* Portions marked with a “*” have been omitted pursuant to a request for
confidential treatment. Such portions have been filed separately with the
Securities and Exchange Commission.

 

Exhibit 10.10

 

FRAMEWORK FOR TECHNOLOGY COLLABORATION AGREEMENT

 

This Framework for Technology Collaboration Agreement (the “Agreement” or
“Framework Agreement”) is made and entered into on the Closing Date, as defined
in Exhibit D, by and between AMAZON.COM, INC., a Delaware corporation (“Amazon”)
and FRANKLIN ELECTRONIC PUBLISHERS, INC., a Pennsylvania corporation
(“Franklin”).

 

INTRODUCTION

 

Amazon is acquiring all of the shares of MobiPocket.com, S.A. (“MobiPocket”) as
of the Closing Date.

 

Franklin and MobiPocket are parties to several agreements related to MobiPocket
technologies and other items which will remain in effect in accordance with
their terms after the Closing Date (as defined in Exhibit D).

 

Franklin is a major shareholder in MobiPocket, and Franklin and Amazon desire to
establish the terms of the ongoing software development and distribution
relationship between Franklin and MobiPocket that will be in effect as of the
Closing Date by entering into this Agreement and the further agreements in the
forms set forth as Exhibits hereto.

 

Amazon and Franklin also desire to set forth the terms of a release and license
from Franklin to Amazon and its Affiliates under certain intellectual property
of Franklin and its Affiliates (as defined in Exhibit D).

 

In consideration of the foregoing premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:

 

AGREEMENT

 

Section 1. Defined Terms. Unless otherwise specified in this Agreement, each
term that appears with initial letters capitalized has the meaning set forth in
Exhibit D (Definitions), or in the applicable Going-Forward Technology
Agreement(s).

 

Section 2. Technology Development and Licenses

 

2.1 Japan Reader Development and License Terms. Franklin and MobiPocket shall
enter into, effective as of the Closing Date, the First Amendment to the Japan
Reader Development and License Agreement in the form set forth in Exhibit A.

 

2.2 Amendment to Development and License Agreement. Franklin and MobiPocket
shall enter into, effective as of the Closing Date, the Third Amendment to the
Development and License Agreement in the form set forth in Exhibit B.

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2.3 Source Code Escrow Agreement.

 

2.3.1 Franklin and MobiPocket shall enter into a Source Code Escrow Agreement in
the form set forth in Exhibit C, effective as of the Closing Date, and shall
terminate their existing Source Code Agreement in its entirety as of the
effective date of the Source Code Escrow Agreement contemplated by this
Agreement. Notwithstanding anything to the contrary in the Going-Forward
Technology Agreements, Franklin and Amazon agree that MobiPocket shall deposit,
within thirty (30) days of the Closing Date, source code for current versions of
the MobiPocket Reader (including the UA Reader and the MPRJ delivered under the
Japan Reader Development and License Agreement ) licensed to Franklin, and
related deposit materials, in the escrow account established by such Source Code
Escrow Agreement. Section 2.4.5 of this Agreement shall take effect only upon
Mobi-Pocket’s deposit of all source code required to be deposited in accordance
with the previous sentence; provided, however, that Amazon, on behalf of
MobiPocket and any Affiliate of Amazon, agrees that Franklin shall at all times
during the term of Source Code Escrow Agreement and any successor thereto be
entitled to bring actions or proceedings against MobiPocket, Amazon, or any
Affiliate of Amazon seeking specific performance to remedy any breach of Section
1.6 of the Source Code Escrow Agreement or any successor thereto Franklin and
Amazon further agree that the terms of the Source Code Escrow Agreement,
together with this Section 2.3 and the source code escrow-related terms of the
Going-Forward Technology Agreements (as amended by this Agreement), amend and
supersede in their entirety all obligations of MobiPocket or Amazon to Franklin
with respect to source code escrow or access rights.

 

2.3.2 If Iron Mountain Intellectual Property Management, Inc. (“IMIPM”), the
third party source code agent selected by mutual agreement of the parties to
perform such function for purposes of the Source Code Escrow Agreement set forth
in Exhibit C, elects (a) to terminate the Source Code Escrow Agreement, or (b)
not to renew the Source Code Escrow Agreement on terms mutually agreeable to the
parties, Franklin and Amazon will work together to identify a substitute third
party escrow agent and to complete all necessary forms of agreement, on
substantially equivalent terms (to the extent this is possible based on using
commercially reasonable efforts to work with the substitute third party escrow
agent to obtain such terms) as set forth in the Source Code Escrow Agreement
except to the extent (if any) that the parties mutually agree to modify such
terms, as promptly as possible (and, if possible, before the actual date of
expiration or termination of the then-existing Source Code Escrow Agreement).
Should Amazon fail to comply in any respect with its duties and obligations
under this Section 2.3.2, Amazon hereby agrees that Franklin may,
notwithstanding the provisions of Section 2.4.5 herein, exercise any appropriate
remedy in connection with such failure. Any such substitute source code escrow
agreement that the parties may enter into shall be deemed to be the “Source Code
Escrow Agreement” for purposes of this Agreement upon its entry into effect. The
terms of this Section 2.3.2 shall not apply, and the parties shall have no
obligation to seek to enter into a substitute source code escrow agreement, in
the event the then-current Source Code Escrow Agreement is terminated because of
an uncured nonpayment or breach by Franklin or any authorized successor thereto.

 

2.4 Future Development Projects.

 

2.4.1 During the term of Franklin’s license to the UA Reader (as set forth in
the Development and License Agreement), Franklin may request from time to time
that MobiPocket perform particular Future Development Projects that relate
solely to development for the Franklin operating system platforms and Franklin
devices for which MobiPocket has previously performed development work, are
reasonably related to

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previous development activities undertaken by MobiPocket under agreements with
Franklin, and are otherwise commercially reasonable in nature and scope.
Franklin shall provide MobiPocket with a detailed written proposal regarding any
Future Development Project that it requests that MobiPocket consider
undertaking, including without limitation which Going-Forward Technology
Agreement Franklin proposes to have apply to the results of such Future
Development Project (i.e., which Going-Forward Technology Agreement’s license
terms, duration and potentially other terms, subject to mutual agreement of the
parties in each such instance, should apply to the deliverables that Franklin is
proposing to obtain under a Future Development Project). Upon request from
MobiPocket, Franklin shall provide additional information and requirements
regarding any such proposal to assist MobiPocket’s consideration thereof.

 

2.4.2 MobiPocket may in its sole discretion determine that it is willing,
subject to further mutual agreement with Franklin on applicable terms (including
without limitation regarding specifications, milestone schedule, acceptance
testing, fees, payment schedule, and the application of the license terms,
duration and potentially other terms from a Going-Forward Technology Agreement)
to perform such a Future Development Project. If MobiPocket notifies Franklin
that it is potentially interested in performing a Future Development Project on
mutually agreed terms and conditions, the parties shall use commercially
reasonable efforts to negotiate for a period of not less than thirty (30) days
and enter into a binding written agreement concerning such Future Development
Project, which agreement shall either state that the license terms and duration
of a specified Going-Forward Technology Agreement apply to the results of the
Future Development Project, or shall expressly supersede all potentially
relevant terms of the Going-Forward Technology Agreements and shall specify the
license terms and duration applicable to the results of such Future Development
Project. In either case, such agreement shall specify that source code to be
developed thereunder shall be placed in escrow under the terms of the then
applicable Source Code Escrow Agreement between Franklin and MobiPocket or its
successor.

 

2.4.3 If (a) MobiPocket does not agree to enter into negotiations regarding a
Future Development Project that Franklin believes in good faith relates solely
to development for the Franklin operating system platforms and Franklin devices
for which MobiPocket has previously performed development work is reasonably
related to previous development activities undertaken by MobiPocket under
agreements with Franklin, and is otherwise commercially reasonable in nature and
scope, or (b) MobiPocket and Franklin do not reach agreement on binding terms
that would apply to a Future Development Project after negotiating pursuant to
Section 2.4.2 for at least thirty (30) days with respect to such terms (in
either such case, the parties shall have reached a “Future Development
Impasse”), Franklin may provide written notice to Amazon that Franklin is
escalating discussion regarding the applicable Future Development Project within
the management of Franklin and Amazon as follows: The Chief Executive Officer of
Franklin and a Vice President of Amazon shall arrange and participate in a
meeting (in person or otherwise, as such individuals may determine) and seek to
resolve the Future Development Impasse. If such discussions do not result in the
parties’ reaching a mutually satisfactory resolution within thirty (30) days
after Franklin issued a written notice invoking this escalation procedure,
Franklin may pursue obtaining access to relevant versions of MobiPocket Reader
source code in accordance with the release conditions and other terms of the
Source Code Escrow Agreement.

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2.4.4 Franklin agrees that notwithstanding anything to the contrary in the
Going-Forward Technology Agreements or any other agreement between Franklin and
MobiPocket, this Section 2.4 together with Section 1.1 and Exhibit A of the
Japan Reader Development and License Agreement, Section 8(d) of the Development
and License Agreement (as amended), and the Source Code Escrow Agreement set
forth the sole and exclusive obligations of MobiPocket and Amazon with respect
to any future software development, customization or update activities
(collectively, “Future Development Projects”) in connection with any
Going-Forward Technology Agreement or any other agreement between Franklin and
MobiPocket.

 

2.4.5 SOLE AND EXCLUSIVE REMEDY; WAIVER OF OTHER REMEDIES. FRANKLIN FURTHER
AGREES THAT, SUBJECT TO MOBIPOCKET’S DEPOSIT OF ALL SOURCE CODE AS EXPRESSLY
REFERENCED IN SECTION 2.3.1 HEREIN OR SECTION 1.6 OF THE SOURCE CODE ESCROW
AGREEMENT OR ANY SUCCESSOR THERETO, THE TERMS OF SECTION 2.4.3 AND THE RELEASE
TO FRANKLIN OF APPROPRIATE SOURCE CODE IN ACCORDANCE WITH THE SOURCE CODE ESCROW
AGREEMENT SHALL CONSTITUTE ITS SOLE AND EXCLUSIVE REMEDY FOR ANY FAILURE BY
MOBIPOCKET OR AMAZON OR ANY AMAZON AFFILIATE TO PROVIDE ANY REQUESTED SOFTWARE
CUSTOMIZATION, ERROR CORRECTION, OR OTHER FUTURE SOFTWARE DEVELOPMENT. FRANKLIN
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS AND REMEDIES THAT IT MAY HAVE AT
LAW OR OTHERWISE TO OBTAIN ANY REMEDY OR RELIEF OTHER THAN AS EXPRESSLY SET
FORTH IN THIS AGREEMENT OR THE JAPAN READER DEVELOPMENT AND LICENSE AGREEMENT OR
THE DEVELOPMENT AND LICENSE AGREEMENT WITH RESPECT TO ANY FAILURE BY MOBIPOCKET
OR AMAZON OR ANY AMAZON AFFILIATE TO PERFORM ANY OBLIGATION TO FRANKLIN
(INCLUDING WITHOUT LIMITATION ANY OBLIGATION TO TIMELY COMPLETE AND DELIVER ANY
SOFTWARE UPDATE OR ERROR CORRECTION, ANY MODIFIED OR NEW SOFTWARE, OR ANY
WARRANTY OR REPAIR OBLIGATION REGARDING ANY OF THE FOREGOING), WHETHER OR NOT
SUCH FAILURE CONSTITUTES A MATERIAL BREACH OF ANY AGREEMENT OF MOBIPOCKET,
AMAZON OR ANY AMAZON AFFILIATE.

 

2.4.6 AMAZON RESPONSIBILITY FOR MOBIPOCKET PERFORMANCE; TERMINATION OF CERTAIN
AGREEMENTS. For purposes of clarification, Amazon agrees that it shall be
responsible for MobiPocket’s compliance with and performance of all
responsibilities under this Agreement, the Going-Forward Technology Agreements,
and the Source Code Escrow Agreement, and that Amazon will be liable for any
failure of MobiPocket to so comply or perform, and Amazon further agrees that in
the case in which MobiPocket is merged into or otherwise consolidated with
Amazon or in the case in which MobiPocket takes action to assign or transfer any
Going-Forward Technology Agreements or the Source Code Escrow Agreement to
Amazon that Amazon hereby accepts the obligations of MobiPocket thereunder or
accepts the delegation of all duties of MobiPocket thereunder. Without limiting
the foregoing, the parties hereby acknowledge and agree that, other than the
Source Code Escrow Agreement, and the Going-Forward Technology Agreements that
any and all other agreements between MobiPocket and Franklin existing as of the
date hereof are hereby terminated in their entirety as of the Closing Date.

 

2.5 Revised Per Unit Royalty Amount. Franklin shall pay to MobiPocket a per unit
royalty

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of * in connection with Franklin’s sales of any and all products containing the
UA Reader, any other version of the MobiPocket Reader, or any derivative work of
any of the foregoing developed by Franklin or MobiPocket in accordance with the
Going-Forward Technology Agreements or any other agreement between them
regarding a Future Development Project, or pursuant to any license rights
granted to Franklin under the Source Code Escrow Agreement; provided, however,
that this sentence shall not apply to Franklin’s sales of products that are
subject to the LPL 1000 Letter Agreement. The parties agree that this Section
2.5 amends and supersedes in their entirety the per unit royalty terms set forth
in each of the Going-Forward Technology Agreements. The parties agree that any
royalties that are due to be paid by Franklin under any Going-Forward Technology
Agreements on or after the Closing Date shall be accrued and earned out against
any royalty advances paid by Franklin to MobiPocket or Amazon at any time
without regard to the determination of which agreement under which such royalty
advance was initially paid by Franklin.

 

2.6 Other Fees. Except as expressly amended by this Agreement, all royalties,
fees and other amounts that Franklin is obligated to pay MobiPocket or its
successors (including without limitation Amazon and its Affiliates) pursuant to
the Going-Forward Technology Agreements or any other agreement between
MobiPocket and Franklin will continue to accrue after the Closing Date in
accordance with the applicable agreement and for as long as it remains in
effect. MobiPocket shall invoice Franklin for, and Franklin shall pay to
MobiPocket, any and all such royalties, fees and other amounts in accordance
with each applicable agreement.

 

2.7 Review of Certain Terms. The terms of this Section 2.7 will apply only if, *

 

2.8 Additional Framework Terms. Franklin and Amazon further agree that,
effective as of the Closing Date the following shall govern all of the
Going-Forward Technology Agreements:

 

2.8.1 Notwithstanding anything to the contrary in the Going-Forward Technology
Agreements or any other agreement between Franklin and MobiPocket, this
Agreement, as well as each of the Going-Forward Technology Agreements, including
all amendments and addenda thereto, shall be governed by the laws of the State
of New York, without reference to rules governing choice of law.

 

2.8.2 (a) With respect to all deliverables that MobiPocket has provided or
provides in the future to Franklin under either the Reader Agreement dated June
22, 2001, as amended, or the LPL 1000 Letter Agreement, MobiPocket shall have no
indemnity or other obligation under Section 26 of such Reader Agreement, the
second paragraph of the LPL 1000 Letter Agreement, or otherwise, with respect to
any third party claim to the extent arising from any code, specifications or
other material not created by MobiPocket; any modification or unauthorized use
of the MPR or other mutually-agreed deliverable; any further distributions of
Franklin products that incorporate a prior version of the MPR or other
mutually-agreed deliverable following MobiPocket’s delivery of any updated
version thereof to Franklin with respect to such future distribution; or the
combination of the MPR or other mutually-agreed deliverable with any Franklin
product, or any product, software, hardware, technology or service with which
the MPR or other mutually-agreed deliverable may be used, where the applicable
third party claim would not have occurred but for such combination (any claim
described in this sentence, an “Excluded Claim”).

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(b) Franklin shall defend, indemnify and hold MobiPocket harmless from and
against any and all third party claims, damages, liabilities, costs (including
reasonable attorneys’ fees) and expenses incurred by MobiPocket resulting from
any Excluded Claim or regarding Franklin’s use or distribution of the Franklin
Products; provided, however, that this Section 2.8.2 shall not apply to the
subject matter of the Patent Infringement Defense Letter Agreement.

 

2.8.3 Reservation of Rights. Notwithstanding anything set forth in any of the
Going Forward Technology Agreements to the contrary, except as otherwise
expressly authorized in (i) the Development and License Agreement, as amended,
the Source Code Escrow Agreement, or the Japan Reader Development Agreement, as
amended, or (ii) as otherwise authorized in writing by MobiPocket or Amazon
after the Closing Date: (a) Franklin will not use, disclose, publish or
distribute any MobiPocket software, including the MPR or the MobiPocket
Publisher Professional Software, or any other mutually-agreed MobiPocket
deliverable (or any portion thereof), or any and all updates or upgrades thereto
(collectively, “MP Software”); (b) Franklin will not decompile, reverse
engineer, disassemble or otherwise attempt to derive source code from any MP
Software; (c) subject to the licenses expressly granted in the Going Forward
Technology Agreements, MobiPocket hereby reserves all of its right, title and
interest in and to all MP Software, including the MPR, the MobiPocket Publisher
Software, and any other mutually-agreed MobiPocket deliverable; and (d) for
purposes of clarification, nothing in this Agreement or in any of the
Going-Forward Technology Agreements authorizes Franklin to distribute, or to
sublicense rights in the MPR, the MobiPocket Publisher Software, or any other MP
Software whatsoever, for use on or distribution with, any product other than
products based on or incorporating the UA; provided that Franklin, its
sublicensees and its customers shall be entitled to continue to distribute
products that include the MPR existing as of the Closing Date and Franklin shall
be entitled to develop Franklin’s “Ultimate Reference Suite” line of products
incorporating the MPR under the Going-Forward Technology Agreements; and,
further provided, that Amazon agrees that, notwithstanding anything to the
contrary in this Section 2.8.3, Amazon will negotiate in good faith with
Franklin at Franklin’s reasonable request for extension of rights under any
Gong-Forward Technology Agreement to platforms based on operating systems other
than UA during the term of any such Going-Forward Technology Agreement on fair
and non-discriminatory terms. In addition to and without limiting the foregoing,
Franklin acknowledges that nothing contained in this Agreement or any of the
Going-Forward Technology Agreements shall be construed to allow Franklin to
sublicense or otherwise distribute any MP Software whatsoever (including, but
not limited to, the MPR or the MobiPocket Publisher Professional Software) on a
standalone basis in any manner whatsoever, without MobiPocket’s prior written
approval; provided that Franklin shall be entitled to continue to distribute any
version of the MPR, whether Standard or Pro, or of the MobiPocket Standard or
Publisher Professional Software or of the MobiPocket Office Companion to end
users from Franklin’s web site for which Franklin shall pay to MobiPocket * for
all such sales.

 

Section 3. License and Release Related to Franklin Patents and Other Proprietary
Rights

 

3.1 License.

 

(a) Franklin hereby grants to MobiPocket, Amazon, and Amazon’s current and
future Affiliates, on behalf of Franklin and its Affiliates, and effective as of
the Closing Date, an irrevocable, fully paid up, worldwide, non-exclusive
license under the Franklin Patents, to make, have made, use, contribute to the
use of, induce the use of, and incorporate any and all software and other
technologies applicable to its or their development work for Franklin or its
Affiliates, and solely for use in such development work for Franklin,

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pursuant to the Going-Forward Technology Agreements or any written agreement
between any such parties concerning any Future Development Project. Such license
shall take effect on the Closing Date and shall remain in effect until the
expiration or termination of Franklin’s license to distribute any development
work performed and owned by MobiPocket, Amazon or any Amazon Affiliate under the
Development and License Agreement, the Japan Reader Development and License
Agreement, or any binding written agreement concerning any Future Development
Project (which time period shall be referred to herein as the “Cooperation
Period”).

 

(b) Franklin hereby grants to MobiPocket, Amazon and its current and future
Affiliates, on behalf of Franklin and its Affiliates, and effective as of the
Closing Date, an irrevocable, fully paid up, worldwide, non-exclusive license
under the Franklin Patents, and solely during the Cooperation Period, to make,
have made, sell, license, import, use, contribute to the use of, and induce the
use of, any product, technology or service within the Licensed Field of Use and
to practice any method in making, having made, using, licensing or selling any
product, technology or service within the Licensed Field of Use, that, but for
this license, would constitute Infringement of any claim of the Franklin
Patents. During the Cooperation Period, in the event that, as part of any Future
Development Project or other development work for Franklin (collectively,
“Future Work”), Franklin requests that MobiPocket include any modified or new
features or functionality as part of such Future Work (collectively, “New
Features”), then prior to MobiPocket commencing any work on such New Features,
Franklin shall first disclose to MobiPocket and Amazon whether it has any
Patents covering such New Features (these patents, the “Additional Franklin
Patents”). Notwithstanding the license term set forth above in this Section
3.1(b) (i.e., the Cooperation Period), in the event that Franklin fails to so
disclose the existence of any such Additional Franklin Patents, as applicable,
Franklin acknowledges and agrees that the licenses granted in this Section
3.1(b) shall be automatically deemed to include such Additional Franklin
Patents, and that the license for the Additional Franklin Patents shall remain
in effect until the date of expiration of all rights, worldwide, under the last
to expire of the Additional Franklin Patents.

 

3.2 Certain Rights. Without limiting the rights that third parties would enjoy
as a result of application of the patent exhaustion doctrine or similar
principles, MobiPocket and Amazon and its Affiliates may sublicense to
customers, developers, manufacturers, suppliers, and distributors under the
licenses set forth in Section 3.1(b) the right to incorporate or combine its or
their products, services or technologies within the Licensed Field of Use,
and/or use its or their products, services or technologies with such third
parties’ products, services or technologies within the Licensed Field of Use,
and/or to distribute, use and authorize others to use products, services or
technologies of MobiPocket, Amazon or its Affiliates within the Licensed Field
of Use in or with such third parties’ products, services or technologies;
provided, however, that the right so granted shall not include a right for a
third party product, service or technology to directly Infringe any Franklin
Patent if the applicable MobiPocket, Amazon or Amazon Affiliate services or
technologies were not incorporated or combined therein.

 

3.3 Release. Franklin, on behalf of itself and its Affiliates, hereby
irrevocably releases MobiPocket, Amazon, its Affiliates, and its and their
customers, licensees, developers, suppliers, manufacturers, distributors, and
successors and assigns from any and all liability for Infringement arising prior
to the Closing Date to the extent that such Infringement would have been
licensed under this Agreement if it had occurred after the Closing Date.

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3.4 Covenants Regarding Non-Patent Intellectual Property Rights. In addition to
the Patent licenses set forth above, Franklin, on behalf of itself and its
Affiliates, hereby irrevocably and perpetually covenants not to sue MobiPocket,
Amazon, any Amazon Affiliate or any of its or their customers, licensees,
developers, suppliers, manufacturers, or distributors:

 

(a) in connection with any MobiPocket software, or any products, services or
technologies containing or using any MobiPocket software, for infringement of
any copyrights owned, licensed to or controlled by Franklin or any Franklin
Affiliate as of the Closing Date and incorporated, modified, distributed or
otherwise used as of the Closing Date in connection with MobiPocket software or
related materials, (for example, documentation or HTML web sites).

 

(b) in connection with any MobiPocket software, or any products, services or
technologies containing or using any MobiPocket software, for misappropriation
or misuse of any trade secrets of Franklin or any Franklin Affiliate or breach
of any confidentiality agreement with Franklin or any Franklin Affiliate, but
solely with respect to trade secrets or confidential information that have been
incorporated or otherwise used, as of the Closing Date, in MobiPocket software.

 

For purposes of clarification, the terms of this Section 3.4 do not supersede
any obligation of MobiPocket or its successors or assigns to pay any royalties
that may be owed from time to time to Franklin in accordance with any agreement
between MobiPocket and Franklin that is in effect as of the Closing Date, as
applicable, and, notwithstanding any other provision hereof, including, but not
limited to, Section 2.4.5, do not limit the remedies of Franklin in connection
therewith, which agreements are as follows: the eBookBase Retail Agreement (as
defined in Exhibit D). The parties acknowledge that as of the Closing Date,
MobiPocket is not licensed from Franklin or any Affiliate of Franklin, pursuant
to a written Linguistic Technology Licensing Agreement with Franklin or
otherwise, any spelling correction technology in any or all of twenty languages
or dialects (including, but not limited to, English (America), French, or French
(Canadian) or any inflection technology in any or all of French, German,
Italian, or Spanish (“the Linguistic Technology Licensing Materials”), that no
Franklin Linguistic Technology Licensing Materials are copied in, used in,
incorporated in, or form the basis for any MobiPocket software or product as of
the Closing Date, and that no Linguistic Technology Licensing Materials are
covered by the provisions of this Section 3.4 or licensed from Franklin to
Amazon hereunder.

 

3.5 New Affiliates. If Amazon acquires an Affiliate after the Closing Date, the
licenses and covenants granted under Sections 3.1, 3.2 and 3.4 shall extend to
such Affiliate effective as of the date of the acquisition.

 

3.6 Former Affiliates. If an Affiliate of Franklin ceases to be an Affiliate
after the Closing Date and such Affiliate holds any Franklin Patents, all
licenses granted under this Agreement shall continue for the Cooperation Period
notwithstanding such change in the status of such Affiliate.

 

3.7 Transfers of Intellectual Property. Franklin will cause any transferee or
successor in interest to any Franklin Patent or other intellectual property or
proprietary right, or any interest therein, to be bound by all applicable terms
of this Section 3.

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3.8 Further Discussions. The parties agree to enter into good faith discussions
upon request of either of them in order to license to each other, in
consideration of reasonable royalties customary in the industry, additional
rights under their applicable Patents (i.e., as to the Franklin Patents, beyond
the scope of the terms set forth in this Section 3) on fair and
non-discriminatory terms. If the parties are not able to agree upon a
commercially reasonable royalty rate or related licensing terms, they agree that
before either of them may commence any legal action seeking to enforce its
patent rights with respect to any products or services of the other party, the
parties will escalate discussions on commercially reasonable royalties and
related licensing terms through their respective senior management teams and
permit a commercially reasonable amount of time for such discussions to lead to
agreement, and in no event will either party commence any such legal action
unless at least forty-five (45) days have elapsed since the initial escalation
of discussions to the level of Vice President at each company; provided,
however, that neither party shall be required to wait for the forty-five (45)
day period to elapse to commence legal action if doing so would cause it to
forfeit any rights due to the applicable statute of limitations setting forth
the time by which to bring such action.

 

Section 4. E-Bookbase Agreement. Effective as of the Closing Date, Amazon
(acting on behalf of MobiPocket) and Franklin agree, with respect to the
eBookBase Retailer Agreement, that:

 

4.1 Term. Such eBookBase Retailer Agreement shall remain in effect until the
three (3)-year anniversary of the Closing Date, except that, without limiting
any other rights or remedies that either party to such agreement may have at law
or otherwise (including without limitation any right to terminate the eBookBase
Retailer Agreement), either party may terminate such agreement upon not less
than thirty (30) days prior written notice to the other party of any material
breach of such agreement by such other party, unless the breach has been cured
within such thirty (30) day period.

 

4.2 Reduction of Certain Fees. The fees charged by MobiPocket to Franklin for
redistribution of eBooks pursuant to such Agreement will be reduced to * of the
applicable fees set forth in Exhibit A of such eBookBase Retailer Agreement for
the remainder of the term agreed to in Section 4.1. The parties agree that once
the * advance paid by Franklin to MobiPocket in connection with the eBookBase
Retailer Agreement has been earned out, no further advances shall be due or
owing in connection with such Agreement.

 

Subject only to the terms set forth in this Agreement, the eBookBase Retailer
Agreement shall remain in full force and effect in accordance with its terms. In
the event of any conflict between the terms set forth in this Agreement and the
eBookBase Retailer Agreement, the terms of this Agreement shall control.

 

Section 5. Agreement Regarding Branded Store on Amazon Site. Amazon agrees that
upon the first annual renewal date of the Market Development Funds Agreement
dated January 1, 2004, Amazon will renew the branded store for Franklin and *,
in consideration of the terms and conditions of this Agreement.

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Section 6. Nondisclosure; No Publicity.

 

6.1 Amazon and Franklin will abide by the terms and conditions of the
Nondisclosure Agreement with respect to information received by them as a result
of activities contemplated by this Agreement. Nonpublic information about
MobiPocket or its products and/or services disclosed to Franklin in connection
with the preparation of or activities contemplated by this Agreement shall be
deemed to be Confidential Information of Amazon for purposes of the
Nondisclosure Agreement.

 

6.2 Public Disclosures. (i) Each party agrees that Confidential Information (as
defined below) shall not be disclosed by such party in any manner except in
accordance with the express provisions of this Section 6.2. For purposes of this
Section 6.2, the term “Confidential Information” means the existence and terms
of the Letter Agreement between Amazon and Franklin dated as of even date
herewith (the “Letter Agreement”), this Agreement, all agreements contemplated
thereby or hereby or related thereto, and the transactions contemplated thereby
or hereby (with the express exception of any information contained therein or
related to any such transaction that was a matter of public record prior to the
Closing Date); provided, however, that Confidential Information for purposes
hereof and for purposes of the Nondisclosure Agreement shall not include (i) any
information that becomes publicly known without breach of this Section 6.2 by
the party against whom enforcement of this Section 6.2 is otherwise sought or
(ii) any information to be included in any press release referenced herein or
later consented to hereunder or in any filing referenced in Clause (ii) below .
Each party further agrees that, except as contemplated herein, no announcement
regarding any Confidential Information in a press release, conference,
advertisement, written announcement, professional or trade publication, mass
marketing materials, or otherwise may be made without the prior written consent
of the other party; provided that Amazon agrees (i) that the first press release
or other announcement issued by Amazon relating to the acquisition of MobiPocket
by Amazon or the MPR shall be acceptable in all respects to Franklin and shall
include a reference to Franklin’s embedding of MobiPocket technology in
Franklin’s reference devices localized for Franklin’s global markets, and, (ii)
to cooperate in good faith with Franklin to issue a joint press release related
to a future product launch on or before March 31, 2006.

 

(ii) Notwithstanding the foregoing, (i) either party may disclose any of the
Confidential Information to its employees, investment bankers, lenders,
accountants and attorneys, in each case only where such persons or entities have
a need to know such information and are under appropriate nondisclosure
obligations, (ii) Amazon agrees that nothing herein or in the Nondisclosure
Agreement limits or restricts in any way Franklin’s filing of a Form 8-K with
the Commission, as set forth on Appendix A hereto and Franklin’s issuance of a
press release as attached hereto as Appendix B, (iii) Amazon agrees that nothing
herein or in the Nondisclosure Agreement limits or restricts in any way
Franklin’s filing of the Letter Agreement without redaction and this Agreement
and certain of its exhibits as an exhibit to Form 10-K or 10-Q for the period in
which the documents are entered into, in the redacted form(s) attached as
Appendix C hereto if, concurrently with the filing of such Form 8-K, Franklin
files a confidential treatment request with the Commission in the form of
Appendix D hereto (the “CTR”) pursuant to Rule 406 under the 33 Act and Rule
24b-2 under the 34 Act, (iv) each party may disclose or describe the
Confidential Information in its periodic reports and other filings pursuant to
the Securities Act of 1933, as amended (the “33 Act”) and the Securities
Exchange Act of 1934, as amended (the “34 Act”), and the rules and regulations
promulgated thereunder (the “Rules”), or to the extent otherwise required by law
or judicial or administrative order; provided, however, that if such disclosure
is so required during the period beginning on the Closing Date and ending on the
date six months after the Closing Date, the disclosing party will notify the
other party in writing by fax in the form described below (the “Notice”)
promptly before such disclosure in the case in which confidential treatment is
available for language that is proposed to disclose or describe

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Confidential Information in any financial statement that contains additional
language to that set forth in Appendix A and will cooperate with the non
disclosing party to seek confidential treatment with respect to such disclosure
to the maximum extent possible under law but only in the case in which the non
disclosing party notifies the disclosing party in writing by fax within
seventy-two hours of receipt of Notice of its desire to have the disclosing
party seek such confidential treatment (“Return Notice”), which Return Notice
shall with specificity describe the language for which such treatment is desired
and the reason that such treatment is desired; provided, that in default of
timely delivery by the non disclosing party of Return Notice in accordance with
this provision waiver of the rights of the non disclosing party to have the
disclosing party seek confidential treatment under this provision shall be
deemed. The parties agree that Notice shall be sufficient if in the form of a
letter indicating the filing at issue and containing the proposed language
containing Confidential Information and that Notice hereunder need not include
in its entirety the filing at issue. Any notices to be faxed under this Section
(i) to Amazon shall be faxed to: attention General Counsel, fax (206) 266-7010
or (ii) to Franklin shall be faxed to: attention CEO, fax (609) 387 0082, with
copy to CFO, fax 609 387 2666.

 

Section 7. Warranties; Disclaimers.

 

7.1 Warranties. Each party represents, warrants and covenants that: (a) it has
the full right, power and authority to enter into this Agreement and perform its
obligations hereunder, (b) its performance of this Agreement, and the other
parties’ exercise of rights under this Agreement, will not conflict with or
result in a breach of any of the terms of, or constitute a default under, any
agreement or law by which it is bound, (c) when executed and delivered, this
Agreement will constitute its legal, valid and binding obligation enforceable
against it in accordance with its terms, (d) it will comply with all applicable
laws in its performance of, and its exercise of its rights under, this
Agreement, and (e) it will not, and will not purport to represent itself to any
third party as having any authority to, bind the other party or incur any
obligation on behalf of the other party or its Affiliates. In addition, Franklin
represents, warrants and covenants that it has the full right, power, and
authority to grant the licenses, releases and covenants under Franklin Patents
and other intellectual property and proprietary rights that are provided in this
Agreement.

 

7.2 DISCLAIMERS. EXCEPT AS EXPRESSLY PROVIDED IN SECTION 7.1, NEITHER PARTY
HERETO MAKES, AND EACH PARTY HEREBY WAIVES AND DISCLAIMS, ANY REPRESENTATIONS OR
WARRANTIES REGARDING THIS AGREEMENT OR ANY OF THE ACTIVITIES CONTEMPLATED
HEREBY, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR NON-INFRINGEMENT, AND ANY IMPLIED WARRANTIES ARISING OUT
OF COURSE OF DEALING, COURSE OF PERFORMANCE OR USAGE OF TRADE. WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, EACH PARTY SPECIFICALLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY REGARDING ANY ECONOMIC OR OTHER BENEFIT THAT THE
OTHER PARTY MIGHT OBTAIN THROUGH ITS PARTICIPATION IN OR PERFORMANCE UNDER THIS
AGREEMENT.

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Section 8. Indemnity

 

8.1 Each party (acting as an “Indemnifying Party”) shall be solely responsible
for, and shall defend, indemnify and hold the other party and its Affiliates
(and each of their directors, officers, employees and agents) (collectively, the
“Indemnified Parties”) harmless from and against, any and all third party
claims, costs, losses, damages and expenses (including reasonable attorneys’
fees) arising out of or in connection with any actual or alleged breach of any
of the Indemnifying Party’s representations and warranties set forth in this
Agreement. For purposes of clarification, an Affiliate of either party shall not
be deemed to be a “third party” for purposes of “third party claims” that give
rise to the other party’s obligations under this Section 8.

 

8.2 In connection with any third-party claim, action or proceeding described in
Section 8.1 (collectively, a “Claim”), the Indemnified Party shall: (a) give the
Indemnifying Party prompt written notice of such Claim (provided that any delay
in notification will not relieve the Indemnified Party of its obligations
hereunder except to the extent that the delay impairs its ability to defend such
Claim), (b) cooperate reasonably with the Indemnifying Party (at the
Indemnifying Party’s request and expense) in connection with the defense and
settlement of such Claim, and (c) permit the Indemnifying Party to control the
defense and settlement of such Claim; provided, that the Indemnifying Party may
not settle such Claim without the Indemnified Party’s prior written consent
(which shall not be unreasonably withheld); and provided, further, that the
Indemnified Party (at its cost) may participate in the defense and settlement of
such Claim with counsel of its own choosing.

 

Section 9. Miscellaneous

 

9.1 Trademark Use. Amazon agrees to authorize Franklin at no charge to use,
subject to Franklin’s entry into and compliance with Amazon’s then-current
standard applicable license terms and usage guidelines, the logos and/or other
trademarks under which Amazon distributes the MobiPocket Reader from time to
time during the Cooperation Period.

 

9.2 LIMITATION OF LIABILITY. EXCEPT TO THE EXTENT (I) AWARDED TO A THIRD PARTY
IN ANY JUDGMENT AGAINST WHICH EITHER PARTY IS OBLIGATED TO INDEMNIFY ANY
INDEMNIFIED PARTY PURSUANT TO SECTION 8, (II) ARISING OUT OF EITHER PARTY’S
BREACH OF ANY WARRANTY SET FORTH IN SECTION 7, (III) IN CONNECTION WITH ANY
BREACH OR MISUSE BY EITHER PARTY OF THE LICENSE TERMS OR OTHER INTELLECTUAL
PROPERTY RIGHTS OR PROTECTIONS EXPRESSLY REFERENCED IN THIS AGREEMENT (INCLUDING
WITHOUT LIMITATION EACH EXHIBIT HERETO), OR (IV) AS SPECIFICALLY PROVIDED IN THE
JAPAN READER DEVELOPMENT AND LICENSE AGREEMENT NEITHER PARTY WILL BE LIABLE FOR
INCIDENTAL, INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT
LIMITATION, LOST PROFITS OR LOST DATA) UNDER THIS AGREEMENT, EVEN IF THAT PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

9.3 Assignment. This Agreement and the rights granted under it, including its
Exhibits, may not be assigned by Franklin in whole or in part without Amazon’s
prior written consent. Amazon will have the right to assign all or any part of
its rights under this Agreement and/or any of the Going-Forward Technology
Agreements at any time to any Affiliate of Amazon

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that agrees to be bound by the terms hereof and for which Amazon agrees to be
responsible under Section 2.4.6 hereof. Subject to the foregoing, this Agreement
will be fully binding upon, inure to the benefit of and be enforceable by the
parties hereto and their respective successors and permitted assigns.

 

9.4 This Section intentionally left blank.

 

9.5 Notices. All notices, consents, approvals or other communications hereunder
in connection with this Agreement will be in writing and sent by internationally
recognized certified mail, return receipt requested, or by receipted
internationally recognized commercial courier, addressed to each of the
following addressees or such substitute addressees as may be designated in
writing.

 

Amazon.com, Inc.    Franklin Electronic Publishers, Inc. 1200 12th Avenue South
   One Franklin Plaza Suite 1200    Burlington, NJ 08016 Seattle, WA 98144     
Facsimile: (206) 266-7010    Fax 609 387 0082 Attn: General Counsel    ATTN:
President and CEO

 

Copy to: Chief Financial Officer

 

9.6 Entire Agreement. This Agreement, including the Exhibits referenced herein
and the Non-Disclosure Agreement, represents the entire agreement between the
parties with respect to the subject matter hereof and supersedes any previous or
contemporaneous oral or written agreements regarding such subject matter. Any
modification of this Agreement must be in writing and signed by a duly
authorized representative of each party. For purposes of clarification, nothing
in this Agreement shall be deemed to limit in any way the effectiveness of the
Non-Disclosure Agreement, any of the Going-Forward Technology Agreements (as
amended by this Agreement), or any other separate agreements regarding other
subject matter between Amazon and Franklin or MobiPocket and Franklin.

 

9.7 Counterparts. This Agreement may be executed by facsimile and in any number
of counterparts, each of which will be considered an original, but all of which,
when taken together, will constitute one and the same Agreement.

 

IN WITNESS WHEREOF, the parties have executed this Agreement intending to be
legally bound as of and only as of the Closing Date.

 

Amazon.com, Inc.   Franklin Electronic Publishers, Inc. By:  

 

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  By:  

 

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Title:  

 

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  Title:  

 

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Address:  

 

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  Address:  

 

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Exhibit D

Definitions for Framework Agreement

 

Definitions. The following terms will have the following specified meanings when
used in the Framework Agreement in initially capitalized form. All section
references below are to the Framework Agreement.

 

1.0 “Additional Franklin Patents” shall have the meaning set forth in Section
3.1 of the main body of this Agreement.

 

1.1 “Affiliate” means, with respect to any legally recognizable entity, any
other such entity directly or indirectly Controlling, Controlled by, or under
common Control with such entity. “Control,” as used in this definition, means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a legally recognizable entity,
whether through the ownership of voting shares or other voting interests, by
contract, or otherwise. Where such entity is a partnership, limited liability
company, corporation, or similar entity and has partners, members, or
shareholders, each of which has equal ownership interests or equal control
interests, by contract or otherwise, then each such partner, member, or
shareholder will be deemed to possess, directly or indirectly, the power to
direct or cause the direction of the management and policies of that entity.

 

1.2 “Closing Date” means the date on which the acquisition of MobiPocket by
Amazon takes effect.

 

1.3 “Comparable Licensee” is defined in Section 2.7.

 

1.4 “Development and License Agreement” means the agreement of such title
entered into between MobiPocket and Franklin on May 6, 2003, as amended.

 

1.5 “eBookBase Retail Agreement” means the MobiPocket eBookBase Retailer
Agreement between MobiPocket and Franklin that was signed by MobiPocket on May
10, 2004.

 

1.6 “Franklin Patents” means any Patent under which Franklin or any of its
current or future Affiliates owns, controls, or obtains the right to grant a
license or other immunity from suit.

 

1.7 “Future Development Projects” has the meaning set forth in Section 2.4.4.

 

1.8 “Going-Forward Technology Agreements” means: (a) the Reader Agreement; (b)
the Development and License Agreement, as amended; (c) the Japan Reader
Development and License Agreement, as amended; (d) the LPL 1000 Letter
Agreement; (e) the MobiPocket eBookBase Retailer Agreement dated January 10,
2004; and (f) the MobiPocket eBookBase Publisher Agreement dated February 5,
2004. For purposes of clarity, the Content and Software Cross Selling Agreement
dated 1/2/02, as amended, between MobiPocket and Franklin to which the documents
referenced by (e) and (f) are Appendices is hereby terminated and only the
aforementioned named Appendices referenced in (e) and (f) immediately above from
such Cross Selling agreement shall be considered “Going-Forward Technology
Agreements,” but not any other parts of such agreement; (g) three Download
Content Agreements between MobiPocket and Franklin dated April 29, 2003, April
21, 2003 and May 3, 2003.

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1.9 “Indemnified Parties” and “Indemnifying Parties” are both defined in Section
8.1.

 

1.10 “Infringement” (and related terms such as “Infringe” and “Infringed”) means
direct infringement, contributory infringement or inducing infringement of a
Patent or any right under a Patent.

 

1.11 “Japan Reader Development and License Agreement” means the Japan Reader
Development and License Agreement dated February 3, 2005 between MobiPocket and
Franklin in the form set forth in Exhibit A.

 

1.12 “Licensed Field of Use” means (a) the MP Software, and (b) any and all
services or technologies that process content in electronic format or that
transmit or receive content over a public or private local or wide-area network
(including without limitation the Internet). (c) For purposes of clarification,
the Licensed Field of Use shall include all versions of the MP Software that
have been distributed by MobiPocket as of the Closing Date, to the extent that
such versions incorporate inventions covered by Franklin Patents, and all
activities and business practices going forward that MobiPocket has engaged in
with respect to commercialization of such MP Software as of the Closing Date, to
the extent that such activities and business practices incorporate any Franklin
Patents ((a), (b) and (c) shall be referred to collectively as, the “Covered
Readers and Practices”). Other than the aforementioned Covered Readers and
Practices, the Licensed Field of Use shall not include any handheld electronic
reference product, such as, by way of example only, Franklin’s model MWD-1470
known as the Merriam-Webster Dictionary & Thesaurus, or any distribution of MP
Software in connection with any MobiPocket or Amazon (including its Affiliates)
designed or branded handheld devices that contain embedded electronic content or
are intended to accept the download of electronic content from a public or
private local or wide-area network (including without limitation the Internet)
and incorporate an electronic display for viewing such content (e.g., an eBook
reader device) (collectively “Proprietary Devices”). In the event that Franklin
has valid Patents that read onto such Proprietary Devices, as applicable, then
the terms of Section 3.8 shall apply (without limiting their generality) to any
Patent licenses that Amazon wishes to obtain relating to such Proprietary
Devices. For avoidance of doubt, in no case shall the Licensed Field of Use
encompass any software, service, or technology that uses any invention covered
by a Franklin Patent other than (x) inventions covered by Franklin Patents that
were incorporated in Covered Readers and Practices or (y) inventions covered by
Additional Franklin Patents deemed to have been included within the license
granted in Section 3.1(b) of the Framework Agreement.

 

1.13 “LPL 1000 Letter Agreement” means the letter agreement related to LPL 1000
between Franklin and MobiPocket and dated August 23, 2004.

 

1.14 “Non-Disclosure Agreement” means the agreement between Amazon and Franklin
dated October 27, 2004 and entitled “Mutual Non-Disclosure Agreement.”

 

1.15 “Patents” means all patents (including design patents), utility models,
patent registrations, and equivalent rights worldwide issued or issuing on any
applications for the same entitled, in whole or in part, to an effective filing
date on or before the end of the period in which MobiPocket is performing
development work or maintenance for Franklin in accordance with the terms of the
Development and License Agreement, the Japan Reader Development and License
Agreement or any such binding written agreement concerning a Future Development
Project . “Patents” includes patent applications, provisional applications,
invention registrations, utility models, extensions, divisionals, continuations,
continuations-in-part, renewals, reexaminations, reissued patents, and any other
invention document submitted to a patent office or equivalent agency that can
result in a patent or equivalent right, in any jurisdiction worldwide.

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1.16 “Reader Agreement” means the agreement between Franklin and MobiPocket
dated June 22, 2001, as amended, which is entitled “Reader Agreement.”

 

1.17 “Source Code Escrow Agreement” means the agreement of such title in the
form set forth in Exhibit B.

 

1.18 “UA” means Franklin’s proprietary operating system that is used both to
operate and to provide applications that define functionality, such as providing
access to content stored in electronic format.

 

1.19 “UA Reader” means versions of the MobiPocket Reader 4.x software for
handheld platforms or direct successors thereto (“MPR”) that are customized by
MobiPocket, Amazon or an Amazon Affiliate for use as an integral part of
Franklin products that incorporate the UA.

 

1.20 The “Warranty Period” means the period that begins upon Franklin’s
acceptance of final and complete deliverables under the Development and License
Agreement and terminates on the earlier of (i) one year from first commercial
shipment of any Franklin product that contains such MobiPocket deliverable and
(ii) eighteen (18) months after the date Franklin accepted such MobiPocket
deliverable.