Document:

<PAGE>   1
                                                              Exhibit 4.1

COMMON STOCK
COMMON STOCK
VarsityBooks.com Inc.
VB-
INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 922300 10 8
This is to certify that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF $.0001 OF COMMON STOCK
OF

VarsityBooks.com Inc.
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid unless countersigned and registered by the Transfer Agent and
Registrar.

Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.

Dated:

SECRETARYCHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER

COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE

<PAGE>   2

-D
TEN ENT -D
JT TEN -D
as tenants in common
as tenants by the entireties
as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT-D                       Custodian
                                       (Cust)
(Minor)
                                    under Uniform Gifts to Minors
                                    Act
                                                          (State)
Additional abbreviations may also be used though not in the above list.
For value received,            hereby sell(s), assign(s) and transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ZIP CODE OF ASSIGNEE

Shares
of the stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint

Attorney to transfer the said stock on the books of the within-named Corporation
with full power of substitution in the premises.

Dated

NOTICE:

THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON
THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.

 Signature(s) Guaranteed:
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO
S.E.C. RULE 17Ad-15.<PAGE>   1
                                                                     EXHIBIT 4.2

                              VARSITYBOOKS.COM INC.

             FOURTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT

                                FEBRUARY 3, 2000

<PAGE>   2

                                                 TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               PAGE
                                                                                                               ----
<S>                                                                                                            <C>
SECTION 1
RESTRICTIONS ON TRANSFERABILITY; REGISTRATION RIGHTS..............................................................3
         1.1      CERTAIN DEFINITIONS.............................................................................3
         1.2      RESTRICTIONS....................................................................................4
         1.3      RESTRICTIVE LEGEND..............................................................................5
         1.4      NOTICE OF PROPOSED TRANSFERS....................................................................5
         1.5      REQUESTED REGISTRATION..........................................................................6
         1.6      COMPANY REGISTRATION............................................................................8
         1.7      REGISTRATION ON FORM S-3........................................................................9
         1.8      EXPENSES OF REGISTRATION........................................................................9
         1.9      REGISTRATION PROCEDURES........................................................................10
         1.10     INDEMNIFICATION................................................................................11
         1.11     INFORMATION BY HOLDER..........................................................................13
         1.12     RULE 144 REPORTING.............................................................................14
         1.13     TRANSFER OF REGISTRATION RIGHTS................................................................14
         1.14     STANDOFF AGREEMENT.............................................................................14
         1.15     TERMINATION OF RIGHTS..........................................................................15
         1.16     OTHER REGISTRATION RIGHTS......................................................................15

SECTION 2
RIGHT OF FIRST OFFER AND ELECTION OF DIRECTORS...................................................................15
         2.1      INVESTORS' RIGHT OF FIRST OFFER................................................................15
         2.2      ELECTION OF DIRECTORS..........................................................................17
         2.3      TERMINATION OF RIGHT OF FIRST OFFER AND ELECTION OF DIRECTORS..................................18

SECTION 3
AFFIRMATIVE COVENANTS OF THE COMPANY.............................................................................18
         3.1      FINANCIAL INFORMATION..........................................................................18
         3.2      DELIVERY OF INFORMATION........................................................................18
         3.3      INSPECTION.....................................................................................19
         3.4      EXPENSES OF THE BOARD OF DIRECTORS.............................................................20
         3.5      RESERVED EMPLOYEE SHARES.......................................................................20
         3.6      ACQUISITION OF STOCK...........................................................................20
         3.7      TITLES AND SALARIES............................................................................20
         3.8      BOARD OF DIRECTORS MEETINGS....................................................................20
         3.9      IRC SECTION 305................................................................................20
         3.10     BOARD OF DIRECTORS.............................................................................20
         3.11     POSITIVE COVENANTS.............................................................................21
         3.12     NEGATIVE COVENANTS.............................................................................22
         3.13     STOCK RESTRICTION AGREEMENTS...................................................................23
         3.14     OBSERVER RIGHTS................................................................................23
         3.15     TERMINATION OF SECTION 3 RIGHTS................................................................23
</TABLE>

                                       i
<PAGE>   3

<TABLE>
<S>               <C>                                                                                           <C>
SECTION 4
MISCELLANEOUS....................................................................................................23
         4.1      GOVERNING LAW..................................................................................23
         4.2      THIRD PARTIES..................................................................................23
         4.3      SURVIVAL.......................................................................................23
         4.4      SUCCESSORS AND ASSIGNS.........................................................................23
         4.5      ENTIRE AGREEMENT; AMENDMENT....................................................................23
         4.6      EFFECT OF AMENDMENT OR WAIVER..................................................................24
         4.7      RIGHTS OF HOLDERS..............................................................................24
         4.8      NOTICES, ETC...................................................................................24
         4.9      DELAYS OR OMISSIONS............................................................................25
         4.10     COUNTERPARTS...................................................................................25
         4.11     SEVERABILITY OF THIS AGREEMENT.................................................................25
</TABLE>

EXHIBIT A         SERIES A PREFERRED INVESTOR SCHEDULE

EXHIBIT B         SERIES B PREFERRED INVESTOR SCHEDULE

EXHIBIT C         SERIES C PREFERRED INVESTOR SCHEDULE

                                       ii
<PAGE>   4

             FOURTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT

         THIS FOURTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT (the
"Agreement") is entered into as of this 3 day of February, 2000 by and among (i)
VarsityBooks.com Inc., a Delaware corporation (the "Company"), with principal
offices located at 2020 K Street, N.W., Sixth Floor, Washington, D.C. 20006,
(ii) those holders of the Company's Series A Preferred Stock (the "Series A
Preferred") listed on Exhibit A attached hereto (the "Series A Investors"),
(iii) Baker & Taylor, Inc. ("B&T"), a Delaware corporation with its principal
office at Five LakePointe Plaza, Suite 500, 2709 Water Ridge Parkway, Charlotte,
North Carolina 28217, (iv) those holders of the Company's Series B Preferred
Stock (the "Series B Preferred") listed on Exhibit B attached hereto (the
"Series B Investors"), (v) those holders of the Company's Series C Preferred
Stock (the "Series C Preferred" and together with the Series A Preferred and
Series B Preferred, the "Preferred Stock") listed on Exhibit C attached hereto
(the "Series C Investors") , (vi) Eric J. Kuhn, (vii) Timothy J. Levy, (viii)
America Online, Inc. ("AOL") and (ix) Sallie Mae, Inc. ("Sallie Mae" and
together with the Series A Investors, the Series B Investors, Series C Investors
and AOL, the "Investors").

                                R E C I T A L S :

         WHEREAS, the Company, the Series A Investors and B&T have entered into
that certain Investors' Rights Agreement (the "Original Agreement"), dated as of
August 6, 1998;

         WHEREAS, the Company, the Series A Investors, Series B Investors and
B&T entered into that certain Amended and Restated Investors Rights Agreement
(the "Second Agreement"), dated as of February 25, 1999;

         WHEREAS, the Company, the Series A Investors, Series B Investors, the
Series C Investors, Eric Kuhn, Timothy Levy and B&T entered into that certain
Second Amended and Restated Investors Rights Agreement (the "Third Agreement"),
dated as of August 27, 1999;

         WHEREAS, the Company, the Series A Investors, Series B Investors, the
Series C Investors, Eric Kuhn, Timothy Levy, B&T and AOL entered into that
certain Third Amended and Restated Investors Rights Agreement (the "Fourth
Agreement"), dated as of December 22, 1999;

         WHEREAS, on December 22, 1999, the Company and ICQ, Inc. entered into
that certain Interactive Marketing Agreement (the "Marketing Agreement")
pursuant to which the Company shall grant that certain contingent Stock
Subscription Warrant (the "Existing AOL Warrant") dated as of December 22, 1999,
to AOL to purchase an aggregate of up to 463,246 shares of the Common Stock of
the Company;

         WHEREAS, it was a condition to the Warrant and to the closing of the
transactions contemplated by the Marketing Agreement that the Company and the
Investors entered into the Third Agreement in order to provide AOL with certain
rights in connection with the shares issuable upon exercise of the Existing AOL
Warrant;

                                       1
<PAGE>   5

         WHEREAS, on the date hereof, the Company and Sallie Mae, Inc. are
entering into that certain Product Promotion Agreement (the "Product Promotion
Agreement") pursuant to which the Company shall grant certain Stock Subscription
Warrants (the "Sallie Mae Warrants") dated as of February 3, 2000, to Sallie Mae
to purchase an aggregate of up to 616,863 shares of the Common Stock of the
Company;

         WHEREAS, it is a condition to the Sallie Mae Warrants and to the
closing of the transactions contemplated by the Product Promotion Agreement that
the Company and the Investors enter into this Agreement to, among other things,
amend and restate the rights granted pursuant to the Fourth Agreement in order
to provide Sallie Mae with certain rights in connection with the Warrant;

         WHEREAS; it is a condition of the AOL Warrant that the Company grant to
AOL an additional warrant to purchase an additional 34,367 shares of the Common
Stock of the Company (the "Additional AOL Warrant," and, together with the
Existing AOL Warrant, the "AOL Warrants");

         WHEREAS, pursuant to Section 4.5 of the Fourth Agreement, the Fourth
Agreement or any term thereof may be amended, waived, discharged or terminated
by a written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought; provided, however, that
(i) a majority of the outstanding Registrable Securities whether or not
converted by the Series A Investors and B&T and (ii) a majority of the
outstanding Registrable Securities whether or not converted held by the Series B
Investors, each group voting separately as a class, may waive or amend, on
behalf of the Investors and other holders of Shares, any provisions of the
Fourth Agreement benefiting the Series A Investors and Series B Investors so
long as the effect thereof will be that the Series A Investors and Series B
Investors and other holders of Shares will be treated equally, and (iii) a
majority of the outstanding Registrable Securities (whether or not converted)
held by the Series C Investors, each group voting separately as a class, may
waive or amend, on behalf of the Investors and other holders of Shares, any
provisions of the Fourth Agreement benefiting the Investors so long as the
effect thereof will be that the Investors and other holders of Shares will be
treated equally; provided, further, that (i) any action that would affect the
rights of Mr. Kuhn or Mr. Levy under the Fourth Agreement will only be effective
with their written consent and (ii) the rights of any series of Preferred Stock,
any individual, or any entity to nominate a director under Section 2.2 will not
be amended without the consent of such individual or a majority of the holders
of such series; and

         WHEREAS, by entering into this Agreement, the Series A Investors whose
signatures are set forth on the signature pages hereto, which Series A Investors
constitute a majority of the outstanding Registrable Securities; the Series B
Investors whose signatures are set forth on the signature pages hereto, which
Series B Investors constitute a majority of the outstanding Registrable
Securities; the Series C Investors whose signatures are set forth on the
signature pages hereto, which Series C Investors constitute a majority of the
outstanding Registrable Securities; B&T; AOL, Eric Kuhn and Timothy Levy, hereby
consent to amending the Fourth Agreement in the manner set forth herein.

                                       2
<PAGE>   6

         NOW THEREFORE, in consideration of the mutual agreements, covenants and
conditions contained herein, the Company and each of the Investors hereby agree
as follows:

                                   SECTION 1
              RESTRICTIONS ON TRANSFERABILITY; REGISTRATION RIGHTS

         1.1 CERTAIN DEFINITIONS.

         All capitalized terms used herein and not defined below shall have the
meanings set forth in the Series C Stock Purchase Agreement. The following terms
shall have the following respective meanings:

                  "COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.

                  "CONVERSION SHARES" shall mean the Common Stock issued or
issuable upon conversion of the Preferred Stock.

                  "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

                  "HOLDER" shall mean Mr. Kuhn, Mr. Levy, B&T, any Investor
holding Registrable Securities and any person holding Registrable Securities to
whom the rights under this Agreement have been transferred in accordance with
Section 1.13 hereof.

                  "INITIATING HOLDERS" shall mean any Investors or transferees
of any Investors under Section 1.13 hereof who in the aggregate are Holders of
not less than twenty percent (20%) of the Registrable Securities; provided, that
Mr. Kuhn or Mr. Levy shall be Initiating Holders for purposes of Section 1.7
without regard to the percentage of Registrable Securities held by them, and
provided, that AOL and Sallie Mae shall each be an Initiating Holder for
purposes of Sections 1.5 and 1.7 without regard to the percentage of Registrable
Securities held by AOL or Sallie Mae.

                  "REGISTER", "REGISTERED" and "REGISTRATION" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.

                  "REGISTRATION EXPENSES" shall mean all expenses incurred by
the Company in complying with Sections 1.5 and 1.6 hereof, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses, all fees and disbursements of one counsel for the Holders (as
limited by Section 1.8), and the expense of any special audits incident to or
required by any such registration (but excluding the compensation of regular
employees of the Company which shall be paid in any event by the Company).

                  "REGISTRABLE SECURITIES" shall mean (i) the Conversion Shares;
and (ii) any Common Stock of the Company issued or issuable in respect of the
Shares or Conversion Shares

                                       3
<PAGE>   7

or other securities issued or issuable with respect to the Shares or Conversion
Shares upon any stock split, stock dividend, recapitalization, or similar event,
or any Common Stock otherwise issued or issuable with respect to the Shares or
Conversion Shares; (iii) the shares of Common Stock purchased by B&T pursuant to
that certain Stock Purchase Agreement and Warrant, each dated July 10, 1998;
(iv) the shares of Common Stock held by Mr. Kuhn and Mr. Levy; (v) the shares of
Common Stock purchased by AOL pursuant to the AOL Warrants; and (vi) the shares
of Common Stock purchased by Sallie Mae pursuant to the Sallie Mae Warrants,
provided, however, that shares of Common Stock or other securities shall only be
treated as Registrable Securities if and so long as they have not been (A) sold
to or through a broker or dealer or underwriter in a public distribution or a
public securities transaction, or (B) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Rule 144 so that all transfer restrictions and restrictive legends with respect
thereto are removed upon the consummation of such sale

                  "RESTRICTED SECURITIES" shall mean the securities of the
Company required to bear the legend referred to by the Securities Act as set
forth in Section 1.3 hereof.

                  "RULE 144" means Rule 144 promulgated under the Securities
Act.

                  "RULE 145" means Rule 145 promulgated under the Securities
Act.

                  "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

                  "SELLING EXPENSES" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders and, except as set forth under "Registration
Expenses," all fees and disbursements of counsel for any Holder.

                  "SHARES" shall mean the shares of Series A Preferred sold
pursuant to the Series A Convertible Preferred Stock Purchase Agreement, dated
August 6, 1998, the shares of Series B Preferred sold pursuant to the Series B
Convertible Stock Purchase Agreement dated February 25, 1999, the shares of
Series C Preferred sold pursuant to the Series C Stock Purchase Agreement, the
shares of Common Stock purchased by B&T pursuant to that certain Stock Purchase
Agreement and Warrant, each dated July 10, 1998, the shares of Common Stock
purchased by AOL pursuant to the AOL Warrants dated December 22, 1999, and the
shares of Common Stock purchased by Sallie Mae pursuant to the Sallie Mae
Warrants.

         1.2 RESTRICTIONS.

         The Shares and the Conversion Shares shall not be sold, assigned,
transferred or pledged except upon the conditions specified in this Agreement,
which conditions are intended to ensure compliance with the provisions of the
Securities Act. Each Investor will cause any proposed purchaser, assignee,
transferee or pledgee of the Shares and the Conversion Shares to agree to take
and hold such securities subject to the provisions and upon the conditions
specified in this Agreement.

                                       4
<PAGE>   8

         1.3 RESTRICTIVE LEGEND.

         Each certificate representing (i) the Shares, (ii) the Conversion
Shares, and (iv) any other securities issued in respect of the securities
referenced in clauses (i) and (ii) upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall (unless
otherwise permitted by the provisions of Section 1.4 below) be stamped or
otherwise imprinted with legends in the following form (in addition to any
legend required under applicable state securities laws):

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
                  FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
                  SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE
                  SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE OF SUCH
                  REGISTRATION OR UNLESS SUCH SALE OR TRANSFER IS EXEMPT FROM
                  THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID
                  ACT. THE COMPANY MAY REASONABLY REQUEST AN OPINION OF COUNSEL
                  (WHICH MAY BE COUNSEL FOR THE COMPANY) STATING THAT SUCH SALE
                  OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
                  DELIVERY REQUIREMENTS OF SAID ACT."

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
                  ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE
                  COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH
                  THE SECRETARY OF THE COMPANY."

                  Each Investor and Holder consents to the Company making a
notation on its records and giving instructions to any transfer agent of the
Restricted Securities in order to implement the restrictions on transfer
established in this Section 1.

         1.4 NOTICE OF PROPOSED TRANSFERS.

         The holder of each certificate representing Restricted Securities, by
acceptance thereof, agrees to comply in all respects with the provisions of this
Section 1. Prior to any proposed sale, assignment, transfer or pledge of any
Restricted Securities, unless there is in effect a registration statement under
the Securities Act covering the proposed transfer, the holder thereof shall give
written notice to the Company of such holder's intention to effect such
transfer, sale, assignment or pledge. Each such notice shall describe the manner
and circumstances of the proposed transfer, sale, assignment or pledge in
sufficient detail, and shall be accompanied at such holder's expense by either
(i) an unqualified written opinion of legal counsel who shall be, and whose
legal opinion shall be, reasonably satisfactory to the Company, addressed to the
Company, to the effect that the proposed transfer of the Restricted Securities
may be effected without registration under the Securities Act, (ii) a "no
action" letter from the Commission to the effect that the transfer of such
securities without registration will not result in a recommendation

                                       5
<PAGE>   9

by the staff of the Commission that action be taken with respect thereto, or
(iii) any other evidence reasonably satisfactory to counsel to the Company,
whereupon the holder of such Restricted Securities shall be entitled to transfer
such Restricted Securities in accordance with the terms of the notice delivered
by the holder to the Company. The Company will not require such a legal opinion
or "no action" letter (a) in any transaction in compliance with Rule 144, (b) in
any transaction in which an Investor which is a corporation distributes
Restricted Securities solely to its majority-owned subsidiaries, affiliates or
stockholders for no consideration, or (c) in any transaction in which an
Investor which is a partnership or a limited liability company distributes
Restricted Securities solely to partners, members or other equity holders
thereof for no consideration; provided that each transferee agrees in writing to
be subject to the terms of this Section 1.4. Each certificate evidencing the
Restricted Securities transferred as above provided shall bear, except if such
transfer is made pursuant to Rule 144, the appropriate restrictive legends
referring to the Securities Act set forth in Section 1.3 above, except that such
certificate shall not bear such restrictive legend if, in the opinion of counsel
for such holder and the Company, such legend is not required in order to
establish compliance with any provisions of the Securities Act.

         1.5 REQUESTED REGISTRATION.

                  (a) Request for Registration. In case the Company shall
receive from Initiating Holders a written request that the Company effect any
registration, qualification or compliance with respect to the Registrable
Securities, the reasonably anticipated aggregate offering price of which exceeds
five million dollars ($5,000,000), the Company will:

                           (i) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and

                           (ii) as soon as practicable, use its best efforts to
effect such registration, qualification or compliance (including, without
limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act and any other governmental requirements or regulations) as may be
so requested and as would permit or facilitate the sale and distribution of all
or such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within thirty (30) days after receipt of such written notice from
the Company; provided, however, that the Company shall not be obligated to take
any action to effect any such registration, qualification or compliance pursuant
to this Section 1.5:

                                    (1) In any particular jurisdiction in which
the Company would be required to execute a general consent to service of process
in effecting such registration, qualification or compliance unless the Company
is already subject to service in such jurisdiction and except as may be required
by the Securities Act;

                                    (2) Prior to the earlier of (i) six (6)
months following the closing date of the first public offering of the Company's
securities to the general public which is

                                       6
<PAGE>   10

effected pursuant to a registration statement filed with, and declared effective
by, the Commission under the Securities Act (the "Initial Public Offering") or
(ii) August 6, 2001;

                                    (3) Prior to ninety (90) days following the
closing date of the Company's Initial Public Offering;

                                    (4) If the Company delivers notice to the
Holders within thirty (30) days of such request that the Company intends to file
a registration statement for the Company's Initial Public Offering within ninety
(90) days;

                                    (5) (a) After the Company has effected two
(2) such registrations pursuant to this Section 1.5(a) with respect to rights
held hereunder by the Series A Investors, (b) after the Company has effected two
(2) such registrations pursuant to this Section 1.5(a) with respect to rights
held hereunder by the Series B Investors, (c) after the Company has effected two
(2) such registrations pursuant to this Section 1.5(a) with respect to rights
held hereunder by the Series C Investors, (d) after the Company has effected two
(2) such registrations pursuant to this Section 1.5(a) with respect to rights
held hereunder by AOL, provided that, notwithstanding any provision hereof to
the contrary, AOL shall not initiate more than one (1) registration pursuant to
this Section 1.5(a) prior to the first anniversary of the Initial Public
Offering; and after the Company has effected two (2) such registrations pursuant
to this Section 1.5(a) with respect to rights held hereunder by Sallie Mae,
provided that, notwithstanding any provision hereof to the contrary, Sallie Mae
shall not initiate more than one (1) registration pursuant to this Section
1.5(a) prior to the first anniversary of the Initial Public Offering; or

                                    (6) If the Company shall furnish to such
Holders a certificate, signed by the President of the Company, stating that in
the good faith judgment of the Board of Directors it would be detrimental to the
Company or its shareholders for a registration statement to be filed in the near
future, then the Company's obligation to use its best efforts to register,
qualify or comply under this Section 1.5 shall be deferred for a period not to
exceed ninety (90) days from the date of receipt of written request from the
Initiating Holders; provided, however, that the Company may not utilize this
right more than once in any twelve (12) month period.

         Subject to the foregoing clauses (1) through (6), the Company shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Initiating Holders.

                  (b) Underwriting. If a registration pursuant to Section 1.5 is
for a registered public offering involving an underwriting, the Company shall so
advise the Holders as part of the notice given pursuant to Section 1.5(a)(i).
The right of any Holder to registration pursuant to Section 1.5 shall be
conditioned upon such Holder's participation in the underwriting arrangements
required by this Section 1.5 and the inclusion of such Holder's Registrable
Securities in the underwriting, to the extent requested, to the extent provided
herein.

         The Company shall (together with all Holders proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by a majority in interest of the Initiating Holders (which managing underwriter
shall be reasonably acceptable to the Company).

                                       7
<PAGE>   11

Notwithstanding any other provision of this Section 1.5, if the managing
underwriter advises the Initiating Holders in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the
Company shall so advise all Holders of Registrable Securities and the number of
shares of Registrable Securities that may be included in the registration and
underwriting shall be allocated first among the Initiating Holders, then among
all Holders thereof other than Mr. Kuhn and Mr. Levy in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the registration statement and then, to the extent
any Registrable Securities may be included that are held by Mr. Kuhn and Mr.
Levy, in proportion to the amounts held by them; provided, however, that with
respect to any public offering following the Initial Public Offering, not
including those shares allocated among the Initiating Holders, the number of
shares allocated among all remaining Holders (including Mr. Kuhn and Mr. Levy)
shall not be less than thirty percent (30%) of the number of shares to be sold
in such public offering. No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. To facilitate the allocation of shares in
accordance with the above provisions, the Company or the underwriters may round
the number of shares allocated to any Holder to the nearest one hundred (100)
shares.

         If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration.

         1.6 COMPANY REGISTRATION.

                  (a) Notice of Registration. If at any time or from time to
time, the Company shall determine to register any of its securities, either for
its own account or the account of a security holder or holders other than (i)
the Company's Initial Public Offering, (ii) a registration relating solely to
employee benefit plans, or (iii) a registration relating solely to a transaction
subject to Rule 145, the Company will:

                           (i) promptly give to each Holder written notice
thereof; and

                           (ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests made within thirty (30) days after receipt of such written notice
from the Company by any Holder.

                  (b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.6(a)(i). In such event, the right of any Holder to
registration pursuant to Section 1.6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company (or by the
Holders who

                                       8
<PAGE>   12

have demanded such registration). Notwithstanding any other provision of this
Section 1.6, if the managing underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the managing
underwriter may limit the number of Registrable Securities to be included in the
registration and underwriting, on a pro rata basis based on the total number of
securities (including, without limitation, Registrable Securities) entitled to
registration pursuant to registration rights granted to the participating
Holders other than Mr. Kuhn and Mr. Levy by the Company at the time of the
filing of the registration statement and then, to the extent any Registrable
Securities may be included that are held by Mr. Kuhn and Mr. Levy, in proportion
to the amounts held by them; provided, however, that (i) in no event shall any
shares being sold by a shareholder exercising a demand registration right either
pursuant to or substantially the same as that granted in Section 1.5 hereof be
excluded from the offering, except as provided in Section 1.5(b), and (ii) that
with respect to any public offering following the Initial Public Offering, the
number of shares allocated among all Holders of Registrable Securities
exercising its rights under this Section 1.6 shall not be less than thirty
percent (30%) of the number of shares to be sold in such public offering. To
facilitate the allocation of shares in accordance with the above provisions, the
Company or the underwriters may round the number of shares allocated to any
Holder or other holder to the nearest one hundred (100) shares. If any Holder or
other holder disapproves of the terms of any such underwriting, he or she may
elect to withdraw therefrom by written notice to the Company and the managing
underwriter. Any securities excluded or withdrawn from such underwriting shall
be withdrawn from such registration.

                  (c) Right to Terminate Registration. The Company shall have
the right to terminate or withdraw any registration initiated by it under this
Section 1.6 prior to the effectiveness of such registration, whether or not any
Holder has elected to include securities in such registration.

         1.7 REGISTRATION ON FORM S-3.

         In addition to the rights set forth in Section 1.5, if the Initiating
Holders request that the Company file a registration statement on Form S-3 (or
any successor thereto) for a public offering of shares of Registrable Securities
the reasonable anticipated aggregate price to the public of which would exceed
one million dollars ($1,000,000), and the Company is a registrant entitled to
use Form S-3 to register securities for such offering, the Company shall use its
best efforts to cause such shares to be registered for the offering on such form
(or any successor thereto). The Company shall not be obligated to file (i) more
than four (4) registration statements under this Section 1.7 in any consecutive
twelve (12) month period.

         1.8 EXPENSES OF REGISTRATION.

         All Registration Expenses incurred in connection with demand
registrations pursuant to Section 1.5, all Company registrations pursuant to
Section 1.6, and all registrations on Form S-3 pursuant to Section 1.7 shall be
borne by the Company, provided that the Company shall not be required to pay the
Registration Expenses of any registration proceeding begun pursuant to Section
1.5, the request of which has been subsequently withdrawn by the Initiating
Holders. In such case, (i) the Holders of Registrable Securities to have been
registered shall bear all such Registration Expenses pro rata on the basis of
the number of shares to have been registered, and

                                       9
<PAGE>   13

(ii) the Company shall be deemed not to have effected a registration pursuant to
subparagraph 1.5(a) of this Agreement. Notwithstanding the foregoing, however,
if at the time of the withdrawal, the Holders have learned of a material adverse
change in the condition, business or prospects of the Company from that known to
the Holders at the time of their request, of which the Company had knowledge at
the time of the request, then the Holders shall not be required to pay any of
said Registration Expenses. In such case, the Company shall be deemed not to
have effected a registration pursuant to subparagraph 1.5(a) of this Agreement.
Unless otherwise stated, all Selling Expenses relating to securities registered
on behalf of the Holders and all other registration expenses incurred in
connection with any registration pursuant to this Section 1 shall be borne by
the Holders of the registered securities included in such registration pro rata
on the basis of the number of shares so registered, except that each Holder
shall bear the expense of any counsel or other expert retained by it in addition
to the one counsel whose fees are included in the calculation of Registration
Expenses.

         1.9 REGISTRATION PROCEDURES.

         In the case of each registration, qualification or compliance effected
by the Company pursuant to this Section 1, the Company will keep each Holder
advised in writing as to the initiation of each registration, qualification and
compliance and as to the completion thereof. At its expense the Company will:

                  (a) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
eighty (180) days or until the distribution described in the registration
statement has been completed;

                  (b) Furnish to the Holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may reasonably request
in order to facilitate the public offering of such securities;

                  (c) Use its best efforts to register and qualify the
securities covered by the registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions;

                  (d) In the event of any underwritten public offering, enter
into and perform all its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement;

                  (e) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits

                                       10
<PAGE>   14

to state a material fact required to be stated therein or necessary to make the
statement therein not misleading in light of the circumstances then existing;
and, at the request of such Holder, prepare and furnish to such Holder a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the offerees
of such shares, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;

                  (f) Notify each Holder promptly (i) of the receipt by the
Company of any notification with respect to any comments by the Commission with
respect to such registration statement or prospectus or any amendment or
supplement thereto or any request by the Commission for the amending or
supplementing thereof or for additional information with respect thereto, (ii)
of the receipt by the Company of any notification with respect to the issuance
by the Commission of any stop order suspending the effectiveness of such
registration statement or prospectus or any amendment or supplement thereto or
the initiation or threatening of any proceeding for that purpose and (iii) of
the receipt by the Company of any notification with respect to the suspension of
the qualification of such Registrable Securities, for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purposes;

                  (g) Use its best efforts to cause such Registrable Securities
to be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of the
Company to enable the seller or sellers thereof to consummate the disposition of
such Registrable Securities;

                  (h) Use its best efforts to obtain from its independent
certified public accountants "comfort" letters in customary form and at
customary times and covering matters of the type customarily covered by comfort
letters;

                  (i) Use its best efforts to obtain from its counsel an opinion
or opinions in customary form;

                  (j) Provide a transfer agent and registrar (which may be the
same entity and which may be the Company) for such Registrable Securities; and

                  (k) Issue to any underwriter to which any Holder of
Registrable Securities may sell shares in such offering certificates evidencing
such Registrable Securities;

         1.10 INDEMNIFICATION.

                  (a) The Company will indemnify each Holder of Registrable
Securities included in a registration pursuant to this Agreement, each of its
officers directors and partners, and each person controlling such Holder within
the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus,

                                       11
<PAGE>   15

offering circular or other document, or any amendment or supplement thereto,
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation by the Company of the Securities Act, the Exchange Act, state
securities laws or any rule or regulation promulgated under such laws applicable
to the Company in connection with any such registration, qualification or
compliance, and the Company will reimburse each such Holder, each of its
officers and directors, and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action, as
such expenses are incurred, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by any
Holder, controlling person or underwriter and stated to be specifically for use
therein.

                  (b) Each Holder, severally and not jointly, will, if
Registrable Securities held by such Holder are included in the securities as to
which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors and officers, each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act, and each other such Holder, each of its
officers, directors and partners and each person controlling such Holder within
the meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company, such Holders, such
directors, officers, partners, persons, underwriters or control persons for any
legal or any other expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability or action, as such expenses
are incurred, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged omission)
is made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by an instrument duly executed by such Holder and stated to be
specifically for use therein. Notwithstanding the foregoing, the liability of
each Holder under this Section 1.10(b) shall be limited to an amount equal to
the net proceeds of the shares sold by such Holder.

                  (c) Each party entitled to indemnification under this Section
1.10 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense; provided, however,

                                       12
<PAGE>   16

that an Indemnified Party (together with all other Indemnified Parties which may
be represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by the Indemnifying
Party, if representation of such Indemnified Party by the counsel retained by
the Indemnifying Party would be inappropriate due to actual or potential
differing interests between such Indemnified Party and any other party
represented by such counsel in such proceeding. The failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its obligations under this Section 1.10 unless the failure to give such
notice is materially prejudicial to an Indemnifying Party's ability to defend
such action. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.

                  (d) If the indemnification provided for in this Section is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, claim, damage, liability or action referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amounts paid or payable by such
indemnified party as a result of such loss, claim, damage, liability or action
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions which resulted in such loss, claim,
damage or liability as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Holders of Registrable Securities agree that it would not be
just and equitable if contributions pursuant to this paragraph were determined
by pro rata allocation or by any other method of allocation which did not take
into account the equitable considerations referred to herein. The amount paid or
payable to an indemnified party as a result of the losses, claims, damages,
liabilities or expenses referred to above shall be deemed to include, subject to
the limitation set forth in this Section (h)(iv), any legal or other expenses
reasonably incurred in connection with investigating or defending the same.
Notwithstanding the foregoing, in no event shall the amount contributed by a
Holder of Registrable Securities exceed the aggregate net offering proceeds
received by such Holder from the sale of such Holder's Registrable Securities.

         1.11 INFORMATION BY HOLDER.

         The Holder or Holders of Registrable Securities included in any
registration shall furnish to the Company such information regarding such Holder
or Holders, the Registrable Securities held by them and the distribution
proposed by such Holder or Holders as the Company may request in writing and as
shall be required in connection with any registration, qualification or
compliance referred to in this Section 1.

                                       13
<PAGE>   17

         1.12 RULE 144 REPORTING.

         With a view to making available the benefits of certain rules and
regulations of the Commission which may at any time permit the sale of the
Restricted Securities to the public without registration, after such time as a
public market exists for the Common Stock of the Company, the Company agrees to
use its best efforts to:

                  (a) Make and keep public information available, as those terms
are understood and defined in Rule 144, at all times after the effective date
that the Company becomes subject to the reporting requirements of the Securities
Act or the Exchange Act;

                  (b) File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements); and

                  (c) So long as an Investor owns any Restricted Securities, to
furnish to each Investor forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as an Investor may reasonably request in
availing itself of any rule or regulation of the Commission allowing an Investor
to sell any such securities without registration.

         1.13 TRANSFER OF REGISTRATION RIGHTS.

         The rights to cause the Company to register securities granted
Investors under Sections 1.5, 1.6 and 1.7 may be assigned to a transferee or
assignee reasonably acceptable (unreasonable transferees or assignees would
include, but not be limited to, competitors or potential competitors of the
Company as determined by the Board of Directors prior to transfer) to the
Company in connection with any transfer or assignment of Registrable Securities
by an Investor (together with any affiliate); provided that (a) such transfer
may otherwise be effected in accordance with applicable securities laws, (b)
notice of such assignment is given to the Company, (c) such transferee or
assignee covenants to be bound by the registration rights provisions in this
Agreement, and (d) such transferee or assignee (i) is a wholly-owned subsidiary,
affiliate, or constituent partner (including limited partners, retired partners,
spouses and ancestors, lineal descendants and siblings of such partners or
spouses who acquire Registrable Securities by gift, will or intestate
succession) of such Investor, (ii) is any family member or trust for the benefit
of Mr. Kuhn, Mr. Levy or any individual Investor, or (iii) acquires from Mr.
Kuhn, Mr. Levy or such Investor at least fifty thousand (50,000) shares of
Restricted Securities (as appropriately adjusted for stock splits and the like).

         1.14 STANDOFF AGREEMENT.

         Each Holder holding more than one percent (1 %) of the Company's Common
Stock on a fully-diluted basis agrees in connection with the Initial Public
Offering and the first public

                                       14
<PAGE>   18

offering of the Company's securities thereafter (other than a registration of
securities in a transaction subject to Rule 145 or with respect to an employee
benefit plan) that, upon request of the Company or the underwriters managing any
underwritten offering of the Company's securities, not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
Registrable Securities (other than those included in the registration) without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed one hundred eighty (180) days from
the effective date of such registration) as may be requested by the Company or
such managing underwriters; provided, that (i) the officers and directors of the
Company also agree to such restrictions, and (ii) the holders of the Company's
securities with registration rights similar to those granted in Sections 1.5,
1.6 and 1.7 herein also agree to, or are bound by, such restrictions.

         1.15 TERMINATION OF RIGHTS.

         The rights of any particular Holder to cause the Company to register
securities under Sections 1.5, 1.6 and 1.7 shall terminate with respect to such
Holder on the fifth year anniversary of the effective date of the Company's
Initial Public Offering.

         1.16 OTHER REGISTRATION RIGHTS.

         The Company shall not grant any registration rights to any existing or
future holder of equity securities of the Company, or securities convertible
into Common Stock of the Company, which rights are more favorable than the
registration rights granted to the Investors.

                                   SECTION 2
                 RIGHT OF FIRST OFFER AND ELECTION OF DIRECTORS

         2.1 INVESTORS' RIGHT OF FIRST OFFER.

                  (a) Right of First Offer. Subject to the terms and conditions
contained in this Section 2.1, the Company hereby grants to each Investor the
right of first offer to purchase its Pro Rata Portion of any New Securities (as
defined in subsection 2.1(b)) which the Company may, from time to time, propose
to sell and issue. An Investor's "Pro Rata Portion" for purposes of this Section
2.1 is the ratio that (x) the sum of the number of shares of the Company's
Common Stock then held by such Investor and the number of shares of the
Company's Common Stock issuable upon conversion of the Preferred Stock then held
by such Investor bears to (y) the sum of the total number of shares of Company's
Common Stock then outstanding and the number of shares of the Company's Common
Stock issuable upon conversion of the then outstanding securities exercisable
for or convertible into, directly or indirectly, shares of Common Stock.

                  (b) Definition of New Securities. Except as set forth below,
"New Securities" shall mean any shares of capital stock of the Company,
including Common Stock and Preferred Stock, whether authorized or not, and
rights, options or warrants to purchase said shares of Common Stock or Preferred
Stock, and securities of any type whatsoever that are, or may become,
convertible into said shares of Common Stock or Preferred Stock. Notwithstanding
the foregoing, "New Securities" does not include (i) the Shares or the
Conversion Shares, (ii) securities offered to the public generally pursuant to a
registration statement under the Securities

                                       15
<PAGE>   19

Act, (iii) securities issued pursuant to the acquisition of another corporation
by the Company by merger, purchase of substantially all of the assets or shares
or other reorganization whereby the Company or its shareholders own not less
than a majority of the voting power of the surviving or successor corporation,
(iv) any shares of the Company's Common Stock or related options convertible
into or exercisable for such Common Stock issued to employees, officers and
directors of, and consultants to, the Company, pursuant to any arrangement
approved by the Board of Directors of the Company including the members of the
Board of Directors appointed by the Series B Investors and Series C Investors,
(v) shares of the Company's Common Stock or related options convertible into or
exercisable for such Common Stock issued to any bank, equipment lessor or other
similar financial institution if and to the extent that the transaction in which
such sale or grant is to be made is unanimously approved by the Company's Board
of Directors, (vi) shares of the capital stock of the Company issued pursuant to
any existing rights or agreements that have been disclosed to the Investors,
including, without limitation, convertible securities, options and warrants,
provided that the Company shall have complied with the right of first offer
established by this Section 2.1 with respect to the initial sale or grant by the
Company of such rights or agreements, (vii) stock issued in connection with any
stock split, stock dividend or recapitalization by the Company; provided
however, that shares of the Company's Common Stock issued pursuant to (iv) shall
not, in the aggregate, exceed 2,030,836 shares of Common Stock, or such other
number of shares of Common Stock as the Board of Directors shall, in its sole
discretion, from time to time approve as being issuable pursuant to the
Company's Stock Option Plans in accordance with Section 3.12.

                  (c) Notice of Right. In the event the Company proposes to
undertake an issuance of New Securities, it shall give each Investor written
notice of its intention, describing the type of New Securities and the price and
terms upon which the Company proposes to issue the same. Each Investor shall
have fifteen (15) days from the date of receipt of any such notice to agree to
purchase shares of such New Securities (up to the amount referred to in
subsection 2.1 (a)), for the price and upon the terms specified in the notice,
by giving written notice to the Company and stating therein the quantity of New
Securities to be purchased. If any Investor fails to agree to purchase its full
Pro Rata Portion within such fifteen (15) day period, the Company will give the
Investors that did so agree (the "Electing Investors") notice of the number of
shares which were not subscribed for by the non-electing Investors. Such notice
may be by telephone if followed by written confirmation within two (2) days. The
Electing Investors shall have ten (10) business days from the date of such
notice to agree to purchase their Pro Rata Portion of all of the New Securities
not purchased by such non-electing Purchasers.

                  (d) Exercise of Right. If any Investor exercises its right of
first offer hereunder, the closing of the purchase of the New Securities with
respect to which such right has been exercised shall take place within ninety
(90) calendar days after each Investor gives notice of such exercise, which
period of time shall be extended in order to comply with applicable laws and
regulations. Upon exercise of such right of first offer, the Company and such
Investor shall be legally obligated to consummate the purchase contemplated
thereby and shall use their best efforts to secure any approvals required in
connection therewith.

                  (e) Lapse and Reinstatement of Right. In the event an Investor
fails to exercise the right of first offer provided in this Section 2.1 within
said fifteen (15) day period, the Company shall have ninety (90) days thereafter
to sell or enter into an agreement (pursuant to

                                       16
<PAGE>   20

which the sale of New Securities covered thereby shall be closed, if at all,
within sixty (60) days from the date of said agreement) to sell the New
Securities not elected to be purchased by such Investor at the price and upon
the terms no more favorable to the purchasers of such securities than specified
in the Company's notice. In the event the Company has not sold the New
Securities or entered into an agreement to sell the New Securities within said
ninety (90) day period (or sold and issued New Securities in accordance with the
foregoing within sixty (60) days from the date of said agreement), the Company
shall not thereafter issue or sell any New Securities without first offering
such securities to each Investor in the manner provided above.

                  (f) Assignment. The right of each Investor to purchase any
part of the New Securities may be assigned in whole or in part to any partner,
subsidiary, affiliate or shareholder of an Investor, or other persons or
organizations who acquire at least one hundred thousand (100,000) shares of
Restricted Securities (as adjusted for stock splits and the like).

         2.2 ELECTION OF DIRECTORS. The Holders shall vote their respective
shares of the Company's capital stock in favor of the nominees to the Company's
Board of Directors who are nominated as follows:

                  (i) for as long as at least 100,000 shares of Series A
Preferred are outstanding, the holders of at least one-half (50%) the Series A
Preferred then outstanding shall be entitled to nominate one (i) representative
to be elected as a member of the Company's Board of Directors;

                  (ii) for as long as at least 200,000 shares of Series B
Preferred are outstanding, FBR Technology Venture Partners I, LP shall be
entitled to nominate one (1) representative to be elected as a member of the
Company's Board of Directors and Mayfield Fund, LP shall be entitled to nominate
one (1) representative to be elected as a member of the Company's Board of
Directors;

                  (iii) for as long as B & T holds at least 500,000 shares of
Common Stock, B & T shall have the right to nominate one (1) representative to
be elected as a member of the Company's Board of Directors;

                  (iv) for as long as at least 900,000 shares of Series C are
outstanding (as adjusted for stock splits, combinations, dividends or similar
recapitalizations) shall remain outstanding, Tribune Company shall be entitled
to nominate one (1) representative;

                  (v) for so long as Eric J. Kuhn continues in the employ of the
Company or holds at least 100,000 shares of Common Stock, Eric J. Kuhn shall be
entitled to nominate a member of the Company's Board of Directors;

                  (vi) for so long as Timothy J. Levy continues in the employ or
the Company or holds at least 100,000 shares of Common Stock, Timothy J. Levy
shall be entitled to nominate a member of the Company's Board of Directors; and

                  (vii) any representatives to be elected as a member of the
Company's Board of Directors to replace any representative due to the failure of
the named parties in paragraphs (i) through (vi) above to continue to meet the
conditions of such respective provisions, shall be

                                       17
<PAGE>   21

mutually agreed upon between the Company and the holders of two-thirds (66 2/3%)
of the then outstanding Preferred Stock, which approval may be withheld or given
in the sole and absolute discretion of the holders of the Preferred Stock.

                  (c) In the case of any vacancy (other than a vacancy caused by
removal) in the office of a director occurring among the directors elected by
holder(s) of stock pursuant to this Section 2.2, the remaining directors so
elected by such holder(s) may by affirmative vote of at least one-half (50%)
thereof (or the remaining director so elected if there be but one and, if there
are no such directors remaining, by the holder(s) who has the right to designate
such director as described in this Section 2.2, if such holder(s) has the
authority to designate a representative to the Board of Directors or, if no such
particular stockholder has such rights by the affirmative vote of the holders of
a majority of the shares of that class or series), elect successor or successors
to hold office for the unexpired term of the director or directors whose place
or places shall be vacant. Any director who shall have been elected by any
particular holder(s) or by any directors so elected as provided in the
immediately preceding sentence hereof may be removed during the aforesaid term
of office, either with or without cause, by, and only by, the affirmative vote
of the holder(s) of stock entitled to elect such director or directors, given
either at a special meeting of such holder(s) duly called for that purposed or
pursuant to a written consent of stockholders, and any vacancy thereby created
may be filled by the holder(s) of stock represented at the meeting or pursuant
to unanimous written consent.

         2.3 TERMINATION OF RIGHT OF FIRST OFFER AND ELECTION OF DIRECTORS. The
right of first offer granted under Section 2.1 of this Agreement and the
election of directors provision set forth under Section 2.2 of this Agreement
shall terminate immediately prior to and be of no further force or effect on or
after the date of the closing of the Company's first sale of its Common Stock
pursuant to an firm commitment underwritten public offering (a "Qualifying
Public Offering") pursuant to which all outstanding shares of Preferred Stock
are converted, automatically or otherwise, into shares of Common Stock of the
Company.

                                   SECTION 3
                      AFFIRMATIVE COVENANTS OF THE COMPANY

         The Company hereby covenants and agrees as follows:

         3.1 FINANCIAL INFORMATION. So long as an Investor is a Holder, the
Company will furnish to such Holder, as soon as practicable after the end of
each fiscal year, but in no event more than ninety (90) days after the end of
such fiscal year, an audited consolidated balance sheet of the Company and
audited consolidated statements of income, shareholders' equity and cash flows
for such year, as well as annual budgets. Additionally, the Company will deliver
to such Holder, as soon as practicable after the end of each calendar quarter,
and calendar month, consolidated balance sheets of the Company and consolidated
statements of income and cash flow for such calendar quarter or calendar month
and for the current fiscal year to date.

         3.2 DELIVERY OF INFORMATION. So long as a Series B Investor, Series C
Investor, AOL or Sallie Mae is a Holder, the Company will furnish to such Holder
the same written information it delivers to its Board of Directors. In addition,
the Company will deliver to a Holder all other information reasonably requested
by such Series B Investor, Series C Investor, AOL or Sallie

                                       18
<PAGE>   22

Mae. All information hereafter furnished to such Holder hereunder shall be
deemed confidential and shall be kept in strict confidence by such Holder under
appropriate safeguards; provided, that the foregoing restriction shall not apply
to any information which (i) as shown by written records, was lawfully in the
possession of such Holder prior to any disclosure by the Company, so long as the
source of such information was not bound by a confidentiality agreement with the
Company in respect thereof, or (ii) is generally available to the public other
than as a result of disclosure by such Holder.

         3.3 INSPECTION. The Company shall permit each Investor, at such
Investor's expense, to visit and inspect the Company's properties, to examine
its books of account and records and to discuss the Company's affairs, finances
and accounts with its officers, all at such reasonable times as may be requested
by such Investor; provided, however, that the Company shall not be obligated
pursuant to this Section 3.3 to provide access to any information which it
reasonably considers to be a trade secret or similar confidential information.

                                       19
<PAGE>   23

         3.4 EXPENSES OF THE BOARD OF DIRECTORS. The Company shall pay the
reasonable, preapproved expenses of the members of the Board of Directors,
including airfare and hotel costs, incurred in connection with their service on
the Board of Directors.

         3.5 RESERVED EMPLOYEE SHARES. The shares of Common Stock reserved for
employees, officers, of, and consultants to, the Company (the "Employee
Shares"), are to be issued from time to time solely under the Company's 1998
Stock Plan (the "Stock Plan") as may be determined and approved by the Board of
Directors subject to Section 3.12 hereof. Unless otherwise agreed to by the
Board of Directors and subject to Section 3.12 hereof, Employee Shares subject
to options issued under the Stock Plan or other approved plans will vest, until
the option holder's employment with or services to the Company terminate, over a
four year period on an equal monthly basis. The Company shall retain a right of
first refusal, which right shall be freely assignable and, with respect to all
such Employee Shares subject to such options, the holder of such Employee Shares
shall agree to a market standoff provision consistent with the market standoff
provision contained in Section 1.14.

         3.6 ACQUISITION OF STOCK. All shares of Preferred Stock held or
acquired by the Investors or by affiliated entities or persons shall be
aggregated together for the purpose of determining the availability of any
rights under this Section 3.

         3.7 TITLES AND SALARIES. Titles of Company management shall be agreed
upon by the Board of Directors. All salaries must be reviewed and approved by
the Board of Directors.

         3.8 BOARD OF DIRECTORS MEETINGS. The Board of Directors shall meet on a
monthly basis until such time as the unanimous Board of Directors determine
otherwise. The meetings shall be held at the principal office of the Company or
in any other place the directors may determine. If the Chairman is not present
at a meeting of the Board of Directors, the directors present may appoint one of
their number to act as Chairman for the purpose of the meeting. A meeting of
directors may be held by means of any telephone, electronic or other
communications facilities which permit all persons participating in the meeting
to communicate with each other simultaneously and instantaneously, and a
director participating in a meeting by those facilities is deemed to be present
at that meeting.

         3.9 IRC SECTION 305. So long as any shares of Preferred Stock remain
outstanding, the Company will not, without approval of holders of a majority of
each series of Preferred Stock then outstanding, do any act or thing which would
result in taxation of the holders of shares of the Preferred Stock under Section
305 of the Internal Revenue Code of 1986, as amended (or any comparable
provision of the Internal Revenue Code as hereafter from time to time amended).

         3.10 BOARD OF DIRECTORS.

                  (a) In any and all elections of directors of the Company
(whether at a meeting or by written consent in lieu of a meeting), all parties
hereto shall vote or cause to be voted all shares of the Company's capital stock
then owned by him or it, or over which he or it has voting control, and
otherwise use his or its respective best efforts, so as to fix the number of
directors as set forth in Section 2.2 of this Agreement and to elect the
nominees nominated in accordance with Section 2.2 of this Agreement.

                                       20
<PAGE>   24

                  (b) The Company shall provide each of the Investors with 30
days' prior written notice of any intended mailing of a notice to the Investors
for a meeting at which directors are to be elected. The Company agrees to
nominate and recommend for election as directors only the individuals designated
pursuant to Section 2.2 of this Agreement.

         3.11 POSITIVE COVENANTS. Subject to Section 3.15, so long as
Registrable Securities are outstanding, the Company will:

                  (a) promptly pay and discharge, or cause to be paid and
discharged, when due and payable, all lawful taxes, assessments, and
governmental charges or levies imposed upon the income, profits, property, or
business of the Company or any subsidiary; provided, however, that any such tax,
assessment, charge, or levy need not be paid if the validity thereof shall
currently be contested in good faith by appropriate proceedings and if the
Company shall have set aside on its books adequate reserves with respect
thereof, and provided further, that the Company will pay all such taxes,
assessments, charges, or levies forthwith upon the commencement of proceedings
to foreclose any lien that may have attached as security therefor;

                  (b) keep its properties and those of its subsidiaries in good
repair, working order, and condition, reasonable wear and tear excepted, and
from time to time make all needful and proper repairs, renewals, replacements,
additions, and improvements thereto;

                  (c) keep its assets and those of its subsidiaries that are of
an insurable character insured by financially sound and reputable insurers
against loss or damage by fire, extended coverage, and explosion insurance in
amounts customary for companies in similar businesses similarly situated; and
the Company will maintain, with financially sound and reputable insurers,
insurance against other hazards, risks, and liabilities to persons and property
to the extent and in the manner customary for companies in similar businesses
similarly situated;

                  (d) keep true records and books of account in which full,
true, and correct entries will be made of all dealings or transactions in
relation to its business and affairs in accordance with generally accepted
accounting principles applied on a consistent basis;

                  (e) duly observe and conform to all valid requirements of
governmental authorities relating to the conduct of their businesses or to their
property or assets;

                  (f) maintain in full force and effect its corporate existence,
rights, and franchises and all licenses and other rights to use patents,
processes, licenses, trademarks, trade names, or copyrights owned or possessed
by it or any subsidiary and deemed by the Company to be necessary to the conduct
of its business;

                  (g) the Company will retain independent public accountants of
recognized national standing who shall certify the Company's financial
statements at the end of each fiscal year. In the event the services of the
independent public accountants so selected, or any firm of independent public
accountants hereafter employed by the Company are terminated, the Company will
promptly thereafter notify the Investors and will request the firm of
independent public accountants whose services are terminated to deliver to the
Investors a letter from such firm setting forth the reasons for the termination
of their services. In the event of such termination, the Company will promptly
thereafter engage another firm of independent public

                                       21
<PAGE>   25

accountants of recognized national standing. In its notice to the Investors the
Company shall state whether the change of accountants was recommended or
approved by the Board of Directors of the Company or any committee thereof;

                  (h) cause each person now or hereafter employed by it or any
subsidiary with access to confidential information to enter into a proprietary
information and inventions agreement substantially in form acceptable to the
Company and the Investors;

                  (i) and hold monthly meetings of the Board of Directors.

         3.12 NEGATIVE COVENANTS.

                  (a) Subject to Section 3.15, so long as any shares of Series B
Preferred or Series C Preferred remain outstanding, the Company will not execute
any Major Actions (as hereinafter defined) without the majority vote of the
Board of Directors, which vote must include the affirmative vote of both members
of the Board of Directors nominated by the Series B Investors and the member of
the Board of Directors nominated by Tribune Company, as the case may be. Major
Actions shall be limited to the following:

                           (i) the issuance of indebtedness for borrowed money
in excess of One Hundred Thousand Dollars ($100,000);

                           (ii) the sale, conveyance, or other disposition,
including a merger, consolidation or reorganization, of all or substantially all
of the Company's property or business;

                           (iii) repurchase, redemption or other acquisition of
outstanding shares of the Company's capital stock (other than redemption from
employees in connection with their termination);

                           (iv) an acquisition by the Company of capital assets
for a consideration in excess of One Hundred Thousand Dollars ($100,000) or
other material expenditures in excess of Two Hundred Thousand Dollars ($200,000)
not included in the annual operating budget;

                           (v) changes in the list of Major Actions;

                           (vi) the approval of an annual budget;

                           (vii) any increase in the number of shares reserved
for issuance under the Company's stock option plans;

                           (viii) any option granted under the Company's stock
option plan (or shares for which options granted thereunder have been exercised)
where such grant vests at a rate in excess of 25% per annum from the date of
issuance;

                           (ix) the entering into a new line of business not
specified or contemplated in the Business Plan dated July, 1999; and

                                       22
<PAGE>   26

                           (x) any amendment to the Company's Third Amended and
Restated Certificate of Incorporation or Bylaws.

                  (b) Subject to Section 3.15, the Company shall not enter into
any transaction with any director, officer or affiliated party unless such
transaction is approved by a majority of the disinterested members of the Board
of Directors. A "disinterested" director shall mean any director who does not
have any direct or indirect financial or other interest in a transaction except
for an interest arising as a result of his or her shareholdings in the Company.

         3.13 STOCK RESTRICTION AGREEMENTS. The Company will cause each person
now or hereafter employed by the Company or any subsidiary of the Company to
enter into stock restriction and market stand-off agreements substantially in
form acceptable to the Investors.

         3.14 OBSERVER RIGHTS. For so long as Carlyle Venture Partners, L.P. or
its affiliates shall be a stockholder, such entities shall be entitled to the
rights specified in the Management Letter dated August 26, 1999, attached to the
Series C Stock Purchase Agreement as Exhibit H.

         3.15 TERMINATION OF SECTION 3 RIGHTS. The rights granted under this
Section 3 shall terminate immediately prior to and be of no further force or
effect on or after the date of the closing of the first Qualifying Public
Offering.

                                   SECTION 4
                                  MISCELLANEOUS

         4.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Delaware without reference to conflict of laws of
principles.

         4.2 THIRD PARTIES. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.

         4.3 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Investor and the closing
of the transactions contemplated hereby. All statements as to factual matters
contained in any certificate or exhibit delivered by or on behalf of the Company
pursuant hereto shall be deemed to be the representations and warranties of the
Company hereunder as of such date of such certificate or exhibit.

         4.4 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.

         4.5 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement among the parties with regard to the subjects hereof and thereof and
supercede any prior discussions, agreements or understandings of the parties
hereto relating to the matters contained herein, including without limitation,
the Equity Investment and Operating Agreement, dated as of July

                                       23
<PAGE>   27

10, 1988 (as amended by the First Amendment, dated as of October 9, 1998) by and
between the Company and Baker & Taylor, Inc (in particular, Article 5 thereof),
the Original Agreement, the Second Agreement, the Third Agreement and the Fourth
Agreement. Neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or termination
is sought; provided, however, that (i) a majority of the outstanding Registrable
Securities (whether or not converted) held by the Series A Investors and B&T,
(ii) a majority of the outstanding Registrable Securities (whether or not
converted) held by the Series B Investors and (iii) a majority of the
outstanding Registrable Securities (whether or not converted) held by the Series
C Investors, each group voting separately as a class, may waive or amend, on
behalf of the Investors and other holders of Shares, any provisions hereof
benefiting the Investors so long as the effect thereof will be that the
Investors and other holders of Shares will be treated equally; provided,
further, that (i) any action that would affect the rights of AOL, Sallie Mae,
Mr. Kuhn or Mr. Levy under this Agreement shall only be effective with their
respective written consent and (ii) the rights of any series of Preferred Stock,
any individual, or any entity to nominate a director under Section 2.2 shall not
be amended without the consent of such individual or a majority of the holders
of such series.

         4.6 EFFECT OF AMENDMENT OR WAIVER. Each Investor and its successors and
assigns acknowledge that by the operation of Section 4.5 hereof the Company and
the holders of a majority of the outstanding Registrable Securities held by the
parties specified will have the right and power to diminish or eliminate any or
all rights or increase any or all obligations pursuant to this Agreement.

         4.7 RIGHTS OF HOLDERS. Each holder of Registrable Securities shall have
the absolute right to exercise or refrain from exercising any right or rights
that such holder may have by reason of this Agreement, including, without
limitation, the right to consent to the waiver or modification of any obligation
under this Agreement, and such holder shall not incur any liability to any other
holder of any securities of the Company as a result of exercising or refraining
from exercising any such right or rights.

         4.8 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
the earlier of (a) when received, (b) upon personal delivery to the party to be
notified, (c) one business day after delivery via facsimile, (d) one day after
being deposited with an overnight courier service or (e) three days after
deposit with the United States Post Office, by registered or certified mail,
postage prepaid, return receipt requested, and addressed (i) if to an Investor,
at such Investor's address set forth on Exhibit A, Exhibit B, or Exhibit C or at
such address as such Investor shall have furnished to the Company in writing, or
(ii) if to any other holder of any Shares, at such address as such holder shall
have furnished the Company in writing, or, until any such holder so furnishes an
address to the Company, then to and at the address of the last holder of such
Shares who has so furnished an address to the Company, or (iii) if to the
Company, at its address set forth on the first page of this Agreement addressed
to the attention of the Corporate Secretary, or at such other address as the
Company shall have furnished to the Investors. If notice is provided by mail,
notice shall be deemed to be given upon proper deposit with the United States
mail.

                                       24
<PAGE>   28

         4.9 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any holder of any Shares upon any breach or default
of the Company under this Agreement shall impair any such right, power or remedy
of such holder, nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence thereof or of any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any holder of any breach or default under this Agreement, or any
waiver on the part of any holder of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing or as provided in this Agreement. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.

         4.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all parties hereto,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.

         4.11 SEVERABILITY OF THIS AGREEMENT. If any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement will continue in full force and effect
without said provision and the parties agree to replace such provision with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such provisions; provided that no such
severability will be effective against a party if it materially and adversely
changes the economic benefits of this Agreement to such party.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       25
<PAGE>   29

         IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Investors' Rights Agreement as of the date first above written.

                                                VARSITYBOOKS.COM INC.

                                                By: /s/ Eric J. Kuhn
                                                   -----------------------------
                                                   Eric J. Kuhn
                                                   Chief Executive Officer

                                       26
<PAGE>   30

PALMER PRIVATE EQUITY INVESTMENTS, LLC
c/o Stone Pine Companies
1625 Farnam Street, #700
Omaha, NE   68102

By: /s/ Thompson H. Rogers
   --------------------------------------
      Name: Thompson H. Rogers

STONE PINE VARSITYBOOKS.COM, LLC
1625 Farnam Street, #700
Omaha, NE  68102

By: /s/ Thompson H. Rogers
   --------------------------------------
      Name: Thompson H. Rogers
      Title:
            -----------------------------

                                       27
<PAGE>   31
John D. McKey, Jr.
2081 East Ocean Blvd.
2nd Floor
Stuart, FL   34996

By:
   --------------------------------------
      Name: John D. McKey, Jr.

MESIROW Financial, F.B.O.
Mary H. Jochim
350 North Clark Street
Chicago, IL   60610

By:
   --------------------------------------
      Name:
      Title:

FBR TECHNOLOGY VENTURE PARTNERS I, L.P.
Potomac Tower
1001 19th Street North
Arlington, VA  22209
By FBR Venture Capital Managers, Inc.

By: /s/ FBR TECHNOLOGY VENTURE PARTNERS I, L.P.
   --------------------------------------
     Name:
     Title:

MAYFIELD IX
A Delaware Limited Partnership
c/o Mayfield Fund, L.P.
2800 Sand Hill Road
Menlo Park, CA  94025

By: Mayfield IX Management, L.L.C.
A Delaware Limited Liability Company,
Its General Partner

By: /s/ MAYFIELD IX
   --------------------------------------
      Name:
           ------------------------------
      Title:
            -----------------------------

                                       28
<PAGE>   32

MAYFIELD ASSOCIATES FUND IV
c/o Mayfield Fund, L.P.
2800 Sand Hill Road
Menlo Park, CA  94025

A Delaware Limited Partnership

By: Mayfield IX Management, L.L.C.
A Delaware Limited Liability Company,
Its General Partner

By: /s/ MAYFIELD ASSOCIATES FUND IV
   --------------------------------------
      Name:
           ------------------------------
      Title:
            -----------------------------

Richard Gaiti
559 Provinceline Road
Hopewell, NJ 08525

By:
   --------------------------------------
     Name: Richard Gaiti

Steven B. Kalafer
8 Coach and Four Lane
Annandale, NJ 08801

By:
   --------------------------------------
     Name: Steven B. Kalafer

                                       29
<PAGE>   33

CLIFTON MANAGEMENT TRADING, INC.
633 Franklin Avenue, Suite 112
Nutley, NY 07110

By:
   --------------------------------------
      Name:
      Title:

KUHN IRREVOCABLE TRUST DATED 7/30/98
Sandor Engel, Esq. Trustee
825 N. Twelfth Street
Allentown, PA 18102

By:
   --------------------------------------
     Name: Sandor Engel, Esq.
     Title: Trustee

Edward and Blossom Leibowitz, JTWRS
1039 Guisando De Avila
Tampa, FL 33613

By:
   --------------------------------------
     Name: Edward Leibowitz

By:
   --------------------------------------
     Name: Blossom Leibowitz

Michael J. Kuhn
2804 Deercreek Circle
Austin, TX 78703

By:
   --------------------------------------
     Name: Michael J. Kuhn

Eric J. Kuhn
2501 Porter Street, N.W., Apt. 1026
Washington, D.C. 20008

By: /s/ Eric J. Kuhn
   --------------------------------------
     Name: Eric J. Kuhn

                                       30
<PAGE>   34

Jason and Susan Kuhn, JTWRS
1039 Guisando De Avila
Tampa, FL 33613

By:
   --------------------------------------
     Name: Jason Kuhn

By:
   --------------------------------------
     Name: Susan Kuhn

Karen Kuhn
2334 Riverbend Road
Allentown, PA 18103

By:
   --------------------------------------
     Name: Karen Kuhn

Timothy J. Levy
2501 Porter Street, N.W., Apt. 416
Washington, D.C. 20008

By: /s/ Timothy J. Levy
   --------------------------------------
     Name: Timothy J. Levy

Allen Gribben
8157 Lyon Valley Road
New Tripoli, PA  18066

By:
   --------------------------------------
     Name: Allen Gribben

Moshe Lehrfield
1310 NE 173rd Street
Miami Beach, FL  33162

By:
   --------------------------------------
     Name: Moshe Lehrfield

                                       31
<PAGE>   35

Karen R. Gundersheimer &
Werner L. Gundersheimer
2903 32nd Street, N.W.
Washington, D.C.  20008

By:
   --------------------------------------
     Name: Karen R. Gundersheimer

By:
   --------------------------------------
     Name: Werner L. Gundersheimer

Jeffrey C. Levy
120 The Prado
Atlanta, GA 30309

By:
   --------------------------------------
     Name: Jeffrey C. Levy

Linda R. Levy
19 Greenwood Avenue
Lawrenceville, NJ 08648

By: /s/ Linda R. Levy
   --------------------------------------
     Name: Linda R. Levy

Paul G. Levy
19 Greenwood Avenue
Lawrenceville, NJ 08648

By:
   --------------------------------------
     Name: Paul G. Levy

Deborah R. Levy
444 Central Park West, #9B
New York, NY  10025

By: /s/ Deborah R. Levy
   --------------------------------------
     Name: Deborah R. Levy

                                       32
<PAGE>   36

Robert Haft
2346 Massachusetts Avenue
Washington, D.C. 20008

By:
   --------------------------------------
     Name: Robert Haft

Andrew Green
1325 18th Street, N.W. #1010
Washington, D.C.

By:
   --------------------------------------
     Name: Andrew Green

Jeremy Fineberg
833 Central Avenue
Lawrence, NY

By:
   --------------------------------------
     Name: Jeremy Fineberg

BARRY FAMILY TRUST U/D/T
DATED JANUARY 13, 1998
1950 TASSO
Palo Alto, CA 94304
Lawrence, NY

By:
   --------------------------------------
     Name:
     Title: Trustee

                                       33
<PAGE>   37

WS INVESTMENT COMPANY 98B
650 Page Mill Road
Palo Alto, CA 94304

By:
   --------------------------------------
     Name:
     Title

SDJ CAPITAL, INC.
c/o Jay Seinfeld
2025 Broadway, Apt. 27B
New York, NY  10023

By:
   --------------------------------------
     Name: Jay Seinfeld

THE TRIBUNE COMPANY

435 N. Michigan Avenue
Chicago, Illinois  60611

By: /s/ THE TRIBUNE COMPANY
   --------------------------------------
      Name:
           ------------------------------
      Title:
            -----------------------------

                                       34
<PAGE>   38

CARLYLE VENTURES PARTNERS, L.P.
By:  Its General Partner, TCG Ventures, Ltd.

1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC 20004

By: /s/ CARLYLE VENTURES PARTNERS, L.P.
   --------------------------------------
         J. Mitchell Reese
         Attorney-In-Fact

C/S VENTURE INVESTORS, L.P.
By:  Its General Partner, TCG Ventures, Ltd.

1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC  20004

By: /s/ C/S VENTURE INVESTORS, L.P.
   --------------------------------------
         J. Mitchell Reese
         Attorney-In-Fact

CARLYLE U.S. VENTURE PARTNERS, L.P.
By:  Its General Partner, TCG Ventures, L.L.C.

1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC  20004

By: /s/ CARLYLE U.S. VENTURE PARTNERS, L.P.
   --------------------------------------
         J. Mitchell Reese
         Attorney-In-Fact

CARLYLE VENTURE COINVESTMENT L.L.C.
By:  Its Manager TCG Ventures, L.L.C.

1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC  20004

By: /s/ CARLYLE VENTURE COINVESTMENT L.L.C.
   --------------------------------------
         J. Mitchell Reese
         Attorney-In-Fact

                                       35
<PAGE>   39

VARSITY BOOK TRUST
c/o Mayfield Fund
2800 Sand Hill Road
Menlo Park, CA 94025

By: /s/ VARSITY BOOK TRUST
   --------------------------------------
Name:
     ------------------------------------
Authorized Signatory

Allen Morgan
c/o Mayfield Fund
2800 Sand Hill Road
Menlo Park, CA  94025

-----------------------------------------
Allen Morgan

SOUTHEASTERN TECHNOLOGY FUND, L.P.
By: Southeastern Capital Company, L.L.C.,
    Its General Partner

Attn: Emerson Fann
4035 Chris Drive, Suite C
Huntsville, Alabama  35802

By:
   --------------------------------------
         Name: Chris H. Horgen
         Title: Managing Member

AFFILIATED E-COMMERCE INVESTMENTS, LLC

1625 Farnan Street #700
Omaha, NE  68102

By: /s/ AFFILIATED E-COMMERCE INVESTMENTS, LLC
   -------------------------------------------
         Name: Thompson H. Rogers
         Title:
               -------------------------------

                                       36
<PAGE>   40

FBR TECHNOLOGY VENTURE PARTNERS, I.L.P.
Attn: Potomac Tower
1001 19th Street North
Arlington, Virginia  22209

By: /s/ FBR TECHNOLOGY VENTURE PARTNERS, I.L.P.
   --------------------------------------
         Name: Gene Riechers
         Title:

VENTUREHOUSEGROUP L.L.C.
1750 Tysons Boulevard
Suite 400
McLean VA  22102

By:
   --------------------------------------
         Name:
         Title:

GARAGE.COM INVESTMENTS I, L.P.
420 Florence Avenue
Suite 300
Palo Alto, CA  94301

By:
   --------------------------------------
         Name:
         Title:

ROGER A. KUHN AND KAREN KUHN JTWROS
2334 Riverbend Road
Allentown, PA  18103

By:
   --------------------------------------
         Name: Roger A. Kuhn

By:
   --------------------------------------
         Name: Karen Kuhn

Craig Richards
2736 Flintgrove Road
Charlotte, NC  28226

By: /s/ Craig Richards
   --------------------------------------
         Name: Craig Richards

                                       37
<PAGE>   41

Richard Hozik
707 Crown Meadow Drive
Great Falls, VA  22066

By:
   --------------------------------------
         Name:  Richard Hozik

Philip B. Dolan
9521 Purcell Drive
Potomac, MD  20854

By: /s/ Philip B. Dolan
   --------------------------------------
         Name:  Philip B. Dolan

B&T Enterprises, L.L.C.

Attn: Philip Dolan
The Carlyle Group
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC 20004

By:    CPLCF I, L.P,
       Its Managing Member

By:    The Carlyle Group, L.P.,
       Its General Partner

By:    TWC Virginia, Inc.,
       Its General Partner

By: /s/ B&T Enterprises, L.L.C.
   --------------------------------------
         Name:
         Title:

EAGLE ROCK VENTURES, L.P.
c/o hipO.com
2 Concourse Parkway, Suite 600
Atlanta, GA  30328

By:
   --------------------------------------
         Name:
         Title:

                                       38
<PAGE>   42

Onuoha O. Odim
c/o hipO.com
2 Concourse Parkway, Suite 600
Atlanta, GA  30328

By:
   --------------------------------------
         Name: Onuoha O. Odim

Joe Argilagos
c/o hipO.com
2 Concourse Parkway, Suite 600
Atlanta, GA  30328

By:
   --------------------------------------
         Name: Joe Argilages

ESHER LIMITED
P.O. Box 274
Hemisphere House
36 Hilgrove Street
St Helier, Jersey JE4 8TR
Channel Islands
United Kingdom

By:
   --------------------------------------
         Name:
         Title:

Roger T. Staubach
Staubach Companies
6750 LBJ Freeway, Suite 1100
Dallas, Texas  75240

By: /s/ Roger T. Staubach
   --------------------------------------
         Name: Roger T. Staubach

America Online, Inc.
22000 AOL Way
Dulles, VA 20166-9323

By: /s/ America Online, Inc.
   --------------------------------------
         Name:
         Title:

                                       39
<PAGE>   43

Sallie Mae, Inc.
11600 Sallie Mae Drive
Reston, VA 20193

By: /s/ Sallie Mae, Inc.
   --------------------------------------
         Name:
         Title:

Cornelius McCarthy
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Cornelius McCarthy
   --------------------------------------
         Name:

Katharine McLeese
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Katharine McLeese
   --------------------------------------
         Name:

Peter Rawlings
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Peter Rawlings
   --------------------------------------
         Name:

Richard Hansen
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Richard Hansen
   --------------------------------------
         Name:

                                       40
<PAGE>   44

CBF Investments LLC
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ CBF Investments LLC
   --------------------------------------
         Name:

Roy Dinsdale
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Roy Dinsdale
   --------------------------------------
         Name:

Todd Feltz
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Todd Feltz
   --------------------------------------
         Name:

Jerry Slusky
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: Jerry Slusky
   --------------------------------------
         Name:

Vantage Communications, Inc.
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Vantage Communications, Inc.
   --------------------------------------
         Name:

                                       41
<PAGE>   45

Chris Dinsdale
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Chris Dinsdale
   --------------------------------------
         Name:

MTAC, Inc.
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ MTAC, Inc.
   --------------------------------------
         Name:

Susan Gallagher
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Susan Gallagher
   --------------------------------------
         Name:

                                       42
<PAGE>   46

Thompson H. Rogers
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Thompson H. Rogers
   --------------------------------------
         Name:

David F. McLeese
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ David F. McLeese
   --------------------------------------
         Name:

Donna Walsh
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Donna Walsh
   --------------------------------------
         David McLeese

Thompson H. and Jane D. Rogers
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Thompson H. and Jane D. Rogers
   --------------------------------------
         Thompson H. Rogers

                                       43
<PAGE>   47

Paul Bagley
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Paul Bagley
   --------------------------------------
         Thompson H. Rogers

Donald R. Jackson
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Donald R. Jackson
   --------------------------------------
         Thompson H. Rogers

L. Wayne Harber
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ L. Wayne Harber
   --------------------------------------
         Thompson H. Rogers

W. Duke DeGrassi
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ W. Duke DeGrassi
   --------------------------------------
         Thompson H. Rogers

Mario Giannini
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Mario Giannini
   --------------------------------------
         Thompson H. Rogers

Leslie Brun
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Leslie Brun
   --------------------------------------
         Thompson H. Rogers

                                       44
<PAGE>   48

Jim Fried
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Jim Fried
   --------------------------------------
         Thompson H. Rogers

Andy Cahill
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

By: /s/ Andy Cahill
   --------------------------------------
         Thompson H. Rogers

                                       45
<PAGE>   49

                                    EXHIBIT A

                      SERIES A PREFERRED INVESTOR SCHEDULE

<TABLE>
<CAPTION>
                                                           NUMBER OF SHARES OF
         NAME AND ADDRESS                               SERIES A PREFERRED STOCK
         ----------------                               ------------------------
<S>                                                     <C>
StonePine VarsityBooks.com LLC                                    714,285
1625 Furnam #700
Omaha, NE  68102

Palmer Private Equity Investments, LLC                            214,285
c/o Stone Pine Companies
1625 Furnam #700
Omaha, NE  68102

Richard Gaiti                                                     142,857
559 Provinceline Road
Hopewell, NJ  08525

Clifton Management & Trading, Inc.                                142,857
633 Franklin Avenue, Suite 112
Nutley, NJ  07110

Steven B. Kalafer                                                  71,428
8 Coach and Four Lane
Annandale, NJ  08801

Kuhn Irrevocable Trust dated 7/30/98                               71,428
Sandor Engel, Esq. Trustee
825 N. Twelfth Street
Allentown, PA  18102

Edward and Blossom Leibowitz, JTWRS                                71,428
1039 Guisando De Avila
Tampa, FL  33613

Michael J. Kuhn                                                    35,714
2804 Deercreek Circle
Austin, TX  78703

Timothy J. Levy                                                    35,714
2501 Porter Street, N.W., Apt. 416
Washington, D.C.  20008

Eric J. Kuhn                                                       35,714
2501 Porter Street, NW, #1026
Washington, DC  20008

Karen Kuhn                                                         35,714
2334 Riverbend Road
Allentown, PA  18103
</TABLE>

<PAGE>   50

<TABLE>
<CAPTION>
                                                           NUMBER OF SHARES OF
         NAME AND ADDRESS                               SERIES A PREFERRED STOCK
         ----------------                               ------------------------
<S>                                                     <C>
Allen Gribben                                                      35,714
8157 Lyon Valley Road
New Tripoli, PA  18066

Moshe Lehrfield                                                    35,714
1310 NE 173rd Street
North Miami Beach, FL  33162

Linda R. Levy                                                      35,714
19 Greenwood Avenue
Lawrenceville, NJ  08648

Karen R. Gundersheimer &                                           35,714
Werner L. Gundersheimer
2903 32nd Street, NW
Washington, DC  20008

Paul G. Levy                                                       21,428
19 Greenwood Avenue
Lawrenceville, NJ  08648

Jason and Susan Kuhn, JTWRS                                        17,857
1039 Guisando De Avila
Tampa, FL  33613

Jeffrey C. Levy                                                    17,857
120 The Prado
Atlanta, GA  30309

Deborah R. Levy                                                    14,285
444 Central Park West, #9B
New York, NY  10025

Andrew Green                                                      178,571
1325 18th Street, N.W. #1010
Washington, D.C.

Jeremy Fineberg                                                    35,714
833 Central Avenue
Lawrence, NY

Barry Family Trust u/d/t dated January 13, 1998                     7,142
1950 Tasso
Palo Alto, CA  94304

WS Investment Company 98B                                          28,572
650 Page Mill Road
Palo Alto, CA  94304

SDJ Capital, Inc.                                                  35,714
c/o Jay Seinfeld
2025 Broadway, Apt. 27B
New York, New York  10023
</TABLE>

<PAGE>   51

                                    EXHIBIT B

                      SERIES B PREFERRED INVESTOR SCHEDULE

<TABLE>
<CAPTION>
                                                           NUMBER OF SHARES OF
            NAME AND ADDRESS                            SERIES B PREFERRED STOCK
            ----------------                            ------------------------
<S>                                                     <C>
FBR Technology Venture Partners I, L.P.                         1,388,889
Potomac Tower
1001 19th Street North
Arlington, VA  22209

Palmer Private Equity Investments, LLC                           138,889
c/o Stone Pine Companies
1625 Farnam Street, #700
Omaha, NE  68102

Palmer Private Equity Investments, LLC                           118,056
c/o Stone Pine Companies
1625 Farnam Street, #700
Omaha, NE  68102

Stone Pine VarsityBooks.com, LLC                                 347,222
1625 Farnam Street, #700
Omaha, NE  68102

Stone Pine VarsityBooks.com II, LLC                              506,944
1625 Farnam Street, #700
Omaha, NE  68102
                                                                 354,244
B&T Enterprises, L.L.C.
c/o Philip Dolan
The Carlyle Group
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC 20004

John D. McKey, Jr                                                 69,445
[as Bridge Loan Holder]
2081 East Ocean Blvd.
2nd Floor
Sturat, FL  34996
</TABLE>

<PAGE>   52

                                    EXHIBIT B

                      SERIES B PREFERRED INVESTOR SCHEDULE

<TABLE>
<CAPTION>
                                                           NUMBER OF SHARES OF
            NAME AND ADDRESS                            SERIES B PREFERRED STOCK
            ----------------                            ------------------------
<S>                                                     <C>
Mary H. Jochim                                                    34,722
350 North Clark Street
Chicago, IL  60610

Mayfield IX                                                      2,854,027
c/o Mayfield Fund, L.P.
2800 Sand Hill Road
Menlo Park, CA  94025

Mayfield Associates Fund IV                                       150,212
c/o Mayfield Fund, L.P.
2800 Sand Hill Road
Menlo Park, CA  94025

Robert Haft                                                       694,445
2346 Massachusetts Avenue
Washington, D.C.  20008

Richard Gaiti                                                     78,460
559 Provinceline Road
Hopewell, NJ 08525

Steven B. Kalafer                                                 69,444
8 Coach and Four Lane
Annandale, NJ 08801

Eric J. Kuhn                                                      19,615
2501 Porter Street, N.W., Apt. 1026
Washington, D.C. 20008

Jason and Susan Kuhn                                               8,681
1039 Guisando De Avila
Tampa, FL 33613

Karen Kuhn                                                        19,615
2334 Riverbend Road
Allentown, PA 18103
</TABLE>

<PAGE>   53

                                    EXHIBIT B

                      SERIES B PREFERRED INVESTOR SCHEDULE

<TABLE>
<CAPTION>
                                                          NUMBER OF SHARES OF
         NAME AND ADDRESS                               SERIES B PREFERRED STOCK
----------------------------------                      ------------------------

<S>                                                     <C>
SDJ Capital, Inc                                                 19,615
Attn: Jay Seinfeld
2025 Broadway, Apt. 27B
New York, NY  10023

AND

SDJ Capital, Inc.
Attn: Josh Dobin
101 Pine Tree Drive, #1430
Miami Beach, FL  33140

Timothy J. Levy                                                  19,615
2501 Porter Street, N.W., Apt. 416
Washington, D.C. 20008

Jeffrey C. Levy                                                  17,361
120 The Prado
Atlanta, GA 30309

Linda R. Levy                                                    17,361
19 Greenwood Avenue
Lawrenceville, NJ  08648

Cornelius McCarthy                                               6,945
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

Katharine McLeese                                                17,362
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

Peter Rawlings                                                   31,251
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102
</TABLE>

<PAGE>   54

<TABLE>
<S>                                                              <C>
Richard Hansen                                                   34,722
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

CBF Investments LLC                                              34,722
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

Roy Dinsdale                                                     34,722
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

Todd Feltz                                                       34,722
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

Jerry Slusky                                                     34,722
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

Vantage Communications, Inc.                                     69,444
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

Chris Dinsdale                                                   69,444
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

MTAC, Inc.                                                       69,444
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

Susan Gallagher                                                  69,444
c/o Rick Putnam
Baird Holm Law Firm
1500 Woodmen Tower
Omaha, Neb  68102

Paul Levy
19 Greenwood Avenue                                              6,944
Lawrenceville, NJ  08648
</TABLE>

<PAGE>   55

                                    EXHIBIT C

                      SERIES C PREFERRED INVESTOR SCHEDULE

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                                            Number of Series C
Name and Address                                          Preferred Stock Shares
--------------------------------------------------------------------------------
<S>                                                       <C>
TRIBUNE COMPANY                                                        2,976,191
435 N. Michigan Avenue
Chicago, Illinois  60611
--------------------------------------------------------------------------------
CARLYLE VENTURES PARTNERS, L.P.                                        1,490,967
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC 20004
--------------------------------------------------------------------------------
C/S VENTURE INVESTORS, L.P.                                              311,250
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC  20004
--------------------------------------------------------------------------------
CARLYLE U.S. VENTURE PARTNERS, L.P.                                      197,741
Suite 220 South
Washington, DC  20004
--------------------------------------------------------------------------------
CARLYLE VENTURE COINVESTMENT L.L.C.                                      232,185
1001 Pennsylvania Avenue, N.W.
Suite 220 South
Washington, DC  20004
--------------------------------------------------------------------------------
MAYFIELD IX                                                            1,130,953
c/o Mayfield Fund, L.P.
2800 Sand Hill Road
Menlo Park, CA  94025
--------------------------------------------------------------------------------
MAYFIELD ASSOCIATES FUND IV                                               59,524
c/o Mayfield Fund, L.P.
2800 Sand Hill Road
Menlo Park, CA  94025
--------------------------------------------------------------------------------
</TABLE>

<PAGE>   56

<TABLE>
<S>                                                                      <C>
--------------------------------------------------------------------------------
VARSITY BOOKTRUST                                                        491,074
c/o Mayfield Fund, L.P.
2800 Sand Hill Road
Menlo Park, CA  94025
--------------------------------------------------------------------------------
AFFILIATED E-COMMERCE INVESTMENTS, LLC                                   297,620
1625 Farnan Street #700
Omaha, NE  68102
--------------------------------------------------------------------------------
FBR TECHNOLOGY VENTURE PARTNERS, I.L.P.                                  595,239
Potomac Tower
1001 19th Street North
Arlington, Virginia  22209
--------------------------------------------------------------------------------
SOUTHEASTERN TECHNOLOGY FUND, L.P.                                       297,620
Attn:  Emerson Fann
4035 Chris Drive, Suite C
Huntsville, Alabama  35802
--------------------------------------------------------------------------------
Robert Haft                                                              357,143
2346 Massachusetts Avenue, N.W.
Washington, D.C.  20008
--------------------------------------------------------------------------------
Allen Morgan                                                              14,881
c/o Mayfield Fund, L.P.
2800 Sand Hill Road
Menlo Park, CA  94025
--------------------------------------------------------------------------------
Paul Levy                                                                  7,441
19 Greenwood Avenue
Lawrenceville, NJ  08648
--------------------------------------------------------------------------------
Linda R. Levy                                                              7,441
19 Greenwood Avenue
Lawrenceville, NJ  08648
--------------------------------------------------------------------------------
ROLLINGWOOD CAPITAL PARTNERS L.L.C.                                      148,810
1750 Tysons Boulevard
Suite 400
McLean VA  22102
--------------------------------------------------------------------------------
</TABLE>

<PAGE>   57

<TABLE>
<S>                                                                      <C>
--------------------------------------------------------------------------------
GARAGE.COM INVESTMENTS I, L.P.                                            44,643
420 Florence Avenue
Suite 300
Palo Alto, CA  94301
--------------------------------------------------------------------------------
ROGER A. KUHN AND KAREN KUHN                                              37,203
JTWROS
2334 Riverbend Road
Allentown, PA  18103
--------------------------------------------------------------------------------
Jason Kuhn                                                                 7,441
1039 Guisando De Avila
Tampa, FL  33613
--------------------------------------------------------------------------------
Craig Richards                                                            14,881
2736 Flintgrove Road
Charlotte, NC  28226
--------------------------------------------------------------------------------
Eric J. Kuhn                                                              29,750
2501 Porter Street, NW
Apartment 1026
Washington, DC  20008
--------------------------------------------------------------------------------
Richard Hozik                                                             29,762
707 Crown Meadow Drive
Great Falls, VA  22066
--------------------------------------------------------------------------------
Andrew Green                                                              59,524
1325 18th Street, N.W. #1010
Washington, DC
--------------------------------------------------------------------------------
Philip B. Dolan                                                           14,881
9521 Purcell Drive
Potomac, MD  20854
--------------------------------------------------------------------------------
EAGLE ROCK VENTURES, L.P.                                                 14,881
c/o hipO.com
2 Concourse Parkway, Suite 600
Atlanta, GA  30328
--------------------------------------------------------------------------------
Onuoha O. Odim                                                             7,441
c/o hipO.com
2 Concourse Parkway, Suite 600
Atlanta, GA  30328
--------------------------------------------------------------------------------
</TABLE>

<PAGE>   58

<TABLE>
<S>                                                                       <C>
--------------------------------------------------------------------------------
Joe Argilagos                                                              7,441
c/o hipO.com
2 Concourse Parkway, Suite 600
Atlanta, GA  30328
--------------------------------------------------------------------------------
ESHER LIMITED                                                             14,881
P.O. Box 274
Hemisphere House
36 Hilgrove Street
St Helier, Jersey JE4 8TR
Channel Islands
United Kingdom
--------------------------------------------------------------------------------
Roger T. Staubach                                                         29,762
Staubach Companies
6750 LBJ Freeway, Suite 1100
Dallas, Texas  75240
--------------------------------------------------------------------------------
</TABLE>

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