Document:

Exhibit 4.1

    
      

    

    Exhibit
      4.1

     

    

    INTERNAP
      NETWORK SERVICES CORPORATION

     

    and
      

    

    AMERICAN
      STOCK TRANSFER AND TRUST COMPANY,

     

    as
      Rights Agent

    

    

     

    PREFERRED
      STOCK RIGHTS AGREEMENT

    

     

    Dated
      as of April 11, 2007

    

     

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

    

    EXHIBITS
      

     

    
      	
              Exhibit
                A

            	
                

            	
              Form
                of Certificate of Designation

            	
                

            	
               

            
	 	 	 	 	 
	
              Exhibit
                B

            	 	
              Form
                of Rights Certificate

            	 	 
	 	 	 	 	 
	
              Exhibit
                C

            	
                

            	
              Summary
                of Rights

            	
                

            	
               

            

    

    

    

    

    

    

    
      

      
        
          
            
            

          

          
            i

            
              

            

          

          
            
            

          

           

        

      

    

    PREFERRED
      STOCK RIGHTS AGREEMENT

    

    This
      Preferred Stock Rights Agreement is dated as of April 11, 2007 (this
“Agreement”),
      between Internap Network Services Corporation, a Delaware corporation (the
      “Company”),
      and
      American Stock Transfer and Trust Company, as Rights Agent (the “Rights
      Agent”).

    

    On
      March
      15, 2007 (the “Rights
      Dividend Declaration Date”),
      the
      Board of Directors of the Company authorized and declared a dividend of one
      Preferred Share Purchase Right (a“Right”)
      for
      each Common Share (as hereinafter defined) of the Company outstanding as of
      the
      Close of Business (as hereinafter defined) on March 23, 2007 (the “Record
      Date”),
      each
      Right representing the right to purchase one one-thousandth (0.001) of a share
      of Series B Preferred Stock (as such number may be adjusted pursuant to the
      provisions of this Agreement), having the rights, preferences and privileges
      set
      forth in the form of Certificate of Designation of Rights, Preferences and
      Privileges of Series B Preferred Stock attached hereto as Exhibit
      A,
      upon
      the terms and subject to the conditions herein set forth, and further authorized
      and directed the issuance of one Right (as such number may be adjusted pursuant
      to the provisions of this Agreement) with respect to each Common Share that
      shall become outstanding between the Record Date and the earlier of the
      Distribution Date and the Expiration Date (as such terms are hereinafter
      defined), and in certain circumstances after the Distribution Date.

    

    NOW,
      THEREFORE, in consideration of the promises and the mutual agreements herein
      set
      forth, the parties hereby agree as follows:

    

    Section
      1.    Certain
      Definitions.    For
      purposes of this Agreement, the following terms have the meanings
      indicated:

    

    (a)    “Acquiring
      Person”
      shall
      mean any Person, who or which, together with all Affiliates and Associates
      of
      such Person, shall be the Beneficial Owner of 15% or more of the Common Shares
      then outstanding, but shall not include the Company, any Subsidiary of the
      Company or any employee benefit plan of the Company or of any Subsidiary of
      the
      Company, or any entity holding Common Shares for or pursuant to the terms of
      any
      such plan. Notwithstanding the foregoing, no Person shall be deemed to be an
      Acquiring Person as the result of an acquisition of Common Shares by the Company
      which, by reducing the number of shares outstanding, increases the proportionate
      number of shares beneficially owned by such Person to 15% or more of the Common
      Shares of the Company then outstanding; provided,
      however,
      that if
      a Person shall become the Beneficial Owner of 15% or more of the Common Shares
      of the Company then outstanding by reason of share purchases by the Company
      and
      shall, after such share purchases by the Company, become the Beneficial Owner
      of
      any additional Common Shares of the Company (other than pursuant to a dividend
      or distribution paid or made by the Company on the outstanding Common Shares
      in
      Common Shares or pursuant to a split or subdivision of the outstanding Common
      Shares), then such Person shall be deemed to be an Acquiring Person unless
      upon
      becoming the Beneficial Owner of such additional Common Shares of the Company
      such Person does not beneficially own 15% or more of the Common Shares of the
      Company then outstanding. Notwithstanding the foregoing, if the Company’s Board
      of Directors determines in good faith that a Person who would otherwise be
      an
“Acquiring Person,” as defined pursuant to the foregoing provisions of this
      paragraph (a), has become such inadvertently (including, without limitation,
      because (A) such Person was unaware that it beneficially owned a percentage
      of
      the Common Shares that would otherwise cause such Person to be an “Acquiring
      Person,” as defined pursuant to the foregoing provisions of this paragraph (a),
      or (B) such Person was aware of the extent of the Common Shares it beneficially
      owned but had no actual knowledge of the consequences of such beneficial
      ownership under this Agreement) and without any intention of changing or
      influencing control of the Company, and if such Person divested or divests
      as
      promptly as practicable a sufficient number of Common Shares so that such Person
      would no longer be an “Acquiring Person,” as defined pursuant to the foregoing
      provisions of this paragraph (a), then such Person shall not be deemed to be
      or
      to have become an “Acquiring Person” for any purposes of this Agreement
      including, without limitation Section 1(ii) hereof.

    
      

      
        
          
            
            

          

          
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    (b)    “Adjustment
      Fraction”
      shall
      have the meaning set forth in Section 11(a)(i) hereof.

    

    (c)    “Affiliate”
      and
“Associate”
      shall
      have the respective meanings ascribed to such terms in Rule 12b-2 of the General
      Rules and Regulations under the Exchange Act, as in effect on the date of this
      Agreement.

    

    (d)    A
      Person shall be deemed the “Beneficial
      Owner”
      of and
      shall be deemed to “beneficially
      own”
      any
      securities:

    

    (i)    which
      such Person or any of such Person’s Affiliates or Associates beneficially owns,
      directly or indirectly, for purposes of Section 13(d) of the Exchange Act and
      Rule 13d-3 thereunder (or any comparable or successor law or
      regulation);

    

    (ii)    which
      such Person or any of such Person’s Affiliates or Associates has (A) the right
      to acquire (whether such right is exercisable immediately or only after the
      passage of time) pursuant to any agreement, arrangement or understanding,
      whether or not in writing, (other than customary agreements with and between
      underwriters and selling group members with respect to a bona fide public
      offering of securities), or upon the exercise of conversion rights, exchange
      rights, rights (other than the Rights), warrants or options, or otherwise;
      provided,
      however,
      that a
      Person shall not be deemed pursuant to this Section 1(d)(ii)(A) to be the
      Beneficial Owner of, or to beneficially own, (1) securities tendered pursuant
      to
      a tender or exchange offer made by or on behalf of such Person or any of such
      Person’s Affiliates or Associates until such tendered securities are accepted
      for purchase or exchange, or (2) securities which a Person or any of such
      Person’s Affiliates or Associates may be deemed to have the right to acquire
      pursuant to any merger or other acquisition agreement between the Company and
      such Person (or one or more of its Affiliates or Associates) if such agreement
      has been approved by the Board of Directors of the Company prior to there being
      an Acquiring Person; or (B) the right to vote pursuant to any agreement,
      arrangement or understanding, whether or not in writing; provided,
      however,
      that a
      Person shall not be deemed the Beneficial Owner of, or to beneficially own,
      any
      security under this Section 1(d)(ii)(B) if the agreement, arrangement or
      understanding to vote such security (1) arises solely from a revocable proxy
      or
      consent given to such Person in response to a public proxy or consent
      solicitation made pursuant to, and in accordance with, the applicable rules
      and
      regulations of the Exchange Act and (2) is not also then reportable on Schedule
      13D under the Exchange Act (or any comparable or successor report);
      or

    

    (iii)    which
      are beneficially owned, directly or indirectly, by any other Person (or any
      Affiliate or Associate thereof) with which such Person or any of such Person’s
      Affiliates or Associates has any agreement, arrangement or understanding,
      whether or not in writing (other than customary agreements with and between
      underwriters and selling group members with respect to a bona fide public
      offering of securities) for the purpose of acquiring, holding, voting (except
      to
      the extent contemplated by the proviso to Section 1(d)(ii)(B)) or disposing
      of
      any securities of the Company; provided,
      however,
      that in
      no case shall an officer or director of the Company be deemed (x) the Beneficial
      Owner of any securities beneficially owned by another officer or director of
      the
      Company solely by reason of actions undertaken by such persons in their capacity
      as officers or directors of the Company or (y) the Beneficial Owner of
      securities held of record by the trustee of any employee benefit plan of the
      Company or any Subsidiary of the Company for the benefit of any employee of
      the
      Company or any Subsidiary of the Company, other than the officer or director,
      by
      reason of any influence that such officer or director may have over the voting
      of the securities held in the plan.

    
      

      
        
          
            
            

          

          
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    (e)    “Business
      Day”
      shall
      mean any day other than a Saturday, Sunday or a day on which banking
      institutions in New York are authorized or obligated by law or executive order
      to close.

    

    (f)    “Close
      of Business”
      on any
      given date shall mean 5:00 P.M., New York time, on such date; provided,
      however,
      that if
      such date is not a Business Day it shall mean 5:00 P.M., New York time, on
      the
      next succeeding Business Day.

    

    (g)    “Common
      Stock Equivalents”
      shall
      have the meaning set forth in Section 11(a)(iii) hereof.

    

    (h)    “Common
      Shares”
      when
      used with reference to the Company shall mean the shares of Common Stock of
      the
      Company, par value at $0.001 per share. Common Shares when used with reference
      to any Person other than the Company shall mean the capital stock (or equity
      interest) with the greatest voting power of such other Person or, if such other
      Person is a Subsidiary of another Person, the Person or Persons which ultimately
      control such first-mentioned Person.

    

    (i)    “Company”
      shall
      mean Internap Network Services Corporation, a Delaware corporation, subject
      to
      the terms of Section 13(a)(iii)(C) hereof.

    

    (j)    “Current
      Per Share Market Price”
      of any
      security (a “Security” for purposes of this definition), for all computations
      other than those made pursuant to Section 11(a)(iii) hereof, shall mean the
      average of the daily closing prices per share of such Security for the thirty
      (30) consecutive Trading Days immediately prior to such date, and for purposes
      of computations made pursuant to Section 11(a)(iii) hereof, the Current Per
      Share Market Price of any Security on any date shall be deemed to be the average
      of the daily closing prices per share of such Security for the ten (10)
      consecutive Trading Days immediately prior to such date; provided,
      however,
      that in
      the event that the Current Per Share Market Price of the Security is determined
      during a period following the announcement by the issuer of such Security of
      (i)
      a dividend or distribution on such Security payable in shares of such Security
      or securities convertible into such shares or (ii) any subdivision, combination
      or reclassification of such Security, and prior to the expiration of the
      applicable thirty (30) Trading Day or ten (10) Trading Day period, after the
      ex-dividend date for such dividend or distribution, or the record date for
      such
      subdivision, combination or reclassification, then, and in each such case,
      the
      Current Per Share Market Price shall be appropriately adjusted to reflect the
      current market price per share equivalent of such Security. The closing price
      for each day shall be the last sale price, regular way, or, in case no such
      sale
      takes place on such day, the average of the closing bid and asked prices,
      regular way, in either case as reported in the principal consolidated
      transaction reporting system with respect to securities listed or admitted
      to
      trading on the New York Stock Exchange or Nasdaq or, if the Security is not
      listed or admitted to trading on the New York Stock Exchange or Nasdaq, as
      reported in the principal consolidated transaction reporting system with respect
      to securities listed on the principal national securities exchange on which
      the
      Security is listed or admitted to trading or, if the Security is not listed
      or
      admitted to trading on any national securities exchange, the average of the
      closing bid and asked prices as furnished by a professional market maker making
      a market in the Security selected by the Board of Directors of the Company.
      If
      on any such date no market maker is making a market in the Security, the fair
      value of such shares on such date as determined in good faith by the Board
      of
      Directors of the Company shall be used, whose determination shall be conclusive
      for all purposes. If the Preferred Shares are not publicly traded, the Current
      Per Share Market Price of the Preferred Shares shall be conclusively deemed
      to
      be (x) the Current Per Share Market Price of the Common Shares as determined
      pursuant to this Section 1(j), as appropriately adjusted to reflect any stock
      split, stock dividend or similar transaction occurring after the date hereof,
      multiplied by (y) 1,000. If the Security is not publicly held or so listed
      or
      traded, Current Per Share Market Price shall mean the fair value per share
      as
      determined in good faith by the Board of Directors of the Company, whose
      determination shall be described in a statement filed with the Rights Agent
      and
      shall be conclusive for all purposes.

    
      

      
        
          
            
            

          

          
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    (k)    “Current
      Value”
      shall
      have the meaning set forth in Section 11(a)(iii) hereof.

    

    (l)    “Distribution
      Date”
      shall
      mean the earlier of (i) the Close of Business on the tenth (10th) day (or such
      later date as may be determined by action of the Company’s Board of Directors)
      after the Shares Acquisition Date (or, if the tenth (10th) day after the Shares
      Acquisition Date occurs before the Record Date, the Close of Business on the
      Record Date) or (ii) the Close of Business on the tenth (10th) Business Day
      (or
      such later date as may be determined by action of the Company’s Board of
      Directors) after the date that a tender or exchange offer by any Person (other
      than the Company, any Subsidiary of the Company, any employee benefit plan
      of
      the Company or of any Subsidiary of the Company, or any Person or entity
      organized, appointed or established by the Company for or pursuant to the terms
      of any such plan) is first published or sent or given within the meaning of
      Rule
      14d-2(a) of the General Rules and Regulations under the Exchange Act, if,
      assuming the successful consummation thereof, such Person would be an Acquiring
      Person.

    

    (m)    “Equivalent
      Shares”
      shall
      mean Preferred Shares and any other class or series of capital stock of the
      Company which is entitled to the same rights, privileges and preferences as
      the
      Preferred Shares.

    

    (n)    “Exchange
      Act”
      shall
      mean the Securities Exchange Act of 1934, as amended.

    

    (o)    “Exchange
      Ratio”
      shall
      have the meaning set forth in Section 24(a) hereof.

    

    (p)    “Exercise
      Price”
      shall
      have the meaning set forth in Section 4(a) hereof.

    

    (q)    “Expiration
      Date”
      shall
      mean the earliest to occur of: (i) the Close of Business on the Final Expiration
      Date, (ii) the Redemption Date, or (iii) the time at which the Company’s Board
      of Directors orders the exchange of the Rights as provided in Section 24
      hereof.

    

    (r)    “Final
      Expiration Date”
      shall
      mean the Close of Business on March 23, 2017.

    

    (s)    “Nasdaq”
      shall
      mean The Nasdaq Stock Market, Inc.

     

    (t)    “Person”
      shall
      mean any individual, firm, corporation, limited liability company, partnership,
      trust, association, company or any other entity, and shall include any successor
      (by merger or otherwise) of such entity.

    

    (u)    “Post-Event
      Transferee”
      shall
      have the meaning set forth in Section 7(e) hereof.

    

    (v)    “Preferred
      Shares”
      shall
      mean shares of Series B Preferred Stock, par value $0.001 per share, of the
      Company.

    

    (w)    “Pre-Event
      Transferee”
      shall
      have the meaning set forth in Section 7(e) hereof.

    

    (x)    “Principal
      Party”
      shall
      have the meaning set forth in Section 13(b) hereof.

    

    (y)    “Record
      Date”
      shall
      have the meaning set forth in the recitals at the beginning of this
      Agreement.

    
      

      
        
          
            
            

          

          
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    (z)    “Redemption
      Date”
      shall
      have the meaning set forth in Section 23(a) hereof.

    

    (aa)    “Redemption
      Price”
      shall
      have the meaning set forth in Section 23(a) hereof.

    

    (bb)    “Rights
      Agent”
      shall
      mean (i) American Stock Transfer and Trust Company, (ii) its successor or
      replacement as provided in Sections 19 and 21 hereof, and (iii) any co-Rights
      Agent appointed pursuant to Section 2 hereof.

    

    (cc)    “Rights
      Certificate”
      shall
      mean a certificate substantially in the form attached hereto as Exhibit
      B.

    

    (dd)    “Rights
      Dividend Declaration Date”
      shall
      have the meaning set forth in the recitals at the beginning of this
      Agreement.

    

    (ee)    “Section
      11(a)(ii) Event”
      shall
      mean any event described in Section 11(a)(ii) hereof.

    

    (ff)    “Section
      11(a)(ii) Trigger Date”
      shall
      have the meaning set forth in Section 11(a)(iii) hereof.

    

    (gg)    “Section
      13 Event”
      shall
      mean any event described in clause (i), (ii) or (iii) of Section 13(a)
      hereof.

    

    (hh)    “Securities
      Act”
      shall
      mean the Securities Act of 1933, as amended.

    

    (ii)    “Shares
      Acquisition Date”
      shall
      mean the first date of public announcement (which, for purposes of this
      definition, shall include, without limitation, a report filed pursuant to
      Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that
      an
      Acquiring Person has become such; provided
      that,
      if such
      Person is determined not to have become an Acquiring Person pursuant to Section
      1(a) hereof, then no Shares Acquisition Date shall be deemed to have occurred
      by
      virtue of such event and no Distribution Date shall be deemed to have occurred
      by virtue of such event.

    

    (jj)    “Spread”
      shall
      have the meaning set forth in Section 11(a)(iii) hereof.

    

    (kk)    “Subsidiary”
      of any
      Person shall mean any corporation or other entity of which an amount of voting
      securities sufficient to elect a majority of the directors or Persons having
      similar authority of such corporation or other entity is beneficially owned,
      directly or indirectly, by such Person, or any corporation or other entity
      otherwise controlled by such Person.

    

    (ll)    “Substitution
      Period”
      shall
      have the meaning set forth in Section 11(a)(iii) hereof.

    

    (mm)    “Summary
      of Rights”
      shall
      mean a summary of this Agreement substantially in the form attached hereto
      as
Exhibit
      C.

    

    (nn)    “Total
      Exercise Price”
      shall
      have the meaning set forth in Section 4(a) hereof.

    

    (oo)    “Trading
      Day”
      shall
      mean a day on which the principal national securities exchange on which a
      referenced security is listed or admitted to trading is open for the transaction
      of business or, if a referenced security is not listed or admitted to trading
      on
      any national securities exchange, a Business Day.

    
      

      
        
          
            
            

          

          
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    (pp)    “Triggering
      Event”
      shall
      mean any Section 11(a)(ii) Event or any Section 13 Event.

    

    Section
      2.    Appointment
      of Rights Agent.    The
      Company hereby appoints the Rights Agent to act as agent for the Company in
      accordance with the terms and conditions hereof, and the Rights Agent hereby
      accepts such appointment. The Company may from time to time appoint such
      co-Rights Agents as it may deem necessary or desirable, upon ten (10) days’
prior written notice to the Rights Agent.

    

    Section
      3.    Issuance
      of Rights Certificates.

    

    (a)    Until
      the Distribution Date, (i) the Rights will be evidenced (subject to the
      provisions of Sections 3(b) and 3(c) hereof) by the certificates for Common
      Shares registered in the names of the holders thereof (which certificates shall
      also be deemed to be Rights Certificates) and not by separate Rights
      Certificates and (ii) the right to receive Rights Certificates will be
      transferable only in connection with the transfer of Common Shares. Until the
      earlier of the Distribution Date or the Expiration Date, the surrender for
      transfer of certificates for Common Shares shall also constitute the surrender
      for transfer of the Rights associated with the Common Shares represented
      thereby. As soon as practicable after the Distribution Date, the Company will
      prepare and execute, the Rights Agent will countersign, and the Company will
      send or cause to be sent (and the Rights Agent will, if requested, send) by
      first-class, postage-prepaid mail, to each record holder of Common Shares as
      of
      the Close of Business on the Distribution Date, at the address of such holder
      shown on the records of the Company, a Rights Certificate evidencing one Right
      for each Common Share so held, subject to adjustment as provided herein. In
      the
      event that an adjustment in the number of Rights per Common Share has been
      made
      pursuant to Section 11 hereof, then at the time of distribution of the Rights
      Certificates, the Company shall make the necessary and appropriate rounding
      adjustments (in accordance with Section 14(a) hereof) so that Rights
      Certificates representing only whole numbers of Rights are distributed and
      cash
      is paid in lieu of any fractional Rights (in accordance with Section 14(a)
      hereof). As of the Distribution Date, the Rights will be evidenced solely by
      such Rights Certificates and may be transferred by the transfer of the Rights
      Certificates as permitted hereby, separately and apart from any transfer of
      Common Shares, and the holders of such Rights Certificates as listed in the
      records of the Company or any transfer agent or registrar for the Rights shall
      be the record holders thereof.

    

    (b)    On
      the Record Date or as soon as practicable thereafter, the Company will send
      a
      copy of the Summary of Rights by first-class, postage-prepaid mail, to each
      record holder of Common Shares as of the Close of Business on the Record Date,
      at the address of such holder shown on the records of the Company’s transfer
      agent and registrar. With respect to certificates for Common Shares outstanding
      as of the Record Date, until the Distribution Date, the Rights will be evidenced
      by such certificates registered in the names of the holders thereof together
      with the Summary of Rights.

    

    (c)    Unless
      the Company’s Board of Directors by resolution adopted at or before the time of
      the issuance of any Common Shares after the Record Date but prior to the earlier
      of the Distribution Date or the Expiration Date (or, in certain circumstances
      provided in Section 22 hereof, after the Distribution Date) specifies to the
      contrary, Rights shall be issued in respect of all Common Shares that are so
      issued, and Certificates representing such Common Shares shall also be deemed
      to
      be certificates for Rights, and shall bear the following legend:

    

    THIS
      CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS
      AS
      SET FORTH IN A PREFERRED STOCK RIGHTS AGREEMENT BETWEEN INTERNAP NETWORK
      SERVICES CORPORATION AND AMERICAN STOCK TRANSFER AND TRUST COMPANY, AS THE
      RIGHTS AGENT, DATED AS OF APRIL 11, 2007 (THE “RIGHTS AGREEMENT”), THE TERMS OF
      WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON
      FILE
      AT THE PRINCIPAL EXECUTIVE OFFICES OF INTERNAP NETWORK SERVICES CORPORATION
      UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE 

    
      

      
        
          
            
            

          

          
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    RIGHTS
      AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL
      NO
      LONGER BE EVIDENCED BY THIS CERTIFICATE. THE COMPANY WILL MAIL TO THE HOLDER
      OF
      THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT
      OF
      A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS
      AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES
      AN
      ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE
      DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF
      SUCH
      PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.

    

    With
      respect to such certificates containing the foregoing legend, until the earlier
      of the Distribution Date or the Expiration Date, the Rights associated with
      the
      Common Shares represented by such certificates shall be evidenced by such
      certificates alone, and the surrender for transfer of any such certificate
      shall
      also constitute the transfer of the Rights associated with the Common Shares
      represented thereby. 

    

    (d)    In
      the event that the Company purchases or acquires any Common Shares after the
      Record Date but prior to the Distribution Date, any Rights associated with
      such
      Common Shares shall be deemed canceled and retired so that the Company shall
      not
      be entitled to exercise any Rights associated with the Common Shares that are
      no
      longer outstanding.

    

    Section
      4.    Form
      of Rights Certificates.

    

    (a)    The
      Rights Certificates (and the forms of election to purchase Preferred Shares
      and
      of assignment to be printed on the reverse thereof) shall be substantially
      in
      the form of Exhibit
      B
      hereto
      and may have such marks of identification or designation and such legends,
      summaries or endorsements printed thereon as the Company may deem appropriate,
      and which are not inconsistent with the provisions of this Agreement, or as
      may
      be required to comply with any applicable law or with any rule or regulation
      made pursuant thereto or with any rule or regulation of any stock exchange
      or a
      national market system, on which the Rights may from time to time be listed
      or
      included, or to conform to usage. Subject to the provisions of Section 11 and
      Section 22 hereof, the Rights Certificates, whenever distributed, shall be
      dated
      as of the Record Date (or in the case of Rights issued with respect to Common
      Shares issued by the Company after the Record Date, as of the date of issuance
      of such Common Shares) and on their face shall entitle the holders thereof
      to
      purchase such number of one-thousandths (0.001) of a Preferred Share as shall
      be
      set forth therein at the price set forth therein (such exercise price per one
      one-thousandth (0.001) of a Preferred Share being hereinafter referred to as
      the
“Exercise
      Price”
      and the
      aggregate Exercise Price of all Preferred Shares issuable upon exercise of
      one
      Right being hereinafter referred to as the“Total
      Exercise Price”),
      but
      the number and type of securities purchasable upon the exercise of each Right
      and the Exercise Price shall be subject to adjustment as provided
      herein.

    

    (b)    Any
      Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that
      represents Rights beneficially owned by: (i) an Acquiring Person or any
      Associate or Affiliate of an Acquiring Person, (ii) a Post-Event Transferee,
      (iii) a Pre-Event Transferee or (iv) any subsequent transferee receiving
      transferred Rights from a Post-Event Transferee or a Pre-Event Transferee,
      either directly or through one or more intermediate transferees, and any Rights
      Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
      exchange, replacement or adjustment of any other Rights Certificate referred
      to
      in this sentence, shall contain (to the extent feasible) the following
      legend:

    
      

      
        
          
            
            

          

          
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    THE
      RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED
      BY
      A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
      AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE PREFERRED STOCK RIGHTS
      AGREEMENT BETWEEN INTERNAP NETWORK SERVICES CORPORATION AND AMERICAN STOCK
      TRANSFER AND TRUST COMPANY, AS THE RIGHTS AGENT, DATED AS OF APRIL 11, 2007
      (THE
“RIGHTS AGREEMENT”)). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
      REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED
      IN
      SECTION 7(e) OF THE RIGHTS AGREEMENT.

    

    Section
      5.    Countersignature
      and Registration.

    

    (a)    The
      Rights Certificates shall be executed on behalf of the Company by its Chairman
      of the Board, its Chief Executive Officer, its Chief Financial Officer, its
      President, any Vice President or its Treasurer, either manually or by facsimile
      signature, and by the Secretary or an Assistant Secretary of the Company, either
      manually or by facsimile signature, and shall have affixed thereto the Company’s
      seal (if any) or a facsimile thereof. The Rights Certificates shall be manually
      countersigned by the Rights Agent and shall not be valid for any purpose unless
      countersigned. In case any officer of the Company who shall have signed any
      of
      the Rights Certificates shall cease to be such officer of the Company before
      countersignature by the Rights Agent and issuance and delivery by the Company,
      such Rights Certificates, nevertheless, may be countersigned by the Rights
      Agent
      and issued and delivered by the Company with the same force and effect as though
      the person who signed such Rights Certificates on behalf of the Company had
      not
      ceased to be such officer of the Company; and any Rights Certificate may be
      signed on behalf of the Company by any person who, at the actual date of the
      execution of such Rights Certificate, shall be a proper officer of the Company
      to sign such Rights Certificate, although at the date of the execution of this
      Agreement any such person was not such an officer.

    

    (b)    Following
      the Distribution Date, the Rights Agent will keep or cause to be kept, at its
      office designated for such purposes, books for registration and transfer of
      the
      Rights Certificates issued hereunder. Such books shall show the names and
      addresses of the respective holders of the Rights Certificates, the number
      of
      Rights evidenced on its face by each of the Rights Certificates and the date
      of
      each of the Rights Certificates.

    

    Section
      6.    Transfer,
      Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed,
      Lost or Stolen Rights Certificates.

    

    (a)    Subject
      to the provisions of Sections 7(e), 14 and 24 hereof, at any time after the
      Close of Business on the Distribution Date, and at or prior to the Close of
      Business on the Expiration Date, any Rights Certificate or Rights Certificates
      may be transferred, split up, combined or exchanged for another Rights
      Certificate or Rights Certificates, entitling the registered holder to purchase
      a like number of one-thousandths (0.001) of a Preferred Share (or, following
      a
      Triggering Event, other securities, cash or other assets, as the case may be)
      as
      the Rights Certificate or Rights Certificates surrendered then entitled such
      holder to purchase. Any registered holder desiring to transfer, split up,
      combine or exchange any Rights Certificate or Rights Certificates shall make
      such request in writing delivered to the Rights Agent, and shall surrender
      the
      Rights Certificate or Rights Certificates to be transferred, split up, combined
      or exchanged at the office of the Rights Agent designated for such purpose.
      Neither the Rights Agent nor the Company shall be obligated to take any action
      whatsoever with respect to the transfer of any such surrendered Rights
      Certificate until the registered holder shall have completed and signed the
      certificate contained in the form of assignment on the reverse side of such
      Rights Certificate and shall have provided such additional evidence of the
      identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
      or
      Associates thereof as the Company shall reasonably request. Thereupon the Rights
      Agent shall, subject to Sections 7(e), 14 and 24 hereof, countersign and deliver
      to the Person entitled thereto a Rights Certificate or Rights Certificates,
      as
      the case may be, as so requested. The Company may require payment from the
      registered holder of a sum sufficient to cover any tax or governmental charge
      that may be imposed in connection with any transfer, split up, combination
      or
      exchange of Rights Certificates. The Rights Agent shall have no duty or
      obligation under this Section unless and until it is satisfied that all such
      taxes and/or governmental charges have been paid.

    
      

      
        
          
            
            

          

          
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    (b)    Upon
      receipt by the Company and the Rights Agent of evidence reasonably satisfactory
      to them of the loss, theft, destruction or mutilation of a Rights Certificate,
      and, in case of loss, theft or destruction, of indemnity or security
      satisfactory to them, and, at the Company’s request, reimbursement to the
      Company and the Rights Agent of all reasonable expenses incidental thereto,
      and
      upon surrender to the Rights Agent and cancellation of the Rights Certificate
      if
      mutilated, the Company will make and deliver a new Rights Certificate of like
      tenor to the Rights Agent for countersignature and delivery to the registered
      holder in lieu of the Rights Certificate so lost, stolen, destroyed or
      mutilated.

    

    Section
      7.    Exercise
      of Rights; Exercise Price; Expiration Date of Rights.

    

    (a)    The
      registered holder of any Rights Certificate may exercise the Rights evidenced
      thereby (except as otherwise provided herein) in whole or in part at any time
      after the Distribution Date and prior to the Close of Business on the Expiration
      Date by surrender of the Rights Certificate, with the form of election to
      purchase on the reverse side thereof duly executed, to the Rights Agent at
      the
      office of the Rights Agent designated for such purpose, together with payment
      of
      the Exercise Price for each one-thousandth (0.001) of a Preferred Share (or,
      following a Triggering Event, other securities, cash or other assets as the
      case
      may be) as to which the Rights are exercised.

    

    (b)    The
      Exercise Price for each one-thousandth (0.001) of a Preferred Share issuable
      pursuant to the exercise of a Right shall initially be $100, shall be subject
      to
      adjustment from time to time as provided in Sections 11 and 13 hereof and shall
      be payable in lawful money of the United States of America in accordance with
      paragraph (c) below.

    

    (c)    Upon
      receipt of a Rights Certificate representing exercisable Rights, with the form
      of election to purchase duly executed, accompanied by payment of the Exercise
      Price for the number of one-thousandths (0.001) of a Preferred Share (or,
      following a Triggering Event, other securities, cash or other assets as the
      case
      may be) to be purchased and an amount equal to any applicable tax or
      governmental charge required to be paid by the holder of such Rights Certificate
      in accordance with Section 9(e) hereof, the Rights Agent shall, subject to
      Section 20(k) hereof, thereupon promptly (i) (A) requisition from any transfer
      agent of the Preferred Shares (or make available, if the Rights Agent is the
      transfer agent for the Preferred Shares) a certificate or certificates for
      the
      number of one-thousandths (0.001) of a Preferred Share (or, following a
      Triggering Event, other securities, cash or other assets as the case may be)
      to
      be purchased and the Company hereby irrevocably authorizes its transfer agent
      to
      comply with all such requests or (B) if the Company shall have elected to
      deposit the total number of one-thousandths (0.001) of a Preferred Share (or,
      following a Triggering Event, other securities, cash or other assets as the
      case
      may be) issuable upon exercise of the Rights hereunder with a depository agent,
      requisition from the depository agent depository receipts representing such
      number of one-thousandths (0.001) of a Preferred Share (or, following a
      Triggering Event, other securities, cash or other assets as the case may be)
      as
      are to be purchased (in which case certificates for the Preferred Shares (or,
      following a Triggering Event, other securities, cash or other assets as the
      case
      may be) represented by such receipts shall be deposited by the transfer agent
      with the depository agent) and the Company hereby directs the depository agent
      to comply with such request, (ii) when appropriate, requisition from the Company
      the amount of cash to be paid in lieu of issuance of fractional shares in
      accordance with Section 14 hereof, (iii) after receipt of such certificates
      or
      depository receipts, cause the same to be delivered to or upon the order of
      the
      registered holder of such Rights Certificate, registered in such name or names
      as may be designated by such holder and (iv) when appropriate, after receipt
      thereof, deliver such cash to or upon the order of the registered holder of
      such
      Rights Certificate. The payment of the Exercise Price (as such amount may be
      reduced (including to zero) pursuant to Section 11(a)(iii) hereof) and an amount
      equal to any applicable transfer tax required to be paid by the holder of such
      Rights Certificate in accordance with Section 9(e) hereof, may be made in cash
      or by certified bank check, cashier’s check or bank draft payable to the order
      of the Company. In the event that the Company is obligated to issue securities
      of the Company other than Preferred Shares, pay cash and/or distribute other
      property pursuant to Section 11(a) hereof, the Company will make all
      arrangements necessary so that such other securities, cash and/or other property
      are available for distribution by the Rights Agent, if and when necessary to
      comply with this Agreement.

    
      

      
        
          
            
            

          

          
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    (d)    In
      case the registered holder of any Rights Certificate shall exercise less than
      all the Rights evidenced thereby, a new Rights Certificate evidencing Rights
      equivalent to the Rights remaining unexercised shall be issued by the Rights
      Agent to the registered holder of such Rights Certificate or to his or her
      duly
      authorized assigns, subject to the provisions of Section 6 and Section 14
      hereof.

    

    (e)    Notwithstanding
      anything in this Agreement to the contrary, from and after the first occurrence
      of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring
      Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee
      of
      an Acquiring Person (or of any such Associate or Affiliate) who becomes a
      transferee after the Acquiring Person becomes such (a“Post-Event
      Transferee”),
      (iii)
      a transferee of an Acquiring Person (or of any such Associate or Affiliate)
      who
      becomes a transferee prior to or concurrently with the Acquiring Person becoming
      such and receives such Rights pursuant to either (A) a transfer (whether or
      not
      for consideration) from the Acquiring Person to holders of equity interests
      in
      such Acquiring Person or to any Person with whom the Acquiring Person has any
      continuing agreement, arrangement or understanding regarding the transferred
      Rights or (B) a transfer which the Company’s Board of Directors has determined
      is part of a plan, arrangement or understanding which has as a primary purpose
      or effect the avoidance of this Section 7(e) (a“Pre-Event
      Transferee”)
      or (iv)
      any subsequent transferee receiving transferred Rights from a Post-Event
      Transferee or a Pre-Event Transferee, either directly or through one or more
      intermediate transferees, shall become null and void without any further action
      and no holder of such Rights shall have any rights whatsoever with respect
      to
      such Rights, whether under any provision of this Agreement or otherwise. The
      Company shall notify the Rights Agent when this Section 7(e) and Section 4(b)
      applies and shall use all reasonable efforts to ensure that the provisions
      of
      this Section 7(e) and Section 4(b) hereof are complied with, but neither the
      Rights Agent nor the Company shall have any liability to any holder of Rights
      Certificates or to any other Person as a result of the Company’s failure to make
      any determinations with respect to an Acquiring Person or any of such Acquiring
      Person’s Affiliates, Associates or transferees hereunder.

    

    (f)    Notwithstanding
      anything in this Agreement to the contrary, neither the Rights Agent nor the
      Company shall be obligated to undertake any action with respect to a registered
      holder upon the occurrence of any purported exercise as set forth in Section
      7
      unless such registered holder shall, in addition to having complied with the
      requirements of subsection 7(a), have (i) properly completed and signed the
      certificate contained in the form of election to purchase set forth on the
      reverse side of the Rights Certificate surrendered for such exercise and (ii)
      provided such additional evidence of the identity of the Beneficial Owner (or
      former Beneficial Owner) or Affiliates or Associates thereof as the Company
      and
      the Rights Agent shall reasonably request.

    

    Section
      8.    Cancellation
      and Destruction of Rights Certificates.    All
      Rights Certificates surrendered for the purpose of exercise, transfer, split
      up,
      combination or exchange shall, if surrendered to the Company or to any of its
      agents, be delivered to the Rights Agent for cancellation or in canceled form,
      or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
      Certificates shall be issued in lieu thereof except as expressly permitted
      by
      any of the provisions of this Agreement. The Company shall deliver to the Rights
      Agent for cancellation and retirement, and the Rights Agent shall so cancel
      and
      retire, any Rights Certificate purchased or acquired by the Company otherwise
      than upon the exercise thereof. The Rights Agent shall deliver all canceled
      Rights Certificates to the Company, or shall, at the written request of the
      Company, destroy such canceled Rights Certificates, and in such case shall
      deliver a certificate evidencing the destruction thereof to the
      Company.

    
      

      
        
          
            
            

          

          
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    Section
      9.    Reservation
      and Availability of Preferred Shares.

    

    (a)    The
      Company covenants and agrees that it will use its best efforts to cause to
      be
      reserved and kept available out of its authorized and unissued Preferred Shares
      not reserved for another purpose (and, following the occurrence of a Section
      11(a)(ii) Event, out of its authorized and unissued Common Shares and/or other
      securities), the number of Preferred Shares (and, following the occurrence
      of
      the Section 11(a)(ii) Event, Common Shares and/or other securities) that will
      be
      sufficient to permit the exercise in full of all outstanding Rights in
      accordance with this Agreement.

    

    (b)    If
      the Company shall hereafter list any of its Preferred Shares on a national
      securities exchange, then so long as the Preferred Shares (and, following the
      occurrence of a Section 11(a)(ii) Event, Common Shares and/or other securities)
      issuable and deliverable upon exercise of the Rights may be listed on such
      exchange, the Company shall use its best efforts to cause, from and after such
      time as the Rights become exercisable (but only to the extent that the Company’s
      Board of Directors determines that it is reasonably likely that the Rights
      will
      be exercised), all shares reserved for such issuance to be listed on such
      exchange upon official notice of issuance upon such exercise.

    

    (c)    The
      Company shall use its best efforts to (i) file, as soon as practicable following
      the earliest date after the first occurrence of a Section 11(a)(ii) Event in
      which the consideration to be delivered by the Company upon exercise of the
      Rights is described in Section 11(a)(ii) or Section 11(a)(iii) hereof, or as
      soon as is required by law following the Distribution Date, as the case may
      be,
      a registration statement under the Securities Act with respect to the securities
      purchasable upon exercise of the Rights on an appropriate form, (ii) cause
      such
      registration statement to become effective as soon as practicable after such
      filing and (iii) cause such registration statement to remain effective (with
      a
      prospectus at all times meeting the requirements of the Securities Act) until
      the earlier of (A) the date as of which the Rights are no longer exercisable
      for
      such securities and (B) the date of expiration of the Rights. The Company may
      temporarily suspend, for a period not to exceed ninety (90) days after the
      date
      set forth in clause (i) of the first sentence of this Section 9(c), the
      exercisability of the Rights in order to prepare and file such registration
      statement and permit it to become effective. Upon any such suspension, the
      Company shall issue a public announcement stating, and notify the Rights Agent,
      that the exercisability of the Rights has been temporarily suspended, as well
      as
      a public announcement and notification to the Rights Agent at such time as
      the
      suspension is no longer in effect. The Company will also take such action as
      may
      be appropriate under, or to ensure compliance with, the securities or “blue sky”
laws of the various states in connection with the exercisability of the Rights.
      Notwithstanding any provision of this Agreement to the contrary, the Rights
      shall not be exercisable in any jurisdiction, unless the requisite qualification
      in such jurisdiction shall have been obtained, or an exemption therefrom shall
      be available, and until a registration statement has been declared and remains
      effective.

    

    (d)    The
      Company covenants and agrees that it will take all such action as may be
      necessary to ensure that all Preferred Shares (or other securities of the
      Company) delivered upon exercise of Rights shall, at the time of delivery of
      the
      certificates for such securities (subject to payment of the Exercise Price),
      be
      duly and validly authorized and issued and fully paid and
      nonassessable.

    

    (e)    The
      Company further covenants and agrees that it will pay when due and payable
      any
      and all taxes and charges which may be payable in respect of the original
      issuance or delivery of the Rights Certificates or of any Preferred Shares
      (or
      other securities of the Company) upon the exercise of Rights. The Company shall
      not, however, be required to pay any tax or charge which may be payable in
      respect of any transfer or delivery of Rights Certificates to a Person other
      than, or the issuance or delivery of certificates or depository receipts for
      the
      Preferred Shares (or other securities of the Company) in a name other than
      that
      of, the registered holder of the Rights Certificate evidencing Rights
      surrendered for exercise or to issue or to deliver any certificates or
      depository receipts for Preferred Shares (or other securities of the Company)
      upon the exercise of any Rights until any such tax and charge shall have been
      paid (any such tax and charge being payable by the holder of such Rights
      Certificate at the time of surrender) or until it has been established to the
      Company’s satisfaction that no such tax or charge is due.

    
      

      
        
          
            
            

          

          
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    Section
      10.    Record
      Date.    Each
      Person in whose name any certificate for a number of one-thousandths (0.001)
      of
      a Preferred Share (or other securities of the Company) is issued upon the
      exercise of Rights shall for all purposes be deemed to have become the holder
      of
      record of Preferred Shares (or other securities of the Company) represented
      thereby on, and such certificate shall be dated, the date upon which the Rights
      Certificate evidencing such Rights was duly surrendered and payment of the
      Total
      Exercise Price with respect to which the Rights have been exercised (and any
      applicable transfer taxes and charges) was made; provided,
      however,
      that if
      the date of such surrender and payment is a date upon which the transfer books
      of the Company are closed, such Person shall be deemed to have become the record
      holder of such shares on, and such certificate shall be dated, the next
      succeeding Business Day on which the transfer books of the Company are open.
      Prior to the exercise of the Rights evidenced thereby, the holder of a Rights
      Certificate shall not be entitled to any rights of a holder of Preferred Shares
      (or other securities of the Company) for which the Rights shall be exercisable,
      including, without limitation, the right to vote, to receive dividends or other
      distributions or to exercise any preemptive rights, and shall not be entitled
      to
      receive any notice of any proceedings of the Company, except as provided
      herein.

    

    Section
      11.    Adjustment
      of Exercise Price, Number of Shares or Number of Rights.    The
      Exercise Price, the number and kind of shares or other property covered by
      each
      Right and the number of Rights outstanding are subject to adjustment from time
      to time as provided in this Section 11.

    

    (a)    (i)    In
      the event that the Company shall at any time after the date of this Agreement
      (A) declare a dividend on the Preferred Shares payable in Preferred Shares,
      (B)
      subdivide the outstanding Preferred Shares, (C) combine the outstanding
      Preferred Shares (by reverse stock split or otherwise) into a smaller number
      of
      Preferred Shares, or (D) issue any shares of its capital stock in a
      reclassification of the Preferred Shares (including any such reclassification
      in
      connection with a consolidation or merger in which the Company is the continuing
      or surviving corporation), then, in each such event, except as otherwise
      provided in this Section 11 and Section 7(e) hereof: (1) the Exercise Price
      in
      effect at the time of the record date for such dividend or of the effective
      date
      of such subdivision, combination or reclassification shall be adjusted so that
      the Exercise Price thereafter shall equal the result obtained by dividing the
      Exercise Price in effect immediately prior to such time by a fraction (the
      “Adjustment
      Fraction”),
      the
      numerator of which shall be the total number of Preferred Shares (or shares
      of
      capital stock issued in such reclassification of the Preferred Shares)
      outstanding immediately following such time and the denominator of which shall
      be the total number of Preferred Shares outstanding immediately prior to such
      time; provided,
      however,
      that in
      no event shall the consideration to be paid upon the exercise of one Right
      be
      less than the aggregate par value of the shares of capital stock of the Company
      issuable upon exercise of such Right; and (2) the number of one-thousandths
      (0.001) of a Preferred Share (or share of such other capital stock) issuable
      upon the exercise of each Right shall equal the number of one-thousandths
      (0.001) of a Preferred Share (or share of such other capital stock) as was
      issuable upon exercise of a Right immediately prior to the occurrence of the
      event described in clauses (A)-(D) of this Section 11(a)(i), multiplied by
      the
      Adjustment Fraction; provided,
      however,
      that,
      no such adjustment shall be made pursuant to this Section 11(a)(i) to the extent
      that there shall have simultaneously occurred an event described in clause
      (A),
      (B), (C) or (D) of Section 11(n) with a proportionate adjustment being made
      thereunder. Each Common Share that shall become outstanding after an adjustment
      has been made pursuant to this Section 11(a)(i) shall have associated with
      it
      the number of Rights, exercisable at the Exercise Price and for the number
      of
      one-thousandths (0.001) of a Preferred Share (or shares of such other capital
      stock) as one Common Share has associated with it immediately following the
      adjustment made pursuant to this Section 11(a)(i).

    
      

      
        
          
            
            

          

          
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    (ii)    Subject
      to Section 24 of this Agreement, in the event that any Person becomes an
      Acquiring Person, then promptly following such event each holder of a Right,
      except as provided in Section 7(e) hereof, shall thereafter have the right
      to
      receive for each Right, upon exercise thereof in accordance with the terms
      of
      this Agreement and payment of the Exercise Price in effect immediately prior
      to
      the occurrence of such event, in lieu of a number of one-thousandths (0.001)
      of
      a Preferred Share, such number of Common Shares of the Company as shall equal
      the quotient obtained by dividing (A) the product obtained by multiplying (1)
      the Exercise Price in effect immediately prior to the occurrence of such event
      by (2) the number of one-thousandths (0.001) of a Preferred Share for which
      a
      Right was exercisable (or would have been exercisable if the Distribution Date
      had occurred) immediately prior to the first occurrence of such event, by (B)
      fifty percent (50%) of the Current Per Share Market Price for Common Shares
      on
      the date of occurrence of the Triggering Event; provided,
      however,
      that
      the Exercise Price and the number of Common Shares of the Company so receivable
      upon exercise of a Right shall be subject to further adjustment as appropriate
      in accordance with Section 11(e) hereof to reflect any events occurring in
      respect of the Common Shares of the Company after the occurrence of such
      event.

    

    (iii)    In
      lieu of issuing Common Shares in accordance with Section 11(a)(ii) hereof,
      the
      Company may, if the Company’s Board of Directors determines that such action is
      necessary or appropriate and not contrary to the interest of holders of Rights
      and, in the event that the number of Common Shares which are authorized by
      the
      Company’s Certificate of Incorporation but not outstanding or reserved for
      issuance for purposes other than upon exercise of the Rights are not sufficient
      to permit the exercise in full of the Rights, or if any necessary regulatory
      approval for such issuance has not been obtained by the Company, the Company
      shall: (A) determine the excess of (1) the value of the Common Shares issuable
      upon the exercise of a Right (the“Current
      Value”)
      over
      (2) the Exercise Price (such excess, the“Spread”)
      and (B)
      with respect to each Right, make adequate provision to substitute for such
      Common Shares, upon exercise of the Rights, (1) cash, (2) a reduction in the
      Exercise Price, (3) other equity securities of the Company (including, without
      limitation, shares or units of shares of any series of preferred stock which
      the
      Company’s Board of Directors has deemed to have the same value as Common Shares
      (such shares or units of shares of preferred stock are herein called“Common
      Stock Equivalents”)),
      except to the extent that the Company has not obtained any necessary stockholder
      or regulatory approval for such issuance, (4) debt securities of the Company,
      except to the extent that the Company has not obtained any necessary stockholder
      or regulatory approval for such issuance, (5) other assets or (6) any
      combination of the foregoing, having an aggregate value equal to the Current
      Value, where such aggregate value has been determined by the Company’s Board of
      Directors based upon the advice of a nationally recognized investment banking
      firm selected by the Company’s Board of Directors; provided,
      however,
      that if
      the Company shall not have made adequate provision to deliver value pursuant
      to
      clause (B) above within thirty (30) days following the later of (x) the first
      occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company’s
      right of redemption pursuant to

    
      

      
        
          
            
            

          

          
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    Section
      23(a) expires (the later of (x) and (y) being referred to herein as the
“Section
      11(a)(ii) Trigger
      Date”),
      then
      the Company shall be obligated to deliver, upon the surrender for exercise
      of a
      Right and without requiring payment of the Exercise Price, Common Shares (to
      the
      extent available), except to the extent that the Company has not obtained any
      necessary stockholder or regulatory approval for such issuance, and then, if
      necessary, cash, which shares and/or cash have an aggregate value equal to
      the
      Spread. If the Company’s Board of Directors shall determine in good faith that
      it is likely that sufficient additional Common Shares could be authorized for
      issuance upon exercise in full of the Rights or that any necessary regulatory
      approval for such issuance will be obtained, the thirty (30) day period set
      forth above may be extended to the extent necessary, but not more than ninety
      (90) days after the Section 11(a)(ii) Trigger Date, in order that the Company
      may seek stockholder approval for the authorization of such additional shares
      or
      take action to obtain such regulatory approval (such period, as it may be
      extended, the “Substitution
      Period”).
      To the
      extent that the Company determines that some action need be taken pursuant
      to
      the first and/or second sentences of this Section 11(a)(iii), the Company (x)
      shall provide, subject to Section 7(e) hereof, that such action shall apply
      uniformly to all outstanding Rights and (y) may suspend the exercisability
      of
      the Rights until the expiration of the Substitution Period in order to seek
      any
      authorization of additional shares, to take any action to obtain any required
      regulatory approval and/or to decide the appropriate form of distribution to
      be
      made pursuant to such first sentence and to determine the value thereof. In
      the
      event of any such suspension, the Company shall promptly notify the Rights
      Agent
      thereof and shall issue a public announcement (with prompt notice thereof to
      the
      Rights Agent) stating that the exercisability of the Rights has been temporarily
      suspended, as well as a public announcement (with prompt notice thereof to
      the
      Rights Agent) at such time as the suspension is no longer in effect. For
      purposes of this Section 11(a)(iii), the value of the Common Shares shall be
      the
      Current Per Share Market Price of the Common Shares on the Section 11(a)(ii)
      Trigger Date and the value of any Common Stock Equivalent shall be deemed to
      have the same value as the Common Shares on such date.

    

    (b)    In
      case the Company shall, at any time after the date of this Agreement, fix a
      record date for the issuance of rights, options or warrants to all holders
      of
      Preferred Shares entitling such holders (for a period expiring within forty-five
      (45) calendar days after such record date) to subscribe for or purchase
      Preferred Shares or Equivalent Shares or securities convertible into Preferred
      Shares or Equivalent Shares at a price per share (or having a conversion price
      per share, if a security convertible into Preferred Shares or Equivalent Shares)
      less than the then Current Per Share Market Price of the Preferred Shares or
      Equivalent Shares on such record date, then, in each such case, the Exercise
      Price to be in effect after such record date shall be determined by multiplying
      the Exercise Price in effect immediately prior to such record date by a
      fraction, the numerator of which shall be the number of Preferred Shares and
      Equivalent Shares (if any) outstanding on such record date, plus the number
      of
      Preferred Shares or Equivalent Shares, as the case may be, which the aggregate
      offering price of the total number of Preferred Shares or Equivalent Shares,
      as
      the case may be, to be offered or issued (and/or the aggregate initial
      conversion price of the convertible securities to be offered or issued) would
      purchase at such current market price, and the denominator of which shall be
      the
      number of Preferred Shares and Equivalent Shares (if any) outstanding on such
      record date, plus the number of additional Preferred Shares or Equivalent
      Shares, as the case may be, to be offered for subscription or purchase (or
      into
      which the convertible securities so to be offered are initially convertible);
      provided,
      however,
      that in
      no event shall the consideration to be paid upon the exercise of one Right
      be
      less than the aggregate par value of the shares of capital stock of the Company
      issuable upon exercise of one Right. In case such subscription price may be
      paid
      in a consideration part or all of which shall be in a form other than cash,
      the
      value of such consideration shall be as determined in good faith by the
      Company’s Board of Directors, whose determination shall be described in a
      statement filed with the Rights Agent and shall be conclusive and binding on
      the
      Rights Agent and the holders of the Rights for all purposes. Preferred Shares
      and Equivalent Shares owned by or held for the account of the Company shall
      not
      be deemed outstanding for the purpose of any such computation. Such adjustment
      shall be made successively whenever such a record date is fixed, and in the
      event that such rights, options or warrants are not so issued, the Exercise
      Price shall be adjusted to be the Exercise Price which would then be in effect
      if such record date had not been fixed.

    
      

      
        
          
            
            

          

          
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    (c)    In
      case the Company shall, at any time after the date of this Agreement, fix a
      record date for the making of a distribution to all holders of the Preferred
      Shares or of any class or series of Equivalent Shares (including any such
      distribution made in connection with a consolidation or merger in which the
      Company is the continuing or surviving Person) of evidences of indebtedness
      or
      assets (other than a regular quarterly cash dividend, if any, or a dividend
      payable in Preferred Shares) or subscription rights, options or warrants
      (excluding those referred to in Section 11(b)), then, in each such case, the
      Exercise Price to be in effect after such record date shall be determined by
      multiplying the Exercise Price in effect immediately prior to such record date
      by a fraction, the numerator of which shall be the Current Per Share Market
      Price of a Preferred Share or an Equivalent Share on such record date, less
      the
      fair market value per Preferred Share or Equivalent Share (as determined in
      good
      faith by the Board of Directors of the Company, whose determination shall be
      described in a statement filed with the Rights Agent and shall be conclusive
      for
      all purposes) of the portion of the cash, assets or evidences of indebtedness
      so
      to be distributed or of such subscription rights or warrants applicable to
      a
      Preferred Share or Equivalent Share, as the case may be, and the denominator
      of
      which shall be such Current Per Share Market Price of a Preferred Share or
      Equivalent Share on such record date; provided,
      however,
      that in
      no event shall the consideration to be paid upon the exercise of one Right
      be
      less than the aggregate par value of the shares of capital stock of the Company
      issuable upon exercise of one Right. Such adjustments shall be made successively
      whenever such a record date is fixed, and in the event that such distribution
      is
      not so made, the Exercise Price shall be adjusted to be the Exercise Price
      which
      would have been in effect if such record date had not been fixed.

    

    (d)    Anything
      herein to the contrary notwithstanding, no adjustment in the Exercise Price
      shall be required unless such adjustment would require an increase or decrease
      of at least one percent (1%) of the Exercise Price; provided,
      however,
      that
      any adjustments which by reason of this Section 11(d) are not required to be
      made shall be carried forward and taken into account in any subsequent
      adjustment. All calculations under this Section 11 shall be made to the nearest
      cent or to the nearest ten-thousandth (0.0001) of a Common Share or other share
      or one hundred-thousandth (0.00001) of a Preferred Share, as the case may be.
      Notwithstanding the first sentence of this Section 11(d), any adjustment
      required by this Section 11 shall be made no later than the earlier of (i)
      three
      (3) years from the date of the transaction which requires such adjustment or
      (ii) the Expiration Date.

    

    (e)    If
      as a result of an adjustment made pursuant to Section 11(a) or Section 13(a)
      hereof, the holder of any Right thereafter exercised shall become entitled
      to
      receive any shares of capital stock other than Preferred Shares, thereafter
      the
      number of such other shares so receivable upon exercise of any Right and, if
      required, the Exercise Price thereof, shall be subject to adjustment from time
      to time in a manner and on terms as nearly equivalent as practicable to the
      provisions with respect to the Preferred Shares contained in Sections 11(a),
      11(b), 11(c), 11(d), 11(g), 11(h), 11(j) and 11(l), and the provisions of
      Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares shall apply
      on
      like terms to any such other shares.

    

    (f)    All
      Rights originally issued by the Company subsequent to any adjustment made to
      the
      Exercise Price hereunder shall evidence the right to purchase, at the adjusted
      Exercise Price, the number of one-thousandths (0.001) of a Preferred Share
      purchasable from time to time hereunder upon exercise of the Rights, all subject
      to further adjustment as provided herein.

    

    (g)    Unless
      the Company shall have exercised its election as provided in Section 11(h),
      upon
      each adjustment of the Exercise Price as a result of the calculations made
      in
      Sections 11(b) and (c), each Right outstanding immediately prior to the making
      of such adjustment shall thereafter evidence the right to purchase, at the
      adjusted Exercise Price, that number of Preferred Shares (calculated to the
      nearest one hundred-thousandth (0.00001) of a share) obtained by (i) multiplying
      (x) the number of Preferred Shares covered by a Right immediately prior to
      this
      adjustment, by (y) the Exercise Price in effect immediately prior to such
      adjustment of the Exercise Price, and (ii) dividing the product so obtained
      by
      the Exercise Price in effect immediately after such adjustment of the Exercise
      Price.

    
      

      
        
          
            
            

          

          
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    (h)    The
      Company may elect on or after the date of any adjustment of the Exercise Price
      to adjust the number of Rights, in substitution for any adjustment in the number
      of Preferred Shares purchasable upon the exercise of a Right. Each of the Rights
      outstanding after such adjustment of the number of Rights shall be exercisable
      for the number of one-thousandths (0.001) of a Preferred Share for which a
      Right
      was exercisable immediately prior to such adjustment. Each Right held of record
      prior to such adjustment of the number of Rights shall become that number of
      Rights (calculated to the nearest one hundred-thousandth (0.00001)) obtained
      by
      dividing the Exercise Price in effect immediately prior to adjustment of the
      Exercise Price by the Exercise Price in effect immediately after adjustment
      of
      the Exercise Price. The Company shall make a public announcement and promptly
      notify the Rights Agent of its election to adjust the number of Rights,
      indicating the record date for the adjustment, and, if known at the time, the
      amount of the adjustment to be made. This record date may be the date on which
      the Exercise Price is adjusted or any day thereafter, but, if any Rights
      Certificates have been issued, shall be at least ten (10) days later than the
      date of the public announcement. If Rights Certificates have been issued, upon
      each adjustment of the number of Rights pursuant to this Section 11(h), the
      Company shall, as promptly as practicable, cause to be distributed to holders
      of
      record of Rights Certificates on such record date Rights Certificates
      evidencing, subject to Section 14 hereof, the additional Rights to which such
      holders shall be entitled as a result of such adjustment, or, at the option
      of
      the Company, shall cause to be distributed to such holders of record in
      substitution and replacement for the Rights Certificates held by such holders
      prior to the date of adjustment, and upon surrender thereof, if required by
      the
      Company, new Rights Certificates evidencing all the Rights to which such holders
      shall be entitled after such adjustment. Rights Certificates so to be
      distributed shall be issued, executed and countersigned in the manner provided
      for herein (and may bear, at the option of the Company, the adjusted Exercise
      Price) and shall be registered in the names of the holders of record of Rights
      Certificates on the record date specified in the public
      announcement.

    

    (i)    Irrespective
      of any adjustment or change in the Exercise Price or the number of Preferred
      Shares issuable upon the exercise of the Rights, the Rights Certificates
      theretofore and thereafter issued may continue to express the Exercise Price
      per
      one one-thousandth (0.001) of a Preferred Share and the number of
      one-thousandths (0.001) of a Preferred Share which were expressed in the initial
      Rights Certificates issued hereunder.

    

    (j)    Before
      taking any action that would cause an adjustment reducing the Exercise Price
      below the par or stated value, if any, of the number of one-thousandths (0.001)
      of a Preferred Share issuable upon exercise of the Rights, the Company shall
      take any corporate action which may, in the opinion of its counsel, be necessary
      in order that the Company may validly and legally issue as fully paid and
      nonassessable shares such number of one-thousandths (0.001) of a Preferred
      Share
      at such adjusted Exercise Price.

    

    (k)    In
      any case in which this Section 11 shall require that an adjustment in the
      Exercise Price be made effective as of a record date for a specified event,
      the
      Company may elect to defer (with prompt written notice thereof to the Rights
      Agent) until the occurrence of such event the issuing to the holder of any
      Right
      exercised after such record date of the number of one-thousandths (0.001) of
      a
      Preferred Share and other capital stock or securities of the Company, if any,
      issuable upon such exercise over and above the number of one-thousandths (0.001)
      of a Preferred Share and other capital stock or securities of the Company,
      if
      any, issuable upon such exercise on the basis of the Exercise Price in effect
      prior to such adjustment; provided,
      however,
      that
      the Company shall deliver to such holder a due bill or other appropriate
      instrument evidencing such holder’s right to receive such additional shares
      (fractional or otherwise) upon the occurrence of the event requiring such
      adjustment.

    
      

      
        
          
            
            

          

          
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    (l)    Anything
      in this Section 11 to the contrary notwithstanding, prior to the Distribution
      Date, the Company shall be entitled to make such adjustments in the Exercise
      Price, in addition to those adjustments expressly required by this Section
      11,
      as and to the extent that it in its sole discretion shall determine to be
      advisable in order that any (i) consolidation or subdivision of the Preferred
      or
      Common Shares, (ii) issuance wholly for cash of any Preferred or Common Shares
      at less than the current market price, (iii) issuance wholly for cash of
      Preferred or Common Shares or securities which by their terms are convertible
      into or exchangeable for Preferred or Common Shares, (iv) stock dividends or
      (v)
      issuance of rights, options or warrants referred to in this Section 11,
      hereafter made by the Company to holders of its Preferred or Common Shares
      shall
      not be taxable to such stockholders.

    

    (m)    The
      Company covenants and agrees that, after the Distribution Date, it will not,
      except as permitted by Sections 23, 24 or 27 hereof, take (or permit to be
      taken) any action if at the time such action is taken it is reasonably
      foreseeable that such action will diminish substantially or otherwise eliminate
      the benefits intended to be afforded by the Rights.

    

    (n)    In
      the event that the Company shall at any time after the date of this Agreement
      (A) declare a dividend on the Common Shares payable in Common Shares, (B)
      subdivide the outstanding Common Shares, (C) combine the outstanding Common
      Shares (by reverse stock split or otherwise) into a smaller number of Common
      Shares, or (D) issue any shares of its capital stock in a reclassification
      of
      the Common Shares (including any such reclassification in connection with a
      consolidation or merger in which the Company is the continuing or surviving
      Person), then, in each such event, except as otherwise provided in this Section
      11(a) and Section 7(e) hereof: (1) each Common Share (or shares of capital
      stock
      issued in such reclassification of the Common Shares) outstanding immediately
      following such time shall have associated with it the number of Rights as were
      associated with one Common Share immediately prior to the occurrence of the
      event described in clauses (A)-(D) above; (2) the Exercise Price in effect
      at
      the time of the record date for such dividend or of the effective date of such
      subdivision, combination or reclassification shall be adjusted so that the
      Exercise Price thereafter shall equal the result obtained by multiplying the
      Exercise Price in effect immediately prior to such time by a fraction, the
      numerator of which shall be the total number of Common Shares outstanding
      immediately prior to the event described in clauses (A)-(D) above, and the
      denominator of which shall be the total number of Common Shares outstanding
      immediately after such event; provided,
      however,
      that in
      no event shall the consideration to be paid upon the exercise of one Right
      be
      less than the aggregate par value of the shares of capital stock of the Company
      issuable upon exercise of such Right; and (3) the number of one-thousandths
      (0.001) of a Preferred Share (or shares of such other capital stock) issuable
      upon the exercise of each Right outstanding after such event shall equal the
      number of one-thousandths (0.001) of a Preferred Share (or shares of such other
      capital stock) as were issuable with respect to one Right immediately prior
      to
      such event. Each Common Share that shall become outstanding after an adjustment
      has been made pursuant to this Section 11(n) shall have associated with it
      the
      number of Rights, exercisable at the Exercise Price and for the number of
      one-thousandths (0.001) of a Preferred Share (or shares of such other capital
      stock) as one Common Share has associated with it immediately following the
      adjustment made pursuant to this Section 11(n). If an event occurs which would
      require an adjustment under both this Section 11(n) and Section 11(a)(ii)
      hereof, the adjustment provided for in this Section 11(n) shall be in addition
      to, and shall be made prior to, any adjustment required pursuant to Section
      11(a)(ii) hereof.

    

    Section
      12.    Certificate
      of Adjusted Exercise Price or Number of Shares.    Whenever
      an adjustment is made as provided in Sections 11 or 13 hereof, the Company
      shall
      promptly (a) prepare a certificate setting forth such adjustment and a brief
      statement of the facts and computations accounting for such adjustment, (b)
      file
      with the Rights Agent and with each transfer agent for the Preferred Shares
      a
      copy of such certificate and (c) mail a brief summary thereof to each holder
      of
      a Rights Certificate in accordance with Section 26 hereof. Notwithstanding
      the
      foregoing sentence, the failure of the Company to make such certification or
      give such notice shall not affect the validity of such adjustment or the force
      or effect of the requirement for such adjustment. The Rights Agent shall be
      fully protected in relying on any such certificate and on any adjustment or
      statement therein contained and shall have no duty or liability with respect
      to,
      and shall not be deemed to have knowledge of, any adjustment or any such event
      unless and until it shall have received such a certificate.

    
      

      
        
          
            
            

          

          
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    Section
      13.    Consolidation,
      Merger or Sale or Transfer of Assets or Earning Power.

    

    (a)    In
      the event that, following a Person becoming an Acquiring Person, directly or
      indirectly:

    

    (i)    the
      Company shall consolidate with, or merge with and into, any other Person (other
      than a wholly-owned Subsidiary of the Company in a transaction the principal
      purpose of which is to change the state of incorporation of the Company and
      which complies with Section 11(m) hereof);

    

    (ii)    any
      Person shall consolidate with the Company, or merge with and into the Company
      and the Company shall be the continuing or surviving Person of such
      consolidation or merger and, in connection with such merger, all or part of
      the
      Common Shares shall be changed into or exchanged for stock or other securities
      of any other Person (or the Company); or

    

    (iii)    the
      Company shall sell or otherwise transfer (or one or more of its Subsidiaries
      shall sell or otherwise transfer), in one or more transactions, assets or
      earning power aggregating fifty percent (50%) or more of the assets or earning
      power of the Company and its Subsidiaries (taken as a whole) to any other Person
      or Persons (other than the Company or one or more of its wholly owned
      Subsidiaries in one or more transactions, each of which individually (and
      together) complies with Section 11(m) hereof),

    

    then,
      concurrent with and in each such case,

    

    (A)    each
      holder of a Right (except as provided in Section 7(e) hereof) shall thereafter
      have the right to receive, upon the exercise thereof at a price equal to the
      Total Exercise Price applicable immediately prior to the occurrence of the
      Section 13 Event in accordance with the terms of this Agreement, such number
      of
      validly authorized and issued, fully paid, nonassessable and freely tradeable
      Common Shares of the Principal Party (as hereinafter defined), free of any
      liens, encumbrances, rights of first refusal or other adverse claims, as shall
      be equal to the result obtained by dividing such Total Exercise Price by an
      amount equal to fifty percent (50%) of the Current Per Share Market Price of
      the
      Common Shares of such Principal Party on the date of consummation of such
      Section 13 Event, provided,
      however,
      that
      the Exercise Price and the number of Common Shares of such Principal Party
      so
      receivable upon exercise of a Right shall be subject to further adjustment
      as
      appropriate in accordance with Section 11(e) hereof;

    

    (B)    such
      Principal Party shall thereafter be liable for, and shall assume, by virtue
      of
      such Section 13 Event, all the obligations and duties of the Company pursuant
      to
      this Agreement;

    

    (C)    the
      term “Company” shall thereafter be deemed to refer to such Principal Party, it
      being specifically intended that the provisions of Section 11 hereof shall
      apply
      only to such Principal Party following the first occurrence of a Section 13
      Event;

    
      

      
        
          
            
            

          

          
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    (D)    such
      Principal Party shall take such steps (including, but not limited to, the
      reservation of a sufficient number of its Common Shares) in connection with
      the
      consummation of any such transaction as may be necessary to ensure that the
      provisions hereof shall thereafter be applicable, as nearly as reasonably may
      be, in relation to its Common Shares thereafter deliverable upon the exercise
      of
      the Rights; and

    

    (E)    upon
      the subsequent occurrence of any consolidation, merger, sale or transfer of
      assets or other extraordinary transaction in respect of such Principal Party,
      each holder of a Right shall thereupon be entitled to receive, upon exercise
      of
      a Right and payment of the Total Exercise Price as provided in this Section
      13(a), such cash, shares, rights, warrants and other property which such holder
      would have been entitled to receive had such holder, at the time of such
      transaction, owned the Common Shares of the Principal Party receivable upon
      the
      exercise of such Right pursuant to this Section 13(a), and such Principal Party
      shall take such steps (including, but not limited to, reservation of shares
      of
      stock) as may be necessary to permit the subsequent exercise of the Rights
      in
      accordance with the terms hereof for such cash, shares, rights, warrants and
      other property.

    

    (F)    For
      purposes hereof, the “earning power” of the Company and its Subsidiaries shall
      be determined in good faith by the Company’s Board of Directors on the basis of
      the operating income of each business operated by the Company and its
      Subsidiaries during the three fiscal years preceding the date of such
      determination (or, in the case of any business not operated by the Company
      or
      any Subsidiary during three full fiscal years preceding such date, during the
      period such business was operated by the Company or any
      Subsidiary).

    

    (b)    For
      purposes of this Agreement, the term “Principal
      Party”
      shall
      mean:

    

    (i)    in
      the case of any transaction described in clause (i) or (ii) of Section 13(a)
      hereof: (A) the Person that is the issuer of the securities into which the
      Common Shares are converted in such merger or consolidation, or, if there is
      more than one such issuer, the issuer the Common Shares of which have the
      greatest aggregate market value of shares outstanding, or (B) if no securities
      are so issued, (x) the Person that is the other party to the merger, if such
      Person survives said merger, or, if there is more than one such Person, the
      Person the Common Shares of which have the greatest aggregate market value
      of
      shares outstanding or (y) if the Person that is the other party to the merger
      does not survive the merger, the Person that does survive the merger (including
      the Company if it survives) or (z) the Person resulting from the consolidation;
      and

    

    (ii)    in
      the case of any transaction described in clause (iii) of Section 13(a) hereof,
      the Person that is the party receiving the greatest portion of the assets or
      earning power transferred pursuant to such transaction or transactions, or,
      if
      more than one Person that is a party to such transaction or transactions
      receives the same portion of the assets or earning power so transferred and
      each
      such portion would, were it not for the other equal portions, constitute the
      greatest portion of the assets or earning power so transferred, or if the Person
      receiving the greatest portion of the assets or earning power cannot be
      determined, whichever of such Persons is the issuer of Common
      Shares

    
      

      
        
          
            
            

          

          
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    having
      the greatest aggregate market value of shares outstanding; provided that in
      any
      such case described in the foregoing clause (b)(i) or (b)(ii), if the Common
      Shares of such Person are not at such time or have not been continuously over
      the preceding 12-month period registered under Section 12 of the Exchange Act,
      then (1) if such Person is a direct or indirect Subsidiary of another Person
      the
      Common Shares of which are and have been so registered, the term “Principal
      Party” shall refer to such other Person, or (2) if such Person is a Subsidiary,
      directly or indirectly, of more than one Person, the Common Shares of which
      are
      and have been so registered, the term “Principal Party” shall refer to whichever
      of such Persons is the issuer of Common Shares having the greatest aggregate
      market value of shares outstanding, or (3) if such Person is owned, directly
      or
      indirectly, by a joint venture formed by two or more Persons that are not owned,
      directly or indirectly by the same Person, the rules set forth in clauses (1)
      and (2) above shall apply to each of the owners having an interest in the
      venture as if the Person owned by the joint venture was a Subsidiary of both
      or
      all of such joint venturers, and the Principal Party in each such case shall
      bear the obligations set forth in this Section 13 in the same ration as its
      interest in such Person bears to the total of such interests.

    

    (c)    The
      Company shall not consummate any Section 13 Event unless the Principal Party
      shall have a sufficient number of authorized Common Shares that have not been
      issued or reserved for issuance to permit the exercise in full of the Rights
      in
      accordance with this Section 13 and unless prior thereto the Company and such
      issuer shall have executed and delivered to the Rights Agent a supplemental
      agreement confirming that such Principal Party shall, upon consummation of
      such
      Section 13 Event, assume this Agreement in accordance with Sections 13(a) and
      13(b) hereof, that all rights of first refusal or preemptive rights in respect
      of the issuance of Common Shares of such Principal Party upon exercise of
      outstanding Rights have been waived, that there are no rights, warrants,
      instruments or securities outstanding or any agreements or arrangements which,
      as a result of the consummation of such transaction, would eliminate or
      substantially diminish the benefits intended to be afforded by the Rights and
      that such transaction shall not result in a default by such Principal Party
      under this Agreement, and further providing that, as soon as practicable after
      the date of such Section 13 Event, such Principal Party will:

    

    (i)    prepare
      and file a registration statement under the Securities Act with respect to
      the
      Rights and the securities purchasable upon exercise of the Rights on an
      appropriate form, use its best efforts to cause such registration statement
      to
      become effective as soon as practicable after such filing and use its best
      efforts to cause such registration statement to remain effective (with a
      prospectus at all times meeting the requirements of the Securities Act) until
      the Expiration Date, and similarly comply with applicable state securities
      laws;

    

    (ii)    use
      its best efforts to list (or continue the listing of) the Rights and the
      securities purchasable upon exercise of the Rights on a national securities
      exchange; and

    

    (iii)    deliver
      to holders of the Rights historical financial statements for such Principal
      Party that comply in all respects with the requirements for registration on
      Form
      10 (or any successor form) under the Exchange Act.

    

    In
      the
      event that a Section 13 Event shall occur at any time after the occurrence
      of a
      Section 11(a)(ii) Event, the Rights which have not theretofore been exercised
      shall thereafter be exercisable in the manner described in Section 13(a)
      (without taking into account any prior adjustment required by
      Section 11(a)(ii)).

    

    (d)    The
      provisions of this Section 13 shall similarly apply to successive mergers or
      consolidations or sales or other transfers.

    

    Section
      14.    Fractional
      Rights and Fractional Shares.

    

    (a)    
      The Company shall not be required to issue fractions of Rights or to distribute
      Rights Certificates that evidence fractional Rights. In lieu of such fractional
      Rights, there shall be paid to the registered holders of the Rights Certificates
      with regard to which such fractional Rights would otherwise be issuable, an
      amount in cash equal to the same fraction of the current market value of a
      whole
      Right. For the purposes of this Section 14(a), the current market value of
      a
      whole Right shall be the closing price of the Rights for the Trading Day
      immediately prior to the date on which such fractional Rights would have been
      otherwise issuable, as determined pursuant to the second sentence of Section
      1(j) hereof.

    
      

      
        
          
            
            

          

          
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    (b)    The
      Company shall not be required to issue fractions of Preferred Shares (other
      than
      fractions that are integral multiples of one one-thousandth (0.001) of a
      Preferred Share) upon exercise of the Rights or to distribute certificates
      which
      evidence fractional Preferred Shares (other than fractions that are integral
      multiples of one one-thousandth (0.001) of a Preferred Share). Interests in
      fractions of Preferred Shares in integral multiples of one one-thousandth
      (0.001) of a Preferred Share may, at the election of the Company, be evidenced
      by depository receipts, pursuant to an appropriate agreement between the Company
      and a depository selected by it; provided,
      that
      such agreement shall provide that the holders of such depository receipts shall
      have all the rights, privileges and preferences to which they are entitled
      as
      beneficial owners of the Preferred Shares represented by such depository
      receipts. In lieu of fractional Preferred Shares that are not integral multiples
      of one one-thousandth (0.001) of a Preferred Share, the Company shall pay to
      the
      registered holders of Rights Certificates at the time such Rights are exercised
      as herein provided an amount in cash equal to the same fraction of the current
      market value of a Preferred Share. For purposes of this Section 14(b), the
      current market value of a Preferred Share shall be (x) one thousand multiplied
      by (y) the closing price of a Common Share (as determined pursuant to the second
      sentence of Section 1(j) hereof) for the Trading Day immediately prior to the
      date of such exercise.

    

    (c)    The
      Company shall not be required to issue fractions of Common Shares or to
      distribute certificates that evidence fractional Common Shares upon the exercise
      or exchange of Rights. In lieu of such fractional Common Shares, the Company
      shall pay to the registered holders of Rights Certificates at the time such
      Rights are exercised as herein provided an amount in cash equal to the same
      fraction of the current market value of a Common Share. For purposes of this
      Section 14(c), the current market value of a Common Share shall be the closing
      price of a Common Share (as determined pursuant to the second sentence of
      Section 1(j) hereof) for the Trading Day immediately prior to the date of such
      exercise.

    

    (d)    The
      holder of a Right by the acceptance of the Right expressly waives his or her
      right to receive any fractional Rights or any fractional shares (other than
      fractions that are integral multiples of one one-thousandth (0.001) of a
      Preferred Share) upon exercise of a Right.

    

    Section
      15.    Rights
      of Action.    All
      rights of action in respect of this Agreement, excepting the rights of action
      given to the Rights Agent hereunder, are vested in the respective registered
      holders of the Rights Certificates (and, prior to the Distribution Date, the
      registered holders of the Common Shares); and any registered holder of any
      Rights Certificate (or, prior to the Distribution Date, of the Common Shares),
      without the consent of the Rights Agent or of the holder of any other Rights
      Certificate (or, prior to the Distribution Date, of the Common Shares), may,
      in
      his or her own behalf and for his or her own benefit, enforce, and may institute
      and maintain any suit, action or proceeding against the Company to enforce,
      or
      otherwise act in respect of, his or her right to exercise the Rights evidenced
      by such Rights Certificate in the manner provided in such Rights Certificate
      and
      in this Agreement. Without limiting the foregoing or any remedies available
      to
      the holders of Rights, it is specifically acknowledged that the holders of
      Rights would not have an adequate remedy at law for any breach of this Agreement
      and will be entitled to specific performance of the obligations under, and
      injunctive relief against actual or threatened violations of, the obligations
      of
      any Person subject to this Agreement.

    

    Section
      16.    Agreement
      of Rights Holders.    Every
      holder of a Right, by accepting the same, consents and agrees with the Company
      and the Rights Agent and with every other holder of a Right that:

    
      

      
        
          
            
            

          

          
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    (a)    prior
      to the Distribution Date, the Rights will be transferable only in connection
      with the transfer of the Common Shares;

     

    (b)    after
      the Distribution Date, the Rights Certificates are transferable only on the
      registry books of the Rights Agent if surrendered at the office or offices
      of
      the Rights Agent designated for such purposes, duly endorsed or accompanied
      by a
      proper instrument of transfer and with the appropriate forms and certificates
      fully executed; 

    

    (c)    subject
      to Sections 6(a) and 7(f) hereof, the Company and the Rights Agent may deem
      and
      treat the Person in whose name the Rights Certificate (or, prior to the
      Distribution Date, the associated Common Shares certificate) is registered
      as
      the absolute owner thereof and of the Rights evidenced thereby (notwithstanding
      any notations of ownership or writing on the Rights Certificates or the
      associated Common Shares certificate made by anyone other than the Company
      or
      the Rights Agent) for all purposes whatsoever, and neither the Company nor
      the
      Rights Agent shall be affected by any notice to the contrary; and

    

    (d)    notwithstanding
      anything in this Agreement to the contrary, neither the Company nor the Rights
      Agent shall have any liability to any holder of a Right or other Person as
      a
      result of its inability to perform any of its obligations under this Agreement
      by reason of any preliminary or permanent injunction or other order, judgment,
      decree or ruling (whether interlocutory or final) issued by a court or by a
      governmental, regulatory, self-regulatory or administrative agency or
      commission, or any statute, rule, regulation or executive order promulgated
      or
      enacted by any governmental authority, prohibiting or otherwise restraining
      performance of such obligation; provided,
      however,
      that
      the Company must use all reasonable efforts to have any such injunction, order,
      judgment, decree or ruling lifted or otherwise overturned as soon as
      possible.

    

    Section
      17.    Rights
      Certificate Holder Not Deemed a Stockholder.    No
      holder, as such, of any Rights Certificate shall be entitled to vote, receive
      dividends or be deemed for any purpose to be the holder of the Preferred Shares
      or any other securities of the Company which may at any time be issuable on
      the
      exercise of the Rights represented thereby, nor shall anything contained herein
      or in any Rights Certificate be construed to confer upon the holder of any
      Rights Certificate, as such, any of the rights of a stockholder of the Company
      or any right to vote for the election of directors or upon any matter submitted
      to stockholders at any meeting thereof, or to give or withhold consent to any
      corporate action, or to receive notice of meetings or other actions affecting
      stockholders (except as specifically provided in Section 25 hereof), or to
      receive dividends or subscription rights, or otherwise, until the Right or
      Rights evidenced by such Rights Certificate shall have been exercised in
      accordance with the provisions hereof. 

    

    Section
      18.    Concerning
      the Rights Agent.

    

    (a)    The
      Company agrees to pay to the Rights Agent reasonable compensation for all
      services rendered by it hereunder and, from time to time, on demand of the
      Rights Agent, its reasonable expenses and counsel fees and other disbursements
      incurred in the administration and execution of this Agreement and the exercise
      and performance of its duties hereunder. The Company also agrees to indemnify
      the Rights Agent for, and to hold it harmless against, any loss, liability,
      damage, judgment, fine, penalty, claim, demand, settlement, cost or expense
      (including, without limitation, the reasonable fees and expenses of legal
      counsel), incurred without gross negligence, bad faith or willful misconduct
      on
      the part of the Rights Agent, for any action taken, suffered or omitted by
      the
      Rights Agent in connection with the acceptance, administration, exercise and
      performance of its duties under this Agreement, including the costs and expenses
      incurred in defending against any claim of liability.

    
      

      
        
          
            
            

          

          
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    (b)    The
      Rights Agent shall be protected and shall incur no liability for, or in respect
      of any action taken, suffered or omitted by it in connection with its acceptance
      and administration of this Agreement and the exercise and performance of its
      duties hereunder, in reliance upon any Rights Certificate or certificate for
      the
      Preferred Shares or Common Shares or for other securities of the Company,
      instrument of assignment or transfer, power of attorney, endorsement, affidavit,
      letter, notice, direction, consent, certificate, statement or other paper or
      document believed by it to be genuine and to be signed, executed and, where
      necessary, verified or acknowledged, by the proper Person or
      Persons.

    

    Section
      19.    Merger
      or Consolidation or Change of Name of Rights Agent.

    

    (a)    Any
      Person into which the Rights Agent or any successor Rights Agent may be merged
      or with which it may be consolidated, or any Person resulting from any merger
      or
      consolidation to which the Rights Agent or any successor Rights Agent shall
      be a
      party, or any Person succeeding to the corporate trust, stock transfer or other
      shareholder services business of the Rights Agent or any successor Rights Agent,
      shall be the successor to the Rights Agent under this Agreement without the
      execution or filing of any paper or any further act on the part of any of the
      parties hereto; provided,
      however,
      that
      such Person would be eligible for appointment as a successor Rights Agent under
      the provisions of Section 21 hereof. In case at the time such successor Rights
      Agent shall succeed to the agency created by this Agreement, any of the Rights
      Certificates shall have been countersigned but not delivered, any such successor
      Rights Agent may adopt the countersignature of the predecessor Rights Agent
      and
      deliver such Rights Certificates so countersigned; and in case at that time
      any
      of the Rights Certificates shall not have been countersigned, any successor
      Rights Agent may countersign such Rights Certificates either in the name of
      the
      predecessor Rights Agent or in the name of the successor Rights Agent; and
      in
      all such cases such Rights Certificates shall have the full force provided
      in
      the Rights Certificates and in this Agreement.

    

    (b)    In
      case at any time the name of the Rights Agent shall be changed and at such
      time
      any of the Rights Certificates shall have been countersigned but not delivered,
      the Rights Agent may adopt the countersignature under its prior name and deliver
      Rights Certificates so countersigned; and in case at that time any of the Rights
      Certificates shall not have been countersigned, the Rights Agent may countersign
      such Rights Certificates either in its prior name or in its changed name; and
      in
      all such cases such Rights Certificates shall have the full force provided
      in
      the Rights Certificates and in this Agreement.

    

    Section
      20.    Duties
      of Rights Agent.    The
      Rights Agent undertakes the duties and obligations imposed by this Agreement
      upon the following terms and conditions, by all of which the Company and the
      holders of Rights Certificates, by their acceptance thereof, shall be
      bound:

    

    (a)    The
      Rights Agent may consult with legal counsel (who may be legal counsel for the
      Company or an employee of the Rights Agent), and the opinion of such counsel
      shall be full and complete authorization and protection to the Rights Agent
      as
      to any action taken, suffered or omitted by it in good faith and in accordance
      with such advice or opinion.

    

    (b)    Whenever
      in the performance of its duties under this Agreement the Rights Agent shall
      deem it necessary or desirable that any fact or matter (including without
      limitation, the identity of an Acquiring Person and the determination of Current
      Per Share Market Price of any security) be proved or established by the Company
      prior to taking, suffering or omitting to take any action hereunder, such fact
      or matter (unless other evidence in respect thereof be herein specifically
      prescribed) may be deemed to be conclusively proved and established by a
      certificate signed by any one of the Chairman of the Board, the Chief Executive
      Officer, the President, any Vice President, the Chief Financial Officer, the
      Treasurer, the Secretary or any Assistant Secretary of the Company and delivered
      to the Rights Agent; and such certificate shall be full and complete
      authorization to the Rights Agent for any action taken, suffered or omitted
      in
      good faith by it under the provisions of this Agreement in reliance upon such
      certificate.

    
      

      
        
          
            
            

          

          
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    (c)    The
      Rights Agent shall be liable hereunder to the Company and any other Person
      only
      for its own gross negligence, bad faith or willful misconduct.

    

    (d)    The
      Rights Agent shall not be liable for or by reason of any of the statements
      of
      fact or recitals contained in this Agreement or in the Rights Certificates
      (except its countersignature thereof) or be required to verify the same, but
      all
      such statements and recitals are and shall be deemed to have been made by the
      Company only.

    

    (e)    The
      Rights Agent shall not be under any responsibility in respect of the validity
      of
      this Agreement or the execution and delivery hereof (except the due execution
      hereof by the Rights Agent) or in respect of the validity or execution of any
      Rights Certificate (except its countersignature thereof); nor shall it be
      responsible for any breach by the Company of any covenant or condition contained
      in this Agreement or in any Rights Certificate; nor shall it be liable or
      responsible for any change in the exercisability of the Rights or any adjustment
      in the terms of the Rights (including the manner, method or amount thereof)
      provided for in Sections 3, 11, 13, 23 or 24, or the ascertaining of the
      existence of facts that would require any such change or adjustment (except
      with
      respect to the exercise of Rights evidenced by Rights Certificates after receipt
      by the Rights Agent of a certificate furnished pursuant to Section 12 describing
      such change or adjustment, upon which certificate the Rights Agent may rely);
      nor shall it by any act hereunder be deemed to make any representation or
      warranty as to the authorization or reservation of any Preferred Shares to
      be
      issued pursuant to this Agreement or any Rights Certificate or as to whether
      any
      Preferred Shares will, when issued, be validly authorized and issued, fully
      paid
      and nonassessable.

    

    (f)    The
      Company agrees that it will perform, execute, acknowledge and deliver or cause
      to be performed, executed, acknowledged and delivered all such further and
      other
      acts, instruments and assurances as may reasonably be required by the Rights
      Agent for the carrying out or performing by the Rights Agent of the provisions
      of this Agreement.

    

    (g)    The
      Rights Agent is hereby authorized and directed to accept instructions with
      respect to the performance of its duties hereunder from any one of the Chairman
      of the Board, the Chief Executive Officer, the President, any Vice President,
      the Chief Financial Officer, the Treasurer, the Secretary or any Assistant
      Secretary of the Company, and to apply to such officers for advice or
      instructions in connection with its duties, and it shall not be liable for
      any
      action taken, suffered or omitted by it in good faith in accordance with
      instruction of any such officer or for any delay in acting while waiting for
      those instructions.

    

    (h)    The
      Rights Agent and any stockholder, director, officer or employee of the Rights
      Agent may, to the extent not otherwise prohibited by applicable law, buy, sell
      or deal in any of the Rights or other securities of the Company or become
      pecuniarily interested in any transaction in which the Company may be
      interested, or contract with or lend money to the Company or otherwise act
      as
      fully and freely as though the Rights Agent were not Rights Agent under this
      Agreement. Nothing herein shall preclude the Rights Agent or any such
      stockholder, director, officer or employee from acting in any other capacity
      for
      the Company or for any other Person.

    

    (i)    The
      Rights Agent may execute and exercise any of the rights or powers hereby vested
      in it or perform any duty hereunder either itself (through its directors,
      officers and employees) or by or through its attorneys or agents, and the Rights
      Agent shall not be answerable or accountable for any act, omission, default,
      neglect or misconduct of any such attorneys or agents or for any loss to the
      Company or any other Person resulting from any such act, omission, default,
      neglect or misconduct; provided,
      however,
      that
      reasonable care was exercised in the selection and continued employment
      thereof.

    
      

      
        
          
            
            

          

          
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    (j)    No
      provision of this Agreement shall require the Rights Agent to expend or risk
      its
      own funds or otherwise incur any financial liability in the performance of
      any
      of its duties hereunder or in the exercise of its rights if there shall be
      reasonable grounds for believing that repayment of such funds or adequate
      indemnification against such risk or liability is not reasonably assured to
      it.

    

    (k)    If,
      with respect to any Rights Certificate surrendered to the Rights Agent for
      exercise or transfer, the certificate attached to the form of assignment or
      form
      of election to purchase, as the case may be, has either not been completed
      or
      indicates an affirmative response to clause 1 and/or 2 thereof, the Rights
      Agent
      shall not take any further action with respect to such requested exercise or
      transfer without first consulting with the Company.

    

    Section
      21.    Change
      of Rights Agent.    The
      Rights Agent or any successor Rights Agent may resign and be discharged from
      its
      duties under this Agreement upon thirty (30) days’ notice in writing mailed to
      the Company and to each transfer agent of the Preferred Shares and the Common
      Shares by registered or certified mail. The Company may remove the Rights Agent
      or any successor Rights Agent upon thirty (30) days’ notice in writing, mailed
      to the Rights Agent or successor Rights Agent, as the case may be, and to each
      transfer agent of the Preferred Shares and the Common Shares by registered
      or
      certified mail, and to the holders of the Rights Certificates by first-class
      mail. If the Rights Agent shall resign or be removed or shall otherwise become
      incapable of acting, the Company shall appoint a successor to the Rights Agent.
      If the Company shall fail to make such appointment within a period of thirty
      (30) days after giving notice of such removal or after it has been notified
      in
      writing of such resignation or incapacity by the resigning or incapacitated
      Rights Agent or by the holder of a Rights Certificate (who shall, with such
      notice, submit his or her Rights Certificate for inspection by the Company),
      then the registered holder of any Rights Certificate may apply to any court
      of
      competent jurisdiction for the appointment of a new Rights Agent. Any
      successor Rights Agent, whether appointed by the Company or by such a court,
      shall be a corporation organized and doing business under the laws of the United
      States or of the State of State of New York (or of any other state of the United
      States so long as such corporation is authorized to do business as a banking
      institution in the State of State of New York), in good standing, having an
      office in the State of State of New York, which is authorized under such laws
      to
      exercise corporate trust or stock transfer powers and is subject to supervision
      or examination by federal or state authority and which has at the time of its
      appointment as Rights Agent a combined capital and surplus of at least $50
      million. After
      appointment, the successor Rights Agent shall be vested with the same powers,
      rights, duties and responsibilities as if it had been originally named as Rights
      Agent without further act or deed; but the predecessor Rights Agent shall
      deliver and transfer to the successor Rights Agent any property at the time
      held
      by it hereunder, and execute and deliver any further assurance, conveyance,
      act
      or deed necessary for the purpose. Not later than the effective date of any
      such
      appointment, the Company shall file notice thereof in writing with the
      predecessor Rights Agent and each transfer agent of the Preferred Shares and
      the
      Common Shares, and mail a notice thereof in writing to the registered holders
      of
      the Rights Certificates. Failure to give any notice provided for in this
      Section 21, however, or any defect therein, shall not affect the legality
      or validity of the resignation or removal of the Rights Agent or the appointment
      of the successor Rights Agent, as the case may be.

    

    Section
      22.    Issuance
      of New Rights Certificates.    Notwithstanding
      any of the provisions of this Agreement or of the Rights to the contrary, the
      Company may, at its option, issue new Rights Certificates evidencing Rights
      in
      such form as may be approved by its Board of Directors to reflect any adjustment
      or change in the Exercise Price and the number or kind or class of shares or
      other securities or property purchasable under the Rights Certificates made
      in
      accordance with the provisions of this Agreement. In addition, in connection
      with the issuance or sale of Common Shares following the Distribution Date
      and
      prior to the earlier of the redemption or expiration of the Rights, the Company
      (a) shall, with respect to Common Shares so issued or sold pursuant to the
      exercise of stock options or under any employee plan or arrangement, granted
      or
      awarded prior to the Distribution Date, or upon the exercise, conversion or
      exchange of other securities of the Company issued by the Company prior to
      the
      Distribution Date and (b) may, in any other case, if deemed necessary or

    
      

      
        
          
            
            

          

          
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    appropriate
      by the Board of Directors of the Company, issue Rights Certificates representing
      the appropriate number of Rights in connection with such issuance or sale;
      provided,
      however,
      that
      (i) no such Rights Certificate shall be issued if, and to the extent that,
      the
      company shall be advised by counsel that such issuance would create a
      significant risk of or result in material adverse tax consequences to the
      Company or the Person to whom such Rights Certificate would be issued or would
      create a significant risk of or result in such options’ or employee plans’ or
      arrangements’ failing to qualify for otherwise available special tax treatment
      and (ii) no such Rights Certificate shall be issued if, and to the extent that,
      appropriate adjustment shall otherwise have been made in lieu of the issuance
      thereof.

    

    Section
      23.    Redemption.

    

    (a)    The
      Board of Directors may, at its option, at any time prior to the Close of
      Business on the earlier of (i) the tenth day following the Shares Acquisition
      Date (or such later date as may be determined by action of the Company’s Board
      of Directors and publicly announced by the Company) and (ii) the Final
      Expiration Date, redeem all but not less than all the then outstanding Rights
      at
      a redemption price of $0.001 per Right, appropriately adjusted to reflect any
      stock split, stock dividend or similar transaction occurring after the date
      hereof (such redemption price being herein referred to as the“Redemption
      Price”)
      and the
      Company may, at its option, pay the Redemption Price either in Common Shares
      (based on the Current Per Share Market Price thereof at the time of redemption)
      or cash. Such redemption of the Rights by the Company may be made effective
      at
      such time, on such basis and with such conditions as the Company’s Board of
      Directors in its sole discretion may establish. The date on which the Company’s
      Board of Directors elects to make the redemption effective shall be referred
      to
      as the “Redemption
      Date.”

    

    (b)    Immediately
      upon the action of the Board of Directors of the Company ordering the redemption
      of the Rights, evidence of which shall have been filed with the Rights Agent,
      and without any further action and without any notice, the right to exercise
      the
      Rights will terminate and the only right thereafter of the holders of Rights
      shall be to receive the Redemption Price. The Company shall promptly give public
      notice of any such redemption (with prompt notice thereof to the Rights Agent);
      provided,
      however,
      that
      the failure to give, or any defect in, any such notice shall not affect the
      validity of such redemption. Within ten (10) days after the action of the
      Company’s Board of Directors ordering the redemption of the Rights, the Company
      shall give notice of such redemption to the Rights Agent and the holders of
      the
      then outstanding Rights by mailing such notice to all such holders at their
      last
      addresses as they appear upon the registry books of the Rights Agent or, prior
      to the Distribution Date, on the registry books of the transfer agent for the
      Common Shares. Any notice that is mailed in the manner herein provided shall
      be
      deemed given, whether or not the holder receives the notice. Each such notice
      of
      redemption will state the method by which the payment of the Redemption Price
      will be made. Neither the Company nor any of its Affiliates or Associates may
      redeem, acquire or purchase for value any Rights at any time in any manner
      other
      than that specifically set forth in this Section 23 or in Section 24 hereof,
      and
      other than in connection with the purchase of Common Shares prior to the
      Distribution Date.

     

    Section
      24.    Exchange.

    

    (a)    Subject
      to subsection 24(c) below, the Company’s Board of Directors may, at its option,
      at any time after any Person becomes an Acquiring Person, exchange all or part
      of the then outstanding and exercisable Rights (which shall not include Rights
      that have become null and void pursuant to the provisions of Section 7(e)
      hereof) for Common Shares at an exchange ratio of one Common Share per Right,
      appropriately adjusted to reflect any stock split, stock dividend or similar
      transaction occurring after the date hereof (such exchange ratio being
      hereinafter referred to as the“Exchange
      Ratio”).
      Notwithstanding the foregoing, the Company’s Board of Directors shall not be
      empowered to effect such exchange at any time after any Person (other than
      the
      Company, any Subsidiary of the Company, any employee benefit plan of the Company
      or any such Subsidiary, or any entity holding Common Shares for or pursuant
      to
      the terms of any such plan), together with all Affiliates and Associates of
      such
      Person, becomes the Beneficial Owner of 50% or more of the Common Shares then
      outstanding.

    
      

      
        
          
            
            

          

          
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    (b)    Immediately
      upon the action of the Company’s Board of Directors ordering the exchange of any
      Rights pursuant to Section 24(a) and without any further action and without
      any
      notice, the right to exercise such Rights shall terminate and the only right
      thereafter of a holder of such Rights shall be to receive that number of Common
      Shares equal to the number of such Rights held by such holder multiplied by
      the
      Exchange Ratio. The Company shall give public notice (with prompt notice thereof
      to the Rights Agent) of any such exchange; provided,
      however,
      that
      the failure to give, or any defect in, such notice shall not affect the validity
      of such exchange. The Company shall mail a notice of any such exchange to all
      of
      the holders of such Rights at their last addresses as they appear upon the
      registry books of the Rights Agent. Any notice that is mailed in the manner
      herein provided shall be deemed given, whether or not the holder receives the
      notice. Each such notice of exchange will state the method by which the exchange
      of the Common Shares for Rights will be effected and, in the event of any
      partial exchange, the number of Rights that will be exchanged. Any partial
      exchange shall be effected pro rata based on the number of Rights (other than
      Rights which have become null and void pursuant to the provisions of Section
      7(e) hereof) held by each holder of Rights.

    

    (c)    In
      the event that there shall not be sufficient Common Shares issued but not
      outstanding or authorized but unissued to permit any exchange of Rights as
      contemplated in accordance with Section 24(a), the Company shall either take
      such action as may be necessary to authorize additional Common Shares for
      issuance upon exchange of the Rights or alternatively, at the option of a
      majority of the Company’s Board of Directors, with respect to each Right (i) pay
      cash in an amount equal to the Current Value (as hereinafter defined), in lieu
      of issuing Common Shares in exchange therefor, or (ii) issue debt or equity
      securities or a combination thereof, having a value equal to the Current Value,
      in lieu of issuing Common Shares in exchange for each such Right, where the
      value of such securities shall be determined by a nationally recognized
      investment banking firm selected by majority vote of the Company’s Board of
      Directors, or (iii) deliver any combination of cash, property, Common Shares
      and/or other securities having a value equal to the Current Value in exchange
      for each Right. For purposes of this Section 24(c) only, the Current Value
      shall
      mean the product of the Current Per Share Market Price of Common Shares on
      the
      date of the occurrence of the event described above in subsection (a),
      multiplied by the number of Common Shares for which the Right otherwise would
      be
      exchangeable if there were sufficient shares available. To the extent that
      the
      Company determines that some action need be taken pursuant to clauses (i),
      (ii)
      or (iii) of this Section 24(c), the Company’s Board of Directors may temporarily
      suspend the exercisability of the Rights for a period of up to sixty (60) days
      following the date on which the event described in Section 24(a) shall have
      occurred, in order to seek any authorization of additional Common Shares and/or
      to decide the appropriate form of distribution to be made pursuant to the above
      provision and to determine the value thereof. In the event of any such
      suspension, the Company shall issue a public announcement stating that the
      exercisability of the Rights has been temporarily suspended.

    

    (d)    The
      Company shall not be required to issue fractions of Common Shares or to
      distribute certificates that evidence fractional Common Shares. In lieu of
      such
      fractional Common Shares, there shall be paid to the registered holders of
      the
      Rights Certificates with regard to which such fractional Common Shares would
      otherwise be issuable, an amount in cash equal to the same fraction of the
      current market value of a whole Common Share (as determined pursuant to the
      second sentence of Section 1(j) hereof).

     

    (e)    The
      Company may, at its option, by majority vote of the Company’s Board of
      Directors, at any time before any Person has become an Acquiring Person,
      exchange all or part of the then outstanding Rights for rights of substantially
      equivalent value, as determined reasonably and with good faith by the Company’s
      Board of Directors based upon the advice of one or more nationally recognized
      investment banking firms.

    
      

      
        
          
            
            

          

          
            27

            
              

            

          

          
            
            

          

           

        

      

    

    (f)    Immediately
      upon the action of the Company’s Board of Directors ordering the exchange of any
      Rights pursuant to Section 24(e) and without any further action and without
      any
      notice, the right to exercise such Rights shall terminate and the only right
      thereafter of a holder of such Rights shall be to receive that number of rights
      in exchange therefor as has been determined by the Company’s Board of Directors
      in accordance with subsection 24(e) above. The Company shall give public notice
      (with prompt notice thereof to the Rights Agent) of any such exchange;
provided,
      however,
      that
      the failure to give, or any defect in, such notice shall not affect the validity
      of such exchange. The Company shall mail a notice of any such exchange to all
      of
      the holders of such Rights at their last addresses as they appear upon the
      registry books of the transfer agent for the Common Shares of the Company.
      Any
      notice that is mailed in the manner herein provided shall be deemed given,
      whether or not the holder receives the notice. Each such notice of exchange
      will
      state the method by which the exchange of the Rights will be
      effected.

    

    Section
      25.    Notice
      of Certain Events.

    

    (a)    In
      case
      the Company shall, at any time after the Distribution Date, propose (i) to
      pay any dividend payable in stock of any class to the holders of the Preferred
      Shares or to make any other distribution to the holders of the Preferred Shares
      (other than a regular quarterly cash dividend), (ii) to offer to the
      holders of the Preferred Shares rights or warrants to subscribe for or to
      purchase any additional Preferred Shares or shares of stock of any class or
      any
      other securities, rights or options, (iii) to effect any reclassification
      of the Preferred Shares (other than a reclassification involving only the
      subdivision of outstanding Preferred Shares), (iv) to effect any
      consolidation or merger into or with, or to effect any sale or other transfer
      (or to permit one or more of its Subsidiaries to effect any sale or other
      transfer), in one or more transactions, of 50% or more of the assets or earning
      power of the Company and its Subsidiaries (taken as a whole) to, any other
      Person, (v) to effect the liquidation, dissolution or winding up of the
      Company, or (vi) to declare or pay any dividend on the Common Shares
      payable in Common Shares or to effect a subdivision, combination or
      consolidation of the Common Shares (by reclassification or otherwise than by
      payment of dividends in Common Shares), then, in each such case, the Company
      shall give to each holder of a Right Certificate, in accordance with Section
      26
      hereof, a notice of such proposed action, which shall specify the record date
      for the purposes of such stock dividend, or distribution of rights or warrants,
      or the date on which such reclassification, consolidation, merger, sale,
      transfer, liquidation, dissolution, or winding up is to take place and the
      date
      of participation therein by the holders of the Common Shares and/or Preferred
      Shares, if any such date is to be fixed, and such notice shall be so given
      in
      the case of any action covered by clause (i) or (ii) above at least 10 days
      prior to the record date for determining holders of the Preferred Shares for
      purposes of such action, and, in the case of any such other action, at least
      10
      days prior to the date of the taking of such proposed action or the date of
      participation therein by the holders of the Common Shares and/or Preferred
      Shares, whichever shall be the earlier.

    

    (b)    In
      case
      the event set forth in Section 11(a)(ii) hereof shall occur, then the Company
      shall, as soon as practicable thereafter, give to each holder of a Right
      Certificate, in accordance with Section 26 hereof, a notice of the occurrence
      of
      such event, which notice shall describe such event and the consequences of
      such
      event to holders of Rights under Section 11(a)(ii) hereof.

    
      

      
        
          
            
            

          

          
            28

            
              

            

          

          
            
            

          

           

        

      

    

    Section
      26.    Notices.    Notices
      or demands authorized by this Agreement to be given or made by the Rights Agent
      or by the holder of any Rights Certificate to or on the Company shall be
      sufficiently given or made if delivered, in the case of domestic delivery,
      by
      first-class mail, postage prepaid or by overnight courier service, or in the
      case of international delivery, by two-day courier service, to the address
      as
      follows:

    

    Internap
      Network Services Corporation 

    250
      Williams Street

    Atlanta,
      Georgia 30303

    Attention:
      Richard Dobb, Vice President and General Counsel

    

    with
      a
      copy to:

    

    Troutman
      Sanders LLP

    600
      Peachtree Street, N.E., Suite 5200

    Atlanta,
      Georgia 30308

    Attention:
      W. Brinkley Dickerson, Jr.

    Facsimile
      No.: (404) 962-6743

    

    Subject
      to the provisions of Section 21 hereof, any notice or demand authorized by
      this
      Agreement to be given or made by the Company or by the holder of any Rights
      Certificate to or on the Rights Agent shall be sufficiently given or made if
      in
      writing and sent by first-class mail, postage prepaid, addressed (until another
      address is filed in writing with the Company) as follows: 

    

    59
      Maiden
      Lane, Plaza Level

    New
      York,
      NY 10038

    

    Attention:
      Wilbert Myles

    Facsimile
      No.: (718)
      921-8323

     

    

    Notices
      or demands authorized by this Agreement to be given or made by the Company
      or
      the Rights Agent to the holder of any Rights Certificate shall be sufficiently
      given or made if sent by first-class mail, postage prepaid, addressed to such
      holder at the address of such holder as shown on the registry books of the
      Company.

    

    Section
      27.    Supplements
      and Amendments.    Prior
      to the occurrence of a Distribution Date, the Company may supplement or amend
      this Agreement in any respect without the approval of any holders of Rights
      and
      the Rights Agent shall, if the Company so instructs, execute such supplement
      or
      amendment. From and after the occurrence of a Distribution Date, the Company
      and
      the Rights Agent may from time to time supplement or amend this Agreement
      without the approval of any holders of Rights in order to (i) cure any
      ambiguity, (ii) correct or supplement any provision contained herein which
      may
      be defective or inconsistent with any other provisions herein, (iii) shorten
      or
      lengthen any time period hereunder or (iv) to change or supplement the
      provisions hereunder in any manner that the Company may deem necessary or
      desirable and that shall not adversely affect the interests of the holders
      of
      Rights (other than an Acquiring Person or an Affiliate or Associate of an
      Acquiring Person); provided,
      this
      Agreement may not be supplemented or amended to lengthen, pursuant to clause
      (iii) of this sentence, (A) a time period relating to when the Rights may be
      redeemed at such time as the Rights are not then redeemable or (B) any other
      time period unless such lengthening is for the purpose of protecting, enhancing
      or clarifying the rights of, and/or the benefits to, the holders of Rights
      (other than an Acquiring Person or an Affiliate or Associate of an Acquiring
      Person). Upon the delivery of a certificate from an appropriate officer of
      the
      Company that states that the proposed supplement or amendment is in compliance
      with the terms of this Section 27 and provided that such supplement or amendment
      does not change or increase the Rights Agent’s rights, duties, liabilities or
      obligations hereunder, the Rights Agent shall execute such supplement or
      amendment. Prior to the Distribution Date, the interests of the holders of
      Rights shall be deemed coincident with the interests of the holders of Common
      Shares.

    
      

      
        
          
            
            

          

          
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    Section
      28.    Successors.    All
      the covenants and provisions of this Agreement by or for the benefit of the
      Company or the Rights Agent shall bind and inure to the benefit of their
      respective successors and assigns hereunder.

    

    Section
      29.    Determinations
      and Actions by the Company’s Board of Directors, etc.

    

    (a)    For
      all purposes of this Agreement, any calculation of the number of Common Shares
      outstanding at any particular time, including for purposes of determining the
      particular percentage of such outstanding Common Shares of which any Person
      is
      the Beneficial Owner, shall be made in accordance with the last sentence of
      Rule
      13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act.
      The
      Board of Directors of the Company shall have the exclusive power and authority
      to administer this Agreement and to exercise all rights and powers specifically
      granted to the Company’s Board of Directors, or the Company, or as may be
      necessary or advisable in the administration of this Agreement, including,
      without limitation, the right and power (i) to interpret the provisions of
      this
      Agreement and (ii) to make all determinations deemed necessary or advisable
      for
      the administration of this Agreement (including a determination to redeem or
      not
      redeem the Rights or to amend the Agreement). All such actions, calculations,
      interpretations and determinations (including, for purposes of clause (y) below,
      all omissions with respect to the foregoing) which are done or made by the
      Company’s Board of Directors in good faith, shall (x) be final, conclusive and
      binding on the Company, the Rights Agent, the holders of the Rights Certificates
      and all other parties and (y) with respect to claims specifically arising from
      the Agreement, not subject the Board of Directors of the Company to any
      liability to the holders of the Rights. The Rights Agent is entitled always
      to
      assume the Company’s Board of Directors acted in good faith and shall be fully
      protected and incur no liability in reliance thereon.

    

    (b)    It
      is understood that the TIDE Committee (as defined below) of the Board of
      Directors of the Company shall review and evaluate this Agreement in order
      to
      consider whether the maintenance of this Agreement continues to be in the
      interests of the Company, its stockholders and any other relevant constituencies
      of the Company, within three (3) years of the date hereof and at least every
      three (3) years thereafter, or sooner than that if any Person shall have made
      a
      proposal to the Company, or taken any such other action, that, if effective,
      could cause such Person to become an Acquiring Person hereunder, if a majority
      of the members of the TIDE Committee shall deem such review and evaluation
      appropriate after giving due regard to all relevant circumstances. Following
      each such review, the TIDE Committee will communicate its conclusions to the
      full Board of Directors of the Company, including any recommendation in light
      thereof as to whether this Agreement should be modified or the Rights should
      be
      redeemed. “TIDE
      Committee”
      shall
      mean a committee appointed by the Board of Directors of the Company to fulfill
      the foregoing duties and shall be comprised of members of the Board of Directors
      who are independent under the listing standards of Nasdaq, or any other national
      securities exchange on which the Common Shares is listed, and who is not an
      Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
      representative of an Acquiring Person, or of any such Affiliate or Associate;
      provided,
      however,
      that
      the fact that a Person is nominated for election as a director by an Acquiring
      Person or any such Affiliate, Associate or representative, or the fact that
      an
      Acquiring Person or any such Affiliate, Associate or representative votes in
      favor of the election of a Person as a director, shall not, in and of itself,
      disqualify a Person from being independent provided that such Person does not
      have any agreement or understanding with such Acquiring Person, Affiliate,
      Associate or representative with respect to how such Person will vote on any
      future transactions. The Board of Directors may designate an existing committee
      of the Board of Directors to serve as the TIDE Committee provided that the
      members of such committee satisfy the foregoing requirements.

    
      

      
        
          
            
            

          

          
            30

            
              

            

          

          
            
            

          

           

        

      

    

    Section
      30.    Benefits
      of this Agreement.    Nothing
      in this Agreement shall be construed to give to any Person other than the
      Company, the Rights Agent and the registered holders of the Rights Certificates
      (and, prior to the Distribution Date, the Common Shares) any legal or equitable
      right, remedy or claim pursuant to this Agreement; but this Agreement shall
      be
      for the sole and exclusive benefit of the Company, the Rights Agent and the
      registered holders of the Rights Certificates (and, prior to the Distribution
      Date, the Common Shares). 

     

    Section
      31.    Severability.    If
      any term, provision, covenant or restriction of this Agreement is held by a
      court of competent jurisdiction or other authority to be invalid, void or
      unenforceable, the remainder of the terms, provisions, covenants and
      restrictions of this Agreement shall remain in full force and effect and shall
      in no way be affected, impaired or invalidated; provided,
      however,
      that
      notwithstanding anything in this Agreement to the contrary, if any such term,
      provision, covenant or restriction is held by such court or authority to be
      invalid, void or unenforceable and the Board of Directors of the Company
      determines in its good faith judgment that severing the invalid language from
      this Agreement would adversely affect the purpose or effect of this Agreement,
      the right of redemption set forth in Section 23 hereof shall be reinstated
      and
      shall not expire until the Close of Business on the tenth day following the
      date
      of such determination by the Company’s Board of Directors. 

     

    Section
      32.    Governing
      Law.    This
      Agreement and each Right and each Rights Certificate issued hereunder shall
      be
      deemed to be a contract made under the laws of the State of Delaware and for
      all
      purposes shall be governed by and construed in accordance with the laws of
      such
      State applicable to contracts to be made and performed entirely within such
      State, except that all provisions regarding the rights, duties, obligations
      and
      immunities of the Rights Agent shall be governed by and construed in accordance
      with the laws of the State of New York applicable to contracts made and to
      be
      performed entirely within such State. 

     

    Section
      33.    Counterparts.    This
      Agreement may be executed in any number of counterparts and each of such
      counterparts shall for all purposes be deemed to be an original, and all such
      counterparts shall together constitute but one and the same instrument.

     

    Section
      34.    Descriptive
      Headings.    Descriptive
      headings of the several Sections of this Agreement are inserted for convenience
      only and shall not control or affect the meaning or construction of any of
      the
      provisions hereof. 

     

    

    

    [remainder
      of page intentionally left blank] 

    

    

    
      

      
        
          
            
            

          

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

    

    “COMPANY”

    

    INTERNAP
      NETWORK SERVICES CORPORATION

    

    By:      
      /s/
      David
      Buckel

    Name: 
      David
      Buckel

    Title:   
      Chief
      Financial Officer 

    

    

    

    “RIGHTS
      AGENT”

    

    AMERICAN
      STOCK TRANSFER AND TRUST COMPANY

     

    
      By:      
        /s/
        Wilbert Myles

      Name: 
        Wilbert
        Myles

      Title:    Vice
        President

      

    

    

    
      

      
        
          
            
            

          

          
            32

            
              

            

          

          
            
            

          

        

      

    

    

    EXHIBIT
      A 

    

    FORM
      OF CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES AND

    PRIVILEGES
      OF SERIES B PREFERRED STOCK OF

    INTERNAP
      NETWORK SERVICES CORPORATION

    

    The
      undersigned, Richard Dobb, does hereby certify: 

    

    1.    That
      she is the duly elected and acting Vice President and General Counsel of
      Internap Network Services Corporation, a Delaware corporation (the“Corporation”).

    

    2.    That
      pursuant to the authority conferred upon the Corporation’s Board of Directors by
      the Amended and Restated Certificate of Incorporation of the said Corporation,
      the said Board of Directors of the Corporation on March 15, 2007 adopted the
      following resolutions creating a series of Preferred Stock designated as Series
      B Preferred Stock:

    

    “RESOLVED:    that
      pursuant to the authority vested in the Board of Directors of the Corporation
      by
      the Certificate of Incorporation, as amended, the Corporation’s Board of
      Directors does hereby provide for the issue of a series of Preferred Stock
      of
      the Corporation and does hereby fix and herein state and express the
      designations, powers, preferences and relative and other special rights and
      the
      qualifications, limitations and restrictions of such series of Preferred Stock
      as follows:

    

    Section
      1.    Designation
      and Amount.    The
      shares of such series shall be designated as “Series
      B Preferred Stock.”
      The
      Series B Preferred Stock shall have a par value of $0.001 per share, and the
      number of shares constituting such series shall be 500,000.

     

    Section
      2.    Proportional
      Adjustment.    In
      the event that the Corporation shall at any time after the issuance of any
      share
      or shares of Series B Preferred Stock (i) declare any dividend on Common Stock
      of the Corporation (“Common
      Stock”)
      payable
      in shares of Common Stock, (ii) subdivide the outstanding Common Stock or (iii)
      combine the outstanding Common Stock into a smaller number of shares, then
      in
      each such case the Corporation shall simultaneously effect a proportional
      adjustment to the number of outstanding shares of Series B Preferred Stock.
      

    

    Section
      3.    Dividends
      and Distributions.
      

    

    (a)    Subject
      to the prior and superior right of the holders of any shares of any series
      of
      Preferred Stock ranking prior and superior to the shares of Series B Preferred
      Stock with respect to dividends, the holders of shares of Series B Preferred
      Stock shall be entitled to receive when, as and if declared by the Corporation’s
      Board of Directors out of funds legally available for the purpose, quarterly
      dividends payable in cash on the last day of March, June, September, and
      December in each year (each such date being referred to herein as a“Quarterly Dividend
      Payment Date”),
      commencing on the first Quarterly Dividend Payment Date after the first issuance
      of a share or fraction of a share of Series B Preferred Stock, in an amount
      per
      share (rounded to the nearest cent) equal to 1,000 times the aggregate per
      share
      amount of all cash dividends, and 1,000 times the aggregate per share amount
      (payable in kind) of all non-cash dividends or other distributions other than
      a
      dividend payable in shares of Common Stock or a subdivision of the outstanding
      shares of Common Stock (by reclassification or otherwise), declared on the
      Common Stock since the immediately preceding Quarterly Dividend Payment Date,
      or, with respect to the first Quarterly Dividend Payment Date, since the first
      issuance of any share or fraction of a share of Series B Preferred
      Stock.

    
      

      
        
          
            
            

          

          
            1

            
              

            

          

          
            
            

        

      

    

    (b)    The
      Corporation shall declare a dividend or distribution on the Series B Preferred
      Stock as provided in paragraph (a) above immediately after it declares a
      dividend or distribution on the Common Stock (other than a dividend payable
      in
      shares of Common Stock). 

     

    (c)    Dividends
      shall begin to accrue on outstanding shares of Series B Preferred Stock from
      the
      Quarterly Dividend Payment Date next preceding the date of issue of such shares
      of Series B Preferred Stock, unless the date of issue of such shares is prior
      to
      the record date for the first Quarterly Dividend Payment Date, in which case
      dividends on such shares shall begin to accrue from the date of issue of such
      shares, or unless the date of issue is a Quarterly Dividend Payment Date or
      is a
      date after the record date for the determination of holders of shares of Series
      B Preferred Stock entitled to receive a quarterly dividend and before such
      Quarterly Dividend Payment Date, in either of which events such dividends shall
      begin to accrue from such Quarterly Dividend Payment Date. Accrued but unpaid
      dividends shall not bear interest. Dividends paid on the shares of Series B
      Preferred Stock in an amount less than the total amount of such dividends at
      the
      time accrued and payable on such shares shall be allocated pro rata on a
      share-by-share basis among all such shares at the time outstanding. The
      Corporation’s Board of Directors may fix a record date for the determination of
      holders of shares of Series B Preferred Stock entitled to receive payment of
      a
      dividend or distribution declared thereon, which record date shall be no more
      than 30 days prior to the date fixed for the payment thereof. 

     

    Section
      4.    Voting
      Rights.    The
      holders of shares of Series B Preferred Stock shall have the following voting
      rights: 

     

    (a)    Each
      share of Series B Preferred Stock shall entitle the holder thereof to 1,000
      votes on all matters submitted to a vote of the stockholders of the Corporation.
      

     

    (b)    Except
      as otherwise provided herein or by law, the holders of shares of Series B
      Preferred Stock and the holders of shares of Common Stock shall vote together
      as
      one class on all matters submitted to a vote of stockholders of the Corporation.
      

     

    (c)    Except
      as required by law, the holders of Series B Preferred Stock shall have no
      special voting rights and their consent shall not be required (except to the
      extent that they are entitled to vote with holders of Common Stock as set forth
      herein) for taking any corporate action. 

     

    Section
      5.    Certain
      Restrictions.
      

     

    (a)    The
      Corporation shall not declare any dividend on, make any distribution on, or
      redeem or purchase or otherwise acquire for consideration any shares of Common
      Stock after the first issuance of a share or fraction of a share of Series
      B
      Preferred Stock unless concurrently therewith it shall declare a dividend on
      the
      Series B Preferred Stock as required by Section 3 hereof. 

     

    (b)    Whenever
      quarterly dividends or other dividends or distributions payable on the Series
      B
      Preferred Stock as provided in Section 3 are in arrears, thereafter and until
      all accrued and unpaid dividends and distributions, whether or not declared,
      on
      shares of Series B Preferred Stock outstanding shall have been paid in full,
      the
      Corporation shall not: 

     

    (i)    declare
      or pay dividends on, make any other distributions on, or redeem or purchase
      or
      otherwise acquire for consideration any shares of stock ranking junior (either
      as to dividends or upon liquidation, dissolution or winding up) to the Series
      B
      Preferred Stock; 

    
      

      
        
          
            
            

          

          
            2

            
              

            

          

          
            
            

          

        

      

    

     

    (ii)    declare
      or pay dividends on, or make any other distributions on any shares of stock
      ranking on a parity (either as to dividends or upon liquidation, dissolution
      or
      winding up) with the Series B Preferred Stock, except dividends paid ratably
      on
      the Series B Preferred Stock and all such parity stock on which dividends are
      payable or in arrears in proportion to the total amounts to which the holders
      of
      all such shares are then entitled; 

     

    (iii)    redeem
      or purchase or otherwise acquire for consideration shares of any stock ranking
      on a parity (either as to dividends or upon liquidation, dissolution or winding
      up) with the Series B Preferred Stock, provided that the Corporation may at
      any
      time redeem, purchase or otherwise acquire shares of any such parity stock
      in
      exchange for shares of any stock of the Corporation ranking junior (either
      as to
      dividends or upon dissolution, liquidation or winding up) to the Series B
      Preferred Stock; or 

     

    (iv)    purchase
      or otherwise acquire for consideration any shares of Series B Preferred Stock,
      or any shares of stock ranking on a parity with the Series B Preferred Stock,
      except in accordance with a purchase offer made in writing or by publication
      (as
      determined by the Corporation’s Board of Directors) to all holders of such
      shares upon such terms as the Corporation’s Board of Directors, after
      consideration of the respective annual dividend rates and other relative rights
      and preferences of the respective series or classes, shall determine in good
      faith will result in fair and equitable treatment among the respective series
      or
      classes. 

     

    (c)    The
      Corporation shall not permit any subsidiary of the Corporation to purchase
      or
      otherwise acquire for consideration any shares of stock of the Corporation
      unless the Corporation could, under paragraph (a) of this Section 5, purchase
      or
      otherwise acquire such shares at such time and in such manner. 

     

    Section
      6.    Reacquired
      Shares.    Any
      shares of Series B Preferred Stock purchased or otherwise acquired by the
      Corporation in any manner whatsoever shall be retired and canceled promptly
      after the acquisition thereof. All such shares shall upon their cancellation
      become authorized but unissued shares of Preferred Stock and may be reissued
      as
      part of a new series of Preferred Stock to be created by resolution or
      resolutions of the Corporation’s Board of Directors, subject to the conditions
      and restrictions on issuance set forth herein and in the Amended and Restated
      Certificate of Incorporation, as then amended. 

     

    Section
      7.    Liquidation,
      Dissolution or Winding Up.    Upon
      any liquidation, dissolution or winding up of the Corporation, the holders
      of
      shares of Series B Preferred Stock shall be entitled to receive an aggregate
      amount per share equal to 1,000 times the aggregate amount to be distributed
      per
      share to holders of shares of Common Stock plus an amount equal to any accrued
      and unpaid dividends on such shares of Series B Preferred Stock. 

     

    Section
      8.    Consolidation,
      Merger, etc.    In
      case the Corporation shall enter into any consolidation, merger, combination
      or
      other transaction in which the shares of Common Stock are exchanged for or
      changed into other stock or securities, cash and/or any other property, then
      in
      any such case the shares of Series B Preferred Stock shall at the same time
      be
      similarly exchanged or changed in an amount per share equal to 1,000 times
      the
      aggregate amount of stock, securities, cash and/or any other property (payable
      in kind), as the case may be, into which or for which each share of Common
      Stock
      is changed or exchanged. 

     

    Section
      9.    No
      Redemption.    The
      shares of Series B Preferred Stock shall not be redeemable. 

    
      

      
        
          
            
            

          

          
            3

            
              

            

          

          
            
            

          

           

        

      

    

    Section
      10.    Ranking.    The
      Series B Preferred Stock shall rank junior to all other series of the
      Corporation’s Preferred Stock as to the payment of dividends and the
      distribution of assets, unless the terms of any such series shall provide
      otherwise. 

     

    Section
      11.    Amendment.    The
      Amended and Restated Certificate of Incorporation of the Corporation shall
      not
      be further amended in any manner which would materially alter or change the
      powers, preference or special rights of the Series B Preferred Stock so as
      to
      affect them adversely without the affirmative vote of the holders of a majority
      of the outstanding shares of Series B Preferred Stock, voting separately as
      a
      series. 

     

    Section
      12.    Fractional
      Shares.    Series
      B Preferred Stock may be issued in fractions of a share which shall entitle
      the
      holder, in proportion to such holder’s fractional shares, to exercise voting
      rights, receive dividends, participate in distributions and to have the benefit
      of all other rights of holders of Series B Preferred Stock. 

    

     

    RESOLVED
      FURTHER, that the Chief Executive Officer, Chief Financial Officer, President,
      any Vice President, Secretary or any Assistant Secretary of this Corporation
      be,
      and they hereby are, authorized and directed to prepare and file a Certificate
      of Designation of Rights, Preferences and Privileges of the Series B Preferred
      Stock of the Corporation in accordance with the foregoing resolution and the
      applicable provisions of Delaware law and to take such actions as they may
      deem
      necessary or appropriate to carry out the intent of the foregoing resolution.”

    

    I
      further
      declare under penalty of perjury that the matters set forth in the foregoing
      Certificate of Designation are true and correct of my own knowledge.

    

    Executed
      at Atlanta, Georgia on April 5, 2007.

    
       

      
                                                                _______________________________

                                                        Richard
          Dobb

      
                                                        Vice
      President and
      General Counsel

    
                                                              Internap
        Network
        Services Corporation 

    

     

    
      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
      B 

     

    FORM
      OF RIGHTS CERTIFICATE 

     

    
      	 
	
              Certificate
                No. R-
                                

            	
                

            	
              _________
                Rights

            

    

     

     

    NOT
      EXERCISABLE AFTER THE EARLIER OF (i) MARCH 23, 2017, (ii) THE DATE TERMINATED
      BY
      THE COMPANY OR (iii) THE DATE THE COMPANY EXCHANGES THE RIGHTS PURSUANT TO
      THE
      PREFERRED STOCK RIGHTS AGREEMENT BETWEEN INTERNAP NETWORK SERVICES CORPORATION
      AND AMERICAN STOCK TRANSFER AND TRUST COMPANY, AS THE RIGHTS AGENT, DATED AS
      OF
      April 11, 2007 (THE “RIGHTS AGREEMENT”). THE RIGHTS ARE SUBJECT TO REDEMPTION,
      AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN
      THE
      RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
      AN
      ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
      TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
      RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
      CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
      ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
      TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE
      AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
      SPECIFIED IN SECTION 7(e) OF SUCH RIGHTS AGREEMENT.]1* 

     

     

     

    __________________________

      
        1
          The
          portion of the legend in brackets shall be inserted only if applicable
          and shall
          replace the preceding sentence.

        
           

          
            
              
                
                

              

              
                1

                
                  

                

              

              
                
                

              

            

          

        

         

      

    

    RIGHTS
      CERTIFICATE 

     

    INTERNAP
      NETWORK SERVICES CORPORATION

    

    This
      certifies that                                         
                                      ,
      or
      registered assigns, is the registered owner of the number of Rights set forth
      above, each of which entitles the owner thereof, subject to the terms,
      provisions and conditions of the Preferred Stock Rights Agreement dated as
      of
      April 11, 2007, (the “Rights
      Agreement”),
      between Internap Network Services Corporation, a Delaware corporation (the
      “Company”),
      and
      American Stock Transfer And Trust Company , as Rights Agent (the “Rights
      Agent”),
      to
      purchase from the Company at any time after the Distribution Date (as such
      term
      is defined in the Rights Agreement) and prior to 5:00 P.M., New York time,
      on
      March 23, 2017 at the office of the Rights Agent designated for such purpose,
      or
      at the office of its successor as Rights Agent, one one-thousandth (0.001)
      of a
      fully paid and non-assessable share of Series B Preferred Stock, par value
      $0.001 per share (the “Preferred
      Shares”),
      of the
      Company, at an Exercise Price of $100 per one-thousandth (0.001) of a Preferred
      Share (the “Exercise
      Price”),
      upon
      presentation and surrender of this Rights Certificate with the Form of Election
      to Purchase and related Certificate duly executed. The number of Rights
      evidenced by this Rights Certificate (and the number of one-thousandths (0.001)
      of a Preferred Share which may be purchased upon exercise hereof) set forth
      above are the number and Exercise Price as of April 11, 2007 based on the
      Preferred Shares as constituted at such date. As provided in the Rights
      Agreement, the Exercise Price and the number and kind of Preferred Shares or
      other securities that may be purchased upon the exercise of the Rights evidenced
      by this Rights Certificate are subject to modification and adjustment upon
      the
      happening of certain events.

    

    This
      Rights Certificate is subject to all of the terms, provisions and conditions
      of
      the Rights Agreement, which terms, provisions and conditions are hereby
      incorporated herein by reference and made a part hereof and to which Rights
      Agreement reference is hereby made for a full description of the rights,
      limitations of rights, obligations, duties and immunities hereunder of the
      Rights Agent, the Company and the holders of the Rights Certificates, which
      limitations of rights include the temporary suspension of the exercisability
      of
      such Rights under the specific circumstances set forth in the Rights Agreement.
      Copies of the Rights Agreement are on file at the principal executive offices
      of
      the Company and the above-mentioned office of the Rights Agent.

    

    Subject
      to the provisions of the Rights Agreement, the Rights evidenced by this Rights
      Certificate (i) may be redeemed by the Company, at its option, at a redemption
      price of $0.001 per Right or (ii) may be exchanged by the Company in whole
      or in
      part for Common Shares, substantially equivalent rights or other consideration
      as determined by the Company.

    

    This
      Rights Certificate, with or without other Rights Certificates, upon surrender
      at
      the office of the Rights Agent designated for such purpose, may be exchanged
      for
      another Rights Certificate or Rights Certificates of like tenor and date
      evidencing Rights entitling the holder to purchase a like aggregate amount
      of
      securities as the Rights evidenced by the Rights Certificate or Rights
      Certificates surrendered shall have entitled such holder to purchase. If this
      Rights Certificate shall be exercised in part, the holder shall be entitled
      to
      receive upon surrender hereof another Rights Certificate or Rights Certificates
      for the number of whole Rights not exercised.

    

    No
      fractional portion of less than one one-thousandth (0.001) of a Preferred Share
      will be issued upon the exercise of any Right or Rights evidenced hereby but
      in
      lieu thereof a cash payment will be made, as provided in the Rights
      Agreement.

    
       

      
        
          
            
            

          

          
            2

            
              

            

          

          
            
            

        

      

    

    No
      holder
      of this Rights Certificate, as such, shall be entitled to vote or receive
      dividends or be deemed for any purpose the holder of the Preferred Shares or
      of
      any other securities of the Company which may at any time be issuable on the
      exercise hereof, nor shall anything contained in the Rights Agreement or herein
      be construed to confer upon the holder hereof, as such, any of the rights of
      a
      stockholder of the Company or any right to vote for the election of directors
      or
      upon any matter submitted to stockholders at any meeting thereof, or to give
      or
      withhold consent to any corporate action, or to receive notice of meetings
      or
      other actions affecting stockholders (except as provided in the Rights
      Agreement), or to receive dividends or subscription rights, or otherwise, until
      the Right or Rights evidenced by this Rights Certificate shall have been
      exercised as provided in the Rights Agreement.

     

    This
      Rights Certificate shall not be valid or obligatory for any purpose until it
      shall have been countersigned by the Rights Agent.

     

    WITNESS
      the facsimile signature of the proper officers of the Company and its corporate
      seal. Dated as of                             ,
                  .
      

    

    INTERNAP
      NETWORK SERVICES CORPORATION

    

    By: 
      __________________________________      

    Its: 
      __________________________________      

    

    

    ATTEST

    

    By: 
      __________________________________      

    Its: 
      Secretary

    

    Countersigned:

    

    AMERICAN
      STOCK TRANSFER AND TRUST COMPANY,
      as
      Rights Agent

    

    By: 
      ____________________________     

    Its: 
      ____________________________     

    

    

    

    
       

      
        
          
            
            

          

          
            3

            
              

            

          

          
            
            

          

        

      

    

     

    Form
      of Reverse Side of Rights Certificate 

    

    FORM
      OF ASSIGNMENT 

    

    (To
      be
      executed by the registered holder if such holder desires to transfer the Rights
      Certificate) 

    

    FOR
      VALUE
      RECEIVED                                         
                                              
            
      hereby
      sells, assigns and transfers unto 

     

                                                                                                                                                                                      
                                                                                                                                                     

    (Please
      print name and address of transferee) 

    

    this
      Rights Certificate, together with all right, title and interest therein, and
      does hereby irrevocably constitute and appoint                                         
                          
      Attorney, to transfer the within Rights Certificate on the books of the
      within-named Company, with full power of substitution. 

    

    Dated:
                              ,
               

     

            
                                                          

                    
Signature
      

     

    Signature
      Guaranteed: 

     

    Signatures
      must be guaranteed by an “Eligible Guarantor Institution” (with membership in an
      approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of
      the
      Securities Exchange Act of 1934, as amended. 

    

    
       

      
        
          
            
            

          

          
            4

            
              

            

          

          
            
            

          

           

        

      

    

    CERTIFICATE 

     

    The
      undersigned hereby certifies by checking the appropriate boxes that:

     

    (1)    this
      Rights Certificate  ̈
      is
 ̈
      is not
      being sold, assigned and transferred by or on behalf of a Person who is or
      was
      an Acquiring Person, or an Affiliate or Associate of any such Person (as such
      terms are defined in the Rights Agreement); 

     

    (2)    after
      due inquiry and to the best knowledge of the undersigned, it  ̈
      did
 ̈
      did not
      acquire the Rights evidenced by this Rights Certificate from any Person who
      is,
      was or subsequently became an Acquiring Person or an Affiliate or Associate
      of
      any such Person. 

     

    Dated:
                              ,
               

     

    
       

              
                                                            

                      
        Signature

       

    

    Signature
      Guaranteed: 

     

    Signatures
      must be guaranteed by an “Eligible Guarantor Institution” (with membership in an
      approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of
      the
      Securities Exchange Act of 1934, as amended. 

    

    
       

      
        
          
            
            

          

          
            5

            
              

            

          

          
            
            

          

        

      

    

     

    Form
      of Reverse Side of Rights Certificate - continued

    

    FORM
      OF ELECTION TO PURCHASE 

     

    (To
      be
      executed if holder desires to exercise rights represented by the Rights
      Certificate) 

     

    To:
                                               

     

    The
      undersigned hereby irrevocably elects to exercise                                         
      Rights
      represented by this Rights Certificate to purchase the number of one-thousandths
      (0.001) of a Preferred Share issuable upon the exercise of such Rights and
      requests that certificates for such number of one-thousandths (0.001) of a
      Preferred Share issued in the name of: 

     

    Please
      insert social security 

    or
      other
      identifying number 

     

                                                                                                                                                                                                                                                                                                                                      
      

    (Please
      print name and address) 

     

                                                                                                                                                                                                                                                                                                                                        

     

    If
      such
      number of Rights shall not be all the Rights evidenced by this Rights
      Certificate, a new Rights Certificate for the balance remaining of such Rights
      shall be registered in the name of and delivered to: 

     

    Please
      insert social security 

    or
      other
      identifying number 

                                                                                                                                                                                                                                                                                                                                        

    (Please
      print name and address) 

     

                                                             
                                              
                                        
                                                                                                                                                                                      
 

     

     

    Dated:
                              ,
               

    
       

      
         

                
                                                              

                        
          Signature

      

    

     

    Signature
      Guaranteed: 

     

    Signatures
      must be guaranteed by an “Eligible Guarantor Institution” (with membership in an
      approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of
      the
      Securities Exchange Act of 1934, as amended. 

     

    
      
         

        
          
            
              
              

            

            
              6

              
                

              

            

            
              
              

            

          

        

      

       

    

    CERTIFICATE 

     

    The
      undersigned hereby certifies by checking the appropriate boxes that:

     

    (1)    the
      Rights evidenced by this Rights Certificate  ̈
      are
 ̈
      are not
      being exercised by or on behalf of a Person who is or was an Acquiring Person
      or
      an Affiliate or Associate of any such Person (as such terms are defined in
      the
      Rights Agreement); 

     

    (2)    after
      due inquiry and to the best knowledge of the undersigned, it  ̈
      did
 ̈
      did not
      acquire the Rights evidenced by this Rights Certificate from any Person who
      is,
      was or subsequently became an Acquiring Person or an Affiliate or Associate
      of
      any such Person. 

     

    Dated:
                              ,
               

    
       

      
         

                
                                                              

                        
          Signature

      

    

    Signature
      Guaranteed: 

     

    Signatures
      must be guaranteed by an “Eligible Guarantor Institution” (with membership in an
      approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of
      the
      Securities Exchange Act of 1934, as amended. 

     

    
      
         

        
          
            
              
              

            

            
              7

              
                

              

            

            
              
              

            

          

        

      

       

    

    Form
      of Reverse Side of Rights Certificate—continued 

     

    NOTICE 

     

    The
      signature in the foregoing Forms of Assignment and Election must conform to
      the
      name as written upon the face of this Rights Certificate in every particular,
      without alteration or enlargement or any change whatsoever. 

    

    
      
         

        
          
            
              
              

            

            
              8

              
                

              

            

            
              
              

            

          

        

      

       

    

    EXHIBIT
      C 

     

    STOCKHOLDER
      RIGHTS PLAN 

    INTERNAP
      NETWORK SERVICES CORPORATION

     

    Summary
      of Rights 

     

    
      	 
	
              Distribution
                and

              Transfer
                of 

              Rights;
                Rights

              Certificate:

            	
                

            	
              The
                Board of Directors of the Company has declared a dividend of one
                Right for
                each share of Common Stock of Internap Network Services Corporation
                (the
                “Company”)
                outstanding. Prior to the Distribution Date referred to below, the
                Rights
                will be evidenced by and trade with the certificates for the Common
                Stock.
                After the Distribution Date, the Company will mail Rights certificates
                to
                the Company’s stockholders and the Rights will become transferable apart
                from the Common Stock.

            
	 	 	 
	
              Distribution

              Date:

            	
                

            	
              Rights
                will separate from the Common Stock and become exercisable following
                (a)
                the tenth day (or such later date as may be determined by the Company’s
                Board of Directors) after a person or group acquires beneficial ownership
                of 15% or more of the Company’s Common Stock or (b) the tenth business day
                (or such later date as may be determined by the Company’s Board of
                Directors) after a person or group announces a tender or exchange
                offer,
                the consummation of which would result in ownership by a person or
                group
                of 15% or more of the Company’s Common Stock.

            
	 	 	 
	
              Preferred
                Stock

              Purchasable

              Upon
                Exercise of

              Rights:

            	
                

            	
              After
                the Distribution Date, each Right will entitle the holder to purchase
                for
                $100 (the “Exercise
                Price”),
                a fraction of a share of the Company’s Preferred Stock with economic terms
                similar to that of one share of the Company’s Common
                Stock.

            
	 	 	 
	
              Flip-In:

            	
                

            	
              If
                an acquirer (an “Acquiring
                Person”)
                obtains 15% or more of the Company’s Common Stock, then each Right (other
                than Rights owned by an Acquiring Person or its affiliates) will
                entitle
                the holder thereof to purchase, for the Exercise Price, a number
                of shares
                of the Company’s Common Stock having a then-current market value of twice
                the Exercise Price.

            
	 	 	 
	
              Flip-Over:

            	
                

            	
              If,
                after an Acquiring Person obtains 15% or more of the Company’s Common
                Stock, (a) the Company merges into another entity, (b) an acquiring
                entity
                merges into the Company or (c) the Company sells more than 50% of
                the
                Company’s assets or earning power, then each Right (other than Rights
                owned by an Acquiring Person or its affiliates) will entitle the
                holder
                thereof to purchase, for the Exercise Price, a number of shares of
                Common
                Stock of the person engaging in the transaction having a then current
                market value of twice the Exercise Price.

            
	 	 	 
	
              Exchange

              Provision:

            	
                

            	
              At
                any time after the date on which an Acquiring Person obtains 15%
                or more
                of the Company’s Common Stock and prior to the acquisition by the
                Acquiring Person of 50% of the outstanding Common Stock, the Board
                of
                Directors of the Company may exchange the Rights (other than Rights
                owned
                by the Acquiring Person or its affiliates), in whole or in part,
                for
                shares of Common Stock of the Company at an exchange ratio of one
                share of
                Common Stock per Right (subject to
                adjustment).

            

    

     

    
      
        
          
            
            

          

          
            1

            
              

            

          

          
            
            

          

        

      

       

    

    
      	
              Redemption
                of 

              the
                Rights:

            	
                

            	
              Rights
                will be redeemable at the Company’s option for $0.001 per Right at any
                time on or prior to the tenth day (or such later date as may be determined
                by the Company’s Board of Directors) after public announcement that a
                Person has acquired beneficial ownership of 15% or more of the Company’s
                Common Stock (the “Shares
                Acquisition Date”).

            
	 	 	 
	
              Expiration
                of the 

              Rights:

            	
                

            	
              The
                Rights expire on the earliest of (a) March 23, 2017 or (b) exchange
                or
                redemption of the Rights as described above.

            
	 	 	 
	
              Review
                of Rights 

              Agreement:

            	 	
              A
                committee of the Board composed of independent directors will review
                the
                Rights Agreement periodically (at least every three years) in order
                to
                consider whether the maintenance of the Rights Agreement continues
                to be
                in the best interests of the Company, its stockholders and any other
                relevant constituencies. This committee will communicate its conclusions
                to the full Board after each review, including any recommendation
                as to
                whether the Rights Agreement should be modified or the Rights should
                be
                redeemed.

            
	 	 	 
	
              Amendment
                of 

              Terms
                of Rights:

            	
                

            	
              The
                terms of the Rights and the Rights Agreement may be amended in any
                respect
                without the consent of the Rights holders on or prior to the Distribution
                Date; thereafter, the terms of the Rights and the Rights Agreement
                may be
                amended without the consent of the Rights holders in order to cure
                any
                ambiguities or to make changes which do not adversely affect the
                interests
                of Rights holders (other than the Acquiring Person).

            
	 	 	 
	
              Voting
                Rights:

            	
                

            	
              Rights
                will not have any voting rights.

            
	 	 	 
	
              Anti-Dilution
                

              Provisions:

            	
                

            	
              Rights
                will have the benefit of certain customary anti-dilution
                provisions.

            
	 	 	 
	
              Taxes:

            	
                

            	
              The
                Rights distribution should not be taxable for federal income tax
                purposes.
                However, following an event that renders the Rights exercisable or
                upon
                redemption of the Rights, stockholders may recognize taxable
                income.

            

    

     

    The
      foregoing is a summary of certain principal terms of the Stockholder Rights
      Plan
      only and is qualified in its entirety by reference to the Preferred Stock Rights
      Agreement dated as of April 11, 2007 between the Company and American Stock
      Transfer And Trust Company as Rights Agent (the “Rights
      Agreement”).
      The
      Rights Agreement may be amended from time to time. A copy of the Rights
      Agreement was filed with the Securities and Exchange Commission as an exhibit
      to
      a Registration Statement on Form 8-A. A copy of the Rights Agreement is
      available free of charge from the Company. 

    
       

       

      2EXHIBIT 10.44

 Exhibit 10.44 
 REVOLVING LINE OF CREDIT LOAN AGREEMENT 
 AND SECURITY AGREEMENT 
 THIS REVOLVING LINE OF CREDIT LOAN AGREEMENT AND SECURITY AGREEMENT (“Agreement”) is
made as of March 8, 2007, by and between Varsity Group Inc., a Delaware corporation, Campus Outfitters Group, LLC, a Delaware limited liability company, and VarsityBooks.com, LLC, a Delaware limited liability company, all having an address at
1300 19th Street, NW, Washington, D.C. 20036-5854; and Bank of America, N.A., a national banking corporation, having
an address at 1101 Wootton Parkway, 4th Floor, Rockville, Maryland 20852. 
 RECITALS 
 A. The Borrower has applied
to the Lender for a revolving line of credit loan facility in the maximum principal amount of Five Million and 00/100 Dollars ($5,000,000.00) to be used by the Borrower for working capital and issuance of letters of credit. 
 B. The Lender is willing to make the Revolving Loan on the terms and conditions hereinafter set forth. 
 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 agree as follows: 
 ARTICLE 1. DEFINITIONS. 
 1.1 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 dollar value that results by
multiplying the Investment Collateral Value for each type of BOA Investments in the BOA Collateral Accounts by the applicable Margin Percentage for each such type of BOA Investments. 
 c. “Advance” means an advance of funds under the Revolving Loan. 

 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 Revolving Line of Credit Loan Agreement and Security Agreement, as the same may be amended, modified or supplemented from time to time. 
 g. “Allowed Amount of Advances” means the aggregate amount of all Advances of principal under the Revolving Loan permitted to be
outstanding at any particular time under section 2.1 of this Agreement titled “Allowed Amount of Advances.” 
 h. “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. 
 i. “Assignment” means a direct assignment of Payments under Government Contracts, pursuant to and in compliance with the Assignment of
Claims Act. 
 j. “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. 
 k. “BOA Collateral Accounts” means one or more restricted deposit or investment accounts owned and
established by Borrower with Lender or Bank of America Securities, LLC, in which shall be deposited and held the BOA Investments. 
 l.
“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. 
 m. “Borrower” means Varsity Group Inc., a Delaware corporation, Campus Outfitters Group, LLC, a Delaware limited liability company, and
VarsityBooks.com, LLC, a Delaware limited liability company, 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 

  

 2 

 
hereinafter, financial information concerning the Borrower shall mean financial information for Varsity Group Inc., Campus Outfitters Group, LLC, and
VarsityBooks.com, LLC, stated on a consolidated basis. 
 n. “Borrowing Base” means: 
 1. Aggregate Adjusted Collateral Value; plus 
 2. Fifty percent (50%) of Borrower’s Eligible New Textbook Inventory; plus 
 3.
Twenty-Five percent (25%) 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. 
 o. “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). 
  

 3 

 p. “Borrowing Date” means the date on which an Advance is made. 
 q. “Business Day” means any day that is not a Saturday, Sunday or banking holiday in the State of Maryland. 
 r. “Capital Lease” means any lease which has been or should be capitalized on the books of the lessee in accordance with GAAP.

 s. “Cash Collateral Account” means an account to be established by Lender in Borrower’s name, with the Lender, upon
the occurrence and continuation of an Event of Default, 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. 
 t. “Closing Date” means March 8, 2007. 
 u. “Code” means the Internal Revenue Code of the United States, as amended. 
 v. “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; 
  

 4 

 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”. 
 w.
“Commercial Accounts” means all Accounts of Borrower due from Customers other than the Government. 
 x. “Compliance
Certificate” means a certificate substantially in the form of Schedule 1.1(B) attached hereto and made a part hereof. 
 y. “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 Revolving 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; 
  

 5 

 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. 
 z. “Contra Account” means an Account due from an account debtor to which the Borrower owes money. 
 aa. “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. 
  

 6 

 bb. “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; 
  

 7 

 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. 
 cc. “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 

  

 8 

 
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. 
 dd. “Ending Date” means April 30, 2008. 
 ee. “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. 
 ff. “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. 
 gg. “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. 
 hh. “Event of Default” means any one of the events specified as an “Event of Default” under this
Agreement. 
 ii. “GAAP” means generally accepted accounting principles in the United States of America, consistently
applied. 
 jj. “GAAS” means generally accepted auditing standards in the United States of America. 
 kk. “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. 
 ll. “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. 
  

 9 

 mm. “Government Accounts” means all Accounts of Borrower arising out of any Government
Contract. 
 nn. “Government Contracts” means all contracts of Borrower with a Government, including all renewals,
extensions, modifications, change orders and amendments thereof and thereto. 
 oo. “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. 
 pp. 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; 
  

 10 

 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. 
 qq. 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). 
 rr. “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. 
 ss. “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. 

tt. “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 reported by Lender or stated in a statement or certificate issued by Lender for the day on which such valuation is requested. 
 2. If stock, the Investment Collateral Value shall be determined by multiplying (i) the per share price of such stock at the most
recent close of trading on a trading exchange for such stock, times (ii) the number of shares of such stock held by Lender as Collateral. In the event that stock held as Collateral is not traded on an exchange, the Investment Collateral Value
of such stock shall be determined by obtaining the quoted value of such stock from a reputable brokerage firm selected by Lender. If no such quote is available, the value will be determined by Lender in its sole discretion. 
  

 11 

 3. If a mutual fund, the Investment Collateral Value shall be determined by multiplying
(i) the most recent per share net asset value of such mutual fund obtained from the Wall Street Journal, times (ii) the number of shares of such mutual fund held by Lender as Collateral. In the event that such net asset value 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.

 4. If corporate bonds, the Investment Collateral Value shall be determined from the most recent closing price for such
bonds obtained from the Wall Street Journal. If such closing 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. 
 5. 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. 
 6. If other than stock, mutual funds, corporate bonds, or government agency obligations or bonds or for which no quote is available from a
reputable brokerage firm, the Investment Collateral Value shall be determined by the Lender in its sole discretion. 
 Notwithstanding the
definition of “Investment Collateral Value” set forth above, in the event that the per share price of any Collateral that is stock, at the most recent close of trading on a trading exchange for such stock, is $10.00 or less, or if the
stock has been issued and outstanding for less than six months since the initial public offering for such stock, the Investment Collateral Value of such stock shall conclusively be deemed to be $0 for purposes of this Agreement. In the event that
such stock is not traded on an exchange, the per share price of such stock shall be determined by obtaining the quoted value of such stock from 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 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 amounts held by Lender Bank of America Securities, LLC or the Affiliates of
either (on deposit or otherwise) and comprising Collateral 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. 

  

 12 

 
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. 

uu. “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. 
 vv. “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. 
 ww. “Lender” means Bank of America, N.A., and its successors and assigns. 
 xx. “Letter of Credit” means a letter of credit issued by the Lender for the account of the Borrower under this Agreement. 

yy. “Letter of Credit Agreement” means the Application and Agreement for Standby Letter of Credit form or Lender’s other
standard form of application and reimbursement agreement in effect from time to time that Lender requires as a condition for each letter of credit that Lender issues to one of its Customers. 
 zz. “Letter of Credit Sublimit” means One Million and 00/100 Dollars ($1,000,000.00). 
 aaa. “Loan” means the Revolving Loan. 
 bbb. “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 Revolving Loan,
as such documents or instruments may be amended, modified or extended from time to time. 
 ccc. “LOC Obligations” means, at
any time, the sum of (i) the maximum amount which is, or at any time thereafter may become, available to be drawn under Letters of Credit then outstanding, assuming compliance with all requirements for drawings referred to in such Letters of
Credit; plus (ii) the aggregate amount of all drawings under Letters of Credit honored by Lender but not reimbursed. 
  

 13 

 ddd. “Margin Percentages” means the percentages applicable to the various types of BOA
Investments in the BOA Collateral Accounts, as follows: 
 1. Bank of America Money Market Accounts/Certificates of
Deposit/Savings/Checkings - 100%; 
 2. Bank of America Corporate Stock - 70%; 
 3. Securities rated by Standard & Poor as A+ or A - 70%; 
 4. Securities rated by Standard & Poor as B+ - 65%; 
 5. Securities rated by Standard & Poor as B - 60%; 
 6. Money Market Mutual Funds quoted in Wall Street Journal or Baron’s - 95%; 
 7. US Government Obligations quoted in Wall Street Journal or Baron’s - 90%; 
 8. Corporate/Municipal Bonds quoted in Wall Street Journal or Baron’s - 80%; 
 9. Equities (excluding international funds and equities that are restricted or controlled stock) quoted in Wall Street Journal or
Baron’s - 70%; 
 10. U.S. Corporate Bonds (BAA or higher) and State/Municipal Bonds (A or higher) - 80%; 
 11. Government issued or Government guaranteed instruments - 90%; 
 12. U.S. Government or U.S. Agencies Securities - 80%; 
 13. Bankers Acceptances - 90%; 
 14. Commercial Paper - A1/P1 - 90%; and 
 15. Commercial Paper - A2/P2 - 85%. 
 eee. “Material Adverse Effect” means any event, circumstance or condition that would have a material adverse impact or effect on
(1) the business, operations, prospects, properties, or condition of the Borrower (financial or otherwise), or (2) the Borrower’s ability to duly and punctually pay or perform its obligations under this Agreement or any of the other
Loan Documents, the materiality of such change to be determined by Lender in its reasonable discretion. 
 fff. “Maximum Revolving
Loan Commitment Amount” means Five Million and 00/100 Dollars ($5,000,000.00), or such lesser amount that Borrower may request as set forth in this Agreement. 
 ggg. “Multiemployer Plan” means a Plan which is a multiemployer plan as defined in Sections 3(37) or 4001(a)(3) of ERISA. 
 hhh. “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. 
  

 14 

 iii. “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. 
 jjj. “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. 
 kkk. “Operating Account” means a demand deposit account
to be established by the Borrower with the Lender for the Borrower’s use in connection with its business operations and with the Revolving Loan. 
 lll. “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. 
 mmm. “PBGC” means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA and any successor
thereto. 
 nnn. “Person” means any individual, partnership, association, trust, corporation, limited liability company or
partnership, or other entity. 
 ooo. “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. 
 ppp. “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. 
 qqq. “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. 
 rrr. “Revolving Loan” means the Revolving Loan facility and any Advances made available thereunder by Lender to Borrower pursuant to this Agreement in the maximum principal amount of Five Million and
00/100 Dollars ($5,000,000.00), evidenced by the Revolving Note. 
 sss. “Revolving Note” means the Borrower’s
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 Revolving Loan. 
  

 15 

 ttt. “Single Employer Plan” means any Plan which is covered by Title IV of ERISA, but
which is not a Multiemployer Plan. 
 uuu. “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. 
 vvv. “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.

 www. “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. 
 xxx. “UCC” means the Uniform Commercial Code in the state(s) as set forth in Section 1.4 of this Agreement. 
 yyy. “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. 
 1.2 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 

  

 16 

 
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. 
 1.3 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. 
 1.4 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 Maryland, shall have the meanings ascribed to them under the Uniform Commercial Code as adopted by the State of Maryland. 
 ARTICLE 2. LOAN. 
 2.1 Revolving Line of
Credit. The Lender agrees to extend the Revolving Loan to Borrower, subject to the terms and conditions of this Agreement. Until the Ending Date, Borrower may borrow, repay and reborrow Advances in accordance with this Agreement. 
 a. Allowed Amount of Advances. The aggregate principal amount of Advances outstanding at any time under the Revolving Note shall not exceed the
lesser of: 
 1. the difference between (i) the Maximum Revolving Loan Commitment Amount and (ii) the LOC
Obligations; or 
 2. the difference between (i) the Borrowing Base and (ii) the LOC Obligations; provided however,
as follows: 
 Notwithstanding anything in this Agreement to the contrary, Lender, in its sole and absolute discretion, may reserve against the amount
available for Advances under the Revolving Note, thereby limiting the amount that the Borrower may be advanced under the Revolving Note, should Lender determine that such action is necessary or prudent to permit Lender to be repaid all Advances made
to Borrower. 
 b. Mandatory Prepayments. If the principal outstanding under the Revolving Loan, at any time exceeds the Allowed
Amount of Advances, then Borrower shall make an immediate payment of principal under the Revolving Loan in an amount sufficient that the principal outstanding under the Revolving Loan will no longer exceed the Allowed Amount of Advances. 

 

 17 

 c. Procedure for Advances. Borrower may request Advances by telephone through its employees or
agents, as hereinafter provided. Each Advance request must be received by Lender not later than 1:00 p.m. (Eastern Standard time) on the date the Advance is to be made and must specify the amount of the Advance. Lender shall deposit the Advance into
Borrower’s Operating Account if Borrower is entitled to the Advance, subject to the terms and conditions of this Agreement. If Borrower has entered into a separate auto borrow or similar cash management service with Lender, then the provisions
of such service shall control with respect to the procedures for making Advances to Borrower. 
 d. Repayment of Revolving Loan; Auto
Debit. Borrower promises to repay the Revolving Loan, with interest, at the time and in the manner and in accordance with the terms provided in the Revolving Note. Borrower has elected to authorize Lender to effect payment of sums due under the
Revolving Note and this Agreement by means of debiting Borrower’s account with Lender, account number 4112807553. This authorization shall not affect the obligation of Borrower to pay such sums when due, without notice, if there are
insufficient funds in such account to make payment in full on the due date thereof, or if Lender fails to debit the account. 
 e. Letter
of Credit Subfacility. At Lender’s discretion, Lender shall issue Letters of Credit for the account of the Borrower from time to time upon request from the Closing Date until the Ending Date, subject to the following terms and conditions:

 1. the aggregate amount of LOC Obligations shall at no time exceed the Letter of Credit Sublimit; 
 2. any request for a Letter of Credit to be issued must be delivered and received by Lender not later than five (5) business days
prior to the date that Borrower wishes to have the Letter of Credit issued; 
 3. no Letter of Credit shall have an original
expiry date more than one year from the date of issuance or beyond the Ending Date unless otherwise agreed to by Lender in writing or unless Borrower’s obligation to reimburse Lender for drawings under the Letter of Credit has been fully
secured by a cash deposit with the Lender; 
 4. Borrower shall execute and deliver to Lender a Letter of Credit Agreement
with respect to each Letter of Credit to be issued by Lender, using the Lender’s standard reimbursement agreement form at the time the Letter of Credit is issued. The form and substance of each Letter of Credit, and any reimbursement agreement
required by Lender in relation to a Letter of Credit, must be satisfactory to the Lender, in its sole judgment; 
  

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 5. issuance of the Letter of Credit shall not cause the aggregate outstanding principal
amount of all Advances to exceed the Allowed Amount of Advances, determined taking into account the increase in the amount of the LOC Obligations caused by the issuance of the Letter of Credit; 
 6. Lender shall not be required to issue any Letter of Credit if any circumstance exists that would entitle Lender not to honor a request
for an Advance under the Revolving Loan; 
 7. upon notice from Lender of any drawing under any Letter of Credit, Borrower
shall, as to be determined in Lender’s sole and absolute discretion, either (a) deliver cash to Lender, in an amount satisfactory to secure all LOC Obligations and all amounts payable by the Borrower to the Lender under any Letter of
Credit Agreement pertaining to such LOC Obligations, or (b) immediately reimburse Lender for the amount of the drawing, plus interest from the date of the drawing at the highest rate of interest then in effect under the Revolving Note. The
Borrower’s obligation to reimburse the Lender for any drawing under a Letter of Credit shall be absolute and unconditional, irrespective of any rights of set-off, counterclaim or defense to payment the Borrower may claim or have against the
Lender, the beneficiary of the Letter of Credit or any other Person; 
 8. unless the Borrower makes reimbursement from
another source on the day of the drawing under any Letter of Credit, the Borrower shall be deemed to have requested an Advance under the Revolving Loan in the amount of the drawing, and (i) Lender, at its option, may make such an Advance
(irrespective of whether Borrower would then be entitled to an Advance under the terms of this Agreement) and apply the proceeds of the Advance to satisfy the Borrower’s obligation to reimburse Lender for the amount drawn on the Letter of
Credit; and (ii) any such Advance shall be repayable, with interest, in accordance with the terms and conditions of the Revolving Note; and 
 9. the provisions of the Letter of Credit Agreement pertaining to each Letter of Credit are deemed incorporated into this Agreement by this reference and shall be binding upon the Lender and Borrower as if fully set
forth herein. If a conflict exists between the terms of the Letter of Credit Agreement and any other Loan Document, the terms of the Letter of Credit Agreement shall control with respect to the Letter of Credit issued pursuant to that Letter of
Credit Agreement but not as to other matters governed by this Agreement or such Loan Document. 
 f. Use of Revolving Loan Proceeds.
The proceeds of the Revolving Loan shall be used for working capital and to finance the issuance of Letters of Credit, and for no other purposes. 
  

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 g. Revolving Loan Fees. Borrower promises to pay Lender the following fees in consideration of
entering into this Agreement. These fees are in addition to interest payable under the Revolving Note: 
 1. an up front fee
of $12,500.00, payable on the Closing Date; 
 2. an unused fee for each day that any part of the Maximum Revolving Loan
Commitment Amount is unused. The unused fee shall be calculated and payable monthly, in arrears, commencing on the first day of the first month after the date of this Agreement. The unused fee shall be determined for each day by multiplying the part
of the Maximum Revolving Loan Commitment Amount that is unused on that day by a per-diem rate equal to 0.25, divided by 360; 
 3. an annual fee of 1.75% of the face amount of any Letter of Credit issued by Lender under this Agreement, such fee being initially payable at the time of issuance of a Letter of Credit and then being payable on each anniversary date of
such issuance date while the Letter of Credit remains outstanding. Borrower shall also pay, at the time of issuance of a Letter of Credit, Lender’s standard costs for issuance of a Letter of Credit, in the amount then being charged by Lender at
the time of issuance of such Letter of Credit; and 
 4. the fees and costs associated for up to two field examinations
performed by the Lender or its agents per calendar year. However, the Lender shall have the right to perform such additional field examinations at any time, in its sole discretion. Each additional field examination will be at Lender’s own
expense if no Event of Default has occurred and remains uncured at the time of the additional field examination, but shall be at the Borrower’s expense if an Event of Default has occurred and remains uncured at the time of the additional field
examination. 
 ARTICLE 3. CONDITIONS PRECEDENT TO LOAN. 
 3.1 Conditions Precedent to Initial Advance. The Lender shall be under no obligation to make the first Advance under this Agreement until, in the Lender’s sole judgment, all of the following conditions are
satisfied or waived in writing: 
 a. 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 Closing 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 Closing Date. 
 b. 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 

  

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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 Revolving Loan as the Lender may require; 
 2. Borrower’s projected income statements for the fiscal year 2007; 
 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 or termination statements as Lender may deem necessary to remove any Encumbrances
on the Collateral. 
 c. Executed Notes and Loan Documents. Borrower shall deliver to the Lender, fully executed: this Agreement, the
Revolving Note, UCC-1 Financing Statements 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. 
 d. 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, 

  

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Indiana, and (2) 5107-A, 5107-D, 5112 and 5127 Berwyn Road, College Park, Maryland), shall have executed and delivered to Lender waivers in form and
substance satisfactory to Lender by no later than ninety (90) days from the Closing Date. 
 e. 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 by no later than ninety (90) days from the Closing Date. 
 f. 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. 
 g. Legal Opinion. Borrower shall deliver to the Lender a written opinion or opinions of legal counsel
for Borrower dated the Closing Date and addressed to the Lender, which opinions must be in form and content satisfactory to the Lender. Without limiting the generality of the foregoing, the opinion or opinions must address the Borrower’s
organization, existence, power, good standing and authority and as to the validity, binding effect and enforceability of the Loan Documents, including the existence, validity, enforceability, attachment, perfection, and binding effect of any
security interest, lien or assignment being granted by Borrower or any guarantor or other Person providing Collateral to Lender with respect to the Collateral. 
 h. Operating Account. The Borrower shall establish and maintain at all times its primary Operating Account with the Lender. 
 i. 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. 
 j. Borrowing Base Certificate. Borrower shall deliver to the Lender a Borrowing Base
Certificate dated as of December 31, 2006 with supporting schedules attached thereto, including without limitation, current accounts receivable and accounts payable reports. 
  

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 3.2 Future Advances. The obligation of the Lender to make any Advance under the Revolving Loan
subsequent to the Closing Date is further conditional on: 
 a. 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; 
 b. Borrowing Base Certificates. Until April 30, 2007, 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 December 31, 2006, along with the supporting schedules thereto. Commencing with the Borrowing Base Certificate due under this Agreement on or before April 30,
2007 stating the Borrowing Base as of March 31, 2007, 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. Notwithstanding the above, Lender shall be entitled to withhold Advances based on the information provided in any Borrowing Base Certificate if Lender reasonably determines that
(1) the information provided by Borrower in such Borrowing Base Certificate and/or 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). 
 c. Field Examination. Within thirty
(30) days of the Closing Date, Lender shall have received the written results of the field examination conducted of the Borrower and its business records, and such results shall be in form and substance satisfactory to Lender as determined in
Lender’s sole discretion. 
 d. Representations and Warranties. All representations and warranties contained herein shall be true
and correct in all material respects at the date of such disbursement; 
 e. No Material Adverse Change. The Lender shall have
determined, in its sole discretion, that no material adverse change has occurred in the financial condition of the Borrower from that disclosed in the most recent financial statements furnished to the Lender prior to the Closing Date; and

 f. 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. 
 3.3 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, 

  

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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. 
 ARTICLE 4. SECURITY. 

4.1 Grant of Security Interest. As security for (i) the payment of the Loan, and any other extensions of credit, loans, Letters of Credit
or other financial accommodations now or hereafter made by the Lender for the benefit of the Borrower, (ii) the performance of the Borrower’s obligations under or in connection with any interest rate swap agreement as defined in 11 U.S.C.
§ 101 by and between the Borrower and the Lender or any Affiliate of the Lender (whether absolute or contingent and whether now or hereafter becoming due or owing), and (iii) any other liability or obligation of Borrower to Lender whether
now or hereafter existing, of every kind and description, whether or not evidenced by notes or other instruments, and whether or not such liability or obligations are direct or indirect, fixed or contingent, liquidated or unliquidated, 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. Proceeds of the Collateral shall be allocated pari passu among the Loan and any outstanding interest rate swap agreements. 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. 
 4.2 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. 
  

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 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. 
 4.3 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: 
 a. 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. 
 b. Dividends and Distributions. So long as no Event of Default shall have
occurred and be continuing (or would occur as a result thereof), and except as provided otherwise in this Agreement or in any of the other Loan Documents, all interest, income, dividends, distributions and other amounts payable in cash in respect of
the BOA Investments may be paid to, collected by, used, distributed and retained by Borrower; provided, however, that all such income, dividends, distributions and other amounts shall, at all times after the occurrence and
during the continuance of an Event of Default, 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 (whether or not during the continuance of an Event of Default) 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 

  

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(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). 
 c. 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 (or its Affiliates, including without limitation, Bank of America Securities, LLC) 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. 
 d. Control Agreements. With respect to securities held in the BOA Collateral Accounts, 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). 
 e. 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 

  

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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 after the occurrence and during the
continuance of an Event of Default (except for the actions described in clause (E) below 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 
  

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 (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 within ten (10) days after
written request to do so by Lender (provided that no such request shall be necessary at any time after the occurrence and during the continuance of an Event of Default or if the Collateral is of a type or nature which could readily decline in value
during such ten (10) day period), 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. 
 4.4
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. 
 4.5 Financing Statements; Possession of Collateral by Lender;
Control. At the request of the Lender, Borrower will execute financing statements, continuation statements 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 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, 

  

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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. 
 4.6 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. 
 4.7 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. 

4.8 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. 
  

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 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. 
 ARTICLE 5.
BORROWER’S REPRESENTATIONS AND WARRANTIES. 
 To induce the Lender to enter into this Agreement and to extend the Revolving Loan to
Borrower, Borrower makes the following representations and warranties to the Lender. 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. 
 5.1 Corporate
Authority; Subsidiaries. Varsity Group 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 those previously disclosed in writing to the Lender. Varsity Group Inc. maintains its chief executive office at the following location:

 Varsity Group Inc. 
 1300 19th Street, NW 
 Washington, D.C. 20036-5854 
  

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 5.2 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 other than those previously disclosed in writing to the Lender. Campus Outfitters Group, LLC maintains its chief executive office at the
following location: 
 Campus Outfitters Group, LLC 
 c/o Varsity Group Inc. 
 1300 19th Street, NW 
 Washington, D.C. 20036-5854 
 5.3 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, and those other subsidiaries (if any) previously disclosed in writing to
the Lender. VarsityBooks.com, LLC maintains its chief executive office at the following location: 
 VarsityBooks.com, LLC 
 c/o Varsity Group Inc. 
 1300 19th Street, NW 
 Washington, D.C. 20036-5854 
  

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 5.4 Approvals. Varsity Group Inc. has provided Lender with a true and accurate certificate of a
Resolution of the 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. 
 5.5 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. 
 5.6 Litigation. Except as set forth in Schedule 5.4 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. 
 5.7 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, 

  

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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. 
 5.8
Loan Application. The statements made and the documents delivered by Borrower to the Lender in connection with its application for the Revolving Loan and 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. 
 5.9 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. 
 5.10 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 set forth in Schedule 5.10 attached hereto. 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. 
 5.11 No Default. 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. 
 5.12
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 

  

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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) Borrower has previously disclosed to Lender all of Borrower’s activities that 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. 
 5.13 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.

 5.14 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. 
 5.15 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. 
  

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 5.16 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.

 5.17 Payment of Employees and Subcontractors. Borrower is not in default with regard to the payment of any employee or
subcontractor. 
 5.18 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. 
  

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 5.19 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. 
 ARTICLE 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: 
 6.1 Payment of Revolving Loan and Equipment Loan. Make the payments on the Revolving Loan at the times and places and in the manners specified in the Revolving Note, respectively. 
 6.2 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). 
 6.3
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. 
 6.4 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. 
 6.5 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. 
  

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 6.6 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 loss lender 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. 
 6.7 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. 
 6.8 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, judgements, 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. 
  

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 6.9 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. 
 6.10 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. 
 6.11 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: 

a. Annual Financial Statements. As soon as available, but in no event more than one hundred twenty (120) 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 PricewaterhouseCoopers 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. 
  

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 b. 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. 
 c. Quarterly Statements and Certificates. As soon as available but in no event more than fifty (50) 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. 
 d. 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. 
 e. Borrowing Base Certificates.
Borrower shall submit a fully completed Borrowing Base Certificate effective as of December 31, 2006 (“December 2006 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 April 29, 2007 (unless an updated Borrowing Base Certificate has been provided earlier than April 29, 2007 for the month ending March 31, 2007 (“March 2007
BBC”), in which case Lender shall rely on the March 2007 BBC). Thereafter, a Borrowing Base Certificate shall be submitted by Borrower to Lender not later than thirty (30) days after the end of each month, stating the Borrowing Base as of
the last day of the preceding month, commencing with the Borrowing Base Certificate due by April 30, 2007 for the month ending March 31, 2007. Lender shall not be obligated to make the initial Advance 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. 
 f. Additional
Reports and Information. With reasonable promptness, such additional information, reports or statements as the Lender may from time to time request. 
 g. 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 

  

 39 

 
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. 
 6.12 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. 
 6.13 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 

  

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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. 
 6.14 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. 
 6.15
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 Two Million and 00/100 Dollars
($2,000,000.00). If at any time the Aggregate Adjusted Collateral Value of the BOA Investments is less than $2,000,000.00, Borrower shall, within three (3) Business Days of the date that the Aggregate Adjusted Collateral Value of the BOA
Investments falls below $2,000,000.00, either (a) pledge, grant a security interest in and delivery to Lender additional securities so that the Aggregate Adjusted Collateral Value of the BOA Investments equals or exceeds $2,000,000.00, or
(b) provide cash collateral in an amount such that the Aggregate Adjusted Collateral Value of the BOA Investments equals or exceeds $2,000,000.00. 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 $2,000,000.00. If an Event of Default 

  

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exists hereunder and the Collateral is declining in value or threatens to decline speedily in 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. 
 6.16 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. 
 6.17 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.

  

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 6.18 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. 
 6.19 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.

 6.20 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. 
 6.21 Depository Accounts. Maintain primary
operating and depository accounts (such accounts not to include the accounts set forth in Schedule 6.21) with Lender, including, without limitation, the Operating Account. 
  

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 ARTICLE 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: 
 7.1 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) indebtedness and contingent obligations under Capital Leases and purchase money security
interests in an amount not to exceed in the aggregate, at any one time, the sum of Five Hundred Thousand and 00/100 Dollars ($500,000.00); (d) intercompany indebtedness and guarantees between the Borrower and its subsidiaries; (e) Letters
of Credit issued by Lender in accordance with the terms of this Agreement; (f) indebtedness in respect of swap agreements; (h) unsecured indebtedness not otherwise permitted by this Section 7.1 in an amount not to exceed in the
aggregate the sum of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) and any refinancings, refundings, renewals or extensions thereof (without increasing, or shortening the scheduled maturity of, or the principal amount thereof);
(g) 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 (h) 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). 
 7.2 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 

  

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of pledges or deposits in connection with workers compensation, unemployment insurance and other social security legislation; (f) Encumbrances securing
Capital Leases or purchase money security interests securing amounts not to exceed in the aggregate Five Hundred Thousand and 00/100 Dollars ($500,000.00) at any time outstanding; (g) Encumbrances not otherwise permitted hereunder that do not
in the aggregate exceed Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) at any time outstanding; (h) Encumbrances in respect of precautionary UCC filings in respect of leases; and (i) Extensions, renewals and replacements of
Encumbrances referred to in clauses (a) through (h) 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. 
 7.3 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. 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 
 7.4 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. 
 7.5 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, 

  

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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. 
 7.6 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) investments in swap agreements permitted under this Agreement; (j) 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 Revolving Loan, and shall further result in a dollar for dollar permanent reduction in the amount of the Maximum Revolving Loan
Commitment 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. 
  

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 7.7 Loans. Make loans or advances to any Person or Persons that exceed in the aggregate the sum of
$50,000.00 outstanding at any time, 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. 
 7.8 Guaranty. Guaranty or provide surety or pledge or hypothecate assets for the obligation of any other Person or
Persons. 
 7.9 Repurchase of Securities. Purchase, redeem or otherwise acquire any of its own capital stock; or purchase, acquire,
redeem, retire or make any payment on account of the principal of any indebtedness of Borrower, except at the stated maturity of such indebtedness, and except payments of indebtedness incurred under this Agreement. This section shall not prohibit
(a) such distributions or payments paid solely to the Borrower; and (b) repurchases of the Borrower’s common stock or common stock options from present or former officers or employees of the Borrower upon the death, disability or
termination of employment of such officer or employee in an aggregate amount not to exceed $100,000 in any fiscal year (except to the extent of proceeds received pursuant to a key man policy on the life of such an officer or employee). 

7.10 Use of Proceeds. Use, or allow the use of, the proceeds of the Revolving Loan 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. 
 7.11 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.

 7.12 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). 
 7.13 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. 
  

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 ARTICLE 8. COLLECTION, DEPOSIT AND ASSIGNMENT OF PAYMENTS. 
 8.1 Operating Account. While the Loan remains in effect and until such time as Lender has no further obligations hereunder, 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. 
 8.2 Cash Collateral Account. Lender may, upon the occurrence and continuation of an Event of Default, 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 provided no Event of Default has occurred and remains uncured, the remaining funds shall be deposited
into Borrower’s Operating Account. If an Event of Default has occurred and remains uncured, 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. 
 8.3 Overdrafts. At Lender’s sole option in each instance, Lender may do one of the following: 
 a. Lender may make
Advances under the Revolving Note to prevent or to cover an overdraft on account of Borrower with Lender. Each such Advance will accrue interest from the date of the Advance or the date on which the account is overdrawn, whichever occurs first, at
the interest rate described in the Revolving Note. Lender may make such Advances even if the Advances may cause the balance owing under the Revolving Note to exceed the Maximum Revolving Loan Commitment Amount; or 
  

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 b. Lender may reduce the amount of credit otherwise available under the Revolving Note by the amount of
any overdraft on any account of Borrower with Lender. 
 This section shall not be deemed to authorize Borrower to create overdrafts on any of
Borrower’s accounts with Lender. 
 ARTICLE 9. EVENTS OF DEFAULT AND REMEDIES. 
 9.1 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, and such failure shall continue for five
(5) Business Days; 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 be a default or event of default under any indebtedness or obligation of Borrower to any third party in excess of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) that causes that third party to declare such indebtedness or other
obligation due prior to its scheduled date of maturity; or 
  

 49 

 f. there shall occur a default or event of default under any existing or future loan, indebtedness or
obligation of Borrower to Lender; or 
 g. 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 
 h. one or more judgments or decrees in an amount of more than Two Hundred
Fifty Thousand and 00/100 Dollars ($250,000.00) 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 
 i. any material change in the business, operations, property, assets or condition (financial or otherwise) of Borrower shall occur which adversely affects the ability of Borrower to meet and carry out its obligations under this Agreement or
any of the other Loan Documents or to perform the transactions contemplated herein or thereby, the materiality of such change to be determined by the Lender in its sole discretion; or 
 j. 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 
 k. 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; or 
 l. 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 

 

 50 

 m. 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 (including, without limitation, any Swap Agreement) with the Lender or any of Lender’s
Affiliates to be observed or performed on its part and such default shall continue unremedied for a period of fifteen (15) Business Days after written notice of the existence of such default is given by Lender. The cure period described in this
paragraph is inapplicable to the Events of Default listed in the paragraphs above. 
 If one of the foregoing events or circumstances occurs to which a cure
period applies, Lender will not exercise its rights and remedies under this Agreement to collect the Loan except as Lender reasonably deems necessary to protect its interests in the Collateral, but Lender shall not be required to make any new
Advances, loans or other financial accommodations unless and until the default is timely cured under this Agreement. Notwithstanding anything in this Agreement to the contrary, any right to cure a default is applicable only to defaults for which a
cure period has been provided, and only to the occurrence of a single default during any one calendar year period. Borrower shall have no right to cure more than one default in any one calendar year period, nor shall Borrower have the right at any
time to cure any default for which no cure period has been provided. 
 9.2 Rights and Remedies of the Lender. Upon the occurrence of
any Event of Default, the Lender may, at its option, exercise any one or more of the following rights and remedies: 
 a. Declare this
Agreement and the Lender’s obligation to make or extend any Advances on the Revolving Loan to be terminated, and declare the entire unpaid principal amounts of the Revolving Loan, 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 Revolving Loan, 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 

  

 51 

 
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; 
  

 52 

 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 judgement 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. 
  

 53 

 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 

  

 54 

 
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. 
 9.3 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 Revolving 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. 
 9.4 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. 
 ARTICLE 10. MISCELLANEOUS PROVISIONS. 
 10.1 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. 
  

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 10.2 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. 
 10.3 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. 
 1300 19th Street, NW 
 Washington, D.C. 20036-5854 
 Attention: President 
 If to Lender: 
 Bank of America, N.A. 
 1101 Wootton Parkway, 4th Floor 
 Rockville, Maryland 20852 
 Attention: Michael J. Radcliffe, Senior Vice President 
 With copy to:

 Joseph P. Corish, Esquire 
 Bean, Kinney & Korman,
P.C. 
 2000 N. 14th Street, Suite 100 
 Arlington, Virginia 22201 
 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. 
  

 56 

 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. 
 10.4 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. 
 10.5 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. 
 10.6 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. 
 10.7 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. 
  

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 10.8 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. 
 10.9 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. 
 10.10 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. 
 10.11 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. 
 10.12 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. 
 10.13 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. 
  

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 10.14 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. 
 10.15 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 Maryland 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. 
 10.16 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. 
 10.17 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

  

 59 

 
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. 
 10.18 ARBITRATION AND WAIVER OF JURY TRIAL. 
 (a) This paragraph concerns the resolution of any controversies or
claims between the parties, whether arising in contract, tort or by statute, including but not limited to controversies or claims that arise out of or relate to: (i) this Agreement (including any renewals, extensions or modifications); or
(ii) any document related to this Agreement; (collectively a “Claim”). For the purposes of this arbitration provision only, the term “parties” shall include any parent corporation, subsidiary or affiliate of Lender involved
in the servicing, management or administration of any obligation described or evidenced by this Agreement. 
 (b) At the request of any party
to this Agreement, any Claim shall be resolved by binding arbitration in accordance with the Federal Arbitration Act (Title 9, U.S. Code) (the “Act”). The Act will apply even though this Agreement provides that it is governed by the law of
a specified state. The arbitration will take place on an individual basis without resort to any form of class action. 
 (c) Arbitration
proceedings will be determined in accordance with the Act, the then-current rules and procedures for the arbitration of financial services disputes of the American Arbitration Association or any successor thereof (“AAA”), and the terms of
this paragraph. In the event of any inconsistency, the terms of this paragraph shall control. If AAA is unwilling or unable to (i) serve as the provider or arbitration or (ii) enforce any provision of this arbitration clause, any party to
this Agreement may substitute another arbitration organization with similar procedures to serve as the provider of arbitration. 
 (d) The
arbitration shall be administered by AAA and conducted, unless otherwise required by law, in any U.S. state where real or tangible personal property collateral for this credit is located or if there is no such collateral, in the state specified in
the governing law section of this Agreement. All Claims shall be determined by one arbitrator; however, if Claims exceed $5,000,000, upon the request of any party, the Claims shall be decided by three arbitrators. All arbitration hearings
shall commence within 90 days of the demand for arbitration and close within 90 days of commencement and the award of the arbitrator(s) shall be issued within 30 days of the close of the hearing. However, the arbitrator(s), upon a showing of good
cause, may extend the commencement of the hearing for up to an additional 60 days. The arbitrator(s) shall provide a concise written statement of reasons for the award. The arbitration award may be submitted to any court having jurisdiction to be
confirmed, judgment entered and enforced. 
  

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 (e) The arbitrator(s) will give effect to statutes of limitation in determining any Claim and may dismiss
the arbitration on the basis that the Claim is barred. For purposes of the application of the statute of limitations, the service on AAA under applicable AAA rules of a notice of Claim is the equivalent of the filing of a lawsuit. Any dispute
concerning this arbitration provision or whether a claim is arbitrable shall be determined by the arbitrator(s). The arbitrator(s) shall have the power to award legal fees pursuant to the terms of this Agreement. 
 (f) This paragraph does not limit the right of the any party to: (i) exercise self-help remedies, such as but not limited to, setoff;
(ii) initiate judicial or nonjudicial foreclosure against any real or personal property collateral; (iii) exercise any judicial or power of sale rights, or (iv) act in a court of law to obtain an interim remedy, such as but no limited
to, injunctive relief, writ of possession or appointment of a receiver, or additional or supplementary remedies. 
 (g) The filing of a court
action is not intended to constitute a waiver of the right of any party, including the suing party, thereafter to require submittal of the Claim to arbitration. 
 (h) By agreeing to binding arbitration, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of any Claim. Furthermore, without intending in any way to limit
this Agreement to arbitrate, to the extent any Claim is not arbitrated, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of such Claim. This provision is a material inducement for the parties
entering into this Agreement. 
 10.19 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. 
 (Signatures and Notary Acknowledgments on following pages) 
  

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 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:	 	  	 	(SEAL)
	Name:	 	  	 	
	Title:	 	  	 	

  

					
	CAMPUS OUTFITTERS GROUP, LLC, a Delaware limited liability company
	
	By: Varsity Group Inc., a Delaware corporation, as its sole member
			
	By:	 	  	 	(SEAL)
	Name:	 	  	 	
	Title:	 	  	 	

  

					
	VARSITYBOOKS.COM, LLC, a Delaware limited liability company
	
	By: Varsity Group Inc., a Delaware corporation, as its sole member
			
	By:	 	  	 	(SEAL)
	Name:	 	  	 	
	Title:	 	  	 	

  

					
	BANK OF AMERICA, N.A.
			
	By:	 	/s/ Michael J. Radcliffe	 	(SEAL)
		 	Michael J. Radcliffe	 	
		 	Senior Vice President	 	

  

 62 

					
	 State of Maryland
	 	)	  	
	 County of                     
	 	)	  	To Wit:

 This instrument, executed and acknowledged before me by
                             as
                             of Varsity Group Inc., a Delaware corporation, this
                     day of March, 2007. 
  

					
			
	[SEAL]	 		 	   
		 		 	Notary Public

 My commission expires:
                                        
                 
  

					
	 State of Maryland
	 	)	  	
	 County of                     
	 	)	  	To Wit:

 This instrument, executed and acknowledged before me by
                         as
                     of Varsity Group Inc., a Delaware corporation, in its capacity as sole member of Campus Outfitters Group, LLC, a Delaware
limited liability company, this                              day of March, 2007. 
  

					
			
	[SEAL]	 		 	   
		 		 	Notary Public

 My commission expires:
                                        
                 
  

					
	 State of Maryland
	 	)	  	
	 County of                     
	 	)	  	To Wit:

 This instrument, executed and acknowledged before me by
                         as
                         of Varsity Group Inc., a Delaware corporation, in its capacity as sole member of
VarsityBooks.com, LLC, a Delaware limited liability company, this                          day of March, 2007. 

 

					
			
	[SEAL]	 		 	   
		 		 	Notary Public

 My commission expires:
                                        
                 
  

 63 

					
	 State of Maryland
	 	)	  	
	 County of                     
	 	)	  	To Wit:

 This instrument, executed and acknowledged before me by Michael J. Radcliffe, Senior Vice
President of Bank of America, N.A., this              day of March, 2007. 
  

					
			
	[SEAL]	 		 	   
		 		 	Notary Public

 My commission expires:
                                        
     
  

 64 

 SCHEDULE 1.1(A) 
 (BORROWING BASE CERTIFICATE FORM) 

 SCHEDULE 1.1(B) 
 COMPLIANCE CERTIFICATE 
 THIS COMPLIANCE CERTIFICATE (“Certificate”), is given by
Varsity Group Inc., a Delaware corporation, Campus Outfitters Group, LLC, a Delaware limited liability company and VarsityBooks.com, LLC, a Delaware limited liability company (jointly and severally, the “Borrower”) to Bank of America, N.A.
(“Lender”) pursuant to the Revolving Line of Credit Loan Agreement and Security Agreement, dated as of March 8, 2007, (together with all amendments and modifications, if any, from time to time made thereto, the “Loan
Agreement”) between Borrower and Lender. Unless otherwise defined herein, capitalized terms used in this Certificate have the meanings ascribed to them in the Loan Agreement. 
  

	1.	Effective Date. This Certificate is made as of                     
[quarter end]. 

  

	2.	Financial Statements. The attached financial statements have been prepared in accordance with GAAP, consistently applied from period to period; they are accurate and present
fairly the consolidated financial condition and results of operations of the Borrower for the month ending                     ,
200  , subject to normal year-end audit adjustments. 

  

	3.	Representations and Warranties. The Borrower’s Representations and Warranties under the Loan Agreement continue to be true and correct in all material respects as of the
effective date of this Certificate, except as follows [state exceptions to representations and warranties; if none, enter “None.”]:
                    . 

  

	4.	Compliance with Affirmative Covenants. The Borrower is in compliance with all of its affirmative covenants under the Loan Agreement. Further, at the effective date of this
Certificate: 

 a. The Tangible Net Worth of Borrower required under the Loan Agreement must not at any time be
more than                     . The Tangible Net Worth of Borrower as of the effective date of this Certificate is
                    . 
 Worksheets
are attached as Schedule “A” hereto showing how the foregoing financial information was computed. 
  

	5.	Compliance with Negative Covenants. The Borrower has committed no violation of the negative covenants under Article 6 of the Loan Agreement. 

  

	6.	No Event of Default. No Event of Default has occurred and continues to exist under the Loan Agreement, except as follows [describe event or events of default; if none, enter
“None.”]                     . 

  

 66 

	7.	Certification. The undersigned hereby certifies, on behalf of the Borrower, that (i) he/she is the
                    [TITLE] of Borrower, and, as such, is authorized to execute this Certificate on behalf of the Borrower, and
(ii) pursuant to the Loan Agreement, based upon a review made under his/her supervision, that the information provided in the foregoing and annexed Compliance Certificate and worksheets attached hereto, having an effective date of
                    , 200            , are true, correct and complete.

  

			
	[NAME OF BORROWER]
		
	By:	 	  
		 	 [NAME OF AUTHORIZED PERSON]
 [TITLE]

  

 67 

 SCHEDULE A TO COMPLIANCE WORKSHEET 
 COMPUTATION WORKSHEET 
 Period Ending
                         
  

 68 

 SCHEDULE 5.1-1, 5.1-2 and 5.1-3 
 (Borrower Information Statement) 
  

 69 

 SCHEDULE 5.4
 LITIGATION AND CLAIMS SCHEDULE 
 (Description of Litigation and Amount Claimed) 
 NONE 
  

 70 

 SCHEDULE 5.10 
 (TAXES DUE AND OWING) 
 NONE 
  

 71 

 SCHEDULE 5.13 
 (NON-ASSIGNABLE INTELLECTUAL PROPERTY AND CONTRACTS) 
 NONE 
  

 72 

 SCHEDULE 6.13
 EQUIPMENT LOCATION 
  

 73 

 SCHEDULE 6.21 
 (List of Non-Lender Accounts) 
 NONE 
  

 74 

 SCHEDULE 7.1 
 (PERMITTED INDEBTEDNESS) 
 NONE 
  

 75 

 (SCHEDULE 7.2) 
 (PERMITTED ENCUMBRANCES) 
 NONE 
  

 76

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