice and cure period shall apply to nonpayment of amounts due):

(a)A party fails to timely pay any amounts due hereunder; or

(b)A party violates any material provision of this Agreement (which shall include a material failure to provide the required services hereunder, or a breach of the confidentiality provisions of this Agreement) or otherwise has committed breaches of this Agreement that, in the aggregate, are material.

6.Limited Warranty. NL warrants that, as to any eBooks sold or licensed to Customer for use with Customer netLibrary.com, NL has the necessary authority to sell or license such eBooks to Customer and to give Customer access to the eBooks on Customer netLibrary.com. Otherwise, NL’s sole warranty hereunder is that it will use commercially reasonable efforts to provide the netLibrary.com Services as described in this Agreement.

7.Warranty Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN SECTION 6, CUSTOMER NETLIBRARY.COM AND THE EBOOKS LICENSED HEREUNDER ARE PROVIDED AS-IS WITHOUT WARRANTY OF ANY KIND AND NL EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. NL DOES NOT WARRANT, GUARANTEE OR MAKE ANY REPRESENTATIONS REGARDING THE USE, OR THE RESULTS OF THE USE OF CUSTOMER NETLIBRARY.COM. NO ORAL OR WRITTEN INFORMATION OR ADVICE GIVEN BY NL OR ITS EMPLOYEES SHALL CREATE A WARRANTY OR IN ANY WAY INCREASE THE SCOPE OF NL’S OBLIGATIONS HEREUNDER, AND CUSTOMER MAY NOT RELY ON ANY SUCH INFORMATION OR ADVICE.

  1. Indemnity; Limitation on Damages.

(a) NL will defend, indemnify and hold Customer harmless from any action based solely on a claim that the use of netLibrary.com by Customer or its Patrons in accordance with this Agreement infringes any copyright, or trade secrets of any third party. Customer will defend, indemnify, and hold NL harmless from any action based solely on a claim that the use of Customer netLibrary.com by Customer or its Patrons in violation of the terms of this Agreement infringes any copyright or trade secrets of any third party.

(b)Except as provided in Section 8(a), neither party shall claim special, incidental, indirect, or consequential damages, including lost profits, for breach of this Agreement. Remedies shall be limited to claims for amounts due hereunder, for injunctive relief only as provided hereunder, or for direct damages. A party’s aggregate liability for any and all claims, losses, liabilities and demands arising hereunder, whether for breach of contract, in tort or otherwise, shall be limited (in the case of NL’s liability to Customer) to the amount of Fees paid by Customer to NL, or (in the case of Customer’s liability to NL) to the amount of Fees payable by Customer to NL, in each case in the 12 month period preceding the claim. Notwithstanding any other provision of this Agreement, a non-breaching party may seek injunctive relief in any court of competent jurisdiction to enjoin or restrain the breaching party from continuing to do any act or commit any violation or threatened violation of this Agreement, and the prevailing party, if any, on a claim for injunctive relief shall be entitled to recover its reasonable attorneys’ fees incurred in connection with that proceeding. Injunctive relief will be without prejudice to the non-breaching party’s right also to seek money damages for breach.

  1. Confidential Information. Customer shall not use or disclose information relating to (i)the terms of this Agreement, (ii)the content of reports delivered hereunder, or (iii)pricing terms or arrangements under this Agreement, as allowed by law.

10.Intellectual Property Rights. The eBooks provided by NL under this Agreement are subject to copyrights owned by NL and third parties. Customer shall not take any action, and shall not permit any action to be taken by its patrons, that would violate the copyrights of such third parties and NL. Customer shall not attempt to register any of the trademarks, company names, trade names or product names owned or used by NL without NL’s written permission, and any rights Customer may acquire in such trademarks, company names, product names or trade names, shall be and hereby are assigned by Customer to NL. Customer shall not attempt to develop any products that contain the “look and feel” of any of Customer’s products and services. Customer understands and agrees that continued violation of copyrights of NL or any third party by Customer and/or its Patrons shall give NL the right to terminate this Agreement under Paragraph5 above.

11. Escrow Agreement. Within sixty days from the execution of this Agreement, NL shall deliver to Customer a copy of an escrow agreement (“Escrow Agreement”) with an independent third-party escrow agent (“Escrow Agent”) providing for the following:

(a)NL shall deliver to Escrow Agent, on a quarterly basis, a copy of a compact disc (or other suitable medium) containing a copy of all eBooks then available on Member netLibrary.com for which Member has prepaid the Access Fee or is then paying Access Fees (the “Backup eBook Copies”).

(b)At the time of delivery of the Backup eBook Copies, NL shall make available to Member a report listing the eBooks concurrently being delivered to the Escrow Agent as the Backup eBook Copies.

(c)From time to time, NL shall deposit with Escrow Agent a description of the software and other equipment needed for a system designed to display, and to protect the copyrights of, the eBooks included in the Backup eBook Copies, so that a single copy of an eBook can be viewed by only one user at a time (the “Backup System Description”).

In the case that the Backup eBook Copies are released pursuant to the terms and conditions of the Escrow Agreement, Member acknowledges and agrees that the copyrights for all eBooks included with the Backup eBook Copies are and will be owned by the respective publishers and NL, and Member further agrees that it will use the Backup eBook Copies in a manner that will permit the eBook to be viewed by only a single user at any time, and that any violation of this agreement will be a violation of the copyright of the publisher of the eBook for which Member will be accountable to the publisher. Member further acknowledges agrees that the rights provided to Member under the Escrow Agreement may not include the computer software or similar rights necessary to operate the system described in the Backup System Description, and that such system might not have the same or comparable functionality as netLibrary.com.

12.General Provisions.

(a)Assignability. Neither party may sell, assign, transfer or convey this Agreement or its rights and obligations hereunder, without the prior written consent of the other party, which shall not be unreasonably withheld; provided that NL reserves the right to assign or transfer this Agreement to an affiliate or to any party that acquires substantially all of the assets of NL. Nothing in this paragraph shall restrict usage of Customer netLibrary.com by Patrons.

(b)Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute the same Agreement.

(c)Entire Agreement. Except as provided in paragraph (f) below, this Agreement sets forth the entire agreement between the parties hereto with respect to the subject matter hereof, merges all discussions between them and supersedes and replaces any and every other prior or contemporaneous agreement, understanding or negotiation that may have existed between NL and Customer to the extent that any such agreement relates to the subject matter hereof.

(d)Exhibits Incorporated. All Exhibits referred to in this Agreement shall be deemed incorporated in this Agreement by reference.

(e)Force Majeure. Customer acknowledges that the Internet is an unsecure, unstable, unregulated, unorganized and unreliable environment, and that the ability of NL to deliver the netLibrary.com Services may be dependent upon the Internet and equipment, software, systems, data and services provided by various telecommunications carriers, equipment manufacturers, firewall providers and encryption system developers and other vendors and third parties. Neither party shall be liable for or have the right to terminate this Agreement as a result of, any delays or failures to perform any of its obligations hereunder to the extent that such delays or failures are due to circumstances beyond its reasonable control, including acts of God, strikes, riots, acts of war, power failures, functions or malfunctions of the Internet, telecommunications services, firewalls, encryption systems and security devices, or governmental regulations imposed after the date of this Agreement.

(f)Further Assurances. Customer and NL agree to take such further actions and to execute such further documents as may be necessary or appropriate to effectuate this Agreement and the transactions contemplated herein.

(g)Jurisdiction and Venue. NL and Customer agree that any action arising from or out of the negotiations, execution, interpretation or enforcement of this Agreement may be brought in the state or federal courts that are located in the State of Colorado. Customer hereby consents to jurisdiction and venue in the state and federal courts in Colorado.

(h)Law Governing Agreement. The parties agree that this Agreement was entered into in, and the place of contracting shall be deemed to be, Boulder, Colorado. This Agreement shall be governed by the laws of the State of Colorado, U.S.A. (without regard to any conflict of laws provisions contained therein), except as to copyright and trademark matters, which are governed by the law of the United States and any applicable international conventions. The parties agree that, to the extent that the United Nations Convention on Contracts for the International Sale of Goods would be deemed to apply to this Agreement or any transactions hereunder, the parties agree to exclude the application of any and all provisions of such Convention to this Agreement.

(i)Arbitration. Any dispute or controversy arising in connection with this Agreement shall be finally settled by binding arbitration. The arbitration shall be held in Denver, Colorado, and conducted in accordance with the rules of the American Arbitration Association, before a panel of three arbitrators selected in accordance therewith, and in the English language. Judgment upon the award rendered may be entered in any court having jurisdiction, or application may be made to such court for a judicial acceptance of the award and an order of enforcement. However, nothing in this Agreement shall prevent NL from seeking temporary or injunctive relief to prevent Customer or any Patron from violating copyright or other intellectual property rights of NL or any third party.

(j)Modification or Amendment. Notwithstanding any other provision contained herein, NL shall have the right to modify and amend Exhibit B and the fees and discounts referenced therein upon each annual anniversary of this Agreement provided that NL provides Customer with thirty days written notice of any new fee or discount structure. Any other modification or amendment of any provision of this Agreement must be in writing and signed by a duly authorized representative of each party.

(k)No Implied Waivers. The failure of either party to exercise any right or remedy herein, or the waiver by either party of any breach of this Agreement, shall not prevent a subsequent exercise or enforcement of such provisions or be deemed a waiver of any subsequent breach of the same or any other provision of this Agreement.

(l)No Third-Party Beneficiaries. This Agreement is not intended to confer any benefit on any person or entity not a party hereto.