Exhibit 4.1


 


AAR CORP.


and


COMPUTERSHARE TRUST COMPANY, N.A.


Rights Agent






 


Rights Agreement


 


Dated as of July 11, 2007


 
















TABLE OF CONTENTS


	
  

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.

  	
   

  	
  Certain Definitions

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.

  	
   

  	
  Appointment of Rights
  Agent

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.

  	
   

  	
  Issue of Right
  Certificates

  	
   

  	
  3

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.

  	
   

  	
  Form of Right
  Certificates

  	
   

  	
  5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.

  	
   

  	
  Countersignature and
  Registration

  	
   

  	
  6

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.

  	
   

  	
  Transfer,
  Split Up, Combination and Exchange of Right Certificates; 

  Mutilated, Destroyed, Lost or Stolen Right Certificates

  	
   

  	
  6

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.

  	
   

  	
  Exercise of Rights;
  Purchase Price; Expiration Date of Rights

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.

  	
   

  	
  Cancellation and
  Destruction of Right Certificates

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.

  	
   

  	
  Reservation and
  Availability of Shares of Common Stock

  	
   

  	
  9

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.

  	
   

  	
  Common Stock Record
  Date

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 11.

  	
   

  	
  Adjustment of Purchase
  Price, Number of Shares or Number of Rights

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 12.

  	
   

  	
  Certificate of Adjusted
  Purchase Price or Number of Shares

  	
   

  	
  16

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 13.

  	
   

  	
  Consolidation, Merger
  or Sale or Transfer of Assets or Earning Power

  	
   

  	
  16

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 14.

  	
   

  	
  Additional Covenants

  	
   

  	
  18

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 15.

  	
   

  	
  Fractional Rights and
  Fractional Shares

  	
   

  	
  19

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 16.

  	
   

  	
  Rights of Action

  	
   

  	
  19

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 17.

  	
   

  	
  Agreement of Right
  Holders

  	
   

  	
  20

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 18.

  	
   

  	
  Right Certificate
  Holder Not Deemed a Stockholder

  	
   

  	
  20

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 19.

  	
   

  	
  Concerning the Rights
  Agent

  	
   

  	
  20

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 20.

  	
   

  	
  Merger or Consolidation
  or Change of Name of Rights Agent

  	
   

  	
  21

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 21.

  	
   

  	
  Terms and Conditions to
  Duties of Rights Agent

  	
   

  	
  21

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 22.

  	
   

  	
  Change of Rights Agent

  	
   

  	
  23

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 23.

  	
   

  	
  Issuance of New Right
  Certificates

  	
   

  	
  24

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 24.

  	
   

  	
  Redemption

  	
   

  	
  24

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 25.

  	
   

  	
  Exchange

  	
   

  	
  25

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 26.

  	
   

  	
  Notice of Certain
  Events

  	
   

  	
  26

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 27.

  	
   

  	
  Notices

  	
   

  	
  26

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 28.

  	
   

  	
  Supplements and
  Amendments

  	
   

  	
  27

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 29.

  	
   

  	
  Determination and
  Actions by the Board of Directors, etc

  	
   

  	
  27

  	
   

  



 



 i
 









 


	
  Section 30.

  	
   

  	
  Successors

  	
   

  	
  28

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 31.

  	
   

  	
  Benefits of this
  Agreement

  	
   

  	
  28

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 32.

  	
   

  	
  Governing Law

  	
   

  	
  28

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 33.

  	
   

  	
  Counterparts

  	
   

  	
  28

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 34.

  	
   

  	
  Descriptive Headings

  	
   

  	
  28

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 35.

  	
   

  	
  Severability

  	
   

  	
  28

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  A

  	
   

  	
  Form of Rights
  Certificate

  	
   

  	
  A-1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Form of Summary of Rights

  	
   

  	
  B-1

  	
   

  



 



 ii















RIGHTS AGREEMENT


This
Agreement, dated as of July 11, 2007, between AAR CORP., a Delaware corporation
(the “Company”), and Computershare Trust Company, N.A., a national banking
association (the “Rights Agent”).


W  I  T  N
E  S  S  E  T  H


WHEREAS,
the Board of Directors of the Company has authorized and declared a dividend
distribution (the “Distribution”) of one Right (as hereinafter defined) for
each share of Common Stock, $1.00 par value, of the Company outstanding at the
close of business on  August 6, 2007 (the
“Record Date”) and has further authorized the issuance of one Right in respect
of each share of Common Stock of the Company issued between such date and the
earlier of the Distribution Date or the Expiration Date (as such terms are
hereinafter defined), each Right initially representing the right to purchase
one share of Common Stock of the Company (the “Rights”), all upon the terms,
with the adjustments and subject to the conditions hereinafter set forth;


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


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


(a)           “Acquiring Person” shall mean any
Person who or which, together with all Affiliates and Associates of such
Person, without prior approval of the Company shall be the Beneficial Owner of
a Substantial Block or who was such a Beneficial Owner at any time after the
date hereof, whether or not such Person continues to be the Beneficial Owner of
a Substantial Block, but shall not include the Company, any Subsidiary of or
other Person controlled by the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company or any Person appointed as trustee
by the Company or such Subsidiary pursuant to the terms of any such plan in
that Person’s capacity as trustee. 
Notwithstanding the foregoing, no Person shall become an “Acquiring
Person” (i) as a result of the acquisition of shares of Common Stock by the
Company which, by reducing the number of shares of Common Stock outstanding,
increases the proportional number of shares beneficially owned by such Person
together with all Affiliates and Associates of such Person; provided  however,
that if (1) a Person would become an Acquiring Person (but for the
operation of this subclause (i)) as a result of the acquisition of shares
of Common Stock by the Company, and (2) after such share acquisition by
the Company, such Person, or an Affiliate or Associate of such Person, becomes
the Beneficial Owner of any additional shares of Common Stock, then such Person
shall be deemed an Acquiring Person; or (ii) if the Board of Directors
determines that such Person became an Acquiring Person inadvertently, and such
Person promptly divests itself of a sufficient number of shares of Common Stock
so that such Person is the Beneficial Owner of such number of shares of Common
Stock so that such Person no longer would be an Acquiring Person.













(b)           “Affiliate” and “Associate” shall have
the respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934 (the “Exchange
Act”), as in effect on the date of this Agreement, but shall not include the
Company, any Subsidiary of or other Person controlled by the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company or any
Person appointed as trustee by the Company or such Subsidiary pursuant to the
terms of any such plan in that Person’s capacity as trustee.


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


(i)            of which such Person or any of such
Person’s Affiliates or Associates directly or indirectly has “beneficial
ownership,” as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act, as in effect on the date of this
Agreement;


(ii)           which such Person or any of such
Person’s Affiliates or Associates directly or indirectly has (A) the right
to acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding
(whether or not in writing), or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to “beneficially own,” securities tendered pursuant
to a tender or exchange offer made by or on behalf of such Person or any of such
Person’s Affiliates or Associates until such tendered securities are accepted
for purchase; or (B) the right (whether sole or shared) to vote or dispose
of pursuant to any agreement, arrangement or understanding (whether or not in
writing); provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to “beneficially own,” any security under this
clause (B) pursuant to an agreement, arrangement or understanding to vote
such security that (1) arises solely from a revocable proxy or consent
given in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the Exchange Act and the rules and regulations
thereunder and (2) is not also then required to be reported as
beneficially owned on a Schedule 13D under the Exchange Act (or any
comparable or successor report); or


(iii)          which are beneficially owned, directly
or indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person or any of such Person’s Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in clause (B) of subparagraph (ii) of this
paragraph (c)) or disposing of any securities of the Company.


Notwithstanding
anything in this definition of Beneficial Ownership to the contrary, the phrase
“then outstanding,” when used with reference to a Person’s Beneficial Ownership
of securities of the Company, shall mean the number of such securities then
issued and outstanding together with the number of such securities not then
actually issued and outstanding which such Person would be deemed to own
beneficially hereunder.



 2
 









(d)           “Business Day” shall mean any day
other than a Saturday, Sunday or a legal holiday for banking institutions in
the State of Illinois.


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


(f)            “Common Stock” when used with
reference to the Company shall mean the Common Stock, $1.00 par value, of the
Company.  “Common Stock” when used with
reference to any Person other than the Company shall mean the capital stock
with the greatest aggregate voting power or the equity securities or other
equity interests having power to control or direct the management of such
Person or, if such Person is a subsidiary of or controlled by another Person,
the Person which ultimately controls such first-mentioned Person and
which has issued and outstanding such capital stock, equity securities or
equity interests.


(g)           “Person” shall mean any individual,
firm, corporation, partnership, trust, association, joint venture, syndicate or
other entity, and shall include any successor (by merger or otherwise) of such
entity.


(h)           “Stock Acquisition Date” shall mean
the first date of public announcement (which shall include, without limitation,
a report filed pursuant to the Exchange Act) by the Company or an Acquiring
Person of facts that show that an Acquiring Person has become such.


(i)            “Subsidiary” of any Person shall
mean any corporation or other Person of which a majority of the voting power of
the voting equity securities or equity interest is owned, directly or
indirectly, by such Person, or which is otherwise controlled by such Person.


(j)            “Substantial Block” shall mean a
number of shares of Common Stock of the Company which equals or exceeds 15% of
the number of shares of Common Stock of the Company then outstanding.


Section 2.               Appointment of Rights Agent.  The Company hereby appoints the Rights Agent
to act as agent for the Company and the holders of the Rights (who, in
accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment.  The Company may from time to time appoint
such Co-Rights Agents as it may deem necessary or desirable.  In the event the Company appoints one or more
Co-Rights Agents, the respective duties of the Rights Agent and the Co-Rights
Agents shall be as the Company determines.


Section 3.               Issue of Right Certificates.


(a)           Until the earlier of  the close of business on (i) the tenth
business day after the Stock Acquisition Date (or, the Record Date, if the
tenth business day after the Stock Acquisition Date occurs before the Record
Date), or (ii) the tenth business day after the commencement of, or first
public announcement of, the intent of any Person (other than the Company or any
of its subsidiaries or any employee benefit plan of the Company or of any
subsidiary of the Company 



 3
 









or any Person appointed
as trustee by the Company or such subsidiary pursuant to the terms of any such
plan in such Person’s capacity as trustee) to commence (which intention to
commence remains in effect for five business days after such announcement) a
tender or exchange offer which would result in such Person becoming an Acquiring
Person (including any such day which is after the date of this Agreement and
prior to the issuance of the Rights, the earlier of such dates being herein
referred to as the “Distribution Date”), (x) the Rights will be evidenced
by the certificates for the Common Stock of the Company registered in the names
of the holders of the Common Stock (which certificates for Common Stock shall
be deemed also to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Stock.  As soon as practicable after the Distribution
Date, the Rights Agent will send, by first-class, insured, postage
prepaid mail, to each record holder of the Common Stock as of the close of
business on the Distribution Date, at the address of such holder shown on the
records of the Company, a certificate for Rights, in substantially the form of Exhibit A
hereto (the “Rights Certificates”), evidencing one Right for each share of
Common Stock so held.  As of and after
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.


(b)           As soon as practicable after the
Record Date, the Company will send a copy of a Summary of Rights to Purchase
Common Stock, in substantially the form attached hereto as Exhibit B
(the “Summary of Rights”), by first-class, postage prepaid mail, to each
record holder of the Common Stock as of the close of business on the Record
Date, at the address of such holder shown on the records of the Company.  With respect to certificates for the Common
Stock outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates for the Common Stock registered
in the names of the holders of the Common Stock.  Until the Distribution Date (or earlier
Expiration Date), the surrender for transfer of any of the certificates for the
Common Stock outstanding on the Record Date shall also constitute the transfer
of the Rights associated with the Common Stock represented by such certificate.


(c)           Rights shall be issued in respect of
all shares of Common Stock which become outstanding after the Record Date but
prior to the earlier of the Distribution Date or the Expiration Date.  Certificates representing such shares shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:


This certificate also
evidences and entitles the holder hereof to certain Rights as set forth in a
Rights Agreement between AAR CORP. and Computershare Trust Company, N.A. dated
as of July 11, 2007 (the “Rights Agreement”), the terms of which are
hereby incorporated herein by reference and a copy of which is on file at the
principal executive offices of AAR CORP. 
Under certain circumstances, as set forth in the Rights Agreement, such
Rights may be redeemed, may expire or may be evidenced by separate certificates
and will no longer be evidenced by this certificate.  AAR CORP. will mail to the holder of this
certificate a copy of the Rights Agreement without charge promptly upon receipt
of a written request therefor.  Under
certain circumstances, Rights issued to, or held by, an Acquiring Person or
Associates or 



 4
 









Affiliates of an
Acquiring Person (as defined in the Rights Agreement) and any subsequent holder
of such Rights may become null and void.


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


Section 4.               Form of Right Certificates.


(a)           The Right Certificates (and the forms
of election to purchase shares and of assignment to be printed on the reverse
thereof) shall be substantially the same as Exhibit A hereto and may have
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the
Rights may from time to time be listed, or to conform to usage.  Subject to the provisions of Section 11
and Section 22 hereof, the Right Certificates, whenever issued, shall be
dated as of the Record Date, and on their face shall entitle the holders
thereof to purchase such number of shares of Common Stock as shall be set forth
therein at the price per share set forth therein (the “Purchase Price”), but
the number of such shares and the Purchase Price shall be subject to adjustments
as provided herein.


(b)           Any Right Certificate that represents
Rights beneficially owned by an Acquiring Person or any Associate or Affiliate
of an Acquiring Person and any Rights Certificate issued at any time upon the
transfer of any Rights to such an Acquiring Person or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person, Associate or
Affiliate, and any Rights Certificate issued pursuant to Section 6 or
Section 11 upon transfer, exchange, replacement or adjustment of any other
Rights Certificate referred to in this sentence, shall contain the following
legend:


The Rights represented by this Rights Certificate were
issued to a Person who was an Acquiring Person or an Affiliate or an Associate
of an Acquiring Person (as such terms are defined in the Rights Agreement,
dated as of July 11, 2007).  This Rights
Certificate and the Rights represented hereby may become void to the extent
provided by, and under certain circumstances as specified in, Section 7(e)
of the Rights Agreement.


The
provisions of Section 7(e) of this Rights Agreement shall be operative
whether or not the foregoing legend is contained on any such Rights
Certificate.



 5
 









Section 5.               Countersignature
and Registration.


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


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


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


(a)           Subject to the provisions of
Section 15 hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on the Expiration
Date, any Right Certificate or Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of shares of Common
Stock as the Right Certificate or Right Certificates surrendered then entitled
such holder to purchase.  Any registered
holder desiring to transfer, split up, combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent.  Thereupon the Rights Agent
shall countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested.  The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.


(b)           Upon receipt by the Company and the
Rights Agent of evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory to them, and
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if 



 6
 









mutilated, the Company
will make and deliver a new Right Certificate of like tenor to the Rights Agent
for delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.


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


(a)           The registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date,
upon surrender of the Right Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at the principal
office of the Rights Agent in Chicago, Illinois, together with payment of the
Purchase Price for each share of Common Stock of the Company as to which the
Rights are exercised, at or prior to the close of business on the earlier of
the close of business on (i) August 6, 2017 (the “Final Expiration Date”),
or (ii) the date on which the Rights are redeemed pursuant to
Section 24 (such earlier date being herein referred to as the “Expiration
Date”).


(b)           The Purchase Price for each share of
Common Stock pursuant to the exercise of a Right shall initially be $140.00,
shall be subject to adjustment from time to time as provided in
Sections 11 and 13 and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.


(c)           Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the shares to be
purchased, and an amount equal to any applicable transfer tax in cash, or by
certified check or bank draft payable to the order of the Company, the Rights
specified in the election shall be exercised, and the Rights Agent shall,
subject to Section 21(j), thereupon promptly (i) (A) requisition
from any transfer agent of the Common Stock of the Company (or make available,
if the Rights Agent is the transfer agent) certificates for the number of
shares of Common Stock to be purchased (and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests), or (B) if the
Company, in its sole discretion, shall have elected to deposit the shares of
Common Stock issuable upon exercise of the Rights hereunder into a depositary,
requisition from the depositary agent depositary receipts representing such
number of shares of Common Stock as are to be purchased (in which case
certificates for the shares of Common Stock represented by such receipts shall
be deposited by the transfer agent with the depositary agent) and the Company
will direct the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 15, (iii) promptly
after receipt of such certificates, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder and (iv) when
appropriate, after receipt promptly deliver such cash to or upon the order of
the registered holder of such Right Certificate.  The payment of the Purchase Price may be made
(x) in cash or by certified bank check or bank draft payable to the order
of the Company, or (y) by delivery of a certificate or certificates (with
appropriate stock powers executed in blank attached thereto) evidencing a
number of shares of Common Stock equal to the then Purchase Price divided by
the closing price (as determined pursuant to Section 11(d) hereof) per share
of Common Stock on the Trading Day immediately preceding the date of such
exercise.  In the 



 7
 









event that the Company is
obligated to issue other securities (including shares of Common Stock) of the
Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so
that such other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate.  In addition, in the case of an exercise of
the Rights by a holder pursuant to Section 11(a)(ii), the Rights Agent
shall return such Rights Certificate to the registered holder thereof after
imprinting, stamping or otherwise indicating thereon that the rights
represented by such Rights Certificate no longer include the rights provided by
Section 11(a)(ii) of the Rights Agreement and if less than all the Rights
represented by such Rights Certificate were so exercised, the Rights Agent
shall indicate on the Rights Certificate the number of Rights represented
thereby which continue to include the rights provided by
Section 11(a)(ii).


(d)           In case the registered holder of any
Right Certificate shall exercise (except pursuant to Section 11(a)(ii))
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 15.


(e)           Notwithstanding anything in this
Agreement to the contrary, from and after the first occurrence of an event
described in Section 11(a)(ii), any Rights beneficially owned (including
beneficial ownership that can be deemed to exist because of the transfer of
voting rights pursuant to a voting trust or similar arrangement) by an
Acquiring Person or an Associate or Affiliate of an Acquiring Person shall be
void and any holder of such Rights shall thereafter have no right to exercise
such Rights under any provision of this Agreement.  No Rights Certificate shall be issued
pursuant to Section 3 that represents Rights beneficially owned by an
Acquiring Person whose Rights are void pursuant to the preceding sentence or
any Associate or Affiliate thereof; no Rights Certificate shall be issued at
any time upon the transfer of any Rights to an Acquiring Person whose Rights
are void pursuant to the preceding sentence or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or Affiliate; and
any Rights Certificate delivered to the Rights Agent for transfer to an
Acquiring Person (or Associate or Affiliate thereof) whose Rights are void
pursuant to the preceding sentence shall be cancelled.


(f)            Notwithstanding anything in this
Agreement to the contrary, the Rights shall not be effectively exercised and
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7, unless such registered holder
shall have (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise, and (ii) provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.


Section 8.               Cancellation and Destruction
of Right Certificates.  All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, 



 8
 









and no Right Certificates
shall be issued in lieu thereof except as expressly permitted by any of the
provisions of this Rights Agreement.  The
Company shall deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall so cancel and retire, any other Right Certificate
purchased or acquired by the Company otherwise than upon the exercise
thereof.  The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.


Section 9.               Reservation and Availability
of Shares of Common Stock.


(a)           The Company covenants and agrees that
after the occurrence of an event described in Section 11 it will cause to
be reserved and kept available, and not reserved for other purposes, out of its
authorized and unissued shares of Common Stock or its authorized and issued
shares of Common Stock held in its treasury, the number of shares of Common
Stock that will be sufficient to permit the exercise in full of all outstanding
Rights.


(b)           So long as the Common Stock issuable
upon the exercise of Rights may be listed on any national securities exchange,
the Company shall use its best efforts to cause, from and after the
Distribution Date, all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.


(c)           The Company covenants and agrees that
it will take all such action as may be necessary to insure that all shares of
Common Stock delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such shares (subject to payment of the Purchase Price),
be duly and validly authorized and issued and fully paid and nonassessable
shares.


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


(e)           The Company shall use its best
efforts to (i) file, as soon as practicable following the Distribution
Date, a registration statement under the Securities Act of 1933 (the “Act”),
with respect to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act and the rules and regulations thereunder)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Expiration Date.  The Company will also take such action as may
be appropriate under, or to 



 9
 









ensure compliance with,
the securities or “blue sky” laws of the various states in connection with the
exercisability of the Rights.


Section 10.             Common Stock Record Date.  Each person in whose name any certificate for
shares of Common Stock is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the Common Stock
represented thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made in
accordance with Section 7; provided, however, that if the
date of such surrender and payment is a date upon which the Common Stock
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares on, and such certificate shall be
dated, the next succeeding business day on which the Common Stock transfer
books of the Company are open.  Prior to
the exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a stockholder of the Company with
respect to shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.


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


(a)           (i)            In
the event the Company shall at any time after the date of this Agreement
(A) declare a dividend on the Common Stock payable in shares of Common
Stock, (B) subdivide the outstanding shares of Common Stock,
(C) combine the outstanding shares of Common Stock into a smaller number
of shares or (D) issue any shares of its capital stock in a reclassification
or recapitalization of the Common Stock (including any such reclassification or
recapitalization in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided this Section 11(a) and in Section 7(e), the Purchase Price
in effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination, reclassification or recapitalization,
and the number and kind of shares of capital stock issuable on such date, shall
be proportionately adjusted so that the holder of any Right exercised after
such time shall be entitled to receive the aggregate number and kind of shares
of capital stock, other securities and/or property which, if such Right had
been exercised immediately prior to such date and at a time when the Common
Stock transfer books of the Company were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination, reclassification or recapitalization; provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon the exercise of one Right.  If an event occurs which would require an
adjustment under both Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii).


 



 10















(ii)           In the event that at any time after
the date hereof, any Person, alone or together with its Affiliates and
Associates, shall become an Acquiring Person then proper provision shall be
made so that each holder of a Right, except as provided in Section 7(e)
hereof, shall have a right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, such
number of shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then
number of shares of Common Stock for which a Right is then exercisable and
dividing that product by (y) 50% of the current market price for one share
of Common Stock (determined pursuant to Section 11(d)) on the date of the
occurrence of the event set forth above in this subparagraph (ii) (such number
of shares being referred to as the “number of Adjustment Shares”); provided,
however, that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13
hereof, then only the provisions of Section 13 hereof shall apply and no
adjustment shall be made pursuant to this Section 11(a)(ii).


(iii)          In the event that there shall not be
sufficient treasury shares or authorized but unissued shares of Common Stock to
permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) or, if any regulatory approvals for the issuance of such
Common Stock has not been obtained by the Company, and the Rights become so
exercisable, notwithstanding any other provision of this Agreement, to the
extent necessary and permitted by applicable law and any agreements in effect
on the date hereof to which it is a party, the Company shall, with respect to each
Right, make adequate provision to substitute upon exercise of such Right to the
extent necessary and on a pro rata or such other basis as the Company deems
appropriate, (1) cash, (2) a reduction in the Purchase Price,
(3) other equity securities of the Company (including without limitation
shares or units of shares of preferred stock or other securities),
(4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having an aggregate value equal to the “current
per share market price” (as determined pursuant to Section 11(d) hereof)
of the Common Stock for which such Right is otherwise exercisable, where such
aggregate value has been determined by the Board of Directors of the Company
based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors of the Company.


(b)           In case a record date is fixed by the
Company or otherwise established for the issuance of rights, options or
warrants to all holders of Common Stock entitling them (for a period expiring
within 45 calendar days after such record date) to subscribe for or purchase
Common Stock (or securities convertible into Common Stock) at a price per share
of Common Stock (or having a conversion price per share of Common Stock, if a
security convertible into Common Stock) less than the current market price (as
defined in Section 11(d)) per share of Common Stock on such record date,
the Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, of which the numerator shall be the number of shares of
Common Stock outstanding on such record date plus the number of shares of
Common Stock which the aggregate offering price of the total number of shares
of Common Stock so to be offered (and/or the aggregate initial conversion price
of the convertible securities so to be offered) would purchase at such current
market price and of which the denominator shall be the number of 



 11
 









shares of Common Stock
outstanding on such record date plus the number of additional shares of Common
Stock to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right.  In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent. 
Shares of Common Stock owned by or held for the account of the Company
shall not be deemed outstanding for the purpose of any such computation.  Such adjustment shall be made successively
whenever such a record date is fixed or established; and in the event that such
rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed or established.


(c)           If the Company shall fix a record
date for the making of a distribution to all holders of Common Stock (including
any such distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of evidences of indebtedness,
cash (other than a regular periodic cash dividend), assets (other than a
dividend payable in Common Stock, but including any dividend payable in stock
other than Common Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b)), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the current market price (as defined in Section 11(d)) per
share of Common Stock on such record date, less the fair market value (as
determined reasonably and with good faith to the holders of Rights by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent)
of the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants distributable in respect
of one share of Common Stock and the denominator of which shall be the current
market price per share of the Common Stock; provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right.  Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution
is not so made, the Purchase Price shall again be adjusted to be the Purchase
Price which would be in effect if such record date had not been fixed.


(d)           For the purpose of any computation
hereunder, the “current market price” per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices per share of
Common Stock for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that
in the event that the current market price per share of Common Stock is
determined during a period following the announcement by the issuer of the
Common Stock of (i) a dividend or distribution on the Common Stock payable
in shares of Common Stock or securities convertible into shares of Common Stock
or (ii) any subdivision, combination or reclassification of the Common
Stock, and prior to the expiration of 30 Trading Days after the ex-dividend
date for such dividend or 



 12
 









distribution, or the
record date for such subdivision, combination or reclassification, as the case
may be, then, and in each such case, the “current market price” shall be appropriately
adjusted to reflect the current market price per common share equivalent.  The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the shares of Common Stock are listed or
admitted to trading or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System (“NASDAQ”) or such other
system then in use, or, if on any such date the shares of Common Stock are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Common Stock
selected by the Board of Directors of the Company, except that, if on any such
date no market maker is making a market in the Common Stock, the fair value of
such shares on such date as determined in good faith by the Board of Directors
of the Company shall be used.  The term “Trading
Day” shall mean a day on which the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading is open for
the transaction of business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a Business Day.  If the Common Stock is not publicly held or
not so listed or traded, “current market price” per share shall mean the fair
value per share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent.


(e)           No adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in such price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment.  All calculations under this
Section 11 shall be made to the nearest cent or to the nearest ten-thousandth
of a share as the case may be. 
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which mandates
such adjustment or (ii) the Expiration Date.


(f)            If as a result of an adjustment made
pursuant to Section 11(a) or Section 13(a), the holder of any Right
thereafter exercised shall become entitled to receive any shares of capital
stock of the Company other than shares of Common Stock, thereafter the number
of such other shares so receivable upon exercise of any Right shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the shares contained in
Section 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10, 13 and 15 with respect to the shares of Common
Stock shall apply on like terms to any such other shares.



 13
 









(g)           All Rights originally issued by the
Company subsequent to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price, the number of
shares of Common Stock purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided herein.


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


(i)            The Company may elect on or after
the date of any adjustment of the Purchase Price to adjust the number of
Rights, in substitution for any adjustment in the number of shares of Common
Stock purchasable upon the exercise of a Right. 
Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of shares of Common Stock for which
a Right was exercisable immediately prior to such adjustment.  Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase
Price.  The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made.  Such record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, the record date shall be at
least 10 days later than the date of the public announcement.  If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders
of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 15, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. 
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the option of
the Company, the adjusted Purchase Price) and shall be registered in the names
of the holders of record of Right Certificates on the record date specified in
the public announcement.


(j)            Irrespective of any adjustment or
change in the Purchase Price or the number of shares of Common Stock issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price per share and the
number of shares which were expressed in the initial Right Certificates issued
hereunder.



 14
 









(k)           Before taking any action that would
cause an adjustment reducing the per share Purchase Price below the then par
value per share, if any, of the shares of Common Stock issuable upon exercise
of the Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable shares of such Common Stock at such
adjusted Purchase Price.


(l)            In any case in which this
Section 11 shall require that an adjustment in the Purchase Price be made
effective as of a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuing to the holder of any Right
exercised after such record date the shares of Common Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise over
and above the shares of Common Stock and other capital stock or securities of
the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder’s right to receive such additional shares
upon the occurrence of the event requiring such adjustment.


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


(n)           Anything in this Agreement to the
contrary notwithstanding, in the event that the Company shall at any time after
the date of this Agreement (i) declare a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, (iii) combine the outstanding Common Stock
into a smaller number of shares or (iv) issue any shares of its capital
stock in a reclassification of the outstanding Common Stock, the number of
Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated
with each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event (or, in the event that any adjustment
is made in connection with such event by reason of Section 11(i), after
such adjustment) by a fraction the numerator of which shall be the total number
of shares of Common Stock outstanding immediately prior to the occurrence of
the event and the denominator of which shall be the total number of shares of
Common Stock outstanding immediately after 
the occurrence of the event.


(o)           Notwithstanding any other provision
of this Agreement, no adjustment to the Purchase Price, the number of shares of
Common Stock (or fractions of a share) for which a Right is exercisable or the
number of Rights outstanding (except as permitted by Section 23 



 15
 









hereof) or any similar
adjustment shall be made or be effective if such adjustment would have the
effect of reducing or limiting the benefits the holders of the Rights would
have had absent such adjustment, including, without limitation, the benefits
under Section 11(a)(ii) and Section 13, unless the terms of this
Agreement are amended so as to preserve such benefits.


(p)           The Company covenants and agrees
that, following the Distribution Date, except as permitted by Section 24
or Section 26 hereof, it will not, directly or indirectly, take any action
the purpose or effect of which is to eliminate or otherwise diminish the
benefits intended to be afforded by the Rights.


Section 12.             Certificate of Adjusted Purchase
Price or Number of Shares.  Whenever
an adjustment is made as provided in Section 11 or 13, the Company shall
(a) promptly prepare a certificate setting forth such adjustment, and a
brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Common Stock a
copy of such certificate and (c) mail a brief summary thereof to each
holder of a Right Certificate in accordance with Section 26.  The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment contained therein.


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


(a)           In the event that, on or after the
Stock Acquisition Date, directly or indirectly, (i) the Company shall
consolidate with, or merge with and into, any other Person, and the Company
shall not be the continuing or surviving corporation, (ii) any Person
shall consolidate with the Company, or merge with and into the Company, and the
Company shall be the continuing or surviving corporation and, in connection
therewith, all or part of the Common Stock of the Company shall be changed into
or exchanged for stock or other securities of any other Person or cash or any
other property, or (iii) the Company shall sell or otherwise transfer (or
one or more of its subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its subsidiaries (taken as a whole)
to any other Person or Persons, then, and in each such case, proper provision
shall be made so that (A) each holder of a Right, subject to Section 7(e),
shall thereafter have the right to receive, upon the exercise thereof at the
then-current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid, non-assessable
and freely tradeable shares of Common Stock of the Principal Party (as
hereinafter defined), free and clear of any liens, encumbrances and adverse
claims and not subject to any rights of call, purchase or first refusal, as
shall be equal to the result obtained by (x) multiplying the then current
Purchase Price by the number of shares of Common Stock for which a Right is
then exercisable (without taking into account any adjustment previously made
pursuant to Section 11(a)(ii) hereof) and dividing that product by
(y) 50% of the current market price (determined pursuant to
Section 11(d)) per share of the Common Stock of the Principal Party on the
date of consummation of such consolidation, merger, sale or transfer;
(B) such Principal Party shall thereafter be liable for, and shall assume,
by virtue of such consolidation, merger, sale or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (C) the term “Company”
shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall apply
only to such Principal Party following the first occurrence of an event set
forth 



 16
 









in Section 13(a)
hereof; and (D) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of shares of its Common
Stock in accordance with Section 9) in connection with such consummation
as may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to the shares of its
Common Stock or cash, property or other securities thereafter deliverable upon
the exercise of the Rights.


(b)           “Principal Party” shall mean
(i) in the case of any transaction described in (i) or (ii) of
the first sentence of Section 13(a), the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted in
such merger or consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; and (ii) in the
case of any transaction described in (iii) of the first sentence in
Section 13(a), the Person that is the party receiving the greatest portion
of the assets or earning power transferred pursuant to such transaction or
transactions; provided, however, that in any such case,
(1) if the shares of Common Stock of such Person are not at such time and
have not been continuously over the preceding twelve month period registered
under Section 12 of the Exchange Act (“Registered Common Shares”) or such
Person is not a corporation, and such Person is directly or indirectly
controlled by another Person which has Registered Common Shares outstanding, “Principal
Party” shall refer to such other Person; (2) if the shares of Common Stock
of such Person are not Registered Common Shares or such Person is not a
corporation, and such Person is directly or indirectly controlled by another
Person which does not have Registered Common Shares outstanding, “Principal
Party” shall refer to the controlling Person of such first-mentioned
Person; (3) if the shares of Common Stock of such Person are not
Registered Common Shares or such Person is not a corporation, and such Person
is directly or indirectly controlled by more than one Person, and one or more
of such controlling Persons have Registered Common Shares outstanding, “Principal
Party” shall refer to whichever of such controlling Persons is the issuer of
the Registered Common Shares having the greatest aggregate market value; and
(4) if the shares of Common Stock of such Person are not Registered Common
Shares or such Person is not a corporation, and such Person is directly or
indirectly controlled by more than one Person, and none of such controlling
Persons have Registered Common Shares outstanding, “Principal Party” shall refer
to whichever controlling Person is the corporation having the greatest
stockholders equity or, if no such controlling Person is a corporation, shall
refer to whichever controlling Person has the greatest net assets.


(c)           The Company shall not consummate any
such consolidation, merger, sale or transfer unless prior thereto the Company
and such Principal Party shall have executed and delivered to the Rights Agent
a legally valid, binding and enforceable supplemental agreement in compliance
with the provisions set forth in Section 13(a) and (b), and if applicable
Section 13(d), and further providing that, as soon as practicable after
the date of any consolidation, merger or sale of assets mentioned in this
Section 13, such issuer will (i) prepare and file a registration
statement under the Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, and will use
its best efforts to cause such registration statement to (A) become
effective as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the Expiration Date; and (ii) use its best efforts to qualify or
register the Rights and the securities purchasable upon exercise of the Rights
under the blue sky laws of such jurisdictions as may be necessary or 



 17
 









appropriate; and
(iii) deliver to holders of the Rights historical financial statements for
such issuer and each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.


(d)           Notwithstanding anything in
Section 13(b) and (c) to the contrary, if the Principal Party as
determined pursuant to paragraph (b) above is not a corporation or does
not have shares of Common Stock, proper provision shall be made so that such
Principal Party shall create or otherwise make available for purposes of the
exercise of the Rights in accordance with the terms of this Agreement, cash or
a type or types of securities having a fair market value (as determined by a
nationally recognized investment banking firm selected by the Board of
Directors of the Company) equal to at least the value of the shares of Common
Stock which each holder of a Right would have been entitled to receive if such Principal
Party had been a corporation or had shares of Common Stock.


(e)           The Company covenants and agrees
that, following the Distribution Date, it shall not consummate any of the
transactions described in clauses (i), (ii) and (iii) of the first
sentence of Section 13(a) if at the time of or after such consummation
there would be any charter or by-law provisions or any rights, warrants
or other instruments or securities outstanding or agreements in effect or any
other action taken which would diminish or eliminate the benefits intended to
be afforded by the Rights, unless prior thereto the Principal Party shall have
amended or repealed such charter or by-law provisions, instruments or
securities, agreements or actions or otherwise protected the holders of the
Rights from such diminution or elimination of benefits, and the Company and the
Principal Party shall have executed and delivered to the Rights Agent a legally
valid, binding and enforceable supplemental agreement providing for such
amendment, repeal or other protection.


(f)            The provisions of this
Section 13 shall similarly apply to successive mergers, consolidations,
sales or other transfers. 
Notwithstanding the occurrence of any transaction set forth in
Section 11(a)(ii), in the event that any transaction set forth in
Section 13 subsequently occurs, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described in this
Section 13.


Section 14.             Additional Covenants.


(a)           After the Stock Acquisition Date, the
Company covenants and agrees that it shall not (i) consolidate with,
(ii) merge with or into, or (iii) sell or transfer to, in one or more
transactions, assets or earning power aggregating more than 50% of the assets
or earning power of the Company and its subsidiaries taken as a whole, any
other Person if at the time of or after such consolidation, merger or sale
there are any charter or by-law provisions or any rights, warrants or
other instruments outstanding or any other action taken which would diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.  The Company shall not consummate any such
consolidation, merger or sale unless prior thereto the Company and such other
Person shall have executed and delivered to the Rights Agent a supplemental
agreement evidencing compliance with this subsection.


 



 18















Section 15.             Fractional
Rights and Fractional Shares.


(a)           The Company shall not be required to
issue fractions of Rights or to distribute Right Certificates which evidence
fractional Rights.  In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right.  For the purposes
of this Section 15(a), the current market value of a whole Right shall be
the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable.  The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading or,
if the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as
reported by NASDAQ or such other system then in use or, if on any such date the
Rights are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Rights selected by the Board of Directors of the Company, except that, if
on any such date no such market maker is making a market in the Rights, the
fair value of the Rights on such date as determined in good faith by the Board
of Directors of the Company shall be used.


(b)           The Company shall not be required to
issue fractions of shares upon exercise of the Rights or to distribute
certificates which evidence fractional shares. 
In lieu of fractional shares, the Company may pay to the registered
holders of Right Certificates at the time such Right Certificates are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of a share of Common Stock. 
For purposes of this Section 15(b), the current market value of a
share of Common Stock shall be the closing price of a share of Common Stock (as
determined pursuant to the second sentence of Section 11(d)) for the
Trading Day immediately prior to the date of such exercise.


(c)           Each holder of a Right or Rights by
the acceptance of the Rights expressly waives his right to receive any
fractional Rights or any fractional shares upon exercise of a Right or Rights.


Section 16.             Rights of Action.  All rights of action in respect of this
Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Stock); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Common Stock), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner 



 19
 









provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.  Holders of Rights shall be entitled to
recover the reasonable costs and expenses, including attorneys’ fees, incurred
by them in any action to enforce the provisions of this Agreement.


Section 17.             Agreement of Right Holders.  Every holder of a Right by accepting the same
consents and agrees with the Company and the Rights Agent and with every other
holder of a Right that:


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


(b)           after the close of business on the
Distribution Date, the Rights will be transferable only by transfer of the
Right Certificates, which are transferable only on the registry books of the
Rights Agent if surrendered at the principal office of the Rights Agent, duly
endorsed or accompanied by a proper instrument of transfer; and


(c)           the Company and the Rights Agent may
deem and treat the person in whose name each Right Certificate (or, prior to
the Distribution Date, the associated Common Stock certificate) is registered
as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificate
or the associated Common Stock certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary.


Section 18.             Right Certificate Holder Not
Deemed a Stockholder.  No holder, as
such, of any Right Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of Common Stock or any other securities of
the Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting stockholders (except
as provided in Section 25), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions hereof.


Section 19.             Concerning the Rights Agent.


(a)           The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder.  The 



 20
 









Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises.


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


Section 20.             Merger or Consolidation or
Change of Name of Rights Agent.


(a)           Any corporation into which the Rights
Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 22.  In case at the time
such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.


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


Section 21.             Terms and Conditions to Duties
of Rights Agent.  The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:



 21
 









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


(b)           Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the Company prior
to taking or omitting any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to
be conclusively proved and established by a certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President or any Executive or
Senior Vice President and by the Treasurer or any Assistant Treasurer or the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the Rights Agent for
any action taken or omitted by it in good faith under the provisions of this
Agreement in reliance upon such certificate.


(c)           The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or willful misconduct.


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


(e)           The Rights Agent shall not be under
any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right Certificate (except
its countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in any
Right Certificate; nor shall it be responsible for any adjustment required
under the provisions of Sections 11 or 13 or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after actual notice of any
such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock to be issued pursuant to this Agreement or any Right Certificate
or as to whether any shares of Common Stock will, when issued, be validly
authorized and issued, fully paid and nonassessable.


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


(g)           The Rights Agent is hereby authorized
and directed to accept determinations, interpretations and instructions with
respect to the performance of its duties hereunder from the Chairman of the
Board, the Vice Chairman of the Board, the President or any Executive or Senior
Vice President or the Secretary or any Assistant Secretary or the Treasurer or
any 



 22
 









Assistant Treasurer of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with determinations,
interpretations and instructions of any such officer.


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


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


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


Section 22.             Change of Rights Agent.  The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon 30
days’ notice in writing mailed to the Company and to each transfer agent of the
Common Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. 
The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days’ notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail.  If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting
or shall repeatedly fail or refuse to act, the Company shall appoint a
successor to the Rights Agent.  If the
Company shall fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity or repeated failure or refusal to act by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by
the Company), then the registered holder of any Right Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights
Agent.  Any successor Rights Agent,
whether appointed by the Company or by such a court, shall be a corporation or
trust company organized and doing business under the laws of the United States,
in good standing, which is authorized under such laws to exercise corporate
trust or stock transfer powers and is subject to supervision or examination by
federal or state authority and which has individually or combined with an
affiliate at the time of its appointment as Rights Agent a combined capital and
surplus of at least $100 million dollars. After appointment, the 



 23
 









successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock, and mail a notice thereof in writing to the
registered holders of the Right Certificates. 
Failure to give any notice provided for in this Section 22,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.


Section 23.             Issuance of New Right
Certificates.  Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price per share and the number or kind or class of
shares of stock or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.


Section 24.             Redemption.


(a)           The Board of Directors of the Company
may, at its option, at any time prior to the earlier of (i) the close of
business on the tenth business day after the Stock Acquisition Date or
(ii) the Final Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right, as such amount may
be appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the “Redemption Price”).


(b)           Immediately upon the action of the
Board of Directors of the Company ordering the redemption of the Rights, and
without any further action and without any notice, the Rights will terminate
and the only right thereafter of the holders of Rights shall be to receive the
Redemption Price.  As soon as practicable
after the action of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the holders of the
then outstanding Rights by mailing such notice to all such holders at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Stock.  Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice.  Such notice
of redemption shall state the method by which the payment of the Redemption
Price will be made.  Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in this Section 24, and other than in connection with the repurchase
of Common Stock prior to the Distribution Date.


(c)           The Company may, at its option, discharge
all of its obligations with respect to the Rights by (i) issuing a press
release announcing the manner of redemption of the Rights and (ii) mailing
payment of the Redemption Price to the registered holders of the Rights at
their last addresses as they appear on the registry books of the Rights Agent
or, prior to the Distribution 



 24
 









Date, on the registry
books of the Transfer Agent of the Common Stock, and upon such action, all
outstanding Rights Certificates shall be null and void without any further
action by the Company.


Section 25.             Exchange.


(a)           Subject to Section 15(b), the Board
of Directors of the Company may, at its option, at any time after the time that
any Person becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e) and
Section 11(a)(ii) hereof) for shares of Common Stock of the Company at an
exchange ratio of one share of Common Stock per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred to as the
“Exchange Ratio”).  Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any subsidiary
of the Company, any employee benefit plan of the Company or any such
subsidiary, any entity holding shares of Common Stock for or pursuant to the terms
of any such plan or any trustee, administrator or fiduciary of such a plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the shares of Common Stock then outstanding.


(b)           Immediately upon the action of the
Board of Directors of the Company ordering the exchange of any Rights pursuant
to subsection (a) of this Section 25 and without any further action
and without any notice, the right to exercise such Rights shall terminate and
the only right thereafter of a holder of such Rights shall be to receive that
number of shares of Common Stock equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. 
The Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. 
The Company promptly shall mail a notice of any such exchange to all of
the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent.  Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. 
Each such notice of exchange will state the method by which the exchange
of the shares of Common Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged.  Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7(e) and Section 11(a)(ii)
hereof) held by each holder of Rights.


(c)           In the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in accordance with
this Section 25, the Company shall take all such action as may be
necessary to authorize additional shares of Common Stock for issuance upon
exchange of the Rights; and, consistent with the provisions of Section 9(e)
and Section 11(a)(iii) hereof, in the event the Company is unable to cause
shares of Common Stock to be delivered in exchange for Rights for any reason
within 90 days after the announcement of the decision to exchange Rights
pursuant to Section (a) of this Section 25, the Company shall
substitute for each share of Common Stock otherwise issuable upon the exchange
of Rights, cash, other assets or other securities of the 



 25
 









Company (or any
combination of the foregoing) having an aggregate value equal to the “current
per share market price” (as determined pursuant to Section 11(d)(ii)
hereof), as determined by the Board of Directors of the Company.


Section 26.             Notice of Certain Events.  In case the Company shall propose (a) to
pay any dividend payable in stock of any class to the holders of its Common
Stock or to make any other distribution to the holders of its Common Stock
(other than a regular periodic cash dividend out of earnings or retained
earnings or other than a special cash dividend declared at a time when there is
no Acquiring Person out of earnings or retained earnings, or (b) to offer
to the holders of its Common Stock rights or warrants to subscribe for or to
purchase any additional shares of Common Stock or shares of stock of any class
or any other securities, rights or options, or (c) to effect any
reclassification of its Common Stock (other than a reclassification involving
only the subdivision of outstanding shares of Common Stock), or (d) to
effect any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its subsidiaries to effect any sale or
other transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its subsidiaries (taken as a whole) to, any
other Person or Persons, or (e) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right, in accordance with Section 26, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of Common Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by
clause (a) or (b) above at least twenty days prior to the record date
for determining holders of the Common Stock for purposes of such action, and in
the case of any such other action, at least twenty days prior to the date of
the taking of such proposed action or the date of participation therein by the
holders of Common Stock, whichever shall be the earlier.


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


Section 27.             Notices.  Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:  


	
  

  	
  AAR CORP.

  1100 North Wood Dale Road

  Wood Dale, Illinois  60191

  Attention:  Secretary

  	
   

  



 


with
copy to the General Counsel at the same address.  Subject to the provisions of Section 22,
any notice or demand authorized by this Agreement to be given or made by the
Company or by 



 26
 









the
holder of any Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Company) as follows:  


	
  

  	
  Computershare Trust Company, N.A.

  2 North LaSalle Street

  Chicago, Illinois 60602

  Attention:  Corporate Actions

  	
   

  



 


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


Section 28.             Supplements and Amendments.  The Company and the Rights Agent may from
time to time supplement or amend this Agreement without approval of any holders
of Right Certificates in order to cure any ambiguity, to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, to extend the period of redemption provided for in
Section 24 hereof, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Rights Agent may deem
necessary or desirable and which shall not adversely affect the interests of
the holders of Rights Certificates; provided, however, that this
Agreement may not be supplemented or amended in any way after an Acquiring
Person has become such.  Upon the
delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the
terms of this Section 28, the Rights Agent shall execute such supplement
or amendment unless the Rights Agent shall have determined in good faith that
such supplement or amendment would adversely affect its interest under this
Agreement.  Prior to the Distribution
Date, the interests of the holders of Rights shall be deemed coincident with
the interests of the holders of Common Stock.


Section 29.             Determination and Actions by the
Board of Directors, etc.  For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding shares of Common Stock or any
other securities of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General
Rules and Regulations under the Exchange Act.  The Board of Directors of the Company shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board, or the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement).  All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are
done or made by the Board in good faith, shall (x) be final, conclusive
and binding on the 



 27
 









Company, the Rights
Agent, the holders of the Rights Certificates and all other parties, and
(y) not subject the Board to any liability to the holders of the Rights
Certificates.


Section 30.             Successors.  All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.


Section 31.             Benefits of this Agreement.  Nothing in this Agreement shall be construed
to give to any person or corporation other than the Company, the Rights Agent
and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Stock) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders
of the Right Certificates.


Section 32.             Governing Law.  This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts to be made and
performed entirely within such state.


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


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


Section 35.             Severability.  If any term, provision, covenant or
restriction of this Agreement shall be held by a court of competent
jurisdiction or other authority to be invalid, void, illegal or unenforceable,
the validity or enforceability of the remainder of the terms, provisions,
covenants and restrictions shall not be affected thereby.



 28
 









IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.  


	
  Attest:

  	
   

  	
   

  	
   

  	
  AAR CORP.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Howard A. Pulsifer 

  	
   

  	
   

  	
  By:

  	
  /s/ David P. Storch 

  
	
   

  	
  Name:

  	
  Howard A. Pulsifer 

  	
   

  	
  Name:

  	
  David P. Storch 

  
	
   

  	
  Title:

  	
  Vice President, Secretary and 

  	
   

  	
  Title:

  	
  President and Chief Executive 

  
	
   

  	
  General Counsel

  	
   

  	
   

  	
  Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
  COMPUTERSHARE TRUST COMPANY, N.A.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Rosanna Garofalo

  	
   

  	
  By:

  	
  /s/ Tammie Marshall

  
	
   

  	
  Name:

  	
  Rosanna Garofalo

  	
   

  	
  Name:

  	
  Tammie Marshall

  
	
   

  	
  Title:

  	
  Senior Account Manager

  	
  Title:

  	
  Senior Account Manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
																



 


 



 29















EXHIBIT A


FORM OF RIGHTS
CERTIFICATE


Certificate No. R-                                                                                                                                                       _____
Rights


NOT EXERCISABLE AFTER AUGUST 6, 2017, OR EARLIER IF
NOTICE OF REDEMPTION OR EXCHANGE IS GIVEN. 
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT BETWEEN AAR CORP.
AND COMPUTERSHARE TRUST COMPANY, N.A. (THE “RIGHTS AGREEMENT”).  [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE WERE ISSUED TO A PERSON WHO WAS AN ACQUIRING PERSON OR AN AFFILIATE
OR AN ASSOCIATE OF AN ACQUIRING PERSON. 
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY HAVE BECOME
VOID TO THE EXTENT PROVIDED BY  SECTION
7(e) OF THE RIGHTS AGREEMENT.](1)


RIGHTS CERTIFICATE


AAR CORP.


This
certifies that _______________, or registered assigns, is the registered owner
of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of July 11, 2007 (the “Rights Agreement”), between AAR
CORP., a Delaware corporation (the “Company”), and Computershare Trust Company,
N.A., a national banking association 
(the “Rights Agent”), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior
to 5:00 P.M. (Central time) on August 6, 2017, at the principal office of
the Rights Agent in Chicago, Illinois, one fully paid, non-assessable
share of the Common Stock, $1.00 par value (the “Common Stock”), of the
Company, at a purchase price of $140.00 per share (the “Purchase Price”), upon
presentation and surrender of this Rights Certificate with the appropriate Form
of Election to Purchase duly executed. 
The number of Rights evidenced by this Rights Certificate (and the
number of shares which may be purchased upon exercise thereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
August 6, 2017 based on the Common Stock of the Company as constituted at such
date.






*              The
portion of the legend in brackets shall be inserted only if applicable.  



 A-1
 









As
provided in the Rights Agreement, the Purchase Price and the number of shares
of Common Stock or other securities which may be purchased upon the exercise of
the Rights evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events.


This
Rights Certificate is subject to all of the terms, provisions and conditions of
the Rights Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates.  Copies of the Rights Agreement are on file at
the principal office of the Company, and are also available upon written
request to the Company.


This
Rights Certificate, with or without other Rights Certificates, upon surrender
at the office of the Rights Agent designated for such purpose, may be exchanged
for another Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
shares of Common Stock as the Rights evidenced by the Rights Certificate or
Rights Certificates surrendered shall have entitled such holder to
purchase.  If this Rights Certificate
shall be exercised (other than pursuant to Section 11(a)(ii) of the Rights
Agreement) in part, the holder shall be entitled to receive upon surrender
hereof another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.  If this
Rights Certificate shall be exercised in whole or in part pursuant to Section
11(a)(ii) of the Rights Agreement, the holder shall be entitled to receive this
Rights Certificate duly marked to indicate such exercise has occurred as set
forth in the Rights Agreement.


Subject
to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
may be redeemed by the Company at its option at a redemption price of $.01 per
Right.  Subject to the provisions of the
Rights Agreement, the Company, at its option, may elect to mail payment of the
redemption price to the registered holder of the Right at the time of
redemption, in which event this Certificate may become void without any further
action by the Company.


No
fractional shares of Common Stock will be issued upon the exercise of any Right
or Rights evidenced hereby, but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.


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



 A-2
 









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


WITNESS
the facsimile signature of the proper officers of the Company and its corporate
seal.   Dated as of August 6, 2007.


	
  [SEAL] ATTEST:

  	
   

  	
  AAR CORP.

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Countersigned:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  COMPUTERSHARE TRUST COMPANY, N.A.

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  Authorized
  Signatory

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 



 A-3
 









 


[Form of Reverse Side of Rights Certificate]


FORM OF
ASSIGNMENT


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


FOR VALUE RECEIVED
                                    
 hereby sells, assigns and transfers
unto                                     
                                                                                                                                                                                                              
                                                                                                                                                                                                              

(Please print name and address of transferee)


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



	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
  _________________ 
  ___, 20___

  	
   

  	
  Signature

  	
   

  



 


 


Signature
Guaranteed:


Signatures
must be guaranteed by a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc., or
a commercial bank, savings association, credit union or trust company having an
office or correspondent in the United States or other eligible guarantor institution
which is a participant in a signature guarantee medallion program.



 A-4
 









Certificate


The
undersigned hereby certifies by checking the appropriate boxes that:


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


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


	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
  ________________ ____, _____

  	
   

  	
  Signature

  	
   

  



 



 A-5
 









[Form of Reverse Side of Rights Certificate —
continued]


FORM OF ELECTION TO PURCHASE


(To be
executed if holder desires to exercise the Rights Certificate

pursuant to Section 11(a)(ii) of the Rights Agreement.)


To:
         AAR CORP.


The
undersigned hereby irrevocably elects to exercise _________ Rights represented
by this Rights Certificate to purchase the shares of Common Stock (or other
securities of the Company) issuable upon the exercise of such Rights and requests
that certificates for such shares be issued in the name of:  


	
  

  
	
  (Please insert social security or other identifying
  number)

  



 


	
  

  
	
   

  
	
  (Please print name and address)

  



 


The
Rights Certificate indicating the balance, if any, of such Rights that may
still be exercised pursuant to Section 11(a)(ii) of the Rights Agreement shall
be returned to the undersigned unless such person requests that the Rights
Certificate be registered in the name of and delivered to:  


	
  

  
	
  (Please insert social security or other identifying
  number.)

  (Complete only if the Rights Certificate is to be registered in

  a name other than the undersigned’s.)

  



 


	
  

  
	
   

  
	
  (Please print name and address)

  



 


	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated: 

  	
  _____________________ _____, _____

  	
   

  	
  Signature

  



 



 A-6
 









Signature Guaranteed:


Signatures
must be guaranteed by a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc., or
a commercial bank, savings association, credit union or trust company having an
office or correspondent in the United States or other eligible guarantor
institution which is a participant in a signature guarantee medallion program.



 A-7
 









Certificate


The undersigned hereby
certifies that by checking the appropriate boxes that:


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


(2)           this Rights Certificate [    ] is [   
] is not being sold, assigned and transferred by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate or Associate of any
such Acquiring Person;


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


	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated: 

  	
  _____________________ _____, _____

  	
   

  	
  Signature

  



 


 



 A-8
 









NOTICE


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


In
the event the certification set forth above in the Form of Assignment or the Form
of Election to Purchase, as the case may be, is not completed, the Company and
the Rights Agent will deem the Beneficial Owner of the Rights evidenced by this
Rights Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement) and such Assignment
or Election to Purchase will not be honored.


 



 A-9















EXHIBIT B


AAR CORP.

SUMMARY OF RIGHTS TO PURCHASE

COMMON STOCK


On
July 10, 2007, the Board of Directors of AAR CORP. (the “Company”) declared a
dividend distribution of one Right for each outstanding share of Common Stock,
$1.00 par value (the “Common Stock”), of the Company to the stockholders of
record on August 6, 2007 (the “Record Date”). 
Each Right entitles the registered holder to purchase from the Company
one share of Common Stock at a price of $140.00 per share (the “Purchase Price”),
subject to adjustment.  The description
and terms of the Rights are set forth in a Rights Agreement (the “Rights
Agreement”) between the Company and Computershare Trust Company, N.A., as
Rights Agent (the “Rights Agent”).  The
Rights replace the common stock purchase rights which were distributed to the
Company’s stockholders in 1997.


Until
the earlier to occur of (i) the tenth business day after a public
announcement that a person or group of affiliated or associated persons
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding shares of Common Stock of the Company (such person or group
being called an “Acquiring Person” and such date of first public announcement
being called the “Stock Acquisition Date”), or (ii) the tenth business day
after the commencement or announcement of an intention to make a tender offer
or exchange offer which would result in any person or group of affiliated or
associated persons becoming an Acquiring Person (the earlier of such dates
being called the “Distribution Date”), the Rights will be evidenced, with
respect to any of the Company’s Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificate with a copy of this Summary of
Rights attached thereto.  The Rights Agreement
provides that, until the Distribution Date, the Rights will be transferred with
and only with the Company’s Common Stock. 
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock certificates issued after the Record Date upon
transfer or new issuance of the Company’s Common Stock will contain a notation
incorporating the Rights Agreement by reference.  Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any of
the Company’s Common Stock certificates outstanding as of the Record Date will
also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.  As soon
as practicable following the Distribution Date, separate certificates
evidencing the Rights (“Rights Certificates”) will be mailed to holders of
record of the Company’s Common Stock as of the close of business on the
Distribution Date and, thereafter, such separate Rights Certificates alone will
evidence the Rights.


The
Rights are not exercisable until the Distribution Date.  The Rights will expire on August 6, 2017,
unless earlier redeemed by the Company as described below.


The
Purchase Price payable, and the number of shares of Common Stock or other securities
or property issuable, upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution (i) in the event of a stock dividend
on, or a subdivision, combination or reclassification of the Common Stock,
(ii) upon the grant to holders of Common Stock of certain 



 B-1
 









rights, options or warrants to subscribe for shares of
Common Stock or convertible securities at less than the current market price of
the Common Stock or (iii) upon the distribution to holders of Common Stock
of evidences of indebtedness or assets (excluding (a) a regular periodic
cash dividend or (b) a dividend payable in Common Stock) or of
subscription rights, options or warrants (other than those referred to above).


In
the event that a person becomes the beneficial owner of 15% or more of the
outstanding shares of Common Stock (i.e.,
becomes an Acquiring Person), each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will be void),  will have the right to receive upon exercise
thereof, that number of shares of Common Stock 
having a market value of two times the exercise price of the Right (such
right being called the “Flip-In” right).


In
the event that, on or after the Stock Acquisition Date, the Company were
acquired in a merger or other business combination, or 50% or more of its
assets or earning power were sold, proper provision shall be made so that each
holder of a Right shall thereafter have the right to receive, upon the exercise
thereof at the then current exercise price of the Right, that number of shares
of common stock of the acquiring company which at the time of such transaction
would have a market value of two times the exercise price of the Right.  In the event that the Company were the
surviving corporation in a merger involving the Acquiring Person and the Common
Stock were not changed or exchanged, proper provision shall be made so that
each holder of a Right, other than Rights beneficially owned by the Acquiring
Person (which will be void), will thereafter have the right to receive upon
exercise that number of shares of the Common Stock having a market value of two
times the exercise price of the Right (such right being called the “Flip-Over”
right).  The holder of a right will no
longer have a Flip-Over right if, and to the extent that, he has
exercised his Flip-In right.


With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price.  No fractional shares will be
issued and, in lieu thereof, a cash payment will be made based on the market
price of the Common Stock on the last trading date prior to the date of
exercise.


At
any time prior to the tenth day after the time that there is an Acquiring
Person, the Company may, at its option, redeem the Rights in whole but not in
part, at a price of $0.01 per Right (the “Redemption Price”).  Immediately upon the authorization of the
redemption of the Rights by the Board of Directors of the Company, the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.


Until
a Right is exercised, the holder thereof, as such, will have no rights as a
stockholder of the Company, including, without limitation, the right to vote or
to receive dividends.


The
Board of Directors of the Company may amend the Rights Agreement from time to
time, provided that any such changes do not adversely affect the interest of
the holders of the Rights, and provided further that the Rights Agreement may
not be supplemented or amended in any way after an Acquiring Person has become
such.



 B-2
 









A
copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Registration Statement on Form 8-A.  A copy of the Rights Agreement is available
to all Right holders free of charge from the Company.  This summary description of the Rights does
not purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is hereby incorporated herein by reference.


* * * * * * * * *


 



 B-3