Document:

Exhibit
4.3

 

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), 55 WATER STREET, NEW
YORK, NEW YORK, TO THE COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.

 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING SET FORTH IN THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF DTC OR A
NOMINEE OF DTC.  THIS NOTE IS EXCHANGEABLE FOR NOTES
REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC OR ANOTHER NOMINEE OF DTC OR BY
DTC OR ITS NOMINEE TO A SUCCESSOR DEPOSITORY OR ITS NOMINEE.

 

Registered No.001

$150,000,000

CUSIP No. 648053 AC 0

 

NEW PLAN EXCEL REALTY
TRUST, INC.

 

4.50% SENIOR NOTE DUE
2011

 

NEW PLAN EXCEL REALTY TRUST, INC., a corporation duly organized and
existing under the laws of the State of Maryland (herein referred to as the
“Company,” which term shall include any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Cede
& Co. or registered assigns, upon presentation, the principal sum of One
Hundred Fifty Million Dollars ($150,000,000) on February 1, 2011 (the “Stated
Maturity Date”), unless redeemed in full prior to the Stated Maturity Date, and
to pay interest on the outstanding principal amount thereof from February 6,
2004 or from the immediately preceding Interest Payment Date (as defined below)
to which interest has been paid or duly provided for, semiannually in arrears
on February 1 and August 1 in each year (each, an “Interest Payment Date”),
commencing August 1, 2004, at the rate of 4.50% per annum, until the entire
principal hereof is paid or made available for payment.  The interest so

 

 

payable and punctually
paid or duly provided for on
any Interest Payment Date will, as provided in the Indenture, be paid to
the Person in whose name this Note is registered at the close of business on the Regular Record Date for such
interest, which shall be the January 15 or July 15 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date.  Any such
interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may either be
paid to the Person in whose name this Note is registered
at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by
the Trustee (as defined below), notice whereof shall be given to Holders of the
Notes not more than 15 days and not less than
10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes (as defined below) may be listed, and upon such notice as may
be required by such exchange, all as more fully provided in the Indenture.

 

Payment of the principal of and Make-Whole
Amount (as defined below), if any, and interest on this Note on the Stated Maturity Date or date of earlier redemption will be made in same day funds
against presentation and surrender of this Note at the office or agency
maintained for that purpose in the City of New York, or elsewhere as provided
in the Indenture, in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts;
provided, however, that if this Note is not a global note, at the option of the
Company, payments of interest on any Interest Payment Date other than the Stated Maturity Date or date of earlier redemption may be made by check mailed to
the address of the Person entitled
thereto as such address shall appear in the Security Register; provided
further, that interest due on an
Interest Payment Date on or prior to a date previously set for redemption will
be paid on such Interest Payment Date to the holder of this Note on the
applicable Regular Record Date. 
Interest on this Note will be
computed on the basis of a 360-day year of twelve 30-day months.

 

This Note will be part of a series of debt securities of the Company
(herein called the “Debt Securities”) titled “4.50% Senior Notes Due 2011” (herein called the “Notes”), issued and to be
issued in one or more series under an Indenture,
dated as of January 30, 2004 (the “Indenture”), by and between the
Company and U.S. Bank Trust National Association, as trustee (herein called the “Trustee,” which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Notes and of the terms upon which the Notes
are authenticated and delivered.

 

2

 

This Note may be redeemed at any time at the option of the Company, in
whole or in part, in accordance with the terms of Article Eleven of the
Indenture, at a redemption price equal to the sum of (i) the principal amount
being redeemed plus unpaid interest accrued thereon to the Redemption Date and
(ii) the Make-Whole Amount, if any, with respect thereto.

 

Notwithstanding anything in the Indenture to the contrary, “Make-Whole
Amount” means, in connection with any optional redemption of any Notes, the
excess, if any, of

 

•                  the aggregate present value as of the
Redemption Date of each dollar of principal being redeemed and the amount of
interest, exclusive of interest accrued to the Redemption Date, that would have
been payable in respect of each such dollar of principal if the redemption had
not been made, determined by discounting, on a semiannual basis, such principal
and interest at the Reinvestment Rate (as defined below), determined on the
third business day preceding the date notice of the redemption is given, from
the respective dates on which such principal
and interest would have been payable if the redemption had not been
made, to the Redemption Date, over

 

•                  the aggregate principal amount of the
Notes being redeemed.

 

“Reinvestment Rate” means a rate per annum equal to
the sum of 0.150% plus the arithmetic
mean of the yields under the heading
“Week Ending” published in the most recent Statistical Release (as defined
below) under the caption “Treasury Constant Maturities” for the maturity (rounded to the nearest month) corresponding to the remaining life to maturity of the Notes,
as of the Redemption Date of the Notes being redeemed.  If no maturity exactly corresponds to the maturity, yields for the two published maturities
most closely corresponding to that maturity shall be calculated pursuant
to the immediately preceding sentence and the Reinvestment Rate shall be
interpolated or extrapolated from those yields on a straight-line basis,
rounding each of the relevant periods to the nearest month.  For purposes of calculating the Reinvestment
Rate, the most recent Statistical Release published prior to the date of
determination of the Make-Whole Amount shall be used.

 

“Statistical Release”
means the statistical release designated “H.15(519)” or any successor
publication which is published weekly by the Board of Governors of the Federal
Reserve System and which reports yields on actively traded United States
government securities adjusted to constant maturities or, if the statistical
release is not published at the time of any determination of the Make-Whole
Amount, then such other reasonably comparable index which shall be designated
by us.

 

3

 

The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company on this Note and (b) certain restrictive
covenants and the related defaults and Events of Default applicable to the
Company, in each case, upon compliance by the Company with certain conditions
set forth in the Indenture, which provisions apply to this Note.

 

If an Event of Default with respect to the Notes shall occur and be continuing, the
principal of the Notes may be declared due and payable in the manner and with
the effect provided in the Indenture.

 

As provided in and subject to the provisions of the Indenture, the
Holder of this Note shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given
written notice to the Trustee
of a continuing Event of Default with respect to the Notes, the Holders
of not less than 25% in principal amount of the Notes at the time Outstanding
shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as  Trustee and offered the Trustee reasonable
indemnity and the Trustee shall not have received from the Holders of a
majority in principal amount of the Notes at
the time Outstanding a direction inconsistent with such request, and
shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of
indemnity.  The foregoing shall
not apply to any suit instituted by the Holder of this Note for the enforcement of any payment of principal
hereof or any Make-Whole Amount or interest
hereon on or after the respective due dates expressed herein.

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof
and the modification of the rights and obligations of the Company and
the rights of the Holders of the
Outstanding Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders
of not less than a majority in principal amount of the Outstanding Debt
Securities of each series of the Notes then Outstanding affected thereby (voting as one class).  The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Notes at the time Outstanding, on behalf of the Holders of all the
Notes, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their
consequences.  Any such consent or
waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.

 

4

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or
impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of (and Make-Whole Amount, if any) and interest on this Note at the times, place and rate, and in
the coin or currency, herein prescribed.

 

As provided in the Indenture and subject to certain limitations therein
and herein set forth, the transfer of this Note is registrable in the Security
Register, upon surrender of this Note for registration of transfer at the
office or agency of the Company in any Place of Payment where the principal of
(and Make-Whole Amount, if any) and interest on this Note are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by the
Holder hereof or his or her attorney duly authorized in writing, and thereupon
one or more new Notes, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.

 

The Notes are issuable only in registered form in denominations of
$1,000 and any integral multiple thereof. 
As provided in the Indenture and subject to certain limitations therein
and herein set forth, this Note is exchangeable for a like aggregate principal amount
of Notes of this series of a different authorized denomination, as requested by
the Holder surrendering the same.

 

No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.

 

Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

 

No recourse under or upon any obligation, covenant or agreement
contained in the Indenture or in this Note, or because of any indebtedness
evidenced hereby or thereby, shall be had against any promoter, as such, or
against any past, present or future stockholder, officer or director, as such,
of the Company or of any successor, either directly or through the Company or
any successor, under any rule of law, statute or constitutional provision or by
the enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance of this Note by the Holder thereof and as part of the consideration for the issue of
the Notes.

 

5

 

All capitalized terms used but not otherwise defined
in this Note which are defined in the Indenture shall have the meanings
assigned to them in the Indenture.

 

THE INDENTURE AND THE NOTES, INCLUDING THIS NOTE, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused a “CUSIP” number to be printed on the Notes
as a convenience to the Holders of such Notes. 
No representation is made as to the correctness or accuracy of such
CUSIP number as printed on the Notes, and reliance may be placed only on the
other identification numbers printed hereon.

 

Unless the certificate of authentication hereon has been executed by or
on behalf of the Trustee by manual signature, this Note shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.

 

6

 

IN WITNESS WHEREOF, NEW PLAN EXCEL REALTY TRUST, INC. has caused this
instrument to be duly executed under its corporate seal.

 

Dated:  February 6, 2004

 

	
   

  	
  NEW PLAN EXCEL REALTY
  TRUST, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  [Corporate Seal]

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Steven F. Siegel

  	
   

  
	
  Executive Vice President,

  	
   

  
	
  General Counsel and Secretary

  	
   

  
					

 

7

 

TRUSTEE’S CERTIFICATE OF
AUTHENTICATION:

 

This is one of the Notes of the series designated therein referred to
in the within-mentioned Indenture.

 

	
   

  	
  U.S. BANK TRUST
  NATIONAL ASSOCIATION,

  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

8

 

ASSIGNMENT FORM

 

FOR VALUE RECEIVED, the
undersigned hereby

sells, assigns and
transfers unto

 

PLEASE INSERT SOCIAL

SECURITY OR OTHER IDENTIFYING

NUMBER OF ASSIGNEE

 

 

(Please Print or Typewrite Name and Address including
Zip Code of Assignee)

 

 

the within Note of New
Plan Excel Realty Trust, Inc.  and
hereby does irrevocably constitute and appoint

 

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

 

Dated:

 

 

NOTICE:  The signature to this assignment must
correspond with the name as it appears on the first page of the within Note in
every particular, without alteration or enlargement or any change whatever.

 

9Exhibit 4.1

 

THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS
NOTE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED
THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

 

THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS
NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1)
TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), (3) TO AN INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR
WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS
OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

 

THIS NOTE, ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION AND
ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO
MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS NOTE AND ANY
SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE
INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF RESTRICTED
SECURITIES GENERALLY.  THE HOLDER OF
THIS NOTE AND SUCH SHARES OF COMMON STOCK SHALL BE DEEMED BY THE ACCEPTANCE OF
THIS NOTE AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR
SUPPLEMENT.

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DEPOSITARY”), OR A NOMINEE OF THE

 

 

DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND ANY
AGENT THEREOF AS THE OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES.  UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITARY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY
A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY
OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY, AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

 

 

 

	
  No. 1

  	
   

  	
  Principal Amount
  $75,000,000,

  as revised by the Schedule of Increases

  and Decreases in the Global Note attached hereto

  

 

CUSIP NO. 000361 AE 5

 

AAR CORP.

 

2.875% Convertible
Senior Notes due February 1, 2024

 

AAR
CORP., a Delaware corporation, promises to pay to Cede & Co., or registered
assigns, the principal sum of Seventy-Five Million Dollars, as revised by the
Schedule of Increases and Decreases in the Global Note attached hereto, on
February 1, 2024.

 

Interest
Payment Dates:  February 1, and August
1.

 

Record
Dates:  January 15 and July 15.

 

Additional
provisions of this Note are set forth on the other side of this Note.

 

	
   

  	
  AAR CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ TIMOTHY
  J. ROMENESKO

  
	
   

  	
   

  
	
  TRUSTEE’S
  CERTIFICATE OF

  AUTHENTICATION

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  
	
   

  	
   

  
	
  U.S. BANK NATIONAL
  ASSOCIATION,

  	
   

  
	
  as Trustee, certifies
  that this is one of

  the Notes referred to in the within-mentioned Indenture.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ BENJAMIN J. KRUEGER

  	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

  	
   

  	
   

  
						

 

 

[FORM OF REVERSE
SIDE OF NOTE]

 

2.875% Convertible
Senior Notes due February 1, 2024

 

1.             Interest

 

AAR CORP., a Delaware corporation (such corporation,
and its successors and assigns under the Indenture hereinafter referred to,
being herein called the “Company”), promises to pay interest on the principal
amount of this Note at the rate per annum shown above.  The Company will pay interest semiannually
on February 1 and August 1 of each year. 
Interest on the Notes will accrue from the most recent date to which
interest has been paid on the Notes or, if no interest has been paid, from
February 3, 2004.  The Company shall, to
the fullest extent permitted by law, pay interest on overdue principal and
overdue installments of interest, if any (plus interest on such interest to the
extent lawful), at the rate borne by the Notes, which interest shall be payable
upon demand.  Interest will be computed
on the basis of a 360-day year of twelve 30-day months.

 

2.             Method of Payment

 

By no later than 11:00 a.m. (New York City time) on
the date on which any principal of or interest on any Note is due and payable,
the Company shall irrevocably deposit with the Trustee or the Paying Agent
money sufficient to pay such principal and/or interest.  The Company will pay interest (except
Defaulted Interest) on the principal amount of the Notes on each February 1 and
August 1 to the Persons who are registered Holders of Notes at the close of
business on the January 15 and July 15 next preceding the Interest Payment Date
even if Notes are canceled or repurchased after the Record Date and on or
before the Interest Payment Date. 
Holders must surrender Notes to a Paying Agent to collect principal
payments.  The Company will pay
principal and interest in money of the United States that at the time of payment
is legal tender for payment of public and private debts.  The Company will make all payments in
respect of a Definitive Note (including principal and interest) in U.S. dollars
at the office of the Trustee.  At the
Company’s option, however, the Company may make such payments by mailing a check
to the registered address of each Holder thereof as such address shall appear
on the Note Register or, with respect to Notes represented by a Global Note, by
wire transfer of immediately available funds to the accounts specified by the
Depositary.

 

3.             Paying Agent,
Conversion Agent and Registrar

 

Initially, U.S. Bank National Association (“Trustee”)
will act as Paying Agent, Conversion Agent and Registrar.  The Company may appoint and change any
Paying Agent, Conversion Agent, Registrar or co-registrar without notice to any
Holder.  The Company or any of its
domestically incorporated Subsidiaries may act as Paying Agent, Conversion
Agent, Registrar or co-registrar.

 

4.             Indenture

 

The Company issued the Notes under an Indenture dated
as of February 3, 2004 (as it may be amended or supplemented from time to time
in accordance with the terms thereof, the “Indenture”), among the Company and
the Trustee.  The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of

 

1

 

1939 (15 U.S.C.
§§ 77aaa-77bbbb) as in effect from time to time (the “Act”).  Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture.  The Notes are subject to all such terms, and
Holders are referred to the Indenture and the Act for a statement of those
terms.  To the extent permitted by applicable
law, in the event of any inconsistency between the terms of this Note and the
terms of the Indenture, the terms of the Indenture shall control.

 

The Notes are senior unsecured obligations of the
Company limited to $90,000,000 aggregate principal amount.

 

5.             Redemption at the
Option of the Company

 

No sinking fund is provided for the Notes.  The Notes are redeemable for cash in whole,
or in part, at any time on or after February 1, 2008 at the option of the
Company at a redemption price (“Redemption Price”) equal to the following plus
any accrued and unpaid interest (including Liquidated Damages, if any) to, but
not including, the Redemption Date:

 

•      Beginning February 1, 2008
through January 31, 2009:  100.958% of
the principal amount;

 

•      Beginning February 1, 2009
through January 31, 2010: 100.479% of the principal amount;

 

•      On or after February 1,
2010: 100.000% of the principal amount.

 

6.             Notice of
Redemption at the Option of the Company

 

Notice of redemption at the option of the Company
shall be mailed at least 30 days but not more than 60 days before a Redemption
Date to the Trustee, the Paying Agent and each Holder of Notes to be redeemed
at the Holder’s registered address.  If
money sufficient to pay the Redemption Price of all Notes (or portions thereof)
to be redeemed on the Redemption Date is deposited with the Paying Agent prior
to or on the Redemption Date, on and after the Redemption Date, interest
(including Liquidated Damages, if any), if any, shall cease to accrue on such
Notes or portions thereof.  Notes in
denominations larger than $1,000 principal amount may be redeemed in part but
only in integral multiples of $1,000 principal amount.

 

7.             Purchase
by the Company at the Option of the Holder; Purchase at the Option of the
Holder Upon a Designated Event

 

Subject to the terms and
conditions of the Indenture, a Holder shall have the option to require the
Company to purchase the Notes held by such Holder on February 1, 2010, February
1, 2014 and February 1, 2019 (each, a “Repurchase Date”) at a purchase price
(the “Purchase Price”) equal to 100% of the principal amount of the Notes to be
purchased plus any accrued and unpaid interest, if any (including Liquidated
Damages, if any), to but not including such Repurchase Date, upon delivery of a
Purchase Notice containing the information set forth in the Indenture, from the
opening of business on the date that is 20 Business Days prior to such
Repurchase Date until the close of business on the Business Day immediately
prior to such Repurchase Date and upon delivery of the Notes to the Paying
Agent by the Holder as set forth

 

2

 

in the Indenture.  The Company
will pay the Purchase Price in cash with respect each Repurchase Date.

 

Notes
in denominations larger than $1,000 principal amount may be purchased in part,
but only in integral multiples of $1,000 principal amount.

 

If a Designated Event shall
occur, each Holder shall have the right, at such Holder’s option and subject to
the terms and conditions of the Indenture, to require the Company to purchase
any or all of such Holder’s Notes or any portion of the principal amount
thereof that is equal to $1,000 or an integral multiple of $1,000 on the day
that is 45 days after the date of the Company Notice of the occurrence of the
Designated Event (subject to extension to comply with applicable law) for a
Designated Event Purchase Price equal to 100% of the principal amount of Notes
purchased plus accrued and unpaid interest (including Liquidated Damages, if
any) to but not including the Designated Event Purchase Date, which Designated
Event Purchase Price shall be paid in cash.

 

Holders have the right to
withdraw any Purchase Notice or Designated Event Purchase Notice, as the case
may be, by delivery to the Paying Agent of a written notice of withdrawal in
accordance with the provisions of the Indenture.

 

8.             Conversion

 

Subject to the procedures set forth in the Indenture,
a Holder may convert Notes into Common Stock on or before the close of business
on January 31, 2024 during the periods and upon satisfaction of the conditions
set forth in the Indenture.

 

Notes in respect of which a Holder has delivered a
notice of exercise of the option to require the Company to purchase such Notes
pursuant to Article VI or VII of the Indenture may be converted only if the
notice of exercise is withdrawn in accordance with the terms of the Indenture.

 

The initial Conversion Rate is 53.7924 shares of
Common Stock per $1,000 principal amount, subject to adjustment in certain
events described in the Indenture.  The
Company may, at its option, deliver in lieu of shares of Common Stock, cash or
a combination of cash and shares of Common Stock.

 

To convert the Notes a Holder must (1) complete and
manually sign the irrevocable conversion notice on the back of the Notes (or
complete and manually sign a facsimile of such notice) and deliver such notice
to the Conversion Agent at the office maintained by the Conversion Agent for
such purpose, (2) surrender the Notes to the Conversion Agent, (3) furnish
appropriate endorsements and transfer documents if required by the Conversion
Agent, the Company or the Trustee and (4) pay any transfer or similar tax, if
required.

 

9.             Denominations;
Transfer; Exchange

 

The Notes are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000.  A Holder may transfer or exchange Notes
in  accordance with the Indenture.  The Registrar may require a Holder, among other
things, to furnish appropriate endorsements or transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture.  The Registrar need not register the transfer
of or exchange

 

3

 

any Notes (A) for
a period beginning at the opening of business 15 days before any selection of
Notes for redemption or repurchase and ending at the close of business on the
day notice of such redemption or repurchase is deemed to have been given to all
Holders of Notes to be so redeemed or repurchased or (B) selected for
redemption or repurchase in whole or in part, except for the transfer of the
unredeemed portion of any Note being redeemed in part.

 

10.           Persons Deemed
Owners

 

The registered Holder of this Note may be treated as
the owner of this Note for all purposes.

 

11.           Unclaimed Money

 

If money for the payment of the principal of, or
interest on the Note remains unclaimed for two years, the Trustee or Paying
Agent shall pay the money back to the Company at its written request unless an
abandoned property law designates another Person.  After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment.

 

12.           Amendment, Waiver

 

Subject to certain exceptions set forth in the
Indenture, (i) the Indenture and the Notes may be amended with the written
consent of the Holders of at least a majority in aggregate principal amount of
the then outstanding Notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes)
and (ii) any default (other than with respect to nonpayment) or noncompliance
with any provision may be waived with the written consent of the Holders of a
majority in aggregate principal amount of the then outstanding Notes
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes).  Subject to certain exceptions set forth in the Indenture, without
the consent of any Holder, the Company and the Trustee may amend the Indenture
or the Notes.

 

13.           Defaulted Interest

 

Except as otherwise specified with respect to the
Notes, any Defaulted Interest on any Note shall forthwith cease to be payable
to the registered Holder thereof on the relevant Record Date or accrual date,
as the case may be, by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company as provided for in Section 2.12 of the Indenture.

 

14.           No Recourse Against
Others

 

No recourse for the payment of the principal of or
interest (or including Liquidated Damages, if any) on this Note and no recourse
under or upon any obligation, covenant or agreement of the Company in the
Indenture, this Note or in any supplemental indenture, or because of the
creation of any Indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer, director, or subsidiary,
past, present or future, of the Company or of any successor corporation or
entity, whether by virtue of any constitution, statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise, it being understood
that all such liability is hereby waived and released as a condition

 

4

 

to, and as a
consideration for, the execution and delivery of the Indenture and the issue of
this Note.

 

15.           Authentication

 

This Note shall not be valid until an authorized
signatory of the Trustee (or an authenticating agent acting on its behalf)
manually signs the certificate of authentication on the other side of this
Note.

 

16.           Abbreviations

 

Customary abbreviations may be used in the name of a
Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants
by the entirety), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors
Act).

 

16.           CUSIP Numbers

 

Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures the Company has caused
CUSIP numbers to be printed on the Notes. 
No representation is made as to the accuracy of such numbers as printed
on the Notes and reliance may be placed only on the other identification
numbers placed thereon.

 

17.           Governing Law

 

This Note shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts made
and to be performed entirely in such state, without regard to principles of
conflicts of law.

 

The Company will furnish to any Holder upon written
request and without charge to the Holder a copy of the Indenture which has in
it the text of this Note.  Requests may
be made to:

 

	
  AAR CORP.

  
	
  One AAR
  Place

  
	
  1100 Wood
  Dale Road

  
	
  Wood Dale,
  Illinois 60191

  
	
  Attention:  General Counsel

  
	
  Facsimile
  No.:  630-227-2059

  

 

 

	
  EXHIBIT A:

  	
   

  	
  ASSIGNMENT FORM

  
	
  EXHIBIT B:

  	
   

  	
  SCHEDULE OF INCREASES
  OR DECREASES IN GLOBAL SECURITY

  
	
  EXHIBIT C:

  	
   

  	
  OPTION OF HOLDER TO
  ELECT PURCHASE

  
	
  EXHIBIT D:

  	
   

  	
  FORM OF CERTIFICATE TO
  BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF SECURITIES

  

 

5

 

EXHIBIT A

 

ASSIGNMENT FORM

 

To assign this Note, fill in
the form below:

 

I or we assign and transfer
this Note to

 

	
   

  	
   

  	
   

  
	
   

  	
  (Print or type
  assignee’s name, address and zip code)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Insert
  assignee’s soc. sec. or tax I.D. No.)

  	
   

  

 

and irrevocably appoint
                    
agent to transfer this Note on the books of the Company.  The agent may substitute another to act for
him.

 

	
  Date:

  	
   

  	
   

  	
   

  	
  Your Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  	
   

  
	
   

  	
  (Signature must
  be guaranteed)

  	
   

  	
   

  
									

 

 

Sign exactly as your name
appears on the other side of this Note.

 

The signature(s) should be
guaranteed by an eligible guarantor institution (banks, stockbrokers, savings
and loan associations and credit unions with membership in an approved
signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.

 

In connection with any
transfer or exchange of any of the Notes evidenced by this certificate occurring
prior to the date that is two years after the later of the date of original
issuance of such Notes and the last date, if any, on which such Notes were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Notes are being:

 

CHECK ONE BOX BELOW:

 

	
  1.

  	
  o

  	
   

  	
  acquired for the
  undersigned’s own account, without transfer; or

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  o

  	
   

  	
  transferred to the
  Company; or

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  o

  	
   

  	
  transferred pursuant to
  and in compliance with Rule 144A under the Securities Act of 1933, as amended
  (the “Securities Act”); or

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  o

  	
   

  	
  transferred pursuant to
  an effective registration statement under the Securities Act; or

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  o

  	
   

  	
  transferred to an
  institutional accredited investor (as defined in Rule 501(a)(1), (2), (3) or
  (7) under the Securities Act), that has furnished to the Trustee a signed
  letter containing certain representations and agreements (the form of which
  letter appears as Section 2.7 of the Indenture); or

  

 

A-1

 

	
  6.

  	
  o

  	
   

  	
  transferred pursuant to
  another available exemption from the registration requirements of the
  Securities Act of 1933.

  

 

Unless one of the boxes is
checked, the Trustee will refuse to register any of the Notes evidenced by this
certificate in the name of any person other than the registered Holder thereof;
provided,
however,
that if box (5) or (6) is checked, the Trustee or the Company may require,
prior to registering any such transfer of the Notes, in their sole discretion,
such legal opinions, certifications and other information as the Trustee or the
Company may reasonably request to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, such as the exemption provided
by Rule 144 under such Act.

 

	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Signature must be
  guaranteed)

  	
  Signature

  
			

 

The signature(s) should
be guaranteed by an eligible guarantor institution (banks, stockbrokers,
savings and loan associations and credit unions with membership in an approved
signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.

 

TO BE COMPLETED BY PURCHASER
IF (1) OR (3) ABOVE IS CHECKED.

 

The
undersigned represents and warrants that it is purchasing this Note for its own
account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a qualified institutional buyer
within the meaning of Rule 144A under the Securities Act, as amended, and is
aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned’s foregoing representations in order to claim the
exemption from registration provided by Rule 144A.

 

 

	
  Dated:

  	
  NOTICE:  To be executed by an executive officer

  
	
   

  	
   

  
	
   

  	
  [INSERT NAME
  OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				

 

A-2

 

EXHIBIT B

 

SCHEDULE OF
INCREASES OR DECREASES IN GLOBAL SECURITY

 

The following
increases or decreases in this Global Note have been made:

 

	
  Date of

  Exchange

  	
   

  	
  Amount of
  decrease in

  Principal Amount of this

  Global Note

  	
   

  	
  Amount of
  increase in

  Principal Amount of this

  Global Note

  	
   

  	
  Principal
  Amount of this

  Global Note following such

  decrease or increase

  	
   

  	
  Signature
  of authorized

  signatory of Trustee or Notes

  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

B-1

 

EXHIBIT C

 

OPTION OF HOLDER
TO ELECT PURCHASE

 

If you
want to elect to have this Note purchased by the Company pursuant to Section
7.1 or Article VI of the Indenture, check the box:  o

 

If you
want to elect to have only part of this Note purchased by the Company pursuant
to Section 7.1 or Article VI of the Indenture, state the amount in principal
amount (must be an integral multiple of $1,000): 
$                     .

 

 

	
  Date:

  	
   

  	
   

  	
   

  	
  Your Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Sign exactly as your
  name appears

  on the other side of this Note)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  	
   

  
	
   

  	
  (Signature must
  be guaranteed)

  	
   

  
									

 

The signature(s) should be
guaranteed by an eligible guarantor institution (banks, stockbrokers, savings
and loan associations and credit unions with membership in an approved
signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.

 

C-1

 

EXHIBIT D

 

FORM OF CERTIFICATE TO BE DELIVERED UPON
EXCHANGE

OR REGISTRATION OF TRANSFER OF SECURITIES

 

Re:          2.875% Convertible
Senior Notes due February 1, 2024 of AAR CORP. (the “Company”).

 

This
Certificate relates to $
                                 
principal amount of Notes held in
*            book-entry
or
*              
definitive form by                                           
(the “Transferor”).

 

The
Transferor has requested the Trustee by written order to exchange or register
the transfer of a Note or Notes.

 

In
connection with such request and in respect of each such Note, the Transferor
does hereby certify that the Transferor is familiar with the Indenture, dated
as of February 3, 2004 (as amended or supplemented to date, the “Indenture”),
between the Company and U.S. Bank National Association, as trustee (the
“Trustee”), relating to the above-captioned Notes and that the transfer of this
Note does not require registration under the Securities Act (as defined below)
because:*

 

o            Such
Note is being acquired for the Transferor’s own account without transfer.

 

o            Such
Note is being transferred to a “qualified institutional buyer” (as defined in
Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”)),
in accordance with Rule 144A under the Securities Act.

 

o            Such
Note is being transferred (i) pursuant to an exemption from registration in
accordance with Rule 144 under the Securities Act (and based upon an opinion of
counsel if the Company or the Trustee so requests) or (ii) pursuant to an
effective registration statement under the Securities Act.

 

o            Such
Note is being transferred in reliance on and in compliance with another
exemption from the registration requirements of the Securities Act (and based
upon an opinion of counsel if the Company or the Trustee so requests).

 

*              Fill in blank or check appropriate box, as applicable.

 

D-1

 

You
are entitled to rely upon this certificate and you are irrevocably authorized
to produce this certificate or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.

 

	
   

  	
  [INSERT NAME
  OF TRANSFEROR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Date:

  
					

 

D-2

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