A program I use to come up with a license is Blinkbid. It will help develop a written agreement that licenses your images for specific terms. They may not go for the watermark, especially if they're being used for advertising.
As to the cost, there's a site called Stock Photo Price Calculator (
http://photographersindex.com/stockprice.htm). It can help in giving you a WAG as to what to charge. example - assuming that the images are used for advertising (I chose magazine as the medium), 1/4 page, with 10,000 or less distribution (since it's tough to determine how many actual hits the site may get based on the images), the price PER image is between $275 and $600, with a medium range of $437.50.
They'd probably hurl at that price per image, but hopefully that kind if gives you a starting point.