Document:

SUBSCRIPTION AGREEMENT

 

This Subscription Agreement
(this “Agreement”) is dated as of February , 2017, between Air Industries Group, a Nevada corporation (the “Company”),
and the person identified on the signature page hereto (“Purchaser”).

 

The Company is offering
(the “Offering”) pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder,
up to $1,200,000 principal amount of its 8% Subordinated Convertible Notes due January 31, 2019 in the form annexed hereto as Exhibit
A (the “Notes”), together with five-year warrants, in the form annexed hereto as Exhibit B (the “Warrants”),
to purchase 7,692 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”),
for each $100,000 principal amount of Notes purchased. The purchase price for the Notes and Warrants will be equal to the principal
amount of the Note acquired by each Purchaser.

 

The Offering will commence
February 7, 2017, and terminate on the close of business on February 17, 2017 (the “Initial Offering Period”),
which period may be extended by the Company for up to an additional 10 days (this additional period and the Initial Offering Period
shall be referred to as the “Offering Period”). The Company may hold a closing at any time during the Offering
Period (the “First Closing”). Thereafter, the Issuer may sell up to a maximum of $1,200,000 in Notes in the
aggregate (the “Maximum Amount”), and further closings (“Further Closings”) may from time
to time be conducted with respect to the Notes sold until the termination or expiration of the Offering Period. Each of the First
Closing and Further Closings is referred to as a “Closing.”

 

The Notes are convertible
into shares of Common Stock at an initial conversion price of $3.25 per share, subject to certain adjustments in accordance with
the provisions of the Notes, except that for subscribers who are officers, directors or otherwise deemed to be affiliates of the
Company under the rules of the NYSE MKT (each, an “Affiliate”), the initial conversion price of the Notes shall
be the closing price of the Company’s Common Stock as of the market close immediately prior to the closing of the purchase
of the Notes by the Affiliate.

 

The exercise price
of the Warrants will be an amount equal to the closing price of the Company’s Common Stock as of the market close immediately
prior to the closing of the purchase of the Notes, subject to certain adjustments in accordance with the provisions of the Warrants.

 

Purchaser desires to
purchase, and the Company is willing to sell to the Purchaser, upon the terms and conditions stated in this Agreement, a Note in
the principal amount set forth on the signature page hereof (the “Purchased Note”), together with a Warrant
to purchase the number of shares set forth on the signature page hereof, for the purchase price set forth on the signature page
hereof (the “Purchase Price”). The Purchased Note and the Warrant are hereinafter referred to as the “Securities”.

 

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NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and Purchaser agree as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1       Definitions.
In addition to the terms defined elsewhere in this Agreement the following terms have the meanings set forth in this Section 1.1:

 

“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Board
of Directors”means the board of directors of the Company.

 

“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.

 

“Commission”
means the United States Securities and Exchange Commission.

 

“Common
Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed.

 

“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

 

“Conversion
Shares” means the number of shares of Common Stock issuable upon conversion of the Purchased Note.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

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“Placement
Agent” means Taglich Brothers, Inc.

 

“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

 

“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.

 

“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company
formed or acquired after the date hereof.

 

“Trading
Day” means a day on which the principal Trading Market is open for trading.

 

“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the
New York Stock Exchange (or any successors to any of the foregoing).

 

“Transfer
Agent” means Broadridge Corporate Issuer Solutions, Inc., the current transfer agent of the Company, with a mailing address
of P. O. Box 1342, Brentwood, New York 11717 and a facsimile number of 215 553 5402, and any successor transfer agent of the Company.

 

“Underlying
Shares” means the Conversion Shares and the Warrant Shares.

 

“Warrant
Shares” means the shares issuable upon exercise of the Warrant.

 

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ARTICLE II.

PURCHASE AND SALE

 

2.1       Purchase of
the Securities. Subject to the terms and conditions of this Agreement, the Purchaser, intending to be legally bound, hereby
irrevocably subscribes for and agrees to purchase the Securities, and the Company agrees to issue the Securities against its receipt
of the Purchase Price from an escrow account with a bank designated by the Company (the “Escrow Account”) . The Purchaser
shall deposit payment for the Securities in the Escrow Account by wire transfer of immediately available funds.

 

2.2       Deliveries.
Purchaser will deposit the Purchase Price in the Escrow Account by wire transfer of immediately available funds. The Company will
deliver to the Purchaser the Securities against the Company’s receipt of the Purchase Price from the Escrow Account.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1       Representations
and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed
a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding
section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to Purchaser:

 

(a)       Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set forth on Exhibit 21.1 to the Annual Report on Form 10-K filed
with the SEC on April 4, 2016 (the “10-K”). The Company owns, directly or indirectly, all of the capital stock or other
equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock
of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe
for or purchase securities.

 

(b)       Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company
nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any this Agreement or the Securities, (ii) a material adverse effect on the results of operations, assets,
business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material
adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under this Agreement
or the Securities (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted
in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

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(c)       Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement and the Securities, and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery
of this Agreement and the Securities by the Company and the consummation by it of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board
of Directors or the Company’s stockholders in connection herewith or therewith, except as may be required in connection with
the Required Approvals. This Agreement and the Securities have been (or upon delivery will have been) duly executed by the Company
and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’
rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(d)       No
Conflicts. The execution, delivery and performance by the Company of this Agreement and the Securities, the issuance and sale
of the Securities and the consummation by it of the transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws
or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company
or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or
otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company
or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which
the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property
or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could
not have or reasonably be expected to result in a Material Adverse Effect.

 

(e)       Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of this Agreement and the Securities, other than:
(i) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing
of the Underlying Shares in the time and manner required thereby, (ii) the filing of Form D with the Commission and such filings
as are required to be made under applicable state securities laws; and (iv) the consent of PNC Bank, National Association, as the
Company’s senior lender, under the Amended and Restated Revolving Credit, Term Loan and Security Agreement, as amended (collectively,
the “Required Approvals”).

 

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(f)       Issuance
of the Securities. The Securities been duly authorized, and when issued in accordance with the terms set forth in this Agreement,
will be duly and validly issued, and constitute the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with their terms. The Conversion Shares, when in accordance with the terms of the Purchased Note, and the
Warrant Shares, when issued in accordance with the terms of the Warrant, will be duly authorized, and duly and validly issued,
fully paid and non-assessable, free and clear of all Liens imposed by the Company, other than restrictions on transfer provided
for in this Agreement. The Company has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance
of the Underlying Shares.

 

(g)       Capitalization.
The authorized capital stock of the Company consists of 25,000,000 shares of Common Stock and 3,000,000 shares of preferred stock,
$.001 par value per share, including 2,000,000 shares of Series A Convertible Preferred Stock (the “Series A Preferred Stock”).
After giving effect to the payment on December 15, 2016 of a dividend on the Series A Preferred Stock in shares of Series A Preferred
Stock in lieu of cash dividends, 1,188,728 shares of Series A Preferred Stock and 7,583,165 shares of Common Stock are outstanding.
No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the
transactions contemplated by this Agreement. Except as a result of the purchase and sale of the Securities and the issuance of
a warrant to Taglich Brothers, Inc., placement agent for the Securities (the “Placement Agent”) and as set forth in
the SEC Reports, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire any shares of Common Stock or the capital stock of any Subsidiary, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common
Stock or Common Stock Equivalents or capital stock of any Subsidiary. The issuance and sale of the Securities will not obligate
the Company or any Subsidiary to issue shares of Common Stock or other securities to any Person (other than the Purchaser and the
other holders of the Notes and warrants issued in the Offering and the Placement Agent) and will not result in a right of any holder
of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. There are no outstanding
securities or instruments of the Company or any Subsidiary that contain any redemption or similar provisions, and there are no
contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to redeem
a security of the Company or such Subsidiary. The Company does not have any stock appreciation rights or “phantom stock”
plans or agreements or any similar plan or agreement. All of the outstanding shares of capital stock of the Company are duly authorized,
validly issued, fully paid and non-assessable, have been issued in compliance with all federal and state securities laws, and none
of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.
There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

 

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(h)       SEC
Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and
none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time
of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles
applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in
such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required
by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as
of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.

 

(i)       Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there has
been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the
Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property
to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v)
the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except
for the issuance of the Securities and the Underlying Shares and the issuance of the warrant to the Placement Agent, no event,
liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with
respect to the Company or its Subsidiaries or their respective businesses, properties, operations, assets or financial condition,
that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made
or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.

 

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(j)       Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or enforceability of this Agreement or the Securities or (ii)
could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of
violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and
to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company
or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities
Act.

 

(k)       Labor
Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of
the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or
any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure
or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant
in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance
with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

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(l)       Compliance.
Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any
court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation
of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as
could not have or reasonably be expected to result in a Material Adverse Effect.

 

(m)      Environmental
Laws.The Company and its Subsidiaries (i) are in compliance with all federal, state, local and foreign laws relating to
pollution or protection of human health or the environment (including ambient air, surface water, groundwater, land surface or
subsurface strata), including laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment,
or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands, or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations, issued, entered, promulgated or approved thereunder (“Environmental
Laws”); (ii) have received all permits licenses or other approvals required of them under applicable Environmental Laws
to conduct their respective businesses; and (iii) are in compliance with all terms and conditions of any such permit, license or
approval, where in each clause (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually
or in the aggregate, a Material Adverse Effect.

 

(n)       Regulatory
Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Material Permit.

 

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(o)       Title
to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them
and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries,
in each case free and clear of all Liens, except for (i) Liens set forth in the SEC Reports, (ii) such Liens as do not materially
affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by
the Company and the Subsidiaries and (iii) Liens for the payment of federal, state or other taxes, for which appropriate reserves
have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties. Any real
property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable
leases with which the Company and the Subsidiaries are in compliance.

 

(p)       Intellectual
Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights
and similar rights as described in the SEC Reports as necessary or required for use in connection with their respective businesses
and which the failure to so have could have a Material Adverse Effect.

 

(q)       Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged. Neither the
Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without
a significant increase in cost.

 

(r)       Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company or
any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party
to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case
in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan
of the Company.

 

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(s)       Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable requirements of
the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers
have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of
the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange
Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal
control over financial reporting of the Company and its Subsidiaries.

 

(t)       Certain
Fees. Except for (i) a sales commission to be paid to the Placement Agent in an amount equal to 8% of the purchase price of
the Notes, payable at the Company’s option, in cash or additional convertible notes having the same terms and conditions
as the Purchased Note, and (ii) and warrants to purchase a number of shares of Common Stock equal to ten percent (10.0%) of the
number of shares of Common Stock into which the Notes are convertible as of the date of issuance, exercisable at the same price
as the Warrant issued to the Purchaser, to be issued to the Placement Agent, no brokerage or finder’s fees or commissions
are or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Purchaser shall have
no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated by this Agreement.

 

(u)       Private
Placement. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchaser as contemplated hereby.
The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.

 

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(v)       Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.

 

(w)       Registration
Rights. Except as disclosed in the Company’s SEC Reports, no Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company or any Subsidiary.

 

(x)       Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company
has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance requirements. The Common Stock is currently eligible
for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is current
in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such
electronic transfer.

 

(y)       Disclosure.
All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company and its Subsidiaries, their
respective businesses and the transactions contemplated hereby, is true and correct and does not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.

 

(z)       No
Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering
of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require
the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any
Trading Market on which any of the securities of the Company are listed or designated.

 

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(aa)   Solvency.
Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds
the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry
on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular
capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability
thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate
all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).
The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. For the purposes of this
Agreement, “Indebtedness” means (x) any liabilities for borrowed money or amounts owed in excess of $50,000
(other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent
obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated
balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due under
leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to
any Indebtedness.

 

(bb)   Tax
Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local
income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due
on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of
all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or
of any Subsidiary know of no basis for any such claim.

 

(cc)   No
General Solicitation. Neither the Company nor any Person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchaser
and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

 

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(dd)   Foreign
Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent
or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns
from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person
acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision
of the Foreign Corrupt Practices Act of 1977, as amended.

 

(ee)   Regulation
M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of,
any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Placement Agent in connection
with the placement of the Securities.

 

(ff)   Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent,
employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

 

(gg) Money
Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money
Laundering Laws”), and no Action or Proceeding by or before any court or governmental agency, authority or body or any
arbitrator involving the Company and any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of
the Company or any Subsidiary, threatened.

 

(hh) No
Disqualification Events.  With respect to the Securities to be offered and sold hereunder in reliance on Rule 506 under
the Securities Act, none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other
officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding
voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under
the Securities Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person”
and, together, “Issuer Covered Persons”) is subject to any of the "Bad Actor" disqualifications described
in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification
Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person
is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under
Rule 506(e), and has furnished to the Purchaser a copy of any disclosures provided thereunder.

 

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(ii)       Other
Covered Persons. Other than the Placement Agent, the Company is not aware of any person (other than any Issuer Covered Person)
that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale
of any Securities.

 

3.2       Representations
and Warranties of the Purchaser. Purchaser hereby represents and warrants to the Company as follows:

 

(a)       Organization;
Authority. Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability
company or similar power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise
to carry out its or his obligations hereunder. The execution and delivery of this Agreement and performance by Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all necessary corporate, partnership, limited liability
company or similar action, as applicable, on the part of Purchaser. This Agreement, when delivered by Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding obligation of Purchaser, enforceable against it or him in accordance
with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.

 

(b)       Own
Account. Purchaser understands that the Securities are “restricted securities” and have not been registered under
the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and
not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities
law. Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

 

(c)       Purchaser
Status. At the time Purchaser was offered the Securities, it was, and as of the date hereof it is, either: (i) an “accredited
investor” as defined in Rule 501(a) under the Securities Act or (ii) a “qualified institutional buyer” as defined
in Rule 144A(a) under the Securities Act.

 

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(d)       Experience
of Purchaser. Purchaser, either alone or together with its or his representatives, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities.
Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete
loss of such investment.

 

(e)       General
Solicitation. Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented
at any seminar or any other general solicitation or general advertisement.

 

(f)       Access
to Information. Purchaser acknowledges that it or he has had the opportunity to review this Agreement (including all exhibits
and schedules thereto) and the SEC Reports and has been afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the terms and conditions of the Securities and the merits
and risks of investing in the securities of the Company; (ii) access to information about the Company and its financial condition,
results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii)
the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or
expense that is necessary to make an informed investment decision with respect to the investment. 

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1       Transfer
Restrictions.

 

(a)       The
Securities and the Underlying Shares only may be disposed of in compliance with state and federal securities laws. In connection
with any transfer of Securities or the Underlying Shares other than pursuant to an effective registration statement or Rule 144,
to the Company or to an Affiliate of a Purchaser, the Company may require the transferor thereof to provide to the Company an opinion
of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities
or Conversion Shares under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound
by the terms of this Agreement and shall have the rights and obligations of a Purchaser under this Agreement.

 

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(b)       The
Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities or Underlying
Shares in the following form:

[NEITHER] THIS SECURITY [NOR
THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE OR EXERCISABLE] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

4.2       Use
of Proceeds. The Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes,
including the payment of Indebtedness.

 

ARTICLE V.

MISCELLANEOUS

 

5.1       Indemnity.
The Purchaser agrees to indemnify and hold harmless the Company, its officers and directors, employees and its affiliates and their
respective successors and assigns and each other person, if any, who controls any thereof, against any loss, liability, claim,
damage and expense whatsoever (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating,
preparing or defending against any litigation commenced or threatened or any claim whatsoever) arising out of or based upon any
false representation or warranty or breach or failure by the Purchaser to comply with any covenant or agreement made by the Purchaser
herein or in any other document furnished by the Purchaser to any of the foregoing in connection with this transaction.

 

5.2       Modification.
Neither this Agreement nor any provisions hereof shall be modified, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge or termination is sought.

 

5.3       Notices.
Any notice, demand or other communication which any party hereto may be required, or may elect, to give to anyone interested hereunder
shall be sufficiently given if (a) deposited, prepaid, with a recognized international courier service, (b) delivered personally,
(c) upon the expiration of twenty four (24) hours after transmission, if sent by facsimile if a confirmation of transmission is
produced by the sending machine (and a copy of each facsimile promptly shall be sent as provided in clause (a), in each case to
the parties at their respective addresses set forth below their signatures to this Agreement (or at such other address for a party
as shall be specified by like notice; provided that the notices of a change of address shall be effective only upon receipt thereof).

 

5.4       Counterparts.
This Agreement may be executed through the use of separate signature pages or in any number of counterparts and by facsimile, and
each of such counterparts shall, for all purposes, constitute one agreement binding on all parties, notwithstanding that all parties
are not signatories to the same counterpart. Signatures may be facsimiles.

 

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5.5       Binding
Effect. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the parties and
their heirs, executors, administrators, successors, legal representatives and assigns.

 

5.6       Entire
Agreement. This Agreement (including the exhibits and schedules hereto) contain the entire agreement of the parties and there
are no representations, covenants or other agreements except as stated or referred to herein and therein.

 

5.7       Assignability.
This Agreement is not transferable or assignable by the undersigned.

 

5.8       Applicable
Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of New York,
without giving effect to conflicts of law principles. If there is any litigation relating to this Agreement or the transaction
contemplated hereby, the parties hereto irrevocably consent to the jurisdiction of the courts of the State of New York and of any
federal court located in such State in connection with any action or proceeding arising out of or relating to this Agreement, any
document or instrument delivered pursuant to, in connection with or simultaneously with this Agreement, or a breach of this Agreement
or any such document or instrument. In any such action or proceeding, each party hereto waives personal service of any summons,
complaint or other process and agrees that service thereof may be made in accordance with Section 5.3. Within 30 days after such
service, or such other time as may be mutually agreed upon in writing by the attorneys for the parties to such action or proceeding,
the party so served shall appear or answer such summons, complaint or other process. EACH PARTY HERETO WAIVES TRIAL BY JURY
IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT OR ANY BREACH OR ALLEGED BREACH HEREOF.

 

(Signature Pages Follow)

 

    18

     

    

 

IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the day and year this subscription has been accepted by the Company as set forth below.

 

Name of Purchaser: ____________________________________________________

 

Name of Purchaser, if Joint: _____________________________________________

 

Signature of Individual or Authorized Signatory: __________________________

 

Signature of Purchaser, if Joint Individuals: ________________________________________

 

Name of Authorized Signatory, if Entity: ____________________________________

 

Title of Authorized Signatory, if Entity: _____________________________________

 

Email Address of Authorized Signatory: ___________________________________________

 

Facsimile Number of Authorized Signatory: _________________________________________

 

Address for Notices to Purchaser: 

 

__________________________________

 

__________________________________

 

Address for Delivery of Securities to Purchaser (if not same
as address for notice):

 

__________________________________

 

__________________________________

 

Subscription Amount: $____________

Principal Amount and Purchase Price of Note: $___________ Number
of Warrants: __________

EIN Number: _______________________

 

ACCEPTANCE OF SUBSCRIPTION

		 AIR
INDUSTRIES GROUP

 

By: _____________________________

Daniel R. Godin

President and Chief Executive Officer

Date: February __, 2017

 

    19

     

    

  

EXHIBIT A

 

NEITHER THIS NOTE NOR THE SECURITIES INTO
WHICH THIS NOTE ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ACCORDINGLY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE BE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
SAID ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO AIR INDUSTRIES GROUP THAT SUCH REGISTRATION IS NOT REQUIRED.

 

	No. AIRI-	 
	Principal Amount:	 Issue Date: February , 2017

 

8% Subordinated Convertible Note due January 31, 2019

 

FOR VALUE RECEIVED,
AIR INDUSTRIES GROUP, a Nevada corporation (the “Company”) hereby promises to pay to the order of or assigns (the "Holder"),
without demand, the sum of _____________________ Dollars ($ ), together with accrued
interest on the unpaid principal amount thereof, on January 31, 2019 (the "Maturity Date"), or such earlier date as the
same may become due as provided in Section 3 hereof.

 

Interest on the
unpaid principal amount of this Note shall be payable at the rate of eight percent (8%) per annum, in cash, or if the Company is
prohibited by applicable law or the holder of the Senior Indebtedness from paying interest in cash, or otherwise elects to do so,
the Company may pay interest at the rate of twelve percent (12%) per annum in the form of additional notes having the same terms
and conditions as this Note, on the last day of February, May, August and November of each year, commencing May 31, 2017 (each
an “Interest Payment Date”) from the date of issuance or the most recent Interest Payment Date until the principal
and accrued interest hereon has been paid in full. Upon the occurrence and continuation of an Event of Default (as defined in Section
3 below), interest shall accrue and be payable in cash at the rate of 12% per annum. Interest on this Note shall be calculated
based upon a year consisting of 365 days and actual days elapsed (including the first day but excluding the last day) occurring
in the period for which interest is payable.

 

This Note is one
of a series of the Company’s two-year 8% subordinated convertible notes due January 31, 2019 (together with any other Notes
issued as contemplated by this Note, the “Notes”).

 

This Note may be prepaid
in whole or in part at any time but only with the prior consent of the Holder. All payments made pursuant to this Note shall be
applied first to reimbursable expenses, interest accrued, if any, and then principal.

 

The following is a
statement of rights of the Holder and the conditions to which this Note is subject, and to which the Holder, by acceptance of this
Note, agrees:

 

1.     Subordination. (a)      This
Note will be subordinate and inferior to the Company’s Senior Indebtedness (as hereinafter defined). The Company for itself,
its successors and assigns, covenants and agrees and the Holder of this Note, for himself, his successors and assigns, by his acceptance
of this Note likewise covenants and agrees that, to the extent provided below, the payment of all amounts due pursuant to this
Note is hereby expressly subordinated and junior in right of payment to the extent and in the manner hereinafter set forth, to
the Company’s Senior Indebtedness. As used herein, the term “Senior Indebtedness” shall mean the principal of,
and interest and premium, if any, on any and all, (i) indebtedness of the Company for borrowed money or obligations with respect
to which the Company is a guarantor, to banks, insurance companies, or other financial institutions or entities regularly engaged
in the business of lending money, in each case as in effect as of the date hereof (other than the Notes), or as may be borrowed
hereafter, including without limitation, indebtedness incurred by one or more of the Company’s subsidiaries under the Amended
and Restated Revolving Credit, Term Loan, Equipment Line and Security Agreement, dated as of June 27, 2013 among Air Industries
Machining, Corp., Welding Metallurgy, Inc., Nassau Tool Works, Inc., Woodbine Products Inc., Eur-Pac Corporation, Electronic Connection
Corporation, The Sterling Engineering Corporation, and PNC Bank, National Association, as agent for the various lenders named therein,
as amended as of the date hereof (the “Loan Agreement”), the payment of which has been guaranteed by the Company and
Air Realty Group, LLC (the “Guarantors”), (ii) any such indebtedness or any debentures, notes or other evidence of
indebtedness issued in exchange for or to refinance such Senior Indebtedness, or any indebtedness arising from the satisfaction
of such Senior Indebtedness by a Guarantor, provided that such indebtedness issued in exchange for or to refinance Senior Indebtedness
or arising from the satisfaction of Senior Indebtedness by a Guarantor is on commercially reasonable terms as of the date of incurrence
not to exceed the principal amount under such Senior Indebtedness and provided further that the Company provides the Holder with
prior written notice of such action.

 

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(b)     Upon the
acceleration of any Senior Indebtedness or upon the maturity of all or any portion of the principal amount of any Senior Indebtedness
by lapse of time, acceleration or otherwise, all such Senior Indebtedness which has been so accelerated or matured shall first
indefeasibly be paid in full before any payment is made by the Company or any person acting on behalf of the Company on account
of any obligations evidenced by this Note.

 

(c)     The Company
shall not pay any principal portion of this Note, or interest accrued hereon, if at such time there exists a Blockage Event (as
hereafter defined) and written notice thereof has been given to the Company and the Holder by the holders of the Senior Indebtedness.

 

(d)     A “Blockage
Event” is deemed to exist for the period of time commencing on the date of receipt by the Holder of written notice of the
occurrence of a Default or an Event of Default (as defined in the instruments evidencing the Senior Indebtedness), provided that
the failure to pay accrued interest on this Note or the other Notes when due shall not give rise to a Blockage Event in the absence
of another Default or Event of Default, which notice shall specify such Default or Event of Default, and ending on:

 

(i)     the date
such Default or Event of Default under the Senior Indebtedness, as applicable, is cured or waived, provided that such Default or
Event of Default is the result of the failure to pay any amount due thereunder; or

 

(ii)     in the
case of any other Default or Event of Default under the Senior Indebtedness, the earlier of (A) the date on which Holder has received
written notice of such Default or Event of Default shall have been cured or waived and (B) the date that is 365 days after the
occurrence of such Default or Event of Default, provided that a Blockage Event with respect to a single specified Default or Event
of Default may be deemed to occur only once for each twelve-month period, provided, further, that no Default or Event of Default
that existed at the commencement of, or during the pendency of, a Blockage Event shall serve as the basis for the institution of
any subsequent Blockage Event.

 

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A Blockage Event shall
not be deemed to have existed during the period of time commencing on the date upon which the holder of this Note or holders of
other Notes accelerate payment of the principal amount of this Note or such other Notes as a result of any Event of Default hereunder
or under such other Notes and ending on the 365th day after written notice of such acceleration given by the holder
or such other holders to the Company and the holders of the instruments evidencing the Senior Indebtedness; provided that in no
event shall the Company pay the holder of this Note or the holders of any other Notes the principal amount so accelerated if a
Blockage Event then exists until the Senior Indebtedness has been paid in full.

 

(e)       At
any time there exists a Blockage Event, (i) the Company shall not, directly or indirectly, make any payment of any part of this
Note, (ii) the Holder shall not demand or accept from the Company or any other person any such payment or cancel, set-off or otherwise
discharge any part of the indebtedness represented by this Note, and (iii) neither the Company nor the Holder shall otherwise take
or permit any action prejudicial to or inconsistent with the priority position of any holder of Senior Indebtedness over the Holder
of this Note.

 

(f)       No
right of any holder of Senior Indebtedness to enforce the subordination provisions of this obligation shall be impaired by any
act or failure to act by the Company or the Holder or by their failure to comply with this Note or any other agreement or document
evidencing, related to or securing the obligations hereunder. Without in any way limiting the generality of the preceding sentence,
the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Holder, without
incurring responsibility to the Holder and without impairing or releasing the subordination provided in this Note or the obligations
of the Holder to the holders of Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms
of payment of any Senior Indebtedness provided that such change does not materially impact Holder in an adverse manner; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing any Senior Indebtedness; (iii) release
any person or entity liable in any manner for the collection of any Senior Indebtedness; and (iv) exercise or refrain from exercising
any rights against the Company or any other person or entity.

 

(g)       In
the event that the Company shall make any payment or prepayment to the Holder on account of the obligations under this Note which
is prohibited by this Section, such payment shall be held by the Holder, in trust for the benefit of, and shall be paid forthwith
over and delivered to, the holders of Senior Indebtedness (pro rata as to each of such holders on the basis of the respective amounts
and priorities of Senior Indebtedness held by them) to the extent necessary to pay all Senior Indebtedness due to such holders
of Senior Indebtedness in full in accordance with its terms (whether or not such Senior Indebtedness is due and owing), after giving
effect to any concurrent payment or distribution to or for the holders of such Senior Indebtedness.

 

(h)       After
all Senior Indebtedness indefeasibly is paid in full and until the obligations under the Note are paid in full, the Holder shall
be subrogated to the rights of holders of Senior Indebtedness to the extent that distributions otherwise payable to the Holder
have been applied to the payment of Senior Indebtedness. For purposes of such subrogation, no payments or distributions to holders
of such Senior Indebtedness of any cash, property or securities to which the Holder would be entitled except for the provisions
of this Section and no payment over pursuant to the provisions of this Section to holders of such Senior Indebtedness by the Holder,
shall, as between the Company, its creditors other than holders of such Senior Indebtedness, and the Holder, be deemed to be a
payment by the Company to or on account of such Senior Indebtedness, it being understood that the provisions of this Section are
solely for the purpose of defining the relative rights of the holders of such Senior Indebtedness, on the one hand and the Holder,
on the other hand.

 

    22

     

    

 

(i)       In
any insolvency, receivership, bankruptcy, dissolution, liquidation or reorganization proceeding, or in any other proceeding, whether
voluntary or involuntary, by or against the Company under any bankruptcy or insolvency law or laws relating to relief of debtors,
to compositions, extensions or readjustments of indebtedness:

 

(i)      the claims
of any holders of Senior Indebtedness against the Company shall be paid indefeasibly in full in cash or such payment shall have
been provided for in a manner acceptable to the holders of at least a majority of the then outstanding principal amount of the
Senior Indebtedness before any payment is made to the Holder;

 

(ii)     until all
Senior Indebtedness is indefeasibly paid in full in cash or such payment shall have been provided for in a manner acceptable to
the holders of at least a majority of the then outstanding principal amount of the Senior Indebtedness before any payment is made
to the Holder, any distribution to which the Holder would be entitled but for this Section shall be made to holders of Senior Indebtedness,
except for distribution of securities issued by the Company which are subordinate and junior in right of payment to the Senior
Indebtedness; and

 

(iii)       the
holders of Senior Indebtedness shall have the right to enforce, collect and receive every such payment or distribution and give
acquittance therefor. If, in or as a result of any action case or proceeding under Title 11 of the United States Code, as amended
from time to time, or any comparable statute, relating to the Company, the holders of the Senior Indebtedness return, refund or
repay to the Company, or any trustee or committee appointed in such case or proceeding receive any payment or proceeds of any collateral
in connection with such action, case or proceeding alleging that the receipt of such payments or proceeds by the holders of the
Senior Indebtedness was a transfer voidable under state or federal law, then the holders of the Senior Indebtedness shall not be
deemed ever to have received such payments or proceeds for purposes of this Note in determining whether and when all Senior Indebtedness
has been paid in full and the Company shall pay or cause to be paid, and the Holder shall be entitled to receive any such funds,
proceeds or collateral to satisfy all amounts due hereunder. In the event the holders of Senior Indebtedness receive amounts in
excess of payment in full (cash) of amounts outstanding in respect of Senior Indebtedness (without giving effect to whether claims
in respect of the Senior Indebtedness are allowed in any insolvency proceeding), the holders of Senior Indebtedness shall pay such
excess amounts to the Holder.

 

(k)       By
its acceptance of this Note, the Holder agrees to execute and deliver such documents as may be reasonably requested from time to
time by the Company or the holder of any Senior Indebtedness in order to implement the foregoing provisions of this Section.

 

2.       Conversion At
the Option of the Holder.

 

(a) (1) The Holder shall
have the option at any time while this Note remains outstanding to convert the unpaid principal amount and accrued interest thereon
into shares of the Company’s Common Stock at a conversion price of $____ per share, subject to adjustment as provided in
Section 2(c) below (the “Conversion Price”). The number of shares of Common Stock issuable upon any conversion of this
Note shall equal the outstanding principal amount of this Note to be converted, plus the amount of any accrued but unpaid interest
on this Note through the date (the “Conversion Date”) the Company receives a notice of conversion in the form of Schedule
I annexed hereto (a “Conversion Notice”), divided by the Conversion Price on the Conversion Date. The Holder shall
effect conversions under this Section 2(a)(1) by delivering to the Company a Conversion Notice, together with a schedule in the
form of Schedule II annexed hereto (the “Conversion Schedule”). If the Holder is converting less than all of the principal
amount of this Note, the Company shall promptly deliver to the Holder a Conversion Schedule indicating the principal amount (and
accrued interest) which has not been converted.

 

    23

     

    

 

(2) Upon conversion of
this Note, the Company shall promptly (but in no event later than three (3) trading days after the Conversion Date) issue or cause
to be issued and cause to be delivered to or upon the written order of the Holder and in such name or names as the Holder may designate
a certificate for the shares of Common Stock issuable upon such conversion (the “Conversion
Shares”). The Holder, or any person so designated by the Holder to receive
the Conversion Shares, shall be deemed to have become holder of record of such Conversion Shares as of the Conversion Date. The
Company shall, upon request of the Holder, use its reasonable best efforts to deliver the Conversion Shares electronically through
DTC.

 

(3) The Holder shall
not be required to deliver the original Note in order to effect a conversion hereunder. Execution and delivery of the Conversion
Notice shall have the same effect as cancellation of the original Note and issuance of a new Note representing the remaining outstanding
principal amount; provided that the cancellation of the original Note shall not be deemed effective until a certificate
for the Conversion Shares is delivered to the Holder, or the Holder or its designee receives a credit for the Conversion Shares
to its balance account with DTC through its Deposit Withdrawal Agent Commission System. The Holder shall deliver the original Note
to the Company within thirty (30) days after the conversion of the entire Note hereunder, provided, that the Holder’s
failure to so deliver the original Note shall not affect the validity of such conversion or any of the Company’s obligations
under this Note, and the Company’s sole remedy for the Holder’s failure to deliver the original Note shall be to obtain
an affidavit of lost Note from the Holder.

 

(4) The Company’s
obligations to issue and deliver Conversion Shares upon conversion of this Note in accordance with the terms and subject to the
conditions hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any judgment against any person or any action to enforce
the same, or any set-off, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or
any other person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other person,
and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection
with the issuance of such Conversion Shares (other than such limitations contemplated by this Note).

 

(5) If by the fifth
(5th) trading day after a Conversion Date the Company fails to deliver or cause to be delivered to the Holder such Conversion
Shares in such amounts and in the manner required pursuant to Section 2(a)(2), then
the Holder will have the right to rescind such conversion.

 

(6) If by the third
(3rd) trading day after a Conversion Date the Company fails to deliver or cause to be delivered to the Holder such Conversion
Shares in such amounts and in the manner required pursuant to Section 2(a)(2), and if after such third (3rd) trading
day the holder purchases (in an open market transaction or otherwise) shares of common stock to deliver in satisfaction of a sale
by the holder of the Conversion Shares which the Holder anticipated receiving upon such conversion (a “buy-in”), then
the Company shall, at the option of the Holder (in his or its sole discretion), either (i) pay cash to the Holder (in addition
to any other remedies available to or elected by the Holder) in an amount equal to the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of common stock so purchased (the “buy-in price”), at which point the
Company’s obligation to deliver such certificate (and to issue such common stock) shall terminate, or (ii) promptly honor
its obligation to deliver to the Holder a certificate or certificates representing such common stock and pay cash to the holder
in an amount equal to the excess (if any) of the buy-in price over the product of (a) such number of shares of common stock, times
(b) the closing price on the date of the event giving rise to the Company’s obligation to deliver such certificate.

 

    24

     

    

 

(7) Each certificate
for Conversion Shares shall bear a restrictive legend and any certificate issued at any time in exchange or substitution for any
certificate bearing such legend, shall also bear such legend.

 

(b) No Fractional
Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note.   As
to any fraction of a share which a Holder would otherwise be entitled to purchase upon such conversion, the Company shall at its
election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the
volume weighted average price on the Conversion Date or round up to the next whole share.

 

(c) Adjustments to
Conversion Price. The Conversion Price is subject to adjustment from time to time as set forth in this Section 2(c).

 

(1) Stock Dividends
and Splits. If the Company, at any time while this Note is outstanding, (i) pays a stock dividend on its Common Stock or otherwise
makes a distribution of Common Stock on its Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number
of shares, or (iii) combines outstanding shares of Common Stock into a smaller number of shares, then in each such case the Conversion
Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately
before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such
event. Any adjustment made pursuant to clause (i) of this Section shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii)
or (iii) of this Section shall become effective immediately after the effective date of such subdivision or combination.

 

(2) Pro Rata Distributions.
If the Company, at any time while this Note is outstanding, distributes to all holders of Common Stock (i) evidences of its indebtedness,
(ii) any security (other than a distribution of Common Stock described in Section 2(c)(1)(i)), (iii) rights or warrants
to subscribe for or purchase any security, or (iv) cash or any other asset (in each case, “Distributed Property”),
then the Company shall deliver to the Holder (on the effective date of such distribution), the Distributed Property that the Holder
would have been entitled to receive in respect of the Conversion Shares for which this Note could have been converted immediately
prior to the date on which holders of Common Stock became entitled to receive such Distributed Property.

 

    25

     

    

 

(3) Fundamental
Changes. If, at any time while this Note is outstanding, (i) the Company, directly or indirectly, in one or more related transactions
effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects
any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one
or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by
the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group
acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent conversion
of this Note, the Holder shall have the right to receive, for each share of Common Stock that would have been issuable upon such
conversion immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder, the number of shares
of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional
consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of
the number of shares of Common Stock into which this Note may be converted immediately prior to such Fundamental Transaction. For
purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting
the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice
as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice
as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Transaction. The Company
shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor
Entity”) to assume in writing all of the obligations of the Company under this Note and the other Transaction Documents
in accordance with the provisions of this Section pursuant to written agreements in form and substance reasonably satisfactory
to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option
of the Holder, deliver to the Holder in exchange for this Note a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Note which is convertible into a corresponding number of shares of capital
stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion
of this Note (without regard to any limitations on the conversion of this Note) prior to such Fundamental Transaction, and with
conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative
value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Note immediately
prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder.
Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that
from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring
to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company
and shall assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect
as if such Successor Entity had been named as the Company herein.

 

(4) Calculations.
All calculations under this Section 2(c) shall be made to the nearest cent or the nearest 1/100th of a share, as applicable. The
number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of
the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

 

    26

     

    

 

(5) Notice of Adjustments.
Upon the occurrence of each adjustment pursuant to this Section 2D, the Company at its expense will promptly compute such adjustment
in accordance with the terms hereof and prepare and deliver to the Holder a certificate describing in reasonable detail such adjustment
and the transactions giving rise thereto, including all facts upon which such adjustment is based.

 

(6) Notice of Corporate
Events. If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of
its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock
of the Company, (ii) authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for a Fundamental
Change or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company
shall deliver to the holders of the Notes a notice describing the material terms and conditions of such transaction, at least twenty
(20) trading days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in order to ensure
that the holders of the Notes are given the practical opportunity to convert the Notes prior to such time so as to participate
in or vote with respect to such transaction.

 

3.        Events of Default.

 

(a) The occurrence
of any of the following events shall constitute a default ("Event of Default"):

 

(i)        Failure to
Pay Principal or Interest. The Company fails to pay any installment of principal, interest or other sum due under this Note
within ten days after the same becomes due, including without limitation the failure to pay due to the existence of a Blockage
Event.

 

(ii)       Receiver or
Trustee. The Company shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a
receiver or trustee for it or for a substantial part of its property or business; or such a receiver or trustee shall otherwise
be appointed without the consent of the Company is not dismissed within sixty (60) days of appointment.

(iii)      Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings or relief under any bankruptcy
law or any law, or the issuance of any notice in relation to such event, for the relief of debtors shall be instituted by or against
the Company and if instituted against Company are not dismissed within sixty (60) days of initiation.

 

(b) Upon the occurrence
and during the continuance of any Event of Default, upon notice to the Company and the holders of the Senior Indebtedness, the
holders of a majority of the unpaid principal amount of the Notes then outstanding may demand the payment of the unpaid principal
amount of the Notes, which together with all interest accrued thereon and other amounts payable hereunder shall become immediately
due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, subject
to the provisions of Section 1(a) hereof, and the Holder may immediately enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law.

 

4.       Pro
Rata Treatment of Noteholders. Each payment or prepayment of principal of this Note shall be made to the holder of the Notes
pro rata in accordance with the respective unpaid principal amounts of such holders’ respective Notes. Each payment of interest
on the Notes shall be made to the holders of the Notes pro rata in accordance with the amounts of interest due and payable to such
holders under such holders’ respective Notes. Each distribution of cash, property, securities or other value received by
the holders of the Notes in respect of the indebtedness outstanding under the Notes, after payment of collection and other expenses
as provided in the Notes, shall be apportioned to such holders pro rata in accordance with the respective unpaid principal amounts
of and interest on such holders’ respective Notes.

 

    27

     

    

 

5.       Note Register.
The Company shall maintain a transfer agent, which may be the transfer agent for the Common Stock or the Company itself, for the
registration of Notes. Upon any transfer of this Note in accordance with the provisions hereof, the Company shall register or cause
the transfer agent to register such transfer on the Note register.

 

6.       Record Owner.
The Company may deem the person in whose name this Note shall be registered upon the registry books of the Company to be, and may
treat such person as, the absolute owner of this Note, and the Company shall not be affected by any notice to the contrary. All
such payments and such conversion shall be valid and effective to satisfy and discharge the liability upon this Note to the extent
of the sum or sums so paid or the conversion so made.

 

7.       Miscellaneous.

 

(a)       Waiver.
The holders of a majority of the unpaid principal amount of the Notes then outstanding may waive any provision or term of this
Note. No failure or delay on the part of Holder hereof in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise
thereof or of any other right, power or privilege. All rights and remedies existing hereunder are cumulative to, and not exclusive
of, any rights or remedies otherwise available.

 

(b)
Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall
be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii)deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or
(iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder
shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting
facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where
such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during
normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be: (i) if to the Company to: Air Industries Group, 360 Motor Parkway, Suite 100, Hauppauge,
New York 11788, Attn: Daniel R. Godin, President and CEO, facsimile: (631) 206-9152,
with a copy by facsimile only to: Eaton & Van Winkle LLP, Three Park Avenue, 16th
floor, New York, NY 10016, Attn: Vincent J. McGill, Esq., facsimile: (212) 779-9928, and (ii) if to the Holder, at the address(es)
set forth in the Securities Purchase Agreement.

 

(c)       Terms.
The term "Note" and all reference thereto, as used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or supplemented.

 

(d)       Successors
and Assigns. This Note shall be binding upon the Company and its successors and assigns, and shall inure to the benefit of
the Holder and its successors and assigns.

 

    28

     

    

 

(e)       Expenses.
The Company shall reimburse Holder for all reasonable costs and expenses, including without limitation, reasonable attorneys’
fees and expenses, incurred in connection with (i) drafting, negotiating, executing and delivering any amendment, modification
or waiver of, or consent with respect to, any matter relating to the rights of Holder hereunder and (ii) enforcing any provisions
of this Note and/or collecting any amounts due under this Note.

 

(f)       Governing
Law. This Note shall be governed by and construed in accordance with the laws of the State of New York. Any action brought
by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the civil
or state courts of New York or in the federal courts located in the State and county of New York. Both parties and the individual
signing this Agreement on behalf of the Company agree to submit to the jurisdiction of such courts. The prevailing party shall
be entitled to recover from the other party its reasonable attorney's fees and costs.

 

(g)     Savings Clause.
Nothing contained herein shall be deemed to establish or require the payment of a rate of interest or other charges in excess of
the maximum permitted by applicable law. In the event that the rate of interest required to be paid or other charges hereunder
exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the
Company to the Holder and thus refunded to the Company.

 

IN WITNESS WHEREOF, Company has caused
this Note to be signed in its name by an authorized officer as of the day set forth above.

 

	 	AIR
INDUSTRIES GROUP  

                            

                            

By: _____________________________

Daniel R. Godin

President and Chief Executive Officer

 

    29

     

    

 

  

Schedule I

 

FORM OF CONVERSION NOTICE

 

(To be executed by the registered Holder
in order to convert Note)

 

The undersigned hereby elects to convert
the specified principal amount of the 8% Subordinated Convertible Note (the “Note”) into shares of common stock, par
value $0.001 per share (the “Common Stock”), of AIR INDUSTRIES GROUP, a Nevada corporation, according to the conditions
hereof, as of the date written below.

 

	 	__________________________________________________________________
	 	Date to Effect Conversion
	 	 
	 	__________________________________________________________________
	 	Principal amount of Note owned prior to conversion
	 	 
	 	__________________________________________________________________
	 	
        Principal amount of Note to be converted

        (including accrued but unpaid interest
        thereon)

	 	 
	 	__________________________________________________________________
	 	Number of shares of Common Stock to be Issued
	 	 
	 	__________________________________________________________________
	 	Applicable Conversion Price 
	 	 
	 	__________________________________________________________________
	 	Principal amount of Note owned subsequent to Conversion
	 	 
	 	__________________________________________________________________
	 	Name of Holder
	 	 
	 	By_______________________________________________________________
	 	Name:
	 	Title: 

 

    30

     

    

 

Schedule II

 

CONVERSION SCHEDULE

 

This Conversion Schedule reflects conversions
of the 8% Subordinated Convertible Note issued by AIR INDUSTRIES GROUP

 

	Date of Conversion	Amount of Conversion	Aggregate Principal Amount Remaining

                                                                                Subsequent to Conversion

	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

    31

     

    

 

EXHIBIT B

 

NEITHER THIS SECURITY NOR THE SECURITIES
FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

 

AIR
INDUSTRIES GROUP

 

	Warrant Shares: 	 February , 2017

  

THIS COMMON STOCK PURCHASE
WARRANT (the “Warrant”) certifies that, for value received, or assigns (the “Holder”) is
entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or
prior to the close of business on January 31, 2022 (the “Termination Date”) but not thereafter, to subscribe
for and purchase from Air Industries Group, a Nevada corporation (the “Company”), up to ___________ (______)
shares (as subject to adjustment hereunder, the “Warrant Shares”) of the Company’s common stock (“Common
Stock”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as
defined in Section 2(b).

 

Section 1.
     Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings
indicated in this Section 1:

 

“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Board
of Directors” means the board of directors of the Company.

 

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“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.

 

“Commission”
means the United States Securities and Exchange Commission.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Liens”
means a lien, charge pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

 

“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted
from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

  

“Trading
Day” means a day on which the Common Stock is traded on a Trading Market.

 

“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on
the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange or the OTCQB or OTCQX (or any successors to any of the foregoing.

 

“Transfer
Agent” means Broadridge Corporate Issuer Solutions, Inc., the current transfer agent of the Company, with a mailing address
of PO Box 1342, Brentwood, New York 11717 and a facsimile number of (215) 553-5402, and any successor transfer agent of the Company.

 

“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed
or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if the OTCQB or OTCQX is not a Trading Market,
the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTCQB or OTCQX, (c)
if the Common Stock is not then listed or quoted for trading on the OTCQB or OTCQX and if prices for the Common Stock are then
reported in the “Pink Sheets” published by Pink OTC Markets Group, Inc. (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all
other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith
by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

    33

     

    

 

Section 2.
     Exercise.

 

a)       Exercise
of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times
on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate
by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed
facsimile copy (or e-mail attachment) of the Notice of Exercise form annexed hereto. Within three (3) Trading Days following the
date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable
Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure
specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be
required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required.
Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company
until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which
case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final
Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total
number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records
showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice
of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares
hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on
the face hereof.

 

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b)       Exercise
Price. The exercise price per share of the Common Stock under this Warrant shall be Dollars ($ ), subject to adjustment
hereunder (the “Exercise Price”).

 

c)       Cashless
Exercise. If at the time of exercise hereof there is no effective registration statement registering for sale or resale the
Warrant Shares, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise”
in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)]
by (A), where:

 

(A) = the
last VWAP immediately preceding the time of delivery of the Notice of Exercise giving rise to the applicable “cashless exercise”,
as set forth in the applicable Notice of Exercise (to clarify, the “last VWAP” will be the last VWAP as calculated
over an entire Trading Day such that, in the event that this Warrant is exercised at a time that the Trading Market is open, the
prior Trading Day’s VWAP shall be used in this calculation);

 

(B) = the
Exercise Price of this Warrant, as adjusted hereunder; and

 

(X) =
the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant
if such exercise were by means of a cash exercise rather than a cashless exercise.

 

If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9)
of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised, and the
holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant Shares.  The Company
agrees not to take any position contrary to this Section 2(c).

 

		d)	Mechanics of Exercise.

 

i.       Delivery
of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer
Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository
Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant
in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or
resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical
delivery of a certificate, registered in the Company’s share register in the name of the holder or its designee, for the
number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the
Notice of Exercise by the date that is three (3) Trading Days after the delivery to the Company of the Notice of Exercise (such
date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise the Holder shall be deemed
for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been
exercised, irrespective of the date of delivery of the Warrant Shares; provided payment of the aggregate Exercise Price (other
than in the case of a Cashless Exercise) is received within three Trading Days of delivery of the Notice of Exercise. The Company
agrees to maintain a transfer agent that is a participant in the FAST program so long as this warrant remains outstanding and exercisable.

 

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ii.       Delivery
of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder
and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.

 

iii.       Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i)
by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

iv.       Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder,
if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder
is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise
purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated
receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount,
if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common
Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required
to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such
purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver
to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise
and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000
to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such
purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the
Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the
Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right
to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon
exercise of the Warrant as required pursuant to the terms hereof.

 

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v.       No
Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the
Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.

 

vi.       Charges,
Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder;
provided, however, that in the event Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder
and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental
thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees
to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day
electronic delivery of the Warrant Shares.

 

vii.       Closing
of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.

 

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Section 3.Certain
Adjustments.

 

a)       Stock
Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution of capital stock in respect of its Common Stock, (ii) subdivides outstanding shares of Common Stock into a
larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller
number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then
in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant
shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment
made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders
entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of
a subdivision, combination or re-classification.

 

b)       Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues
or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired
if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant immediately before
the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights.

 

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c)       Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets
in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group
acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share
purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent
exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon
such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard
to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant
is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise
of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to
apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in
a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder
shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental
Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor
(the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the
other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance
reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction
and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number
of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable
and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock
(but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value
of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting
the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably
satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity
shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this
Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity),
and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant
and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

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d)       Calculations.
All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

e)       Notice
to Holder.

 

i.       Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly
deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment
to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

ii.       Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer
of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email
to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least
20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice
or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified
in such notice. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice
to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

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Section 4.      Transfer
of Warrant.

 

a)       Transferability.
Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof, this Warrant and
all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender
of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination
or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance
herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b)       New
Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the
Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants
to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the date
hereof and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c)       Warrant
Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and
for all other purposes, absent actual notice to the contrary.

 

d)       Transfer
Restrictions. (i) If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer
of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and
under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or
current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer,
that the Holder or transferee of this Warrant, as the case may be, provides to the Company an opinion of counsel, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to the effect that the transfer of this Warrant does
not require registration under the Securities Act.

 

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(ii) The
Holder will not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of (or enter into any transaction which
is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise) by the Holder of this Warrant, the Warrant Shares and any other securities issuable
upon exercise hereof.

 

e)       Representation
by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any
exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for
distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities
law, except pursuant to sales registered or exempted under the Securities Act.

 

Section 5.      Miscellaneous.

 

a)       No
Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in
Section 3.

 

b)       Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of
the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or stock certificate.

 

c)       Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding
Business Day.

 

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d)       Authorized
Shares.

 

The Company
covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise of the purchase
rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares
may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market
upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise
of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment
for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and non-assessable and free from
all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).

 

Except and
to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions
as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting
the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and non-assessable Warrant Shares upon the exercise of this
Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking
any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.

 

e)       Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed
by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of
conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of
this Warrant shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New
York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for
the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not
to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts,
or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating
to this Warrant. If any party shall commence an action or proceeding to enforce any provisions of this Warrant, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses
incurred in the investigation, preparation and prosecution of such action or proceeding.

 

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f)       Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does
not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

g)       Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all
rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of
this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of
appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.

 

h)       Notices.
Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation,
any Notice of Exercise, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service, addressed to the Company, at the address set forth above Attention: Daniel R. Godin, facsimile number (631)
206-9152, email address kpetersen@airindustriesgroup.com, with a copy to Daniel R. Godin at Dgodin@airindustriesgroup.com
or such other facsimile number, email address or address as the Company may specify for such purposes by notice to the Holders.
Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered
personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile
number or address of such Holder appearing on the books of the Company, or if no such facsimile number or address appears on the
books of the Company. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest
of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in
this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number set forth in this Section on a day that is not
a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date
of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given.

 

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i)       Limitation
of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase
Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder
for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.

 

j)       Remedies.
The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled
to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert
the defense in any action for specific performance that a remedy at law would be adequate.

 

k)       Successors
and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and
shall be enforceable by the Holder or holder of Warrant Shares.

 

l)       Amendment.
This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

m)       Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions
of this Warrant.

 

n)       Headings.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of
this Warrant.

 

(Signature Page Follows)

 

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[Warrant Issued February __, 2017]

 

IN WITNESS WHEREOF, the
Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

  

	 	
        AIR INDUSTRIES GROUP

         

         

	 	
        By:____________________

        Name: Daniel R. Godin

        Title: President and CEO

 

Confirmed

 

 

By: __________________

 

    46

     

    

 

NOTICE OF EXERCISE

 

To:AIR
INDUSTRIES GROUP

 

(1)       The
undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes,
if any.

 

(2)       Payment
shall take the form of (check applicable box):

 

  ☐ in lawful money
of the United States; or

 

  ☐ [if permitted]
the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless
exercise procedure set forth in subsection 2(c).

 

(3)       Please
issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

 

 

The Warrant Shares shall be delivered to
the following DWAC Account Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

 

[SIGNATURE
OF HOLDER]

 

Name of Investing Entity: __________________________

Signature of Authorized Signatory of
Investing Entity: ____________________

Name of Authorized Signatory: ____________________________

Title of Authorized Signatory: _____________________________

Date: _______________

 

    47

     

    

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

 

 

FOR VALUE RECEIVED, _____
shares of Common Stock underlying the foregoing Warrant and all rights evidenced thereby are hereby assigned to _____________.

 

 

Dated:

 

Holder’s Signature:
_______________

 

Holder’s Address: _______________

 

 

NOTE: The signature to this Assignment
Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever.
Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority
to assign the foregoing Warrant.EX-4.1

 Exhibit 4.1 

OFFICER’S CERTIFICATE 

The undersigned, McKesson Corporation, a Delaware corporation (the “Company”), hereby certifies through Brian P. Moore, its Senior
Vice President and Treasurer, pursuant to Sections 2.1, 2.3 and 11.5 of the Indenture, dated as of December 4, 2012 (the “Indenture”), by and between the Company, as Issuer, and Wells Fargo Bank, National Association, as Trustee, as
follows: 
 1. The form and terms of the 0.625% Notes due 2021 (the “2021 Notes”), as set forth on Annex A attached hereto,
the form and terms of the 1.500% Notes due 2025 (the “2025 Notes”), as set forth on Annex B attached hereto and the form and terms of the 3.125% Notes due 2029 (the “2029 Notes”), as set forth on Annex C attached
hereto have been established pursuant to Sections 2.1 and 2.3 of the Indenture and comply with the Indenture. 
 2. The undersigned has read
the Indenture. 
 3. The statements made in this certificate are based upon an examination of the 2021 Notes, the 2025 Notes and the 2029
Notes under the Indenture, upon an examination of and familiarity with the Indenture, upon the general knowledge of and familiarity with the operations of the Company of the undersigned and upon the performance of his duties as an officer of the
Company. 
 4. In the opinion of the undersigned, he has made such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not the covenants and conditions provided for in the Indenture relating to the issuance and authentication of each of the 2021 Notes, the 2025 Notes and the 2029 Notes have been complied with. 

5. In the opinion of the undersigned, with respect to the foregoing, the covenants and conditions provided for in the Indenture relating to
the issuance and authentication of each of the 2021 Notes, the 2025 Notes and the 2029 Notes have been complied with. 
 Capitalized terms
used herein without definition have the meanings assigned to them in the Indenture. 

 IN WITNESS WHEREOF, the undersigned has caused this certificate to be executed by its duly
authorized officer as of this 17th day of February, 2017. 
  

			
	 McKESSON CORPORATION

		
	 By:
	 	 /s/ Brian P. Moore

		 	 Name: Brian P. Moore

		 	 Title: Senior Vice President and Treasurer

 [Signature Page to Officer’s Certificate under the Indenture] 

 

 ANNEX A 

Pursuant to Section 2.3 of the Indenture, dated as of December 4, 2012 (the “Indenture”), between McKesson Corporation, a
Delaware corporation (the “Issuer”), and Wells Fargo Bank, National Association, as trustee (the “Trustee”), the terms of a series of securities to be issued pursuant to the Indenture are as follows: 

 

	 	1.	Designation. The designation of the securities is “0.625% Notes due 2021” (the “2021 Notes”). 

  

	 	2.	Initial Aggregate Principal Amount. The 2021 Notes shall be limited in initial aggregate principal amount to €600,000,000 (except for 2021 Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other 2021 Notes pursuant to Section 2.8, 2.9, 2.11, 8.5 or 12.3 of the Indenture). 

  

	 	3.	Currency Denomination. The 2021 Notes shall be denominated in euro. 

  

	 	4.	Maturity. The date on which the principal of the 2021 Notes is payable is August 17, 2021. 

  

	 	5.	Rate of Interest; Interest Payment Date; Regular Record Dates. Each 2021 Note shall bear interest from February 17, 2017 at 0.625% per annum until the principal thereof is paid. Such interest shall be
payable annually in arrears on August 17 of each year, commencing on August 17, 2017, to the persons in whose names the 2021 Notes are registered at the close of business on the immediately preceding August 3. Interest on the 2021 Notes
shall accrue from the most recent date to which interest has been paid, or, if no interest has been paid, from February 17, 2017. Interest on the 2021 Notes shall be computed on the basis of the actual number of days in the period for which
interest is being calculated and the actual number of days from and including the last date on which interest was paid on the 2021 Notes (or February 17, 2017, if no interest has been paid on the 2021 Notes), to, but excluding, the next
scheduled interest payment date. This payment convention is referred to as “Actual/Actual (ICMA)” as defined in the rulebook of the International Capital Market Association. In the event that any date on which principal, premium, if any,
or interest is payable on the 2021 Notes is not a Business Day, then payment of the principal, premium, if any, or interest payable on such date will be made on the next succeeding date that is a Business Day (and without any interest or other
payment in respect of any such delay). For the purposes of the 2021 Notes, “Business Day” is any day that is not a Saturday, Sunday or other day on which banking institutions in New York City, London or another place of payment on the 2021
Notes is authorized or required by law to close and on which the Trans-European Automated Real-Time Gross Settlement Express Transfer System (the “TARGET2 System”), or any successor thereto, is open. 

  
 A-1 

	 	6.	Place of Payment. Principal of, premium, if any, and interest on the 2021 Notes shall be payable, and the transfer of the 2021 Notes shall be registrable, at the office or agency of the Issuer to be maintained
for such purpose in Minneapolis, Minnesota, except that, at the option of the Issuer, interest may be paid by mailing a check to the address of the person entitled thereto as it appears on the 2021 Notes register; provided, however,
that while any 2021 Notes are represented by a Registered Global Security, payment of principal of, premium, if any, or interest on the 2021 Notes may be made by wire transfer to the account of the Depositary or its nominee. 

 

	 	7.	Optional Redemption. The 2021 Notes may be redeemed (a) prior to July 17, 2021 (the “Par Call Date”) in whole, at any time, or in part, from time to time, at the option of the Issuer, for
cash, at a redemption price equal to the greater of (i) 100% of their principal amount, or (ii) an amount, as determined by the Quotation Agent, equal to the sum of the present values of the remaining scheduled payments of principal, premium,
if any, and interest thereon (not including any portion of such payments of interest accrued to the date of redemption), discounted to the date of redemption on an annual basis (Actual/Actual ICMA) at the Comparable Government Bond Rate plus 20
basis points, plus, in each case, accrued and unpaid interest thereon to, but not including the date of redemption, (b) on or after the Par Call Date, in whole, at any time, or in part, from time to time, at the option of the Issuer, for cash,
at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest to, but not including, the redemption date or (c) at the Issuer’s option in whole, but not in part, at 100% of the principal amount, together
with accrued and unpaid interest, if any, to, but excluding, the redemption date if, as a result of any change in, or amendment to, the laws, regulations or rulings of the United States (or any political subdivision or taxing authority thereof or
therein having power to tax), or any change in official position regarding application or interpretation of those laws, regulations or rulings (including a holding by a court of competent jurisdiction), which change, amendment, application or
interpretation is announced and becomes effective on or after the February 17, 2017, the Issuer becomes or, based upon a written opinion of independent counsel selected by the Issuer, will become obligated to pay Additional Amounts as described
in Section 16 hereof and that obligation cannot be avoided by taking reasonable measures available to the Issuer, as determined by the Issuer in its sole discretion acting in good faith; provided that, in each case, after the principal
amount of any 2021 Note remaining outstanding after a redemption in part shall be €100,000 or a higher integral multiple of €1,000. Notwithstanding the foregoing, installments of interest on 2021 Notes that are due and payable on interest
payment dates falling on or prior to a redemption date will be payable on the interest payment date to the registered Holders as of the close of business on the relevant record date. Holders of the 2021 Notes to be redeemed will receive notice
thereof mailed (or, in the case of 2021 Notes held in book-entry form, transmitted electronically) at least 15 and not more than 45 days prior to the date fixed for redemption. Unless the Issuer defaults in payment of the redemption price, on and
after the redemption date, interest will cease to accrue on the 2021 Notes or portions thereof called for redemption. If less than all of the 2021 Notes are to be redeemed, the 2021 Notes to be redeemed will be selected in accordance with the
standard procedures of the Depositary. If the 2021 Notes to be redeemed are not Registered Global Securities then held by the Depositary, the Trustee will select the 2021 Notes to be redeemed on a pro rata basis. If the 2021 Notes are listed
on the New York Stock Exchange (the “NYSE”) or any other national securities exchange registered under the Exchange Act, the Trustee will select 2021 Notes in compliance with the requirements of the NYSE or other national securities
exchange on which the 2021 Notes are listed. 

  
 A-2 

 “Comparable Government Bond” means, in relation to any Comparable Government Bond Rate
calculation, at the discretion of an independent investment bank selected by the Issuer, a German government bond whose maturity is closest to the Par Call Date, or if such independent investment bank in its discretion determines that such similar
bond is not in issue, such other German government bond as such independent investment bank may, with the advice of three brokers of, and/or market makers in, German government bonds selected by the Issuer, determine to be appropriate for
determining the Comparable Government Bond Rate. 
 “Comparable Government Bond Rate” means the price, expressed as a percentage
(rounded to three decimal places, with 0.0005 being rounded upwards), at which the gross redemption yield on the 2021 Notes to be redeemed, if they were to be purchased at such price on the third Business Day prior to the date fixed for redemption,
would be equal to the gross redemption yield on such Business Day of the Comparable Government Bond on the basis of the middle market price of the Comparable Government Bond prevailing at 11:00 a.m. (London time) on such Business Day as determined
by an independent investment bank selected by the Issuer. 
  

	 	8.	Change of Control. If a Change of Control Triggering Event (as defined below) occurs, unless the Issuer has previously exercised its right to redeem the 2021 Notes in whole as described above, Holders of the 2021
Notes will have the right to require the Issuer to repurchase all or any part (in integral multiples of €1,000 original principal amount) of their 2021 Notes pursuant to the offer described below (the “Change of Control Offer”);
provided that the principal amount of any 2021 Note remaining outstanding after a repurchase in part shall be €100,000 or a higher integral multiple of €1,000. In the Change of Control Offer, the Issuer will be required to offer
payment in cash equal to 101% of the then outstanding aggregate principal amount of 2021 Notes repurchased plus accrued and unpaid interest, if any, on the 2021 Notes repurchased, to, but not including, the date of repurchase (the “Change of
Control Payment”). Within 30 days following any Change of Control Triggering Event, the Issuer will be required to mail a notice to Holders of the 2021 Notes describing the transaction or transactions that constitute the Change of Control
Triggering Event and offering to repurchase the 2021 Notes on the date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the “Change of Control Payment
Date”), pursuant to the procedures described herein and in such notice. The Issuer must comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the 2021 Notes as a result of a Change of Control Triggering Event. To the extent that the provisions of any securities laws or regulations
conflict with the Change of Control provisions herein, the Issuer will be required to comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions herein by
virtue of such conflicts. 

  
 A-3 

 The paying agent will promptly mail (or, in the case of 2021 Notes held in book-entry form,
transmit electronically) to each Holder of the 2021 Notes properly tendered the repurchase price for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book-entry) to each Holder a new 2021 Note equal in
principal amount to any unrepurchased portion of any 2021 Notes surrendered; provided, that each new 2021 Note will be in a principal amount of €100,000 or an integral multiple of €1,000 thereafter. 

Notwithstanding the foregoing, the Issuer will not be required to make a Change of Control Offer upon the occurrence of a Change of Control
Triggering Event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for a Change of Control Offer made by the Issuer and the third party repurchases all 2021 Notes properly tendered and
not withdrawn under its offer. In addition, the Issuer will not repurchase any 2021 Notes if there has occurred and is continuing on the Change of Control Payment Date an Event of Default, other than a default in the payment of the Change of Control
Payment upon a Change of Control Triggering Event. On the Change of Control Payment Date, the Issuer will be required, to the extent lawful, to (i) accept for payment all 2021 Notes or portions thereof properly tendered pursuant to the Change
of Control Offer; (ii) deposit with the paying agent, no later than 10:00 a.m., London time, an amount equal to the Change of Control Payment in respect of all 2021 Notes or portions thereof properly tendered; and (iii) deliver or cause to
be delivered to the Trustee the 2021 Notes properly accepted together with an Officer’s Certificate stating the aggregate principal amount of 2021 Notes or portions of 2021 Notes being repurchased. 

  
 A-4 

 “Below Investment Grade Rating Event” means the 2021 Notes are rated below an
Investment Grade Rating by each of the Rating Agencies (as defined below) on any date from the date of the public notice of an arrangement that could result in a Change of Control until the end of the 60-day
period following public notice of the occurrence of the Change of Control (which 60-day period shall be extended so long as the rating of the 2021 Notes is under publicly announced consideration for possible
downgrade by any of the Rating Agencies). 
 “Change of Control” means the occurrence of any of the following: (1) the direct
or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Issuer and its Subsidiaries taken
as a whole to any Person other than the Issuer or one of its Subsidiaries; (2) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any Person becomes the beneficial owner,
directly or indirectly, of more than 50% of the then outstanding number of shares of the Issuer’s voting stock; or (3) the first day on which a majority of the members of the Issuer’s Board of Directors are not Continuing Directors.
Notwithstanding the foregoing, a transaction will not be deemed to result in a Change of Control if (i) the Issuer becomes a wholly owned subsidiary of a holding company and (ii) the holders of the voting stock of such holding company
immediately following that transaction are substantially the same as the holders of the Issuer’s voting stock immediately prior to that transaction. 

“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Below Investment Grade Rating Event.

 “Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the Issuer who
(1) was a member of such Board of Directors on the date of original issue of the 2021 Notes; or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were
members of such Board of Directors at the time of such nomination or election (either by a specific vote or by approval of the Issuer’s proxy statement in which such member was named as a nominee for election as a director, without objection to
such nomination). 

  
 A-5 

 “Fitch” means Fitch Ratings Inc., a subsidiary of Hearst Corporation and Fimalac, S.A.

 “Investment Grade Rating” means a rating equal to or higher than BBB- (or the
equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P. 

“Moody’s” means Moody’s Investors Service, Inc. 

“Rating Agencies” means (1) each of Fitch, Moody’s and S&P; and (2) if any one or more of Fitch, Moody’s or
S&P ceases to rate the 2021 Notes or fails to make a rating of the 2021 Notes publicly available for reasons outside of the Issuer’s reasonable control, then, at the Issuer’s election, either (x) each of the remaining agencies, as
the case may be or (y) each of the remaining agencies, as the case may be, and any “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) under the Exchange Act, selected by the Issuer (as
certified by a Board Resolution) as a replacement agency for Fitch, Moody’s or S&P, or all of them, as the case may be. 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. 

 

	 	9.	Mandatory Redemption. The 2021 Notes are not mandatorily redeemable and are not entitled to the benefit of a sinking fund or any analogous provisions. 

 

	 	10.	Denominations. The 2021 Notes shall be issued initially in minimum denominations of €100,000 and shall be issued in integral multiples of €1,000 in excess thereof. 

 

	 	11.	Amount Payable Upon Acceleration. The principal of the 2021 Notes shall be payable upon declaration of acceleration pursuant to Section 5.1 of the Indenture. 

 

	 	12.	Payment Currency. All payments of interest and principal, including payments made upon any redemption or repurchase of 2021 Notes, will be made in euro; provided that if the euro is unavailable to the Issuer due
to the imposition of exchange controls or other circumstances beyond the Issuer’s control or if the euro is no longer being used by the then member states of the European Monetary Union that have adopted the euro as their currency or for the
settlement of transactions by public institutions of or within the international banking community, then all payments in respect of the 2021 Notes will be made in Dollars until the euro is again available to the Issuer or so used. In such
circumstances, the amount payable on any date in euro will be converted into Dollars at the rate mandated by the Board of Governors of the Federal Reserve System as of the close of business on the second Business Day prior to the relevant payment
date or, if the Board of Governors of the Federal Reserve System has not announced a rate of conversion, on the basis of the most recent Dollar/euro exchange rate published in The Wall Street Journal on or prior to the second Business Day
prior to the relevant payment date or, in the event The Wall Street Journal has not published such exchange rate, the rate will be determined in the Issuer’s sole discretion on the basis of the most recently available market exchange
rate for the euro. Any payment in respect of 2021 Notes so made in Dollars will not constitute an Event of Default. Neither the Trustee nor the paying agent shall have any responsibility for any calculation or conversion in connection with the
foregoing. 

  
 A-6 

	 	13.	Payment Currency—Election. Notwithstanding the provisions of Section 12 hereof, the principal of and interest on the 2021 Notes shall not be payable in a currency other than euro. 

 

	 	14.	Payment Currency—Index. Notwithstanding the provisions of Section 12 hereof, the principal of and interest on the 2021 Notes shall not be determined with reference to an index based on a coin or
currency. 

  

	 	15.	Registered Securities. The 2021 Notes shall be issued only as Registered Securities. The 2021 Notes shall be issuable as Registered Global Securities. 

  
 A-7 

	 	16.	Additional Amounts. All payments of principal, interest, and premium, if any, in respect of the 2021 Notes will be made free and clear of, and without withholding or deduction for, any present or future taxes,
assessments, duties or governmental charges of whatever nature imposed, levied or collected by the United States (or any political subdivision or taxing authority thereof or therein having power to tax), unless such withholding or deduction is
required by law or the official interpretation or administration thereof. Subject to the exceptions and limitations set forth below, the Issuer will pay as additional interest in respect of the 2021 Notes such additional amounts as are necessary in
order that the net payment by the Issuer of the principal of, premium, if any, and interest (collectively, “Additional Amounts”) in respect of the 2021 Notes to a Holder who is not a United States person (as defined below), after
withholding or deduction for any present or future tax, assessment, duties or other governmental charge imposed by the United States (or any political subdivision or taxing authority thereof or therein having power to tax), will not be less than the
amount provided in the 2021 Notes to be then due and payable; provided, however, that the foregoing obligation to pay Additional Amounts shall not apply: (1) to the extent any tax, assessment or other governmental charge would not have been
imposed but for the Holder (or the beneficial owner for whose benefit such Holder holds such 2021 Note), or a fiduciary, settlor, beneficiary, member or shareholder of the Holder if the Holder is an estate, trust, partnership or corporation, or a
person holding a power over an estate or trust administered by a fiduciary Holder, being considered as (a) being or having been engaged in a trade or business in the United States or having or having had a permanent establishment in the United
States, (b) having a current or former connection with the United States (other than a connection arising solely as a result of the ownership of 2021 Notes, the receipt of any payment or the enforcement of any rights hereunder), including being
or having been a citizen or resident of the United States, (c) being or having been a personal holding company, a passive foreign investment company or a controlled foreign corporation for U.S. federal income tax purposes or a corporation that
has accumulated earnings to avoid U.S. federal income tax, (d) being or having been a “10-percent shareholder” of the Issuer as defined in section 871(h)(3) of the United States Internal Revenue
Code of 1986, as amended (the “Code”) or any successor provision or (e) being a bank receiving payments on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business, as
described in section 881(c)(3)(A) of the Code or any successor provision; (2) to any Holder that is not the sole beneficial owner of 2021 Notes, or a portion of 2021 Notes, or that is a fiduciary, partnership, limited liability company or other
fiscally transparent entity, but only to the extent that a beneficial owner with respect to the Holder, a beneficiary or settlor with respect to the fiduciary, or a beneficial owner or member of the partnership, limited liability company or other
fiscally transparent entity would not have been entitled to the payment of an Additional Amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or distributive share of the payment; (3) to the extent
any tax, assessment or other governmental charge that would not have been imposed but for the failure of the Holder or any other person to comply with certification, identification or information reporting requirements concerning the nationality,
residence, identity or connection with the United States of the Holder or beneficial owner of 2021 Notes, if compliance is required by statute, by regulation of the United States or any taxing authority therein or by an applicable income tax treaty
to which the United States is a party as a precondition to exemption from such tax, assessment or other governmental charge; (4) to any tax, assessment or other governmental charge that is imposed otherwise than by withholding by the Issuer or
a paying agent from the payment; (5) to any tax, assessment or other governmental charge required to be withheld by any paying agent from any payment of principal of or interest on any 2021 Notes, if such payment can be made without such
withholding by any other paying agent; (6) to any estate, inheritance, gift, sales, transfer, wealth, capital gains or personal property tax or similar tax, assessment or other governmental charge, or excise tax imposed on the transfer of 2021
Notes; (7) to the extent any tax, assessment or other governmental charge would not have been imposed but for the presentation by the Holder of any 2021 Note, where presentation is required, for payment on a date more than 30 days after the
date on which payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later, except to the extent that the beneficiary or Holder thereof would have been entitled to the payment of Additional Amounts
had such 2021 Note been presented for payment on any day during such 30-day period; to any tax, assessment or other governmental charge imposed under sections 1471 through 1474 of the Code (or any amended or
successor provisions), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to section 1471(b) of the Code or any fiscal or regulatory legislation, rules or practices adopted pursuant to any
intergovernmental agreement entered into in connection with the implementation of such sections of the Code, whether currently in effect or as published and amended from time to time; or (9) in the case of any combination of items (1), (2),
(3), (4), (5), (6), (7) and (8). The 2021 Notes are subject in all cases to any tax, fiscal or other law or regulation or administrative or judicial interpretation applicable to 2021 Notes. Except as specifically provided in this Section 16,
the Issuer will not be required to make any payment for any tax, assessment or other governmental charge imposed by any government or a political subdivision or taxing authority of or in any government or political subdivision. As used in this
Section 16 and above in Section 12 hereof, the term “United States” means the United States of America, its territories and possessions, the states of the United States and the District of Columbia, and the term “United
States person” means any individual who is a citizen or resident of the United States for U.S. federal income tax purposes, a corporation, partnership or other entity created or organized in or under the laws of the United States, any state of
the United States or the District of Columbia, or any estate or trust the income of which is subject to U.S. federal income taxation regardless of its source. 

  
 A-8 

	 	17.	Definitive Certificates. The 2021 Notes shall be exchanged by the Issuer for 2021 Notes in definitive form only (i) subject to the provisions of Section 2.8 of the Indenture or (ii) if an Event of
Default has occurred and is continuing, and the Depositary requests the issuance of 2021 Notes in definitive form. 

  

	 	18.	Registrar; Paying Agent; Depositary. U.S. Bank National Association shall initially serve as the registrar and transfer agent and Elavon Financial Services DAC shall initially serve as the paying agent for the
2021 Notes. Clearstream Banking, S.A. and Euroclear Bank S.A./N.V. shall initially serve as the Depositary for the Registered Global Security representing the 2021 Notes. Elavon Financial Services DAC shall initially serve as the common depositary
for the Depositary. 

  

	 	19.	Events of Default; Covenants. There shall be no deletions from or modifications or additions to the Events of Default set forth in Section 5.1 of the Indenture with respect to the 2021 Notes. There shall be
the following additions to the covenants of the Issuer set forth in Article III of the Indenture with respect to the 2021 Notes: 

  
 A-9 

 Limitation on Liens. The Issuer covenants that, so long as any of the 2021 Notes remain
outstanding, it shall not, nor shall it permit any Consolidated Subsidiary to, create or assume any Indebtedness for money borrowed which is secured by a mortgage, pledge, security interest or lien (“liens”) of or upon any assets, whether
now owned or hereafter acquired, of the Issuer or any such Consolidated Subsidiary without equally and ratably securing the 2021 Notes by a lien ranking equally to and ratably with (or at the option of the Issuer, senior to) such secured
Indebtedness, except that the foregoing restriction shall not apply to (a) liens on any assets of any corporation existing at the time such corporation becomes a Consolidated Subsidiary; (b) liens on any assets existing at the time of
acquisition of such assets by the Issuer or a Consolidated Subsidiary, or liens to secure the payment of all or any part of the purchase price of such assets upon the acquisition of such assets by the Issuer or a Consolidated Subsidiary or to secure
any indebtedness incurred or guaranteed by the Issuer or a Consolidated Subsidiary prior to, at the time of, or within 360 days after such acquisition (or in the case of real property, the completion of construction (including any improvements on an
existing asset) or commencement of full operation of such asset, whichever is later), which indebtedness is incurred or guaranteed for the purpose of financing all or any part of the purchase price thereof or, in the case of real property,
construction or improvements thereon; (c) liens on any assets securing indebtedness owed by any Consolidated Subsidiary to the Issuer or another wholly owned Subsidiary; (d) liens on any assets of a corporation existing at the time such
corporation is merged into or consolidated with the Issuer or a Subsidiary or at the time of a purchase, lease or other acquisition of the assets of a corporation or firm as an entirety or substantially as an entirety by the Issuer or a Subsidiary;
(e) liens on any assets of the Issuer or a Consolidated Subsidiary in favor of the United States of America or any state thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State
thereof, or in favor of any other country, or any political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any indebtedness incurred or guaranteed for the purpose of
financing all or any part of the purchase price (or, in the case of real property, the cost of construction) of the assets subject to such liens (including, but not limited to, liens incurred in connection with pollution control, industrial revenue
or similar financing); (f) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any lien referred to in the foregoing clauses (a) to (e), inclusive; (g) liens imposed by law,
such as mechanics’, workmen’s, repairmen’s, materialmen’s, carriers’, warehousemen’s, vendors’ or other similar liens arising in the ordinary course of business, or governmental (federal, state or municipal) liens
arising out of contracts for the sale of products or services by the Issuer or any Consolidated Subsidiary, or deposits or pledges to obtain the release of any of the foregoing liens; (h) pledges, liens or deposits under worker’s
compensation laws or similar legislation and liens or judgments thereunder which are not currently dischargeable, or in connection with bids, tenders, contracts (other than for the payment of money) or leases to which the Issuer or any Consolidated
Subsidiary is a party, or to secure public or statutory obligations of the Issuer or any Consolidated Subsidiary, or in connection with obtaining or maintaining self-insurance or to obtain the benefits of any law, regulation or arrangement
pertaining to unemployment insurance, old age pensions, social security or similar matters, or to secure surety, appeal or customs bonds to which the Issuer or any Consolidated Subsidiary is a party, or in litigation or other proceedings such as,
but not limited to, interpleader proceedings, and other similar pledges, liens or deposits made or incurred in the ordinary course of business; (i) liens created by or resulting from any litigation or other proceeding which is being contested
in good faith by appropriate proceedings, including liens arising out of judgments or awards against the Issuer or any Consolidated Subsidiary with respect to which the Issuer or such Consolidated Subsidiary is in good faith prosecuting an appeal or
proceedings for review or for which the time to make an appeal has not yet expired; or final unappealable judgment liens which are satisfied within 15 days of the date of judgment; or liens incurred by the Issuer or any Consolidated Subsidiary for
the purpose of obtaining a stay or discharge in the course of any litigation or other proceeding to which the Issuer or such Consolidated Subsidiary is a party; (j) liens for taxes or assessments or governmental charges or levies not yet due or
delinquent, or which can thereafter be paid without penalty, or which are being contested in good faith by appropriate proceedings; landlord’s liens on property held under lease; and any other liens or charges incidental to the conduct of the
business of the Issuer or any Consolidated Subsidiary or the ownership of the assets of any of them which were not incurred in connection with the borrowing of money or the obtaining of advances or credit and which do not, in the opinion of the
Issuer, materially impair the use of such assets in the operation of the business of the Issuer or such Consolidated Subsidiary or the value of such assets for the purposes thereof; (k) liens relating to accounts receivable of the Issuer or any
of its Subsidiaries which have been sold, assigned or otherwise transferred to another Person in a transaction classified as a sale of accounts receivable in accordance with accounting principles generally accepted in the United States of America
(to the extent the sale by the Issuer or the applicable Subsidiary is deemed to give rise to a lien in favor of the purchaser thereof in such accounts receivable or the proceeds thereof); or (l) liens on any assets of the Issuer or any of its
Subsidiaries (including Receivables Subsidiaries) incurred in connection with a Qualified Receivables Transaction. Notwithstanding the above, the Issuer or any Consolidated Subsidiary may, without securing the 2021 Notes, create or assume any
Indebtedness which is secured by a lien which would otherwise be subject to the foregoing restrictions, provided that at the time of such creation or assumption, after giving effect thereto, Exempted Debt does not exceed 10% of the total
assets of the Issuer and its Subsidiaries on a consolidated basis, determined in accordance with accounting principles generally accepted in the United States of America. 

  
 A-10 

 Limitation on Sale and Lease-Back Transactions. The Issuer covenants that, so long as any
of the 2021 Notes remain outstanding, the Issuer will not, nor shall the Issuer permit any Consolidated Subsidiary to, enter into any sale and lease-back transaction with respect to any assets, other than any sale and lease-back transaction
involving a lease for a term of not more than three years, unless either (a) the Issuer or such Consolidated Subsidiary would be entitled to incur Indebtedness secured by a lien on the assets to be leased in an amount at least equal to the
Attributable Debt in respect of such transaction without equally and ratably securing the 2021 Notes pursuant to clauses (a) through (k) inclusive of the covenant with respect to “Limitation on Liens” above, or (b) the proceeds
of the sale of the assets to be leased are at least equal to their fair market value (as determined by the Board of Directors of the Issuer) and the proceeds are applied to the purchase or acquisition (or, in the case of real property, the
construction) of assets or to the retirement (other than at maturity or pursuant to a mandatory sinking fund or mandatory redemption provision) of indebtedness. The foregoing limitation shall not apply, if at the time the Issuer or any Consolidated
Subsidiary enters into such sale and lease-back transaction, and after giving effect thereto, Exempted Debt does not exceed 10% of the total assets of the Issuer and its Subsidiaries on a consolidated basis, determined in accordance with accounting
principles generally accepted in the United States of America. 
 The term “Attributable Debt” in connection with a sale and
lease-back transaction shall mean, as of the date of determination, the lesser of (a) the fair value of the assets subject to such transaction, as determined by the Board of Directors of the Issuer, or (b) the present value (discounted at
the rate of interest set forth in or implicit in the terms of such lease or, if it is not practicable to determine such rate, the weighted average interest rate per annum borne by all series of Securities then Outstanding and subject to the
“Limitation on Sale and Lease-Back Transactions” covenant above compounded semi-annually, in either case as determined by the principal accounting or financial officer of the Issuer) of the remaining obligations of the Issuer or any
Consolidated Subsidiary for net rental payments during the remaining term of all leases (including any period for which such lease has been extended or may, at the option of the lessor, be extended). 

  
 A-11 

 The term “Consolidated Subsidiary” shall mean any Subsidiary substantially all the
property of which is located, and substantially all the operations of which are conducted, in the United States of America whose financial statements are consolidated with those of the Issuer in accordance with accounting principles generally
accepted in the United States of America. 
 The term “Exempted Debt” shall mean the sum of the following as of the date of
determination: (i) Indebtedness of the Issuer and its Consolidated Subsidiaries incurred after the date of issuance of the 2021 Notes and secured by liens not permitted to be created or assumed pursuant to the covenant with respect to
“Limitation on Liens” above, and (ii) Attributable Debt of the Issuer and its Consolidated Subsidiaries in respect of every sale and lease-back transaction entered into after the date of issuance of the 2021 Notes, other than leases
expressly permitted by the covenant with respect to “Limitation on Sale and Lease-Back Transactions” above. 
 The term
“Indebtedness” shall mean all items classified as indebtedness on the most recently available consolidated balance sheet of the Issuer and its Consolidated Subsidiaries, in accordance with accounting principles generally accepted in the
United States of America. 
 The term “net rental payments” under any lease of any period shall mean the sum of the rental and
other payments required to be paid in such period by the lessee thereunder, not including, however, any amounts required to be paid by such lessee (whether or not designated as rental or additional rental) on account of maintenance and repairs,
reconstruction, insurance, taxes, assessments, water rates or similar charges required to be paid by such lessee thereunder or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales, maintenance and repairs,
reconstruction, insurance, taxes, assessments, water rates or similar charges. 
 The term “Qualified Receivables Transaction”
shall mean any transaction or series of transactions entered into by the Issuer or any of its Subsidiaries pursuant to which the Issuer or any of its Subsidiaries sells, conveys or otherwise transfers to (i) a Receivables Subsidiary (in the
case of a transfer by the Issuer or any of its Subsidiaries) and (ii) any other Person (in the case of a transfer by a Receivables Subsidiary), or grants a security interest in, any accounts receivable (whether now existing or arising in the
future) or inventory of the Issuer or any of its Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such
accounts receivable or inventory, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions
involving accounts receivable or inventory. 

  
 A-12 

 The term “Receivables Subsidiary” shall mean a Subsidiary of the Issuer which engages
in no activities other than in connection with the financing of accounts receivable or inventory (a) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Issuer or any
Subsidiary of the Issuer (excluding guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in
connection with a Qualified Receivables Transaction), (ii) is recourse or obligates the Issuer or any Subsidiary of the Issuer in any way other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary
course of business in connection with a Qualified Receivables Transaction or (iii) subjects any property or asset of the Issuer or any Subsidiary of the Issuer (other than accounts receivable or inventory and related assets as provided in the
definition of “Qualified Receivables Transaction”), directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary
course of business in connection with a Qualified Receivables Transaction, (b) with which neither the Issuer nor any Subsidiary of Issuer has any material contract, agreement, arrangement or understanding other than on terms customary for
securitization of receivables or inventory and (c) with which neither the Issuer nor any Subsidiary of the Issuer has any obligations to maintain or preserve such Subsidiary’s financial condition or cause such Subsidiary to achieve certain
levels of operating results. 
  

	 	20.	Conversion and Exchange. The 2021 Notes shall not be convertible into or exchangeable for any other security. 

  

	 	21.	Additional Issues. The Issuer may, without notice to or the consent of the Holders of the 2021 Notes, create and issue additional 2021 Notes with the same terms as the 2021 Notes in all respects, except for the
issue date, the public offering price and, under certain circumstances, the first interest payment date. Such additional 2021 Notes shall be consolidated and form a single series with the 2021 Notes. 

 

	 	22.	Other Terms. The 2021 Notes shall have the other terms and shall be substantially in the form set forth in the form of the 2021 Notes attached hereto as Annex A-1. In case
of any conflict between this Annex A and the 2021 Notes, the form of the 2021 Notes shall control. 

  
 A-13 

	 	23.	Access to Information. The Issuer and the Holders shall cooperate with the Trustee and shall provide the Trustee with reasonable access to, and copies of, documents or information necessary for the Trustee to
comply with any cost basis reporting obligations imposed on it by a governmental authority in connection with certain transfers or exchanges of 2021 Notes. 

Capitalized terms used but not otherwise defined in this Annex A shall have the respective meanings ascribed to such terms in the Indenture.

  
 A-14 

 ANNEX A-1 

[FORM OF 2021 NOTE] 
 REGISTERED
REGISTERED 
 THIS NOTE IS A REGISTERED GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A COMMON
DEPOSITARY OR A NOMINEE OF A COMMON DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN
THE NAME OF USB NOMINEES (UK) LIMITED OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO USB NOMINEES (UK) LIMITED, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, USB NOMINEES (UK) LIMITED, HAS AN INTEREST HEREIN. TRANSFERS OF THIS REGISTERED GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF ELAVON
FINANCIAL SERVICES DAC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE. 
  

			
	No. R – A1	  	ISIN NO. XS1567173809
		  	COMMON CODE 156717380

 McKESSON CORPORATION 

0.625% NOTES DUE AUGUST 17, 2021 

McKesson Corporation, a Delaware corporation (the “Issuer,” which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to USB Nominees (UK) Limited, or registered assigns, the principal sum of Six Hundred Million euros (€600,000,000) on August 17, 2021 and to pay interest on said
principal sum from February 17, 2017, or from the most recent interest payment date to which interest has been paid or duly provided for, annually on August 17 (the “Interest Payment Date”) of each year commencing on
August 17, 2017, at the rate of 0.625% per annum until the principal hereof shall have become due and payable. 

 The amount of interest payable on any Interest Payment Date shall be computed on the basis of the
actual number of days in the period for which interest is being calculated and the actual number of days from and including the last date on which interest was paid on this Note (or February 17, 2017, if no interest has been paid on this Note),
to, but excluding, the next scheduled interest payment date. In the event that any date on which the principal or interest payable on this Note is not a Business Day, then payment of principal or interest payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other payment in respect of such delay). The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture (referred to on the reverse hereof) be paid to the person in whose name this Note is registered at the close of business on the record date for such interest installment, which shall be the close of business on the immediately preceding
August 3 prior to such Interest Payment Date, as applicable. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered Holders on such record date and may be paid to the person
in whose name this Note is registered at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the date of payment of such defaulted interest), notice whereof shall be given by mail by or on
behalf of the Issuer to the registered Holders of Notes not less than 15 days preceding such subsequent record date, all as more fully provided in the Indenture. The principal of and the interest on this Note shall be payable at the office or agency
of the Issuer maintained for that purpose in euro (except as otherwise provided in this Note); provided, however, that payment of interest may be made at the option of the Issuer by check mailed to the person entitled thereto at such
address as shall appear in the registry books of the Issuer; provided, further, that for so long as this Note is represented by a Registered Global Security, payment of principal, premium, if any, or interest on this Note may be made
by wire transfer to the account of the Depositary or its nominee. If the euro is unavailable to the Issuer due to the imposition of exchange controls or other circumstances beyond the Issuer’s control or if the euro is no longer being used by
the then member states of the European Monetary Union that have adopted the euro as their currency or for the settlement of transactions by public institutions of or within the international banking community, then all payments in respect of the
Notes will be made in Dollars until the euro is again available to the Issuer or so used. In such circumstances, the amount payable on any date in euro will be converted into Dollars at the rate mandated by the Board of Governors of the Federal
Reserve System as of the close of business on the second Business Day prior to the relevant payment date or, if the Board of Governors of the Federal Reserve System has not announced a rate of conversion, on the basis of the most recent Dollar/euro
exchange rate published in The Wall Street Journal on or prior to the second Business Day prior to the relevant payment date or, in the event The Wall Street Journal has not published such exchange rate, the rate will be determined in
the Issuer’s sole discretion on the basis of the most recently available market exchange rate for the euro. Any payment in respect of Notes so made in Dollars will not constitute an Event of Default. For the purposes of the Notes,
“Business Day” is any day that is not a Saturday, Sunday or other day on which banking institutions in New York City, London or another place of payment on the Notes is authorized or required by law to close and on which the Trans-European
Automated Real-Time Gross Settlement Express Transfer System (the “TARGET2 System”), or any successor thereto, is open. 
 Unless
the certificate of authentication hereon has been executed by or on behalf of the Trustee (as defined below) under the Indenture (as defined below), by the manual signature of one of its authorized signatories, this Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose. 
 Capitalized terms used in this Note which are defined in the
Indenture shall have the respective meanings assigned to them in the Indenture. 
 The provisions of this Note are continued on the reverse
side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. 

  
 A-1-2 

 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed, manually or in
facsimile. 
  

			
	 McKESSON CORPORATION

		
	 By:
	 	  

		 	 Name:

		 	 Title:

  

			
	CERTIFICATE OF AUTHENTICATION
	This is one of the Securities referred to in the within-mentioned Indenture.
	
	 WELLS FARGO BANK, NATIONAL ASSOCIATION

        as Trustee

		
	By:	 	  

		 	Authorized Signatory
		
	Dated:	 	  

  
 A-1-3 

 [FORM OF REVERSE SIDE OF NOTE] 

This Note is one of a duly authorized series of securities (the “Securities”) of the Issuer designated as its 0.625% Notes due
August 17, 2021 (the “Notes”). The Securities are all issued or to be issued under and pursuant to an Indenture, dated as of December 4, 2012 (the “Indenture”), duly executed and delivered between the Issuer and Wells
Fargo Bank, National Association as trustee with respect to the Notes (the “Trustee”), to which the Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights thereunder of the
Issuer, the Trustee and the Holders of the Securities and the terms upon which the Notes are to be authenticated and delivered. The terms of individual series of Securities may vary with respect to interest rate or interest rate formulas, issue
dates, maturity, redemption, repayment, currency of payment and otherwise. 
 The Notes are issuable only as Registered Securities in
minimum denominations of €100,000 and integral multiples of €1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Notes are exchangeable for a like aggregate principal amount of
Notes as requested by the Holder surrendering the same. 
 Except as set forth below, this Note is not redeemable and is not entitled to the
benefit of a sinking fund or any analogous provision. 
 The Notes may be redeemed (a) prior to July 17, 2021 (the “Par Call
Date”) in whole, at any time, or in part, from time to time, at the option of the Issuer, for cash, at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) an amount, as determined by the Quotation Agent,
equal to the sum of the present values of the remaining scheduled payments of principal, premium, if any, and interest thereon (not including any portion of such payments of interest accrued to the date of redemption), discounted to the date of
redemption on an annual basis at the Comparable Government Bond Rate plus 20 basis points, plus, in each case, accrued and unpaid interest thereon to, but not including the date of redemption, (b) on or after the Par Call Date, in whole, at any
time, or in part, from time to time, at the option of the Issuer, for cash, at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest to, but not including, the redemption date or (c) at the Issuer’s
option in whole, but not in part, at 100% of the principal amount, together with accrued and unpaid interest, if any, to, but excluding, the redemption date if, as a result of any change in, or amendment to, the laws, regulations or rulings of the
United States (or any political subdivision or taxing authority thereof or therein having power to tax), or any change in official position regarding application or interpretation of those laws, regulations or rulings (including a holding by a court
of competent jurisdiction), which change, amendment, application or interpretation is announced and becomes effective on or after February 17, 2017, the Issuer becomes or, based upon a written opinion of independent counsel selected by the
Issuer, will become obligated to pay Additional Amounts and that obligation cannot be avoided by taking reasonable measures available to the Issuer, as determined by the Issuer in its sole discretion acting in good faith. Notwithstanding the
foregoing, installments of interest on Notes that are due and payable on interest payment dates falling on or prior to a redemption date will be payable on the interest payment date to the registered Holders as of the close of business on the
relevant record date. Holders of the Notes to be redeemed will receive notice thereof mailed (or, in the case of Notes held in book-entry form, transmitted electronically) at least 15 and not more than 45 days prior to the date fixed for redemption.
Unless the Issuer defaults in payment of the redemption price, on and after the redemption date, interest will cease to accrue on the Notes or portions thereof called for redemption. If less than all of the Notes are to be redeemed, no Notes of a
principal amount of €100,000 or less shall be redeemed in part. If less than all of the Notes are to be redeemed, the Notes to be redeemed will be selected in accordance with the standard procedures of the Depositary. If the Notes to be
redeemed are not Registered Global Securities then held by the Depositary, the Trustee will select the Notes to be redeemed on a pro rata basis. If the Notes are listed on the New York Stock Exchange (the “NYSE”) or any other
national securities exchange registered under the Exchange Act, the Trustee will select Notes in compliance with the requirements of the NYSE or other national securities exchange on which the Notes are listed. As used in this paragraph, the term
“United States” means the United States of America, its territories and possessions, the states of the United States and the District of Columbia. 

  
 A-1-4 

 “Comparable Government Bond” means, in relation to any Comparable Government Bond Rate
calculation, at the discretion of an independent investment bank selected by the Issuer, a German government bond whose maturity is closest to the Par Call Date, or if such independent investment bank in its discretion determines that such similar
bond is not in issue, such other German government bond as such independent investment bank may, with the advice of three brokers of, and/or market makers in, German government bonds selected by the Issuer, determine to be appropriate for
determining the Comparable Government Bond Rate. 
 “Comparable Government Bond Rate” means the price, expressed as a percentage
(rounded to three decimal places, with 0.0005 being rounded upwards), at which the gross redemption yield on the Notes to be redeemed, if they were to be purchased at such price on the third Business Day prior to the date fixed for redemption, would
be equal to the gross redemption yield on such Business Day of the Comparable Government Bond on the basis of the middle market price of the Comparable Government Bond prevailing at 11:00 a.m. (London time) on such Business Day as determined by an
independent investment bank selected by the Issuer. 
 If a Change of Control Triggering Event (as defined below) occurs, unless the Issuer
has previously exercised its right to redeem the Notes in whole as described above, Holders of the Notes will have the right to require the Issuer to repurchase all or any part (in integral multiples of €1,000 original principal amount) of
their Notes pursuant to the offer described below (the “Change of Control Offer”); provided that the principal amount of any Note remaining outstanding after a repurchase in part shall be €100,000 or a higher integral multiple of
€1,000. In the Change of Control Offer, the Issuer will be required to offer payment in cash equal to 101% of the then outstanding aggregate principal amount of Notes repurchased plus accrued and unpaid interest, if any, on the Notes
repurchased, to, but not including, the date of repurchase (the “Change of Control Payment”). Within 30 days following any Change of Control Triggering Event, the Issuer will be required to mail a notice to Holders of the Notes describing
the transaction or transactions that constitute the Change of Control Triggering Event and offering to repurchase the Notes on the date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such
notice is mailed (the “Change of Control Payment Date”), pursuant to the procedures described herein and in such notice. The Issuer must comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control Triggering Event. To the extent that the
provisions of any securities laws or regulations conflict with the Change of Control provisions herein, the Issuer will be required to comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations
under the Change of Control provisions herein by virtue of such conflicts. 

  
 A-1-5 

 The paying agent will promptly mail (or, in the case of Notes held in book-entry form, transmit
electronically) to each Holder of the Notes properly tendered the repurchase price for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book-entry) to each Holder a new Note equal in principal amount to
any unrepurchased portion of any Notes surrendered; provided, that each new Note will be in a principal amount of €100,000 or an integral multiple of €1,000 thereafter. 

Notwithstanding the foregoing, the Issuer will not be required to make a Change of Control Offer upon the occurrence of a Change of Control
Triggering Event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for a Change of Control Offer made by the Issuer and the third party repurchases all Notes properly tendered and not
withdrawn under its offer. In addition, the Issuer will not repurchase any Notes if there has occurred and is continuing on the Change of Control Payment Date an event of default under the Indenture, other than a default in the payment of the Change
of Control Payment upon a Change of Control Triggering Event. 
 On the Change of Control Payment Date, the Issuer will be required, to the
extent lawful, to (i) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer; (ii) deposit with the paying agent, no later than 10:00 a.m., London time, an amount equal to the Change of
Control Payment in respect of all Notes or portions of Notes properly tendered; and (iii) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer’s Certificate stating the aggregate principal
amount of Notes or portions of Notes being repurchased. 
 “Below Investment Grade Rating Event” means the Notes are rated below
an Investment Grade Rating by each of the Rating Agencies (as defined below) on any date from the date of the public notice of an arrangement that could result in a Change of Control until the end of the
60-day period following public notice of the occurrence of the Change of Control (which 60-day period shall be extended so long as the rating of the Notes is under
publicly announced consideration for possible downgrade by any of the Rating Agencies). 
 “Change of Control” means the
occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the
properties or assets of the Issuer and its Subsidiaries taken as a whole to any Person other than the Issuer or one of its Subsidiaries; (2) the consummation of any transaction (including, without limitation, any merger or consolidation) the
result of which is that any Person becomes the beneficial owner, directly or indirectly, of more than 50% of the then outstanding number of shares of the Issuer’s voting stock; or (3) the first day on which a majority of the members of the
Issuer’s Board of Directors are not Continuing Directors. Notwithstanding the foregoing, a transaction will not be deemed to result in a Change of Control if (i) the Issuer becomes a wholly owned subsidiary of a holding company and
(ii) the holders of the voting stock of such holding company immediately following that transaction are substantially the same as the holders of the Issuer’s voting stock immediately prior to that transaction. 

  
 A-1-6 

 “Change of Control Triggering Event” means the occurrence of both a Change of Control
and a Below Investment Grade Rating Event. 
 “Continuing Directors” means, as of any date of determination, any member of the
Board of Directors of the Issuer who (1) was a member of such Board of Directors on the date of original issue of this Security; or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board of Directors at the time of such nomination or election (either by a specific vote or by approval of the Issuer’s proxy statement in which such member was named as a nominee for election as a
director, without objection to such nomination). 
 “Fitch” means Fitch Ratings Inc., a subsidiary of Hearst Corporation and
Fimalac, S.A. 
 “Investment Grade Rating” means a rating equal to or higher than BBB- (or
the equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P. 

“Moody’s” means Moody’s Investors Service, Inc. 

“Rating Agencies” means (1) each of Fitch, Moody’s and S&P; and (2) if any one or more of Fitch, Moody’s or
S&P ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the Issuer’s reasonable control, then, at the Issuer’s election, either (x) each of the remaining agencies, as the case
may be or (y) at the Issuer’s election, each of the remaining agencies, as the case may be, and any “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) under the Exchange Act, selected
by the Issuer (as certified by a Board Resolution) as a replacement agency for Fitch, Moody’s or S&P, or all of them, as the case may be. 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. 

All payments of principal, interest, and premium, if any, in respect of the Notes will be made free and clear of, and without withholding or
deduction for, any present or future taxes, assessments, duties or governmental charges of whatever nature imposed, levied or collected by the United States (or any political subdivision or taxing authority thereof or therein having power to tax),
unless such withholding or deduction is required by law or the official interpretation or administration thereof. 

  
 A-1-7 

 Subject to the exceptions and limitations set forth below, the Issuer will pay as additional
interest in respect of the Notes such additional amounts as are necessary in order that the net payment by the Issuer of the principal of, premium, if any, and interest (collectively, “Additional Amounts”) in respect of the Notes to a
Holder who is not a United States person (as defined below), after withholding or deduction for any present or future tax, assessment, duties or other governmental charge imposed by the United States (or any political subdivision or taxing authority
thereof or therein having power to tax), will not be less than the amount provided herein to be then due and payable; provided, however, that the foregoing obligation to pay Additional Amounts shall not apply: (1) to the extent any tax,
assessment or other governmental charge would not have been imposed but for the Holder (or the beneficial owner for whose benefit such Holder holds such Note), or a fiduciary, settlor, beneficiary, member or shareholder of the Holder if the Holder
is an estate, trust, partnership or corporation, or a person holding a power over an estate or trust administered by a fiduciary Holder, being considered as (a) being or having been engaged in a trade or business in the United States or having
or having had a permanent establishment in the United States, (b) having a current or former connection with the United States (other than a connection arising solely as a result of the ownership of a Note, the receipt of any payment or the
enforcement of any rights hereunder), including being or having been a citizen or resident of the United States, (c) being or having been a personal holding company, a passive foreign investment company or a controlled foreign corporation for
U.S. federal income tax purposes or a corporation that has accumulated earnings to avoid U.S. federal income tax, (d) being or having been a “10-percent shareholder” of the Company as defined in
section 871(h)(3) of the United States Internal Revenue Code of 1986, as amended (the “Code”) or any successor provision or (e) being a bank receiving payments on an extension of credit made pursuant to a loan agreement entered into
in the ordinary course of its trade or business, as described in section 881(c)(3)(A) of the Code or any successor provision; (2) to any Holder that is not the sole beneficial owner of a Note, or a portion of a Note, or that is a fiduciary,
partnership, limited liability company or other fiscally transparent entity, but only to the extent that a beneficial owner with respect to the Holder, a beneficiary or settlor with respect to the fiduciary, or a beneficial owner or member of the
partnership, limited liability company or other fiscally transparent entity would not have been entitled to the payment of an Additional Amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or distributive
share of the payment; (3) to the extent any tax, assessment or other governmental charge that would not have been imposed but for the failure of the Holder or any other person to comply with certification, identification or information
reporting requirements concerning the nationality, residence, identity or connection with the United States of the Holder or beneficial owner of a Note, if compliance is required by statute, by regulation of the United States or any taxing authority
therein or by an applicable income tax treaty to which the United States is a party as a precondition to exemption from such tax, assessment or other governmental charge; (4) to any tax, assessment or other governmental charge that is imposed
otherwise than by withholding by the Issuer or a paying agent from the payment; (5) to any tax, assessment or other governmental charge required to be withheld by any paying agent from any payment of principal of or interest on any Note, if
such payment can be made without such withholding by any other paying agent; (6) to any estate, inheritance, gift, sales, transfer, wealth, capital gains or personal property tax or similar tax, assessment or other governmental charge, or
excise tax imposed on the transfer of a Note; (7) to the extent any tax, assessment or other governmental charge would not have been imposed but for the presentation by the Holder of any Note, where presentation is required, for payment on a
date more than 30 days after the date on which payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later, except to the extent that the beneficiary or Holder thereof would have been entitled to
the payment of Additional Amounts had such Note been presented for payment on any day during such 30-day period; to any tax, assessment or other governmental charge imposed under sections 1471 through 1474 of
the Code (or any amended or successor provisions), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to section 1471(b) of the Code or any fiscal or regulatory legislation, rules or practices
adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such sections of the Code, whether currently in effect or as published and amended from time to time; or (9) in the case of any
combination of items (1), (2), (3), (4), (5), (6), (7) and (8). As used in this paragraph, the term “United States” means the United States of America, its territories and possessions, the states of the United States and the District of
Columbia, and the term “United States person” means any individual who is a citizen or resident of the United States for U.S. federal income tax purposes, a corporation, partnership or other entity created or organized in or under the laws
of the United States, any state of the United States or the District of Columbia, or any estate or trust the income of which is subject to U.S. federal income taxation regardless of its source. 

  
 A-1-8 

 This Note is subject in all cases to any tax, fiscal or other law or regulation or administrative
or judicial interpretation applicable hereto. 
 If an Event of Default with respect to the Notes shall occur and be continuing, the
principal of all the Notes may be declared due and payable in the manner and with the effect provided in the Indenture. 
 The Indenture
contains provisions permitting the Issuer and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Senior Securities or Subordinated Securities, as the case may be, of all series issued under
such Indenture then outstanding and affected (each voting as one class), to add any provisions to, or change in any manner, eliminate or waive any of the provisions of, such Indenture or modify in any manner the rights of the holders of the
Securities or Coupons so affected; provided that the Issuer and the Trustee, may not, without the consent of the holder of each Outstanding Security affected thereby, (i) extend the final maturity of the principal of any Security or
reduce the principal amount thereof or premium thereon, if any, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or change the currency in which the principal thereof (other
than as otherwise may be provided with respect to such series), premium, if any, or interest thereon is payable or reduce the amount of the principal of any Original Issue Discount Security that is payable upon acceleration or provable in
bankruptcy, or in the case of Subordinated Securities of any series, modify any of the subordination provisions or the definition of “Senior Indebtedness” relating to such series in a manner adverse to the holders of such Subordinated
Securities, or alter certain provisions of the Indenture relating to Securities not denominated in Dollars or the Judgment Currency of such Securities or impair or affect the right of any Securityholder to institute suit for the enforcement of any
payment thereof when due or, if the Securities provide therefor, any right of repayment at the option of the Securityholder or (ii) reduce the aforesaid percentage in principal amount of Securities of any series issued under the Indenture, the
consent of the holders of which is required for any such modification. It is also provided in the Indenture that, with respect to certain defaults or Events of Default regarding the Securities of any series, the holders of a majority in aggregate
principal amount Outstanding of the Securities of each such series, each such series voting as a separate class (or, of all Securities, as the case may be voting as a single class) may under certain circumstances waive all defaults with respect to
each such series (or with respect to all the Securities, as the case may be) and rescind and annul a declaration of default and its consequences, but no such waiver or rescission and annulment shall extend to or affect any subsequent default or
shall impair any right consequent thereto. The preceding sentence shall not, however, apply to a default in the payment of the principal of or interest on any of the Securities. 

  
 A-1-9 

 No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note at the time, place and rate, and in the coin or currency, herein prescribed. 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note may be registered on the registry
books of the Issuer, upon surrender of this Note for registration of transfer at the office or agency of the Issuer maintained by the Issuer for such purpose in Minneapolis, Minnesota, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Issuer and the Trustee duly executed by, the holder hereof or by its 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. 
 No service charge shall be made for any such registration of transfer
or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. 

Prior to due presentment of this Note for registration of transfer, the Issuer, the Trustee and any agent of the Issuer 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 Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. 

  
 A-1-10 

 [FORM OF SCHEDULE FOR ENDORSEMENTS ON REGISTERED 

GLOBAL SECURITIES TO REFLECT CHANGES IN PRINCIPAL AMOUNT] 

Schedule A 
 Changes to Principal
Amount of Registered Global Securities 
  

							
	 Date
	  	 Principal Amount 
of Notes 
by which this Registered
Global
Security is to be 
Reduced or Increased, 
and Reason for 
Reduction or Increase
	  	 Remaining Principal 
Amount of this Registered 
Global
Security
	  	 Notation Made By

	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  

  

  
 A-1-11 

 ANNEX B 

Pursuant to Section 2.3 of the Indenture, dated as of December 4, 2012 (the “Indenture”), between McKesson Corporation, a
Delaware corporation (the “Issuer”), and Wells Fargo Bank, National Association, as trustee (the “Trustee”), the terms of a series of securities to be issued pursuant to the Indenture are as follows: 

 

	 	1.	Designation. The designation of the securities is “1.500% Notes due 2025” (the “2025 Notes”). 

  

	 	2.	Initial Aggregate Principal Amount. The 2025 Notes shall be limited in initial aggregate principal amount to €600,000,000 (except for 2025 Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other 2025 Notes pursuant to Section 2.8, 2.9, 2.11, 8.5 or 12.3 of the Indenture). 

  

	 	3.	Currency Denomination. The 2025 Notes shall be denominated in euro. 

  

	 	4.	Maturity. The date on which the principal of the 2025 Notes is payable is November 17, 2025. 

  

	 	5.	Rate of Interest; Interest Payment Date; Regular Record Dates. Each 2025 Note shall bear interest from February 17, 2017 at 1.500% per annum until the principal thereof is paid. Such interest shall be
payable annually in arrears on November 17 of each year, commencing on November 17, 2017, to the persons in whose names the 2025 Notes are registered at the close of business on the immediately preceding November 3. Interest on the 2025
Notes shall accrue from the most recent date to which interest has been paid, or, if no interest has been paid, from February 17, 2017. Interest on the 2025 Notes shall be computed on the basis of the actual number of days in the period for
which interest is being calculated and the actual number of days from and including the last date on which interest was paid on the 2025 Notes (or February 17, 2017, if no interest has been paid on the 2025 Notes), to, but excluding, the next
scheduled interest payment date. This payment convention is referred to as “Actual/Actual (ICMA)” as defined in the rulebook of the International Capital Market Association. In the event that any date on which principal, premium, if any,
or interest is payable on the 2025 Notes is not a Business Day, then payment of the principal, premium, if any, or interest payable on such date will be made on the next succeeding date that is a Business Day (and without any interest or other
payment in respect of any such delay). For the purposes of the 2025 Notes, “Business Day” is any day that is not a Saturday, Sunday or other day on which banking institutions in New York City, London or another place of payment on the 2025
Notes is authorized or required by law to close and on which the Trans-European Automated Real-Time Gross Settlement Express Transfer System (the “TARGET2 System”), or any successor thereto, is open. 

  
 B-1 

	 	6.	Place of Payment. Principal of, premium, if any, and interest on the 2025 Notes shall be payable, and the transfer of the 2025 Notes shall be registrable, at the office or agency of the Issuer to be maintained
for such purpose in Minneapolis, Minnesota, except that, at the option of the Issuer, interest may be paid by mailing a check to the address of the person entitled thereto as it appears on the 2025 Notes register; provided, however,
that while any 2025 Notes are represented by a Registered Global Security, payment of principal of, premium, if any, or interest on the 2025 Notes may be made by wire transfer to the account of the Depositary or its nominee. 

 

	 	7.	Optional Redemption. The 2025 Notes may be redeemed (a) prior to August 17, 2025 (the “Par Call Date”) in whole, at any time, or in part, from time to time, at the option of the Issuer, for
cash, at a redemption price equal to the greater of (i) 100% of their principal amount, or (ii) an amount, as determined by the Quotation Agent, equal to the sum of the present values of the remaining scheduled payments of principal, premium,
if any, and interest thereon (not including any portion of such payments of interest accrued to the date of redemption), discounted to the date of redemption on an annual basis (Actual/Actual ICMA) at the Comparable Government Bond Rate plus 25
basis points, plus, in each case, accrued and unpaid interest thereon to, but not including the date of redemption, (b) on or after the Par Call Date, in whole, at any time, or in part, from time to time, at the option of the Issuer, for cash,
at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest to, but not including, the redemption date or (c) at the Issuer’s option in whole, but not in part, at 100% of the principal amount, together
with accrued and unpaid interest, if any, to, but excluding, the redemption date if, as a result of any change in, or amendment to, the laws, regulations or rulings of the United States (or any political subdivision or taxing authority thereof or
therein having power to tax), or any change in official position regarding application or interpretation of those laws, regulations or rulings (including a holding by a court of competent jurisdiction), which change, amendment, application or
interpretation is announced and becomes effective on or after the February 17, 2017, the Issuer becomes or, based upon a written opinion of independent counsel selected by the Issuer, will become obligated to pay Additional Amounts as described
in Section 16 hereof and that obligation cannot be avoided by taking reasonable measures available to the Issuer, as determined by the Issuer in its sole discretion acting in good faith; provided that, in each case, after the principal
amount of any 2025 Note remaining outstanding after a redemption in part shall be €100,000 or a higher integral multiple of €1,000. Notwithstanding the foregoing, installments of interest on 2025 Notes that are due and payable on interest
payment dates falling on or prior to a redemption date will be payable on the interest payment date to the registered Holders as of the close of business on the relevant record date. Holders of the 2025 Notes to be redeemed will receive notice
thereof mailed (or, in the case of 2025 Notes held in book-entry form, transmitted electronically) at least 15 and not more than 45 days prior to the date fixed for redemption. Unless the Issuer defaults in payment of the redemption price, on and
after the redemption date, interest will cease to accrue on the 2025 Notes or portions thereof called for redemption. If less than all of the 2025 Notes are to be redeemed, the 2025 Notes to be redeemed will be selected in accordance with the
standard procedures of the Depositary. If the 2025 Notes to be redeemed are not Registered Global Securities then held by the Depositary, the Trustee will select the 2025 Notes to be redeemed on a pro rata basis. If the 2025 Notes are listed
on the New York Stock Exchange (the “NYSE”) or any other national securities exchange registered under the Exchange Act, the Trustee will select 2025 Notes in compliance with the requirements of the NYSE or other national securities
exchange on which the 2025 Notes are listed. 

  
 B-2 

 “Comparable Government Bond” means, in relation to any Comparable Government Bond Rate
calculation, at the discretion of an independent investment bank selected by the Issuer, a German government bond whose maturity is closest to the Par Call Date, or if such independent investment bank in its discretion determines that such similar
bond is not in issue, such other German government bond as such independent investment bank may, with the advice of three brokers of, and/or market makers in, German government bonds selected by the Issuer, determine to be appropriate for
determining the Comparable Government Bond Rate. 
 “Comparable Government Bond Rate” means the price, expressed as a percentage
(rounded to three decimal places, with 0.0005 being rounded upwards), at which the gross redemption yield on the 2025 Notes to be redeemed, if they were to be purchased at such price on the third Business Day prior to the date fixed for redemption,
would be equal to the gross redemption yield on such Business Day of the Comparable Government Bond on the basis of the middle market price of the Comparable Government Bond prevailing at 11:00 a.m. (London time) on such Business Day as determined
by an independent investment bank selected by the Issuer. 
  

	 	8.	Change of Control. If a Change of Control Triggering Event (as defined below) occurs, unless the Issuer has previously exercised its right to redeem the 2025 Notes in whole as described above, Holders of the 2025
Notes will have the right to require the Issuer to repurchase all or any part (in integral multiples of €1,000 original principal amount) of their 2025 Notes pursuant to the offer described below (the “Change of Control Offer”);
provided that the principal amount of any 2025 Note remaining outstanding after a repurchase in part shall be €100,000 or a higher integral multiple of €1,000. In the Change of Control Offer, the Issuer will be required to offer
payment in cash equal to 101% of the then outstanding aggregate principal amount of 2025 Notes repurchased plus accrued and unpaid interest, if any, on the 2025 Notes repurchased, to, but not including, the date of repurchase (the “Change of
Control Payment”). Within 30 days following any Change of Control Triggering Event, the Issuer will be required to mail a notice to Holders of the 2025 Notes describing the transaction or transactions that constitute the Change of Control
Triggering Event and offering to repurchase the 2025 Notes on the date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the “Change of Control Payment
Date”), pursuant to the procedures described herein and in such notice. The Issuer must comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the 2025 Notes as a result of a Change of Control Triggering Event. To the extent that the provisions of any securities laws or regulations
conflict with the Change of Control provisions herein, the Issuer will be required to comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions herein by
virtue of such conflicts. 

  
 B-3 

 The paying agent will promptly mail (or, in the case of 2025 Notes held in book-entry form,
transmit electronically) to each Holder of the 2025 Notes properly tendered the repurchase price for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book-entry) to each Holder a new 2025 Note equal in
principal amount to any unrepurchased portion of any 2025 Notes surrendered; provided, that each new 2025 Note will be in a principal amount of €100,000 or an integral multiple of €1,000 thereafter. 

Notwithstanding the foregoing, the Issuer will not be required to make a Change of Control Offer upon the occurrence of a Change of Control
Triggering Event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for a Change of Control Offer made by the Issuer and the third party repurchases all 2025 Notes properly tendered and
not withdrawn under its offer. In addition, the Issuer will not repurchase any 2025 Notes if there has occurred and is continuing on the Change of Control Payment Date an Event of Default, other than a default in the payment of the Change of Control
Payment upon a Change of Control Triggering Event. On the Change of Control Payment Date, the Issuer will be required, to the extent lawful, to (i) accept for payment all 2025 Notes or portions thereof properly tendered pursuant to the Change
of Control Offer; (ii) deposit with the paying agent, no later than 10:00 a.m., London time, an amount equal to the Change of Control Payment in respect of all 2025 Notes or portions thereof properly tendered; and (iii) deliver or cause to
be delivered to the Trustee the 2025 Notes properly accepted together with an Officer’s Certificate stating the aggregate principal amount of 2025 Notes or portions of 2025 Notes being repurchased. 

  
 B-4 

 “Below Investment Grade Rating Event” means the 2025 Notes are rated below an
Investment Grade Rating by each of the Rating Agencies (as defined below) on any date from the date of the public notice of an arrangement that could result in a Change of Control until the end of the 60-day
period following public notice of the occurrence of the Change of Control (which 60-day period shall be extended so long as the rating of the 2025 Notes is under publicly announced consideration for possible
downgrade by any of the Rating Agencies). 
 “Change of Control” means the occurrence of any of the following: (1) the direct
or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Issuer and its Subsidiaries taken
as a whole to any Person other than the Issuer or one of its Subsidiaries; (2) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any Person becomes the beneficial owner,
directly or indirectly, of more than 50% of the then outstanding number of shares of the Issuer’s voting stock; or (3) the first day on which a majority of the members of the Issuer’s Board of Directors are not Continuing Directors.
Notwithstanding the foregoing, a transaction will not be deemed to result in a Change of Control if (i) the Issuer becomes a wholly owned subsidiary of a holding company and (ii) the holders of the voting stock of such holding company
immediately following that transaction are substantially the same as the holders of the Issuer’s voting stock immediately prior to that transaction. 

“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Below Investment Grade Rating Event.

 “Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the Issuer who
(1) was a member of such Board of Directors on the date of original issue of the 2025 Notes; or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were
members of such Board of Directors at the time of such nomination or election (either by a specific vote or by approval of the Issuer’s proxy statement in which such member was named as a nominee for election as a director, without objection to
such nomination). 

  
 B-5 

 “Fitch” means Fitch Ratings Inc., a subsidiary of Hearst Corporation and Fimalac, S.A.

 “Investment Grade Rating” means a rating equal to or higher than BBB- (or the
equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P. 

“Moody’s” means Moody’s Investors Service, Inc. 

“Rating Agencies” means (1) each of Fitch, Moody’s and S&P; and (2) if any one or more of Fitch, Moody’s or
S&P ceases to rate the 2025 Notes or fails to make a rating of the 2025 Notes publicly available for reasons outside of the Issuer’s reasonable control, then, at the Issuer’s election, either (x) each of the remaining agencies, as
the case may be or (y) each of the remaining agencies, as the case may be, and any “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) under the Exchange Act, selected by the Issuer (as
certified by a Board Resolution) as a replacement agency for Fitch, Moody’s or S&P, or all of them, as the case may be. 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. 

 

	 	9.	Mandatory Redemption. The 2025 Notes are not mandatorily redeemable and are not entitled to the benefit of a sinking fund or any analogous provisions. 

 

	 	10.	Denominations. The 2025 Notes shall be issued initially in minimum denominations of €100,000 and shall be issued in integral multiples of €1,000 in excess thereof. 

 

	 	11.	Amount Payable Upon Acceleration. The principal of the 2025 Notes shall be payable upon declaration of acceleration pursuant to Section 5.1 of the Indenture. 

  
 B-6 

	 	12.	Payment Currency. All payments of interest and principal, including payments made upon any redemption or repurchase of 2025 Notes, will be made in euro; provided that if the euro is unavailable to the Issuer due
to the imposition of exchange controls or other circumstances beyond the Issuer’s control or if the euro is no longer being used by the then member states of the European Monetary Union that have adopted the euro as their currency or for the
settlement of transactions by public institutions of or within the international banking community, then all payments in respect of the 2025 Notes will be made in Dollars until the euro is again available to the Issuer or so used. In such
circumstances, the amount payable on any date in euro will be converted into Dollars at the rate mandated by the Board of Governors of the Federal Reserve System as of the close of business on the second Business Day prior to the relevant payment
date or, if the Board of Governors of the Federal Reserve System has not announced a rate of conversion, on the basis of the most recent Dollar/euro exchange rate published in The Wall Street Journal on or prior to the second Business Day
prior to the relevant payment date or, in the event The Wall Street Journal has not published such exchange rate, the rate will be determined in the Issuer’s sole discretion on the basis of the most recently available market exchange
rate for the euro. Any payment in respect of 2025 Notes so made in Dollars will not constitute an Event of Default. Neither the Trustee nor the paying agent shall have any responsibility for any calculation or conversion in connection with the
foregoing. 

  

	 	13.	Payment Currency—Election. Notwithstanding the provisions of Section 12 hereof, the principal of and interest on the 2025 Notes shall not be payable in a currency other than euro. 

 

	 	14.	Payment Currency—Index. Notwithstanding the provisions of Section 12 hereof, the principal of and interest on the 2025 Notes shall not be determined with reference to an index based on a coin or
currency. 

  

	 	15.	Registered Securities. The 2025 Notes shall be issued only as Registered Securities. The 2025 Notes shall be issuable as Registered Global Securities. 

  
 B-7 

	 	16.	Additional Amounts. All payments of principal, interest, and premium, if any, in respect of the 2025 Notes will be made free and clear of, and without withholding or deduction for, any present or future taxes,
assessments, duties or governmental charges of whatever nature imposed, levied or collected by the United States (or any political subdivision or taxing authority thereof or therein having power to tax), unless such withholding or deduction is
required by law or the official interpretation or administration thereof. Subject to the exceptions and limitations set forth below, the Issuer will pay as additional interest in respect of the 2025 Notes such additional amounts as are necessary in
order that the net payment by the Issuer of the principal of, premium, if any, and interest (collectively, “Additional Amounts”) in respect of the 2025 Notes to a Holder who is not a United States person (as defined below), after
withholding or deduction for any present or future tax, assessment, duties or other governmental charge imposed by the United States (or any political subdivision or taxing authority thereof or therein having power to tax), will not be less than the
amount provided in the 2025 Notes to be then due and payable; provided, however, that the foregoing obligation to pay Additional Amounts shall not apply: (1) to the extent any tax, assessment or other governmental charge would not have been
imposed but for the Holder (or the beneficial owner for whose benefit such Holder holds such 2025 Note), or a fiduciary, settlor, beneficiary, member or shareholder of the Holder if the Holder is an estate, trust, partnership or corporation, or a
person holding a power over an estate or trust administered by a fiduciary Holder, being considered as (a) being or having been engaged in a trade or business in the United States or having or having had a permanent establishment in the United
States, (b) having a current or former connection with the United States (other than a connection arising solely as a result of the ownership of 2025 Notes, the receipt of any payment or the enforcement of any rights hereunder), including being
or having been a citizen or resident of the United States, (c) being or having been a personal holding company, a passive foreign investment company or a controlled foreign corporation for U.S. federal income tax purposes or a corporation that
has accumulated earnings to avoid U.S. federal income tax, (d) being or having been a “10-percent shareholder” of the Issuer as defined in section 871(h)(3) of the United States Internal Revenue
Code of 1986, as amended (the “Code”) or any successor provision or (e) being a bank receiving payments on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business, as
described in section 881(c)(3)(A) of the Code or any successor provision; (2) to any Holder that is not the sole beneficial owner of 2025 Notes, or a portion of 2025 Notes, or that is a fiduciary, partnership, limited liability company or other
fiscally transparent entity, but only to the extent that a beneficial owner with respect to the Holder, a beneficiary or settlor with respect to the fiduciary, or a beneficial owner or member of the partnership, limited liability company or other
fiscally transparent entity would not have been entitled to the payment of an Additional Amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or distributive share of the payment; (3) to the extent
any tax, assessment or other governmental charge that would not have been imposed but for the failure of the Holder or any other person to comply with certification, identification or information reporting requirements concerning the nationality,
residence, identity or connection with the United States of the Holder or beneficial owner of 2025 Notes, if compliance is required by statute, by regulation of the United States or any taxing authority therein or by an applicable income tax treaty
to which the United States is a party as a precondition to exemption from such tax, assessment or other governmental charge; (4) to any tax, assessment or other governmental charge that is imposed otherwise than by withholding by the Issuer or
a paying agent from the payment; (5) to any tax, assessment or other governmental charge required to be withheld by any paying agent from any payment of principal of or interest on any 2025 Notes, if such payment can be made without such
withholding by any other paying agent; (6) to any estate, inheritance, gift, sales, transfer, wealth, capital gains or personal property tax or similar tax, assessment or other governmental charge, or excise tax imposed on the transfer of 2025
Notes; (7) to the extent any tax, assessment or other governmental charge would not have been imposed but for the presentation by the Holder of any 2025 Note, where presentation is required, for payment on a date more than 30 days after the
date on which payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later, except to the extent that the beneficiary or Holder thereof would have been entitled to the payment of Additional Amounts
had such 2025 Note been presented for payment on any day during such 30-day period; to any tax, assessment or other governmental charge imposed under sections 1471 through 1474 of the Code (or any amended or
successor provisions), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to section 1471(b) of the Code or any fiscal or regulatory legislation, rules or practices adopted pursuant to any
intergovernmental agreement entered into in connection with the implementation of such sections of the Code, whether currently in effect or as published and amended from time to time; or (9) in the case of any combination of items (1), (2),
(3), (4), (5), (6), (7) and (8). The 2025 Notes are subject in all cases to any tax, fiscal or other law or regulation or administrative or judicial interpretation applicable to 2025 Notes. Except as specifically provided in this Section 16,
the Issuer will not be required to make any payment for any tax, assessment or other governmental charge imposed by any government or a political subdivision or taxing authority of or in any government or political subdivision. As used in this
Section 16 and above in Section 12 hereof, the term “United States” means the United States of America, its territories and possessions, the states of the United States and the District of Columbia, and the term “United
States person” means any individual who is a citizen or resident of the United States for U.S. federal income tax purposes, a corporation, partnership or other entity created or organized in or under the laws of the United States, any state of
the United States or the District of Columbia, or any estate or trust the income of which is subject to U.S. federal income taxation regardless of its source. 

  
 B-8 

	 	17.	Definitive Certificates. The 2025 Notes shall be exchanged by the Issuer for 2025 Notes in definitive form only (i) subject to the provisions of Section 2.8 of the Indenture or (ii) if an Event of
Default has occurred and is continuing, and the Depositary requests the issuance of 2025 Notes in definitive form. 

  

	 	18.	Registrar; Paying Agent; Depositary. U.S. Bank National Association shall initially serve as the registrar and transfer agent and Elavon Financial Services DAC shall initially serve as the paying agent for the
2025 Notes. Clearstream Banking, S.A. and Euroclear Bank S.A./N.V. shall initially serve as the Depositary for the Registered Global Security representing the 2025 Notes. Elavon Financial Services DAC shall initially serve as the common depositary
for the Depositary. 

  

	 	19.	Events of Default; Covenants. There shall be no deletions from or modifications or additions to the Events of Default set forth in Section 5.1 of the Indenture with respect to the 2025 Notes. There shall be
the following additions to the covenants of the Issuer set forth in Article III of the Indenture with respect to the 2025 Notes: 

  
 B-9 

 Limitation on Liens. The Issuer covenants that, so long as any of the 2025 Notes remain
outstanding, it shall not, nor shall it permit any Consolidated Subsidiary to, create or assume any Indebtedness for money borrowed which is secured by a mortgage, pledge, security interest or lien (“liens”) of or upon any assets, whether
now owned or hereafter acquired, of the Issuer or any such Consolidated Subsidiary without equally and ratably securing the 2025 Notes by a lien ranking equally to and ratably with (or at the option of the Issuer, senior to) such secured
Indebtedness, except that the foregoing restriction shall not apply to (a) liens on any assets of any corporation existing at the time such corporation becomes a Consolidated Subsidiary; (b) liens on any assets existing at the time of
acquisition of such assets by the Issuer or a Consolidated Subsidiary, or liens to secure the payment of all or any part of the purchase price of such assets upon the acquisition of such assets by the Issuer or a Consolidated Subsidiary or to secure
any indebtedness incurred or guaranteed by the Issuer or a Consolidated Subsidiary prior to, at the time of, or within 360 days after such acquisition (or in the case of real property, the completion of construction (including any improvements on an
existing asset) or commencement of full operation of such asset, whichever is later), which indebtedness is incurred or guaranteed for the purpose of financing all or any part of the purchase price thereof or, in the case of real property,
construction or improvements thereon; (c) liens on any assets securing indebtedness owed by any Consolidated Subsidiary to the Issuer or another wholly owned Subsidiary; (d) liens on any assets of a corporation existing at the time such
corporation is merged into or consolidated with the Issuer or a Subsidiary or at the time of a purchase, lease or other acquisition of the assets of a corporation or firm as an entirety or substantially as an entirety by the Issuer or a Subsidiary;
(e) liens on any assets of the Issuer or a Consolidated Subsidiary in favor of the United States of America or any state thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State
thereof, or in favor of any other country, or any political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any indebtedness incurred or guaranteed for the purpose of
financing all or any part of the purchase price (or, in the case of real property, the cost of construction) of the assets subject to such liens (including, but not limited to, liens incurred in connection with pollution control, industrial revenue
or similar financing); (f) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any lien referred to in the foregoing clauses (a) to (e), inclusive; (g) liens imposed by law,
such as mechanics’, workmen’s, repairmen’s, materialmen’s, carriers’, warehousemen’s, vendors’ or other similar liens arising in the ordinary course of business, or governmental (federal, state or municipal) liens
arising out of contracts for the sale of products or services by the Issuer or any Consolidated Subsidiary, or deposits or pledges to obtain the release of any of the foregoing liens; (h) pledges, liens or deposits under worker’s
compensation laws or similar legislation and liens or judgments thereunder which are not currently dischargeable, or in connection with bids, tenders, contracts (other than for the payment of money) or leases to which the Issuer or any Consolidated
Subsidiary is a party, or to secure public or statutory obligations of the Issuer or any Consolidated Subsidiary, or in connection with obtaining or maintaining self-insurance or to obtain the benefits of any law, regulation or arrangement
pertaining to unemployment insurance, old age pensions, social security or similar matters, or to secure surety, appeal or customs bonds to which the Issuer or any Consolidated Subsidiary is a party, or in litigation or other proceedings such as,
but not limited to, interpleader proceedings, and other similar pledges, liens or deposits made or incurred in the ordinary course of business; (i) liens created by or resulting from any litigation or other proceeding which is being contested
in good faith by appropriate proceedings, including liens arising out of judgments or awards against the Issuer or any Consolidated Subsidiary with respect to which the Issuer or such Consolidated Subsidiary is in good faith prosecuting an appeal or
proceedings for review or for which the time to make an appeal has not yet expired; or final unappealable judgment liens which are satisfied within 15 days of the date of judgment; or liens incurred by the Issuer or any Consolidated Subsidiary for
the purpose of obtaining a stay or discharge in the course of any litigation or other proceeding to which the Issuer or such Consolidated Subsidiary is a party; (j) liens for taxes or assessments or governmental charges or levies not yet due or
delinquent, or which can thereafter be paid without penalty, or which are being contested in good faith by appropriate proceedings; landlord’s liens on property held under lease; and any other liens or charges incidental to the conduct of the
business of the Issuer or any Consolidated Subsidiary or the ownership of the assets of any of them which were not incurred in connection with the borrowing of money or the obtaining of advances or credit and which do not, in the opinion of the
Issuer, materially impair the use of such assets in the operation of the business of the Issuer or such Consolidated Subsidiary or the value of such assets for the purposes thereof; (k) liens relating to accounts receivable of the Issuer or any
of its Subsidiaries which have been sold, assigned or otherwise transferred to another Person in a transaction classified as a sale of accounts receivable in accordance with accounting principles generally accepted in the United States of America
(to the extent the sale by the Issuer or the applicable Subsidiary is deemed to give rise to a lien in favor of the purchaser thereof in such accounts receivable or the proceeds thereof); or (l) liens on any assets of the Issuer or any of its
Subsidiaries (including Receivables Subsidiaries) incurred in connection with a Qualified Receivables Transaction. Notwithstanding the above, the Issuer or any Consolidated Subsidiary may, without securing the 2025 Notes, create or assume any
Indebtedness which is secured by a lien which would otherwise be subject to the foregoing restrictions, provided that at the time of such creation or assumption, after giving effect thereto, Exempted Debt does not exceed 10% of the total
assets of the Issuer and its Subsidiaries on a consolidated basis, determined in accordance with accounting principles generally accepted in the United States of America. 

  
 B-10 

 Limitation on Sale and Lease-Back Transactions. The Issuer covenants that, so long as any
of the 2025 Notes remain outstanding, the Issuer will not, nor shall the Issuer permit any Consolidated Subsidiary to, enter into any sale and lease-back transaction with respect to any assets, other than any sale and lease-back transaction
involving a lease for a term of not more than three years, unless either (a) the Issuer or such Consolidated Subsidiary would be entitled to incur Indebtedness secured by a lien on the assets to be leased in an amount at least equal to the
Attributable Debt in respect of such transaction without equally and ratably securing the 2025 Notes pursuant to clauses (a) through (k) inclusive of the covenant with respect to “Limitation on Liens” above, or (b) the proceeds
of the sale of the assets to be leased are at least equal to their fair market value (as determined by the Board of Directors of the Issuer) and the proceeds are applied to the purchase or acquisition (or, in the case of real property, the
construction) of assets or to the retirement (other than at maturity or pursuant to a mandatory sinking fund or mandatory redemption provision) of indebtedness. The foregoing limitation shall not apply, if at the time the Issuer or any Consolidated
Subsidiary enters into such sale and lease-back transaction, and after giving effect thereto, Exempted Debt does not exceed 10% of the total assets of the Issuer and its Subsidiaries on a consolidated basis, determined in accordance with accounting
principles generally accepted in the United States of America. 
 The term “Attributable Debt” in connection with a sale and
lease-back transaction shall mean, as of the date of determination, the lesser of (a) the fair value of the assets subject to such transaction, as determined by the Board of Directors of the Issuer, or (b) the present value (discounted at
the rate of interest set forth in or implicit in the terms of such lease or, if it is not practicable to determine such rate, the weighted average interest rate per annum borne by all series of Securities then Outstanding and subject to the
“Limitation on Sale and Lease-Back Transactions” covenant above compounded semi-annually, in either case as determined by the principal accounting or financial officer of the Issuer) of the remaining obligations of the Issuer or any
Consolidated Subsidiary for net rental payments during the remaining term of all leases (including any period for which such lease has been extended or may, at the option of the lessor, be extended). 

  
 B-11 

 The term “Consolidated Subsidiary” shall mean any Subsidiary substantially all the
property of which is located, and substantially all the operations of which are conducted, in the United States of America whose financial statements are consolidated with those of the Issuer in accordance with accounting principles generally
accepted in the United States of America. 
 The term “Exempted Debt” shall mean the sum of the following as of the date of
determination: (i) Indebtedness of the Issuer and its Consolidated Subsidiaries incurred after the date of issuance of the 2025 Notes and secured by liens not permitted to be created or assumed pursuant to the covenant with respect to
“Limitation on Liens” above, and (ii) Attributable Debt of the Issuer and its Consolidated Subsidiaries in respect of every sale and lease-back transaction entered into after the date of issuance of the 2025 Notes, other than leases
expressly permitted by the covenant with respect to “Limitation on Sale and Lease-Back Transactions” above. 
 The term
“Indebtedness” shall mean all items classified as indebtedness on the most recently available consolidated balance sheet of the Issuer and its Consolidated Subsidiaries, in accordance with accounting principles generally accepted in the
United States of America. 
 The term “net rental payments” under any lease of any period shall mean the sum of the rental and
other payments required to be paid in such period by the lessee thereunder, not including, however, any amounts required to be paid by such lessee (whether or not designated as rental or additional rental) on account of maintenance and repairs,
reconstruction, insurance, taxes, assessments, water rates or similar charges required to be paid by such lessee thereunder or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales, maintenance and repairs,
reconstruction, insurance, taxes, assessments, water rates or similar charges. 
 The term “Qualified Receivables Transaction”
shall mean any transaction or series of transactions entered into by the Issuer or any of its Subsidiaries pursuant to which the Issuer or any of its Subsidiaries sells, conveys or otherwise transfers to (i) a Receivables Subsidiary (in the
case of a transfer by the Issuer or any of its Subsidiaries) and (ii) any other Person (in the case of a transfer by a Receivables Subsidiary), or grants a security interest in, any accounts receivable (whether now existing or arising in the
future) or inventory of the Issuer or any of its Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such
accounts receivable or inventory, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions
involving accounts receivable or inventory. 

  
 B-12 

 The term “Receivables Subsidiary” shall mean a Subsidiary of the Issuer which engages
in no activities other than in connection with the financing of accounts receivable or inventory (a) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Issuer or any
Subsidiary of the Issuer (excluding guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in
connection with a Qualified Receivables Transaction), (ii) is recourse or obligates the Issuer or any Subsidiary of the Issuer in any way other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary
course of business in connection with a Qualified Receivables Transaction or (iii) subjects any property or asset of the Issuer or any Subsidiary of the Issuer (other than accounts receivable or inventory and related assets as provided in the
definition of “Qualified Receivables Transaction”), directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary
course of business in connection with a Qualified Receivables Transaction, (b) with which neither the Issuer nor any Subsidiary of Issuer has any material contract, agreement, arrangement or understanding other than on terms customary for
securitization of receivables or inventory and (c) with which neither the Issuer nor any Subsidiary of the Issuer has any obligations to maintain or preserve such Subsidiary’s financial condition or cause such Subsidiary to achieve certain
levels of operating results. 
  

	 	20.	Conversion and Exchange. The 2025 Notes shall not be convertible into or exchangeable for any other security. 

  

	 	21.	Additional Issues. The Issuer may, without notice to or the consent of the Holders of the 2025 Notes, create and issue additional 2025 Notes with the same terms as the 2025 Notes in all respects, except for the
issue date, the public offering price and, under certain circumstances, the first interest payment date. Such additional 2025 Notes shall be consolidated and form a single series with the 2025 Notes. 

 

	 	22.	Other Terms. The 2025 Notes shall have the other terms and shall be substantially in the form set forth in the form of the 2025 Notes attached hereto as Annex B-1. In case
of any conflict between this Annex B and the 2025 Notes, the form of the 2025 Notes shall control. 

  

	 	23.	Access to Information. The Issuer and the Holders shall cooperate with the Trustee and shall provide the Trustee with reasonable access to, and copies of, documents or information necessary for the Trustee to
comply with any cost basis reporting obligations imposed on it by a governmental authority in connection with certain transfers or exchanges of 2025 Notes. 

  
 B-13 

 Capitalized terms used but not otherwise defined in this Annex B shall have the respective
meanings ascribed to such terms in the Indenture. 
  

  
 B-14 

 ANNEX B-1 

[FORM OF 2025 NOTE] 
 REGISTERED
REGISTERED 
 THIS NOTE IS A REGISTERED GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A COMMON
DEPOSITARY OR A NOMINEE OF A COMMON DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN
THE NAME OF USB NOMINEES (UK) LIMITED OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO USB NOMINEES (UK) LIMITED, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, USB NOMINEES (UK) LIMITED, HAS AN INTEREST HEREIN. TRANSFERS OF THIS REGISTERED GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF ELAVON
FINANCIAL SERVICES DAC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE. 
  

			
	No. R – A2	  	ISIN NO. XS1567174286
		  	COMMON CODE 156717428

 McKESSON CORPORATION 

1.500% NOTES DUE NOVEMBER 17, 2025 

McKesson Corporation, a Delaware corporation (the “Issuer,” which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to USB Nominees (UK) Limited, or registered assigns, the principal sum of Six Hundred Million euros (€600,000,000) on November 17, 2025 and to pay interest on said
principal sum from February 17, 2017, or from the most recent interest payment date to which interest has been paid or duly provided for, annually on November 17 (the “Interest Payment Date”) of each year commencing on
November 17, 2017, at the rate of 1.500% per annum until the principal hereof shall have become due and payable. 

  
 B-1-1 

 The amount of interest payable on any Interest Payment Date shall be computed on the basis of the
actual number of days in the period for which interest is being calculated and the actual number of days from and including the last date on which interest was paid on this Note (or February 17, 2017, if no interest has been paid on this Note),
to, but excluding, the next scheduled interest payment date. In the event that any date on which the principal or interest payable on this Note is not a Business Day, then payment of principal or interest payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other payment in respect of such delay). The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture (referred to on the reverse hereof) be paid to the person in whose name this Note is registered at the close of business on the record date for such interest installment, which shall be the close of business on the immediately preceding
November 3 prior to such Interest Payment Date, as applicable. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered Holders on such record date and may be paid to the
person in whose name this Note is registered at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the date of payment of such defaulted interest), notice whereof shall be given by mail by or
on behalf of the Issuer to the registered Holders of Notes not less than 15 days preceding such subsequent record date, all as more fully provided in the Indenture. The principal of and the interest on this Note shall be payable at the office or
agency of the Issuer maintained for that purpose in euro (except as otherwise provided in this Note); provided, however, that payment of interest may be made at the option of the Issuer by check mailed to the person entitled thereto at
such address as shall appear in the registry books of the Issuer; provided, further, that for so long as this Note is represented by a Registered Global Security, payment of principal, premium, if any, or interest on this Note may be
made by wire transfer to the account of the Depositary or its nominee. If the euro is unavailable to the Issuer due to the imposition of exchange controls or other circumstances beyond the Issuer’s control or if the euro is no longer being used
by the then member states of the European Monetary Union that have adopted the euro as their currency or for the settlement of transactions by public institutions of or within the international banking community, then all payments in respect of the
Notes will be made in Dollars until the euro is again available to the Issuer or so used. In such circumstances, the amount payable on any date in euro will be converted into Dollars at the rate mandated by the Board of Governors of the Federal
Reserve System as of the close of business on the second Business Day prior to the relevant payment date or, if the Board of Governors of the Federal Reserve System has not announced a rate of conversion, on the basis of the most recent Dollar/euro
exchange rate published in The Wall Street Journal on or prior to the second Business Day prior to the relevant payment date or, in the event The Wall Street Journal has not published such exchange rate, the rate will be determined in
the Issuer’s sole discretion on the basis of the most recently available market exchange rate for the euro. Any payment in respect of Notes so made in Dollars will not constitute an Event of Default. For the purposes of the Notes,
“Business Day” is any day that is not a Saturday, Sunday or other day on which banking institutions in New York City, London or another place of payment on the Notes is authorized or required by law to close and on which the Trans-European
Automated Real-Time Gross Settlement Express Transfer System (the “TARGET2 System”), or any successor thereto, is open. 
 Unless
the certificate of authentication hereon has been executed by or on behalf of the Trustee (as defined below) under the Indenture (as defined below), by the manual signature of one of its authorized signatories, this Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purpose. 
 Capitalized terms used in this Note which are defined in the
Indenture shall have the respective meanings assigned to them in the Indenture. 
 The provisions of this Note are continued on the reverse
side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. 

  
 B-1-2 

 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed, manually or in
facsimile. 
  

			
	 McKESSON CORPORATION

		
	 By:
	 	  

		 	 Name:

		 	 Title:

  

			
	CERTIFICATE OF AUTHENTICATION
	This is one of the Securities referred to in the within-mentioned Indenture.
	
	 WELLS FARGO BANK, NATIONAL ASSOCIATION

        as Trustee

		
	By:	 	  

		 	Authorized Signatory
		
	Dated:	 	  

  
 B-1-3 

 [FORM OF REVERSE SIDE OF NOTE] 

This Note is one of a duly authorized series of securities (the “Securities”) of the Issuer designated as its 1.500% Notes due
November 17, 2025 (the “Notes”). The Securities are all issued or to be issued under and pursuant to an Indenture, dated as of December 4, 2012 (the “Indenture”), duly executed and delivered between the Issuer and Wells
Fargo Bank, National Association as trustee with respect to the Notes (the “Trustee”), to which the Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights thereunder of the
Issuer, the Trustee and the Holders of the Securities and the terms upon which the Notes are to be authenticated and delivered. The terms of individual series of Securities may vary with respect to interest rate or interest rate formulas, issue
dates, maturity, redemption, repayment, currency of payment and otherwise. 
 The Notes are issuable only as Registered Securities in
minimum denominations of €100,000 and integral multiples of €1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Notes are exchangeable for a like aggregate principal amount of
Notes as requested by the Holder surrendering the same. 
 Except as set forth below, this Note is not redeemable and is not entitled to the
benefit of a sinking fund or any analogous provision. 
 The Notes may be redeemed (a) prior to August 17, 2025 (the “Par
Call Date”) in whole, at any time, or in part, from time to time, at the option of the Issuer, for cash, at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) an amount, as determined by the Quotation
Agent, equal to the sum of the present values of the remaining scheduled payments of principal, premium, if any, and interest thereon (not including any portion of such payments of interest accrued to the date of redemption), discounted to the date
of redemption on an annual basis at the Comparable Government Bond Rate plus 25 basis points, plus, in each case, accrued and unpaid interest thereon to, but not including the date of redemption, (b) on or after the Par Call Date, in whole, at
any time, or in part, from time to time, at the option of the Issuer, for cash, at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest to, but not including, the redemption date or (c) at the
Issuer’s option in whole, but not in part, at 100% of the principal amount, together with accrued and unpaid interest, if any, to, but excluding, the redemption date if, as a result of any change in, or amendment to, the laws, regulations or
rulings of the United States (or any political subdivision or taxing authority thereof or therein having power to tax), or any change in official position regarding application or interpretation of those laws, regulations or rulings (including a
holding by a court of competent jurisdiction), which change, amendment, application or interpretation is announced and becomes effective on or after February 17, 2017, the Issuer becomes or, based upon a written opinion of independent counsel
selected by the Issuer, will become obligated to pay Additional Amounts and that obligation cannot be avoided by taking reasonable measures available to the Issuer, as determined by the Issuer in its sole discretion acting in good faith.
Notwithstanding the foregoing, installments of interest on Notes that are due and payable on interest payment dates falling on or prior to a redemption date will be payable on the interest payment date to the registered Holders as of the close of
business on the relevant record date. Holders of the Notes to be redeemed will receive notice thereof mailed (or, in the case of Notes held in book-entry form, transmitted electronically) at least 15 and not more than 45 days prior to the date fixed
for redemption. Unless the Issuer defaults in payment of the redemption price, on and after the redemption date, interest will cease to accrue on the Notes or portions thereof called for redemption. If less than all of the Notes are to be redeemed,
no Notes of a principal amount of €100,000 or less shall be redeemed in part. If less than all of the Notes are to be redeemed, the Notes to be redeemed will be selected in accordance with the standard procedures of the Depositary. If the Notes
to be redeemed are not Registered Global Securities then held by the Depositary, the Trustee will select the Notes to be redeemed on a pro rata basis. If the Notes are listed on the New York Stock Exchange (the “NYSE”) or any other
national securities exchange registered under the Exchange Act, the Trustee will select Notes in compliance with the requirements of the NYSE or other national securities exchange on which the Notes are listed. As used in this paragraph, the term
“United States” means the United States of America, its territories and possessions, the states of the United States and the District of Columbia. 

  
 B-1-4 

 “Comparable Government Bond” means, in relation to any Comparable Government Bond Rate
calculation, at the discretion of an independent investment bank selected by the Issuer, a German government bond whose maturity is closest to the Par Call Date, or if such independent investment bank in its discretion determines that such similar
bond is not in issue, such other German government bond as such independent investment bank may, with the advice of three brokers of, and/or market makers in, German government bonds selected by the Issuer, determine to be appropriate for
determining the Comparable Government Bond Rate. 
 “Comparable Government Bond Rate” means the price, expressed as a percentage
(rounded to three decimal places, with 0.0005 being rounded upwards), at which the gross redemption yield on the Notes to be redeemed, if they were to be purchased at such price on the third Business Day prior to the date fixed for redemption, would
be equal to the gross redemption yield on such Business Day of the Comparable Government Bond on the basis of the middle market price of the Comparable Government Bond prevailing at 11:00 a.m. (London time) on such Business Day as determined by an
independent investment bank selected by the Issuer. 
 If a Change of Control Triggering Event (as defined below) occurs, unless the Issuer
has previously exercised its right to redeem the Notes in whole as described above, Holders of the Notes will have the right to require the Issuer to repurchase all or any part (in integral multiples of €1,000 original principal amount) of
their Notes pursuant to the offer described below (the “Change of Control Offer”); provided that the principal amount of any Note remaining outstanding after a repurchase in part shall be €100,000 or a higher integral multiple of
€1,000. In the Change of Control Offer, the Issuer will be required to offer payment in cash equal to 101% of the then outstanding aggregate principal amount of Notes repurchased plus accrued and unpaid interest, if any, on the Notes
repurchased, to, but not including, the date of repurchase (the “Change of Control Payment”). Within 30 days following any Change of Control Triggering Event, the Issuer will be required to mail a notice to Holders of the Notes describing
the transaction or transactions that constitute the Change of Control Triggering Event and offering to repurchase the Notes on the date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such
notice is mailed (the “Change of Control Payment Date”), pursuant to the procedures described herein and in such notice. The Issuer must comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control Triggering Event. To the extent that the
provisions of any securities laws or regulations conflict with the Change of Control provisions herein, the Issuer will be required to comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations
under the Change of Control provisions herein by virtue of such conflicts. 

  
 B-1-5 

 The paying agent will promptly mail (or, in the case of Notes held in book-entry form, transmit
electronically) to each Holder of the Notes properly tendered the repurchase price for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book-entry) to each Holder a new Note equal in principal amount to
any unrepurchased portion of any Notes surrendered; provided, that each new Note will be in a principal amount of €100,000 or an integral multiple of €1,000 thereafter. 

Notwithstanding the foregoing, the Issuer will not be required to make a Change of Control Offer upon the occurrence of a Change of Control
Triggering Event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for a Change of Control Offer made by the Issuer and the third party repurchases all Notes properly tendered and not
withdrawn under its offer. In addition, the Issuer will not repurchase any Notes if there has occurred and is continuing on the Change of Control Payment Date an event of default under the Indenture, other than a default in the payment of the Change
of Control Payment upon a Change of Control Triggering Event. 
 On the Change of Control Payment Date, the Issuer will be required, to the
extent lawful, to (i) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer; (ii) deposit with the paying agent, no later than 10:00 a.m., London time, an amount equal to the Change of
Control Payment in respect of all Notes or portions of Notes properly tendered; and (iii) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer’s Certificate stating the aggregate principal
amount of Notes or portions of Notes being repurchased. 
 “Below Investment Grade Rating Event” means the Notes are rated below
an Investment Grade Rating by each of the Rating Agencies (as defined below) on any date from the date of the public notice of an arrangement that could result in a Change of Control until the end of the
60-day period following public notice of the occurrence of the Change of Control (which 60-day period shall be extended so long as the rating of the Notes is under
publicly announced consideration for possible downgrade by any of the Rating Agencies). 
 “Change of Control” means the
occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the
properties or assets of the Issuer and its Subsidiaries taken as a whole to any Person other than the Issuer or one of its Subsidiaries; (2) the consummation of any transaction (including, without limitation, any merger or consolidation) the
result of which is that any Person becomes the beneficial owner, directly or indirectly, of more than 50% of the then outstanding number of shares of the Issuer’s voting stock; or (3) the first day on which a majority of the members of the
Issuer’s Board of Directors are not Continuing Directors. Notwithstanding the foregoing, a transaction will not be deemed to result in a Change of Control if (i) the Issuer becomes a wholly owned subsidiary of a holding company and
(ii) the holders of the voting stock of such holding company immediately following that transaction are substantially the same as the holders of the Issuer’s voting stock immediately prior to that transaction. 

  
 B-1-6 

 “Change of Control Triggering Event” means the occurrence of both a Change of Control
and a Below Investment Grade Rating Event. 
 “Continuing Directors” means, as of any date of determination, any member of the
Board of Directors of the Issuer who (1) was a member of such Board of Directors on the date of original issue of this Security; or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board of Directors at the time of such nomination or election (either by a specific vote or by approval of the Issuer’s proxy statement in which such member was named as a nominee for election as a
director, without objection to such nomination). 
 “Fitch” means Fitch Ratings Inc., a subsidiary of Hearst Corporation and
Fimalac, S.A. 
 “Investment Grade Rating” means a rating equal to or higher than BBB- (or
the equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P. 

“Moody’s” means Moody’s Investors Service, Inc. 

“Rating Agencies” means (1) each of Fitch, Moody’s and S&P; and (2) if any one or more of Fitch, Moody’s or
S&P ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the Issuer’s reasonable control, then, at the Issuer’s election, either (x) each of the remaining agencies, as the case
may be or (y) at the Issuer’s election, each of the remaining agencies, as the case may be, and any “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) under the Exchange Act, selected
by the Issuer (as certified by a Board Resolution) as a replacement agency for Fitch, Moody’s or S&P, or all of them, as the case may be. 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. 

All payments of principal, interest, and premium, if any, in respect of the Notes will be made free and clear of, and without withholding or
deduction for, any present or future taxes, assessments, duties or governmental charges of whatever nature imposed, levied or collected by the United States (or any political subdivision or taxing authority thereof or therein having power to tax),
unless such withholding or deduction is required by law or the official interpretation or administration thereof. 

  
 B-1-7 

 Subject to the exceptions and limitations set forth below, the Issuer will pay as additional
interest in respect of the Notes such additional amounts as are necessary in order that the net payment by the Issuer of the principal of, premium, if any, and interest (collectively, “Additional Amounts”) in respect of the Notes to a
Holder who is not a United States person (as defined below), after withholding or deduction for any present or future tax, assessment, duties or other governmental charge imposed by the United States (or any political subdivision or taxing authority
thereof or therein having power to tax), will not be less than the amount provided herein to be then due and payable; provided, however, that the foregoing obligation to pay Additional Amounts shall not apply: (1) to the extent any tax,
assessment or other governmental charge would not have been imposed but for the Holder (or the beneficial owner for whose benefit such Holder holds such Note), or a fiduciary, settlor, beneficiary, member or shareholder of the Holder if the Holder
is an estate, trust, partnership or corporation, or a person holding a power over an estate or trust administered by a fiduciary Holder, being considered as (a) being or having been engaged in a trade or business in the United States or having
or having had a permanent establishment in the United States, (b) having a current or former connection with the United States (other than a connection arising solely as a result of the ownership of a Note, the receipt of any payment or the
enforcement of any rights hereunder), including being or having been a citizen or resident of the United States, (c) being or having been a personal holding company, a passive foreign investment company or a controlled foreign corporation for
U.S. federal income tax purposes or a corporation that has accumulated earnings to avoid U.S. federal income tax, (d) being or having been a “10-percent shareholder” of the Company as defined in
section 871(h)(3) of the United States Internal Revenue Code of 1986, as amended (the “Code”) or any successor provision or (e) being a bank receiving payments on an extension of credit made pursuant to a loan agreement entered into
in the ordinary course of its trade or business, as described in section 881(c)(3)(A) of the Code or any successor provision; (2) to any Holder that is not the sole beneficial owner of a Note, or a portion of a Note, or that is a fiduciary,
partnership, limited liability company or other fiscally transparent entity, but only to the extent that a beneficial owner with respect to the Holder, a beneficiary or settlor with respect to the fiduciary, or a beneficial owner or member of the
partnership, limited liability company or other fiscally transparent entity would not have been entitled to the payment of an Additional Amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or distributive
share of the payment; (3) to the extent any tax, assessment or other governmental charge that would not have been imposed but for the failure of the Holder or any other person to comply with certification, identification or information
reporting requirements concerning the nationality, residence, identity or connection with the United States of the Holder or beneficial owner of a Note, if compliance is required by statute, by regulation of the United States or any taxing authority
therein or by an applicable income tax treaty to which the United States is a party as a precondition to exemption from such tax, assessment or other governmental charge; (4) to any tax, assessment or other governmental charge that is imposed
otherwise than by withholding by the Issuer or a paying agent from the payment; (5) to any tax, assessment or other governmental charge required to be withheld by any paying agent from any payment of principal of or interest on any Note, if
such payment can be made without such withholding by any other paying agent; (6) to any estate, inheritance, gift, sales, transfer, wealth, capital gains or personal property tax or similar tax, assessment or other governmental charge, or
excise tax imposed on the transfer of a Note; (7) to the extent any tax, assessment or other governmental charge would not have been imposed but for the presentation by the Holder of any Note, where presentation is required, for payment on a
date more than 30 days after the date on which payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later, except to the extent that the beneficiary or Holder thereof would have been entitled to
the payment of Additional Amounts had such Note been presented for payment on any day during such 30-day period; to any tax, assessment or other governmental charge imposed under sections 1471 through 1474 of
the Code (or any amended or successor provisions), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to section 1471(b) of the Code or any fiscal or regulatory legislation, rules or practices
adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such sections of the Code, whether currently in effect or as published and amended from time to time; or (9) in the case of any
combination of items (1), (2), (3), (4), (5), (6), (7) and (8). As used in this paragraph, the term “United States” means the United States of America, its territories and possessions, the states of the United States and the District of
Columbia, and the term “United States person” means any individual who is a citizen or resident of the United States for U.S. federal income tax purposes, a corporation, partnership or other entity created or organized in or under the laws
of the United States, any state of the United States or the District of Columbia, or any estate or trust the income of which is subject to U.S. federal income taxation regardless of its source. 

  
 B-1-8 

 This Note is subject in all cases to any tax, fiscal or other law or regulation or administrative
or judicial interpretation applicable hereto. 
 If an Event of Default with respect to the Notes shall occur and be continuing, the
principal of all the Notes may be declared due and payable in the manner and with the effect provided in the Indenture. 
 The Indenture
contains provisions permitting the Issuer and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Senior Securities or Subordinated Securities, as the case may be, of all series issued under
such Indenture then outstanding and affected (each voting as one class), to add any provisions to, or change in any manner, eliminate or waive any of the provisions of, such Indenture or modify in any manner the rights of the holders of the
Securities or Coupons so affected; provided that the Issuer and the Trustee, may not, without the consent of the holder of each Outstanding Security affected thereby, (i) extend the final maturity of the principal of any Security or
reduce the principal amount thereof or premium thereon, if any, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or change the currency in which the principal thereof (other
than as otherwise may be provided with respect to such series), premium, if any, or interest thereon is payable or reduce the amount of the principal of any Original Issue Discount Security that is payable upon acceleration or provable in
bankruptcy, or in the case of Subordinated Securities of any series, modify any of the subordination provisions or the definition of “Senior Indebtedness” relating to such series in a manner adverse to the holders of such Subordinated
Securities, or alter certain provisions of the Indenture relating to Securities not denominated in Dollars or the Judgment Currency of such Securities or impair or affect the right of any Securityholder to institute suit for the enforcement of any
payment thereof when due or, if the Securities provide therefor, any right of repayment at the option of the Securityholder or (ii) reduce the aforesaid percentage in principal amount of Securities of any series issued under the Indenture, the
consent of the holders of which is required for any such modification. It is also provided in the Indenture that, with respect to certain defaults or Events of Default regarding the Securities of any series, the holders of a majority in aggregate
principal amount Outstanding of the Securities of each such series, each such series voting as a separate class (or, of all Securities, as the case may be voting as a single class) may under certain circumstances waive all defaults with respect to
each such series (or with respect to all the Securities, as the case may be) and rescind and annul a declaration of default and its consequences, but no such waiver or rescission and annulment shall extend to or affect any subsequent default or
shall impair any right consequent thereto. The preceding sentence shall not, however, apply to a default in the payment of the principal of or interest on any of the Securities. 

  
 B-1-9 

 No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note at the time, place and rate, and in the coin or currency, herein prescribed. 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note may be registered on the registry
books of the Issuer, upon surrender of this Note for registration of transfer at the office or agency of the Issuer maintained by the Issuer for such purpose in Minneapolis, Minnesota, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Issuer and the Trustee duly executed by, the holder hereof or by its 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. 
 No service charge shall be made for any such registration of transfer
or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. 

Prior to due presentment of this Note for registration of transfer, the Issuer, the Trustee and any agent of the Issuer 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 Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. 

  
 B-1-10 

 [FORM OF SCHEDULE FOR ENDORSEMENTS ON REGISTERED 

GLOBAL SECURITIES TO REFLECT CHANGES IN PRINCIPAL AMOUNT] 

Schedule A 
 Changes to Principal
Amount of Registered Global Securities 
  

							
	 Date
	  	 Principal Amount 
of Notes 
by which this Registered
Global
Security is to be 
Reduced or Increased, 
and Reason for 
Reduction or Increase
	  	 Remaining Principal 
Amount of this Registered 
Global
Security
	  	 Notation Made By

				
	  
	  	  
	  	  
	  	  

				
	  
	  	  
	  	  
	  	  

				
	  
	  	  
	  	  
	  	  

				
	  
	  	  
	  	  
	  	  

				
	  
	  	  
	  	  
	  	  

  

  
 B-1-11 

 ANNEX C 

Pursuant to Section 2.3 of the Indenture, dated as of December 4, 2012 (the “Indenture”), between McKesson Corporation, a
Delaware corporation (the “Issuer”), and Wells Fargo Bank, National Association, as trustee (the “Trustee”), the terms of a series of securities to be issued pursuant to the Indenture are as follows: 

 

	 	1.	Designation. The designation of the securities is “3.125% Notes due 2029” (the “2029 Notes”). 

  

	 	2.	Initial Aggregate Principal Amount. The 2029 Notes shall be limited in initial aggregate principal amount to £450,000,000 (except for 2029 Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other 2029 Notes pursuant to Section 2.8, 2.9, 2.11, 8.5 or 12.3 of the Indenture). 

  

	 	3.	Currency Denomination. The 2029 Notes shall be denominated in sterling. 

  

	 	4.	Maturity. The date on which the principal of the 2029 Notes is payable is February 17, 2029. 

  

	 	5.	Rate of Interest; Interest Payment Date; Regular Record Dates. Each 2029 Note shall bear interest from February 17, 2017 at 3.125% per annum until the principal thereof is paid. Such interest shall be
payable annually in arrears on February 17 of each year, commencing on February 17, 2018, to the persons in whose names the 2029 Notes are registered at the close of business on the immediately preceding February 3. Interest on the 2029
Notes shall accrue from the most recent date to which interest has been paid, or, if no interest has been paid, from February 17, 2017. Interest on the 2029 Notes shall be computed on the basis of the actual number of days in the period for
which interest is being calculated and the actual number of days from and including the last date on which interest was paid on the 2029 Notes (or February 17, 2017, if no interest has been paid on the 2029 Notes), to, but excluding, the next
scheduled interest payment date. This payment convention is referred to as “Actual/Actual (ICMA)” as defined in the rulebook of the International Capital Market Association. In the event that any date on which principal, premium, if any,
or interest is payable on the 2029 Notes is not a Business Day, then payment of the principal, premium, if any, or interest payable on such date will be made on the next succeeding date that is a Business Day (and without any interest or other
payment in respect of any such delay). For the purposes of the 2029 Notes, “Business Day” is any day that is not a Saturday, Sunday or other day on which banking institutions in New York City, London or another place of payment on the 2029
Notes is authorized or required by law to close. 

  
 C-1 

	 	6.	Place of Payment. Principal of, premium, if any, and interest on the 2029 Notes shall be payable, and the transfer of the 2029 Notes shall be registrable, at the office or agency of the Issuer to be maintained
for such purpose in Minneapolis, Minnesota, except that, at the option of the Issuer, interest may be paid by mailing a check to the address of the person entitled thereto as it appears on the 2029 Notes register; provided, however,
that while any 2029 Notes are represented by a Registered Global Security, payment of principal of, premium, if any, or interest on the 2029 Notes may be made by wire transfer to the account of the Depositary or its nominee. 

 

	 	7.	Optional Redemption. The 2029 Notes may be redeemed (a) prior to November 17, 2028 (the “Par Call Date”) in whole, at any time, or in part, from time to time, at the option of the Issuer, for
cash, at a redemption price equal to the greater of (i) 100% of their principal amount, or (ii) an amount, as determined by the Quotation Agent, equal to the sum of the present values of the remaining scheduled payments of principal, premium,
if any, and interest thereon (not including any portion of such payments of interest accrued to the date of redemption), discounted to the date of redemption on an annual basis (Actual/Actual ICMA) at the Comparable Government Bond Rate plus 20
basis points, plus, in each case, accrued and unpaid interest thereon to, but not including the date of redemption, (b) on or after the Par Call Date, in whole, at any time, or in part, from time to time, at the option of the Issuer, for cash,
at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest to, but not including, the redemption date or (c) at the Issuer’s option in whole, but not in part, at 100% of the principal amount, together
with accrued and unpaid interest, if any, to, but excluding, the redemption date if, as a result of any change in, or amendment to, the laws, regulations or rulings of the United States (or any political subdivision or taxing authority thereof or
therein having power to tax), or any change in official position regarding application or interpretation of those laws, regulations or rulings (including a holding by a court of competent jurisdiction), which change, amendment, application or
interpretation is announced and becomes effective on or after the February 17, 2017, the Issuer becomes or, based upon a written opinion of independent counsel selected by the Issuer, will become obligated to pay Additional Amounts as described
in Section 16 hereof and that obligation cannot be avoided by taking reasonable measures available to the Issuer, as determined by the Issuer in its sole discretion acting in good faith; provided that, in each case, after the principal
amount of any 2029 Note remaining outstanding after a redemption in part shall be £100,000 or a higher integral multiple of £1,000. Notwithstanding the foregoing, installments of interest on 2029 Notes that are due and payable on
interest payment dates falling on or prior to a redemption date will be payable on the interest payment date to the registered Holders as of the close of business on the relevant record date. Holders of the 2029 Notes to be redeemed will receive
notice thereof mailed (or, in the case of 2029 Notes held in book-entry form, transmitted electronically) at least 15 and not more than 45 days prior to the date fixed for redemption. Unless the Issuer defaults in payment of the redemption price, on
and after the redemption date, interest will cease to accrue on the 2029 Notes or portions thereof called for redemption. If less than all of the 2029 Notes are to be redeemed, the 2029 Notes to be redeemed will be selected in accordance with the
standard procedures of the Depositary. If the 2029 Notes to be redeemed are not Registered Global Securities then held by the Depositary, the Trustee will select the 2029 Notes to be redeemed on a pro rata basis. If the 2029 Notes are listed
on the New York Stock Exchange (the “NYSE”) or any other national securities exchange registered under the Exchange Act, the Trustee will select 2029 Notes in compliance with the requirements of the NYSE or other national securities
exchange on which the 2029 Notes are listed. 

  
 C-2 

 “Comparable Government Bond” means, in relation to any Comparable Government Bond Rate
calculation, at the discretion of an independent investment bank selected by the Issuer, a United Kingdom government bond whose maturity is closest to the Par Call Date, or if such independent investment bank in its discretion determines that such
similar bond is not in issue, such other German government bond as such independent investment bank may, with the advice of three brokers of, and/or market makers in, German government bonds selected by the Issuer, determine to be appropriate for
determining the Comparable Government Bond Rate. 
 “Comparable Government Bond Rate” means the price, expressed as a percentage
(rounded to three decimal places, with 0.0005 being rounded upwards), at which the gross redemption yield on the 2029 Notes to be redeemed, if they were to be purchased at such price on the third Business Day prior to the date fixed for redemption,
would be equal to the gross redemption yield on such Business Day of the Comparable Government Bond on the basis of the middle market price of the Comparable Government Bond prevailing at 11:00 a.m. (London time) on such Business Day as determined
by an independent investment bank selected by the Issuer. 
  

	 	8.	Change of Control. If a Change of Control Triggering Event (as defined below) occurs, unless the Issuer has previously exercised its right to redeem the 2029 Notes in whole as described above, Holders of the 2029
Notes will have the right to require the Issuer to repurchase all or any part (in integral multiples of £1,000 original principal amount) of their 2029 Notes pursuant to the offer described below (the “Change of Control Offer”);
provided that the principal amount of any 2029 Note remaining outstanding after a repurchase in part shall be £100,000 or a higher integral multiple of £1,000. In the Change of Control Offer, the Issuer will be required to offer
payment in cash equal to 101% of the then outstanding aggregate principal amount of 2029 Notes repurchased plus accrued and unpaid interest, if any, on the 2029 Notes repurchased, to, but not including, the date of repurchase (the “Change of
Control Payment”). Within 30 days following any Change of Control Triggering Event, the Issuer will be required to mail a notice to Holders of the 2029 Notes describing the transaction or transactions that constitute the Change of Control
Triggering Event and offering to repurchase the 2029 Notes on the date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the “Change of Control Payment
Date”), pursuant to the procedures described herein and in such notice. The Issuer must comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the 2029 Notes as a result of a Change of Control Triggering Event. To the extent that the provisions of any securities laws or regulations
conflict with the Change of Control provisions herein, the Issuer will be required to comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions herein by
virtue of such conflicts. 

  
 C-3 

 The paying agent will promptly mail (or, in the case of 2029 Notes held in book-entry form,
transmit electronically) to each Holder of the 2029 Notes properly tendered the repurchase price for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book-entry) to each Holder a new 2029 Note equal in
principal amount to any unrepurchased portion of any 2029 Notes surrendered; provided, that each new 2029 Note will be in a principal amount of £100,000 or an integral multiple of £1,000 thereafter. 

Notwithstanding the foregoing, the Issuer will not be required to make a Change of Control Offer upon the occurrence of a Change of Control
Triggering Event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for a Change of Control Offer made by the Issuer and the third party repurchases all 2029 Notes properly tendered and
not withdrawn under its offer. In addition, the Issuer will not repurchase any 2029 Notes if there has occurred and is continuing on the Change of Control Payment Date an Event of Default, other than a default in the payment of the Change of Control
Payment upon a Change of Control Triggering Event. On the Change of Control Payment Date, the Issuer will be required, to the extent lawful, to (i) accept for payment all 2029 Notes or portions thereof properly tendered pursuant to the Change
of Control Offer; (ii) deposit with the paying agent, no later than 10:00 a.m., London time, an amount equal to the Change of Control Payment in respect of all 2029 Notes or portions thereof properly tendered; and (iii) deliver or cause to
be delivered to the Trustee the 2029 Notes properly accepted together with an Officer’s Certificate stating the aggregate principal amount of 2029 Notes or portions of 2029 Notes being repurchased. 

  
 C-4 

 “Below Investment Grade Rating Event” means the 2029 Notes are rated below an
Investment Grade Rating by each of the Rating Agencies (as defined below) on any date from the date of the public notice of an arrangement that could result in a Change of Control until the end of the 60-day
period following public notice of the occurrence of the Change of Control (which 60-day period shall be extended so long as the rating of the 2029 Notes is under publicly announced consideration for possible
downgrade by any of the Rating Agencies). 
 “Change of Control” means the occurrence of any of the following: (1) the direct
or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Issuer and its Subsidiaries taken
as a whole to any Person other than the Issuer or one of its Subsidiaries; (2) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any Person becomes the beneficial owner,
directly or indirectly, of more than 50% of the then outstanding number of shares of the Issuer’s voting stock; or (3) the first day on which a majority of the members of the Issuer’s Board of Directors are not Continuing Directors.
Notwithstanding the foregoing, a transaction will not be deemed to result in a Change of Control if (i) the Issuer becomes a wholly owned subsidiary of a holding company and (ii) the holders of the voting stock of such holding company
immediately following that transaction are substantially the same as the holders of the Issuer’s voting stock immediately prior to that transaction. 

“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Below Investment Grade Rating Event.

 “Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the Issuer who
(1) was a member of such Board of Directors on the date of original issue of the 2029 Notes; or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were
members of such Board of Directors at the time of such nomination or election (either by a specific vote or by approval of the Issuer’s proxy statement in which such member was named as a nominee for election as a director, without objection to
such nomination). 
 “Fitch” means Fitch Ratings Inc., a subsidiary of Hearst Corporation and Fimalac, S.A. 

  
 C-5 

 “Investment Grade Rating” means a rating equal to or higher than BBB- (or the equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P. 

“Moody’s” means Moody’s Investors Service, Inc. 

“Rating Agencies” means (1) each of Fitch, Moody’s and S&P; and (2) if any one or more of Fitch, Moody’s or
S&P ceases to rate the 2029 Notes or fails to make a rating of the 2029 Notes publicly available for reasons outside of the Issuer’s reasonable control, then, at the Issuer’s election, either (x) each of the remaining agencies, as
the case may be or (y) each of the remaining agencies, as the case may be, and any “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) under the Exchange Act, selected by the Issuer (as
certified by a Board Resolution) as a replacement agency for Fitch, Moody’s or S&P, or all of them, as the case may be. 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. 

 

	 	9.	Mandatory Redemption. The 2029 Notes are not mandatorily redeemable and are not entitled to the benefit of a sinking fund or any analogous provisions. 

 

	 	10.	Denominations. The 2029 Notes shall be issued initially in minimum denominations of £100,000 and shall be issued in integral multiples of £1,000 in excess thereof. 

 

	 	11.	Amount Payable Upon Acceleration. The principal of the 2029 Notes shall be payable upon declaration of acceleration pursuant to Section 5.1 of the Indenture. 

 

	 	12.	Payment Currency. All payments of interest and principal, including payments made upon any redemption or repurchase of 2029 Notes, will be made in sterling; provided that if sterling is unavailable to the Issuer
due to the imposition of exchange controls or other circumstances beyond the Issuer’s control or for the settlement of transactions by public institutions of or within the international banking community, then all payments in respect of the
2029 Notes will be made in Dollars until sterling is again available to the Issuer or so used. In such circumstances, the amount payable on any date in sterling will be converted into Dollars at the rate mandated by the Board of Governors of the
Federal Reserve System as of the close of business on the second Business Day prior to the relevant payment date or, if the Board of Governors of the Federal Reserve System has not announced a rate of conversion, on the basis of the most recent
Dollar/sterling exchange rate published in The Wall Street Journal on or prior to the second Business Day prior to the relevant payment date or, in the event The Wall Street Journal has not published such exchange rate, the rate will
be determined in the Issuer’s sole discretion on the basis of the most recently available market exchange rate for sterling. Any payment in respect of 2029 Notes so made in Dollars will not constitute an Event of Default. Neither the Trustee
nor the paying agent shall have any responsibility for any calculation or conversion in connection with the foregoing. 

  
 C-6 

	 	13.	Payment Currency—Election. Notwithstanding the provisions of Section 12 hereof, the principal of and interest on the 2029 Notes shall not be payable in a currency other than sterling. 

 

	 	14.	Payment Currency—Index. Notwithstanding the provisions of Section 12 hereof, the principal of and interest on the 2029 Notes shall not be determined with reference to an index based on a coin or
currency. 

  

	 	15.	Registered Securities. The 2029 Notes shall be issued only as Registered Securities. The 2029 Notes shall be issuable as Registered Global Securities. 

  
 C-7 

	 	16.	Additional Amounts. All payments of principal, interest, and premium, if any, in respect of the 2029 Notes will be made free and clear of, and without withholding or deduction for, any present or future taxes,
assessments, duties or governmental charges of whatever nature imposed, levied or collected by the United States (or any political subdivision or taxing authority thereof or therein having power to tax), unless such withholding or deduction is
required by law or the official interpretation or administration thereof. Subject to the exceptions and limitations set forth below, the Issuer will pay as additional interest in respect of the 2029 Notes such additional amounts as are necessary in
order that the net payment by the Issuer of the principal of, premium, if any, and interest (collectively, “Additional Amounts”) in respect of the 2029 Notes to a Holder who is not a United States person (as defined below), after
withholding or deduction for any present or future tax, assessment, duties or other governmental charge imposed by the United States (or any political subdivision or taxing authority thereof or therein having power to tax), will not be less than the
amount provided in the 2029 Notes to be then due and payable; provided, however, that the foregoing obligation to pay Additional Amounts shall not apply: (1) to the extent any tax, assessment or other governmental charge would not have been
imposed but for the Holder (or the beneficial owner for whose benefit such Holder holds such 2029 Note), or a fiduciary, settlor, beneficiary, member or shareholder of the Holder if the Holder is an estate, trust, partnership or corporation, or a
person holding a power over an estate or trust administered by a fiduciary Holder, being considered as (a) being or having been engaged in a trade or business in the United States or having or having had a permanent establishment in the United
States, (b) having a current or former connection with the United States (other than a connection arising solely as a result of the ownership of 2029 Notes, the receipt of any payment or the enforcement of any rights hereunder), including being
or having been a citizen or resident of the United States, (c) being or having been a personal holding company, a passive foreign investment company or a controlled foreign corporation for U.S. federal income tax purposes or a corporation that
has accumulated earnings to avoid U.S. federal income tax, (d) being or having been a “10-percent shareholder” of the Issuer as defined in section 871(h)(3) of the United States Internal Revenue
Code of 1986, as amended (the “Code”) or any successor provision or (e) being a bank receiving payments on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business, as
described in section 881(c)(3)(A) of the Code or any successor provision; (2) to any Holder that is not the sole beneficial owner of 2029 Notes, or a portion of 2029 Notes, or that is a fiduciary, partnership, limited liability company or other
fiscally transparent entity, but only to the extent that a beneficial owner with respect to the Holder, a beneficiary or settlor with respect to the fiduciary, or a beneficial owner or member of the partnership, limited liability company or other
fiscally transparent entity would not have been entitled to the payment of an Additional Amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or distributive share of the payment; (3) to the extent
any tax, assessment or other governmental charge that would not have been imposed but for the failure of the Holder or any other person to comply with certification, identification or information reporting requirements concerning the nationality,
residence, identity or connection with the United States of the Holder or beneficial owner of 2029 Notes, if compliance is required by statute, by regulation of the United States or any taxing authority therein or by an applicable income tax treaty
to which the United States is a party as a precondition to exemption from such tax, assessment or other governmental charge; (4) to any tax, assessment or other governmental charge that is imposed otherwise than by withholding by the Issuer or
a paying agent from the payment; (5) to any tax, assessment or other governmental charge required to be withheld by any paying agent from any payment of principal of or interest on any 2029 Notes, if such payment can be made without such
withholding by any other paying agent; (6) to any estate, inheritance, gift, sales, transfer, wealth, capital gains or personal property tax or similar tax, assessment or other governmental charge, or excise tax imposed on the transfer of 2029
Notes; (7) to the extent any tax, assessment or other governmental charge would not have been imposed but for the presentation by the Holder of any 2029 Note, where presentation is required, for payment on a date more than 30 days after the
date on which payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later, except to the extent that the beneficiary or Holder thereof would have been entitled to the payment of Additional Amounts
had such 2029 Note been presented for payment on any day during such 30-day period; to any tax, assessment or other governmental charge imposed under sections 1471 through 1474 of the Code (or any amended or
successor provisions), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to section 1471(b) of the Code or any fiscal or regulatory legislation, rules or practices adopted pursuant to any
intergovernmental agreement entered into in connection with the implementation of such sections of the Code, whether currently in effect or as published and amended from time to time; or (9) in the case of any combination of items (1), (2),
(3), (4), (5), (6), (7) and (8). The 2029 Notes are subject in all cases to any tax, fiscal or other law or regulation or administrative or judicial interpretation applicable to 2029 Notes. Except as specifically provided in this Section 16,
the Issuer will not be required to make any payment for any tax, assessment or other governmental charge imposed by any government or a political subdivision or taxing authority of or in any government or political subdivision. As used in this
Section 16 and above in Section 12 hereof, the term “United States” means the United States of America, its territories and possessions, the states of the United States and the District of Columbia, and the term “United
States person” means any individual who is a citizen or resident of the United States for U.S. federal income tax purposes, a corporation, partnership or other entity created or organized in or under the laws of the United States, any state of
the United States or the District of Columbia, or any estate or trust the income of which is subject to U.S. federal income taxation regardless of its source. 

  
 C-8 

	 	17.	Definitive Certificates. The 2029 Notes shall be exchanged by the Issuer for 2029 Notes in definitive form only (i) subject to the provisions of Section 2.8 of the Indenture or (ii) if an Event of
Default has occurred and is continuing, and the Depositary requests the issuance of 2029 Notes in definitive form. 

  

	 	18.	Registrar; Paying Agent; Depositary. U.S. Bank National Association shall initially serve as the registrar and transfer agent and Elavon Financial Services DAC shall initially serve as the paying agent for the
2029 Notes. Clearstream Banking, S.A. and Euroclear Bank S.A./N.V. shall initially serve as the Depositary for the Registered Global Security representing the 2029 Notes. Elavon Financial Services DAC shall initially serve as the common depositary
for the Depositary. 

  

	 	19.	Events of Default; Covenants. There shall be no deletions from or modifications or additions to the Events of Default set forth in Section 5.1 of the Indenture with respect to the 2029 Notes. There shall be
the following additions to the covenants of the Issuer set forth in Article III of the Indenture with respect to the 2029 Notes: 

  
 C-9 

 Limitation on Liens. The Issuer covenants that, so long as any of the 2029 Notes remain
outstanding, it shall not, nor shall it permit any Consolidated Subsidiary to, create or assume any Indebtedness for money borrowed which is secured by a mortgage, pledge, security interest or lien (“liens”) of or upon any assets, whether
now owned or hereafter acquired, of the Issuer or any such Consolidated Subsidiary without equally and ratably securing the 2029 Notes by a lien ranking equally to and ratably with (or at the option of the Issuer, senior to) such secured
Indebtedness, except that the foregoing restriction shall not apply to (a) liens on any assets of any corporation existing at the time such corporation becomes a Consolidated Subsidiary; (b) liens on any assets existing at the time of
acquisition of such assets by the Issuer or a Consolidated Subsidiary, or liens to secure the payment of all or any part of the purchase price of such assets upon the acquisition of such assets by the Issuer or a Consolidated Subsidiary or to secure
any indebtedness incurred or guaranteed by the Issuer or a Consolidated Subsidiary prior to, at the time of, or within 360 days after such acquisition (or in the case of real property, the completion of construction (including any improvements on an
existing asset) or commencement of full operation of such asset, whichever is later), which indebtedness is incurred or guaranteed for the purpose of financing all or any part of the purchase price thereof or, in the case of real property,
construction or improvements thereon; (c) liens on any assets securing indebtedness owed by any Consolidated Subsidiary to the Issuer or another wholly owned Subsidiary; (d) liens on any assets of a corporation existing at the time such
corporation is merged into or consolidated with the Issuer or a Subsidiary or at the time of a purchase, lease or other acquisition of the assets of a corporation or firm as an entirety or substantially as an entirety by the Issuer or a Subsidiary;
(e) liens on any assets of the Issuer or a Consolidated Subsidiary in favor of the United States of America or any state thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any State
thereof, or in favor of any other country, or any political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any indebtedness incurred or guaranteed for the purpose of
financing all or any part of the purchase price (or, in the case of real property, the cost of construction) of the assets subject to such liens (including, but not limited to, liens incurred in connection with pollution control, industrial revenue
or similar financing); (f) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any lien referred to in the foregoing clauses (a) to (e), inclusive; (g) liens imposed by law,
such as mechanics’, workmen’s, repairmen’s, materialmen’s, carriers’, warehousemen’s, vendors’ or other similar liens arising in the ordinary course of business, or governmental (federal, state or municipal) liens
arising out of contracts for the sale of products or services by the Issuer or any Consolidated Subsidiary, or deposits or pledges to obtain the release of any of the foregoing liens; (h) pledges, liens or deposits under worker’s
compensation laws or similar legislation and liens or judgments thereunder which are not currently dischargeable, or in connection with bids, tenders, contracts (other than for the payment of money) or leases to which the Issuer or any Consolidated
Subsidiary is a party, or to secure public or statutory obligations of the Issuer or any Consolidated Subsidiary, or in connection with obtaining or maintaining self-insurance or to obtain the benefits of any law, regulation or arrangement
pertaining to unemployment insurance, old age pensions, social security or similar matters, or to secure surety, appeal or customs bonds to which the Issuer or any Consolidated Subsidiary is a party, or in litigation or other proceedings such as,
but not limited to, interpleader proceedings, and other similar pledges, liens or deposits made or incurred in the ordinary course of business; (i) liens created by or resulting from any litigation or other proceeding which is being contested
in good faith by appropriate proceedings, including liens arising out of judgments or awards against the Issuer or any Consolidated Subsidiary with respect to which the Issuer or such Consolidated Subsidiary is in good faith prosecuting an appeal or
proceedings for review or for which the time to make an appeal has not yet expired; or final unappealable judgment liens which are satisfied within 15 days of the date of judgment; or liens incurred by the Issuer or any Consolidated Subsidiary for
the purpose of obtaining a stay or discharge in the course of any litigation or other proceeding to which the Issuer or such Consolidated Subsidiary is a party; (j) liens for taxes or assessments or governmental charges or levies not yet due or
delinquent, or which can thereafter be paid without penalty, or which are being contested in good faith by appropriate proceedings; landlord’s liens on property held under lease; and any other liens or charges incidental to the conduct of the
business of the Issuer or any Consolidated Subsidiary or the ownership of the assets of any of them which were not incurred in connection with the borrowing of money or the obtaining of advances or credit and which do not, in the opinion of the
Issuer, materially impair the use of such assets in the operation of the business of the Issuer or such Consolidated Subsidiary or the value of such assets for the purposes thereof; (k) liens relating to accounts receivable of the Issuer or any
of its Subsidiaries which have been sold, assigned or otherwise transferred to another Person in a transaction classified as a sale of accounts receivable in accordance with accounting principles generally accepted in the United States of America
(to the extent the sale by the Issuer or the applicable Subsidiary is deemed to give rise to a lien in favor of the purchaser thereof in such accounts receivable or the proceeds thereof); or (l) liens on any assets of the Issuer or any of its
Subsidiaries (including Receivables Subsidiaries) incurred in connection with a Qualified Receivables Transaction. Notwithstanding the above, the Issuer or any Consolidated Subsidiary may, without securing the 2029 Notes, create or assume any
Indebtedness which is secured by a lien which would otherwise be subject to the foregoing restrictions, provided that at the time of such creation or assumption, after giving effect thereto, Exempted Debt does not exceed 10% of the total
assets of the Issuer and its Subsidiaries on a consolidated basis, determined in accordance with accounting principles generally accepted in the United States of America. 

  
 C-10 

 Limitation on Sale and Lease-Back Transactions. The Issuer covenants that, so long as any
of the 2029 Notes remain outstanding, the Issuer will not, nor shall the Issuer permit any Consolidated Subsidiary to, enter into any sale and lease-back transaction with respect to any assets, other than any sale and lease-back transaction
involving a lease for a term of not more than three years, unless either (a) the Issuer or such Consolidated Subsidiary would be entitled to incur Indebtedness secured by a lien on the assets to be leased in an amount at least equal to the
Attributable Debt in respect of such transaction without equally and ratably securing the 2029 Notes pursuant to clauses (a) through (k) inclusive of the covenant with respect to “Limitation on Liens” above, or (b) the proceeds
of the sale of the assets to be leased are at least equal to their fair market value (as determined by the Board of Directors of the Issuer) and the proceeds are applied to the purchase or acquisition (or, in the case of real property, the
construction) of assets or to the retirement (other than at maturity or pursuant to a mandatory sinking fund or mandatory redemption provision) of indebtedness. The foregoing limitation shall not apply, if at the time the Issuer or any Consolidated
Subsidiary enters into such sale and lease-back transaction, and after giving effect thereto, Exempted Debt does not exceed 10% of the total assets of the Issuer and its Subsidiaries on a consolidated basis, determined in accordance with accounting
principles generally accepted in the United States of America. 
 The term “Attributable Debt” in connection with a sale and
lease-back transaction shall mean, as of the date of determination, the lesser of (a) the fair value of the assets subject to such transaction, as determined by the Board of Directors of the Issuer, or (b) the present value (discounted at
the rate of interest set forth in or implicit in the terms of such lease or, if it is not practicable to determine such rate, the weighted average interest rate per annum borne by all series of Securities then Outstanding and subject to the
“Limitation on Sale and Lease-Back Transactions” covenant above compounded semi-annually, in either case as determined by the principal accounting or financial officer of the Issuer) of the remaining obligations of the Issuer or any
Consolidated Subsidiary for net rental payments during the remaining term of all leases (including any period for which such lease has been extended or may, at the option of the lessor, be extended). 

The term “Consolidated Subsidiary” shall mean any Subsidiary substantially all the property of which is located, and substantially
all the operations of which are conducted, in the United States of America whose financial statements are consolidated with those of the Issuer in accordance with accounting principles generally accepted in the United States of America. 

  
 C-11 

 The term “Exempted Debt” shall mean the sum of the following as of the date of
determination: (i) Indebtedness of the Issuer and its Consolidated Subsidiaries incurred after the date of issuance of the 2029 Notes and secured by liens not permitted to be created or assumed pursuant to the covenant with respect to
“Limitation on Liens” above, and (ii) Attributable Debt of the Issuer and its Consolidated Subsidiaries in respect of every sale and lease-back transaction entered into after the date of issuance of the 2029 Notes, other than leases
expressly permitted by the covenant with respect to “Limitation on Sale and Lease-Back Transactions” above. 
 The term
“Indebtedness” shall mean all items classified as indebtedness on the most recently available consolidated balance sheet of the Issuer and its Consolidated Subsidiaries, in accordance with accounting principles generally accepted in the
United States of America. 
 The term “net rental payments” under any lease of any period shall mean the sum of the rental and
other payments required to be paid in such period by the lessee thereunder, not including, however, any amounts required to be paid by such lessee (whether or not designated as rental or additional rental) on account of maintenance and repairs,
reconstruction, insurance, taxes, assessments, water rates or similar charges required to be paid by such lessee thereunder or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales, maintenance and repairs,
reconstruction, insurance, taxes, assessments, water rates or similar charges. 
 The term “Qualified Receivables Transaction”
shall mean any transaction or series of transactions entered into by the Issuer or any of its Subsidiaries pursuant to which the Issuer or any of its Subsidiaries sells, conveys or otherwise transfers to (i) a Receivables Subsidiary (in the
case of a transfer by the Issuer or any of its Subsidiaries) and (ii) any other Person (in the case of a transfer by a Receivables Subsidiary), or grants a security interest in, any accounts receivable (whether now existing or arising in the
future) or inventory of the Issuer or any of its Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such
accounts receivable or inventory, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions
involving accounts receivable or inventory. 

  
 C-12 

 The term “Receivables Subsidiary” shall mean a Subsidiary of the Issuer which engages
in no activities other than in connection with the financing of accounts receivable or inventory (a) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Issuer or any
Subsidiary of the Issuer (excluding guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in
connection with a Qualified Receivables Transaction), (ii) is recourse or obligates the Issuer or any Subsidiary of the Issuer in any way other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary
course of business in connection with a Qualified Receivables Transaction or (iii) subjects any property or asset of the Issuer or any Subsidiary of the Issuer (other than accounts receivable or inventory and related assets as provided in the
definition of “Qualified Receivables Transaction”), directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary
course of business in connection with a Qualified Receivables Transaction, (b) with which neither the Issuer nor any Subsidiary of Issuer has any material contract, agreement, arrangement or understanding other than on terms customary for
securitization of receivables or inventory and (c) with which neither the Issuer nor any Subsidiary of the Issuer has any obligations to maintain or preserve such Subsidiary’s financial condition or cause such Subsidiary to achieve certain
levels of operating results. 
  

	 	20.	Conversion and Exchange. The 2029 Notes shall not be convertible into or exchangeable for any other security. 

  

	 	21.	Additional Issues. The Issuer may, without notice to or the consent of the Holders of the 2029 Notes, create and issue additional 2029 Notes with the same terms as the 2029 Notes in all respects, except for the
issue date, the public offering price and, under certain circumstances, the first interest payment date. Such additional 2029 Notes shall be consolidated and form a single series with the 2029 Notes. 

 

	 	22.	Other Terms. The 2029 Notes shall have the other terms and shall be substantially in the form set forth in the form of the 2029 Notes attached hereto as Annex C-1. In case
of any conflict between this Annex C and the 2029 Notes, the form of the 2029 Notes shall control. 

  

	 	23.	Access to Information. The Issuer and the Holders shall cooperate with the Trustee and shall provide the Trustee with reasonable access to, and copies of, documents or information necessary for the Trustee to
comply with any cost basis reporting obligations imposed on it by a governmental authority in connection with certain transfers or exchanges of 2029 Notes. 

  
 C-13 

 Capitalized terms used but not otherwise defined in this Annex C shall have the respective
meanings ascribed to such terms in the Indenture. 
  

  
 C-14 

 ANNEX C-1 

[FORM OF 2029 NOTE] 
 REGISTERED
REGISTERED 
 THIS NOTE IS A REGISTERED GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A COMMON
DEPOSITARY OR A NOMINEE OF A COMMON DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN
THE NAME OF USB NOMINEES (UK) LIMITED OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE COMMON DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO USB NOMINEES (UK) LIMITED, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, USB NOMINEES (UK) LIMITED, HAS AN INTEREST HEREIN. TRANSFERS OF THIS REGISTERED GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF ELAVON
FINANCIAL SERVICES DAC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE. 
  

			
	No. R – A3	  	ISIN NO. XS1567174526
		  	COMMON CODE 156717452

 McKESSON CORPORATION 

3.125% NOTES DUE FEBRUARY 17, 2029 

McKesson Corporation, a Delaware corporation (the “Issuer,” which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to USB Nominees (UK) Limited, or registered assigns, the principal sum of Four Hundred Fifty Million pounds sterling (£450,000,000) on February 17, 2029 and to pay
interest on said principal sum from February 17, 2017, or from the most recent interest payment date to which interest has been paid or duly provided for, annually on February 17 (the “Interest Payment Date”) of each year
commencing on February 17, 2018, at the rate of 3.125% per annum until the principal hereof shall have become due and payable. 

  
 C-1-1 

 The amount of interest payable on any Interest Payment Date shall be computed on the basis of the
actual number of days in the period for which interest is being calculated and the actual number of days from and including the last date on which interest was paid on this Note (or February 17, 2017, if no interest has been paid on this Note),
to, but excluding, the next scheduled interest payment date. In the event that any date on which the principal or interest payable on this Note is not a Business Day, then payment of principal or interest payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other payment in respect of such delay). The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture (referred to on the reverse hereof) be paid to the person in whose name this Note is registered at the close of business on the record date for such interest installment, which shall be the close of business on the immediately preceding
February 3 prior to such Interest Payment Date, as applicable. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered Holders on such record date and may be paid to the
person in whose name this Note is registered at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the date of payment of such defaulted interest), notice whereof shall be given by mail by or
on behalf of the Issuer to the registered Holders of Notes not less than 15 days preceding such subsequent record date, all as more fully provided in the Indenture. The principal of and the interest on this Note shall be payable at the office or
agency of the Issuer maintained for that purpose in sterling (except as otherwise provided in this Note); provided, however, that payment of interest may be made at the option of the Issuer by check mailed to the person entitled
thereto at such address as shall appear in the registry books of the Issuer; provided, further, that for so long as this Note is represented by a Registered Global Security, payment of principal, premium, if any, or interest on this
Note may be made by wire transfer to the account of the Depositary or its nominee. If sterling is unavailable to the Issuer due to the imposition of exchange controls or other circumstances beyond the Issuer’s control or for the settlement of
transactions by public institutions of or within the international banking community, then all payments in respect of the Notes will be made in Dollars until sterling is again available to the Issuer or so used. In such circumstances, the amount
payable on any date in sterling will be converted into Dollars at the rate mandated by the Board of Governors of the Federal Reserve System as of the close of business on the second Business Day prior to the relevant payment date or, if the Board of
Governors of the Federal Reserve System has not announced a rate of conversion, on the basis of the most recent Dollar/sterling exchange rate published in The Wall Street Journal on or prior to the second Business Day prior to the relevant
payment date or, in the event The Wall Street Journal has not published such exchange rate, the rate will be determined in the Issuer’s sole discretion on the basis of the most recently available market exchange rate for sterling. Any
payment in respect of Notes so made in Dollars will not constitute an Event of Default. For the purposes of the Notes, “Business Day” is any day that is not a Saturday, Sunday or other day on which banking institutions in New York City,
London or another place of payment on the Notes is authorized or required by law to close. 
 Unless the certificate of authentication
hereon has been executed by or on behalf of the Trustee (as defined below) under the Indenture (as defined below), by the manual signature of one of its authorized signatories, this Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose. 
 Capitalized terms used in this Note which are defined in the Indenture shall have the respective
meanings assigned to them in the Indenture. 
 The provisions of this Note are continued on the reverse side hereof and such continued
provisions shall for all purposes have the same effect as though fully set forth at this place. 

  
 C-1-2 

 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed, manually or in
facsimile. 
  

			
	McKESSON CORPORATION
		
	By:	 	  

		 	Name:
		 	Title:

  

			
	CERTIFICATE OF AUTHENTICATION
	This is one of the Securities referred to in the within-mentioned Indenture.
	
	 WELLS FARGO BANK, NATIONAL ASSOCIATION

        as Trustee

		
	By:	 	  

		 	Authorized Signatory
		
	Dated:	 	  

  
 C-1-3 

 [FORM OF REVERSE SIDE OF NOTE] 

This Note is one of a duly authorized series of securities (the “Securities”) of the Issuer designated as its 3.125% Notes due
February 17, 2029 (the “Notes”). The Securities are all issued or to be issued under and pursuant to an Indenture, dated as of December 4, 2012 (the “Indenture”), duly executed and delivered between the Issuer and Wells
Fargo Bank, National Association as trustee with respect to the Notes (the “Trustee”), to which the Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights thereunder of the
Issuer, the Trustee and the Holders of the Securities and the terms upon which the Notes are to be authenticated and delivered. The terms of individual series of Securities may vary with respect to interest rate or interest rate formulas, issue
dates, maturity, redemption, repayment, currency of payment and otherwise. 
 The Notes are issuable only as Registered Securities in
minimum denominations of £100,000 and integral multiples of £1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Notes are exchangeable for a like aggregate principal amount of
Notes as requested by the Holder surrendering the same. 
 Except as set forth below, this Note is not redeemable and is not entitled to the
benefit of a sinking fund or any analogous provision. 
 The Notes may be redeemed (a) prior November 17, 2028 (the “Par Call
Date”) in whole, at any time, or in part, from time to time, at the option of the Issuer, for cash, at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) an amount, as determined by the Quotation Agent,
equal to the sum of the present values of the remaining scheduled payments of principal, premium, if any, and interest thereon (not including any portion of such payments of interest accrued to the date of redemption), discounted to the date of
redemption on an annual basis at the Comparable Government Bond Rate plus 25 basis points, plus, in each case, accrued and unpaid interest thereon to, but not including the date of redemption, (b) on or after the Par Call Date, in whole, at any
time, or in part, from time to time, at the option of the Issuer, for cash, at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest to, but not including, the redemption date or (c) at the Issuer’s
option in whole, but not in part, at 100% of the principal amount, together with accrued and unpaid interest, if any, to, but excluding, the redemption date if, as a result of any change in, or amendment to, the laws, regulations or rulings of the
United States (or any political subdivision or taxing authority thereof or therein having power to tax), or any change in official position regarding application or interpretation of those laws, regulations or rulings (including a holding by a court
of competent jurisdiction), which change, amendment, application or interpretation is announced and becomes effective on or after February 17, 2017, the Issuer becomes or, based upon a written opinion of independent counsel selected by the
Issuer, will become obligated to pay Additional Amounts and that obligation cannot be avoided by taking reasonable measures available to the Issuer, as determined by the Issuer in its sole discretion acting in good faith. Notwithstanding the
foregoing, installments of interest on Notes that are due and payable on interest payment dates falling on or prior to a redemption date will be payable on the interest payment date to the registered Holders as of the close of business on the
relevant record date. Holders of the Notes to be redeemed will receive notice thereof mailed (or, in the case of Notes held in book-entry form, transmitted electronically) at least 15 and not more than 45 days prior to the date fixed for redemption.
Unless the Issuer defaults in payment of the redemption price, on and after the redemption date, interest will cease to accrue on the Notes or portions thereof called for redemption. If less than all of the Notes are to be redeemed, no Notes of a
principal amount of £100,000 or less shall be redeemed in part. If less than all of the Notes are to be redeemed, the Notes to be redeemed will be selected in accordance with the standard procedures of the Depositary. If the Notes to be
redeemed are not Registered Global Securities then held by the Depositary, the Trustee will select the Notes to be redeemed on a pro rata basis. If the Notes are listed on the New York Stock Exchange (the “NYSE”) or any other
national securities exchange registered under the Exchange Act, the Trustee will select Notes in compliance with the requirements of the NYSE or other national securities exchange on which the Notes are listed. As used in this paragraph, the term
“United States” means the United States of America, its territories and possessions, the states of the United States and the District of Columbia. 

  
 C-1-4 

 “Comparable Government Bond” means, in relation to any Comparable Government Bond Rate
calculation, at the discretion of an independent investment bank selected by the Issuer, a United Kingdom government bond whose maturity is closest to the Par Call Date, or if such independent investment bank in its discretion determines that such
similar bond is not in issue, such other German government bond as such independent investment bank may, with the advice of three brokers of, and/or market makers in, German government bonds selected by the Issuer, determine to be appropriate for
determining the Comparable Government Bond Rate. 
 “Comparable Government Bond Rate” means the price, expressed as a percentage
(rounded to three decimal places, with 0.0005 being rounded upwards), at which the gross redemption yield on the Notes to be redeemed, if they were to be purchased at such price on the third Business Day prior to the date fixed for redemption, would
be equal to the gross redemption yield on such Business Day of the Comparable Government Bond on the basis of the middle market price of the Comparable Government Bond prevailing at 11:00 a.m. (London time) on such Business Day as determined by an
independent investment bank selected by the Issuer. 
 If a Change of Control Triggering Event (as defined below) occurs, unless the Issuer
has previously exercised its right to redeem the Notes in whole as described above, Holders of the Notes will have the right to require the Issuer to repurchase all or any part (in integral multiples of £1,000 original principal amount) of
their Notes pursuant to the offer described below (the “Change of Control Offer”); provided that the principal amount of any Note remaining outstanding after a repurchase in part shall be £100,000 or a higher integral multiple of
£1,000. In the Change of Control Offer, the Issuer will be required to offer payment in cash equal to 101% of the then outstanding aggregate principal amount of Notes repurchased plus accrued and unpaid interest, if any, on the Notes
repurchased, to, but not including, the date of repurchase (the “Change of Control Payment”). Within 30 days following any Change of Control Triggering Event, the Issuer will be required to mail a notice to Holders of the Notes describing
the transaction or transactions that constitute the Change of Control Triggering Event and offering to repurchase the Notes on the date specified in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such
notice is mailed (the “Change of Control Payment Date”), pursuant to the procedures described herein and in such notice. The Issuer must comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control Triggering Event. To the extent that the
provisions of any securities laws or regulations conflict with the Change of Control provisions herein, the Issuer will be required to comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations
under the Change of Control provisions herein by virtue of such conflicts. 

  
 C-1-5 

 The paying agent will promptly mail (or, in the case of Notes held in book-entry form, transmit
electronically) to each Holder of the Notes properly tendered the repurchase price for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book-entry) to each Holder a new Note equal in principal amount to
any unrepurchased portion of any Notes surrendered; provided, that each new Note will be in a principal amount of £100,000 or an integral multiple of £1,000 thereafter. 

Notwithstanding the foregoing, the Issuer will not be required to make a Change of Control Offer upon the occurrence of a Change of Control
Triggering Event if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for a Change of Control Offer made by the Issuer and the third party repurchases all Notes properly tendered and not
withdrawn under its offer. In addition, the Issuer will not repurchase any Notes if there has occurred and is continuing on the Change of Control Payment Date an event of default under the Indenture, other than a default in the payment of the Change
of Control Payment upon a Change of Control Triggering Event. 
 On the Change of Control Payment Date, the Issuer will be required, to the
extent lawful, to (i) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer; (ii) deposit with the paying agent, no later than 10:00 a.m., London time, an amount equal to the Change of
Control Payment in respect of all Notes or portions of Notes properly tendered; and (iii) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officer’s Certificate stating the aggregate principal
amount of Notes or portions of Notes being repurchased. 
 “Below Investment Grade Rating Event” means the Notes are rated below
an Investment Grade Rating by each of the Rating Agencies (as defined below) on any date from the date of the public notice of an arrangement that could result in a Change of Control until the end of the
60-day period following public notice of the occurrence of the Change of Control (which 60-day period shall be extended so long as the rating of the Notes is under
publicly announced consideration for possible downgrade by any of the Rating Agencies). 
 “Change of Control” means the
occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the
properties or assets of the Issuer and its Subsidiaries taken as a whole to any Person other than the Issuer or one of its Subsidiaries; (2) the consummation of any transaction (including, without limitation, any merger or consolidation) the
result of which is that any Person becomes the beneficial owner, directly or indirectly, of more than 50% of the then outstanding number of shares of the Issuer’s voting stock; or (3) the first day on which a majority of the members of the
Issuer’s Board of Directors are not Continuing Directors. Notwithstanding the foregoing, a transaction will not be deemed to result in a Change of Control if (i) the Issuer becomes a wholly owned subsidiary of a holding company and
(ii) the holders of the voting stock of such holding company immediately following that transaction are substantially the same as the holders of the Issuer’s voting stock immediately prior to that transaction. 

  
 C-1-6 

 “Change of Control Triggering Event” means the occurrence of both a Change of Control
and a Below Investment Grade Rating Event. 
 “Continuing Directors” means, as of any date of determination, any member of the
Board of Directors of the Issuer who (1) was a member of such Board of Directors on the date of original issue of this Security; or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board of Directors at the time of such nomination or election (either by a specific vote or by approval of the Issuer’s proxy statement in which such member was named as a nominee for election as a
director, without objection to such nomination). 
 “Fitch” means Fitch Ratings Inc., a subsidiary of Hearst Corporation and
Fimalac, S.A. 
 “Investment Grade Rating” means a rating equal to or higher than BBB- (or
the equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P. 

“Moody’s” means Moody’s Investors Service, Inc. 

“Rating Agencies” means (1) each of Fitch, Moody’s and S&P; and (2) if any one or more of Fitch, Moody’s or
S&P ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the Issuer’s reasonable control, then, at the Issuer’s election, either (x) each of the remaining agencies, as the case
may be or (y) at the Issuer’s election, each of the remaining agencies, as the case may be, and any “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) under the Exchange Act, selected
by the Issuer (as certified by a Board Resolution) as a replacement agency for Fitch, Moody’s or S&P, or all of them, as the case may be. 

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. 

All payments of principal, interest, and premium, if any, in respect of the Notes will be made free and clear of, and without withholding or
deduction for, any present or future taxes, assessments, duties or governmental charges of whatever nature imposed, levied or collected by the United States (or any political subdivision or taxing authority thereof or therein having power to tax),
unless such withholding or deduction is required by law or the official interpretation or administration thereof. 

  
 C-1-7 

 Subject to the exceptions and limitations set forth below, the Issuer will pay as additional
interest in respect of the Notes such additional amounts as are necessary in order that the net payment by the Issuer of the principal of, premium, if any, and interest (collectively, “Additional Amounts”) in respect of the Notes to a
Holder who is not a United States person (as defined below), after withholding or deduction for any present or future tax, assessment, duties or other governmental charge imposed by the United States (or any political subdivision or taxing authority
thereof or therein having power to tax), will not be less than the amount provided herein to be then due and payable; provided, however, that the foregoing obligation to pay Additional Amounts shall not apply: (1) to the extent any tax,
assessment or other governmental charge would not have been imposed but for the Holder (or the beneficial owner for whose benefit such Holder holds such Note), or a fiduciary, settlor, beneficiary, member or shareholder of the Holder if the Holder
is an estate, trust, partnership or corporation, or a person holding a power over an estate or trust administered by a fiduciary Holder, being considered as (a) being or having been engaged in a trade or business in the United States or having
or having had a permanent establishment in the United States, (b) having a current or former connection with the United States (other than a connection arising solely as a result of the ownership of a Note, the receipt of any payment or the
enforcement of any rights hereunder), including being or having been a citizen or resident of the United States, (c) being or having been a personal holding company, a passive foreign investment company or a controlled foreign corporation for
U.S. federal income tax purposes or a corporation that has accumulated earnings to avoid U.S. federal income tax, (d) being or having been a “10-percent shareholder” of the Company as defined in
section 871(h)(3) of the United States Internal Revenue Code of 1986, as amended (the “Code”) or any successor provision or (e) being a bank receiving payments on an extension of credit made pursuant to a loan agreement entered into
in the ordinary course of its trade or business, as described in section 881(c)(3)(A) of the Code or any successor provision; (2) to any Holder that is not the sole beneficial owner of a Note, or a portion of a Note, or that is a fiduciary,
partnership, limited liability company or other fiscally transparent entity, but only to the extent that a beneficial owner with respect to the Holder, a beneficiary or settlor with respect to the fiduciary, or a beneficial owner or member of the
partnership, limited liability company or other fiscally transparent entity would not have been entitled to the payment of an Additional Amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or distributive
share of the payment; (3) to the extent any tax, assessment or other governmental charge that would not have been imposed but for the failure of the Holder or any other person to comply with certification, identification or information
reporting requirements concerning the nationality, residence, identity or connection with the United States of the Holder or beneficial owner of a Note, if compliance is required by statute, by regulation of the United States or any taxing authority
therein or by an applicable income tax treaty to which the United States is a party as a precondition to exemption from such tax, assessment or other governmental charge; (4) to any tax, assessment or other governmental charge that is imposed
otherwise than by withholding by the Issuer or a paying agent from the payment; (5) to any tax, assessment or other governmental charge required to be withheld by any paying agent from any payment of principal of or interest on any Note, if
such payment can be made without such withholding by any other paying agent; (6) to any estate, inheritance, gift, sales, transfer, wealth, capital gains or personal property tax or similar tax, assessment or other governmental charge, or
excise tax imposed on the transfer of a Note; (7) to the extent any tax, assessment or other governmental charge would not have been imposed but for the presentation by the Holder of any Note, where presentation is required, for payment on a
date more than 30 days after the date on which payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later, except to the extent that the beneficiary or Holder thereof would have been entitled to
the payment of Additional Amounts had such Note been presented for payment on any day during such 30-day period; to any tax, assessment or other governmental charge imposed under sections 1471 through 1474 of
the Code (or any amended or successor provisions), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to section 1471(b) of the Code or any fiscal or regulatory legislation, rules or practices
adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such sections of the Code, whether currently in effect or as published and amended from time to time; or (9) in the case of any
combination of items (1), (2), (3), (4), (5), (6), (7) and (8). As used in this paragraph, the term “United States” means the United States of America, its territories and possessions, the states of the United States and the District of
Columbia, and the term “United States person” means any individual who is a citizen or resident of the United States for U.S. federal income tax purposes, a corporation, partnership or other entity created or organized in or under the laws
of the United States, any state of the United States or the District of Columbia, or any estate or trust the income of which is subject to U.S. federal income taxation regardless of its source. 

  
 C-1-8 

 This Note is subject in all cases to any tax, fiscal or other law or regulation or administrative
or judicial interpretation applicable hereto. 
 If an Event of Default with respect to the Notes shall occur and be continuing, the
principal of all the Notes may be declared due and payable in the manner and with the effect provided in the Indenture. 
 The Indenture
contains provisions permitting the Issuer and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Senior Securities or Subordinated Securities, as the case may be, of all series issued under
such Indenture then outstanding and affected (each voting as one class), to add any provisions to, or change in any manner, eliminate or waive any of the provisions of, such Indenture or modify in any manner the rights of the holders of the
Securities or Coupons so affected; provided that the Issuer and the Trustee, may not, without the consent of the holder of each Outstanding Security affected thereby, (i) extend the final maturity of the principal of any Security or
reduce the principal amount thereof or premium thereon, if any, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or change the currency in which the principal thereof (other
than as otherwise may be provided with respect to such series), premium, if any, or interest thereon is payable or reduce the amount of the principal of any Original Issue Discount Security that is payable upon acceleration or provable in
bankruptcy, or in the case of Subordinated Securities of any series, modify any of the subordination provisions or the definition of “Senior Indebtedness” relating to such series in a manner adverse to the holders of such Subordinated
Securities, or alter certain provisions of the Indenture relating to Securities not denominated in Dollars or the Judgment Currency of such Securities or impair or affect the right of any Securityholder to institute suit for the enforcement of any
payment thereof when due or, if the Securities provide therefor, any right of repayment at the option of the Securityholder or (ii) reduce the aforesaid percentage in principal amount of Securities of any series issued under the Indenture, the
consent of the holders of which is required for any such modification. It is also provided in the Indenture that, with respect to certain defaults or Events of Default regarding the Securities of any series, the holders of a majority in aggregate
principal amount Outstanding of the Securities of each such series, each such series voting as a separate class (or, of all Securities, as the case may be voting as a single class) may under certain circumstances waive all defaults with respect to
each such series (or with respect to all the Securities, as the case may be) and rescind and annul a declaration of default and its consequences, but no such waiver or rescission and annulment shall extend to or affect any subsequent default or
shall impair any right consequent thereto. The preceding sentence shall not, however, apply to a default in the payment of the principal of or interest on any of the Securities. 

  
 C-1-9 

 No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note at the time, place and rate, and in the coin or currency, herein prescribed. 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note may be registered on the registry
books of the Issuer, upon surrender of this Note for registration of transfer at the office or agency of the Issuer maintained by the Issuer for such purpose in Minneapolis, Minnesota, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Issuer and the Trustee duly executed by, the holder hereof or by its 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. 
 No service charge shall be made for any such registration of transfer
or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. 

Prior to due presentment of this Note for registration of transfer, the Issuer, the Trustee and any agent of the Issuer 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 Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW. 

  
 C-1-10 

 [FORM OF SCHEDULE FOR ENDORSEMENTS ON REGISTERED 

GLOBAL SECURITIES TO REFLECT CHANGES IN PRINCIPAL AMOUNT] 

Schedule A 
 Changes to Principal
Amount of Registered Global Securities 
  

							
	 Date
	  	 Principal Amount 
of Notes 
by which this Registered
Global
Security is to be 
Reduced or Increased, 
and Reason for 
Reduction or Increase
	  	 Remaining Principal 
Amount of this Registered 
Global
Security
	  	 Notation Made By

				
	  
	  	  
	  	  
	  	  

				
	  
	  	  
	  	  
	  	  

				
	  
	  	  
	  	  
	  	  

				
	  
	  	  
	  	  
	  	  

				
	  
	  	  
	  	  
	  	  

  
 C-1-11

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