Document:

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                                                                   EXHIBIT 10.20

                                NETLIBRARY, INC.

                 SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
                             STOCKHOLDERS AGREEMENT

         THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT (the "Agreement") is made and entered into as of February 18, 2000, by
and among NETLIBRARY, INC., a Delaware corporation (the "Company"), those
certain holders of the Company's Common Stock listed on Exhibit A hereto (the
"Key Stockholders") and the persons and entities listed on Exhibit B hereto, as
amended from time to time (the "Investors").

                                    RECITALS

         WHEREAS, the Key Stockholders or their transferees are the beneficial
owners of an aggregate of Two Million Eight Hundred Seventy Thousand Two Hundred
Ninety-Seven (2,870,297) shares of the Common Stock of the Company;

         WHEREAS, the Company previously sold shares of its Series A Preferred
Stock (the "Series A Preferred Stock"), its Series B Preferred Stock (the
"Series B Preferred Stock") and its Series C Preferred Stock (the "Series C
Preferred Stock") to certain of the Investors;

         WHEREAS, the Company, the Key Stockholders and such Investors entered
into a certain Amended and Restated Stockholders Agreement, dated as of October
8, 1999, as amended by the Amendment thereto dated January 18, 2000 (the
"Stockholders Agreement");

         WHEREAS, the Company proposes to sell shares of its Series D Preferred
Stock (the "Series D Preferred Stock") to certain of the Investors pursuant to a
Series D Preferred Stock Purchase Agreement and/or the Agreement and Plan of
Merger between the Company and peanutpress.com, Inc. and certain other parties
(collectively, the "Series D Purchase Agreement") (the "Series D Financing");
and

         WHEREAS, in connection with the consummation of the Series D Financing,
the Company, the Key Stockholders and the Investors desire to amend the
Stockholders Agreement as set forth below.

         NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                  1. Section 1(c) shall be modified in its entirety to read as
follows:

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                           (c) "INVESTOR SHARES" shall mean all shares of
                  capital stock of the Company registered in the names of the
                  Investors or beneficially owned by them as of the date hereof
                  and any and all other securities of the Company legally
                  acquired by the Investors after the date hereof (including but
                  not limited to all shares of Common Stock issued upon
                  conversion of the Series A Preferred Stock, the Series B
                  Preferred Stock, the Series C Preferred Stock and the Series D
                  Preferred Stock).

                  2. Section 3.4(a) shall be amended by (i) deleting the word
"and" before the words "each holder of Series C Preferred Stock," and (ii) by
inserting after the words "(390,000) shares of Series C Preferred Stock" the
following: "and each holder of Series D Preferred Stock that, by itself or with
its Affiliates holds at least Two Hundred Eighty Thousand (280,000) shares of
Series D Preferred Stock."

                  3. Section 6.5(y) shall be amended in its entirety to read as
follows:

                  this Agreement may be amended in connection with the closing
                  of any purchase of the Company's Series C Preferred Stock or
                  Series D Preferred Stock so as to add any purchaser of the
                  Series C Preferred Stock or Series D Preferred Stock as a
                  party hereto, and as an Investor as defined above, by having
                  each such purchaser execute a counterpart copy of this
                  Agreement and modifying Exhibit B to include such person.

                  4. Except as specifically set forth above, the Stockholders
Agreement shall remain in effect, without modification.

                  IN WITNESS WHEREOF, the parties hereto have executed this
AMENDMENT TO SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT as of the date
first above written.

COMPANY:

NETLIBRARY, INC.
3080 Center Green Drive
Boulder, Colorado  80301

By:    /s/ TIMOTHY R. SCHIEWE
    ---------------------------------
Name:  Timothy R. Schiewe
      -------------------------------
Title: President and CEO
       ------------------------------

                                       2
<PAGE>   3

KEY STOCKHOLDERS:

     /s/ TIMOTHY R. SCHIEWE                   WORLD VENTURE PARTNERS, INC.
----------------------------------------
Timothy R. Schiewe

     /s/ F. CLARK ELLIS                       By:  /s/ PETE ESTLER
----------------------------------------          ------------------------------
F. Clark Ellis                                Name: Pete Estler
                                              Title: Principal

     /s/ HENRY VELLANDI
----------------------------------------
Henry Vellandi

                                       3
<PAGE>   4
INVESTORS:

/s/ R. MICHAEL SEGROVES
-----------------------------------
R. Michael Segroves

/s/ HAROLD S. Schwenk, Jr.
-----------------------------------
Harold S. Schwenk, Jr.

GRAND CENTRAL HOLDINGS, LLC

By: /s/ WARREN H. HABER, JR.
    -------------------------------
Name: Warren H. Haber, Jr.
Title:  Member

GCH PEANUTPRESS, LLC

By: Grand Central Holdings, LLC,
    its Managing Member

By: /s/ WARREN H. HABER, JR.
    -------------------------------
Name: Warren H. Haber, Jr.
Title: Member

HUDSON VENTURE PARTNERS, L.P.

By: Grand Central Holdings, LLC,
    holder of an irrevocable proxy

By: /s/ WARREN H. HABER, JR.
    -------------------------------
Name: Warren H. Haber, Jr.
Title: Member

                                       4
<PAGE>   5
ABC-CLIO                                     ANSCHUTZ FAMILY
                                             INVESTMENT COMPANY LLC

                                             By: Anschutz Company, its Manager

By: /s/ RONALD J. BOEHM                      By: /s/ SCOTT CARPENTER
   -------------------------------              --------------------------------
Name:   Ronald J. Boehm                      Name:   Scott Carpenter
Title:  CEO                                  Title:  Vice President
Date:   February 17, 2000                    Date:   February __, 2000

BOWANA FOUNDATION                            BCI INVESTMENTS II, LLC

By: /s/ ERIC SWANSON                         By: /s/ JEFFREY S. DEMOND
   -------------------------------              --------------------------------
Name:   Eric Swanson                         Name:   Jeffrey S. Demond
Title:  Vice President                       Title:  Member
Date:   February 17, 2000                    Date:   February 7, 2000

                                       5
<PAGE>   6
BAIN CAPITAL FUND VI, L.P.              PEP INVESTMENTS PTY LTD

BY: Bain Capital Partners VI, L.P.,     By: Bain Capital, Inc.,
     its General Partner                 its attorney-in-fact

By: Bain Capital Investors VI, Inc.,    By: /s/ PAUL EDGERLY
     its General Partner                    -------------------------
                                        Name:  Paul Edgerly
                                        Title: Managing Director
     By: /s/ PAUL EDGERLY               Date: February__, 2000
        --------------------
     Name: Paul Edgerly
     Title: Managing Director
     Date: February __, 2000

BROOKSIDE CAPITAL PARTNERS              SANKATY HIGH YIELD ASSET
FUND, L.P.                              PARTNERS, L.P.

By: /s/ DOMENIC FERRANTE                By: /s/ JONATHAN LAVINE
   -------------------------               -------------------------
Name: Domenic Ferrante                  Name: Jonathan Lavine
Title: Managing Director                Title: Managing Director
Date: February 12, 2000                 Date: February __, 2000

BCIP ASSOCIATES II                      BCIP ASSOCIATES II-B

By: Bain Capital, Inc.,                 By: Bain Capital, Inc.,
     its Managing Partner                    its Managing Partner

    By: /s/ PAUL EDGERLY                    By: /s/ PAUL EDGERLY
       ---------------------                   ---------------------
    Name: Paul Edgerly                      Name: Paul Edgerly
    Title: Managing Director                Title: Managing Director
    Date: February __, 2000                 Date: February __, 2000

                                       6
<PAGE>   7
BERGER NEW GENERATION FUND
A SERIES OF THE BERGER INVESTMENT
PORTFOLIO OF TRUSTS

By: /s/ MARK S. SUNDERHUSE
    -------------------------------
Name: Mark S. Sunderhuse
Title: Vice President
Date: February 18, 2000

COMCAST INTERACTIVE CAPITAL, L.P.

By: CIC Partners, LP, its general partner
By: CIC Venture Management, LLC, general partner

By: /s/ ABRAM E. PATLOVE
   --------------------------
Name: Abram E. Patlove
Title: Vice President
Date: February __, 2000

COVESTCO-MEDEURA, LLC                           UNIVERSITY OF COLORADO
                                                FOUNDATION, INC.
By: Medeura, LLC, its Manager
By: Medeura Limited, its Managing Member

By: /s/ ALBIN A. JOHANN                         By: /s/ JIM BARLOW
    -------------------------------                 -----------------------
Name: Albin A. Johann                           Name: Jim Barlow
Title: Director                                 Title: Treasurer
Date: February 24, 2000                         Date: February 17, 2000

DLJ CAPITAL CORP.                               DLJ ESC II, L.P.

                                                By: DLJ LBO Plans Management
                                                    Corporation
                                                Its: Manager
By: /s/ ROBERT FINZI
    -------------------------------             By: /s/ ROBERT FINZI
Name: Robert Finzi                                  -------------------------
Its: Attorney in Fact                           Name: Robert Finzi
Date: February __, 2000                         Date: February __, 2000

                                       7
<PAGE>   8
EBSCO INDUSTRIES, INC.                  EPIXTECH, INC. (FORMERLY KNOWN
                                        AS AMERITECH LIBRARY SERVICES)

By: /s/ RICHARD L. BOZZELLI             By: /s/ LANA PORTER
    ---------------------------             ----------------------------
Name:  Richard L. Bozzelli              Name:  Lana Porter
Title: Vice President & CFO             Title: President / CEO
Date:  February 18, 2000                Date:  February __, 2000

FOLLETT CORPORATION                     HOUGHTON MIFFLIN

By: /s/ KENNETH J. HULL                 By: /s/ NADER F. DAREHSHORI
   ---------------------------             ----------------------------
Name:  Kenneth J. Hull                  Name:  Nader F. Darehshori
Title: Chairman / CEO                   Title: Chairman, President and CEO
Date:  March 8, 2000                    Date:  February 18, 2000

LDIG NL, INC.                           MARCEL DEKKER, INC.

By: /s/ CRAIG ENENSTEIN                 By:
   ---------------------------             ----------------------------
Name:  Craig Enenstein                  Name:
Title: VP Business Development               --------------------------
       & Strategy                       Title:
Date:  March 14, 2000                         -------------------------
                                        Date:   February __, 2000

MARKET STREET PARTNERS NL               MARQUETTE VENTURE PARTNERS III, L.P.

By: /s/ MICHAEL C. FRANSON              By: /s/ LLOYD RUTH
   ---------------------------             ----------------------------
Name:  Michael C. Franson               Name:  Lloyd Ruth
Title: Managing General Partner         Title: Authorized Signatory
Date:  February 20, 2000                Date:  February __, 2000

                                       8
<PAGE>   9

THE MCGRAW-HILL
COMPANIES, INC.                             PARKER & SON LIMITED

By:  /s/ ROBERT J. BAHASH                   By:  /s/ TIM EUSTACE
   -------------------------------             -----------------------
Name:  Robert J. Bahash                     Name:  Tim Eustace
Title: EVP CFO                              Title: Director / Secretary
Date:  February 18, 2000                    Date:  February 18th, 2000

PARTHENON INVESTORS, L.P.                   PCIP INVESTORS

By: Parthenon Investment Advisors, L.L.C.
    its general partner

By:  /s/ JOHN RUTHERFORD                    By:  /s/ JOHN RUTHERFORD
   -------------------------------             -----------------------
Name:  John Rutherford                      Name:  John Rutherford
Title: Managing Member                      Title: General Partner
Date:  February __, 2000                    Date:  February __, 2000

PEARL STREET TRUST                          REPERTOIRE CAPITAL
                                            VENTURES RLLLP

By:  /s/ SCOTT A. BECK                      By:  /s/ KARL FRIEDMAN
   -------------------------------             -----------------------
Name:  Scott A. Beck                        Name:  Karl Friedman
Title: Trustee                              Title: General Partner
Date:  February 17, 2000                    Date:  February  11, 2000

SEQUEL LIMITED PARTNERSHIP                  SEQUEL EURO LIMITED
                                            PARTNERSHIP

By: Sequel Venture Partners, L.L.C.,        By: Sequel Venture Partners, L.L.C.
    General Partner                             General Partner

By:  /s/ THOMAS G. WASHING                  By:  /s/ THOMAS G. WASHING
   -------------------------------             -----------------------
Name:  Thomas G. Washing                    Name:  Thomas G. Washing
Title: General Partner                      Title: General Partner
Date:  February __, 2000                    Date:  February __, 2000

                                       9
<PAGE>   10
SORENSON FAMILY LIMITED            SORENSON LIMITED PARTNERSHIP,
PARTNERSHIP                        FLLLP

By: /s/ RALPH Z. SORENSON          By: /s/ RALPH Z. SORENSON
   -------------------------          -------------------------
Name:  Ralph Z. Sorenson           Name:  Ralph Z. Sorenson
Title: General Partner             Title: General Partner
Date:  February 17, 2000           Date:  February 17, 2000

SPROUT CAPITAL VIII, L.P.          SPROUT VENTURE CAPITAL, L.P.

By: DLJ Capital Corp.              By: DLJ Capital Corp.
Its: Managing General Partner      Its: Managing General Partner

By: /s/ ROBERT FINZI               By: /s/ ROBERT FINZI
   -------------------------          -------------------------
Name: Robert Finzi                 Name: Robert Finzi
Its:  Attorney in Fact             Its:  Attorney in Fact

THE TELL ERTL FAMILY               WORLD VENTURE PARTNERS, INC.

By: /s/ JOSEPH L. FOX              By: /s/ PETE ESTLER
   -------------------------          -------------------------
Name:  Joseph L. Fox               Name:  Pete Estler
Title: Co-Trustee                  Title: President
Date:  February 17, 2000           Date:  February __, 2000

                                       10
<PAGE>   11
WPG NETWORKING FUND, LP                 WPG SOFTWARE FUND, LP

By: Weiss, Peck & Greer, LLC,           By: Weiss, Peck & Greer, LLC,
    its General Partner                     its General Partner

    By: /s/ RAJ MEHRA                       By: /s/ BENJAMIN JAMES TAYLOR
       -------------------------               ----------------------------
       Member                                  Member
    Name: Raj Mehra                         Name: Benjamin James Taylor
    Title: Managing Director                Title: Managing Director
    Date: February __, 2000                 Date: February __, 2000

WPG INSTITUTIONAL                       WPG INSTITUTIONAL
NETWORKING FUND, LP                     SOFTWARE FUND, LP

By: Weiss, Peck & Greer, LLC,           By: Weiss, Peck & Greer, LLC,
    its General Partner                     its General Partner

    By: /s/ RAJ MEHRA                       By: /s/ BENJAMIN JAMES TAYLOR
       -------------------------               ----------------------------
       Member                                  Member
    Name: Raj Mehra                         Name: Benjamin James Taylor
    Title: Managing Director                Title: Managing Director
    Date: February __, 2000                 Date: February __, 2000

WPG RAYTHEON                            WPG RAYTHEON
NETWORKING FUND, LP                     SOFTWARE FUND, LP

By: Weiss, Peck & Greer, LLC,           By: Weiss, Peck & Greer, LLC,
    its attorney-in-fact                    its attorney-in-fact

    By: /s/ RAJ MEHRA                       By: /s/ BENJAMIN JAMES TAYLOR
       -------------------------               ----------------------------
       Member                                  Member
    Name: Raj Mehra                         Name: Benjamin James Taylor
    Title: Managing Director                Title: Managing Director
    Date: February __, 2000                 Date: February __, 2000

                                       11
<PAGE>   12
/s/ RAJ MEHRA                           /s/ LLOYD RUTH
---------------------------             ------------------------------
RAJ MEHRA                               LLOYD RUTH

/s/ TIM COLLINS                         /s/ SHARON MAGNESS
---------------------------             ------------------------------
TIM COLLINS                             SHARON MAGNESS

                                        /s/ PETER BEHRENDT
---------------------------             ------------------------------
NAVEEN JAIN                             PETER BEHRENDT

---------------------------
ANU JAIN

/s/ RALPH Z. SORENSON                   /s/ NANCY OVERMAN
---------------------------             ------------------------------
RALPH Z. SORENSON                       NANCY OVERMAN

/s/ MARK WATTLES
---------------------------             ------------------------------
MARK WATTLES                            LILLIAN NADHIR

/s/ DAN H. BROUGHTON
---------------------------
DAN H. BROUGHTON

                                       12<PAGE>   1
                                                                   EXHIBIT 10.21

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

                            WARRANT TO PURCHASE STOCK

Corporation:                    netLibrary, Inc., a Delaware Corporation
Number of Shares:               24,582
Class of Stock:                 Common
Initial Exercise Price:         $3.6613 per share
Issue Date:                     September 3, 1999
Expiration Date:                September 4, 2004 (Subject to Article 4.1)

     THIS WARRANT CERTIFIES THAT, in consideration of the payment of $1.00 and
for other good and valuable consideration, IMPERIAL BANCORP or registered
permitted assignee ("Holder") is entitled to purchase the number of fully paid
and nonassessable shares of the class of securities (the "Shares") of the
corporation (the "Company") at the initial exercise price per Share (the
"Warrant Price") all as set forth above and as adjusted pursuant to Article 2 of
this Warrant, subject to the provisions and upon the terms and conditions set
forth of this Warrant.

ARTICLE 1. EXERCISE

     1.1  Method of Exercise. Holder may exercise this Warrant by delivering
this Warrant and a duly executed Notice of Exercise in substantially the form
attached as Appendix 1 to the principal office of the Company. Unless Holder is
exercising the conversion right set forth in Section 1.2, Holder shall also
deliver to the Company a check for the aggregate Warrant Price for the Shares
being purchased.

     1.2  Conversion Right. In lieu of exercising this Warrant as specified in
Section 1.1, Holder may from time to time convert this Warrant, in whole but not
in part, into a number of Shares determined by dividing (a) the aggregate fair
market value of the Shares or other securities otherwise issuable upon exercise
of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair
market value of one Share. The fair market value of the Shares shall be
determined pursuant to Section 1.3.

     1.3  Fair Market Value. If the Shares are traded regularly in a public
market, the fair market value of the Shares shall be the closing price of the
Shares (or the closing price of the Company's stock into which the Shares are
convertible) reported for the business day immediately before Holder delivers
its Notice of Exercise to the Company. If the Shares are not regularly traded in
a public market, the Board of Directors of the Company shall determine fair
market value in its reasonable good faith judgment. The foregoing
notwithstanding, if Holder advises the Board of Directors in writing that Holder
disagrees with such determination, then the Company and Holder shall promptly
agree upon a reputable investment banking firm to undertake such valuation. If
the valuation of such investment banking firm is greater than that determined

<PAGE>   2

by the Board of Directors, then all fees and expenses of such investment banking
firm shall be paid by the Company. In all other circumstances, such fees and
expenses shall be paid by Holder.

     1.4  Delivery of Certificate and New Warrant. Promptly after Holder
exercises or converts this Warrant, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant representing the
Shares not so acquired.

     1.5  Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, or surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.

     1.6  Repurchase on Sale, Merger, or Consolidation of the Company.

     1.6.1. "Acquisition". For the purpose of this Warrant, "Acquisition" means
any sale, license, or other disposition of all or substantially all of the
assets (including intellectual property) of the Company, or any reorganization,
consolidation, or merger of the Company where the holders of the Company's
securities before the transaction beneficially own less than 50% of the
outstanding voting securities of the surviving entity after the transaction.

     1.6.2. Assumption of Warrant. If upon the closing of any Acquisition the
successor entity assumes the obligations of this Warrant, then this Warrant
shall be exercisable for the same securities, cash, and property as would be
payable for the Shares issuable upon exercise of the unexercised portion of this
Warrant as if such Shares were outstanding on the record date for the
Acquisition and subsequent closing. The Warrant Price shall be adjusted
accordingly.

     1.6.3. Nonassumption. If upon the closing of any Acquisition the successor
entity does not assume the obligations of this Warrant and Holder has not
otherwise exercised this Warrant in full, then the unexercised portion of this
Warrant shall be deemed to have been automatically converted pursuant to Section
1.2 and thereafter Holder shall participate in the Acquisition on the same terms
as other holders of the same class of securities of the Company.

ARTICLE 2. ADJUSTMENTS TO THE SHARES.

     2.1  Stock Dividends, Splits, Etc. If the Company declares or pays a
dividend on its common stock payable in common stock, or other securities,
subdivides the outstanding common stock into a greater amount of common stock,
then upon exercise of this Warrant, for each Share acquired, Holder shall
receive, without cost to Holder, the total number and kind of securities to
which Holder would have been entitled had Holder owned the Shares of record as
of the date the dividend or subdivision occurred.

     2.2  Reclassification, Exchange or Substitution. Upon any reclassification,
exchange, substitution, or other event that results in a change of the number
and/or class of the securities issuable upon exercise or conversion of this
Warrant, Holder shall be entitled to receive, upon exercise or conversion of
this Warrant,

                                       2
<PAGE>   3

the number and kind of securities and property that Holder would have received
for the Shares if this Warrant had been exercised immediately before such
reclassification, exchange, substitution, or other event. The Company or its
successor shall promptly issue to Holder a new Warrant for such new securities
or other property. The new Warrant shall provide for adjustments which shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Article 2 including, without limitation, adjustments to the Warrant Price
and to the number of securities or property issuable upon exercise of the new
Warrant. The provisions of this Section 2.2 shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events.

     2.3  Adjustments for Combinations, Etc. If the outstanding Shares are
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares, the Warrant Price shall be proportionately increased.

     2.4  No Impairment. The Company shall not, by amendment of its Articles of
Incorporation or through a reorganization, transfer of assets, consolidation,
merger, dissolution, issue, or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed under this Warrant by the Company, but shall at all times
in good faith assist in carrying out all the provisions of this Article 2 and in
taking all such action as may be necessary or appropriate to protect Holder's
rights under this Article against impairment. If the Company takes any action
affecting the Shares or its common stock other than as described above that
adversely affects Holder's rights under this Warrant, the Warrant Price shall be
adjusted downward and the number of Shares issuable upon exercise of this
Warrant shall be adjusted upward in such a manner that the aggregate Warrant
Price of this Warrant is unchanged.

     2.5  Certificate as to Adjustments. Upon each adjustment of the Warrant
Price, the Company at its expense shall promptly compute such adjustment, and
furnish Holder with a certificate of its Chief Financial Officer setting forth
such adjustment and the facts upon which such adjustment is based. The Company
shall, upon written request, furnish Holder a certificate setting forth the
Warrant Price in effect upon the date thereof and the series of adjustments
leading to such Warrant Price.

     2.6  Fractional Shares. No fractional shares shall be issuable upon
exercise or conversion of the Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share interest
arises upon any exercise of the Warrant, the Company shall eliminate such
fractional share by paying Holder cash in the amount computed by multiplying the
fractional interest by the fair market value of a full Share.

ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.

     3.1  Representations and Warranties. The Company hereby represents and
warrants to the Holder that all Shares which may be issued upon the exercise of
the purchase right represented by this Warrant, and all securities, if any,
issuable upon conversion of the Shares, shall, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable, and free of any liens
and encumbrances except for restrictions on transfer provided for herein or
under applicable federal and state securities laws.

                                       3
<PAGE>   4

     3.2  Notice of Certain Events. If the Company proposes at any time (a) to
declare any dividend or distribution upon its common stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for subscription pro rata to the holders of any class or series of
its stock any additional shares of stock of any class or series or other rights;
(c) to effect any reclassification or recapitalization of common stock; (d) to
merge or consolidate with or into any other corporation, or sell, lease,
license, or convey all or substantially all of its assets, or to liquidate,
dissolve or wind up; or (e) offer holders of registration rights commensurate
with those described on Exhibit A the opportunity to participate in an
underwritten public offering of the company's securities for cash, then, in
connection with each such event, the Company shall give Holder (1) at least 10
days prior written notice of the date on which a record will be taken for such
dividend, distribution, or subscription rights (and specifying the date on which
the holders of common stock will be entitled thereto) or for determining rights
to vote, if any, in respect of the matters referred to in (c) and (d) above; (2)
in the case of the matters referred to in (c) and (d) above at least 10 days
prior written notice of the date when the same will take place (and specifying
the date on which the holders of common stock will be entitled to exchange their
common stock for securities or other property deliverable upon the occurrence of
such event); and (3) in the case of the matter referred to in (e) above, the
same notice as is given to the holders of such registration rights.

     3.3  Information Rights. So long as the Holder holds this Warrant and/or
any of the Shares, the Holder shall be entitled to receive all information that
Company provides to other holders of an equivalent number of the Shares.

     3.4  Registration Under Securities Act of 1933, as amended. The Company
agrees that the Shares shall be subject to the registration rights set forth on
Exhibit A.

ARTICLE 4. MISCELLANEOUS.

     4.1  Term This Warrant is exercisable, in whole or in part, at any time and
from time to time on or before the Expiration Date set forth above.

     4.2  Legends. This Warrant and the Shares (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) shall be
imprinted with a legend in substantially the following form:

     THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
     AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN
     EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN
     OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS
     COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

     4.3  Compliance with Securities Laws on Transfer. This Warrant and the
Shares issuable upon exercise of this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company). The Company
shall not require Holder to provide an opinion of counsel if the transfer is to
an affiliate of Holder or if there is

                                       4
<PAGE>   5

no material question as to the availability of current information as referenced
in Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e)
in reasonable detail, the selling broker represents that it has complied with
Rule 144(f), and the Company is provided with a copy of Holder's notice of
proposed sale.

     4.4  Transfer Procedure. Subject to the provisions of Section 4.3, Holder
may transfer all of this Warrant in its entirety or all (but not less than all)
the Shares issuable upon exercise of this Warrant (or the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) by giving the
Company notice of the portion of the Warrant being transferred setting forth the
name, address and taxpayer identification number of the transferee and
surrendering this Warrant to the Company for reissuance to the transferee(s)
(and Holder, if applicable). Unless the Company is filing financial information
with the SEC pursuant to the Securities Exchange Act of 1934, the Company shall
have the right to refuse to transfer any portion of this Warrant to any person
who directly competes with the Company.

     4.5  Notices. All notices and other communications from the Company to the
Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company or the
Holder, as the case may be, in writing by the Company or such Holder from time
to time.

     4.6  Waiver. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.

     4.7  Attorneys' Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys' fees.

     4.8  Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Colorado, without giving effect to its
principles regarding conflicts of law.

                                         NETLIBRARY, INC.

                                         By:  /s/ TIMOTHY R. SCHIEWE
                                            -----------------------------------
                                         Name:     Timothy R. Schiewe
                                         Title:    President

                                         By:  /s/ DONNA BURK
                                           ------------------------------------
                                         Name:     Donna Burk
                                         Title:    Secretary

                                       5
<PAGE>   6

                                   APPENDIX 1

                               NOTICE OF EXERCISE

     1.   The undersigned hereby elects to purchase __________ shares of the
Common Stock of netLibrary, Inc. pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price of such shares in full.

     2.   The undersigned hereby elects to convert the attached Warrant into
Shares in the manner specified in Section 1.2 of the Warrant. This conversion is
exercised with respect to _______ of the Shares covered by the Warrant.

     [Strike paragraph that does not apply.]

     3.   Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name as is specified below:

             Chief Financial Officer
             Controllers Department
             Imperial Bancorp
             P.O. Box 92991
             Los Angeles, CA 90009
             Or Registered Assignee

     3.   The undersigned represents it is acquiring the shares solely for its
own account and not as a nominee for any other party and not with a view toward
the resale or distribution thereof except in compliance with applicable
securities laws.

IMPERIAL BANCORP  or Registered Assignee

---------------------------------------
(Signature)

---------------------------------------
(Date)

                                       6

<PAGE>   7

                                    EXHIBIT A

                               Registration Rights

     The Shares shall be deemed "registrable securities" or otherwise entitled
to "piggy back" registration rights in accordance with the terms of the Amended
and Restated Investors' Rights Agreement (the "Agreement") dated May 17, 1999
among the Company and certain of its shareholders, as such agreement may be
amended from time to time.

     By acceptance of the Warrant to which this Exhibit A is attached, Holder
shall have the rights of a "Holder" (as defined in the Agreement) and be subject
to the restrictions on such a "Holder" under Article 2 of the Agreement, other
than Section 2.11; provided, that Holder shall have the right to participate in
a demand registration under Section 2.2 of the Agreement only if persons who are
Holders under the Agreement satisfy the 20% requirement of Section 2.2(a). If
the Agreement is amended pursuant to Section 2.11 and such amendment would have
an adverse impact on Holder's registration rights thereunder Holder will not be
bound by such amendment without Holder's consent. Holder shall not be party to,
or have any other rights granted to the parties to the Agreement.

                                       7

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