Document:

<PAGE>

                                                                    EXHIBIT 10.3

                        INCENTIVE STOCK OPTION AGREEMENT
                  UNDER THE HAIGHTS CROSS COMMUNICATIONS, INC.
                        2000 STOCK OPTION AND GRANT PLAN

                                    (PERFORMANCE VESTING)

NAME OF OPTIONEE:                   [Name] (the "Optionee")

NO. OF OPTION SHARES:               [Number] Shares of Common Stock

GRANT DATE:                         [Date] (the "Grant Date")

EXPIRATION DATE:                    [Date] (the "Expiration Date")

OPTION EXERCISE PRICE/SHARE:        [Price] (the "Option Exercise Price")

      Pursuant to the Haights Cross Communications, Inc. 2000 Stock Option and
Grant Plan (the "Plan"), Haights Cross Communications, Inc., a Delaware
corporation (together with all successors thereto, the "Company"), hereby grants
to the Optionee, who is an employee of the Company or any of its Subsidiaries,
an option (the "Stock Option") to purchase on or prior to the Expiration Date,
or such earlier date as is specified herein, all or any part of the number of
shares of Common Stock, par value $.001 per share ("Common Stock"), of the
Company indicated above (the "Option Shares," and such shares once issued shall
be referred to as the "Issued Shares"), at the Option Exercise Price, subject to
the terms and conditions set forth in this Incentive Stock Option Agreement
(this "Agreement") and in the Plan. This Stock Option is intended to qualify as
an "incentive stock option" as defined in Section 422(b) of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"). To the extent that any
portion of the Stock Option does not so qualify, it shall be deemed a
non-qualified stock option.

      1.    DEFINITIONS. For the purposes of this Agreement, the following terms
shall have the following respective meanings. All capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in the
Plan.

            "Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations thereunder.

            An "Affiliate" of any Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by or is
under common control with the first mentioned Person. A Person shall be deemed
to control another Person if such first Person possesses directly or indirectly
the power to direct, or cause the direction of, the management and policies of
the second Person, whether through the ownership or voting securities, by
contract or otherwise.

            "Bankruptcy" shall mean (i) the filing of a voluntary petition under
any bankruptcy or insolvency law, or a petition for the appointment of a
receiver or the making of an

<PAGE>

assignment for the benefit of creditors, with respect to the Optionee or any
Permitted Transferee, or (ii) the Optionee or any Permitted Transferee being
subjected involuntarily to such a petition or assignment or to an attachment or
other legal or equitable interest with respect to the Optionee's assets, which
involuntary petition or assignment or attachment is not discharged within 60
days after its date, and (iii) the Optionee or any Permitted Transferee being
subject to a transfer of the Stock Option or the Issued Shares by operation of
law, except by reason of death.

            "Board" shall mean the Board of Directors of the Company or its
successor entity.

            "Cause" shall mean that the Optionee has:

                  (i)   Acted with negligence or willful misconduct in
connection with the performance of his or her material duties;

                  (ii)  Acted in an insubordinate, recalcitrant, disobedient,
refractory, truculent, or unmanageable manner;

                  (iii) Acted in a violent manner;

                  (iv)  Used abusive language toward any manager or employee;

                  (v)   Been the subject of excessive unreported or unexcused
absences;

                  (vi)  Committed a material act of common law fraud against the
Company or any of its officers;

                  (vii) Been convicted of a felony;

                  (viii) Breached a fiduciary duty owed to the Company;

                  (ix)  Embezzled assets of the Company;

                  (x)   Failed to adequately treat a drug or alcohol dependency
problem which has an adverse impact on the performance of the Optionee's duties;

                  (xi)  Violated any material policy of the Company, including
the Company's Equal Employment and Harassment Policy; or

                  (xii) Voluntarily resigned his or her employment with the
Company or any of its Subsidiaries.

            "Committee" shall mean the Board or a committee of the Board then
responsible for administration of the Plan.

            "Common Stock" shall mean the Company's Common Stock, par value
$.001 per share, together with any shares into which Common Stock may be
converted or exchanged, as provided above and herein.

<PAGE>

            "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.

            "Initial Public Offering" shall mean the consummation of the first
fully underwritten, firm commitment public offering pursuant to an effective
registration statement under the Act, other than on Forms S-4 or S-8 or their
then equivalents, covering the offer and sale by the Company of its equity
securities, or such other event as a result of or following which the Common
Stock shall be publicly held.

            "Permitted Transferees" shall mean any of the following to whom the
Optionee may transfer Issued Shares hereunder: the Optionee's spouse, children
(natural or adopted), stepchildren or a trust for their sole benefit of which
the Optionee is the settlor; provided, however, that any such trust does not
require or permit distribution of any Issued Shares during the term of this
Agreement unless subject to its terms.

            "Person" shall mean any individual, corporation, partnership
(limited or general), limited liability company, limited liability partnership,
association, trust, joint venture, unincorporated organization or any similar
entity.

            "Sale Event" shall mean, regardless of form thereof, consummation of
(i) the dissolution or liquidation of the Company, (ii) the sale of all or
substantially all of the assets of the Company on a consolidated basis to an
unrelated person or entity, (iii) a merger, reorganization or consolidation in
which the holders of the Company's outstanding voting power immediately prior to
such transaction do not own a majority of the outstanding voting power of the
successor entity immediately upon completion of such transaction, (iv) the sale
of all or a majority of the outstanding capital stock of the Company to an
unrelated person or entity or (v) any other transaction in which the owners of
the Company's outstanding voting power immediately prior to such transaction do
not own at least a majority of the outstanding voting power of the successor
entity immediately upon completion of the transaction.

            "Service Relationship" shall mean any relationship as an employee,
part-time employee, director or consultant of the Company or any Subsidiary of
the Company such that, for example, a Service Relationship shall be deemed to
continue without interruption in the event the Optionee's status changes from
full-time employee to part-time employee or consultant.

            "Subsidiary" shall mean any corporation, limited liability company
or other entity (other than the Company) in any unbroken chain of corporations,
limited liability companies or other entities beginning with the Company if each
of the corporations, limited liability companies or entities (other than the
last corporation or entity in the unbroken chain) owns stock or other interests
possessing 50 percent or more of the economic interest or the total combined
voting power of all classes of stock or other interests in one of the other
corporations, limited liability companies or entities in the chain.

<PAGE>

      2.    VESTING AND EXERCISABILITY.

            (a)   No portion of this Stock Option may be exercised until such
      portion shall have vested.

            (b)   Except as set forth below and in Section 6, and subject to the
determination of the Committee in its sole discretion to accelerate the vesting
schedule hereunder, this Stock Option shall vest and be exercisable as provided
on Schedule A attached hereto.

            (c)   In the event the Optionee's Service Relationship with the
Company and its Subsidiaries is terminated by the Company for Cause, this Stock
Option shall immediately expire and be null and void as of the date of such
termination. In the event that the Optionee's Service Relationship with the
Company and its Subsidiaries terminates for any other reason or under any other
circumstances, including the Optionee's resignation, retirement or termination
by the Company (other than for Cause), or upon the Optionee's death or
disability (as defined in Section 422(c)(6) of the Code), this Stock Option may
thereafter be exercised, to the extent it was vested and exercisable on the date
of such termination, until the date specified in Section 1(d) below. Any portion
of the Stock Option that is not exercisable on the date of such termination of
the Service Relationship shall immediately expire and be null and void.

            (d)   Subject to the provisions of Section 2(c) and Section 6 below,
once any portion of this Stock Option becomes vested and exercisable, it shall
continue to be exercisable by the Optionee or his or her successors as
contemplated herein at any time or times prior to the earliest of (i) the date
which is (A) twelve (12) months following the date on which the Optionee's
Service Relationship with the Company and its Subsidiaries terminates due to
death or disability or (B) 90 days following the date on which the Optionee's
Service Relationship with the Company terminates if the termination is due to
any other reason (other than termination by the Company for Cause), or (ii) the
Expiration Date. For purposes of this Agreement the Committee shall have sole
discretion to determine the reason for the termination of the Optionee's Service
Relationship with the Company or any Subsidiary.

            (e)   It is understood and intended that this Stock Option is
intended to qualify as an "incentive stock option" as defined in Section 422 of
the Code to the extent permitted under applicable law. Accordingly, the Optionee
understands that in order to obtain the benefits of an incentive stock option
under Section 422 of the Code, no sale or other disposition may be made of
Issued Shares for which incentive stock option treatment is desired within the
one-year period beginning on the day after the day of the transfer of such
Issued Shares to him or her, nor within the two-year period beginning on the day
after the grant of this Stock Option and further that this Stock Option must be
exercised within three months after termination of employment (or twelve months
in the case of death or disability) to qualify as an incentive stock option. If
the Optionee disposes (whether by sale, gift, transfer or otherwise) of any such
Issued Shares within either of these periods, he or she will notify the Company
within thirty (30) days after such disposition. The Optionee also agrees to
provide the Company with any information concerning any such dispositions
required by the Company for tax purposes. Further, to the extent Option Shares
and any other incentive stock options of the Optionee having an aggregate Fair
Market

<PAGE>

Value in excess of $100,000 (determined as of the Grant Date) vest in any year,
such options will not qualify as incentive stock options.

      3.    EXERCISE OF STOCK OPTION.

            (a)   The Optionee may exercise this Stock Option only in the
following manner: Prior to the Expiration Date (subject to Section 6), the
Optionee may deliver a Stock Option exercise notice (an "Exercise Notice") in
the form of Appendix A hereto indicating his or her election to purchase some or
all of the Option Shares with respect to which this Stock Option is exercisable
at the time of such notice. Such notice shall specify the number of Option
Shares to be purchased. Payment of the purchase price may be made by one or more
of the following methods:

                  (i)   in cash, by certified or bank check, or other instrument
      acceptable to the Committee in U.S. funds payable to the order of the
      Company in an amount equal to the purchase price of such Option Shares;

                  (ii)  by the Optionee delivering to the Company a promissory
      note if the Board has expressly authorized the loan of funds to the
      Optionee for the purpose of enabling or assisting the Optionee to effect
      the exercise of his or her Stock Option; provided that at least so much of
      the exercise price as represents the par value of the Stock shall be paid
      other than with a promissory note if otherwise required by state law;

                  (iii) if the Initial Public Offering covering the offer and
      sale of Common Stock of the Company to the public has occurred, then (A)
      through the delivery (or attestation to ownership) of shares of Common
      Stock that have been purchased by the Optionee on the open market or that
      have been held by the Optionee for at least six months and are not subject
      to restrictions under any plan of the Company, (B) by the Optionee
      delivering to the Company a properly executed Exercise Notice together
      with irrevocable instructions to a broker to promptly deliver to the
      Company cash or a check payable and acceptable to the Company to pay the
      option purchase price, provided that in the event the Optionee chooses to
      pay the option purchase price as so provided, the Optionee and the broker
      shall comply with such procedures and enter into such agreements of
      indemnity and other agreements as the Committee shall prescribe as a
      condition of such payment procedure, or (C) a combination of (i), (iii)(A)
      and (iii)(B) above. Payment instruments will be received subject to
      collection.

            (b)   Certificates for the Option Shares so purchased will be issued
and delivered to the Optionee upon compliance to the satisfaction of the
Committee with all requirements under applicable laws or regulations in
connection with such issuance. Until the Optionee shall have complied with the
requirements hereof and of the Plan, the Company shall be under no obligation to
issue the Option Shares subject to this Stock Option, and the determination of
the Committee as to such compliance shall be final and binding on the Optionee.
The Optionee shall not be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares of Common Stock subject to this
Stock Option unless and until this Stock Option shall have been exercised
pursuant to the terms hereof, the Company shall have issued and delivered the
Option Shares to the Optionee, and the Optionee's name shall have

<PAGE>

been entered as a stockholder of record on the books of the Company. Thereupon,
the Optionee shall have full dividend and other ownership rights with respect to
such Issued Shares, subject to the terms of this Agreement.

            (c)   Notwithstanding any other provision hereof or of the Plan, no
portion of this Stock Option shall be exercisable after the Expiration Date.

      4.    INCORPORATION OF PLAN. Notwithstanding anything herein to the
contrary, this Stock Option shall be subject to and governed by all the terms
and conditions of the Plan.

      5.    TRANSFERABILITY. This Agreement is personal to the Optionee and is
not transferable by the Optionee in any manner other than by will or by the laws
of descent and distribution. The Stock Option may be exercised during the
Optionee's lifetime only by the Optionee (or by the Optionee's guardian or
personal representative in the event of the Optionee's incapacity). The Optionee
may elect to designate a beneficiary by providing written notice of the name of
such beneficiary to the Company, and may revoke or change such designation at
any time by filing written notice of revocation or change with the Company; such
beneficiary may exercise the Optionee's Stock Option in the event of the
Optionee's death to the extent provided herein. If the Optionee does not
designate a beneficiary, or if the designated beneficiary predeceases the
Optionee, the executor of the Optionee may exercise this Stock Option to the
extent provided herein in the event of the Optionee's death.

      6.    EFFECT OF CERTAIN TRANSACTIONS. In the case of a Sale Event, this
Stock Option shall terminate upon the effective time of any such Sale Event
unless provision is made in connection with such transaction in the sole
discretion of the parties thereto for the assumption of this Stock Option
heretofore granted, or the substitution of this Stock Option with a new Stock
Option of the successor entity or a parent thereof, with such adjustment as to
the number and kind of shares and the per share exercise prices as such parties
shall agree. In the event of such termination, the Optionee shall be permitted,
for a specified period of time prior to the consummation of the Sale Event as
determined by the Committee, to exercise all portions of the Stock Option which
are then exercisable.

      7.    WITHHOLDING TAXES. The Optionee shall, not later than the date as of
which the exercise of this Stock Option becomes a taxable event for federal
income tax purposes, pay to the Company or make arrangements satisfactory to the
Committee for payment of any federal, state and local taxes required by law to
be withheld on account of such taxable event. Subject to approval by the
Committee, the Optionee may elect to have the minimum tax withholding obligation
satisfied, in whole or in part, by authorizing the Company to withhold from
shares of Common Stock to be issued, or transferring to the Company, a number of
shares of Common Stock with an aggregate Fair Market Value that would satisfy
the withholding amount due. The Optionee acknowledges and agrees that the
Company or any Subsidiary of the Company has the right to deduct from payments
of any kind otherwise due to the Optionee, or from the Option Shares to be
issued in respect of an exercise of this Stock Option, any federal, state or
local taxes of any kind required by law to be withheld with respect to the
issuance of Option Shares to the Optionee.

<PAGE>

      8.    RESTRICTIONS ON TRANSFER OF ISSUED SHARES. None of the Issued Shares
acquired upon exercise of the Stock Option shall be sold, assigned, transferred,
pledged, hypothecated, given away or in any other manner disposed of or
encumbered, whether voluntarily or by operation of law, unless such transfer is
in compliance with all applicable securities laws (including, without
limitation, the Act), and such disposition is in accordance with the terms and
conditions of Sections 8 and 9. In connection with any transfer of Issued
Shares, the Company may require the transferor to provide at the Optionee's own
expense an opinion of counsel to the transferor, satisfactory to the Company,
that such transfer is in compliance with all foreign, federal and state
securities laws (including, without limitation, the Act). Any attempted
disposition of Issued Shares not in accordance with the terms and conditions of
Sections 8 and 9 shall be null and void, and the Company shall not reflect on
its records any change in record ownership of any Issued Shares as a result of
any such disposition, shall otherwise refuse to recognize any such disposition
and shall not in any way give effect to any such disposition of any Issued
Shares. Subject to the foregoing general provisions, Issued Shares may be
transferred pursuant to the following specific terms and conditions:

            (a)   Transfers to Permitted Transferees. The Optionee may sell,
assign, transfer or give away any or all of the Issued Shares to Permitted
Transferees; provided, however, that such Permitted Transferee(s) shall, as a
condition to any such transfer, agree to be subject to the provisions of this
Agreement to the same extent as the Optionee (including, without limitation, the
provisions of Sections 8, 9 and 11) and shall have delivered a written
acknowledgment to that effect to the Company.

            (b)   Transfers Upon Death. Upon the death of the Optionee, any
Issued Shares then held by the Optionee at the time of such death and any Issued
Shares acquired thereafter by the Optionee's legal representative pursuant to
this Agreement shall be subject to the provisions of Sections 8 and 9, if
applicable, and the Optionee's estate, executors, administrators, personal
representatives, heirs, legatees and distributees shall be obligated to convey
such Issued Shares to the Company or its assigns under the terms contemplated
hereby.

            (c)   Company's Right of First Refusal. In the event that the
Optionee (or any transferee holding Issued Shares subject to this Section 8(c))
desires to transfer all or any part of the Issued Shares to any person other
than the Company (an "Offeror"), the Optionee shall: (i) obtain in writing an
irrevocable and unconditional bona fide offer (the "Offer") for the purchase
thereof from the Offeror; and (ii) give written notice (the "Option Notice") to
the Company setting forth the Optionee's desire to transfer such shares, which
Option Notice shall be accompanied by a photocopy of the Offer and shall set
forth the name and address of the Offeror and the price and terms of the Offer.
Upon receipt of the Option Notice, the Company shall have an assignable option
to purchase any or all of such Issued Shares (the "Company Option Shares")
specified in the Option Notice, such option to be exercisable by giving, within
30 days after receipt of the Option Notice, a written counternotice to the
Optionee. If the Company elects to purchase any or all of such Company Option
Shares, it shall be obligated to purchase, and the Optionee shall be obligated
to sell to the Company, such Company Option Shares at the price and terms
indicated in the Offer within 30 days from the date of delivery by the Company
of such counternotice.

<PAGE>

            (d)   Sale of Option Shares to Offeror. The Optionee may, for 60
days after the expiration of the 30-day option period as set forth in Section
8(c), sell to the Offeror, pursuant to the terms of the Offer, any or all of
such Company Option Shares not purchased or agreed to be purchased by the
Company or its assignee. If any or all of such Company Option Shares are not
sold pursuant to an Offer within the time permitted above, the unsold Company
Option Shares shall remain subject to the terms of this Section 8.

            (e)   Adjustments for Changes in Capital Structure. If, as a result
of any reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar change in the Common Stock, the
outstanding shares of Common Stock are increased or decreased or are exchanged
for a different number or kind of shares of the Company's stock, the
restrictions contained in this Section 8 shall apply with equal force to
additional and/or substitute securities, if any, received by the Optionee in
exchange for, or by virtue of his or her ownership of, Issued Shares.

      9.    COMPANY'S RIGHT OF REPURCHASE.

            (a)   Right of Repurchase. The Company shall have the right (the
"Repurchase Right") upon the occurrence of any of the events specified in
Section 9(b) below (the "Repurchase Event") to repurchase from the Optionee (or
his or her estate) some or all (as determined by the Company) of the Issued
Shares held or subsequently acquired upon exercise of this Stock Option in
accordance with the terms hereof by the Optionee (or his or her estate) at the
price per share specified below. The Repurchase Right may be exercised by the
Company within 19 months following the date of such event (the "Repurchase
Period"). The Repurchase Right shall be exercised by the Company by giving the
holder written notice on or before the last day of the Repurchase Period of its
intention to exercise the Repurchase Right, and, together with such notice,
tendering to the holder an amount equal to the Fair Market Value of the Issued
Shares, determined as provided in Section 9(c). The Company may assign the
Repurchase Right to one or more persons. Upon exercise of the Repurchase Right
in the manner provided in this Section 9(a), the Optionee (or his or her estate)
shall deliver to the Company the stock certificate or certificates representing
the shares being repurchased, duly endorsed and free and clear of any and all
liens, charges and encumbrances.

      If Issued Shares are not purchased under the Repurchase Right, the
Optionee and his or her successor in interest, if any, will hold any such shares
in his or her possession subject to all of the provisions of this Section 8 and
Section 9 and Section 11 hereof.

            (b)   Company's Right to Exercise Repurchase Right. The Company
shall have the Repurchase Right in the event that any of the following events
shall occur:

                  (i)   The termination of the Optionee's Service Relationship
      with the Company and its Subsidiaries for any reason whatsoever,
      regardless of the circumstances thereof, and including, without
      limitation, upon death, disability, retirement, discharge or resignation
      for any reason, whether voluntarily or involuntarily; or

                  (ii)  The Optionee's Bankruptcy.

<PAGE>

            (c)   Determination of Fair Market Value. The Fair Market Value of
the Issued Shares shall be, for purposes of this Section 9, reasonably
determined by the Board in good faith as of the date the Board decides to
exercise the Repurchase Right.

      10.   ESCROW ARRANGEMENT.

            (a)   Escrow. In order to carry out the provisions of Sections 8 and
9 of this Agreement more effectively, the Company shall hold any Issued Shares
in escrow together with separate stock powers executed by the Optionee in blank
for transfer, and any Permitted Transferee shall, as an additional condition to
any transfer of Issued Shares, execute a like stock power as to such Issued
Shares. The Company shall not dispose of the Issued Shares except as otherwise
provided in this Agreement. In the event of any purchase by the Company (or any
of its assigns), the Company is hereby authorized by the Optionee and any
Permitted Transferee, as the Optionee's and each such Permitted Transferee's
attorney-in-fact, to date and complete the stock powers necessary for the
transfer of the Issued Shares being purchased and to transfer such Issued Shares
in accordance with the terms hereof. At such time as any Issued Shares are no
longer subject to the Company's Repurchase Right and first refusal rights, the
Company shall, at the written request of the Optionee, deliver to the Optionee
(or the relevant Permitted Transferee) a certificate representing such Issued
Shares with the balance of the Issued Shares to be held in escrow pursuant to
this Section 10.

            (b)   Remedy. Without limitation of any other provision of this
Agreement or other rights, in the event that the Optionee, any Permitted
Transferees or any other person or entity is required to sell the Optionee's
Issued Shares pursuant to the provisions of Section 8, Section 9, and Section 11
of this Agreement and in the further event that he or she refuses or for any
reason fails to deliver to the Company or its designated purchaser of such
Issued Shares the certificate or certificates evidencing such Issued Shares
together with a related stock power, the Company or such designated purchaser
may deposit the applicable purchase price for such Issued Shares with a bank
designated by the Company, or with the Company's independent public accounting
firm, as agent or trustee, or in escrow, for the Optionee, any Permitted
Transferees or other person or entity, to be held by such bank or accounting
firm for the benefit of and for delivery to him, them or it, and/or, in its
discretion, pay such purchase price by offsetting any indebtedness then owed by
the Optionee as provided above. Upon any such deposit and/or offset by the
Company or its designated purchaser of such amount and upon notice to the person
or entity who was required to sell the Issued Shares to be sold pursuant to the
provisions of Sections 8, 9 and 11, such Issued Shares shall at such time be
deemed to have been sold, assigned, transferred and conveyed to such purchaser,
the holder thereof shall have no further rights thereto (other than the right to
withdraw the payment thereof held in escrow, if applicable), and the Company
shall record such transfer in its stock transfer book or in any appropriate
manner.

      11.   DRAG ALONG RIGHT. In the event the holders of a majority of the
Company's equity securities then outstanding (the "Majority Shareholders")
determine that the Company should enter into a Sale Event, the Optionee,
including any Permitted Transferees, shall be obligated to and shall upon the
written request of the Majority Shareholders (subject to Section 6): (a) sell,
transfer and deliver, or cause to be sold, transferred and delivered, to the
purchaser in such Sale Event, his or her Issued Shares (including for this
purpose all of such Optionee's or his

<PAGE>

or her Permitted Transferee's Issued Shares that presently or as a result of any
such transaction may be acquired upon the exercise of options (following the
payment of the exercise price therefor)) on substantially the same terms
applicable to the Majority Shareholders (with appropriate adjustments to reflect
the conversion of convertible securities, the redemption of redeemable
securities and the exercise of exercisable securities as well as the relative
preferences and priorities of preferred stock); and (b) execute and deliver such
instruments of conveyance and transfer and take such other action, including
voting such Issued Shares in favor of any Sale proposed by the Majority
Shareholders and executing any purchase agreements, merger agreements, indemnity
agreements, escrow agreements or related documents, as the Majority Shareholders
or such purchaser may reasonably require in order to carry out the terms and
provisions of this Section 11.

      12.   LOCKUP PROVISION. The Optionee agrees, if requested by the Company
and any underwriter engaged by the Company, not to sell or otherwise transfer or
dispose of any securities of the Company (including, without limitation pursuant
to Rule 144 under the Act) held by him or her for such period following the
effective date of any registration statement of the Company filed under the Act
as the Company or such underwriter shall specify reasonably and in good faith,
not to exceed 180 days in the case of the Company's Initial Public Offering or
90 days in the case of any other public offering.

      13.   MISCELLANEOUS PROVISIONS.

            (a)   Equitable Relief. The parties hereto agree and declare that
legal remedies may be inadequate to enforce the provisions of this Agreement and
that equitable relief, including specific performance and injunctive relief, may
be used to enforce the provisions of this Agreement.

            (b)   Change and Modifications. This Agreement may not be orally
changed, modified or terminated, nor shall any oral waiver of any of its terms
be effective. This Agreement may be changed, modified or terminated only by an
agreement in writing signed by the Company and the Optionee.

            (c)   Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware without regard to
conflict of law principles.

            (d)   Headings. The headings are intended only for convenience in
finding the subject matter and do not constitute part of the text of this
Agreement and shall not be considered in the interpretation of this Agreement.

            (e)   Saving Clause. If any provision(s) of this Agreement shall be
determined to be illegal or unenforceable, such determination shall in no manner
affect the legality or enforceability of any other provision hereof.

            (f)   Notices. All notices, requests, consents and other
communications shall be in writing and be deemed given when delivered
personally, by telex or facsimile transmission or when received if mailed by
first class registered or certified mail, postage prepaid. Notices to the
Company or the Optionee shall be addressed as set forth underneath their
signatures below,

<PAGE>

or to such other address or addresses as may have been furnished by such party
in writing to the other.

            (g)   Benefit and Binding Effect. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto, their respective
successors, permitted assigns, and legal representatives. The Company has the
right to assign this Agreement, and such assignee shall become entitled to all
the rights of the Company hereunder to the extent of such assignment.

            (h)   Dispute Resolution. Except as provided below, any dispute
arising out of or relating to this Agreement or the breach, termination or
validity hereof shall be finally settled by binding arbitration conducted
expeditiously in accordance with the J.A.M.S./Endispute Comprehensive
Arbitration Rules and Procedures (the "J.A.M.S. Rules"). The arbitration shall
be governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, and
judgment upon the award rendered by the arbitrators may be entered by any court
having jurisdiction thereof. The place of arbitration shall be New York, New
York.

      The parties covenant and agree that the arbitration shall commence within
60 days of the date on which a written demand for arbitration is filed by any
party hereto. In connection with the arbitration proceeding, the arbitrator
shall have the power to order the production of documents by each party and any
third-party witnesses. In addition, each party may take up to three depositions
as of right, and the arbitrator may in his or her discretion allow additional
depositions upon good cause shown by the moving party. However, the arbitrator
shall not have the power to order the answering of interrogatories or the
response to requests for admission. In connection with any arbitration, each
party shall provide to the other, no later than 7 business days before the date
of the arbitration, the identity of all persons that may testify at the
arbitration and a copy of all documents that may be introduced at the
arbitration or considered or used by a party's witness or expert. The
arbitrator's decision and award shall be made and delivered within 6 months of
the selection of the arbitrator. The arbitrator's decision shall set forth a
reasoned basis for any award of damages or finding of liability. The arbitrator
shall not have power to award damages in excess of actual compensatory damages
and shall not multiply actual damages or award punitive damages or any other
damages that are specifically excluded under this Agreement, and each party
hereby irrevocably waives any claim to such damages.

      The parties covenant and agree that they will participate in the
arbitration in good faith. This Section 13(h) applies equally to requests for
temporary, preliminary or permanent injunctive relief, except that in the case
of temporary or preliminary injunctive relief any party may proceed in court
without prior arbitration for the limited purpose of avoiding immediate and
irreparable harm.

      Each of the parties hereto (i) hereby irrevocably submits to the
jurisdiction of any United States District Court of competent jurisdiction for
the purpose of enforcing the award or decision in any such proceeding, (ii)
hereby waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, any claim that it is not
subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution (except as protected
by applicable law), that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding

<PAGE>

is improper or that this Agreement or the subject matter hereof may not be
enforced in or by such court, and hereby waives and agrees not to seek any
review by any court of any other jurisdiction which may be called upon to grant
an enforcement of the judgment of any such court. Each of the parties hereto
hereby consents to service of process by registered mail at the address to which
notices are to be given. Each of the parties hereto agrees that its, his or her
submission to jurisdiction and its, his or her consent to service of process by
mail is made for the express benefit of the other parties hereto. Final judgment
against any party hereto in any such action, suit or proceeding may be enforced
in other jurisdictions by suit, action or proceeding on the judgment, or in any
other manner provided by or pursuant to the laws of such other jurisdiction.

            (i)   Counterparts. For the convenience of the parties and to
facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.

            (j)   Termination. The Company's repurchase rights under Section 9,
the restrictions on transfer of Issued Shares under Section 8 and the drag along
obligations under Section 11 shall terminate upon the closing of the Company's
Initial Public Offering or upon consummation of any Sale Event, as a result of
which shares of the Company (or the surviving or resulting entity) of the same
class as the Issued Shares are registered under Section 12 of the Exchange Act
and publicly traded on NASDAQ/NMS or any national security exchange.

<PAGE>

      The foregoing Agreement is hereby accepted and the terms and conditions
thereof hereby agreed to by the undersigned as of the Grant Date first above
written.

                                    HAIGHTS CROSS COMMUNICATIONS, INC.

                                    By: ________________________________________
                                        Name:  Peter J. Quandt
                                        Title:  Chairman and Chief Executive
                                                Officer

                                    Address:

                                        10 New King Street
                                        Suite 102
                                        White Plains, NY  10604

      The foregoing Agreement is hereby accepted and the terms and conditions
thereof hereby agreed to by the undersigned as of the Grant Date first above
written.

                                    OPTIONEE:
                                    ____________________________________________
                                    Name:

                                    Address:

                                        ________________________________________
                                        ________________________________________
                                        ________________________________________
SPOUSE'S CONSENT(1)
I acknowledge that I have read the
foregoing Incentive Stock Option Agreement
and understand the contents thereof.

____________________________________
Name:

--------
      (1) Only required if Optionee's state of residence is AZ, CA, ID, LA, NM,
NV, TX, WA or WI.

<PAGE>

                                    DESIGNATED BENEFICIARY:
                                    ____________________________________________

                                    Beneficiary's Address:

                                            ____________________________________
                                            ____________________________________
                                            ____________________________________

<PAGE>

                                   APPENDIX A

                          STOCK OPTION EXERCISE NOTICE

Haights Cross Communications, Inc.
10 New King Street
Suite 102
White Plains, NY  10604
Attention: Chief Financial Officer

      Pursuant to the terms of my stock option agreement dated __________ (the
"Agreement") under the Haights Cross Communications, Inc. 2000 Stock Option and
Grant Plan, I, [Insert Name] ________________, hereby [Circle One]
partially/fully exercise such option by including herein payment in the amount
of $______ representing the purchase price for [Fill in number of Option Shares]
_______ option shares. I have chosen the following form(s) of payment:

          [ ]   1.   Cash

          [ ]   2.   Certified or bank check payable to Haights Cross
                     Communications, Inc.

          [ ]   3.   Other (as described in the Agreement (please describe))
                     ___________________________________________________________

                                    Sincerely yours,

                                    ____________________________________________
                                    Name:

                                    Address:
                                          ______________________________________
                                          ______________________________________
                                          ______________________________________

<PAGE>

                                   SCHEDULE A

                          PERFORMANCE VESTING CRITERIA

      1.    DEFINITIONS. For purposes of this Schedule A, the following terms
shall have the following meanings:

            (a)   "Business" shall mean the Haights Cross Communications, Inc.
business unit in which the Optionee is employed at the Grant Date, as set forth
in the letter delivered to the Optionee under Section 4 below;

            (b)   "Floor" shall mean the minimum Gross EBITDA that the Business
must achieve for a given fiscal year in order for any portion of the Stock
Option eligible for vesting with respect to such fiscal year (as described in
Section 2 below) to actually vest and become exercisable;

            (c)   "Gross EBITDA" shall mean the earnings of the Business before
(i) interest income and expense allocable to the Business, (ii) corporate income
taxes allocable to the Business, (iii) depreciation on property, plant and
equipment of the Business, (iv) amortization of goodwill of the Business, (v)
amortization of other intangibles of the Business, (vi) gains or losses on the
disposition of assets, lines of business, product lines or similar transactions
by the Business, and (vii) amortization of prepublication costs; and

            (d)   "Target" shall mean the Gross EBITDA that the Business must
achieve for a given fiscal year in order for the full percentage of the Stock
Option eligible for vesting with respect to such fiscal year (as described in
Section 2 below) to actually vest and become exercisable.

      2.    PERCENTAGE OF STOCK OPTION AVAILABLE FOR VESTING. The percentage of
the Stock Option that is eligible for vesting with respect to a given fiscal
year shall be as follows:

<TABLE>
<CAPTION>
                                      PERCENTAGE (AGGREGATE PERCENTAGE) OF STOCK
                                                       OPTION
FISCAL YEAR ENDING                               ELIGIBLE FOR VESTING
------------------                               --------------------
<S>                                   <C>
December 31, 2004                                      40%  (40%)
December 31, 2005                                      40%  (80%)
December 31, 2006                                      20% (100%)
</TABLE>

      3.    VESTING AND EXERCISABILITY. Upon the date of the completion of the
Company's annual audit with respect to the Company's fiscal years ending
December 31, 2004, 2005 and 2006:

            (a)   If the Gross EBITDA for the applicable fiscal year is equal to
or less than the Floor for such year, then 0% of the Stock Option eligible for
vesting with respect to such

<PAGE>

fiscal year shall vest, and the percentage of the Stock Option eligible for
vesting with respect to such fiscal year shall immediately expire and be null
and void; or

If the Gross EBITDA for the applicable fiscal year is greater than the Floor,
then the percentage of the Stock Option eligible for vesting that shall actually
vest with respect to such fiscal year shall be equal to (i) the percentage of
the Stock Option eligible for vesting for such year (as set forth in the table
in Section 2 above), multiplied by (ii) a fraction (not to exceed 1), the
numerator of which shall be equal to the Gross EBITDA for such fiscal year minus
the Floor, and the denominator of which shall be equal to the Target minus the
Floor. If the Gross EBITDA for the applicable fiscal year is greater than the
Floor, but less than the Target, then the percentage of the Stock Option
available for vesting with respect to such fiscal year that does not actually
vest shall immediately expire and be null and void.

            By way of example only, if for the fiscal year ending December 31,
2004, the Floor is $8,000,000, the Target is $10,000,000, and the actual Gross
EBITDA is $9,250,000, then the percentage of the Stock Option that would
actually vest with respect to such fiscal year would be equal to:

      40% * (($9,250,000 - $8,000,000)/($10,000,000 - $8,000,000)) = 25.0%

and 15.0% of the Stock Option would immediately expire and be null and void.

      4.    FLOOR AND TARGET. The Floor and Target for a Business for a given
fiscal year during the term of this Agreement shall be established and approved
by the Board of Directors and shall be set forth in the table below to be
delivered by the Company to the Optionee as soon as practical upon the start of
such fiscal year but in no event later than April 30 of such fiscal year.

<TABLE>
<CAPTION>
                                  AMOUNT IN THOUSANDS
                                  -------------------
FISCAL YEAR ENDING            FLOOR                  TARGET
-----------------             ----                   ------
<S>                           <C>                    <C>
</TABLE><PAGE>

                                                                   EXHIBIT 10(W)
                          EMPLOYMENT AGREEMENT BETWEEN
                       CATUITY INC. & ALFRED H. RACINE III

    This Employment Agreement is made and entered into as of September 23, 2004
between Catuity, Inc. (the "Company"), a Delaware corporation, and Alfred Henry
Racine, III (the "Executive").

         1. EMPLOYMENT. Company hereby employs Executive, and Executive hereby
accepts employment with Company, on the terms and conditions hereinafter set
forth.

         2. TERM. The term of this Agreement will commence on the date of this
Agreement and end on the first anniversary thereof, unless further extended or
terminated as hereinafter set forth. Commencing on the first anniversary and on
each anniversary date thereafter, the term of Executive's employment may be
extended for one (1) additional year by the mutual written agreement of the
parties.

         3. DUTIES AND RESPONSIBILITIES. Executive shall serve with the duties
of President and Chief Executive Officer of Company (or in such other position
as may be mutually agreed upon by Executive and the Board) and shall have such
responsibilities, duties and authority as may be assigned to him by the Board.
Executive shall devote substantially all of his working time and effort to the
business and affairs of Company, except that he may as hereinafter provided
serve as a member of the board of directors of other companies, charities, civic
organizations and professional organizations.

         4. SERVICE ON BOARD OF DIRECTORS. During the term of this Agreement,
Executive shall serve, if and when elected, and re-elected, as a member of the
Board of Company or of any of its subsidiaries, affiliates or divisions, and as
an officer of any subsidiary, affiliate or division, if elected. When this
Agreement terminates, Executive will, if requested by the Board of Company,
tender his resignation from any and all such Board positions.

         5. OUTSIDE ACTIVITIES. During the term of this Agreement, Executive may
devote reasonable periods of time to serve as a member of the board of directors
or of a committee of any organization involving no conflict of interest with
Company, and he may engage in charitable, civic and community activities and
manage his personal investments, including his controlling interest in Original
Ink LLC, whose assets include Altamont Partners; provided that such activities
do not materially interfere with the regular performance of his duties and
responsibilities under this Agreement.

         6. PLACE OF EMPLOYMENT. Executive shall have his office in, and perform
his duties in, the metropolitan Charlottesville, Virginia area and shall not be
required to move from the metropolitan Charlottesville, Virginia area; provided
that, he shall from time to time be required to travel when necessary in
carrying out Company's business. Executive acknowledges that Company's current
main offices and employees are located in Sydney, Australia and Detroit,
Michigan, and that accordingly significant and regular travel will be required
to dispatch his normal duties.

         7. REIMBURSEMENT OF EXPENSES AND FURNISHING OF SERVICES TO EXECUTIVE.
During the term of this Agreement, Executive shall be entitled to, including but
without limitation, an office at the company's corporate headquarters, as well
as reimbursement, upon proper accounting, of reasonable expenses and
disbursements incurred by him in the course of his duties. All expense
reimbursements will be subject to compliance with IRS regulations so as to be
deductible as ordinary and necessary business expenses, and to compliance with
Company's normal policies and practices.

         8. BASE SALARY COMPENSATION. During the term of Executive's employment,
he shall be paid a minimum base salary of Two Hundred Fifty-Thousand dollars
($250,000) per year. The Board may increase Executive's salary from time to time
in its discretion, and if so increased, such salary shall not be decreased
thereafter during the term of this Agreement.

         9. OTHER BENEFITS. Executive shall be entitled to participate in all
bonus or incentive plans and stock purchase plans in such manner as such plans
apply to officers and senior executives of the Company generally, and in all
employee benefit, including disability insurance coverage, and fringe benefit
plans currently maintained, or hereafter adopted, by Company, as such plans may
be amended or (or terminated) from time to time in accordance with their terms,
in the same manner as such plans apply to officers and senior executives of
Company of comparable or lesser position generally.

                  In addition, Executive shall be entitled to three (3) weeks of
personal time off, to be used at his discretion but scheduled in consultation
with the Board so as to accommodate Company's business

<PAGE>

interests, during each 12-month period hereof.

                  If Executive does not participate in any Company-sponsored
medical insurance programs, Company shall reimburse Executive monthly for the
premiums paid by Executive to maintain an individual policy of medical insurance
covering Executive and his dependents, currently in the amount of Four Hundred
and Four Dollars ($404) monthly. Further, the Company agrees to pay for any
increases in the cost of the premiums for as long as the total average monthly
costs do not exceed One Thousand Dollars ($1,000.00).

                  Company shall reimburse Executive for his legal fees incurred
in the drafting and negotiation of this Employment Agreement. Executive believes
that those fees shall be approximately $15,000.

         10. STOCK OPTIONS. Company agrees that it will grant to Executive an
option to purchase a number of shares equal to ten percent (10%) of the total of
currently issued and outstanding shares of common stock of the Company at a
exercise price equal to the average of the closing bid and asked prices as
reported on the NASDAQ Small Cap market of the stock on each of the ten (10)
trading days following the Effective Date of this Agreement (the "Options"). The
Options shall be confirmed in an Option Agreement in form substantially similar
to the form of stock option agreement attached hereto. This grant will be
expressly conditioned on obtaining stockholder approval of the grant, which the
Company will seek as soon as reasonably practicable but not later than the next
occurring regular annual meeting of stockholders (typically held in May). The
Options will have a term of five (5) years from the date of this Agreement, and
shall be exercisable in the following manner. Twenty Five percent (25%) of the
Options shall vest six (6) months after the Effective Date of the Agreement.
Fifteen percent (15%) of the Options shall vest one (1) year after the Effective
Date of the Agreement. The balance of the Options shall vest based upon the
following formula for increases in stock price. Twenty percent (20%) of the
remaining stock Options shall vest when the stock price increases ten percent
(10%) above the exercise price. Twenty percent (20%) of the remaining stock
Options shall vest when the stock price increases twenty percent (20%) above the
exercise price. The final twenty percent (20%) of the stock Options shall vest
when the stock price rises thirty percent (30%) above the exercise price. The
Options shall continue to vest and be exercisable after the Executive's
termination of employment for any reason, except for a "Termination for Cause"
as defined in the Option Agreement. The number of shares and the strike price
subject to such Options shall be adjusted in the event of stock dividends, stock
splits, or other changes in the capitalization of the Company. Termination of
Executive's employment merely because of expiration of this Employment Agreement
or any other reason other than a "Termination for Cause" shall not cause a
forfeiture of such options.

         11. TERMINATION BY EXECUTIVE. Executive may voluntarily terminate his
employment hereunder at any time, with or without cause or reason, on 30 days'
notice.

         12. NON DISPARAGEMENT OF EXECUTIVE. Company shall do nothing to
disparage Executive's reputation or good name during or after the term of this
Agreement.

         13. TERMINATION BY COMPANY. Company may terminate this Agreement and
the employment of Executive at any time, with or without cause or reason, on 30
days' notice.

         14. INDEMNIFICATION. In addition to any indemnification provided by the
By-Laws of Company or otherwise, Company shall indemnify and provide reasonable
advances for expenses to Executive, to the fullest extent permitted by the laws
of the State of Delaware, if Executive is made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that Executive is or was
an officer, director or employee of Company or any subsidiary or affiliate
thereof, in which capacity Executive is or was serving at Company's request,
against expenses, judgments, fines and amounts paid in settlement incurred by
him in connection with such action, suit or proceeding. Company shall exercise
its reasonable commercial efforts to maintain directors' and officers' insurance
coverage as well as all other appropriate malpractice and professional liability
coverage on behalf of Executive during the term of this Agreement at Company's
expense, in a manner and coverage substantially similar to the D&O insurance
currently in effect. Subject to requirements of any applicable insurance
coverage, Executive shall have the absolute

<PAGE>

right to engage counsel reasonably acceptable to Company and at legal rates
deemed reasonably acceptable to Company, for the above-referenced actions.
Executive shall give prompt notice to Company of any claims made against him for
which he will seek indemnification.

         15. PAYMENT OF BENEFIT ON DEATH OF EXECUTIVE. In the event of the death
of Executive, this Agreement shall terminate except as to the Options and the
various benefit plans which, by their terms, continue after his death or by
which his estate, heirs, surviving spouse, personal representative, devisees,
legatees and beneficiaries are paid benefits.

         16. AMENDMENT OR MODIFICATION WAIVER. No provision of this Agreement
may be amended, modified or waived, unless such amendment, modification or
waiver shall be authorized by the Board or any authorized committee of the
Board, and shall be agreed to in writing, signed by Executive and by an officer
of Company thereunto duly authorized. Except as otherwise specifically provided
in this Agreement, no waiver by either party hereto of any breach by the other
party hereto of any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of a subsequent breach of such
condition or provision or a waiver of a similar or dissimilar provision or
condition at the same or any prior or subsequent time.

         17. SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions and portions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent provided by law.

         18. SUCCESSORS. This Agreement shall be binding upon any successor of
Company and such successor shall be deemed substituted for Company under the
terms of this Agreement; but any such substitution shall not relieve Company of
any of its obligations hereunder. As used in this Agreement, the term
"successor" shall include any person, firm, corporation or like business entity
which at any time, whether by merger, purchase or otherwise, acquires all or
substantially all of the assets or business of Company. This Agreement may not
be otherwise assigned by Company without Executive's written consent.

         19. CONFIDENTIAL INFORMATION. Executive agrees not to disclose, either
while in Company's employ or at any time thereafter, to any person not employed
by Company or not engaged to render services to Company any confidential
agreement obtained by him while in the employ of Company, including, without
limitation, any of Company's inventions, processes, methods of distribution,
customers or trade secrets; provided, however, that this provision shall not
preclude Executive from use or disclosure of information known generally to the
public or of information not considered confidential by persons engaged in the
business conducted by Company or from disclosure required by law or court order.

         20. WITHHOLDING. Anything to the contrary notwithstanding, all payments
required to be made by Company hereunder to Executive or his estate or
beneficiary shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as Company may reasonably determine
it should withhold pursuant to any applicable law or regulation. In lieu of
withholding such amounts, Company may accept other provisions to the end that it
has sufficient funds to pay all taxes required by law to be withheld in respect
to any of such payments.

         21. NOTICES. For the purpose of this Agreement, notices, demands or
other communications provided for herein shall be in writing and shall be deemed
to have been duly given when delivered or (unless other specified) mailed by
United States Certified Mail, return receipt requested, postage prepaid,
addressed as follows:

                           to Executive:    Alfred Henry Racine III
                                            Eleven Altamont Circle
                                            Charlottesville, VA 22902-4606

                           to Company:      Catuity, Inc.

<PAGE>

                           2711 East Jefferson Avenue
                            Detroit, Michigan  48207

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

         22. CONSTRUCTION WITH DELAWARE LAW. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware.

         23. ENTIRE AGREEMENT OF PARTIES. This Agreement contains the entire
agreement of the parties and no party shall be liable and bound except as
provided herein, but this instrument does not replace, rescind or abrogate any
other agreement or plan between the parties which may now be or may hereinafter
become effective.

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00072-of-00352.parquet"}]]