CONFIDENTIAL OFFERING MEMORANDUM

NEBRASKA BOOKS HOLDINGS, INC.

Offer to Exchange

Up to $125.0 Million in Principal Amount of 2.0% Convertible Senior PIK Notes Due 2026

For any and all outstanding

15.0% Senior Secured Notes Due 2016

(CUSIP No. 63983WAA6)

THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, APRIL 14, 2016, UNLESSEXTENDED BY NEBRASKA BOOKS HOLDINGS, INC. (AS SO EXTENDED, THE “EXPIRATION DATE”).

Nebraska Books Holdings, Inc., a Delaware corporation (“NBH,” “we,” “us” or the “Company”), is offering (the “exchange offer”) to exchange for each $1.00 principalamount of outstanding 15.0% Senior Secured Notes due 2016 (the “existing notes”):

$1.05 principal amount of its 2.0% Convertible Senior PIK Notes Due 2026 (the “new senior notes”); and

an additional amount of principal of our new senior notes equal to any accrued and unpaid interest due on the existing notes, held by the tendering holder to, butnot including, the closing date of the exchange offer (which, based, on a closing date of April 14, 2016, we estimate at $0.08085 per $1.00 of existing notes (anyfractional amount of new senior notes to be received in the exchange offer will be rounded down to the nearest dollar).

As of the date of this confidential offering memorandum, $110.0 million principal amount of existing notes were outstanding.

The exchange offer is subject to customary conditions, which we may assert or waive. These conditions include (1) 95.0% of the outstanding aggregate principal amount ofthe existing notes is validly tendered and not withdrawn; (2) finalizing definitive documentation for the new senior term loan with terms and conditions reasonablyacceptable to the Company and funds managed by MAST Capital Management, LLC (collectively, “MAST”); (3) finalizing definitive documentation for the purchase bythe Company of third party debt securities and a loan with a face value of $70.0 million for a total purchase price of $31.5 million (the “purchased loan”) and (4) othercustomary conditions described in this confidential offering memorandum. We refer to the new senior term loan, the purchase of the purchased loan and the additional drawof funds under the existing credit facility necessary to redeem the remaining existing notes not tendered in the exchange offer as the “restructuring transactions.” See “TheExchange Offer — Conditions to the Completion of the Exchange Offer.”

The board of directors (the “board”) of the Company formed a special committee of disinterested directors (the “special committee”) to consider the exchange offer and therestructuring transactions and make recommendations to the full board. The members of the special committee were Benjamin Ng and Steve Clemente. The specialcommittee had authority to hire financial advisors and it engaged Alvarez & Marsal (“A&M” or the “financial advisor”). A&M provided advice and analyses but did notprovide a fairness opinion or other opinion on the fairness of the exchange offer or the other potential transactions considered by the special committee and the board. Thespecial committee met 12 times (including telephonic meetings) to consider the exchange offer and other potential transactions with MAST. The special committee alsocarefully considered other alternatives, including the potential for a transaction with unaffiliated third parties. After concluding that no third party transactions were likelyavailable on equivalent terms, the special committee negotiated the terms of the exchange offer and other potential transactions with MAST, which included multiple roundsof negotiations. As part of its evaluation, the special committee reviewed the proposed acquisition of the purchased loan and determined that the acquisition would benefitthe company by providing cash flow to support the company’s operations and ability to service its debts, including a review of the purchased loan issuer’s financialstatements and other confidential information pursuant to a confidentiality agreement. The special committee determined that the transactions were in the best interests ofthe company and represented an opportunity for the Company to avoid bankruptcy, foreclosure or other liquidation proceedings, and approved the transactions andrecommended them to the board of directors. The exchange offer and the restructuring transactions were approved by our board of directors upon recommendation by thespecial committee. In approving the transactions the board also relied on the analyses provided by management and A&M.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) NOR ANY STATE SECURITIES COMMISSION HAS APPROVED ORDISAPPROVED OF THIS TRANSACTION OR THESE SECURITIES, PASSED UPON THE MERITS OR FAIRNESS OF THE TRANSACTION, PASSEDUPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS CONFIDENTIAL OFFERING MEMORANDUM, OR DETERMINED IF THISCONFIDENTIAL OFFERING MEMORANDUM IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINALOFFENSE.

The new senior notes will be issued pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), providedby Rule 506(c) of Regulation D promulgated under the Securities Act and the exemption from state securities law requirements provided by Section 18(b)(4)(E) of theSecurities Act. Only beneficial holders of existing notes that are “accredited investors,” as such term is defined in Rule 501 of Regulation D may participate in theExchange Offer. As a result, in addition to completing and returning the Letter of Transmittal, as a condition to accepting your tender of existing notes in the exchangeoffer, each beneficial owner of notes must also (1) complete and return a eligibility questionnaire certifying, among other things, such beneficial owner’s status as anaccredited investor, and (2) provide a written confirmation, from one of the following persons or entities that such person or entity has taken reasonable steps, on or afterFebruary 1, 2016, to verify that such beneficial owner is an accredited investor and has in fact determined that such purchaser is an accredited investor: (1) a registeredbroker-dealer; (2) an investment adviser registered with the Securities and Exchange Commission; (3) a licensed attorney who is in good standing under the laws of thejurisdictions in which he or she is admitted to practice law; or (4) a certified public accountant who is duly registered and in good standing under the laws of the place of hisor her residence or principal office. See “The Exchange Offer — Procedures for Tendering Existing Notes in the Exchange Offer.”

The exchange agent for the exchange offer is Computershare and the information agent for the exchange offer is Georgeson. The telephone number and address of theinformation agent are set forth under “Where You Can find More Information.”

SEE “RISK FACTORS” BEGINNING ON PAGE 16 FOR A DISCUSSION OF RISKS YOU SHOULD CONSIDER BEFORE MAKING A DECISION WITHRESPECT TO THE EXCHANGE OFFER.

The date of this confidential offering memorandum is March 18, 2016.

THE NEW SENIOR NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THESECURITIES ACT OF 1933 (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORYAUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BEOFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITHRULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON THAT THE HOLDER ANDANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONALBUYER WITHIN THE MEANING OF RULE 144A (A “QIB”) THAT IS ACQUIRING THE NEW SENIORNOTES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE QIBS, (2) PURSUANT TOAN EXEMPTION FROM REGISTRATION UNDER RULE 144 UNDER THE SECURITIES ACT (“RULE144”), IF AVAILABLE, (3) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THEREGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (4) TO NEBRASKA BOOK HOLDINGS,INC. OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIESACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATEOF THE UNITED STATES.

THIS CONFIDENTIAL OFFERING MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO EXCHANGEIN ANY JURISDICTION IN WHICH, OR FROM ANY PERSON TO OR FROM WHOM, IT IS UNLAWFUL TOMAKE SUCH OFFER OR SOLICITATION UNDER APPLICABLE FEDERAL SECURITIES OR STATESECURITIES LAWS. THE DELIVERY OF THIS CONFIDENTIAL OFFERING MEMORANDUM SHALL NOTUNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINEDHEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HASBEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR ANY ATTACHMENTS HERETO ORIN THE AFFAIRS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES SINCE THE DATE HEREOF. THECOMPANY DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION, EXCEPT AS OTHERWISEREQUIRED BY LAW.

PRIOR TO MAKING A DECISION WITH RESPECT TO THE EXCHANGE OFFER, HOLDERS OF EXISTINGNOTES (THE “NOTEHOLDERS”) ARE ENCOURAGED TO READ AND CONSIDER CAREFULLY THISENTIRE CONFIDENTIAL OFFERING MEMORANDUM AND THE MATTERS DESCRIBED IN THISCONFIDENTIAL OFFERING MEMORANDUM AND THE LETTER OF TRANSMITTAL.

A SPECIAL COMMITTEE OF OUR BOARD OF DIRECTORS, UPON COMPLETION OF ITS OWNEVALUATION AND FOLLOWING ITS CONSIDERATION OF THE ANALYSES OF ITS FINANCIALADVISER, HAS APPROVED THE MAKING OF THE EXCHANGE OFFER. YOU MUST, HOWEVER, MAKEYOUR OWN DECISION WHETHER TO TENDER EXISTING NOTES. THE COMPANY, THE SPECIALCOMMITTEE AND THE BOARD OF DIRECTORS DO NOT MAKE ANY RECOMMENDATION TO YOUWITH RESPECT TO THE EXCHANGE OFFER, AND NO THIRD PARTY HAS BEEN AUTHORIZED BY USOR OUR BOARD OF DIRECTORS TO MAKE ANY SUCH RECOMMENDATION.

IN MAKING A DECISION IN CONNECTION WITH THE EXCHANGE OFFER, NOTEHOLDERS MUSTRELY ON THEIR OWN EXAMINATION OF THE COMPANY, TERMS OF THE EXCHANGE OFFER, ANDRESTRUCTURING TRANSACTIONS, INCLUDING THE MERITS AND RISKS INVOLVED.NOTEHOLDERS SHOULD NOT CONSTRUE THE CONTENTS OF THIS CONFIDENTIAL OFFERINGMEMORANDUM AS PROVIDING ANY LEGAL, BUSINESS, FINANCIAL OR TAX ADVICE. EACHNOTEHOLDER SHOULD CONSULT WITH ITS OWN LEGAL, BUSINESS, FINANCIAL AND TAXADVISORS WITH RESPECT TO ANY SUCH MATTERS CONCERNING THIS CONFIDENTIAL OFFERINGMEMORANDUM, THE EXCHANGE OFFER AND THE RESTRUCTURING TRANSACTIONSCONTEMPLATED HEREBY.

TABLE OF CONTENTS

Page

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SUMMARY TERMS OF THE EXCHANGE OFFER ............................................................................................... 1

SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA.................................................................... 14

RISK FACTORS ....................................................................................................................................................... 16

FORWARD-LOOKING STATEMENTS................................................................................................................. 34

CAPITALIZATION .................................................................................................................................................. 35

BUSINESS ................................................................................................................................................................ 36

MANAGEMENT ...................................................................................................................................................... 38

THE RESTRUCTURING TRANSACTIONS .......................................................................................................... 40

THE EXCHANGE OFFER ....................................................................................................................................... 41

DESCRIPTION OF THE NEW SENIOR NOTES ................................................................................................... 49

DESCRIPTION OF OTHER INDEBTEDNESS ...................................................................................................... 77

DESCRIPTION OF CAPITAL STOCK ................................................................................................................... 79

DESCRIPTION OF RESTRUCTURING SUPPORT AGREEMENT ..................................................................... 83

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS .................................................. 84

PLAN OF DISTRIBUTION...................................................................................................................................... 93

PRICE RANGE OF COMMON STOCK.................................................................................................................. 95

WHERE YOU CAN FIND MORE INFORMATION .............................................................................................. 96

FINANCIAL STATEMENTS..................................................................................................................................F-1

EXHIBIT A – FORM OF INDENTURE ................................................................................................................ A-1

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SUMMARY TERMS OF THE EXCHANGE OFFER

You should read carefully this confidential offering memorandum before making any decision with respectto the exchange offer. The following summary describes the material terms of the exchange offer and informationcontained elsewhere in this confidential offering memorandum. This summary is intended to provide you withsufficient information to understand the essential features and significance of the exchange offer but is not complete,and it may not contain all of the information that may be important to you in making a decision with respect to theexchange offer. This summary is qualified in its entirety by the more detailed information appearing elsewhere orincorporated by reference in this confidential offering memorandum. We urge you to read the following summarytogether with the more detailed information and financial statements that are included elsewhere in this confidentialoffering memorandum.

Questions and Answers About the Exchange Offer

Q: Who is making the exchange offer?

A: Nebraska Books Holdings, Inc., the issuer of the existing notes, is making the exchange offer.

Q: Why are we making the exchange offer?

A: We are making the exchange offer to restructure our existing capital structure. The consummation ofthe exchange offer is a critical step in our operational and financial restructuring plan along with therestructuring transactions. See “— Purpose and Effect of Exchange Offer” and “— The RestructuringTransactions.”

Q: When does the exchange offer expire?

A: The exchange offer will expire at 12:00 midnight, New York City time, on Thursday, April 14, 2016,unless extended by us. See “The Exchange Offer — Expiration Date; Extensions; Amendments.” TheCompany currently intends to take advantage of the applicable 30-day grace period for making thesemi-annual cash interest payment due on March 31, 2016 on the existing notes. However there is noguarantee it will be able to make such payment in a timely fashion or at all to holders of existingnotes that are not exchanged in the exchange offer. If the exchange offer is not completed byApril 30, 2016 and we have not paid accrued and unpaid interest that was due on March 31, 2016, itwill be an event of default under our existing notes. If we pay accrued and unpaid interest by April30, 2016 and the exchange offer is not completed by June 30, 2016, it will be an event of defaultunder the existing notes unless we can borrow or otherwise obtain sufficient funds to repay theexisting notes.

Q: What will you receive in the exchange offer?

A: We are offering to exchange for each $1.00 principal amount of outstanding existing notes:

$1.05 principal amount of our new senior notes, plus

an additional amount of principal of our new senior notes equal to any accrued and unpaidinterest due on the existing notes (as defined below), held by the tendering holder to, but notincluding, the closing date of the exchange offer (which, based, on a closing date of April14, 2016, we estimate at $0.08085 per $1.00 of existing notes (any fractional amount of newsenior notes to be revised in the exchange offer will be rounded down to the nearest dollar)).

We describe the new senior notes in more detail under “— Summary Description of the NewSecurities,” “Description of the New Senior Notes” and “Description of Capital Stock.”

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The Company currently intends to take advantage of the applicable 30-day grace period for makingthe semi-annual cash interest payment due on March 31, 2016 on the existing notes. However there isno guarantee it will be able to make such payment in a timely fashion or at all to holders of existingnotes that are not exchanged in the exchange offer. The cash interest that holders of the existingnotes would otherwise be entitled has been included in the calculation of the amount of new seniornotes such noteholders are being offered in the exchange offer and will receive in lieu of such cashinterest payment.

Q: What are the terms of the new senior notes?

A: The new senior notes will accrue interest at a rate of 2.0% per annum, payable semi-annually inarrears on March 15 and September 15 of each year, beginning September 15, 2016. For the first twoyears after closing, interest on the new senior notes will be paid in kind by issuing new senior notesin lieu of cash. After the first two years, all interest will be paid in cash if there are available funds atthe Company. If funds are not available, interest will be paid in kind. See “Description of NewSenior Notes.” The new senior notes will mature on April 1, 2026.

At any time prior to 5:00 pm Eastern time on the second business day immediately preceding April 1,2026, each $1,000 of principal amount of such notes are convertible into 684.2285 shares of commonstock of the Company, determined based on a 25% premium above the 60 business day VWAP ofour common stock on the launch date, subject to restrictions that are intended to protect theCompany’s ability to continue to use its net operating loss carryforwards for federal income taxpurposes. See “Description of the New Senior Notes — Conversion Rights.”

The new senior notes will be senior unsecured obligations of the Company, will be senior in right ofpayment to all existing and future subordinated indebtedness of the Company, will be effectivelysubordinated to any future secured indebtedness of the Company to the extent of the collateralsecuring that indebtedness, will be structurally subordinate to all of the liabilities of each of theIssuer’s subsidiaries, including the ABL credit facility and new senior term loan, and will be equal inright of payment with any future senior unsecured indebtedness of the Company. See “Risk Factors— Risks Related to Our Indebtedness.”

Q: What amount of existing notes are we seeking in the exchange offer?

A: We are seeking the exchange of all outstanding existing notes. Currently, $110.0 million principalamount of the existing notes is outstanding. The exchange offer is conditioned upon, among otherthings, the tender of at least 95.0% of the outstanding aggregate principal amount of the existingnotes. As described below, funds managed by MAST Capital Management, LLC (collectively,“MAST”), who are the largest holders of the existing notes have agreed to tender all their notes in theexchange offer subject to the conditions contained herein. In addition, MAST has agreed to permitthe Company to borrow sufficient funds under its ABL credit facility to redeem all existing notes thatdon’t participate in the exchange offer.

Q: Who may participate in the exchange offer?

A: Only holders of existing notes that are accredited investors and that provide proper verification oftheir accredited investor status may participate in the exchange offer. See “The Exchange Offer —Procedures for Tendering Existing Notes in the Exchange Offer” for additional information.

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Q: Will the new senior notes issued in the exchange offer be freely tradable under the U.S. Federalsecurities laws?

A: No. The new senior notes will be issued in a private placement offering only to “accreditedinvestors” in reliance on the exemption from registration provided under Rule 506 of Regulation D(“Regulation D”) of the Securities Act. Therefore, the new senior notes and the shares of ourcommon stock issuable upon conversion of the new senior notes will be considered “restrictedsecurities” under Rule 144 of the Securities Act (“Rule 144”). Accordingly, the new senior notes andthe shares of our common stock issued or issuable to you may only be resold by you pursuant to Rule144 or another applicable exemption from the registration requirements of the Securities Act. Theexemption under Rule 144 will not be available until, at the earliest, one year after the closing of theexchange offer. Resales to qualified institutional buyers may be permissible under the exemptionprovided by Rule 144A under the Securities Act. Resales under either Rule 144 or Rule 144A areavailable only if there is current information regarding the Company available (Rule 144) oravailable upon request (Rule 144A). Each holder of existing notes tendering the existing notes forexchange must complete a representation letter to confirm that the holder is an accredited investorand provide proper verification of accredited investor status. See “The Exchange Offer — U.S.Securities Laws Considerations”.

Our certificate of incorporation also has a provision prohibiting transfers of our common stock to theextent that such transfers would cause the Company to lose its ability to continue to use its netoperating loss carryforwards for federal income tax purposes.

Q: Will the new senior notes be listed?

A: No. The new senior notes will not be listed for trading on any national securities exchange orauthorized to be quoted in any inter-dealer quotation system of any national securities association.We do not intend to apply for either listing or quotation of the new senior notes. Similarly, ourcommon stock is not listed, although it is quoted on the OTC markets under the symbol “NEEB.”

Q: What risks should you consider in deciding whether or not to tender your existing notes?

A: In deciding whether to participate in the exchange offer, you should carefully consider the discussionof risks and uncertainties relating to the restructuring transactions, the exchange offer, our businessstrategy and operations, our indebtedness and our common stock described in the section of thisconfidential offering memorandum entitled “Risk Factors.”

Q: If you do not tender your existing notes in the exchange offer, will you receive the remainingscheduled interest payment and payment of principal on the existing notes at maturity?

A: Without the exchange offer, we may not have sufficient liquidity to make the next scheduled interestpayment on the existing notes due on March 31, 2016, repay the existing notes when they mature inJune 2016, or repay our ABL credit facility. If you currently hold existing notes and do not tenderthem, we expect to redeem your existing notes only if we meet the minimum exchange threshold of95.0% and complete the exchange offer.

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Q: How do you participate in the exchange offer?

A: Our obligation to accept your tender of existing notes is conditional upon us receiving:

a completed letter of transmittal (or agent’s message);

your existing notes by book-entry transfer to an account monitored by the exchange agent atthe Depository Trust Company (“DTC”) pursuant to procedures described below at “TheExchange Offer — Procedures for Tendering Existing Notes in the Exchange Offer;”

a completed eligibility questionnaire; and

a written confirmation from one of the following persons or entities that such person orentity has taken reasonable steps, on or after February 1, 2016, to verify that such beneficialowner is an accredited investor and has in fact determined that such purchaser is anaccredited investor: (a) a registered broker-dealer; (b) an investment adviser registered withthe Securities and Exchange Commission; (c) a licensed attorney who is in good standingunder the laws of the jurisdictions in which he or she is admitted to practice law; or (d) acertified public accountant who is duly registered and in good standing under the laws of theplace of his or her residence or principal office.

The eligibility questionnaire and the verification letter should be delivered directly to our counsel,Arnall Golden Gregory LLP, to the attention of Robert Dow, via email to robert.dow@agg.com orfacsimile at (404) 873-8707. These items should be submitted early enough to allow for approvalprior to the expiration of the exchange offer. We have no obligation to accept delivery of anytendered notes until we have received and confirmed the adequacy of the required eligibilitydocumentation. All other required documents must be delivered to the exchange agent before theexpiration date of the exchange offer. For more information on how to participate in the exchangeoffer, please see “The Exchange Offer — Procedures for Tendering Existing Notes in the ExchangeOffer.”

Q: What is the procedure for tendering existing notes if you beneficially own existing notes thatare registered in the name of a broker, dealer, commercial bank, trust company or othernominee?

A: If you beneficially own existing notes that are registered in the name of a broker, dealer, commercialbank, trust company or other nominee and you wish to tender your existing notes in the exchangeoffer, you should promptly contact the person in whose name the existing notes are registered andinstruct that person to tender on your behalf. If you wish to tender in the exchange offer for yourself,prior to completing and executing the letter of transmittal and delivering your existing notes, youmust make appropriate arrangements to register ownership of the existing notes in your name.

Q: What are the conditions to the exchange offer?

A: The exchange offer is subject to customary conditions, which we may assert or waive. Theseconditions include (1) 95.0% of the outstanding aggregate principal amount of the existing notes isvalidly tendered and not withdrawn; (2) finalizing definitive documentation for the new senior termloan with terms and conditions reasonably acceptable to the Company and MAST; (3) finalizingdefinitive documentation for the purchase by the Company of a third party loan with a face value of$70.0 million for a total purchase price of $31.5 million (the “purchased loan”) and (4) othercustomary conditions described in this confidential offering memorandum. We describe theseconditions in more detail under “The Exchange Offer — Conditions to the Completion of theExchange Offer.” We will not be required, but we reserve the right, to accept for exchange anyexisting notes tendered (or, alternatively, we may terminate the exchange offer) if any of theconditions of the exchange offer as described under “The Exchange Offer — Conditions to theCompletion of the Exchange Offer” remain unsatisfied.

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Q: May you withdraw your tender of existing notes?

A: Yes. You may withdraw any tendered existing notes at any time prior to the expiration date of theexchange offer, as it may be extended from time to time. The intended expiration date is 12:00midnight, New York City time, on April 14, 2016.

Q: What happens if your existing notes are not accepted in the exchange offer?

A: If we decide for any reason not to accept your existing notes for exchange, the existing notes will bereturned to you, at our expense, promptly after the expiration or termination of the exchange offer. Inthe case of existing notes tendered by book entry transfer into the exchange agent’s account at DTC,any unaccepted existing notes will be credited to your account or the account of your broker, dealer,commercial bank, trust company or other nominee at DTC.

Q: Who will pay the fees and expenses associated with the exchange offer?

A: We will bear all fees and expenses incurred in connection with consummating the exchange offer andrestructuring transactions. See “The Exchange Offer — Fees and Expenses.”

Q: How will you be taxed on the exchange of your existing notes?

A: We believe that the exchange of an existing note in the exchange offer should constitute a taxableexchange for U.S. Federal income tax purposes. Consequently, upon your exchange of an existingnote in the exchange offer, you generally should recognize gain or loss equal to the differencebetween (1) the issue price of any new senior notes received in exchange for existing notes, and(2) your adjusted basis in the existing notes surrendered in the exchange, plus ordinary income withrespect to any new senior notes received in payment of interest due. We expect that the new seniornotes will be treated as issued with “original issue discount” for U.S. Federal income tax purposes.Consequently, holders of a new senior note will be required to include amounts in gross income inadvance of the receipt of cash attributable to the new senior note. Please see the section titled“Certain United States Federal Income Tax Considerations.” You should consult your own taxadvisor for a full understanding of the tax consequences of participating in the exchange offer.

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Q: Has the Company, its board of directors or the special committee adopted a position on theexchange offer?

A: The board of the Company formed a special committee to consider the exchange offer and therestructuring transactions and make recommendations to the full board. The members of the specialcommittee were Benjamin Ng and Steve Clemente. The special committee had authority to hirefinancial advisors and it engaged Alvarez & Marsal. A&M provided advice and analyses but did notprovide a fairness opinion or other opinion on the fairness of the exchange offer or the other potentialtransactions considered by the special committee and the board. The special committee met 12 times(including telephonic meetings) to consider the exchange offer and other potential transactions withMAST. The special committee also carefully considered other alternatives, including the potentialfor a transaction with unaffiliated third parties. After concluding that no third party transactions werelikely available on equivalent terms, the special committee negotiated the terms of the exchange offerand other potential transactions with MAST, which included multiple rounds of negotiations. As partof its evaluation, the special committee reviewed the proposed acquisition of the purchased loan anddetermined that the acquisition would benefit the company by providing cash flow to support thecompany’s operations and ability to service its debts, including a review of the purchased loanissuer’s financial statements and other confidential information pursuant to a confidentialityagreement. The special committee determined that the transactions were in the best interests of theCompany and represented an opportunity for the Company to avoid bankruptcy foreclosure or otherliquidation proceedings, and approved the transactions and recommended them to the board ofdirectors. The exchange offer and the restructuring transactions were approved by our board ofdirectors upon recommendation by the special committee. In approving the transactions the boardalso relied on the analyses provided by management and A&M. However, the Company, the specialcommittee and the board of directors do not make any recommendation as to whether you shouldtender existing notes pursuant to the exchange offer. You must make the decision whether to tenderexisting notes.

Q: Who can answer your questions concerning the exchange offer?

A: If you have any questions about the exchange offer or how to submit your letter of transmittal, or ifyou need additional copies of this confidential offering memorandum, contact Georgeson LLC bywriting to 480 Washington Blvd., 26th Floor, Jersey City, NJ 07310 or calling (888) 206-0860.

Q: Do other noteholders support the exchange offer?

A: Yes. MAST, the largest holder of the existing notes, has agreed to tender all its existing notes.

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The Company

Nebraska Book Holdings, Inc., a Delaware corporation incorporated on May 31, 2012, referred to herein asthe “Company” or the “Issuer,” participates in the college bookstore industry through its subsidiary, Nebraska BookCompany, Inc., referred to herein as the “Nebraska Book Company.”

Company Overview

We provide the college bookstore industry with a variety of services including propriety information ande-commerce systems, back end system access and support and by supplying used textbooks to college bookstoreoperators. We believe we are one of the largest wholesale distributors of used college textbooks in North America,offering over 149,000 textbook titles and selling or renting over 3.6 million books annually, primarily to collegebookstores serving campuses located in the United States.

Our principal executive offices are located at Nebraska Book Company, Inc., 4700 South 19th Street,Lincoln, Nebraska 68512, and our telephone number is (402) 421-0500.

Purpose and Effect of Exchange Offer

The exchange offer, along with the restructuring transactions, is a part of our effort to restructure ourexisting capital structure as described in more detail below under “— The Restructuring Transactions.”

For the nine months ended December 31, 2015, our revenues have declined to $80.6 million from $85.8million for the prior year period and our net loss from continuing operations increased from $(5.0 million) to$(17.8 million) during the same periods. In response, we have implemented an aggressive cost-cutting operationalplan, coupled with a longer term development of new products and services, that we expect will cause our results oroperations to improve over the next three years. However, while we are in the process of implementing theseinitiatives, we are not in compliance with our net leverage ratio covenants under the indenture governing ourexisting notes, although we have received waivers that are effective through March 31, 2016. In addition, it is clearthat without restructuring our capital structure we will not have sufficient liquidity to repay our ABL credit facilitywhen it becomes due, make the next scheduled interest payment on the existing notes on March 31, 2016, or repaythe existing notes when they mature in June 2016.

In order to provide sufficient time to implement our operational and strategic plans, we must restructure ourobligations under the existing notes. MAST, the largest holder of the existing notes has agreed to exchange all of itsexisting notes in the exchange offer.

The success of the exchange offer is crucial for the survival of the Company. Otherwise, we may have tocommence bankruptcy, foreclosure or other liquidation proceedings. Without the exchange offer, we will be unableto repay our outstanding debt when it comes due as described above. As a result, if not enough noteholders tenderexisting notes in the exchange offer or we are otherwise unable to consummate timely the restructuring transactions,the consequences of the lenders under our existing term loan accelerating the maturity of that indebtedness andseeking to exercise their remedies on their collateral for payment, as well as the potential cross-default andacceleration of the existing notes as a result thereof, would have a materially adverse effect on us and our ability tocontinue operating our business. Accordingly, if we fail to consummate the restructuring transactions described inthis confidential offering memorandum, we may have to commence bankruptcy, foreclosure or other liquidationproceedings and, if possible, we may consummate a similar restructuring of the existing notes in bankruptcy. Inaddition, we believe our business may deteriorate during a bankruptcy case. If that occurs, the noteholders willlikely receive materially worse treatment than under the exchange offer.

Restructuring Support

We have engaged in discussions with the certain of the holders of our existing notes regarding the terms ofthe exchange offer, including with MAST, the largest holder of our existing notes. As of March 18, 2016, we haveentered into a restructuring support agreement with MAST. Pursuant to the restructuring support agreement, MASThas committed to tendering all of its notes in the exchange subject to the terms and conditions set forth therein. Theobligations of MAST under the restructuring support agreement are conditioned upon us finalizing definitivedocumentation for the restructuring transactions and obtaining the minimum exchange offer threshold of 95.0%.The conditions are also conditions to the exchange offer. We expect that MAST will solicit support for the exchange

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offer from other noteholders. MAST is not receiving any consideration for this solicitation. In addition, MAST hasagreed that, upon attainment of the minimum exchange offer threshold of 95.0%, it will lend a subsidiary of theCompany sufficient funds to redeem the remaining existing notes, if necessary.

The Restructuring Transactions

MAST’s obligations under its restructuring support agreement are conditional upon the Company finalizingdefinitive documentation for the restructuring transactions. The restructuring transactions consist of:

the Company will be permitted to draw sufficient funds under its ABL credit facility to redeem theremaining existing notes not tendered in the exchange offer;

closing of the purchase by the Company from MAST of a third party loan with a face value of$70.0 million for a total purchase price of $31.5 million (the “purchased loan”); and

entering into a new term loan with MAST for $31.5 million for the primary purpose of purchasingthe purchased loan (the “new senior term loan”).

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Summary of the Exchange Offer

THE EXCHANGE OFFER We are offering to exchange for each $1.00 principal amount ofoutstanding existing notes:

$1.05 principal amount of our new senior notes, plus

an additional amount of principal of our new senior notes equalto any accrued and unpaid interest due on the existing notes,held by the tendering holder to, but not including, the closingdate of the exchange offer (which, based, on a closing date ofApril 14, 2016, we estimate at $0.08085 per $1.00 of existingnotes) (any fractional amount of new senior notes to be receivedin the exchange offer will be rounded down to the nearestdollar).

The new senior notes are being issued in a transaction exempt fromregistration.

The new senior notes will be issued pursuant to the exemption from theregistration requirements of the Securities Act of 1933, as amended (the“Securities Act”), provided by Rule 506(c) of Regulation D promulgatedunder the Securities Act and the exemption from state securities lawrequirements provided by Section 18(b)(4)(E) of the Securities Act.Only beneficial holders of existing notes that are “accredited investors,”as such term is defined in Rule 501 of Regulation D may participate inthe exchange offer. As a result, in addition to completing and returningthe Letter of Transmittal, as a condition to accepting your tender ofexisting notes in the exchange offer, each beneficial owner of existingnotes must (1) complete and return a eligibility questionnaire certifying,among other things, such beneficial owner’s status as an accreditedinvestor, and (2) provide a written confirmation, from one of thefollowing persons or entities that such person or entity has takenreasonable steps, on or after February 1, 2016, to verify that suchbeneficial owner is an accredited investor and has in fact determined thatsuch purchaser is an accredited investor: (1) a registered broker-dealer;(2) an investment adviser registered with the Securities and ExchangeCommission; (3) a licensed attorney who is in good standing under thelaws of the jurisdictions in which he or she is admitted to practice law; or(4) a certified public accountant who is duly registered and in goodstanding under the laws of the place of his or her residence or principaloffice. See “The Exchange Offer — Procedures for Tendering ExistingDates in the Exchange offer” for additional information.

EXPIRATION DATE;ACCEPTANCE OFTENDERS; DELIVERYOF NEW SECURITIES

The exchange offer will expire at 12:00 midnight, New York City time,on Thursday, April 14, 2016, unless we extend it. We reserve the right toextend or amend the exchange offer, in our sole discretion. During anyextension, any existing notes previously tendered and not withdrawn willremain subject to the exchange offer. During any such period, you willhave the right to withdraw any previously tendered notes. We will issuethe new securities promptly following the expiration date upon ourdetermination that the conditions to the exchange offer have beenfulfilled. If we decide for any reason not to accept the existing notes thatany noteholder has tendered for exchange, those existing notes will bereturned to such noteholder without cost promptly after the expiration ortermination of the exchange offer. Any unaccepted existing notestendered by book entry transfer into the exchange agent’s account at TheDepositary Trust Company (“DTC”), as described below, will be

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credited to the tendering holder’s account at DTC. See “The ExchangeOffer — Procedures for Tendering Existing Notes in the ExchangeOffer” for a more complete description of the tender procedures.

WITHDRAWAL RIGHTSAND REVOCATION

Tenders of existing notes may be withdrawn at any time prior to theexpiration date (and any extensions thereto). See “The Exchange Offer— Withdrawal of Tenders.”

CONDITIONS TO THEEXCHANGE OFFER

The exchange offer is subject to customary conditions, which we mayassert or waive. These conditions include (1) 95.0% of the outstandingaggregate principal amount of the existing notes is validly tendered andnot withdrawn; (2) finalizing definitive documentation for the new seniorterm loan with terms and conditions reasonably acceptable to theCompany and MAST; (3) finalizing definitive documentation for thepurchase by the Company of third party loan with a face value of $70.0million for a total purchase price of $31.5 million (the “purchased loan”)and (4) other customary conditions described in this confidential offeringmemorandum. See “The Exchange Offer — Conditions to theCompletion of the Exchange Offer.”

CONSEQUENCES TONOTEHOLDERS NOTTENDERING IN THEEXCHANGE OFFER

Once the exchange offer is completed, any of your existing notes that arenot tendered and exchanged in the exchange offer will remainoutstanding in accordance with their terms, unless otherwise redeemedby the Company. MAST has agreed to permit the Company to borrowfunds under its ABL credit facility to redeem all existing notes thatdidn’t participate in the exchange offer.

CERTAIN U.S. FEDERALINCOME TAXCONSIDERATIONS

The exchange of an existing note in the exchange offer likely willconstitute a taxable exchange for U.S. Federal income tax purposes.Participants in the exchange offer generally should recognize gain or lossequal to the difference between (1) the issue price of any new seniornotes received in exchange for existing notes, and (2) the adjusted basisin the existing notes surrendered in the exchange, plus ordinary incomewith respect to any new senior notes received in payment or interest due.See “Certain United States Federal Income Tax Considerations.”

HOLDERS ARE STRONGLY URGED TO CONSULT THEIRTAX ADVISORS REGARDING THE UNITED STATESFEDERAL, STATE, LOCAL AND ANY FOREIGN TAXCONSEQUENCES OF THE EXCHANGE.

EXCHANGE AGENT;INFORMATION AGENT

Computershare is the exchange agent and Georgeson LLC is theinformation agent for the exchange offer. Noteholders can find theaddress and telephone number for the information agent set forth under“Where You can Find More Information.” See “The Exchange Offer —Exchange Agent.”

FEES AND EXPENSES We will bear all fees and expenses in connection with consummating theexchange offer and restructuring transactions. As a result, noteholdersare not required to pay any brokerage commissions or any other fees orexpenses to the exchange agent or the information agent. See “TheExchange Offer — Fees and Expenses.”

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CERTAINCONSEQUENCES OFFAILURE TOCONSUMMATE THEEXCHANGE OFFER

If the minimum tender condition is not satisfied or waived by us by theexpiration date or we are not able to successfully accomplish the otherelements of the restructuring transactions, we and certain of oursubsidiaries may commence bankruptcy, foreclosure or other liquidationproceedings. See “The Exchange Offer — Consequences of Failure toExchange.”

TERMINATION We reserve the right to terminate the exchange offer at any time prior tothe expiration date if the conditions described above are not met. See“The Exchange Offer — Conditions to the Completion of the ExchangeOffer.”

ADDITIONALINFORMATION

You may obtain additional copies of the confidential offeringmemorandum by calling the information agent at the phone number orwriting to the address set forth under “Where You Can Find AdditionalInformation.”

RISK FACTORS When deciding whether to participate in the exchange offer, you shouldcarefully consider the information in the section titled “Risk Factors”and the other information included in or incorporated by reference intothis confidential offering memorandum.

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Summary Description of the New Securities

SECURITIES OFFERED Up to $125.0 million aggregate principal amount of 2.0% ConvertibleSenior PIK Notes due 2026.

MATURITY DATE April 1, 2026

INTEREST RATE 2.0% per annum on the principal amount, payable semiannually onMarch 15 and September 15 of each year, beginning on September 15,2016. For the first two years after closing, interest on the new seniornotes will be paid in kind by issuing new senior notes in lieu of cash.After the first two years, all interest will be paid in cash if there areavailable funds at the Company. If funds are not available, interest willbe paid in kind. See “Description of the New Senior Notes.”

CONVERSION At any time prior to 5:00 pm Eastern time on the second business dayimmediately preceding April 1, 2026, each $1,000 of principal amount ofsuch notes are convertible into 684.2285 of shares of common stock ofthe Company, determined based on a 25% premium above the 60business day VWAP of our common stock on the launch date, subject torestrictions on conversion that are intended to protect the Company’sability to continue to use its net operating loss carryforwards for federalincome tax purposes. See “Description of the New Senior Notes –Conversion Rights”.

RANKING The new senior notes will be:

senior unsecured obligations of the Company;

senior in right of payment to all existing and futuresubordinated indebtedness of the Company;

effectively subordinated to any future secured indebtedness ofthe Issuer to the extent of the collateral securing thatindebtedness;

structurally subordinate to all of the liabilities of each of theIssuer’s subsidiaries, including the Credit Facilities; and

equal in right of payment with any future senior unsecuredindebtedness of the Company.

None of our subsidiaries will guarantee our obligations under the newsenior notes.

MATERIAL COVENANTS The indenture governing the new senior notes will include a covenantthat limits our ability to consolidate or merge or sell all or substantiallyall of our assets.

The indenture will require the Company to provide unaudited quarterlyfinancial statements and audited annual financial statements as well asother financial information necessary to allow noteholders to trade underRule 144A, in each case, with penalty interest of 0.5% for failure tocomply. See “Description of the New Senior Notes.”

OPTIONAL REDEMPTION We may redeem all or part of the new senior notes at any time on or afterMarch 15, 2021 upon not less than 30 nor more than 60 days’ notice at101%, plus accrued and unpaid interest, if any, to the particularredemption date beginning on the issue date. Prior to March 15, 2021,we may also redeem all or part of the new senior notes at a redemption

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price equal to the sum of 100% of the principal amount, plus accrued andunpaid interest, if any, to the particular redemption date plus a “make-whole” premium.

CHANGE IN CONTROL Upon a fundamental change, as defined in the indenture, each holder ofthe new senior notes will have the right to require us to repurchase someor all of its new senior notes at a purchase price equal to 101% of theprincipal amount of the new senior notes plus accrued and unpaidinterest, if any, to the date of purchase. See “Description of the NewSenior Notes.”

LISTING The new senior notes will not be listed for trading on any nationalsecurities exchange or authorized for quotation on any automatedquotation system.

TRANSFER RESTRICTIONS The new senior notes have not been registered under the Securities Actand may not be offered or sold within the United States except pursuantto an exemption from, or in a transaction not subject to, the registrationrequirements of the Securities Act. See “Plan of Distribution – TransferRestrictions.”

PROCEEDS We will not receive any proceeds from the exchange of the existingnotes for the new senior notes.

BOOK ENTRY; DELIVERYAND FORM

The new senior notes will initially be held only through DTC.

ORIGINAL ISSUE DISCOUNT For at least the first two years after closing, interest on the new seniornotes will be paid in kind by issuing new senior notes in lieu of cash.For U.S. federal income tax purposes, the existence of this option meansthat none of the interest payments on the new senior notes are “qualifiedstated interest”. Consequently, the new senior notes are treated as havingbeen issued with “original issue discount”, and U.S. holders (as definedunder “Certain United States Federal Income Tax Considerations”) arerequired to include the original issue discount in gross income for U.S.federal income tax purposes on a constant yield to maturity basis,regardless of whether interest is paid currently in cash. See “CertainUnited States Federal Income Tax Considerations — Tax Consequencesof Ownership and Disposition of New Senior Notes to US Holders.”

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SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA

The following tables present certain summary consolidated financial and other data as of the dates and forthe periods indicated with respect to the Company. The Company is a holding company and its operations consistentirely of controlling the Nebraska Book Company. The Company’s financial statements and results of operationsare substantially the same as that of Nebraska Book Company. We derived the historical consolidated financial dataas of March 31, 2015 and 2014 and for the fiscal years ended March 31, 2015 and 2014 and for the three monthperiod ended June 30, 2012 and for the nine month period ended March 31, 2013, from the audited consolidatedfinancial statements for such dates, which are included elsewhere in this offering memorandum. We derived thehistorical consolidated financial data as of and for the nine month period ended December 31, 2015 from theCompany’s unaudited condensed consolidated financial statements as of and for such date, which are includedelsewhere in this offering memorandum. The Company’s unaudited condensed consolidated financial statementshave been prepared on the same basis as Company’s audited consolidated financial statements and, in the opinion ofour management, include all adjustments, consisting only of normal and recurring adjustments, necessary for a fairpresentation of the information set forth therein. Certain historical consolidated financial data line items have beenreclassified to conform with the current presentation. Interim financial results are not necessarily indicative ofresults for the full fiscal year or any future reporting period. You should read the information below together with“Capitalization,” and the Company’s consolidated financial statements, including the related notes, includedelsewhere in this offering memorandum.

Predecessor Successor

threemonths

ninemonths fiscal year fiscal year nine months

ended ended ended ended ended

June 30, March 31, March 31, March 31, December 31,

2012 2013 2014 2015 2015

Statement of Operations Date: (unaudited)

Revenue, net of returns $ 23,860 $ 109,301 $ 127,955 $ 118,228 $ 80,596

Cost of goods sold 14,355 55,162 74,942 73,585 51,171

Gross profit 9,505 54,139 53,013 44,643 29,425

Operating expenses:

Selling, general and administrative 11,447 48,084 50,980 51,520 38,348

Depreciation 404 1,937 2,171 2,040 1,213

Amortization 1,667 5,393 7,770 8,232 7,669

Impairment - - - 38 -

Total operating expenses 13,518 55,414 60,921 61,830 47,230

Loss from operations (4,013) (1,275) (7,908) (17,187) (17,805)

Operating (Income) expense:

Interest expense 8,322 22,029 39,675 24,426 18,829

Interest income (14) (46) (9) (14) (24)

Total other expense 8,308 21,983 39,666 24,412 18,805Loss before reorganization items andincome taxes (12,321) (23,258) (47,574) (41,599) (36,610)

Reorganization items, net (275,466) (10,094) - - -Income (loss) from continuing operationsbefore income taxes 263,145 (13,164) (47,574) (41,599) (36,610)

Income tax expense (benefit) - (5,181) (7,014) 93 45

Income (loss) from continuing operations 263,145 (7,983) (40,560) (41,692) (36,655)Gain (loss) from discontinue operations,net of income tax (6,858) 12,922 6,053 (27,834) (2,143)

Net Income (loss) $ 256,287 $ 4,939 $ (34,507) $ (69,526) $ (38,798)

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Predecessor Successorthree

monthsnine

months fiscal year fiscal year nine months

ended ended ended ended ended

June 30, March 31, March 31, March 31,December

31,

2012 2013 2014 2015 2015

Statement of cash flows data: (unaudited)

Net cash provided by (used in)operating activities $ (44,840) $ 66,416 $ 29,007 $ (29,201) $ (49,594)

Net cash provided by (used in)investing activities (3,164) (5,087) (8,446) (15,335) 47,256

Net cash provided by (used in)financing activities (15,834) (78,197) (36,014) 34,966 8,285

Successor

March 31, March 31, December 31,

2014 2015 2015

Balance sheet data: (unaudited)

Cash $ 12,316 $ 2,117 $ 8,015

Inventories 79,729 27,766 18,681

Assets held for sale - 80,079 -

Property, plant and equipment 31,447 12,638 11,592

Total assets 238,323 216,593 140,251

Total debt 121,538 161,914 173,324

Total Stockholders' equity (deficit) 55,761 (13,278) (51,322)

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RISK FACTORS

Exchanging your existing notes for the new senior notes involves a high degree of risk and uncertainty.Failure to exchange your existing notes also involves significant risk. You should carefully consider the risks anduncertainties described below as well as the other information appearing elsewhere in this confidential offeringmemorandum before making a decision whether to participate in the exchange offer. The risks and uncertaintiesdescribed below are intended to highlight risks and uncertainties that are specific to us but are not the only risksand uncertainties that we face. Additional risks and uncertainties, including risks and uncertainties that wecurrently deem immaterial or risks and uncertainties generally applicable to companies that have recentlyundertaken transactions such as the restructuring transactions, may also impair our business, the value of yourinvestment and our ability to pay interest and dividends on, and repay or refinance, the new senior notes.

The information in this confidential offering memorandum includes forward-looking statements, whichinvolve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of numerous factors, including those described in this section and elsewhere in thisconfidential offering memorandum. See “Forward-Looking Statements.”

Risks Related to the Restructuring Transactions

If not enough noteholders tender their existing notes and/or conditions to closing have not been satisfied and, asa result, we fail to consummate the restructuring transactions, we may be unable to pay the amounts due on ouroutstanding debts as they mature, including the interest payment due March 31, 2016 on the existing notes andprincipal payment due on June 30, 2016, and we may be required to seek protection from creditors.

There are certain conditions to the consummation of the restructuring transactions, including thecompletion of the exchange offer. The exchange offer is also subject to customary conditions, which we may assertor waive. These conditions include (1) 95.0% of the outstanding aggregate principal amount of the existing notes isvalidly tendered and not withdrawn; (2) finalizing definitive documentation for the new senior term loan with termsand conditions reasonably acceptable to the Company and MAST; (3) finalizing definitive documentation for thepurchase by the Company of the purchased loan and (4) other customary conditions described in this confidentialoffering memorandum. We refer to the new senior term loan, the purchase of the purchased loan, and the additionaldraw of funds under the existing credit facility necessary to redeem the remaining existing notes not tendered in theExchange Offer as the “restructuring transactions.” See “The Exchange Offer — Conditions to the Completion ofthe Exchange Offer.” If not enough noteholders tender their existing notes and we do not consummate therestructuring transactions, under our current highly-leveraged capital structure, unless we can obtain additionalfinancing, we do not anticipate that we will be able to pay the amounts due on certain of our outstanding debts asthey mature, including the next scheduled interest payment on the existing notes due March 31, 2016, the principalamount of the existing notes at maturity on June 30, 2016 and, depending on our ability to refinance the existingnotes, our existing ABL credit facility. Our failure to make any such payments would constitute a default or an eventthat could constitute an event of default under the terms of the other applicable agreements and indentures governingour indebtedness. In such a situation, we may be unable to secure the additional financing required to satisfy suchobligations and we may have to commence bankruptcy, foreclosure or other liquidation proceedings.

The Company currently intends to take advantage of the applicable 30-day grace period for making thesemi-annual cash interest payment due on March 31, 2016 on the existing notes. However there is no guarantee wewill be able to make such payment in a timely fashion or at all to holders of existing notes if the exchange offer isnot consummated. The cash interest to which holders of the existing notes would otherwise be entitled has beenincluded in the calculation of the amount of new senior notes such noteholders are being offered in the exchangeoffer and will receive in lieu of such cash interest payment.

Even if the restructuring transactions, including the exchange offer, are consummated, there is no guaranteethat we will meet our financial projections. If we do not meet our projections, we could still default in the futureunder our ABL credit facility, the new senior term loan or the new senior notes.

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An alternative to the financial restructuring proposals presented in this confidential offering memorandum maynot be available to us and even if available and completed, may be less attractive than the financial restructuringwe are proposing.

We believe that the completion of the proposed restructuring is critical to our continuing viability. If we donot consummate the restructuring transactions, we will likely consider other alternatives to adjust our capitalstructure. Prior to undertaking this exchange offer, the special committee and the board have carefully consideredother alternatives and been unable to find alternative financing on equivalent terms. An alternative financialrestructuring arrangement may not be available or, if available, may not result in a successful reorganization or beon terms as favorable to our creditors and equity holders as the terms of the financial restructuring we are proposing.

Alternative financial restructuring arrangements may include bankruptcy, foreclosure or other liquidationproceedings. The expenses of any such case would reduce the assets available for payment or distribution to oursecurity holders, including holders of the existing notes. In addition, we believe that a bankruptcy filing (eithervoluntary or involuntary) would not increase the amount of any payment or distribution that holders of the existingnotes would receive. In fact, a bankruptcy filing could reduce such amount and, in any event, would delay receipt ofany such payment or distribution by such holders.

Following the consummation of the restructuring, if we were to commence a bankruptcy case or if we were tobecome the subject of an involuntary bankruptcy case filed by our creditors, your unsecured position in the newsenior notes would be inferior to your current position in the existing notes.

In general, a debt security represents a potential bankruptcy claim equal to its stated principal amount plusaccrued and unpaid interest up to the date a bankruptcy case is commenced. Secured debt securities claims wouldhave priority over unsecured claims to the extent of the value of the security holder’s interest in the collateralsecuring payment of such debt securities. The priority in repayment of each unsecured claim would depend, amongother things, on the entity against which the claim is held and the provisions of any contract, instrument, release,indenture or other agreement governing the priority in repayment of the claim. Holders of equity securities aretreated as holders of interests rather than claims and, as such, rank behind holders of claims in right of repayment.

The existing notes are secured by certain collateral. The holders of the existing notes that receive our newsenior notes in the restructuring will not have priority over unsecured claims to the extent of the value of theholders’ interest in the collateral securing the existing notes in a subsequent bankruptcy case because the new seniornotes would not be secured by collateral. As such, holders of new senior notes would hold unsecured claims.

The interests of funds affiliated with Mast Capital Management LLC (collectively, “MAST”), our majority owner,may be in conflict with your interests.

MAST beneficially owns a majority of our outstanding common stock, the existing notes and ouroutstanding debt other than the existing notes as of March 18, 2016. As a result, MAST currently possesses and willcontinue to retain significant influence over our affairs. MAST’s stock ownership and creditor status may allowMAST to influence our business decisions such as future issuances of our securities, the payments of dividends, ifany, on our common stock, the incurrence of debt by us, and the entering into of extraordinary transactions. Theinterests of MAST as a stockholder, major noteholder, and/or major lender may conflict with your interests.

The acquisition of the purchased loan and the new senior term loan are transactions with an affiliate of theCompany, and the price and other terms may not be fair to the Company or the noteholders.

As part of the restructuring, the Company is purchasing from MAST a loan with a total face value of $70.0million for a total purchase price of $31.5 million. In addition, MAST is providing the new senior term loan of $31.5million, for the primary purpose of acquiring the purchased loan. MAST is a major shareholder of the Company, theprimary lender to the Company, and holds a majority of the existing notes. While the transactions are beingnegotiated with MAST independently by the special committee, there can be no assurance that the price for thepurchased loan represents a fair price to the Company, or that the other terms of the transactions are fair to theCompany and the other noteholders. While the committee has consulted with A&M, we have not retained, and donot intend to retain, an independent valuation expert to perform a valuation of the purchased loan. The purchased

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loan will represent a significant portion of the Company’s assets. If the Company recognizes losses on the purchasedloan, the Company’s ability to repay the existing notes or the new senior notes could be significantly impaired.

The borrower under the loan we are purchasing could default on its obligations, which could have a materialadverse effect on our financial condition.

As part of the restructuring, the Company is purchasing from MAST a loan with a total face value of $70.0million. The loan represents an obligation of a privately-held company, Sonifi Solutions Inc. As a private company,there is very limited information available for the borrower, and we are unable to provide any financial informationto investors. We reviewed confidential information made available to us, subject to a confidentiality agreement,including the financial statements of the company. If the borrower fails to make the scheduled payments on thepurchased loan, we would suffer significant losses. In addition, we are not aware of any meaningful resale marketfor the purchased loan. In making a decision whether to participate in the exchange offer, noteholders should notrely on the ability of this borrower to make payments of principal or interest. See “The Restructuring Transactions –Purchased Loan.”

We have not obtained a third-party determination that the exchange offer is fair to the existing noteholders.

We are not making a recommendation as to whether existing noteholders should participate in the exchangeoffer. While the special committee has independently negotiated the terms of the new senior notes, this exchangeoffer and the restructuring transactions independently on behalf of the Company, we have not retained, and do notintend to retain, any unaffiliated representative to act solely on behalf of the existing noteholders for purposes ofnegotiating the exchange offer or preparing a report concerning the fairness of the exchange offer. No assurance isgiven that the value of the new senior notes received in the exchange offer will in the future equal or exceed thevalue of the existing notes tendered, and we do not take a position as to whether you should participate in theexchange offer.

Recognition of cancellation of debt income may increase our income tax liability and adversely impact ourfinancial position.

The Company may recognize cancellation of debt income for U.S. federal income tax purposes as a resultof the exchange offer if, and to the extent, the outstanding balance (principal plus accrued but unpaid interest) of theexisting notes exceeds the issue price of the new senior notes delivered in the exchange offer. The Companybelieves we will have sufficient consolidated tax loss carryforwards to offset any such income for U.S. federalincome tax purposes (although there may be some liability for federal alternative minimum tax and state incometax). However, if it were determined that the available tax loss carryforwards were significantly less than the amountestimated or were otherwise limited (such as by reason of an annual limitation under section 382, as discussedbelow), the Company could have a significantly greater income tax liability as a result of the exchange offer.

The Company may not be allowed to deduct interest with respect to the new senior notes.

For U.S. federal income tax purposes, no deduction is allowed for interest paid or accrued with respect toconvertible debt if it is substantially certain that the holders will voluntarily convert the debt into equity. The properapplication of this provision in the case of the new senior notes is subject to varying interpretations, depending inpart on facts and circumstances existing on the exchange date. A holder of a new senior note may at its optionconvert the new senior notes into common stock of the Company at any time, subject to the limitation due to netoperating losses (“NOLs”) described below. The Company currently intends to take the position, and the three-yearprojections so reflect (at the stated interest rate), that the Company is entitled to interest deductions in respect of thenew senior notes. Nevertheless, there is no assurance that the Internal Revenue Service (“IRS”) would not take acontrary position, or that any change in facts and circumstances would not result in the Company changing itsposition.

In addition, even if not disallowed, any interest deductions with the respect to such new senior notes wouldcease upon an actual conversion of such new senior notes into common stock.

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If a bankruptcy petition were filed by or against the Company, holders of the new senior notes mayreceive a lesser amount for their claim than they would have been entitled to receive under the indenturegoverning the new senior notes

If a bankruptcy petition were filed by or against the Company under the U.S. Bankruptcy Code after theissuance of the new senior notes, the claim by any holder of the new senior notes for the principal amount of the newsenior notes may be limited to an amount equal to the sum of: (1) the original issue price for the new senior notes;and (2) the portion of the OID that does not constitute “unmatured interest” for purposes of the U.S. BankruptcyCode. Any OID that was not amortized as of the date of the bankruptcy filing would constitute unmatured interest.Accordingly, holders of the new senior notes under those circumstances may receive a lesser amount than theywould be entitled to under the terms of the indenture governing the new senior notes, even if sufficient funds areavailable.

Our ABL credit facility and indenture governing the existing notes impose and the new senior term loan andindenture governing the new senior notes will impose significant operating and financial restrictions, which mayprevent us from pursuing certain business opportunities and taking certain actions.

Our ABL credit facility and indenture governing the existing notes currently impose and the new seniorterm loan and indenture governing the new senior notes will impose operating and financial restrictions on us. Theserestrictions limit or prohibit, among other things, our ability to:

incur additional indebtedness or issue certain preferred stock;

pay dividends, redeem subordinated debt or make other restricted payments;

make certain investments or acquisitions;

issue stock of subsidiaries;

grant or permit certain liens on our assets;

enter into certain transactions with affiliates;

merge, consolidate or transfer substantially all of our assets;

incur dividend or other payment restrictions affecting certain of our subsidiaries;

take actions in violation of certain financial maintenance covenants;

transfer, sell or acquire assets, including capital stock of our subsidiaries; and

change the business we conduct.

These covenants could adversely affect our ability to finance our future operations or capital needs,withstand a future downturn in our business or the economy in general, engage in business activities, includingfuture opportunities that may be in our interest, and plan for or react to market conditions or otherwise execute ourbusiness strategies. A breach of any of these covenants could result in a default in respect of the ABL credit facility,existing notes indenture, new senior term loan or new senior notes indenture. If a default occurs, the relevant lendersor holders of such indebtedness could elect to declare the indebtedness, together with accrued interest and other fees,to be immediately due and payable and proceed against any collateral securing that indebtedness. Acceleration ofour other indebtedness could result in a default under the terms of the indenture governing the new senior notes.There is no guarantee that we would be able to satisfy our obligations if any of our indebtedness is accelerated. See“Risks Related to Our Indebtedness.”

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The restructuring transactions could cause the Company to become subject to the Investment Company Act,which could impose costs and burdens on the Company.

After the purchase of the purchased loan, the Company will have a significant portion of its assets investedin, and will earn a significant amount of its income from, its passive investment in that loan. The Company will notbe registered with the Securities and Exchange Commission as an investment Company under the InvestmentCompany Act of 1940, as amended (the “Investment Company Act”). Investors therefore will not benefit from theprotection afforded by that law. The Company believes that is not required to register under the InvestmentCompany Act because it is primarily engaged in an operating business. If the Company becomes subject toregistration under the Investment Company Act, the Company would incur significant additional expenses tocomply with that law, and there would be significant and burdensome limitations placed on the Company’soperations. The expenses and burdens imposed by the Investment Company Act could adversely affect theCompany’s results of operations and liquidity, which could adversely affect the Company’s ability to meet itsobligations under the new senior notes, the ABL credit facility and the new senior term loan.

Risks Related to the Exchange Offer

The consummation of the exchange offer may be delayed or may not occur.

We are not obligated to consummate the exchange offer under certain circumstances and unless and untilcertain conditions are satisfied. Even if the exchange offer is completed, it may not be completed on the scheduledescribed in this confidential offering memorandum and eligible holders participating in the exchange offer mayhave to wait longer than expected to receive their new senior notes, during which time such holders will not be ableto effect transfers of their existing notes tendered in the exchange offer.

Eligible holders may not receive new senior notes in the exchange offer if the procedures for the exchange offerare not followed.

We will issue the new senior notes in exchange for the existing notes only if eligible holders tender theexisting notes and each delivers a properly completed and duly executed letter of transmittal and other requireddocuments at or prior to the expiration date. Eligible holders should allow sufficient time to ensure timely deliveryof the necessary documents. None of the Company, the exchange agent, information agent, the trustee under theindenture governing the existing notes or the trustee under the indenture governing the new senior notes or any otherperson or entity is under any duty to give notification of defects or irregularities with respect to tenders of theexisting notes. If a beneficial owner of existing notes that is an eligible holder has its existing notes registered in thename of a broker, dealer, commercial bank, trust company or other nominee and the holder wish to tender suchexisting notes in the exchange offer, such beneficial owner should promptly contact the person in whose name itsexisting notes are registered and instruct that person to tender on its behalf. Beneficial owners should be aware thattheir broker, dealer, commercial bank, trust company or other nominee may establish its own earlier deadline forparticipation in the exchange offer. Accordingly, beneficial owners wishing to participate in the exchange offershould contact their broker, dealer, commercial bank, trust company or other nominee as soon as possible in order todetermine the time by which such owner must take action in order to participate.

The minimum amount of existing notes that must be tendered as a condition to the consummation of theexchange offer is subject to change, and we will extend withdrawal rights if we make such a change.

An active trading market for the new senior notes may not develop, and holders of the new senior notes may notbe able to sell their new senior notes when they want and, if they do sell their new senior notes, they may not beable to receive the price they want.

Because the exchange offer will be the first issuance of the new senior notes, there has been no previoustrading market for the new senior notes you will receive in the exchange offer. The new senior notes will not belisted for trading on any national securities exchange or authorized to be quoted in any inter-dealer quotation systemof any national securities association, and we do not intend to apply for any such listing or quotation. We do notknow the extent to which investor interest will lead to the development of a trading market for the new senior notesor how liquid any such market might be. Moreover, the liquidity of any market for the new senior notes will also

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depend upon the number of holders of the new senior notes, our financial performance, the market for similarsecurities and the interest of securities dealers in making a market in the new senior notes. We cannot assurenoteholders that an active trading market will develop or, if it does, at what prices the new senior notes may trade.Therefore, noteholders may not be able to sell the new senior notes when they want and, if they do sell, they may notbe able to receive the price they want.

You may not receive any cash interest payments on the new senior notes.

The terms of the new senior notes call for in kind interest payments for the first two years and thereafterinterest payments which will be in cash if we have sufficient available cash. Otherwise those payments also will bein kind. In recent periods we have experienced negative cash flow from operations and we expect this trend tocontinue for more than two years. There can be no assurance that we will have cash available to make any cashinterest payments.

We are relying on an exemption from securities registration requirements.

The new senior notes are being offered to prospective investors in reliance on a private offering exemptionfrom registration pursuant to Regulation D under the Securities Act and corresponding exemptions from applicablestate securities laws. If the company fails to qualify for any such exemption, investors in this offering may have theright to rescind their purchase of such new senior notes. It is possible that if an investor should seek rescission, suchinvestor might succeed. If a number of Investors were successful in seeking rescission, the company would facesevere financial demands that would materially and adversely affect the company and thus the investment of thenon-rescinding investors.

You may not be able to convert your new senior notes into common stock, or transfer common stock issuableupon conversion, due to a transfer restriction in our certificate of incorporation and in the new senior notes.

Our amended and restated certificate of incorporation has a provision prohibiting transfers of our commonstock to the extent that such transfers would cause the Company to lose its ability to continue to use its net operatingloss carryforwards for federal income tax purposes. The indenture governing the new senior notes also containsrestrictions on the conversion of the new senior notes into common stock, including if such conversion wouldnegatively impact the Company’s ability to continue to use its net operating loss carryforwards. This restrictioncould prevent you from seeking the intrinsic value of the common stock underlying the new senior notes. See“Description of The New Senior Notes,” “Description of Capital Stock — Transfer Restrictions” and “CertainUnited States Federal Income Tax Considerations.”

If the restructuring transactions are consummated, noteholders that do not exchange their existing notes in theexchange offer will be subject to certain risks.

Noteholders that do not exchange their existing notes will not be entitled to receive any amount of the newsenior notes delivered to tendering noteholders.

Consummation of the exchange offer could adversely affect the trading market, if any, for any untenderedexisting notes. We may leave any untendered existing notes outstanding. We also reserve the right, but are under noobligation, to purchase such untendered existing notes (whether pursuant to open market purchases, negotiatedtransactions, or otherwise, and whether for consideration similar to or different from that offered in the exchangeoffer), defease such existing notes pursuant to the terms of the indenture governing the existing notes (the “existingindenture”) or as otherwise agreed with the holders of such existing notes, or to redeem such existing notes inaccordance with their terms, subject, however, to any restrictions under our then existing indebtedness.

If an insufficient number of existing notes is tendered and/or the Company determines that it is, or will be,unable to, or that it is more advantageous or expeditious not to, complete the restructuring transactions, theCompany will consider all financial alternatives available to us at such time, which is likely to result in areorganization under federal bankruptcy laws. Any reorganization that may result could be on terms less favorable tothe noteholders than the terms of the exchange offer. If a protracted and non-orderly reorganization were to occur,

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there is a risk that the ability of the noteholders to recover their investments would be substantially delayed andmore impaired than under the proposed restructuring transactions.

MAST has agreed that, upon attaining the minimum tender condition of 95.0% of the existing notes, it willlend a subsidiary of the Company sufficient funds to redeem all existing notes. However, there can be no assurancethat the minimum tender condition will be met or that MAST will provide such financing.

To the extent holders of the existing notes have any claims against us resulting from their acquisition orownership of existing notes, they will give up those claims if they exchange their existing notes.

By tendering the existing notes in the exchange offer, upon closing of the exchange offer, holders of theexisting notes will be deemed to have released and waived any and all claims they, their successors and their assignshave or may have had against:

us, our subsidiaries, our affiliates and their stockholders, and

our directors, officers, employees, attorneys, accountants, advisors, agents and representatives, ineach case whether current or former, as well as the directors, officers, employees, attorneys,accountants, advisors, agents and representatives of our subsidiaries, our affiliates and ourstockholders

arising from, related to, or in connection with, their acquisition or ownership of the existing notes, including claimsfor accrued interest, whether those claims arise under federal or state securities laws or otherwise. Because it is notpossible to estimate the likelihood of success in pursuing these legal claims or the magnitude of any recovery towhich they ultimately might be entitled, it is possible that the consideration noteholders receive in the exchangeoffer will have a value less than the value of any legal claims noteholders are relinquishing. Holders who do nottender their existing notes for exchange and former holders who have already sold their existing notes will continueto have the right to prosecute their claims against us.

Holders of existing notes who participate in the exchange offer will lose their rights under the existing indenture.

Noteholders who tender their existing notes will receive new senior notes but will lose all rights associatedwith the existing notes. The existing indenture obligates us to pay noteholders a certain amount of annual interest,which tendering noteholders will forfeit in favor of the interest payable on the new senior notes and the principal ofthe new senior notes.

The conversion of the new senior notes may limit our ability to use our net operating losses to offset futuretaxable income.

An “ownership change” of the Company for U.S. Federal income tax purposes occurs generally when thereis a cumulative change of greater than 50% in our stock ownership within a three (3) year period. Such an ownershipchange can significantly limit the amount of pre-ownership change net operating losses that we may use during thepost-ownership change periods. The conversion of new senior notes, as well as any future equity issuances andtransactions among shareholders, separately or in the aggregate, may trigger an ownership change. If an ownershipchange of the Company occurs, it may limit the amount of net operating losses available to us to offset futuretaxable income and may reduce the amount of cash available to us to satisfy our obligations. Because of theprotections built into the terms of the new senior notes and our amended and restated certificate of incorporation, wedo not expect the conversion of the new senior notes, alone, or together with other equity issuances, to contribute toan ownership change within the three years following the issuance of the new senior notes. See “Certain U.S.Federal Income Tax Considerations — Tax Consequences of the Exchange Offer to the Company.”

You may not be able to exercise your conversion rights if the exercise would adversely affect our net operatingloss (NOL) carryforwards.

The terms of the new senior notes provide restrictions on conversion of the new senior notes intended toprevent the loss of the Company’s ability to use its current NOLs. As of June 30, 2015 we have $108.1 million in

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unused NOLs. If the conversion of the new senior notes created a significant change in the ownership of theCompany, all or a portion of the NOLs could be lost. See “Certain United States Federal Income TaxConsiderations.”

You will be required to pay U.S. federal income tax on the new senior notes even if we do not pay cash interest.

Because the new senior notes require us, in certain circumstances, to pay interest as PIK interest, none ofthe interest payments on the new senior notes will be “qualified stated interest” for federal income tax purposes evenif cash interest instead may be paid in some interest periods. Consequently, the new senior notes will be treated asissued with original issue discount (“OID”) for federal income tax purposes, and U.S. holders will be required toinclude the OID in gross income regardless of whether interest is paid currently in cash. See “Certain United StatedFederal Income Tax Considerations.”

Adjustment to the conversion price of the new senior notes may result in a taxable deemed distribution to you.

The conversion price of the new senior notes is subject to adjustment under certain circumstances, such asin the event of certain cash or property distributions with respect to shares of our common stock. The presence orabsence of an adjustment to the conversion prices at which such notes are convertible may result in constructivedistributions to the holders of such securities, or in certain cases to existing common stockholders, which would betaxable similar to an ordinary distribution on stock.

Your decision to tender your existing notes for new senior notes exposes you to the risk of nonpayment for alonger period of time.

The outstanding existing notes mature on June 30, 2016, and the new senior notes will mature on April 1,2026. If following the maturity date of the existing notes, but prior to the maturity date of the new senior notesreceived in exchange for those existing notes, we were to become subject to a bankruptcy or similar proceeding, theholders of the existing notes who did not exchange their existing notes for new senior notes could have been paid infull and there would exist a risk that holders who exchanged their existing notes for new senior notes would not bepaid in full, if at all. The market price of new senior notes may also decline during that period if our creditworthinessdeclines. Your decision to tender your existing notes should be made with the understanding that the lengthenedmaturity of the new senior notes exposes you to the risk of nonpayment or a decline in our creditworthiness for alonger period of time.

Our ability to repurchase the new senior notes upon a fundamental change may be limited.

Upon a fundamental change, as defined in the indenture, we will not increase the conversion rate on theoutstanding new senior notes. Instead, upon the occurrence of specific change of control events, each holder of thenew senior notes will have the right to require us to repurchase all outstanding new senior notes at 101% of theprincipal amount thereof plus accrued and unpaid interest to the date of repurchase. If the holder does not exercisethis right, we may repurchase all outstanding new senior notes at the applicable redemption price, subject to anyvalid conversion election prior to the redemption date. In addition, lenders under our ABL credit facility may havethe right to accelerate the indebtedness thereunder upon a fundamental change. Any of our future debt agreementsmay contain a similar provision regarding the lender’s right to accelerate the indebtedness upon a fundamentalchange. However, it is likely that we will not have sufficient funds at the time of a fundamental change to make therequired repurchase of new senior notes or repayment of our other indebtedness, unless we are able to refinance thenotes. There is no assurance that we will be able to refinance the new senior notes in such an event. The terms ofour ABL credit facility also will limit our ability to purchase your new senior notes under certain conditions. Any ofour future debt agreements may contain similar restrictions.

If we fail to repurchase any new senior notes submitted in a fundamental change purchase offer, it wouldconstitute an event of default under the indenture governing the new senior notes which, in turn, would constitute anevent of default under our ABL credit facility and could constitute an event of default under our other indebtedness,even if the change of control itself would not cause a default. Important corporate events, such as takeovers,recapitalizations or similar transactions, may not constitute a fundamental change under the indenture governing the

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new senior notes and thus not permit the holders of the new senior notes to require us to repurchase or redeem thenew senior notes. See “Description of the New Senior Notes — Fundamental Change.”

We can enter into transactions like recapitalizations, reorganizations and other highly leveraged transactions thatdo not constitute a fundamental change but that could adversely affect the holders of the new senior notes.

Certain important corporate events, such as leveraged recapitalizations that would increase the level of ourindebtedness, would not constitute a fundamental change under the indenture governing the new senior notes.Therefore, we could, in the future, enter into certain transactions, including acquisitions, reorganizations, refinancingor other recapitalizations, that would not constitute a change of control under the indenture, but that could increasethe amount of indebtedness outstanding at such time or otherwise affect our capital structure or credit rating.

You may not be able to determine when a fundamental change giving rise to mandatory repurchase rights hasoccurred following a sale of “substantially all” of our assets.

The definition of fundamental change in the indenture governing the new senior notes includes a phraserelating to the direct or indirect sale, conveyance, transfer, lease or other disposition of “all or substantially all” ofour assets. There is no precise established definition of the phrase “substantially all” under applicable law.Accordingly, your ability to require us to repurchase new senior notes as a result of a sale, conveyance, transfer,lease or other disposition of less than all of our assets to another individual, group or entity may be uncertain.

None of our existing or future subsidiaries will be guarantors with respect to the new senior notes, and therefore,any claims you may have in respect of the new senior notes will be structurally subordinated to the liabilities ofthose subsidiaries.

None of our existing or future subsidiaries will guarantee the new senior notes. If any of our subsidiariesbecomes insolvent, liquidates, reorganizes, dissolves or otherwise winds up, holders of its indebtedness and otherliabilities (including its trade creditors) generally will be entitled to payment on their claims from the assets of suchsubsidiary before any of those assets would be made available to us. Consequently, your claims in respect of the newsenior notes will be structurally subordinated to all of the existing and future liabilities of our subsidiaries. See“Description of the New Senior Notes.”

You will not be entitled to any registration rights with respect to the new senior notes or the common stockissuable upon conversion of the new senior notes under the Securities Act and any state securities laws, and thereare restrictions on your ability to transfer or resell the new senior notes or the common stock issuable uponconversion of the new senior notes without registration under applicable securities laws.

The new senior notes and the common stock issuable upon conversion of the new senior notes are beingoffered and sold pursuant to an exemption from registration under federal and applicable state securities laws. Thenew senior notes and the common stock issuable upon conversion of the new senior notes have not been registeredunder the Securities Act or any state securities laws. Furthermore, as a holder of the new senior notes, you will nothave any registration rights with respect to the new senior notes or the common stock issuable upon conversion ofthe new senior notes under the Securities Act or any state securities laws. As a result, you may transfer or resell thenew senior notes or the common stock issuable upon conversion of the new senior notes in the United States only ina transaction exempt from the registration requirements of federal and applicable state securities laws that meets therequirements set forth herein or pursuant to an effective registration statement, and you may be required to bear therisk of your investment for an indefinite period of time. The exemption under Rule 144 will not be available untilone year after the closing of the exchange offer. Resales under Rule 144 are available only if there is currentinformation available regarding the Company. The Company has had instances in the past where it was unable tomaintain the availability of current information on a timely basis.

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Risks Relating to Our Business, Strategy and Operations

Our business, strategy, and operations are subject to numerous risks and uncertainties, including, withoutlimitation, the following:

We have a recent history of operating losses, and we will need additional capital to continue our operations.

In recent years we have incurred significant operating losses. We have struggled with profitability over theyears and continue to incur losses from operations. Our revenues have been reduced following the sale of theCollege Stores Division and our current revenues are insufficient to cover operating expenses. We expect to incuradditional losses. If we are unable to execute our business plan, we may never generate sufficient revenue, incomeand cash flows to support our operations.

We have recently breached our covenant to provide timely financial information as required in the indenture forthe existing notes and we may be unable to comply with the similar covenant in the indenture for the new seniornotes.

We recently breached the covenant to provide timely information. After the exchange offer, if we fail tocomply with the covenant to provide timely financial, we will incur penalty interest of 0.5% on the outstanding newsenior notes.

We face competition in our markets, which could adversely impact our revenue levels, profit margins and abilityto acquire an adequate supply of used textbooks.

Our industry is highly competitive. A large number of actual and potential competitors exist, some ofwhich are larger than us and have substantially greater resources. Revenue levels and profit margins could beadversely affected if we experience increased competition in the markets in which we currently operate or inmarkets in which we will operate in the future. In addition, the increased competition may adversely impact ourability to acquire an adequate supply of used textbooks. Also, we may face increased competition from publishers orthird parties providing electronic books in a more desirable format.

We experience competition from alternative sources of textbooks for students (such as websites designed torent or sell textbooks and rent e-books, other digital content and other merchandise directed to students; on-lineresources; publishers selling or renting directly to students; and print-on-demand textbooks) and from the use ofcourse packs (which are collections of copyrighted materials and professors’ original content which are produced bycollege bookstores and sold to students), all of which have the potential to reduce or replace the need for textbookssold through college bookstores. A substantial increase in the availability or the acceptance of these alternatives as asource of textbooks and textbook information could significantly reduce college students’ use of college bookstoresand/or the use of traditional textbooks and thus adversely impact our revenue levels and profit margins.

We are also experiencing growing competition from technology-enabled student-to-student transactionsthat take place over the internet. These transactions, whereby a student enters into a transaction directly with anotherstudent for the sale and purchase of a textbook, provide competition by reducing the supply of textbooks available tous for purchase and by reducing the sale of textbooks through college bookstores. While these transactions haveoccurred for many years, prior to the internet these transactions were limited by geography, a lack of informationrelated to pricing and demand, and other factors. A significant increase in the number of these transactions couldadversely impact our revenue levels and profit margins.

Over the years, we believe an increasing number of institution-owned college bookstores have decided tooutsource or “contract-manage” the operation of their bookstores. The leading managers of these bookstores includeone of our principal competitors in the wholesale textbook distribution business. Contract-managed bookstoresprimarily purchase their used textbook requirements from and sell their available supply of used textbooks to theiraffiliated operations. A significant increase in the number of contract-managed bookstores operated by ourcompetitors, particularly at large college campuses, could adversely affect our ability to acquire an adequate supplyof used textbooks. Also, college stores on smaller campuses tend to work exclusively with only one contract-

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managed supplier, which has the effect of limiting our ability to buy books and add new accounts on the smallercampuses where our competitors already have a presence.

We believe all of these competitive factors have contributed to a decline in textbooks sold in the Textbookdivision in recent years.

Our business is impacted by the general health of the economy and the credit markets, and declines in consumerspending or other conditions negatively affecting the economy may reduce student spending and adversely affectour future results of operations.

Since the recession beginning in 2008, the global economic environment has been characterized by weakeconomies, high unemployment rates and volatile financial markets. While the global economy appears to beimproving since 2008, further declines in consumer confidence and an unstable economic environment contribute to,among other things, reduced funding levels for colleges and universities and decreased spending by students.Decreases in student enrollment in colleges and universities due to the lack of financial aid and other sources offunding for education, along with any related decreases on spending by students on textbooks and other generalmerchandise, could have a material adverse impact on our revenues and results of operations.

We may be unable to obtain a sufficient supply of used textbooks, which could adversely impact our revenuelevels and profit margins.

Our ability to purchase a sufficient number of used textbooks largely determines our used textbook salesfor future periods. Successfully acquiring books typically requires a visible presence on college campuses at the endof each semester and during the term, which requires hiring a significant number of temporary personnel. Textbookacquisition also depends upon college students’ willingness to sell their used textbooks at the end of each semester.The unavailability of sufficient personnel or a shift in student preferences, could impair our ability to acquiresufficient used textbooks to meet our sales objectives, thereby adversely affecting revenue levels and profit margins.In addition, our supply of used textbooks significantly decreased in fiscal 2015 as a result of the sale of our CollegeStores Division.

Publishers may not continue to increase prices of textbooks annually, which could adversely impact our revenuelevels and profits.

Our ability to increase our used textbook prices each fiscal year depends on annual price increases on newtextbooks implemented by publishers. The failure of publishers to continue annual price increases on new textbookscould adversely impact our revenue levels and profits.

Publisher practices regarding new editions and materials packaged with new textbooks could change, therebyreducing the supply of used textbooks available to us and adversely impacting our revenue levels and profits.

Publishers have historically produced new editions of textbooks every two to four years. Changes in thebusiness models of publishers to accelerate the new edition cycle or to significantly increase the number oftextbooks with other materials packaged or bundled with them could reduce the supply of used textbooks availableto us, thereby adversely impacting our revenue levels and profits.

The textbook market, and the publishing industry generally, is changing, with electronic forms of textbookscontinuing to replace traditional print media, and our business model must continue to evolve to meet currentand future student needs or our business and results of operations could be materially and adversely impacted.

Traditionally, new and used textbooks were published only in print form. In recent years, innovations intechnology have led to a rise in electronic publishing. For instance, in 2008 digital textbooks had less than 1% unitmarket share, while in 2015 that share increased to 9%. The print textbook business is highly capital intensive andpresents both business planning and logistical challenges. Our investments in and the growth of our print textbookbusiness are subject to risks as a result of changes taking place in the publishing industry and the increasing shifttoward digital and online content. If a transition to electronic textbooks occurs faster than we anticipate, we may endup with excess inventory that we would need to write off. As we experience reduced demand for print textbooks

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and increased demand for electronic media, if we fail to adapt our methods of marketing, hiring, and investing incapital resources, our results of operations, and our business generally, may be materially and adversely affected.

We purchase and price our textbooks based on our past experience and anticipated levels of demand. Our grossmargins may decline if actual results differ materially from our assumptions.

We typically plan our textbook purchases based on factors such as pricing, our demand forecast for themost popular titles, and estimated timing of edition changes. These factors are highly unpredictable and canfluctuate substantially, especially if pricing competition becomes more intense or demand is reduced due toseasonality or other factors. If our assumptions used in purchasing and pricing are incorrect, we may be unable tosatisfy student demand or we may have to incur significantly increased cost in order to do so, in which event ourstudent satisfaction and results of operations could be affected adversely. Conversely, if we attempt to mitigate thisrisk and acquire more copies than needed to satisfy student demand, then our gross margins would be affectedadversely.

Our business is subject to seasonal business swings, and our business could be materially adversely impacted ifwe fail to manage our cash appropriately or if sales fall below our expectations during certain seasons.

Our business experiences seasonal business swings. The college and university semester and quarterlyschedules drive our business cycle and require us to make large orders and receive large shipments of new textbooksand general merchandise between mid-June and August and again between mid-October and December each year inadvance of the “back-to-school” rush. This seasonality requires us to manage our cash flows over the course of theyear. If sales were to fall substantially below what we would normally expect during certain periods, our annualfinancial results would be adversely affected and our ability to service our debt may also be adversely affected.

We face technology-related risks related to system interruption and potential data loss or other security breaches.

With respect to our information technology and e-commerce technology platforms, such as PRISM andWinPRISM, we may experience system interruptions and delays that make our websites and services unavailable orslow to respond and prevent us from efficiently fulfilling orders or providing services to third parties, which mayreduce our net sales and the attractiveness of our products and services. If we are unable to continually add softwareand hardware, effectively upgrade our systems and network infrastructure and take other steps to improve theefficiency of our systems, it could cause system interruptions or delays and adversely affect our operating results. Inaddition, our computer and communications systems and operations could be damaged or interrupted by fire, flood,power loss, telecommunications failure, earthquakes, acts of war or terrorism, acts of God, computer viruses,physical or electronic break-ins, and similar events or disruptions. Our online applications are also subject tosecurity breaches that could potentially expose us or third parties to a loss or misuse of data, which could adverselyaffect our operating results, result in litigation or potential liability, or otherwise harm our business or reputation.

We are, from time to time, subject to litigation, which, if adversely determined, could result in substantial losses.

We are, from time to time, during the ordinary course of operating our business, subject to variouslitigation claims and legal disputes, including contract, lease, and employment claims. Certain litigation claims maynot be covered entirely or at all by our insurance policies or our insurance carriers may seek to deny coverage. Inaddition, litigation claims can be expensive to defend and may divert our attention from the operations of ourbusiness. Further, litigation, even if without merit, can attract adverse media attention. As a result, litigation canhave a material adverse effect on our business and, because we cannot predict the outcome of any action, it ispossible that adverse judgments or settlements could significantly reduce our earnings or result in losses.

We are subject to the credit risk of our customers.

We provide credit to our customers in the normal course of business and generally do not require collateralin extending such credit. This exposure could have an adverse effect on our business, financial condition, results ofoperations, and cash flow. In addition, we may need to make credit decisions that could cause our business todecline, or the collection of certain receivables could become impossible and that we would need to write off.

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Increased prices for raw materials or finished goods used in our products and/or interruptions in deliveries ofraw materials or finished goods could adversely affect our profitability, margins, and revenues.

The principal raw materials used by our suppliers include paper, various fabrics, and plastics. The prices wepay our suppliers for new textbooks, clothing, and general merchandise are dependent in part on the market price forraw materials used to produce them. The price and availability of such raw materials may fluctuate substantially,depending on a variety of factors, including demand, crop yields, weather, supply conditions, transportation costs,energy prices, work stoppages, government regulation, economic climates, and other unpredictable factors. Any andall of these factors may be exacerbated by global climate change. Fluctuations in the price and availability of rawmaterials to our suppliers have not materially affected our profitability in recent years. However, increases in rawmaterial costs, together with other factors, might cause an increase in the cost of goods for our suppliers which maybe passed onto us through higher prices.

We may be liable if our suppliers fail to comply with copyright laws.

Substantially all of the products we sell are subject to copyright laws and licenses that limit the manner andgeographic area in which these products may be sold and provide royalties to the copyright owners. Any sales ofthese products in violation of these laws and licenses by anyone in the chain of distribution may subject us tomonetary damages and confiscation of the products. We distribute an extensive selection of titles from differentauthors and artists throughout numerous jurisdictions and rely primarily on our suppliers to ensure payment ofappropriate royalties and compliance with copyright laws, some of which may be conflicting or not clearlydeveloped. Although we have not experienced a material loss due to copyright violations, future copyright violationsby someone in our distribution channel may adversely affect our business.

We face data security risks with respect to personal information.

Our business also involves the receipt and storage of personal information about customers and employees.Our use of personal information is regulated at the international, federal and state levels. Privacy and informationsecurity laws and regulations change from time to time, and compliance with them may result in cost increases dueto necessary systems changes and the development of new processes. If we fail to comply with these laws andregulations, it could be subjected to legal risk. In addition, even if we fully comply with all laws and regulations andeven though we have taken significant steps to protect personal information, we could experience a data securitybreach and our reputation could be damaged, possibly resulting in lost future sales or decreased usage of credit anddebit card products. Because the techniques used to obtain unauthorized access, disable or degrade service, orsabotage systems, change frequently and often are not recognized until launched against a target, we may be unableto anticipate these techniques or to implement adequate preventative measures. A party that is able to circumventour security measures could misappropriate our or our users’ proprietary information and cause interruption in itsoperations. Any compromise of our data security could result in a violation of applicable privacy and other laws orstandards, significant legal and financial exposure and a loss of confidence in our security measures, which couldharm the business. Data security breaches may also result from non-technical means, such as intentional orunintentional actions by employees.

Increases in labor costs, potential labor disputes, and work stoppages at our facilities or the facilities of oursuppliers could materially adversely affect our financial performance.

Our financial performance is affected by the availability of qualified personnel and the cost of labor. As ofDecember 31, 2015, we employed approximately 293 full time employees, 12 part time employees, and40 temporary workers. If our workers were to engage in a strike, a work stoppage, or other slowdowns, we couldexperience disruptions of our operations. Such disruptions could result in a loss of business and an increase inoperating expenses, which could reduce profit margins. In addition, our labor force, which currently is non-unionized, may become subject to labor union organizing efforts, which could cause us to incur additional laborcosts and increase the related risks currently faced. Strikes, work stoppages, or slowdowns experienced by thesesuppliers and customers could result in slowdowns or closures of facilities where components of our products aremanufactured or delivered. Any interruption in the production or delivery of these components could reduce sales,increase costs, and have a material adverse effect on our business.

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We may need additional capital, and there is no guarantee that additional capital will be available on favorableterms, if at all.

Our textbook and general merchandise business is highly capital intensive. Although we currentlyanticipate that our available funds and cash flow from operations will be sufficient to meet our cash needs for theforeseeable future, we may require additional financing, particularly if the investment required to fund our textbookand general merchandise business is greater than we anticipated or we choose to invest in new technologies orcomplementary businesses or change our business model. Our ability to obtain financing will depend, among otherthings, on our development efforts, business plans, operating performance and condition of the capital markets at thetime we seek financing. There can be no assurance that additional financing will be available to us on favorableterms when required, or at all.

Our business will suffer if certain of our key officers or employees discontinue their employment.

The success of our business is materially dependent upon the skills, experience, and efforts of certain of ourkey officers and employees. The loss of key personnel could have a material adverse effect on our business,operating results, or financial condition. We may not succeed in attracting and retaining the personnel we need togenerate sales and to expand our operations successfully, and, in such event, our business could be materially andadversely affected. The loss of the services of any key personnel, or our inability to hire new personnel with therequisite skills, could impair our ability to develop new products or enhance existing products, sell products to ourcustomers, or manage our business effectively.

Future impairment of intangible assets and long-lived assets could materially reduce our future earnings.

Adverse future changes in the business environment or in our ability to perform audits successfully andcompete effectively in our market could result in additional impairment of intangible assets or long-lived assets,which could materially adversely impact future earnings. In addition, we must complete impairment testing at leastannually, which could materially impair our intangible assets. Specifically, we must perform annual assessments todetermine whether some portion, if not all, of our intangible assets and other long-term assets are impaired. There isa possibility that this year’s assessment will result in an impairment charge.

There may be other risks that we cannot predict.

There may be additional events in the future that we cannot accurately predict or over which we have nocontrol. The risks and uncertainties listed in this section provide examples of risks, uncertainties and events that maycause our actual results to differ materially from our projections. You should be aware that the occurrence of any ofthe events denoted above as risks and uncertainties could have a materially adverse effect on our business, financialcondition and results of operations.

Risks Related to Our Indebtedness

Our substantial level of indebtedness could adversely affect our financial condition and prevent us from fulfillingour obligations under the new senior notes.

As of December 31, 2015, after giving effect to the issuance of the new senior notes offered hereby and thenew senior term loan, we would have had approximately $209.9 million of total debt outstanding.. Our substantiallevel of indebtedness could have important consequences to you and significant effects on our business, includingthe following:

it may be more difficult for us to satisfy our financial obligations, including with respect to thenew senior notes;

our ability to obtain additional financing for working capital, capital expenditures, strategicacquisitions or general corporate purposes may be impaired;

our ability to fund a fundamental change purchase offer may be limited;

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our substantial level of indebtedness could place us at a competitive disadvantage compared to ourcompetitors that may have proportionately less debt;

our flexibility in planning for, or reacting to, changes in our business and the industry in which weoperate may be limited; and

our substantial level of indebtedness may make us more vulnerable to economic downturns andadverse developments in our business.

We expect to obtain the funds to pay our expenses and to repay our indebtedness primarily from ouroperations and from the acquisition of the purchased loan. Our ability to meet our expenses and make thesepayments therefore depends on our future performance, which will be affected by financial, business, economic andother factors, many of which we cannot control. Our business may not generate sufficient cash flow from operationsin the future, which could result in our being unable to repay indebtedness, including the new senior notes, or tofund other liquidity needs. If we do not have enough funds, we may be required to refinance all or part of our thenexisting debt, sell assets or borrow more funds, which we may not be able to accomplish on terms acceptable to us,or at all. In addition, the terms of existing or future debt agreements may restrict us from pursuing any of thesealternatives.

We will remain highly leveraged after the restructuring transactions, and despite our current indebtedness level,we and any of our existing or future subsidiaries may still be able to incur substantially more debt, which couldexacerbate the risks associated with our substantial leverage.

Even if we complete the restructuring transactions, including the exchange offer, we will continue to havesubstantial indebtedness, which may adversely affect our financial condition. After giving effect to the restructuringtransactions, our outstanding debt would total $209.9 million (pro forma as of December 31, 2015). This high levelof leverage may highly impact our business.

We and any of our existing and future subsidiaries may be able to incur substantial additional indebtedness inthe future.

Although the terms of the new senior term loan and our ABL credit facility will contain limitations on ourability to incur additional indebtedness, these restrictions are subject to a number of qualifications and exceptions.Liens on our subsidiaries’ assets securing our ABL credit facility, which include substantially all of our assets,subject to certain exceptions and permitted liens, have priority over the new senior notes which are unsecured. If weincur any additional secured indebtedness it will be senior to the new senior notes. If we incur any additionalindebtedness that ranks equally with the new senior notes, the holders of that additional debt will be entitled to shareratably with the holders of the new senior notes in any proceeds distributed in connection with any insolvency,liquidation, reorganization, dissolution or other winding up of the Company. If new debt is added to our or any ofour subsidiaries’ current debt levels, the related risks that we now face could be exacerbated. See “Description ofOther Indebtedness.”

If we default under our ABL credit facility or the new senior term loan, the lenders may declare the debtimmediately due.

Our existing ABL credit facility requires, and we expect that the new senior term loan will also require, oursubsidiaries to comply with specified financial ratios and other performance covenants. No assurance can beprovided that we will not violate the covenants or default on our obligations under the ABL credit facility or the newsenior term loan in the future. If we fail to comply with these covenants or default on our obligations under theseloans, the lenders may accelerate the maturity of the debt. We cannot be certain that in such a situation we would beable to secure adequate or timely replacement financing on acceptable terms or at all. If the lenders were to makesuch an accelerated repayment demand and we were unable to honor it, the lenders may proceed against thecollateral securing their indebtedness and cross-acceleration language contained in the indentures underlying anyuntendered existing notes and our new senior notes could also be triggered, potentially accelerating the requiredrepayment of those notes as well. In such an instance, there can also be no assurance that we will be able to secure

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additional financing that would be required to make such a rapid repayment and our assets may be insufficient torepay in full the secured indebtedness under the new ABL credit facility or any other indebtedness.

Because the new senior notes will be unsecured, and most of our additional debt has been incurred by oursubsidiaries, you may not be fully repaid under the new senior notes if the Company or its subsidiaries becomeinsolvent.

Because the new senior notes will be unsecured, if we become insolvent, you may be repaid only after ourobligations under our all of our secured debts are satisfied. Our ABL credit facility is secured by liens onsubstantially all of the assets of our current and future subsidiaries. The new senior term loan also will be secured bycertain of our subsidiaries’ assets. If we were to default under our senior debt, the lenders could foreclose on thecollateral regardless of any default with respect to the new senior notes. These assets would first be used to repay infull all amounts outstanding under our secured debt. In addition, substantially all of our assets are held by oursubsidiaries, which are direct obligors under our secured debt, and our subsidiaries have not guaranteed the newsenior notes. In the event of insolvency of any subsidiary, all of the subsidiary’s creditors would have a priority overthe new senior notes as to any assets held at the subsidiary level.

We may not be able to generate sufficient cash to service all of our indebtedness, including the new senior notes,and may be forced to take other actions to satisfy our obligations under our debt agreements, which may not besuccessful.

Our ability to make scheduled payments on or to refinance our debt obligations depends on our financialcondition and operating performance, which are subject to prevailing economic and competitive conditions and tocertain financial, business and other factors beyond our control. Our business may not generate sufficient cash flowfrom operations in the future and our currently anticipated levels of revenue and cash flow may not be realized,either or both of which could result in our being unable to repay indebtedness, including borrowings under our ABLcredit facility, the new senior term loan, and the new senior notes, or to fund other liquidity needs. Therefore, wemay not be able to maintain or realize a level of cash flows from operating activities sufficient to permit us to paythe principal, premium, if any, and interest on our indebtedness, including borrowings under our ABL credit facility,the new senior term loan, and the new senior notes.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may beforced to reduce or delay investments and capital expenditures, sell assets, seek additional capital or restructure orrefinance our indebtedness, including our indebtedness under our ABL credit facility, the new senior term loan, andthe new senior notes. Our ability to restructure or refinance our debt will depend on the condition of the capitalmarkets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates andmay require us to comply with more onerous borrowing covenants, which could further restrict our businessoperations. The terms of existing or future debt instruments, including our ABL credit facility, the new senior termloan, and the indenture governing the new senior notes, may restrict us from adopting some of these alternatives. Inaddition, any failure to make payments of principal and interest on our outstanding indebtedness on a timely basiswould likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness.These alternative measures may not be successful and may not permit us to meet our scheduled debt serviceobligations.

As a holding company, we depend on cash flow from our subsidiaries, and our subsidiaries are subject torestrictions on their ability to pay dividends.

We are a holding company that derives all of its operating income from its subsidiaries. We are dependenton the earnings and cash flow of our subsidiaries to meet our obligations with respect to the new senior notes. If weand/or our subsidiaries become insolvent, we may not have sufficient assets to make payments on amounts due onany or all of the new senior notes or the existing notes, to the extent they have not been tendered in the exchangeoffer and remain outstanding. In addition, applicable corporate law of certain jurisdictions restricts their ability topay dividends.

Moreover, our existing ABL credit facility is secured by liens on substantially all of our assets (other thancertain cash amounts and certain other excluded assets), liens on substantially all of our existing subsidiaries and

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pledges of the capital stock of all existing subsidiaries (in each case other than the new subsidiary formed for thepurpose of owning the purchased loan).

After completion of the restructuring transactions, if any of our subsidiaries that are guarantors default ontheir guarantees of the ABL credit facility, the senior lender could foreclose on the collateral. These subsidiaries’assets would first be used to repay in full all amounts outstanding under the ABL credit facility and the new seniorterm loan and would not be available to satisfy obligations under the new senior notes.

Similarly, if our subsidiaries become bankrupt, liquidate, dissolve, reorganize or undergo a similarproceeding, such subsidiaries’ assets will be available to pay obligations under the new senior notes only after alloutstanding debt and other obligations of such subsidiary has been paid in full. In addition, an event of default underthe ABL credit facility may prohibit us from paying our obligations under the new senior notes.

The Company has incurred significant losses in recent years and expects to continue to have operatinglosses in the near future.

Risks Relating to our Common Stock

Our stock is currently quoted on the OTC market which may have an unfavorable impact on our stock price andliquidity.

The OTC market is a significantly more limited market in comparison to other larger trading markets suchas the NASDAQ Stock Market. The quotation of our shares on the OTC market results in a relatively illiquid marketavailable for existing and potential shareholders to trade shares of our common stock, which could ultimatelydepress the trading price of our common stock and could have a long-term adverse impact on our ability to raisecapital in the future.

There is no assurance of an active public market for the Company’s common stock, and the price of theCompany’s common stock may be volatile.

Given the relatively minimal public float and trading activity in the Company’s securities, there is littlelikelihood of any active and liquid public trading market developing for its shares. If such a market does develop,the price of the shares may be volatile. Since the shares do not qualify to trade on any national securities exchange,if they do actually trade, the only available market will continue to be through the OTC markets. It is possible thatno active public market with significant liquidity will ever develop. Thus, investors run the risk that investors maynever be able to sell their shares. The trading price of our common stock has been and may continue to be subject tolarge fluctuations. Our stock price may increase or decrease in response to a number of events and factors,including: (1) future announcements concerning us, key clients or competitors, (2) quarterly variations in operatingresults and liquidity, (3) changes in financial estimates and recommendations by securities analysts,(4) developments with respect to technology or litigation, (5) the operating and stock price performance of othercompanies that investors may deem comparable to our Company, (6) acquisitions and financings, and (7) sales ofblocks of stock by insiders.

Our common stock may be deemed a “penny stock,” which would adversely affect its liquidity.

The market price for our common stock recently has been trading at around $1.00 per share. If our commonstock continues to trade below $5.00 it may become subject to the “penny stock” rules, which apply generally toequity securities with a price of less than $5.00 per share, other than securities registered on certain nationalsecurities exchanges. Our stock is not a penny stock only because we are subject to an exception for issuers withrevenues of at least $6 million for the past three years. Penny stocks are subject to rules that impose additional salespractices on broker-dealers who sell our securities. For example, broker-dealers must make special suitabilitydeterminations for purchasers of penny stock and obtain the purchasers’ written consent to the transaction prior tothe sale. Also, broker-dealers must deliver disclosure schedules disclosing sales commissions and current quotationsfor the securities to each purchaser of a penny stock. The broker-dealer also must disclose the commissions payableto the broker-dealer and the registered underwriter, current quotations for the securities and, if the broker-dealer isthe sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over themarket. Broker-dealers must also send monthly statements disclosing recent price information for the penny stock

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held in the purchaser’s account as well as information regarding the limited market in penny stocks. These rules maycause some broker-dealers to choose not to deal in penny stocks, which could have an adverse effect on the priceand liquidity of shares of our common stock if our common stock is deemed to be a penny stock. If the exception tothe penny stock rules becomes unavailable, the penny stock rules may restrict the ability of purchasers in thisoffering to sell our common stock in the secondary market. The transaction costs associated with penny stocks arehigh, reducing the number of broker-dealers willing to engage in the trading of our shares. This could result inreduced liquidity and an increase in the spread between the bid and ask price. Investors should be aware that thelevel of trading activity on the secondary market can be very illiquid and investors may find it expensive anddifficult to sell their shares.

Sales or issuances of shares of common stock, including upon conversion of the new senior notes, will dilute thecommon stock.

If the restructuring transactions are consummated, the additional common stock issued, upon conversion ofthe new senior notes, will represent 92.35% of the Company’s outstanding common stock on a fully-diluted basisand will result in dilution of the equity interests of the holders of common stock and adversely affect the value of ourcommon stock. In addition, there can be no assurance that we will not need to issue additional equity securities inthe future in order to execute our business plan if we do not achieve our projected results or for other reasons, whichcould lead to further dilution to holders of the common stock. This dilution of common stock or the perception thatsuch dilution might occur could depress the price of our common stock, including common stock underlying thenew senior notes

Our charter restricts the ownership and transfer of our outstanding stock and the new senior notes containrestrictions on the conversion of the new senior notes to common stock, which may limit your ability toparticipate in increases in our equity value.

In fiscal 2016, the Company’s charter was amended to restrict transfers of our common stock in ways thatcould result in an ownership change of the Company under Section 382, which could substantially reduce oreliminate the potential benefits of the Company’s net operating losses and unrealized tax losses. Our charter nowgenerally restricts any direct or indirect transfer (such as transfers of our stock that result from the transfer ofinterests in other entities that own our stock) if the effect would be to (1) increase the direct or indirect ownership ofour stock by any person or entity from less than 4.95% of our outstanding common stock to 4.95% or more of ouroutstanding common stock; or (2) increase by any amount the percentage of our common stock owned directly orindirectly by any person or entity owning or deemed to own 4.95% or more of our outstanding common stock. Theindirect ownership rules are complex and may cause shares of stock owned directly or indirectly by a group ofrelated individuals or entities to be constructively owned by one individual or entity. These transfer restrictions mayresult in the delay or refusal of certain requested transfers of our common stock, or prohibit ownership (thusrequiring dispositions) of our common stock due to a change in the relationship between two or more persons orentities or to a transfer of an interest in an entity other than us that, directly or indirectly, owns our common stock.These transfer restrictions may prevent you from participating in any increase in value of our common stock,including the common stock underlying the new senior notes. These transfer restrictions also could delay or preventa transaction or a change in control of us that might involve a premium price for shares of our stock or otherwise bein the best interests of our stockholders. Any attempt to own or transfer shares of our stock in violation of theserestrictions may result in the transfer being automatically void.

We may issue preferred stock with terms that could dilute the voting power or reduce the value of our commonstock.

While we have no specific plan to issue preferred stock, our charter authorizes us to issue, without theapproval of our stockholders, one or more classes or series of preferred stock having such designations, powers,privileges, preferences, including preferences over our common stock respecting dividends and distributions, termsof redemption and relative participation, optional or other rights, if any, of the shares of each such series of preferredstock and any qualifications, limitations or restrictions thereof, as our board of directors may determine. The termsof one or more classes or series of preferred stock could dilute the voting power or reduce the value of our commonstock. For example, the repurchase or redemption rights or liquidation preferences we could assign to holders ofpreferred stock could affect the residual value of the common stock

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FORWARD-LOOKING STATEMENTS

This confidential offering memorandum contains forward-looking statements within the meaning of U.S.securities laws. These forward-looking statements are included throughout this confidential offering memorandum,including in sections entitled “Summary Terms of the Exchange Offer,” “Risk Factors,” “The Exchange Offer,” and“Business” and in discussions of related matters such as our industry, business strategy, goals, expectationsconcerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capitalresources and other financial and operating information and the success of the Company’s restructuring program, theimpact of the exchange offer on the Company’s ability to service its debt on a going forward basis, the Company’sprojected liquidity in the event of the failure or success of this exchange offer. Forward-looking statements are, bydefinition, statements that are not historical in nature and relate to possible future events. They may be, but are notnecessarily, identified by words such as “will,” “shall,” “believe,” “expect,” “plan,” “intend,” “may,” “anticipate”and similar expressions.

These forward-looking statements reflect our current views with respect to possible future events, are basedon various assumptions and estimates and are subject to known and unknown risks and uncertainties. Theseforward-looking statements are not guarantees or predictions of our future performance, and our actual results ofoperations and financial condition and future developments may differ materially from those projected in, andcontemplated by, the forward-looking statements. Our actual results could differ materially from those anticipatedin these forward-looking statements. Among the factors that could cause actual results to differ materially are therisks and uncertainties described under “Risk Factors.”

Many of the factors described under “Risk Factors” are beyond our ability to control or predict. Any, or acombination, of these factors could materially affect our future financial condition or results of operations and theultimate accuracy of the forward looking statements. In particular, we can offer no assurances that: (1) holders whofail to tender will or will not receive payment in full at maturity; (2) the Company will or will not be forced to enterbankruptcy, foreclosure or other liquidation proceedings if this offer fails; or (3) that the Company will improve itsresults sufficiently to pay its debts when due to holders who tender in the exchange offer. Management cautionsagainst putting undue reliance on forward-looking statements or projecting any future results based on suchstatements.

For a more complete description of some of the risks and uncertainties facing our business that could causefuture results or events to differ materially from those expressed or implied in our forward-looking statements, see“Risk Factors.” Given the risks and uncertainties, you should not place undue reliance on these forward-lookingstatements.

All forward-looking statements included in this confidential offering memorandum are made only as of thedate of this confidential offering memorandum, and the Company does not undertake any obligation to update orcorrect any forward-looking statements to reflect events or circumstances that subsequently occur, or of which itbecomes aware after the date of this confidential offering memorandum. You should read this confidential offeringmemorandum completely and with the understanding that our actual future results of operations and financialcondition may be materially different from what we expect. All forward-looking statements attributable to us areexpressly qualified by these cautionary statements.

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CAPITALIZATION

Capitalization

as ofDecember 31, 2015

(in millions) actual adjusted

Cash and cash equivalents(1)............................................................................................... $ 8.0 $ 6.7

Debt:ABL Credit Facility (2)........................................................................................................ $ 52.2 $ 52.2Existing Notes (3) ................................................................................................................ 118.9 —Existing Sale Leaseback Obligations (4) ............................................................................. 6.6 6.6New Senior Notes offered hereby (3) (5)............................................................................. — 119.6New Senior Term Loan (6) .................................................................................................. — 31.5

Total Debt, including accrued interest and sales leaseback obligation ......................... $ 177.7 $ 209.9Total stockholders’ deficit (7).............................................................................................. (51.3) (52.0)

Total capitalization (5)......................................................................................................... $ 126.4 $ 157.8

(1) Cash change based on $1.3 million of estimated fees related to the transaction.

(2) The ABL Credit Facility will remain in place. MAST has agreed that, upon attainment of the minimum exchange offer threshold of 95.0%,it will lend the Company under the ABL credit facility sufficient funds to redeem the remaining existing notes, if necessary, and to payexpenses related to this exchange offer and the restructuring transactions. As of February 29, 2016, $52.4 million was outstanding under theABL Credit Facility.

(3) On the issue date, we will irrevocably deposit with the trustee of the existing notes an amount sufficient to redeem, satisfy and discharge ourobligations thereunder and to release the liens relating thereto. The existing notes bear interest at 15.0% per annum with a maturity date ofJune 30, 2016 and a 5.0% call premium.

(4) The sale leaseback obligation was recorded when the Lincoln headquarter buildings were sold and leased back to the Company onOctober 19, 2015.

(5) Does not give effect to original issue discount, if any. This table assumes full participation in the exchange offer and issuance of $125.0million of new senior notes. In addition as of December 31, 2015, this figure reflects interest accrued of $4.1 million. If only the minimumof 95% required for the exchange offer is achieved, the amount of the new senior notes would be reduced by $6.0 million and the amountoutstanding under the ABL Credit Facility would be increased by $6.0 million. Furthermore, the actual debt issuance amount will be higherdue to the incremental interest expense incurred from date of the financials through the transaction close date. Assuming a conversion dateof April 14, 2016 and full participation of the conversion, the accrued interest is projected to be $8.9 million, resulting in a total projectedissuance of New Senior Notes of $124.4 million.

(6) The amount borrowed will be used to acquire the purchased loan. The new senior term loan will bear interest at 6.0% per annum, with thetwo-year paid-in-kind pay option.

(7) Stockholders’ deficit has been adjusted for $0.7 million of deferred financing fees write-off relating to the Senior Secured debt as ofDecember 31, 2015.

Fully Diluted Equity Capitalization Table (1)outstandingas of date

hereof (%)

outstandingimmediately

following closing (%)

Common Stock......................................................... 6,721,765 94.84% 6,721,765 7.26%Vested Restricted Stock Units (2)............................. 365,341 5.16% 365,341 0.39%Convertible Notes (3) ............................................... 0 0.00% 85,528,566 92.35%

Total ................................................................. 7,087,106 100.00% 92,615,672 100.00%

(1) Excludes:

(a) 58,410 options to purchase common stock of the Company that are outstanding, all of which have a strike price of $10.19 per shareand of which 28,380 are vested, because these awards would be antidilutive; and

(b) 2,178,189 warrants to purchase common stock of the Company that are outstanding, 693,054 of which have a strike price of $14.88per share and 1,485,135 of which have a strike price of $22.32 per share, because these awards would be antidilutive.

(2) There are 484,642 restricted stock units (“RSUs”) currently outstanding and eligible for vesting over time. RSUs vest according to a scheduleset forth in the applicable grant agreement, but only convert into shares of common stock of the Company upon a change of control (asdefined in the applicable grant agreement). The transactions contemplated hereby do not constitute a change of control, as defined in thegrant agreement.

(3) Assumes full conversion on the day immediately following the closing prior to any additional interest accrual of $125.0 million of new seniornotes at a conversion price of 684.2285 shares per $1,000 principal amount of new senior notes.

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BUSINESS

The Company

Nebraska Book Holdings, Inc., a Delaware corporation incorporated on May 31, 2012, referred to herein as the“Company” participates in the college bookstore industry through its subsidiary, Nebraska Book Company, Inc.,referred to herein as the “Nebraska Book Company.”

The Company’s predecessor, NBC Acquisition Corp. and its subsidiaries, referred to herein as the “Old Company,”filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code on June 27, 2011. The Old Companycontinued to operate the business and manage the properties as debtor in possession under the jurisdiction of theBankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of theBankruptcy Court prior to emergence from bankruptcy. Upon emergence of the Old Company from bankruptcy onJune 29, 2012, all assets of the Old Company were transferred to the Company, and the Company thereby becamethe beneficial owner of the Nebraska Book Company business. The Company does not conduct significant activitiesapart from its indirect investment in the Nebraska Book Company business.

Company Overview

We provide the college bookstore industry with a variety of services including propriety information ande-commerce systems, back end system access and support and by supplying used textbooks to college bookstoreoperators. We believe we are one of the largest wholesale distributors of used college textbooks in North America,offering over 149,000 textbook titles and selling or renting over 3.6 million books annually, primarily to collegebookstores serving campuses located in the United States.

Recently Discontinued Operations

As part of its participation in the college bookstore industry, the Company previously operated a large number of on-campus and off-campus stores. On June 11, 2015, the Company sold the majority of its college stores, including thecorrelating assets and inventory owned or leased by the Company to Follett Higher Education Group, Inc. for anaggregate purchase price of approximately $45.3 million. In addition, the Company subsequently completed theclosure of the remaining college bookstores within our college bookstores segment. As a result, college bookstoresare considered discontinued in our condensed consolidated statements of operations and all corresponding priorperiod operating results presented in our condensed consolidated statements of operations and the accompanyingnotes have been reclassified to reflect the operations of these stores as discontinued operations.

Our Business

We have organized our operating segments based upon differences in products and services provided. We have threeoperating segments:

College Stores. As noted above, we have sold our on-campus and off-campus stores, the operations of which werepreviously reported in our College Stores division. While the operating results of this segment have been reclassifiedas discontinued operations within our financial statements, our College Stores segment includes certain indirectcosts related to the operation of College Stores that do not qualify as discontinued operations. See Note 13 to ourUnaudited Condensed Consolidated Financial Statements for the three and nine months ended December 31, 2015and December 31, 2014.

Textbook. Our Textbook division consists primarily of selling used textbooks to college bookstores, buying themback from students or college bookstores at the end of each college semester, and then reselling them to collegebookstores. Our wholesale operations experience two distinct selling periods and two distinct buying periods. Thepeak selling periods occur prior to the beginning of each school semester in July/August and November/December.The buying periods occur at the end of each school semester in May and December. As such, a significant portion ofour annual net sales are recognized during our second and fourth fiscal quarters.

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Complementary Services. Through our Complementary Services division (the “Complementary Servicesdivision”), we offer book related services such as computer hardware and software systems, e commercetechnology, and consulting services.

Ownership

The Company’s largest shareholder is MAST Capital Management, LLC, referred to herein as MAST. MASTcurrently owns a majority of the Company’s outstanding common stock.

Corporate Information

Our principal executive offices are located at 4700 South 19th Street, Lincoln, NE 68512. Our principal website islocated at http://www.nebook.com. The information on, or accessible through, our website is not part of thisoffering memorandum.

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MANAGEMENT

The members of the Company’s board of directors and senior executive officers and their ages are as follows:

Name Age PositionBen Riggsby 44 Interim Chief Executive Officer, President and DirectorJohn Maciel 49 Interim Chief Financial OfficerNate Rempe 37 Chief Technology Officer, Senior Vice President - Information

TechnologyMichael Elliott 50 Chief Sales ExecutiveSarah Funk 35 Vice President of Human ResourcesPete Grenier 36 Vice President of Product ManagementRandy Stejskal 49 Vice President of College Store DesignPeter Reed 36 DirectorSteven Clemente 46 DirectorJustin Bonner 34 DirectorAdam Kleinman 40 DirectorBenjamin Ng 53 Director

The business experience, principal occupation and employment as well as the periods of service of each of theCompany’s directors and senior executive officers during the last five fiscal years are set forth below.

Ben Riggsby has served as Interim CEO of the Company since February 2015. Mr. Riggsby joined the Company inDecember 2012 as Vice President – Business Intelligence where he led the Company’s development of enterprise-wide textbook pricing and inventory management strategies. Prior to that, Mr. Riggsby served as Principal ofSteelhead Enterprises, a multi-channel distressed retail goods dealer, from December 2010 to December 2012.From March 2006 to December 2010, Ben was Senior Vice President of Merchandising at Movie Gallery, Inc.which operated over 4,500 Hollywood Video, Game Crazy and Movie Gallery outlets in the U.S. and Canada.

John Maciel was named the Company’s Interim CFO in March 2015. Mr. Maciel is a Managing Director withAlvarez & Marsal in San Francisco, and specializes in business plan development, organizational strategies,operational and financial control planning, and accounting for complex transactions. Prior to that, Mr. Macieloperated his own consulting firm for 11 years, providing accounting, financial planning and management consultingservices. Before that, he spent six years as a manager in the audit and turnaround practices of a Big Four firm in SanFrancisco. Mr. Maciel earned a bachelor’s degree in business administration from the University of California atBerkeley. He is a Certified Public Accountant (Inactive).

Nate Rempe joined the Company in July 2005 as Director of Internet Strategy and assumed the role of VicePresident, Information Technology in May 2007. Mr. Rempe was named to his current role of Senior Vice Presidentand Chief Technology Officer in April 2009. Prior to joining the Company, Mr. Rempe held technology leadershiproles in retail banking, direct marketing, and relocation management. He also served as executive faculty atCreighton University for five years, where he taught graduate level courses in information technology. Mr. Rempeholds four U.S. patents and has two patents pending in varying areas of information technology.

Michael Elliott joined the Company in October 2014 as Chief Sales Executive. Prior to joining the Company,Mr. Elliott served as Vice President for Strategic Sales and Alliances with OneTouchPoint, where he focused onbusiness-to-business sales team development and leadership. Mr. Elliott’s professional experience also includessales leadership roles with North American Corporation, Hess Print Solutions and Wallace Computer Services, Inc.,which merged to become Moore Wallace and ultimately to RR Donnelly. Mr. Elliott holds a Bachelor of Sciencedegree in marketing and communications from Northern Illinois University and an MBA from Loyola University.

Sarah Funk has served as Vice President for Human Resources since May, 2012. Prior to that, Ms. Funk served asthe Company’s Director of Organizational Effectiveness. Sarah is responsible for leading the development andexecution of a talent strategy aligned with business direction and goals. This includes workforce planning,

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succession management, talent acquisition, training and development, engagement, and change management. Priorto joining the Company, Ms. Funk held multiple leadership roles within Human Resources at Target stores fromJanuary 2006 to November 2010. Ms. Funk holds a Bachelor of Science in Business Administration from theUniversity of Nebraska-Lincoln.

Pete Grenier has served as the Company’s Vice President for Product Management since December 2015. Prior tothat, Mr. Grenier served as the Company’s Director of Textbook Merchandise Management from 2012 to 2015, andas Director of Merchandising and Planning for Neebo, Inc., from 2008 to 2012. Mr. Grenier also worked as a SeniorBuyer for Follett Higher Education Group from 2006 to 2008, as a Buyer for Team Sports and Activewear for Sears,and as an Assistant Buyer for Bass Pro Shops. Mr. Grenier holds a Bachelor of Science in Finance and an MBAwith a concentration in Economics, both from Missouri State University.

Randy Stejskal has served as Vice President for the Company’s College Store Design division since 2001. Prior to2001, Mr. Stejskal served as Director of Store Planning for the Company from 1992 to 2001. Mr. Stejskal has alsoserved as Area Manager for Richman Gordman and as an Assistant Manager for Pier 1 Imports. Mr. Stejskal holds aBachelor of Science degree in Business Administration and Management from the University of Nebraska-Lincoln.

Peter Reed has been a director of the Company since 2012. Mr. Reed is a Portfolio Manager and Partner at MASTCapital Management, LLC. Mr. Reed focuses on the Cable, Construction Materials, Media, Satellite,Telecommunications and Wireless sectors. Prior to joining MAST in 2004, Mr. Reed was an investment bankinganalyst at Brown, Gibbons, Lang & Company where he worked on mergers and acquisitions, in-court and out-of-court financial restructurings and debt and equity private placements for middle market companies.

Steven Clemente has been a director of the Company since 2015. Mr. Clemente served as CEO and President of theCompany from August 2012 to February 2015, and prior to that as Senior Vice President of College Stores from2010 to 2012. Mr. Clemente worked in the retail industry for 15 years at Target Corporation, most recently as VicePresident of Store Operations. In that role, Mr. Clemente oversaw 82 retail locations, and his stores represented oneof the Company’s largest food regions where he provided complete lifestyle services for guests. Mr. Clemente’steam was also instrumental in the development of Target’s college market focus.

Justin Bonner has been a director of the Company since 2012. Mr. Bonner is a Senior Analyst, Investment Researchat MAST Capital Management, LLC. Mr. Bonner focuses on the consumer discretionary sectors, including Gaming,Lodging, Leisure, Restaurants, and Retail. Prior to joining MAST in 2007, Mr. Bonner was an Associate Director atBabson Capital Management, an institutional money management firm.

Adam Kleinman has been a director of the Company since 2012. Mr. Kleinman is the Chief Operating Officer,General Counsel and Partner at MAST Capital Management, LLC. He has served as General Counsel of MASTsince 2009, and he became a Partner and Chief Operating Officer in 2013. Prior to joining MAST in 2009,Mr. Kleinman was an Associate in the Banking and Leveraged Finance group at Bingham McCutchen LLP, wherehe represented leading financial institutions, hedge funds and corporate borrowers in a broad range of commercialfinancial transactions.

Benjamin Ng has been a director of the Company since 2012. Mr. Ng is a private investor and presently serves as adirector and advisor to privately-held companies in the finance, education and real estate industries. Prior to that,Mr. Ng retired as board member and CFO of Tommy Hilfiger Corporation. Mr. Ng was also an investment bankerat Goldman Sachs & Co.

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THE RESTRUCTURING TRANSACTIONS

The exchange offer is a part of the restructuring transactions, which are intended to help us achieve our financialrestructuring goals. The exchange offer is subject to customary conditions, which we may assert or waive. Theseconditions include (1) 95.0% of the outstanding aggregate principal amount of the existing notes is validly tenderedand not withdrawn; (2) finalizing definitive documentation for the new senior term loan with terms and conditionsreasonably acceptable to the Company and MAST; (3) finalizing definitive documentation for the purchase by theCompany of third party debt securities and loans with a face value of $70.0 million for a total purchase price of$31.5 million (the “purchased loan”) and (4) other customary conditions described in this confidential offeringmemorandum. The issuance of the new senior notes in the exchange offer will extend the maturity of theindebtedness under the existing notes from June 2016 to April 2026. Annual interest on the new senior notes issuedin the exchange offer will be reduced to approximately $2.5 million from the $16.5 million in annual interestcurrently due under the existing notes. In addition, the Company’s cash requirements will be significantly reducedbecause interest on the new senior notes for the first two years will be paid in kind. After the first two years, allinterest will be paid in cash if there are available funds at the Company.

New Senior Term Loan

As part of the restructuring, the Company will enter into a new senior term loan of $31.5 million withMAST. The proceeds of the new senior term loan will be used to (1) acquire the purchased loan as described below,and (2) pay transaction related fees and expenses. The new senior term loan will mature four years from the closingdate and bear interest at a rate per annum equal to 6.0%, which may be paid in kind at the Company’s option for aperiod of two years from the closing date.

Purchased Loan

The purchased loan consist of one loan from one borrower, Sonifi Solutions, Inc. (“Sonifi”), which iscurrently held by funds managed by MAST. The loan was priced based on the recent trading activity for similarloans. The loan is summarized below:

Principal Mkt. Mkt. Rate Income CurrentName Maturity ($) Price Value (%) ($) Yield (%)

Sonifi Solutions Inc. .......................... 3/31/2018 $ 70,000,000 45.00% $ 31,500,000 8.00% $ 5,600,000 17.78%

Sonifi Solutions, Inc.

Sonifi was formed in 1980 and is headquartered in Sioux Falls, South Dakota. Sonifi provides in-roomentertainment and broadband services predominately to the hospitality and healthcare industries. Since entering intoits first lien term, Sonifi has paid all interest payments when due. The term loan allowed Sonifi to pay interest inkind three times. During the first three quarters of 2015, Sonifi paid interest in kind. Starting in December 2015,Sonifi paid cash interest and will be required to pay cash interest on the term loan going forward. There is nofinancial information publicly available for this company.

In evaluating the investment in Sonifi, our management and the special committee and its advisors considered thelimited information on Sonifi, available on Sonifi’s website at http://www.sonifi.com/ and confidential informationmade available to us, subject to a confidentiality agreement, including the financial statements of the company. Wehave not undertaken to verify the accuracy of the information on the website. Sonifi does not make available to thepublic its financial information and we are not disclosing any financial information with respect to it. In making adecision whether to participate in the exchange offer, noteholders should not rely on the ability of this borrower tomake payments of principal or interest. See “Risk Factors – Risks Related to the Restructuring Transactions – theborrower under the loan we are purchasing could default on its obligations, which could have a material adverseeffect on our financial condition.”

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THE EXCHANGE OFFER

General

Upon the terms and conditions set forth in this confidential offering memorandum, we are offering toexchange for each $1.00 principal amount of outstanding existing notes:

$1.05 principal amount of our new senior notes, plus

an additional amount of principal of our new senior notes equal to any accrued and unpaid interestdue on the existing notes (as defined below), held by the tendering holder to, but not including, theclosing date of the exchange offer (which, based, on a closing date of April 14, 2016, we estimateat $0.08085 per $1.00 of existing notes) (any fractional amount of new senior notes to be receivedin the exchange offer will be rounded down to the nearest dollar).

This confidential offering memorandum is being made available to all noteholders. The exchange offer issubject to customary conditions, which we may assert or waive. These conditions include (i) 95.0% of theoutstanding aggregate principal amount of the existing notes is validly tendered and not withdrawn; (ii) finalizingdefinitive documentation for the new senior term loan with terms and conditions reasonably acceptable to theCompany and MAST; (iii) finalizing definitive documentation for the purchase by the Company of third party debtsecurities and loans with a face value of $70.0 million for a total purchase price of $31.5 million (the “purchasedloan”) and (iv) other customary conditions described in this confidential offering memorandum. See— Conditions tothe Completion of the Exchange Offer.”

Existing notes will be deemed to have been accepted as validly tendered if, as and when we have given oralor written notice thereof to the exchange agent. DTC will receive, through its Automated Tender Offer Program(“ATOP”), tenders from noteholders whose existing notes are held through DTC and will deliver the new seniornotes to such holders.

If you beneficially own existing notes that are registered in the name of a broker, dealer, commercial bank,trust company or nominee and you wish to tender your existing notes in the exchange offer, you should promptlycontact the person in whose name the existing notes are registered and instruct that person to tender on your behalf.

We reserve the right to purchase or make offers for any existing notes that remain outstanding subsequentto the expiration date or to redeem the existing notes as a whole or in part and from time to time, as permitted by theindenture governing the existing notes, and to the extent permitted by applicable law, to purchase existing notes inthe open market, in privately negotiated transactions or otherwise, all to the extent allowed by our existing ABLcredit facility and the new senior term loan. Following completion of the exchange offer, the terms of any suchpurchases or subsequent offers could differ from the terms of the exchange offer. If the exchange offer closes,MAST has agreed to permit the Company to borrow sufficient funds under its ABL credit facility to redeem allexisting notes that did not participate in the exchange offer, and we currently intend to do so concurrently withclosing the exchange offer. The Company or funds managed by MAST may also purchase or make offers for anyexisting notes at prices they may find attractive in the open market, in privately negotiated transactions or otherwiseduring the exchange offer to the extent allowed by the existing notes indenture, the existing ABL credit facility,other applicable agreements and applicable law.

Noteholders that exchange existing notes for new senior notes will not be required to pay brokeragecommissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes associated with thetransfer of the existing notes to us (or to our order) upon completion of the exchange offer. We will pay all chargesand expenses, other than certain applicable taxes, in connection with the exchange offer and restructuringtransactions. See “— Fees and Expenses” below.

New senior notes may not be issued in minimum denominations of less than $1.00.

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Expiration Date; Extensions; Amendments

The expiration date is 12:00 midnight, New York City time on April 14, 2016, unless the period for theexchange offer is extended, in which case the expiration date will be 12:00 midnight, New York City time on thelast date to which the exchange offer is extended. We may extend the exchange offer, in our sole discretion, for anypurpose including, without limitation, to permit the satisfaction or waiver of all conditions to the exchange offer. Ifwe make a material change to the exchange offer or if we waive a material condition of the exchange offer, we willextend the exchange offer to the extent required under the Securities Exchange Act of 1934.

To extend the expiration date, we will notify the exchange agent of any extension by oral or written noticeprior to 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date andwe will notify the noteholders, or cause them to be notified, by such time and date by public announcement. Suchnotification will state the new expiration date.

We expressly reserve the right (1) to delay acceptance of any existing notes, to extend the exchange offer,or to terminate the exchange offer or any or all of the other restructuring transactions and not accept existing notesnot previously accepted, if any of the conditions set forth under “— Conditions to the Completion of the ExchangeOffer” shall not have been waived or satisfied by us prior to the expiration date and (2) to amend at any time, orfrom time to time, the terms of the exchange offer. If we exercise any such right, we will give oral or written noticethereof to the exchange agent as promptly as practicable. If the exchange offer is amended in a manner determinedby us to constitute a material change, we will promptly disclose such amendment in a manner reasonably calculatedto inform the noteholders of such amendment.

The minimum period during which the exchange offer will remain open following a material change in theterms of such exchange offer or in the information concerning such exchange offer (other than a change in price or achange in percentage of existing notes sought) will depend upon the facts and circumstances of such change,including the relative materiality of the terms or information changes. With respect to any change in considerationfor or percentage of existing notes sought, a minimum extension of ten business days will be made to allow foradequate dissemination of such change. If any of the terms of the exchange offer are amended in a manner wedetermine to constitute a material change adversely affecting any noteholder, we will promptly disclose any suchamendment in a manner reasonably calculated to inform the noteholders of such amendment and will extend theexchange offer for a time period which we, in our sole discretion, deem appropriate, depending upon thesignificance of the amendment, the manner of disclosure to noteholders and if the period for the exchange offerwould otherwise expire during such time period.

U.S. Securities Law Considerations

The new senior notes will be issued in a private placement offering only to accredited investors, in relianceon the exemption from registration provided under Rule 506(c) of Regulation D. Each holder of existing notestendering the existing notes for exchange must complete an eligibility questionnaire to confirm that the holder is anaccredited investor. We reserve the absolute right to reject any and all existing notes not properly tendered with aproperly completed eligibility questionnaire or tendered by holders for which we cannot confirm the holder’s statusas an accredited investor.

In addition, the new senior notes and the shares of our common stock issuable upon conversion of the newsenior notes will be considered restricted securities under Rule 144. We do not intend to register the resale of theshares of our common stock or issuable upon conversion of the new senior notes and, accordingly, such resale maybe made only subject to Rule 144 or another applicable exemption under the Securities Act. The exemption underRule 144 will not be available until, at the earliest, one year after the closing of the exchange offer. Resales toqualified institutional buyers may be permissible under the exemption provided by Rule 144A under the SecuritiesAct. Resales under either Rule 144 or Rule 144A are available only if there is current information regarding theCompany available (Rule 144) or available upon request (Rule 144A).

Notwithstanding anything in this confidential offering memorandum to the contrary, the exchange offer isnot being made to, and we will not accept tenders for exchange from, holders of existing notes in any jurisdiction inwhich the exchange offer or the acceptance of the exchange offer would not be in compliance with the securities orblue sky laws of that jurisdiction.

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Release of Legal Claims by Tendering Noteholders

By tendering your existing notes in the exchange offer, effective upon payment to you in full of theconsideration payable in the exchange offer, you will, as of the closing of the exchange offer, be deemed to havereleased and waived any and all claims or causes of action of any kind whatsoever, whether known or unknown that,directly or indirectly arise out of, are based upon or are in any manner connected with your or your successors’ andassigns’ ownership or acquisition of the existing notes so tendered, including any accrued interest and any relatedtransaction, event, circumstance, action, failure to act or occurrence of any sort or type, whether known or unknown,including without limitation any approval or acceptance given or denied, which occurred, existed, was taken,permitted or begun prior to the date of such release, in each case, that you, your successors and your assigns have ormay have had against (1) our Company, subsidiaries, affiliates and stockholders and (2) our directors, officers,employees, attorneys, accountants, advisors, agents and representatives, whether current or former, as well as thoseof our subsidiaries, affiliates and stockholders, whether those claims arise under federal or state securities laws orotherwise.

Procedures for Tendering Existing Notes in the Exchange Offer

Tendering noteholders should comply with the procedure for book-entry transfer described below.

By transmitting acceptance through book-entry transfer, tendering noteholders will be deemed to havemade the representations and warranties contained in the letter of transmittal in connection with their decision toparticipate in the exchange offer. In addition all beneficial noteholders must provide appropriate verification of theirstatus as accredited investors. See “— U.S. Securities Law Considerations.”

Tender of Existing Notes Held through a Custodian

If you beneficially own existing notes that are registered in the name of a broker, dealer, commercial bank,trust company or other nominee and you wish to tender those existing notes in the exchange offer, you shouldpromptly contact the person in whose name the existing notes are registered and instruct that holder to tender onyour behalf.

Tender of Existing Notes Held Through DTC

To tender your existing notes that are held through DTC, you must cause the exchange agent to receive atimely confirmation of a book-entry transfer of existing notes into the exchange agent’s account at DTC (a “book-entry confirmation”), pursuant to the procedure for book-entry transfer described below, prior to the expiration date.

The method of delivery of all required documents, including delivery through DTC and any acceptance ofan agent’s message transmitted through ATOP or otherwise, is at the election and risk of the noteholder tenderingthose existing notes. If such delivery is by mail, it is recommended that registered mail, properly insured, with returnreceipt requested, be used. In all cases, sufficient time should be allowed to assure timely delivery. No requireddocuments should be sent to the Company. Delivery of all other required documents (i.e. the eligibility questionnaireand verification letter) must be made to our counsel, Arnall Golden Gregory LLP, to the attention of Robert Dow,via email to robert.dow@agg.com or facsimile at (404) 873-8707. Noteholders may also request their respectivebrokers, dealers, commercial banks, trust companies or nominees to effect such tender for such noteholders.

The tender by a noteholder will constitute an agreement between such noteholder and us in accordance withthe terms and subject to the conditions set forth herein and in the applicable letter of transmittal.

All questions as to the validity, form, eligibility, time of receipt, acceptance and withdrawal of the tenderedexisting notes will be determined by us in our sole discretion, which determination will be final and binding. Wereserve the absolute right to reject any and all existing notes not properly tendered or any existing notes which, ifaccepted, would, in the opinion of our counsel, be unlawful. We also reserve the absolute right to waive any defector irregularities of tender as to particular existing notes. Our interpretation of the terms and conditions of theexchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unlesswaived, any defects or irregularities in connection with tenders of existing notes must be cured within such time aswe shall determine. The Company, the exchange agent, the information agent, or any other person shall not be under

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any duty to give notification of defects or irregularities with respect to tenders of existing notes and shall not incurany liability for failure to give such notification. Tenders of existing notes will not be deemed to have been madeuntil such defects or irregularities have been cured or waived. Any letters of transmittal received by the exchangeagent or book-entry transfers received by DTC that are not properly tendered and as to which the defects orirregularities have not been cured or waived will be returned, at our expense, to such holder by the exchange agent,unless otherwise provided in the letter of transmittal, promptly following the expiration date.

We will not be liable for any delay by DTC or any participant or indirect participant in identifying thebeneficial owners of the existing notes, and we may conclusively rely on, and shall be protected in relying on,instructions from DTC for all purposes.

Eligibility Questionnaire

Our acceptance of any tendered existing notes is conditioned upon each beneficial noteholder’s delivery ofan eligibility questionnaire completed and executed by the noteholder. Only appropriately verified “accreditedinvestors” may participate in the exchange offer and exchange their existing notes for the new senior notes. Theeligibility questionnaire includes representations to confirm the holder’s status as an accredited investor.

An “Accredited Investor” is a term that is defined in Rule 501 of Regulation D, and means any person whocomes within any of the following categories, or any person who the Company reasonably believes comes withinany of the following categories, at the time of issuance of the new senior notes to that person:

(1) Any bank as defined in section 3(a)(2) of the Securities Act or any savings and loan association orother institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in itsindividual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of theExchange Act; any insurance company as defined in section 2(a)(13) of the Securities Act; anyinvestment company registered under the Investment Company Act or a business developmentcompany as defined in section 2(a)(48) of the Investment Company Act; any Small BusinessInvestment Company licensed by the U.S. Small Business Administration under section 301(c) or(d) of the Small Business Investment Act of 1958; any plan established and maintained by a state,its political subdivisions, or any agency or instrumentality of a state or its political subdivisions,for the benefit of its employees, if such plan has total assets in excess of $5 million; any employeebenefit plan within the meaning of the Employee Retirement Income Security Act of 1974(“ERISA”), if the investment decision is made by a plan fiduciary, as defined in section 3(21) ofERISA, which is either a bank, savings and loan association, insurance company, or registeredinvestment adviser, or if the employee benefit plan has total assets in excess of $5 million or, if aself-directed plan, with investment decisions made solely by persons that are accredited investors;

(2) Any private business development company as defined in section 202(a)(22) of the InvestmentAdvisers Act of 1940;

(3) Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation,Massachusetts or similar business trust, or partnership, not formed for the specific purpose ofacquiring the securities offered, with total assets in excess of $5 million;

(4) Any director, executive officer, or general partner of the Company, or any director, executiveofficer, or general partner of a general partner of the Company;

(5) Any natural person whose individual net worth, or joint net worth with that persons’ spouse, at thetime of its purchase exceeds $1 million (for purposes of calculating net worth, the person’sprimary residence shall not be included as an asset and indebtedness that is secured by theperson’s primary residence, up to the estimated fair market value of the primary residence at thetime of the sale of the new senior notes, shall not be included as a liability);

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(6) Any natural person who had an individual income in excess of $200,000 in each of the two mostrecent years or joint income with that person’s spouse in excess of $300,000 in each of those yearsand has a reasonable expectation of reaching the same income level in the current year;

(7) Any trust, with total assets in excess of $5 million, not formed for the specific purpose ofacquiring the securities offered, whose purchase is directed by a sophisticated person as describedin Rule 506(b)(2)(ii) of Regulation D; or

(8) Any entity in which all of the equity owners are Accredited Investors.

To comply with applicable securities regulations, the Company must take reasonable steps to verify that theinvestors in its new senior notes are Accredited Investors. Any tender of existing notes which does not include aproperly completed eligibility questionnaire confirming such status may be rejected by the exchange agent andreturned to the noteholder. See “—U.S. Securities Laws Considerations.”

Verification Letter

Each eligibility questionnaire must provide a confirmation, in the form of the verification letter attached tothe eligibility questionnaire, from one of the following persons or entities that such person or entity has takenreasonable steps, on or after February 1, 2016, to verify that such beneficial owner is an accredited investor and hasin fact determined that such purchaser is an accredited investor:

(a) a registered broker-dealer;

(b) an investment adviser registered with the Securities and Exchange Commission;

(c) a licensed attorney who is in good standing under the laws of the jurisdictions in which he or she isadmitted to practice law; or

(d) a certified public accountant who is duly registered and in good standing under the laws of the place ofhis or her residence or principal office.

The eligibility questionnaire and the verification letter must be delivered directly to our counsel, ArnallGolden Gregory LLP, to the attention of Robert Dow, via email to robert.dow@agg.com or facsimile at (404) 873-8707. These items should be submitted early enough to allow for approval prior to the expiration of the exchangeoffer. We have no obligation to accept delivery of any tendered notes until we have received and confirmed theadequacy of the required eligibility documentation.

Acceptance of Existing Notes For Exchange; Delivery of the New Securities

Upon satisfaction or waiver of all of the conditions to the exchange offer, all existing notes validly tenderedand not withdrawn will be accepted and the new senior notes will be issued promptly after expiration of theexchange offer. See “— Conditions to the Completion of the Exchange Offer.” For purposes of the exchange offer,existing notes shall be deemed to have been accepted as validly tendered for exchange when, as and if we havegiven oral or written notice thereof to the exchange agent. For each $1.00 principal amount outstanding of existingnotes exchanged, the noteholder will receive $1.05 principal amount of new senior notes, plus an additional amountof principal equal to any accrued and unpaid interest due on the existing notes held by the tendering holder to, butnot including, the closing date of the exchange offer (which based on a closing date of April 14, 2016, we estimateat $0.08085 per $1.00 of existing notes) (any fractional amount of new senior notes to be received in the exchangeoffer will be rebounded up to the nearest dollar). The new senior notes may be issued in denominations of not lessthan $1.00. The new senior notes will be delivered promptly following acceptance of the tendered existing notes.

In all cases, issuances of new senior notes for existing notes that are accepted for exchange pursuant to theexchange offer will be made only after timely receipt by the exchange agent of a timely confirmation of a book-entry transfer of existing notes into the exchange agent’s account at DTC.

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If any tendered existing notes are not accepted for any reason set forth under “— Conditions to theCompletion of the Exchange Offer,” such unaccepted or such unexchanged existing notes will be credited to anaccount maintained with DTC promptly after the expiration or termination of the exchange offer.

Book-Entry Transfer

The exchange agent will make a request to establish an account with respect to the existing notes at DTCfor purposes of the exchange offer within two business days after the date of this confidential offeringmemorandum. Any financial institution that is a participant in DTC’s systems may make book-entry delivery ofexisting notes by causing DTC to transfer such existing notes into the exchange agent’s account at DTC inaccordance with DTC’s procedures for transfer. Although delivery of existing notes may be effected through book-entry transfer at DTC, all other required documentation (i.e. the eligibility questionnaire and verification letter),should also be transmitted to and received by to our counsel, Arnall Golden Gregory LLP, to the attention of RobertDow, via email to robert.dow@agg.com or facsimile at (404) 873-8707 prior to the expiration date. Delivery ofdocumentation to DTC will not constitute valid delivery to our counsel, and the tender will not be valid.

The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC mayutilize DTC’s ATOP procedures to tender existing notes.

Any participant in DTC may make book-entry delivery of existing notes by causing DTC to transfer suchexisting notes into the exchange agent’s account in accordance with DTC’s ATOP procedures for transfer. Theexchange for the existing notes so tendered will only be made, however, after a book-entry confirmation of suchbook-entry transfer of such existing notes into the exchange agent’s account, and timely receipt by the exchangeagent of any required documents. An agent’s message is a message, transmitted by DTC and received by theexchange agent and forming part of a book-entry confirmation, that states that DTC has received an expressacknowledgment from a participant tendering existing notes that are the subject of such book-entry confirmation thatsuch participant has received and agrees to be bound by the terms of the letter of transmittal and that we may enforcethat agreement against that participant.

Required documentation must be sent only to our counsel. Do not send required documentation to us orDTC.

THE METHOD OF DELIVERY OF EXISTING NOTES AND ALL OTHER DOCUMENTS,INCLUDING DELIVERY THROUGH DTC AND ANY ACCEPTANCE OF AN AGENT’S MESSAGETHROUGH ATOP, IS AT YOUR ELECTION AND RISK. IF YOU SEND THESE DOCUMENTS BY MAIL,WE RECOMMEND THAT YOU USE REGISTERED MAIL, RETURN RECEIPT REQUESTED, THAT YOUOBTAIN PROPER INSURANCE, AND THAT YOU MAIL THOSE DOCUMENTS SUFFICIENTLY INADVANCE OF THE DATE ON WHICH THE EXCHANGE OFFER EXPIRES TO PERMIT DELIVERY TOOUR COUNSEL ON OR BEFORE SUCH DATE.

Withdrawal of Tenders

NOTEHOLDERS MAY WITHDRAW TENDERS OF EXISTING NOTES AT ANY TIME PRIORTO THE EXPIRATION DATE (OR ANY EXTENSION THERETO). You may withdraw tendered notes for solong as this exchange offer remains open. In addition, if we have not agreed to accept your existing notes forexchange, you can withdraw them at any time after the expiration of 40 business days from the commencement ofthe tender offer. With respect to any existing notes tendered using the procedure for book-entry transfer describedabove, any notice of withdrawal must specify the name and number of the account at DTC to be credited with thewithdrawn existing notes and otherwise comply with the procedures of DTC. All questions as to the validity, formand eligibility — including time of receipt — of these notices will be determined by us. Our determination will befinal and binding.

Any existing notes properly withdrawn will be deemed not to have been validly tendered for exchange forpurposes of the exchange offer. Any existing notes that have been tendered for exchange but that are not exchangedfor any reason will be returned to the registered holder without cost to that holder promptly after withdrawal, non-acceptance of tender or termination of the exchange offer. With respect to any existing notes tendered by book-entrytransfer into the exchange agent’s account at DTC by using the book-entry transfer procedures described above, any

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withdrawn or unaccepted existing notes will be credited to the tendering holder’s account at DTC. Properlywithdrawn existing notes may be retendered at any time on or prior to the expiration of the exchange offer byfollowing the procedures described above under “— Procedures for Tendering Existing Notes in the ExchangeOffer.”

Conditions to the Completion of the Exchange Offer

Notwithstanding any other provision of the exchange offer, or any extension of the exchange offer, we shallnot be required to accept for exchange any existing notes, issue any new senior notes, or make any payment forexisting notes, and we may terminate or amend the exchange offer or any or all of the other restructuringtransactions if at any time prior to acceptance for exchange of existing notes, we determine, in our reasonablejudgment, that any of the following conditions has not been satisfied:

at least 95.0% of the outstanding aggregate principal amount of the existing notes has been validlytendered and not withdrawn;

the Company and MAST have finalized definition documentation for the new senior term loanwith terms and conditions, reasonably acceptable to both parties;

the Company and MAST have finalized definitive documentation for the purchase by theCompany or a third party loan with a face value of $70.0 for a total purchase price of $31.5million;

there shall not have occurred or be likely to occur any event affecting our business or financialaffairs that would or might reasonably be expected to prohibit, prevent, restrict or delayconsummation of the restructuring transactions as a whole or that might reasonably be expected tobe material to noteholders in deciding whether to participate in the exchange offer; and

there shall not have been any action taken or threatened, or any statute, rule, regulation, judgment,order, stay, decree or injunction promulgated, enacted, entered, enforced or deemed applicable tothe exchange offer or the exchange of existing notes pursuant to the exchange offer, by or beforeany court or governmental regulatory or administrative agency or authority, tribunal, domestic orforeign, which (1) challenges the making of the exchange offer or the consummation of therestructuring transactions as a whole or might reasonably be expected to, directly or indirectly,prohibit, prevent, restrict or delay consummation of, or might otherwise reasonably be expected toadversely affect in any material manner, any of the restructuring transactions or the consummationof the restructuring transactions as a whole or (2) could reasonably be expected to materiallyadversely affect our business, condition (financial or otherwise), income, operations, properties,assets, liabilities or prospects, or materially impair the contemplated benefits of any of therestructuring transactions, or the consummation of the restructuring transactions as a whole to usor that might be material to noteholders in deciding whether to participate in the exchange offer.

The foregoing conditions are for our sole benefit and may be asserted by us or may be waived by us, inwhole or in part, at any time and from time to time, in our reasonable discretion, provided, that all of the conditionsto the exchange offer, other than those requiring receipt of necessary governmental approvals, will be satisfied orwaived by us at or prior to the expiration date. The failure by us at any time to exercise any of the foregoing rightsshall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may beasserted at any time and from time to time by us prior to the expiration date.

Exchange Agent

Computershare has been appointed as exchange agent for the exchange offer. We will pay the exchangeagent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expensesin connection therewith.

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Information Agent

Georgeson LLC has been appointed as information agent for the exchange offer, and will receivecustomary compensation for its services. We will also reimburse the information agent for its reasonable out-of-pocket expenses. Questions concerning tender procedures and requests for additional copies of this confidentialoffering memorandum, or other documents should be directed to the information agent at the addresses andtelephone numbers set forth under “Where You Can Find More Information.” Noteholders may also contact theirbroker, dealer, commercial bank or trust company for assistance concerning the exchange offer.

Advisors

The Company’s Financial Advisor

The board of the Company formed a special committee to consider the exchange offer and the restructuringtransactions and make recommendations to the full board. The members of the special committee were Benjamin Ngand Steve Clemente. The special committee had authority to hire financial advisors and it engaged Alvarez &Marsal (“A&M” or the “financial advisor”). A&M provided advice and analyses but did not provide a fairnessopinion or other opinion on the fairness of the exchange offer or the other potential transactions considered by thespecial committee and the board. We are paying A&M customary fees for its services, and we are indemnifyingA&M. A&M has not, however, been retained to solicit and is not soliciting acceptances of the exchange offer ormaking any recommendation with respect thereto and has not been engaged to provide a fairness opinion withrespect to any of the restructuring transactions.

Fees and Expenses

We will pay the reasonable and customary fees and reasonable out-of-pocket expenses of the exchangeagent, the information agent, and the trustee (as described below), and legal, accounting, and related fees andexpenses related to the exchange offer and restructuring transactions. We may also pay brokerage houses and othercustodians, nominees and fiduciaries their reasonable out-of-pocket expenses incurred in forwarding copies of thisconfidential offering memorandum and related documents to the beneficial owners of the existing notes and inhandling or forwarding tenders for exchange. We will not, however, make any payments to brokers, dealers or otherpersons soliciting acceptances of the exchange offer.

Additionally, we will pay all transfer taxes, if any, applicable to the exchange of existing notes pursuant tothe exchange offer. If, however, the consideration for the exchange offer is to be issued in the name of any personother than the registered holder of the existing notes exchanged therefor or if for existing notes that are registered inthe name of any person other than the person signing the letter of transmittal, or if a transfer tax is imposed for anyreason other than the exchange of existing notes pursuant to the exchange offer, then the amount of any such transfertaxes imposed on the registered holder or any other persons will be payable by the noteholder that is exchanging. Ifsatisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the letter of transmittal,the amount of such transfer taxes will be billed directly to such holder of the existing notes that are exchanged.

Consequences of Failure to Exchange

Completion of the exchange offer will have certain consequences to noteholders who do not exchange theirexisting notes for new senior notes, including, without limitation, that, if the remaining existing notes are notredeemed, the trading market for unexchanged existing notes could become limited or nonexistent due to thereduction in the amount of the existing notes outstanding after completion of the exchange offer, which mayadversely affect the market price and price volatility of such existing notes, and the Company may be unable torepay such existing notes when they come due on June 30, 2016. See “Risk Factors — Risks Related to theExchange Offer.”

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DESCRIPTION OF THE NEW SENIOR NOTES

As used below in this “Description of the New Senior Notes” section, the “Issuer” means Nebraska BookHoldings, Inc., a Delaware corporation, and its successors, but not any of its subsidiaries. The Issuer will issue thenotes described in this confidential offering memorandum under an Indenture, to be dated as of the Issue Date (the“Indenture”), between the Issuer and Wilmington Trust, National Association, as trustee (in such capacity, the“Trustee”). The terms of the new senior notes include those set forth in the Indenture and those made part of theIndenture by reference to the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”). A copy of theIndenture is attached to this confidential offering memorandum as Exhibit A.

The following summary of the material terms and provisions of the new senior notes and the Indenture doesnot purport to be complete and is subject to the detailed provisions of, and qualified in its entirety by reference to,provisions of the new senior notes and the Indenture. You can find definitions of certain terms used in thisdescription under the heading “— Certain Definitions.”

Principal, Maturity and Interest

The new senior notes will mature on April 1, 2026. The new senior notes will bear interest at the rate shownon the cover page of this confidential offering memorandum, payable on March 15 and September 15 of each year(each such date, an “interest payment date”), to Holders of record at the Close of Business on March 1 andSeptember 1, as the case may be (each such date, a “regular record date”), immediately preceding the relevantinterest payment date. Interest on the new senior notes will be computed on the basis of a 360-day year of twelve30-day months.

The new senior notes will initially be issued in registered form, without coupons, and in denominations of$1.00 and integral multiples of $1.00 in excess thereof. Such denominations and minimum denominations will beused and observed for all payments, redemptions and repurchases.

An aggregate principal amount of new senior notes equal to up to $125.0 million (the “Initial Notes”) is beingissued in this offering. The Issuer may issue additional notes having identical terms and conditions to the newsenior notes being issued in this offering, except for Issue Date, issue price and first interest payment date in anunlimited aggregate principal amount (the “additional notes”). In addition, if the Issuer elects to pay PIK Interest (asdefined below) in respect of the new senior notes, the Issuer may elect either (1) to increase the outstandingprincipal amount of the new senior notes or (2) to issue additional notes as certificated new senior notes (in the caseof (1) or (2), the “PIK Notes”) under the Indenture having the same terms as the new senior notes offered hereby(such payment in clause (1) or (2), a “PIK Payment”) (any fractional amount of PIK Notes to be received in a PIKPayment will be rounded down to the nearest dollar). Any additional notes subsequently issued under the Indenturewill be part of the same issue as the new senior notes being issued in this offering and will be treated as one singleclass with the new senior notes being issued in this offering. For purposes of this “Description of the New SeniorNotes” references to the new senior notes include any additional notes that are actually issued and any references to“principal amount of the new senior notes” include any increase in the principal amount of the outstanding newsenior notes as a result of a PIK Payment.

Interest on the new senior notes will be payable semi-annually in arrears, on and, commencing onSeptember 15, 2016. Until the first interest payment date that is two years after the Issue Date (the “PIK OnlyPeriod”) interest will be paid by increasing the outstanding principal amount of the new senior notes or by issuingadditional PIK Notes (“PIK Interest”) (any fractional amount of PIK Notes to be received in a PIK Payment will berounded down to the nearest dollar). To pay PIK Interest by issuing new senior notes in certificated form, the Issuerwill be required to deliver an Authentication Order to the Trustee to authenticate and deliver PIK Notes incertificated form at least 20 Business Days before the relevant interest payment date. The Issuer will be deemed tohave selected to pay interest by increasing the outstanding principal amount of the new senior notes by an amountequal to the applicable amount of interest for the interest period unless the Trustee receives notice that the Issuer isrequired to pay Cash Interest or, if applicable, an Authentication Order. After the PIK Only Period, interest will bepaid in PIK Interest unless the Issuer’s Subsidiaries have the contractual ability to dividend cash to the Issuer underthe Credit Facilities, other future Subsidiary Indebtedness and any other agreements such that once such dividend ispaid and combined with the Issuer’s then current cash and Cash Equivalents, the Issuer could pay interest in respectof such interest period entirely in cash (“Cash Interest”) (excluding from such calculations (a) any cash and Cash

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Equivalents equal to $5.0 million available to be dividended to the Issuer to pay interest, (b) any cash and CashEquivalents on hand at the Issuer which has been distributed to the Issuer and the distribution of which isconditioned upon such cash and Cash Equivalents being utilized for a purpose other than paying Cash Interest(including, without limitation, amounts permitted to be distributed to the Issuer solely for the purpose of payingtaxes attributable to the Issuer’s consolidated Subsidiaries, provided such conditions are otherwise permitted by theCredit Facilities, other future Subsidiary Indebtedness or any agreement that amends, modifies, renews, increases,supplements, refunds, replaces or refinances such Indebtedness), and (c) cash and Cash Equivalents equal to$1.0 million on hand at the Issuer). If the Issuer is required to pay Cash Interest, the Issuer will be required todeliver notice to the Trustee (and the Trustee shall forward such notice to Holders without further instructions ororders from the Issuer) that the Issuer is required to pay Cash Interest at least 20 Business Days before the relevantinterest payment date. The Issuer will make each interest payment due on an interest payment date to the Holders ofrecord as of the Close of Business on the immediately preceding regular record date. Interest on the new seniornotes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from andincluding the Issue Date with respect to the new senior notes.

Notwithstanding anything to the contrary, the payment of accrued interest in connection with any redemptionor repurchase of new senior notes, as described under “— Optional Redemption,” and “— Fundamental Change”shall be made solely in cash.

At all times, PIK Interest on the new senior notes will be payable (x) by increasing the outstanding principalamount of the new senior notes by an amount equal to the applicable amount of interest for the interest period(rounded down to the nearest whole dollar) to the credit of Holders on the regular record date and adjusting thebooks and records of the Trustee with respect to such new senior notes or (y) by issuing PIK Notes as certificatednew senior notes in an aggregate principal amount equal to the applicable amount of interest for the interest period(rounded down to the nearest whole dollar), and the Trustee will authenticate and deliver such PIK Notes incertificated form for original issuance to the Holders on the regular record date, as shown by the records of theregister of Holders. Notwithstanding any requirement to deliver an authentication order to authenticate and deliverPIK Notes as certificated new senior notes or a notice stating that the Issuer will be required to pay Cash Interest atleast 20 Business Days prior to the relevant interest payment date, if the Issuer does not deliver an authenticationorder or notice stating the Issuer is required to pay Cash Interest at least 20 Business Days prior to the relevantinterest payment date, the Issuer will pay PIK Interest by increasing the outstanding principal amount of the newsenior notes by an amount equal to applicable amount of interest for the interest period to the credit of Holders onthe regular record date and adjusting the books and records of the Trustee with respect to such new senior notes. Insuch case, the Trustee will increase the principal amount of the new senior notes by an amount equal to applicableamount of interest for the interest period. Following an increase in the principal amount of the outstanding newsenior notes as a result of a PIK Payment, the new senior notes will bear interest on such increased principal amountfrom and after the date of such PIK Payment. Any PIK Notes issued as certificated new senior notes will be datedas of the applicable interest payment date and will bear interest from and after such date. All PIK Notes issuedpursuant to a PIK Payment will mature on April 1, 2026 and will be governed by, and subject to the terms,provisions and conditions of, the Indenture and shall have the same rights and benefits as the new senior notesissued on the Issue Date. Any certificated PIK Notes will be issued with the description “PIK” on the face of suchPIK Note.

Methods of Receiving Payments on the new senior notes

If a Holder has given wire transfer instructions to the Issuer at least ten Business Days prior to the applicablepayment date, the Issuer will make all payments on such Holder’s Notes by wire transfer of immediately availablefunds to the account specified in those instructions. Otherwise, payments on the new senior notes will be made atthe office or agency of the paying agent (the “Paying Agent”) and registrar (the “Registrar”) for the new senior notesunless the Issuer elects to make interest payments by check mailed to the Holders at their addresses set forth in theregister of Holders.

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Ranking

The new senior notes will be the Issuer’s general senior unsecured obligations, will rank senior in right ofpayment to all existing and future debt of the Issuer that is expressly subordinated in right of payment to the newsenior notes, will rank equally in right of payment with all existing and future liabilities of the Issuer that are not sosubordinated and will be effectively subordinated to any of the Issuer’s future secured Indebtedness to the extent ofthe value of the assets securing such Indebtedness. The new senior notes will also be structurally subordinate to allof the liabilities of each of the Issuer’s Subsidiaries, including the Credit Facilities.

Optional Redemption

Except as set forth in the paragraph immediately below, the new senior notes may not be redeemed prior toMarch 15, 2021. At any time or from time to time on or after March 15, 2021, the Issuer, at its option, may redeemthe new senior notes, in whole or in part, upon not less than 30 nor more than 60 days’ notice, at the redemptionprices (expressed as percentages of principal amount) set forth below, together with accrued and unpaid interestthereon, if any, to the Redemption Date, if redeemed during the 12-month period beginning March 15 of the yearsindicated:

Year Percentage

2021 and thereafter.................................................................................................................. 101%

Prior to March 15, 2021, the Issuer may redeem the new senior notes, in whole or in part, at a redemption priceequal to 100% of the principal amount thereof, plus the Applicable Premium as of, plus accrued and unpaid interestthereon, if any, to the Redemption Date.

Selection and Notice of Redemption

In the event that less than all of the new senior notes are to be redeemed at any time pursuant to an optionalredemption, selection of the new senior notes for redemption will be made, in the case of global new senior notes, inaccordance with the policies and procedures of the Depositary and, in the case of certificated new senior notes, bythe Trustee on a pro rata basis, by lot or by such method as the Trustee deems appropriate in such denominations asare allowed for new senior notes and PIK Notes, if any.

Notice of redemption will be mailed or otherwise delivered at least 30 but not more than 60 days before thedate of redemption to each Holder of new senior notes to be redeemed at its registered address, except thatredemption notices may be mailed more than 60 days prior to a Redemption Date if the notice is issued inconnection with a satisfaction and discharge of the Indenture. If any Note is to be redeemed in part only, the noticeof redemption that relates to that Note will state the portion of the principal amount of the new senior notes to beredeemed. A new Note in a principal amount equal to the unredeemed portion of the Note will be issued in thename of the Holder of the Note upon cancellation of the original Note. On and after the date of redemption, interestwill cease to accrue on new senior notes or portions thereof called for redemption so long as the Issuer has depositedwith the Paying Agent for the new senior notes funds in satisfaction of the Redemption Price (including accrued andunpaid interest on the new senior notes to be redeemed) pursuant to the Indenture.

Fundamental Change

Repurchase at the Option of Holders

The Indenture will provide that upon the occurrence of a Fundamental Change each Holder will have the rightto require that the Issuer purchase that Holder’s new senior notes for a cash price (the “Fundamental ChangePurchase Price”) equal to 101% of the principal amount of the new senior notes to be purchased, plus accrued andunpaid interest thereon, if any, to but excluding the date of purchase; provided, however, if the date of purchaseoccurs after a regular record date and on or prior to an interest payment date to which it relates, the Issuer will payaccrued and unpaid interest to the Holder of record on the regular record date and the Fundamental Change PurchasePrice will be equal to 101% of the principal amount of the new senior notes to be purchased.

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On or before the 10th day after a Fundamental Change, the Issuer will provide to the Holders, the Trustee andPaying Agent a notice of the occurrence of such Fundamental Change and of the purchase right at the option of theHolders arising as a result thereof.

The obligation of the Issuer to make a Fundamental Change purchase offer will be satisfied if a third partymakes the Fundamental Change purchase offer in the manner, at the times and otherwise in compliance with therequirements applicable to a Fundamental Change purchase offer made by the Issuer and purchases all new seniornotes properly tendered and not withdrawn under the Fundamental Change purchase offer.

With respect to any disposition of assets, the phrase “all or substantially all” as used in the Indenture (includingas set forth under the definition of “Fundamental Change” varies according to the facts and circumstances of thesubject transaction, has no clearly established meaning under New York law (which governs the Indenture) and issubject to judicial interpretation. Accordingly, in certain circumstances there may be a degree of uncertainty inascertaining whether a particular transaction would involve a disposition of “all or substantially all” of the assets ofthe Issuer, and therefore it may be unclear as to whether a Fundamental Change has occurred and whether theHolders have the right to require the Issuer to purchase new senior notes.

In connection with any Fundamental Change purchase offer, the Issuer will, if required and notwithstandinganything to the contrary in the Indenture, comply with the provisions of the tender offer rules under the ExchangeAct that may then be applicable and file a Schedule TO, if required, or any other required schedule under theExchange Act.

If a Fundamental Change does occur, there can be no assurance that the Issuer will have the financial resourcesat the time of the Fundamental Change to make any required repurchases of the new senior notes. In addition, wecannot assure you that in the event of a Fundamental Change, the Issuer will be able to obtain the consents necessaryto consummate a Fundamental Change purchase offer from the lenders under agreements governing outstandingIndebtedness which may prohibit the offer.

Certain Covenants

The Indenture will contain, among others, the following covenants:

Limitations on Mergers, Consolidations, Etc.

The Issuer will not, directly or indirectly, in a single transaction or a series of related transactions, consolidateor merge with or into (other than a merger with a Wholly-Owned Subsidiary solely for the purpose of changing theIssuer’s jurisdiction of incorporation to another State of the United States), or sell, lease, transfer, convey orotherwise dispose of or assign all or substantially all of the assets of the Issuer unless:

(1) either:

(a) the Issuer will be the surviving or continuing Person; or

(b) the Person formed by or surviving such consolidation or merger or to which such sale, lease,conveyance or other disposition shall be made (or, in the case of a plan of liquidation, any Person to whichassets are transferred) (collectively, the “Successor”) is a corporation, limited liability company or limitedpartnership organized and existing under the laws of any State of the United States of America or theDistrict of Columbia, and the Successor expressly assumes, by supplemental indenture, all of theobligations of the Issuer under the new senior notes and the Indenture; and

(2) immediately prior to and immediately after giving effect to such transaction and the assumption of theobligations as set forth in clause (1)(b) above, no Default shall have occurred and be continuing.

For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction orseries of transactions) of all or substantially all of the properties or assets of one or more Subsidiaries, the EquityInterests of which constitute all or substantially all of the properties and assets of the Issuer, will be deemed to be thetransfer of all or substantially all of the properties and assets of the Issuer.

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Upon any consolidation, combination or merger of the Issuer, or any transfer of all or substantially all of theassets of the Issuer in accordance with the foregoing, in which the Issuer is not the continuing obligor under the newsenior notes, the surviving entity formed by such consolidation or into which the Issuer is merged or to which theconveyance, lease or transfer is made will succeed to, and be substituted for, and may exercise every right andpower of, the Issuer under the new senior notes and with the same effect as if such surviving entity had been namedtherein as the Issuer and, except in the case of a lease, the Issuer, as the case may be, will be released from theobligation to pay the principal of and interest on the new senior notes, as the case may be, and all of the Issuer’sother obligations and covenants under the new senior notes and the Indenture.

Notwithstanding anything in the foregoing section, the Issuer may merge with or into any Subsidiary and anySubsidiary may merge with or into any other Subsidiary.

Reports

The Indenture will provide that for so long as any new senior notes are outstanding, unless the Issuer is subjectto the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise complies with such reportingrequirements, the Issuer will furnish without cost to each Holder and file with the Trustee:

(1) (a) within 95 days after the end of each fiscal year beginning with the fiscal year ended March 31,2016, annual audited consolidated financial statements of the Issuer for such fiscal year (along with customarycomparative results) and (b) within 50 days after the end of each of the first three fiscal quarters of each fiscalyear beginning with the first fiscal quarter ended June 30, 2016, quarterly unaudited financial statements forthe interim period as of, and for the period ending on, the end of such fiscal quarter (along with comparativeresults for the corresponding interim period in the prior year), in each case, including (i) a “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” with respect to the periodspresented and (ii), with respect to the annual information only, a report on the audited financial statements bythe Issuer’s certified independent accountants, provided that no such financial statements shall be required toprovide footnote disclosure regarding any guarantors or non-guarantors of any of the Issuer’s Indebtedness;

(2) promptly from time to time after the occurrence of an event that would require information about suchevent to be provided to the SEC on Form 8-K, or any successor or comparable form, a report with suchinformation; provided that unless otherwise required to be provided to Holders, reports will only be requiredwith respect to the following Form 8-K Items (or its successor item): Item 1.01 (Entry into a MaterialDefinitive Agreement), Item 1.02 (Termination of a Material Definitive Agreement), Item 1.03 (Bankruptcy orReceivership), Item 2.01 (Completion of Acquisition or Disposition of Assets), Item 2.03 (Creation of a DirectFinancial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant), Item 2.04(Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement), Item 2.05 (Costs Associated with Exit or Disposal Activities), Item 5.01(Changes in Control of Registrant), and Item 9.01 (Financial Statements and Exhibits, but only with respect tofinancial statements and pro forma financial information relating to transactions required to be reportedpursuant to Item 2.01), and provided that such financial information need not be audited to the extent notpreviously audited; provided, however, that unless otherwise required to be provided to Holders, no suchcurrent report will be required to be furnished if the Issuer determines in its good faith judgment that suchevent is not material to Holders or the business, assets, operations, financial positions or prospects of theIssuer; provided further that trade secrets and other confidential information that is competitively sensitive inthe good faith and reasonable determination of the Issuer may be redacted from such disclosures. In addition,for so long as any new senior notes remain outstanding, the Issuer will furnish to the Holders and to securitiesanalysts, market makers and prospective investors that certify that they are Qualified Institutional Buyers (orother eligible investors in the new senior notes), upon their request, the information described above as well asall information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

The Issuer shall either (1) maintain a website (which may be non-public) to which Holders, prospectiveinvestors that certify that they are Qualified Institutional Buyers (or other eligible investors in the new senior notes),securities analysts and market makers (collectively, “Permitted Parties”) are given access and to which suchinformation is posted; (2) distribute via electronic mail such information to beneficial owners of the new seniornotes, securities analysts and market makers who request to receive such distributions or (3) file such informationwith the SEC.

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Conversion rights

General

Prior to the Close of Business on the second Business Day immediately preceding the Maturity Date of thenew senior notes, the new senior notes will be convertible into shares of Common Stock at any time at the option ofthe Holder. The Conversion Rate will initially be 684.2285 shares of Common Stock per $1,000 principal amountof new senior notes (equivalent to an initial Conversion Price of approximately $1.4615 per share of CommonStock). The Trustee will initially act as the conversion agent.

If the Issuer calls notes for redemption, a Holder of new senior notes may surrender such new senior notes forconversion at any time prior to the Close of Business on the second Business Day immediately preceding theRedemption Date unless the Issuer fails to pay the Redemption Price. If a Holder of new senior notes has submittednew senior notes for purchase upon a Fundamental Change, such Holder may convert such new senior notes only ifsuch Holder first withdraws its purchase election.

The Issuer will not issue fractional shares upon conversion of new senior notes. Instead, the Issuer will paycash in lieu of fractional shares based on the Last Reported Sale Price of its Common Stock on the relevantconversion date. The Issuer’s delivery to you of the full number of shares of its Common Stock, together with anycash payment for any fractional shares, into which your Note is convertible, will be deemed to satisfy in full theIssuer’s obligation to pay (1) the principal amount of such Note and (2) accrued and unpaid interest, and AdditionalInterest, if any, to, but not including, the conversion date. As a result, accrued and unpaid interest, and AdditionalInterest, if any, to, but not including, the conversion date will be deemed to be paid in full rather than cancelled,extinguished or forfeited.

The Conversion Rate and the equivalent Conversion Price in effect at any given time are referred to as the“applicable conversion rate” and the “applicable conversion price,” respectively, and will be subject to adjustment asdescribed below. A Holder may convert fewer than all of such Holder’s new senior notes so long as the principalamount of notes converted is equal to $1.00 or an integral multiple of $1.00 in excess thereof.

Upon conversion of a Note, except in the limited circumstances described below, the Holder of such Note willnot be entitled to any separate cash payment for accrued and unpaid interest or Additional Interest, if any. If newsenior notes are converted after the Close of Business on a regular record date for the payment of interest, Holders ofsuch new senior notes at the Close of Business on such record date will receive the interest and additional interest, ifany, payable on such new senior notes on the corresponding interest payment date notwithstanding the conversion.However, new senior notes surrendered for conversion during the period from the Close of Business on any regularrecord date to the Open of Business on the immediately following interest payment date must be accompanied byfunds equal to the amount of interest and Additional Interest, if any, payable on such interest payment date on thenew senior notes so converted; provided that no such payment need be made (1) for conversions following theregular record date immediately preceding the Maturity Date, (2) if the Issuer has delivered notice specifying aRedemption Date that is after a regular record date and on or prior to the first Business Day following thecorresponding interest payment date, (3) if the Issuer has specified a Fundamental Change purchase date that is aftera regular record date and on or prior to the first Business Day following the corresponding interest payment date or(4) to the extent of any overdue interest, if any overdue interest exists at the time of conversion with respect to suchNote.

If a Holder converts new senior notes, the Issuer will pay any documentary, stamp or similar issue or transfertax or duty due on the issue of any shares of its Common Stock upon such conversion, unless the tax is due becausethe Holder requests any shares of Common Stock to be issued in a name other than the Holder’s name, in which casethe Holder will pay such tax.

Conversion procedures

If you hold a beneficial interest in a global Note, to convert your new senior notes you must comply with theDepository’s procedures for converting a beneficial interest in a global Note and, if required, pay funds equal tointerest payable on the next interest payment date to which you are not entitled and, if required, pay alldocumentary, stamp or similar issue or transfer taxes or duties, if any.

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If you hold a certificated Note, to convert you must (1) complete and manually sign the conversion notice or acopy of the conversion notice on the back of the Note, (2) deliver the conversion notice, which is irrevocable subjectto certain limitations described below, and the Note to the conversion agent, (3) if required, furnish appropriateendorsements and transfer documents, (4) if required, pay all documentary, stamp or similar issue or transfer taxesor duties and (5) if required, pay funds equal to interest payable on the next interest payment date to which you arenot entitled.

The date such Holder complies with these requirements is the “conversion date” under the Indenture.

If you have elected for the Issuer to repurchase your new senior notes or a portion of your new senior notespursuant to a Fundamental Change purchase offer, you may not surrender your new senior notes for conversion untilyou have validly withdrawn your election in accordance with the Indenture and the offer to purchase.

If you have surrendered your new senior notes or a portion of your new senior notes for purchase in connectionwith a Fundamental Change, your right to withdraw your new senior notes or a portion of your new senior notes andconvert the new senior notes will terminate at the Close of Business on the second Business Day immediatelypreceding the relevant date the Issuer will purchase such new senior notes in connection with a Fundamental Changepurchase offer.

Settlement upon conversion

Upon conversion of the new senior notes, the Issuer will deliver to a converting Holder a number of shares ofCommon Stock equal to (1) the aggregate principal amount of new senior notes to be converted divided by $1,000,multiplied by (2) the applicable conversion rate. The Issuer will deliver such shares of Common Stock on the thirdBusiness Day immediately following the relevant conversion date, together with cash in lieu of any fractional shareof Common Stock issuable upon conversion.

Each conversion will be deemed to have been effected as to any new senior notes surrendered for conversionon the conversion date for such new senior notes and the converting Holder will become the record holder of anyshares of Common Stock due upon such conversion as of the Close of Business on such conversion date.

If the Common Stock (or other Capital Stock into which the new senior notes are then convertible) becomeslisted or quoted on any of The New York Stock Exchange, The Nasdaq Global Select Market or The Nasdaq GlobalMarket (or any of their respective successors), unless and until the Issuer obtains stockholder approval to issue 20%or more of the Common Stock outstanding at the time the new senior notes are issued in accordance with certainlisting standards of the securities exchanges, if the Issuer is required to deliver shares of Common Stock to aconverting Holder and such number of shares, in the aggregate with all the other shares of Common Stockpreviously delivered by the Issuer upon conversion of new senior notes, exceeds 19.99% of the Common Stockoutstanding on the date that the new senior notes are first issued, the Issuer will pay to such Holder the value of anysuch excess shares in cash (based on the VWAP over the five Trading Day period commencing on the secondTrading Day after the relevant conversion date); provided that the Issuer will notify such Holder of the exact mannerin which such cash value will be determined no later than the Close of Business on the Business Day immediatelyfollowing the conversion date.

Conversion rate adjustments

The Conversion Rate will be adjusted as described below, except that the Issuer will not make any adjustmentsto the Conversion Rate if Holders of the new senior notes participate (other than in the case of a share split or sharecombination), at the same time and upon the same terms as Holders of shares of Common Stock and solely as aresult of holding the new senior notes, in any of the transactions described below, without having to convert theirnew senior notes, as if they held a number of shares of Common Stock equal to the applicable conversion rate ineffect immediately prior to the adjustment thereof in respect of such transaction, multiplied by the principal amountof new senior notes held by such Holders, divided by $1,000.

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(1) If the Issuer issues shares of Common Stock as a dividend or distribution on its Common Stock, or ifthe Issuer effects a share split or share combination, the Conversion Rate will be adjusted based on thefollowing formula:

CR1 = CR0 x OS1

OS0

where,

CR0 = the Conversion Rate in effect immediately prior to the Open of Business on theEx-Dividend Date of such dividend or distribution, or immediately prior to the Open ofBusiness on the effective date of such share split or share combination, as applicable;

CR1 = the Conversion Rate in effect immediately after the Open of Business on the Ex-DividendDate or immediately after the Open of Business on such effective date, as applicable;

OS0 = the number of shares of Common Stock outstanding immediately prior to the Open ofBusiness on the Ex-Dividend Date or immediately prior to the Open of Business on sucheffective date, as applicable; and

OS1 = the number of shares of Common Stock outstanding immediately after giving effect to,and solely as a result of, such dividend, distribution, share split or combination, asapplicable.

Any adjustment made pursuant to this clause (1) shall become effective immediately after the Open ofBusiness on the Ex-Dividend Date for such dividend or distribution, or immediately after the Open of Businesson the effective date for such share split or share combination, as applicable. If any dividend or distribution ofthe type described in this clause (1) is declared but not so paid or made, the Conversion Rate shall beimmediately readjusted, effective as of the date the Board of Directors determines not to pay such dividend ordistribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not beendeclared or announced.

(2) If the Issuer distributes to all or substantially all Holders of shares of Common Stock any rights, optionsor warrants entitling them for a period of not more than 45 calendar days after the date of such distribution tosubscribe for or purchase shares of Common Stock, at a price per share less than the VWAP for the60 consecutive Business Day period ending on, and including, the Trading Day immediately preceding the dateof announcement of such distribution or if during the 60 consecutive Business Day period there were less thanfive days with a Last Reported Sale Price, then the VWAP for the five consecutive Trading Days ending on,and including the Trading Day immediately preceding the date of announcement of such distribution, theConversion Rate will be increased based on the following formula:

CR1 = CR0 x OS0 + XOS0 + Y

where,

CR0 = the Conversion Rate in effect immediately prior to the Open of Business on theEx-Dividend Date for such distribution;

CR1 = the Conversion Rate in effect immediately after the Open of Business on the Ex-DividendDate for such distribution;

OS0 = the number of shares of Common Stock outstanding immediately prior to the Open ofBusiness on the Ex-Dividend Date for such distribution;

X = the total number of shares of Common Stock issuable pursuant to such rights, options orwarrants; and

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Y = the number of shares of Common Stock equal to the aggregate price payable to exercisesuch rights, options or warrants divided by the VWAP for the 60 consecutive BusinessDay period ending on, and including, the Trading Day immediately preceding the date ofannouncement of the distribution of such rights, options or warrants or if during the60 consecutive Business Day period there were less than five days with a Last ReportedSale Price, then the VWAP for the five consecutive Trading Days ending on, andincluding, the Trading Day immediately preceding the date of announcement of thedistribution of such rights, options or warrants.

The foregoing increase in the Conversion Rate shall be successively made whenever any such rights,options or warrants are distributed and shall become effective immediately after the Open of Business on theEx-Dividend Date for such distribution. If such rights, options or warrants are not so distributed, theConversion Rate will be immediately readjusted to the Conversion Rate that would then be in effect if suchCommon Stock Record Date for such distribution had not been fixed. In addition, to the extent that shares ofCommon Stock are not delivered after the expiration of such rights, options or warrants, the Conversion Rateshall be immediately readjusted to the Conversion Rate that would then be in effect had the increase made forthe distribution of such rights, options or warrants been made on the basis of delivery of only the number ofshares of Common Stock actually delivered.

In determining whether any rights, options or warrants entitle the Holders of shares of Common Stock tosubscribe for or purchase shares of Common Stock at less than the VWAP for the 60 consecutive Business Dayperiod ending on, and including, the Trading Day immediately preceding the date of announcement of suchdistribution or if during the 60 consecutive Business Day period there were less than five days with a LastReported Sale Price, then the VWAP for the five consecutive Trading Days ending on, and including theTrading Day immediately preceding the date of announcement of such distribution, and in determining theaggregate offering price of such shares of Common Stock, there shall be taken into account any considerationreceived by the Issuer for such rights, options or warrants and any amount payable upon exercise or conversionthereof, the value of such consideration, if other than cash, to be determined by the Board of Directors.

(3) If the Issuer distributes shares of its Capital Stock, evidences of its Indebtedness, other assets orproperty of the Issuer or rights, options or warrants to acquire the Issuer’s Capital Stock or other securities (the“distributed property”), to all or substantially all Holders of shares of the Issuer’s Common Stock, excluding(a) dividends, distributions, rights, options or warrants as to which an adjustment was effected pursuant toclause (1) or (2) above, (b) dividends or distributions paid exclusively in cash as to which an adjustment waseffected pursuant to clause (4) below and (c) spin-offs to which the provisions set forth below in this clause (3)shall apply;

then the Conversion Rate will be increased based on the following formula:

CR1 = CR0 xSP0

SP0 – FMV

where,

CR0 = the Conversion Rate in effect immediately prior to the Open of Business on theEx-Dividend Date for such distribution;

CR1 = the Conversion Rate in effect immediately after the Open of Business on the Ex-DividendDate for such distribution;

SP0 = the VWAP for the 60 consecutive Business Day period ending on, and including, theTrading Day immediately preceding the Ex-Dividend Date for such distribution or ifduring the 60 consecutive Business Day period there were less than five days with a LastReported Sale Price, then the VWAP for the five consecutive Trading Days ending on,and including, the Trading Day immediately preceding the Ex-Dividend Date for suchdistribution; and

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FMV = the Fair Market Value (as determined by the Board of Directors) of the distributedproperty distributed with respect to each outstanding share of Common Stock on theEx-Dividend Date for such distribution;

provided that if “FMV” as set forth above is equal to or greater than “SP0” as set forth above, in lieu of the foregoingincrease, adequate provision will be made so that each Holder of a Note shall receive on the date on which thedistributed property is distributed to Holders of shares of Common Stock, for each $1,000 principal amount of newsenior notes, the amount and kind of distributed property that such Holder would have received had such Holderowned a number of shares of Common Stock equal to the Conversion Rate immediately prior to the Open ofBusiness on the Ex-Dividend Date for such distribution; provided, further that if the Board of Directors determines“FMV” for purposes of the foregoing increase by reference to the actual or when-issued trading market for anysecurities, it must in doing so consider the prices in such market over the same period used in computing the VWAPfor purposes of determining “SP0” as set forth above.

An increase in the Conversion Rate made pursuant to the immediately preceding paragraph shall becomeeffective immediately after the Open of Business on the Ex-Dividend Date for such distribution.

With respect to an adjustment pursuant to this clause (3) where there has been a payment of a dividend orother distribution on the Common Stock of shares of Capital Stock of any class or series, or similar equityinterest, of or relating to a Subsidiary, other business unit or affiliate, where such Capital Stock or similarequity interest is listed or quoted (or will be listed or quoted upon consummation of the spin-off) on a majorU.S. or non-U.S. securities exchange, which we refer to as a “Spin-Off,” the Conversion Rate will be increasedbased on the following formula:

CR1 = CR0 xFMV0 + MP0

MP0

where,

CR0 = the Conversion Rate in effect immediately prior to the end of the Valuation Period;

CR1 = the Conversion Rate in effect immediately after the end of the Valuation Period;

FMV0 = the volume-weighted average price of the Capital Stock or similar equity interestdistributed to holders of shares of Common Stock applicable to one share of CommonStock (determined for purposes of the definition of “VWAP” as if such Capital Stock orsimilar equity interest were Common Stock) over the first 10 consecutive Business Dayperiod immediately following, and including, the first Trading Day after the effectivedate of the Spin-Off (the “Valuation Period”); and

MP0 = the VWAP over the Valuation Period.

The increase in the Conversion Rate under the preceding paragraph will be determined as of the Close ofBusiness on the last Business Day of the Valuation Period; provided that in respect of any conversion duringthe Valuation Period, references with respect to 10 consecutive Business Days shall be deemed replaced withsuch lesser number of Business Days as have elapsed from, and including, the first Trading Day after theeffective date of such spin-off to, and including, the conversion date in determining the applicable conversionrate.

(4) If any cash dividend or distribution is paid or made to all or substantially all holders of shares ofCommon Stock, the Conversion Rate will be increased based on the following formula:

CR1 = CR0 xSP0

SP0 – C

where,

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CR0 = the Conversion Rate in effect immediately prior to the Open of Business on theEx-Dividend Date for such dividend or distribution;

CR1 = the Conversion Rate in effect immediately after the Open of Business on the Ex-DividendDate for such dividend or distribution;

SP0 = the VWAP for the 60 consecutive Business Day period ending on, and including, theTrading Day immediately preceding the Ex-Dividend Date for such dividend ordistribution or if during the 60 consecutive Business Day period there were less than fivedays with a Last Reported Sale Price, then the VWAP for the five consecutive TradingDays ending on, and including, the Trading Day immediately preceding the Ex-DividendDate for such dividend or distribution; and

C = the amount in cash per share the Issuer distributes to holders of shares of Common Stock.

The increase in the Conversion Rate under the preceding paragraph will become effective immediatelyafter the Open of Business on the Ex-Dividend Date for such dividend or distribution. If such dividend ordistribution is not so paid or made, the Conversion Rate shall be immediately readjusted to the ConversionRate that would then be in effect if such dividend or distribution had not been declared.

Notwithstanding the foregoing, if “C” (as defined above) is equal to or greater than “SP0” (as definedabove), in lieu of the foregoing increase, each Holder of a Note shall receive, for each $1,000 principal amountof new senior notes, at the same time and upon the same terms as Holders of shares of Common Stock, theamount of cash that such Holder would have received if such Holder owned a number of shares of CommonStock equal to the Conversion Rate in effect immediately prior to the Open of Business on the Ex-DividendDate for such dividend or distribution.

(5) If the Issuer or any of its Subsidiaries make a payment in respect of a tender offer or exchange offer forshares of Common Stock, to the extent that the cash and value of any other consideration (as determined by theBoard of Directors) included in the payment per share of Common Stock exceeds the VWAP over the first10 consecutive Business Day period immediately following, and including, the first Trading Day after the datesuch tender offer or exchange offer expires, the Conversion Rate will be increased based on the followingformula:

CR1 = CR0 xAC + (SP1 x OS1)

OC0 x SP1

where,

CR0 = the Conversion Rate in effect immediately prior to the Close of Business on the tenthBusiness Day immediately following, and including, the first Trading Day after suchtender offer or exchange offer expires;

CR1 = the Conversion Rate in effect immediately after the Close of Business on the tenthBusiness Day immediately following, and including, the first Trading Day after suchtender offer or exchange offer expires;

AC = the aggregate value of all cash and any other consideration (as determined by the Boardof Directors) paid or payable for shares of Common Stock purchased in such tender offeror exchange offer;

OS0 = the number of shares of Common Stock outstanding immediately prior to the date suchtender offer or exchange offer expires (prior to giving effect to the purchase of all sharesof Common Stock accepted for purchase or exchange in such tender offer or exchangeoffer);

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OS1 = the number of shares of Common Stock outstanding immediately after the date suchtender offer or exchange offer expires (after giving effect to the purchase of all shares ofCommon Stock accepted for purchase or exchange in such tender offer or exchangeoffer); and

SP1 = the VWAP over the first 10 consecutive Business Day period immediately following, andincluding, the first Trading Day after such tender offer or exchange offer expires.

The increase in the Conversion Rate under the preceding paragraph will occur at the Close of Business onthe tenth Business Day immediately following, and including, the first Trading Day after such tender offer orexchange offer expires; provided that in respect of any conversion within the first 10 consecutive Business Dayperiod immediately following, and including, the first Trading Day after the date any such tender offer orexchange offer expires, references to 10 consecutive Business Days shall be deemed replaced with such lessernumber of Business Days as have elapsed from, and including, the first Trading Date after the date such tenderoffer or exchange offer expires to, and including, the conversion date in determining the applicable conversionrate.

Except as stated herein, the Issuer will not adjust the Conversion Rate for the issuance of shares ofCommon Stock or any securities convertible into or exchangeable for shares of Common Stock or the right topurchase shares of Common Stock or such convertible or exchangeable securities. If, however, the applicationof the foregoing formulas would result in a decrease in the Conversion Rate, no adjustment to the ConversionRate will be made (other than as a result of a reverse share split or share combination and subject to theIssuer’s right to readjust the Conversion Rate as described in this section).

To the extent permitted by applicable law and subject to, if applicable, any securities exchange on whichany of the Issuer’s securities are then listed, the Issuer is permitted to increase the Conversion Rate of the newsenior notes by any amount for a period of at least 20 Business Days if the Board of Directors determines thatsuch increase would be in the Issuer’s best interest. The Issuer may also (but are not required to) increase theConversion Rate to avoid or diminish income tax to Holders of shares of Common Stock or rights to purchaseshares of Common Stock in connection with a dividend or distribution of shares or Common Stock (or rights toacquire shares of Common Stock) or similar event.

A Holder of new senior notes may, in some circumstances, including a distribution of cash dividends toHolders of shares of Common Stock, be deemed to have received a distribution subject to U.S. federal incometax as a result of an adjustment or the nonoccurrence of an adjustment to the Conversion Rate. To the extentthe applicable withholding agent pays withholding taxes or backup withholding on behalf of a Holder orbeneficial owner (for U.S. federal income tax purposes) of a Note as a result of an adjustment or thenonoccurrence of an adjustment to the Conversion Rate, the applicable withholding agent may, at its option, setoff such payments against payments on the Note or, in certain circumstances, the Common Stock received onany conversion of the Note.

The Issuer currently does not have a rights plan relating to its Common Stock. To the extent that the Issuerhas a rights plan in effect upon conversion of the new senior notes, you will receive, in addition to any sharesof Common Stock you will receive in connection with such conversion, the rights under the rights plan withrespect to such shares of Common Stock, unless prior to any conversion, the rights have separated from theIssuer’s Common Stock, in which case, and only in such case, the Conversion Rate will be adjusted at the timeof separation as if we distributed, to all holders of shares of Common Stock, distributed property as describedin clause (3) above, subject to readjustment in the event of the expiration, termination or redemption of suchrights.

The applicable conversion rate will not be adjusted, among other things:

upon the issuance of any of shares of Common Stock pursuant to any present or future plan providingfor the reinvestment of dividends or interest payable on the Issuer’s securities and the investment ofadditional optional amounts in shares of the Issuer’s common stock under any plan;

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upon the issuance of any of shares of Common Stock or options or rights to purchase shares ofCommon Stock pursuant to any present or future employee or director benefit plan or program of theIssuer, or assumed by the Issuer, or any of its subsidiaries;

upon the issuance of any of shares of Common Stock pursuant to any option, warrant, right orexercisable, exchangeable or convertible security not described in the preceding bullet andoutstanding as of the Issue Date;

for a change in the par value of the Common Stock; or

for accrued and unpaid interest, and Additional Interest or defaulted interest, if any.

Adjustments to the applicable conversion rate will be calculated to the nearest 1/10,000th of a share ofCommon Stock. No adjustment to the Conversion Rate will be required unless the adjustment would requirean increase or decrease of at least 1% of the applicable conversion rate. If an adjustment is not made becausethe adjustment does not change the applicable conversion rate by at least 1%, then such adjustment will becarried forward and taken into account in any future adjustment. Notwithstanding the foregoing, upon anyconversion of new senior notes (solely with respect to the new senior notes to be converted), the Issuer willgive effect to all adjustments that have otherwise been deferred pursuant to the immediately precedingsentence, and those adjustments will no longer be carried forward and taken into account in any futureadjustment.

Recapitalizations, reclassifications and changes of our common stock

In the case of: (1) any recapitalization, reclassification or change of the Common Stock (other than changesresulting from a subdivision or combination), (2) any consolidation, merger or combination involving the Issuer andwhich results in Holders of Common Stock being entitled to receive cash, securities or other property or assets inexchange for some or all of their shares of Common Stock, (3) any sale, lease or other transfer to a third party of theconsolidated assets of the Issuer and its subsidiaries substantially as an entirety or (4) any statutory share exchange;in each case as a result of which the Issuer’s Common Stock would be converted into, or exchanged for, stock, othersecurities, other property or assets (including cash or any combination thereof), then, at the effective time of thetransaction, the Issuer will enter into a supplemental indenture to provide that the right to convert a Note will bechanged into a right to convert such Note into the kind and amount of shares of stock, other securities or otherproperty or assets (including cash or any combination thereof) that a Holder of a number of shares of the Issuer’sCommon Stock equal to the Conversion Rate immediately prior to such transaction would have owned or beenentitled to receive (the “reference property”) upon such transaction. If the transaction causes the Common Stock tobe converted into the right to receive more than a single type of consideration (determined based in part upon anyform of stockholder election), the reference property into which the new senior notes will be convertible will bedeemed to be the weighted average of the types and amounts of consideration received by the Holders of shares ofCommon Stock that affirmatively make such an election. The Issuer will notify Holders of the new senior notes andthe Trustee of such weighted average as soon as practicable after such determination is made. The Issuer will agreein the Indenture not to become a party to any such transaction unless its terms are consistent with the foregoing.

Adjustments of prices

Whenever any provision of the Indenture requires a calculation of VWAP over a span of multiple days, theIssuer will make appropriate adjustments to account for any adjustment to the Conversion Rate that becomeseffective, or any event requiring an adjustment to the Conversion Rate where the Ex-Dividend Date, Common StockRecord Date, effective date or expiration date, as the case may be, of the event occurs, at any time during the periodduring which such prices are to be calculated. Such adjustments will be effective as of the Ex-Dividend Date,Common Stock Record Date, effective date or expiration date, as the case may be, of the event causing theadjustment to the Conversion Rate.

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Limitations on Conversion Rights

Notwithstanding anything to the contrary described above, no Restricted Person shall be entitled to acquireshares of Common Stock delivered upon conversion of any Note, unless such Restricted Person has receivedapproval of the Board of Directors in accordance with the provisions described below.

Any purported delivery of shares of Common Stock upon conversion by a Restricted Person shall be void andhave no effect, unless such Restricted Person has received approval of the Board of Directors in accordance with theprovisions described below.

If any delivery of shares of Common Stock owed to any Restricted Person upon conversion is not made, inwhole or in part, as a result of these limitations:

(1) the Issuer’s obligation to make such delivery shall not be extinguished and the Issuer shall deliver suchshares of Common Stock as promptly as practicable (though with no maximum waiting period) followinga determination by the Board of Directors that such further delivery would not violate the limitationsdiscussed above or require a waiver by the Board of Directors of the limitations discussed above;provided, further, that if a Restricted Person is waiting for delivery of the Common Stock, the RestrictedPerson is not entitled to any payments of interest hereunder on the converted new senior notes;

(2) the Restricted Person may request the return of the new senior notes surrendered by it for conversion (butonly to the extent shares of Common Stock have not been delivered), after which the Issuer shall deliversuch new senior notes to such Restricted Person within five Business Days after receipt of such request;and

(3) upon a return of new senior notes as discussed above the Restricted Person will receive the RedemptionPrice if a Redemption Date for all outstanding new senior notes has already passed.

The Board of Directors may, at its sole option, waive (as to a particular Restricted Person or as to all RestrictedPersons) any restrictions that limit delivery of shares of Common Stock to a Restricted Person upon conversion ofits new senior notes.

In the event that the Board of Directors exercises its rights to waive any such restrictions as to all RestrictedPersons, the Issuer or, at the written request and expense of the Issuer, the Trustee shall send or cause to be sent toeach Holder 30 days prior to the effective waiver date an irrevocable notice (such notice, the “4.95% StockholderProvision Waiver Notice”) stating that as of an effective date specified therein, the Issuer waives any restrictionsthat limit the delivery of shares of Common Stock to a Restricted Person upon conversion of its new senior notes.

After the date of the mailing of the 4.95% Stockholder Provision Waiver Notice, the Issuer may at its optionprepare, and the Trustee shall execute, a supplemental indenture to this Indenture that eliminates any provisions ofthe Indenture in respect of any limitation on the ability of a Restricted Person to convert its new senior notes.

Events of Default

Each of the following is an “Event of Default”:

(1) failure by the Issuer to pay interest on any of the new senior notes when it becomes due and payableand the continuance of any such failure for 30 days;

(2) failure by the Issuer to pay the principal on any of the new senior notes when it becomes due andpayable, whether at Stated Maturity, upon redemption, upon purchase, upon acceleration or otherwise;

(3) failure by the Issuer to comply with any of its agreements or covenants described above under“Certain Covenants — Limitations on Mergers, Consolidations, Etc.,” or in respect of its obligations to make aFundamental Change purchase offer;

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(4) failure by the Issuer to comply with its obligation to convert the new senior notes upon exercise of aHolder’s conversion right subject to certain exceptions discussed under “Conversion Rights — Limitations onConversion Rights” and such failure continues for five Business Days;

(5) failure by the Issuer to provide notice to Holders as a result of a Fundamental Change;

(6) failure by the Issuer to comply with any other agreement or covenant in the Indenture and continuanceof this failure for 30 days after notice of the failure has been given to the Issuer by the Trustee or by theHolders of at least 25% of the aggregate principal amount of the new senior notes then outstanding;

(7) default under any mortgage, indenture or other instrument or agreement under which there may beissued or by which there may be secured or evidenced Indebtedness of the Issuer, whether such Indebtednessnow exists or is incurred after the Issue Date, which default:

(a) is caused by a failure to pay at final maturity (giving effect to any applicable grace periods and anyextensions thereof) principal on such Indebtedness,

(b) results in the acceleration of such Indebtedness prior to its express final maturity, or

(c) results in the commencement of judicial proceedings to foreclose upon, or to exercise remediesunder applicable law or applicable security documents to take ownership of, the assets securing suchIndebtedness, and

in each case, the principal amount of such Indebtedness, together with any other Indebtedness with respect to whichan event described in clause (a), (b) or (c) has occurred and is continuing, aggregates to $20.0 million or more;

(8) one or more judgments or orders that exceed $20.0 million in the aggregate (net of amounts coveredby insurance or bonded) for the payment of money have been entered by a court or courts of competentjurisdiction against the Issuer and such judgment or judgments have not been satisfied, stayed, annulled orrescinded within 60 days of being entered;

(9) the Issuer pursuant to or within the meaning of any applicable bankruptcy law:

(a) commences a voluntary case or proceeding,

(b) consents to the entry of an order for relief against it in an involuntary case or proceeding,

(c) consents to the appointment of a Custodian of it or for all or substantially all of its assets, or

(d) makes a general assignment for the benefit of its creditors; and

(10) a court of competent jurisdiction enters an order or decree under any applicable bankruptcy law that:

(a) is for relief against the Issuer as debtor in an involuntary case,

(b) appoints a Custodian of the Issuer or a Custodian for all or substantially all of the assets of theIssuer, or

(c) orders the liquidation of the Issuer,

and the order or decree remains unstayed and in effect for 60 days.

Except for a failure to comply with the agreements and covenants described above under “Certain Covenants— Reports”, if an Event of Default (other than an Event of Default specified in clause (9) or (10) above with respectto the Issuer) shall have occurred and be continuing under the Indenture, the Trustee, by written notice to the Issuer,or the Holders of at least 25% in aggregate principal amount of the new senior notes then outstanding, by writtennotice to the Issuer and the Trustee, may declare all amounts owing under the new senior notes to be due and

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payable immediately. If an Event of Default specified in clause (9) or (10) with respect to the Issuer occurs, alloutstanding new senior notes shall become due and payable without any further action or notice.

The sole remedy relating to the failure of the Issuer to comply with its agreements and covenants describedabove under “Certain Covenants — Reports,” will consist exclusively of the right to receive Additional Interest onthe principal amount of the new senior notes at a rate equal to 0.5% per annum, payable as set forth below. ThisAdditional Interest will be payable in the same manner and on the same interest payment dates and subject to thesame terms as other interest. Additional Interest will accrue on all outstanding new senior notes from and includingthe date on which a failure to comply with agreements and covenants described above under “Certain Covenants —Reports,” first occurs to such date on which the failure to comply shall have been cured or waived. For theavoidance of doubt, this provision will not affect the rights of Holders in the event of the occurrence of any otherEvent of Default. For the further avoidance of doubt, no Additional Interest shall be payable under this provisionuntil the Issuer fails to comply with its agreements and covenants described above under “Certain Covenants –Reports,” for a period of 60 calendar days. For the avoidance of doubt, Additional Interest pursuant to this provisionshall not accrue at an aggregate rate in excess of 0.5% per annum regardless of the number of events orcircumstances giving rise to the requirement to pay such Additional Interest.

The Trustee shall, within 90 days after any Default with respect to the new senior notes is actually known to aResponsible Officer of the Trustee, give the Holders notice of all uncured Defaults thereunder actually known to it;provided, however, that, except in the case of an Event of Default in payment with respect to the new senior notes ora Default in complying with “Certain Covenants — Limitations on Mergers, Consolidations, Etc.,” the Trustee shallbe protected in withholding such notice if and so long as it in good faith determines that the withholding of suchnotice is in the interest of the Holders.

No Holder will have any right to institute any proceeding with respect to the Indenture or the new senior notes,or for any remedy thereunder, unless the Trustee:

(1) has failed to act for a period of 60 days after receiving written notice of a continuing Event of Defaultby such Holder and a request to act by Holders of at least 25% in aggregate principal amount of new seniornotes outstanding;

(2) has been offered indemnity, security or prefunding satisfactory to it; and

(3) has not received from the Holders of a majority in aggregate principal amount of the outstanding newsenior notes a direction inconsistent with such request.

However, such limitations do not apply to a suit instituted by a Holder of any Note for enforcement of paymentof the principal of or interest on such Note on or after the due date therefor (after giving effect to the grace periodspecified in clause (1) of the first paragraph of this “Events of Default” section).

The Issuer is required to deliver to the Trustee annually a statement regarding compliance with the Indentureand, upon any Officer of the Issuer becoming aware of any Default, a statement specifying such Default and whataction the Issuer is taking or proposes to take with respect thereto.

Satisfaction and Discharge

The Indenture will be discharged and will cease to be of further effect (except as to rights of registration oftransfer or exchange of new senior notes which shall survive until all new senior notes have been canceled) as to alloutstanding new senior notes when either:

(1) all the new senior notes that have been authenticated and delivered (except lost, stolen or destroyednew senior notes which have been replaced or paid and new senior notes for whose payment money has beendeposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or dischargedfrom this trust) have been delivered to the Trustee for cancellation, or

(2) (a) all new senior notes not delivered to the Trustee for cancellation otherwise (i) have become dueand payable at maturity, on the date of redemption or on the date the Issuer is required to repurchase new

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senior notes as a result of a Fundamental Change or will become due and payable within one year of such dateand the Issuer has irrevocably deposited or caused to be deposited with the Trustee funds in trust in an amountof money sufficient to pay and discharge the entire Indebtedness (including all principal and accrued interest)on the new senior notes not theretofore delivered to the Trustee for cancellation, (ii) have been called forredemption (regardless of whether a Fundamental Change has occurred or will occur) or will be called forredemption within one year and the Issuer has irrevocably deposited or caused to be deposited with the Trusteefunds in trust in an amount of money sufficient to pay and discharge the entire Indebtedness (including anyprincipal and accrued interest) on the new senior notes not theretofore delivered to the Trustee for cancellationor (iii) have been delivered for conversion and the Issuer shall deliver to the Holders shares of Common Stocksufficient to pay all amounts owing in respect of the new senior notes not theretofore delivered to the Trusteefor cancellation or redemption,

(b) the Issuer has paid all sums payable by it under the Indenture, and

(c) the Issuer has delivered irrevocable instructions to the Trustee to apply the deposited moneytoward the payment of the new senior notes at maturity, on the date of redemption or the date the Issuer isrequired to repurchase notes as a result of a Fundamental Change, as the case may be.

In addition, the Issuer must deliver an Officers’ Certificate and an Opinion of Counsel stating that allconditions precedent to satisfaction and discharge have been complied with.

Transfer and Exchange

A Holder will be able to register the transfer of or exchange new senior notes only in accordance with theprovisions of the Indenture. The Registrar may require a Holder, among other things, to furnish appropriateendorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.Without the prior consent of the Issuer, the Registrar is not required to register the transfer of or exchange of anyNote (1) selected for redemption, (2) for a period of 15 days before the mailing or other delivery of a notice ofredemption, (3) between a Record Date and the next succeeding interest payment date, (4) when a Holder hasaccepted a Fundamental Change purchase offer and not validly withdrawn its acceptance or (5) when a conversionnotice has been delivered.

The new senior notes will be issued in registered form and the registered Holder will be treated as the owner ofsuch Note for all purposes.

Amendment, Supplement and Waiver

Subject to certain exceptions, the Indenture or the new senior notes may be amended with the consent (whichmay include consents obtained in connection with a tender offer or exchange offer for new senior notes) of theHolders of at least a majority in aggregate principal amount of the new senior notes then outstanding, and anyexisting Default under, or compliance with any provision of, the Indenture may be waived (other than anycontinuing Default in the payment of the principal or interest on the new senior notes or to deliver cash and shares ofCommon Stock upon conversion subject to certain limitations on the right to convert) with the consent (which mayinclude consents obtained in connection with a tender offer or exchange offer for new senior notes) of the Holders ofa majority in principal amount of the new senior notes then outstanding; provided that, without the consent of eachHolder affected, no amendment or waiver may:

(1) reduce, or change the maturity of, the principal of any Note;

(2) reduce the rate of or extend the time for payment of interest on any Note;

(3) reduce any premium payable upon redemption of the new senior notes or upon a Fundamental Changeor change the date on which any new senior notes are subject to redemption (other than any minimum noticeperiod) or subject to repurchase as a result of a Fundamental Change or amend or modify in any manneradverse to the Holders the Issuer’s obligation to make such payment whether through amendment or waiver ofprovisions in the covenants, definitions or otherwise;

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(4) make any Note payable in money or currency other than that stated in the new senior notes;

(5) modify or change any provision of the Indenture or the related definitions to affect the ranking of thenew senior notes in a manner that adversely affects the Holders;

(6) reduce the percentage of Holders necessary to consent to an amendment or waiver to the Indenture orthe new senior notes;

(7) waive a default in the payment of principal of or premium or interest on any new senior notes (excepta rescission of acceleration of the new senior notes by the Holders thereof as provided in the Indenture and awaiver of the payment default that resulted from such acceleration);

(8) impair the rights of Holders to receive payments of principal of or interest on the new senior notes onor after the due date therefor or to institute suit for the enforcement of any payment on the new senior notes;

(9) make any change in these amendment and waiver provisions; or

(10) make any change that affects the conversion rights of the new senior notes.

Notwithstanding the foregoing, the Issuer and the Trustee, may amend the Indenture, or the new senior notes,without the consent of any Holder:

(1) to cure any ambiguity, defect or inconsistency;

(2) to provide for uncertificated new senior notes in addition to or in place of certificated new seniornotes;

(3) to provide for the assumption of the Issuer’s obligations to the Holders in the case of a merger,consolidation or sale of all or substantially all of the assets in accordance with “Certain Covenants —Limitations on Mergers, Consolidations, Etc.”;

(4) to secure the new senior notes or provide security for additional borrowings under the Credit Facilitiesor any additional Indebtedness which Liens are permitted to be incurred in accordance with the Indenture;

(5) to evidence and provide the acceptance of the appointment of a successor trustee under the Indenture;

(6) to make any change that would provide any additional rights or benefits to Holders or that does notmaterially adversely affect the rights of any Holder or, in the case of the Indenture, to qualify or maintain thequalification of the Indenture under the Trust Indenture Act;

(7) to eliminate any provisions of the Indenture in respect of any limitation on the ability of a RestrictedPerson to convert its new senior notes;

(8) to add or incorporate additional provisions of the Trust Indenture Act; or

(9) to conform the text of the Indenture to any provisions of the “Description of the New Senior Notes” orto correct a manifest error in any formula in the Indenture.

No Personal Liability of Directors, Officers, Employees, Stockholders and Members

No director, officer, employee, incorporator, stockholder, partner, member or manager of the Issuer will haveany liability for any obligations of the Issuer under the new senior notes or the Indenture or for any claim based on,in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives andreleases all such liability. The waiver and release are part of the consideration for issuance of the new senior notes.The waiver may not be effective to waive liabilities under the federal securities laws. It is the view of the SEC thatthis type of waiver is against public policy.

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Concerning the Trustee

Wilmington Trust, National Association is the Trustee under the Indenture and will be appointed by the Issueras Registrar, Paying Agent and Conversion Agent with regard to the new senior notes.

The Holders of a majority in principal amount of the then outstanding new senior notes will have the right todirect the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee,subject to certain exceptions. The Indenture provides that, in case an Event of Default occurs and is not cured, theTrustee will be required, in the exercise of its power, to use the degree of care of a prudent person in similarcircumstances in the conduct of his own affairs. The Trustee will be under no obligation to exercise any of its rightsor powers under the Indenture at the request of any Holder, unless such Holder shall have offered to the Trusteeindemnity, security or prefunding satisfactory to the Trustee.

Governing Law

The Indenture and the new senior notes will be governed by, and construed in accordance with, the laws of theState of New York, as applied to contracts made and performed within the state of New York, without regard toprinciples of conflicts of laws.

Certain Definitions

Set forth below is a summary of certain of the defined terms used in the Indenture. Reference is made to theIndenture for the full definition of all such terms.

“382 Person” means any individual, firm, corporation or other legal entity, including persons treated as anentity pursuant to Treasury Regulation § 1.382-3(a)(1)(i); and includes any successor (by merger or otherwise) ofsuch entity.

“4.95% Stockholder” means a 382 Person who owns a Percentage Stock Ownership equal to or exceeding4.95% of the Issuer’s then-outstanding Stock, whether directly or indirectly, and including Stock such 382 Personwould be deemed to constructively own or which otherwise would be aggregated with shares owned by such382 Person pursuant to Section 382 of the Code or any successor provision or replacement provision and theapplicable Treasury Regulations thereunder.

“Additional Interest” means all amounts, if any, payable if the Issuer does not comply with its agreements andcovenants described above under “Certain Covenants — Reports.” Unless the context otherwise requires, allreferences to interest include Additional Interest, if any. Any express reference to Additional Interest shall not beconstrued as excluding Additional Interest in any other text where no such express reference is made.

“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled byor under direct or indirect common control with, such specified Person. For the purposes of this definition,“control” when used with respect to any Person means the power to direct the management and policies of suchPerson, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and theterms “controlling” and “controlled” have meanings correlative to the foregoing.

“Agent” means any Registrar, Paying Agent or conversion agent.

“amend” means to amend, supplement, restate, amend and restate or otherwise modify; and “amendment” shallhave a correlative meaning.

“Applicable Premium” means, with respect to any Note on any Redemption Date, the greater of (1) 1.0% of theprincipal amount of such Note and (2) the excess of (a) the present value at such Redemption Date of (i) theredemption price of such Note at March 15, 2021 (as set forth in the table under “Optional Redemption”), plus(ii) all scheduled interest payments due on such Note from the Redemption Date through March 15, 2021 (excludingaccrued and unpaid interest through the Redemption Date), computed using a discount rate equal to the TreasuryRate at such Redemption Date, plus 20 basis points over (b) the principal amount of such Note. The ApplicablePremium shall be calculated by the Issuer and the Trustee shall have no liability therefor.

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“Applicable Procedures” means, with respect to any transfer or transaction involving a Global Note or anybeneficial interest therein, the rules and procedures of the Depository for such Note, to the extent applicable to suchtransaction and as in effect from time to time.

“asset” means any asset or property.

“Bankruptcy Code” means Title 11 of the United States Code, as amended.

“bankruptcy law” means the Bankruptcy Code or any similar federal foreign or state law for the relief ofdebtors.

“Board of Directors” means, with respect to any Person, (1) in the case of any corporation, the board ofdirectors of such Person, (2) in the case of any limited liability company, the board of managers of such Person,(3) in the case of any partnership, the Board of Directors of the general partner of such Person and (4) in any othercase, the functional equivalent of the foregoing.

“Board Resolution” means, with respect to any Person, a copy of a resolution certified by the Secretary or anAssistant Secretary or the General Counsel of such Person to have been duly adopted by the Board of Directors andto be in full force and effect on the date of such certification, and delivered to the Trustee.

“Business Day” means a day other than a Saturday, Sunday or other day on which banking institutions in NewYork, or with respect to a payment date, in the jurisdiction of the place of payment, are authorized or required bylaw to close.

“Capital Stock” means any and all shares, interests, participations, rights or other equivalents (howeverdesignated) of corporate stock and, with respect to partnerships, partnership interests (whether general or limited)and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of,or distributions of assets of, such partnership.

“Capitalized Lease” means a lease required to be capitalized for financial reporting purposes in accordancewith GAAP.

“Capitalized Lease Obligations” of any Person means the obligations of such Person to pay rent or otheramounts under a Capitalized Lease, and the amount of such obligation shall be the capitalized amount thereofdetermined in accordance with GAAP.

“Cash Equivalents” means:

(1) obligations with a maturity of 360 days or less issued or directly and fully guaranteed or insured bythe U.S. or any agency or instrumentality thereof (provided that the full faith and credit of the U.S. is pledgedin support thereof);

(2) time deposits and certificates of deposit or acceptances with a maturity of 360 days or less of anyfinancial institution having combined capital and surplus and undivided profits of not less than $500 millionand is assigned at least a rating of “A” (or such other similar equivalent rating) or higher by at least onenationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act);

(3) commercial paper maturing no more than 180 days from the date of creation thereof issued by acorporation that is not the Issuer or an Affiliate of the Issuer, and is organized under the laws of any State ofthe U.S. or the District of Columbia and rated at least A-1 by S&P or at least P-1 by Moody’s;

(4) repurchase obligations with a term of not more than ten days for underlying securities of the typesdescribed in clause (1) above entered into with any commercial bank meeting the specifications of clause (2)above;

(5) demand deposit accounts maintained in the ordinary course of business; and

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(6) investments in money market or other mutual funds substantially all of whose assets comprisesecurities of the types described in clauses (1) through (5) above.

“Certificate of Incorporation” means the Certificate of Incorporation of the Issuer, as amended.

“Certificated Notes” means any of the Notes executed, authenticated and delivered in definitive non-global,fully registered form without interest coupons pursuant to the Indenture.

“Close of Business” means 5:00 p.m., New York City time.

“Code” means the United States Internal Revenue Code of 1986, as amended from time to time.

“Common Stock” means the shares of common stock, $0.001 par value per share, of the Issuer as they exist onthe date of this Indenture and, to the extent specified in a notice from the Issuer to any Holder prior to anyconversion, any other interest in the Issuer that the Issuer determines will be treated as Stock of the Issuer forpurposes of applying Section 382 to the Issuer.

“Common Stock Record Date” means, with respect to any dividend, distribution or other transaction or eventin which the holders of the Common Stock (or other applicable security) have the right to receive any cash,securities or other property or in which the Common Stock (or other applicable security) is exchanged for orconverted into any combination of cash, securities or other property, the date fixed for determination of holders ofthe Common Stock (or other applicable security) entitled to receive such cash, securities or other property (whethersuch date is fixed by the Board of Directors or a duly authorized committee thereof, statute, contract or otherwise).

“Conversion Price” means, per share of Common Stock, $1,000 divided by the applicable conversion rate.

“Conversion Rate” means initially 684.2285 shares of Common Stock per $1,000 principal amount of newsenior notes (equivalent to an initial Conversion Price of approximately $1.4615), subject to adjustment.

“Corporate Trust Office” means the corporate trust office of the Trustee located at 50 S. 6th Street, Suite 1290,Minneapolis, MN 55402, Attention: Nebraska Book Holdings, Inc. account manager, or such other office,designated by the Trustee by written notice to the Issuer, at which at any particular time its corporate trust businessshall be administered.

“Credit Agreement” means the Term Loan Credit and Security Agreement, originally dated as ofNovember 13, 2014, by and among Nebraska Book Company, Inc., as borrower, certain co-borrowers andguarantors party thereto, MAST OC I Master Fund L.P., as agent, and the lenders from time to time party thereto,(1) as amended by that certain Amendment No. 1 to Revolving Credit and Security Agreement dated as ofMarch 27, 2015, (2) as amended by that certain Waiver and Amendment No. 2 to Revolving Credit and SecurityAgreement dated as of April 23, 2015, (3) as amended by that certain Omnibus Amendment, Consent andAssignment Agreement dated as of June 11, 2015 and (4) as amended by that certain Amendment No. 4 to TermLoan Credit and Security Agreement dated as of June 25, 2015, including in each case any notes, guarantees,collateral and security documents, instruments and agreements executed in connection therewith, and in each case asamended, amended and restated, supplemented, modified, refinanced, replaced or otherwise restructured, in wholeor in part, from time to time.

“Credit Facilities” means one or more debt facilities (which may be outstanding at the same time andincluding, without limitation, the Credit Agreement), indentures or commercial paper facilities with banks or otherinstitutional lenders or investors or indentures or other agreements providing for revolving credit loans, term loansor letters of credit or other long-term Indebtedness and, in each case, as such agreements may be amended, amendedand restated, supplemented, modified, refinanced, replaced or otherwise restructured, in whole or in part from timeto time (including increasing the amount of available borrowings thereunder or adding Subsidiaries as additionalborrowers or guarantors thereunder) with respect to all or any portion of the Indebtedness under such agreement oragreements or any successor or replacement agreement or agreements and whether by the same or any other agent,lender or group of lenders.

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“Custodian” means any receiver, trustee, assignee, liquidator or similar official under any applicablebankruptcy law.

“Default” means (1) any Event of Default or (2) any event, act or condition that, after notice or the passage oftime or both, would be an Event of Default.

“Depository” means The Depository Trust Company, or a successor thereto registered under the Exchange Actor other applicable statute or regulation.

“Disqualified Equity Interests” of any Person means any class of Equity Interests of such Person that, by itsterms, or by the terms of any related agreement or of any security into which it is convertible, puttable orexchangeable, is, or upon the happening of any event or the passage of time would be, required to be redeemed bysuch Person, whether or not at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant toa sinking fund obligation or otherwise, in whole or in part, on or prior to the date which is 91 days after the finalmaturity date of the new senior notes; provided, however, that any class of Equity Interests of such Person that, byits terms, authorizes such Person to satisfy in full its obligations with respect to the payment of dividends or uponmaturity, redemption (pursuant to a sinking fund or otherwise) or repurchase thereof or otherwise by the delivery ofEquity Interests that are not Disqualified Equity Interests, and that is not convertible, puttable or exchangeable forDisqualified Equity Interests or Indebtedness, will not be deemed to be Disqualified Equity Interests so long as suchPerson satisfies its obligations with respect thereto solely by the delivery of Equity Interests that are not DisqualifiedEquity Interests; provided, further, however, that any Equity Interests that would not constitute Disqualified EquityInterests but for provisions thereof giving holders thereof (or the holders of any security into or for which suchEquity Interests are convertible, exchangeable or exercisable) the right to require the Issuer to redeem such EquityInterests upon the occurrence of a fundamental change occurring prior to the 91st day after the final maturity date ofthe new senior notes shall not constitute Disqualified Equity Interests if the fundamental change provisionsapplicable to such Equity Interests are no more favorable to such holders than the Fundamental Change provisionsdescribed above and such Equity Interests specifically provide that the Issuer will not redeem any such EquityInterests pursuant to such provisions prior to the Issuer’s purchase of the new senior notes as required pursuant toFundamental Change provisions.

“Equity Interests” of any Person means (1) any and all shares or other equity interests (including commonstock, preferred stock, limited liability company interests and partnership interests) in such Person and (2) all rightsto purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of orinterests in (however designated) such shares or other interests in such Person.

“Event of Loss” means, with respect to any property or asset, any (i) loss or destruction of, or damage to, suchproperty or assets or (ii) any condemnation, seizure or taking, by exercise of the power of eminent domain orotherwise, of such property or asset, or confiscation or requisition of the use of such property or asset.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Ex-Dividend Date” means the first date on which a trade of shares of Common Stock may be made on theapplicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend ordistribution in question, from the Issuer or, if applicable, from the seller of the shares of Common Stock on suchexchange or market (in the form of due bills or otherwise) as determined by such exchange or market or in theabsence of requirements from such exchange or market as determined by the conversion agent.

“Fair Market Value” means, with respect to any asset, the price (after taking into account any liabilities relatingto such asset) that would be negotiated in an arm’s-length transaction for cash between a willing seller and a willingand able buyer, neither of which is under any compulsion to complete the transaction, as such price is determined ingood faith by the Issuer (and, if such transaction involves assets with a value in excess of $10.0 million, suchdetermination shall be made by the Board of Directors of the Issuer or a duly authorized committee thereof, asevidenced by a resolution of such Board of Directors or committee delivered to the Trustee).

“Fundamental Change” means the occurrence of any of the following events at any time after the new seniornotes are originally issued:

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(1) (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act),other than one or more Permitted Holders, acquires beneficial ownership (as defined in Rules 13d-3 and 13d-5under the Exchange Act, except that for purposes of this clause that person or group shall be deemed to have“beneficial ownership” of all securities that any such person or group has the right to acquire, whether suchright is exercisable immediately or only after the passage of time), directly or indirectly, of Voting Stockrepresenting 50% or more of the voting power of the total outstanding Voting Stock of the Issuer and(b) Permitted Holders are no longer the beneficial owners, directly or indirectly, of Voting Stock representing50% or more of the voting power of the total outstanding Voting Stock of the Issuer;

(2) during any period of two consecutive years, individuals who at the beginning of such periodconstituted the Board of Directors (together with any new directors whose election to such Board of Directorsor whose nomination for election by the stockholders of the Issuer was approved by a vote of the majority ofthe directors of the Issuer then still in office who were either directors at the beginning of such period or whoseelection or nomination for election was previously so approved) cease for any reason to constitute a majority ofthe Board of Directors of the Issuer;

(3) (a) all or substantially all of the assets of the Issuer and its Subsidiaries are sold or otherwisetransferred to any Person other than a Wholly-Owned Subsidiary or one or more Permitted Holders or (b) theIssuer consolidates or merges with or into another Person other than a Wholly-Owned Subsidiary or one ormore Permitted Holders or any Person other than a Wholly-Owned Subsidiary or one or more PermittedHolders consolidates or merges with or into the Issuer; provided that in either case under this clause (3), in onetransaction or a series of related transactions in which immediately after the consummation thereof Personsbeneficially owning (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly,Voting Stock representing in the aggregate a majority of the total voting power of the Voting Stock of theIssuer immediately prior to such consummation do not beneficially own (as defined in Rules 13d-3 and 13d-5under the Exchange Act), directly or indirectly, Voting Stock representing a majority of the total voting powerof the Voting Stock of the Issuer or the surviving or transferee Person;

(4) the Issuer shall adopt a plan of liquidation or dissolution or any such plan shall be approved by thestockholders of the Issuer; or

(5) if the Common Stock (or other Capital Stock into which the new senior notes are then convertiblepursuant to the terms of this Indenture) is listed or quoted on any of The New York Stock Exchange, TheNasdaq Global Select Market or The Nasdaq Global Market (or any of their respective successors), then if theCommon Stock (or other Capital Stock into which the new senior notes are then convertible pursuant to theterms of this Indenture) ceases to be listed or quoted on at least one of The New York Stock Exchange, TheNasdaq Global Select Market or The Nasdaq Global Market (or any of their respective successors).

For purposes of this definition, a Person shall not be deemed to have beneficial ownership of securities subjectto a stock purchase agreement, merger agreement or similar agreement until the consummation of the transactionscontemplated by such agreement.

Notwithstanding the foregoing, a Fundamental Change as a result of clauses (1), (2) or (3) above will not bedeemed to have occurred if at least 90% of the consideration received or to be received by holders of shares ofCommon Stock (excluding cash payments for fractional shares and cash payments made pursuant to dissenters’appraisal rights) in connection with the transaction or transactions constituting the Fundamental Change consists ofPublicly Traded Securities and as a result of such transaction or transactions, the new senior notes becomeconvertible into such Publicly Traded Securities, excluding cash payments for fractional shares.

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of theAccounting Principles Board of the American Institute of Certified Public Accountants and statements andpronouncements of the Financial Accounting Standards Board or in such other statements by such other entity asmay be approved by a significant segment of the accounting profession of the United States, as in effect on the IssueDate.

“Governmental Authority” means the government of the United States or any other nation, or of any politicalsubdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body,

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court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrativepowers or functions of or pertaining to government (including any supra-national bodies such as the EuropeanUnion, the European Central Bank or the Organization for Economic Cooperation and Development).

“guarantee” means a direct or indirect guarantee by any Person of any Indebtedness of any other Person andincludes any obligation, direct or indirect, contingent or otherwise, of such Person: (1) to purchase or pay (oradvance or supply funds for the purchase or payment of) Indebtedness of such other Person (whether arising byvirtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services(unless such purchase arrangements are on arm’s-length terms and are entered into in the ordinary course ofbusiness), to take-or-pay, or to maintain financial statement conditions or otherwise); or (2) entered into for purposesof assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligeeagainst loss in respect thereof (in whole or in part); “guarantee,” when used as a verb, and “guaranteed” havecorrelative meanings.

“Hedging Obligations” of any Person means the obligations of such Person pursuant to (1) any interest rateswap agreement, interest rate collar agreement or other similar agreement or arrangement, (2) agreements orarrangements relating to, or designed to protect such Person against, fluctuations in foreign currency exchange rates,or (3) any forward contract, commodity swap agreement, commodity option agreement or other similar agreement orarrangement.

“Holder” means any registered holder, from time to time, of the new senior notes.

“incur” means, with respect to any Indebtedness or Obligation, incur, create, issue, assume, guarantee orotherwise become directly or indirectly liable, contingently or otherwise, with respect to such Indebtedness orObligation; provided that (1) the Indebtedness of a Person existing at the time such Person became a Subsidiaryshall be deemed to have been incurred by such Subsidiary and (2) neither the accrual of interest nor the accretion oforiginal issue discount shall be deemed to be an incurrence of Indebtedness.

“Indebtedness” of any Person at any date means, without duplication:

(1) all liabilities, contingent or otherwise, of such Person for borrowed money (whether or not therecourse of the lender is to the whole of the assets of such Person or only to a portion thereof);

(2) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(3) all reimbursement obligations of such Person in respect of letters of credit, letters of guaranty,bankers’ acceptances and similar credit transactions;

(4) all obligations of such Person to pay the deferred and unpaid purchase price of property or services,except trade payables and accrued expenses incurred by such Person in the ordinary course of business inconnection with obtaining goods, materials or services;

(5) the maximum fixed redemption or repurchase price of all Disqualified Equity Interests of suchPerson;

(6) all Capitalized Lease Obligations of such Person;

(7) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not suchIndebtedness is assumed by such Person;

(8) all Indebtedness of others guaranteed by such Person to the extent of such guarantee; provided thatIndebtedness of the Issuer or its Subsidiaries that is guaranteed by the Issuer or the Issuer’s Subsidiaries shallonly be counted once in the calculation of the amount of Indebtedness of the Issuer and its Subsidiaries on aconsolidated basis;

(9) to the extent not otherwise included in this definition, Hedging Obligations of such Person; and

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(10) all obligations of such Person under conditional sale or other title retention agreements relating toassets purchased by such Person.

The amount of any Indebtedness which is incurred at a discount to the principal amount at maturity thereof asof any date shall be deemed to have been incurred at the accreted value thereof as of such date. The amount ofIndebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligationsas described above, the maximum liability of such Person for any such contingent obligations at such date and, inthe case of clause (7), the lesser of (a) the Fair Market Value of any asset subject to a Lien securing the Indebtednessof others on the date that the Lien attaches and (b) the amount of the Indebtedness secured. For purposes ofclause (5), the “maximum fixed redemption or repurchase price” of any Disqualified Equity Interests that do nothave a fixed redemption or repurchase price shall be calculated in accordance with the terms of such DisqualifiedEquity Interests as if such Disqualified Equity Interests were redeemed or repurchased on any date on which anamount of Indebtedness outstanding shall be required to be determined pursuant to this Indenture.

“Issue Date” means with respect to any Note, the date on which such Note was originally issued and, in thecase of the Initial Notes, April [15], 2016.

“Last Reported Sale Price” means, on any relevant day, the closing sale price per share of Common Stock asreported in composite transactions for the principal United States national or regional securities exchange on whichthe Common Stock is traded. If the Common Stock is not listed for trading on a United States national or regionalsecurities exchange on the relevant day, the “Last Reported Sale Price” will be the closing sale price per share ofCommon Stock in the over-the-counter market on the relevant day as reported by OTC Markets Group Inc. orsimilar organization selected by the Issuer. If the Common Stock is not so listed or quoted, the “Last Reported SalePrice” will be the average of the mid-point of the last bid and ask prices per share of Common Stock on the relevantdate from each of at least three nationally recognized independent investment banking firms selected by the Issuerfor this purpose.

“Lien” means, with respect to any asset, any mortgage, deed of trust, lien (statutory or other), pledge, lease,easement, restriction, covenant, charge, security interest or other encumbrance of any kind or nature in respect ofsuch asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional saleor other title retention agreement, and any lease in the nature thereof, any option or other agreement to sell, and anyfiling of, or agreement to give, any financing statement under the UCC (or equivalent statutes) of any jurisdiction(other than cautionary filings in respect of operating leases).

“Maturity Date” means April 1, 2026.

“Moody’s” means Moody’s Investors Service, Inc., and its successors.

“New senior notes” means, collectively, the Initial Notes, PIK Notes and the additional notes, treated as asingle class of securities under this Indenture, as amended or supplemented from time to time in accordance with theterms of this Indenture; provided any such PIK Notes and additional notes may have a different Issue Date, issueprice and first interest payment date than the Initial Notes.

“Notes Custodian” means the custodian with respect to a Global Note or any successor Person thereto and shallinitially be the Trustee.

“Obligation” means any principal, interest, penalties, fees, indemnification, reimbursements, costs, expenses,damages and other liabilities payable under the documentation governing any Indebtedness.

“Officer” means any of the following of the Issuer: the Chief Executive Officer, the Chief Financial Officer,the President, any Vice President, the Treasurer or the Secretary.

“Officers’ Certificate” means a certificate signed by two Officers.

“Open of Business” means 9:00 a.m., New York City time.

“Opinion of Counsel” means a written opinion reasonably acceptable to the Trustee from legal counsel. Thecounsel may be an employee of or counsel to the Issuer.

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“Percentage Stock Ownership” means the percentage Stock Ownership interest of any 382 Person or group (asthe context may require) for purposes of Section 382 of the Code as determined in accordance with the TreasuryRegulation § 1.382-2T(g), (h), (j) and (k) or any successor provision.

“Permitted Holders” means each of (1) Mast Capital Management, LLC; (2) any Affiliate or successor of anyof the foregoing formed by such Person; and (3) any “group” (as such term is used in Sections 13(d) and 14(d) of theExchange Act) to which any Person named in clauses (1) and (2) above belongs for purposes of holding its equityinvestment in the Issuer (or any direct or indirect parent company thereof) so long as the Persons named inclauses (1) and (2) above hold a majority of the Voting Stock of the Issuer (or any direct or indirect parent companythereof) held by all members of such “group.”

“Person” means any individual, corporation, partnership, limited liability company, joint venture, incorporatedor unincorporated association, joint-stock company, trust, unincorporated organization or government or otheragency or political subdivision thereof or other entity of any kind.

“Publicly Traded Securities” means shares of Capital Stock that are listed or quoted on any of The New YorkStock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respectivesuccessors) or which will be so listed or quoted when issued or exchanged in connection with the transaction thatwould otherwise be a Fundamental Change.

“Qualified Institutional Buyer” or “QIB” has the meaning specified in Rule 144A.

“Record Date” means the applicable Record Date specified in the new senior notes; provided that if any suchdate is not a Business Day, the Record Date shall not be affected.

“redeem” means to redeem, repurchase, purchase, defease, retire, discharge or otherwise acquire or retire forvalue; and “redemption” has a correlative meaning; provided that this definition does not apply for purposes of the“Optional Redemption” provision described above.

“Redemption Date” means, when used with respect to any Note to be redeemed, the date fixed for suchredemption pursuant to this Indenture and the new senior notes.

“Redemption Price” means, when used with respect to any Note to be redeemed, the price fixed for suchredemption, payable in immediately available funds, pursuant to this Indenture and the new senior notes. For allredemptions pursuant to the “Optional Redemption” provision described above, the Redemption Price shall be asrequired by the terms of the new senior notes.

“Related Person” means, with respect to any Holder, any 382 Person that would be treated as owning shares ofCommon Stock owned by such Holder at any time during the Section 382 Testing Period ending on the conversiondate, applying the attribution rules in Section 382, but such term shall not include a “public group” as defined inTreasury Regulation Section 1.382-2T(f)(13).

“Responsible Officer” means, when used with respect to the Trustee, any officer in the Corporate Trust Officeof the Trustee, including any vice president, trust officer or any other officer of the Trustee who customarilyperforms functions similar to those performed by the Persons who at the time shall be such officers, respectively, orto whom any corporate trust matter is referred because of such officer’s knowledge of and familiarity with theparticular subject and, in each case, shall have direct responsibility for the administration of this Indenture.

“Restricted Person” means a Holder, to the extent that such Holder or a Related Person (1) is or was a 4.95%Stockholder with respect to the Issuer at any time during the Section 382 Testing Period ending on the applicableconversion date, or (2) would as a result of the acquisition of Common Stock in connection with the conversionbecome a 4.95% Stockholder with respect to the Issuer.

“Rule 144A” means Rule 144A under the Securities Act.

“S&P” means Standard & Poor’s Ratings Service, a division of the McGraw-Hill Companies, Inc., and itssuccessors.

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“SEC” means the U.S. Securities and Exchange Commission.

“Section 382” means Section 382 of the Code and the Treasury Regulations promulgated thereunder.

“Section 382 Testing Period” has the meaning ascribed to “testing period” in Section 382, as applied to theIssuer.

“Securities Act” means the U.S. Securities Act of 1933, as amended.

“Significant Subsidiary” means (1) any Subsidiary that would be a “significant subsidiary” as defined inRegulation S-X promulgated pursuant to the Securities Act as such Regulation is in effect on the Issue Date and(2) any Subsidiary that, when aggregated with all other Subsidiaries that are not otherwise Significant Subsidiariesand as to which any event described in clause (9) or (10) under the “Events of Default” provisions described abovehas occurred and is continuing, would constitute a Significant Subsidiary under clause (1) of this definition.

“Stated Maturity” means, with respect to any installment of interest or principal on any Indebtedness, the dateon which such payment of interest or principal is scheduled to be paid in the documentation governing suchIndebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest orprincipal prior to the date originally scheduled for the payment thereof.

“Stock” means any interest that would be treated as “stock” of the Issuer pursuant to Treasury Regulation§ 1.382-2T(f)(18).

“Stock Ownership” means any direct or indirect ownership of Stock, including any ownership by virtue ofapplication of constructive ownership rules, with such direct, indirect, and constructive ownership determined underthe provisions of Section 382 of the Code and the regulations thereunder, including, for the avoidance of doubt, anyownership whereby a 382 Person owns Stock pursuant to a “coordinated acquisition” treated as a single “entity” asdefined in Section 1.382-3(a)(1) of the Treasury Regulations, or such Stock is otherwise aggregated with Stockowned by such Person pursuant to the provisions of Section 382 of the Code and the Treasury Regulationsthereunder.

“Subsidiary” means, with respect to any Person:

(1) any corporation, limited liability company, association or other business entity of which more than50% of the total voting power of the Equity Interests entitled (without regard to the occurrence of anycontingency) to vote in the election of the Board of Directors thereof are at the time owned or controlled,directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combinationthereof); and

(2) any partnership (a) the sole general partner or the managing general partner of which is such Person ora Subsidiary of such Person or (b) the only general partners of which are such Person or one or moreSubsidiaries of such Person (or any combination thereof).

Unless otherwise specified, “Subsidiary” refers to a Subsidiary of the Issuer.

“Trading Day” means a day during which (1) trading in securities generally occurs on the principal UnitedStates national or regional securities exchange on which the Common Stock is then listed or admitted for trading or,if the Common Stock is not then listed or admitted for trading on a United States national or regional securitiesexchange, on the principal other market on which the Common Stock is then traded, and (2) a Last Reported SalePrice for the Common Stock is available on such securities exchange or market. If the Common Stock is not solisted or traded, “Trading Day” means a Business Day.

“transfer” means any sale, issuance, conveyance, transfer, lease, assignment, Event of Loss or otherdisposition.

“Transfer Agent” means American Stock Transfer & Trust Company, LLC acting in its capacity as transferagent of the Common Stock and any successor thereto.

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“Transfer Restricted Note” means a Note that bears or is required to bear a restrictive legend.

“Treasury Rate” means, with respect to any Redemption Date, the yield to maturity at the time of computationof United States Treasury securities with a constant maturity (as compiled and published in the most recent FederalReserve Statistical Release H.15(519) that has become publicly available at least two business days prior to suchRedemption Date (or, if such Statistical Release is no longer published, any publicly available source of similarmarket data)) most nearly equal to the period from such Redemption Date to March 15, 2021; provided, however,that if the period from such Redemption Date to March 15, 2021 is not equal to the constant maturity of a UnitedStates Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linearinterpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United StatesTreasury securities for which such yields are given, except that if the period from such Redemption Date toMarch 15, 2021 is less than one year, the weekly average yield on actually traded United States Treasury securitiesadjusted to a constant maturity of one year shall be used.

“Treasury Regulations” means the regulations, including temporary regulations or any successor regulationspromulgated under the Code, as amended from time to time.

“UCC” means the Uniform Commercial Code as in effect in the State of New York, and any successor statute,as in effect from time to time (except that terms used herein which are defined in the Uniform Commercial Code asin effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding anyreplacement or amendment of such statute).

“U.S.” means the United States of America.

“U.S.” Government Obligations” means direct non-callable obligations of, or obligations guaranteed by, theUnited States of America for the payment of which guarantee or obligations the full faith and credit of the UnitedStates is pledged.

“U.S. Legal Tender” means such coin or currency of the United States of America as at the time of paymentshall be legal tender for the payment of public and private debts.

“Voting Stock” with respect to any Person means securities of any class of Equity Interests of such Person (inthe case of a partnership, the sole general partner or managing general partner of such Person) entitling the holdersthereof (whether at all times or only so long as no senior class of stock or other relevant equity interest has votingpower by reason of any contingency) to vote in the election of members of the Board of Directors of such Person.

“VWAP” means the per-share volume-weighted average price of the Common Stock as displayed under theheading “VWAP” in the row labeled “Bloomberg” on Bloomberg Page “NEEB <equity> VWAP” (or its equivalentsuccessor if such page is not available) or if such volume-weighted average price is unavailable on Bloomberg, themarket value of one share of Common Stock on such day determined, using a volume-weighted average method, ifapplicable, by a nationally recognized independent investment banking firm retained for this purpose by the Issuer.

“Wholly-Owned Subsidiary” means a Subsidiary of which 100% of the Equity Interests (except for directors’qualifying shares or certain minority interests owned by other Persons solely due to local law requirements that therebe more than one stockholder, but which interest is not in excess of what is required for such purpose) are owneddirectly by the Issuer or through one or more Wholly-Owned Subsidiaries.

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DESCRIPTION OF OTHER INDEBTEDNESS

ABL Credit Facility

On November 13, 2014, Nebraska Book Company and its wholly-owned subsidiaries entered into arevolving credit facility with a new lender (the “ABL credit facility”). Nebraska Book Company is an indirectwholly-owned subsidiary of the Company. The ABL credit facility originally provided for both revolving advancesand delayed draw term loans and was set to mature on the earlier of November 13, 2019 or 90 days before thematurity of the existing notes. Concurrently with the closing of the sale of the campus bookstore operations toFollett, PNC Bank assigned to certain funds managed by MAST all of its rights and obligations under the ABLcredit facility. Through a series of amendments between the lenders and Nebraska Book Company, the ABL creditfacility was amended into an $80 million term loan credit facility. On March 17, 2016, Nebraska Book Companyand its wholly-owned subsidiaries entered into a forbearance agreement with the agent and required lenders pursuantto which they agreed not to exercise any of their rights or remedies with respect to defaults arising out of thespringing maturity date of the ABL credit facility until April 29, 2016 in order for the Company to complete theexchange offer, at which point the existing stated maturity of November 13, 2019 would be reinstated and any suchdefaults would be deemed to have been cured. Borrowings under the ABL credit facility as of February 29, 2016totaled $52.4 million, which includes $0.2 of accrued interest and $3.7 million of commitment fees and interest paid-in-kind described below. As of February 29, 2016, $31.5 million of undrawn capacity remained on the ABL creditfacility subject to the approval of the lenders. Once repaid, delayed draw term loans cannot be borrowed again.Various conditions, as defined in the ABL credit facility, must be met before delayed draw term loans can be repaid.

Delayed draw term loans accrue interest at an annual rate of 8.0%, of which 5.0% is due and payable inarrears on the last day of each month and 3.0% is paid-in-kind and added to the principal balance of the delayeddraw term loans on the last day of each month. Interest paid-in-kind as of February 29, 2016 totaled approximately$1.43 million.

There were $2.3 million of commitment fees associated with the delayed draw term loans which are dueand payable upon maturity of the ABL credit facility. The commitment fees accrue interest in the same manner asthe delayed draw term loans and are subject to the same repayment conditions which exist for the delayed draw termloans. Interest paid-in-kind on these fees as of February 29, 2016 totaled approximately $71,778.

Nebraska Book Company and each of its wholly-owned subsidiaries, as borrowers and guarantors, haveguaranteed the obligations under the ABL credit facility. The ABL credit facility is secured by first priority liens on,and a first priority security interest in, substantially all of the non-real estate assets of Nebraska Book Company andeach of its wholly-owned subsidiaries, including all of the capital stock of such subsidiaries and all intercompanydebt. The security interests are evidenced by the ABL credit facility and other related agreements, including certainintellectual property security agreements, deposit account control agreements, and a pledge agreement.

The ABL credit facility contains representations, warranties, affirmative covenants, negative covenants,information requests, and events of default customarily applicable to ABL facilities. Pursuant to a certainIntercreditor Agreement dated as of November 13, 2014, among the agent of the ABL credit facility, the trustee forthe existing notes and certain other parties thereto, the liens securing our obligations under the ABL credit facilityare senior to the liens securing our obligations under the existing notes. The Intercreditor Agreement also requiresthat, after an event of default under either the ABL credit facility or the existing notes, any proceeds of enforcementwith respect to collateral will be applied, first, to the obligations under the ABL credit facility until paid in full, and,second, to the obligations under the existing notes.

MAST has agreed that, upon attainment of the minimum exchange offer threshold of 95.0%, it will lend theCompany under the ABL credit facility sufficient funds to redeem the remaining existing notes, if necessary.

New Senior Term Loan

As part of the restructuring transactions, we will enter into a senior term loan of up $31.5 million withMAST. The proceeds of the new senior term loan will be used to acquire the purchased loan and pay transactionrelated fees and expenses. See “The Restructuring Transactions.”

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The new senior term loan will bear interest at a rate per annum equal to 6.0%, which may be paid in kind atour option for a period of two years from the closing date. Thereafter, all interest shall be payable in cash if thereare funds available. Interest will be payable monthly in arrears. The new senior term loan will have a default rate ofinterest at the applicable interest rate plus an additional 2.0%.

The new senior term loan will be secured by a perfected, first priority lien on and security interest in allexisting and future assets of a newly created wholly-owned subsidiary of Nebraska Book Company, including thepurchased loan and a pledge of the stock of such subsidiary.

The new senior term loan contains representations, warranties, affirmative covenants, negative covenants,information requests, and events of default customarily applicable to similar term loans.

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DESCRIPTION OF CAPITAL STOCK

Description of Common Stock

We may issue, from time to time, shares of our common stock, the general terms and provisions of whichare summarized below. This summary does not purport to be complete and is subject to, and is qualified in itsentirety by express reference to, the provisions of our charter and bylaws.

Authorized Shares

Under our charter, we have the authority to issue an aggregate of 14,000,000 shares of common stock. Asof December 31, 2015, 6,721,765 shares of our common stock were outstanding and 1,000,000 shares of ourcommon stock were reserved for issuance pursuant to our 2012 Equity Incentive Plan. We have also granted optionsto purchase our common stock under our 2012 Equity Incentive Plan for which previously granted options remainoutstanding. In conjunction with the closing of the notes exchange, our charter will be amended to increase theaggregate number of shares of common stock authorized for issuance to 119,000,000.

Dividends

Subject to the rights, if any, of holders of any outstanding series of preferred stock or any class or series ofstock having a preference over or the right to participate with the common stock with respect to the payment ofdividends and other distributions in cash, stock of any corporation or property of the Company, such dividends andother distributions may be declared and paid on the common stock of the assets of the Company that are by lawavailable therefor at such times and in such amounts as the Board in its discretion shall determine.

Voting Rights

Each holder of common stock is entitled to one vote per share, and is entitled to vote on all matterspresented to a vote of stockholders, including the election of directors. Holders of common stock have nocumulative voting rights. As a result, the holders of a majority of the outstanding shares of common stock generallywill be able to elect all of our directors then standing for election and holders of the remaining shares will not beable to elect any director, subject to any voting rights held by holders of our preferred stock.

Liquidation Rights

If we liquidate our business, the holders of all outstanding shares of common stock are entitled to receivethe remaining assets of the Company available for distribution ratably in proportion to the number of shares ofcommon stock held by each such stockholder, after payment or provision for payment of the debts and otherliabilities of the Company and of the preferential and other amounts, if any, to which holders of preferred stock shallbe entitled.

Absence of Other Rights

Holders of common stock have no preemptive rights to purchase or subscribe for any stock or othersecurities. In addition, there are no conversion rights or redemption or sinking fund provisions.

Transfer Restrictions

Under federal tax laws, the Company may use its net operating losses and unrealized tax losses,collectively referred to herein as NOLs, and certain related tax credits to offset certain income tax liability. Untilthey expire, the Company can “carry forward” NOLs and certain related tax credits that the Company does not usein any particular year to offset taxable income in future years. If, however, the Company experiences an “ownershipchange,” as determined under Section 382 of the Internal Revenue Code of 1986, as amended, the limitationsimposed by Section 382 could result in a material amount of the Company’s NOLs expiring unused, and therefore,significantly reduce the value of the Company’s NOLs. Under Section 382, an ownership change occurs if astockholder or group of stockholders deemed to own at least 5% of our common stock increases its overall

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percentage ownership of the Company by more than 50 percentage points over their lowest ownership percentage ofthe Company within a rolling three-year period.

In fiscal 2016, the Company’s charter was amended to restrict transfers of our common stock in ways thatcould result in an ownership change of the Company under Section 382, which could substantially reduce oreliminate the potential benefits of the Company’s net operating losses and unrealized tax losses. Our charter nowgenerally restricts any direct or indirect transfer (such as transfers of our stock that result from the transfer ofinterests in other entities that own our stock) if the effect would be to (1) increase the direct or indirect ownership ofour stock by any person or entity from less than 4.95% of our outstanding common stock to 4.95% or more of ouroutstanding common stock; or (2) increase by any amount the percentage of our common stock owned directly orindirectly by any person or entity owning or deemed to own 4.95% or more of our outstanding common stock.These transfer restrictions may result in the delay or refusal of certain requested transfers of our common stock, orprohibit ownership (thus requiring dispositions) of our common stock due to a change in the relationship betweentwo or more persons or entities or to a transfer of an interest in an entity other than us that, directly or indirectly,owns our common stock. To the extent permitted by law, any stockholder who knowingly violates the transferrestrictions contained in our charter will be liable for any and all damages we suffer as a result of such violation,including damages resulting from any limitation in our ability to use our NOLs and any professional fees incurred inconnection with such violation.

Certain Anti-takeover Effects

General. Certain provisions of our charter, our bylaws and the Delaware General Corporation Law (the“DGCL”) could make it more difficult to consummate an acquisition of control of us by means of a tender offer, aproxy fight, open market purchases or otherwise in a transaction not approved by our Board of Directors, regardlessof whether our stockholders support the transaction. The summary of the provisions set forth below does not purportto be complete and is qualified in its entirety by reference to our charter, our bylaws and the DGCL.

Business Combinations. Section 203 of the DGCL restricts a wide range of transactions (“businesscombinations”) between a corporation and an interested stockholder. An “interested stockholder” is, generally, anyperson who beneficially owns, directly or indirectly, 15% or more of the corporation’s outstanding voting stock.Business combinations are broadly defined to include (1) mergers or consolidations with, (2) sales or otherdispositions of more than 10% of the corporation’s assets to, (3) certain transactions resulting in the issuance ortransfer of any stock of the corporation or any subsidiary to, (4) certain transactions resulting in an increase in theproportionate share of stock of the corporation or any subsidiary owned by, or (5) receipt of the benefit (other thanproportionately as a stockholder) of any loans, advances or other financial benefits by, an interested stockholder.Section 203 provides that an interested stockholder may not engage in a business combination with the corporationfor a period of three years from the time of becoming an interested stockholder unless (a) the Board of Directorsapproved either the business combination or the transaction which resulted in the person becoming an interestedstockholder prior to the time that person became an interested stockholder; (b) upon consummation of thetransaction which resulted in the person becoming an interested stockholder, that person owned at least 85% of thecorporation’s voting stock (excluding, for purposes of determining the voting stock outstanding, but not theoutstanding voting stock owned by the interested stockholder, shares owned by persons who are directors and alsoofficers and shares owned by certain employee stock plans); or (c) the business combination is approved by theBoard of Directors and authorized by the affirmative vote of at least 66 2⁄3% of the outstanding voting stock not owned by the interested stockholder. The restrictions on business combinations with interested stockholderscontained in Section 203 of the DGCL do not apply to a corporation whose certificate of incorporation or bylawscontains a provision expressly electing not to be governed by the statute; however, neither our charter nor ourbylaws contains a provision electing to “opt-out” of Section 203.

Advance Notice Provisions. Stockholders seeking to nominate candidates to be elected as directors at anannual meeting or to bring business before an annual meeting must comply with an advance written procedure. Onlypersons who are nominated by or at the direction of our board, or by a stockholder who has given timely writtennotice to our secretary before the meeting to elect directors, will be eligible for election as directors. At anystockholders’ meeting the business to be conducted is limited to business brought before the meeting by or at thedirection of the board of directors, or a stockholder who has given timely written notice to our secretary of itsintention to bring business before an annual meeting. A stockholder must give notice, that is received at the

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principal executive offices of the Company not less than 90 days, nor more than 120 days prior to the anniversary ofthe previous year’s annual meeting if the annual meeting is scheduled to be held on a day which is not more than 30days prior to the anniversary of the previous year’s annual meeting or not later than 70 days after the anniversary ofthe previous year’s annual meeting. Regarding any other annual meeting of stockholders, notice must be receivednot less than 10 days following the date on which the meeting date is first proposed on a website used by theCompany’s board of directors to provide information to Company stockholders. In the case of a special meeting, thereason for the meeting must be delivered not less than 10 days and not more than 60 days before the date of themeeting, either personally, or by mail or by electronic transmission. A stockholder’s notice must also contain certaininformation specified in the bylaws. These provisions may preclude or deter some stockholders from bringingmatters before, or making nominations for directors at, an annual meeting.

Special Meetings. The Board of Directors may call a special meeting pursuant to a resolution adopted by amajority of the directors in then in office, by the Chairman of the Board, or any holder or holders of record of atleast twenty percent (20%) of the outstanding shares of capital stock of the Company then entitled to vote on anymatter for which the respective special meeting is being called.

Increase and Decrease of Authorized Shares of Capital Stock. The number of authorized shares of eithercommon stock or preferred stock available for issuance under our charter may be increased or decreased pursuanceto terms and conditions defined in our charter.

Limitation of Liability; Indemnification

Our certificate of incorporation contains certain provisions permitted under the DGCL relating to theliability of directors. These provisions eliminate a director’s, officer’s, employees’, or agent’s personal liability tothe fullest extent not prohibited by applicable law.

These provisions may have the effect of reducing the likelihood of derivative litigation against directorsand may discourage or deter stockholders or the Company from bringing a lawsuit against our directors. However,these provisions do not limit or eliminate our rights or those of any stockholder to seek non-monetary relief, such asan injunction or rescission, in the event of a breach of a director’s fiduciary duty. Also, these provisions will notalter a director’s liability under federal securities laws.

Our charter provides that we must advance expenses, as incurred, to our directors and officers inconnection with a legal proceeding to the fullest extent permitted by Delaware law, subject to very limitedexceptions. These rights are deemed to have fully vested at the time the indemnitee assumes his or her position withthe Company and shall continue as to an indemnitee who has ceased to be a director or officer and shall inure to thebenefit of the indemnitee’s heirs, executors and administrators.

Description of Preferred Stock

We may issue, from time to time, shares of one or more series or classes of our preferred stock. Thefollowing description sets forth certain general terms and provisions of the preferred stock that may be issued. Thefollowing summary of provisions of the preferred stock does not purport to be complete and is subject to, and isqualified in its entirety by reference to, the provisions of our charter, bylaws and the certificate of designationrelating to a specific series of the preferred stock.

Authorized Shares

Under our charter, we have the authority to issue 1,000,000 shares of preferred stock.

General

Our Board of Directors is authorized to determine the terms for each series of preferred stock, which mayinclude:

the designation of the shares and the number of shares that constitute the series;

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the voting powers of the shares;

the dividend rates of the shares including whether the dividends will be cumulative ornoncumulative as well as the dates and preferences of dividends on the series;

the redemption rights of the shares;

the rights of the holders of shares upon the voluntary or involuntary liquidation, dissolution orwinding of the affairs of, or upon any distribution of the assets of, the Company;

whether and on what terms the shares of the series will be convertible into or exchangeable forother securities;

whether and on what terms, the holders of such shares of the series can purchase any securities ofthe Company or any other corporation or other entity;

the terms and amount of any sinking fund applicable to the series; and

the other rights and privileges and any qualifications, limitations of or restrictions on the rights orprivileges of the series.

Liquidation Rights

Unless otherwise set forth in the certificate of designation, holders of any outstanding shares of ourpreferred stock will have a liquidation preference to holders of our common stock in the event of any liquidation,dissolution or winding up of the corporation, whether voluntary or involuntary, or in the event of insolvency.

You can obtain more information about our common stock by reviewing our amended and restatedcertificate of incorporation and bylaws, as well as the Delaware General Corporation Law.

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DESCRIPTION OF RESTRUCTURING SUPPORT AGREEMENT

We have engaged in discussions with the certain of the holders of our existing notes regarding the terms ofthe exchange offer, including with MAST, the largest holder of our existing notes. As of March 18, 2016, weentered into a restructuring support agreement with MAST. Pursuant to the restructuring support agreement, MASThas committed to tendering all of its notes in the exchange subject to the terms and conditions set forth therein. Theobligations of MAST under the restructuring support agreement are conditioned upon us finalizing definitivedocumentation for the restructuring transactions and obtaining the minimum exchange offer threshold of 95.0%.The conditions are also conditions to the exchange offer. We expect that MAST will solicit support for the exchangeoffer from other noteholders. MAST is not receiving any consideration for this solicitation. In addition, MAST hasagreed that, upon attainment of the minimum exchange offer threshold of 95.0%, it will lend a subsidiary of theCompany sufficient funds to redeem all existing notes, if necessary.

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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following discussion is a general summary of certain anticipated U.S. Federal income taxconsiderations associated with the exchange offer and the ownership and disposition of the new senior notes and theownership and disposition of the common stock issued upon conversion of the new senior notes. The following doesnot address the tax consequences of the ownership of new senior notes or common stock to subsequent transfereesof the new senior notes or common stock. This summary is based upon laws, regulations, rulings and decisionscurrently in effect, all of which are subject to change or subject to differing interpretations at any time, possibly withretroactive effect. We have not sought, nor will we seek, any rulings from the Internal Revenue Service (the “IRS”),with respect to the matters discussed below. There can be no assurance that the IRS will not take a different positionconcerning the U.S. federal income tax consequences of the exchange, ownership or disposition of the notes or theownership and disposition of the common stock or that any such position would not be sustained. Moreover, thissummary addresses only holders who hold the existing notes and will hold the new senior notes and common stock,as the case may be, as “capital assets” within the meaning of Section 1221 of the Internal Revenue Code of 1986, asamended (the “Code”), and does not purport to address (a) subsequent transferees of new senior notes, or (b) personsin special tax situations, such as financial institutions, insurance companies, regulated investment companies, tax-exempt investors, dealers in securities and currencies, certain former U.S. citizens or residents, persons holding theexisting notes, new senior notes or common stock as a position in a “straddle,” “hedge,” “conversion transaction,”“constructive sale” or other integrated transaction for tax purposes. Further, this discussion does not address theconsequences under U.S. alternative minimum tax rules, U.S. Federal estate or gift tax laws, the laws of any U.S.state or locality or any foreign tax laws.

If a partnership or other entity taxable as a partnership holds existing notes, new senior notes or commonstock, the tax treatment of a partner generally will depend on the status of the partner and the activities of thepartnership. Any such partner should consult a tax advisor as to the tax consequences of the exchange offer and theownership and disposition of any new senior notes and common stock.

Each U.S. Holder and Non-U.S. Holder should consult its tax advisor regarding the particular taxconsequences to the Holder of the exchange offer, the ownership and disposition of any new senior notes orcommon stock, as well as any tax consequences that may arise under the laws of any other relevant foreign,state, local, or other taxing jurisdiction.

As used herein, the term “U.S. Holder” means a holder of existing notes, new senior notes or commonstock, as the case may be, that is, for U.S. Federal income tax purposes, (1) an individual who is a citizen or residentof the United States; (2) a corporation or entity treated as a corporation for U.S. Federal income tax purposes that iscreated or organized in or under the laws of the United States or of any political subdivision thereof; (3) an estate theincome of which is subject to U.S. Federal income taxation regardless of its source; or (4) a trust (a) if a U.S. court isable to exercise primary supervision over the administration of the trust and one or more U.S. persons have theauthority to control all substantial decisions of the trust or (b) that has a valid election in effect under applicableTreasury Regulations to be treated as a U.S. person. For purposes of this discussion, the term “Non-U.S. Holder”means a holder of existing notes, new senior notes or common stock that is not a U.S. Holder.

In certain circumstances we may be obligated to pay amounts on the new senior notes that are in excess ofstated interest or principal on the notes. We do not intend to treat the possibility of paying such additional amountsas causing the notes to be treated as contingent payment debt instruments; nonetheless, additional income will berecognized if any such additional payment is made. It is possible that the IRS may take a different position, in whichcase a holder might be required to accrue interest income at a higher rate than the stated interest rate and to treat asordinary interest income any gain realized on the disposition (including a conversion) of the note. This discussionassumes that the notes will not be treated as contingent payment debt instruments. Investors should consult theirown tax advisors regarding the possible application of the contingent payment debt instrument rules to the newsenior notes.

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Tax Consequences of the Exchange Offer to U.S. Holders of Existing Notes Who Do Not Participate in theExchange Offer

The exchange offer will not be a taxable event for U.S. Federal income tax purposes for a U.S. Holder of anexisting note who does not exchange its existing note for a new senior note pursuant to the exchange offer. Suchholders of an existing note generally will recognize any income, gain or loss in respect of the existing note at thesame time and in the same amounts as they would have recognized had the exchange offer not occurred.

Tax Consequences of the Exchange Offer to U.S. Holders of Existing Notes Who Participate in the ExchangeOffer

General

We believe that the exchange of an existing note in the exchange offer should constitute a taxable exchangeunder Section 1001 of the Code pursuant to which a U.S. Holder may recognize gain or loss for U.S. Federal incometax purposes. In general, an exchange of an existing note in the exchange offer would be a taxable event unless theCode explicitly prevented recognition of any gain or loss realized (e.g., if the exchange was a recapitalization underthe Code as discussed below). In order for the exchange of an existing note in the exchange offer to qualify as anontaxable recapitalization under Section 368(a)(1)(E) and Section 354 of the Code, both the existing notes and thenew notes must be “securities” under the relevant provisions of the Code, and non recognition would only apply tothe extent the principal amount of the new notes received did not exceed the principal amount of the existing notesexchanges.

Whether an instrument constitutes a “security” is determined based on all the facts and circumstances, butmost authorities have focused on the length of the term of a debt instrument as an important factor in determiningwhether such instrument is a security for U.S. Federal income tax purposes. These authorities have indicated that aterm of five years or less ordinarily is too short to qualify the instrument as a security, whereas a term of ten years ormore ordinarily is sufficient to qualify the instrument as a security. However, there are numerous other factors thatcould be taken into account in determining whether a debt instrument is a security, including the security forpayment, the creditworthiness of the obligor, the subordination or lack thereof to other creditors, the right to vote orotherwise participate in the management of the obligor, the convertibility of the instrument into an equity interest ofthe obligor, whether payments of interest are fixed, variable or contingent, and whether such payments are made ona current basis or accrued. The existing notes have a term of four (4) years and thus, based on their term to maturityand other features, which do not constitute securities for U.S. Federal income tax purposes, although the IRS maytake a contrary position. As a result, the exchange of existing notes in the exchange offer should not qualify as atax-free recapitalization under Sections 368(a)(1)(E) and 354 of the Code, but rather, should be treated as a taxableexchange of property pursuant to which a U.S. Holder may recognize gain or loss for U.S. Federal income taxpurposes.

Application of Modification Regulations.

The exchange of an existing note for a new senior note should be analyzed as if the exchange were amodification of the existing note. Under Section 1001 of the Code and the Treasury Regulations thereunder (the“Modification Regulations”), the modification of a debt instrument can give rise to a taxable exchange upon whichgain or loss is realized, if the modified debt instrument differs materially either in kind or extent from the originaldebt instrument. In this regard, the Modification Regulations provide that, as a general rule, a taxable exchangeoccurs when, based on all the facts and circumstances and taking into account all changes in the terms of the debtinstrument collectively, the legal rights or obligations that are altered, and the degree to which they are altered, areeconomically significant (a “significant modification”). The Modification Regulations state that they can apply toany modification of a debt instrument, regardless of the form of the modification, including an exchange of a newdebt instrument for an existing debt instrument. Therefore, the Modification Regulations are applicable indetermining the consequences of an exchange of an existing note for a new senior note.

The Modification Regulations provide, among other things, that a change in the yield of a debt instrumentis a significant modification if the yield on the modified instrument varies from the annual yield on the unmodifiedinstrument (determined as of the date of the modification) by more than the greater of (i) 25 basis points and (ii) five

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percent of the annual yield of the unmodified instrument. The Modification Regulations also provide that a changein the timing of payments due under a debt instrument is a significant modification if it results in the materialdeferral of scheduled payments, which depends on all the facts and circumstances. The Modification Regulationsprovide in this respect a safe harbor under which a deferral of one or more scheduled payments within the safeharbor period, which is the lesser of 5 years or 50 percent of the original term of the instrument, is not a materialdeferral if the deferred payments are unconditionally payable no later than the end of the safe harbor period.

We believe that the exchange of an existing note for a new senior note should be a significant modificationunder the Modification Regulations because it results in (1) a change in yield on the existing notes by more than thegreater of (i) 25 basis points and (ii) five percent of the annual yield of the existing notes and (2) a deferral ofprincipal payments on the existing note which exceeds the safe harbor period, each of which would independentlyresult in a significant modification for purposes of the Modification Regulations. Consequently, the exchange of anexisting note for a new senior note pursuant to the exchange offer will result in a taxable exchange under the Code.

U.S. Holders are urged to consult with their tax advisors with respect to the application of the Code’sModification Regulations to their particular circumstances.

Gain or Loss Recognition.

Subject to the treatment of a portion of any gain as ordinary income to the extent of any market discountaccrued on the existing notes (discussed below), and assuming the exchange of existing notes for new senior notes inthe exchange offer does not qualify for treatment as a tax-free recapitalization and constitutes a significantmodification under the Code’s Modification Regulations, a U.S. Holder would recognize gain or loss for U.S.Federal income tax purposes upon the exchange in an amount equal to the difference between (1) the “issue price”(see “Issue Price of the New Senior Notes” below) of the new senior notes received in exchange for the existingnotes (excluding any new senior notes issued in satisfaction of accrued interest), and (2) the U.S. Holder’s adjustedtax basis in the existing notes exchanged. A U.S. Holder’s adjusted tax basis in an existing note generally will equalthe issue price of the existing note as increased by any original issue discount previously taken into account by suchU.S. Holder. Any such gain or loss recognized generally would be capital gain or loss, as any original purchaser ofan existing note will have held it for more than one year on the date of the exchange. Non-corporate, U.S. Holdersgenerally are subject to reduced rates of U.S. Federal income taxation on net long-term capital gains. Your basis inthe new senior note received will be equal to the issue price of the new senior note. Your holding period in the newsenior note will begin on the day following the exchange.

The market discount provision of the Code may apply to U.S. Holders of the existing notes. In general, anexisting note that is acquired by a U.S. Holder in the secondary market will be treated as acquired with marketdiscount if the existing note’s principal amount exceeds the tax basis of the debt instrument in the U.S. Holder’shands immediately after its acquisition, unless such excess is less than a statutorily defined de minimis amount. Anygain recognized by a U.S. Holder with respect to an existing note that was acquired with market discount will besubject to tax as ordinary income to the extent of the market discount accrued during the period the existing notewas held by such U.S. Holder, unless the U.S. Holder previously elected to include market discount in income as itaccrued for U.S. federal income tax purposes.

Payment of Accrued Interest on the Existing Notes.

If there is accrued and unpaid interest on the existing notes at the time that the exchange offers areconsummated, a portion of the consideration received by a U.S. Holder in exchange for its existing notes may beconsidered attributable to the accrued and unpaid interest for U.S. federal income tax purposes. Such amount wouldgenerally be taxable to the U.S. Holder as interest (i.e., ordinary income) to the extent that the interest was notpreviously included in income by the U.S. Holder.

Issue Price of the New Senior Notes.

The issue price of the new senior notes will depend on whether the new senior notes are “publicly traded”for purposes of the OID provisions of the Code. If the new senior notes are publicly traded, the issue price of thenew senior notes will equal their fair market value as of the exchange date. If the new senior notes are not publicly

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traded, the issue price of the new senior notes will equal the fair market value of the existing notes (which notes arepublicly traded).

We expect that the new senior notes will be treated as publicly traded for purposes of determining theirissue price. As a result, under applicable Treasury Regulations, the issue price of the new senior notes should equaltheir fair market value at such time. In general, the fair market value of the new senior notes will be presumed toequal their sales price or quoted price during the 31-day period ending 15 days after the exchange date. If there ismore than one sales price, more than one quoted price, or both one or more sales prices and quoted prices, then thefair market value of the new senior notes will be determined by the Company using any reasonable method. Ingeneral, the Company’s determination of the issue price of the new senior notes is binding on all holders, other thana holder that explicitly discloses that its determination of fair market value is different from the Company’sdetermination in a statement attached to the holder’s timely filed tax return for the taxable year in which theexchange date occurs.

Tax Consequences of Ownership and Disposition of New Senior Notes to US Holders

Original Issue Discount.

For any interest period through two years after the date of issuance, we may elect to pay interest on the newsenior notes entirely in cash, or entirely in PIK interest. For U.S. federal income tax purposes, the existence of thisoption means that none of the interest payments on the new senior notes will be qualified stated interest even if wenever exercise the option to pay interest in the form of PIK interest. Consequently, the new senior notes will betreated as issued with original issue discount, or “OID,” and the U.S. Holder will be required to include such OID ingross income as it accrues, possibly in advance of the receipt of cash attributable to that income.

The new senior notes will be treated as issued with OID in an amount equal to the difference between their“stated redemption price at maturity” (the sum of all payments to be made on the notes other than “qualified statedinterest”) and their “issue price.” The “issue price” of the new senior notes should be equal to their fair market value(see “Issue Price of the New Senior Notes” above). A U.S. Holder must generally include the OID in gross incomeas it accrues over the term of the notes at a constant yield without regard to the U.S. Holder’s regular method ofaccounting for U.S. federal income tax purposes.

The amount of OID that must be included in income will generally equal the sum of the “daily portions” ofOID with respect to the new senior notes for each day during the taxable year or portion of the taxable year in whicha U.S. Holder held the new senior notes (“accrued OID”). The daily portion is determined by allocating to each dayin any “accrual period” a pro rata portion of the OID allocable to that accrual period. The “accrual period” for a newsenior note may be of any length and may vary in length over the term of the note, provided that each accrual periodis no longer than one year and each scheduled payment of principal or interest occurs on the first day or the final dayof an accrual period.

The amount of OID allocable to any accrual period, subject to the possible adjustments described below,other than the final accrual period is an amount equal to the excess, if any, of (1) the product of the note’s adjustedissue price at the beginning of such accrual period and its yield to maturity (determined on the basis of compoundingat the close of each accrual period and properly adjusted for the length of the accrual period) over (2) the aggregateof all stated interest allocable to the accrual period. OID allocable to a final accrual period is the difference betweenthe amount payable at maturity (other than a payment of stated interest) and the adjusted issue price of the note atthe beginning of the final accrual period. The “adjusted issue price” of a note at the beginning of any accrual periodis generally equal to its issue price increased by the accrued OID for each prior accrual period. The yield to maturityof a note is the rate that, when used in computing the present value of all payments to be made on the note, producesan amount equal to the issue price of the note. For purposes of determining the yield to maturity of a new seniornote, a U.S. Holder may assume that we will not exercise the option to pay PIK interest, except in respect of anyperiod in which we actually elect to pay PIK interest.

If we in fact pay the interest in cash on the new senior notes, a U.S. Holder will not be required to adjust itsOID inclusions. Each payment made in cash under a new senior note will be treated first as a payment of anyaccrued OID that has not been allocated to prior payments and second as a payment of principal (which is notincludible in income). A U.S. Holder of a new senior note generally will not be required to include separately in

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income cash payments received on such note to the extent such payments constitute payments of previously accruedOID. If for any interest payment period we exercise our option to pay interest in the form of PIK interest, a U.S.Holder of a new senior note will be required to adjust its OID calculation for future periods by treating the seniorexchange toggle note as if it had been retired and then reissued for an amount equal to its adjusted issue price on thedate preceding the first date of such future interest payment period, and to re-calculate the yield to maturity of thereissued note by treating the amount of PIK interest paid (and of any prior PIK interest paid) as a payment that willbe made on the maturity date of such reissued note.

The rules regarding OID are complex and the rules described above may not apply in all cases.Accordingly, you should consult your own tax advisors regarding their application.

Exercise of Conversion Rights.

A U.S. Holder of a new senior note generally will not recognize gain or loss upon the conversion of a newsenior note into common stock, except with respect to any cash received in lieu of fractional shares. The holdingperiod of the shares received upon conversion will include the period during which the new senior note was held,and the U.S. Holder’s aggregate tax basis in the shares received upon conversion will be equal to such holder’saggregate tax basis in the new senior note at the time of conversion, less the portion allocable to any fractional share.A U.S. Holder of a new senior note will generally recognize capital gain or loss for U.S. Federal income taxpurposes upon the receipt of cash in lieu of a fractional share in an amount equal to the difference between theamount of any cash received and the holder’s tax basis in such fractional share. This gain or loss should be capitalgain or loss, and should be taxable as described below under “Disposition of the New Senior Notes.”

Adjustment of Conversion Rate.

The terms of the new senior notes allow for changes in the conversion rate of the new senior notes intocommon stock in certain circumstances. A change in conversion rate may result in a taxable dividend to U.S.Holders, although such holders would not actually receive any cash or other property. A taxable dividend wouldresult, for example, if the conversion rate is adjusted to compensate holders for distributions of cash or otherproperty to our shareholders. However, not all changes in the conversion rate will result in a taxable dividend to U.S.Holders. For instance, a change in the conversion rate may occur in order to prevent the dilution of the holders’interests upon a stock split or other change in capital structure. Changes of this type, if made by a bona fide,reasonable adjustment formula, are not treated as taxable dividends.

Disposition of the New Senior Notes.

Except as set forth above under “Exercise of Conversion Rights,” upon a sale, exchange, retirement orother taxable disposition of a new senior note, a U.S. Holder generally will recognize gain or loss equal to thedifference between (1) the amount of cash plus the fair market value of any property received (less any amountreceived in respect of accrued interest not previously included in income, which will be taxable as ordinary interestincome) and (2) the U.S. Holder’s adjusted tax basis in the new senior note immediately before such sale, exchange,retirement or other taxable disposition (which will reflect any original issue discount previously included inincome). Gain or loss recognized on the taxable disposition of a new senior note will be capital gain or loss and willbe long-term in nature if at the time of the taxable disposition the new senior note has been held by the U.S. Holderfor more than one (1) year. Under current law, long-term capital gains of non-corporate holders are generallyeligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.

Tax Consequences of Ownership and Disposition of Common Stock to US Holders

Cash Distributions on Common Stock

If we make distributions of cash or other property (other than certain distributions of our own stock) on ourcommon stock received by a U.S. Holder as part the exchange offer or received upon conversion of a new seniornote, the distributions generally will be treated as dividends to the U.S. Holder to the extent of our current oraccumulated earnings and profits as determined under U.S. Federal income tax principles at the end of the tax yearof the distribution, then as a tax-free return of capital to the extent of the U.S. Holder’s tax basis in the common

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stock on which the distribution was made, reducing such basis (but not below zero) by the amount of such tax-freedistribution, and thereafter as gain from the sale or exchange of common stock.

Distributions treated as dividends as explained above that are received by a corporate U.S. Holder may beeligible for a dividends received deduction. Distributions treated as dividends as explained above that are receivedby a non-corporate U.S. Holder may qualify for taxation at lower rates applicable to long-term capital gains,provided that certain holding period and other requirements are satisfied. Each holder should consult its own taxadvisors regarding the applicability of either such special rule under such holder’s particular factual situation.

Disposition of Common Stock

Upon the sale, exchange, redemption (unless treated as a dividend under the Code) or other taxabledisposition of our common stock acquired upon conversion of a new senior note, a U.S. Holder generally willrecognize capital gain or loss equal to the difference between (1) the amount of cash and the fair market value of anyproperty received upon the sale, exchange, redemption or other taxable disposition and (2) the U.S. Holder’s taxbasis in the common stock immediately before such sale, exchange, redemption or other taxable disposition. Suchcapital gain or loss will be long-term if the U.S. Holder’s holding period in respect of such common stock is morethan one (1) year. The deductibility of capital losses is subject to limitations.

Tax Consequences to Non-U.S. Holders of Existing Notes Who Do Not Participate in the ExchangeOffer

The exchange offer will not be a taxable event for U.S. Federal income tax purposes for a Non-U.S. Holderof an existing note who does not exchange its existing note for a new senior note or common stock pursuant to theexchange offer. Such holders of an existing note generally will recognize any income, gain or loss in respect of theexisting note at the same time and in the same amounts as they would have recognized had the exchange offer notoccurred.

Tax Consequences to Non-U.S. Holders of Existing Notes Who Participate in the Exchange Offer

Exchange Offer and Disposition of New Senior Notes or Common Stock

Subject to the discussion below concerning information reporting and backup withholding, gain realized bya Non-U.S. Holder on the exchange of existing notes for new senior notes in the exchange offer, and the sale,exchange or other taxable disposition of the new senior notes or common stock, will not be subject to U.S. Federalincome or withholding tax unless the gain is “U.S. trade or business income” of the Non-U.S. Holder. Income isconsidered U.S. trade or business income of a Non-U.S. Holder if (1) such gain is “effectively connected” with atrade or business conducted by such Non-U.S. Holder in the United States and, if required by an applicable incometax treaty as a condition for subjecting such Non-U.S. Holder to U.S. taxation on a net income basis, such income isattributable to a permanent establishment such Non-U.S. Holder maintains in the United States or (2) in the case ofan exchange of an existing note for a new senior note in the exchange offer or a sale of a new senior note orcommon stock by a Non-U.S. Holder who is an individual, such individual was present in the United States for atleast 183 days during the taxable year in which the gain is realized and other specified conditions are met.

Income that is effectively connected with the conduct of a U.S. trade or business by a Non-U.S. Holder willgenerally be subject to regular U.S. Federal income tax in the same manner as if it were realized by a U.S. Holder. Inaddition, if a corporate Non-U.S. Holder recognizes effectively connected income, such Non-U.S. Holder may,under certain circumstances, be subject to an additional branch profits tax at a 30% rate, or at a lower rate if suchNon-U.S. Holder is eligible for the benefits of an income tax treaty that provides for a lower rate.

Adjustment of Conversion Rate of New Senior Note

The terms of the new senior notes allow for changes in the conversion rate of the new senior notes intocommon stock in certain circumstances. A change in conversion rate may result in a taxable dividend to Non-U.S.Holders, although such holders would not actually receive any cash or other property. A taxable dividend wouldresult, for example, if the conversion rate is adjusted to compensate holders for distributions of cash or other

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property to our shareholders. However, not all changes in the conversion rate will result in a taxable dividend toNon-U.S. Holders. For instance, a change in the conversion rate may occur in order to prevent the dilution of theholders’ interests upon a stock split or other change in capital structure. Changes of this type, if made by a bona fide,reasonable adjustment formula, are not treated as taxable dividends.

Conversion of New Senior Notes

A Non-U.S. Holder of a New Senior Note generally will not recognize gain or loss upon the conversion ofa New Senior Note into common stock. The holding period of the shares received upon conversion will include theperiod during which the New Senior Note was held, and the Non-U.S. Holder’s aggregate tax basis in the sharesreceived upon conversion will be equal to such holder’s aggregate tax basis in the New Senior Note at the time ofconversion.

Interest and Original Issue Discount

In general, interest paid to and original issue discount accrued by a Non-U.S. Holder of a new senior notewill not be subject to any U.S. withholding tax if it qualifies for the portfolio interest exemption, and it will nototherwise be subject to U.S. Federal income tax if it is not U.S. trade or business income of the Non-U.S. Holder.Interest and original issue discount on a new senior note may qualify for the portfolio interest exemption if (1) theNon-U.S. Holder of the new senior note (a) does not own, actually and constructively, 10% or more of the totalcombined voting power of all classes of our stock entitled to vote, (b) is not a controlled foreign corporation related,directly or indirectly, to us through stock ownership and (c) is not a bank receiving interest on an extension of creditmade pursuant to a loan agreement made in the ordinary course of its trade or business, and (2) applicablecertification requirements are met.

Interest paid to and original issue discount accrued by a Non-U.S. Holder on a new senior note thatconstitutes U.S. trade or business income will be subject to U.S. Federal income tax on a net income basis atgraduated rates in the same manner that a U.S. Holder is subject to tax and will be exempt from the U.S. withholdingtax described below. In the case of a Non-U.S. Holder that is a corporation, U.S. trade or business income undercertain circumstances also will be subject to an additional branch profits tax at a 30% rate, or, if applicable, a lowertreaty rate. Interest and original issue discount of a Non-U.S. Holder that does not qualify for the portfolio interestexemption and that is not U.S. trade or business income will be subject to withholding of U.S. Federal income tax atthe rate of 30%, unless a U.S. income tax treaty reduces or eliminates withholding. To claim the benefit of a taxtreaty or to claim an exemption from withholding because income is U.S. trade or business income, a Non-U.S.Holder must provide a properly executed Form W-8BEN, W-8BEN-E or W-8ECI or a successor form, as applicable,prior to the payment of the income. These forms generally must be updated periodically. A Non-U.S. Holder who isclaiming the benefits of a tax treaty may be required to obtain a U.S. taxpayer identification number and to providecertain documentary evidence issued by a foreign governmental authority to prove residence in the foreign country.

Dividends on Common Stock

Distributions of cash or other property (other than certain distributions of our own stock) on our commonstock, including deemed distributions, will generally be characterized as either taxable dividends, non-taxable returnof a capital or as capital gain as more thoroughly described above under “Cash Distributions on Common Stock”. Tothe extent that any distribution is treated as a dividend, the Non-U.S. Holder generally will be subject to withholdingof U.S. Federal income tax on actual or deemed dividend distributions at a 30% rate or a lower rate that anapplicable income tax treaty may specify. Non-U.S. Holders should consult their tax advisers on their entitlement tobenefits under a relevant income tax treaty. A Non-U.S. Holder of common stock that claims the benefit of anincome tax treaty rate generally will be required to satisfy applicable certification and other requirements. A Non-U.S. Holder of common stock that is eligible for a reduced rate of U.S. withholding tax under an income tax treatymay obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for a refund with theIRS.

Dividends that are U.S. trade or business income are generally subject to U.S. Federal income tax on a netincome basis at graduated rates in the same manner that a U.S. Holder is subject to tax and will be exempt from thewithholding tax described above. In the case of a Non-U.S. Holder that is a corporation, U.S. trade or business

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income under certain circumstances also will be subject to an additional branch profits tax at a 30% rate, or, ifapplicable, a lower treaty rate. To claim an exemption from withholding because a dividend is U.S. trade or businessincome, a Non-U.S. Holder must satisfy applicable certification and other requirements.

Information Reporting and Backup Withholding

U.S. Holders

Information reporting and backup withholding at the rate specified in the Code may apply to payments on anew senior note or an existing note, dividends on common stock or proceeds from the sale or other disposition of anexisting note, a new senior note or common stock with respect to certain non-corporate U.S. Holders. Such U.S.Holders generally will be subject to backup withholding unless the U.S. Holder provides to us a correct taxpayeridentification number and certain other information, certified under penalties of perjury, or otherwise establishes anexemption. Any amounts withheld from a payment to a U.S. Holder under the backup withholding rules will beallowed as a credit against the holder’s U.S. Federal income tax liability and may entitle the holder to a refund,provided that the required information is furnished to the IRS.

Non-U.S. Holders

If you are a Non-U.S. Holder, you may be required to comply with certain certification procedures toestablish that you are not a U.S. person in order to avoid backup withholding tax with respect to our payments on anew senior note or dividends on our common stock, or proceeds of the sale or other disposition of a new senior noteor common stock. Any amounts withheld from a payment to a Non-U.S. Holder under the backup withholding ruleswill be allowed as a credit against the holder’s U.S. Federal income tax liability and may entitle the holder to arefund, provided that the required information is furnished to the IRS.

Tax Consequences of the Exchange Offer to the Company

Interest Deductions

Payments of stated interest with respect to the new senior notes and existing notes and original issuediscount with respect to the new senior notes should generally be deductible by us in calculating our income subjectto U.S. Federal income tax.

Potential Disallowance of Interest Deductions

Under section 163(l) of the Code, no deduction is allowed for interest paid or accrued with respect toindebtedness if a substantial amount of the principal of or interest on such indebtedness is required to be paid orconverted into equity of the issuer, or the indebtedness is part of an arrangement which is reasonably expected tohave such outcome. Where the conversion into equity is at the option of the holder, such principal or interest istreated as required to be paid or converted only if there is a substantial certainty that the holder will exercise itsoption. No Treasury regulations have yet been issued under this section. The proper application of this section in thecase of the new senior notes is subject to varying interpretations and will depend in part on facts and circumstancesexisting on the exchange date. Pursuant to the terms of the new senior notes, a holder of a new senior note mayconvert the new senior notes into common stock of the Company under certain conditions. As of the date of thisconfidential offering memorandum, the Company does not believe that it is substantially certain the holders of thenew senior notes would convert. Accordingly, the Company currently intends to take the position that the Companyis entitled to interest deductions in respect of such notes. Nevertheless, there is no assurance that the IRS would nottake a contrary position, or that any change in facts and circumstances would not result in the Company changing itsposition.. Were this assertion successful, the interest paid or accrued with respect to the new senior notes would notbe deductible.

Discharge of Indebtedness Income

We will generally recognize discharge of indebtedness income for U.S. Federal income tax purposes as aresult of the exchange offer if, and to the extent that, the adjusted issue price and any accrued but unpaid interest on

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the existing notes surrendered in the exchange offer exceeds the issue price of any new senior notes. However, anysuch discharge of indebtedness income might be reduced or eliminated by certain judicial or statutory exceptions.

We have net operating losses for the current year and carryovers from prior years (and possibly futureyears) that may offset all or part of our discharge of indebtedness income, if any. However, our ability to use thesecarryovers may be subject to limitations, such as the limitation of the use of loss carryovers triggered by asignificant change in ownership as discussed below, and the alternative minimum tax limitation. We do not believethat an ownership change has occurred that has subjected our use of NOLs to any current limitation. To the extentthat available net operating loss carryovers are used to offset discharge of indebtedness income, they will beunavailable as a potential offset to future income.

382 Limitation

Pursuant to Section 382 of the Code, an “ownership change” with respect to a company can significantlylimit the amount of pre-ownership change net operating losses that such company may use during its post-ownershipchange periods. For this purpose, an ownership change occurs generally when there is a cumulative change ofgreater than 50% in a company’s stock ownership within a three (3) year period. The conversion of new seniornotes, as well as any future equity issuances and transactions among shareholders, separately or in the aggregate,may be counted for purposes of determining whether an ownership change has occurred for purposes of Section 382of the Code. However, the Company has adopted a protective amendment to its amended and restated certificate ofincorporation which is designed to prevent any transfers that could trigger an ownership change under Section 382of the Code. In addition, the indenture governing the new senior notes also contains restrictions on the conversionof the new senior notes into common stock, including if such conversion would negatively impact the Company’sability to continue to use its net operating loss carryforwards. As a result, we do not believe that an ownershipchange will occur as a result of the exchange offer or conversion of the new senior notes into shares of our commonstock.

Other Jurisdictions

This discussion does not address the tax consequences of ownership of the existing notes, new senior notesor common stock by holders resident in countries other than the United States. Holders should consult their own taxadvisors with respect to the tax considerations in the jurisdiction of their residence applicable to their individualcircumstances.

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PLAN OF DISTRIBUTION

We are relying on Section 4(a)(2) of the Securities Act of 1933 and Rule 506(c) of Regulation D thereunderto exempt the exchange offer from the registration requirements of the Securities Act. Regulation D provides anexemption from the registration requirements of the Securities Act for certain private offerings. The exchange offeris also, pursuant to Section 18(b)(4)(D) of the Securities Act, exempt from the registration and qualificationrequirements of state securities laws. We have no contract, arrangement, or understanding relating to, and will not,directly or indirectly, pay any commission or other remuneration to any broker, dealer, salesperson, agent, or anyother person for soliciting you to accept or reject the exchange offer. In addition, none of our financial advisors andno broker, dealer, salesperson, agent, or any other person, is engaged or authorized to express any statement,opinion, recommendation, or judgment with respect to the relative merits and risks of the exchange offer.

We have agreed to pay all expenses incident to the exchange offer, other than commissions or concessionsof any broker or dealers.

Transfer Restrictions

The new senior notes have not been registered under the Securities Act. Therefore, the new senior notesand the shares of our common stock issuable upon conversion of the new senior notes will be considered “restrictedsecurities” under Rule 144. Accordingly, the new senior notes and the shares of our common stock issued orissuable to you may only be resold by you pursuant to Rule 144 or another applicable exemption from theregistration requirements of the Securities Act. The exemption under Rule 144 will not be available until, at theearliest, one year after the closing of the exchange offer. Resales to qualified institutional buyers may be permissibleunder the exemption provided by Rule 144A under the Securities Act. Resales under either Rule 144 or Rule 144Aare available only if there is current information regarding the Company available (Rule 144) or available uponrequest (Rule 144A).

By accepting the new senior notes in the exchange offer, each noteholder will be deemed to haverepresented and agreed that the noteholder will not effect any transfer of the new senior notes except in compliancewith applicable federal and state securities laws.

If the noteholder elects to resell the new senior notes in reliance on Rule 144A, each purchaser of the newsenior notes in reliance upon Rule 144A will be deemed to have represented and agreed as follows (terms used inthis paragraph that are defined in Rule 144A under the Securities Act are used herein as defined therein):

(1) The purchaser (i) is a qualified institutional buyer, (ii) is aware that the sale to it is being made inreliance on Rule 144A and (iii) is acquiring the new senior notes for its own account or for the account of a qualifiedinstitutional buyer.

(2) The purchaser understands that the new senior notes are being offered in a transaction not involving anypublic offering in the United States within the meaning of the Securities Act, that the new senior notes have not beenand will not be registered under the Securities Act and that (A) if in the future it decides to offer, resell, pledge orotherwise transfer any of the new senior notes such notes may be offered, resold, pledged or otherwise transferredonly (i) to the Company or any of its subsidiaries, (ii) to a person whom the seller reasonably believes is a qualifiedinstitutional buyer purchasing for its own account or for the account of a qualified institutional buyer in a transactionmeeting the requirements of Rule 144A, (iii) in a transaction meeting the requirements of Rule 144 under theSecurities Act, (iv) in accordance with another exemption from the registration requirements of the Securities Act(and based upon an opinion of counsel acceptable to the Company) or (v) pursuant to an effective registrationstatement and, in each case, in accordance with the applicable securities laws of any state of the United States or anyother applicable jurisdiction, and that (B) the purchaser will, and each subsequent holder is required to, notify anysubsequent purchaser of the new senior notes from it of the resale restrictions referred to in (A) above.

(3) The purchaser understands that the new senior notes will, until the expiration of the applicable holdingperiod with respect to the new senior notes set forth in Rule 144 of the Securities Act, unless otherwise agreed to byus and the holder thereof, bear a legend substantially to the following effect:

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THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIESACT OF 1933 (THE "SECURITIES ACT"), OR WITH ANY SECURITIES REGULATORY AUTHORITY OFANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD,PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH RULE 144A UNDERTHE SECURITIES ACT ("RULE 144A") TO A PERSON THAT THE HOLDER AND ANY PERSON ACTINGON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THEMEANING OF RULE 144A (A "QIB") THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNTOR FOR THE ACCOUNT OF ONE OR MORE QIBS, (2) PURSUANT TO AN EXEMPTION FROMREGISTRATION UNDER RULE 144 UNDER THE SECURITIES ACT, IF AVAILABLE, (3) PURSUANT TOANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THESECURITIES ACT, (4) TO NEBRASKA BOOK HOLDINGS, INC. OR (5) PURSUANT TO AN EFFECTIVEREGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITHANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.

(4) Either (A) the purchaser is not acquiring or holding such new senior note with the assets of (i) an“employee benefit plan” (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, asamended (“ERISA”), that is subject to ERISA, (ii) a “plan” which is subject to Section 4975 of the Code, (iii) anyentity deemed under ERISA to hold “plan assets” of any of the foregoing by reason of an employee benefit plan’s orplan’s investment in such entity, or (iv) a governmental plan or church plan subject to applicable law that is similarin purpose or effect to the fiduciary responsibility or prohibited transaction provisions of ERISA or Section 4975 ofthe Code (“Similar Law”); or (B) the acquisition and holding of such new senior note (and any exchange of the newsenior note for an exchange note) by the purchaser, throughout the period that it holds such new senior note, isexempt from the prohibited transaction restrictions under ERISA and Section 4975 of the Code or any provisions ofSimilar Law, as applicable, pursuant to one or more prohibited transaction statutory or administrative exemptions.

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PRICE RANGE OF COMMON STOCK

Our stock is quoted on the OTC market, under the ticker symbol “NEEB”. We have not declared dividendson our common stock and do not anticipate paying dividends on our common stock in the foreseeable future.

Our shares are thinly traded, with low average daily volume. This, coupled with a limited number ofmarket makers, impairs the liquidity of our common stock, not only in the number of shares of common stock thatcan be bought and sold, but also through possible delays in the timing of transactions, and lower prices for ourcommon stock that might otherwise prevail. This could make it difficult for an investor to sell shares of ourcommon stock upon conversion of the new senior notes or to obtain a desired price.

Our common stock may be subject to the low-price security, or so called “penny stock,” rules that imposeadditional sales practice requirements on broker-dealers who sell such securities. The securities Enforcement andPenny Stock Reform Act of 1990 require additional disclosure in connection with any trades involving a stockdefined as a “penny stock” (generally defined as, according to recent regulations adopted by the U.S. Securities andExchange Commission, any equity security that has a market price of less than $5.00 per share, subject to certainexceptions), including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining thepenny stock market and the risks associated therewith. Our stock is not a penny stock only because we are subjectto an exception for issuers with revenues of at least $6 million for the past three years. The regulations governinglow-priced or penny stocks sometimes may limit the ability of broker-dealers to sell the Company’s common stockand thus, ultimately, the ability of investors to sell their securities in the secondary market. Prices for theCompany’s common stock will be determined in the marketplace and may be influenced by many factors, includingthe depth and liquidity of the market for the common stock, the Company’s results of operations, what investorsthink of the Company and general economic and market conditions. Market fluctuations could have a materialadverse impact on the trading of our shares.

The table below sets forth the range of high and low closing prices of our common stock as reported on theOTC market, for the last two years.

Nebraska Book Holdings,Inc. Common Stock

High Low

Year Ended March 31, 2016Quarter Ended June 30, 2015 .................................................... $4.25 $3.14Quarter Ended September 30, 2015 .......................................... 3.10 1.75Quarter Ended December 31, 2015........................................... 2.00 1.04Quarter Ended March 31, 2016 (through March 17, 2016)....... 1.40 1.00

High Low

Year Ended March 31, 2015Quarter Ended June 30, 2014 .................................................... $7.40 $6.95Quarter Ended September 30, 2014 .......................................... 6.95 5.20Quarter Ended December 31, 2014........................................... 6.00 4.25Quarter Ended March 31, 2015................................................. 5.45 3.40

As the foregoing are over-the-counter market quotations, they reflect inter-dealer prices, without retailmarkup, markdown, or commissions, and may not represent actual transactions. Due to an illiquid market and thelack of available current financial information for many of the periods shown above, the reported prices may not bereflective of actual fair value.

The company’s shares are held through DTC with the sole record holder being Cede & Co. as nominee.

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WHERE YOU CAN FIND MORE INFORMATION

This confidential offering memorandum contains summaries of the terms of certain agreements that theCompany has entered, or will enter, into in connection with this offering. The descriptions contained in thisconfidential offering memorandum of those agreements do not purport to be complete and are subject to, andqualified in their entirety by reference to, the definitive agreements.

You may request a copy of the agreements described herein at no cost by writing or telephoning theCompany at the following address: Attention: Chief Financial Officer, Nebraska Book Company, Inc., 4700 South19th Street, Lincoln, Nebraska 68512.

The Company has agreed that so long as the notes constitute restricted securities within the meaning ofRule 144(a)(3) under the Securities Act and so long as it is not subject to the information requirements of theExchange Act, the holder of any note and any prospective purchaser of such note designated by such holder willhave the right to obtain from the Company information meeting the requirements of Rule 144A.

We have appointed Computershare as the exchange agent and Georgeson LLC (Georgeson) as theinformation agent for the exchange offer. All inquiries relating to the exchange offer should be directed toGeorgeson as the information agent at the telephone numbers and addresses set forth below.

DELIVERY OF A LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN THEADDRESS LISTED ABOVE OR TRANSMISSION OF INSTRUCTIONS BY FACSIMILE OTHER THANAS SET FORTH ABOVE IS NOT VALID DELIVERY OF THE LETTER OF TRANSMITTAL.

Any questions regarding procedures for tendering existing notes or requests for additional copies of thisconfidential offering memorandum, the enclosed letter of transmittal may be directed to information agent:

480 Washington Blvd., 26th FloorJersey City, NJ 07310

Banks, Brokers and Shareholders

Call Toll-Free (888) 206-0860nebraskabook@georgeson.com

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FINANCIAL STATEMENTS

Nebraska Book Holdings, Inc. Audited Consolidated Financial Statements

Independent Auditor’s Report - KPMG LLP

Consolidated Balance Sheets (as of March 31, 2015 and 2014)

Consolidated Statements of Operations (for the years ended March 31, 2015 and 2014 and nine monthsended March 31, 2013 (Successor) and three months ended June 30 2012 (Predecessor))

Consolidated Statements of Stockholder’s Equity (for the years ended March 31, 2015 and 2014 and ninemonths ended March 31, 2013 (Successor) and three months ended June 30 2012 (Predecessor))

Consolidated Statements of Cash Flows (for the years ended March 31, 2015 and 2014 and nine monthsended March 31, 2013 (Successor) and three months ended June 30 2012 (Predecessor))

Notes to Consolidated Financial Statements

Nebraska Book Holdings, Inc. Unaudited Interim Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets (as of December 31, 2015 and March 31, 2015)

Condensed Consolidated Statements of Operations (for the three months and nine months endedDecember 31, 2015 and 2014)

Condensed Consolidated Statements of Stockholder’s Equity (for the nine months ended December 31,2015 and 2014)

Condensed Consolidated Statements of Cash Flows (for the nine months ended December 31, 2015and 2014)

Notes to Unaudited Condensed Consolidated Financial Statements

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EXHIBIT A – FORM OF INDENTURE

NEBRASKA BOOK HOLDINGS, INC., as Issuer,

and

WILMINGTON TRUST, NATIONAL ASSOCIATION,

as Trustee,

INDENTURE

Dated as of April [15], 2016

2.00% Convertible Senior PIK Notes due 2026

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TABLE OF CONTENTS

Page

ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01. Definitions ................................................................................................................... 1 SECTION 1.02. Other Definitions ....................................................................................................... 13 SECTION 1.03. Incorporation by Reference of Certain Provisions of the Trust Indenture Act.......... 14 SECTION 1.04. Rules of Construction ................................................................................................ 14 SECTION 1.05. Section 382 Interpretive Provisions .......................................................................... 14

ARTICLE TWO THE NOTES

SECTION 2.01. Form and Dating ........................................................................................................ 15 SECTION 2.02. Execution, Authentication and Denomination; Additional Notes ............................. 16 SECTION 2.03. Registrar, Paying Agent and Conversion Agent ........................................................ 17 SECTION 2.04. Paying Agent and Conversion Agent To Hold Assets in Trust ................................. 18 SECTION 2.05. Holder Lists ............................................................................................................... 18 SECTION 2.06. Transfer and Exchange .............................................................................................. 18 SECTION 2.07. Replacement Notes .................................................................................................... 19 SECTION 2.08. Outstanding Notes ..................................................................................................... 19 SECTION 2.09. Treasury Notes .......................................................................................................... 19 SECTION 2.10. Temporary Notes ....................................................................................................... 20 SECTION 2.11. Cancellation ............................................................................................................... 20 SECTION 2.12. Defaulted Interest ...................................................................................................... 20 SECTION 2.13. CUSIP Numbers, ISINs, etc ...................................................................................... 20 SECTION 2.14. Deposit of Moneys .................................................................................................... 21 SECTION 2.15. Certificated Notes ...................................................................................................... 21 SECTION 2.16. Special Transfer Provisions ....................................................................................... 22 SECTION 2.17. FATCA ...................................................................................................................... 25

ARTICLE THREE REDEMPTION

SECTION 3.01. Optional Redemption; Notices to Trustee ................................................................. 25 SECTION 3.02. Selection of Notes To Be Redeemed ......................................................................... 26 SECTION 3.03. Notice of Redemption ............................................................................................... 26 SECTION 3.04. Effect of Notice of Redemption ................................................................................ 27 SECTION 3.05. Deposit of Redemption Price .................................................................................... 27 SECTION 3.06. Notes Redeemed in Part ............................................................................................ 27 SECTION 3.07. Applicability of Article Three; Voluntary Surrender ................................................ 27

ARTICLE FOUR COVENANTS

SECTION 4.01. Payment of Notes ...................................................................................................... 28 SECTION 4.02. Maintenance of Office or Agency ............................................................................. 28 SECTION 4.03. Corporate Existence .................................................................................................. 28 SECTION 4.04. Payment of Taxes and Other Claims ......................................................................... 29 SECTION 4.05. Maintenance of Properties and Insurance.................................................................. 29 SECTION 4.06. Compliance Certificate; Notice of Default ................................................................ 29

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SECTION 4.07. Compliance with Laws .............................................................................................. 30 SECTION 4.08. Waiver of Stay, Extension or Usury Laws ................................................................ 30 SECTION 4.09. Reports to Holders ..................................................................................................... 30

ARTICLE FIVE SUCCESSOR CORPORATION

SECTION 5.01. Mergers, Consolidations, Etc .................................................................................... 31

ARTICLE SIX DEFAULT AND REMEDIES

SECTION 6.01. Events of Default ....................................................................................................... 32 SECTION 6.02. Acceleration .............................................................................................................. 34 SECTION 6.03. Other Remedies ......................................................................................................... 34 SECTION 6.04. Waiver of Past Defaults ............................................................................................. 34 SECTION 6.05. Control by Majority ................................................................................................... 35 SECTION 6.06. Limitation on Suits .................................................................................................... 35 SECTION 6.07. Rights of Holders To Receive Payment .................................................................... 35 SECTION 6.08. Collection Suit by Trustee ......................................................................................... 35 SECTION 6.09. Trustee May File Proofs of Claim ............................................................................. 36 SECTION 6.10. Priorities .................................................................................................................... 36 SECTION 6.11. Undertaking for Costs ............................................................................................... 36 SECTION 6.12. Sole Remedy for Failure to Report ............................................................................ 37

ARTICLE SEVEN TRUSTEE

SECTION 7.01. Duties of Trustee ....................................................................................................... 37 SECTION 7.02. Rights of Trustee ....................................................................................................... 38 SECTION 7.03. Individual Rights of Trustee ...................................................................................... 39 SECTION 7.04. Trustee’s Disclaimer ................................................................................................. 39 SECTION 7.05. Notice of Default ....................................................................................................... 40 SECTION 7.06. Reports by Trustee to Holders ................................................................................... 40 SECTION 7.07. Compensation and Indemnity .................................................................................... 40 SECTION 7.08. Replacement of Trustee ............................................................................................. 41 SECTION 7.09. Successor Trustee by Merger, Etc ............................................................................. 42 SECTION 7.10. Eligibility; Disqualification ....................................................................................... 42 SECTION 7.11. Preferential Collection of Claims Against the Issuer ................................................ 42

ARTICLE EIGHT DISCHARGE OF INDENTURE

SECTION 8.01. Termination of the Issuer’s Obligations .................................................................... 42 SECTION 8.02. Application of Trust Money ...................................................................................... 43 SECTION 8.03. Repayment to the Issuer ............................................................................................ 43 SECTION 8.04. Reinstatement ............................................................................................................ 44

ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 9.01. Without Consent of Holders ...................................................................................... 44 SECTION 9.02. With Consent of Holders ........................................................................................... 45 SECTION 9.03. Revocation and Effect of Consents ........................................................................... 46 SECTION 9.04. Notation on or Exchange of Notes ............................................................................ 46

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SECTION 9.05. Trustee To Sign Amendments, Etc ............................................................................ 47

ARTICLE TEN CONVERSION

SECTION 10.01. Right to Convert ........................................................................................................ 47 SECTION 10.02. Conversion Procedure ............................................................................................... 47 SECTION 10.03. Settlement upon Conversion ..................................................................................... 49 SECTION 10.04. Adjustment of Conversion Rate ................................................................................ 50 SECTION 10.05. Effect of Reclassification, Consolidation, Merger or Sale ........................................ 58 SECTION 10.06. Adjustments of Prices ................................................................................................ 59 SECTION 10.07. Taxes on Shares Issued.............................................................................................. 59 SECTION 10.08. Reservation of Shares; Shares to be Fully Paid; Compliance with

Governmental Requirements ..................................................................................... 59 SECTION 10.09. Responsibility of Trustee and Conversion Agent ...................................................... 60 SECTION 10.10. Notice to Holders Prior to Certain Actions ............................................................... 60 SECTION 10.11. Stockholder Rights Plan ............................................................................................ 61 SECTION 10.12. Issuer Determination Final ........................................................................................ 61 SECTION 10.13. 4.95% Stockholder Limitations ................................................................................. 61 SECTION 10.14. Waiver of 4.95% Stockholder Provisions ................................................................. 62

ARTICLE ELEVEN PURCHASE AT OPTION OF HOLDERS UPON A FUNDAMENTAL CHANGE

SECTION 11.01. Purchase at Option of Holders upon a Fundamental Change .................................... 63 SECTION 11.02. Effect of Fundamental Change Purchase Notice ....................................................... 65 SECTION 11.03. Withdrawal of Fundamental Change Purchase Notice .............................................. 65 SECTION 11.04. Deposit of Fundamental Change Purchase Price ....................................................... 66 SECTION 11.05. Notes Purchased in Whole or in Part ......................................................................... 66 SECTION 11.06. Covenant to Comply With Securities Laws upon Purchase of Notes ....................... 66 SECTION 11.07. Repayment to the Issuer ............................................................................................ 66

ARTICLE TWELVE MISCELLANEOUS

SECTION 12.01. Notices ....................................................................................................................... 66 SECTION 12.02. Communications by Holders with Other Holders ..................................................... 68 SECTION 12.03. Certificate and Opinion as to Conditions Precedent .................................................. 68 SECTION 12.04. Statements Required in Certificate or Opinion ......................................................... 68 SECTION 12.05. Rules by Trustee, Paying Agent, Registrar, Conversion Agent ................................ 69 SECTION 12.06. Legal Holidays .......................................................................................................... 69 SECTION 12.07. Governing Law .......................................................................................................... 69 SECTION 12.08. No Adverse Interpretation of Other Agreements ...................................................... 69 SECTION 12.09. No Recourse Against Others ..................................................................................... 69 SECTION 12.10. Successors ................................................................................................................. 69 SECTION 12.11. Duplicate Originals ................................................................................................... 69 SECTION 12.12. Severability ................................................................................................................ 69 SECTION 12.13. Waiver of Jury Trial .................................................................................................. 69 SECTION 12.14. Submission to Jurisdiction......................................................................................... 70 SECTION 12.15. USA PATRIOT Act .................................................................................................. 70 SECTION 12.16. Force Majeure ........................................................................................................... 70 SECTION 12.17. Calculations ............................................................................................................... 70

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Exhibit A - Form of Note Exhibit B - Form of Legends Exhibit C - Form of Cash Interest Payment Notice

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INDENTURE dated as of April [15], 2016 among NEBRASKA BOOK HOLDINGS, INC., a Delaware corporation (the “Issuer”) and WILMINGTON TRUST, NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States of America, as trustee (in such capacity and any successor, the “Trustee”).

The Issuer has duly authorized the creation of the Initial Notes on the Issue Date and, thereafter, Additional Notes (which such Additional Notes may have a different Issue Date, issue price and first Interest Payment Date than the Initial Notes), and to provide therefor, the Issuer has duly authorized the execution and delivery of this Indenture. All acts and requirements necessary to make the Notes, when duly issued and executed by the Issuer and authenticated and delivered hereunder, the valid and binding obligations of the Issuer and to make this Indenture a valid and binding agreement of the Issuer have been done.

Each party hereto agrees as follows for the benefit of each other party and for the equal and ratable benefit of the Holders of the Notes:

ARTICLE ONE

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01. Definitions.

Set forth below are certain defined terms used in this Indenture.

“382 Person” means any individual, firm, corporation or other legal entity, including persons treated as an entity pursuant to Treasury Regulation § 1.382-3(a)(1)(i); and includes any successor (by merger or otherwise) of such entity.

“4.95% Stockholder” means a 382 Person who owns a Percentage Stock Ownership equal to or exceeding 4.95% of the Issuer’s then-outstanding Stock, whether directly or indirectly, and including Stock such 382 Person would be deemed to constructively own or which otherwise would be aggregated with shares owned by such 382 Person pursuant to Section 382 of the Code or any successor provision or replacement provision and the applicable Treasury Regulations thereunder.

“Additional Interest” means all amounts, if any, payable pursuant to Section 6.12 hereof. Unless the context otherwise requires, all references in this Indenture to interest include Additional Interest, if any. Any express reference to Additional Interest in this Indenture shall not be construed as excluding Additional Interest in any other text where no such express reference is made.

“Additional Notes” means additional Notes having identical terms and conditions to the Initial Notes, except for Issue Date, issue price and first Interest Payment Date, in an unlimited aggregate principal amount, and in the case of a PIK Payment, PIK Notes issued hereunder.

“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with, such specified Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Agent” means any Registrar, Paying Agent or Conversion Agent.

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“amend” means to amend, supplement, restate, amend and restate or otherwise modify; and “amendment” shall have a correlative meaning.

“Applicable Conversion Rate” means the Conversion Rate in effect at any given time.

“Applicable Premium” means, with respect to any Note on any Redemption Date, the greater of (1) 1.0% of the principal amount of such Note and (2) the excess of (a) the present value at such Redemption Date of (i) the redemption price of such Note at March 15, 2021 (as set forth in the table in Section 5 of Exhibit A hereto), plus (ii) all scheduled interest payments due on such Note from the Redemption Date through March 15, 2021 (excluding accrued and unpaid interest through the Redemption Date), computed using a discount rate equal to the Treasury Rate at such Redemption Date, plus 20 basis points over (b) the principal amount of such Note. The Applicable Premium shall be calculated by the Issuer and the Trustee shall have no liability therefor.

“Applicable Procedures” means, with respect to any transfer or transaction involving a Global Note or any beneficial interest therein, the rules and procedures of the Depository for such Note, to the extent applicable to such transaction and as in effect from time to time.

“asset” means any asset or property.

“Bankruptcy Code” means Title 11 of the United States Code, as amended.

“bankruptcy law” means the Bankruptcy Code or any similar federal foreign or state law for the relief of debtors.

“Board of Directors” means, with respect to any Person, (1) in the case of any corporation, the board of directors of such Person, (2) in the case of any limited liability company, the board of managers of such Person, (3) in the case of any partnership, the Board of Directors of the general partner of such Person and (4) in any other case, the functional equivalent of the foregoing.

“Board Resolution” means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary or the General Counsel of such Person to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.

“Business Day” means a day other than a Saturday, Sunday or other day on which banking institutions in New York, or with respect to a payment date, in the jurisdiction of the place of payment, are authorized or required by law to close.

“Capital Stock” means any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock and, with respect to partnerships, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership.

“Capitalized Lease” means a lease required to be capitalized for financial reporting purposes in accordance with GAAP.

“Capitalized Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under a Capitalized Lease, and the amount of such obligation shall be the capitalized amount thereof determined in accordance with GAAP.

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“Cash Equivalents” means:

(1) obligations with a maturity of 360 days or less issued or directly and fully guaranteed or insured by the U.S. or any agency or instrumentality thereof (provided that the full faith and credit of the U.S. is pledged in support thereof);

(2) time deposits and certificates of deposit or acceptances with a maturity of 360 days or less of any financial institution having combined capital and surplus and undivided profits of not less than $500 million and is assigned at least a rating of “A” (or such other similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act);

(3) commercial paper maturing no more than 180 days from the date of creation thereof issued by a corporation that is not the Issuer or an Affiliate of the Issuer, and is organized under the laws of any State of the U.S. or the District of Columbia and rated at least A-1 by S&P or at least P-1 by Moody’s;

(4) repurchase obligations with a term of not more than ten days for underlying securities of the types described in clause (1) above entered into with any commercial bank meeting the specifications of clause (2) above;

(5) demand deposit accounts maintained in the ordinary course of business; and

(6) investments in money market or other mutual funds substantially all of whose assets comprise securities of the types described in clauses (1) through (5) above.

“Certificate of Incorporation” means the Certificate of Incorporation of the Issuer, as amended.

“Certificated Notes” mean any of the Notes executed, authenticated and delivered in definitive non-global, fully registered form without interest coupons, pursuant to this Indenture.

“Close of Business” means 5:00 p.m., New York City time.

“Code” means the United States Internal Revenue Code of 1986, as amended from time to time.

“Common Stock” means the shares of common stock, $0.001 par value per share, of the Issuer as they exist on the date of this Indenture and, to the extent specified in a notice from the Issuer to any Holder prior to any conversion, any other interest in the Issuer that the Issuer determines will be treated as Stock of the Issuer for purposes of applying Section 382 to the Issuer.

“Common Stock Record Date” means, with respect to any dividend, distribution or other transaction or event in which the holders of the Common Stock (or other applicable security) have the right to receive any cash, securities or other property or in which the Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of the Common Stock (or other applicable security) entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or a duly authorized committee thereof, statute, contract or otherwise).

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“Conversion Price” means, per share of Common Stock, $1,000 divided by the Applicable Conversion Rate.

“Conversion Rate” means initially 684.2285 shares of Common Stock per $1,000 principal amount of Notes (equivalent to an initial Conversion Price of approximately $1.4615), subject to adjustment as set forth herein.

“Corporate Trust Office” means the corporate trust office of the Trustee located at 50 S. 6th Street, Suite 1290, Minneapolis, MN 55402, Attention: Nebraska Book Holdings, Inc. account manager, or such other office, designated by the Trustee by written notice to the Issuer, at which at any particular time its corporate trust business shall be administered.

“Credit Agreement” means the Term Loan Credit and Security Agreement, originally dated as of November 13, 2014, by and among Nebraska Book Company, Inc., as borrower, certain co-borrowers and guarantors party thereto, MAST OC I Master Fund L.P., as agent, and the lenders from time to time party thereto, (1) as amended by that certain Amendment No. 1 to Revolving Credit and Security Agreement dated as of March 27, 2015, (2) as amended by that certain Waiver and Amendment No. 2 to Revolving Credit and Security Agreement dated as of April 23, 2015, (3) as amended by that certain Omnibus Amendment, Consent and Assignment Agreement dated as of June 11, 2015, and (4) as amended by that certain Amendment No. 4 to Term Loan Credit and Security Agreement dated as of June 25, 2015, including in each case any notes, guarantees, collateral and security documents, instruments and agreements executed in connection therewith, and in each case as amended, amended and restated, supplemented, modified, refinanced, replaced or otherwise restructured, in whole or in part, from time to time.

“Credit Facilities” means one or more debt facilities (which may be outstanding at the same time and including, without limitation, the Credit Agreement), indentures or commercial paper facilities with banks or other institutional lenders or investors or indentures or other agreements providing for revolving credit loans, term loans or letters of credit or other long-term Indebtedness and, in each case, as such agreements may be amended, amended and restated, supplemented, modified, refinanced, replaced or otherwise restructured, in whole or in part from time to time (including increasing the amount of available borrowings thereunder or adding Subsidiaries as additional borrowers or guarantors thereunder) with respect to all or any portion of the Indebtedness under such agreement or agreements or any successor or replacement agreement or agreements and whether by the same or any other agent, lender or group of lenders.

“Custodian” means any receiver, trustee, assignee, liquidator or similar official under any applicable bankruptcy law.

“Default” means (1) any Event of Default or (2) any event, act or condition that, after notice or the passage of time or both, would be an Event of Default.

“Depository” means The Depository Trust Company, or a successor thereto registered under the Exchange Act or other applicable statute or regulation.

“Disqualified Equity Interests” of any Person means any class of Equity Interests of such Person that, by its terms, or by the terms of any related agreement or of any security into which it is convertible, puttable or exchangeable, is, or upon the happening of any event or the passage of time would be, required to be redeemed by such Person, whether or not at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, on or prior to the date which is 91 days after the final maturity date of the Notes; provided, however,

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that any class of Equity Interests of such Person that, by its terms, authorizes such Person to satisfy in full its obligations with respect to the payment of dividends or upon maturity, redemption (pursuant to a sinking fund or otherwise) or repurchase thereof or otherwise by the delivery of Equity Interests that are not Disqualified Equity Interests, and that is not convertible, puttable or exchangeable for Disqualified Equity Interests or Indebtedness, will not be deemed to be Disqualified Equity Interests so long as such Person satisfies its obligations with respect thereto solely by the delivery of Equity Interests that are not Disqualified Equity Interests; provided, further, however, that any Equity Interests that would not constitute Disqualified Equity Interests but for provisions thereof giving holders thereof (or the holders of any security into or for which such Equity Interests are convertible, exchangeable or exercisable) the right to require the Issuer to redeem such Equity Interests upon the occurrence of a fundamental change occurring prior to the 91st day after the final maturity date of the Notes shall not constitute Disqualified Equity Interests if the fundamental change provisions applicable to such Equity Interests are no more favorable to such holders than the provisions set forth in Article Eleven and such Equity Interests specifically provide that the Issuer will not redeem any such Equity Interests pursuant to such provisions prior to the Issuer’s purchase of the Notes as required pursuant to the provisions described under Article Eleven.

“Equity Interests” of any Person means (1) any and all shares or other equity interests (including common stock, preferred stock, limited liability company interests and partnership interests) in such Person and (2) all rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such Person.

“Event of Loss” means, with respect to any property or asset, any (i) loss or destruction of, or damage to, such property or assets or (ii) any condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, of such property or asset, or confiscation or requisition of the use of such property or asset.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Ex-Dividend Date” means the first date on which a trade of shares of Common Stock may be made on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question, from the Issuer or, if applicable, from the seller of the shares of Common Stock on such exchange or market (in the form of due bills or otherwise) as determined by such exchange or market or in the absence of requirements from such exchange or market as determined by the Conversion Agent.

“Fair Market Value” means, with respect to any asset, the price (after taking into account any liabilities relating to such asset) that would be negotiated in an arm’s-length transaction for cash between a willing seller and a willing and able buyer, neither of which is under any compulsion to complete the transaction, as such price is determined in good faith by the Issuer (and, if such transaction involves assets with a value in excess of $10.0 million, such determination shall be made by the Board of Directors of the Issuer or a duly authorized committee thereof, as evidenced by a resolution of such Board of Directors or committee delivered to the Trustee).

“Fundamental Change” means the occurrence of any of the following events at any time after the Notes are originally issued:

(1) (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, acquires beneficial ownership (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this

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clause that person or group shall be deemed to have “beneficial ownership” of all securities that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of Voting Stock representing 50% or more of the voting power of the total outstanding Voting Stock of the Issuer and (b) Permitted Holders are no longer the beneficial owners, directly or indirectly, of Voting Stock representing 50% or more of the voting power of the total outstanding Voting Stock of the Issuer;

(2) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election to such Board of Directors or whose nomination for election by the stockholders of the Issuer was approved by a vote of the majority of the directors of the Issuer then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Issuer;

(3) (a) all or substantially all of the assets of the Issuer and its Subsidiaries are sold or otherwise transferred to any Person other than a Wholly-Owned Subsidiary or one or more Permitted Holders or (b) the Issuer consolidates or merges with or into another Person other than a Wholly-Owned Subsidiary or one or more Permitted Holders or any Person other than a Wholly-Owned Subsidiary or one or more Permitted Holders consolidates or merges with or into the Issuer; provided that in either case under this clause (3), in one transaction or a series of related transactions in which immediately after the consummation thereof Persons beneficially owning (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, Voting Stock representing in the aggregate a majority of the total voting power of the Voting Stock of the Issuer immediately prior to such consummation do not beneficially own (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, Voting Stock representing a majority of the total voting power of the Voting Stock of the Issuer or the surviving or transferee Person;

(4) the Issuer shall adopt a plan of liquidation or dissolution or any such plan shall be approved by the stockholders of the Issuer; or

(5) if the Common Stock (or other Capital Stock into which the Notes are then convertible pursuant to the terms of this Indenture) is listed or quoted on any of The New York Stock Exchange, The Nasdaq Global Select Market or The Nasdaq Global Market (or any of their respective successors), then if the Common Stock (or other Capital Stock into which the Notes are then convertible pursuant to the terms of this Indenture) ceases to be listed or quoted on at least one of The New York Stock Exchange, The Nasdaq Global Select Market or The Nasdaq Global Market (or any of their respective successors).

For purposes of this definition, a Person shall not be deemed to have beneficial ownership of securities subject to a stock purchase agreement, merger agreement or similar agreement until the consummation of the transactions contemplated by such agreement.

Notwithstanding the foregoing, a Fundamental Change as a result of clauses (1), (2) or (3) above will not be deemed to have occurred if at least 90% of the consideration received or to be received by holders of shares of Common Stock (excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights) in connection with the transaction or transactions constituting the Fundamental Change consists of Publicly Traded Securities and as a result of such transaction or transactions, the Notes become convertible into such Publicly Traded Securities, excluding cash payments for fractional shares.

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“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect on the Issue Date.

“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union, the European Central Bank or the Organization for Economic Cooperation and Development).

“guarantee” means a direct or indirect guarantee by any Person of any Indebtedness of any other Person and includes any obligation, direct or indirect, contingent or otherwise, of such Person: (1) to purchase or pay (or advance or supply funds for the purchase or payment of) Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services (unless such purchase arrangements are on arm’s-length terms and are entered into in the ordinary course of business), to take-or-pay, or to maintain financial statement conditions or otherwise); or (2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); “guarantee,” when used as a verb, and “guaranteed” have correlative meanings.

“Hedging Obligations” of any Person means the obligations of such Person pursuant to (1) any interest rate swap agreement, interest rate collar agreement or other similar agreement or arrangement, (2) agreements or arrangements relating to, or designed to protect such Person against, fluctuations in foreign currency exchange rates, or (3) any forward contract, commodity swap agreement, commodity option agreement or other similar agreement or arrangement.

“Holder” means any registered holder, from time to time, of the Notes.

“incur” means, with respect to any Indebtedness or Obligation, incur, create, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to such Indebtedness or Obligation; provided that (1) the Indebtedness of a Person existing at the time such Person became a Subsidiary shall be deemed to have been incurred by such Subsidiary and (2) neither the accrual of interest nor the accretion of original issue discount shall be deemed to be an incurrence of Indebtedness.

“Indebtedness” of any Person at any date means, without duplication:

(1) all liabilities, contingent or otherwise, of such Person for borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof);

(2) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(3) all reimbursement obligations of such Person in respect of letters of credit, letters of guaranty, bankers’ acceptances and similar credit transactions;

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(4) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, except trade payables and accrued expenses incurred by such Person in the ordinary course of business in connection with obtaining goods, materials or services;

(5) the maximum fixed redemption or repurchase price of all Disqualified Equity Interests of such Person;

(6) all Capitalized Lease Obligations of such Person;

(7) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person;

(8) all Indebtedness of others guaranteed by such Person to the extent of such guarantee; provided that Indebtedness of the Issuer or its Subsidiaries that is guaranteed by the Issuer or the Issuer’s Subsidiaries shall only be counted once in the calculation of the amount of Indebtedness of the Issuer and its Subsidiaries on a consolidated basis;

(9) to the extent not otherwise included in this definition, Hedging Obligations of such Person; and

(10) all obligations of such Person under conditional sale or other title retention agreements relating to assets purchased by such Person.

The amount of any Indebtedness which is incurred at a discount to the principal amount at maturity thereof as of any date shall be deemed to have been incurred at the accreted value thereof as of such date. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above, the maximum liability of such Person for any such contingent obligations at such date and, in the case of clause (7), the lesser of (a) the Fair Market Value of any asset subject to a Lien securing the Indebtedness of others on the date that the Lien attaches and (b) the amount of the Indebtedness secured. For purposes of clause (5), the “maximum fixed redemption or repurchase price” of any Disqualified Equity Interests that do not have a fixed redemption or repurchase price shall be calculated in accordance with the terms of such Disqualified Equity Interests as if such Disqualified Equity Interests were redeemed or repurchased on any date on which an amount of Indebtedness outstanding shall be required to be determined pursuant to this Indenture.

“Indenture” means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof.

“Initial Notes” means the $[125],000,000 aggregate principal amount of 2.00% Convertible Senior PIK Notes due 2026 issued on the Issue Date.

“Issue Date” means with respect to any Note, the date on which such Note was originally issued and, in the case of the Initial Notes, April [15], 2016.

“Last Reported Sale Price” means, on any relevant day, the closing sale price per share of Common Stock as reported in composite transactions for the principal United States national or regional securities exchange on which the Common Stock is traded. If the Common Stock is not listed for trading on a United States national or regional securities exchange on the relevant day, the “Last Reported Sale Price” will be the closing sale price per share of Common Stock in the over-the-counter market on the relevant day as reported by OTC Markets Group Inc. or similar organization selected by the Issuer. If the Common Stock is not so listed or quoted, the “Last Reported Sale Price” will be the average

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of the mid-point of the last bid and ask prices per share of Common Stock on the relevant date from each of at least three nationally recognized independent investment banking firms selected by the Issuer for this purpose.

“Lien” means, with respect to any asset, any mortgage, deed of trust, lien (statutory or other), pledge, lease, easement, restriction, covenant, charge, security interest or other encumbrance of any kind or nature in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, and any lease in the nature thereof, any option or other agreement to sell, and any filing of, or agreement to give, any financing statement under the UCC (or equivalent statutes) of any jurisdiction (other than cautionary filings in respect of operating leases).

“Maturity Date” means April 1, 2026.

“Moody’s” means Moody’s Investors Service, Inc., and its successors.

“Notes” means, collectively, the Initial Notes, PIK Notes and the Additional Notes, treated as a single class of securities under this Indenture, as amended or supplemented from time to time in accordance with the terms of this Indenture; provided any such PIK Notes and Additional Notes may have a different Issue Date, issue price and first Interest Payment Date than the Initial Notes.

“Notes Custodian” means the custodian with respect to a Global Note or any successor Person thereto and shall initially be the Trustee.

“Obligation” means any principal, interest, penalties, fees, indemnification, reimbursements, costs, expenses, damages and other liabilities payable under the documentation governing any Indebtedness.

“Officer” means any of the following of the Issuer: the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer or the Secretary.

“Officers’ Certificate” means a certificate signed by two Officers.

“Open of Business” means 9:00 a.m., New York City time.

“Opinion of Counsel” means a written opinion reasonably acceptable to the Trustee from legal counsel. The counsel may be an employee of or counsel to the Issuer.

“Percentage Stock Ownership” means the percentage Stock Ownership interest of any 382 Person or group (as the context may require) for purposes of Section 382 of the Code as determined in accordance with the Treasury Regulation § 1.382-2T(g), (h), (j) and (k) or any successor provision.

“Permitted Holders” means each of (1) Mast Capital Management, LLC; (2) any Affiliate or successor of any of the foregoing formed by such Person; and (3) any “group” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) to which any Person named in clauses (1) and (2) above belongs for purposes of holding its equity investment in the Issuer (or any direct or indirect parent company thereof) so long as the Persons named in clauses (1) and (2) above hold a majority of the Voting Stock of the Issuer (or any direct or indirect parent company thereof) held by all members of such “group.”

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“Person” means any individual, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind.

“Publicly Traded Securities” means shares of Capital Stock that are listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) or which will be so listed or quoted when issued or exchanged in connection with the transaction that would otherwise be a Fundamental Change.

“Qualified Institutional Buyer” or “QIB” has the meaning specified in Rule 144A.

“Record Date” means the applicable Record Date specified in the Notes; provided that if any such date is not a Business Day, the Record Date shall not be affected.

“redeem” means to redeem, repurchase, purchase, defease, retire, discharge or otherwise acquire or retire for value; and “redemption” has a correlative meaning; provided that this definition does not apply for purposes of Article Three or Sections 5 or 8 of the Notes.

“Redemption Date” means, when used with respect to any Note to be redeemed, the date fixed for such redemption pursuant to this Indenture and the Notes.

“Redemption Price” means, when used with respect to any Note to be redeemed, the price fixed for such redemption, payable in immediately available funds, pursuant to this Indenture and the Notes. For all redemptions pursuant to Article Three and/or Sections 5 or 8 of the Notes, the Redemption Price shall be as required by the terms of the Notes.

“Related Person” means, with respect to any Holder, any 382 Person that would be treated as owning shares of Common Stock owned by such Holder at any time during the Section 382 Testing Period ending on the Conversion Date, applying the attribution rules in Section 382, but such term shall not include a “public group” as defined in Treasury Regulation Section 1.382-2T(f)(13).

“Responsible Officer” means, when used with respect to the Trustee, any officer in the Corporate Trust Office of the Trustee, including any vice president, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such officer’s knowledge of and familiarity with the particular subject and, in each case, shall have direct responsibility for the administration of this Indenture.

“Restricted Person” means a Holder, to the extent that such Holder or a Related Person (1) is or was a 4.95% Stockholder with respect to the Issuer at any time during the Section 382 Testing Period ending on the applicable Conversion Date, or (2) would as a result of the acquisition of Common Stock in connection with the conversion become a 4.95% Stockholder with respect to the Issuer.

“Rule 144A” means Rule 144A under the Securities Act.

“S&P” means Standard & Poor’s Ratings Service, a division of the McGraw-Hill Companies, Inc., and its successors.

“SEC” means the U.S. Securities and Exchange Commission.

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“Section 382” means Section 382 of the Code and the Treasury Regulations promulgated thereunder.

“Section 382 Testing Period” has the meaning ascribed to “testing period” in Section 382, as applied to the Issuer.

“Securities Act” means the U.S. Securities Act of 1933, as amended.

“Significant Subsidiary” means (1) any Subsidiary that would be a “significant subsidiary” as defined in Regulation S-X promulgated pursuant to the Securities Act as such Regulation is in effect on the Issue Date and (2) any Subsidiary that, when aggregated with all other Subsidiaries that are not otherwise Significant Subsidiaries and as to which any event described in clause (9) or (10) under Section 6.01 has occurred and is continuing, would constitute a Significant Subsidiary under clause (1) of this definition.

“Stated Maturity” means, with respect to any installment of interest or principal on any Indebtedness, the date on which such payment of interest or principal is scheduled to be paid in the documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

“Stock” means any interest that would be treated as “stock” of the Issuer pursuant to Treasury Regulation § 1.382-2T(f)(18).

“Stock Ownership” means any direct or indirect ownership of Stock, including any ownership by virtue of application of constructive ownership rules, with such direct, indirect, and constructive ownership determined under the provisions of Section 382 of the Code and the regulations thereunder, including, for the avoidance of doubt, any ownership whereby a 382 Person owns Stock pursuant to a “coordinated acquisition” treated as a single “entity” as defined in Section 1.382-3(a)(1) of the Treasury Regulations, or such Stock is otherwise aggregated with Stock owned by such Person pursuant to the provisions of Section 382 of the Code and the Treasury Regulations thereunder.

“Subsidiary” means, with respect to any Person:

(1) any corporation, limited liability company, association or other business entity of which more than 50% of the total voting power of the Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Board of Directors thereof are at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

(2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof).

Unless otherwise specified, “Subsidiary” refers to a Subsidiary of the Issuer.

“Trading Day” means a day during which (1) trading in securities generally occurs on the principal United States national or regional securities exchange on which the Common Stock is then listed or admitted for trading or, if the Common Stock is not then listed or admitted for trading on a United States national or regional securities exchange, on the principal other market on which the Common Stock is then traded, and (2) a Last Reported Sale Price for the Common Stock is available on

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such securities exchange or market. If the Common Stock is not so listed or traded, “Trading Day” means a Business Day.

“transfer” means any sale, issuance, conveyance, transfer, lease, assignment, Event of Loss or other disposition.

“Transfer Agent” means American Stock Transfer & Trust Company, LLC acting in its capacity as transfer agent of the Common Stock and any successor thereto.

“Transfer Restricted Note” means a Note that bears or is required to bear the legend set forth in Section (ii) of Exhibit B hereto.

“Treasury Rate” means, with respect to any Redemption Date, the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) that has become publicly available at least two business days prior to such Redemption Date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from such Redemption Date to March 15, 2021; provided, however, that if the period from such Redemption Date to March 15, 2021 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from such Redemption Date to March 15, 2021 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.

“Treasury Regulations” means the regulations, including temporary regulations or any successor regulations promulgated under the Code, as amended from time to time.

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended.

“UCC” means the Uniform Commercial Code as in effect in the State of New York, and any successor statute, as in effect from time to time (except that terms used herein which are defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute).

“U.S.” means the United States of America.

“U.S. Government Obligations” means direct non-callable obligations of, or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States is pledged.

“U.S. Legal Tender” means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts.

“Voting Stock” with respect to any Person means securities of any class of Equity Interests of such Person (in the case of a partnership, the sole general partner or managing general partner of such Person) entitling the holders thereof (whether at all times or only so long as no senior class of stock or other relevant equity interest has voting power by reason of any contingency) to vote in the election of members of the Board of Directors of such Person.

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“VWAP” means the per-share volume-weighted average price of the Common Stock as displayed under the heading “VWAP” in the row labeled “Bloomberg” on Bloomberg Page “NEEB <equity> VWAP” (or its equivalent successor if such page is not available) or if such volume-weighted average price is unavailable on Bloomberg, the market value of one share of Common Stock on such day determined, using a volume-weighted average method, if applicable, by a nationally recognized independent investment banking firm retained for this purpose by the Issuer.

“Wholly-Owned Subsidiary” means a Subsidiary of which 100% of the Equity Interests (except for directors’ qualifying shares or certain minority interests owned by other Persons solely due to local law requirements that there be more than one stockholder, but which interest is not in excess of what is required for such purpose) are owned directly by the Issuer or through one or more Wholly-Owned Subsidiaries.

SECTION 1.02. Other Definitions.

Term Defined in Section

“4.95% Stockholder Provision Waiver Notice” .................................... 10.14 “Agent Members” ................................................................................. 2.01(e) “Applicable Law” .................................................................................. 2.17 “Authentication Order” ........................................................................ 2.02 “Cash Interest” ..................................................................................... Exhibit A “Certificated Notes” ............................................................................. 2.01(f) “Clause A Distribution” ........................................................................ 10.04(c) “Clause B Distribution” ......................................................................... 10.04(c) “Clause C Distribution” ......................................................................... 10.04(c) “Conversion Agent ................................................................................ 2.03 “Conversion Date” ................................................................................. 10.02(b) “Conversion Notice” ............................................................................. 10.02(b) “Defaulted Interest” ............................................................................... 2.12 “Distributed Property ............................................................................. 10.04(c) “Event of Default” ................................................................................. 6.01 “Fundamental Change Company Notice” ............................................. 11.01(b) “Fundamental Change Purchase Date” .................................................. 11.01(a) “Fundamental Change Purchase Notice” .............................................. 11.01(a) “Fundamental Change Purchase Price” ................................................. 11.01(a) “Global Notes” ...................................................................................... 2.01(d) “Interest Payment Date” ....................................................................... Exhibit A “Interest Payment Notice” .................................................................... 2.02 “Issuer” .................................................................................................. Preamble “Merger Event” ..................................................................................... 10.05 “Notice of Redemption” ........................................................................ 3.03 “Paying Agent” ...................................................................................... 2.03 “PIK Interest” ........................................................................................ Exhibit A “PIK Notes” ........................................................................................... 2.01(c) “PIK Only Period” ................................................................................. Exhibit A “PIK Payment” ...................................................................................... 2.01(c) “Reference Property” ............................................................................. 10.05 “Registrar” ............................................................................................. 2.03 “Rule 144A Global Notes” .................................................................... 2.01(d) “Rule 144A Notes” ................................................................................ 2.01(b)

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Term Defined in Section

“Spin-Off” ............................................................................................. 10.04(c) “Successor” ........................................................................................... 5.01(a)(1) “Trigger Event” ..................................................................................... 10.04(c) “Trustee” ............................................................................................... Preamble “Valuation Period” ................................................................................ 10.04(c)

SECTION 1.03. Incorporation by Reference of Certain Provisions of the Trust Indenture Act.

Whenever this Indenture refers to a provision of the Trust Indenture Act, such provision is incorporated by reference in, and made a part of, this Indenture. The following Trust Indenture Act terms used in this Indenture have the following meanings:

“indenture securities” means the Notes.

“obligor” on this indenture securities means the Issuer or any other obligor on the Notes.

All other Trust Indenture Act terms used in this Indenture that are defined by the Trust Indenture Act, defined by Trust Indenture Act reference to another statute or defined by SEC rule and not otherwise defined herein have the meanings assigned to them therein. No provision of the Trust Indenture Act that is not specifically incorporated by reference herein shall have any applicability to this Indenture, or to any parties hereto, or to the Notes or any Holders thereof.

SECTION 1.04. Rules of Construction.

Unless the context otherwise requires:

(1) a term has the meaning assigned to it;

(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(3) “or” is not exclusive;

(4) words in the singular include the plural, and words in the plural include the singular;

(5) provisions apply to successive events and transactions;

(6) “herein,” “hereof” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and

(7) the words “including,” “includes” and similar words shall be deemed to be followed by “without limitation.”

SECTION 1.05. Section 382 Interpretive Provisions.

For purposes of this Indenture:

(a) ownership of Common Stock shall be determined using the rules applicable to the Issuer under Section 382 and the Certificate of Incorporation;

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(b) the Notes shall not be treated as having been converted for purposes of Section 382 prior to the actual conversion thereof; and

(c) Article Ten shall be interpreted and applied in a manner consistent with the intent of eliminating increases in the ownership of Common Stock by 4.95% Stockholders other than public groups as determined for purposes of applying Section 382 to the Issuer.

ARTICLE TWO

THE NOTES

SECTION 2.01. Form and Dating.

(a) The Notes and the Trustee’s certificate of authentication with respect thereto shall be substantially in the form set forth in Exhibit A. The Notes may have notations, legends or endorsements required by law, rule or usage to which the Issuer is subject. Each Note shall be dated the date of its authentication.

(b) The Notes are being offered and sold in reliance on Rule 506 under the Securities Act and may be resold to QIBs in reliance on Rule 144A (“Rule 144A Notes”). The Notes will be issuable only in registered, global form, without interest coupons, and in denominations of $1.00 and integral multiples of $1.00 in excess thereof. PIK Payments on the PIK Notes will be made in PIK Note denominations of $1.00 and any integral multiple of $1.00 in excess thereof (any fractional amount of PIK Notes to be received in a PIK Payment will be rounded down to the nearest dollar). Such denominations and minimum denominations will be used and observed for all payments, redemptions, repurchases and conversions.

(c) The Issuer may issue Additional Notes (other than the PIK Notes), subject to compliance with the terms of this Indenture. In addition, if the Issuer pays (without regard to any restrictions or limitations set forth under Article Four) PIK Interest in respect of the Notes, the Issuer may elect either (i) to increase the outstanding principal amount of the Notes to the credit of Holders on the relevant Record Date and to adjust the books and records of the Trustee with respect to such Notes to reflect the increase or (ii) issue Additional Notes as Certificated Notes (in the case of (i) or (ii), the “PIK Notes”) under the Indenture having the same terms as the Notes offered hereby (such payment in clause (i) or (ii), a “PIK Payment”) (any fractional amount of PIK Notes to be received in a PIK Payment will be rounded down to the nearest dollar).

(d) Rule 144A Notes initially will be issued in the form of one or more global securities in registered form without interest coupons (collectively, the “Rule 144A Global Notes”). The Rule 144A Global Notes shall in each case contain the global securities legend and the applicable restricted securities legend set forth in Exhibit B hereto. The Global Notes (as defined below) will be deposited upon issuance with the Trustee as Notes Custodian for the Depository and registered in the name of the Depository or its nominee, in each case for credit to an account of a direct or indirect participant in the Depository as described below. The Rule 144A Global Notes are also referred to herein as the “Global Notes.” The aggregate principal amount of the Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depository or its nominee as hereinafter provided.

(e) Book-Entry Provisions. This Section 2.01(e) shall apply only to a Global Note deposited with or on behalf of the Depository.

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(i) The Issuer shall execute and the Trustee shall, in accordance with this Section 2.01(e), authenticate and deliver initially one or more Global Notes that (A) shall be registered in the name of the Depository for such Global Note or Global Notes or the nominee of such Depository and (B) shall be delivered by the Trustee to such Depository or pursuant to such Depository’s instructions or held by the Trustee as Notes Custodian for the Depository.

(ii) Members of, or participants in, the Depository (“Agent Members”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depository or by the Trustee as the Notes Custodian of the Depository or under such Global Note, and the Issuer, the Trustee and any agent of the Issuer or the Trustee shall be entitled to treat the Depository as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Trustee or any agent of the Issuer or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices of such Depository governing the exercise of the rights of a holder of a beneficial interest in any Global Note.

(f) Global Notes. Except as provided in this Section 2.01 or Section 2.15 or 2.16, owners of beneficial interests in Global Notes shall not be entitled to receive physical delivery of Notes issued in the form of Certificated Notes.

(g) The terms and provisions contained in the Notes shall constitute, and are expressly made, a part of this Indenture and, to the extent applicable, the Issuer and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and agree to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

(h) The Notes may be presented for registration of transfer and exchange at the offices of the Registrar.

SECTION 2.02. Execution, Authentication and Denomination; Additional Notes.

One Officer of the Issuer (who shall have been duly authorized by all requisite corporate actions) shall sign the Notes for such Issuer by manual or facsimile signature.

If an Officer whose signature is on a Note was an Officer at the time of such execution but no longer holds that office at the time the Trustee authenticates the Note, the Note shall nevertheless be valid.

A Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture.

The Trustee shall authenticate the Initial Notes on the Issue Date in the aggregate principal amount of $[125],000,000 upon a written order of the Issuer in the form of a certificate of any Officer of the Issuer (an “Authentication Order”). In addition, the Trustee shall as a result of a PIK

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Payment (i) authenticate PIK Notes that may be validly issued under this Indenture as Certificated Notes, or (ii) increase the outstanding principal amount of the Notes to the credit of Holders on the relevant Record Date and adjust the books and records of the Trustee with respect to such Notes, and in the case of PIK Notes to be issued as Certificated Notes upon receipt of an Authentication Order (any fractional amount of PIK Notes to be received in a PIK Payment will be rounded down to the nearest dollar). The Trustee shall also authenticate any Additional Notes for original issue from time to time after the Issue Date in such principal amount as set forth in an Authentication Order. The Authentication Order for such Additional Notes shall specify the principal amount of the Notes to be authenticated and the date on which the issue of Notes is to be authenticated. Notwithstanding anything to the contrary contained herein, the Company may from time to time, without notice to or consent of the Holders, issue such additional principal amounts of Additional Notes as may be issued and authenticated pursuant to this paragraph of Section 2.02, and Notes authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of, other Notes pursuant to Section 2.06, Section 2.07, Section 2.10, Section 2.15, Section 2.16, Section 3.06, Section 9.04, Section 10.02 or Section 11.05. In addition, with respect to authentication pursuant to this paragraph the Trustee shall be entitled to conclusively rely upon such Authentication Order and such other documentation the Trustee is entitled to under Section 12.03 in authenticating the initial Notes and Additional Notes (other than PIK Notes).

The Trustee may appoint an authenticating agent reasonably acceptable to the Issuer to authenticate Notes. Unless otherwise provided in the appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Issuer and Affiliates of the Issuer.

SECTION 2.03. Registrar, Paying Agent and Conversion Agent.

The Issuer shall maintain or cause to be maintained an office or agency where (a) Notes may be presented or surrendered for registration of transfer or for exchange (“Registrar”), (b) Notes may, subject to Section 2 of the Notes, be presented or surrendered for redemption, purchase or payment (“Paying Agent”), (c) notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served and (d) Notes may be presented for conversion (“Conversion Agent”). The Issuer may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Issuer may act as Registrar, Paying Agent and Conversion Agent, except that for the purposes of Articles Three, Eight and Eleven, neither the Issuer nor any Affiliate of the Issuer shall act as Paying Agent. The Registrar shall keep a register of the Notes and of their transfer and exchange. The Issuer, upon written notice to the Trustee, may have one or more co-registrars, one or more additional paying agents and one or more Conversion Agents reasonably acceptable to the Trustee. The term “Registrar” includes any co-registrar, the term “Paying Agent” includes any additional paying agent and the term “Conversion Agent” includes one or more Conversion Agents. The Issuer initially appoints the Trustee as Registrar, Paying Agent and Conversion Agent until such time as the Trustee has resigned or a successor has been appointed.

The Issuer shall enter into an appropriate agency agreement with any Agent not a party to this Indenture, which agreement shall implement the provisions of this Indenture that relate to such Agent. The Issuer shall notify the Trustee, in writing in advance, of the name and address of any such Agent. If the Issuer fails to maintain a Registrar, Paying Agent or Conversion Agent, the Trustee shall act as such.

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SECTION 2.04. Paying Agent and Conversion Agent To Hold Assets in Trust.

The Issuer shall require each Paying Agent and Conversion Agent other than the Trustee to agree in writing that, each Paying Agent and Conversion Agent shall hold in trust for the benefit of Holders or the Trustee all assets held by the Paying Agent and Conversion Agent for the payment of principal of, or interest on, the Notes or delivery of Common Stock upon conversion of Notes (whether such assets have been distributed to it by the Issuer or any other obligor on the Notes), and shall notify the Trustee of any Default by the Issuer (or any other obligor on the Notes) in making any such payment or delivery. The Issuer at any time may require a Paying Agent or Conversion Agent to distribute all assets held by it to the Trustee and account for any assets disbursed and the Trustee may at any time during the continuance of any payment Default, upon written request to a Paying Agent or Conversion Agent, require such Paying Agent or Conversion Agent to distribute all assets held by it to the Trustee and to account for any assets distributed. Upon distribution to the Trustee of all assets that shall have been delivered by the Issuer to the Paying Agent and Conversion Agent, the Paying Agent and Conversion Agent shall have no further liability for such assets.

SECTION 2.05. Holder Lists.

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders. If the Trustee is not the Registrar, the Issuer shall furnish to the Trustee at least five (5) Business Days prior to each Interest Payment Date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders, which list may be conclusively relied upon by the Trustee.

SECTION 2.06. Transfer and Exchange.

Subject to Sections 2.15 and 2.16, when Notes are presented to the Registrar with a request to register the transfer of such Notes or to exchange such Notes for an equal principal amount of Notes of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transaction are met; provided, however, that the Notes surrendered for transfer or exchange shall be duly endorsed on the assignment and exchange form included in the Note and accompanied by a transferee letter of representation in the form included in the Note if the Notes are being surrendered for transfer duly executed by the Holder thereof or his or her attorney duly authorized in writing. To permit registrations of transfers and exchanges of Certificated Notes, the Issuer shall execute and the Trustee shall authenticate Notes at the Registrar’s request. No service charge shall be made for any registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith.

Without the prior written consent of the Issuer, the Registrar shall not be required to register the transfer of or exchange of any Note (i) during a period beginning at the opening of business 15 days before the mailing or other delivery of a Notice of Redemption of Notes and ending at the Close of Business on the day of such mailing or other delivery, (ii) selected for redemption in whole or in part pursuant to Article Three, except the unredeemed portion of any Note being redeemed in part, (iii) beginning at the opening of business on any Record Date and ending on the Close of Business on the related Interest Payment Date, (iv) when a Fundamental Change Purchase Notice has been delivered and not validly withdrawn by the Holder thereof and (v) when a Conversion Notice has been delivered.

Any Holder of a beneficial interest in a Global Note shall, by acceptance of such beneficial interest, agree that transfers of beneficial interests in such Global Notes may be effected only

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through a book-entry system maintained by the Holder of such Global Note (or its agent), and that ownership of a beneficial interest in the Note shall be required to be reflected in a book-entry system.

SECTION 2.07. Replacement Notes.

If a mutilated Note is surrendered to the Trustee or either the Issuer or the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Issuer shall issue and the Trustee shall authenticate, upon receipt of an Authentication Order, a replacement Note if the Trustee’s requirements are met. Such Holder must provide an indemnity bond or other indemnity, sufficient in the judgment of both the Issuer and the Trustee, to protect the Issuer, the Trustee or any Agent from any loss which any of them may suffer if a Note is replaced. The Issuer may charge such Holder for its reasonable out-of-pocket expenses in replacing a Note pursuant to this Section 2.07, including reasonable fees and expenses of counsel and of the Trustee.

Every replacement Note is an additional obligation of the Issuer.

SECTION 2.08. Outstanding Notes.

Notes outstanding at any time are all the Notes that have been authenticated by the Trustee except those cancelled by it, those delivered to it for cancellation and those described in this Section 2.08 as not outstanding. A Note does not cease to be outstanding because the Issuer or any of their respective Affiliates holds the Note (subject to the provisions of Section 2.09).

If a Note is replaced pursuant to Section 2.07 (other than a mutilated Note surrendered for replacement), it ceases to be outstanding unless a Responsible Officer of the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note and replacement thereof pursuant to Section 2.07.

If the principal amount of any Note is considered paid under Section 4.01, it ceases to be outstanding and interest ceases to accrue. If on a Redemption Date, Fundamental Change Purchase Date or the Maturity Date the Trustee or Paying Agent (other than the Issuer or an Affiliate thereof) holds U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the principal and interest due on the Notes payable on that date, then on and after that date such Notes cease to be outstanding and interest on them ceases to accrue.

If a Note is converted in accordance with Article Ten, then on the Conversion Date, such Note shall cease to be outstanding and interest ceases to accrue, unless there shall be a default in the delivery of the consideration payable hereunder upon such conversion.

SECTION 2.09. Treasury Notes.

In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, only Notes owned by the Issuer or any of its Subsidiaries shall be disregarded, except that, for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned shall be disregarded. For the avoidance of doubt, Notes that are beneficially owned by the Issuer or any of its Subsidiaries, individually or as part of a group, but which are not actually owned by any of the Issuer or its Subsidiaries, shall not be considered to be owned by any of the Issuer or its Subsidiaries for purposes of this Section 2.09.

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SECTION 2.10. Temporary Notes.

Until definitive Notes are ready for delivery, the Issuer may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Issuer considers appropriate for temporary Notes. Without unreasonable delay, the Issuer shall prepare and the Trustee shall authenticate, upon receipt of an Authentication Order, definitive Notes in exchange for temporary Notes. Until such exchange, temporary Notes shall be entitled to the same rights, benefits and privileges as definitive Notes. Notwithstanding the foregoing, so long as the Notes are represented by a Global Note, such Global Note may be in typewritten form.

SECTION 2.11. Cancellation.

The Issuer at any time may deliver Notes to the Trustee for cancellation. The Registrar, the Paying Agent and the Conversion Agent shall forward to the Trustee any Notes surrendered to them for transfer, exchange, redemption, payment, including any payment pursuant to Article Eleven, conversion or cancellation. The Trustee, or at the direction of the Trustee, the Registrar, the Paying Agent or the Conversion Agent (other than the Issuer or a Subsidiary), and no one else, shall cancel and, at the written direction of the Issuer, shall cancel all Notes surrendered for transfer, exchange, redemption, payment, including any payment pursuant to Article Eleven or conversion and shall dispose of all Notes in accordance with its customary procedures. Subject to Section 2.07, the Issuer may not issue new Notes to replace Notes that it has paid or delivered to the Trustee for cancellation or that any Holder has converted pursuant to Article Ten. If the Issuer shall acquire any of the Notes, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Notes unless and until the same are surrendered to the Trustee for cancellation pursuant to this Section 2.11. The Notes so acquired, while held by or on behalf of the Issuer or its Subsidiaries, shall not entitle the Holder thereof to convert the Notes.

SECTION 2.12. Defaulted Interest.

If the Issuer defaults in a payment of interest on the Notes notwithstanding the 30 day period provided for in Section 6.01(1), it shall, unless the Trustee fixes another record date pursuant to Section 6.10, pay the defaulted interest, plus (to the extent lawful) any interest thereon (collectively referred to herein as “Defaulted Interest”) in any lawful manner. Unless the context otherwise requires, all references in this Indenture to interest include Defaulted Interest, if any. Any express reference to Defaulted Interest in this Indenture shall not be construed as excluding Defaulted Interest in any other text where no such express reference is made. The Issuer may pay the Defaulted Interest to the Persons who are Holders on a subsequent special record date, which date shall be the fifteenth day next preceding the date fixed by the Issuer for the payment of Defaulted Interest or the next succeeding Business Day if such date is not a Business Day. At least 15 days before any such subsequent special record date, the Issuer shall mail or otherwise deliver to each Holder, with a copy to the Trustee, a notice that states the subsequent special record date, the payment date and the amount of Defaulted Interest, including any interest payable on such Defaulted Interest, if any, to be paid.

SECTION 2.13. CUSIP Numbers, ISINs, etc.

The Issuer in issuing the Notes may use “CUSIP” numbers, “ISINs” and “Common Code” numbers (if then generally in use) and, if so, the Trustee shall use CUSIP numbers, ISINs and Common Code numbers in notices of redemption or exchange as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers, either as printed on the Notes or as contained in any notice of a redemption that reliance may be placed only on the other identification numbers printed on the Notes and that any such redemption shall

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not be affected by any defect in or omission of such numbers. The Issuer shall promptly advise the Trustee in writing of any change in the CUSIP numbers, ISINs and Common Code numbers.

SECTION 2.14. Deposit of Moneys.

Subject to Section 2 of the Notes, prior to 10:00 a.m. New York City time on each Interest Payment Date, Maturity Date, Redemption Date and Fundamental Change Purchase Date, the Issuer shall have deposited with the Paying Agent in immediately available funds money sufficient to make cash payments, if any, due on such Interest Payment Date, Maturity Date, Redemption Date and Fundamental Change Purchase Date, as the case may be, in a timely manner which permits the Paying Agent to remit payment to the Holders on such Interest Payment Date, Maturity Date, Redemption Date and Fundamental Change Purchase Date, as the case may be.

SECTION 2.15. Certificated Notes.

(a) A Global Note deposited with the Depository or with the Trustee as Notes Custodian for the Depository shall be transferred to the beneficial owners thereof in the form of Certificated Notes in an aggregate principal amount equal to the principal amount of such Global Note, in exchange for such Global Note, only if such transfer complies with Section 2.16 hereof and (i) the Depository notifies the Issuer that it is unwilling or unable to continue as Depository for such Global Note and the Depository fails to appoint a successor depository or if at any time such Depository ceases to be a “clearing agency” registered under the Exchange Act and, in either case, a successor depositary is not appointed by the Issuer within 90 days of such notice or (ii) the Issuer, at its option, notifies the Trustee in writing that it elects to cause the issuance of Notes in definitive form under this Indenture, then, upon surrender by the relevant Global Note Holder of its Global Note, Notes in such form will be issued to each Person that such Global Note Holder and the Depository identifies as being the beneficial owner of the related Notes. In addition, beneficial interests in a Global Note may be exchanged for Certificated Notes upon prior written notice given to the Trustee by or on behalf of the Depository in accordance with this Indenture. In all cases, Certificated Notes delivered in exchange for any Global Note or beneficial interests in Global Notes will be registered in the names, and issued in any approved denominations, requested in writing by or on behalf of the Depository (in accordance with its customary procedures) and will bear the applicable restrictive legend referred to in Exhibit B hereof, unless that legend is not required by applicable law.

(b) Any Global Note that is transferable to the beneficial owners thereof pursuant to this Section 2.15 shall be surrendered by the Depository to the Trustee to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate, upon receipt of an Authentication Order, and deliver, upon such transfer of each portion of such Global Note, an equal aggregate principal amount of Certificated Notes of authorized denominations. Any portion of a Global Note transferred pursuant to this Section 2.15 shall be executed, authenticated and delivered only in denominations of $1.00 principal amount or any integral multiple of $1.00 in excess thereof and registered in such names as the Depository shall direct. Any Certificated Note delivered in exchange for an interest in the Transfer Restricted Note shall, except as otherwise provided by Exhibit B hereof, bear the applicable restricted securities legend and definitive note legend set forth in Exhibit B hereto.

(c) Subject to the provisions of this Section 2.15, the registered Holder of a Global Note shall be entitled to grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes.

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(d) In the event of the occurrence of one of the events specified in Section 2.15(a), the Issuer shall promptly make available to the Trustee a reasonable supply of Certificated Notes in definitive, fully registered form without interest coupons. In the event that the Certificated Notes are not issued to each such beneficial owner promptly after the Registrar has received a written request from the Holder of a Global Note to issue such Certificated Note, the Issuer expressly acknowledges, with respect to the right of any Holder to pursue a remedy pursuant to Article Six of this Indenture, the right of any beneficial holder of Notes to pursue such remedy with respect to the portion of the Global Note that represents such beneficial holder’s Notes as if such Certificated Notes had been issued.

(e) By its acceptance of any Note bearing any legend in Exhibit B, each Holder of such Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in such legend in Exhibit B and agrees that it will transfer such Note only as provided in this Indenture.

The Registrar shall retain for a period of two years copies of all letters, notices and other written communications received pursuant to Section 2.02 or this Section 2.15. The Issuer shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar.

SECTION 2.16. Special Transfer Provisions.

(a) Transfer and Exchange of Certificated Notes. When Certificated Notes are presented to the Registrar with a written request:

(x) to register the transfer of such Certificated Notes; or

(y) to exchange such Certificated Notes for an equal principal amount of Certificated Notes of other authorized denominations,

the Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Certificated Notes surrendered for transfer or exchange shall be duly endorsed on the assignment and exchange form included in the Note and be accompanied by a written transferee letter of representation in the form included in the Note if the Notes are being surrendered for transfer duly executed by the Holder thereof or its attorney duly authorized in writing.

(b) Restrictions on Transfer of a Certificated Note for a Beneficial Interest in a Global Note. A Certificated Note may not be exchanged for a beneficial interest in a Rule 144A Global Note except upon satisfaction of the requirements set forth below. Upon receipt by the Registrar of a Certificated Note, duly endorsed on the assignment and exchange form included in the Note, together with:

(i) a certification in the form attached to the Note that such Certificated Note is being transferred to a QIB in accordance with Rule 144A; and

(ii) written instructions directing the Registrar to make, or to direct the Notes Custodian to make, an adjustment on its books and records with respect to such Rule 144A Global Note (in the case of a transfer pursuant to clause (b)(i)) to reflect an increase in the aggregate principal amount of the Notes represented by the Rule 144A Global Note, such instructions to contain information regarding the Depository account to be credited with such increase,

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then the Trustee shall cancel such Certificated Note and cause, or direct the Notes Custodian to cause, in accordance with the standing instructions and procedures existing between the Depository and the Notes Custodian, the aggregate principal amount of Notes represented by the Rule 144A Global Note to be increased by the aggregate principal amount of the Certificated Note to be exchanged and shall credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Rule 144A Global Note equal to the principal amount of the Certificated Note so canceled. If no Rule 144A Global Notes are then outstanding, the Issuer shall issue and the Trustee shall authenticate, upon receipt on an Authentication Order, a new Rule 144A Global Note in the appropriate principal amount.

(c) Transfer and Exchange of Global Notes.

(i) The transfer and exchange of Global Notes or beneficial interests therein shall be effected through the Depository, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depository therefor. A transferor of a beneficial interest in a Global Note shall deliver to the Registrar a written order given in accordance with the Depository’s procedures containing information regarding the participant account of the Depository to be credited with a beneficial interest in the Global Note. The Registrar shall, in accordance with such instructions, instruct the Depository to credit to the account of the Person specified in such instructions a beneficial interest in the Global Note and to debit the account of the Person making the transfer the beneficial interest in the Global Note being transferred.

(ii) If the proposed transfer is a transfer of a beneficial interest in one Global Note to a beneficial interest in another Global Note, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Note to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of the Global Note from which such interest is being transferred.

(iii) Notwithstanding any other provisions of Article Two (other than the provisions set forth in Section 2.15), a Global Note may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository.

(iv) In the event that a Global Note is exchanged for Certificated Notes pursuant to Section 2.15, such Notes may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.16 (including the certification requirements in the form attached to the Note intended to ensure that such transfers comply with Rule 144A or another applicable exemption under the Securities Act, as the case may be) and such other procedures as may from time to time be adopted by the Issuer.

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(d) Legends.

(i) Except as permitted by Section 2.16(d)(iv), each Note certificate evidencing the Global Notes (and all Notes issued in exchange therefor or in substitution thereof) shall bear a legend in substantially the form of sections (i) and (ii) of Exhibit B hereto.

(ii) Except as permitted by Section 2.16(d)(iv), each Certificated Note shall bear a legend in substantially the form of section (iii) of Exhibit B hereto.

(iii) Except as permitted by Section 2.16(d)(iv), upon a conversion of Notes pursuant to Article Ten hereof, every share of Common Stock shall bear a legend in substantially the form of section (ii) of Exhibit B hereto and such other legends as required by the Certificate of Incorporation.

(iv) Upon any sale or transfer of a Transfer Restricted Note (including any Transfer Restricted Note represented by a Global Note) or share of Common Stock that contains the legend set forth in section (ii) of Exhibit B pursuant to Rule 144 under the Securities Act, the Registrar shall permit the transferee thereof to exchange such Transfer Restricted Note or share of Common Stock for a certificated Note or share of Common Stock that does not bear the legend set forth in section (ii) of Exhibit B hereto and rescind any restriction on the transfer of such Transfer Restricted Note or share of Common Stock, if the transferor thereof certifies in writing to the Registrar that such sale or transfer was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Note).

(e) Cancellation or Adjustment of Global Note. At such time as all beneficial interests in a Global Note have either been exchanged for Certificated Notes, redeemed, purchased, canceled or converted, such Global Note shall, at the written direction of the Issuer, be canceled by the Trustee in accordance with its customary procedures. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for Certificated Notes, redeemed, purchased, canceled or converted, the principal amount of Notes represented by such Global Note shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Notes Custodian for such Global Note) with respect to such Global Note, by the Trustee or the Notes Custodian, to reflect such reduction.

(f) No Obligation of the Trustee.

(i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Note, a member of, or a participant in the Depository or other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depository) of any notice (including any Notice of Redemption or Fundamental Change Company Notice) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders under the Notes shall be given or made only to or upon the

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order of the registered Holders (which shall be the Depository or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through the Depository subject to the applicable rules and procedures of the Depository. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its members, participants and any beneficial owners.

(ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depository participants, members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

SECTION 2.17. FATCA.

In order to comply with applicable tax laws, rules and regulations (inclusive of directives, guidelines and interpretations promulgated by competent authorities) in effect from time to time (“Applicable Law”), a foreign financial institution, issuer, trustee, paying agent, holder or other institution that is or has agreed to be subject to the Indenture, and the Issuer agrees (i) to provide to the Trustee upon its written request such information that is in the Issuer’s possession about Holders or other applicable parties and/or transactions (including any modification to the terms of such transactions) so the Trustee can determine whether it has tax related obligations under Applicable Law, and (ii) that the Trustee shall be entitled to make any withholding or deduction from payments under the Indenture to the extent necessary to comply with Applicable Law for which the Trustee shall not have any liability.

ARTICLE THREE

REDEMPTION

SECTION 3.01. Optional Redemption; Notices to Trustee.

The Issuer may, at its option, redeem the Notes in whole or in part at any time from time to time at a purchase price equal to the Redemption Price, plus accrued and unpaid interest, if any, to the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date) in accordance with the procedures set forth in this Indenture. If the Issuer elects to redeem Notes pursuant to this Section 3.01 and Section 5 of the Notes, it shall notify the Trustee in writing of the Redemption Date, the Redemption Price and the principal amount of Notes to be redeemed (when all Notes are being redeemed, this principal amount shall include all Notes delivered for conversion that have not been converted pursuant to Section 10.13). The Issuer shall give notice of redemption to the Paying Agent and Trustee at least 35 days but not more than 60 days before the Redemption Date (unless a shorter notice shall be agreed to by the Trustee), together with an Officers’ Certificate stating that such redemption will comply with the conditions contained herein.

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SECTION 3.02. Selection of Notes To Be Redeemed.

In the event that less than all of the Notes are to be redeemed at any time pursuant to Section 3.01 and Section 5 of the Notes, selection of the Notes for redemption will be made in the case of Global Notes in accordance with the policies and procedures of the Depository and, in the case of the Certificated Notes, by the Trustee on a pro rata basis, by lot or by such other method as the Trustee shall deem appropriate; provided, however, that no Notes of a principal amount of $1.00 or less shall be redeemed in part.

SECTION 3.03. Notice of Redemption.

At least 30 days but not more than 60 days before a Redemption Date, the Issuer shall mail or deliver a notice of redemption (“Notice of Redemption”) to each Holder whose Notes are to be redeemed at its registered address (except that a notice issued in connection with a redemption referred to in Section 8.01(2) may be delivered more than 60 days before such Redemption Date). At the Issuer’s written request, the Trustee shall forward the Notice of Redemption in the Issuer’s name and at the Issuer’s expense. Each Notice of Redemption shall identify the Notes (including the CUSIP number) to be redeemed and shall state:

(1) the Redemption Date;

(2) the Redemption Price and the amount of accrued interest, if any, to be paid;

(3) the Applicable Conversion Rate and Conversion Price,

(4) the name and address of the Paying Agent and Conversion Agent;

(5) that Notes called for redemption must be surrendered to the Paying Agent to collect the Redemption Price plus accrued interest, if any;

(6) that the Notes called for redemption may be converted at any time prior to the Close of Business on the second Business Day immediately preceding the Redemption Date unless the Issuer fails to pay the Redemption Price, subject to the 4.95% Stockholder limitations provided for in Section 10.13, and that all Notes delivered for conversion that are withdrawn from conversion pursuant to Sections 10.13 and 10.14 will be redeemed as provided for in the Notice of Redemption that was delivered to redeem all the Notes;

(7) that the Holders who want to convert Notes must satisfy the conversion requirements set forth in the Indenture and the Notes;

(8) that, unless the Issuer defaults in making the redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date, and the only remaining right of the Holders of such Notes is to receive payment of the Redemption Price and the amount of accrued interest, if any, upon surrender to the Paying Agent of the Notes redeemed;

(9) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and if a Certificated Note is being redeemed in part that, after the Redemption Date, and upon surrender of such Certificated Note, a new Certificated Note or Certificated Notes in aggregate principal amount equal to the unredeemed portion thereof will be issued;

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(10) if fewer than all the Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption; and

(11) the Section of the Notes pursuant to which the Notes are to be redeemed.

The notice, if mailed or otherwise delivered in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. In any case, failure to give such notice by mail or other contemplated form of delivery or any defect in the notice to the Holder of any Note designated for redemption in whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. Notices of redemption may not be conditional.

SECTION 3.04. Effect of Notice of Redemption.

Once a Notice of Redemption is mailed or otherwise delivered in accordance with Section 3.03, Notes called for redemption become due and payable on the Redemption Date and at the Redemption Price plus accrued interest, if any. Upon surrender to the Trustee or Paying Agent, such Notes called for redemption shall be paid at the Redemption Price (which shall include accrued interest thereon to, but not including, the Redemption Date). Holders of record on the relevant Record Date shall be entitled to receive interest due on any Interest Payment Date on or prior to a Redemption Date. On and after the Redemption Date interest shall cease to accrue on Notes or portions thereof called for redemption unless the Issuer shall have not complied with its obligations pursuant to Section 3.05.

SECTION 3.05. Deposit of Redemption Price.

On or before 10:00 a.m. New York time on the Redemption Date, the Issuer shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price plus accrued and unpaid interest, if any, of all Notes to be redeemed on that date other than Notes or portions of Notes called for redemption which on or prior thereto have been delivered to the Trustee or Conversion Agent for cancellation or conversion and have been cancelled or converted. The Paying Agent shall as promptly as practicable return to the Issuer any U.S. Legal Tender not required for that purpose because of a conversion of the Notes pursuant to Article Ten.

If the Issuer complies with the preceding paragraph, then, unless the Issuer defaults in the payment of such Redemption Price plus accrued interest, if any, interest on the Notes to be redeemed will cease to accrue on and after the applicable Redemption Date, whether or not such Notes are presented for payment.

SECTION 3.06. Notes Redeemed in Part.

If any Note is to be redeemed in part only, the Notice of Redemption that relates to that Note will state the portion of the principal amount thereof to be redeemed. If a Certificated Note is being redeemed in part, a new Certificated Note or Certificated Notes in principal amount equal to the unredeemed portion of the original Certificated Note or Certificated Notes shall be issued in the name of the Holder thereof upon cancellation of the original Certificated Note or Certificated Notes.

SECTION 3.07. Applicability of Article Three; Voluntary Surrender.

The provisions of this Article Three, including but not limited to Section 3.02, as well as Sections 5 and 8 of the Notes, shall apply only to those redemptions in which Holders are compelled to

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accept repurchase of their Notes prior to maturity at the election of the Company pursuant to Section 3.01. For the sake of clarity, neither this Article Three nor Sections 5 or 8 of the Notes shall apply to any transaction in which a Holder voluntarily surrenders a Note for cancellation, whether pursuant to a privately negotiated transaction, an open market purchase, a tender offer, or otherwise. Furthermore, no such mutually agreed upon transaction shall be deemed to indirectly violate this Article Three, Sections 5 or 8 of the Notes, or any implied duty of good faith and fair dealing because it has been entered into in lieu of or in close proximity in time to an Article Three redemption, or for any other reason.

ARTICLE FOUR

COVENANTS

SECTION 4.01. Payment of Notes.

The Issuer shall pay the principal of (and premium, if any) and interest on the Notes in the manner provided in the Notes and this Indenture. Except as otherwise set forth herein with respect to PIK Payments, an installment of principal of or interest on the Notes shall be considered paid on the date it is due if the Trustee or Paying Agent (other than the Issuer or an Affiliate thereof) holds on that date immediately available funds designated for and sufficient to pay the installment. Any PIK Payments shall be considered paid on the date interest is due. Interest on the Notes will be computed on the basis of a 360-day year comprised of twelve 30-day months.

The Issuer shall pay interest (including, without limitation, post-petition interest in a proceeding under any bankruptcy law) on overdue principal at the rate equal to two percent per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including, without limitation, post-petition interest in a proceeding under any bankruptcy law) on Defaulted Interest, without regard to any grace period, at the rate equal to two percent per annum in excess of the then applicable interest rate on the Notes to the extent lawful.

SECTION 4.02. Maintenance of Office or Agency.

The Issuer shall maintain the office or agency required under Section 2.03 (which may be an office of the Trustee or an affiliate of the Trustee or Registrar). The Issuer shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuer shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations and surrenders may be made at the address of the Trustee set forth in Section 12.01.

The Issuer may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Issuer will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

The Issuer hereby initially designates Wilmington Trust, National Association, 50 S. 6th Street, Suite 1290, Minneapolis, MN 55402, as such office of the Issuer in accordance with Section 2.03.

SECTION 4.03. Corporate Existence.

Except as otherwise permitted by Article Five, the Issuer shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence in accordance with its

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organizational documents. The Issuer shall provide prompt written notice of any change to its name or its corporate existence to the Trustee.

SECTION 4.04. Payment of Taxes and Other Claims.

The Issuer shall, and shall cause each of its Subsidiaries to, pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (a) all material taxes, assessments and governmental charges levied or imposed upon it or any of its Subsidiaries or upon the income, profits or property of it or any of its Subsidiaries and (b) all lawful claims for labor, materials and supplies which, in each case, if unpaid, might by law become a material liability or Lien upon the property of it or any of its Subsidiaries; provided, however, that none of the Issuer or any Subsidiary shall be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount the applicability or validity is being contested in good faith by appropriate actions and for which appropriate provision has been made.

SECTION 4.05. Maintenance of Properties and Insurance.

(a) The Issuer shall, and shall cause each of its Subsidiaries to, maintain its material properties in normal condition (subject to ordinary wear and tear) and make all reasonably necessary repairs, renewals or replacements thereto as in the judgment of the Issuer may be reasonably necessary to the conduct of the business of the Issuer; provided, however, that nothing in this Section 4.05 shall prevent the Issuer or any of its Subsidiaries from discontinuing the operation and maintenance of any of its properties, if such properties are, in the reasonable and good faith judgment of the Board of Directors of the Issuer or any Subsidiary, as the case may be, no longer reasonably necessary in the conduct of their respective businesses.

(b) The Issuer shall provide or cause to be provided, for itself and each of its Subsidiaries, insurance (including appropriate self-insurance) against loss or damage of the kinds that, in the good faith judgment of the Issuer, are reasonably adequate and appropriate for the conduct of the business of the Issuer and such Subsidiaries.

SECTION 4.06. Compliance Certificate; Notice of Default.

(a) The Issuer shall deliver to the Trustee, within 120 days after the close of each fiscal year, an Officers’ Certificate stating that a review of the activities of the Issuer and its Subsidiaries has been made under the supervision of the signing Officers with a view to determining whether the Issuer has kept, observed, performed and fulfilled its obligations under this Indenture and further stating, as to each such Officer signing such certificate, that to the best of such Officer’s knowledge, the Issuer during such preceding fiscal year has kept, observed, performed and fulfilled each and every such covenant and no Default occurred during such year and at the date of such certificate there is no Default that has occurred and is continuing or, if such signers do know of such Default, the certificate shall describe its status with particularity. The Officers’ Certificate shall also notify the Trustee should the Issuer elect to change the manner in which it fixes its fiscal year end.

(b) The Issuer shall deliver to the Trustee as soon as possible and in any event within five days after the Issuer becomes aware of the occurrence of any Default an Officers’ Certificate specifying the Default and describing its status with particularity and the action proposed to be taken thereto.

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SECTION 4.07. Compliance with Laws.

The Issuer shall comply, and shall cause each of its Subsidiaries to comply, with all applicable statutes, rules, regulations, orders and restrictions of the United States, all states and municipalities thereof, and in all cases, whether domestic or foreign, of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing, in respect of the conduct of their respective businesses and the ownership of their respective properties, except, in any such case, to the extent the failure to so comply would not, individually or in the aggregate, have a material adverse effect on the business, financial condition or results of operations of the Issuer and its Subsidiaries taken as a whole.

SECTION 4.08. Waiver of Stay, Extension or Usury Laws.

The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Issuer from paying all or any portion of the principal of and/or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture, and (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

SECTION 4.09. Reports to Holders.

For so long as any Notes are outstanding, unless the Issuer is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise complies with such reporting requirements, the Issuer will furnish without cost to each Holder and file with the Trustee:

(1) (x) within 95 days after the end of each fiscal year beginning with the fiscal year ended March 31, 2016, annual audited consolidated financial statements of the Issuer for such fiscal year (along with customary comparative results) and (y) within 50 days after the end of each of the first three fiscal quarters of each fiscal year beginning with the first fiscal quarter ended June 30, 2016, quarterly unaudited financial statements for the interim period as of, and for the period ending on, the end of such fiscal quarter (along with comparative results for the corresponding interim period in the prior year), in each case, including (i) a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” with respect to the periods presented and (ii) with respect to the annual information only, a report on the audited financial statements by the Issuer’s certified independent accountants, provided that no such financial statements shall be required to provide footnote disclosure regarding any guarantors or non-guarantors of any of the Issuer’s Indebtedness; and

(2) promptly from time to time after the occurrence of an event that would require information about such event to be provided to the SEC on Form 8-K, or any successor or comparable form, a report with such information; provided that unless otherwise required to be provided to Holders, reports will only be required with respect to the following Form 8-K Items (or its successor item): Item 1.01 (Entry into a Material Definitive Agreement), Item 1.02 (Termination of a Material Definitive Agreement), Item 1.03 (Bankruptcy or Receivership), Item 2.01 (Completion of Acquisition or Disposition of Assets), Item 2.03 (Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant), Item 2.04 (Triggering Events that Accelerate or Increase a Direct Financial Obligation or an

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Obligation under an Off-Balance Sheet Arrangement), Item 2.05 (Costs Associated with Exit or Disposal Activities), Item 5.01 (Changes in Control of Registrant), and Item 9.01 (Financial Statements and Exhibits, but only with respect to financial statements and pro forma financial information relating to transactions required to be reported pursuant to Item 2.01), and provided that such financial information need not be audited to the extent not previously audited; provided, however, that unless otherwise required to be provided to Holders, no such current report will be required to be furnished if the Issuer determines in its good faith judgment that such event is not material to Holders or the business, assets, operations, financial positions or prospects of the Issuer; provided further that trade secrets and other confidential information that is competitively sensitive in the good faith and reasonable determination of the Issuer may be redacted from such disclosures.

In addition, for so long as any Notes remain outstanding, the Issuer will furnish to the Holders, and to securities analysts and prospective investors that certify that they are Qualified Institutional Buyers (or other eligible investors in the Notes), upon their request, the information described above as well as all information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

The Issuer shall either (1) maintain a website (which may be non-public) to which Holders, prospective investors that certify that they are securities analysts, market makers and Qualified Institutional Buyers (or other eligible investors in the Notes) and, so long as the information on such website does not include information that is both material with respect to the Notes for U.S. securities law purposes and not otherwise publicly available, that are not determined by the Issuer in good faith to be business competitors or customers of the Issuer are given access and to which such information is posted; (2) distribute via electronic mail such information to beneficial owners of the Notes, securities analysts and market makers who request to receive such distributions or (3) file such information with the SEC.

Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuer’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

ARTICLE FIVE

SUCCESSOR CORPORATION

SECTION 5.01. Mergers, Consolidations, Etc.

(a) The Issuer will not, directly or indirectly, in a single transaction or a series of related transactions, consolidate or merge with or into (other than a merger with a Wholly-Owned Subsidiary solely for the purpose of changing the Issuer’s jurisdiction of incorporation to another State of the United States), or sell, lease, transfer, convey or otherwise dispose of or assign all or substantially all of the assets of the Issuer unless:

(1) either:

(A) the Issuer will be the surviving or continuing Person; or

(B) the Person formed by or surviving such consolidation or merger or to which such sale, lease, conveyance or other disposition shall be made (or, in the case of a

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plan of liquidation, any Person to which assets are transferred) (collectively, the “Successor”) is a corporation, limited liability company or limited partnership organized and existing under the laws of any State of the United States of America or the District of Columbia, and the Successor expressly assumes, by supplemental indenture, all of the obligations of the Issuer under the Notes and this Indenture, and

(2) immediately prior to and immediately after giving effect to such transaction and the assumption of the obligations as set forth in clause (1)(B), above no Default shall have occurred and be continuing.

(b) For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Subsidiaries, the Equity Interests of which constitute all or substantially all of the properties and assets of the Issuer, will be deemed to be the transfer of all or substantially all of the properties and assets of the Issuer.

(c) Upon any consolidation, combination or merger of the Issuer, or any transfer of all or substantially all of the assets of the Issuer in accordance with the foregoing, in which the Issuer is not the continuing obligor under the Notes, the surviving entity formed by such consolidation or into which the Issuer is merged or to which the conveyance, lease or transfer is made will succeed to, and be substituted for, and may exercise every right and power of, the Issuer under the Notes with the same effect as if such surviving entity had been named therein as the Issuer and, except in the case of a lease, the Issuer, as the case may be, will be released from the obligation to pay the principal of and interest on the Notes, as the case may be, and all of the Issuer’s other obligations and covenants under the Notes and this Indenture.

(d) Notwithstanding anything in the foregoing section, the Issuer may merge with or into, any Subsidiary and any Subsidiary may merge with or into any other Subsidiary.

ARTICLE SIX

DEFAULT AND REMEDIES

SECTION 6.01. Events of Default.

Each of the following is an “Event of Default”:

(1) failure by the Issuer to pay interest on any of the Notes when it becomes due and payable and the continuance of any such failure for 30 days;

(2) failure by the Issuer to pay the principal on any of the Notes when it becomes due and payable, whether at Stated Maturity, upon redemption, upon purchase, upon acceleration or otherwise;

(3) failure by the Issuer to comply with Section 5.01 or with its obligations to make an offer to purchase Notes pursuant to a Fundamental Change Company Notice in accordance with Section 11.01;

(4) failure by the Issuer to comply with its obligation to convert the Notes in accordance with this Indenture upon exercise of a Holder’s conversion right, subject to Sections 10.13 and 10.14, and such failure continues for five Business Days;

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(5) failure by the Issuer to provide the Fundamental Change Company Notice to Holders required pursuant to Section 11.01(b) hereof when due;

(6) failure by the Issuer to comply with any other agreement or covenant in this Indenture and continuance of such failure for 30 days after notice of such failure has been given to the Issuer by the Trustee or by the Holders of at least 25% of the aggregate principal amount of the Notes then outstanding;

(7) default under any mortgage, indenture or other instrument or agreement under which there may be issued or by which there may be secured or evidenced Indebtedness of the Issuer, whether such Indebtedness now exists or is incurred after the Issue Date, which default:

(A) is caused by a failure to pay at final maturity (giving effect to any applicable grace periods and any extensions thereof) principal on such Indebtedness,

(B) results in the acceleration of such Indebtedness prior to its express final maturity, or

(C) results in the commencement of judicial proceedings to foreclose upon, or to exercise remedies under applicable law or applicable security documents to take ownership of, the assets securing such Indebtedness, and

in each case, the principal amount of such Indebtedness, together with any other Indebtedness with respect to which an event described in clause (A), (B) or (C) has occurred and is continuing, aggregates to $20.0 million or more;

(8) one or more judgments or orders that exceed $20.0 million in the aggregate (net of amounts covered by insurance or bonded) for the payment of money have been entered by a court or courts of competent jurisdiction against the Issuer and such judgment or judgments have not been satisfied, stayed, annulled or rescinded within 60 days of being entered;

(9) the Issuer pursuant to or within the meaning of any applicable bankruptcy law:

(A) commences a voluntary case or proceeding,

(B) consents to the entry of an order for relief against it in an involuntary case or proceeding,

(C) consents to the appointment of a Custodian of it or for all or substantially all of its assets, or

(D) makes a general assignment for the benefit of its creditors; and

(10) a court of competent jurisdiction enters an order or decree under any applicable bankruptcy law that:

(A) is for relief against the Issuer as debtor in an involuntary case,

(B) appoints a Custodian of the Issuer or a Custodian for all or substantially all of the assets of the Issuer, or

(C) orders the liquidation of the Issuer,

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and the order or decree remains unstayed and in effect for 60 days.

SECTION 6.02. Acceleration.

Except as set forth in Section 6.12, if an Event of Default (other than an Event of Default specified in clause (9) or (10) of Section 6.01 with respect to the Issuer) shall have occurred and be continuing under this Indenture, the Trustee, by written notice to the Issuer, or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding, by written notice to the Issuer and the Trustee, may declare all amounts owing under the Notes to be due and payable immediately. If an Event of Default specified in clause (9) or (10) of Section 6.01 with respect to the Issuer occurs, all outstanding Notes shall become due and payable without any further action or notice.

The Trustee shall, within 90 days after any Default with respect to the Notes is actually known to a Responsible Officer of the Trustee, give the Holders notice of all uncured Defaults thereunder actually known to it; provided, however, that, except in the case of an Event of Default in payment with respect to the Notes or a Default in complying with Section 5.01, the Trustee shall be protected in withholding such notice if and so long as it in good faith determines that the withholding of such notice is in the interest of the Holders.

The Holders of a majority in aggregate principal amount of such outstanding Notes may rescind and annul such acceleration:

(1) if the rescission would not conflict with any judgment or decree;

(2) if all existing Defaults have been cured or waived except nonpayment of principal or interest that has become due solely because of this acceleration;

(3) to the extent the payment of such interest is lawful, interest on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid; and

(4) if the Issuer has paid to the Trustee its reasonable compensation and reimbursed the Trustee for its expenses, disbursements and advances.

SECTION 6.03. Other Remedies.

Subject to Section 6.12, if an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law.

SECTION 6.04. Waiver of Past Defaults.

Subject to Sections 2.09, 6.07 and 9.02, the Holders of a majority in aggregate principal amount of the outstanding Notes (which may include consents obtained in connection with a tender offer or exchange offer of Notes) by written notice to the Trustee may waive an existing Default and its

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consequences, except a Default in the payment of principal of or interest on any Note as specified in Section 6.01(1) or (2). The Issuer shall deliver to the Trustee an Officers’ Certificate stating that the requisite percentage of Holders have consented to such waiver and attaching copies of such consents. When a Default is waived, it is cured and ceases.

SECTION 6.05. Control by Majority.

The Holders of not less than a majority in aggregate principal amount of the outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with any law or this Indenture, that the Trustee determines may be unduly prejudicial to the rights of another Holder, or that may involve the Trustee in personal liability; provided that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. In the event the Trustee takes any action or follows any direction pursuant to this Indenture, the Trustee shall be entitled to indemnification or security satisfactory to the Trustee against any loss or expense caused by taking such action or following such direction.

SECTION 6.06. Limitation on Suits.

No Holder will have any right to institute any proceeding with respect to this Indenture or the Notes or for any remedy thereunder, unless the Trustee:

(1) has failed to act for a period of 60 days after receiving written notice of a continuing Event of Default by such Holder and a request to act by Holders of at least 25% in aggregate principal amount of Notes outstanding;

(2) has been offered indemnity, security or prefunding satisfactory to it; and

(3) has not received from the Holders of a majority in aggregate principal amount of the outstanding Notes a direction inconsistent with such request.

However, such limitations do not apply to a suit instituted by a Holder of any Note for enforcement of payment of the principal of or interest on such Note on or after the due date therefor (after giving effect to the grace period specified in clause (1) of Section 6.01).

A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over such other Holder.

SECTION 6.07. Rights of Holders To Receive Payment.

Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and interest on a Note, on or after the respective due dates therefor, or to receive cash and shares of Common Stock upon conversion, subject to Sections 10.13 and 10.14, or to bring suit for the enforcement of any such payment or right to convert, subject to Sections 10.13 and 10.14, on or after such respective dates, shall not be impaired or affected without the consent of the Holder.

SECTION 6.08. Collection Suit by Trustee.

If an Event of Default in payment of principal or interest specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Issuer or any other obligor on the Notes for the whole amount of principal and

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accrued interest and fees remaining unpaid, together with interest on overdue principal and, to the extent that payment of such interest is lawful, interest on overdue installments of interest, in each case at the rate per annum borne by the Notes and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

SECTION 6.09. Trustee May File Proofs of Claim.

The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relating to the Issuer, its creditors or its property and shall be entitled and empowered to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same, and any Custodian in any such judicial proceedings is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the compensation, expenses, disbursements and advances of the Trustee, its agent and counsel, and any other amounts due the Trustee under Section 7.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, compromise, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. The Trustee shall be entitled to participate as a member of any official committee of creditors in the matters as it deems necessary or advisable.

SECTION 6.10. Priorities.

If the Trustee collects any money or property pursuant to this Article Six, it shall pay out the money or property in the following order:

First: to the Trustee, its agents and counsel for amounts due under Section 7.07;

Second: to Holders for interest accrued on the Notes, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for interest;

Third: to Holders for principal amounts due and unpaid on the Notes, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal; and

Fourth: to the Issuer.

The Trustee, upon prior notice to the Issuer, may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10.

SECTION 6.11. Undertaking for Costs.

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to

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Section 6.07, or a suit by a Holder or Holders of more than 10% in aggregate principal amount of the outstanding Notes.

SECTION 6.12. Sole Remedy for Failure to Report.

Notwithstanding any other provision of this Indenture, the sole remedy relating to the failure of the Issuer to comply with its agreements under Section 4.09 of this Indenture will consist exclusively of the right to receive Additional Interest on the principal amount of the Notes at a rate equal to 0.5% per annum, payable as set forth below. This Additional Interest will be payable in the same manner and on the same Interest Payment Dates and subject to the same terms as other interest payable under this Indenture. Additional Interest will accrue on all outstanding Notes from and including the date on which a failure to comply with Section 4.09 first occurs to such date on which the failure to comply with Section 4.09 shall have been cured or waived. For the avoidance of doubt, the provisions of this Section 6.12 will not affect the rights of Holders in the event of the occurrence of any other Event of Default. For the further avoidance of doubt, no Additional Interest shall be payable under this section until the Issuer fails to comply with Section 4.09 for a period of 60 calendar days. For the avoidance of doubt, Additional Interest pursuant to this Section 6.12 shall not accrue at an aggregate rate in excess of 0.5% per annum regardless of the number of events or circumstances giving rise to the requirement to pay such Additional Interest.

ARTICLE SEVEN

TRUSTEE

SECTION 7.01. Duties of Trustee.

(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

(b) Except during the continuance of an Event of Default:

(1) The Trustee need perform only those duties as are specifically set forth herein or, to the extent applicable, in the Trust Indenture Act and no duties, covenants, responsibilities or obligations shall be implied in this Indenture against the Trustee.

(2) The Trustee may, in good faith, conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates (including Officers’ Certificates) or opinions (including Opinions of Counsel) furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

(c) Notwithstanding anything to the contrary herein, the Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(1) This paragraph does not limit the effect of Section 7.01(b).

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(2) The Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts.

(3) The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.

(d) No provision of this Indenture or the Notes shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or to take or omit to take any action under this Indenture or take any action at the request or direction of Holders if it shall have reasonable grounds for believing that repayment of such funds or security against such liability is not assured to it.

(e) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to this Section 7.01.

(f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuer. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

SECTION 7.02. Rights of Trustee.

Subject to Section 7.01:

(a) The Trustee may rely conclusively on any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.

(b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate and an Opinion of Counsel, which shall conform to the provisions of Section 12.04. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel.

(c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent (other than an agent who is an employee of the Trustee) appointed with due care.

(d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers.

(e) The Trustee may consult with counsel of its selection and the advice or opinion of such counsel as to legal matters, including with respect to this Indenture, shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it hereunder in good faith and in reliance upon the advice or opinion of such counsel.

(f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby.

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(g) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate (including any Officers’ Certificate), statement, instrument, opinion (including any Opinion of Counsel), notice, request, direction, consent, order, bond, debenture, or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled, upon reasonable notice to the Issuer, to examine the books, records, and premises of the Issuer, personally or by agent or attorney at the sole cost of the Issuer.

(h) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

(i) The permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as duties.

(j) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder.

(k) The Trustee may request that the Issuer deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.

(l) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a Default is received by the Trustee at the Corporate Trust Office and such notice references the Notes and this Indenture and states therein it is a notice of Default or Event of Default.

(m) Whenever in the administration of or in connection with this Indenture or the Notes, the Issuer is required to provide an Officers’ Certificate, the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder or thereunder, the Trustee (unless other evidence be herein specifically prescribed) may, as the case may be, request and in the absence of bad faith or willful misconduct on its part, rely upon such Officers’ Certificate.

(n) In no event shall the Trustee be responsible or liable for any special, indirect or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit), irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

SECTION 7.03. Individual Rights of Trustee.

The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer, its Subsidiaries or their respective Affiliates with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.

SECTION 7.04. Trustee’s Disclaimer.

The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuer’s use of the proceeds

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from the Notes, and it shall not be responsible for any statement of the Issuer in this Indenture or any document issued in connection with the issuance of Notes or any statement in the Notes other than the Trustee’s certificate of authentication. The Trustee makes no representations with respect to the effectiveness or adequacy of this Indenture.

SECTION 7.05. Notice of Default.

The Trustee shall, within 90 days after any Event of Default is actually known to a Responsible Officer of the Trustee, give the Holders notice of all uncured Events of Default thereunder actually known to it; provided, however, that except in the case of an Event of Default in payment or a Event of Default in complying with Section 5.01, the Trustee shall be protected in withholding such notice if and so long as it in good faith determines that the withholding of such notice is in the interest of the Holders.

SECTION 7.06. Reports by Trustee to Holders.

Within 60 days after each June 1, beginning with June 1, 2016, the Trustee shall, to the extent that any of the events described in Trust Indenture Act § 313(a) occurred within the previous twelve months, but not otherwise, mail or otherwise deliver to each Holder a brief report dated as of such date that complies with Trust Indenture Act § 313(a). The Trustee also shall comply with Trust Indenture Act §313(c).

A copy of each report at the time of its mailing or delivery to Holders shall be mailed or otherwise delivered to the Issuer.

SECTION 7.07. Compensation and Indemnity.

The Issuer shall pay to the Trustee from time to time such compensation as the Issuer and the Trustee shall from time to time agree in writing for its services hereunder. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall reimburse the Trustee upon request for all reasonable disbursements, expenses (including reasonable fees and expenses of agents and counsel) and advances incurred or made by it in addition to the compensation for its services, except any such disbursements, expenses and advances as may be attributable to the Trustee’s negligence, bad faith or willful misconduct.

The Issuer shall indemnify each of the Trustee or any predecessor Trustee and its agents, employees, officers, stockholders and directors for, and hold them harmless against, any and all loss, damage, claims or expenses (including, but not limited to, reasonable attorneys’ fees and expenses) including taxes (other than taxes based upon, measured by or determined by the taxable income of the Trustee) or liability incurred by them except for such actions to the extent caused by any negligence, bad faith or willful misconduct on their part, arising out of or in connection with the acceptance or administration of this trust including the reasonable costs and expenses of enforcing this indemnity, defending themselves against or investigating any claim or liability in connection with the exercise or performance of any of the Trustee’s rights, powers or duties hereunder and including claims by or against the Issuer. The Trustee shall notify the Issuer promptly of any claim asserted against the Trustee or any of its agents, employees, officers, stockholders and directors of which it has actual knowledge or after a Responsible Officer or the Trustee shall have received written notice of the same for which it may seek indemnity. Failure of the Trustee to so notify the Issuer shall not relieve the Issuer of its obligations hereunder. The Issuer may, subject to the approval of the Trustee (at its sole discretion), defend the claim and the Trustee shall cooperate in the defense. The Trustee and its agents, employees, officers, stockholders and directors subject to the claim may have separate counsel and the Issuer shall pay the

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reasonable fees and expenses of such counsel; provided, however, that the Issuer will not be required to pay such fees and expenses if, subject to the approval of the Trustee (at its sole discretion), it assumes the Trustee’s defense and there is no conflict of interest between the Issuer and the Trustee and its agents, employees, officers, stockholders and directors subject to the claim in connection with such defense as reasonably determined by the Trustee. The Issuer need not pay for any settlement made without its written consent (which shall not be unreasonably withheld). The Issuer need not reimburse any expense or indemnify against any loss or liability to the extent incurred by the Trustee through its negligence, bad faith or willful misconduct.

To secure the Issuer’s payment obligations in this Section 7.07, the Trustee shall have a Lien prior to the Notes against all money or property held or collected by the Trustee, in its capacity as Trustee, except for such money or property held in trust for the payment of principal of (and premium, if any) or interest on particular Notes.

When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(9) or (10) occurs, the expenses and the compensation for the services (including the reasonable fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any bankruptcy law.

Notwithstanding any other provision in this Indenture, the foregoing provisions of this Section 7.07 shall survive the satisfaction and discharge of this Indenture or the appointment of a successor Trustee.

SECTION 7.08. Replacement of Trustee.

The Trustee may resign at any time by so notifying the Issuer in writing. The Holders of a majority in principal amount of the outstanding Notes may remove the Trustee by so notifying the Issuer and the Trustee and may appoint a successor Trustee. The Issuer may remove the Trustee if:

(1) the Trustee fails to comply with Section 7.10;

(2) the Trustee is adjudged bankrupt or insolvent;

(3) a receiver or other public officer takes charge of the Trustee or its property; or

(4) the Trustee becomes incapable of acting.

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuer shall notify each Holder of such event and shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuer.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer. Immediately after that, the retiring Trustee shall transfer, after payment of all sums then owing to the Trustee pursuant to Section 7.07, all property held by it as Trustee to the successor Trustee, subject to the Lien provided in Section 7.07, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail or otherwise deliver notice of its succession to each Holder.

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If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the Holders of at least 10% in principal amount of the outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee at the expense of the Issuer.

If the Trustee fails to comply with Section 7.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Issuer’s obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.

SECTION 7.09. Successor Trustee by Merger, Etc.

If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the resulting, surviving or transferee corporation without any further act shall, if such resulting, surviving or transferee corporation is otherwise eligible hereunder, be the successor Trustee; provided that such corporation shall be otherwise qualified and eligible under this Article Seven.

SECTION 7.10. Eligibility; Disqualification.

This Indenture shall always have a Trustee who satisfies the requirement of Trust Indenture Act §§ 310(a)(1), 310(a)(2) and 310(a)(5). The Trustee shall have a combined capital and surplus of at least $150,000,000 as set forth in its most recent published annual report of condition. In addition, if the Trustee is a corporation included in a bank holding company system, the Trustee, independently of the bank holding company, shall meet the capital requirements of Trust Indenture Act § 310(a)(2). The Trustee shall comply with Trust Indenture Act § 310(b); provided, however, that there shall be excluded from the operation of Trust Indenture Act § 310(b)(1) any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Issuer are outstanding, if the requirements for such exclusion set forth in Trust Indenture Act § 310(b)(1) are met. The provisions of Trust Indenture Act § 310 shall apply to the Issuer and any other obligor of the Notes.

SECTION 7.11. Preferential Collection of Claims Against the Issuer.

The Trustee, in its capacity as Trustee hereunder, shall comply with Trust Indenture Act § 311(a), excluding any creditor relationship listed in Trust Indenture Act § 311(b). A Trustee who has resigned or been removed shall be subject to Trust Indenture Act § 311(a) to the extent indicated.

ARTICLE EIGHT

DISCHARGE OF INDENTURE

SECTION 8.01. Termination of the Issuer’s Obligations.

The Issuer may terminate its obligations under the Notes and this Indenture, and this Indenture will be discharged and shall cease to be of further effect, except those obligations referred to in the penultimate paragraph of this Section 8.01, as to all outstanding Notes when either:

(1) all the Notes that have been authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has been

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deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from this trust) have been delivered to the Trustee for cancellation, or

(2) (a) all Notes not delivered to the Trustee for cancellation otherwise (i) have become due and payable on the Maturity Date, Redemption Date or Fundamental Change Purchase Date or will become due and payable within one year of such date and the Issuer has irrevocably deposited or caused to be deposited with the Trustee funds in trust in an amount of money sufficient to pay and discharge the entire Indebtedness (including all principal and accrued interest) on the Notes not theretofore delivered to the Trustee for cancellation, (ii) have been called for redemption pursuant to Article 3 and Section 5 of the Notes (regardless of whether a Fundamental Change has occurred or will occur) or will be called for redemption within one year and the Issuer has irrevocably deposited or caused to be deposited with the Trustee funds in trust in an amount of money sufficient to pay and discharge the entire Indebtedness (including any principal and accrued interest) on the Notes not theretofore delivered to the Trustee for cancellation or (iii) have been delivered for conversion and the Issuer shall deliver to the Holders shares of Common Stock sufficient to pay all amounts owing in respect of the Notes not theretofore delivered to the Trustee for cancellation or redemption,

(b) the Issuer has paid all sums payable by it under this Indenture, and

(c) the Issuer has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at the Maturity Date, Redemption Date or Fundamental Change Purchase Date, as the case may be.

In addition, the Issuer must deliver an Officers’ Certificate and an Opinion of Counsel stating that all conditions precedent to satisfaction and discharge have been complied with.

Subject to the next sentence and notwithstanding the foregoing paragraph, the Issuer’s obligations in Sections 2.05, 2.06, 2.07, 2.08, 4.01, 4.02, 4.03 (as to legal existence of the Issuer only), 7.07, 8.03 and 8.04, Article Ten and Article Eleven shall survive until the Notes are no longer outstanding pursuant to the last paragraph of Section 2.08. After the Notes are no longer outstanding, the Issuer’s obligations in Sections 7.07, 8.03 and 8.04 shall survive such satisfaction and discharge as well as those provisions set forth herein that expressly survive the termination of this Indenture.

After such delivery or irrevocable deposit, the Trustee upon request shall acknowledge in writing the discharge of the Issuer’s obligations under the Notes and this Indenture except for those surviving obligations specified above.

SECTION 8.02. Application of Trust Money.

The Trustee or Paying Agent shall hold in trust U.S. Legal Tender and U.S. Government Obligations deposited with it pursuant to this Article Eight, and shall apply the deposited U.S. Legal Tender and the money from U.S. Government Obligations in accordance with this Indenture to the payment of principal of and interest on the Notes. The Trustee shall be under no obligation to invest said U.S. Legal Tender and U.S. Government Obligations except as it may agree with the Issuer.

SECTION 8.03. Repayment to the Issuer.

Subject to this Article Eight, the Trustee and the Paying Agent shall promptly pay to the Issuer upon written request any excess U.S. Legal Tender and U.S. Government Obligations held by them at any time and thereupon shall be relieved from all liability with respect to such money. The Trustee and

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the Paying Agent shall pay to the Issuer upon written request any money held by them for the payment of principal or interest that remains unclaimed for two years; subject to the requirements of any applicable abandoned property laws and its unclaimed property procedures. After payment to the Issuer, Holders entitled to such money must look to the Issuer for payment as general creditors unless an applicable law designates another Person.

SECTION 8.04. Reinstatement.

If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender and U.S. Government Obligations in accordance with this Article Eight by reason of any legal proceeding or by reason of any order or judgment of any court or Governmental Authority enjoining, restraining or otherwise prohibiting such application, the Issuer’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to this Article Eight until such time as the Trustee or Paying Agent is permitted to apply all such U.S. Legal Tender and U.S. Government Obligations in accordance with this Article Eight; provided that if the Issuer has made any payment of interest on or principal of any Notes because of the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the U.S. Legal Tender and U.S. Government Obligations held by the Trustee or Paying Agent.

ARTICLE NINE

AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 9.01. Without Consent of Holders.

(a) The Issuer and the Trustee may amend or supplement this Indenture or the Notes without notice to or the consent of any Holder:

(1) to cure any ambiguity, defect or inconsistency;

(2) to provide for uncertificated Notes in addition to or in place of certificated Notes;

(3) to provide for the assumption of the Issuer’s obligations to the Holders in the case of a merger, consolidation or sale of all or substantially all of the assets, in accordance with Article Five;

(4) to secure the Notes or provide security for additional borrowings under the Credit Facilities or any additional Indebtedness which Liens are permitted to be incurred in accordance with this Indenture;

(5) to evidence and provide the acceptance of the appointment of a successor trustee under this Indenture;

(6) to make any change that would provide any additional rights or benefits to Holders or that does not materially adversely affect the rights of any Holder or, in the case of this Indenture, to qualify or maintain the qualification of this Indenture under the Trust Indenture Act;

(7) to eliminate any provisions of this Indenture in respect of any limitation on the ability of a Restricted Person to convert its Notes;

(8) to add or incorporate additional provisions of the Trust Indenture Act; or

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(9) to conform text of the Indenture to any provision of the “Description of the New Senior Notes” or to correct a manifest error in any formula in the Indenture;

provided that the Issuer have delivered to the Trustee an Opinion of Counsel and an Officers’ Certificate, each stating that such amendment or supplement complies with the provisions of this Section 9.01.

SECTION 9.02. With Consent of Holders.

(a) Subject to Section 6.07, the Issuer and the Trustee may amend this Indenture without notice to any Holder but with the written consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding (voting as one class) (including consents obtained in connection with a tender offer for, exchange for or purchase of the Notes) and any past default or compliance with any provisions may also be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for Notes).

(b) Without the consent of each Holder affected, no amendment or waiver may:

(1) reduce, or change the maturity of, the principal of any Note;

(2) reduce the rate of or extend the time for payment of interest on any Note;

(3) reduce any premium payable upon redemption of the Notes or the Fundamental Change Purchase Price or change the date on which any Notes are subject to redemption (other than any minimum notice period) or the Fundamental Change Purchase Date or amend or modify in any manner adverse to the Holders the Issuer’s obligation to make such payments, whether through an amendment or waiver of provisions in the covenants, definitions or otherwise;

(4) make any Note payable in money or currency other than that stated in the Notes;

(5) modify or change any provision of this Indenture or the related definitions to affect the ranking of the Notes in a manner that adversely affects the Holders;

(6) reduce the percentage of Holders necessary to consent to an amendment or waiver to this Indenture or the Notes;

(7) waive a default in the payment of principal of or premium or interest on any Notes (except a rescission of acceleration of the Notes by the Holders thereof as provided in this Indenture and a waiver of the payment default that resulted from such acceleration);

(8) impair the rights of Holders to receive payments of principal of or interest on the Notes on or after the due date therefor or to institute suit for the enforcement of any payment on the Notes;

(9) make any change in these amendment and waiver provisions; or

(10) make any change that adversely affects the conversion rights of the Notes.

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(c) It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, supplement or waiver but it shall be sufficient if such consent approves the substance thereof.

(d) After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Issuer shall mail or deliver to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Issuer to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, supplement or waiver.

SECTION 9.03. Revocation and Effect of Consents.

Until an amendment, waiver or supplement becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note. However, any such Holder or subsequent Holder may revoke the consent as to his Note or portion of his Note by notice to the Trustee or the Issuer received before the date on which the Trustee receives an Officers’ Certificate certifying that the Holders of the requisite principal amount of Notes have consented (and not theretofore revoked such consent) to the amendment, supplement or waiver.

The Issuer may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver which record date shall be at least 15 days prior to the first solicitation of such consent. If a record date is fixed, then notwithstanding the last sentence of the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date. The Issuer shall inform the Trustee in writing of the fixed record date if applicable.

After an amendment, supplement or waiver becomes effective, it shall bind every Holder, unless it makes a change described in any of clauses (1) through (10) of Section 9.02(b), in which case, the amendment, supplement or waiver shall bind only each Holder of a Note who has consented to it and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note; provided that any such waiver shall not impair or affect the right of any Holder to receive payment of principal of and interest on a Note, on or after the respective due dates therefor, or to bring suit for the enforcement of any such payment on or after such respective dates without the consent of such Holder.

SECTION 9.04. Notation on or Exchange of Notes.

If an amendment, supplement or waiver changes the terms of a Note, the Issuer may require the Holder of the Note to deliver it to the Trustee. The Issuer shall provide the Trustee with an appropriate notation on the Note about the changed terms and cause the Trustee to return it to the Holder at the Issuer’s expense. Alternatively, if the Issuer or the Trustee so determines, the Issuer in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.

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SECTION 9.05. Trustee To Sign Amendments, Etc.

The Trustee shall execute any amendment, supplement or waiver authorized pursuant to this Article Nine; provided that the Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver which affects the Trustee’s own rights, duties or immunities, as applicable, under this Indenture. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel and an Officers’ Certificate each stating that the execution of any amendment, supplement or waiver authorized pursuant to this Article Nine is authorized or permitted by this Indenture and such amendment, supplement or waiver constitutes the legal, valid and binding obligation of the Issuer enforceable in accordance with its terms. Such Opinion of Counsel shall be at the expense of the Issuer.

ARTICLE TEN

CONVERSION

SECTION 10.01. Right to Convert.

(a) Subject to and upon compliance with the provisions of this Indenture, each Holder shall have the right, at such Holder’s option, at any time prior to the Close of Business on the second Business Day immediately preceding the Maturity Date, to convert the principal amount of any such Notes, or any portion of such principal amount, into shares of Common Stock, provided that any portion of such principal amount that a Holder elects to convert is equal to $1.00 or an integral multiple of $1.00 in excess thereof.

(b) Notwithstanding the foregoing, if a Holder’s Note is called for redemption under Article Three, such Holder may surrender such Note for conversion at any time prior to the Close of Business on the second Business Day immediately preceding the Redemption Date for such Note unless the Issuer fails to pay the Redemption Price. If a Holder has already delivered a Fundamental Change Purchase Notice with respect to a Note under Section 11.01, such Holder may convert such Note only if such Holder first validly withdraws the related Fundamental Change Purchase Notice pursuant to Section 11.03. If a Holder has surrendered such Holder’s Note for purchase in connection with a Fundamental Change, such Holder’s right to withdraw the related Fundamental Change Purchase Notice and convert each Note that is subject thereto will terminate at the Close of Business on the second Business Day prior to the relevant Fundamental Change Purchase Date.

(c) Provisions of this Indenture that apply to conversion of all of a Note also apply to conversion of a portion of a Note.

(d) A Holder of Notes is not entitled to any rights of a holder of shares of Common Stock until such Holder has converted its Notes, and only to the extent such Notes are deemed to have been converted into shares of Common Stock pursuant to this Article Ten.

SECTION 10.02. Conversion Procedure.

(a) Each Note shall be convertible at the office of the Conversion Agent.

(b) In order to exercise the conversion right with respect to any interest in Global Notes, the Holder must complete the appropriate instruction form for conversion pursuant to the Depositary’s book-entry conversion program, furnish appropriate endorsements and transfer documents if required by the Issuer or the Trustee or Conversion Agent, and pay the funds, if any, required by

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Section 10.03(c) and any transfer taxes or duties if required pursuant to Section 10.07. However, no service charge will be imposed by the Issuer, the Trustee or the Registrar for any registration of transfer or exchange of Notes except in compliance with the below provisions governing exercise of conversion rights. In order to exercise the conversion right with respect to any Certificated Notes, the Holder of any such Notes to be converted, in whole or in part, shall:

(i) complete and manually sign the conversion notice or a copy of the conversion notice provided on the back of the Note (the “Conversion Notice”);

(ii) deliver the Conversion Notice, which is irrevocable subject to Sections 10.13 and 10.14, and the Note to the Conversion Agent;

(iii) if required, furnish appropriate endorsements and transfer documents,

(iv) if required pursuant to Section 10.07, pay any transfer taxes or duties; and

(v) if required, pay funds equal to interest payable on the next Interest Payment Date to which the Holder is not entitled as required by Section 10.03(c).

The date on which the Holder satisfies all of the applicable requirements set forth above is the “Conversion Date.”

(c) On the fifth Business Day immediately following the Conversion Date, the Issuer shall issue and shall deliver to the converting Holder at the office of the Conversion Agent, a certificate or certificates, or the Issuer will or will instruct the Transfer Agent to create a book-entry notation, for the number of full shares of Common Stock issuable in respect of such conversion in accordance with the provisions of this Article Ten. In case any Certificated Notes shall validly be surrendered for partial conversion, the Issuer shall execute and the Trustee shall authenticate and deliver to the Holder of the Certificated Notes so surrendered, without charge to such Holder, new Certificated Notes in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Certificated Notes.

Each conversion shall be deemed to have been effected as to any such Notes (or portion thereof) surrendered for conversion on the Conversion Date for such Notes (or portion thereof) and the converting Holder shall be deemed to have become the record holder of any shares of Common Stock due upon such conversion as of the Close of Business on the relevant Conversion Date.

(d) Upon the conversion of an interest in a Global Note, the Trustee (or other Conversion Agent appointed by the Issuer) shall make a notation on such Global Note as to the reduction in the principal amount represented thereby. The Issuer shall notify the Trustee in writing of any conversions of Notes effected through any Conversion Agent other than the Trustee.

(e) Each share of Common Stock issued upon conversion of the Notes that are Rule 144A Notes shall bear a legend in substantially the form of section (ii) of Exhibit B hereto.

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SECTION 10.03. Settlement upon Conversion.

(a) With respect to any conversion of Notes, the Issuer shall, subject to the provisions of this Article Ten, deliver to converting Holders a number of shares of Common Stock determined by dividing the principal amount of Notes being converted by $1,000 and then multiplying the result by the Applicable Conversion Rate, on the third Business Day immediately following the relevant Conversion Date, together with cash in lieu of any fractional shares of Common Stock pursuant to Section 10.03(d).

(b) Upon conversion, Holders shall not receive any separate cash payment for accrued and unpaid interest unless such conversion occurs between a Record Date and the Interest Payment Date to which it relates and the converting Holder was the Holder on the relevant Record Date.

(c) If Notes are converted after the Close of Business on a Record Date for the payment of interest, Holders of such Notes at the Close of Business on such Record Date will receive the interest payable on such Notes on the corresponding Interest Payment Date notwithstanding the conversion. However, Notes surrendered for conversion during the period from the Close of Business on any Record Date to the Open of Business on the immediately following Interest Payment Date, must be accompanied by funds equal to the amount of interest payable on the Notes so converted; provided that no such payment need be made (i) for conversions following the Record Date immediately preceding the Maturity Date; (ii) if the Issuer has delivered notice specifying a Redemption Date that is after a Record Date and on or prior to the first Business Day immediately following the corresponding Interest Payment Date; (iii) if the Issuer has specified a Fundamental Change Purchase Date that is after a Record Date and on or prior to the first Business Day immediately following the corresponding Interest Payment Date; or (iv) to the extent of any overdue interest, if any overdue interest exists at the time of conversion with respect to such Note.

(d) The Issuer shall not issue fractional shares upon conversion of Notes. If multiple Notes shall be surrendered for conversion at one time by the same Holder, the number of full shares which shall be issuable upon conversion (and the number of fractional shares, if any, for which cash shall be delivered) shall be computed on the basis of the aggregate principal amount of the Notes (or specified portions thereof to the extent permitted hereby) so surrendered. If any fractional share would be issuable upon the conversion of any Notes, the Issuer shall make payment in an amount of cash based on the current market value of the fractional shares. The current market value of a fractional share shall be determined (calculated to the nearest 1/1000th of a share) by multiplying the Last Reported Sale Price on the relevant Conversion Date (or, if such Conversion Date is not a Trading Day, on the immediately preceding Trading Day) by such fractional share and rounding the product to the nearest whole cent.

(e) By delivery to the Holder of the full number of shares of Common Stock, together with any cash payment for fractional shares, the Issuer will be deemed to satisfy in full its obligation to pay the principal amount of the Notes and all accrued and unpaid interest to, but excluding, the Conversion Date. Upon conversion of the Notes, all accrued and unpaid interest to, but excluding, the Conversion Date will be deemed to be paid in full rather than canceled, extinguished or forfeited, subject to Section 10.03(c) above.

(f) If the Common Stock (or other Capital Stock into which the Notes are then convertible pursuant to the terms of this Indenture) becomes listed or quoted on any of The New York Stock Exchange, The Nasdaq Global Select Market or The Nasdaq Global Market (or any of their respective successors), unless and until the Issuer obtains stockholder approval to issue 20% or more of the Common Stock outstanding at the time the Notes are issued in accordance with certain listing standards of the securities exchanges, if the Issuer is required to deliver shares of Common Stock to a

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converting Holder and such number of shares, in the aggregate with all the other shares of Common Stock previously delivered by the Issuer upon conversion of Notes, exceeds 19.99% of the Common Stock outstanding on the date that the Notes are first issued, the Issuer will pay to such Holder the value of any such excess shares in cash (based on the VWAP over the five Trading Day period commencing on the second Trading Day after the relevant Conversion Date); provided that the Company will notify such Holder of the exact manner in which such cash value will be determined no later than the Close of Business on the Business Day immediately following the Conversion Date.

SECTION 10.04. Adjustment of Conversion Rate.

The Conversion Rate shall be adjusted from time to time by the Issuer if any of the following events occurs as described below, except that the Issuer will not make any adjustment to the Conversion Rate if Holders of Notes participate (other than in the case of a share split or share combination), at the same time and on the same terms as holders of shares of Common Stock, solely as a result of holding the Notes, in any of the transactions described in this Section 10.04, without having to convert their Notes, as if such Holders held a number of shares of Common Stock equal to the Applicable Conversion Rate in effect immediately prior to the adjustment thereof in respect of such transaction, multiplied by the principal amount of Notes held by such Holders, divided by $1,000.

(a) If the Issuer issues shares of Common Stock as a dividend or distribution on the Common Stock, or the Issuer effects a share split or share combination, the Conversion Rate will be adjusted based on the following formula:

CR1 = CR0 x OS1 OS0

where,

CR0 = the Conversion Rate in effect immediately prior to the Open of Business on the Ex-Dividend Date of such dividend or distribution, or immediately prior to the Open of Business on the effective date of such share split or share combination, as applicable;

CR1 = the Conversion Rate in effect immediately after the Open of Business on the Ex-Dividend Date or immediately after the Open of Business on such effective date, as applicable;

OS0 = the number of shares of Common Stock outstanding immediately prior to the Open of Business on the Ex-Dividend Date or immediately prior to the Open of Business on such effective date, as applicable; and

OS1 = the number of shares of Common Stock outstanding immediately after giving effect to, and solely as a result of, such dividend, distribution, share split or combination, as applicable.

Any adjustment made pursuant to this Section 10.04(a) shall become effective immediately after the Open of Business on the Ex-Dividend Date for such dividend or distribution, or immediately after the Open of Business on the effective date for such share split or share combination, as applicable. If any dividend or distribution of the type described in this Section 10.04(a) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared or announced.

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(b) If the Issuer distributes to all or substantially all holders of shares of Common Stock any rights, options or warrants entitling them for a period of not more than 45 calendar days after the date of such distribution to subscribe for or purchase shares of Common Stock, at a price per share less than the VWAP for the 60 consecutive Business Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such distribution or if during the 60 consecutive Business Day period there were less than five days with a Last Reported Sale Price, then the VWAP for the five consecutive Trading Days ending on, and including, the Trading Day immediately preceding the date of announcement of such distribution, the Conversion Rate will be increased based on the following formula:

CR1 = CR0 x OS0 + X OS0 + Y

where,

CR0 = the Conversion Rate in effect immediately prior to the Open of Business on the Ex-Dividend Date for such distribution;

CR1 = the Conversion Rate in effect immediately after the Open of Business on the Ex-Dividend Date for such distribution;

OS0 = the number of shares of Common Stock outstanding immediately prior to the Open of Business on the Ex-Dividend Date for such distribution;

X = the total number of shares of Common Stock issuable pursuant to such rights, options or warrants; and

Y = the number of shares of Common Stock equal to the aggregate price payable to exercise such rights, options or warrants divided by the VWAP for the 60 consecutive Business Day period ending on, and including, the Trading Day immediately preceding the date of announcement of the distribution of such rights, options or warrants or if during the 60 consecutive Business Day period there were less than five days with a Last Reported Sale Price, then the VWAP for the five consecutive Trading Days ending on, and including, the Trading Day immediately preceding the date of announcement of the distribution of such rights, options or warrants.

The foregoing increase in the Conversion Rate shall be successively made whenever any such rights, options or warrants are distributed and shall become effective immediately after the Open of Business on the Ex-Dividend Date for such distribution. If such rights, options or warrants are not so distributed, the Conversion Rate will be immediately readjusted to the Conversion Rate that would then be in effect if such Common Stock Record Date for such distribution had not been fixed. In addition, to the extent that shares of Common Stock are not delivered after the expiration of such rights, options or warrants, the Conversion Rate shall be immediately readjusted to the Conversion Rate that would then be in effect had the increase made for the distribution of such rights, options or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered.

In determining whether any rights, options or warrants entitle the holders of shares of Common Stock to subscribe for or purchase shares of Common Stock at less than the VWAP for the 60 consecutive Business Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such distribution or if during the 60 consecutive Business Day period there were

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less than five days with a Last Reported Sale Price, then the VWAP for the five consecutive Trading Days ending on, and including, the Trading Day immediately preceding the date of announcement of such distribution, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Issuer for such rights, options or warrants and any amount payable upon exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the Board of Directors.

(c) If the Issuer distributes shares of its Capital Stock, evidences of its indebtedness, other assets or property of the Issuer or rights, options or warrants to acquire the Issuer’s Capital Stock or other securities (the “Distributed Property”), to all or substantially all holders of shares of Common Stock, excluding:

(i) dividends or distributions of Common Stock or rights, options or warrants as to which an adjustment was effected pursuant to Section 10.04(a) or Section 10.04(b), as the case may be;

(ii) dividends or distributions paid exclusively in cash as to which an adjustment was effected pursuant to Section 10.04(d); and

(iii) Spin-Offs to which the provisions set forth below in this Section 10.04(c) apply;

then the Conversion Rate will be increased based on the following formula:

CR1 = CR0 x SP0

SP0 - FMV

where,

CR0 = the Conversion Rate in effect immediately prior to the Open of Business on the Ex-Dividend Date for such distribution;

CR1 = the Conversion Rate in effect immediately after the Open of Business on the Ex-Dividend Date for such distribution;

SP0 = the VWAP for the 60 consecutive Business Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution or if during the 60 consecutive Business Day period there were less than five days with a Last Reported Sale Price, then the VWAP for the five consecutive Trading Days ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution; and

FMV = the Fair Market Value (as determined by the Board of Directors) of the Distributed Property distributed with respect to each outstanding share of Common Stock on the Ex-Dividend Date for such distribution;

provided that if “FMV” as set forth above is equal to or greater than “SP0” as set forth above, in lieu of the foregoing increase, adequate provision will be made so that each Holder of a Note shall receive on the date on which the Distributed Property is distributed to holders of the Common Stock, for each $1,000 principal amount of the Notes, the amount and kind of Distributed Property that such Holder would have received had such Holder owned a number of shares of Common Stock equal to the Conversion Rate

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immediately prior to the Open of Business on the Ex-Dividend Date for such distribution; provided further that if the Board of Directors determines “FMV” for purposes of the foregoing increase by reference to the actual or when-issued trading market for any securities, it must in doing so consider the prices in such market over the same period used in computing the VWAP for purposes of determining “SP0” as set forth above.

An increase in the Conversion Rate made pursuant to the immediately preceding paragraph shall become effective after the Open of Business on the Ex-Dividend Date for such distribution.

With respect to an adjustment pursuant to this Section 10.04(c) where there has been a payment of a dividend or other distribution on the Common Stock of shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary, or other business unit or affiliate, of the Issuer, where such Capital Stock or similar equity interest is listed or quoted (or will be listed or quoted upon consummation of the Spin-Off) on a major U.S. or non-U.S. securities exchange, such as any of the New York Stock Exchange, the Nasdaq Global Select Market or the Nasdaq Global Market (or any of their successors) (a “Spin-Off”), the Conversion Rate will be increased based on the following formula:

CR1 = CR0 x FMV0 + MP0

MP0

where,

CR0 = the Conversion Rate in effect immediately prior to the end of the Valuation Period;

CR1 = the Conversion Rate in effect immediately after the end of the Valuation Period;

FMV0 = the volume-weighted average price of the Capital Stock or similar equity interest distributed to holders of shares of Common Stock applicable to one share of Common Stock (determined for purposes of the definition of “VWAP” as if such Capital Stock or similar equity interest were Common Stock) over the first 10 consecutive Business Day period immediately following, and including, the first Trading Day after the effective date of the Spin-Off (the “Valuation Period”); and

MP0 = the VWAP over the Valuation Period.

The increase in the Conversion Rate under the preceding paragraph will be determined as of the Close of Business on the last Business Day of the Valuation Period; provided that in respect of any conversion during the Valuation Period, references with respect to 10 consecutive Business Days shall be deemed replaced with such lesser number of Business Days as have elapsed from, and including, the first Trading Day after the effective date of such Spin-Off to, and including, the Conversion Date in determining the Applicable Conversion Rate. If any dividend or distribution that constitutes a Spin-Off is declared but not so paid or made, the Conversion Rate shall be immediately decreased, effective as of the date the Board of Directors determines not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared. For the avoidance of doubt, if the application of the foregoing formula would result in a decrease in the Conversion Rate, no adjustment to the Conversion Rate will be made (other than with respect to the Issuer’s right to readjust the Conversion Rate as described in the immediately preceding sentence).

For purposes of this Section 10.04(c) (and subject in all respects to Section 10.11), rights, options or warrants distributed by the Issuer to all holders of the Common Stock entitling them to

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subscribe for or purchase shares of the Issuer’s Capital Stock, including Common Stock (either initially or under certain circumstances), which rights, options or warrants, until the occurrence of a specified event or events (“Trigger Event”): (i) are deemed to be transferred with such Common Stock; (ii) are not exercisable; and (iii) are also issued in respect of future issuances of Common Stock, shall be deemed not to have been distributed for purposes of this Section 10.04(c) (and no adjustment to the Conversion Rate under this Section 10.04(c) will be required) until the occurrence of the earliest Trigger Event, whereupon such rights, options or warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Rate shall be made under this Section 10.04. If any such right, option or warrant, including any such existing rights, options or warrants distributed prior to the date of this Indenture, are subject to events, upon the occurrence of which such rights, options or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets or property, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and the Ex-Dividend Date with respect to new rights, options or warrants with such rights (in which case the existing rights, options or warrants shall be deemed to terminate and expire on such date without exercise by any of the holders thereof). In addition, in the event of any distribution (or deemed distribution) of rights, options or warrants, or any Trigger Event or other event (of the type described in the immediately preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under this Section 10.04(c) was made, (1) in the case of any such rights, options or warrants that shall all have been redeemed or purchased without exercise by any holders thereof, upon such final redemption or purchase (x) the Conversion Rate shall be readjusted as if such rights, options or warrants had not been issued and (y) the Conversion Rate shall then again be readjusted to give effect to such distribution, deemed distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share of Common Stock redemption or purchase price received by a holder or holders of shares of Common Stock with respect to such rights, options or warrants (assuming such holder had retained such rights, options or warrants), made to all holders of shares of Common Stock as of the date of such redemption or purchase, and (2) in the case of such rights, options or warrants that shall have expired or been terminated without exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights, options and warrants had not been issued.

For purposes of Section 10.04(a), Section 10.04(b) and this Section 10.04(c), any dividend or distribution to which this Section 10.04(c) is applicable that also includes one or both of:

(A) a dividend or distribution of shares of Common Stock to which Section 10.04(a) is applicable (the “Clause A Distribution”); or

(B) a dividend or distribution of rights, options or warrants to which Section 10.04(b) is applicable (the “Clause B Distribution”),

then (1) such dividend or distribution, other than the Clause A Distribution and the Clause B Distribution, shall be deemed to be a dividend or distribution to which this Section 10.04(c) is applicable (the “Clause C Distribution”) and any adjustment to the Conversion Rate required by this Section 10.04(c) with respect to such Clause C Distribution shall then be made, and (2) the Clause A Distribution and Clause B Distribution shall be deemed to immediately follow the Clause C Distribution and any adjustment to the Conversion Rate required by Section 10.04(a) and Section 10.04(b) with respect thereto shall then be made, except that if determined by the Issuer (I) the “Ex-Dividend Date” of the Clause A Distribution and the Clause B Distribution shall be deemed to be the Ex-Dividend Date of the Clause C Distribution and (II) any shares of Common Stock included in the Clause A Distribution or Clause B Distribution shall be deemed not to be “outstanding immediately prior to the Open of Business on such Ex-Dividend Date or immediately prior to the Open of Business on such effective date, as applicable” within the meaning of

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Section 10.04(a) or “outstanding immediately prior to the Open of Business on such Ex-Dividend Date” within the meaning of Section 10.04(b).

(d) If any cash dividend or distribution is paid or made to all or substantially all holders of shares of Common Stock, the Conversion Rate shall be increased based on the following formula:

CR1 = CR0 x SP0

SP0 – C

where,

CR0 = the Conversion Rate in effect immediately prior to the Open of Business on the Ex-Dividend Date for such dividend or distribution;

CR1 = the Conversion Rate in effect immediately after the Open of Business on the Ex-Dividend Date for such dividend or distribution;

SP0 = the VWAP for the 60 consecutive Business Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution or if during the 60 consecutive Business Day period there were less than five days with a Last Reported Sale Price, then the VWAP for the five consecutive Trading Days ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution; and

C = the amount in cash per share the Issuer distributes to holders of shares of Common Stock.

The increase in the Conversion Rate under this Section 10.04(d) will become effective immediately after the Open of Business on the Ex-Dividend Date for such dividend or distribution. If such dividend or distribution is not so paid or made, the Conversion Rate shall be immediately decreased to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared. For the avoidance of doubt, if the application of the foregoing formula would result in a decrease in the Conversion Rate, no adjustment to the Conversion Rate will be made (other than with respect to the Issuer’s right to readjust the Conversion Rate as described in the immediately preceding sentence).

Notwithstanding the foregoing, if “C” (as defined above) is equal to or greater than “SP0” (as defined above), in lieu of the foregoing increase, each Holder of a Note shall receive, for each $1,000 principal amount of Notes, at the same time and upon the same terms as holders of shares of Common Stock, the amount of cash that such Holder would have received if such Holder owned a number of shares of Common Stock equal to the Conversion Rate in effect immediately prior to the Open of Business on the Ex-Dividend Date for such dividend or distribution.

(e) If the Issuer or any of its Subsidiaries makes a payment in respect of a tender offer or exchange offer for shares of Common Stock, to the extent that the cash and value of any other consideration (as determined by the Board of Directors) included in the payment per share of Common Stock exceeds the VWAP over the first 10 consecutive Business Day period immediately following, and including, the first Trading Day after the date such tender offer or exchange offer expires, the Conversion Rate will be increased based on the following formula:

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CR1 = CR0 x AC + (SP1 x OS1)

OS0 x SP1

where,

CR0 = the Conversion Rate in effect immediately prior to the Close of Business on the tenth Business Day immediately following, and including, the first Trading Day after such tender offer or exchange offer expires;

CR1 = the Conversion Rate in effect immediately after the Close of Business on the tenth Business Day immediately following, and including, the first Trading Day after such tender offer or exchange offer expires;

AC = the aggregate value of all cash and any other consideration (as determined by the Board of Directors) paid or payable for shares of Common Stock purchased in such tender offer or exchange offer;

OS0 = the number of shares of Common Stock outstanding immediately prior to the date such tender offer or exchange offer expires (prior to giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender offer or exchange offer);

OS1 = the number of shares of Common Stock outstanding immediately after the date such tender offer or exchange offer expires (after giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender offer or exchange offer); and

SP1 = the VWAP over the first 10 consecutive Business Day period immediately following, and including, the first Trading Day after such tender offer or exchange offer expires.

The increase in the Conversion Rate under this Section 10.04(e) shall occur at the Close of Business on the tenth Business Day immediately following, and including, the first Trading Day after such tender offer or exchange offer expires; provided that in respect of any conversion within the first 10 consecutive Business Day period immediately following, and including, the first Trading Day after the date any such tender offer or exchange offer expires, references to 10 consecutive Business Days shall be deemed replaced with such lesser number of Business Days as have elapsed from, and including, the first Trading Day after the date such tender offer or exchange offer expires to, and including, the Conversion Date in determining the Applicable Conversion Rate.

(f) Except as herein provided, the Issuer will not adjust the Conversion Rate for the issuance of shares of the Common Stock or any securities convertible into or exchangeable for shares of the Common Stock or the right to purchase shares of the Common Stock or such convertible or exchangeable securities. For the avoidance of doubt, if the application of the foregoing formulas would result in a decrease in the Conversion Rate, no adjustment to the Conversion Rate will be made (other than as a result of a reverse share split or share combination and subject to the Issuer’s right to readjust the Conversion Rate as described in this Section 10.04).

(g) In addition to those Conversion Rate adjustments required by Sections 10.04(a), 10.04(b), 10.04(c), 10.04(d) and 10.04(e), and to the extent permitted by applicable law and subject to, if applicable, any securities exchange on which the Issuer’s securities are then listed, the Issuer from time to time (i) may increase the Conversion Rate by any amount for a period of at least 20 Business Days if the

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Board of Directors determines that such increase would be in the Issuer’s best interest and (ii) may also (but is not required to) increase the Conversion Rate to avoid or diminish any income tax to holders of shares of Common Stock or rights to purchase shares of Common Stock in connection with any dividend or distribution of shares of Common Stock (or rights to acquire shares of Common Stock) or similar event. Whenever the Conversion Rate is increased pursuant to this Section 10.04(g), the Issuer shall mail to Holders of record of the Notes a notice of the increase at least five Business Days prior to the date the increased Conversion Rate takes effect, and such notice shall state the increased Conversion Rate and the period during which it will be in effect.

(h) The Conversion Rate will not be adjusted, among other things:

(i) upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Issuer’s securities and the investment of additional optional amounts in shares of Common Stock under any plan;

(ii) upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee or director benefit plan or program of the Issuer, or assumed by the Issuer, or any of the Issuer’s Subsidiaries;

(iii) upon the issuance of any shares of Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in clause (ii) above and outstanding as of the date the Notes were first issued, except as set forth in Section 10.11;

(iv) for a change in the par value of the Common Stock; or

(v) for accrued and unpaid interest, Additional Interest or Defaulted Interest, if any.

(i) Adjustments to the Conversion Rate under this Article Ten shall be calculated to the nearest cent or to the nearest one-ten thousandth (1/10,000th) of a share of Common Stock. No adjustment shall be made to the Conversion Rate unless such adjustment would require a change of at least 1% in the Applicable Conversion Rate. Any adjustment that would otherwise be required to be made shall be carried forward and taken into account in any future adjustment. Notwithstanding the foregoing, upon any conversion of the Notes (solely with respect to the Notes to be converted), the Issuer shall give effect to all adjustments that Issuer otherwise has deferred pursuant to the immediately preceding sentence, and those adjustments will no longer be carried forward and taken into account in any future adjustment.

(j) Whenever the Conversion Rate is adjusted as herein provided, the Issuer shall promptly file with the Trustee and any Conversion Agent an Officers’ Certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Unless and until the Trustee shall have received such Officers’ Certificate, the Trustee shall not be deemed to have knowledge of any adjustment of the Conversion Rate and may assume without inquiry that the last Conversion Rate of which it has knowledge is still in effect. Promptly after delivery of such certificate, the Issuer shall prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and the date on which each adjustment became effective and shall mail such notice of such adjustment of the Conversion Rate to each Holder at such Holder’s latest address

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appearing on the list of Holders provided for in Section 2.05, promptly after execution thereof. Failure to deliver such notice shall not affect the legality or validity of any such adjustment.

(k) In any case in which this Section 10.04 provides that an adjustment shall become effective immediately after an Ex-Dividend Date for an event, the Issuer may defer until the occurrence of such event (i) issuing to the Holder of any Notes converted after such Ex-Dividend Date and before the occurrence of such event the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (ii) paying to such Holder any amount in cash in lieu of any fraction pursuant to Section 10.03.

(l) For purposes of this Section 10.04, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Issuer, so long as the Issuer does not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Issuer, but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.

(m) A Holder of Notes may, in some circumstances, including a distribution of cash dividends to holders of shares of Common Stock, be deemed to have received a distribution subject to U.S. federal income tax as a result of an adjustment or the nonoccurrence of an adjustment to the Conversion Rate. To the extent the applicable withholding agent pays withholding taxes or backup withholding on behalf of a Holder or beneficial owner (for U.S. federal income tax purposes) of a Note as a result of an adjustment or the nonoccurrence of an adjustment to the Conversion Rate, the applicable withholding agent may, at its option, set off such payments against payments on the Note or, in certain circumstances, the Common Stock received on any conversion of the Note.

SECTION 10.05. Effect of Reclassification, Consolidation, Merger or Sale.

In the case of (i) any recapitalization, reclassification or change of the Common Stock (other than changes resulting from a subdivision or combination), (ii) any consolidation, merger or combination involving the Issuer and which results in holders of Common Stock being entitled to receive cash, securities or other property or assets in exchange for some or all of their shares of Common Stock, (iii) any sale, lease or other transfer to a third party of the consolidated assets of the Issuer and its Subsidiaries substantially as an entirety, or (iv) any statutory share exchange, in each case, as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof) (any such event, a “Merger Event”), then, at the effective time of the Merger Event, the Issuer shall execute with the Trustee a supplemental indenture permitted under Section 9.01 providing for the right to convert the principal amount of any such Notes or any portion of such principal amount, into the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that a holder of a number of shares of Common Stock equal to the Conversion Rate immediately prior to such Merger Event would have owned or been entitled to receive (the “Reference Property”) upon such Merger Event, provided that any portion of such principal amount that a Holder elects to convert is equal to $1.00 or an integral multiple of $1.00 in excess thereof. If such Merger Event causes the Common Stock to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), the Reference Property into which the Notes will be convertible will be deemed to be the weighted average of the types and amounts of consideration received by the holders of shares of Common Stock that affirmatively make such an election. The Issuer shall notify Holders of the Notes and the Trustee of such weighted average as soon as practicable after such determination is made. The Issuer shall not become a party to any Merger Event unless its terms are consistent with the foregoing.

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The Trustee, at the direction of the Issuer, will cause notice of the execution of such supplemental indenture to be mailed to each Holder, at the address of such Holder as it appears on the register of the Notes maintained by the Registrar, within 20 days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture. The above provisions of this Section shall similarly apply to successive reclassifications, changes, consolidations, mergers, combinations, sales and conveyances. If this Section 10.05 applies to any event or occurrence, Section 10.04 shall not apply.

SECTION 10.06. Adjustments of Prices.

Whenever any provision of this Indenture requires a calculation of VWAP over a span of multiple days, the Issuer will make appropriate adjustments determined by the Issuer or its agents to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate where the Ex-Dividend Date, Common Stock Record Date, effective date or expiration date, as the case may be, of the event occurs, at any time during the period during which such prices are to be calculated. Such adjustments will be effective as of the Ex-Dividend Date, Common Stock Record Date, effective date or expiration date, as the case may be, of the event causing the adjustment to the Conversion Rate.

SECTION 10.07. Taxes on Shares Issued.

Any issue of share certificates or creation of book-entry notations on conversions of Notes shall be made without charge to the converting Holder for any documentary, transfer, stamp or any similar tax in respect of the issue thereof, and the Issuer shall pay any and all documentary, stamp or similar issue or transfer taxes or duties that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of Notes pursuant hereto. The Issuer shall not, however, be required to pay any such tax which may be payable in respect of any transfer involved in the issue and delivery of shares in any name other than that of the Holder of any Notes converted, and the Issuer shall not be required to issue or deliver any such share certificate or create any such book-entry notation unless and until the Person or Persons requesting the issue thereof shall have paid to the Issuer the amount of such tax or shall have established to the satisfaction of the Issuer that such tax has been paid.

SECTION 10.08. Reservation of Shares; Shares to be Fully Paid; Compliance with Governmental Requirements.

The Issuer shall provide, free from preemptive rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares of Common Stock to provide for the conversion of the Notes from time to time as such Notes are presented for conversion (assuming that, at the time of the computation of such number of shares or securities, all such Notes would be held by a single Holder).

Before taking any action that would cause an adjustment increasing the Conversion Rate to an amount that would cause the Conversion Price to be reduced below the then par value, if any, of the shares of Common Stock issuable upon conversion of the Notes, the Issuer will take all corporate action which may, in the opinion of its counsel, be necessary in order that the Issuer may validly and legally issue shares of such shares of Common Stock at such adjusted Conversion Price.

The Issuer covenants that all shares of Common Stock that may be issued upon conversion of Notes shall be newly issued shares or treasury shares, shall be duly authorized, validly issued, fully paid and non-assessable and shall be free from preemptive rights and free from any lien or adverse claim.

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If the Common Stock is listed on a national securities exchange or over-the-counter or other domestic market, the Issuer shall use its reasonable efforts to list or cause to have quoted any shares of Common Stock to be issued upon conversion of Notes on such national securities exchange or over-the-counter or other domestic market on which the Common Stock is then listed or quoted.

SECTION 10.09. Responsibility of Trustee and Conversion Agent.

The Trustee and any other Conversion Agent shall not at any time be under any duty or responsibility to any Holder to determine the Conversion Rate or whether any facts exist which may require any adjustment of the Conversion Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same or to determine whether a Holder is a 4.95% Stockholder or to determine whether a conversion violates Section 10.13. The Trustee and any other Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any Common Stock, or of any securities or property, which may at any time be issued or delivered upon the conversion of any Notes; and the Trustee and any other Conversion Agent make no representations with respect thereto. Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Issuer to issue, transfer or deliver any shares of Common Stock or share certificates or other securities or property or cash upon the surrender of any Notes for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the Issuer contained in this Article Ten. Without limiting the generality of the foregoing, neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 10.05 relating either to the kind or amount of shares of stock or securities or property (including cash) receivable by Holders upon the conversion of their Notes after any event referred to in such Section 10.05 or to any adjustment to be made with respect thereto, but, subject to the provisions of Section 7.01, may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers’ Certificate (which the Issuer shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto.

SECTION 10.10. Notice to Holders Prior to Certain Actions.

In case:

(a) the Issuer shall declare a dividend (or any other distribution) on Common Stock that would require an adjustment in the Conversion Rate pursuant to Section 10.04; or

(b) the Issuer shall authorize the granting to the holders of all or substantially all of the shares of Common Stock of options, rights or warrants to subscribe for or purchase any share of any class or any other options, rights or warrants; or

(c) of any reclassification or reorganization of the Common Stock (other than a subdivision or combination of its outstanding Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value), or of any consolidation or merger to which the Issuer is a party and for which approval of any stockholders of the Issuer is required, or of the sale, lease or transfer of all or substantially all of the assets of the Issuer; or

(d) of the voluntary or involuntary dissolution, liquidation or winding up of the Issuer or any of its Significant Subsidiaries;

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then, in each case, the Issuer shall cause to be filed with the Trustee and the Conversion Agent and to be mailed to each Holder at such Holder’s address appearing on the list of Holders provided for in Section 2.05 of this Indenture, as promptly as practicable, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or rights or warrants, or, if a record is not to be taken, the date as of which the holders of shares of Common Stock of record to be entitled to such dividend, distribution or rights are to be determined, or (y) the date on which such reclassification, reorganization, consolidation, merger, sale, lease, transfer, dissolution, liquidation or winding up is expected to become effective or occur, and the date as of which it is expected that holders of shares of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, reorganization, consolidation, merger, sale, transfer, dissolution, liquidation or winding up. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such dividend, distribution, reclassification, reorganization, consolidation, merger, sale, transfer, dissolution, liquidation or winding up.

SECTION 10.11. Stockholder Rights Plan.

Each share of Common Stock issued upon conversion of Notes pursuant to this Article Ten shall be entitled to receive the appropriate number of rights, if any, and the certificates or book entry notations representing the shares of Common Stock issued upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any current or subsequent stockholder rights agreement adopted by the Issuer, as any such agreement may be amended from time to time. Notwithstanding the foregoing, if prior to any conversion such rights have separated from the Common Stock in accordance with the provisions of the applicable stockholder rights agreement, the Conversion Rate shall be adjusted at the time of separation as if the Issuer had distributed, to all holders of the Common Stock, Distributed Property as described in Section 10.03(c) above, subject to readjustment in the event of the expiration, termination or redemption of such rights.

SECTION 10.12. Issuer Determination Final.

Any determination that the Issuer or its Board of Directors must make pursuant to this Article Ten shall be conclusive if made in good faith and in accordance with the provisions of this Article Ten, absent manifest error, and set forth in a Board Resolution.

SECTION 10.13. 4.95% Stockholder Limitations.

(a) Notwithstanding anything to the contrary in this Article Ten, no Restricted Person shall be entitled to acquire shares of Common Stock delivered upon conversion of any Note, unless such Restricted Person has received approval of the Board of Directors in accordance with Section 10.14.

(b) Any purported delivery of shares of Common Stock upon conversion by a Restricted Person shall be void and have no effect, unless such Restricted Person has received approval of the Board of Directors in accordance with Section 10.14.

(c) If any delivery of shares of Common Stock owed to any Restricted Person upon conversion is not made, in whole or in part, as a result of the limitations in this Section 10.13:

(i) the Issuer’s obligation to make such delivery shall not be extinguished and the Issuer shall deliver such shares of Common Stock as promptly as practicable (though with no maximum waiting period) following a determination by the Board of Directors that such further delivery would

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not violate this Section 10.13 or require a waiver by the Board of Directors of this Section 10.13; provided, further, that if a Restricted Person is waiting for delivery of the Common Stock, the Restricted Person is not entitled to any payments of interest hereunder on the converted Notes;

(ii) the Restricted Person may request the return of the Notes surrendered by it for conversion (but only to the extent shares of Common Stock have not been delivered), after which the Issuer shall deliver such Notes to such Restricted Person within five Business Days after receipt of such request; and

(iii) upon a return of Notes pursuant to Section 10.13(c)(ii) the Restricted Person will receive the Redemption Price if a Redemption Date for all outstanding Notes has already passed.

(d) The Issuer shall have sole responsibility to verify compliance with this Section 10.13 and neither the Trustee nor the Conversion Agent shall have any duty nor incur any liability in respect of this Section 10.13.

SECTION 10.14. Waiver of 4.95% Stockholder Provisions.

(a) The Board of Directors may, at its sole option, waive (as to a particular Restricted Person or as to all Restricted Persons) any restrictions under the Indenture that limit delivery of shares of Common Stock to a Restricted Person upon conversion of its Notes.

(b) In the event that the Board of Directors exercises its rights pursuant to this Section 10.14 to waive any such restrictions as to all Restricted Persons, the Issuer or, at the written request and expense of the Issuer, the Trustee, shall send or cause to be sent to each Holder 30 days prior to the effective waiver date an irrevocable notice (such notice, the “4.95% Stockholder Provision Waiver Notice”) stating that as of an effective date specified therein, the Issuer waives any restrictions that limit the delivery of shares of Common Stock to a Restricted Person upon conversion of its Notes.

(c) After the date of the mailing of such 4.95% Stockholder Provision Waiver Notice, whenever in the Notes or in this Indenture there is a reference, in any context, to any limitation on the ability of a Restricted Person to receive shares of Common Stock upon conversion of its Notes, such limitation shall be deemed waived. Any express mention of such limitation on the ability of a Restricted Person to receive shares of Common Stock upon conversion of its Notes shall not be construed as excluding the optional waiver provisions of this Section 10.14 in those provisions of this Indenture when such express mention is not made. A waiver by the Board of Directors of any limitation under this Indenture upon the delivery of shares of Common Stock to a Restricted Person of converted Notes will not create any obligation for the Board of Directors, or an expectation of Holders, for the Board of Directors to take any steps to waive or change any limitation on the delivery of shares of Common Stock that may exist in the Issuer’s organizational documents or otherwise.

(d) After the date of the mailing of the 4.95% Stockholder Provision Waiver Notice, the Issuer may at its option prepare, and the Trustee shall execute, a supplemental indenture to this Indenture that eliminates any provisions of the Indenture in respect of any limitation on the ability of a Restricted Person to convert its Notes.

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ARTICLE ELEVEN

PURCHASE AT OPTION OF HOLDERS UPON A FUNDAMENTAL CHANGE

SECTION 11.01. Purchase at Option of Holders upon a Fundamental Change.

(a) Generally. If a Fundamental Change occurs at any time prior to the Maturity Date of the Notes, then each Holder shall have the right, at such Holder’s option, to require the Issuer to purchase any or all of such Holder’s Notes or any portion thereof that is equal to $1.00 or an integral multiple of $1.00 in excess thereof on a date specified by the Issuer that is no earlier than the 20th and not later than the 35th calendar day following the date of the Fundamental Change Company Notice, subject to extension to comply with applicable law (the “Fundamental Change Purchase Date”), at a purchase price in cash equal to 101% of the principal amount thereof, together with accrued and unpaid interest thereon to, but excluding, the Fundamental Change Purchase Date (the “Fundamental Change Purchase Price”); provided, however, if the Fundamental Change Purchase Date occurs after a Record Date and on or prior to the Interest Payment Date to which it relates, the Issuer will pay accrued and unpaid interest to the Holder of record on such Record Date, and the Fundamental Change Purchase Price will be equal to 101% of the principal amount of the Notes to be purchased.

Purchases of Notes under this Section 11.01 shall be made, at the option of the Holder thereof upon delivery to the Paying Agent of a duly completed notice (the “Fundamental Change Purchase Notice”) in the form set forth on the reverse of the Notes on or prior to the Close of Business on the second Business Day immediately preceding the Fundamental Change Purchase Date, subject to extension to comply with applicable law, which must specify:

(i) if the Notes are Certificated Notes, the certificate numbers of the Holder’s Notes to be delivered for purchase;

(ii) the portion of the principal amount of the Holder’s Notes to be purchased, which must be $1.00 or an integral multiple of $1.00 in excess thereof;

(iii) that the Holder’s Notes are to be purchased by the Issuer pursuant to the applicable provisions of the Notes and this Indenture; and

(iv) delivery or book-entry transfer of the Notes to the Trustee (or other Paying Agent appointed by the Issuer) (together with all necessary endorsements) at any time on or prior to the second Business Day immediately preceding the Fundamental Change Purchase Date, subject to extension to comply with applicable law, at the applicable Corporate Trust Office of the Trustee (or other Paying Agent appointed by the Issuer), such delivery being a condition to receipt by the Holder of the Fundamental Change Purchase Price therefor; provided that such Fundamental Change Purchase Price shall be so paid pursuant to this Section 11.01 only if the Notes so delivered to the Trustee (or other Paying Agent appointed by the Issuer) shall conform in all respects to the description thereof in the related Fundamental Change Purchase Notice;

provided that, if such Holder’s Notes are not Certificated Notes, such Holder must comply with the Applicable Procedures.

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Any purchase by the Issuer contemplated pursuant to the provisions of this Section 11.01 shall be consummated by the delivery of the Fundamental Change Purchase Price to be received by the Holder promptly following the later of the Fundamental Change Purchase Date or the time of the book-entry transfer or delivery of the Notes.

Notwithstanding anything herein to the contrary, any Holder delivering to the Trustee (or other Paying Agent appointed by the Issuer) the Fundamental Change Purchase Notice contemplated by this Section 11.01 shall have the right to withdraw such Fundamental Change Purchase Notice (in whole or in part) at any time prior to the Close of Business on the second Business Day prior to the Fundamental Change Purchase Date by delivery of a written notice of withdrawal to the Trustee (or other Paying Agent appointed by the Issuer) in accordance with Section 11.03 below.

The Paying Agent shall promptly notify the Issuer of the receipt by it of any Fundamental Change Purchase Notice or written notice of withdrawal thereof.

(b) Fundamental Change Company Notice. On or before the 10th day after the occurrence of a Fundamental Change, the Issuer shall deliver to all Holders of record of the Notes and the Trustee and Paying Agent a notice (the “Fundamental Change Company Notice”) of the occurrence of such Fundamental Change and of the purchase right at the option of the Holders arising as a result thereof. Simultaneously with providing such Fundamental Change Company Notice, the Issuer shall publish a notice containing the information included therein once in a newspaper of general circulation in The City of New York or publish such information on the Issuer’s website or through such other public medium as the Issuer may use at such time.

Each Fundamental Change Company Notice shall specify:

(i) the events causing the Fundamental Change;

(ii) the date of the Fundamental Change;

(iii) the last date on which a Holder may exercise the purchase right;

(iv) the Fundamental Change Purchase Price;

(v) the Fundamental Change Purchase Date;

(vi) the name and address of the Paying Agent and the Conversion Agent, if applicable;

(vii) if applicable, the Applicable Conversion Rate and any adjustments to the Applicable Conversion Rate;

(viii) if applicable, that the Notes with respect to which a Fundamental Change Purchase Notice has been delivered by a Holder may be converted only if the Holder validly withdraws the Fundamental Change Purchase Notice in accordance with Section 11.03; and

(ix) the procedures that Holders must follow to require the Issuer to purchase their Notes.

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No failure of the Issuer to give the foregoing notices and no defect therein shall limit any Holder’s purchase rights or affect the validity of the proceedings for the purchase of the Notes pursuant to this Section 11.01.

(c) No Payment During an Acceleration. Notwithstanding the foregoing, no Notes may be purchased by the Issuer at the option of the Holders pursuant to this Section 11.01 if the principal amount of the Notes has been accelerated, and such acceleration has not been rescinded, on or prior to the Fundamental Change Purchase Date.

(d) Payment of Fundamental Change Purchase Price. The Notes to be purchased pursuant to this Section 11.01 shall be paid for in cash.

(e) Third Party Offers. Notwithstanding anything to the contrary in this Article Eleven, the Issuer shall not be required to make a Fundamental Change purchase offer pursuant to a Fundamental Change Company Notice upon a Fundamental Change if a third party makes the Fundamental Change purchase offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Article Eleven and purchases all Notes properly tendered and not withdrawn under the Fundamental Change purchase offer.

SECTION 11.02. Effect of Fundamental Change Purchase Notice.

Upon receipt by the Paying Agent of the Fundamental Change Purchase Notice specified in Section 11.01(a), the Holder of the Note in respect of which such Fundamental Change Purchase Notice was given shall (unless such Fundamental Change Purchase Notice is validly withdrawn as specified in Section 11.03) thereafter be entitled to receive solely the Fundamental Change Purchase Price with respect to such Note. Such Fundamental Change Purchase Price shall be payable to such Holder promptly following the later of (x) the Fundamental Change Purchase Date with respect to such Note (provided the conditions in Section 11.01(a) have been satisfied) and (y) the time of delivery or book-entry transfer of such Note to the Paying Agent by the Holder thereof in the manner required by Section 11.01(a).

SECTION 11.03. Withdrawal of Fundamental Change Purchase Notice.

A Fundamental Change Purchase Notice may be withdrawn (in whole or in part) by means of a written notice of withdrawal delivered to the Paying Agent in accordance with the Fundamental Change Company Notice prior to the Close of Business on the second Business Day immediately preceding the relevant Fundamental Change Purchase Date specifying:

(a) the principal amount of the withdrawn Notes;

(b) if the Notes are Certificated Notes, the certificate numbers of the withdrawn Notes; and

(c) the principal amount, if any, of such Notes that remains subject to the original Fundamental Change Purchase Notice, which must be $1.00 or an integral multiple of $1.00 in excess thereof;

provided that, if such Holder’s Notes are not Certificated Notes, such Holder must comply with the Applicable Procedures.

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SECTION 11.04. Deposit of Fundamental Change Purchase Price.

Prior to 10:00 a.m. New York City time on the Fundamental Change Purchase Date, the Issuer shall deposit with the Paying Agent (or, if the Issuer or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust as provided herein) an amount of immediately available funds, sufficient to pay the Fundamental Change Purchase Price, of all the Notes or portions thereof that are to be purchased as of the Fundamental Change Purchase Date. The Issuer shall promptly notify the Trustee in writing of the amount of any deposits made pursuant to this Section 11.04. If the Paying Agent holds immediately available funds sufficient to pay the Fundamental Change Purchase Price of any Note surrendered for purchase and not withdrawn in accordance with this Indenture then any such Note will cease to be outstanding and interest will cease to accrue thereon on the Fundamental Change Purchase Date and all other rights of the Holder in respect thereof will terminate (other than the right to receive the Fundamental Change Purchase Price and previously accrued and unpaid interest).

SECTION 11.05. Notes Purchased in Whole or in Part.

Any Certificated Note that is to be purchased, whether in whole or in part, shall be surrendered at the office of the Paying Agent (with, if the Issuer or the Trustee so requires, due endorsement on the assignment and exchange form included in the Note) and the Issuer shall execute and the Trustee shall authenticate and deliver to the Holder of such Certificated Note, without service charge, a new Certificated Note or Certificated Notes, of any authorized denomination as requested by such Holder in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Certificated Note so surrendered which is not purchased.

SECTION 11.06. Covenant to Comply With Securities Laws upon Purchase of Notes.

In connection with any offer to purchase Notes under Section 11.01, the Issuer shall, if required and notwithstanding anything to the contrary in the Indenture, comply with the provisions of the tender offer rules under the Exchange Act that may then be applicable and file a Schedule TO, if required, or any other required schedule under the Exchange Act.

SECTION 11.07. Repayment to the Issuer.

Subject to the requirements of any applicable abandoned property laws, regardless of who acts as Paying Agent, the Paying Agent shall return to the Issuer any immediately available funds that remains unclaimed, together with interest, if any, thereon, held by them for the payment of the Fundamental Change Purchase Price; provided that to the extent that the aggregate amount of funds deposited by the Issuer pursuant to Section 11.04 exceeds the aggregate Fundamental Change Purchase Price of the Notes or portions thereof which the Issuer is obligated to purchase as of the Fundamental Change Purchase Date, then as soon as practicable following the Fundamental Change Purchase Date, the Paying Agent shall return any such excess to the Issuer pursuant to the Issuer’s written instructions.

ARTICLE TWELVE

MISCELLANEOUS

SECTION 12.01. Notices.

Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by email, by nationally recognized overnight

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courier service or registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

if to the Issuer: Nebraska Book Holdings, Inc. 4700 South 19th Street Lincoln, NE 68512 Attention: Chief Executive Officer Telephone: 404.421.7300 Email: cfox@nebook.com

with a copy to: Arnall Golden Gregory LLP 171 17th Street NW Suite 2100 Atlanta, GA 30363 Attention: Sean Fogarty Telephone: 404.873.8150 Email: Sean.fogarty@agg.com

if to the Trustee: Wilmington Trust, National Association 50 S. 6th Street Suite 1290 Minneapolis, MN 55402 Attention: Nebraska Book Holdings, Inc. account manager Email: As provided from time to time by the Trustee

Each of the Issuer and the Trustee by written notice to each other such Person may designate additional or different addresses for notices to such Person. Any notice or communication to the Issuer and the Trustee, shall be deemed to have been given or made as of the date so delivered if personally delivered; when answered back; when sent, if sent by email; five calendar days after mailing if sent by registered or certified mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee); and next Business Day if by nationally recognized overnight courier service.

Any notice or communication mailed to a Holder shall be mailed by first class mail or other equivalent means at the address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed. Any notice or communication to a Holder of a Global Note may be delivered by electronic mail.

Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

In addition to the foregoing, the Trustee agrees to accept and act upon notice, instructions or directions pursuant to this Indenture sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods. If the Issuer elects to give the Trustee e-mail or facsimile instructions (or

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instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The Issuer agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk or interception and misuse by third parties.

SECTION 12.02. Communications by Holders with Other Holders.

Holders may communicate pursuant to Trust Indenture Act § 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Issuer, the Trustee, the Registrar and any other Person shall have the protection of Trust Indenture Act § 312(c).

SECTION 12.03. Certificate and Opinion as to Conditions Precedent.

Upon any request or application by the Issuer to the Trustee to take any action under this Indenture, the Issuer shall furnish to the Trustee at the request of the Trustee:

(1) an Officers’ Certificate, in form and substance satisfactory to the Trustee, stating that, in the opinion of the signers, all conditions precedent to be performed or effected by the Issuer, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(2) an Opinion of Counsel stating that, in the opinion of such counsel, any and all such conditions precedent have been complied with.

SECTION 12.04. Statements Required in Certificate or Opinion.

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture, other than the Officers’ Certificate required by Section 4.06, shall include:

(1) a statement that the Person making such certificate or opinion has read such covenant or condition;

(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(3) a statement that, in the opinion of such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with or satisfied; and

(4) a statement as to whether or not, in the opinion of each such Person, such condition or covenant has been complied with;

provided, however, that with respect to matters of fact an Opinion of Counsel may rely on an Officers’ Certificate or certificates of public officials.

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SECTION 12.05. Rules by Trustee, Paying Agent, Registrar, Conversion Agent.

The Trustee, Paying Agent, Registrar or Conversion Agent may make reasonable rules for its functions.

SECTION 12.06. Legal Holidays.

If a payment date is not a Business Day, payment may be made on the next succeeding day that is a Business Day and no interest shall accrue or be paid in respect of the delay.

SECTION 12.07. Governing Law.

This Indenture and the Notes will be governed by, and construed in accordance with, the laws of the State of New York, as applied to contracts made and performed within the State of New York, without regard to principles of conflicts of law.

SECTION 12.08. No Adverse Interpretation of Other Agreements.

This Indenture may not be used to interpret another indenture, loan or debt agreement of the Issuer or any of its Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

SECTION 12.09. No Recourse Against Others.

No director, officer, employee, incorporator, stockholder, partner, member or manager of the Issuer will have any liability for any obligations of the Issuer under the Notes or this Indenture, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

SECTION 12.10. Successors.

All agreements of the Issuer in this Indenture and the Notes shall bind its respective successor. All agreements of the Trustee in this Indenture shall bind its successor.

SECTION 12.11. Duplicate Originals.

All parties may sign any number of copies of this Indenture. Each signed copy or counterpart shall be an original, but all of them together shall represent the same agreement.

SECTION 12.12. Severability.

In case any one or more of the provisions in this Indenture or in the Notes shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law.

SECTION 12.13. Waiver of Jury Trial.

EACH OF THE ISSUER AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO

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TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED HEREBY.

SECTION 12.14. Submission to Jurisdiction.

The Issuer agrees that any suit, action or proceeding against the Issuer brought by any Holder or the Trustee arising out of or based upon this Indenture or the Notes may be instituted in any state or Federal court in the Borough of Manhattan, New York, New York, and any appellate court from thereof, and each of them irrevocably submits to the non-exclusive jurisdiction of such courts in any suit, action or proceeding.

SECTION 12.15. USA PATRIOT Act.

The parties hereto acknowledge that in accordance with Section 326 of the USA PATRIOT Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The Issuer agrees that it will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the USA PATRIOT Act.

SECTION 12.16. Force Majeure.

In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts that are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

SECTION 12.17. Calculations.

Except as otherwise provided herein, the Issuer shall be responsible for making all calculations called for under the Indenture and Notes. These calculations include, but are not limited to, determinations of the Last Reported Sale Price, the VWAP, accrued interest payable on the Notes and the Conversion Rate. The Issuer shall make all these calculations in good faith and, absent manifest error, the Issuer’s calculations shall be final and binding on Holders. Upon written request, the Issuer shall provide a schedule of its calculations to the Trustee and the Conversion Agent, and both the Trustee, and the Conversion Agent are entitled to rely conclusively upon the accuracy of the Issuer’s calculations without independent verification. The Trustee will forward the Issuer’s calculations to any Holder upon the written request of that Holder at the sole cost and expense of the Issuer.

SIGNATURES

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed all as of the date first written above.

NEBRASKA BOOK HOLDINGS, INC., as Issuer By Name: Title:

WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee By Name: Lynn M. Steiner Title: Vice President

Exhibit A-1

EXHIBIT A

[Insert Legends, as applicable, pursuant to the provisions of the Indenture]

NEBRASKA BOOK HOLDINGS, INC. 2.00% Convertible Senior PIK Notes due 2026

CUSIP No. ISIN:

No. $

NEBRASKA BOOK HOLDINGS, INC., a Delaware corporation (the “Issuer”), for value received promises to pay to CEDE & CO. or its registered assigns, the principal sum of [__________] on April 1, 2026.

Interest Payment Dates: March 15 and September 15, commencing on September 15, 2016.

Record Dates: March 1 and September 1.

Reference is made to the further provisions of this Note contained herein, which will for all purposes have the same effect as if set forth at this place.

Exhibit A-2

IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually or by facsimile by its duly authorized officer.

Dated: April [15], 2016

NEBRASKA BOOK HOLDINGS, INC., as Issuer

By: Name: Title:

Exhibit A-3

This is one of the 2.00% Convertible Senior PIK Notes due 2026 described in the within-mentioned Indenture.

Dated: April [15], 2016

WILMINGTON TRUST, NATIONAL ASSOCIATION as Trustee By: ___________________________ Authorized Signatory

Exhibit A-4

(Reverse of Note)

2.00% Convertible Senior PIK Notes due 2026

Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. To the extent any provision hereof conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.

SECTION 1. Interest. Nebraska Book Holdings, Inc., a Delaware corporation (the “Issuer”), promises to pay interest on the principal amount of this Note at a rate of 2.00% per annum from the Issue Date of this Note until maturity. The Issuer will pay interest semi-annually in arrears on March 15 and September 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an “Interest Payment Date”), commencing September 15, 2016. Until the first Interest Payment Date that is two years after the Issue Date (the “PIK Only Period”), interest will be paid by increasing the outstanding principal amount of the Notes or by issuing additional PIK Notes (“PIK Interest”) (any fractional amount of PIK Notes to be received in a PIK Payment will be rounded down to the nearest dollar). To pay PIK Interest by issuing Certificated Notes, the Issuer will be required to deliver an Authentication Order to the Trustee to authorize and deliver PIK Notes as Certificated Notes at least 20 Business Days before the relevant Interest Payment Date. The Issuer will be deemed to have selected to pay interest by increasing the outstanding principal amount of the Notes by an amount equal to the applicable amount of interest for the interest period unless the Trustee receives a Cash Interest Payment Notice or, if applicable, an Authentication Order. After the PIK Only Period, interest will be paid in PIK Interest unless the Issuer’s Subsidiaries have the contractual ability to dividend cash to the Issuer under the Credit Facilities, other future Subsidiary Indebtedness and any other agreements such that once such dividend is paid and combined with the Issuer’s then current cash and Cash Equivalents, the Issuer could pay interest in respect of such interest period entirely in cash (“Cash Interest”) (excluding from such calculations (a) any cash and Cash Equivalents equal to $5.0 million available to be dividended to the Issuer to pay interest, (b) any cash and Cash Equivalents on hand at the Issuer which has been distributed to the Issuer and the distribution of which is conditioned upon such cash and Cash Equivalents being utilized for a purpose other than paying Cash Interest (including, without limitation, amounts permitted to be distributed to the Issuer solely for the purpose of paying taxes attributable to the Issuer’s consolidated Subsidiaries, provided such conditions are otherwise permitted by the Credit Facilities, other future Subsidiary Indebtedness or any agreement that amends, modifies, renews, increases, supplements, refunds, replaces or refinances such Indebtedness), and (c) cash and Cash Equivalents equal to $1.0 million on hand at the Issuer). If the Issuer is required to pay Cash Interest, the Issuer will be required to deliver notice, in the form of the Cash Interest Payment Notice included as Exhibit C to the Indenture, to the Trustee (and the Trustee shall forward such notice to Holders without further instructions or orders from the Issuer) that the Issuer is required to pay Cash Interest at least 20 Business Days before the relevant Interest Payment Date. The Issuer will make each interest payment due on an Interest Payment Date to the Holders of record as of the Close of Business on the immediately preceding regular Record Date. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from and including the Issue Date with respect to the Notes.

Interest on Notes converted after the Close of Business on a Record Date, but prior to the opening of business on the corresponding Interest Payment Date, will be paid to the Holder on the Record Date but, subject to certain exceptions set forth in the Indenture, upon conversion, the Holder must pay the Issuer on the Conversion Date the interest which has accrued and will be paid to the Holder on such Interest Payment Date in order to complete the conversion.

Exhibit A-5

Notwithstanding anything to the contrary, the payment of accrued interest in connection with any redemption of Notes, as described under Article Three and Article Eleven of the Indenture shall be made solely in cash.

At all times, PIK Interest on the Notes will be payable (x) by increasing the outstanding principal amount of the Notes by an amount equal to the applicable amount of interest for the interest period (rounded down to the nearest whole dollar) to the credit of Holders on the relevant Record Date and adjusting the books and records of the Trustee with respect to such Notes or (y) by issuing PIK Notes as Certificated Notes in an aggregate principal amount equal to the applicable amount of interest for the interest period (rounded down to the nearest whole dollar), and the Trustee will, upon receipt of an Authentication Order, authenticate and deliver such PIK Notes in certificated form for original issuance to the Holders on the relevant Record Date, as shown by the records of the register of Holders. Notwithstanding any requirement to deliver an Authentication Order to authenticate and deliver PIK Notes as Certificated Notes or deliver notice that the Issuer is required to pay Cash Interest at least 20 Business Days prior to the relevant Interest Payment Date, if the Issuer does not deliver an Authentication Order or notice that the Issuer is required to pay Cash Interest at least 20 Business Days prior to the relevant Interest Payment Date, the Issuer will pay PIK Interest by increasing the outstanding principal amount of the Notes by an amount equal to applicable amount of interest for the interest period to the credit of Holders on the relevant Record Date and adjusting the books and records of the Trustee with respect to such Notes. In such case, the Trustee will increase the principal amount of the Notes by an amount equal to applicable amount of interest for the interest period. Following an increase in the principal amount of the outstanding Notes as a result of a PIK Payment, the Notes will bear interest on such increased principal amount from and after the date of such PIK Payment. Any PIK Notes issued as Certificated Notes will be dated as of the applicable Interest Payment Date and will bear interest from and after such date. All PIK Notes issued pursuant to a PIK Payment will mature on April 1, 2026 and will be governed by, and subject to the terms, provisions and conditions of, the Indenture and shall have the same rights and benefits as the Notes issued on the Issue Date. Any certificated PIK Notes will be issued with the description “PIK” on the face of such PIK Note.

The Issuer shall pay interest (including, without limitation, post-petition interest in a proceeding under any bankruptcy law) on overdue principal at the rate equal to two percent per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including, without limitation, post-petition interest in a proceeding under any bankruptcy law) on Defaulted Interest, without regard to any grace period, at the rate equal to two percent per annum in excess of the then applicable interest rate on the Notes to the extent lawful.

SECTION 2. Method of Payment. The Issuer will pay interest on the Notes (except Defaulted Interest) to the Persons who are registered Holders of Notes at the Close of Business on the March 1 or September 1 next preceding the Interest Payment Date, even if such Notes are canceled or converted after such Record Date and on or before such Interest Payment Date, except as provided in Section 10.03(c) or Section 2.12 of the Indenture with respect to Defaulted Interest. The Notes will be issued in denominations of $1.00 or integral multiples of $1.00 in excess thereof. The Issuer shall pay principal, premium, if any, and interest on the Notes in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts (“U.S. Legal Tender”) in immediately available funds. Principal, premium, if any, and interest on the Certificated Notes will be payable at the office or agency of the Issuer maintained for such purpose except that, at the option of the Issuer, the payment of interest may be made by check mailed to the Holders of the Notes at their respective addresses set forth in the register of Holders of Notes; provided that all payments of principal, premium and interest with respect to Notes the Holders of which have given wire transfer instructions to the Issuer at least ten Business Days prior to the relevant Interest Payment Date will be required to be made by wire transfer of immediately available funds to the accounts specified by the

Exhibit A-6

Holders thereof. Until otherwise designated by the Issuer, the Issuer’s office or agency will be the office of the Trustee maintained for such purpose.

SECTION 3. Paying Agent, Registrar and Conversion Agent. Initially, Wilmington Trust, National Association, the Trustee under the Indenture, will act as Paying Agent, Registrar and Conversion Agent. The Issuer may change any Paying Agent, Registrar or Conversion Agent without notice to any Holder. The Issuer or any of its Subsidiaries may act in any such capacity subject to the terms of the Indenture.

SECTION 4. Indenture. The Issuer issued the Notes under an Indenture dated as of April [15], 2016 (“Indenture”) between the Issuer and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”). The Notes are subject to all such terms, and Holders are referred to the Indenture and the Trust Indenture Act for a statement of such terms.

SECTION 5. Optional Redemption. Except as set forth in the paragraph immediately below, the Notes may not be redeemed prior to March 15, 2021. At any time or from time to time on or after March 15, 2021, the Issuer, at its option, may redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) set forth below, together with accrued and unpaid interest thereon, if any, to the Redemption Date, if redeemed during the 12-month period beginning March 15 of the years indicated:

Year Percentage

2021 and thereafter ........................................................... 101%

Prior to March 15, 2021, the Issuer may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount thereof, plus the Applicable Premium as of, plus accrued and unpaid interest thereon, if any, to the Redemption Date.

SECTION 6. Fundamental Change. Subject to the terms and conditions of the Indenture, the Issuer will become obligated, at the option of the Holder, to repurchase the Notes if a Fundamental Change occurs at any time prior to the Maturity Date at 101% of the principal amount together with accrued and unpaid interest to, but excluding, the Fundamental Change Purchase Date, which amount will be paid in cash. Holders have the right to withdraw, in whole or in part, any Fundamental Change Purchase Notice by delivering to the Paying Agent a written notice of withdrawal in accordance with the provisions of the Indenture. The right to withdraw the Fundamental Change Purchase Notice will terminate at the Close of Business on the second Business Day immediately preceding the relevant Fundamental Change Purchase Date. On and after the Fundamental Change Purchase Date interest ceases to accrue on Notes or portions thereof purchased.

SECTION 7. Conversion. Subject to and upon compliance with the provisions of the Indenture, including Sections 10.13 and 10.14, the Holder has the right, at its option, to convert the Notes or any portion of such Notes with a minimum denomination of $1.00 and integral multiples of $1.00 in excess thereof into shares of Common Stock at the Applicable Conversion Rate. The Conversion Rate is initially 684.2285 shares of Common Stock per $1,000 principal amount of Notes (equivalent to an initial Conversion Price of approximately $1.4615), subject to adjustment in certain events described in the Indenture. Upon conversion, the Issuer will deliver shares of Common Stock as set forth in the Indenture. No fractional shares will be issued upon any conversion, but a payment in cash will be made, as provided in the Indenture, in respect of any fraction of a share which would otherwise be issuable upon the surrender of any Notes for conversion. Notes in respect of which a Holder is exercising its right to require

Exhibit A-7

repurchase on a Fundamental Change Purchase Date may be converted only if such Holder validly withdraws the related election to exercise such right in accordance with the terms of the Indenture. In the event of a deposit or withdrawal of an interest in this Note, including an exchange, transfer, repurchase or conversion of this Note in part only, the Trustee, as custodian of the Depositary, shall make an adjustment on its records to reflect such deposit or withdrawal in accordance with the rules and procedures of the Depositary.

SECTION 8. Notice of Redemption. Notice of Redemption will be mailed or otherwise delivered at least 30 days but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address. Notes in denominations larger than $1.00 may be redeemed in part. If any Note is to be redeemed in part only, the Notice of Redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note. On and after the Redemption Date interest ceases to accrue on Notes or portions thereof called for redemption.

SECTION 9. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1.00 or integral multiples of $1.00 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuer may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuer and the Registrar are not required to transfer or exchange any Note (i) during a period beginning at the opening of business 15 days before the mailing or other delivery of a Notice of Redemption of Notes and ending at the Close of Business on the day of such mailing or other delivery, (ii) selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part, (iii) beginning at the opening of business on any Record Date and ending on the Close of Business on the related Interest Payment Date, (iv) when a Fundamental Change Purchase Notice has been delivered and not validly withdrawn by the Holder thereof and (v) when a Conversion Notice has been delivered.

SECTION 10. Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes.

SECTION 11. Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding, and any existing Default or compliance with any provision may be waived with the consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. Without notice to or consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes, to, among other things, cure any ambiguity, defect or inconsistency in the Indenture, provide for uncertificated Notes in addition to certificated Notes or make any change that does not materially adversely affect the rights of any Holder of a Note.

SECTION 12. Defaults and Remedies. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes generally may declare all the Notes to be due and payable immediately. Notwithstanding the foregoing, in the case of a Default arising from certain events of bankruptcy or insolvency as set forth in the Indenture, with respect to the Issuer, all outstanding Notes will become due and payable without further action or notice. Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default (except a Default relating to the

Exhibit A-8

payment of principal or interest or the failure to comply with the provisions of Article Five of the Indenture) if a responsible committee of its officers determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default and its consequences under the Indenture except a continuing Default in the payment of interest on, or the principal of, or the premium on, the Notes.

SECTION 13. Covenants. The Indenture contains certain covenants, including, among others, that the Issuer must annually report to the Trustee on compliance and provide reports to Holders.

SECTION 14. No Recourse Against Others. No director, officer, employee, incorporator, stockholder, partner, member or manager of the Issuer shall have any liability for any obligations of the Issuer under the Notes or the Indenture, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

SECTION 15. Trustee Dealings with the Issuer. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Issuer, its Subsidiaries or their respective Affiliates as if it were not the Trustee.

SECTION 16. Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

SECTION 17. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entirety), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

SECTION 18. CUSIP Numbers. The Issuer in issuing the Notes may use “CUSIP” numbers, “ISINs” and “Common Code” numbers (if then generally in use) and, if so, the Trustee shall use CUSIP numbers, ISINs and “Common Code” numbers in notices of redemption or exchange as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers, either as printed on the Notes or as contained in any notice of a redemption that reliance may be placed only on the other identification numbers printed on the Notes and that any such redemption shall not be affected by any defect in or omission of such numbers. The Issuer shall promptly advise the Trustee in writing of any change in the CUSIP numbers, ISINs and Common Code numbers.

SECTION 19. Governing Law. This Note shall be governed by, and construed in accordance with, the laws of the State of New York without giving effect to applicable principles of conflicts of laws to the extent that the application of the laws of another jurisdiction would be required thereby.

The Issuer will furnish to any Holder upon written request and without charge a copy of the Indenture.

Exhibit A-9

ASSIGNMENT AND EXCHANGE FORM

[Check one]

I or we assign and transfer this Note to

(Print or type name, address and zip code of assignee or transferee)

(Insert Social Security or other identifying number of assignee or transferee)

and irrevocably appoint _______________________________________ agent to transfer this Note on the books of the Issuer. The agent may substitute another to act for him.

I or we are exchanging this Note pursuant to Section _____ of the Indenture.

Dated: _________________ Signed: __________________________________ (Sign exactly as name appears on the other side of this Note)

Signature Guarantee: __________________________________________

Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Trustee)

In connection with any transfer of this Note occurring prior to the date which is the

earlier of (i) the date of the declaration by the SEC of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), covering resales of this Note (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) the date following the first anniversary of the original issuance of this Note, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and is transferring this Note:

[Check One]

(1)___ to the Issuer or a subsidiary thereof; or

(2)___ pursuant to and in compliance with Rule 144A under the Securities Act; or

(3)___ pursuant to the exemption from registration provided by Rule 144 under the Securities Act; or

(4)___ pursuant to an effective registration statement under the Securities Act; or

(5)___ pursuant to another available exemption from the registration statement requirements of the Securities Act of 1933;

Exhibit A-10

and unless the box below is checked, the undersigned confirms that such Note is not being transferred to an “affiliate” of the Issuer as defined in Rule 144 under the Securities Act (an “Affiliate”):

The transferee is an Affiliate of the Issuer.

Unless one of the items (1) through (5) above is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered Holder thereof; provided, however, that if item (3) or (5) above is checked, the Issuer or the Trustee may require, prior to registering any such transfer of the Notes, in their sole discretion, such written legal opinions, certifications and other information as the Trustee or the Issuer has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

If none of the items (1) through (5) above are checked, the Trustee or Registrar shall not be obligated to register this Note in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.16 of the Indenture shall have been satisfied.

Dated: Signed: (Sign exactly as name appears on the other side of this Note)

Signature Guarantee:

Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Trustee)

TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

Dated: NOTICE: To be executed by an executive

officer

Exhibit A-11

[TO BE ATTACHED TO GLOBAL NOTES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

The following increases or decreases in this Global Note have been made:

Date of Increase or Decrease

Amount of decrease in Principal

amount of this Global Note

Amount of increase in Principal

amount of this Global Note

Principal amount of this Global

Note following

such decrease or

increase

PIK Interest

Signature of authorized officer of Trustee or

Notes Custodian

Exhibit A-12

[FORM OF TRANSFEREE LETTER OF REPRESENTATION]

Nebraska Book Holdings, Inc. 4700 South 19th Street Lincoln, Nebraska 68512

Wilmington Trust, National Association 50 S. 6th Street Suite 1290 Minneapolis, Minnesota 55402 Attention: Corporate Trust Administration

Ladies and Gentlemen:

This certificate is delivered to request a transfer of $[●],000,000 principal amount of the 2.00% Convertible Senior PIK Notes due 2026 (the “Notes”) of Nebraska Book Holdings, Inc., a Delaware corporation (the “Issuer”).

Upon transfer, the Notes would be registered in the name of the new beneficial owner as follows:

Name: _________________________________________________________________

Address: _______________________________________________________________

Taxpayer ID Number: ____________________________________________________

The undersigned represents and warrants to you that we understand that the Notes have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any investor account for which we are purchasing Notes, to offer, sell or otherwise transfer such Notes prior to the date that is one year after the later of the date of original issue and the last date on which the Issuer or any affiliate of the Issuer was the owner of such Notes (or any predecessor thereto) (the “Resale Restriction Termination Date”) only (1) inside the United States to a person who the seller reasonably believes is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act) purchasing for its own account or for the account of a qualified institutional buyer in a transaction meeting the requirements of Rule 144A under the Securities Act, (2) pursuant to an exemption from registration under the Securities Act provided by Rule 144, (3) in accordance with another exemption from the registration requirements of the Securities Act and based upon an opinion of counsel acceptable to the Issuer (though no opinion will be required in connection with a transfer to an affiliate of the undersigned), (4) to the Issuer or (5) pursuant to an effective registration statement under the Securities Act, subject in each of the foregoing cases to any requirements of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date.

Exhibit A-13

(Name of Transferee)

By: ________________________________ Name: Title:

Address:

Date

Signature Guarantee:

Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Trustee)

Exhibit A-14

[FORM OF CONVERSION NOTICE] If you want to convert this Note into Common Stock of the Issuer, check the box: To convert only part of this Note, state the principal amount to be converted (which must be

$1.00 or an integral multiple of $1.00 in excess thereof): $

In connection with any conversion of Notes,1 the undersigned confirms and certifies as to the

statements checked below:

CHECK ONLY ONE BOX BELOW (AND, IF NECESSARY, INSERT RELEVANT INFORMATION):

For purposes of applying Section 382 to the Issuer, the Holder is not a Restricted Person. For purposes of applying Section 382 to the Issuer, the Holder or any of its Related Persons is or

was a 4.95% Stockholder with respect to the Issuer during the Section 382 Testing Period ending on the Conversion Date.

The principal amount of the Notes held by the Holder is $___________. The Holder requests a waiver from the Company pursuant to Section 10.14 of the Indenture to

convert the following principal amount of Notes $___________. For purposes of applying Section 382 to the Issuer, the Holder and each of its Related Persons

(a) is not and was not a 4.95% Stockholder with respect to the Issuer at any time during the Section 382 Testing Period ending on the Conversion Date and (b) the acquisition of Common Stock in connection with the conversion of the Notes subject to this Conversion Notice will result in the Holder or any of its Related Persons becoming a 4.95% Stockholder with respect to the Company.

The principal amount of the Notes held by the Holder is $___________. The conversion of the following principal amount of the Holder’s Notes will not result in the Holder or any of its Related Persons becoming a 4.95% Stockholder with respect to the Company: $___________. The Holder requests a waiver from the Company pursuant to Section 10.14 of the Indenture to convert the following principal amount of Notes $___________.

1 Pursuant to the terms of the Indenture, absent a waiver from the Issuer, no Notes may be converted

pursuant to Section 10.01 of the Indenture to the extent that the converting Holder is a Restricted Person.

Exhibit A-15

If you want the share certificate or book-entry notation, if any, made out in another person’s name, fill in the form below:

(Insert other person’s social security or tax ID no.)

(Print or type other person’s name, address and zip code)

Date: Signature of Holder:

Signature Guarantee:

Note: Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

Exhibit A-16

[FORM OF FUNDAMENTAL CHANGE REPURCHASE NOTICE]

Wilmington Trust, National Association 50 S. 6th Street Suite 1290 Minneapolis, Minnesota 55402

The undersigned registered owner of this Note hereby acknowledges receipt of a notice from

Nebraska Book Holdings, Inc. (the “Company”) as to the occurrence of a Fundamental Change with respect to the Company and specifying the Fundamental Change Purchase Date and requests and instructs the Company to pay to the registered holder hereof in accordance with the applicable provisions of the Indenture and in the Note (1) the entire principal amount of this Note, or the portion thereof (that is $1.00 principal amount or an integral multiple of $1.00 in excess thereof) below designated, and (2) if such Fundamental Change Purchase Date does not fall during the period after a Record Date and on or prior to the corresponding Interest Payment Date, accrued and unpaid interest, if any, thereon to, but excluding, such Fundamental Change Purchase Date.

In the case of Certificated Notes, the certificate numbers of the Notes to be repurchased are:

_____________________________

Dated: _____________________ ________________________________ Signature(s) _________________________ Social Security or Other Taxpayer Identification Number Principal amount to be repaid (if less than all): $________________

NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as

written upon the face of the Note in every particular without alteration or enlargement or any change whatever.

Signature Guarantee:

Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor program reasonably acceptable to the Trustee)

Exhibit B-1

EXHIBIT B

[FORM OF LEGENDS]

(i) [Global Notes Legend]:

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE ISSUER OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

(ii) [Restricted Notes Legend]:

“THIS SECURITY HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A (A “QIB”) THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ONE OR MORE QIBS, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER RULE 144 UNDER THE SECURITIES ACT (“RULE 144”), IF AVAILABLE, (3) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (4) TO NEBRASKA BOOK HOLDINGS, INC. OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.”

(iii) [Certificated Notes Legend]:

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH REGISTRAR MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

Exhibit C-1

EXHIBIT C

FORM OF CASH INTEREST PAYMENT NOTICE OF

NEBRASKA BOOK HOLDINGS, INC.

[Date]

The undersigned duly authorized officers of Nebraska Book Holdings, Inc. (the “Company”), hereby deliver this notice in such capacity and on behalf of the Company (but without personal liability) to Wilmington Trust, National Association, as trustee (the “Trustee”), pursuant to Section 1.0 of the Note, dated as of April [15], 2016 (the “Indenture”), between the Company and the Trustee with respect to the Company’s outstanding 2.00% Convertible Senior PIK Notes due 2026 (the “Notes”).

1. The Company is required to pay Cash Interest in the aggregate amount of $_____ on [date].

Exhibit C-2

IN WITNESS WHEREOF, we have hereunto signed our names to execute this cash interest payment notice.

NEBRASKA BOOK HOLDINGS, INC.

By: Name: Title:

By: Name: Title: