AMENDED AND RESTATED
REVOLVING LINE OF CREDIT LOAN AGREEMENT
AND SECURITY AGREEMENT

THIS AMENDED AND RESTATED REVOLVING LINE OF CREDIT LOAN AGREEMENT AND SECURITY
AGREEMENT ("Agreement") is made as of February 22, 2008, by and among Varsity
Group Inc., a Delaware corporation, Campus Outfitters Group, LLC, a Delaware
limited liability company, VarsityBooks.com, LLC, a Delaware limited liability
company and CollegeImpact.com, Inc., a Delaware corporation, all having an
address at 2677 Prosperity Avenue, Fairfax, Virginia 20031 (collectively, the
"Borrower"); and VGI FINANCIAL CORP., a Delaware corporation (as assignee of
Bank of America, N.A., a national banking corporation), having an address at
2233 West Street, River Grove, Illinois 60171-1895.

RECITALS

A. The Borrower and Bank of America, N.A. (the "Initial Lender"), entered into
that certain Revolving Line of Credit Loan Agreement and Security Agreement
dated as of March 8, 2007 (as amended prior to the date hereof, the "Existing
Loan Agreement").

B. Effective as of the Effective Date, the Initial Lender has sold and assigned
to the Lender, and the Lender has purchased and assumed from the Initial Lender,
all of the Initial Lender's interest in and to the Initial Lender's rights and
obligations under the Existing Loan Agreement, and as a condition thereto, the
Lender requires that the Borrower amend and restate the Existing Loan Agreement
on the terms and conditions hereinafter set forth.

C. The Borrower is, and has been, in default under the terms and conditions of
the Loan Documents, the declaration and notice of which by the Initial Lender is
hereby acknowledged by the Borrower, as a result of the Borrower's failure to
maintain the Minimum Tangible Net Worth required under Section 6.14 of the
Existing Loan Agreement and this Agreement (the "Existing Event of Default"). As
a result of such Existing Event of Default, the Lender has the right to declare
all principal, interest and other amounts owing under the Loan Documents to be
immediately due and payable. Except as expressly provided in Section 2.1(b) of
this Agreement, Lender has not and is not presently waiving any rights or
remedies in enforcing any or all of Borrower's obligations under any of the Loan
Documents and any or all applicable provisions thereunder.

D. Except as expressly provided in Section 2.1(b) of this Agreement, the
Borrower expressly acknowledges and agrees that, as of the date hereof, the
Lender has not waived, modified or released, directly or indirectly, expressly
or impliedly any or all of its rights or remedies to enforce the terms of the
Loan Documents or to otherwise seek collection of all principal, interest and
other amounts owing under the Loan Documents, with all such rights being
expressly reserved. Except as expressly provided in Section 2.1(b) of this
Agreement, nothing contained in this Agreement shall be deemed or construed to
be a waiver, modification, release or forbearance of any kind or nature
whatsoever with respect to amounts due under the Loan Documents or the rights
and remedies available to the Lender, and all such rights in favor of the Lender
are expressly preserved and shall be deemed unaffected, valid and subsisting
rights notwithstanding the execution and delivery of this Agreement.

INITIAL ACKNOWLEDGMENTS AND AGREEMENTS

To further induce the Lender to enter into this Agreement, the Borrower
covenants, represents and warrants to the Lender with the intent and
understanding that the Lender is expressly relying thereon as a material
inducement to enter into this Agreement, as follows:

 a. The Borrower consents and agrees to the actions requested of the Lender
    herein and acknowledges that the Loan is in default and is immediately due
    and payable in full without further demand;
 b. The terms of the Loan Documents, as amended herein, including, but not
    limited to, Borrower's obligations and liabilities under the Loan Documents
    and the validity and priority of the liens and security interests created
    thereby and hereunder, are hereby affirmed and ratified by the Borrower, and
    it is acknowledged and agreed that the same are in full force and effect and
    are unconditionally binding and enforceable against the Borrower, and all of
    them, as the case may be, in accordance with their respective terms;
 c. The Borrower does not possess any claims, defenses, offsets, recoupments or
    counterclaims of any kind or nature against the enforcement or validity of
    this Agreement, the Existing Loan Agreement, the Loan Documents, or any of
    the obligations set forth therein (collectively, the "Claims"), nor does the
    Borrower now have knowledge of any facts that would give rise to any Claims
    affecting, modifying or limiting the enforceability of same. In the event
    there now exists facts that would give rise to any Claims against or with
    respect to the enforcement of this Agreement, the Loan Documents or the
    Loans, the Borrower does hereby unconditionally, irrevocably and
    unequivocally waive and fully release any and all such Claims to the same
    extent as if such Claims were the subject of a lawsuit, adjudicated to a
    conclusion in favor of the Lender and dismissed therein with prejudice;
 d. To the best of the knowledge or information of the Borrower, the Lender has
    a first priority and superior security interest, which is validly perfected
    against all of the Lender's Collateral;
 e. The Borrower is unconditionally liable for all obligations, whether for
    principal, interest, costs, expenses or otherwise, under the applicable Loan
    Documents and does hereby ratify and affirm all of such obligations;
 f. Through and including February 22, 2008, there was due and owing under the
    Loan Agreement, in addition to interest which continues to accrue on a daily
    basis at the rates and in the manner set forth in the Revolving Note and
    this Agreement, and any and all other costs and expenses, incurred or to be
    incurred by the Lender in connection with this Agreement, the Loans and/or
    the Loan Documents, the following principal amount: $1,775,269.24.
 g. The Borrower fully and unequivocally consents and agrees that there is no
    obligation of the Lender to extend or renew any of the Loan Documents or
    this Agreement or to provide any further or additional financial
    accommodations of any kind or nature whatsoever, other than the Committed
    Advances, on the terms and subject to the conditions set forth herein;
 h. The Borrower, for itself, its heirs, legal representatives, beneficiaries,
    officers, directors, shareholders, employees, affiliates, predecessors,
    subsidiaries, members, managers, attorneys, agents, representatives,
    successors and assigns, and each of them, as the case may be, ("Releasors"),
    does hereby unconditionally, unequivocally and irrevocably remise, release
    and forever discharge the Lender, and its officers, directors, shareholders,
    employees, attorneys, agents, representatives, affiliates, parents,
    predecessors, successors and assigns (collectively, "Released Parties"),
    from and against all manners of action, causes of action, suits, debts,
    accounts, promises, warranties, damages and consequential damages, demands,
    agreements, bonds, bills, specialties, covenants, controversies, variances,
    trespasses, judgments, executions, costs, expenses or claims whatsoever, in
    law or in equity, whether presently known to Releasors or whether not known
    (collectively, the "Released Claims") including, but not limited to, all
    Released Claims arising out of, under, or relating to the Indebtedness, Loan
    Documents or the Lender's Collateral, which the Borrower now has or ever
    had, or can, shall or may have against Released Parties, upon or by reason
    of any manner, cause or thing whatsoever on or at any time prior to the date
    of these presents, it being the intention of the Borrower to reserve nothing
    whatsoever hereunder with respect to Released Parties and to assure Released
    Parties their peace and freedom from all Released Claims;
 i. The failure of the Lender to insist upon strict compliance with any of the
    terms, covenants, or conditions hereof or of one or more of the Loan
    Documents shall not be deemed a waiver of such term, covenant, or condition,
    nor shall any waiver or relinquishment of any right or power hereunder at
    any one time or more times be deemed a waiver or relinquishment of such
    right or power at any time or times; and
 j. The invalidity or unenforceability of any provision in this Agreement or in
    one or more of the Loan Documents shall in no way affect the validity or
    enforceability of any other provision.

AGREEMENTS

NOW, THEREFORE, in consideration of the premises, the mutual agreements herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Lender hereby
further agree as follows:

 1.  DEFINITIONS.
     Defined Terms
     . Certain capitalized terms not otherwise defined herein are used in this
     Agreement with the following meanings, unless the context otherwise
     requires:
      a.  "Account" means a right to payment of a monetary obligation, whether
          or not earned by performance, (i) for property that has been or is to
          be sold, leased, licensed, assigned, or otherwise disposed of, (ii)
          for services rendered or to be rendered, (iii) for a policy of
          insurance issued or to be issued, (iv) for a secondary obligation
          incurred or to be incurred, (v) for energy provided or to be provided,
          (iv) for use or hire of a vessel under a charter or other contract,
          (v) arising out of the use of a credit or charge card or information
          contained on or for use with the card.
      b.  "Adjusted Collateral Value" means, for each type of BOA Investments in
          the BOA Collateral Accounts, the Investment Collateral Value for each
          type of BOA Investments in the BOA Collateral Accounts.
      c.  "Advance" means an advance of funds under the Line of Credit,
          including the Outstanding Advance, Committed Advances and advances
          made on an uncommitted basis.
      d.  "Affiliate" means, with respect to any specified Person, any other
          Person which, directly or indirectly, through one or more
          intermediaries, controls or is controlled by, or is under common
          control with, such specified Person. The term "control" means the
          possession, directly or indirectly, of the power to direct or cause
          the direction of management and policies of a Person, whether through
          ownership of common stock, by contract, or otherwise.
      e.  "Aggregate Adjusted Collateral Value" means the aggregate of the
          Adjusted Collateral Values for the BOA Investments in the BOA
          Collateral Accounts.
      f.  "Agreement" means this Amended and Restated Revolving Line of Credit
          Loan Agreement and Security Agreement, as the same may be amended,
          modified or supplemented from time to time.
      g.  "Apparel Inventory" means that part of the Borrower's Inventory which
          is clothing for sale to the general public and which is not New
          Textbook Inventory, Used Textbook Inventory or On Campus Inventory.
      h.  "Assignment" means a direct assignment of Payments under Government
          Contracts, pursuant to and in compliance with the Assignment of Claims
          Act.
      i.  "Assignment of Claims Act" means Title 31, United States Code 3727,
          and Title 41, United States Code 15, as revised or amended, and any
          rules or regulations issued pursuant thereto, and also shall be deemed
          to include any other laws, rules or regulations governing the
          assignment of payments under Government Contracts or claims against a
          Government.
      j.  "BOA Collateral Accounts" means one or more restricted deposit or
          investment accounts owned and established by Borrower with Bank of
          America, N.A. or Bank of America Securities, LLC, subject to control
          agreements in favor of and satisfactory to the Lender, in which shall
          be deposited and held the BOA Investments.
      k.  "BOA Investments" means the cash, instruments, securities and other
          Investment Property now owned or hereafter acquired by Borrower from
          time to time and to be held in the BOA Collateral Accounts.
      l.  "Borrower" means Varsity Group Inc., a Delaware corporation, Campus
          Outfitters Group, LLC, a Delaware limited liability company,
          VarsityBooks.com, LLC, a Delaware limited liability company, and
          CollegeImpact.com, Inc., a Delaware corporation and to each such
          Person or to all of them, as the context may require, and the
          representations and obligations hereunder of the Persons comprised by
          the term "Borrower" shall be joint and several. For purposes of
          testing compliance with the financial covenants hereinafter, the
          negative covenants hereinafter, and the unused fee provided
          hereinafter, financial information concerning the Borrower shall mean
          financial information for Varsity Group Inc., Campus Outfitters Group,
          LLC, VarsityBooks.com, LLC and CollegeImpact.com, Inc. stated on a
          consolidated basis.
      m.  "Borrowing Base" means:
           1. Aggregate Adjusted Collateral Value; plus
           2. Seventy-five percent (75%) of Borrower's Eligible New Textbook
              Inventory; plus
           3. Fifty percent (50%) of Borrower's Eligible Used Textbook
              Inventory; plus
           4. Fifty percent (50%) of Borrower's Eligible On Campus Inventory;
              plus
           5. Fifty percent (50%) of Borrower's Eligible Apparel Inventory; plus
           6. Eighty percent (80%) of Borrower's Eligible Commercial Accounts.
     
          After calculating the portion of the Borrowing Base comprised of (a)
          the Aggregate Adjusted Collateral Value of the BOA Investments, (b)
          Eligible New Textbook Inventory, (c) Eligible Used Textbook Inventory,
          (d) Eligible On Campus Inventory, (e) Eligible Apparel Inventory and
          (f) Eligible Commercial Accounts, Lender shall deduct from such
          portion of the Borrowing Base such reserves as Lender may establish
          from time to time in its reasonable credit judgment, including without
          limitation, reserves for dilution, rent at leased locations subject to
          statutory or contractual landlord's liens, Inventory shrinkage,
          customs charges, warehousemen's or bailees' charges, and the amount of
          estimated maximum exposure, as determined by Lender from time to time,
          under any interest rate contracts which Borrower enters into with
          Lender (including interest rate swaps, caps, floors, options thereon,
          combinations thereof, or similar contracts).
     
          In addition, Lender may require modifications to the percentage rates
          of advance set forth above, based on the results of any field
          examination or audit of Borrower, as determined in Lender's sole and
          absolute discretion. In the absence of manifest error, Lender's
          determination of the amount of the Borrowing Base shall be conclusive.
     
      n.  "Borrowing Base Certificate" means a certificate substantially in the
          form of Schedule 1.1(A) attached hereto and made a part hereof (or
          such subsequent form as the Lender shall require).
      o.  "Borrowing Date" means the date on which an Advance is made.
      p.  "Business Day" means any day that is not a Saturday, Sunday or banking
          holiday in the State of Illinois.
      q.  "Capital Lease" means any lease which has been or should be
          capitalized on the books of the lessee in accordance with GAAP.
      r.  "Cash Collateral Account" means an account to be established by Lender
          in Borrower's name, with Bank of America, N.A., at Lender's sole
          discretion, for the purpose of receiving Payments, which shall
          constitute part of the Collateral unless and until disbursed to the
          Borrower or applied for the Borrower's account in accordance with this
          Agreement.
      s.  "Code" means the Internal Revenue Code of the United States, as
          amended.
      t.  "Collateral" means all of the following kinds of property now owned or
          hereafter acquired by the Borrower:
           1.  Accounts;
           2.  Chattel paper;
           3.  Deposit accounts;.
           4.  Documents;
           5.  Equipment;
           6.  Fixtures;
           7.  General intangibles (including payment intangibles and software);
           8.  Instruments;
           9.  Inventory;
           10. Investment Property;
           11. Intellectual property;
           12. Money;
           13. Supporting obligations (including letter of credit rights);
           14. All books and records and computer hardware, software and
               systems;
           15. All policies of insurance and the proceeds thereof;
           16. All additions and accessions to and replacements of the
               collateral described above; and
           17. All products and proceeds of all of the collateral described
               above;
     
          provided
     
          ,
          however
          , that notwithstanding any of the other provisions set forth in this
          definition or in Article 4 hereof, this Agreement shall not constitute
          a grant of a security interest in (i) any property to the extent that
          such grant of a security interest is prohibited by any requirements of
          law of a Government, (ii) more than 65% of the total outstanding
          voting capital stock of any foreign subsidiary of the Borrower, and
          (iii) cash held by the Borrower or any of its subsidiaries in
          connection with its role as a tuition payment and/or collection agent,
          to the extent that Borrower has no existing or future ownership
          interest in or entitlement to ownership in all or any part of such
          cash, and is holding such cash only as an agent for another Person. It
          is hereby understood and agreed that any property described in the
          preceding provision shall be excluded from the definition of
          "Collateral" and shall be referred to as the "Excluded Collateral".
     
          
     
      u.  "Commercial Accounts" means all Accounts of Borrower due from
          Customers other than the Government.
      v.  "Committed Advance Ending Date" means April 30, 2008.
      w.  "Compliance Certificate" means a certificate substantially in the form
          of Schedule 1.1(B) attached hereto and made a part hereof.
      x.  "Consolidated Debt" means with respect to Borrower and its
          subsidiaries on a consolidated basis, without duplication, all of the
          following, whether or not included as indebtedness or liabilities in
          accordance with GAAP:
           1. all indebtedness of Borrower and its subsidiaries for borrowed
              money, whether current or long-term (including all amounts owing
              with respect to the Loan) and all obligations of Borrower and its
              subsidiaries evidenced by bonds, debentures, notes, loan
              agreements or other similar instruments;
           2. all purchase money indebtedness of Borrower and its subsidiaries;
           3. the principal portion of all indebtedness under conditional sale
              or other title retention agreements relating to property purchased
              by Borrower and its subsidiaries (other than customary
              reservations or retentions of title under agreements with
              suppliers entered into in the ordinary course of business);
           4. all obligations of Borrower and its subsidiaries arising under
              letters of credit (including standby and commercial), bankers'
              acceptances, bank guaranties, surety bonds and similar
              instruments;
           5. all indebtedness of Borrower and its subsidiaries in respect of
              the deferred purchase price of property or services, other than
              trade accounts payable in the ordinary course of business and, in
              each case, not past due for more than 120 days after the date on
              which such trade account payable was created, and;
           6. any indebtedness of Borrower and its subsidiaries under Capital
              Leases, sale and leaseback transactions, synthetic leases and
              securitization transactions;
           7. all obligations of Borrower and its subsidiaries to purchase,
              redeem, retire, defease or otherwise make any payment prior to the
              Ending Date in respect of any equity or ownership interests in
              such Person or any other Person, valued, in the case of a
              redeemable preferred interest, at the greater of its voluntary or
              involuntary liquidation value plus accrued and unpaid dividends;
           8. all Consolidated Debt of others secured by (or for which the
              holder of such Consolidated Debt has an existing right, contingent
              or otherwise, to be secured by) any Encumbrance on, or payable out
              of the proceeds of production from, property owned or acquired by
              such Person, whether or not the obligations secured thereby have
              been assumed;
           9. all guarantees with respect to Consolidated Debt of the types
              specified in clauses (1) through (8) above of another Person
              (other than Borrower and its subsidiaries); and
     
          For purposes hereof, the amount of any obligation arising under
          letters of credit (including standby and commercial), bankers'
          acceptances, bank guaranties, surety bonds and similar instruments
          shall be the maximum amount available to be drawn thereunder.
     
      y.  "Contra Account" means an Account due from an account debtor to which
          the Borrower owes money.
      z.  "Customer" means any governmental entity (federal, state, county,
          municipal or otherwise) or business entity (corporation, association,
          partnership, limited liability company or partnership, sole
          proprietorship or otherwise) or individual to which Borrower provides
          goods or services for compensation.
      aa. "Dividend" with respect to any Person means that such Person has
          declared or paid a dividend or returned any equity capital to its
          holders of its Equity Interests or authorized or made any other
          distribution, payment or delivery of property (other than common stock
          of such Person) or cash to holders of its Equity Interests as such, or
          redeemed, retired, purchased or otherwise acquired, directly or
          indirectly, for consideration any shares of any class of its Equity
          Interests outstanding on or after the date hereof (or any options or
          warrants issued by such Person with respect to its Equity Interests),
          or set aside any funds for any of the foregoing purposes, or shall
          have permitted any of its Subsidiaries to purchase or otherwise
          acquire for a consideration any shares of any class of the Equity
          Interests of such Person outstanding on or after the date hereof (or
          any options or warrants issued by such Person with respect to its
          Equity Interests) or, in any such case, entered into any transaction
          having a substantially similar effect. Without limiting the foregoing,
          "Dividends" with respect to any Person shall also include all payments
          made or required to be made by such Person with respect to any stock
          appreciation rights plans, equity incentive or achievement plans or
          any similar plans or setting aside of any funds for the foregoing
          purposes.
      ab. "Eligible," when used to describe an Account, means that the Account
          conforms to the following criteria:
           1.  the Account has been Billed;
           2.  in the case of a Commercial Account or Government Account, less
               than ninety-one (91) days have passed from the original billing
               date;
           3.  at the Lender's option, in the case of a Government Account, the
               Borrower has made an Assignment of all Payments due or to become
               due under the Government Contract giving rise to the Account;
           4.  the Account arose from a bona fide sale of goods or services to a
               Customer; the goods or services have been delivered or provided
               to the Customer; the Borrower possesses receipts from the
               Customer acknowledging delivery of the goods or performance of
               the services; and Customer has not returned or rejected the goods
               or services;
           5.  the Account is based upon an enforceable written order or
               contract for goods or services;
           6.  the Borrower's title to the Account is absolute and is not
               subject to any prior assignment, claim, escrow agreement or
               amendment; lien or security interest, and the Borrower otherwise
               has the full and unqualified right and power to assign and grant
               a security interest in the Account to the Lender;
           7.  the amount shown on the books of the Borrower and on any invoice,
               certificate, schedule or statement delivered to the Lender
               regarding the amount due on the Account is due and owing to the
               Borrower;
           8.  the Account is not subject to any claim of reduction,
               counterclaim, set-off, recoupment or other defense in law or
               equity, or any claim for credits, allowances or adjustments by
               the Customer because of returned, inferior or damaged goods,
               unsatisfactory services or for any other reason, or any claim by
               a Customer against a warranty provided by Borrower for an Account
               arising from the sale of goods or services to a Customer;
           9.  the Customer has not notified the Borrower of any dispute
               concerning any of the goods or services giving rise to the
               Account, nor made claim that the goods or services fail to
               conform to the requirements of the Customer's order or contract,
               nor notified the Borrower to cure any default under the
               Customer's order or contract;
           10. the Account does not arise out of a Customer's contract or order
               that by its terms forbids or makes void or unenforceable the
               Borrower's assignment of the Account to the Lender;
           11. the Borrower has not received any note, trade acceptance draft or
               other instrument tendered in payment of the Account;
           12. the Borrower has not received any notice of the death of the
               Customer or any partner in a Customer that is a partnership
               (where the death of such partner would result in dissolution or
               termination of such Customer); nor has Borrower received any
               notice of dissolution, termination of existence, insolvency,
               business failure, appointment of a receiver for any part of the
               property of, assignment for the benefit of creditors by, or the
               filing of a petition in bankruptcy or the commencement of any
               proceeding under any bankruptcy or insolvency laws by or against
               the Customer;
           13. the Customer is not incorporated in any jurisdiction outside the
               United States and is not conducting its business primarily
               outside the United States;
           14. Borrower is not indebted in any manner to the Customer;
           15. no bond has been issued or is contemplated with respect to the
               goods or services furnished by the Borrower or with respect to
               the project or contract for which those goods or services were
               furnished, unless otherwise agreed to in advance, in writing by
               Lender, as determined by Lender in its sole and absolute
               discretion; and
           16. the Account is not an Ineligible Account; and
     
          when used to describe Inventory, shall mean the cost of the Borrower's
          Inventory, less such part of the Inventory that the Lender determines
          to be ineligible, and less a reserve for obsolescence to be determined
          by the Lender. Ineligible Inventory shall include, but shall not be
          limited to, work-in-process, Inventory on consignment and any other
          Inventory that the Lender believes should not be considered eligible,
          either because of doubtful value or because the Lender believes there
          would be practical difficulties in realizing on the Inventory.
     
          In the event of any dispute, under the foregoing criteria, as to
          whether an Account or Inventory is, or has ceased to be, an Eligible
          Account or Eligible Inventory, the Lender's decision shall control.
     
      ac. "Encumbrance" means any mortgage, pledge, deed of trust, collateral
          assignment, security interest, hypothecation, lien or charge of any
          kind (including any conditional sale or other title retention
          agreement, any Capital Lease having substantially the same economic
          effect as any of the foregoing, and the filing of, or agreement or
          authorization to give or file, any financing statement under the
          Uniform Commercial Code or comparable law of any jurisdiction). It is
          understood and agreed by the parties hereto that the Borrower and its
          subsidiaries may, as part of their businesses, grant licenses to
          Persons to use Intellectual Property owned or developed by, or
          licensed to, the Borrower or its subsidiaries. For purposes of this
          Agreement, such licensing activity shall not constitute an
          "Encumbrance" under this Agreement against such Intellectual Property.
      ad. "Effective Date" means February 25, 2008.
      ae. "Ending Date" means May 30, 2008.
      af. "Environmental Laws" mean all laws relating to Hazardous Wastes, Toxic
          Substances or materials that might be emitted, released or discharged
          into the environment or other laws or regulations protecting the
          environment.
      ag. "Equity Interests" means (i) in the case of a corporation, corporate
          stock, (ii) in the case of a limited liability company, association or
          business entity, any and all shares, interests, participations,
          ownership or voting rights or other equivalents (however designated)
          of corporate stock, (iii) in the case of a partnership, partnership
          interests (whether general or limited) and (iv) any other interest or
          participation that confers on a Person the right to receive a share of
          the profits and losses of, or distributions of assets of, the issuing
          Person, in each case regardless of class or designation, and all
          warrants, options, purchase rights, conversion or exchange rights,
          voting rights, calls or claims of any character with respect thereto.
      ah. "ERISA" means the Employee Retirement Income Security Act of 1974, as
          amended, and any successor statute thereto, as interpreted by the
          rules and regulations thereunder, all as the same may be in effect
          from time to time. References to sections of ERISA shall be construed
          also to refer to any successor sections.
      ai. "ERISA Affiliate" means an entity, whether or not incorporated, which
          is under common control with the Borrower or any of its subsidiaries
          within the meaning of Section 4001(a)(14) of ERISA, or is a member of
          a group which includes the Borrower or any of its subsidiaries and
          which is treated as a single employer under Sections 414(b), (c), (m),
          or (o) of the Code.
      aj. "Event of Default" means any one of the events specified as an "Event
          of Default" under this Agreement.
      ak. "GAAP" means generally accepted accounting principles in the United
          States of America, consistently applied.
      al. "GAAS" means generally accepted auditing standards in the United
          States of America.
      am. "Governance Documents" means the Borrower's Articles or Certificate of
          Incorporation and Bylaws or other documents or agreements affecting
          the Borrower's corporate governance if Borrower is a corporation, or
          the Borrower's Articles of Organization and Operating Agreement or
          other documents or agreements affecting the Borrower's limited
          liability company governance if Borrower is a limited liability
          company.
      an. "Government" means the government of the United States of America or
          the departments or agencies of the United States, but does not include
          the government of any state or the District of Columbia or any
          departments or agencies of any state or of the District of Columbia.
      ao. "Government Accounts" means all Accounts of Borrower arising out of
          any Government Contract.
      ap. "Government Contracts" means all contracts of Borrower with a
          Government, including all renewals, extensions, modifications, change
          orders and amendments thereof and thereto.
      aq. "Hazardous Wastes" mean all waste materials subject to regulation
          under the Comprehensive Environmental Response, Compensation, and
          Liability Act, 42 U.S.C. 9601 et seq., the Resource Conservation and
          Recovery Act, 42 U.S.C. 6901 et seq., or applicable state law and any
          other applicable federal, state or local laws and their regulations
          now in force or hereafter enacted relating to hazardous wastes.
      ar. "Ineligible Accounts" shall include the following Accounts:
           1. Accounts that do not conform with the criteria set forth for
              Eligible Accounts;
           2. An Account owing by any account debtor for which the Lender has
              deemed fifty percent (50%) or more of the account debtor's other
              Accounts to be non-Eligible; however, for purposes of this
              category of Ineligible Accounts, each Government Contract shall be
              treated as an individual Customer;
           3. Government Accounts arising under Government Contracts which
              contain an express prohibition against assignment of the
              Borrower's rights to Payment;
           4. The last payment due on a Government Account, unless such
              Government Account arises from a Government Contract which is a
              "fixed price contract" (as defined in the Federal Acquisition
              Regulations) which does not include any provision for progress
              payments, incentive arrangements or price redetermination;
           5. Contra Accounts;
           6. Any Accounts owing by Customers purchasing goods or services from
              the Borrower for such Customer's personal, family or household
              use, or otherwise constituting an Account arising from the sale of
              Consumer Goods (as such term is defined in the UCC); or Accounts
              constituting credit card purchases or which otherwise arise from
              obligations of individuals to pay for such goods or services;
           7. Accounts receivable from Affiliates or subsidiaries of the
              Borrower;
           8. Unbilled Accounts, including, but not limited to, progress
              payments, retainages, milestones and final payments; or
           9. Any Account deemed by the Lender, in the exercise of its sole and
              absolute discretion, to be an Ineligible Account because of
              uncertainty as to the creditworthiness of the Customer or because
              the Lender otherwise considers the collateral value thereof to the
              Lender to be impaired or its ability to realize such value to be
              insecure.
     
      as. "Initial Cash Flow Projections" means the Cash Flow Projections for
          the Borrower attached hereto as Schedule 1.1(C) and made a part
          hereof.
      at. "Initial TNW Amount" means the Tangible Net Worth of Borrower as of
          December 31, 2006, as set forth in the PWC Audit, less Five Hundred
          Thousand and 00/100 Dollars ($500,000.00).
      au. "Intellectual Property" shall mean all patents, licenses, trade names,
          trademarks, copyrights, inventions, service marks, trademark
          registrations, service mark registrations and copyright registrations,
          whether domestic or foreign and applications for any of the foregoing,
          and all proprietary technology, know-how, trade secrets or other
          intellectual property rights owned or used by the Borrower or any
          subsidiary in the operation of their respective businesses.
      av. "Inventory" means the New Textbook Inventory, Used Textbook Inventory,
          On Campus Inventory, Apparel Inventory and all other inventory of
          Borrower, as such term is defined in the UCC.
      aw. "Investment Collateral Value" means the value for each type of BOA
          Investments in the BOA Collateral Accounts which shall be determined
          at any given time as follows:
           1. If checking, savings, money market or other deposit accounts, the
              Investment Collateral Value shall be the daily balance on deposit
              with respect to each of such accounts as stated in a statement or
              certificate issued by Bank of America, N.A. for the day on which
              such valuation is requested.
           2. If government or agency obligations or bonds, the Investment
              Collateral Value shall be determined from the most recent closing
              bid price for such bonds obtained from the Wall Street Journal. If
              such closing bid price is not available in the Wall Street
              Journal, the Investment Collateral Value shall be the value quoted
              to Lender by a reputable brokerage firm selected by Lender. If no
              such quote is available, the value will be determined by Lender in
              its sole discretion.
     
          The Investment Collateral Value of stock, mutual funds (other than
          money market funds accounts referenced in item 1 above) and corporate
          bonds shall conclusively be deemed to be $0 for purposes of this
          Agreement. The foregoing reduction in Investment Collateral Value
          shall not affect the Lender's continuing lien and security interest in
          such Collateral established by the Loan Documents.
     
          In addition, notwithstanding the foregoing, the Investment Property
          and any checking, savings, money market or other deposit accounts
          shall be deemed to not have any Investment Collateral Value hereunder
          unless it is subject to a perfected first priority security interest
          in favor of Lender.
     
          Furthermore, to the extent that Borrower has not (i) delivered any
          Collateral consisting of certificated securities or instruments into
          the possession of Lender, (ii) obtained the written agreement of any
          bailee or securities intermediary in form and substance satisfactory
          to Lender with respect to any Collateral, or (iii) taken any other
          action required by Lender with respect to the Collateral, Lender, in
          its sole discretion, may exclude from the calculations of this
          Agreement, the Investment Collateral Value of any such Collateral
          until Borrower has complied with such requirement to the sole
          satisfaction of Lender.
     
      ax. "Investment Property" means a security, whether certificated or
          uncertificated, security entitlement, securities account, commodity
          contract, or commodity account, and as such term is further defined
          under the UCC.
      ay. "Item" means any "item" as defined in Section 4-104 of the Uniform
          Commercial Code, to include, without exclusion or limitation, checks,
          drafts, money orders or other media by which Payment may be made.
      az. "Lender" means VGI Financial Corp., a Delaware corporation, and its
          successors and assigns.
      ba. "Line of Credit" has the meaning provided in Section 2.1.
      bb. "Line of Credit Amount" has the meaning provided in Section 2.1.
      bc. "Loan" means the Advances made under the Line of Credit.
      bd. "Loan Documents" mean this Agreement, the Revolving Note or any other
          document executed by the Borrower or any other Person evidencing,
          securing, guaranteeing or relating to the Loan or other Obligations,
          as such documents or instruments may be amended, modified or extended
          from time to time.
      be. "Material Adverse Effect" has the meaning provided in the Merger
          Agreement.
      bf. "Merger" has the meaning provided in the Merger Agreement.
      bg. "Merger Agreement" means that certain Plan and Agreement of Merger
          dated February 22, 2008 by and among Varsity Group Inc., a Delaware
          corporation, VGI Holdings Corp., a Delaware corporation and VGI
          Acquisition Corp., a Delaware corporation.
      bh. "Multiemployer Plan" means a Plan which is a multiemployer plan as
          defined in Sections 3(37) or 4001(a)(3) of ERISA.
      bi. "Multiple Employer Plan" means a Plan which the Borrower or any of its
          subsidiaries or any ERISA Affiliate and at least one employer other
          than the Borrower or any of its subsidiaries or any ERISA Affiliate
          are contributing sponsors.
      bj. "New Textbook Inventory" means that part of the Borrower's Inventory
          which is textbooks available for sale to the general public that is
          comprised of new textbooks and is not Used Textbook Inventory, On
          Campus Inventory or Apparel Inventory, which for avoidance of doubt,
          the Borrower must hold legal title to.
      bk. "Obligations" means (i) all debts, obligations or liabilities owing by
          the Borrower to the Lender, now or hereafter existing or incurred
          whether absolute or contingent, of every kind and description, whether
          or not evidenced by notes or other instruments, and whether or not
          such debts, obligations or liabilities are direct or indirect, fixed
          or contingent, liquidated or unliquidated including, without
          limitation, those arising under the Existing Loan Agreement, that
          certain Revolving Note dated March 8, 2007 payable to the Initial
          Lender and assigned to the Lender, this Agreement, the Revolving Note,
          and all other instruments, documents and agreements of every kind and
          nature now or hereafter executed in connection with the Existing Loan
          Agreement, that certain Revolving Note dated March 8, 2007 payable to
          the Initial Lender and assigned to the Lender, this Agreement or the
          Revolving Note (including all renewals, increases, extensions,
          restatements and replacements thereof and amendments and modifications
          of any of the foregoing), (ii) all costs, attorneys' fees and expenses
          incurred by Lender in connection with the collection or enforcement of
          any of the above. For the avoidance of doubt, the Warrant issued to
          Lender in connection herewith is not an "Obligation."
      bl. "Offer" has the meaning provided in the Merger Agreement.
      bm. "On Campus Inventory" means that part of the Borrower's Inventory
          which is for sale to the student population at colleges and
          universities in the United States of America which is not New Textbook
          Inventory, Used Textbook Inventory or Apparel Inventory.
      bn. "Operating Account" means a demand deposit account established by the
          Borrower with Bank of America, N.A. that is subject to an account
          control agreement in favor of and satisfactory to the Lender, for the
          Borrower's use in connection with its business operations and with the
          Line of Credit.
      bo. "Outstanding Advances" means the Advances outstanding on the Effective
          Date that were made to Borrower by Initial Lender, being $1,775,269.24
          in principal amount, with $5,825.68 of accrued interest thereon
          through February 22, 2008, with a per diem of $268.39 through the
          Effective Date, if later.
      bp. "Payment" or "Payments" means any check, draft, cash or any other
          remittance or credit in payment or on account of any or all of the
          Accounts of Borrower.
      bq. "PBGC" means the Pension Benefit Guaranty Corporation established
          pursuant to Subtitle A of Title IV of ERISA and any successor thereto.
      br. "Person" means any individual, partnership, association, trust,
          corporation, limited liability company or partnership, or other
          entity.
      bs. "Plan" means any employee benefit plan (as defined in Section 3(3) of
          ERISA) which is covered by ERISA and with respect to which the
          Borrower or any of its subsidiaries or any ERISA Affiliate is (or, if
          such plan were terminated at such time, would under Section 4069 of
          ERISA be deemed to be) an "employer" within the meaning of Section
          3(5) of ERISA.
      bt. "Prime Rate" means the annual rate of interest identified as the
          "prime rate" in the "Money Rates" column published in the Wall Street
          Journal. If the published prime rate is expressed on the applicable
          date as a range, the prime rate for purposes of this Agreement shall
          be the average between the high and low of that range. If the Wall
          Street Journal ceases to publish a prime rate, Lender may substitute
          another publication publishing the "Prime Rate", as the source of the
          "Prime Rate" for purposes of this Agreement. In the event that "Prime
          Rates" are no longer generally published, then the final published
          Prime Rate shall remain the "Prime Rate" hereunder for the balance of
          the term of this Agreement. Any change in the Prime Rate shall become
          effective, without prior notice to the Borrower, automatically as of
          the date of such change in the Prime Rate..
      bu. "PWC Audit" means that certain financial audit of the consolidated
          financial statements of Varsity Group Inc. and its subsidiaries for
          the year ending December 31, 2006, performed by PricewaterhouseCoopers
          LLP and reflecting the consolidated financial condition of Varsity
          Group Inc. and its subsidiaries, in accordance with GAAP, such audit
          to have been performed in accordance with GAAS.
      bv. "Request for Advance" means a certificate substantially in the form of
          Schedule 1.1(D) attached hereto and made a part hereof.
      bw. "Reportable Event" means a "reportable event" as defined in Section
          4043 of ERISA with respect to which the notice requirements to the
          PBGC have not been waived.
      bx. "Revolving Note" means the Borrower's amended and restated promissory
          note, of even date, in the amount of Five Million and 00/100 Dollars
          ($5,000,000.00), payable to the order of the Lender, and evidencing
          Borrower's obligation to repay the Advances.
      by. "Single Employer Plan" means any Plan which is covered by Title IV of
          ERISA, but which is not a Multiemployer Plan.
      bz. "Tangible Net Worth" means the value of Borrower's total assets
          (including leaseholds and leasehold improvements and reserves against
          assets, but excluding goodwill, patents, trademarks, trade names,
          organization expense, unamortized debt discount and expense,
          capitalized or deferred research and development costs, deferred
          marketing expenses, and other like intangibles, and monies due from
          Affiliates, officers, directors, employees, shareholders, members and
          managers of Borrower) less total liabilities, including but not
          limited to accrued and deferred income taxes.
      ca. "Termination Event" means (i) with respect to any Plan, the occurrence
          of a Reportable Event or the substantial cessation of operations
          (within the meaning of Section 4062(e) of ERISA); (ii) the withdrawal
          of the Borrower or any of its subsidiaries or any ERISA Affiliate from
          a Multiple Employer Plan during a plan year in which it was a
          substantial employer (as such term is defined in Section 4001(a)(2) of
          ERISA), or the termination of a Multiple Employer Plan; (iii) the
          distribution of a notice of intent to terminate or the actual
          termination of a Plan pursuant to Section 4041(a)(2) or 4041A of
          ERISA; (iv) the institution of proceedings to terminate or the actual
          termination of a Plan by the PBGC under Section 4042 of ERISA; (v) any
          event or condition which might constitute grounds under Section 4042
          of ERISA for the termination of, or the appointment of a trustee to
          administer, any Plan; (vi) the complete or partial withdrawal of the
          Borrower or any of its subsidiaries or any ERISA Affiliate from a
          Multiemployer Plan.
      cb. "Toxic Substances" mean any materials which have been shown to have
          significant adverse effects on human health or which are subject to
          regulation under the Toxic Substances Control Act, 15 U.S.C. 2601 et
          seq., applicable state law, or any other applicable federal, state or
          local laws now in force or hereafter enacted relating to toxic
          substances. "Toxic Substances" includes, but is not limited to,
          asbestos, polychlorinated biphenyls (PCBs), petroleum products, and
          lead-based paints.
      cc. "UCC" means the Uniform Commercial Code in the state(s) as set forth
          in Section 1.4 of this Agreement.
      cd. "Used Textbook Inventory" means that part of the Borrower's Inventory
          which is textbooks, which is available for sale to the general public
          in the ordinary course of Borrower's business, and that is not New
          Textbook Inventory, On Campus Inventory or Apparel Inventory.
     
     Accounting Terms
     . Accounting terms used in this Agreement but not defined in this Agreement
     shall have the meanings given to them in accordance with GAAP in effect as
     of the date of this Agreement and as modified from time to time. Except as
     otherwise provided in this Agreement, all financial computations made
     pursuant to this Agreement and all financial reports provided to the Lender
     shall be made in accordance with GAAP, consistently applied. Except as
     otherwise provided in this Agreement, whenever this Agreement refers to a
     balance sheet, financial statement or the information contained in a
     balance sheet or other financial statement, the Agreement shall be
     construed to refer to the most recent consolidated balance sheet or other
     financial statement that Borrower has provided to the Lender.
     Use of Defined Terms
     . All terms defined in this Agreement shall have the same defined meanings
     when used in any certificate, report or other document made or delivered in
     connection with this Agreement, unless otherwise set forth therein.
     UCC Terms
     . Terms that incorporate definitions provided in the Uniform Commercial
     Code shall have such meanings as are mandated by the Uniform Commercial
     Code of the state or states applicable for the determination of such
     meanings. Terms not otherwise defined herein and not incorporating a
     definition under the Uniform Commercial Code of any particular state, but
     which are defined in the Uniform Commercial Code as adopted by the State of
     Illinois, shall have the meanings ascribed to them under the Uniform
     Commercial Code as adopted by the State of Illinois.

 2.  LOAN.
     Revolving Line of Credit
     .
     Line of Credit
     The Lender hereby establishes a line of credit (the "Line of Credit") in
     favor of the Borrower pursuant to which the Lender may, in its sole and
     absolute discretion, and subject to the other terms and conditions of this
     Agreement, make Advances to the Borrower from time to time to and including
     the Ending Date, unless the Lender, in its sole and absolute discretion,
     sooner notifies the Borrower of the termination of the Line of Credit. The
     aggregate principal amount of all Advances at any one time outstanding
     shall not exceed the least of (i) $5,000,000, (ii) the Borrowing Base and
     (iii) such reduced amount as may be fixed by the Lender by written notice
     to the Borrower of not less than $4,000,000 (the "Line of Credit Amount").
     Subject to the foregoing and to the other terms and conditions of this
     Agreement, the Borrower may borrow, repay and reborrow from the Lender the
     Advances.
     Committed Advances; Forbearance
     .
      1. Notwithstanding the foregoing, subject to the terms and conditions of
         this Agreement, the Lender hereby agrees to make Advances (the
         "Committed Advances") to Borrower under the Line of Credit from time to
         time to and including the Committed Advance Ending Date in an aggregate
         principal amount at any one time outstanding not to exceed $2,000,000;
         provided, however, that (i) for the period beginning on the Effective
         Date and ending on February 21, 2008, Lender shall only be obligated to
         make Advances in an amount up to the limit for such period set forth in
         Schedule 2.1, (ii) for each bi-monthly period thereafter, Lender shall
         only be obligated to make Advances in an amount up to the limits set
         forth for such period in Schedule 2.1 (clauses (i) and (ii)
         constituting the "Committed Amount") and (iii) at no time shall Lender
         be obligated to make an Advance if the aggregate of all outstanding
         Advances would exceed the Borrowing Base. It is understood that (A)
         such amount shall be in addition to the amount of the Outstanding
         Advances, (B) all Advances made on or after the Effective Date shall
         constitute Committed Advances in satisfaction of Lender's commitment
         under this Section 2.1(b) and (C) Lender may satisfy its obligation to
         make Committed Advances by releasing cash from the BOA Collateral
         Account in the amount of the required Advance, such release
         constituting an Advance hereunder.
      2. Lender hereby agrees that, during the period beginning on the date
         hereof and ending on May 30, 2008 (the "Forbearance Period"), Lender
         shall not exercise or enforce any of its rights or remedies under the
         Agreement, or under any of the other Loan Documents, in connection with
         the Existing Event of Default, other than with respect to releases or
         other disbursements to Borrower from the BOA Collateral Account, which
         Lender may do at any time. Without limiting the generality of the
         foregoing, the Lender agrees that during the Forbearance Period it will
         forbear from exercising any legal or equitable rights or remedies they
         may have against any of the Collateral (other than the BOA Collateral
         Account), including, but not limited to, any rights of set off with
         respect to any funds in their possession. Notwithstanding the
         foregoing, the Forbearance Period shall terminate and the Lender shall
         immediately be entitled to exercise its legal and equitable rights and
         remedies under this Agreement and the other Loan Documents upon the
         occurrence of any Event of Default other than the Existing Event of
         Default.
     
     EXCEPT FOR THE COMMITTED ADVANCES, THIS AGREEMENT IS NOT, NOR SHALL IT BE
     DEEMED TO CONSTITUTE, A COMMITMENT ON THE PART OF LENDER TO MAKE ANY
     EXTENSION OF CREDIT TO OR FOR ACCOUNT OF BORROWER AND MAY NOT BE RELIED
     UPON BY IT FOR FINANCING.
     Mandatory Prepayments
     . If the principal of all outstanding Advances at any time exceeds the Line
     of Credit Amount, then Borrower shall make an immediate payment in an
     amount sufficient that the principal of all outstanding Advances will no
     longer exceed the Line of Credit Amount.
     Records and Notes Evidencing Advances
     . The Lender will record all Advances made pursuant to this Agreement and
     all payments of principal and interest in its records, which records will
     be conclusive absent manifest error. Any failure so to record or any error
     in doing so shall not, however, limit or otherwise affect the obligation of
     the Borrower hereunder to pay any amount owing with respect to the
     Advances. Instead of or in addition to such records, the Advances may be
     evidenced by the Revolving Note, which will be payable on the Ending Date
     or such earlier date as the Lender may require.
     Advances
     . The Advance shall be denominated in U.S. Dollars. Each Committed Advance
     and each other Advance made by the Lender in its sole and absolute
     discretion will be made in immediately available funds.
     Election to Make Advances
     . The Borrower agrees that its compliance with and its performance of the
     provisions of this Agreement do not obligate the Lender to make any
     Advances and that the Lender may make any Advance in its sole and absolute
     discretion, except as provided in Section 2.1(b).
     Procedure for Advances
     .
      a. Each Advance shall be made upon the Borrower's irrevocable written
         notice delivered to the Lender in the form of a Request for Advance
         attached hereto as Schedule 1.1(D) which notice must be received by the
         Lender prior to 11 a.m. (Chicago time) three (3) Business Days prior to
         the requested borrowing date, specifying: (A) the amount of the
         borrowing, which, unless otherwise agreed by Lender, shall be in an
         aggregate minimum amount of $25,000 or any multiple of $10,000 in
         excess thereof and (B) the requested borrowing date, which shall be a
         Business Day.
      b. The Lender may honor telephone instructions for Advances or payments
         given, or purported to be given, by any one of the individuals
         authorized to sign loan agreements on behalf of the Borrower, or any
         other individual designated by any one of such authorized signers.
      c. Advances will be deposited in the Borrower's Operating Account or the
         Cash Collateral Account, at the sole Lender's discretion.
      d. At the request of the Lender, the Borrower will promptly provide
         written confirmation to the Lender of any telephone instructions. If
         there is a discrepancy and the Lender has already acted on the
         telephone instructions, the telephone instructions will prevail over
         the written confirmation.
      e. The Borrower indemnifies and shall defend and hold the Lender
         (including its officers, employees, and agents) harmless from all
         liability, loss, and costs in connection with or resulting from
         telephone instructions it reasonably believes are made by any
         individual authorized by the Borrower to give such instructions. This
         indemnity and defense obligation will survive this Agreement.
     
     Repayment Terms
     .
     Interest
     . Unless otherwise specified herein, the Borrower shall pay interest on the
     unpaid principal amount of each Advance from the date of the Advance until
     paid in full on the Ending Date or such earlier date as may be required
     under this Agreement at a rate per annum equal to the Prime Rate plus 3%.
     All interest will be computed on the basis of a 360-day year, based on the
     actual number of days elapsed. Notwithstanding the foregoing, prior to the
     effective date the interest shall have accrued at the rates provided in the
     Existing Loan Agreement and the revolving note issued thereunder.
     Principal
     . Unless otherwise required or permitted to be paid sooner pursuant to the
     provisions hereof, the Borrower will repay in full all principal and any
     unpaid interest or other charges outstanding under this Agreement no later
     than the Ending Date.
     Default Rate
     . After demand, while an Event of Default is continuing, or in the event
     any amounts are unpaid after the Ending Date, the unpaid principal balance
     of the Advances will bear interest at a rate per annum which is 2% percent
     higher than the rate of interest otherwise provided under this Agreement
     (the "Default Rate"). The Borrower acknowledges that the Default Rate shall
     be in effect immediately as a result of the Existing Event of Default.
     Place of Payment
     . Each payment by the Borrower will be made without set-off or counterclaim
     in U.S. Dollars in immediately available funds no later than 12:00 noon,
     Chicago time, on the dates called for under this Agreement per wire
     instructions set forth on Schedule 2.8. Funds received on any day after
     such time will be deemed to have been received on the next Business Day.
     Whenever any payment to be made under this Agreement is stated to be due on
     a day which is not a Business Day, such payment will be made on the next
     succeeding Business Day and such extension of time will be included in the
     computation of any interest
     
     Use of Proceeds
     . The proceeds of any Advance shall be used for working capital, and for no
     other purposes. Without limiting the foregoing, the proceeds of any Advance
     shall be used to make payments in accordance with the Initial Cash Flow
     Projections, and for such other purposes as the Lender consents.
     Line of Credit Fee
     . In consideration of the Lender entering into this Agreement, Borrower
     promises to pay Lender a loan administration and collateral monitoring fee
     in the amount of $5,000 per month. This fee is in addition to interest
     payable on the Advances on the Ending Date or such earlier date as may be
     required under this Agreement.

 3.  CONDITIONS PRECEDENT TO LOAN.
     Conditions Precedent to Initial Advance
     . Prior to Lender's purchase of the Existing Loan, and as a condition to
     Lender's obligation to make the initial Committed Advance, the Borrower
     shall satisfy all of the following conditions, in the Lender's sole
     judgment,:
     Representations and Warranties; Compliance
     . All representations and warranties made by Borrower in or in connection
     with this Agreement or any of the other Loan Documents or otherwise made in
     writing in connection with this Agreement shall be true and correct in all
     material respects on the Effective Date, and the Borrower shall have
     performed all of the promises or undertakings under this Agreement and
     satisfied all of the conditions of this Agreement that the Borrower was
     required to perform or to satisfy as of the Effective Date.
     Documents Concerning the Borrower
     . If Borrower is a corporation, Borrower shall deliver to the Lender copies
     of all documents requested by the Lender, including a complete, correct and
     current copy of the Borrower's Articles of Incorporation, certified by the
     Secretary of State of the Borrower's state of incorporation; a complete,
     correct and current copy of its Bylaws, certified by Borrower's corporate
     secretary; a complete, correct and current copy of all resolutions of
     Borrower's Board of Directors authorizing the execution, delivery and
     performance of this Agreement and of the other Loan Documents, certified by
     Borrower's corporate secretary; and appropriate certificates of incumbency
     for those officers of Borrower executing this Agreement or any of the other
     Loan Documents, certified by Borrower's corporate secretary and president.
     If Borrower is a limited liability company, Borrower shall deliver to the
     Lender copies of all documents requested by the Lender, including a
     complete, correct and current copy of the Borrower's Articles of
     Organization, certified by the Secretary of State of the Borrower's state
     of formation/organization; a complete, correct and current copy of its
     Operating Agreement, certified by Borrower's manager or managing member; a
     complete, correct and current copy of all resolutions of Borrower's members
     and managers authorizing the execution, delivery and performance of this
     Agreement and of the other Loan Documents, certified by Borrower's manager
     or managing member. In addition, the following documents and materials
     shall have been delivered to the Lender, and must be satisfactory to the
     Lender in form and substance:
      1. all supporting documentation with regard to the Borrower and the Loan
         as the Lender may require;
      2. Borrower's Initial Cash Flow Projections;
      3. such additional information, opinions, certificates, reports and
         documents relating to the Borrower or the Collateral as the Lender may
         deem necessary; and
      4. such lien releases, termination statements or assignments as Lender may
         deem necessary to remove, or assign to Lender, any Encumbrances on the
         Collateral.
     
     Executed Notes and Loan Documents
     . Borrower shall deliver to the Lender, fully executed: this Agreement, the
     Revolving Note, UCC-3 Financing Statement Amendments and such other
     documents, instruments and certificates as the Lender may reasonably
     require, in form and substance satisfactory to the Lender. All taxes, fees
     and charges with respect to the preparation, filing and recording of the
     Loan Documents shall have been paid by Borrower.
     Landlord and Mortgagee Waivers
     . Borrower shall have used its best efforts to obtain and deliver to Lender
     as soon as possible, such landlord and mortgagee waivers as Lender shall
     request with respect to any of the Borrower's landlords or mortgagees which
     could claim an interest in any Collateral as a remedy for a default under
     any lease, mortgage or deed of trust; provided however, that in any event,
     each such landlord and mortgagee for which a waiver has been required by
     Lender (the required waivers being from landlords of the real property
     leased by Borrower and having the following addresses: (1) 8284 Center Run
     Drive, Suite B, Indianapolis, Indiana, and (2) 5107-A, 5107-D and 5127
     Berwyn Road, College Park, Maryland), shall have executed and delivered to
     Lender waivers in form and substance satisfactory to Lender prior to the
     Effective Date.
     Warehouseman and Bailee Waivers
     . Borrower shall use its best efforts to obtain and deliver to Lender as
     soon as possible, such warehouseman and bailee waivers as Lender shall
     request, in form and substance satisfactory to Lender, with respect to any
     bailees, warehouse operators or other Persons which could claim an interest
     in any Collateral as a remedy for a default under any lease, fulfillment
     arrangement or storage agreement or other agreement, or as a result of
     maintaining possession of any property of Borrower; provided however, that
     in any event, each such bailee, warehouse operator or other Person for
     which a waiver has been required by Lender (the required waivers being from
     the warehousemen holding Borrower's property at 1160 Trademark Drive, Reno,
     Nevada), shall have executed and delivered to Lender waivers in form and
     substance satisfactory to Lender with 60 days of the Effective Date.
     Financing Statements and Control Agreements
     . All financing statements and control agreements deemed necessary by the
     Lender to perfect its security interest in the Collateral or any other
     collateral or property securing the Loan.
     Operating Account
     . The Borrower shall have established and maintain at all times its primary
     Operating Account with Bank of America, N.A., and the Borrower shall have
     delivered to Lender a Control Agreement, signed by the Borrower and Bank of
     America, N.A., under which Bank of America, N.A. shall agree to comply with
     all notifications originated by the Lender that Bank of America, N.A.
     receives directing disposition of the funds in the Operating Account
     without further consent by the Borrower and under which Bank of America,
     N.A. subordinates to the Lender any security interest, lien or right of
     setoff that Bank of America, N.A. may now or hereafter have against the
     Operating Account or property in the account (except Bank of
     America, N.A.'s lien for normal fees).
     Compliance with Covenants
     . Borrower shall establish to Lender's satisfaction that, immediately after
     giving effect to the proposed Advance, Borrower would be in compliance with
     Borrower's financial covenants in section 6.14 of this Agreement (other
     than with respect to the Existing Event of Default).
     Borrowing Base Certificate
     . Borrower shall deliver to the Lender a Borrowing Base Certificate stating
     the Borrowing Base as of January 31, 2008 with supporting schedules
     attached thereto, including without limitation, current accounts receivable
     and accounts payable reports.
     
     Future Advances
     . Prior to requesting any Advance subsequent to the Effective Date, and as
     a condition to the Lender's obligation to make any additional Committed
     Advance, Borrower shall satisfy each of the following conditions:
     Conditions of First Advance Remain Satisfied
     . The Lender shall have determined, in its sole judgment, that the
     conditions precedent to the first Advance are satisfied as of the Borrowing
     Date for the subsequent Advance; the Loan Documents shall remain in full
     force and effect; and neither the Borrower nor any Person providing
     Collateral or a guaranty shall have purported to terminate any of the Loan
     Documents or notified Lender of an intention not to perform under any
     applicable Loan Document;
     Borrowing Base Certificates
     . Until February 25, 2008, Lender shall rely on the Borrowing Base
     Certificate to be provided by Borrower which shall provide Borrowing Base
     and other financial information for Borrower as of January 31, 2008, along
     with the supporting schedules thereto. Commencing with the Borrowing Base
     Certificate due under this Agreement on or before February 25, 2008 stating
     the Borrowing Base as of February 22, 2008, and continuing with each
     Borrowing Base due thereafter, prior to an Advance, the Lender shall have
     timely received such Borrowing Base Certificate, executed by a duly
     authorized officer of the Borrower with supporting updated schedules
     attached thereto.
     Bank Statement
     . The Lender shall have timely received a bank statement for all Deposit
     Accounts as requested from Lender, including but not limited to a statement
     as of the date of any Request for Advance.
     Cash Flow Projections
     .
      1. For all periods prior to such date, Borrower's operations shall have
         generated cash flow from operations equal to or in excess of the levels
         set forth in the Initial Cash Flow Projections.
      2. The Lender shall have timely received all Cash Flow Projections and
         variance reports required under section 6.11(f).
     
     Representations and Warranties
     . All representations and warranties contained herein shall be true and
     correct in all material respects at the date of such disbursement;
     No Material Adverse Change
     . The Lender shall have determined, in its sole discretion, that no
     Material Adverse Effect has occurred; and
     No Default
     . No Event of Default has occurred and remains uncured, and no default or
     event has occurred or circumstance exists which, with the passage of time
     or the giving of notice, or both, would constitute an Event of Default.
     
     Lender's Right To Rely On Communications
     . The Borrower authorizes the Lender to accept, rely upon, act upon and
     comply with, any verbal or written instructions, requests, confirmations
     and orders of any employee or agent of the Borrower. The Borrower
     acknowledges that the transmission between the Borrower and the Lender of
     any such instructions, requests, confirmations and orders involves the
     possibility of errors, omissions, mistakes and discrepancies. The Borrower
     hereby assumes all risk of loss arising out of: (i) the Lender's
     acceptance, reliance on, compliance with or observation of any such
     instructions, requests, confirmations or orders that Lender, in good faith,
     believes are genuine; and (ii) any such errors, omissions, mistakes and
     discrepancies, except those caused by the Lender's gross negligence or
     willful misconduct. Borrower agrees to indemnify Lender and to hold Lender
     harmless for and from all claims, demands, suits, actions, judgments,
     decrees, losses or damages, including attorneys fees and expenses, that
     Lender may incur as a result of the foregoing events or occurrences for
     which the Borrower has assumed the risk of loss.

 4.  SECURITY.
     Grant of Security Interest
     . As security for (i) the payment of the Loan, and any other extensions of
     credit, loans, interest, costs or other financial accommodations made under
     the Existing Loan Agreement or now or hereafter made by the Lender for the
     benefit of the Borrower, and (ii) any other Obligations, the Borrower
     hereby grants to the Lender a security interest in the Collateral. In
     addition, except as provided by law, Borrower grants to Lender a security
     interest in all deposit accounts and investment accounts of Borrower with
     any of Lender's Affiliates. The Borrower further agrees that the Lender
     shall have in respect of the Collateral all of the rights and remedies of a
     secured party under the Uniform Commercial Code, other applicable law and
     this Agreement. The Borrower covenants and agrees to execute and deliver,
     and hereby authorizes Lender to prepare and file with the financing
     statement records for such jurisdictions as Lender deems appropriate, such
     financing statements and other instruments and filings or perform any and
     all acts as are necessary in the opinion of the Lender to perfect, maintain
     and protect the security interest hereby granted. The Borrower shall not
     dispose of the Collateral, or any part thereof, other than in the ordinary
     course of its business or as otherwise may be permitted by this Agreement.
     Covenants Regarding Inventory and Equipment
     . With regard to Collateral that constitutes Inventory or equipment, the
     Borrower further covenants as follows:
      a. The Lender's security interest shall extend and attach to Inventory
         which is presently in existence and is owned by the Borrower or in
         which the Borrower purchases or acquires an interest at any time and
         from time to time in the future, whether such Inventory is in transit
         or in the Borrower's constructive, actual or exclusive occupancy or
         possession or not, and wherever the same may be located, including,
         without limitation, all Inventory which may be located at the premises
         of the Borrower or upon the premises of any carriers, forwarding
         agents, truckers, warehousemen, vendors, selling agents, finishers,
         convertors or other third parties who may have possession of the
         Inventory.
      b. Upon sale, exchange, lease or disposition of the Inventory or
         equipment, the security interest of the Lender shall without break in
         continuity and without further formality or act continue in and attach
         to all cash and non-cash proceeds of such sale, exchange, lease or
         disposition, including Inventory returned or rejected by customers or
         repossessed by either the Borrower or the Lender. As to any such sale,
         exchange, lease or disposition, the Lender shall have all of the rights
         of an unpaid seller, including stoppage in transit, replevin, detinue
         and reclamation.
     
     Covenants Regarding BOA Investments
     . The following supplemental covenants and agreements are in addition to
     the covenants and agreements otherwise set forth in this Agreement with
     respect to Investment Property:
     Voting rights
     . So long as no Event of Default shall have occurred and be continuing,
     Borrower shall be entitled to exercise all voting rights and other
     consensual rights pertaining to the BOA Investments;
     provided
     ,
     however
     , that Borrower will not cast any vote, give any consent, waiver or
     ratification, or take or fail to take any action, in any manner, that
     would, or could reasonably be expected to, violate or be inconsistent with
     any of the terms of this Agreement, or any of the other Loan Documents or
     have the effect of impairing the positions or interests of Lender.
     Dividends and Distributions
     . All interest, income, dividends, distributions and other amounts payable
     in cash in respect of the BOA Investments shall, at all times be paid to
     Lender and retained by it as a part of the Collateral (except to the extent
     applied upon receipt to the repayment of the amounts owing under the
     Revolving Note, this Agreement and/or the other Loan Documents). Lender
     shall also be entitled at all times to receive directly, and to retain as
     part of the Collateral, (i) all interest, income, dividends, distributions
     or other amounts paid or payable in cash or other property in respect of
     any of the BOA Investments in connection with the dissolution, liquidation,
     recapitalization or reclassification of the capital of the applicable
     issuer to the extent representing an extraordinary liquidating or other
     distribution in return of capital, (ii) all additional BOA Investments or
     other securities or property (other than cash) paid or payable or
     distributed or distributable in respect of any of the BOA Investments in
     connection with any noncash dividend, distribution, return of capital,
     spin-off, stock split, split-up, reclassification, combination of shares or
     interests or similar rearrangement, and (iii) without affecting any
     restrictions against such actions contained elsewhere in this Agreement or
     in any of the other Loan Documents, all additional BOA Investments or other
     securities or property (including cash) paid or payable or distributed or
     distributable in respect of any of the BOA Investments in connection with
     any consolidation, merger, exchange of securities, liquidation or other
     reorganization. All interest, income, dividends, distributions or other
     amounts that are received by Borrower in violation of the provisions of
     this Section shall be received in trust for the benefit of Lender, shall be
     segregated from other property or funds of Borrower, and shall be forthwith
     delivered to Lender as Collateral in the same form as so received (with any
     necessary endorsements).
     Delivery of Certificates and Filings
     . To perfect the Lender's lien on and security interest in the BOA
     Investments and other Investment Property which is part of the Collateral,
     Borrower shall immediately deliver to Lender the original of all
     certificates or other instruments evidencing all or any part of the
     Collateral, which shall be retained by Lender until this Agreement is
     terminated. Borrower's failure to so deliver such certificates or
     instruments shall constitute an Event of Default under this Agreement. In
     addition to the delivery of such certificates and instruments, Borrower
     agrees that Lender may file and record UCC financing statements in order to
     perfect Lender's lien on and security interest in the BOA Investments and
     other Investment Property of Borrower. Borrower shall also execute such
     documents as Lender may request in order to perfect or maintain the
     perfection of Lender's lien on and security interest in the BOA Investments
     and other Investment Property of Borrower. Borrower hereby agrees to pay
     the cost of filing all financing statements authorized or required
     hereunder in all public offices wherever the Lender deems filing to be
     necessary or desirable. Borrower hereby authorizes Lender to prepare and
     file with the financing records for such jurisdictions as Lender deems
     appropriate, such financing statements, amendments thereto and
     continuations thereof and other documents pursuant to the UCC and
     otherwise, and to take such other action and perform such other acts, as
     are necessary, in the sole and absolute opinion of the Lender, to perfect
     and maintain the perfection and first lien priority and security interests
     granted hereunder.
     Securities Account Control Agreements
     . With respect to securities held in the BOA Collateral Accounts, if any,
     Borrower shall deliver to Lender a Control Agreement, signed by the
     Borrower and Bank of America Securities, LLC, at which the BOA Collateral
     Accounts is to be established, under which Bank of America Securities, LLC
     shall agree to comply with all notifications originated by the Lender that
     Bank of America Securities, LLC receives directing it to transfer or redeem
     any property in the BOA Collateral Accounts without further consent by the
     Borrower and under which Bank of America Securities, LLC subordinates to
     the Lender any security interest, lien or right of setoff that Bank of
     America Securities, LLC may now or hereafter have against the BOA
     Collateral Accounts or property in the account (except Bank of America
     Securities, LLC's lien for normal commissions and fees).
     Further Assurances; Power of Attorney
     . (i) Borrower hereby agrees to do such further acts and things and to
     execute and deliver to Lender such additional conveyances, assignments,
     agreements and instruments as Lender may require or deem advisable to
     perfect, establish, confirm and maintain the security interest and first
     priority lien provided for herein, to carry out the purposes of this
     Agreement or to further assure and confirm unto Lender its rights, powers
     and remedies hereunder, in each case at Borrower's own expense. Borrower
     hereby ratifies and approves all financing statements naming Lender as
     secured party and Borrower as debtor with respect to the Collateral (and
     any amendments and continuations with respect to such financing statements)
     filed by or on behalf of Lender prior to the date hereof and ratifies and
     confirms the authorization of Lender to file such financing statements (and
     amendments and continuations, if any). Borrower hereby authorizes Lender to
     adopt on behalf of the Borrower any symbol required for authenticating any
     electronic filing. In no event shall Borrower at any time file, or permit
     or cause to be filed, any termination statement with respect to any
     financing statement (or amendment or continuation with respect thereto)
     naming Lender as secured party and Borrower as debtor, without express
     prior written authorization of Lender.
     
     (ii) Borrower hereby irrevocably appoints Lender as its lawful
     attorney-in-fact, with full authority in the place and stead of Borrower
     and in the name of Borrower, Lender or otherwise, and with full power of
     substitution in the premises (which power of attorney, being coupled with
     an interest, is irrevocable for so long as this Agreement shall be in
     effect), exercisable from time to time in Lender's discretion (which may be
     taken by Lender without regard to whether an Event of Default has occurred)
     to allow Lender to take any action and to execute any instruments that
     Lender may reasonably deem necessary or advisable to accomplish the purpose
     of this Agreement, including, without limitation:
     
      A. to ask, demand, collect, sue for, recover, compound, received and give
         acquittance and receipts for moneys due and to become due under or in
         respect of any of the BOA Investments;
      B. to receive, endorse and collect any checks, drafts, instruments,
         chattel paper and other orders for the payment of money made payable to
         Borrower representing any interest, income, dividend, distribution or
         other amount payable in respect of any of the BOA Investments and to
         give full discharge for the same;
      C. to file any claims or take any action or institute any proceedings that
         Lender may deem necessary or advisable for the collection of any of the
         BOA Investments or otherwise to enforce the rights of Lender with
         respect to any of the BOA Investments;
      D. to use, sell, assign, transfer, pledge, make any agreement with respect
         to or otherwise deal with any and all of the BOA Investments as fully
         and completely as though Lender were the absolute owner of the BOA
         Investments for all purposes, and to do from time to time, at Lender's
         option and the Borrower's expense, all other acts and things deemed
         necessary by Lender to protect, preserve or realize upon the BOA
         Investments and to more completely carry out the purposes of this
         Agreement; and
      E. To sign the name of Borrower on any financing statement, continuation
         statement, notice or other similar document that, in Lender's opinion,
         should be made or filed in order to perfect or continue to perfect the
         security interest granted under this Agreement;
     
     (iii) If Borrower fails to perform any covenant or agreement set forth in
     this Section 4.3 at any time, Lender may itself perform, or cause the
     performance of, such covenant or agreement and may take any other action
     that it deems necessary and appropriate for the maintenance and
     preservation of the Collateral or its security interest therein, and the
     expenses so incurred in connection therewith shall be payable by Borrower,
     on demand by Lender.
     
     Certain Rights of the Lender
     . The Lender shall have the right, but not the obligation, (i) to pay any
     taxes or levies on the Collateral or any costs to repair or to preserve the
     Collateral; and (ii) to cure any defaults by Borrower on contracts by the
     Borrower intended to give rise to Accounts. Such payments and the costs of
     curing such defaults shall constitute Advances under the Revolving Note and
     shall be secured pursuant to this Agreement, irrespective of whether the
     Borrower would then be entitled to such Advances under this Agreement.
     Financing Statements; Possession of Collateral by Lender; Control
     . At the request of the Lender, Borrower will execute financing statements,
     continuation statements, assignments and other documents with respect to
     the Collateral pursuant to the Uniform Commercial Code or otherwise, in
     form satisfactory to the Lender, and Borrower will pay the cost of filing
     the same in all public offices wherever the Lender deems filing to be
     necessary or desirable. Borrower agrees that a carbon, photographic,
     photostatic or other reproduction of this Agreement or of a financing
     statement is sufficient as a financing statement, provided however, that it
     shall not limit the obligations of Borrower as previously set forth herein.
     Borrower grants the Lender the right, and hereby authorizes Lender, at the
     Lender's option, to file any or all such financing statements, continuation
     statements, assignments and other documents pursuant to the UCC and
     otherwise, without Borrower's signature, and irrevocably appoints the
     Lender as Borrower's attorney-in-fact to execute any such statements and
     documents in Borrower's name and to perform all other acts which the Lender
     deems appropriate to perfect and to continue the security interests
     conferred by this Agreement. Borrower authorizes the Lender to use the
     collateral description "all assets" or "all personal property" or such
     other descriptions of the Collateral as Lender shall determine to perfect
     Lender's security interest in the Collateral.
     
     In addition, upon request of Lender, Borrower shall immediately deliver to
     Lender, or authorize and direct any and all Persons in possession of
     Collateral, to immediately deliver to Lender all Collateral for which
     Lender requires possession to perfect its security interest in such
     Collateral, properly endorsed or acknowledged. Furthermore, Borrower shall
     take all such actions as may be requested by Lender to allow Lender to
     exercise control over any Collateral for such purpose of allowing Lender to
     perfect its security interest in Collateral, which Collateral may include
     deposit accounts,
     
     Investment Property, letter-of-credit rights and electronic chattel paper
     . At Lender's request, Borrower shall execute and deliver to Lender, and
     have any other Persons in possession or control of Collateral, execute and
     deliver to Lender, control or other agreements, in form and substance
     satisfactory to Lender.
     Records of Collateral; Information
     . Borrower at all times will maintain accurate books and records covering
     the Collateral. Borrower hereby grants the Lender the right to audit the
     books and records of Borrower relating to Collateral at any time and from
     time to time. Borrower shall (i) promptly furnish the Lender with any
     information with respect to Collateral requested by Lender; (ii) allow the
     Lender or its representatives to inspect the Collateral during normal
     business hours upon forty eight (48) hours prior notice or such shorter
     notice (including no notice at all) which shall be reasonable under the
     circumstances, such inspection rights to be provided regardless of where
     such Collateral may be located or in whose possession such Collateral may
     be, and to inspect and copy, or furnish the Lender or its representatives
     with copies of all records relating to the Collateral; (iii) furnish the
     Lender or its representatives such information as the Lender may request to
     identify the Collateral, at the time and in the form requested by Lender;
     and (iv) deliver upon request to Lender shipping and delivery receipts
     evidencing the shipment of goods and invoices evidencing the receipt of the
     Collateral and payment for the Collateral.
     No Release
     . No injury to the Collateral, loss or destruction of the Collateral,
     failure to perfect or to continue the perfection of Lender's security
     interest in the Collateral, or release of Lender's security interest in the
     Collateral or any part thereof (except as may be permitted under the terms
     of this Agreement) shall relieve Borrower of any obligation under this
     Agreement or under any of the other Loan Documents. Borrower expressly
     waives all defenses based on suretyship or impairment of collateral, and
     shall not be released or discharged of any obligation under the Loan
     Documents, in whole or in part, by Lender's failure to protect or preserve
     the Collateral. No Person (other than Lender), in deciding to enter into
     this Loan Agreement, has relied on the execution of this Loan Agreement or
     the granting of a security interest in Collateral by any other Person. Each
     Person comprised by the term "Borrower" waives notice of any change in
     financial condition of any Person liable for the Loan or any part thereof,
     and agrees that maturity of the Loan or any part thereof may be
     accelerated, extended or renewed one or more times by Lender in its
     discretion, without notice to the Person and without affecting Lender's
     security interest in the Collateral. Lender shall not be required to bring
     any action against any other Person or to resort to any other security or
     to any balance of any deposit account as a condition of enforcing its
     rights against any of the Collateral.
     Indemnification; Risk of Loss
     . In any suit, proceeding or action brought by or against the Lender
     relating to the Collateral, the Borrower will defend, indemnify and keep
     the Lender harmless from and against all expense, loss or damage (including
     reasonable attorneys' fees) suffered by reason of any defense, set-off,
     counterclaim, recoupment or reduction of liability whatsoever of account
     debtor or other obligor of the Borrower. The foregoing obligation of the
     Borrower to indemnify the Lender shall survive the payment of the Loan and
     the termination of this Agreement, but shall not extend to any suit,
     proceeding or action arising out of the Lender's gross negligence or
     willful misconduct.

     In addition, the risk of any loss or damage associated with the Collateral,
     including without limitation, any Collateral in the possession of Lender
     shall be borne by the Borrower; provided, that Lender shall be responsible
     for any loss resulting from Lender's gross negligence or willful
     misconduct. In the event that Lender is in possession of Collateral, (a)
     Borrower shall be liable to Lender and shall pay to Lender, upon demand,
     all reasonable expenses, including the cost of insurance and payment of
     taxes or other charges, incurred in the custody, preservation, use or
     operation of the Collateral, and all such expenses shall be secured by the
     Collateral; and (b) Lender may use and operate the Collateral, as
     determined in its sole and absolute discretion, (i) to preserve the
     Collateral or its value, (ii) as permitted by an order of a court having
     competent jurisdiction, or (iii) as otherwise set forth herein or as
     previously or hereafter agreed to by Borrower. Notwithstanding anything in
     this Agreement to the contrary, Lender shall have no duty and be under no
     obligation to collect any income accruing on the Collateral or to preserve
     any rights relating to the Collateral.

 5.  BORROWER'S REPRESENTATIONS AND WARRANTIES.

     To induce the Lender to enter into this Agreement and make Advances to
     Borrower, Borrower makes the following representations and warranties to
     the Lender, in each case except as disclosed or incorporated by reference
     in the Company Reports (as defined in the Merger Agreement) filed with the
     Securities and Exchange Commission on or prior to the date hereof or in the
     Schedules to the Merger Agreement. These representations and warranties are
     continuing, and each request for an Advance shall be deemed to be an
     affirmation of these representations and warranties as of the later of (a)
     the date of such request, or (b) the date of the Advance made with respect
     to such request.

     Corporate Authority; Subsidiaries
     . Each of Varsity Group Inc. and CollegeImpact.com, Inc. (i) is a
     corporation duly organized, validly existing, and in good standing under
     the laws of the State of Delaware, (ii) is qualified to do business as a
     foreign corporation and is in good standing in all jurisdictions where its
     activities or ownership of property require such qualification, except
     where the failure to be so qualified would not have a Material Adverse
     Effect, or would not adversely impact, restrict or delay the ability or
     right of Borrower or Lender to take immediate possession of, liquidate or
     collect any of the Collateral, and (iii) has the full and unrestricted
     power and authority, corporate and otherwise, to own, operate and lease its
     properties, to carry on its business as currently conducted, to execute and
     deliver and perform the Loan Documents, to incur the obligations provided
     for herein and therein, and to perform the transactions contemplated hereby
     and thereby (including without limitation, the creation of the lien and
     security interest in favor of the Lender in the Collateral, the Assignments
     and any other Collateral required by this Agreement), all of which have
     been duly and validly authorized by all proper and necessary action (all of
     which actions are in full force and effect). Varsity Group Inc. has no
     subsidiaries other than Campus Outfitters Group, LLC, a Delaware limited
     liability company, VarsityBooks.com, LLC, a Delaware limited liability
     company, CollegeImpact.com, Inc., a Delaware corporation and, through
     VarsityBooks.com, LLC, Campus Textbooks, LLC, a Maryland limited liability
     company, which has no assets. CollegeImpact.com, Inc. has no subsidiaries.
     Each of Varsity Group Inc. and CollegeImpact.com, Inc. maintains its chief
     executive office at the following location:
     
     c/o Varsity Group Inc.
     2677 Prosperity Avenue
     Fairfax, VA 22031
     
     Limited Liability Company Authority; Subsidiaries
     . Campus Outfitters Group, LLC (i) is a limited liability company duly
     formed and organized, validly existing, and in good standing under the laws
     of the State of Delaware, (ii) is qualified to do business as a foreign
     limited liability company and is in good standing in all jurisdictions
     where its activities or ownership of property require such qualification,
     except where the failure to be so qualified would not have a Material
     Adverse Effect, or would not adversely impact, restrict or delay the
     ability or right of Borrower or Lender to take immediate possession of,
     liquidate or collect any of the Collateral, and (iii) has the full and
     unrestricted power and authority, limited liability company and otherwise,
     to own, operate and lease its properties, to carry on its business as
     currently conducted, to execute and deliver and perform the Loan Documents,
     to incur the obligations provided for herein and therein, and to perform
     the transactions contemplated hereby and thereby (including without
     limitation, the creation of the lien and security interest in favor of the
     Lender in the Collateral, the Assignments and any other Collateral required
     by this Agreement), all of which have been duly and validly authorized by
     all proper and necessary action (all of which actions are in full force and
     effect). Campus Outfitters Group, LLC has no subsidiaries. Campus
     Outfitters Group, LLC maintains its chief executive office at the following
     location:
     
     Campus Outfitters Group, LLC
     c/o Varsity Group Inc.
     2677 Prosperity Avenue
     Fairfax, VA 22031
     
     Limited Liability Company Authority; Subsidiaries
     . VarsityBooks.com, LLC (i) is a limited liability company duly formed and
     organized, validly existing, and in good standing under the laws of the
     State of Delaware, (ii) is qualified to do business as a foreign limited
     liability company and is in good standing in all jurisdictions where its
     activities or ownership of property require such qualification, except
     where the failure to be so qualified would not have a Material Adverse
     Effect, or would not adversely impact, restrict or delay the ability or
     right of Borrower or Lender to take immediate possession of, liquidate or
     collect any of the Collateral, and (iii) has the full and unrestricted
     power and authority, limited liability company and otherwise, to own,
     operate and lease its properties, to carry on its business as currently
     conducted, to execute and deliver and perform the Loan Documents, to incur
     the obligations provided for herein and therein, and to perform the
     transactions contemplated hereby and thereby (including without limitation,
     the creation of the lien and security interest in favor of the Lender in
     the Collateral, the Assignments and any other Collateral required by this
     Agreement), all of which have been duly and validly authorized by all
     proper and necessary action (all of which actions are in full force and
     effect). VarsityBooks.com, LLC has no subsidiaries other than Campus
     Textbooks, LLC, a Maryland limited liability company. VarsityBooks.com, LLC
     maintains its chief executive office at the following location:
     
     VarsityBooks.com, LLC
     c/o Varsity Group Inc.
     2677 Prosperity Avenue
     Fairfax, VA 22031
     
     Approvals
     . Varsity Group Inc. and CollegeImpact.com, Inc. have provided Lender with
     a true and accurate certificate of a Resolution of each such Borrower's
     Board of Directors authorizing the loan transactions contemplated by this
     Agreement, and Campus Outfitters Group, LLC and VarsityBooks.com, LLC have
     provided Lender with a true and accurate certificate of a Resolution of the
     Sole Member for each company authorizing the loan transactions contemplated
     by this Agreement. No further approval, consent or other action by the
     stockholders, members and/or managers of Borrower, by any governmental
     authority or by any other Person is or will be necessary to permit the
     valid execution, delivery or performance by Borrower of this Agreement or
     any of the other Loan Documents.
     Binding Effect, No Violations
     . Each of the Loan Documents, upon its execution and delivery, will
     constitute a legal, valid and binding obligation of Borrower, enforceable
     against Borrower in accordance with its terms. The execution, delivery and
     performance of the Loan Documents will not (i) violate, conflict with or
     constitute a default (with due notice, lapse of time or both) under any
     law, regulation, order or any other requirement of any court, tribunal,
     arbitrator or governmental authority, any terms of the Articles or
     Certificate of Incorporation or Bylaws of Varsity Group Inc., Articles of
     Organization or Operating Agreements of Campus Outfitters Group, LLC or
     VarsityBooks.com, LLC, or any contract, agreement or other arrangement
     binding upon or affecting Borrower or any of its properties, or (ii) result
     in the creation, imposition or acceleration of any indebtedness or any
     Encumbrance of any nature upon, or with respect to, Borrower or any of its
     properties, except such Encumbrances in favor of Lender or as otherwise
     permitted under this Agreement.
     Litigation
     . Except as set forth in the Merger Agreement or in Schedule 5.6 attached
     hereto and made a part hereof, there is no claim, litigation, proceeding or
     investigation pending or threatened in writing against Borrower, its
     properties or business, this Agreement, any of the other Loan Documents, or
     any of the transactions contemplated hereby or thereby, before or by any
     court, tribunal, arbitrator or governmental authority, and there is no
     judgment, liability or award which reasonably may be expected to result in
     a Material Adverse Effect. Borrower is not in default with respect to any
     judgment, order, writ, injunction, decree, rule, award or regulation of any
     court, governmental instrumentality or agency, commission, board, bureau,
     arbitrator or arbitration panel.
     Title to and Condition of Assets
     . The Borrower has good, valid and marketable title to all of its
     properties and assets (whether real or personal) and has the power to
     transfer its rights and interests in the Collateral, and there exist no
     Encumbrances on any of Borrower's properties or assets, including without
     limitation, the Collateral, except such Encumbrances as are in favor of
     Lender or are otherwise permitted under this Agreement. All personal
     property of Borrower is in good operating condition and repair (reasonable
     wear and tear excepted), and is suitable and adequate for the uses for
     which it is being used. Upon the execution and delivery of this Agreement,
     and upon (a) the filing of financing statements, (b) the Lender's taking
     possession of the Collateral, (c) Lender's receipt of a satisfactory
     acknowledgment from a Person in possession of any Collateral that such
     Collateral is in the possession of such Person and is being held for the
     benefit of Lender, and/or (d) Lender obtaining satisfactory control over
     any of the Collateral consisting of Investment Property, deposit accounts,
     letter-of-credit rights or electronic chattel paper or such other
     Collateral for which control is required to perfect a security interest (as
     control is defined in the UCC), as the case may be, the Lender will have a
     good, valid and perfected first priority lien and security interest in the
     Collateral, subject to no Encumbrance in favor of any other Person except
     as permitted under this Agreement.
     Loan Application
     . The statements made and the documents delivered by Borrower to the Lender
     in connection with this Agreement and the other Loan Documents are true,
     correct and complete, in all material respects, omit no material facts, are
     not misleading, and present fairly the condition (financial or otherwise)
     of Borrower. Borrower certifies further that the information set forth in
     the Borrower Information Statement attached hereto as
     Schedule 5.1-1 - 5.1-3
     is true, accurate and complete as of the date of this Agreement.
     No Change
     . No change in the business, operations, properties or condition (financial
     or otherwise) of Borrower, or any other event, has occurred since the date
     of the most recent financial statements submitted to the Lender by
     Borrower, which change would have a material adverse effect on the ability
     of Borrower to perform or comply with all terms, conditions and agreements
     to be performed or complied with by Borrower under this Agreement or under
     any of the other Loan Documents, or to perform the transactions
     contemplated by this Agreement or the other Loan Documents.
     Taxes
     . Borrower has timely filed all tax returns and reports required by any
     governmental authority to be filed by Borrower, and such returns and
     reports are true and correct. Borrower has paid all taxes, assessments and
     other government charges imposed upon it or its income, profits or
     properties, or upon any part thereof, other than (1) those not presently
     due and payable without penalty or interest and (2) those reserved for in
     the Borrower's financial statements filed with the Securities and Exchange
     Commission. Borrower has timely filed all claims for refunds to which
     Borrower is entitled. The amounts reserved as a liability for income and
     other taxes payable in the most recent financial statements of Borrower
     provided to the Lender are sufficient for the payment of all unpaid
     federal, state, county and local income, excise, property and other taxes,
     whether or not disputed, of Borrower accrued for or applicable to the
     period and on the dates of such financial statements and all years and
     periods prior thereto, and for which Borrower may be liable in its own
     right or as a transferee of the assets of, or as successor to, any other
     Person.
     No Default
     . Other than the Existing Event of Defaults, no Event of Default, and no
     event or default which with notice, lapse of time or other condition would
     constitute an Event of Default, has occurred and is continuing.
     Compliance with Laws, Governance Documents and Agreements
     . Borrower has complied and is in full compliance with all applicable laws,
     ordinances, rules, regulations, orders and other requirements of any
     governmental authority or arbitrator, and with all terms and conditions of
     its Governance Documents, and with each material agreement binding upon or
     affecting Borrower or any of its properties. Borrower is not in default
     with respect to any Consolidated Debt. Without limiting the generality of
     the foregoing, Borrower represents to Lender that: (1) none of Borrower's
     activities involve the use, manufacturing, storage, disposal, emission,
     discharge, generation or transportation of Hazardous Wastes, Toxic
     Substances or other materials regulated by Environmental Laws; (2) Borrower
     has complied and is in full compliance with all Environmental Laws; (3)
     Borrower maintains in full force and effect all permits required by
     Environmental Laws; and (4) there exists no pending or threatened
     litigation, order, ruling, notice or investigation regarding the Borrower's
     use, manufacturing, storage, disposal, emission, discharge, generation or
     transportation of Hazardous Wastes or Toxic Substances or regarding any
     violation or alleged violation of any Environmental Laws.
     Licenses and Contracts
     . All franchises, licenses, trademarks, trade names, copyrights, patents,
     permits, certificates, consents, approvals, authorizations, agreements and
     contracts necessary to operate Borrower's business as it currently is being
     operated and to own or lease Borrower's property have been obtained, are in
     effect, have been complied with in all material respects by Borrower, and
     except as set forth in
     Schedule 5.13
     attached hereto, are fully assignable to the Lender for the purpose of
     securing the Loan. Borrower has no knowledge and has not received any
     notice to the effect that any product it manufactures or sells, or any
     service it renders, or any process, method, know-how, trade secret, part or
     material it employs in the manufacture of any product it makes or sells or
     any service it renders, or the marketing or use by it or another of any
     such product or service, may infringe any trademark, trade name, copyright,
     patent, trade secret or legally protected right of any other Person.
     Intellectual Property
     . The Borrower owns all right, title and interest in and to all
     Intellectual Property used in and material to the operation of its business
     or, for such Intellectual Property that is not owned, possesses adequate
     licenses or other legally enforceable rights to use the same. To the
     Borrower's information, knowledge and belief, no valid basis exists upon
     which a claim adversely affecting any such Intellectual Property may be
     asserted against the Borrower or any subsidiary. To the best knowledge of
     the Borrower, no Person is infringing upon the Intellectual Property used
     by the Borrower or any subsidiary necessary to the operation of their
     respective businesses. The Borrower has taken appropriate steps to protect
     the secrecy, confidentiality and value of its and all subsidiaries' rights
     in and to such Intellectual Property and to prevent others from using such
     Intellectual Property without consent.
     Disclosure
     . No representation or warranty of Borrower contained in this Agreement or
     any of the Loan Documents and no written statement of fact furnished or to
     be furnished by Borrower to the Lender pursuant to this Agreement or any of
     the Loan Documents, when viewed together, contains or will contain any
     untrue statement of a fact material to the financial condition of Borrower,
     or omits or will omit to state any material fact necessary in order to make
     the statements contained herein or therein, or furnished herewith or
     therewith, not misleading, in light of the circumstances in which such
     representation, warranty or statement was made.
     Name Change; Merger; Acquisition
     . As of the date of this Agreement, except as shown in
     Schedule 5.1-1-5.1-3
     attached hereto and made a part hereof, during the five years immediately
     preceding the date of this Agreement, Borrower has not changed its name, or
     been the surviving entity in a merger or acquired any business.
     Payment of Employees and Subcontractors
     . Borrower is not in default with regard to the payment of any employee or
     subcontractor.
     ERISA
     . Borrower is in compliance with Borrower's obligations under ERISA.
     Without limiting the generality of the foregoing:
      a. during the five-year period prior to the date on which this
         representation is made or deemed made: (i) no Termination Event has
         occurred, and, to the best of the Borrower's knowledge, no event or
         condition has occurred or exists as a result of which any Termination
         Event could reasonably be expected to occur, with respect to any Plan;
         (ii) no "accumulated funding deficiency," as such term is defined in
         Section 302 of ERISA and Section 412 of the Code, whether or not
         waived, has occurred with respect to any Plan; (iii) each Plan has been
         maintained, operated and funded in compliance with its own terms and in
         material compliance with the provisions of ERISA, the Code, and any
         other applicable federal or state laws; and (iv) no lien in favor of
         the PBGC or a Plan has arisen or is reasonably likely to arise on
         account of any Plan;
      b. the actuarial present value of all "benefit liabilities" under each
         Single Employer Plan (determined within the meaning of Section
         401(a)(2) of the Code, utilizing the actuarial assumptions used to fund
         such Plans), whether or not vested, did not, as of the last annual
         valuation date prior to the date on which this representation is made
         or deemed made, exceed the current value of the assets of such Plan
         allocable to such accrued liabilities;
      c. neither the Borrower nor any of its subsidiaries nor any ERISA
         Affiliate has incurred, or, to the best of the Borrower's knowledge,
         are reasonably expected to incur any withdrawal liability under ERISA
         to any Multiemployer Plan or Multiple Employer Plan. Neither the
         Borrower, any of its subsidiaries nor any ERISA Affiliate has received
         any notification that any Multiemployer Plan is in reorganization
         (within the meaning of Section 4241 of ERISA), is insolvent (within the
         meaning of Section 4245 of ERISA), or has been terminated (within the
         meaning of Title IV of ERISA), and no Multiemployer Plan is, to the
         best knowledge of the Borrower, reasonably expected to be in
         reorganization, insolvent or terminated; and
      d. no prohibited transaction (within the meaning of Section 406 of ERISA
         or Section 4975 of the Code) or breach of fiduciary responsibility has
         occurred with respect to a Plan which has subjected or may subject the
         Borrower or any of its subsidiaries or any ERISA Affiliate to any
         liability under Sections 406, 409, 502(i), or 502(l) of ERISA or
         Section 4975 of the Code, or under any agreement or other instrument
         pursuant to which the Borrower or any of its subsidiaries or any ERISA
         Affiliate has agreed or is required to indemnify any Person against any
         such liability.
     
     Government Contracts
     . Borrower is not party to any contract or agreement with the Government to
     provide goods or services to the Government; accordingly, there does not
     exist any Government Contract between Borrower and the Government, nor does
     there exist any Government Account.

 6.  BORROWER'S AFFIRMATIVE COVENANTS.

     Until all obligations of Borrower under this Agreement and the other Loan
     Documents are paid in full and performed, Borrower covenants and agrees
     that it shall:

     Payment of Advances
     . Make the payments on the Advances at the times and places and in the
     manners specified in this Agreement and the Revolving Note.
     Corporate/Limited Liability Company Existence
     . Preserve, maintain and keep in full force and effect its corporate and/or
     limited liability company existence (as applicable) and good standing in
     the jurisdiction of its incorporation or formation (as applicable).
     Corporate/Limited Liability Company Rights and Franchises; Qualification;
     Orderly Conduct of Business
     . Preserve, maintain and keep in full force and effect all franchises,
     licenses, permits, certificates, consents, approvals and authorizations
     necessary to the operation of Borrower's business as it currently is being
     conducted including any extensions thereof not otherwise prohibited under
     this Agreement or the other Loan Documents, whether now existing or
     hereafter granted to or obtained by Borrower; qualify and remain qualified
     as a foreign corporation or limited liability company (as applicable) in
     each jurisdiction in which such qualification is necessary in view of its
     activities and ownership of property; continue to engage in a business of
     the same general type as now conducted by it.
     Taxes, Charges and Obligations
     . Pay and discharge, when due, all taxes, assessments and governmental
     charges or levies imposed upon it or upon its income, profits, properties
     or any part thereof, prior to the date on which penalties attach thereto,
     as well as all claims which, if unpaid, might become an Encumbrance upon
     any properties of Borrower. Furthermore, Borrower shall pay, discharge or
     otherwise satisfy at or before maturity or before they become delinquent,
     as the case may be, all of the indebtedness and other obligations of
     whatever nature of Borrower; provided however, Borrower shall not be
     required to pay any tax, assessment, charge, levy, claim, indebtedness or
     obligation so long as (i) the validity thereof is being contested by
     Borrower in good faith and by proper proceedings, (ii) Borrower sets aside
     on its books adequate reserves therefor, and (iii) in the case where any
     such tax, assessment, charge, claim or levy might become an Encumbrance
     upon any item of the Collateral or any part thereof, Borrower makes
     arrangements acceptable to the Lender to secure the payment thereof.
     Maintenance of Property
     . Preserve and keep all property used or useful and necessary in its
     business, including without limitation, the Collateral, in reasonably good
     repair, working order and condition (ordinary wear and tear excepted), and
     from time to time make all necessary or desirable repairs, renewals and
     replacements thereof.
     Insurance
     . Maintain and keep in full force and effect, with financially sound and
     reputable insurance companies reasonably acceptable to the Lender,
     insurance in such amounts and covering such risks as is usually carried by
     companies engaged in similar businesses and owning similar properties in
     the same general areas in which Borrower operates (but in any event,
     casualty insurance covering the Borrower's tangible personal property and
     real estate for their full replacement value and comprehensive public
     liability insurance coverage with limits of not less than $2,000,000.00 for
     any one occurrence and $5,000,000.00 for the aggregate of all occurrences
     during a policy period of no more than one (1) year), all such insurance
     policies to be in form and substance satisfactory to the Lender. If
     requested by the Lender, Borrower shall also procure, maintain and keep in
     full force and effect business interruption insurance in an amount, in form
     and issued by companies acceptable to the Lender in all respects. All
     liability insurance policies shall name the Lender as an additional
     insured, and all casualty insurance or business interruption insurance
     policies shall name Lender as the lender loss payee. All insurance policies
     shall prohibit cancellation (including cancellation for nonpayment of
     premium) or reduction of coverage except with thirty (30) days' prior
     written notice to and consent of the Lender. At least thirty (30) days
     prior to the expiration date of each and every insurance policy required by
     this Agreement, Borrower shall obtain and deliver to the Lender a renewal
     or substitution policy in form and substance satisfactory to the Lender.
     Contract Obligations
     . Perform in accordance with its terms every contract, agreement,
     obligation or other arrangement to which Borrower is a party or by which it
     or any of its property is bound, except to the extent that the contract or
     agreement is inconsistent with this Agreement. In the event that any
     default or performance deficiency occurs, Borrower shall notify the Lender
     promptly in writing.
     Compliance with Laws; Governance Documents
     . Comply with all applicable laws, regulations, orders and other
     requirements of any court, tribunal, arbitrator or governmental authority,
     non-compliance with which would have a Material Adverse Effect. Borrower
     will also take all necessary actions to remain in full compliance with its
     Governance Documents. Should Borrower be deemed by any governmental
     authority or deem itself to be in violation of any relevant law, ordinance,
     rule, regulation, orders or other requirement or any Governance Document,
     Borrower shall notify the Lender promptly of such violation and take all
     necessary remedial actions. Without limiting the generality of the
     foregoing, Borrower shall: (1) comply strictly and in all respects with all
     Environmental Laws affecting the Borrower or its property; (2) promptly
     forward to the Lender copies of all orders, notices, permits, applications
     or other written communications and reports finding or alleging that
     Borrower or its property does not comply with any of the Environmental
     Laws; (3) promptly provide a proposed response action, or plan with respect
     to any failure to comply with Environmental Laws; and (4) defend the
     Lender, indemnify the Lender, and hold the Lender harmless from and against
     any claims, demands, suits, actions, judgments, decrees, losses or damages,
     including attorneys' fees, arising out of the failure of Borrower or any of
     its properties to comply with any of the Environmental Laws.
     Books and Records
     . Keep and maintain at its chief executive offices adequate and proper
     records and books of account, in which complete entries are made in
     accordance with GAAP, consistently applied, and in accordance with all
     laws, regulations, orders and other requirements of any court, tribunal,
     arbitrator or governmental authority, reflecting all financial and other
     transactions of Borrower normally and customarily included in records and
     books of account of companies engaged in the same or similar businesses and
     activities as Borrower.
     Access to Borrower's Properties, Books and Records
     . Permit the Lender and any agents or representatives thereof to visit and
     inspect the Borrower's properties and to conduct a field examination in
     order to examine and make abstracts from any of Borrower's books and
     records during normal business hours upon forty eight (48) hours prior
     written notice (or such shorter notice as Lender may determine necessary in
     light of the circumstances), as often as the Lender or such agents or
     representatives may desire, and to discuss the business, operations,
     properties and condition (financial and otherwise) of Borrower with any of
     the officers, directors, agents or representatives (including without
     limitation, the independent certified public accountants) of Borrower.
     Provided no Event of Default has occurred, Borrower shall be responsible
     for the costs of up to two field examinations per calendar year, payable
     upon demand by Lender. Borrower shall be responsible for the costs of all
     field examinations conducted upon the occurrence of an Event of Default
     which remains uncured at the time of such field examinations (also payable
     on demand by Lender). Lender shall have the right, based on the results of
     any field examination and as otherwise determined in Lender's sole
     discretion, to make adjustments to the borrowing base requirements
     (including, without limitation, eligibility and advance rates), the type
     and frequency of reporting required, and the frequency of required
     subsequent field examinations.
     Financial and Other Statements
     . Furnish to the Lender the following statements, which must be
     satisfactory to the Lender in form and substance, at the times and in the
     manner specified below:
     Annual Financial Statements
     . As soon as available, but in no event more than ninety (90) days after
     the close of each of the Borrower's fiscal years, consolidated audited
     financial statements for that year, stating the consolidated financial
     condition of Varsity Group Inc and its subsidiaries. The financial
     statements shall be prepared in accordance with GAAP and audited by
     McGladrey & Pullen LLP or such other independent certified public
     accountant of national standing, deemed reasonably acceptable to Lender, in
     accordance with GAAS. The financial statements must be acceptable to Lender
     in form and substance, and shall contain such detail as Lender may require.
     The financial statements shall include a consolidated balance sheet as of
     the end of such fiscal year, a profit and loss statement and a cash flow
     statement. Borrower shall provide a fully executed and completed Compliance
     Certificate with the audited financial statements to be provided as set
     forth above. Upon request of Lender, Borrower shall also provide an
     unaudited consolidating balance sheet for Varsity Group Inc and its
     subsidiaries.
     Management Letters
     . Promptly upon receipt thereof, copies of any reports submitted to the
     Borrower by independent certified public accountants in connection with
     examination of the financial statements of the Borrower made by such
     accountants.
     Quarterly Statements and Certificates
     . As soon as available but in no event more than forty-five (45) days after
     the close of each of the Borrower's fiscal quarters, the Borrower will
     provide the following, prepared by the officers of Borrower responsible for
     preparation of financial statements for Borrower:
      1. consolidated balance sheets, profit and loss statements and cash flow
         statements of Varsity Group Inc. and its subsidiaries, with supporting
         schedules; and
      2. fully executed and completed Compliance Certificates.
     
     Projections
     . Borrower shall deliver to the Lender, as soon as available but in no
     event more than sixty (60) days after the close of each of Borrower's
     fiscal years, projections of Varsity Group Inc. and its subsidiaries on a
     consolidated basis for the subsequent fiscal year of Varsity Group Inc.
     including consolidated profit and loss statements, and cash flow
     statements.
     Borrowing Base Certificates
     . Borrower shall submit a fully completed Borrowing Base Certificate
     effective as of January 31, 2008 ("January 2008 BBC"), in form and
     substance satisfactory to Lender, prior to any Advance being made under
     this Agreement. Lender shall rely on such Borrowing Base Certificate for
     Advances made through February 29, 2008 (unless an updated Borrowing Base
     Certificate has been provided earlier than February 29, 2008 for the week
     ending February 22, 2008 ("February 22nd BBC"), in which case Lender shall
     rely on the February 22nd BBC). Thereafter, a Borrowing Base Certificate
     shall be submitted by Borrower to Lender not later than noon on Monday of
     each week, stating the Borrowing Base as of the last business day of the
     preceding week, commencing with the Borrowing Base Certificate due by
     February 25, 2008 for the week ending February 22, 2008. Lender shall not
     be obligated to make the initial Advance, any Committed Advances or any
     further Advances under this Agreement if Lender determines, in its sole
     discretion, that (1) the information provided by Borrower in any Borrowing
     Base Certificate (or in any of the supporting schedules thereto) is
     materially inaccurate, misleading, or incomplete; or (2) a material adverse
     change has occurred with respect to the information so provided or with
     respect to the condition of Borrower (financial or otherwise). At Lender's
     request, the Borrower shall furnish to the Lender such schedules,
     certificates, lists, records, reports, information and documents to enable
     the Lender to verify the Borrowing Base.
     Cash Flow Projections; Variance Reports
     . Borrower shall deliver (i) 8-week cash flow projections for Varsity Group
     Inc. and its Subsidiaries (the "Cash Flow Projections"), in form and
     substance reasonably satisfactory to the Lender, prior to the initial
     Committed Advance being made under this Agreement and thereafter on a
     bi-weekly basis every other Friday beginning March 7, 2008 until the Ending
     Date, and (ii) reports of actual cash flow for each period set forth on the
     Initial Cash Flow Projections on the next Business Day following the end of
     each such period, including a statement of the variation of such actual
     cash flow from projected cash flow.
     Bank Statements
     . Borrower shall promptly deliver all bank statements received from any
     bank at which Deposit Accounts are held, and shall promptly (and in any
     event, on the same Business Day) provide such other bank statements or
     other detail (including screen prints) as Lender may request from time to
     time in respect of Deposit Accounts, which may be on a daily basis.
     Additional Reports and Information
     . With reasonable promptness, such additional information, reports or
     statements as the Lender may from time to time request.
     Compliance Certificate
     . At such times as set forth in this Agreement or as may otherwise be
     requested by Lender, Borrower shall deliver a certificate signed by a
     principal financial officer of the Borrower stating whether any Event of
     Default has occurred, or any event which, upon notice or lapse of time or
     both, would constitute an Event of Default. At Lender's request, the
     Borrower shall furnish to the Lender such schedules, certificates, lists,
     records, reports, information and documents to enable the Lender to verify
     the Compliance Certificate.
     
     Accounts and Inventory Schedules
     . From time to time as the Lender may require, Borrower shall deliver to
     the Lender schedules of all outstanding Accounts. Such schedules shall be
     in form and detail satisfactory to the Lender, shall show the age of such
     Accounts in intervals not greater than thirty (30) days, and shall contain
     such other information and be accompanied by such supporting documents as
     the Lender may from time to time prescribe. Borrower also shall deliver to
     the Lender copies of Borrower's invoices, evidences of shipment or delivery
     and such other schedules and information as the Lender may reasonably
     require.
     
     Borrower shall also deliver, from time to time as the Lender may require,
     detailed schedules of Borrower's inventory. The schedules shall reflect the
     Inventory by type, identification number, cost and category (e.g., New
     Textbooks, Used Textbooks) and shall state the number of units in each
     category, and shall otherwise be in form and substance satisfactory to
     Lender.
     
     The items to be provided under this Section 6.12 are to be prepared and
     delivered to the Lender from time to time solely for its convenience in
     maintaining records of the Collateral, and Borrower's failure to give any
     of such items to the Lender shall not affect, terminate, modify or
     otherwise limit the Lender's security interest granted in the Accounts and
     inventory. Borrower shall use its best efforts and shall take any and all
     steps necessary to collect its Accounts, including without limitation, the
     filing and pursuit of legal action in furtherance of said collection
     efforts, and to sell its Inventory for fair market value and on
     commercially reasonable market terms.
     
     Collateral
     . Maintain all tangible Collateral in good condition; insure insurable
     Collateral for its full replacement cost under an insurance policy
     acceptable to Lender that names Lender as loss lender payee; execute,
     deliver and file, or cause the execution, delivery and filing of, any and
     all documents (including without limitation, financing statements and
     continuation statements), necessary or desirable for the Lender to create,
     perfect, preserve, validate or otherwise protect a first priority lien and
     security interest in the Collateral; maintain, or cause to be maintained,
     at all times, the Lender's first priority lien and security interest in the
     Collateral; immediately upon learning thereof, report to the Lender any
     reclamation, return or repossession of any goods forming a part of the
     Collateral, any claim or dispute asserted by any debtor or other obligor
     owing an obligation to Borrower, and any other matters affecting the value
     or enforceability or collectibility of any of the Collateral; defend the
     Collateral against all claims and demands of all Persons at any time
     claiming the same or any interest therein adverse to the Lender, and pay
     all costs and expenses (including attorneys' fees and expenses) incurred in
     connection with such defense; at Borrower's sole cost and expense
     (including attorneys' fees and expenses), settle any and all claims,
     demands and disputes, and indemnify and protect the Lender against any
     liability, loss or expenses arising from any such claims, demands or
     disputes or out of any such reclamation, return or repossession of goods
     forming a part of the Collateral; however, if the Lender shall so elect,
     the Lender shall have the right at all times to settle, compromise, adjust
     or litigate all claims and disputes directly with the Customer or other
     obligor owing an obligation to Borrower upon such terms and conditions as
     the Lender deems advisable, and all costs and expenses thereof (including
     attorneys' fees and expenses) shall be incurred for the account of Borrower
     and shall constitute a part of the obligations owed to the Lender and
     secured pursuant to this Agreement. The Borrower's equipment shall be kept
     and maintained at the locations set forth in said Schedule 6.13 or such
     other locations within the United States of America of which Borrower has
     notified Lender, other than equipment used by Borrower in road shows or
     other presentations to its Customers in accordance with past business
     practices. Borrower shall execute all documents or financing statements and
     take such action as Lender may request to assure that Lender's first
     priority security interest in the equipment continues to be perfected under
     the Uniform Commercial Code or other applicable laws of the jurisdiction to
     which the equipment is moved.
     Financial Covenant; Minimum Tangible Net Worth
     . Maintain on a consolidated basis, a minimum Tangible Net Worth, measured
     each fiscal quarter of Borrower, as follows:
      a. As of June March 31, 2007, a minimum Tangible Net Worth in an amount
         equal to the Initial TNW Amount, less $2,750,000.00;
      b. As of June 30, 2007, a minimum Tangible Net Worth in an amount equal to
         the Initial TNW Amount, less $5,750,000.00;
      c. As of September 30, 2007, a minimum Tangible Net Worth in an amount
         equal to the Initial TNW Amount, plus $100,000.00;
      d. As of December 31, 2007, a minimum Tangible Net Worth in an amount
         equal to the Initial TNW Amount, less $1,750,000.00;
      e. As of March 31, 2008 and as of each fiscal quarter of Borrower
         thereafter, a minimum Tangible Net Worth in an amount equal to the
         Initial TNW Amount, less $500,000.00.
     
     Notwithstanding anything herein to the contrary, in the event that the PWC
     Audit indicates that the Tangible Net Worth of Borrower as of December 31,
     2006 is less than $12,000,000.00, such condition shall constitute an Event
     of Default under this Agreement.
     
     Financial Covenant; Minimum Aggregate Adjusted Collateral Value
     . Maintain, at all times, an Aggregate Adjusted Collateral Value of the BOA
     Investments in the BOA Collateral Accounts of not less than $2,000,000.00,
     less any amounts released by Lender from such BOA Collateral Accounts in
     response to a request for an Advance (the "Minimum
     
     Aggregate Adjusted Collateral Value"). Lender shall be under no obligation
     to permit Advances during any period of time that the Aggregate Adjusted
     Collateral Value of the BOA Investments is less than the Minimum
     
     Aggregate Adjusted Collateral Value. Lender shall have no obligation to
     notify Borrower of the failure to comply with the covenant set forth in
     this Section 6.15, nor to provide Borrower with an opportunity to cure such
     noncompliance, and in such a case Borrower agrees that Lender may
     immediately at Lender's sole option (i) declare amounts due under the
     Revolving Note and/or other Loan Documents to be immediately due and
     payable, and/or (ii) sell all or any part of the Collateral and apply the
     proceeds of such Collateral to the amounts owing under the Revolving Note
     and/or other Loan Documents.
     Notice of Litigation, Default and Loss
     . Give immediate notice to the Lender upon the occurrence of any Event of
     Default or event which with notice or lapse of time or otherwise would
     constitute an Event of Default, and of any loss or damage to any of the
     Collateral. Borrower also shall give immediate notice to the Lender of any
     action, suit or proceeding at law or in equity or by or before any
     governmental instrumentality or agency (domestic or foreign), commission,
     board, bureau, arbitrator or arbitration panel which, if adversely
     determined, could result in a Material Adverse Effect. Immediately upon
     becoming aware that the holder of any Consolidated Debt or Encumbrance has
     given notice or taken any action with respect to a claimed breach, default
     or event of default, a written notice shall be given by Borrower to Lender
     specifying the notice given or action taken by such holder and the nature
     of the claimed breach, default or event of default by the Borrower
     thereunder, and the action being taken or proposed to be taken with respect
     thereto. Borrower shall also give immediate notice to Lender of the
     incurrence by Borrower of any actual or potential contingent liability,
     such notice to include, in detail, the basis for and amount of such
     liability.
     Proxy Statements, Etc
     . Promptly after the sending or filing thereof, copies of all proxy
     statements, financial statements and reports which the Borrower sends to
     its stockholders, and copies of all regular, periodic and special reports,
     and all registration statements which the Borrower files with the
     Securities and Exchange Commission ("SEC") or any governmental authority
     which may be substituted therefor, or with any national securities
     exchange. Documents required to be delivered pursuant to this
     Section 6.17
     (to the extent any such documents are included in materials otherwise filed
     with the SEC) may be delivered electronically and if so delivered, shall be
     deemed to have been delivered on the date (i) on which the Borrower posts
     such documents, or provides a link thereto on the Borrower's website on the
     internet at the following website address:
     www.varsitygroup.com/investorrelations.html; or (ii) on which such
     documents are posted on the Borrower's behalf on an internet or intranet
     website, if any, to which Lender has access;
     provided
     that: (i) the Borrower shall deliver paper copies of such documents to the
     Lender if Lender requests the Borrower to deliver such paper copies until a
     written request to cease delivering paper copies is given by the Lender,
     and (ii) the Borrower shall notify the Lender (by telecopier or electronic
     mail) of the posting of any annual or quarterly reports, registration
     statements or of any posting involving a material event or disclosure, and
     provide to the Lender by electronic mail electronic versions (i.e., soft
     copies) of such documents. Notwithstanding anything contained herein, in
     every instance the Borrower shall be required to provide paper copies of
     the Compliance Certificates required under this Agreement to the Lender.
     ERISA
     . Give prompt notice to Lender of any of the following: (i) of any event or
     condition, including, but not limited to, any Reportable Event, that
     constitutes, or might reasonably lead to, a Termination Event; (ii) with
     respect to any Multiemployer Plan, the receipt of notice as prescribed in
     ERISA or otherwise of any withdrawal liability assessed against the
     Borrower, any of its subsidiaries or any of its ERISA Affiliates, or of a
     determination that any Multiemployer Plan is in reorganization or insolvent
     (both within the meaning of Title IV of ERISA); (iii) the failure to make
     full payment on or before the due date (including extensions) thereof of
     all amounts which the Borrower or any of its subsidiaries or ERISA
     Affiliate is required to contribute to each Plan pursuant to its terms and
     as required to meet the minimum funding standard set forth in ERISA and the
     Code with respect thereto; or (iv) any change in the funding status of any
     Plan that could have a Material Adverse Effect; together, with a
     description of any such event or condition or a copy of any such notice and
     a statement by the principal financial officer of the Borrower briefly
     setting forth the details regarding such event, condition, or notice, and
     the action, if any, which has been or is being taken or is proposed to be
     taken by Borrower with respect thereto. Promptly upon request, the Borrower
     shall furnish to Lender such additional information concerning any Plan as
     may be reasonably requested, including, but not limited to, copies of each
     annual report/return (Form 5500 series), as well as all schedules and
     attachments thereto required to file with the Department of Labor or the
     Internal Revenue Service pursuant to ERISA and the Code, respectively, for
     each "plan year" (within the meaning of Section 3(39) of ERISA). Such
     notice shall be given in any event within five (5) business days after the
     occurrence of any event that Borrower is required to report to Lender under
     this clause.
     Place of Business; Location of Records
     . Maintain its chief executive office, and the office where its records are
     kept, at the address of Borrower previously set forth herein. The Borrower
     shall provide Lender with fourteen (14) days' advance written notice of any
     change in the location of its chief executive offices or the office where
     the Borrower's records are kept.
     Government Contracts
     . Borrower has represented and warranted that Borrower is not presently
     providing goods or services to any Government as part of Borrower's
     business, and it is not Borrower's present intention to do so in the
     future. Borrower shall not enter into any Government Contract without
     providing thirty (30) days advance written notice to Lender of such intent,
     and without (1) taking all actions requested by Lender to perfect Lender's
     security interest in the Government Accounts arising from such Government
     Contract, (2) assigning to Lender the payments under such Government
     Contract in accordance with the Assignment of Claims Act, and (3) executing
     such documents as Lender may request, including an Assignment for each
     Government Contract into which Borrower wishes to enter, and modifications
     to this Agreement and the other Loan Documents in form and substance
     reasonably satisfactory to Lender.
     Depository Accounts
     . Maintain all operating and depository accounts with Bank of America,
     N.A., including, without limitation, the Operating Account, which shall be
     governed by control agreements in favor of and reasonably satisfactory to
     the Lender;
     provided
     , that Borrower may maintain depository accounts at other banks or at Bank
     of America, N.A. that are not governed by a control agreement, so long as
     the amount in such depository accounts does not exceed $5,000 individually
     or $10,000 in the aggregate at any time for all such accounts.

 7.  BORROWER'S NEGATIVE COVENANTS.

     Until all obligations of Borrower under this Agreement and the other Loan
     Documents are paid in full and performed, Borrower covenants and agrees
     that it shall not, unless the Lender otherwise consents in advance in
     writing:

     Indebtedness and Contingent Obligations
     . Contract for any additional Consolidated Debt; or agree to assume,
     guarantee, indorse or otherwise in any way be or become responsible or
     liable, directly or indirectly, for the obligation of any other Person.
     However, notwithstanding the foregoing sentence, Borrower may incur (a)
     trade debt in the ordinary course of business; (b) indebtedness and
     contingent obligations under the Loan Documents; (c) intercompany
     indebtedness and guarantees between the Borrower and its subsidiaries; (d)
     indebtedness arising from the honoring by a bank or other financial
     institution of a check, draft or similar instrument inadvertently drawn in
     the ordinary course of business against insufficient funds, so long as such
     indebtedness is promptly repaid; and (e) indebtedness listed on the
     schedule attached hereto as Schedule 7.1 and any refinancings, refundings,
     renewals or extensions thereof (without increasing, or shortening the
     scheduled maturity of, or the principal amount thereof).
     Encumbrances
     . Create, incur, assume or suffer to exist any Encumbrance upon any of its
     properties or assets (including without limitation, the Collateral),
     whether now owned or hereafter acquired, except for the following: (a)
     Encumbrances created in connection with the Loan Documents; (b) Mechanic's,
     warehouseman's, and statutory landlords' Encumbrances arising as an
     incident to the normal and customary conduct of Borrower's business or the
     ownership of properties and assets by Borrower, and deposits and pledges
     incurred in the ordinary course of business and not in connection with the
     borrowing of money;
     provided
     ,
     however
     , that (i) in each case, the obligation secured is not overdue or, if
     overdue, is being contested in good faith and adequate reserves have been
     set aside by the Borrower as the case may be, and (ii), in the case of
     warehousemen's or landlord's Encumbrances, written subordination agreements
     providing for the subordination or waiver of the warehousemen's or
     landlord's Encumbrances to the security interests and liens provided by
     Borrower to Lender under this Agreement and the other Loan Documents shall
     have been executed by the warehousemen and/or landlords (as applicable) and
     Borrower and delivered to Lender, and are in form and substance
     satisfactory to Lender; (c) Encumbrances securing the payments of taxes or
     other governmental charges incurred in the ordinary course of business that
     either (1) are not delinquent, or (2) are being contested in good faith by
     appropriate legal or administrative proceedings and as to which adequate
     reserves have been set aside on their books to the extent required by GAAP,
     and which do not result in a Material Adverse Effect; (d) Encumbrances
     listed on the schedule attached hereto as
     Schedule 7.2
     ; (e) Encumbrances in respect of pledges or deposits in connection with
     workers compensation, unemployment insurance and other social security
     legislation; (f) Encumbrances in respect of precautionary UCC filings in
     respect of leases; and (g) Extensions, renewals and replacements of
     Encumbrances referred to in clauses (a) through (e) of this Section 7.2;
     provided, however, that any such extension, renewal or replacement
     Encumbrance shall be limited to the property or assets and proceeds thereof
     covered by the Encumbrance extended, renewed or replaced and that the
     obligations secured by any such extension, renewal or replacement
     Encumbrance shall be in an amount not greater than the amount of the
     obligations secured by the Encumbrance extended, renewed or replaced.
     Fundamental Changes
     . Amend its Articles or Certificate of Incorporation or Articles of
     Organization (as applicable) by any amendment which would adversely affect
     Borrower's ability to perform or comply with any of the terms, conditions
     or agreements to be performed or complied with by Borrower hereunder or to
     perform any of the transactions contemplated hereby; change its fiscal
     year, name, or key management; convert its organizational form into another
     entity form or establish any new entity to perform the business or similar
     business of Borrower; reorganize, consolidate or merge with any other
     corporation or company; or change the state of incorporation or
     organization/formation of Borrower. Varsity Group Inc. shall not change
     from a corporation publicly traded in the United States under and in
     accordance with applicable securities and other laws and regulations.
     Furthermore, there shall not occur any change in ownership of the Borrower
     that would result in a change in control of the Borrower. For purposes of
     this covenant, a change in control of the Borrower shall occur if more than
     a thirty five percent (35%) aggregate interest in ownership in the Borrower
     is transferred to a person or entity and/or any affiliates of such person
     or entity, except as a result of the Merger. Furthermore, Borrower shall
     not materially engage in any business other than the business in which
     Borrower is actively engaged as of the date of this Agreement, which
     business the Borrower has fully disclosed to Lender
     Acquisitions
     . Purchase, lease or otherwise acquire the assets, business, goodwill or
     securities of any other Person, including, without limitation, shares of
     stock in corporations, partnership interests in general or limited
     partnerships or membership interests in limited liability companies, or
     acquire any other business.
     Transfer of Assets
     . Sell, lease, assign, pledge or otherwise dispose of any of its
     properties, stock or assets (including without limitation, the Collateral),
     whether now owned or hereafter acquired, except (a) in the ordinary course
     of business and for fair market value, (b) any subsidiary may be merged
     with or into any entity comprising the Borrower, or be liquidated, wound up
     or dissolved, or all or any part of its business, property or assets may be
     conveyed, sold, leased, transferred or otherwise disposed of, in one
     transaction or a series of transactions, to the Borrower; provided that, in
     the case of such a merger or other transaction with the Borrower, the
     Borrower shall be the continuing or surviving corporation or limited
     liability company; (c) dispositions of obsolete, worn out or surplus
     property in the ordinary course of business; (d) the licensing of
     Intellectual Property or software in the ordinary course of business; (e)
     the disposition of cash equivalents or any other investment permitted
     hereunder; provided Borrower retains ownership of the property received in
     exchange for or as a result of such disposition, and further provided that
     such property received as a result of such disposition has a value equal to
     or greater than the value of the cash equivalents or other investment which
     is the subject of such disposition; (f) intercompany transfers of assets or
     property among the entities comprising the Borrower; (g) investments, loans
     and advances permitted by
     Sections 7.6 and 7.7
     of this Agreement; (h) stock purchases permitted by Section 7.9 of this
     Agreement; (i) the granting of Encumbrances permitted under this Agreement;
     (j) discounts or forgiveness of accounts receivable in the ordinary course
     of business in connection with the collection or compromise thereof;
     provided the discount or forgiveness of an account receivable does not
     exceed five percent (5%) of the amount of such account receivable; (k) the
     sale, shut-down or liquidation of Campus Outfitters, L.L.C. so long as the
     net cash flow generated from such sale, shut-down or liquidation (including
     any cash needed to pay any liabilities or obligations incurred in
     connection with or arising as a result of such sale, shut-down or
     liquidation) is not less than negative $300,000.
     Investments
     . Purchase or hold any stock, or evidence of indebtedness of any other
     Person or entity except the following: (a) investments in direct
     obligations of the United States Government and certificates of deposit of
     United States commercial banks insured by the Federal Deposit Insurance
     Corporation; (b) investments in United States dollar-denominated time
     deposits, certificates of deposit and bankers acceptances of any bank whose
     short-term debt rating from Standard & Poor's Ratings Group, a division of
     The McGraw-Hill Companies, Inc. ("
     S&P
     "), is at least A-1 or the equivalent or whose short-term debt rating from
     Moody's Investors Service, Inc. ("
     Moody's
     ") is at least P-1 or the equivalent with maturities of not more than six
     (6) months from the date of acquisition; (c) investments in commercial
     paper with a rating of at least A-1 or the equivalent by S&P or at least
     P-1 or the equivalent by Moody's maturing within six (6) months after the
     date of acquisition; (d) investments in money market funds substantially
     all the assets of which are comprised of securities of the types described
     in clauses (a) through (d) above; (e) investments in deposit accounts in
     which the Lender has been granted a security interest under the Loan
     Documents; (f) investments (including debt obligations) received in
     connection with the bankruptcy or reorganization of suppliers and customers
     and in settlement of delinquent obligations of, and other disputes with,
     customers and suppliers arising in the ordinary course of business; (g)
     receivables owing to the Borrower created or acquired in the ordinary
     course of business and payable on customary trade terms of the Borrower;
     (h) guarantees permitted by Section 7.1 of this Agreement; (i) pledges and
     deposits permitted by Section 7.2 of this Agreement; (j) loans permitted
     under Section 7.7 of this Agreement; (k) securities or limited liability
     company membership interests issued by the Borrower or any of its
     subsidiaries;
     provided
     that the proceeds from all payments made for such issuance shall be paid
     directly to Lender and shall be used to reduce the principal amount owing
     under the Line of Credit, and shall further result in a dollar for dollar
     permanent reduction in the amount of the Line of Credit Amount.
     
     For purposes of this Section 7.6, the amount of any investment shall be
     equal to the initial investment less all repayments, returns, dividends,
     distributions or reimbursements in respect thereof.
     
     Loans
     . Make loans or advances to any Person or Persons, except reasonable
     advances for business expenses of Borrower's employees that would be
     reimbursable under Borrower's existing expense reimbursement policy, or as
     may otherwise be permitted under this Agreement.
     Guaranty
     . Guaranty or provide surety or pledge or hypothecate assets for the
     obligation of any other Person or Persons.
     Dividends; Payments of Indebtedness
     . Declare or pay any Dividend or make any payment on account of any
     indebtedness of Borrower, except payments of indebtedness incurred under
     this Agreement. This section shall not prohibit Dividends or payments of
     indebtedness solely to Varsity Group Inc. or from a wholly-owned Subsidiary
     of Varsity Group Inc. to a Borrower.
     Use of Proceeds
     . Use, or allow the use of, the proceeds of any Advance for any purpose
     which would cause this Agreement to violate any Regulations of the Board of
     Governors of the Federal Reserve System; or for any purpose other than the
     purposes or purposes specified hereinabove.
     Other Agreements
     . Enter into any agreement or undertaking containing any provision which
     would be violated or breached by Borrower's performance of its obligations
     under the Loan Documents.
     Sale and Leaseback
     . Enter into any arrangement whereby Borrower sells or transfers all or any
     substantial part of its fixed assets then owned by it and thereupon, or
     within one (1) year thereafter, rents or leases the assets so sold or
     transferred from the purchaser or transferor (or their respective
     successors in interest).
     Transactions with Affiliates
     . Except as specifically permitted by the terms of this Agreement, enter
     into any transaction, including without limitation, the purchase, sale or
     exchange of property or the rendering of any service, with any Affiliate,
     except (a) in the ordinary course of and pursuant to the reasonable
     requirements of the Borrower's business and upon fair and reasonable terms
     no less favorable to the Borrower than would be applicable in a comparable
     arm's-length transaction with a Person not an Affiliate, and (b)
     transactions between any entities comprising the Borrower; (c) any
     investment and loans permitted by Sections 7.6 and 7.7 of this Agreement;
     (d) compensation of officers and employees (including bonuses) and other
     benefits (including retirement, health, stock options and other benefit
     plans) at then current market terms in the ordinary course of Borrower's
     business, and indemnification arrangements arising in the ordinary course
     of business; (e) the payment of reasonable and directly related transaction
     fees in connection with acquisitions permitted under this Agreement; and
     (f) the payment of reasonable incentive bonuses to employees and officers
     of the Borrower.

 8.  COLLECTION, DEPOSIT AND ASSIGNMENT OF PAYMENTS.
     Operating Account
     . Borrower shall cause all Payments to be deposited into the Operating
     Account, subject to the Lender's option to require Payments to be deposited
     into a Cash Collateral Account, as provided in Section 8.2.
     Cash Collateral Account
     . Lender may at any time require the establishment of a Cash Collateral
     Account, in which event Borrower shall cause all Payments to be deposited
     into the Cash Collateral Account. In furtherance of this covenant, Borrower
     shall instruct all Customers to make all Payments either by electronic
     funds transfer directly to the Cash Collateral Account or by check to a
     post office box or other collection facility under Lender's control for
     deposit into the Cash Collateral Account. If any Payments are made directly
     to the Borrower or otherwise come into the Borrower's possession, the
     Borrower shall not commingle any such Payment with the Borrower's other
     funds or property, but shall hold the Payment separate and apart in trust
     for the Lender and shall promptly deliver the Payment to the Lender
     (appropriately endorsed, if the Payment is in the form of a check) for
     deposit into the Cash Collateral Account. Interest (if any) earned on sums
     on deposit in the Cash Collateral Account shall be added to the Cash
     Collateral Account. The Borrower hereby appoints the Lender and any
     officer, employee or agent of the Lender as the Lender may from time to
     time designate as attorneys-in-fact for the Borrower to endorse and sign
     the name of the Borrower on all checks, drafts, money orders or other Items
     delivered to the Lender for deposit into the Cash Collateral Account. The
     Cash Collateral Account shall constitute part of the Collateral, and funds
     on deposit in the Cash Collateral Account shall be applied towards the
     amounts due and owing under the Revolving Note, this Agreement and/or the
     other Loan Documents as determined by Lender in its sole and absolute
     discretion, and at Lender's sole and absolute discretion, the remaining
     funds shall be deposited into Borrower's Operating Account. Payments
     received by Lender shall be applied as the Lender may determine in its sole
     discretion. Borrower retains sole responsibility for assuring that
     Borrower's Operating Account contains sufficient funds to pay any Items
     that may be presented for payment from the Operating Account.

 9.  EVENTS OF DEFAULT AND REMEDIES.
     Events of Default
     . The occurrence of any one or more of the following events shall
     constitute an Event of Default under this Agreement:
      a. Borrower shall fail to pay, when due, any sum payable under the
         Revolving Note; or
      b. any representation or warranty made by or on behalf of Borrower herein
         or in any of the other Loan Documents which, in the Lender's reasonable
         judgment, shall prove to have been materially incorrect or misleading
         or breached in any material respect on or as of any date as of which
         made; or
      c. a decree or order for relief of Borrower shall be entered by a court of
         competent jurisdiction in any involuntary case involving Borrower under
         any bankruptcy, insolvency or similar law now or hereafter in effect,
         or a receiver, liquidator or other similar agent for Borrower or for
         any substantial part of Borrower's assets or property shall be
         appointed, or the winding up or liquidation of Borrower's affairs shall
         be ordered, or any action by any creditor (other than the Lender) of
         Borrower preparatory to or for the purpose of commencing any such
         involuntary case, appointment, winding up or liquidation shall be
         taken, and such proceeding shall not have been dismissed within sixty
         (60) days after the date it commenced; or
      d. Borrower shall commence a voluntary case under any bankruptcy,
         insolvency or similar law now or hereafter in effect, or Borrower shall
         consent to the entry of an order for relief in an involuntary case
         under any such law or to the appointment of or taking possession by a
         receiver, liquidator or other similar agent for Borrower or for any
         substantial part of Borrower's assets or property, or Borrower shall
         make any general assignment for the benefit of creditors, or Borrower
         shall take any action preparatory to or otherwise in furtherance of any
         of the foregoing, or Borrower shall fail generally to pay its debts as
         such debts come due; or
      e. there shall occur a default or event of default under any existing or
         future loan, indebtedness or obligation of Borrower to Lender; or
      f. the PWC Audit should reflect a tangible net worth for Borrower, as of
         December 31, 2006, of less than Twelve Million and 00/100 Dollars
         ($12,000,000.00); or
      g. one or more judgments or decrees in an amount of more than Twenty Five
         Thousand and 00/100 Dollars ($25,000.00) in the aggregate shall be
         entered against Borrower (not paid or fully covered by insurance) and
         all such judgments or decrees have not been vacated, discharged, stayed
         or bonded pending appeal within thirty (30) days from the entry
         thereof, or any attachment or garnishment shall be issued against
         Borrower or Borrower's property; or
      h. the occurrence of a Material Adverse Effect, as determined by Lender in
         its sole discretion; or
      i. any loss, theft, damage or destruction of any material portion of the
         Collateral for which there is either no insurance coverage or for
         which, in the opinion of the Lender, there is insufficient insurance
         coverage; or
      j. thirty five percent (35%) or more of the voting control in Borrower is
         directly or indirectly sold, assigned, transferred, encumbered or
         otherwise conveyed without the prior written consent of the Lender
         (other than as a result of the Offer or the Merger); or
      k. any of the following events or conditions shall occur: (1) any
         "accumulated funding deficiency," as such term is defined in Section
         302 of ERISA and Section 412 of the Code, whether or not waived, shall
         exist with respect to any Plan, or any lien shall arise on the assets
         of the Borrower or any of its subsidiaries or any ERISA Affiliate in
         favor of the PBGC or a Plan; (2) a Termination Event shall occur with
         respect to a Single Employer Plan, which, in the Lender's opinion, is
         likely to result in the termination of such Plan for purposes of Title
         IV of ERISA; (3) a Termination Event shall occur with respect to a
         Multiemployer Plan or Multiple Employer Plan, which in the Lender's
         opinion, is likely to result in (i) the termination of such Plan for
         purposes of Title IV of ERISA, or (ii) the Borrower or any of its
         subsidiaries or any ERISA Affiliate incurring any liability in
         connection with a withdrawal from, reorganization of (within the
         meaning of Section 4241 of ERISA), or insolvency or (within the meaning
         of Section 4245 of ERISA) such Plan; or (4) any prohibited transaction
         (within the meaning of Section 406 of ERISA or Section 4975 of the
         Code) or breach of fiduciary responsibility shall occur which may
         subject the Borrower or any of its subsidiaries or any ERISA Affiliate
         to any liability under Section 406, 409, 502(i), or 502(l) of ERISA or
         Section 4975 of the Code, or under any agreement or other instrument
         pursuant to which the Borrower or any of its subsidiaries or any ERISA
         Affiliate has agreed or is required to indemnify any Person against any
         such liability; or
      l. the Merger Agreement is terminated for any reason; or
      m. Varsity Group Inc. or any Representative (as defined in the Merger
         Agreement) violates Section 6.2 of the Merger Agreement; or
      n. the Board of Directors of Varsity Group Inc. makes a Change of
         Recommendation (as defined in the Merger Agreement); or
      o. a "Material Adverse Effect", as defined in the Merger Agreement, shall
         have occurred; or
      p. if during any period specified in the Initial Cash Flow Projections,
         Borrower's operations generate cash flow from operations less than the
         amounts set forth in the Initial Cash Flow Projections for such period;
         or
      q. Borrower or any other Person standing as a guarantor for the Loan or
         providing security for the Loan shall fail to observe or perform any
         other term, covenant or agreement contained in this Agreement or in any
         other Loan Document or in any other agreement with the Lender or any of
         Lender's Affiliates to be observed or performed on its part.
     
     Rights and Remedies of the Lender
     . Upon the occurrence of any Event of default or upon the termination of
     the Forbearance Period, the Lender may, at its option, exercise any one or
     more of the following rights and remedies:
      a. Declare this Agreement to be terminated, and declare the entire unpaid
         principal amounts of the Advances, all interest accrued and unpaid
         thereon, and all other amounts payable under this Agreement and the
         other Loan Documents to be accelerated, and to be immediately due and
         payable (except that upon the occurrence of an Event of Default arising
         out of voluntary or involuntary bankruptcy proceedings in which the
         Borrower is the debtor, such acceleration shall occur automatically and
         immediately without any declaration or other action on the part of the
         Lender) whereupon the amount of the Advances, all such accrued
         interest, and all such amounts shall become and be immediately due and
         payable, without presentment, demand, protest or further notice of any
         kind, all of which are hereby expressly waived by Borrower, anything
         contained herein or in any of the other Loan Documents to the contrary
         notwithstanding;
      b. Take possession or control of, store, lease, operate, manage, sell or
         otherwise dispose of all or any part of the Collateral in accordance
         with the remedies provided to secured parties under the Uniform
         Commercial Code, this Agreement, the Loan Documents or other applicable
         law. In taking possession of the Collateral, the Lender may enter the
         Borrower's premises and otherwise proceed without legal process, and
         the Borrower shall on the Lender's demand, promptly assemble and make
         the Collateral available to the Lender at a place designated by the
         Lender. The Lender shall be entitled to immediate possession of all
         books and records evidencing or pertaining to any of the Collateral. In
         the event of any sale or other disposition of the Collateral, Lender
         may disclaim any warranty relating to title, possession, quiet
         enjoyment or any other warranty of the like, including without
         limitation, any warranty of merchantability or fitness for a particular
         purpose;
      c. Notify any or all Customers to make any Payments due to Borrower from
         such Customers directly to the Lender and render performance to or for
         the benefit of Lender of any obligations of such Customers to Borrower.
         To facilitate direct collection, Borrower hereby appoints the Lender
         and any officer or employee of the Lender, as the Lender may from time
         to time designate, as attorney-in-fact for Borrower to (i) receive,
         open and dispose of all mail addressed to Borrower and take therefrom
         any Payments on or proceeds of Accounts; (ii) take over Borrower's post
         office boxes or make such other arrangements, in which Borrower shall
         cooperate, to receive Borrower's mail, including notifying the post
         office authorities to change the address for delivery of mail addressed
         to Borrower to such address as the Lender shall designate; (iii)
         endorse the name of Borrower in favor of the Lender upon any and all
         checks, drafts, money orders, notes, acceptances or other evidences of
         payment or Collateral that may come into the Lender's possession; (iv)
         sign and endorse the name of Borrower on any invoice or bill of lading
         relating to any of the Accounts, on verifications of Accounts sent to
         any Customer, to drafts against any Customer, to assignments of
         Accounts, and to notices to any Customer; and (v) do all acts and
         things necessary to carry out this Agreement and the transactions
         contemplated hereby, including signing the name of Borrower on any
         instruments required by law in connection with the transactions
         contemplated hereby and on financing statements as permitted under the
         Uniform Commercial Code of any appropriate state. Borrower hereby
         ratifies and approves all acts of such attorneys-in-fact, and neither
         the Lender nor any other such attorney-in-fact shall be liable for any
         acts of commission or omission, or for any error of judgment or mistake
         of fact or law of any such attorney-in-fact. This power, being coupled
         with an interest and given to secure an obligation, is irrevocable so
         long as the Loan remains unsatisfied, or any Loan Document remains
         effective, as solely determined by the Lender. Lender shall have no
         obligation or duty to pursue any Person other than Borrower for the
         amounts owing under or in connection with the Loan, this Agreement or
         the other Loan Documents, including without limitation, any Persons
         pledging property to secure the Loan. To the extent such rights may now
         or hereafter exist, Borrower waives the right to require Lender to
         pursue any Persons other than Borrower to pay the amounts owing under
         the Revolving Note, Loan Agreement or other Loan Documents;
      d. In the Lender's own name, or in the name of Borrower, demand, collect,
         receive, sue for and give receipts and releases for, any and all
         amounts due on Accounts, but the Lender shall not, under any
         circumstances, be liable for any error or omission or delay of any kind
         occurring in the settlement, collection or payment of any Accounts or
         any instrument received in payment thereof or for any damage resulting
         therefrom;
      e. Endorse as the agent of Borrower any chattel paper, documents or
         instruments forming all or any part of the Collateral;
      f. Make formal application for the transfer of all of Borrower's permits,
         licenses, approvals, agreements and the like relating to the Collateral
         or to Borrower's business to the Lender or to any assignee of the
         Lender or to any purchaser of any of the Collateral;
      g. Obtain appointment of a receiver for all or any of the Collateral,
         Borrower hereby consenting to the appointment of such a receiver and
         agreeing not to oppose any such appointment. Any receiver so appointed
         shall have such powers as may be conferred by the appointing authority
         including any or all of the powers, rights and remedies which the
         Lender is authorized to exercise by the Loan Documents, and shall have
         the right to incur such obligations and to issue such certificates
         therefor as the appointing authority shall authorize;
      h. Take any other action which the Lender deems necessary or desirable to
         protect and realize upon its security interest in the Collateral;
      i. File any legal action or lawsuit and obtain a judgment for any and all
         amounts owing under the Revolving Note, this Agreement or the other
         Loan Documents, and in conjunction with any such action, Lender may
         pursue any ancillary remedies provided by law, including without
         limitation, attachment, garnishment, execution and levy;
      j. With respect to any Investment Property (including without limitation,
         the BOA Investments and/or the BOA Collateral Accounts), in addition to
         any other remedies set forth in this Agreement:
          1. To transfer to or register in Lender's name or the name of any
             nominee all or any part of the Investment Property of Borrower,
             without notice to Borrower and with or without disclosing that such
             Collateral is subject to the security interest created hereunder;
          2. To sell, resell, assign and deliver, in its sole discretion, all or
             any of the Investment Property of Borrower, in one or more parcels,
             on any securities exchange on which any of the Investment Property
             may be listed, at public or private sale, at any of Lender's
             offices or elsewhere, for cash, upon credit or for future delivery,
             at such time or times and at such price or prices and upon such
             other terms as Lender may deem satisfactory. If any of such
             Collateral is sold by Lender upon credit or for future delivery,
             Lender shall not be liable for the failure of the purchaser to
             purchase or pay for the same and, in the event of any such failure,
             Lender may resell such Collateral. In no event shall Borrower be
             credited with any part of the proceeds of sale of any such
             Collateral until and to the extent cash payment in respect thereof
             has actually been received by Lender. Each purchaser at any such
             sale shall hold the property sold free from any lien or
             Encumbrance, including any equity or right of redemption of
             Borrower, and Borrower hereby expressly waives, to the fullest
             extent permitted under applicable law, all rights of redemption,
             stay or appraisal, and all rights to require Lender to marshal any
             assets in favor of Borrower or any other party or against or in
             payment of any or all of the amounts owing under the Revolving
             Note, this Agreement or any of the other Loan Documents, that it
             has or may have under any rule of law or statute now existing or
             hereafter adopted.
          3. To exercise, to the extent permitted by applicable law, (i) all
             voting, consensual and other rights and powers pertaining to the
             Borrower's Investment Property including without limitation, the
             BOA Investments and BOA Collateral Accounts (whether or not
             transferred into the name of Lender), at any meeting of
             shareholders, partners, members or otherwise, and (ii) any and all
             rights of conversion, exchange, subscription and any other rights,
             privileges or options pertaining to such Investment Property, as if
             Lender were the absolute owner thereof (including, without
             limitation, the right to exchange at its discretion any and all of
             the Investment Property upon the merger, consolidation,
             reorganization, reclassification, combination of shares or
             interest, similar rearrangement or other similar fundamental change
             in the structure of the applicable issuer, or upon the exercise by
             Borrower or Lender of any right, privilege or option pertaining to
             such Investment Property), and in connection therewith, the right
             to deposit and deliver any and all of the Investment Property with
             any committee, depositary, registrar or other designated agency
             upon such terms and conditions as Lender may determine, and give
             all consents, waivers and ratifications in respect of such
             Investment Property, all without liability except to account for
             any property actually received by it, but Lender shall have no duty
             to exercise any such right, privilege or option or give any such
             consent, waiver or ratification and shall not be responsible for
             any failure to do so or delay in so doing; and for the foregoing
             purposes, Borrower will promptly execute and deliver or cause to be
             executed and delivered to Lender, upon request, all such proxies
             and other instruments as Lender may request to enable Lender to
             exercise such rights and powers; AND IN FURTHERANCE OF THE
             FOREGOING AND WITHOUT LIMITATION THEREOF, BORROWER HEREBY
             IRREVOCABLY CONSTITUTES AND APPOINTS LENDER AS THE TRUE AND LAWFUL
             PROXY AND ATTORNEY-IN-FACT OF BORROWER, WITH FULL POWER OF
             SUBSTITUTION IN THE PREMISES, TO EXERCISE AFTER THE OCCURRENCE AND
             DURING THE CONTINUANCE OF AN EVENT OF DEFAULT ALL SUCH VOTING,
             CONSENSUAL AND OTHER RIGHTS AND POWERS TO WHICH ANY HOLDER OF ANY
             INVESTMENT PROPERTY WOULD BE ENTITLED BY VIRTUE OF HOLDING THE
             SAME, WHICH PROXY AND POWER OF ATTORNEY, BEING COUPLED WITH AN
             INTEREST, IS IRREVOCABLE AND SHALL BE EFFECTIVE FOR SO LONG AS THIS
             AGREEMENT SHALL BE IN EFFECT.
     
      k. Borrower acknowledges that any failure to comply with its obligation
         regarding the Collateral, including (without limiting the generality of
         the foregoing) collection of the Accounts, shall cause irreparable harm
         to the Lender for which the Lender has no adequate remedy at law, and
         agrees that the Lender shall be entitled to specific performance, an
         injunction or other equitable relief to enforce the Borrower's
         obligations under this Agreement; and
      l. In addition to the foregoing, and not in substitution therefor,
         exercise any one or more of the rights and remedies exercisable by the
         Lender under other provisions of this Agreement, under any of the other
         Loan Documents, or provided by applicable law (including, without
         limiting the generality of the foregoing, the Uniform Commercial Code),
         including without limitation, generally enforcing any or all of the
         Borrower's rights and remedies against any Customers, provided that
         Lender shall be under no obligation to do so.
     
     Application of Proceeds
     . Any proceeds from the collection or sale or other disposition of the
     Collateral shall be applied in the following order of priority:
     
     First
     
     , to the payment of all expenses of collecting, storing, leasing,
     operating, managing, selling or disposing of the Collateral, and to the
     payment of all sums which the Lender may be required or may elect to pay,
     if any, for taxes, assessments, insurance and other charges upon such
     Collateral or any part thereof, and of all other payments which the Lender
     may be required or authorized to make under any provision of this Agreement
     or of any other Loan Document (including in each such case legal costs and
     attorneys' fees and expenses);
     
     
     
     Second
     
     , to the payment of all obligations on the Loan under this Agreement, and
     under the other Loan Documents, and to the payment of any other obligations
     due to the Lender, in such order as the Lender may determine in its sole
     discretion; and
     
     
     
     Third
     
     , to the payment of any surplus then remaining to Borrower, unless
     otherwise provided by law or directed by a court of competent jurisdiction;
     provided
     that Borrower shall be liable for any deficiency if the proceeds of the
     Collateral are insufficient to satisfy all obligations due to the Lender.
     
     
     
     Collection/Enforcement Costs
     . Borrower shall pay all costs and expenses incurred by Lender in
     connection with the enforcement or defense of its rights under this
     Agreement and the other Loan Documents, including without limitation, legal
     costs and attorneys' fees (whether or not suit is instituted), paralegal
     and expert witness fees and costs, and arbitration fees and costs, and in
     connection with the collection of any sums from Borrower.

 10. GUARANTY

     Without limiting the joint and several nature of the liabilities hereunder,
     in order to induce the Lender to extend credit to Borrower hereunder, each
     Borrower hereby irrevocably and unconditionally guarantees, as a primary
     obligor and not merely as a surety, the Obligations. Each Borrower further
     agrees that the due and punctual payment of the Obligations may be extended
     or renewed, in whole or in part, without notice to or further assent from
     it, and that it will remain bound upon its guarantee hereunder
     notwithstanding any such extension or renewal of any Obligation.

     Each Borrower waives presentment to, demand of payment from and protest to
     any other Borrower of any of the Obligations, and also waives notice of
     acceptance of its obligations and notice of protest for nonpayment. The
     obligations of each Borrower hereunder shall not be affected by (a) the
     failure of Lender to assert any claim or demand or to enforce any right or
     remedy against any Borrower under the provisions of this Agreement or any
     other Loan Document or otherwise; (b) any extension or renewal of any of
     the Obligations; (c) any rescission, waiver, amendment or modification of,
     or release from, any of the terms or provisions of this Agreement or any
     other Loan Document; (d) the failure or delay of Lender to exercise any
     right or remedy against any other guarantor of the Obligations; (e) the
     failure of Lender to assert any claim or demand or to enforce any remedy
     under any Loan Document or any other agreement or instrument; (f) any
     default, failure or delay, wilful or otherwise, in the performance of the
     Obligations; or (g) any other act, omission or delay to do any other act
     which may or might in any manner or to any extent vary the risk of any
     Borrower or otherwise operate as a discharge of any Borrower as a matter of
     law or equity or which would impair or eliminate any right of any Borrower
     to subrogation.

     Each Borrower further agrees that its guarantee hereunder constitutes a
     promise of payment when due (whether or not any bankruptcy or similar
     proceeding shall have stayed the accrual or collection of any of the
     Obligations or operated as a discharge thereof) and not merely of
     collection, and waives any right to require that any resort be had by
     Lender to any balance of any deposit account or credit on the books of
     Lender in favor of any Borrower or subsidiary or any other Person.

     The obligations of Borrower hereunder shall not be subject to any
     reduction, limitation, impairment or termination for any reason, and shall
     not be subject to any defense or setoff, counterclaim, recoupment or
     termination whatsoever, by reason of the invalidity, illegality or
     unenforceability of the Obligations, any impossibility in the performance
     of the Obligations or otherwise.

     Each Borrower further agrees that its obligations hereunder shall continue
     to be effective or be reinstated, as the case may be, if at any time
     payment, or any part thereof, of any Obligation is rescinded or must
     otherwise be restored by Lender upon the bankruptcy or reorganization of
     any Borrower or otherwise.

     In furtherance of the foregoing and not in limitation of any other right
     which Lender may have at law or in equity against any Borrower by virtue
     hereof, upon the failure of any Borrower to pay any Obligation when and as
     the same shall become due, whether at maturity, by acceleration, after
     notice of prepayment or otherwise, each Borrower hereby promises to and
     will, upon receipt of written demand by the Lender, forthwith pay, or cause
     to be paid, to the Lender in cash an amount equal the unpaid principal
     amount of such Obligation.

     Upon payment by any Borrower of any sums as provided above, all rights of
     any Borrower against any other Borrower arising as a result thereof by way
     of right of subrogation or otherwise shall in all respects be subordinated
     and junior in right of payment to the prior indefeasible payment in full of
     all the Obligations owed by such Borrower to the Lender.

 11. MISCELLANEOUS PROVISIONS.
     Additional Actions and Documents
     . Borrower shall take or cause to be taken such further actions, shall
     execute, deliver and file or cause to be executed, delivered and filed such
     further documents and instruments, and shall obtain such consents as may be
     necessary or as the Lender may reasonably request in order fully to
     effectuate the purposes, terms and conditions of this Agreement and the
     other Loan Documents, whether before, at or after the closing of
     transactions contemplated hereby and thereby or the occurrence of an Event
     of Default hereunder, including without limitation, executing such
     documents and taking such further actions as requested by Lender to
     evidence or perfect the security interest(s) granted in accordance with
     this Agreement, to maintain a first priority security interest in the
     Collateral for the benefit of Lender, or to effectuate the rights of Lender
     hereunder.
     Expenses
     . Borrower shall, whether or not the transactions contemplated hereby are
     consummated, (i) reimburse the Lender and save the Lender harmless against
     liability for the payment of all out-of-pocket expenses arising in
     connection with: (a) the preparation, execution, delivery or filing of this
     Agreement or any of the Loan Documents; or (b) the administration, defense
     or enforcement of this Agreement or any of the Loan Documents; or (c) the
     preservation or exercise of any rights (including the right to collect and
     dispose of the Collateral) under this Agreement or any of the other Loan
     Documents; and (ii) pay and hold the Lender and each subsequent holder of
     the Revolving Note harmless from and against, any and all present and
     future stamp taxes or similar document taxes or recording taxes and any and
     all charges with respect to or resulting from any delay in paying, or
     failure to pay, such taxes. Without limiting the generality of the
     foregoing, the expenses covered by this paragraph include the Lender's
     legal fees, the costs of audits or examinations conducted by the Lender's
     employees and any arbitration fees or court costs.
     Notices
     . Except as may otherwise be provide herein, all notices, demands, requests
     or other communications provided for herein or in the other Loan Documents
     shall be in writing and shall be deemed to be effective one (1) day after
     dispatch if sent by Federal Express or any other commercially recognized
     overnight delivery service or two (2) days after dispatch if sent by
     registered or certified mail, return receipt requested and addressed as
     follows:
     
     If to Borrower:
     
     Varsity Group Inc.
     2677 Prosperity Avenue
     Fairfax, VA 22031
     
     If to Lender:
     
     VGI Financial Corp.
     2233 West Street
     River Grove, Illinois 60171-1895
     Attention: Dennis McMahon, General Counsel
     
     With copy to:
     
     Brooks B. Gruemmer, Esq.
     McDermott Will & Emery LLP
     227 West Monroe Street
     Chicago, IL 60606
     
     If the Borrower comprises more than one Person, notice to the Borrower at
     the address specified above in this section for Varsity Group Inc. shall
     constitute notice to all such Persons, and each Person signing below as the
     Borrower hereby irrevocably appoints Varsity Group Inc. as that Person's
     agent to receive notices from the Lender under this Agreement or the other
     Loan Documents.
     
     Each party may designate by notice in writing a new address to which any
     notice, demand, request or communication thereafter may be so given, served
     or sent. Each notice, demand, request or communication which is mailed,
     delivered or transmitted in the manner described above shall be deemed
     sufficiently given, served, sent or received for all purposes at such time
     as it is delivered: (i) to the United States Postal Service, in the case of
     a notice given by certified mail; (ii) to Federal Express or any other
     commercially recognized overnight delivery service, in accordance with the
     terms and procedures for such delivery.
     
     Any notices required under the Uniform Commercial Code with respect to the
     sale or other disposition of the Collateral shall be deemed reasonable if
     mailed by the Lender to the Persons entitled thereto at their last known
     address at least ten (10) days prior to disposition of the Collateral and,
     in the case of a private sale of Collateral, need state only that the
     Lender intends to negotiate such a sale.
     
     Severability
     . If fulfillment of any provision of the Loan Documents or performance of
     any transaction related thereto, at the time such fulfillment or
     performance shall be due, shall involve transcending the limit of validity
     prescribed by law, then the obligation to be fulfilled or performed shall
     be reduced to the limit of such validity; and if any clause or provision
     contained in any Loan Document operates or would operate prospectively to
     invalidate any Loan Document, in whole or in part, then such clause or
     provision only shall be held ineffective, as though not herein or therein
     contained, and the remainder of the Loan Documents shall remain operative
     and in full force and effect.
     Survival
     . It is the express intention and agreement of the parties hereto that all
     covenants, agreements, statements, representations, warranties and
     indemnities made by Borrower in the Loan Documents shall survive the
     execution and delivery of the Loan Documents and the making of all Advances
     and extensions of credit thereunder.
     Waivers
     . No waiver by the Lender of, or consent by the Lender to, a variation from
     the requirements of any provision of the Loan Documents shall be effective
     unless made in a written instrument duly executed on behalf of the Lender
     by its duly authorized officer, and any such waiver shall be limited solely
     to those rights or conditions expressly waived.
     Rights Cumulative
     . The rights and remedies of the Lender described in any of the Loan
     Documents are cumulative and not exclusive of any other rights or remedies
     which the Lender or the then holder of the Revolving Note otherwise would
     have at law or in equity or otherwise. No notice to or demand on Borrower
     in any case shall entitle Borrower to any other notice or demand in similar
     or other circumstances.
     Entire Agreement; Modification; Benefit
     . This Agreement, the Schedules hereto, and the other Loan Documents
     constitute the entire agreement of the parties hereto with respect to the
     matters contemplated herein, supersede all prior oral and written
     agreements with respect to the matters contemplated herein, and may not be
     modified, deleted or amended except by written instrument executed by the
     parties. All terms of this Agreement and of the other Loan Documents shall
     be binding upon, and shall inure to the benefit of and be enforceable by,
     the parties hereto and their respective successors and assigns; however,
     Borrower may not assign or transfer any of its rights or obligations
     hereunder without the prior written consent of the Lender. In the event of
     any conflict between the terms of this Agreement and the terms of the other
     Loan Documents, the terms of this Agreement shall control.
     Setoff
     . In addition to any rights or remedies of the Lender provided by law, upon
     the occurrence of any Event of Default hereunder, or any event or
     circumstance which, with the giving of notice or the passage of time or
     both, would constitute an Event of Default hereunder, the Lender is
     irrevocably authorized, at any time or times without prior notice to
     Borrower, to set off, appropriate and apply any and all deposits, credits,
     indebtedness or claims at any time held or owing by the Lender to or for
     the credit or the account of Borrower, in such amounts as the Lender may
     elect, against and on account of the obligations and liabilities of
     Borrower to the Lender hereunder or under any of the other Loan Documents,
     whether or not the Lender has made any demand for payment, and although
     such obligations and liabilities may be contingent or unmatured.
     Construction
     . This Agreement and the other Loan Documents, the rights and obligations
     of the parties hereto, and any claims or disputes relating thereto shall be
     governed by and construed in accordance with the laws of the State of
     Maryland (excluding the choice of law rules thereof) except to the extent
     that the UCC provides for either (a) the application of the laws of the
     state in which Borrower maintains its chief executive office, (b) the
     application of the laws of the state in which the collateral is located,
     (c) the application of the laws of the state in which the Debtor is located
     as determined under the UCC, or (d) otherwise mandates the application of
     the laws of another state or jurisdiction. Each party hereto hereby
     acknowledges that all parties hereto participated equally in the
     negotiation and drafting of this Agreement and that, accordingly, no court
     construing this Agreement shall construe it more stringently against one
     party than against the other.
     Pronouns
     . All pronouns and any variations thereof shall be deemed to refer to the
     masculine, feminine, neuter, singular or plural, as the identity of the
     Person may require.
     Headings
     . Article, section and subsection headings contained in this Agreement are
     inserted for convenience of reference only, shall not be deemed to be a
     part of this Agreement for any purpose, and shall not in any way define or
     affect the meaning, construction or scope of any of the provisions hereof.
     Payments
     . If any payment or performance of any of the obligations under this
     Agreement or any of the other Loan Documents becomes due on a day other
     than a Business Day, the due date shall be extended to the next succeeding
     Business Day, and interest thereon (if applicable) shall be payable at the
     then applicable rate during such extension.
     Execution
     . To facilitate execution, this Agreement and any of the other Loan
     Documents may be executed in as many counterparts as may be required; and
     it shall not be necessary that the signature of, or on behalf of, each
     party, or the signatures of all Persons required to bind any party, appear
     on each counterpart; but it shall be sufficient that the signature of, or
     on behalf of, each party, or the signatures of the Persons required to bind
     any party, appear on one or more of the counterparts. All counterparts
     shall collectively constitute a single agreement. It shall not be necessary
     in making proof of this Agreement or any other Loan Document to produce or
     account for any particular number of counterparts; but rather any number of
     counterparts shall be sufficient so long as those counterparts contain the
     respective signatures of, or on behalf of, all of the parties hereto.
     Consent to Jurisdiction
     . Subject to any provision of this Agreement requiring that disputes be
     submitted to arbitration, the Borrower irrevocably consents to the
     jurisdiction of any state or federal court sitting in the State of Illinois
     over any suit, action, or proceeding arising out of or relating to this
     Agreement or the other Loan Documents. The Borrower irrevocably waives, to
     the fullest extent permitted by law, any objection that the Borrower may
     now or hereafter have to the laying of venue of any such suit, action, or
     proceeding brought in any such court, or any claim that any such suit,
     action, or proceeding brought in any such court has been brought in an
     inconvenient forum. Final judgment in any such suit, action, or proceeding
     brought in any such court shall be conclusive and binding upon the
     Borrower.
     Service of Process
     . The Borrower consents to process being served in any suit, action or
     proceeding by mailing a copy thereof by registered or certified mail
     postage prepaid, return receipt requested, to the Borrower's address
     specified in or designated in this Agreement. The Borrower agrees that such
     service (i) shall be deemed in every respect effective service of process
     upon the Borrower in any such suit, action or proceeding and (ii) shall, to
     the fullest extent permitted by law, be taken and held to be valid personal
     service upon and personal delivery to the Borrower. Nothing in this Section
     shall affect the right of the Lender to serve process in any manner
     permitted by law, or limit any right that the Lender may have to bring
     proceedings against the Borrower in the courts of any jurisdiction or to
     enforce in any lawful manner a judgment obtained in one jurisdiction in any
     other jurisdiction.
     Sale of Loan Documents; Disclosure of Information
     . Borrower hereby consents to and agrees that Lender may disclose to any
     Person any and all information connected with or related to the Loan or
     other Loan Documents for the purpose of selling or assigning any rights of
     Lender in the Loan Documents. The information which may be disclosed by
     Lender includes but is not limited to all Loan Documents, credit files and
     correspondence files and all other writings and oral communications which
     Lender wishes to disclose, in its sole and absolute discretion. Borrower
     also hereby consents to and agrees that Lender may sell or assign any
     rights of Lender in any or all of the Loan Documents pursuant to such terms
     and conditions as may be acceptable to Lender in its sole and absolute
     discretion, to any interested Person, and nothing in this Agreement or the
     other Loan Documents shall prevent, delay or otherwise impede or effect the
     right of Lender to immediately sell or assign any rights of Lender in the
     Loan Documents on such terms as it deems acceptable.
     Jurisdiction; Consent to Service of Process
     .
      a. The Borrower hereby irrevocably and unconditionally submits, for itself
         and its property, to the nonexclusive jurisdiction of the courts of the
         State of Illinois sitting in Chicago and of the United States District
         Court of the Northern District of Illinois, and any appellate court
         from any thereof, in any action or proceeding arising out of or
         relating to this Agreement, or for recognition or enforcement of any
         judgment, and each of the parties hereto hereby irrevocably and
         unconditionally agrees that all claims in respect of any such action or
         proceeding may be heard and determined in such Illinois State or, to
         the extent permitted by law, in such Federal court. Each of the parties
         hereto agrees that a final judgment in any such action or proceeding
         shall be conclusive and may be enforced in other jurisdictions by suit
         on the judgment or in any other manner provided by law. Nothing in this
         Agreement shall affect any right that the Lender may otherwise have to
         bring any action or proceeding relating to this Agreement against the
         Borrower or its properties in the courts of any jurisdiction.
      b. The Borrower hereby irrevocably and unconditionally waives, to the
         fullest extent it may legally and effectively do so, any objection
         which it may now or hereafter have to the laying of venue of any suit,
         action or proceeding arising out of or relating to this Agreement in
         any court referred to in Section 11.18(a). Each of the parties hereto
         hereby irrevocably waives, to the fullest extent permitted by law, the
         defense of an inconvenient forum to the maintenance of such action or
         proceeding in any such court.
      c. Each party to this Agreement irrevocably consents to service of process
         in the manner provided for notices in Section 11.3. Nothing in this
         Agreement will affect the right of any party to this Agreement to serve
         process in any other manner permitted by law.
     
     WAIVER OF JURY TRIAL
     . EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
     APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
     PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
     AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
     CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT
     NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
     EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
     LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
     IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
     AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
     THIS SECTION.
     Releases
     .
      a. Upon full and complete satisfaction of all obligations of Borrower
         under this Agreement (other than contingent or indemnification
         obligations not then due which are to survive termination of the
         Agreement), including without limitation, full payment of all amounts
         owing under this Agreement and the other Loan Documents, and provided
         Lender has no further obligations under this Agreement to make any
         further Advance hereunder or under the other Loan Documents, this
         Agreement shall expire and all obligations under this Agreement (other
         than those which expressly survive the termination of this Agreement)
         shall terminate. Upon written request of Borrower, confirmation by
         Lender of the termination of this Agreement will be provided by Lender
         to Borrower following the termination of the Agreement, all at the sole
         cost and expense of Borrower.
      b. If any of the Collateral shall be sold, transferred or otherwise
         disposed of by Campus Outfitters Group, LLC in a transaction permitted
         by this Agreement, then the Lender, at the request and sole expense of
         Borrower, shall execute and deliver to Borrower all releases or other
         documents reasonably necessary or desirable for the release of the
         Liens created hereby on such Collateral. At the request and sole
         expense of Borrower, Campus Outfitters Group, LLC shall be released
         from its obligations hereunder in the event that all the Equity
         Interests of Campus Outfitters Group, LLC shall be sold, transferred or
         otherwise disposed of in a transaction permitted by this Agreement.

 12. NO NOVATION OF EXISTING LOAN AGREEMENT
      1. No Novation of Existing Loan Agreement. It is the intent of the parties
         hereto that, from and after the Effective Date, this Agreement (i)
         shall re-evidence, in part, the Borrower's obligations and indebtedness
         under the Existing Loan Agreement, (ii) is entered into in substitution
         for, and not in payment of, the obligations and indebtedness of the
         Borrower under the Existing Loan Agreement, and (iii) is in no way
         intended to constitute a novation of any of the Borrower's obligations
         and indebtedness which were evidenced by the Existing Loan Agreement or
         any of the other Loan Documents (including any fee letters or Notes
         delivered in connection therewith). All Advances made and obligations
         incurred under the Existing Loan Agreement which are outstanding on the
         Effective Date shall continue as Loans and obligations under (and shall
         be governed by the terms of) this Agreement. All references herein to
         "hereunder," "hereof," or words of like import and all references in
         any other Loan Document to the "Loan Agreement" or words of like import
         shall mean and be a reference to the Existing Loan Agreement as amended
         and restated hereby (and any section references in such Loan Documents
         to the Existing Loan Agreement shall refer to the applicable equivalent
         provision set forth herein although the section number thereof may have
         changed).

(Signatures and Notary Acknowledgments on following pages)

IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or have
caused this Agreement to be duly executed on their behalf, as of the day and
year first hereinabove set forth.

VARSITY GROUP INC., a Delaware corporation

By: /s/ James Craig
Name: James Craig
Title: President, CEO, CFO

CAMPUS OUTFITTERS GROUP, LLC, a Delaware limited liability company

By: Varsity Group Inc., a Delaware corporation, as its sole member

By: /s/ James Craig
Name: James Craig
Title: President, CEO, CFO

VARSITYBOOKS.COM, LLC, a Delaware limited liability company

By: Varsity Group Inc., a Delaware corporation, as its sole member

By: /s/ James Craig
Name: James Craig
Title: President, CEO, CFO

COLLEGEIMPACT.COM, INC., a Delaware corporation

By: /s/ James Craig
Name: James Craig
Title: President, CEO, CFO

VGI FINANCIAL CORP.

By: /s/ Kathryn Stanton
Name: Kathryn Stanton
Title: President