Document:

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                                                                    EXHIBIT 10.8

                    SUBORDINATION AND INTERCREDITOR AGREEMENT

        This Subordination and Intercreditor Agreement (this "Agreement") is
executed this 11th day of November, 1999 by and between Ingram Book Company, a
division of Ingram Book Group Inc., a Tennessee corporation, with a principal
place of business at One Ingram Boulevard, La Vergne, Tennessee 37086
("Subordinate Trade Creditor"), and Paragon Capital L.L.C., a Delaware limited
liability company with its principal place of business at Hillsite Office
Building, Suite 400, 75 Second Street, Needham, Massachusetts 02494 ("Paragon")
and Foothill Capital Corporation, a California corporation, with its principal
executive offices at 11111 Santa Monica Boulevard, Suite 1500, Los Angeles,
California 90025, and, for the purpose of monitoring and servicing the facility
referenced herein, its regional offices located at 60 State Street, Suite 1150,
Boston, Massachusetts 02109 ("Foothill") (Paragon and Foothill, collectively
being "Senior Lender").

                              W I T N E S S E T H:

        WHEREAS, concurrently with the execution of this Agreement (the
"Borrower") and Subordinate Trade Creditor are entering into a Memorandum of
Understanding dated as of November 8, 1999 (the "Subordinate Trade Credit
Agreement") pursuant to which Subordinate Trade Creditor has agreed to continue
to make credit available to the Borrower, subject to certain pay out terms,
financial covenants and assurances in the Subordinate Trade Credit Agreement, up
to the amount of Eleven Million Six Hundred Thousand ($11,600,000) Dollars until
December 31, 1999 and up to Nine Million Six Hundred Thousand ($9,600,000)
Dollars thereafter pursuant to the terms of the Subordinate Trade Credit
Agreement, for the Borrower's purchase of inventory and charges related thereto
from the Subordinate Trade Creditor, which amounts, in excess of One Million
Five Hundred Thousand ($1,500,000) Dollars, are to be secured by a subordinate
security interest in substantially all of the assets of the Borrower.
Subordinate Trade Creditor has been extending credit to Borrower pursuant to a
Book Return Agreement and Post Petition Trade Facility Agreement, as amended and
as approved by the United States Bankruptcy court for the District of Delaware
("Trade Creditor's Post Petition Agreement") and under the Borrower's First
Amended Joint Plan of Reorganization as approved by the United States Bankruptcy
Court on October 7, 1999 (the "Plan"). Pursuant to the Subordinate Trade Credit
Agreement and the Plan, Borrower is to pay Subordinate Trade Creditor Two
Million Dollars ($2,000,000) on or before December 31, 1999. Pursuant to Trade
Creditor's Post Petition Agreement, the Subordinate Trade Creditor has been
extending credit to Borrower and Borrower currently owes Subordinate Trade
Creditor the approximate sum of Eleven Million Six Hundred Thousand
($11,600,000) Dollars.

        WHEREAS, Senior Lender and the Borrower are parties to a Loan and
Security Agreement between Borrower and Lender dated July 15, 1998, as amended
by the First Amendment to Loan and Security Agreement dated August 17, 1998 and
the Second Amendment to Loan and Security Agreement dated as of September 9,
1998, and the Post Confirmation Credit Agreement and Ratifications and Third
Amendment Agreement dated October 1999 (the "Senior Loan Agreement"), pursuant
to which Senior Lender has extended credit to the Borrower; and

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        WHEREAS, the Borrower has requested that the Senior Lender consent to
the Borrower's continuing to obtain subordinated trade credit; and

        WHEREAS, Senior Lender has required as a condition to entering into
Senior Loan Agreement that Subordinate Trade Creditor enter into this Agreement;
and

        WHEREAS, Subordinate Trade Creditor has agreed to enter into this
Agreement with full knowledge that Senior Lender would not continue the Senior
Loan Agreement and make loans and other extensions of credit under the Senior
Loan Agreement but for the agreements of Subordinate Trade Creditor herein
contained.

        NOW, THEREFORE, in consideration of the foregoing, the premises and the
mutual promise and covenants contained herein, the parties hereby agree as
follows:

        1.      Terms Defined. As used herein (a) the terms "Senior Lender," and
"Subordinate Trade Creditor" shall have the mean meanings given such terms in
the preamble hereto, (b) the terms "Borrower," "Senior Loan Agreement," and
"Subordinate Trade Credit Agreement" shall have the meanings given such terms in
the recitals hereto, and (c) the following terms shall have the following
meanings:

                "Collateral" means all rights, interests and property of the
Borrower of every nature, and whether now owned or hereafter acquired and
wherever located, which is subject to a Senior Lien.

                "Enforcement Action" means any action to enforce payment or
performance of any of the Subordinate Obligations or subordinate Trade Credit
Documents, including, without limitation, any of the following action: (a)
acceleration of the maturity of the Subordinate Obligations, (b) suing for
(including, without limitation, the commencement or joining with any other
creditors of the Borrower in the commencement of any bankruptcy, reorganization,
receivership or insolvency proceeding against the Borrower), (c) the exercise of
any right of set-off for the collection of any amounts due in respect of the
Subordinate Obligations, except as allowed in this Agreement, or (d) a Lien
Enforcement Action. Notwithstanding the foregoing, none of the following shall
constitute an "Enforcement Action" for purposes of this Agreement; (i) delivery
of any choice of default or other notice to the Borrower pursuant to or in
connection with the Subordinate Trade Credit Documents, (ii) the imposition of a
"default rate" of interest to the extent permitted under the Subordinate Trade
Credit Documents, (iii) the institution by Subordinate Trade Creditor of any
action to enforce specific performance of any non-monetary obligation of the
Borrower under any of the Subordinate Trade Credit Documents, provided such
action and any specific performance is subject to the prior rights of the Senior
Lender, or (v) the request by Subordinate Trade Creditor for a draw on the
Letter of Credit in accordance with the terms thereof and to the extent
permitted by law and hereunder.

                "Letter of Credit" means the Letter of Credit in the aggregate
amount of Two Million ($2,000,000) Dollars established by Borrower in favor of
Subordinate Trade Creditor which may be drawn by Subordinate Trade Creditor in
accordance with the payment terms of the Letter of Credit which shall be in the
same form and substance as the attached Exhibit A.

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                "Letter of Credit Draw(s)" means any draw(s), up to an aggregate
maximum of Two Million ($2,000,000) Dollars, in accordance with the payment
terms of the Letter of Credit and to the extent permitted by law.

                "Lien Enforcement Action" means any action, whether legal,
equitable, judicial, nonjudicial or otherwise instituted to enforce any
Subordinate Lien or Senior Lien, as the case may be, including without
limitation, any repossession, foreclosure, public sale, private sale, set-off,
recoupment, exercise of control over or retention of all or any part of the
Collateral or any other action that would dispossess Borrower of the Collateral.

                "Permitted Refinancing" means any refinancing, replacement or
substitution of the Senior Obligations including any unused commitment under the
Senior Loan Agreement, and any number of subsequent refinancings, replacements
and substitutions therefore; provided that the principal balance of any such
refinancing, replacement or substitution therefor and the undrawn face amount of
all letters of credit issued for the account of the Borrower and the drawn but
unreimbursed portion of any such letters of credit, in each case provided as
part of such refinancing, replacement or substitution, shall not exceed Thirty
Five Million ($35,000,000) Dollars and said Permitted Refinancing is on
substantially the same terms as the Senior Loan Agreement including but not
limited to eligible inventory advance rate and loan reserve.

                "Proceeding" means (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to the Borrower, (b) any
liquidation, dissolution or winding up of the Borrower, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, or (c) any
assignment or trust for the benefit of some or all of the Borrower, creditors or
any other marshalling of assets and liabilities of the Borrower.

                "Senior Default" means any default or event of default under the
Senior Loan Documents.

                "Senior Liens" means all liens, security interests, pledges,
hypothecations, mortgages, set-off, recoupment rights and other security devices
now or at any time hereafter securing the Senior Obligations.

                "Senior Loan Documents" means the Senior Loan Agreement, the
Senior Note, the Senior Security Documents and all other documents, instruments
or agreements evidencing, securing or otherwise pertaining to the Senior
Obligations as the same may be modified, amended, renewed, extended or restated
from time to time.

                "Senior Note" means the Master Note dated November 11, 1999
executed by the Borrower payable to the order of Senior Lender the principal
amount of Thirty Five Million ($35,000,000) Dollars.

                "Senior Obligations" means all debts, liabilities and
obligations of the Borrower to Senior Lender without arising under or pursuant
to the Senior Loan Documents or otherwise, including, without limitation, all
obligations to pay principal and interest, including the principal, interest,
fees and costs including principal, interest, fees and costs on any Overadvances
(as

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defined in the Senior Loan Agreement) under the Senior Loan Agreement, all
reimbursement obligations with respect to letters of credit issued pursuant to
the Senior Loan Agreement, and all obligations to pay costs, fees and expenses
under the Senior Loan Documents, including without limitation, reasonable fees
and expenses of counsel to Senior Lender and costs of preservation and
protection of the Collateral.

                "Senior Security Documents" means all security agreements,
pledge agreements, mortgages, deeds of trust, assignments, collateral
assignments, chattel mortgages, financing statements and other documents,
instruments or agreements evidencing, creating, establishing or perfecting
Senior Liens.

                "Subordinate Liens" means all liens, security interests,
pledges, hypothecations, mortgages and other security devices (except for the
Letter of Credit) now or at any time hereafter securing the Subordinate
Obligations.

                "Subordinate Trade Credit Documents" means the Subordinate Trade
Credit Agreement, the Subordinate Security Documents and all other documents,
instruments or agreements evidencing, securing or otherwise pertaining to the
Subordinate Obligations as the same may be modified, amended, renewed, extended
or restated from time to time.

                "Subordinate Obligations" means all debts, liabilities and
obligations of the Borrower or of any guarantors, endorsers or sureties of the
Borrower to Subordinate Trade Creditor arising under or pursuant to the
Subordinate Trade Credit Documents or otherwise, including, without limitation,
all obligations to pay costs, fees and expenses under the Subordinate Trade
Credit Documents.

                "Subordinate Security Documents" means all security agreements,
pledge agreements, mortgages, deeds of trust, assignments, collateral
assignments, chattel mortgages, financing statements and other documents,
instruments or agreements evidencing, creating, establishing or perfecting
Subordinate Liens.

                "Trade Payments" means any payment (i) made by Borrower to
Subordinate Trade Creditor in the ordinary course of Borrower purchasing
inventory and services related thereto including return of product by Borrower
to Subordinate Trade Creditor for credit; (ii) The Trade Creditor Settlement
Payment;

                "Trade Creditor Settlement Payment" means the Two Million
($2,000,000) Dollar payment Borrower is to pay Subordinate Trade Creditor on or
before December 31, 1999 pursuant to the Subordinate Trade Credit Agreement and
the Plan.

        2.      Subordination Generally. To the extent and in the manner
provided in this Agreement, the Subordinate Obligations and Subordinate Liens
shall be subordinate, junior and inferior in right of payment and priority to
the prior payment and priority of the Senior Obligations and the Senior Liens.

        3.      Insolvency Proceeding. In addition to the foregoing, upon any
distribution of assets of the Borrower pursuant to or during any Proceeding,
Senior Lender shall be entitled to

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receive payment in full from such assets of all amounts due or to become due on
or in respect of all Senior Obligations, before Subordinate Trade Creditor shall
be entitled to receive any payment of any type, excepting Letter of Credit Draws
from such assets on account of the Subordinate Obligations, and excepting return
of products for commensurate issuance of credit, dollar for dollar in accordance
with any so-called "546(g)* program" approved by order of the bankruptcy court
(and subject to Senior's Lender rights to object to entry of any such order)
will be permitted, and to that end, excepting Letter of Credit Draws and
receipts from an approved 546(g)* program, Senior Lender shall be entitled to
receive, for application to the payments of the Senior Obligations, any payment
or distribution of any kind or character, whether in cash, property or
securities, which may be payable or deliverable in respect of the Subordinate
Obligations in any such Proceeding. In the event that, notwithstanding the
foregoing provisions of this paragraph, Subordinate Trade Creditor shall have
received during or pursuant to any Proceeding any payment or distribution of
assets of the Borrower of any mind or character, whether in cash, property or
securities on account of the Subordinate Obligations, before all Senior
Obligations are paid in full or payment thereof provided for, excepting Letter
of Credit Draws and receipts from an approved 546(g)* program, such payment or
distribution shall be paid over or delivered forthwith to the Senior Lender for
application to the payment of all Senior Obligations remaining unpaid, to the
extent necessary to pay all Senior Obligations in full, after giving effect to
any concurrent payment or distribution to or for the holders of the Senior or
Obligations.

        4.      Payment Following Acceleration of Subordinate Obligations. In
the event the Subordinate Obligations become due and payable before the stated
maturity thereof, the Senior Obligations outstanding at such time shall be paid
in full, or provision shall be made for such payment in money or in properties
or securities acceptable to Senior Lender, and all obligations of the Senior
Lender under the Senior Loan Documents shall be terminated, before any
Subordinate Lender shall be entitled to receive any payment from the Borrower on
account of the Subordinate Obligations excepting Letter of Credit Draws.

        5.      Permitted Payments on Subordinate Obligation. Subject to the
conditions described in Sections 2, 3, 4 and 6 hereof, and that there has not
occurred any Senior Default for which Senior Lender has served upon Borrower and
Subordinate Trade Creditor a notice of default (or if a Senior Default has
occurred it has been expressly waived, rescinded or annulled writing by Senior
Lender) Borrower may make Trade Payments provided further, that the Borrower
shall be (i) prohibited from making any prepayment of any such obligations,
provided that return of products for commensurate issuance of credit, dollar for
dollar will be permitted and (ii) notwithstanding its receipt of the notice of
default reference in the first sentence of this section 5, Trade Creditor may be
paid Letter of Credit Draws.

        6.      Senior Default. Excepting Letter of Credit Draws, in the event
of the occurrence of any Senior Default for which Senior Lender has served upon
Borrower and Subordinate Trade Creditor a notice of default no payment shall be
made by the Borrower on account of the Subordinate Obligations until such Senior
Default shall have been expressly waived in writing and acceleration (if any) as
a result thereof shall have been expressly waived, rescinded or annulled in
writing.

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        7.      Lien Subordination. Regardless of the validity of, or order of
creation, possession, attachment, perfection, filing, recording, execution, or
delivery of any financing statement, security agreement, pledge agreement,
mortgage or other document evidencing, creating or perfecting any Senior Lien or
Subordinate Lien, and notwithstanding any contrary provisions of any law, rule
or regulation, all Subordinate Liens, and any and all rights of Subordinate
Trade Creditor with respect to any Collateral and all proceeds thereof,
including, without limitation, rights to receive payment from the proceeds
thereof, shall remain inferior and subordinate to the rights of Senior Lender
with respect to such Collateral. Until such time as the Senior Obligations are
paid in full, Subordinate Trade Creditor shall not at any time commence any Lien
Enforcement Action without the express written consent of Senior Lender, which
consent is in Senior Lender's discretion; and, in the event that any such
consent is granted, any Lien Enforcement Action by Subordinate Trade Creditor
shall be expressly undertaken, prosecuted, settled, compromised or otherwise
effected at all times subject to the senior and prior rights of the Senior
Lender in and to any such Collateral, and all such Collateral or proceeds
thereof, or rights obtained with respect thereto, shall be subject to the senior
and prior rights of Senior Lender.

        8.      Remedial Standstill. Subordinate Lender hereby agrees that in
the event any Default of Event of Default occurs under and as defined in the
Subordinate Credit Agreement, and as a result thereof Subordinate Trade Creditor
intends to commence any Enforcement Action, (other than a Lien Enforcement
Action) Subordinate Trade Creditor shall deliver notice thereof (an "Enforcement
Notice") to Senior Lender and, unless Senior Lender otherwise consents in
writing, Subordinate Trade Creditor shall be prohibited from commencing or
prosecuting any Enforcement Action for a period (an "Enforcement Blockage
Period") of 120 days following the date of such Enforcement Notice; provided
that Subordinate Trade Creditor's commencement of any Lien Enforcement Action
shall be governed by Section 7 hereof. After the conclusion of such 120 days,
or, in the event Senior Lender accelerates the maturity of the Senior
Obligations or commences any Lien Enforcement Action, any Enforcement Blockage
Period shall terminate immediately (except as to Subordinate Trade Creditor's
commencement of a Lien Enforcement Action which shall be subject to the
provisions of paragraph 7 above).

        9.      Subrogation. Subject to the payment in full of all Senior
Obligations, Subordinate Trade Creditor shall be subrogated to the extent of the
payments or distributions made to Senior Lender pursuant to the provisions of
the Subordinate Loan Documents and this Agreement, to the rights of Senior
Lender to receive payments or distributions of cash, property or securities
applicable to the Senior Obligations. For purposes of such subrogation, no
payments or distributions to Senior Lender of any cash, property or securities
to which Subordinate trade Creditor would be entitled except for the provisions
of this Agreement and no payments turned over to Senior Lender pursuant to the
provisions of this Agreement by Subordinate Trade Creditor shall, as between the
Borrower and creditors of the Borrower other than Senior Lender and Subordinate
Trade Creditor, be deemed to be a payment or distribution by the Borrower to or
on account of the Subordinate Obligations. Subordinate Trade Creditor shall have
no subrogation rights unless and until Senior Lender has received payments in
full after Senior Obligations.

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        10.     No Reliance. Each of the Senior Lender and Subordinate Trade
Creditor represents to the other that: (a) it is entering into this Agreement on
its own account: (b) entering into this agreement in accordance with all laws,
regulations and statutes affecting or otherwise applicable to it; (c) it has
reviewed and approved the documents regarding its transactions with the Borrower
with its legal counsel; (d) is aware of and able to bear the economic risks
involved entering into the arrangements with Borrower; (e) it has been given
adequate opportunity to review, and have reviewed all financial and other data
and information relating to the Borrower as it deems necessary for it to make a
determination to enter into transactions with the Borrower; (f) it has not
relied upon the credit judgment or analysis of the other, or otherwise,
concerning the Borrower and has, with the assistance of legal counsel,
independently reached its own decision, based upon its own assessment and
analysis of the financial condition and affairs of the Borrower, as to making
any loans or other financial accommodation to the Borrower; and (g) except as
expressly provided herein, neither party has any obligation to provide the other
with notice with respect to the Borrower's performance of the Senior Obligations
or the Subordinate Obligations as the case may be.

        11.     Parties in Interest. The provisions of this Agreement are
intended solely for the purpose of defining the relative rights of the
Subordinate Trade Creditor and the Senior Lender. Nothing contained in this
Agreement is intended to or shall impair, as between the Borrower and its
creditors other than Senior Lender, and Subordinate Trade Creditor, the
obligations of the Borrower which are absolute and unconditional, to pay to
Subordinate Trade Creditor the Subordinate Obligations as and when the same
shall become due and payable in accordance with their terms.

        12.     Rights Not Impaired. No right of Senior Lender to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Borrower or by any act
or failure to act, in good faith, by Senior Lender, or by any noncompliance by
the Borrower or the Subordinate Trade Creditor with the terms, provisions and
covenants of this Agreement, regardless of any knowledge thereof Senior Lender
may have or be otherwise charged, with.

        13.     Disgorged Payments. To the extent any payment of Senior
Obligations (whether by or on behalf of the Borrower, as proceeds of security or
enforcement of any right of set off or otherwise) is (a) declared to be
fraudulent or preferential, (b) set aside or (c) required to be paid to a
trustee, receiver or other similar party under any applicable bankruptcy or
insolvency law, then, if such payment is recovered by, or paid over to, such
trustee, receiver or other similar party, the Senior Obligations or part thereof
originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment had not occurred.

        14.     Modifications and Amendments to Senior Obligations. Senior
Lender may renew, extend, amend, restructure, waive, compromise or otherwise
change the terms of the Senior Obligations and the Senior Loan Documents or
release any obligor on, or collateral for, the Senior Obligations on reasonable
written notice to Subordinate Trade Creditor. Consistent with the foregoing,
Senior Lender may, without notice, (a) extend the date on which payments are
required on the Senior Obligations, (b) reduce the interest rate applicable to
the Senior Obligations, (c) waive compliance with the terms of the Senior Loan
Agreement, including,

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without limitation, charging fee in connection therewith. However, Senior Lender
may not extend credit to Borrower in excess of the greater of (i) the Borrowing
Base, but not to exceed Advance Rates equal to the lesser of sixty-five (65%)
per cent of the Cost of Acceptable Inventory or ninety-five (95%) per cent of
the Net Retail Liquidation Value (all as defined in the Senior Loan agreement)
and (ii) Forty-Five Million ($45,000,000) Dollars without Subordinate Trade
Creditor's Agreement or said amounts in excess of such limits will not have
priority over the Subordinate Obligations.

        15.     Modifications and Amendments to Subordinate Obligation. Except
as expressly provided in the following sentence, without the prior written
consent of the Senior Lender, Subordinate Trade Creditor shall not renew,
extend, amend, restructure, waive, compromise or otherwise change the terms of
the Subordinate Obligations and the Subordinate Trade Credit Documents.
Notwithstanding the foregoing, Subordinate Trade Creditor may, without the
consent of Senior Lender, (a) extend the date on which payments are required on
the Subordinate Obligations, (b) reduce the interest rate applicable to the
Subordinate Obligations, or (c) relax or make less restrictive any covenant in
the Subordinate Trade Credit Documents, provided however, that Subordinate Trade
Creditor may not, without prior written consent of the Senior Lender, waive any
default relative to the Subordinate Obligations or Subordinate Loan Obligations.

        16.     Payments Held in Trust. Notwithstanding the provisions hereof,
any payment or distribution of any character (whether in cash, securities or
other property) or any security shall be received by Subordinate Trade Creditor
at any time that payment to or receipt by Subordinate Trade Creditor is
prohibited hereunder and of which Subordinate Trade Creditor has received
notice, then Subordinate Trade Creditor shall immediately notify Senior Lender
of the receipt of such payment, distribution or security and the Subordinate
Trade Creditor shall hold all payments received in contravention of the terms
hereof in trust for the benefit of, and shall immediately pay the same over or
deliver or transfer the same to, Senior Lender for application to the Senior
Obligations until all Senior Obligations have been paid in full.

        17.     Rights of Refinancing Lender. In the event the Senior
Obligations are paid in whole with the proceeds of one or more Permitted
Refinancings, regardless of whether or not the Senior Loan Documents are
assigned to the refinancing lender, the refinancing lender shall be entitled to
all rights of the Senior Lender hereunder and the Subordinate Trade Creditor
shall be entitled to all rights hereunder. The obligations of the Borrower to
such refinancing lender with respect to such Permitted Refinancing shall
constitute "Senior Obligations" as herein defined and shall be on substantially
the same terms. Upon request by such refinancing lender, Subordinate Trade
Creditor shall enter into a subordination agreement with such refinancing lender
on terms substantially similar to this Subordination Agreement.

        18.     Continuing Agreement. This is a continuing Agreement and will
remain in full force and effect until all of the Senior Obligations have been
fully paid, performed and satisfied and until all financing agreements between
Senior Lender and the Borrower have been terminated. In the event following such
termination and payment in full, any payment of the Senior Obligations is
rescinded or must otherwise be returned by Senior Lenders, this Agreement will
be deemed to be reinstated.

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        19.     Assignment of Subordinate Obligations. Subordinate Trade
Creditor shall not assign, syndicate, participate to any other person, pledge,
encumber or subordinate any part of the Subordinate Obligations or the
Subordinate Loan Documents unless the party to which the Subordinate Obligations
and the Subordinate Loan Documents are assigned, syndicated, participated,
pledged, encumbered or subordinated expressly consents and agrees in writing to
the terms and provisions of this Agreement.

        20.     Other Subordinate Trade Creditors. Any other subordinate trade
creditors of Borrower who are allowed secondary security interests in Collateral
of Borrower will be subject to a Subordination and Intercreditor Agreement with
Senior Lender on terms no less favorable to Senior Lender than this Agreement.

        21.     GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.

        22.     Notices. All notices, requests, demands and other communications
to any party hereunder shall be in writing (including bank wire, facsimile and
similar writing) and shall be given to such party at its address, facsimile
number set forth on the signature pages hereof, or to such other address,
facsimile number as such party may hereafter specify for the purpose by notice
to the other party. Each such notice, request, or other communications shall be
effective (1) if given by facsimile, when such facsimile is transmitted to the
facsimile numbers specified below and receipt is confirmed by recipient, (ii) if
given by mail, three (3) Business Days after deposit in the mails with first
class postage prepaid, addressed as aforesaid, or (iii) if given by any other
means, when delivered at the address specified below.

        23.     Counterparts, Effectiveness. This Agreement may be signed in a
number of identical counterparts, each of which shall be an original, with the
same effect as if the signature thereto and hereto were upon the same
instrument. This Agreement shall become effective when each Subordinate Trade
Creditor and Senior Lender shall have received counterparts hereof signed by all
of the parties hereto.

        24.     No Waiver. No failure or delay by Senior Lender in exercising
any power or privilege, hereunder or under the Senior Loan Documents shall
operate as a waiver hereof or thereof, nor shall any single or partial exercise
of any right hereunder or thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by Law or any of the other Senior Loan Documents.

        25.     Amendments and Modifications. Any provision of this Agreement
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed by Senior Lender and Subordinate Trade Credit.

        26.     SUBORDINATE TRADE CREDITOR AGREES THAT NEITHER IT NOR ANY OF ITS
ASSIGNEES OR SUCCESSORS SHALL (A) SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING,
COUNTERCLAIM OR ANY OTHER ACTION BASED UPON, OR ARISING OUT OF, THIS AGREEMENT,
ANY SECURITY DOCUMENTS, ANY

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COLLATERAL OR THE DEALINGS OR THE RELATIONSHIP BETWEEN THE BORROWER AND ITS
ASSIGNS AND SUCCESSORS AND THE SENIOR LENDER, OR (B) SEEK TO CONSOLIDATE ANY
SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAD NOT
BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE
SENIOR LENDER AND THE SUBORDINATE TRADE CREDITOR, AND THESE PROVISIONS SHALL BE
SUBJECT TO NO EXCEPTIONS. THE SUBORDINATE TRADE CREDITOR ACKNOWLEDGES THAT THE
SENIOR LENDER HAS NOT AGREED WITH OR REPRESENTED TO IT THAT THE PROVISIONS OF
THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

        27.     AS BETWEEN SENIOR LENDER AND SUBORDINATE TRADE CREDITOR, WAIVER
OF SPECIAL DAMAGES, EXCEPT AS PROHIBITED BY LAW, THE SUBORDINATE TRADE CREDITOR
AND SENIOR LENDER HEREBY WAIVE ANY RIGHTS WHICH IT MAY HAVE TO CLAIM OR RECOVER
IN ANY LITIGATION WITH RESPECT TO ANY OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THE SENIOR LOAN DOCUMENTS OR THE SUBORDINATE TRADE CREDIT
DOCUMENTS, INCLUDING WITHOUT LIMITATION THIS AGREEMENT, AND ANY AMENDMENTS
THEREOF, ANY SPECIAL, EXEMPLARY, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.
THE SUBORDINATE TRADE CREDITOR AND SENIOR LENDER AGREE THAT DAMAGES FROM ANY
BREACH BY THE OTHER MAY NOT EXCEED THE AMOUNT OUTSTANDING UNDER THE SENIOR LOAN
DOCUMENTS OR THE SUBORDINATE TRADE CREDIT DOCUMENTS AND THEN ONLY TO THE EXTENT
THOSE DAMAGES ARE A DIRECT RESULT OF THE BREACH. THE SUBORDINATE TRADE CREDITOR
AND SENIOR LENDER HEREBY (A) CERTIFIES THAT NEITHER THE SUBORDINATE TRADE
CREDITOR NOR SENIOR LENDER, NOR ANY AGENT, REPRESENTATIVE, OR ATTORNEY THEREOF
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE SUBORDINATE TRADE CREDITOR OR
SENIOR LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT, IN ENTERING INTO THIS AGREEMENT,
BOTH PARTIES ARE RELYING UPON, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION 27.

        28.     FINAL AGREEMENT. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                                       10
<PAGE>   11

        Executed and delivered as a document under seal as of the date and year
first above written.

<TABLE>
<S>                                                  <C>
SUBORDINATE TRADE CREDITOR                                Address for Notice:
--------------------------

INGRAM BOOK COMPANY                                       Frank A. Korrigan
                                                          Sr. VP and CFO
                                                          Ingram Book Company
By:  /s/  Frank A. Kerrigan                               One Ingram Blvd.
   ------------------------------------                   Las Verne, TN  37086
     Frank A. Kerrigan
     Senior Vice President and
     Chief Financial Officer                              With a copy to:

                                                          General Counsel
                                                          Ingram Book Group Inc.
                                                          One Ingram Blvd.
                                                          Las Verne, TN  37086

SENIOR LENDER
-------------

PARAGON CAPITAL, L.L.C.                                   Address for Notice:

                                                          Andrew H. Moser, President
By:  /s/  Robert J. Shusterman                            Paragon Capital, L.L.C.
   ------------------------------------                   Hillsite Office Building, Suite 400
     Robert J. Shusterman                                 Needham, Massachusetts 02494
     Executive Vice President and                         Fax No. (781) 707-2107
     Chief Credit Officer

SENIOR LENDER:
---------------

FOOTHILL CAPITAL CORPORATION                              Address for Notice:

By:  /s/  Christopher O'Conner                            Steven Cole, Vice President
   ------------------------------------                   Foothill Capital Corporation
     Christopher O'Conner                                 60 State Street, Suite 1150
                                                          Boston, MA  02109
                                                          Fax No. (617) 722 -9493

                                                          With a copy to:

                                                          Shapiro, Israel & Weiner, P.C.
                                                          100 North Washington Street
                                                          Boston, Massachusetts 02114-2126
                                                          Attn:  Joel B. Rosenthal
                                                          Fax No.:  (717) 742-2355
</TABLE>

                                       11
<PAGE>   12

ACKNOWLEDGED AND AGREED

        The Borrower hereby acknowledges and consents to the terms of this
Agreement as set forth above and hereby agrees to observe each and every
provision of this Agreement applicable to the Borrower.

CROWN BOOKS CORPORATION

BORROWER

By:    /s/  Steven G. Panagos
     ---------------------------------------
     Steven G. Panagos, Responsible Officer

                                       12<PAGE>   1

                                                                    EXHIBIT 10.9

                             CROWN BOOKS CORPORATION

                       EMERGENCE BONUS AND INCENTIVE PLAN

1.      PURPOSE

        The purpose of this plan (the "Plan") is to secure for Crown Books
Corporation (the "Company") and its stockholders the benefits arising from
capital stock ownership by employees, officers, directors and consultants of the
Company and its affiliated corporations who are expected to contribute to the
Company's future growth and success. The Plan is also designed to attract and
retain other persons who will provide services to the Company. Those provisions
of the Plan which make express reference to Section 422 of the Internal Revenue
Code of 1986, as amended or replaced from time to time (the "Code"), shall apply
only to Incentive Stock Options (as that term is defined in the Plan). The Plan
was adopted by the Board of Directors of the Company (the "Board") on August 18,
1999, and approved by the creditors of the Company (who subsequently became the
Company's stockholders pursuant to the Company's Plan of Reorganization) on
September 16, 1999 (which approval was ratified by Order of the Bankruptcy Court
dated October 7, 1999).

2.      TYPE OF OPTIONS AND ADMINISTRATION

        (a)     Types of Options. Options granted pursuant to the Plan shall be
authorized by action of the Board (or the committee appointed by the Board in
accordance with Section 2(b) below) and may be either incentive stock options
("Incentive Stock Options") intended to meet the requirements of Section 422 of
the Code or non-statutory options which are not intended to meet the
requirements of Section 422 of the Code ("Non-Qualified Options").

        (b)     Administration. The Plan will be administered by the Board, or
by a committee (the "Committee") consisting of two or more directors appointed
by the Board, in each case whose construction and interpretation of the terms
and provisions of the Plan shall be final and conclusive and binding upon the
optionee and all other persons interested or claiming interests under the Plan.
Notwithstanding the foregoing, if the Company is or becomes a corporation
issuing any class of common equity securities required to be registered under
section 12 of the Securities Exchange Act of 1934 (a "Reporting Company"), to
the extent necessary to preserve any deduction under Section 162(m) of the Code
or to comply with Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or any successor rule ("Rule 16b-3"), any
Committee appointed by the Board to administer the Plan shall be comprised of
two or more directors each of whom shall be a "non-employee director," within
the meaning of Rule 16b-3, and an "outside director," within the meaning of
Treasury Regulation Section 1.162-27(e)(3), (the "Committee") and the delegation
of powers to the Committee shall be consistent with applicable laws and
regulations (including, without limitation, applicable state law and Rule
16b-3). The Board or Committee may in its sole discretion grant options to
purchase shares of the Company's Common Stock, $.01 par value per share ("Common
Stock"), and issue shares upon exercise of such options as provided in the Plan.
The Board or Committee shall have authority, subject to the express provisions
of the Plan, to construe the respective option agreements and the Plan; to
prescribe, amend and rescind rules and regulations relating to

<PAGE>   2
the Plan; to determine the terms and provisions of the respective option
agreements, which need not be identical; and to make all other determinations in
the judgment of the Board or Committee necessary or desirable for the
administration of the Plan. The Board or Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any option
agreement in the manner and to the extent it shall deem expedient to carry the
Plan into effect and it shall be the sole and final judge of such expediency. No
director or person acting pursuant to authority delegated by the Board shall be
liable for any action or determination under the Plan made in good faith.

3.      ELIGIBILITY

        Options may be granted to persons who are, at the time of grant,
employees, officers, directors or consultants of the Company or any parent or
subsidiary of the Company, as respectively defined in Sections 424(e) and 424(f)
of the Code (each such parent and subsidiary of the Company hereinafter
individually and collectively called an "Affiliate"), provided, that Incentive
Stock Options may only be granted to individuals who are employees (within the
meaning of Section 3401(c) of the Code) of the Company or any Affiliate. Options
may also be granted to other persons, provided that such options shall be
Non-Qualified Options. A person who has been granted an option may, if he or she
is otherwise eligible, be granted additional options if the Board or Committee
shall so determine. Notwithstanding anything in the Plan to the contrary, if the
Company is or becomes a Reporting Company, no employee of the Company or an
Affiliate shall be granted options with respect to more than 500,000 shares of
Common Stock during any calendar year.

4.      STOCK SUBJECT TO PLAN

        The stock subject to options granted under the Plan shall be shares of
authorized but unissued or reacquired Common Stock. Subject to adjustment as
provided in Section 15 below, the maximum number of shares of Common Stock of
the Company which may be issued and sold under the Plan is 750,000 shares. If an
option granted under the Plan shall expire, terminate or is cancelled for any
reason without having been exercised in full, the unpurchased shares subject to
such option shall again be available for subsequent option grants under the
Plan.

5.      FORMS OF OPTION AGREEMENTS

        As a condition to the grant of an option under the Plan, each recipient
of an option shall execute an option agreement in such form not inconsistent
with the Plan and as may be approved by the Board or the Committee. The terms of
such option agreements may differ among recipients.

6.      PURCHASE PRICE

        (a)    General. The purchase price per share of Common Stock issuable
upon the exercise of an option shall be determined by the Board or the Committee
at the time of grant of such option, provided, however, that in the case of an
Incentive Stock Option, the exercise price shall not be less than 100% of the
Fair Market Value (as hereinafter defined) of such Common Stock at the time of
grant of such option, or less than 110% of such Fair Market Value in the

                                       2
<PAGE>   3

case of options described in Section 11(b) of the Plan. "Fair Market Value" of a
share of Common Stock of the Company as of a specified date for purposes of the
Plan shall mean the average trading price of a share of the Common Stock on the
principal securities exchange (including but not limited to The Nasdaq SmallCap
Market or The Nasdaq National Market) on which such shares are traded on the day
immediately preceding the date as of which Fair Market Value is being
determined, or on the next preceding date on which such shares are traded if no
shares were traded on such immediately preceding day, or if the shares are not
traded on a securities exchange, Fair Market Value shall be deemed to be the
average of the high bid and low asked prices of the shares in the
over-the-counter market on the day immediately preceding the date as of which
Fair Market Value is being determined or on the next preceding date on which
such high bid and low asked prices were recorded. If the shares are not publicly
traded, Fair Market Value of a share of Common Stock shall be determined in good
faith by the Board.

        (b)     Payment of Purchase Price. Options granted under the Plan may
provide for the payment of the exercise price by delivery of cash or a check to
the order of the Company in an amount equal to the exercise price of such
options, or by any other means (including, without limitation, cashless
exercise) which the Board determines are consistent with the purpose of the Plan
and with applicable laws and regulations (including, without limitation, the
provisions of Rule 16b-3 if the Company is or becomes a Reporting Company).

7.      EXERCISE OPTION PERIOD

        Subject to earlier termination as provided in the Plan, each option and
all rights thereunder shall expire on such date as determined by the Board or
the Committee and set forth in the applicable option agreement, provided, that
such date shall not be later than ten (10) years after the date on which the
option is granted.

8.      EXERCISE OF OPTIONS

        Each option granted under the Plan shall be exercisable either in full
or in installments at such time or times and during such period as shall be set
forth in the option agreement evidencing such option, subject to the provisions
of the Plan. Subject to the requirements in the immediately preceding sentence,
if an option is not at the time of grant immediately exercisable, the Board or
Committee may (i) in the agreement evidencing such option, provide for the
acceleration of the exercise date or dates of the subject option upon the
occurrence of specified events, and/or (ii) at any time prior to the complete
termination of an option, accelerate the exercise date or dates of such option.

9.      NONTRANSFERABILITY OF OPTIONS

        No option granted under this Plan shall be assignable or otherwise
transferable by the optionee, except by will or by the laws of descent and
distribution. An option may be exercised during the lifetime of the optionee
only by the optionee.

                                       3
<PAGE>   4

10.     EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP

        Except as provided in Section 11(d) of the Plan with respect to
Incentive Stock Options and except as may otherwise be determined by the Board
or Committee at the date of grant of an option, and subject to the provisions of
the Plan, an optionee may exercise an option at any time within three (3) months
following the termination of the optionee's employment or other relationship
with the Company and its Affiliates or within one (1) year if such termination
was due to the death or disability (within the meaning of Section 22(e)(3) of
the Code or any successor provisions thereto) of the optionee (to the extent
such option is otherwise exercisable at the time of such termination) but in no
event later than the expiration date of the option. Notwithstanding the
foregoing and except as may otherwise be determined by the Board or Committee,
if the termination of the optionee's employment is for cause or is otherwise
attributable to a breach by the optionee of an employment or confidentiality or
non-disclosure agreement, the option shall expire immediately upon such
termination. The Board shall have the power to determine, in its sole
discretion, what constitutes a termination for cause or a breach of an
employment or confidentiality or non-disclosure agreement, whether an optionee
has been terminated for cause or has breached such an agreement, and the date
upon which such termination for cause or breach occurs. Any such determinations
shall be final and conclusive and binding upon the optionee and all other
persons interested or claiming interests under the Plan.

11.     INCENTIVE STOCK OPTIONS

        Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:

        (a)     Express Designation. All Incentive Stock Options granted under
the Plan shall, at the time of grant, be specifically designated as such in the
option agreement covering such Incentive Stock Options.

        (b)     10% Shareholder. If any employee to whom an Incentive Stock
Option is to be granted under the Plan is, at the time of the grant of such
option, the owner of stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company (after taking into account the
attribution of stock ownership rules of Section 424(d) of the Code), then the
following special provisions shall be applicable to the Incentive Stock Option
granted to such individual:

                (i)     the purchase price per share of the Common Stock subject
        to such Incentive Stock Option shall not be less than 110% of the Fair
        Market Value of one share of Common Stock at the time of grant; and

                (ii)    the option exercise period shall not exceed five (5)
        years from the date of grant.

        (c)     Dollar Limitation. For so long as the Code shall so provide,
options granted to any employee under the Plan (and any other incentive stock
option plans of the Company) which are intended to constitute Incentive Stock
Options shall not constitute Incentive Stock Options to

                                       4
<PAGE>   5

the extent that such options, in the aggregate, become exercisable for the first
time in any one calendar year for shares of Common Stock with an aggregate Fair
Market Value, as of the respective date or dates of grant, of more than
$100,000.

        (d)     Termination of Employment, Death or Disability. No Incentive
Stock Option may be exercised unless, at the time of such exercise, the optionee
is, and has been continuously since the date of grant of his or her option,
employed by the Company or its Affiliate, except that:

                (i)     an Incentive Stock Option may be exercised within the
        period of three (3) months after the date the optionee ceases to be an
        employee of the Company or its Affiliate (or within such lesser period
        as may be specified in the applicable option agreement), to the extent
        it is otherwise exercisable at the time of such cessation,

                (ii)    if the optionee dies while in the employ of the Company
        or its Affiliate, or within three (3) months after the optionee ceases
        to be such an employee, the Incentive Stock Option may be exercised by
        the person to whom it is transferred by will or the laws of descent and
        distribution within the period of one (1) year after the date of death
        (or within such lesser period as may be specified in the applicable
        option agreement), to the extent it is otherwise exercisable at the time
        of the optionee's death, and

                (iii)   if the optionee becomes disabled (within the meaning of
        Section 22(e)(3) of the Code or any successor provisions thereto) while
        in the employ of the Company or its Affiliate, the Incentive Stock
        Option may be exercised within the period of one (1) year after the date
        the optionee ceases to be such an employee because of such disability
        (or within such lesser period as may be specified in the applicable
        option agreement), to the extent it is otherwise exercisable at the time
        of such cessation.

For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Treasury Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no Incentive Stock Option may be exercised after its
expiration date.

12.     ADDITIONAL PROVISIONS

        (a)     Additional Option Provisions. The Board or the Committee may, in
its sole discretion, include additional provisions in option agreements covering
options granted under the Plan, including without limitation, restrictions on
transfer, repurchase rights, rights of first refusal, commitments to pay cash
bonuses or to make, arrange for or guaranty loans or to transfer other property
to optionees upon exercise of options, or such other provisions as shall be
determined by the Board or the Committee, provided, that such additional
provisions shall not be inconsistent with the requirements of applicable law and
such additional provisions shall not cause any Incentive Stock Option granted
under the Plan to fail to qualify as an Incentive Stock Option within the
meaning of Section 422 of the Code.

        (b)     Acceleration, Extension, Etc. The Board or the Committee may, in
its sole discretion (i) accelerate the date or dates on which all or any
particular option or options granted

                                       5
<PAGE>   6

under the Plan may be exercised, or (ii) extend the dates during which all, or
any particular, option or options granted under the Plan may be exercised,
provided, however, that no such acceleration or extension shall be permitted if
it would (i) cause any Incentive Stock Option granted under the Plan to fail to
qualify as an Incentive Stock Option within the meaning of Section 422 of the
Code, or (ii) if the Company is or becomes a Reporting Company, cause the Plan
or any option granted under the Plan to fail to comply with Rule 16b-3 (if
applicable to the Plan or such option).

13.     GENERAL RESTRICTIONS

        (a)     Investment Representations. The Board or Committee may require
any person to whom an option is granted, as a condition of exercising such
option or award, to give written assurances in substance and form satisfactory
to the Board or Committee to the effect that such person is acquiring the Common
Stock subject to the option or award for his or her own account for investment
and not with any present intention of selling or otherwise distributing the
same, and to such other effects as the Board or Committee deems necessary or
appropriate in order to comply with applicable federal and state securities
laws, or with covenants or representations made by the Company in connection
with any public offering of its Common Stock, including any "lock-up" or other
restriction on transferability.

        (b)     Compliance With Securities Law. Each option shall be subject to
the requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares subject to such
option or award upon any securities exchange or automated quotation system or
under any state or federal law, or the consent or approval of any governmental
or regulatory body, or that the disclosure of non-public information or the
satisfaction of any other condition, is necessary as a condition of, or in
connection with the issuance or purchase of shares thereunder, except to the
extent expressly permitted by the Board, such option or award may not be
exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval or satisfaction of such condition shall have
been effected or obtained on conditions acceptable to the Board or the
Committee. Nothing herein shall be deemed to require the Company to apply for or
to obtain such listing, registration, qualification, consent or approval, or to
satisfy such condition. In addition, Common Stock issued upon the exercise of
options may bear such legends as the Company may deem advisable to reflect
restrictions which may be imposed by law, including, without limitation, the
Securities Act of 1933, as amended, any state "blue sky" or other applicable
federal or state securities law.

14.     RIGHTS AS A STOCKHOLDER

        The holder of an option shall have no rights as a stockholder with
respect to any shares covered by the option (including, without limitation, any
right to vote or to receive dividends or non-cash distributions with respect to
such shares) until the effective date of exercise of such option and then only
to the extent of the shares of Common Stock so purchased. No adjustment shall be
made for dividends or other rights for which the record date is prior to the
date of exercise.

                                       6
<PAGE>   7

15.     ADJUSTMENT PROVISIONS FOR RECAPITALIZATIONS,
        REORGANIZATIONS AND RELATED TRANSACTIONS

        (a)     Recapitalizations and Related Transactions. If, through or as a
result of any recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction (i) the outstanding shares of
Common Stock are increased, decreased or exchanged for a different number or
kind of shares or other securities of the Company, or (ii) additional shares or
new or different shares or other non-cash assets are distributed with respect to
such shares of Common Stock or other securities, an appropriate and
proportionate adjustment shall be made in (x) the maximum number and kind of
shares reserved for issuance under or otherwise referred to in the Plan, (y) the
number and kind of shares or other securities subject to any then-outstanding
options under the Plan, and (z) the price for each share subject to any
then-outstanding options under the Plan, without changing the aggregate purchase
price as to which such options remain exercisable. Notwithstanding the
foregoing, no adjustment shall be made pursuant to this Section 15 if such
adjustment (A) would cause any Incentive Stock Option granted under the Plan to
fail to qualify as an Incentive Stock Option within the meaning of Section 422
of the Code, (B) if the Company is or becomes a Reporting Company, would cause
the Plan or any option granted under the Plan to fail to comply with Rule 16b-3
(if applicable to the Plan or such option), or (C) would be considered as the
adoption of a new plan requiring stockholder approval.

        (b)     Reorganization, Merger and Related Transactions. All outstanding
options under the Plan shall become fully exercisable following the occurrence
of any Trigger Event (as defined below), whether or not such options are then
exercisable under the provisions of the applicable agreements relating thereto.
For purposes of the Plan, a "Trigger Event" is any one of the following events:

                (i)     the date the Company acquires knowledge that any person
        or group deemed a person under Section 13(d)-3 of the Exchange Act
        (other than the Company, any Affiliate, any employee benefit plan of the
        Company or of any Affiliate or any entity holding shares of Common Stock
        or other securities of the Company for or pursuant to the terms of any
        such plan or any individual or entity or group or affiliate thereof
        which acquired its beneficial ownership interest prior to the date the
        Plan was adopted by the Board), in a transaction or series of
        transactions, has become the beneficial owner, directly or indirectly
        (with beneficial ownership determined as provided in Rule 13d-3, or any
        successor rule, under the Exchange Act), of securities of the Company
        entitling the person or group to 51% or more of all votes (without
        consideration of the rights of any class of stock to elect directors by
        a separate class vote) to which all stockholders of the Company would be
        entitled in the election of the Board were an election held on such
        date; provided, however, that the sale of voting securities by the
        Company, to a person or group, prior to such person or group acquiring
        such 51% of the voting securities, shall be excluded from the operation
        of this section 15(b)(i) with the advance approval of the Board of
        Directors; and, provided further that the beneficial ownership of 51% or
        more of the voting securities held by Royalty Books Associates, LLC, and
        its affiliates shall not be deemed to be a Trigger Event;

                                       7
<PAGE>   8

                (ii)    the date, during any period of two (2) consecutive
        years, when individuals who at the beginning of such period constitute
        the Board cease for any reason to constitute at least a majority
        thereof, unless the election, or the nomination for election by the
        stockholders of the Company, of each new director was approved by a vote
        of at least a majority of the directors then still in office who were
        directors at the beginning of such period; and

                (iii)   the date of approval by the stockholders of the Company
        of an agreement (a "reorganization agreement") providing for:

                        (A)     The merger or consolidation of the Company with
                another corporation (x) where the stockholders of the Company,
                immediately prior to the merger or consolidation, do not
                beneficially own, immediately after the merger or consolidation,
                shares of the corporation issuing cash or securities in the
                merger or consolidation entitling such stockholders to 50% or
                more of all votes (without consideration of the rights of any
                class of stock to elect directors by a separate class vote) to
                which all stockholders of such corporation would be entitled in
                the election of directors, or (y) where the members of the
                Board, immediately prior to the merger or consolidation, do not,
                immediately after the merger or consolidation, constitute a
                majority of the Board of Directors of the corporation issuing
                cash or securities in the merger or consolidation, or

                        (B)     The sale or other disposition of all or
                substantially all the assets of the Company.

        (c)     Board Authority to Make Adjustments. Any adjustments under this
Section 15 will be made by the Board or the Committee, whose determination as to
what adjustments, if any, will be made and the extent thereof will be final,
binding and conclusive. No fractional shares will be issued under the Plan on
account of any such adjustments.

16.     NO EMPLOYMENT RIGHTS

        Nothing contained in the Plan or in any option agreement shall confer
upon any optionee any right with respect to the continuation of his or her
employment or other relationship with the Company or any of its Affiliates or
interfere in any way with the right of the Company or any of its Affiliates at
any time to terminate such employment or relationship or to increase or decrease
the compensation of the optionee.

17.     AMENDMENT, MODIFICATION OR TERMINATION OF THE PLAN

        (a)     The Board may at any time modify, amend or terminate the Plan,
provided that to the extent required by applicable law, any such modification,
amendment or termination shall be subject to the approval of the stockholders of
the Company.

        (b)     The modification, amendment or termination of the Plan shall
not, without the consent of an optionee, affect his or her rights under an
option previously granted to him or her. With the consent of the optionee
affected, the Board or the Committee may amend or modify

                                       8
<PAGE>   9

outstanding option agreements in a manner not inconsistent with the Plan.
Notwithstanding the foregoing, the Board shall have the right (but not the
obligation), without the consent of the optionee affected, to amend or modify
(i) the terms and provisions of the Plan and of any outstanding Incentive Stock
Option agreements granted under the Plan to the extent necessary to qualify any
or all such options for such favorable federal income tax treatment (including
deferral of taxation upon exercise) as may be afforded incentive stock options
under Section 422 of the Code, (ii) if the Company is or becomes a Reporting
Company, the terms and provisions of the Plan and the option agreements entered
into in connection with any outstanding options to the extent necessary to
ensure the qualification of the Plan and such options under Rule 16b-3 (if
applicable to the Plan and such options), and (iii) if the Company is or becomes
a Reporting Company, the terms and provisions of the Plan and the option
agreements entered into in connection with any outstanding option to the extent
that the Board determines necessary to preserve the deduction of compensation
paid to certain optionees who are "covered employees," within the meaning of
Treasury Regulation Section 1.162-27(c)(2), as a result of the grant or exercise
of options under the Plan.

18.     WITHHOLDING

        (a)     The Company shall have the right to deduct and withhold from
payments or distributions of any kind otherwise due to the optionee any federal,
state or local taxes of any kind required by law to be so deducted and withheld
with respect to any shares issued upon exercise of options under the Plan.
Subject to the prior approval of the Company, which may be withheld by the
Company in its sole discretion, the optionee may elect to satisfy such
obligations, in whole or in part by (i) causing the Company to withhold shares
of Common Stock otherwise issuable pursuant to the exercise of an option, (ii)
delivering to the Company shares of Common Stock already owned by the optionee,
or (iii) delivering to the Company cash or a check to the order of the Company
in an amount equal to the amount required to be so deducted and withheld. The
shares delivered in accordance with method (ii) above or withheld in accordance
with method (i) above shall have a Fair Market Value equal to such withholding
obligation as of the date that the amount of tax to be withheld is to be
determined. An optionee who has made (with the Company's approval) an election
pursuant to method (i) or (ii) of this Section 18(a) may only satisfy his or her
withholding obligation with shares of Common Stock which are not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements.

        (b)     The acceptance of shares of Common Stock upon exercise of an
Incentive Stock Option shall constitute an agreement by the optionee (i) to
notify the Company if any or all of such shares are disposed of by the optionee
within two (2) years from the date the option was granted or within one (1) year
from the date the shares were issued to the optionee pursuant to the exercise of
the option, and (ii) if required by law, to remit to the Company, at the time of
and in the case of any such disposition, an amount sufficient to satisfy the
Company's federal, state and local withholding tax obligations with respect to
such disposition, whether or not, as to both (i) and (ii), the optionee is in
the employ of the Company or its Affiliate at the time of such disposition.

                                       9
<PAGE>   10

19.     CANCELLATION AND NEW GRANT OF OPTIONS, ETC.

        The Board or the Committee shall have the authority to effect, at any
time and from time to time, with the consent of the affected optionee(s) the (i)
cancellation of any or all outstanding options under the Plan and the grant in
substitution therefor of new options under the Plan (or any successor stock
option plan of the Company) covering the same or different numbers of shares of
Common Stock and having an option exercise price per share which may be lower or
higher than the exercise price per share of the cancelled options, or (ii)
amendment of the terms of the option agreements entered into in connection with
any and all outstanding options under the Plan to provide an option exercise
price per share which is higher or lower than the then-current exercise price
per share of such outstanding options.

20.     EFFECTIVE DATE AND DURATION OF THE PLAN

        (a)     Effective Date. The Plan shall become effective when adopted by
the Board, but no Incentive Stock Option granted under the Plan shall become
exercisable unless and until the Plan shall have been approved by the Company's
stockholders. If such stockholder approval is not obtained within twelve (12)
months after the date of the Board's adoption of the Plan, no options previously
granted under the Plan shall be deemed to be Incentive Stock Options and no
Incentive Stock Options shall be granted thereafter. Amendments to the Plan
shall become effective as of the latest of (i) the date of adoption by the
Board, (ii) the date set forth in the amendments or (iii) in the case of any
amendment requiring stockholder approval (as set forth in Section 17), the date
such amendment is approved by the Company's stockholders. Notwithstanding the
foregoing, no Incentive Stock Option granted on or after the effective date of
any such amendment requiring stockholder approval to qualify for incentive stock
option treatment under Section 422 of the Code shall become exercisable unless
and until such amendment shall have been approved by the Company's stockholders.
If such stockholder approval is not obtained within twelve (12) months of the
Board's adoption of such amendment, no options granted on or after the effective
date of such amendment shall be deemed Incentive Stock Options and no Incentive
Stock Options shall be granted thereafter. Subject to above limitations, options
may be granted under the Plan at any time after the effective date of the Plan
and before the date fixed for termination of the Plan.

        (b)     Termination. Unless sooner terminated by the Board, the Plan
shall terminate upon the close of business on the day next preceding the tenth
anniversary of the date of its adoption by the Board. After termination of the
Plan, no further options may be granted under the Plan; provided, however, that
such termination will not affect any options granted prior to termination of the
Plan.

21.     GOVERNING LAW

        The provisions of this Plan shall be governed and construed in
accordance with the laws of the State of Delaware without regard to the
principles thereof relating to the conflicts of laws.

                                       10

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