Document:

Exhibit 4.2

EXECUTION COPY

 

 

AAR CORP.

 

as Issuer,

 

and

 

U.S. Bank National
Association,

 

as Trustee

 

INDENTURE

 

Dated as of
February 1, 2006

 

$150,000,000

 

1.75% Convertible Senior
Notes due 2026

 

 

CROSS-REFERENCE TABLE

 

	
  TIA

  Section

  	
   

  	
  Indenture

  Section

  
	
   

  	
   

  	
   

  
	
  310

  	
  (a)(1)

  	
  11.10

  
	
   

  	
  (a)(2)

  	
  11.10

  
	
   

  	
  (a)(3)

  	
  N.A.

  
	
   

  	
  (a)(4)

  	
  N.A.

  
	
   

  	
  (a)(5)

  	
  N.A.

  
	
   

  	
  (b)

  	
  11.8; 11.10; 15.2

  
	
   

  	
  (c)

  	
  N.A.

  
	
  311

  	
  (a)

  	
  11.11

  
	
   

  	
  (b)

  	
  11.11

  
	
   

  	
  (c)

  	
  N.A.

  
	
  312

  	
  (a)

  	
  2.5

  
	
   

  	
  (b)

  	
  14.3

  
	
   

  	
  (c)

  	
  14.3

  
	
  313

  	
  (a)

  	
  11.6

  
	
   

  	
  (b)(1)

  	
  N.A.

  
	
   

  	
  (b)(2)

  	
  11.6

  
	
   

  	
  (c)

  	
  11.6; 15.2

  
	
   

  	
  (d)

  	
  11.6

  
	
  314

  	
  (a)

  	
  3.5

  
	
   

  	
  (b)

  	
  N.A.

  
	
   

  	
  (c)(1)

  	
  14.4

  
	
   

  	
  (c)(2)

  	
  14.4

  
	
   

  	
  (c)(3)

  	
  N.A.

  
	
   

  	
  (d)

  	
  N.A.

  
	
   

  	
  (e)

  	
  14.5

  
	
   

  	
  (f)

  	
  N.A.

  
	
  315

  	
  (a)

  	
  11.1(b)

  
	
   

  	
  (b)

  	
  11.5; 15.2

  
	
   

  	
  (c)

  	
  11.1(a)

  
	
   

  	
  (d)

  	
  11.1(c)

  
	
   

  	
  (e)

  	
  10.9

  
	
  316

  	
  (a)(last sentence)

  	
  2.8

  
	
   

  	
  (a)(1)(A)

  	
  10.7

  
	
   

  	
  (a)(1)(B)

  	
  10.7

  
	
   

  	
  (a)(2)

  	
  N.A.

  
	
   

  	
  (b)

  	
  10.4

  
	
  317

  	
  (a)(1)

  	
  10.2

  
	
   

  	
  (a)(2)

  	
  10.2

  
	
   

  	
  (b)

  	
  2.4

  
	
  318

  	
  (a)

  	
  14.1

  

N.A.  means not applicable

Note:    This Cross-Reference table shall not, for any
purpose, be deemed to be part of this Indenture.

 

i

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
  DEFINITIONS AND
  INCORPORATION BY REFERENCE

  
	
   

  	
   

  	
   

  
	
  SECTION 1.1.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 1.2.

  	
  Incorporation by Reference of Trust Indenture Act

  	
  11

  
	
   

  	
   

  	
   

  
	
  SECTION 1.3.

  	
  Rules of Construction

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
  THE NOTES

  
	
   

  	
   

  	
   

  
	
  SECTION 2.1.

  	
  Form, Dating and Terms

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 2.2.

  	
  Execution and Authentication

  	
  18

  
	
   

  	
   

  	
   

  
	
  SECTION 2.3.

  	
  Registrar, Conversion Agent and Paying Agent

  	
  19

  
	
   

  	
   

  	
   

  
	
  SECTION 2.4.

  	
  Paying Agent To Hold Money and Securities in Trust

  	
  19

  
	
   

  	
   

  	
   

  
	
  SECTION 2.5.

  	
  Holder Lists

  	
  20

  
	
   

  	
   

  	
   

  
	
  SECTION 2.6.

  	
  Transfer and Exchange

  	
  20

  
	
   

  	
   

  	
   

  
	
  SECTION 2.7.

  	
  Mutilated, Destroyed, Lost or Stolen Notes

  	
  21

  
	
   

  	
   

  	
   

  
	
  SECTION 2.8.

  	
  Outstanding Notes

  	
  22

  
	
   

  	
   

  	
   

  
	
  SECTION 2.9.

  	
  Temporary Notes

  	
  23

  
	
   

  	
   

  	
   

  
	
  SECTION 2.10.

  	
  Cancellation

  	
  23

  
	
   

  	
   

  	
   

  
	
  SECTION 2.11.

  	
  Payment of Interest; Defaulted Interest

  	
  24

  
	
   

  	
   

  	
   

  
	
  SECTION 2.12.

  	
  Computation of Interest

  	
  25

  
	
   

  	
   

  	
   

  
	
  SECTION 2.13.

  	
  CUSIP Numbers

  	
  25

  
	
   

  	
   

  	
   

  
	
  SECTION 2.14.

  	
  Issuance, Transfer and Exchange of Common Stock
  Issuable Upon Conversion of the Notes

  	
  25

  
	
   

  	
   

  	
   

  
	
  SECTION 2.15.

  	
  Calculations in Respect of the Notes

  	
  26

  

 

ii

 

	
  ARTICLE III

  
	
  COVENANTS

  
	
   

  	
   

  	
   

  
	
  SECTION 3.1.

  	
  Payment of Notes

  	
  26

  
	
   

  	
   

  	
   

  
	
  SECTION 3.2.

  	
  Maintenance of Office or Agency

  	
  26

  
	
   

  	
   

  	
   

  
	
  SECTION 3.3.

  	
  Money and Securities for Note Payments To Be Held in
  Trust

  	
  27

  
	
   

  	
   

  	
   

  
	
  SECTION 3.4.

  	
  Corporate Existence

  	
  28

  
	
   

  	
   

  	
   

  
	
  SECTION 3.5.

  	
  Further Instruments and Acts

  	
  28

  
	
   

  	
   

  	
   

  
	
  SECTION 3.6.

  	
  Liquidated Damages Notices

  	
  28

  
	
   

  	
   

  	
   

  
	
  SECTION 3.7.

  	
  SEC Reports

  	
  29

  
	
   

  	
   

  	
   

  
	
  SECTION 3.8.

  	
  Compliance Certificates

  	
  29

  
	
   

  	
   

  	
   

  
	
  SECTION 3.9.

  	
  Rule 144A Information Requirement

  	
  29

  
	
   

  	
   

  	
   

  
	
  SECTION 3.10.

  	
  Stay, Extension and Usury Laws

  	
  29

  
	
   

  	
   

  	
   

  
	
  SECTION 3.11.

  	
  Notice of Default

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
  SUCCESSOR COMPANY

  
	
   

  	
   

  	
   

  
	
  SECTION 4.1.

  	
  Merger and Consolidation

  	
  30

  
	
   

  	
   

  	
   

  
	
  SECTION 4.2.

  	
  Successor Corporation Substituted

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
  REDEMPTION OF NOTES

  
	
   

  	
   

  	
   

  
	
  SECTION 5.1.

  	
  Optional Redemption

  	
  31

  
	
   

  	
   

  	
   

  
	
  SECTION 5.2.

  	
  Applicability of Article

  	
  31

  
	
   

  	
   

  	
   

  
	
  SECTION 5.3.

  	
  Election to Redeem; Notice to Trustee

  	
  31

  
	
   

  	
   

  	
   

  
	
  SECTION 5.4.

  	
  Selection by Trustee of Notes To Be Redeemed

  	
  31

  
	
   

  	
   

  	
   

  
	
  SECTION 5.5.

  	
  Notice of Redemption

  	
  32

  
	
   

  	
   

  	
   

  
	
  SECTION 5.6.

  	
  Deposit of Redemption Price

  	
  33

  
	
   

  	
   

  	
   

  
	
  SECTION 5.7.

  	
  Notes Payable on Redemption Date

  	
  33

  

 

iii

 

	
  SECTION 5.8.

  	
  Notes Redeemed in Part

  	
  34

  
	
   

  	
   

  	
   

  
	
  SECTION 5.9.

  	
  Arrangement on Call for Redemption

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
  PURCHASE UPON A
  DESIGNATED EVENT

  
	
   

  	
   

  	
   

  
	
  SECTION 6.1.

  	
  Purchase at the Option of the Holder upon a
  Designated Event

  	
  35

  
	
   

  	
   

  	
   

  
	
  SECTION 6.2.

  	
  Notice of Designated Event

  	
  35

  
	
   

  	
   

  	
   

  
	
  SECTION 6.3.

  	
  Exercise of Option

  	
  35

  
	
   

  	
   

  	
   

  
	
  SECTION 6.4.

  	
  Procedures

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
  OPTIONAL PURCHASE

  
	
   

  	
   

  	
   

  
	
  SECTION 7.1.

  	
  Purchase of Notes by the Company at the Option of
  the Holder

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
  CONDITIONS AND
  PROCEDURES FOR PURCHASES AT OPTION OF HOLDERS

  
	
   

  	
   

  	
   

  
	
  SECTION 8.1.

  	
  Notice of Repurchase Date or Designated Event

  	
  38

  
	
   

  	
   

  	
   

  
	
  SECTION 8.2.

  	
  Effect of Purchase Notice or Designated Event
  Purchase Notice

  	
  40

  
	
   

  	
   

  	
   

  
	
  SECTION 8.3.

  	
  Notes Purchased in Part

  	
  41

  
	
   

  	
   

  	
   

  
	
  SECTION 8.4.

  	
  Covenant to Comply with Securities Laws upon
  Purchase of Notes

  	
  41

  
	
   

  	
   

  	
   

  
	
  SECTION 8.5.

  	
  Repayment to the Company

  	
  41

  
	
   

  	
   

  	
   

  
	
  SECTION 8.6.

  	
  Exchange in Lieu of Repurchase

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  
	
  CONVERSION OF NOTES

  
	
   

  	
   

  	
   

  
	
  SECTION 9.1.

  	
  Right To Convert

  	
  42

  
	
   

  	
   

  	
   

  
	
  SECTION 9.2.

  	
  Determination of Satisfaction of Certain Conversion
  Triggers

  	
  45

  
	
   

  	
   

  	
   

  
	
  SECTION 9.3.

  	
  Conversion Procedures

  	
  46

  
	
   

  	
   

  	
   

  
	
  SECTION 9.4.

  	
  Cash Payments in Lieu of Fractional Shares

  	
  47

  
	
   

  	
   

  	
   

  
	
  SECTION 9.5.

  	
  Taxes on Conversion

  	
  48

  
	
   

  	
   

  	
   

  
	
  SECTION 9.6.

  	
  Exchange in Lieu of Conversion

  	
  48

  

 

iv

 

	
  SECTION 9.7.

  	
  Covenants of the Company

  	
  48

  
	
   

  	
   

  	
   

  
	
  SECTION 9.8.

  	
  Adjustments to Conversion Rate

  	
  49

  
	
   

  	
   

  	
   

  
	
  SECTION 9.9.

  	
  Calculation Methodology

  	
  53

  
	
   

  	
   

  	
   

  
	
  SECTION 9.10.

  	
  When No Adjustment Required

  	
  53

  
	
   

  	
   

  	
   

  
	
  SECTION 9.11.

  	
  Notice of Adjustment

  	
  54

  
	
   

  	
   

  	
   

  
	
  SECTION 9.12.

  	
  Voluntary Increase

  	
  54

  
	
   

  	
   

  	
   

  
	
  SECTION 9.13.

  	
  Notice to Holders Prior to Certain Actions

  	
  54

  
	
   

  	
   

  	
   

  
	
  SECTION 9.14.

  	
  Effect of Reclassification, Consolidation, Merger,
  Binding Share Exchange or Sale

  	
  55

  
	
   

  	
   

  	
   

  
	
  SECTION 9.15.

  	
  Responsibility of Trustee

  	
  57

  
	
   

  	
   

  	
   

  
	
  SECTION 9.16.

  	
  Successive Adjustments

  	
  57

  
	
   

  	
   

  	
   

  
	
  SECTION 9.17.

  	
  General Considerations

  	
  57

  
	
   

  	
   

  	
   

  
	
  SECTION 9.18.

  	
  Payment of Cash in Lieu of Common Stock

  	
  57

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  
	
  DEFAULTS AND REMEDIES

  
	
   

  	
   

  	
   

  
	
  SECTION 10.1.

  	
  Events of Default

  	
  58

  
	
   

  	
   

  	
   

  
	
  SECTION 10.2.

  	
  Payment of Notes on Default; Suit Therefor

  	
  60

  
	
   

  	
   

  	
   

  
	
  SECTION 10.3.

  	
  Application of Moneys Collected by Trustee

  	
  61

  
	
   

  	
   

  	
   

  
	
  SECTION 10.4.

  	
  Proceedings by Holders

  	
  62

  
	
   

  	
   

  	
   

  
	
  SECTION 10.5.

  	
  Proceedings by Trustee

  	
  63

  
	
   

  	
   

  	
   

  
	
  SECTION 10.6.

  	
  Remedies Cumulative and Continuing

  	
  63

  
	
   

  	
   

  	
   

  
	
  SECTION 10.7.

  	
  Direction of Proceedings; Waiver of Defaults by
  Majority of Holders

  	
  63

  
	
   

  	
   

  	
   

  
	
  SECTION 10.8.

  	
  Notice of Defaults

  	
  64

  
	
   

  	
   

  	
   

  
	
  SECTION 10.9.

  	
  Undertaking to Pay Costs

  	
  64

  

 

v

 

	
  ARTICLE XI

  
	
  TRUSTEE

  
	
   

  	
   

  	
   

  
	
  SECTION 11.1.

  	
  Duties of Trustee

  	
  64

  
	
   

  	
   

  	
   

  
	
  SECTION 11.2.

  	
  Rights of Trustee

  	
  66

  
	
   

  	
   

  	
   

  
	
  SECTION 11.3.

  	
  Individual Rights of Trustee

  	
  67

  
	
   

  	
   

  	
   

  
	
  SECTION 11.4.

  	
  Trustee’s Disclaimer

  	
  67

  
	
   

  	
   

  	
   

  
	
  SECTION 11.5.

  	
  Notice of Defaults

  	
  67

  
	
   

  	
   

  	
   

  
	
  SECTION 11.6.

  	
  Reports by Trustee to Holders

  	
  68

  
	
   

  	
   

  	
   

  
	
  SECTION 11.7.

  	
  Compensation and Indemnity

  	
  68

  
	
   

  	
   

  	
   

  
	
  SECTION 11.8.

  	
  Replacement of Trustee

  	
  69

  
	
   

  	
   

  	
   

  
	
  SECTION 11.9.

  	
  Successor Trustee by Merger

  	
  69

  
	
   

  	
   

  	
   

  
	
  SECTION 11.10.

  	
  Eligibility; Disqualification

  	
  70

  
	
   

  	
   

  	
   

  
	
  SECTION 11.11.

  	
  Preferential Collection of Claims Against Company

  	
  70

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII

  
	
  SATISFACTION AND
  DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

  
	
   

  	
   

  	
   

  
	
  SECTION 12.1.

  	
  Satisfaction and Discharge of Indenture

  	
  70

  
	
   

  	
   

  	
   

  
	
  SECTION 12.2.

  	
  Application by Trustee of Funds Deposited for
  Payment of Notes

  	
  71

  
	
   

  	
   

  	
   

  
	
  SECTION 12.3.

  	
  Repayment of Moneys Held by Paying Agent

  	
  71

  
	
   

  	
   

  	
   

  
	
  SECTION 12.4.

  	
  Return of Moneys Held by Trustee and Paying Agent
  Unclaimed for Two Years

  	
  71

  
	
   

  	
   

  	
   

  
	
  SECTION 12.5.

  	
  Indemnity for U.S. Government Obligations

  	
  72

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  
	
  AMENDMENTS

  
	
   

  	
   

  	
   

  
	
  SECTION 13.1.

  	
  Without Consent of Holders

  	
  72

  
	
   

  	
   

  	
   

  
	
  SECTION 13.2.

  	
  With Consent of Holders

  	
  73

  
	
   

  	
   

  	
   

  
	
  SECTION 13.3.

  	
  Compliance with Trust Indenture Act

  	
  73

  
	
   

  	
   

  	
   

  
	
  SECTION 13.4.

  	
  Revocation and Effect of Consents and Waivers

  	
  74

  

 

vi

 

	
  SECTION 13.5.

  	
  Notation on or Exchange of Notes

  	
  74

  
	
   

  	
   

  	
   

  
	
  SECTION 13.6.

  	
  Trustee To Sign Amendments

  	
  74

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  SECTION 14.1.

  	
  Trust Indenture Act Controls

  	
  74

  
	
   

  	
   

  	
   

  
	
  SECTION 14.2.

  	
  Notices

  	
  74

  
	
   

  	
   

  	
   

  
	
  SECTION 14.3.

  	
  Communication by Holders with Other Holders

  	
  75

  
	
   

  	
   

  	
   

  
	
  SECTION 14.4.

  	
  Certificate and Opinion as to Conditions Precedent

  	
  75

  
	
   

  	
   

  	
   

  
	
  SECTION 14.5.

  	
  Statements Required in Certificate or Opinion

  	
  76

  
	
   

  	
   

  	
   

  
	
  SECTION 14.6.

  	
  When Notes Disregarded

  	
  76

  
	
   

  	
   

  	
   

  
	
  SECTION 14.7.

  	
  Rules by Trustee, Paying Agent and Registrar

  	
  76

  
	
   

  	
   

  	
   

  
	
  SECTION 14.8.

  	
  Governing Law

  	
  76

  
	
   

  	
   

  	
   

  
	
  SECTION 14.9.

  	
  No Recourse Against Others

  	
  76

  
	
   

  	
   

  	
   

  
	
  SECTION 14.10.

  	
  Successors

  	
  77

  
	
   

  	
   

  	
   

  
	
  SECTION 14.11.

  	
  Multiple Originals

  	
  77

  
	
   

  	
   

  	
   

  
	
  SECTION 14.12.

  	
  Variable Provisions

  	
  77

  
	
   

  	
   

  	
   

  
	
  SECTION 14.13.

  	
  Qualification of Indenture

  	
  77

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
  Form of Note

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT B

  	
  Form of Transfer Certificate for Transfer of
  Restricted Stock

  	
   

  
				

 

vii

 

INDENTURE, dated as of February 1, 2006, between
AAR CORP., a Delaware corporation (the “Company”), and U.S. Bank National Association,
a United States banking association, as trustee (the “Trustee”).

 

RECITALS
OF THE COMPANY

 

The Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance of up to $150,000,000
aggregate principal amount of the Company’s 1.75% Convertible Senior Notes due
2026, convertible into common stock, par value $1.00 per share, of the Company
(the “Notes”).

 

Each party agrees as follows for the benefit of the
other parties and for the equal and ratable benefit of the Holders of the
Notes:

 

ARTICLE I

 

DEFINITIONS AND
INCORPORATION BY REFERENCE

 

SECTION 1.1. 
Definitions.

 

“actual knowledge”
has the meaning set forth in Section 11.2(g).

 

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

 

“Agent Members”
has the meaning set forth in Section 2.1(g).

 

“Applicable Stock
Price” means the average of the Closing Prices of the Common Stock
for the five consecutive Trading Day period beginning on the third Trading Day
following the Conversion Date.

 

“Authenticating
Agent” has the meaning set forth in Section 2.2.

 

“Bankruptcy Code”
means the United States Bankruptcy Code, 11 United States Code § 101 et seq., or any successor statute
thereto.

 

“Beneficial Owner”
has the meaning set forth in Rule 13d-3 of the Exchange Act.

 

“Board of Directors”
means either the board of directors of the Company or other body fulfilling the
function of a board of directors of a corporation or other Person or any
committee of such board.

 

“Board Resolution”
means a copy of a resolution certified by the Secretary or an Assistant Secretary
of a company to have been duly adopted by the board of directors of such 

 

1

 

company and to be in full force and effect on the date of such
certification, and delivered to the Trustee.

 

“Business Combination”
has the meaning set forth in Section 9.14.

 

“Business Day”
means each day that is not a Saturday, Sunday or other day on which banking
institutions in New York, New York are authorized or required by law,
regulation or executive order to close.

 

“Capital Stock”
of any Person means any and all shares (including ordinary shares or “American
Depositary Shares”), interests, rights to purchase, warrants, options,
participations or other equivalents of or interests in (however designated)
capital stock or other equity participations, including partnership interests,
whether general or limited, of such Person and any rights (other than debt
securities convertible or exchangeable into an equity interest), warrants or
options to acquire an equity interest in such Person.

 

“Cash Amount Per
Note” has the meaning set forth in Section 9.18(b).

 

A “Change in
Control” shall be deemed to have occurred at such time after the
original issuance of the Notes that any of the following occurs:

 

(a)           any person,
including any syndicate or group deemed to be a “person” under
Section 13(d) (3) of the Exchange Act, acquires beneficial
ownership, directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of shares of the Company’s
Capital Stock entitling the person to exercise 50% or more of the total voting
power of all shares of the Company’s Capital Stock that are entitled to vote
generally in elections of directors, other than an acquisition by the Company,
any of its Subsidiaries or any of its employee benefit plans and other than any
transaction contemplated by the paragraph (b)(ii) below.

 

(b)           the Company merges
or consolidates with or into any other Person (other than a Subsidiary), any
merger of another Person into the Company, or the Company conveys, sells,
transfers or leases all or substantially all of its assets to another Person,
other than any transaction:  (i) that does not result in a
reclassification, conversion, exchange or cancellation of the Company’s
outstanding shares of Common Stock, or (ii) pursuant to which the holders
of the Company’s Common Stock immediately prior to the transaction have the
entitlement to exercise, directly or indirectly, 50% or more of the total
voting power of all shares of Capital Stock entitled to vote generally in the
election of directors of the continuing or surviving corporation immediately
after the transaction, or (iii) which is effected solely to change the
Company’s jurisdiction of incorporation and which results in a reclassification,
conversion or exchange of outstanding shares of the Company’s Common Stock
solely into shares of common stock of the surviving entity.

 

Notwithstanding the foregoing provisions, a Change in
Control shall not be deemed to have occurred if:  (x) the Closing Price of the Common Stock for
any five Trading Days within the period of ten consecutive Trading Days ending
immediately after the later of the Change in Control or the public announcement
of the Change in Control, in the case of a Change in Control relating to an
acquisition of Capital Stock under paragraph (a) of this definition, or
the 

 

2

 

period of ten consecutive Trading Days ending immediately before the
Change in Control, in the case of a Change in Control relating to a merger,
consolidation, asset sale or otherwise under paragraph (b) of this
definition, equals or exceeds 105% of the Conversion Price in effect on each of
those five Trading Days; or (y) all of the consideration paid for the Common
Stock (excluding cash payments for fractional shares and cash payments made
pursuant to dissenters’ appraisal rights) in a merger or consolidation or a
conveyance, sale, transfer or lease otherwise constituting a Change in Control
under paragraph (a) and/or paragraph (b) of this definition consists
of shares of Capital Stock traded on a national securities exchange or quoted
on Nasdaq or its successor (or will be so traded or quoted immediately
following the merger or consolidation) and, as a result of the merger or
consolidation, the Notes become convertible into shares of such Capital Stock.

 

“Closing Price”
of the Common Stock on any Trading Day means the reported last sale price per
share (or if no last sale price is reported, the average of the bid and ask
prices per share or, if more than one in either case, the average of the
average bid and the average ask prices per share) on that Trading Day as
reported by the New York Stock Exchange, or if the Common Stock is not listed
on the New York Stock Exchange, as reported by the Nasdaq National Market or,
if the Common Stock is not quoted on the Nasdaq National Market, as reported by
the principal national or regional securities exchange on which the Common
Stock is listed.  If the Common Stock is
not listed for trading on a United States national or regional securities
exchange and not reported by the Nasdaq National Market on the relevant date,
the “Closing Price” shall be the last quoted bid price for the Common Stock in
the over-the-counter market on the relevant date as reported by the National
Quotation Bureau or similar organization. 
If the Common Stock is not so quoted, the “Closing Price” shall be the
average of the midpoint of the last bid and ask prices for the Common Stock on
the relevant date from each of at least three independent nationally recognized
investment banking firms selected by the Company for this purpose.  If the Common Stock is not so listed, traded,
reported or quoted, and the “Closing Price” cannot be determined in a manner provided
by any of the foregoing, the “Closing Price” will be determined by the Board of
Directors in good faith.

 

“Commission”
means the Securities and Exchange Commission.

 

“Common Stock”
means the common stock, par value $1.00 per share, of the Company as it exists
on the date of this Indenture and any shares of any class or classes of Capital
Stock of the Company resulting from any reclassification or reclassifications
thereof, or, in the event of a merger, consolidation or other similar
transaction involving the Company that is otherwise permitted hereunder in
which the Company is not the surviving corporation, the common stock, common
equity interests, ordinary shares or depositary shares or other certificates
representing common equity interests of such surviving corporation or its
direct or indirect parent corporation, and which have no preference in respect
of dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Company and which are not subject
to redemption by the Company; provided, however, that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable on conversion of Notes shall be substantially in the proportion
which the total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.

 

3

 

“Company”
means AAR CORP., a Delaware corporation, and, subject to Article IV, its
successors and assigns.

 

“Company Notice”
has the meaning set forth in Section 8.1.

 

“Company Notice
Date” has the meaning set forth in Section 8.1.

 

“Company Order”
has the meaning set forth in Section 2.2.

 

“Conversion Agent”
means the office or agency designated by the Company where Notes may be
presented for conversion.

 

“Conversion Date”
has the meaning set forth in Section 9.3.

 

“Conversion
Obligation” has the meaning set forth in Section 9.18.

 

“Conversion Price”
means $1,000 divided by the Conversion Rate.

 

“Conversion Rate”
has the meaning set forth in Section 9.1.

 

“Corporate Trust
Office” means the designated corporate trust office of the Trustee
at which at any time its corporate trust business shall be administered, which
office at the date hereof is located at 60 Livingston Avenue, St. Paul,
Minnesota 55107, Attention:  Corporate Trust Services, or such other
address as the Trustee may designate from time to time by notice to the Holders
and the Company, or the designated corporate trust office of any successor
Trustee (or such other address as such successor Trustee may designate from
time to time by notice to the Holders and the Company).

 

“Current Market
Price” means the average of the Closing Prices of the Common Stock
for the five consecutive Trading Days ending on or at the Time of
Determination.

 

“Default”
means any event or condition that is, or after notice or passage of time or
both would be, an Event of Default.

 

“Defaulted Interest”
has the meaning set forth in Section 2.11.

 

“Definitive Notes”
means the Notes that are in registered definitive form.

 

“Depositary”
means The Depository Trust Company, its nominees and their respective
successors and assigns, or such other depositary institution hereinafter
appointed by the Company.

 

“Designated Event
“ means the occurrence of a Change in Control or a Termination of Trading.

 

“Designated Event
Purchase Date” has the meaning set forth in Section 6.1.

 

“Designated Event
Purchase Notice” has the meaning set forth in Section 6.3.

 

4

 

“Designated Event
Purchase Price” has the meaning set forth in Section 6.1.

 

“Distributed Assets”
has the meaning set forth in Section 9.8(c).

 

“Equity Interests”
means any Capital Stock, partnership, joint venture, member or limited
liability or unlimited liability company interest, beneficial interest in a
trust or similar entity or other equity interest or equity investment of
whatever nature.

 

“Event of Default”
means any event or condition specified as such in Section 10.1.

 

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

 

“Ex-date”
or “Ex-dividend date” has the
meaning set forth in Section 9.1(a)(v)(B).

 

“Expiration Time”
has the meaning set forth in Section 9.8(f).

 

“Fair Market Value”
means, with respect to any asset or property, the price which could be
negotiated in an arm’s-length, free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of whom is under undue
pressure or compulsion to complete the transaction.  Fair Market Value
shall be determined by the Board of Directors acting reasonably and in good
faith.

 

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

 

“Global Notes”
means Notes that are in the form of the Note attached hereto as
Exhibit A and that are issued to a Depositary.

 

“Holder”
means, in the case of any Note, the Person in whose name such Note is
registered in the Note Register kept by the Registrar for that purpose in
accordance with the terms hereof.

 

“Indebtedness”
as applied to any Person, means (i) all indebtedness, obligations and
other liabilities, contingent or otherwise, (A) for borrowed money,
including overdrafts, foreign exchange contracts, currency exchange agreements,
interest rate protection agreements, any liability for the deferred purchase
price of property or services, and any loans or advances from banks, whether or
not evidenced by notes or similar instruments, or (B) evidenced by credit
or loan agreements, bonds, debentures, notes or similar instruments, whether or
not the recourse of the lender is to the whole of such Person’s assets or to
only a portion thereof, other than any account payable or other accrued current
liability or obligation incurred in the ordinary course of business in
connection with the obtaining of materials or services; (ii) all
reimbursement obligations and other liabilities, contingent or otherwise, with
respect to letters of credit, bank guarantees, bankers’ acceptances or other
similar credit transactions;  (iii) all obligations and liabilities,
contingent or otherwise, in respect of leases required, in conformity with
GAAP, to be 

 

5

 

accounted for as capitalized lease obligations on such Person’s balance
sheet;  (iv) all obligations and other liabilities, contingent or
otherwise, under any lease or related document, including a purchase agreement,
conditional sale or other title retention agreement, in connection with the
lease of real property or improvements thereon (or any personal property
included as part of any such lease) which provides that such Person is
contractually obligated to purchase or cause a third party to purchase the
leased property or pay an agreed upon residual value of the leased property,
including such Person’s obligations under such lease or related document to
purchase or cause a third party to purchase such leased property or pay an
agreed upon residual value of the leased property to the lessor; (v) all
such Person’s obligations, contingent or otherwise, with respect to an interest
rate or other swap, cap, floor or collar agreement or hedge agreement, forward
contract or other similar instrument or agreement or foreign currency hedge,
exchange, purchase or similar instrument or agreement; (vi) all such
Person’s direct or indirect guarantees or similar agreements by such Person in
respect of, and all of its obligations or liabilities to purchase or otherwise
acquire or otherwise assure a creditor against loss in respect of,
indebtedness, obligations or liabilities of another Person of the kinds
described in clauses (i) through (v); and (vii) any and all
deferrals, renewals, extensions, refinancings and refundings of, or amendments,
modifications or supplements to, any indebtedness, obligation or liability of
the kinds described in clauses (i) through (vi).

 

“Indenture”
means this Indenture as amended or supplemented from time to time, including,
for all purposes of this instrument and any supplemental indenture or amendment
hereto, the provisions of the TIA that are deemed to be a part of and govern
this instrument and any such supplemental indenture or amendment, respectively.

 

“Initial Public
Offering” means, in the event of a Spin-Off, the first time
securities of the same class or type as the securities being distributed in the
Spin-Off are bona fide offered to the public for cash.

 

“Initial Purchasers”
means the initial purchasers of the Notes.

 

“Interest Payment
Date” has the meaning set forth in the form of Note attached hereto
as Exhibit A.

 

“Liquidated Damages”
has the meaning set forth in Section 3.6.  For all purposes under
this Indenture, the term “interest” shall include Liquidated Damages, if any,
with respect to the Notes.

 

“Liquidated Damages
Notice” has the meaning set forth in Section 3.6.

 

“Make Whole Event”
means an event that constitutes a Designated Event or an event that would have
constituted a Change in Control but for the existence of the 105% Trading Price
exception described in clause (x) of the above definition of “Change in
Control.”

 

“Moody’s”
means Moody’s Investor Services, Inc. (or its successors).

 

“non-electing share”
has the meaning set forth in Section 9.14.

 

6

 

“Note”
or “Notes” has the meaning stated
in the first recital of this Indenture or, as the case may be, means Notes that
have been authenticated and delivered pursuant to this Indenture, including the
Global Note(s).

 

“Note Register”
has the meaning set forth in Section 2.3.

 

“Notes Custodian”
means the custodian with respect to the Global Note (as appointed by the
Depositary or any successor Person thereto) and shall initially be the Trustee.

 

“Officer”
means the Chief Executive Officer, the President, the Chief Financial Officer,
any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or
any Assistant Secretary of the Company.

 

“Officers’
Certificate” means a certificate signed by any two Officers of the
Company.  Each such certificate shall include the statements provided for
in Section 14.5, if and to the extent required by the provisions of
Section 14.4.

 

“Opinion of Counsel”
means a written opinion from legal counsel.  The counsel may be an
employee of or counsel to the Company.  Each such opinion shall include
the statements provided for in Section 14.5, if and to the extent required
by the provisions of Section 14.4.

 

“Outstanding Notes”
has the meaning set forth in Section 2.8.

 

“Paying Agent”
means the office or agency designated by the Company where Notes may be
presented for payment, initially the Trustee.

 

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

 

“protected
purchaser” has the meaning set forth in Section 2.7.

 

“Purchase Notice”
has the meaning set forth in Section 7.1(a)(1).

 

“Purchase Price”
has the meaning provided in paragraph 7 of the Notes.

 

“Purchased Shares”
has the meaning set forth in Section 9.8(f)(i).

 

“QIB”
means any “qualified institutional buyer” (as defined in Rule 144A under
the Securities Act).

 

“Record Date”
has the meaning set forth in the form of Note attached hereto as
Exhibit A.

 

“Redemption Date”
means the date fixed for redemption of the Notes.

 

“Redemption Price”
has the meaning set forth in paragraph 5 of the Notes.

 

7

 

“Registrar”
means the office or agency maintained by the Company where Notes may be
presented for registration of transfer or exchange, initially the Trustee.

 

“Registration Rights
Agreement” means that certain registration rights agreement dated as
of the date of this Indenture by and between the Company and the Initial
Purchasers.

 

“Repurchase Date”
has the meaning set forth in Section 7.1(a).

 

“Resale Restriction
Termination Date” has the meaning set forth on Section 2.6(a).

 

“Responsible
Officer,” when used with respect to the Trustee, means any officer
assigned by the Trustee to administer its corporate trust matters and who is
located at the Corporate Trust Office and who shall have the direct
responsibility for the administration of this Indenture.

 

“Restricted Note
Legend” means the legend set forth in Section 2.1(d).

 

“Restricted Stock
Legend” means the legend required by Section 2.1(e).

 

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

 

“Shelf Registration
Statement” shall have the meaning set forth in the Registration
Rights Agreement.

 

“Significant
Subsidiary” means any Subsidiary that is a “Significant Subsidiary”
of the Company within the meaning of Rule 1-02(w) under Regulation S-X
promulgated by the Commission.

 

“Special Interest
Payment Date” has the meaning set forth in Section 2.11(a).

 

“Special Record
Date” has the meaning set forth in Section 2.11(a).

 

“Spin-Off”
means a dividend or other distribution of shares of Capital Stock of any class
or series, or similar Equity Interests, of or relating to a Subsidiary or other
business unit of the Company.

 

“Spin-Off Market
Price” (a) per share of Common Stock means (i) in the
event a Spin-Off is not effected simultaneously with an Initial Public
Offering, the average of the Closing Prices of the Common Stock for the ten
Trading Days after the effective date of such Spin-Off or (ii) in the
event an Initial Public Offering is effected simultaneously with the Spin-Off,
the Closing Price of the Common Stock on the Trading Day on which the initial
public offering price of securities being distributed in the Initial Public
Offering is determined and (b) per Equity Interest of a Subsidiary or
other business unit of the Company means (i) in the event a Spin-Off is
not effected simultaneously with an Initial Public Offering, the average of the
closing prices of such Equity Interest to be distributed with respect to one
share of Common Stock for the ten Trading Days after the “ex date” with respect
to such Spin-Off or (ii) in the event an Initial Public Offering is
effected simultaneously with the Spin-Off, the initial public offering 

 

8

 

price in the Initial Public Offering of such Equity Interest to be
distributed with respect to one share of Common Stock.

 

“Standard &
Poor’s” means Standard & Poor’s Rating Services (or its
successors).

 

“Stated Maturity,”
when used with respect to the Notes, means February 1, 2024.

 

“Stock Price”
means with respect to any Make Whole Event (i) in any case in which
holders of Common Stock receive only cash, the amount of cash paid per share of
Common Stock in connection with the Change in Control and, (ii) in all
other cases, the average of the Closing Price of the Common Stock for the ten
consecutive Trading Days ending on the Trading Day immediately preceding the
effective date of such Make Whole Event.

 

“Subsidiary”
of any Person means (a) any corporation, association or other business entity
(other than a partnership, joint venture, limited liability company or similar
entity) of which more than 50% of the total ordinary voting power of shares of
Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof (or Persons
performing similar functions) or (b) any partnership, joint venture,
limited liability company or similar entity of which more than 50% of the
capital accounts, distribution rights, total equity and voting interests or
general or limited partnership interests, as applicable, are, in the case of
clauses (a) and (b), at the time owned or controlled, directly or
indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries
of such Person or (3) one or more Subsidiaries of such Person. 
Unless otherwise specified herein, each reference to a Subsidiary will refer to
a Subsidiary of the Company.

 

“Successor Company”
shall have the meaning assigned thereto in clause (i) of
Section 4.1(i).

 

“Termination of
Trading” will be deemed to have occurred if the Common Stock (or
other Common Stock into which the Notes are then convertible) is neither listed
for trading on the New York Stock Exchange nor approved for trading on The
Nasdaq National Market.

 

“TIA” or
“Trust Indenture Act” means the
Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb), as in effect from
time to time.

 

“Time
of Determination” means the time and date of the
determination of stockholders entitled to receive rights, warrants or options
or a distribution, in each case, to which Section 9.1(g), 9.8(a) or
(b) applies (or, if such date is not a Trading Day, then on the last
Trading Day prior to such date).

 

“Trading Day”
means any day on which the New York Stock Exchange is open for trading or, if
the Common Stock is not listed on the New York Stock Exchange but is quoted on
Nasdaq National Market, any day on which the Nasdaq National Market is open for
trading, or if the Common Stock is neither listed on the New York Stock Exchange
nor quoted on the Nasdaq National Market, any day on which the principal
national securities exchange on which the Common Stock is listed is open for
trading or, if the Common Stock is not so listed, admitted for trading or
quoted on a national securities exchange, any Business Day.  A Trading Day only 

 

9

 

includes those days that have a scheduled closing time of
4:00 p.m. (New York City time) or the then standard closing time for
regular trading on the relevant exchange or trading system.

 

“Trading Price”
of the Notes on any date of determination means the average of the secondary
market bid quotations per $1,000 principal amount of the Notes obtained by the
Conversion Agent, at any time the Company instructs the Conversion Agent to
determine the Trading Price, for $5.0 million principal amount of Notes at
approximately 3:30 p.m., New York City time, on such determination date
from three nationally recognized securities dealers selected by the Company, which
may include the Initial Purchasers; provided
that if three such bids cannot reasonably be obtained by the Conversion Agent,
but two such bids are obtained, then the average of the two bids shall be used,
and if only one such bid can reasonably be obtained by the Conversion Agent,
that one bid shall be used.  If the
Conversion Agent cannot reasonably obtain at least one bid for $5.0 million
principal amount of the Notes from a nationally recognized securities dealer,
then the Trading Price per $1,000 principal amount of the Notes will be deemed
to be less than 98% of the product of the Closing Price of the Common Stock on
such determination date and the then applicable Conversion Rate.

 

“Transfer
Restricted Notes” has the meaning set forth in Section 2.1(d).

 

“Trustee”
means the Person identified as “Trustee” in the first paragraph hereof and,
subject to the provisions of Article XI, shall also include any successor
trustee.

 

“Trust Officer”
means, with respect to the Trustee, any officer assigned to the Corporate Trust
Office, and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer’s knowledge of and
familiarity with the particular subject.

 

“Uniform Commercial
Code” means the New York Uniform Commercial Code as in effect from
time to time in the State of New York.

 

“U.S. Government
Obligations” means securities that are (a) direct obligations
of the United States of America for the timely payment of which its full faith
and credit is pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation of the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depositary receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act), as custodian with respect to
any such U.S. Government Obligations or a specific payment of principal of or
interest on any such U.S. Government Obligations held by such custodian for the
account of the holder of such depositary receipt; provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depositary receipt from any amount received by the custodian in respect of
the U.S. Government Obligations or the specific payment of principal of or
interest on the U.S. Government Obligations evidenced by such depositary
receipt.

 

10

 

SECTION 1.2. 
Incorporation by Reference of Trust Indenture Act.  This Indenture is subject to the mandatory
provisions of the TIA which are incorporated by reference in and made a part of
this Indenture.  The following TIA terms have the following meanings:

 

“indenture securities” means the Notes.

 

“indenture security holder” means a Holder.

 

“indenture to be qualified” means this Indenture.

 

“indenture trustee” or “institutional trustee” means
the Trustee.

 

“obligor” on the indenture securities means the
Company and any other obligor on the indenture securities.

 

All other TIA terms used in this Indenture that are
defined by the TIA, defined by the TIA by reference to another statute or
defined by Commission rule have the meanings assigned to them by such
definitions.

 

SECTION 1.3. 
Rules of Construction. 
Unless the context otherwise requires:

 

(1)           a term has the meaning assigned to it;

 

(2)           an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;

 

(3)           “or” is not exclusive;

 

(4)           words in the singular include the plural and words in the
plural include the singular;

 

(5)           unsecured Indebtedness shall not be deemed to be
subordinate or junior to secured Indebtedness merely by virtue of its nature as
unsecured Indebtedness;

 

(6)           the principal amount of any non-interest bearing or other
discount security at any date shall be the principal amount thereof that would
be shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP;

 

(7)           the table of contents and headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference
only, are not intended to be considered a part hereof and shall not modify or
restrict any of the terms or provisions hereof;

 

(8)           the words “herein,” “hereof” and “hereunder” and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision;

 

(9)           all references to “$” or “dollars” shall refer to the
lawful currency of the United States of America;

 

11

 

(10)         the words “include,” “included” and “including” as used
herein shall be deemed in each case to be followed by the phrase “without
limitation,” if not expressly followed by such phrase or the phrase “but not
limited to”;

 

(11)         references to sections of or rules under the Securities
Act, the Exchange Act or the TIA shall be deemed to include substitute,
replacement or successor sections or rules adopted by the Commission from
time to time thereunder; and

 

(12)         any reference to a Section or Article refers to
such Section or Article of this Indenture unless otherwise indicated.

 

ARTICLE II 

 

THE NOTES

 

SECTION 2.1. 
Form, Dating and Terms.

 

(a)           The maximum
aggregate principal amount of Notes that may be authenticated and delivered
under this Indenture is $150,000,000.  Furthermore, Notes may be
authenticated and delivered upon registration or transfer, or in lieu of, other
Notes pursuant to Section 2.6, 2.7 or 13.5.

 

The Notes shall be known and designated as 1.75%
Convertible Senior Notes due 2026.  Pursuant to the provisions of
Article IX, the Notes shall be convertible into Common Stock.

 

Each Note shall bear the applicable legends, if any,
set forth in Section 2.1(d) and transfers of the Notes shall be made
only in accordance with the restrictions described in the applicable
legend.  The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage, in
addition to those set forth on Exhibit A and in Section 2.1(d).  The Company and the Trustee shall approve the
forms of the Notes and any notation, endorsement or legend on them.  Each Note shall be dated the date of its
authentication.  The terms of the Note
set forth in Exhibit A are part of the terms of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to be bound by such terms.

 

The principal of and interest on the Notes shall be
payable at the office or agency of the Company maintained for such purpose in
the City of New York, or at such other office or agency of the Company as may
be maintained for such purpose pursuant to Section 2.3.  Payments in respect of a Definitive Note
(including principal, interest and Liquidated Damages, if any) shall be made in
U.S. dollars at the office of the Trustee. 
At the Company’s option, however, the Company may make such payments by
mailing a check to the registered address of each Holder thereof as such
address as shall appear on the Note Register or with respect to Notes
represented by a Global Note, by wire transfer of immediately available funds
to the accounts specified by the Depositary.  If a payment date is a date
other than a Business Day, payment may be made at that place on the next
succeeding day that is a Business Day and no interest shall accrue for the
intervening period.

 

12

 

(b)           Notes offered and
sold to QIBs in reliance on Rule 144A in the United States of America
shall be issued in the form of one or more permanent Global Notes, without
interest coupons, substantially in the form of Exhibit A.  Such
Global Notes shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Notes Custodian for the Depositary for the
accounts of participants in the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided.  The aggregate principal amount of a Global
Note may from time to time be increased or decreased by adjustments made on the
records of the Notes Custodian, as hereinafter provided.

 

(c)           The Notes shall be
issuable only in fully registered form, without coupons, and only in
denominations of $1,000 and any integral multiple thereof.

 

(d)           Every Note that
bears or is required under this Section 2.1(d) to bear the legend set
forth in this Section 2.1(d) (the “Transfer Restricted Notes”) shall
be subject to the restrictions on transfer set forth in this
Section 2.1(d) (including those set forth in the legend set forth
below), and the Holder of each such Transfer Restricted Note, by such Holder’s
acceptance thereof, agrees to be bound by all such restrictions on
transfer.  As used in Sections 2.1(d) and 2.1(e), the term “transfer”
includes any sale, pledge, transfer or other disposition whatsoever of any
Transfer Restricted Note.  The Registrar shall not register any transfer
of a Transfer Restricted Note not made in accordance with the restrictions on
transfer set forth in this Section 2.1.

 

Subject to the last paragraph of this
Section 2.1(d) and Section 2.14 with respect to Common Stock,
until the expiration of the holding period applicable to sales thereof under
Rule 144(k) under the Securities Act (or any successor provision), any
certificate evidencing any Note (and all securities issued in exchange therefor
or substitution thereof, including Common Stock, if any, issued upon conversion
thereof, which shall bear the legend set forth in Section 2.1(e), if
applicable), shall bear a legend in substantially the following form:

 

THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS.  NEITHER THIS NOTE, THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN
OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER
THE SECURITIES ACT.

 

BY ITS ACQUISITION HEREOF, THE HOLDER AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER THIS NOTE PRIOR TO THE DATE THAT IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH AAR
CORP. (THE “COMPANY”) OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
NOTE (OR ANY PREDECESSOR OF THIS NOTE) (THE “RESALE RESTRICTION TERMINATION
DATE”) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF,
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) FOR 

 

13

 

SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO
A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER AS DEFINED
IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, OR (D) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSE (D) PRIOR TO THE RESALE RESTRICTION
TERMINATION DATE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN
EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THE OTHER SIDE OF THIS NOTE IS COMPLETED AND DELIVERED
BY THE TRANSFEROR TO THE TRUSTEE.  THIS
LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE.

 

THE HOLDER OF THIS SECURITY IS ENTITLED TO THE
BENEFITS OF A REGISTRATION RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF,
AGREES TO BE BOUND BY AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION
RIGHTS AGREEMENT.

 

Any Note (or security issued in exchange or
substitution therefor) as to which such restrictions on transfer shall have
expired in accordance with their terms or that has been transferred pursuant to
a registration statement that has been declared effective under the Securities
Act may, upon surrender of such Note to the Registrar for exchange in
accordance with the provisions of this Section 2.1, be exchanged for a new
Note or Notes, of like tenor and aggregate principal amount, which shall not
bear the Restricted Note Legend required by this Section 2.1(d).

 

(e)           Every stock
certificate representing Common Stock issued upon conversion of a Transfer
Restricted Note that bears or is required under this Section 2.1(e) to
bear the legend set forth in this Section 2.1(e) shall be subject to
the restrictions on transfer set forth in this
Section 2.1(e) (including those set forth in the legend set forth
below), and the Holder of such Common Stock issued upon conversion of a
Transfer Restricted Note, by such Holder’s acceptance thereof, agrees to be
bound by all such restrictions on transfer and the further restrictions set
forth in Section 2.14.  The Company shall not register any transfer
of Common Stock issued upon conversion of such a Transfer Restricted Note not
made in accordance with the restrictions on transfer set forth in this
Section 2.1.

 

Until the expiration of the holding period applicable
to sales thereof under Rule 144(k) under the Securities Act (or any successor
provision), any stock certificate representing Common Stock issued upon
conversion of a Transfer Restricted Note shall bear a legend in substantially
the following form, unless such Common Stock has been sold pursuant to a
registration statement that has been declared effective under the Securities
Act (and which continues to be effective at the time of such transfer) or such
Common Stock has been issued 

 

14

 

upon conversion of Notes that have been transferred pursuant to a
registration statement that has been declared effective under the Securities
Act:

 

THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.

 

BY ITS ACQUISITION HEREOF, THE HOLDER AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER THE COMMON STOCK EVIDENCED HEREBY PRIOR TO THE DATE
THAT THIS LEGEND IS REMOVED (THE “RESALE RESTRICTION TERMINATION DATE”) ONLY
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER AS
DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, OR (D) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY’S AND THE TRANSFER AGENT’S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) PRIOR TO THE RESALE
RESTRICTION TERMINATION DATE TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN
EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THE OTHER SIDE OF THIS CERTIFICATE IS COMPLETED AND DELIVERED
BY THE TRANSFEROR TO THE TRANSFER AGENT. 
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
EARLIER OF THE TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY PURSUANT TO CLAUSE
B ABOVE OR UPON ANY TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY AFTER THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED
HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION).

 

THE HOLDER OF THIS SECURITY IS ENTITLED TO THE
BENEFITS OF A REGISTRATION RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF,
AGREES TO BE BOUND BY AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION
RIGHTS AGREEMENT.

 

Any stock certificate (or security issued in exchange
or substitution therefor) as to which such restrictions on transfer shall have
expired in accordance with their terms or that has been transferred pursuant to
a registration statement that has been declared effective under the

 

15

 

Securities Act may, upon surrender of such stock certificate to the
Registrar for exchange in accordance with the provisions of this
Section 2.1 and Section 2.14, be exchanged for a new stock
certificate, of like tenor and aggregate number of shares, which shall not bear
the Restricted Stock Legend required by this Section 2.1(e).

 

(f)            Each Global Note,
whether or not a Transfer Restricted Note, shall bear the following legend:

 

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

 

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

 

(g)           The following
book-entry provisions shall apply only to Global Notes deposited with the Notes
Custodian:

 

(i)            Each Global Note initially shall (x) be registered in the
name of the Depositary for such Global Note or the nominee of such Depositary,
(y) be delivered to the Notes Custodian and (z) bear legends as set forth in Section 2.1(d).

 

(ii)           Except as provided herein, members of, or participants in,
the Depositary (“Agent Members”) shall have no rights under this Indenture with
respect to any Global Note held on their behalf by the Depositary or by the
Notes Custodian or under such Global Note, and the Depositary may be treated by
the Company, the Trustee, the Notes Custodian and any agent of the Company or
the Trustee as the absolute owner of such 

 

16

Global Note for all purposes
whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of the Depositary governing the exercise of
the rights of a Beneficial Owner of an interest in any Global Note.

 

(iii)          The registered Holder of a Global Note may grant proxies
and otherwise authorize any Person, including Agent Members and Persons that
may hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.

 

(iv)          In connection with any transfer of a portion of the
beneficial interest in a Global Note pursuant to Section 2.1(h) to
Beneficial Owners who are required to hold Definitive Notes, the Trustee shall
reflect on its books and records the date and a decrease in the principal
amount of such Global Note in an amount equal to the principal amount of the
beneficial interest in the Global Note to be transferred, and the Company shall
execute, and the Trustee shall authenticate and deliver, one or more Definitive
Notes of like tenor and amount.

 

(v)           In connection with the transfer of an entire Global Note
to Beneficial Owners pursuant to Section 2.1(h), such Global Note shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each Beneficial
Owner identified by the Depositary in exchange for its beneficial interest in
such Global Note, an equal aggregate principal amount of Definitive Notes of
authorized denominations.

 

(vi)          Any Holder of a Global Note shall, by acceptance of such
Global Note, agree that transfers of beneficial interests in such Global Note
may be effected only through a book-entry system maintained by (a) the
Holder of such Global Note (or its agent) or (b) any Holder of a beneficial
interest in such Global Note, and that ownership of a beneficial interest in
such Global Note shall be required to be reflected in a book entry.

 

(h)           Except as provided
below, owners of beneficial interests in Global Notes will not be entitled to
receive Definitive Notes.  If required to do so pursuant to any applicable
law or regulation, Beneficial Owners may obtain Definitive Notes in exchange
for their beneficial interests in a Global Note upon written request in
accordance with the Depositary’s and the Registrar’s procedures.  In
addition, Definitive Notes shall be transferred to all Beneficial Owners in
exchange for their beneficial interests in a Global Note if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as
depositary for such Global Note or the Depositary ceases to be a clearing
agency registered under the Exchange Act, at a time when the Depositary is
required to be so registered in order to act as Depositary, and in each case a
successor depositary is not appointed by the Company within 90 days of such
notice or (ii) the Company, in its sole discretion, executes and delivers
to the Trustee and Registrar an Officers’ Certificate stating that such Global
Note shall be so exchangeable or (iii) an Event of Default has occurred
and is continuing and the Registrar has received a request from the Depositary.

 

17

 

In the event that the Certificated Notes are not
issued to each such beneficial owner promptly after the Registrar has received
a request form the Holder of a Global Note to issue such Certificated Notes,
the Company expressly acknowledges, with respect to the right of any Holder to
pursue a remedy pursuant to Section 10.4 or 10.6 hereof, the right of any
Beneficial Owner of Notes to pursue such remedy with respect to the portion of
the Global Note that represents such Beneficial Owner’s Notes as if such
Certificated Notes had been issued.

 

(i)            Any Definitive Note
delivered in exchange for an interest in a Global Note pursuant to
Section 2.1(g)(iv) or (v) shall, except as otherwise provided by
Section 2.6, bear the Restricted Note Legend applicable to the Definitive
Note set forth in Section 2.1(d).

 

(j)            In connection with
the exchange of a portion of a Definitive Note for a beneficial interest in a
Global Note, the Trustee shall cancel such Definitive Note, and the Company
shall execute, and the Trustee shall authenticate and deliver, to the
transferring Holder a new Definitive Note representing the principal amount not
so transferred.

 

SECTION 2.2. 
Execution and Authentication. 
An Officer shall sign the Notes for the Company by manual or facsimile
signature.  If an Officer whose signature is on a Note no longer holds
that office at the time the Trustee authenticates the Note, the Note shall be
valid nevertheless.

 

A Note shall not be valid until an authorized
signatory of the Trustee manually authenticates the Note.  The signature of the Trustee on a Note shall
be conclusive evidence that such Note has been duly and validly authenticated
and issued under this Indenture.

 

At any time and from time to time after the execution
and delivery of this Indenture, the Trustee shall, upon the written direction
or order of the Company, authenticate and make available for delivery Notes for
original issue in an aggregate principal amount of up to $150,000,000 upon a
written order of the Company signed by two Officers of the Company (the
“Company Order”).  Such Company Order
shall specify the amount of the Notes to be authenticated, the registered
holders thereof and delivery instructions for such Notes.

 

The Trustee may appoint an agent (the “Authenticating
Agent”) reasonably acceptable to the Company to authenticate the Notes.  Unless limited by the terms of such
appointment, any such Authenticating Agent may authenticate Notes whenever the
Trustee may do so.  Each reference in
this Indenture to authentication by the Trustee includes authentication by such
agent.

 

In case the Company pursuant to Article IV shall
be consolidated or merged with or into any other Person or shall convey,
transfer, lease or otherwise dispose of its properties and assets substantially
as an entirety to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company shall have
been merged, or the Person which shall have received a conveyance, transfer,
lease or other disposition as aforesaid, shall have executed an indenture
supplemental hereto with the Trustee pursuant to Article IV, any of the
Notes authenticated or delivered prior to such consolidation, merger,
conveyance, transfer, lease or other disposition may, from time to time, at the
request of the successor Person, be exchanged for other Notes executed in the
name of the successor Person 

 

18

 

with such changes in phraseology and form as may be appropriate, but
otherwise in substance of like tenor as the Notes surrendered for such exchange
and of like principal amount; and the Trustee, upon Company Order of the
successor Person, shall authenticate and deliver Notes as specified in such
order for the purpose of such exchange. 
If Notes shall at any time be authenticated and delivered in any new
name of a successor Person pursuant to this Section 2.2 in exchange or
substitution for or upon registration of transfer of any Notes, such successor
Person, at the option of the Holders but without expense to them, shall provide
for the exchange of all Notes at the time outstanding for Notes authenticated and
delivered in such new name.

 

SECTION 2.3. 
Registrar, Conversion Agent and Paying Agent.  The Trustee shall initially serve as the
Registrar, Conversion Agent and Paying Agent for the Notes.  The Registrar, the Conversion Agent and the
Paying Agent shall each maintain an office or agency in the Borough of
Manhattan, The City of New York.  The
Registrar shall keep a register of the Notes and of their transfer and exchange
(the “Note Register”).  The Company may
have one or more co-registrars and one or more additional conversions agents
and paying agents.  The term Paying Agent
includes any additional paying agents, the term Conversion Agent includes any
additional conversion agents and the term Registrar includes any co-registrar.  The Company may appoint and change any Paying
Agent, Conversion Agent or Registrar without prior notice to any Holder.

 

The Company shall enter into an appropriate agency
agreement with any Registrar, Conversion Agent or Paying Agent not a party to
this Indenture, which shall incorporate the terms of the TIA.  The agreement shall implement the provisions
of this Indenture that relate to such agent. 
The Company shall notify the Trustee in writing of the name and address
of each such agent.  If the Company fails to maintain a Registrar,
Conversion Agent or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to
Section 11.7.  The Company or any of
its domestically incorporated Subsidiaries may act as Paying Agent, Conversion Agent
or Registrar.

 

The Company may remove any Registrar, Conversion Agent
or Paying Agent upon written notice to such Registrar, Conversion Agent or
Paying Agent and to the Trustee; provided, however, that no such removal shall
become effective until (i) acceptance of any appointment by a successor as
evidenced by an appropriate agreement entered into by the Company and such
successor Registrar, Conversion Agent or Paying Agent, as the case may be, and
delivered to the Trustee or (ii) notification to the Trustee that the
Trustee shall serve as Registrar, Conversion Agent or Paying Agent until the
appointment of a successor in accordance with clause (i) above.  The Registrar, Conversion Agent or Paying
Agent may resign at any time upon written notice to the Company and the
Trustee.

 

SECTION 2.4. 
Paying Agent To Hold Money and Securities in Trust.  Except as otherwise provided herein, on or
prior to 10:00 a.m. (New York City time) on each due date of payment in
respect of any Note, the Company shall deposit with the Paying Agent a sum of
money (in immediately available funds) sufficient to make such payments when
due.  The Company shall require each
Paying Agent (other than the Trustee) to agree in writing that such Paying
Agent shall hold in trust for the benefit of Holders or the Trustee all money
held by such Paying Agent for the payment of principal of, interest on, and
other payments in respect of the Notes, and shall notify the Trustee in writing
of any default by the Company in making any such

 

19

 

payment.  If the Company or a
Subsidiary acts as Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund for the benefit of the
Holders of the Notes.  The Company at any
time may require a Paying Agent (other than the Trustee) to pay all money held
by it to the Trustee and to account for any funds disbursed by such Paying
Agent.  Upon complying with this
Section 2.4, the Paying Agent (if other than the Company or a Subsidiary)
shall have no further liability for the money delivered to the Trustee.  Upon any bankruptcy, reorganization or
similar proceeding with respect to the Company, the Trustee shall serve as
Paying Agent for the Notes.

 

SECTION 2.5. 
Holder Lists.  The Trustee
shall preserve in as current a form as is reasonably practicable the most
recent list available to it of the names and addresses of Holders and shall
otherwise comply with TIA § 312(a). 
If the Trustee is not the Registrar or to the extent otherwise required
under the TIA, the Company, on its own behalf, shall furnish to the Trustee, in
writing at least seven Business Days before each Interest Payment Date and at
such other times as the Trustee may reasonably request in writing within 15 days,
a list in such form and as of such date as the Trustee may reasonably require
of the names and addresses of Holders and the Company shall otherwise comply
with TIA § 312(a).

 

SECTION 2.6. 
Transfer and Exchange.

 

(a)           With respect to any
proposed transfer of a Note prior to the date which is two years after the
later of the date of its original issue and the last date on which the Company
or any Affiliate of the Company was the owner of such Notes (or any predecessor
thereto) (the “Resale Restriction Termination Date”), a transfer of a Note or a
beneficial interest therein to a QIB shall be made upon receipt by the Trustee
or its agent of a certificate substantially in the form of the Form of
Certificate to be Delivered Upon Exchange or Registration of Transfer of
Securities set forth on the reverse of the Note that the transferee is
purchasing the Note for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
“qualified institutional buyer” within the meaning of Rule 144A, and is
aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as it
has requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from registration
provided by Rule 144A.

 

(b)           Upon the transfer,
exchange or replacement of Notes not bearing a Restricted Note Legend, the
Registrar shall deliver Notes that do not bear a Restricted Note Legend. 
Upon the transfer, exchange or replacement of Notes bearing a Restricted Note
Legend, the Registrar shall deliver only Notes that bear such Restricted Note
Legend unless (i) a Note is being transferred pursuant to an effective
registration statement or (ii) there is delivered to the Registrar an
Opinion of Counsel to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.

 

(c)           The Registrar shall
retain copies of all letters, notices and other written communications received
pursuant to Section 2.1 or this Section 2.6 until the Notes have
matured and been paid in full.  The Company shall have the right to
inspect and make copies of 

 

20

 

all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Registrar.

 

(d)           The following
obligations with respect to transfers and exchanges of Notes shall apply:

 

(i)            To permit registrations of transfers and exchanges, the
Company shall, subject to the other terms and conditions of this
Article II, execute and the Trustee shall upon receipt of a Company Order,
authenticate Definitive Notes and Global Notes at the Registrar’s request.

 

(ii)           No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax, assessments or similar governmental
charge payable in connection therewith (other than any such transfer taxes,
assessments or similar governmental charges payable upon exchange or transfer
pursuant to Section 6.4, 7.1 or 9.5).

 

(iii)          The Registrar shall not be required to register the
transfer of or exchange of any Note (A) for a period beginning at the
opening of business 15 days before any selection of Notes for redemption or
repurchase and ending at the close of business on the day notice of such
redemption or repurchase is deemed to have been given to all Holders of Notes to
be so redeemed or repurchased or (B) selected for redemption or repurchase
in whole or in part, except for the transfer of the unredeemed portion of any
Note being redeemed in part.

 

(iv)          Prior to the due presentation for registration of transfer
of any Note, the Company, the Trustee, Paying Agent, the Conversion Agent or
the Registrar may deem and treat the Person in whose name a Note is registered
as the absolute owner of such Note for the purpose of receiving payment of
principal of and interest (including Liquidated Damages, if any) on such Note
and for all other purposes whatsoever, whether or not such Note is overdue, and
none of the Company, the Trustee, the Paying Agent, the Conversion Agent or the
Registrar shall be affected by notice to the contrary.

 

(v)           All Notes issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be entitled
to the same benefits under this Indenture as the Notes surrendered upon such
transfer or exchange.

 

SECTION 2.7. 
Mutilated, Destroyed, Lost or Stolen Notes.  If a mutilated Note is surrendered to the
Registrar or if the Holder of a Note claims that the Note has been lost,
destroyed or wrongfully taken, subject to compliance with the provisions of the
next sentence of this Section 2.7, the Company shall issue and the
Trustee, upon Company Order, shall authenticate a replacement Note if the
requirements of Section 8-405 of the Uniform Commercial Code are met as
confirmed by an Opinion of Counsel, such that the Holder (a) notifies the
Company and the Trustee within a reasonable time after such Holder has notice
of such loss, destruction or wrongful taking and the Registrar has not
registered a transfer prior to receiving such notification, (b) makes such
request to the Company prior to the Company having notice that the Note has
been acquired by a protected purchaser as defined in Section 8-303 of

 

21

 

the Uniform Commercial Code (a “protected purchaser”) and (c) satisfies
any other reasonable requirements of the Company and the Trustee.  Such
Holder shall furnish an indemnity bond sufficient in the judgment of the
Company and the Trustee to protect the Company, the Trustee, the Paying Agent,
the Conversion Agent and the Registrar from any loss which any of them may
suffer if a Note is replaced, then, in the absence of notice to the Company, or
the Trustee, Paying Agent, Conversion Agent or Registrar, that such Note has
been acquired by a protected purchaser, the Company shall execute and upon
Company Order the Trustee shall authenticate and deliver, in exchange for any
such mutilated Note or in lieu of any such destroyed, lost or stolen Note, a
new Note of like tenor and principal amount, bearing a number not contemporaneously
outstanding.

 

In case any such mutilated, destroyed, lost or stolen
Note has become or is about to become due and payable, the Company in its
discretion, but subject to any conversion rights, may, instead of issuing a new
Note, pay such Note upon satisfaction of the conditions set forth in the
preceding paragraph.

 

Upon the issuance of any new Note under this Section,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including attorneys’ fees and expenses and the fees and expenses of
the Trustee) in connection therewith.

 

Every new Note issued pursuant to this Section in
lieu of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Company and any other obligor
upon the Notes, whether or not the mutilated, destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be entitled to all
benefits of this Indenture equally and proportionately with any and all other
Notes duly issued hereunder.

 

The provisions of this Section are exclusive and
shall preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Notes.

 

SECTION 2.8. 
Outstanding Notes.  Notes
outstanding at any time (“Outstanding Notes”) are all Notes authenticated by
the Trustee except for:

 

(i)            Notes theretofore canceled by the Trustee or delivered to
the Trustee for cancellation:

 

(ii)           Notes for the payment or redemption of which money in the
necessary amount has been theretofore deposited with the Trustee or any Paying
Agent (other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the Holders
of such Notes, provided that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision therefor
reasonably satisfactory to the Trustee has been made;

 

(iii)          Notes which have been paid pursuant to Section 2.7 or
in exchange for or in lieu of which other Notes have been authenticated and
delivered pursuant to this Indenture, other than any such Notes in respect of
which there shall have been presented

 

22

 

to the Trustee proof
satisfactory to it that such Notes are held by a bona fide purchaser in whose
hands such Notes are valid obligations of the Company; and

 

(iv)          Notes converted into Common Stock pursuant to
Article IX;

 

provided, however that in determining whether the
Holders of the requisite principal amount of Outstanding Notes are present at a
meeting of Holders of Notes for quorum purposes or have given, made or taken
any request, demand, authorization, direction, notice, consent or waiver or
other action hereunder, Notes owned by the Company or any Affiliate of the
Company shall be disregarded and deemed not to be Outstanding Notes, except
that, in determining whether the Trustee shall be protected in relying upon any
such determination as to the presence of a quorum or upon any such request,
demand, authorization, direction, notice, consent or waiver or other action,
only Notes which a Responsible Officer of the Trustee has been notified in
writing to be so owned shall be so disregarded. 
Notes so owned which have been pledged in good faith may be regarded as
Outstanding Notes if the pledgee is not the Company or any Affiliate of the
Company, and the Trustee shall be protected in relying upon an Officer’s
Certificate to such effect.

 

SECTION 2.9. 
Temporary Notes.  In the
event that Definitive Notes are to be issued under the terms of this Indenture,
until such Definitive Notes are ready for delivery, the Company may prepare
and, upon receipt of a Company Order, the Trustee shall authenticate temporary
Notes.  Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes.  Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate Definitive Notes.  After the preparation of Definitive Notes,
the temporary Notes shall be exchangeable for Definitive Notes upon surrender
of the temporary Notes at any office or agency maintained by the Company for
that purpose and such exchange shall be without charge to the Holder.  Upon surrender for cancellation of any one or
more temporary Notes, the Company shall execute, and the Trustee shall
authenticate and make available for delivery in exchange therefor, one or more
Definitive Notes representing an equal principal amount of Notes.  Until
so exchanged, the Holder of temporary Notes shall in all respects be entitled
to the same benefits under this Indenture as a Holder of Definitive Notes.

 

SECTION 2.10. 
Cancellation.  The Company
at any time may deliver Notes to the Trustee for cancellation.  The
Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment.  The Trustee and no one else shall cancel and
return to the Company all Notes surrendered for registration of transfer,
exchange, payment, redemption, purchase, conversion or cancellation.  All Notes so delivered to the Trustee shall
be cancelled promptly by the Trustee. 
The Company may not issue new Notes to replace Notes it has paid or
delivered to the Trustee for cancellation.

 

At such time as all beneficial interests in a Global
Note have either been exchanged for Definitive Notes, transferred, paid,
redeemed, repurchased, converted or canceled, such Global Note shall be
returned by the Depositary or the Notes Custodian to the Trustee for
cancellation or retained and canceled by the Trustee.  At any time prior to such cancellation, if
any beneficial interest in a Global Note is exchanged for Definitive Notes,
transferred in exchange for an interest in another Global Note, paid, redeemed,
repurchased, converted or 

 

23

 

canceled, the principal amount of Notes represented by such Global Note
shall be reduced and an adjustment shall be made on the Global Note and on the
books and records of the Trustee (if it is then the Notes Custodian for such
Global Note) with respect to such Global Note, by the Trustee or the Notes
Custodian, to reflect such reduction.

 

SECTION 2.11. 
Payment of Interest; Defaulted Interest.  Interest on any Note which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be
paid to the Person in whose name such Note (or one or more predecessor Notes)
is registered at the close of business on the Record Date for such interest at
the office or agency of the Company maintained for such purpose pursuant to
Section 2.3.

 

Any interest on any Note which is payable, but is not
paid when the same becomes due and payable and such nonpayment continues for a
period of 30 days shall forthwith cease to be payable to the Holder on the
Record Date, and such defaulted interest and (to the extent lawful) interest on
such defaulted interest at the rate borne by the Notes (such defaulted interest
and interest thereon herein collectively called “Defaulted Interest”) shall be
paid by the Company, at its election in each case, as provided in clause
(a) or (b) below:

 

(a)           The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Notes (or their respective
predecessor Notes) are registered at the close of business on a Special Record
Date (as defined below) for the payment of such Defaulted Interest, which shall
be fixed in the following manner.  The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each Note
and the date (not less than 30 days after such notice) of the proposed payment
(the “Special Interest Payment Date”), and the Company shall make arrangements
reasonably satisfactory to the Trustee to deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest on or prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided.  Thereupon the Trustee shall fix a record date
(the “Special Record Date”) for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the Special
Interest Payment Date and not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. 
The Trustee shall promptly notify the Company of such Special Record
Date, and in the name and at the expense of the Company, shall cause notice of
the proposed payment of such Defaulted Interest and the Special Record Date and
Special Interest Payment Date therefor to be given in the manner provided for
in Section 14.2, not less than 10 days prior to such Special Record
Date.  Notice of the proposed payment of
such Defaulted Interest and the Special Record Date and Special Interest
Payment Date therefor having been so given, such Defaulted Interest shall be
paid on the Special Interest Payment Date to the Persons in whose names the
Notes (or their respective Predecessor Notes) are registered at the close of
business on such Special Record Date and shall no longer be payable pursuant to
the following clause (b).

 

(b)           The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice as
may be required by such 

 

24

 

exchange, if, after notice
given by the Company to the Trustee of the proposed payment pursuant to this
clause, such manner of payment shall be deemed practicable by the Trustee.

 

Subject to the foregoing provisions of this Section,
each Note delivered under this Indenture upon registration of transfer of, or
in exchange for, or in lieu of any other Note shall carry the rights to
interest accrued and unpaid which were carried by such other Note.

 

SECTION 2.12. 
Computation of Interest. 
Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.

 

SECTION 2.13. 
CUSIP Numbers.  The Company
in issuing the Notes and Common Stock upon conversion of the Notes may use
CUSIP numbers (if then generally in use).  The Trustee shall not be
responsible for the use of CUSIP numbers, and the Trustee makes no
representation as to their correctness as printed on any Note, certificate of
Common Stock or notice to Holders and that reliance may be placed only on the
other identification numbers printed on the Notes, and any redemption shall not
be affected by any defect in or omission of such CUSIP numbers.  The
Company shall promptly notify the Trustee in writing of any change in the CUSIP
numbers.

 

SECTION 2.14. 
Issuance, Transfer and Exchange of Common Stock Issuable Upon
Conversion of the Notes.

 

(a)           Shares of Common
Stock to be issued upon conversion of Notes prior to the effectiveness of a
Shelf Registration Statement shall be physically delivered in certificated form
to the Holders converting such Notes and the certificate representing such
shares of Common Stock shall bear the Restricted Stock Legend unless removed in
accordance with Section 2.1(e).

 

(b)           If (i) shares
of Common Stock to be issued upon conversion of Notes prior to the
effectiveness of a Shelf Registration Statement are to be registered in a name
other than that of the Holder of such Notes or (ii) shares of Common Stock
represented by a certificate bearing the Restricted Stock Legend are
transferred subsequently by such Holder, then, unless the Shelf Registration
Statement has become effective and such shares are being transferred pursuant
to the Shelf Registration Statement, the Holder must deliver to the transfer
agent for the Common Stock and to the Company a certificate in substantially
the form of Exhibit B as to compliance with the restrictions on transfer
applicable to such shares of Common Stock and neither the transfer agent nor
the registrar for the Common Stock shall be required to register any transfer
of such Common Stock not so accompanied by a properly completed certificate.

 

(c)           Except in connection
with a Shelf Registration Statement, if certificates representing shares of
Common Stock are issued upon the registration of transfer, exchange or
replacement of any other certificate representing shares of Common Stock
bearing the Restricted Stock Legend, or if a request is made to remove such
Restricted Stock Legend from certificates representing shares of Common Stock,
the certificates so issued shall bear the Restricted Stock Legend, or the
Restricted Stock Legend shall not be removed, as the case may be, unless there
is delivered to the Company such reasonably satisfactory evidence, which, in
the case of a transfer

 

25

 

made
pursuant to Rule 144 under the Securities Act, may include an Opinion of
Counsel, as may be reasonably required by the Company, that neither the legend
nor the restrictions on transfer set forth therein are required to ensure that
transfers thereof comply with the provisions of Rule 144A or Rule 144
under the Securities Act and that such shares of Common Stock are securities
that are not “restricted” within the meaning of Rule 144 under the
Securities Act.  Upon provision to the Company of such reasonably
satisfactory evidence, the Company shall cause the transfer agent for the
Common Stock to countersign and deliver certificates representing shares of
Common Stock that do not bear the Restricted Stock Legend.

 

SECTION 2.15. 
Calculations in Respect of the Notes.  The Company shall be responsible for making
all calculations called for under the Notes. 
These calculations include, but are not limited to, determinations of
the Trading Prices of the Notes and the Closing Price of the Common Stock, any
accrued interest payable on the Notes and the Conversion Rate of the Notes, and
the projected payment schedule.  The
Company shall make these calculations in good faith and, absent manifest error,
such calculations will be final and binding on Holders of the Note. The Company
shall provide to the Trustee a schedule of its calculations, and the
Trustee, subject to Sections 11.1 and 11.2, shall be entitled to rely upon the
accuracy of such calculations without independent verification.  The Trustee shall forward the Company’s
calculations to any Holder of the Notes upon the request of such Holder.

 

ARTICLE III 

 

COVENANTS

 

SECTION 3.1. 
Payment of Notes.  The
Company shall promptly pay the principal of and interest and Liquidated
Damages, if any, on the Notes on the dates and in the manner provided in the
Notes and in this Indenture.  Principal, interest and Liquidated Damages,
if any, shall be considered paid on the date due if on such date the Trustee or
the Paying Agent holds in accordance with this Indenture money sufficient to
pay all principal, interest and Liquidated Damages, if any, then due and the
Trustee or the Paying Agent, as the case may be, is not prohibited from paying
such money to the Holders on that date pursuant to the terms of this Indenture.

 

The Company shall pay interest on overdue principal at
the rate specified therefor in the Notes, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.

 

Notwithstanding anything to the contrary contained in
this Indenture, the Company may, to the extent it is required to do so by law,
deduct or withhold income or other taxes imposed by the United States of America
or any state or local government from principal or interest (including
Liquidated Damages, if any) payments hereunder.

 

SECTION 3.2. 
Maintenance of Office or Agency. 
The Company will maintain in the City of New York, as required by
Section 2.3, an office or agency where the Notes may be presented or
surrendered for payment, where, if applicable, the Notes may be surrendered for
registration of transfer or exchange or conversion and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may
be served.  The office of the Trustee, at

 

26

 

60 Livingston Avenue, St. Paul, Minnesota 55107, Attention: 
Corporate Trust Services, shall be such office or agency of the Company for
payment, unless the Company shall designate and maintain some other office or
agency for one or more of such purposes.  The Company will give prompt
written notice to the Trustee of any change in the location of any such office
or agency.  If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.

 

The Company may also from time to time designate one
or more other offices or agencies (in or outside of the City of New York) where
the Notes may be presented or surrendered for any or all such purposes and may
from time to time rescind any such designation;
provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the City of New York for
such purposes.  The Company will give prompt written notice to the Trustee
of any such designation or rescission and any change in the location of any
such other office or agency.

 

SECTION 3.3. 
Money and Securities for Note Payments To Be Held in Trust.  If the Company shall at any time act as its
own Paying Agent, it will, on or before each due date of any payment in respect
of the Notes, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum of money in same day funds (or New York Clearing House
funds if such deposit is made prior to the date that such deposit is required
to be made), sufficient to make such payments when so becoming due until such
sums shall be paid to such Persons or otherwise disposed of as herein provided
and will promptly notify the Trustee in writing of its action or failure to so
act.

 

Whenever the Company shall have one or more Paying
Agents for the Notes, it will, on or before each due date of any payment in
respect of the Notes, deposit with any Paying Agent a sum of money in same day
funds (or New York Clearing House funds if such deposit is made prior to the
date on which such deposit is required to be made, that shall be available to
the Trustee by 11:00 a.m. New York City time on such due date, sufficient
to pay the amount so becoming due, such sum to be held in trust for the benefit
of the Persons entitled to such payment, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee in writing of such action
or any failure to so act.

 

The Company will cause each Paying Agent (other than
the Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this
Section 3.3, that such Paying Agent will:

 

(a)           hold all money held by it for the making of any payments
in respect of the Notes in trust for the benefit of the Persons entitled
thereto until such money shall be paid to such Persons or otherwise disposed of
as herein provided;

 

(b)           give the Trustee prompt written notice of any Default by
the Company (or any other obligor upon the Notes) in the making of any payment
in respect of the Notes; and

 

27

 

(c)           at any time during the continuance of any such Default,
upon the written request of the Trustee, forthwith pay to the Trustee all money
so held in trust by such Paying Agent.

 

The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for any other
purpose, pay, or by Company Order direct any Paying Agent to pay, to the
Trustee all money held in trust by the Company or such Paying Agent, such money
to be held by the Trustee upon the same trusts as those upon which such money
were held by the Company or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money and/or shares of Common Stock.

 

Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of any amounts due
in respect of the Notes and remaining unclaimed for two years after such
payment has become due and payable shall be paid to the Company on Company
Order, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Note shall thereafter, as an unsecured general creditor,
look only to the Company for payment thereof, and all liability of the Trustee
or such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment to the Company, shall at the expense of the Company cause to be
published once, in a leading daily newspaper (if practicable, The Wall Street Journal (Eastern
Edition)) printed in the English language and of general circulation in New
York City, notice that such money and/or shares of Common Stock remains
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such publication nor shall it be later than two
years after such payment shall have become due and payable, any unclaimed
balance of such money then remaining will be repaid to the Company.

 

SECTION 3.4. 
Corporate Existence. 
Subject to Article IV, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate rights (charter and statutory) licenses and
franchises of the Company; provided, however, that the Company shall not be
required to preserve any such existence, right, license or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company, and that the loss
thereof is not, and will not be, disadvantageous in any material respect to the
Holders.

 

SECTION 3.5. 
Further Instruments and Acts. 
Upon request of the Trustee, the Company will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.

 

SECTION 3.6. 
Liquidated Damages Notices. 
In the event that the Company is required to pay liquidated damages to
Holders of Notes pursuant to the Registration Rights Agreement (“Liquidated
Damages”), the Company will provide a direction or order in the form of a
written notice (“Liquidated Damages Notice”) to the Trustee of its obligation
to pay Liquidated Damages no later than five Business Days prior to the
proposed payment date set for the amount of Liquidated Damages, and the
Liquidated Damages Notice shall set forth the amount of 

 

28

 

Liquidated Damages to be paid by the Company on such Payment Date and
direct the Trustee to make payment.

 

SECTION 3.7. 
SEC Reports.  The Company
shall file all reports and other information and documents which it is required
to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act, and within 15 days after it files them with the Commission, the
Company shall send copies of all such reports, information and other documents
to the Trustee.

 

SECTION 3.8. 
Compliance Certificates. 
The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year of the Company (beginning with the fiscal year ending
May 31, 2004), an Officers’ Certificate as to the signer’s knowledge of
the Company’s compliance with all conditions and covenants on their part
contained in this Indenture and stating whether or not the signer knows of any
Default or Event of Default.  If such signer knows of such a Default or
Event of Default, the Officers’ Certificate shall describe the Default or Event
of Default and the efforts to remedy the same. 
For the purposes of this Section 3.8, compliance shall be
determined without regard to any grace period or requirement of notice provided
pursuant to the terms of this Indenture.

 

SECTION 3.9. 
Rule 144A Information Requirement.  Within the period prior to the expiration of
the holding period applicable to sales of the Notes under Rule 144(k)
under the Securities Act (or any successor provision), the Company covenants
and agrees that it shall, during any period in which it is not subject to
Section 13 or 15(d) under the Exchange Act, upon the request of any
Holder or beneficial holder of the Notes or any Common Stock issued upon
conversion thereof make available to such Holder or beneficial holder of Notes
or any Common Stock issued upon conversion thereof in connection with any sale
thereof and any prospective purchaser of Notes or such Common Stock designated
by such Holder or beneficial holder, the information required pursuant to
Rule 144A(d)(4) under the Securities Act and they will take such
further action as any Holder or beneficial holder of such Notes or such Common
Stock may reasonably request, all to the extent required from time to time to
enable such Holder or beneficial holder to sell its Notes or Common Stock
without registration under the Securities Act within the limitation of the
exemption provided by Rule 144A, as such Rule may be amended from
time to time.  Upon the request of any
Holder or any beneficial holder of the Notes or such Common Stock, the Company
will deliver to such Holder a written statement as to whether such Holder and
prospective purchaser have complied with such requirements

 

SECTION 3.10. 
Stay, Extension and Usury Laws. 
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law or other law
which would prohibit or forgive the Company from paying all or any portion of
the principal of, interest or Liquidated Damages, if any, on the Notes as
contemplated herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this Indenture, and the
Company (to the extent it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law and covenant that it will not, by resort
to any such law, hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.

 

29

 

SECTION 3.11. 
Notice of Default.  In the
event that any Default that could mature into an Event of Default under
Section 10.1(c) hereof shall occur, the Company shall give written
notice of such Default to the Trustee within 30 days of such Default.

 

ARTICLE IV 

 

SUCCESSOR COMPANY

 

SECTION 4.1. 
Merger and Consolidation. 
The Company shall not (1) consolidate with or merge with or into,
or convey, sell, transfer, lease or otherwise dispose of all or substantially
all of its properties and assets to, any other Person in any one transaction or
series of related transactions, or (2) permit any Person to consolidate
with or merge into the Company, unless:

 

(i)            in the case of a merger or consolidation, either the
Company is the surviving Person, or if the Company is not the surviving Person,
the surviving Person formed by such consolidation or into which the Company is
merged or to which the properties and assets of the Company are transferred
(such surviving Person in any such case, the “Successor Company”) shall be a
corporation organized and existing under the laws of the United States of
America, any State of the United States or the District of Columbia and the
Successor Company (if not the Company) shall expressly assume, by supplemental
indenture, executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, the payment when due of the principal of and
interest (including Liquidated Damages, if any) on the Notes and the
performance of each of the Company’s other obligations under the Notes and this
Indenture;

 

(ii)           immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing; and

 

(iii)          the Company shall have delivered to the Trustee on or prior
to the proposed transaction an Officers’ Certificate and an Opinion of Counsel,
each stating that (a) such consolidation, merger or transfer and such
supplemental indenture (if any) comply with this Indenture, (b) the
Successor Company agrees to be bound by this Indenture and (c) that all
conditions precedent herein provided for relating to such transaction have been
complied with.

 

For purposes of this Article IV, the sale, lease,
conveyance, assignment, transfer, or other disposition of all or substantially
all of the properties and assets of one or more Subsidiaries of the Company,
which properties and assets, if held by the Company instead of such
Subsidiaries, would constitute all or substantially all of the properties and
assets of the Company on a consolidated basis, shall be deemed to be the
transfer of all or substantially all of the properties and assets of the
Company.

 

SECTION 4.2. 
Successor Corporation Substituted.  Upon any consolidation of the Company with,
or merger of the Company into, any other Person or any conveyance, transfer or
lease of all or substantially all the properties and assets of the Company in
accordance with Section 4.1, the Successor Company shall succeed to, and
be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if the

 

30

 

Successor Company had been named as the Company herein, and thereafter,
except in the case of a lease of all or substantially all of its assets, the
predecessor Person shall be relieved of all obligations and covenants under
this Indenture and the Notes.

 

ARTICLE V 

 

REDEMPTION OF NOTES

 

SECTION 5.1. 
Optional Redemption.  At
any time on or after February 6, 2013, the Notes may be redeemed for cash,
as a whole or from time to time in part, subject to the conditions specified in
the form of Note set forth in Exhibit A hereto, which is hereby
incorporated by reference and made a part of this Indenture, in an amount equal
to the Redemption Price.

 

SECTION 5.2. 
Applicability of Article. 
Redemption of Notes at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture or the Notes, shall be
made in accordance with such provision and this Article.

 

SECTION 5.3. 
Election to Redeem; Notice to Trustee.  The election of the Company to redeem any
Notes pursuant to Section 5.1 shall be evidenced by a Board
Resolution.  In case of any redemption at the election of the Company, the
Company shall, not later than the earlier of the date that is 35 days prior to
the Redemption Date fixed by the Company and the date on which notice is given
to the Holders (except as provided in Section 5.5 or unless a shorter
notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Notes to be redeemed, deliver to
the Trustee such documentation and records as shall enable the Trustee to
select the Notes to be redeemed pursuant to Section 5.4 and direct the
Trustee to redeem the Notes in accordance with the Board Resolution.  Any
such notice may be canceled at any time prior to notice of such redemption
being mailed to any Holder and shall thereby be void and of no effect.

 

SECTION 5.4. 
Selection by Trustee of Notes To Be Redeemed.  If less than all the Notes are to be redeemed
at any time pursuant to an optional redemption, the particular Notes to be
redeemed shall be selected not more than 60 days prior to the Redemption Date
by the Trustee, from the outstanding Notes not previously called for
redemption, in compliance with the requirements of the principal securities
exchange, if any, on which such Notes are listed, or, if such Notes are not so
listed, on a pro rata basis, by
lot or by such other method as the Trustee shall deem fair and appropriate (and
in such manner as complies with applicable legal requirements) and which may
provide for the selection for redemption of portions of the principal of the
Notes; provided, however, that Notes selected for partial
redemption shall be in denominations of $1,000 and integral multiples thereof.

 

The Trustee shall promptly notify the Company in
writing of the Notes selected for redemption and, in the case of any Notes
selected for partial redemption, the method it has chosen for the selection of
Notes and the principal amount thereof to be redeemed and upon the Company’s
written approval of such selection, the Trustee shall redeem the selected
Notes.

 

31

 

For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to redemption of Notes shall
relate, in the case of any Note redeemed or to be redeemed only in part, to the
portion of the principal amount of such Note which has been or is to be
redeemed.

 

SECTION 5.5. 
Notice of Redemption. 
Notice of redemption shall be given by first class mail not less than 30
nor more than 60 days prior to the Redemption Date, to each Holder of Notes to
be redeemed.  At the Company’s written request, the Trustee shall give
notice of redemption in the Company’s name and at the Company’s expense; provided,
however, that the Company shall deliver to the Trustee, at least 35
days prior to the Redemption Date (unless a shorter notice period shall be
satisfactory to the Trustee) a Company Order requesting that the Trustee give
such notice at the Company’s expense and setting forth the information to be
stated in such notice as provided in the following items:

 

(i)            the Redemption Date,

 

(ii)           the Redemption Price and the amount of accrued interest to
but excluding the Redemption Date payable as provided in Section 5.7, if
any,

 

(iii)          the then existing Conversion Rate,

 

(iv)          if less than all outstanding Notes are to be redeemed, the
aggregate principal amount of Notes to be redeemed and the aggregate principal
amount of Notes to be outstanding after such partial redemption,

 

(v)           in case any Note is to be redeemed in part only, the
notice that relates to such Note shall state that on and after the Redemption
Date, upon surrender of such Note, the Holder will receive, without charge, a
new Note or Notes of authorized denominations for the principal amount thereof
remaining unredeemed,

 

(vi)          that on the Redemption Date, 100% of the principal amount
of the Notes to be redeemed (and accrued interest, if any, to but excluding the
Redemption Date payable as provided in Section 5.7) will become due and
payable upon each such Note, or the portion thereof, to be redeemed, and,
unless the Company defaults in making the redemption payment, that interest
(and Liquidated Damages, if any) on Notes called for redemption (or the portion
thereof) will cease to accrue on and after said date,

 

(vii)         the place or places where such Notes are to be surrendered
for payment of the Redemption Price and accrued interest, if any,

 

(viii)        the name and address of the Paying Agent
and the Conversion Agent,

 

(ix)           that Notes called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price,

 

(x)            the CUSIP number of the Notes to be redeemed, provided
that no representation is made as to the accuracy or correctness of the CUSIP
number, if any, 

 

32

 

listed in such notice or
printed on the Notes, and any redemption shall not be affected by any defect in
such CUSIP numbers,

 

(xi)           the paragraph of the Notes pursuant to which the Notes are
to be redeemed,

 

(xii)          that the Notes called for redemption may be converted at
any time before the close of business one Business Day prior to the Redemption
Date,

 

(xiii)         whether the Company intends to satisfy
its obligation by delivering Common Stock, cash or a combination of cash and
Common Stock (and in such case, the dollar amount per Note to be satisfied in
cash) in the event that Holders elect to convert their Notes in connection with
the redemption, and

 

(xiv)        the Holders who wish to convert Notes must comply with the
procedures in Article IX and paragraph 8 of the Notes.

 

If the Company exercises its right to redeem the
Notes, in whole or in part, the Company shall disseminate a press release
containing information regarding the redemption, through a public medium that
is customary for such press releases or publish the information on its Web Site
or through such other public medium as the Company may use at that time.

 

SECTION 5.6. 
Deposit of Redemption Price. 
On or before 10:00 a.m. on any Redemption Date, the Company shall
deposit with the Trustee or with a Paying Agent (or, if the Company is acting
as its own Paying Agent, segregate and hold in trust as provided in
Section 2.4) an amount of money sufficient to pay the Redemption Price of
the Notes which are to be redeemed on that date, other than Notes or portions
of Notes called for redemption that are beneficially owned by the Company and
have been delivered by the Company to the Trustee for cancellation or Notes
that have been converted.

 

SECTION 5.7.  Notes Payable on Redemption Date.  Notice of redemption having been given as
aforesaid, the Notes or portions of Notes so to be redeemed shall, on the
Redemption Date, become due and payable at a price equal to the Redemption
Price, except for Notes which are converted in accordance with the terms of
this Indenture, and from and after such date (unless the Company shall default
in the payment of the Redemption Price) such Notes shall cease to bear interest
(and Liquidated Damages, if any).  Upon surrender of any such Note for
redemption in accordance with said notice, such Note shall be paid by the
Company at the Redemption Price on the Redemption Date; provided that if the Redemption Date is on
a date that is after the relevant Record Date and on or prior to the
corresponding Interest Payment Date, the Redemption Price shall not include
accrued and unpaid interest (and Liquidated Damages, if any) and the Company
shall instead pay such interest (and Liquidated Damages, if any) due on the
Interest Payment Date to the Holder of record on the corresponding Record Date.

 

If any Note called for redemption shall not be so paid
upon surrender thereof for redemption, the principal shall, until paid, bear
interest from the Redemption Date at the rate borne by the Notes.

 

33

 

SECTION 5.8. 
Notes Redeemed in Part. 
Any Note which is to be redeemed only in part (pursuant to the
provisions of this Article) shall be surrendered at the office or agency of the
Company maintained for such purpose pursuant to Section 2.3 (with due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder’s
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and make available for delivery to the Holder of
such Note at the expense of the Company, a new Note or Notes, of any authorized
denomination as requested by such Holder, in an aggregate principal amount
equal to and in exchange for the unredeemed portion of the principal amount of
the Note so surrendered, provided,
that each such new Note will be in a principal amount of $1,000 or integral
multiple thereof.

 

If a Holder converts a portion of its Note prior to
receipt of the redemption notice for a Note to be redeemed only in part, the
converted portion will be deemed to be from the portion selected for
redemption.  In the event of any redemption in part, the Company will not
be required to (i) issue, register the transfer of or exchange any Note
during a period beginning at the opening of business 15 days before any
selection of Notes for redemption and ending at the close of business on the
earliest date on which the relevant notice of redemption is deemed to have been
given to all Holders of Notes to be so redeemed; or (ii) register the
transfer of or exchange any Note so selected for redemption, in whole or in
part, except the unredeemed portion of any Note being redeemed in part.

 

SECTION 5.9. 
Arrangement on Call for Redemption.

 

(a)           In connection with
any redemption of Notes, the Company may arrange at or shortly before the time
of the redemption for the purchase and conversion of any Notes called for
redemption by an agreement with one or more investment banks or other
purchasers to purchase such Notes by paying to the Trustee in trust for the
Holders, on or prior to 11:00 a.m. (New York City time) on the Redemption
Date, an amount that, together with any amounts deposited with the Trustee by
the Company for the redemption of such Notes, is not less than the Redemption
Price of such Notes. Notwithstanding anything to the contrary contained in this
Article V, the obligation of the Company to pay the Redemption Prices of
such Notes shall be deemed to be satisfied and discharged to the extent such
amount is so paid by such purchasers;
provided, however, that nothing in this Section 5.9 shall
relieve the Company of its obligation to pay the Redemption Price (plus accrued
interest and Liquidated Damages, if any to, but excluding, the relevant
Redemption Date) on Notes called for redemption.

 

(b)           If such an agreement
is entered into, any Notes called for redemption that are not duly surrendered
for conversion by the Holders thereof may, at the option of the Company, be
deemed, to the fullest extent permitted by law, acquired by such purchasers
from such Holders as of the close of business on the Redemption Date, subject
to payment of the above amount as aforesaid.

 

(c)           At the written
direction of the Company, the Trustee shall hold and pay to the Holders whose
Notes are selected for redemption any such amount paid to it for purchase in
the same manner as it would for moneys deposited with it by the Company for the
redemption of Notes.  Without the Trustee’s prior written consent, no
arrangement between the Company and such purchasers for the purchase and
conversion of any Notes shall increase or otherwise affect 

 

34

 

any
of the powers, duties, responsibilities or obligations of the Trustee as set
forth in this Indenture, and the Company agrees to indemnify the Trustee from,
and hold it harmless against, any loss, liability or expense arising out of or
in connection with any such arrangement for the purchase of any Notes between
the Company and such purchasers, including the reasonable costs and
out-of-pocket expenses incurred by the Trustee in the defense of any claim or
liability arising out of or in connection with the exercise or performance of
any of its powers, duties, responsibilities or obligations under this
Section 5.9.

 

ARTICLE VI 

 

PURCHASE UPON A
DESIGNATED EVENT

 

SECTION 6.1. 
Purchase at the Option of the Holder upon a Designated Event.  If a Designated Event shall occur, each
Holder shall have the right, at such Holder’s option, to require the Company to
purchase any or all of such Holder’s Notes not previously called for redemption
for cash on the date that is no later than 45 days after the date of the
Company Notice of the occurrence of such Designated Event (subject to extension
to comply with applicable law, as provided in Section 8.4) (the “Designated
Event Purchase Date”).  The Notes shall
be repurchased in integral multiples of $1,000 of the principal amount.  The Company shall purchase such Notes at a
price (the “Designated Event Purchase Price”) equal to 100% of the principal
amount of the Notes to be purchased plus accrued and unpaid interest, if any,
and Liquidated Damages, if any, to, but not including, the Designated Event
Purchase Date.

 

SECTION 6.2. 
Notice of Designated Event. 
The Company, or at its request (which must be received by the Paying
Agent at least three Business Days (or such lesser period as agreed to by the
Paying Agent) prior to the date the Paying Agent is requested to give such
notice as described below), the Paying Agent in the name of and at the expense
of the Company, shall mail to all Holders and the Trustee a Company Notice of
the occurrence of a Designated Event and of the purchase right arising as a
result thereof, including the information required by Section 8.1, on or
before the 30th day after the occurrence of such Designated Event.  In addition, the Company will disseminate a
press release containing information about the Designated Event and the
repurchase right arising as a result of the Designated Event through a public
medium that is customary for such press releases or publish the information on
the Company’s Web Site or through such other public medium as the Company may
use at that time.

 

SECTION 6.3. 
Exercise of Option.  For a
Note to be so purchased at the option of the Holder, the Trustee must receive
such Note duly endorsed for transfer, together with a written notice of
purchase (a “Designated Event Purchase Notice”) and the form entitled “Option of
Holder to Elect Purchase” on the reverse thereof duly completed, on or before
the 30th day after the date of the Company Notice of the occurrence of such
Designated Event, subject to extension to comply with applicable law, as
provided in Section 8.4.  The
Designated Event Purchase Notice shall state:

 

(i)            if the Notes are certificated, the certificate numbers of
the Notes which the Holder shall deliver to be purchased, or, if the Notes are
not certificated, the Designated Event Purchase Notice must comply with
appropriate Depositary procedures;

 

35

 

(ii)           the portion of the principal amount of the Notes which the
Holder shall deliver to be purchased, which portion must be $1,000 in principal
amount or an integral multiple thereof; and

 

(iii)          that such Notes shall be purchased as of the Designated
Event Purchase Date pursuant to the terms and conditions specified in paragraph
8 of the Notes and in this Indenture.

 

SECTION 6.4. 
Procedures.  The Company
shall purchase from a Holder, pursuant to this Article VI, Notes if the
principal amount of such Notes is $1,000 or a multiple of $1,000 if so
requested by such Holder.

 

Any purchase by the Company contemplated pursuant to
the provisions of this Article VI shall be consummated by the delivery of
the Designated Event Purchase Price to be received by the Holder promptly
following the later of the Designated Event Purchase Date or the time of
book-entry transfer or delivery of the Notes.

 

The Paying Agent shall promptly notify the Company of
the receipt by it of any Designated Event Purchase Notice.

 

On or before 11:00 a.m., New York City time, on
the Designated Event Purchase Date, the Company shall deposit with the Paying
Agent (or if the Company or an Affiliate of the Company is acting as the Paying
Agent, shall segregate and hold in trust) cash, sufficient to pay the aggregate
Designated Event Purchase Price of the Notes to be purchased pursuant to this
Article VI.  Payment by the Paying Agent of the Designated Event
Purchase Price for such Notes shall be made promptly following the later of the
Designated Event Purchase Date and the time of book-entry transfer or delivery
of such Notes.  If the Paying Agent holds, in accordance with the terms of
this Indenture, cash sufficient to pay the Designated Event Purchase Price of
such

 

Notes on the Designated Event Purchase Date, then, on
and after such date, such Notes shall cease to be outstanding and interest
(including Liquidated Damages, if any) on such Notes shall cease to accrue,
whether or not book-entry transfer of such Notes is made or such Notes are
delivered to the Paying Agent, and all other rights of the Holder shall
terminate (other than the right to receive the Designated Event Purchase Price
upon delivery or transfer of the Notes). 
Nothing herein shall preclude the withholding of any tax required by law
or regulations.

 

The Company shall require each Paying Agent (other
than the Trustee) to agree in writing that the Paying Agent shall hold in trust
for the benefit of Holders or the Trustee all cash held by the Paying Agent for
the payment of the Designated Event Purchase Price and shall notify the Trustee
of any Default by the Company in making any such payment.  The Company at
any time may require a Paying Agent to deliver all cash held by it to the
Trustee and to account for any funds disbursed by the Paying Agent.  Upon
doing so, the Paying Agent shall have no further liability for the cash
delivered to the Trustee.

 

All questions as to the validity, eligibility
(including time of receipt) and acceptance of any Notes for repurchase shall be
determined by the Company, whose determination shall be final and binding.

 

36

 

ARTICLE VII 

 

OPTIONAL PURCHASE

 

SECTION 7.1. 
Purchase of Notes by the Company at the Option of the Holder.

 

(a)           On each of
February 1, 2013, February 1, 2016 and February 1, 2021 (each, a
“Repurchase Date”), Holders shall have the option to require the Company to
purchase any Notes at 100% of the principal amount of the Notes to be
repurchased plus accrued and unpaid interest, if any, and Liquidated Damages,
if any, to but not including such Repurchase Date, subject to the satisfaction
by or on behalf of the Holder of the requirements set forth below:

 

(1)           Purchases of Notes under this Section 7.1 shall be
made, at the option of the Holder thereof, upon delivery to the Paying Agent by
the Holder of a written notice of repurchase (a “Purchase Notice”) in the form
attached to the Note at any time from the opening of business on the date that
is 20 Business Days prior to a Repurchase Date until the close of business on
the last Business Day immediately prior to such Repurchase Date, stating:

 

(i)            if the Notes are certificated, the
certificate numbers of the Notes which the Holder will deliver to be purchased,
or, if the Notes are not certificated, the Purchase Notice must comply with
appropriate Depositary procedures;

 

(ii)           the portion of the principal amount
of the Notes which the Holder will deliver to be purchased, which portion must
be $1,000 in principal amount or an integral multiple thereof; and

 

(iii)          that such Notes shall be purchased as
of the Repurchase Date pursuant to the terms and conditions specified in
paragraph 7 of the Notes and in this Indenture; and

 

(2)           delivery or book-entry transfer of such Notes to the
Paying Agent prior to, on or after the Repurchase Date (together with all
necessary endorsements) at the offices of the Paying Agent, such delivery or
transfer being a condition to receipt by the Holder of the Purchase Price
therefor;
provided, however, that such Purchase Price shall be so paid
pursuant to this Section 7.1 only if the Notes so delivered or transferred
to the Paying Agent shall conform in all respects to the description thereof in
the related Purchase Notice.

 

The Purchase Price with respect to Notes purchased on
a Repurchase Date shall be paid solely in cash.

 

(b)           The Company shall
purchase from a Holder, pursuant to the terms of this Section 7.1, Notes
if the principal amount of such Notes is $1,000 or a multiple of $1,000 if so
requested by such Holder.

 

(c)           Any purchase by the
Company contemplated pursuant to the provisions of this Section 7.1 shall
be consummated by the delivery of the Purchase Price to be received by the 

 

37

 

Holder
promptly following the later of the Repurchase Date and the time of book-entry
transfer or delivery of the Notes.

 

(d)           Notwithstanding
anything herein to the contrary, any Holder delivering to the Paying Agent the
Purchase Notice contemplated by this Section 7.1 shall have the right at
any time prior to the close of business on the Business Day prior to the
Repurchase Date to withdraw such Purchase Notice (in whole or in part) by delivery
of a written notice of withdrawal to the Paying Agent in accordance with
Section 8.2.

 

(e)           The Paying Agent
shall promptly notify the Company of the receipt by it of any Purchase Notice
or written notice of withdrawal thereof.

 

(f)            On or before
11:00 a.m. on the Repurchase Date, the Company shall deposit with the
Paying Agent (or if the Company or an Affiliate of the Company is acting as the
Paying Agent, shall segregate and hold in trust) cash sufficient to pay the
aggregate Purchase Price of the Notes to be purchased pursuant to this
Section 7.1.  Payment by the Paying Agent of the Purchase Price for
such Notes shall be made promptly following the later of the Repurchase Date
and the time of book-entry transfer or delivery of such Notes.  If the
Paying Agent holds, in accordance with the terms of this Indenture, cash
sufficient to pay the Purchase Price of such Notes on the Repurchase Date,
then, on and after such date, such Notes shall cease to be outstanding and
interest and Liquidated Damages, if any, on such Notes shall cease to accrue,
whether or not book-entry transfer of such Notes is made or such Notes are
delivered to the Paying Agent, and all other rights of the Holder shall
terminate (other than the right to receive the Purchase Price upon delivery or
transfer of the Notes).

 

(g)           The Company shall
require each Paying Agent (other than the Trustee) to agree in writing that the
Paying Agent shall hold in trust for the benefit of Holders or the Trustee all
cash held by the Paying Agent for the payment of the Purchase Price and shall
notify the Trustee of any Default by the Company in making any such
payment.  The Company at any time may require a Paying Agent to deliver
all cash held by it to the Trustee and to account for any funds disbursed by the
Paying Agent.  Upon doing so, the Paying Agent shall have no further
liability for the cash and/or Common Stock, as the case may be, delivered to
the Trustee.

 

ARTICLE VIII 

 

CONDITIONS AND
PROCEDURES FOR PURCHASES AT OPTION OF HOLDERS

 

SECTION 8.1. 
Notice of Repurchase Date or Designated Event.  The Company shall send notices (each, a “Company
Notice”) to the Holders (and to Beneficial Owners as required by applicable
law) at their addresses shown in the Note Register not less than 20 Business
Days prior to each Repurchase Date, in accordance with Section 7.1 hereof,
or on or before the 30th day after the occurrence of a Designated Event, in
accordance with Section 6.2 hereof, as the case may be (each such date of
delivery, a “Company Notice Date”).  The
Company shall also deliver a copy of such Company Notice to the Trustee and any
Paying Agent.  Each Company Notice shall include a form of Purchase Notice
or Designated Event Purchase Notice to be completed by a Holder and shall
state:

 

38

 

(i)            the applicable Purchase Price or Designated Event
Purchase Price, excluding accrued and unpaid interest, Conversion Rate at the
time of such notice (and any adjustments to the Conversion Rate) and, to the
extent known at the time of such notice, the amount of accrued and unpaid
interest and Liquidated Damages, if any, that will be payable with respect to
the Notes on the applicable Repurchase Date or Designated Event Purchase Date;

 

(ii)           if the notice relates to a Designated Event, the events
causing the Designated Event and the date of the Designated Event;

 

(iii)          the Repurchase Date or Designated Event Purchase Date;

 

(iv)          the last date on which a Holder may exercise its purchase
right;

 

(v)           the name and address of the Paying Agent and the
Conversion Agent;

 

(vi)          that Notes must be surrendered to the Paying Agent to
collect payment of the Purchase Price or Designated Event Purchase Price;

 

(vii)         that Notes as to which a Purchase Notice or Designated Event
Purchase Notice has been given may be converted only if the applicable Purchase
Notice or Designated Event Purchase Notice has been withdrawn in accordance
with the terms of this Indenture;

 

(viii)        that the Purchase Price or Designated
Event Purchase Price for any Notes as to which a Purchase Notice or a
Designated Event Purchase Notice, as applicable, has been given and not
withdrawn shall be paid by the Paying Agent promptly following the later of the
Repurchase Date or Designated Event Purchase Date, as applicable, and the time
of book-entry transfer or delivery of such Notes;

 

(ix)           the procedures the Holder must follow under
Article VI or VII hereof, as applicable, and this Article VIII;

 

(x)            briefly, the conversion rights of the Notes;

 

(xi)           that, unless the Company defaults in making payment of
such Purchase Price or Designated Event Purchase Price on Notes covered by any
Purchase Notice or Designated Event Purchase Notice, as applicable, interest
and Liquidated Damages, if any, will cease to accrue on and after the Repurchase
Date or Designated Event Purchase Date, as applicable;

 

(xii)          the CUSIP or ISIN number of the Notes; and

 

(xiii)         the procedures for withdrawing a
Purchase Notice or Designated Event Purchase Notice.

 

In connection with providing such Company Notice, the
Company will issue a press release and publish a notice containing the
information in such Company Notice in a

 

39

 

newspaper of general circulation in the City of New York or publish
such information on the Company’s then existing website or through such other
public medium as the Company may use at the time.

 

If any of the Notes is in the form of a Global
Note, then the Company shall modify such Company Notice to the extent necessary
to accord with the procedures of the Depositary applicable to the repurchase of
Global Notes.

 

At the Company’s request, made at least one Business
Day prior to the date upon which such notice is to be mailed, and at the
Company’s expense, the Paying Agent shall give the Company Notice in the
Company’s name to the Holders; provided, however, that, in all cases, the text of
the Company Notice shall be prepared by the Company.

 

SECTION 8.2. 
Effect of Purchase Notice or Designated Event Purchase Notice.  Upon receipt by the Company of a properly
completed and executed Purchase Notice or Designated Event Purchase Notice
specified in Section 7.1 or Section 6.3, as applicable, the Holder of
the Notes in respect of which such Purchase Notice or Designated Event Purchase
Notice, as the case may be, was given shall (unless such Purchase Notice or
Designated Event Purchase Notice is withdrawn as specified in the following two
paragraphs) thereafter be entitled to receive solely the Purchase Price or
Designated Event Purchase Price with respect to such Notes.  Such Purchase
Price or Designated Event Purchase Price shall be paid by the Paying Agent to
such Holder promptly following the later of (i) the Repurchase Date or the
Designated Event Purchase Date, as the case may be, with respect to such Notes
(provided the conditions in
Section 7.1 or Section 6.2, as applicable, have been satisfied) and
(ii) the time of delivery or book-entry transfer of such Notes to the
Paying Agent by the Holder thereof in the manner required by Section 7.1
or Section 6.4, as applicable.  Notes in respect of which a Purchase
Notice or Designated Event Purchase Notice, as the case may be, has been given
by the Holder thereof may not be converted for shares of Common Stock on or
after the date of the delivery of such Purchase Notice or Designated Event
Purchase Notice, as the case may be, unless such Purchase Notice or Designated
Event Purchase Notice, as the case may be, has first been validly withdrawn as
specified in the following two paragraphs.

 

A Purchase Notice or Designated Event Purchase Notice,
as the case may be, may be withdrawn by means of a written notice of withdrawal
delivered to the office of the Paying Agent (with a copy to the Company) at any
time prior to 5:00 p.m. New York City time on the Business Day prior to
the Repurchase Date or the Designated Event Purchase Date, as the case may be,
to which it relates specifying:

 

(i)            if the Notes are certificated, the certificate number of
the Notes in respect of which such notice of withdrawal is being submitted, or,
if not certificated, the written notice of withdrawal must comply with
appropriate Depositary procedures;

 

(ii)           the principal amount of the Notes with respect to which
such notice of withdrawal is being submitted; and

 

40

 

(iii)          the principal amount, if any, of such Notes which remains
subject to the original Purchase Notice or Designated Event Purchase Notice, as
the case may be, and which has been or shall be delivered for purchase by the
Company.

 

The Paying Agent shall promptly return to the
respective Holders thereof any Notes with respect to which a Purchase Notice or
Designated Event Purchase Notice, as the case may be, has been withdrawn in
compliance with this Indenture.

 

SECTION 8.3. 
Notes Purchased in Part. 
Any Notes that are to be purchased only in part shall be surrendered at
the office of the Paying Agent (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder’s attorney duly authorized in writing) and the Company
shall execute and the Trustee or the Authenticating Agent shall authenticate
and deliver to the Holder of such Notes, without service charge, a new Note or
Notes, of any authorized denomination as requested by such Holder in aggregate
principal amount equal to, and in exchange for, the portion of the principal
amount of the Notes so surrendered which is not purchased.

 

SECTION 8.4. 
Covenant to Comply with Securities Laws upon Purchase of Notes.  In connection with any offer to purchase
Notes under Article VI or Article VII hereof, the Company shall, to
the extent required by applicable law, (a) comply with Rules 13e-4
and 14e-1 (and any successor provisions thereto) and any other
rules relating to tender offers under the Exchange Act, if applicable;
(b) file the related Schedule TO (or any successor schedule, form or
report) under the Exchange Act, if applicable; and (c) otherwise comply in
all material respects with all applicable federal and state securities laws so
as to permit the rights and obligations under Article VI or
Article VII to be exercised in the time and in the manner specified in
Article VI or Article VII.

 

SECTION 8.5. 
Repayment to the Company. 
The Trustee and the Paying Agent shall return to the Company any cash or
property that remains unclaimed as provided in paragraph 12 of the Notes and
Section 3.3 hereof, together with interest that the Trustee or Paying
Agent, as the case may be, has agreed to pay, if any, held by them for the
payment of a Purchase Price or Designated Event Purchase Price, as the case may
be; provided, however, that to the extent that the
aggregate amount of cash or property deposited by the Company pursuant to
Section 7.1(f) or 6.4, as applicable, exceeds the aggregate Purchase
Price or Designated Event Purchase Price, as the case may be, of the Notes or
portions thereof which the Company is obligated to purchase as of the Repurchase
Date or Designated Event Purchase Date, as the case may be, then promptly on
and after the Business Day immediately following the Repurchase Date or
Designated Event Purchase Date, as the case may be, the Trustee and the Paying
Agent shall return any such excess to the Company together with interest that
the Trustee or Paying Agent, as the case may be, has agreed to pay, if any.

 

SECTION 8.6. 
Exchange in Lieu of Repurchase. 
The Company shall have the option, exercisable at any time or from time
to time, by an instrument in writing signed by the Company and provided to the
Paying Agent, to designate a, or change the existing designation of the,
financial institution (a “Purchase Party”) to which Notes surrendered by a
Holder for repurchase in accordance with Article VI or Article VII,
as applicable will be initially offered by the Paying 

 

41

 

Agent on behalf of a Holder for exchange in lieu of repurchase.  In order to accept any Notes surrendered for
repurchase, the Purchase Party must agree to deliver, in exchange for such
Notes, the Purchase Price or the Designated Event Purchase Price, as the case
may be, for such Notes in the amount that would be payable if the Notes were
repurchased by the Company in accordance with Article VI or
Article VII, as applicable.  If the Purchase Party accepts any Notes
for repurchase, it will deliver to the Paying Agent, and the Paying Agent will
deliver to Holders that surrendered such Notes for repurchase, the Purchase
Price or the Designated Event Purchase Price, as applicable, payable with
respect to such Notes.  In the event that the Purchase Party agrees to
accept any Notes for repurchase but fails to deliver the Purchase Price or the
Designated Event Purchase Price to the Paying Agent by the Repurchase Date, the
Notes will be repurchased by the Company in accordance with Article VI or
Article VII, as applicable, and the Company will, as promptly as practical
thereafter, but not later than one Business Day following the Repurchase Date
or the Designated Event Purchase Date, as the case may be, cause the Purchase
Price or the Designated Event Purchase Price, as the case may be, for the Notes
to be paid (provided, however, that interest shall continue to
accrue on the Notes to be repurchased until the Purchase Price or the
Designated Event Purchase Price, as the case may be, has been paid).  Any
Notes purchased by the Purchase Party shall remain outstanding.  The
designation by the Company of a Purchase Party does not require such Purchase
Party to accept any Notes.  If the
Purchase Party declines to accept any Notes surrendered for repurchase, the
Company will repurchase the Notes on the terms provided in this
Indenture.  The Company will not pay any consideration to, or otherwise
enter into any arrangement with, the Purchase Party for or with respect to such
designation.

 

ARTICLE IX 

 

CONVERSION OF NOTES

 

SECTION 9.1. 
Right To Convert.

 

(a)           Subject to and upon
compliance with the provisions of this Article IX, a Holder may convert
its Notes into shares of Common Stock at the applicable Conversion Rate
(defined below) at any time during which the following conditions are met:

 

(i)            during any calendar quarter commencing at any time after
March 31, 2006, and only during such calendar quarter, if, as of the last
day of the immediately preceding calendar quarter, the Closing Price per share
of the Common Stock for at least twenty Trading Days in a period of the thirty
consecutive Trading Days ending on the last Trading Day of the immediately
preceding calendar quarter is more than 120% of the Conversion Price on the
last day of the immediately preceding calendar quarter;

 

(ii)           during any five consecutive Business Day period after any
five consecutive Trading Day period in which the Trading Price per $1,000
principal amount of Notes, as determined following a request by a Holder in
accordance with the procedures provided in Section 9.2(b), for each day of
that period was less than 98% of the product of the Closing Price of the Common
Stock and the applicable Conversion Rate per $1,000 principal amount of Notes.

 

42

 

(iii)          in the event that the Company calls the Notes for
redemption pursuant to Article V hereof, at any time prior to
5:00 p.m., New York City time, one Business Day prior to the Redemption
Date, provided that if the Company elects to redeem less than all the Notes,
only those Notes called for redemption may be redeemed pursuant to this
Section 9.1(a)(iii);

 

(iv)          upon the occurrence of a Make Whole Event at any time
beginning ten Trading Days before the anticipated effective date of a Make
Whole Event and until the date specified in the Make Whole Event Conversion
Notice, in which case the Company will notify the Holders and Trustee at least
10 Trading Days prior to the anticipated effective date of any Make Whole Event
that the Company knows or reasonably should know will occur (a “Make Whole
Event Conversion Notice”); provided,
however, that if the Company does
not know, and should not reasonably know, that a Make Whole Event will occur
until a date that is within ten Trading Days before the anticipated effective
date of such Make Whole Event, the Company will notify the Holders and the
Trustee promptly after the Company has knowledge of such Make Whole Event;

 

(v)           (A)  in the event the Company becomes a party to any
transaction or event (including but not limited to any consolidation, merger or
binding share exchange, other than a change resulting from a subdivision or
combination) pursuant to which all or substantially all Shares of the Common
Stock would be converted into cash, securities or other property, in which case
a Holder may surrender Notes for conversion at any time from and after the date
that is 15 days prior to the anticipated effective date for such transaction
until the earlier of 15 days after the actual effective date of such
transaction or event or the date on which the Company announces that such
transaction or event will not take place, and the Company will provide written
notice to the Trustee and the Holders as promptly as practicable following the
Company’s announcement of such transaction or event (but in any case not fewer
than 15 days prior to the effective date of such transaction, or if such
transaction also constitutes a Designated Event, no later than the date on
which the Company provides a Company Notice of the occurrence of a Designated
Event); provided that,
notwithstanding the foregoing, the Notes shall not become subject to conversion
by reason of a transaction which is effected solely to change the Company’s
jurisdiction of incorporation and which results in a reclassification,
conversion or exchange of outstanding shares of the Company’s Common Stock
solely into shares of common stock of the surviving entity; or

 

(B)           in the event the Company elects to
(x) distribute to all holders of Common Stock assets, debt securities or rights
to purchase securities, other than rights referred to in (y) below of the
Company, which distribution has a per share value as determined by the Board of
Directors exceeding 10% of the Closing Price of the Common Stock on the Trading
Day immediately preceding the declaration date for such distribution, or
(y) distribute to all holders of Common Stock rights, options or warrants
entitling them to purchase shares of Common Stock at less than the Current
Market Price, then both in the case of the foregoing clauses (i) and (ii),
the Company must notify the Holders at least 20 days immediately prior to the
ex-dividend date for such distribution, and once the Company has given such
notice, Holders may surrender their Notes for conversion at any time thereafter
until the earlier of the close of business on the Business Day immediately

 

43

 

prior to the ex-dividend date and the Company’s
announcement that such distribution will not take place, even if the Notes are
not otherwise convertible at such time; provided, however, that a Holder may not exercise this right to
convert if the Holder is otherwise entitled to participate in the distribution
without conversion (as used herein, the term “ex-dividend date” or “ex-date”
when used with respect to any issuance or distribution, shall mean the first
date upon which a sale of shares of Common Stock does not automatically
transfer the right to receive the relevant dividend or distribution from the
seller of such Common Stock to its buyer); or

 

(vi)          at any time during the period beginning ten Trading Days
prior to Stated Maturity and ending at 5:00 p.m., New York City time, on
the Business Day immediately preceding the Stated Maturity.

 

(b)           Upon the Company’s
determination that Holders are or will be entitled to convert Notes into shares
of Common Stock in accordance with the provisions of this Section 9.1, the
Company will issue a press release through a public medium that is customary
for such press releases or publish the information on the Company’s Web Site or
through such other public medium as the Company may use at that time.

 

(c)           The number of shares
of Common Stock issuable upon conversion of a Note per $1,000 principal amount
(the “Conversion Rate”) shall be that set forth in paragraph 8 in the Notes,
subject to adjustment as herein set forth.  The initial Conversion Rate is
33.9789 shares of Common Stock issuable upon conversion of a Note per $1,000
principal amount.  A Holder may convert a
portion of the principal amount of Notes if the portion is $1,000 or a multiple
of $1,000.

 

(d)           If a Make Whole
Event occurs prior to February 6, 2013 and a Holder elects to convert its
Notes in connection with such make Whole Event, then the Conversion Rate
otherwise in effect in respect of the Notes for which a conversion notice is
received by the Conversion Agent during the period beginning ten Trading Days
before the anticipated effective date of the Make Whole Event and, if
applicable, ending at the close of business on the Business Day immediately
preceding the Designated Event Purchase Date, or such other date as may be
specified in the Make Whole Conversion Notice, shall be increased by the
amount, if any, determined by reference to the table below, based on the
effective date of the Make Whole Event and the Stock Price of such Make Whole
Event; provided that if the Stock
Price or effective date of the Make Whole Event are not set forth on the table
below:  (i) if the actual Stock
Price on the effective date of the Make Whole Event is between two Stock Prices
in the table or the actual effective date of the Make Whole Event is between
two effective dates in the table, the amount of the Conversion Rate adjustment
will be determined by a straight-line interpolation between the adjustment
amounts set forth for the two Stock Prices and the two effective dates in the
table, as applicable, based on a 365-day year; (ii) if the actual Stock
Price on the effective date of the Make Whole Event exceeds $80.00 per share,
subject to adjustment as set forth herein, no adjustment to the applicable
Conversion Rate will be made; and (iii) if the actual Stock Price on the
effective date of the Make Whole Event is less than $24.22 per share, subject
to adjustment as set forth herein, no adjustment to the applicable Conversion
Rate will be made.

 

44

 

The following table sets forth the amount, if any, by
which the applicable Conversion Rate will increase for each hypothetical Stock
Price and effective date of the Make Whole Event set forth below:

 

Make
Whole Premium (Increase in Applicable Conversion Rate)

 

	
   

  	
   

  	
  Effective Date

  	
   

  
	
  Stock Price on Effective Date

  	
   

  	
  2/1/06*

  	
   

  	
  2/1/07

  	
   

  	
  2/1/08

  	
   

  	
  2/1/09

  	
   

  	
  2/1/10

  	
   

  	
  2/1/11

  	
   

  	
  2/1/12

  	
   

  	
  2/6/13

  	
   

  
	
  $24.22

  	
   

  	
  7.30

  	
   

  	
  7.30

  	
   

  	
  7.30

  	
   

  	
  7.30

  	
   

  	
  7.30

  	
   

  	
  7.30

  	
   

  	
  7.30

  	
   

  	
  0.00

  	
   

  
	
  $27.50

  	
   

  	
  5.79

  	
   

  	
  5.66

  	
   

  	
  5.50

  	
   

  	
  5.30

  	
   

  	
  5.03

  	
   

  	
  4.64

  	
   

  	
  3.98

  	
   

  	
  0.00

  	
   

  
	
  $30.00

  	
   

  	
  4.94

  	
   

  	
  4.78

  	
   

  	
  4.55

  	
   

  	
  4.29

  	
   

  	
  3.94

  	
   

  	
  3.44

  	
   

  	
  2.62

  	
   

  	
  0.00

  	
   

  
	
  $32.50

  	
   

  	
  4.36

  	
   

  	
  4.10

  	
   

  	
  3.93

  	
   

  	
  3.64

  	
   

  	
  3.15

  	
   

  	
  2.61

  	
   

  	
  1.76

  	
   

  	
  0.00

  	
   

  
	
  $35.00

  	
   

  	
  3.78

  	
   

  	
  3.57

  	
   

  	
  3.30

  	
   

  	
  2.98

  	
   

  	
  2.57

  	
   

  	
  2.02

  	
   

  	
  1.21

  	
   

  	
  0.00

  	
   

  
	
  $40.00

  	
   

  	
  3.03

  	
   

  	
  2.81

  	
   

  	
  2.53

  	
   

  	
  2.22

  	
   

  	
  1.82

  	
   

  	
  1.32

  	
   

  	
  0.66

  	
   

  	
  0.00

  	
   

  
	
  $50.00

  	
   

  	
  2.15

  	
   

  	
  1.95

  	
   

  	
  1.71

  	
   

  	
  1.44

  	
   

  	
  1.11

  	
   

  	
  0.75

  	
   

  	
  0.35

  	
   

  	
  0.00

  	
   

  
	
  $60.00

  	
   

  	
  1.67

  	
   

  	
  1.50

  	
   

  	
  1.29

  	
   

  	
  1.07

  	
   

  	
  0.82

  	
   

  	
  0.56

  	
   

  	
  0.28

  	
   

  	
  0.00

  	
   

  
	
  $70.00

  	
   

  	
  1.38

  	
   

  	
  1.24

  	
   

  	
  1.06

  	
   

  	
  0.88

  	
   

  	
  0.68

  	
   

  	
  0.46

  	
   

  	
  0.24

  	
   

  	
  0.00

  	
   

  
	
  $80.00

  	
   

  	
  1.19

  	
   

  	
  1.06

  	
   

  	
  0.91

  	
   

  	
  0.75

  	
   

  	
  0.58

  	
   

  	
  0.40

  	
   

  	
  0.21

  	
   

  	
  0.00

  	
   

  

 

*              Original issue date
of the Notes

 

The Stock Prices set forth in the first column of the
above table will be adjusted as of any date on which the Conversion Rate of the
Notes is adjusted, other than as a result of an adjustment of the Conversion
Rate by virtue of the provisions of this Section 9.1(d).  The adjusted Stock Prices will equal the
Stock Prices applicable immediately prior to such adjustment multiplied by a
fraction, the numerator of which is the Conversion Rate immediately prior to
the adjustment giving rise to the Stock Price adjustment and the denominator of
which is the Conversion Rate as so adjusted. 
The Conversion Rate adjustment amounts set forth in the above table will
be adjusted in the same manner as the Conversion Rate as set forth in
Section 9.8.

 

Notwithstanding any of the foregoing, in no event will
the Conversion Rate exceed 41.2881 shares of Common Stock issuable upon
conversion per $1,000 principal amount of Notes, other than on account of
proportional adjustment to the Conversion Rate in the manner set forth in
paragraphs (a) through (c) of Section 9.8.

 

SECTION 9.2. 
Determination of Satisfaction of Certain Conversion Triggers.

 

(a)           For each calendar
quarter, beginning with the calendar quarter commencing after March 31,
2006, the Conversion Agent shall, on behalf of the Company, determine, on the
first Business Day following the last Trading Day of such calendar quarter,
whether the Notes are convertible, pursuant to clause (i) of
Section 9.1(a), and, if so, will notify the Trustee and the Company in
writing.  Upon written request of the
Conversion Agent, the Company shall provide, or cause to be provided to, the
Conversion Agent the Closing Price per share of Common Stock for the thirty
consecutive Trading Days ending on the last Trading Day of the preceding
calendar quarter.

 

45

 

(b)                                 The
Conversion Agent shall have no obligation to determine the Trading Price of the
Notes and to determine whether the Notes are convertible pursuant to clause (ii) of
Section 9.1(a), unless the Company has requested such determination in
writing; and the Company shall have no obligation to make such request unless a
Holder of Notes provides the Company with reasonable evidence that the Trading
Price per $1,000 principal amount of Notes would be less than 98% of the
product of the Closing Price of the Common Stock and the applicable Conversion
Rate.  At such time, the Company shall
instruct the Conversion Agent to determine the Trading Price of the Notes
beginning on the next succeeding Trading Day and on each successive Trading Day
until the Trading Price per $1,000 principal amount of the Notes is greater
than or equal to 98% of the product of the Closing Price of the Common Stock
and the applicable Conversion Rate.

 

SECTION 9.3.  Conversion Procedures.  To convert Notes, a Holder must satisfy the
requirements in this Section 9.3 and in paragraph 8 of the Notes. 
The date on which the Holder satisfies all those requirements and delivers an
irrevocable conversion notice, together, if the Notes are in certificated form,
with the certificated Note, to the Conversion Agent, along with appropriate
endorsements and transfer documents, and pays any transfer or similar tax, is
the conversion date (the “Conversion Date”).  As soon as practicable, but
in no event later than the third Business Day following the determination of
the Applicable Stock Price, the Company shall deliver to the Holder, through
the Conversion Agent, a certificate for the number of full shares of Common
Stock issuable upon the conversion which shall be equal to (1) the
aggregate original principal amount of the Notes to be converted divided by
1,000, multiplied by (2) the Conversion Rate rounded down to the nearest
whole share, and cash in lieu of any fractional share determined pursuant to Section 9.4. 
Upon conversion, the Company may choose to deliver, in lieu of Common Stock,
cash or a combination of cash and Common Stock as set forth in Section 9.18. 
The Person in whose name the certificate is registered shall only be treated as
a stockholder of record on and after the Conversion Date; provided, however, that no surrender of Notes on any date when the
stock transfer books of the Company shall be closed shall be effective to
constitute the Person or Persons entitled to receive the shares of Common Stock
upon such conversion as the record holder or holders of such shares of Common
Stock on such date, but such surrender shall be effective to constitute the
Person or Persons entitled to receive such shares of Common Stock as the record
holder or holders thereof for all purposes at the close of business on the next
succeeding Business Day on which such stock transfer books are open; such
conversion shall be at the Conversion Rate in effect on the date that such
Notes were surrendered for conversion, as if the stock transfer books of the
Company had not been closed.  Upon conversion of Notes, such Person shall
no longer be a Holder of such Notes.

 

No
payment or adjustment shall be made for dividends on or other distributions
with respect to any Common Stock except as provided in Section 9.8 or as otherwise
provided in this Indenture.

 

Except
as provided in this paragraph, a Holder converting Notes shall not be entitled
to receive any accrued and unpaid interest on any such Notes being
converted.  By delivery to the Holder of the number of shares of Common
Stock or other consideration issuable or payable upon conversion in accordance
with this Section 9.3, any accrued and unpaid interest on such Notes will
be deemed to have been paid in full.  If any Conversion Date occurs
subsequent to the Regular Record Date preceding an Interest Payment Date but
prior to such

 

46

 

Interest Payment Date,
the Holder of such Notes at 5:00 p.m., New York City time, on any Record
Date shall receive the interest payable on such Note on such Interest Payment
Date notwithstanding the conversion thereof. 
Notes surrendered for conversion during the period from 5:00 p.m.,
New York City time, on any Record Date shall (except in the case of Notes which
have been called for redemption on a Redemption Date within such period) be
accompanied by payment from converting Holders, for the account of the Company,
in New York Clearing House funds, of an amount equal to the interest payable on
such Interest Payment Date on the Notes being surrendered for conversion; provided, however, if the Company elects to redeem Notes on
a date that is after the Regular Record Date but on or prior to the
corresponding Interest Payment Date, and such Holder elects to convert those
Notes, the Holder will not be required to pay the Company, at the time that
Holder surrenders those Notes for conversion, the amount of interest such
Holder will receive on the Interest Payment Date.  Upon conversion of
Notes, that portion of accrued but unpaid interest, if any, with respect to the
converted Notes shall not be canceled, extinguished or forfeited, but rather
shall be deemed to be paid in full to the Holder thereof through delivery of
the Common Stock (together with the cash payment, if any, in lieu of fractional
shares) or cash or a combination of cash and Common Stock in exchange for the
Notes being converted pursuant to the provisions hereof, and the cash or the
Fair Market Value of such shares of Common Stock (together with any such cash
payment in lieu of fractional shares) shall be treated as issued, to the extent
thereof, first in exchange for interest accrued and unpaid through the
Conversion Date and the balance, if any, of such cash or the Fair Market Value
of such Common Stock (and any such cash payment) shall be treated as issued in
exchange for the principal amount of the Notes being converted pursuant to the
provisions hereof.  Notwithstanding conversion of any Notes, the Holders
of the Notes and any Common Stock issuable upon conversion thereof will continue
to be entitled to receive Liquidated Damages, if any, in accordance with the
Registration Rights Agreement.  The Company will not adjust the Conversion
Rate to account for accrued interest on any Note.

 

If a
Holder converts more than one Note at the same time, the number of shares of
Common Stock issuable upon the conversion shall be based on the total principal
amount of the Notes converted.

 

Upon
surrender of a Note that is converted in part, the Company shall execute, and
the Trustee or the Authenticating Agent shall authenticate and deliver to the
Holder, a new Note in an authorized denomination equal in principal amount to
the unconverted portion of the Note surrendered.

 

If the
last day on which Notes may be converted is not a Business Day in a place where
a Conversion Agent is located, the Notes may be surrendered to that Conversion
Agent on the next succeeding Business Day.

 

Holders
that have already delivered a Purchase Notice or a Designated Event Purchase
Notice with respect to a Note, may not surrender such Note for conversion until
the Purchase Notice or Designated Event Purchase Notice, as the case may be,
has been withdrawn in accordance with the procedures set forth in Section 8.2.

 

SECTION 9.4. 
Cash Payments in Lieu of Fractional Shares.  The Company shall not issue a fractional
share of Common Stock upon conversion of Notes.  Instead the Company shall

 

47

 

deliver cash for the Fair Market Value of the fractional share. 
The Fair Market Value of a fractional share shall be determined to the nearest
1/10,000th of a share by multiplying the Applicable Stock Price of a full share
of Common Stock by the fractional amount and rounding the product to the
nearest whole cent.  Whether fractional shares are issuable upon a
conversion will be determined on the basis of the total number of Notes that
the Holder is then converting into Common Stock and the aggregate number of
shares of Common Stock issuable upon such conversion.

 

SECTION 9.5. 
Taxes on Conversion.  If a
Holder converts Notes, the Company shall pay any documentary, stamp or similar
issue or transfer tax due on the issue of shares of Common Stock upon the
conversion.  However, the Holder shall
pay any such tax which is due because the Holder requests the shares to be
issued in a name other than the Holder’s name.  The Conversion Agent may
refuse to deliver the certificates representing the Common Stock being issued
in a name other than the Holder’s name until the Conversion Agent receives a
sum sufficient to pay any tax which shall be due because the shares are to be
issued in a name other than the Holder’s name.  Nothing herein shall
preclude the withholding of any tax required by law or regulations.

 

SECTION 9.6. 
Exchange in Lieu of Conversion. 
The Company shall have the option, exercisable at any time or from time
to time, by an instrument in writing signed by the Company and provided to the
Conversion Agent, to designate a, or change the existing designation of the,
financial institution (an “Exchange Party”) to which Notes surrendered by a
Holder for conversion will be initially offered by the Conversion Agent on
behalf of a Holder for exchange in lieu of conversion.  In order to accept any Notes surrendered for
conversion, the Exchange Party must agree to deliver in exchange for such
Notes, a number of full shares of Common Stock issuable upon conversion thereof
based on the applicable Conversion Rate, plus cash for any fractional shares,
or cash or a combination of cash and Common Stock in lieu thereof in the form
that would otherwise have been deliverable by the Company under this Article IX.
If the Exchange Party accepts any Notes for conversion, it will deliver to the
Conversion Agent, and the Conversion Agent will deliver to converting Holders,
the shares of Common Stock or other consideration payable with respect to such
Notes. In the event that the Exchange Party agrees to accept any Notes for
conversion but fails to deliver the consideration for the converted Notes by
the second Business Day following the determination of the Applicable Stock
Price, the Notes will be converted by the Company in accordance with this Article IX
and the Company will, as promptly as practical thereafter, but not later than
three Business Days following the determination of the Applicable Stock Price,
deliver to the Holder shares of Common Stock (together with any cash payment in
lieu of fractional shares) or cash or a combination of cash and shares of
Common Stock in accordance with Section 9.3.  Any Notes exchanged by
the Exchange Party shall remain outstanding. 
The designation by the Company of an Exchange Party does not require
such Exchange Party to accept any Notes for conversion. If the Exchange Party
declines to accept any Notes surrendered for conversion, the Company will
convert the Notes on the terms provided in this Indenture.  The Company will not pay any consideration
to, or otherwise enter into any arrangement with, the Exchange Party for or
with respect to such designation.

 

SECTION 9.7.  Covenants of the Company.  The Company shall, prior to issuance of any
Notes hereunder, and from time to time as may be necessary, reserve out of its
authorized but

 

48

 

unissued Common Stock a sufficient number of shares of Common Stock to
permit the conversion of the Notes.

 

All
shares of Common Stock delivered upon conversion of the Notes shall be newly
issued shares or treasury shares, shall be duly and validly issued and fully
paid and nonassessable and shall be free from preemptive rights and free of any
lien or adverse claim placed thereon by the Company.

 

The
Company shall endeavor promptly to comply with all federal and state securities
laws regulating the order and delivery of shares of Common Stock upon the
conversion of Notes, if any, and shall cause to have listed or quoted all such
shares of Common Stock on each United States national securities exchange or
over-the-counter or other domestic market on which the Common Stock is then
listed or quoted.

 

SECTION 9.8. 
Adjustments to Conversion Rate.  The Conversion Rate shall be subject to
adjustment from time to time, without duplication, as follows:

 

(a)                                  In
case the Company shall (i) pay a dividend, or make a distribution on its
Common Stock, payable exclusively in shares of Common Stock or other Capital
Stock of the Company; (ii) subdivide or split its outstanding Common Stock
into a greater number of shares; (iii) combine or reclassify its
outstanding Common Stock into a smaller number of shares; or (iv) issue by
reclassification of the shares of Common Stock any shares of the Company’s
Capital Stock, the Conversion Rate in effect immediately prior to the record
date or effective date, as the case may be, for the adjustment pursuant to this
Section 9.8(a) as described below, shall be adjusted so that the
Holder of any Notes thereafter surrendered for conversion shall be entitled to
receive the number of shares of Common Stock and/or Capital Stock which such
Holder would have owned or have been entitled to receive after the happening of
any of the events described above had such Notes been converted immediately
prior to such record date or effective date, as the case may be.  An adjustment made pursuant to this Section 9.8(a) shall
become effective immediately after the applicable record date in the case of a
dividend or distribution and shall become effective immediately after the
applicable effective date in the case of subdivision, combination or
reclassification of the Common Stock.  If any dividend or distribution of
the type described in clause (i) above is not so paid or made, the
Conversion Rate shall again be immediately readjusted, effective as of the date
the Board of Directors determines not to pursue such action, to the Conversion
Rate that would then be in effect if such dividend or distribution had not been
declared.  If any subdivision or split, combination or reclassification or
issuance of the type described in clauses (ii) through (iv) of this Section 9.8(a) is
not so made, the Conversion Rate shall again be immediately readjusted,
effective as of the date the Board of Directors determines not to pursue such
action, to the Conversion Rate that would then be in effect if such subdivision
or split, combination or reclassification or issuance had not been declared.

 

(b)                                 In
case the Company at any time or from time to time after the issuance of the
Notes shall issue rights or warrants to all or substantially all holders of the
Common Stock entitling them to subscribe for or purchase Common Stock at a
price per share less (or having a conversion price per share less) than the
Current Market Price per share of Common Stock, the Conversion Rate shall be
adjusted so that the same shall equal the Conversion Rate determined

 

49

 

by multiplying the Conversion
Rate in effect immediately prior to the close of business on the record date
fixed for determination of stockholders entitled to receive such rights or
warrants (prior to any adjustment in accordance with this Section 9.8(b))
by a fraction of which (i) the numerator shall be the number of shares of
Common Stock outstanding on such record date plus the number of additional
shares of Common Stock offered for subscription or purchase, and (ii) the
denominator shall be the number of shares of Common Stock outstanding on such
record date plus the number of shares which the aggregate offering price of the
total number of shares so offered would purchase at the Current Market Price
per share of Common Stock on the earlier of such record date and the Trading
Day immediately preceding the ex date for such issuance of rights or
warrants.  Such adjustment shall be made
successively whenever any such rights or warrants are issued, and shall become
effective immediately after the opening of business on the day following the
record date for the determination of stockholders entitled to receive such
rights or warrants.  To the extent that
shares of Common Stock are not delivered after the expiration of such rights or
warrants, the Conversion Rate shall immediately be readjusted to the Conversion
Rate which would then be in effect had the adjustments made upon the issuance
of such rights or warrants been made on the basis of delivery of only the
number of shares of Common Stock actually delivered.  If such rights or warrants are not so issued,
the Conversion Rate shall again be immediately readjusted to be the Conversion
Rate which would then be in effect if such record date for the determination of
shareholders entitled to receive such rights or warrants had not been
fixed.  In determining whether any rights or warrants entitle the holders
to subscribe for or purchase shares of Common Stock at less than such Current
Market Price, and in determining the aggregate offering price of such shares of
Common Stock, there shall be taken into account any consideration received by
the Company for such rights or warrants, the value of such consideration, if
other than cash, to be determined by the Board of Directors.

 

(c)                                  In
case the Company shall, by dividend or in a merger, amalgamation or
consolidation or otherwise, distribute to all or substantially all holders of
Common Stock any evidences of Indebtedness, shares of Capital Stock of any
class or series, other securities, cash or assets (excluding (i) any
dividend, distribution or issuance covered by those referred to in Section 9.8(a) or
9.8(b) hereof, (ii) any dividend or distribution paid exclusively in
cash referred to in Section 9.8(d) hereof or (iii) any dividend
or distribution that constitutes a Spin-Off which is covered by Section 9.8(e) hereof),
or rights or warrants to subscribe for or purchase any of its securities
(including the distribution of rights to all holders of Common Stock pursuant
to a stockholders rights plan or the detachment of such rights under the terms
of such stockholder rights plan but excluding those rights or warrants referred
to in Section 9.8(b)) (any of the foregoing hereinafter in this Section 9.8(c) called
the “Distributed Assets”), then in each such case the Conversion Rate shall be
adjusted so that the same shall equal the Conversion Rate determined by
multiplying the Conversion Rate in effect immediately prior to the close of
business on the record date fixed for determination of stockholders entitled to
receive such distribution by a fraction of which (A) the numerator shall
be the Current Market Price per share of the Common Stock and (B) the
denominator shall be (1) the Current Market Price per share of the Common
Stock less (2) the Fair Market Value on such record date (as determined in
good faith by the Board of Directors, whose determination shall be conclusive
evidence of such Fair Market Value, and described in a certificate filed with
the Trustee and the Paying Agent) of the portion of the Distributed Assets so
distributed applicable to one share of Common Stock.  Such adjustment
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such distribution; provided, however, that, if (i) the Fair Market 

 

50

 

Value of the portion of the
Distributed Assets so distributed applicable to one share of Common Stock is
equal to or greater than the Current Market Price of the Common Stock or (ii) the
Current Market Price of the Common Stock is greater than the Fair Market Value
per share of such Distributed Assets by less than $1.00, then, in lieu of the
adjustment provided in this Section 9.8(c), adequate provision shall be
made so that each Holder shall have the right to receive upon conversion, in
addition to the shares of Common Stock, the kind and amount of assets, debt
securities, or rights or warrants comprising the Distributed Assets the Holder
would have received had such Holder converted such Notes immediately prior to
the record date for the determination of stockholders entitled to receive such
distribution.  In the event that such
distribution is not so paid or made, the Conversion Rate shall again be
adjusted to the Conversion Rate which would then be in effect if such
distribution had not been declared.

 

(d)                                 In
case the Company shall make any distributions, by dividend or otherwise,
consisting exclusively of cash to all or substantially all holders of
outstanding shares of Common Stock, then, and in each such case, the Conversion
Rate shall be adjusted so that the same shall equal the Conversion Rate
determined by multiplying the Conversion Rate in effect immediately prior to
the close of business on the record date fixed for the determination of holders
of Common Stock entitled to receive such distribution by a fraction of which (A) the
numerator shall be the Current Market Price per share of the Common Stock and (B) the
denominator shall be (1) the Current Market Price per share of Common
Stock minus (2) the amount per share of such distributions (appropriately
adjusted from time to time for any stock dividends on or subdivisions or
combination of Common Stock); provided, however,
that if (i) the per share amount of such distribution equals or exceeds
the Current Market Price of the Common Stock or (ii) the Current Market
Price of the Common Stock exceeds the per share amount of such distribution by
less than $1.00, in lieu of the foregoing adjustment, adequate provision shall
be made so that each Holder of a Note shall have the right to receive upon
conversion, such dividend or distribution such Holder would have received had
such Holder converted each Note immediately prior to the record date for the
determination of stockholders entitled to receive the distribution.

 

(e)                                  In
the event that the Company makes any distribution to all holders of Common
Stock that constitutes a Spin-Off, the Conversion Rate shall be adjusted so
that the same shall equal the Conversion Rate determined by multiplying the
Conversion Rate in effect immediately prior to the close of business on the
record date fixed for the determination of holders of Common Stock entitled to
receive such distribution by a fraction of which (i) the numerator shall
be the Spin-Off Market Price per share of the Common Stock on such record date
plus the Spin-Off Market Price per Equity Interest of the Subsidiary or other
business unit of the Company on such record date applicable to each share of
Common Stock and (ii) the denominator shall be the Spin-Off Market Price
per share of the Common Stock.  The adjustment to the Conversion Rate set
forth in this Section 9.8(e) will occur at the earlier of (1) the
10th Trading Day from, and including, the effective date of the Spin-Off and (2) the
date of the Initial Public Offering of the securities being distributed in the
Spin-Off, if that Initial Public Offering is effected simultaneously with the
Spin-Off; provided, however,
that, if (i) the Spin-Off Market Price per Equity Interest of the Subsidiary
so distributed applicable to one share of Common Stock is equal to or greater
than the Current Market Price of the Common Stock or (ii) the Current
Market Price of the Common Stock is greater than the Spin-Off Market price per
Equity Interest of the Subsidiary by less than $1.00, in lieu of the foregoing
adjustment, adequate

 

51

 

provision shall be made so that
each Holder of a Note shall have the right to receive upon conversion, such
distribution such Holder would have received had such Holder converted each
Note immediately prior to the record date for the determination of stockholders
entitled to receive the distribution.

 

(f)                                    In
case a tender or exchange offer made by the Company or any Subsidiary shall
expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to stockholders of consideration per share
of Common Stock having a Fair Market Value (as determined in good faith by the
Company’s Board of Directors, whose determination shall be conclusive and
described in a resolution of the Board of Directors) that as of the last time
(the “Expiration Time”) tenders or exchanges may be made pursuant to such
tender or exchange offer (as it may be amended) exceeds the Closing Price of a
share of Common Stock on the Trading Day next succeeding the Expiration Time,
the Conversion Rate shall be adjusted so that the same shall equal the rate
determined by multiplying the Conversion Rate by a fraction,

 

(i)                                     the
numerator of which shall be the sum of (x) the Fair Market Value (determined as
aforesaid) of the aggregate consideration payable to stockholders based on the
acceptance (up to any maximum specified in the terms of the tender or exchange
offer) of all shares validly tendered or exchanged and not withdrawn as of the
Expiration Time (the shares deemed so accepted up to any such maximum, being
referred to as the “Purchased Shares”) and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares) at the
Expiration Time and the Closing Price of a share of Common Stock on the Trading
Day next succeeding the Expiration Time, and

 

(ii)                                  the
denominator of which shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) at the Expiration Time multiplied
by the Closing Price of a share of Common Stock on the Trading Day next
succeeding the Expiration Time, such adjustment to become effective immediately
prior to the opening of business on the day following the Expiration Time.  If the Company is obligated to purchase
shares pursuant to any such tender or exchange offer, but the Company is
permanently prevented by applicable law from effecting any such purchases or
all such purchases are rescinded, the Conversion Rate shall again immediately
be readjusted to be the Conversion Rate that would then be in effect if such
tender or exchange offer had not been made.

 

(g)                                 Upon
conversion of the Notes, the Holders shall receive, if they receive shares of
Common Stock, in addition to the Common Stock issuable upon such conversion,
the rights issued under any shareholder rights plan the Company implements
(notwithstanding the occurrence of an event causing such rights to separate
from the Common Stock at or prior to the time of conversion) unless, prior to
conversion, the rights have expired, terminated or been redeemed or exchanged
in accordance with the rights plan.  If, and only if, the Holders of Notes
receive rights under such shareholder rights plans as described in the
preceding sentence upon conversion of their Notes, then no other adjustment
pursuant to this Section 9.8 shall be made in connection with such
shareholder rights plans.

 

52

 

(h)                                 For
purposes of this Section 9.8, the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the Company
but shall include shares issuable in respect of scrip certificates issued in
lieu of fractions of shares of Common Stock. 
The Company shall not pay any dividend or make any distribution on
shares of Common Stock held in the treasury of the Company.

 

(i)                                     Notwithstanding
any of the foregoing, in no event shall the Conversion Rate as adjusted
pursuant to this Section 9.8 exceed 41.2881 shares of Common Stock
issuable upon conversion per $1,000 principal amount of Notes, other than on
account of proportional adjustments to the Conversion Rate in the manner set
forth in paragraphs (a) through (c) of this Section 9.8.

 

SECTION 9.9. 
Calculation Methodology. 
Except as stated in this Article IX, the Conversion Rate will not
be adjusted for the issuance of Common Stock or any securities convertible into
or exchangeable for Common Stock or carrying the right to purchase any of the
foregoing.  If after an adjustment a Holder of a Note upon conversion of
such Note may receive shares of two or more classes of Capital Stock of the
Company, the Conversion Rate shall thereafter be subject to adjustment upon the
occurrence of an action with respect to any such class of Capital Stock as is
contemplated by this Article IX with respect to the Common Stock, on terms
comparable to those applicable to Common Stock in this Article IX. 
All calculations under Article VIII, Section 9.8 and this Section 9.9
shall be made to the nearest cent or to the nearest 1/10,000th of a share, as
the case may be.

 

SECTION 9.10.  When No Adjustment Required.  No adjustment to the Conversion Rate need be
made:

 

(i)                                     upon
the issuance of any shares of Common Stock pursuant to any present or future
plan providing for the reinvestment of dividends or interest payable on
securities of the Company and the investment of additional optional amounts in
shares of Common Stock under any such plan;

 

(ii)                                  upon
the issuance of any shares of Common Stock or options or rights to purchase
those shares pursuant to any present or future employee, director or consultant
benefit plan or program of or assumed by the Company or any of its
Subsidiaries;

 

(iii)                               upon
the issuance of any shares of Common Stock pursuant to any option, warrant,
right, or exercisable, exchangeable or convertible security not described in
paragraph (ii) above and outstanding as of the date of this Indenture;

 

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

 

(v)                                 for
accrued and unpaid interest (including Liquidated Damages owed, if any).

 

To the
extent the Notes become convertible into cash, assets, or property (other than
Capital Stock of the Company or securities to which Section 9.14 applies),
no adjustment shall be made thereafter as to the cash, assets or property.  Interest shall not accrue on such cash.

 

53

 

No
adjustment need be made for a transaction referred to in Sections 9.8(b), (c) or
(e) if Holders of the Notes may participate in the transaction on a basis
and with notice that the Board of Directors determines to be fair and
appropriate in light of the basis and notice on which holders of Common Stock
participate in the transaction.

 

SECTION 9.11. 
Notice of Adjustment.  Whenever
the Conversion Rate is adjusted, the Company shall promptly mail, or cause to
be mailed, by first class mail to Holders in accordance with Section 14.2
a notice of the adjustment.  The Company
shall file with the Trustee and the Conversion Agent a certificate signed by
the Chief Financial Officer of the Company setting forth the adjusted
Conversion Rate.  The certificate shall,
absent manifest error, be conclusive evidence that the adjustment is
correct.  Neither the Trustee nor any
Conversion Agent shall be under any duty or responsibility with respect to any
such certificate except to exhibit the same to any Holder desiring inspection
thereof.

 

SECTION 9.12. 
Voluntary Increase.  The
Company may make such increases in the Conversion Rate, in addition to those
required by Section 9.8, as the Board of Directors considers to be
advisable to avoid or diminish any income tax to holders of Common Stock or
rights to purchase Common Stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event treated as such for income
tax purposes.  To the extent permitted by
applicable law, the Company may from time to time increase the Conversion Rate
by any amount for any period of time if the period is at least 20 days, the
increase is irrevocable during the period and the Board of Directors shall have
made a determination that such increase would be in the best interests of the
Company, which determination shall be conclusive.  Whenever the Conversion Rate is so increased,
the Company shall mail to Holders and file with the Trustee and the Conversion
Agent a notice of such increase.  Neither
the Trustee nor any Conversion Agent shall be under any duty or responsibility
with respect to any such notice except to exhibit the same to any Holder
desiring inspection thereof.  The Company shall mail the notice at least
15 days before the date the increased Conversion Rate takes effect.  The
notice shall state the increased Conversion Rate and the period it shall be in
effect.

 

SECTION 9.13. 
Notice to Holders Prior to Certain Actions.  In case:

 

(a)                                  The
Company shall declare a dividend (or any other distribution) on its Common
Stock that would require an adjustment in the Conversion Rate pursuant to Section 9.8;

 

(b)                                 The
Company shall authorize the granting to all or substantially all the holders of
its Common Stock of rights or warrants to subscribe for or purchase any share
of any class or any other rights or warrants;

 

(c)                                  Of
any reclassification or reorganization of the Common Stock of the Company
(other than a subdivision or combination of its outstanding Common Stock, or a
change in par value, or from par value to no par value, or from no par value to
par value), or of any consolidation or merger to which the Company is a party
and for which approval of any shareholders of the Company is required, or of
the sale or transfer of all or substantially all of the assets of the Company;
or

 

54

 

(d)                                 Of
the voluntary or involuntary dissolution, liquidation or winding-up of the
Company, the Company shall cause to be filed with the Conversion Agent and
shall cause to be mailed to each Holder at its address appearing on the Note
Register, as promptly as possible but in any event at least 15 days (10 days in
the case of (a) or (b) above) prior to the applicable date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution or rights or warrants, or,
if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution, or rights or
warrants are to be determined or (y) the date on which such reclassification,
reorganization, consolidation, merger, sale, transfer, dissolution, liquidation
or winding-up is expected to become effective or occur, and the date as of
which it is expected that holders of Common Stock of record shall be entitled
to exchange their Common Stock for securities, cash or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
sale, transfer, dissolution, liquidation or winding-up.  Failure to give
such notice, or any defect therein, shall not affect the legality or validity
of such dividend, distribution, reclassification, reorganization,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up.

 

SECTION 9.14. 
Effect of Reclassification, Consolidation, Merger, Binding Share
Exchange or Sale.

 

(a)                                  If
any of following events occur (each, a “Business Combination”):

 

(i)                                     any
recapitalization, reclassification or change of the Common Stock, other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or a combination;

 

(ii)                                  a
consolidation, merger or binding share exchange involving the Company and
another Person; or

 

(iii)                               a
sale, conveyance or lease to another Person of all or substantially all of the
property and assets of the Company;

 

in each case as a result
of which holders of Common Stock are entitled to receive stock, other
securities, other property or assets (including cash or any combination
thereof) with respect to or in exchange for Common Stock, the Company or the
successor or purchasing corporation, as the case may be, shall execute with the
Trustee a supplemental indenture (which shall comply with the TIA as in force
at the date of execution of such supplemental indenture if such supplemental
indenture is then required to so comply) providing that the Holders of the
Notes then outstanding will be entitled thereafter to convert such Notes into
the kind and amount of shares of stock, other securities or other property or
assets (including cash or any combination thereof) which they would have owned
or been entitled to receive upon such Business Combination had such Notes been
converted into Common Stock immediately prior to such Business Combination,
except that, if applicable, the Conversion Rate will not be adjusted pursuant
to Section 9.1(d) unless a conversion notice is received by the
Conversion Agent within the applicable time period as specified in Section 9.1(d).

 

55

 

(b)                                 In
the event holders of Common Stock have the opportunity to elect the form of
consideration to be received in such Business Combination, the Company shall
make adequate provision whereby the Holders of the Notes shall have a
reasonable opportunity to determine the form of consideration into which all of
Notes, treated as a single class, shall be convertible from and after the
effective date of such Business Combination. 
Such determination shall be (i) based on the weighted average of
elections made by Holders of the Notes who participate in such determination, (ii) subject
to any limitations to which all of the holders of the Common Stock are subject,
such as pro-rata reductions applicable to any portion of the consideration
payable in such Business Combination and (iii) conducted in such a manner
as to be completed by the date which is the earliest of (x) the deadline for
elections to be made by stockholders of the Company, and (y) two Trading Days
prior to the anticipated effective date of the Business Combination.  The Company shall provide notice of the
opportunity to determine the form of such consideration, as well as notice of
the determination made by Holders (and the weighted average of elections), by
issuing a press release, or providing other appropriate notice, such as by
posting such notice with DTC, and providing a copy of such notice to the
Trustee.  In the event the effective date
of the Business Combination is delayed beyond the initially anticipated
effective date, Holders shall be given the opportunity to make subsequent
similar determinations in regard to such delayed effective date.  The Company may not become a party to any
such transaction unless its terms are materially consistent with this Section 9.14.

 

(c)                                  Any
supplemental indenture entered into pursuant to paragraph (a) of this Section 9.14
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article IX.  If, in the case of any such Business
Combination, the stock or other securities and assets receivable thereupon by a
holder of shares of Common Stock includes shares of stock or other securities
and assets of a corporation other than the successor or purchasing corporation,
as the case may be, in such Business Combination, then such supplemental
indenture shall also be executed by such other corporation and shall contain
such additional provisions to protect the interests of the Holders as the Board
of Directors shall reasonably consider necessary by reason of the foregoing,
including to the extent practicable the provisions providing for the repurchase
rights set forth in Article VI hereof. 
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each Holder, at its address appearing on the Note
Register, within 20 days after execution thereof.  Failure to deliver such
notice shall not affect the legality or validity of such supplemental
indenture.

 

(d)                                 This
Section 9.14 shall similarly apply to successive reclassifications,
changes, consolidations, mergers, combinations, binding share exchanges, sales
and conveyances.

 

(e)                                  If
this Section 9.14 applies to any event or occurrence, Section 9.8
shall not apply.

 

(f)                                    Notwithstanding
anything contained in this Section, and for the avoidance of doubt, this Section shall
not affect the right of a Holder to convert its Notes into shares of Common
Stock prior to the effective date of the Business Combination.

 

56

 

SECTION 9.15. 
Responsibility of Trustee.  Except as specifically required
in Section 9.2 herein, the Trustee and any Conversion Agent shall not at
any time be under any duty or responsibility to any Holder to either calculate
the Conversion Rate or determine whether any facts exist which may require any
adjustment of the Conversion Rate, or with respect to the nature or extent or
calculation of any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed,
in making the same and, subject to Sections 11.1 and 11.2 hereof and the
provisions of this Article IX, shall be protected in relying upon an
Officers’ Certificate with respect to the same.  The Trustee and any
Conversion Agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any shares of Common Stock, or of any securities or
property, which may at any time be issued or delivered upon the conversion of
any Notes and the Trustee and any Conversion Agent make no representations with
respect thereto.  Neither the Trustee nor
any Conversion Agent shall be responsible for any failure of the Company to
issue, transfer or deliver any shares of Common Stock or stock certificates or
other securities or property or cash upon the surrender of any Notes for the
purpose of conversion or to comply with any of the duties, responsibilities or
covenants of the Company contained herein.

 

SECTION 9.16. 
Successive Adjustments.  After an adjustment to the Conversion Rate
under Section 9.8, any subsequent event requiring an adjustment under Section 9.8
shall cause an adjustment to the Conversion Rate as so adjusted.

 

SECTION 9.17. 
General Considerations.  Whenever
successive adjustments to the Conversion Rate are called for pursuant to this Article IX,
such adjustments shall be made to the Current Market Price as may be necessary
or appropriate to effectuate the intent of this Article IX and to avoid
unjust or inequitable results as determined in good faith by the Board of
Directors of the Company.

 

SECTION 9.18. 
Payment of Cash in Lieu of Common Stock.  If a Holder elects to convert all or any
portion of a Note into shares of Common Stock as set forth in Section 9.1
and delivers an irrevocable conversion notice, together, if the Notes are in
certificated form, with the certificated Note as set forth in Section 9.3,
the Company may choose to satisfy all or any portion of its conversion
obligation with respect to a Note (the “Conversion Obligation”) in cash or a
combination of cash and Common Stock.  Upon such election, the Company
will notify such Holder through the Conversion Agent of the Company’s election
to pay cash in lieu of delivery of some or all of the shares of Common Stock
and the dollar amount per Note to be satisfied in cash (which must be expressed
either as 100% of the Conversion Obligation or as a fixed dollar amount) at any
time on or before the date that is two Business Days following the Conversion
Date unless the Company has previously informed Holders of its election in
connection with a redemption of the Notes in accordance with Section 5.1
of this Indenture.  Settlement (in cash and/or Common Stock) will occur on
the third Business Day following the final day of the five consecutive Trading
Day period beginning on the third Trading Day after the Conversion Date. 
Settlement amounts will be computed as follows:

 

(a)                                  if
the Company elects to satisfy the entire Conversion Obligation in cash, the
Company will deliver to such Holder cash in an amount equal to the product
of:  (1) a number equal to (x) the aggregate original principal amount
of Notes to be converted

 

57

 

divided by
1,000, multiplied by (y) the Conversion Rate, and (2) the Applicable Stock
Price; and

 

(b)                                 if
the Company elects to satisfy a fixed portion (other than 100%) of the
Conversion Obligation in cash, the Company will deliver to such Holder (1) cash
in an amount equal to (x) the aggregate principal amount of Notes to be
converted divided by 1,000, multiplied by (y) such cash amount per $1,000
aggregate original principal amount Notes to be converted (“Cash Amount Per
Note”) and (2) a number of shares of Common Stock equal to (x) the
aggregate original principal amount of Notes to be converted by such Holder
divided by 1,000, multiplied by (y) a fraction, the numerator of which is (A) the
Applicable Stock Price multiplied by the Conversion Rate, less (B) the
Cash Amount Per Note, and the denominator of which is the Applicable Stock
Price; provided, however,
that the Company will pay cash in lieu of fractional shares of Common Stock in
accordance with Section 9.4.

 

ARTICLE X

DEFAULTS AND REMEDIES

 

SECTION 10.1. 
Events of Default.  “Event
of Default,” wherever used herein with respect to the Notes, means any one or
more of the following events:

 

(a)                                  default
in the payment of any installment of interest or Liquidated Damages, if any,
upon any of the Notes as and when the same shall become due and payable, and
continuance of such Default for a period of 30 days; or

 

(b)                                 default
in the payment of the principal of any of the Notes as and when the same shall
become due and payable either at maturity, upon redemption, required
repurchase, by declaration or otherwise (including the failure to purchase
Notes in accordance with Articles VI, VII and VIII); or

 

(c)                                  failure
on the part of the Company to perform any other of the covenants or agreements
on the part of the Company in the Notes or in this Indenture for a period of 60
days after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Company by the Trustee, or to the
Company and the Trustee by the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding; or

 

(d)                                 default
by the Company or any of its Significant Subsidiaries in the payment of
principal or premium at final maturity under any instrument or instruments
evidencing Indebtedness (other than the Notes), which Default is in an
aggregate amount exceeding $10.0 million or its equivalent in any other
currency or currencies and continues in effect for more than 30 days after the
expiration of any grace period or extension of time for payment applicable
thereto; or

 

(e)                                  default
by the Company or any of its Significant Subsidiaries under any instrument or
instruments evidencing Indebtedness (other than the Notes) having an

 

58

 

outstanding principal amount of $10.0 million (or its equivalent in any
other currency or currencies) or more, which results in acceleration of the
maturity of such Indebtedness, unless such acceleration has been rescinded
within 10 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Company by the
Trustee, or to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Notes then outstanding; or

 

(f)                                    default
on the part of the Company in its obligation to convert the Notes upon exercise
of a Holder’s conversion right in accordance with the terms of the Notes and Article IX
hereof and such conversion Default is not cured or such conversion is not
rescinded within 5 days after written notice of Default is given by registered
mail to the Company by the Trustee or to the Company and the Trustee by the
Holder of such Note; or

 

(g)                                 default
on the part of the Company in its obligation give notice to Holders of their
right to require the Company to repurchase Notes following the occurrence of a
Designated Event within the time required to give such notice; or

 

(h)                                 a
court of competent jurisdiction shall enter an order for relief with respect to
the Company or a Significant Subsidiary under the Bankruptcy Code or a court of
competent jurisdiction shall enter a judgment, order or decree adjudging the
Company or a Significant Subsidiary a bankrupt or insolvent, or enter an order
for relief for reorganization, arrangement, adjustment or composition of or in
respect of the Company under the Bankruptcy Code or applicable state insolvency
law and the continuance of any such judgment, order or decree is unstayed and
in effect for a period of 60 consecutive days; or

 

(i)                                     the
Company or a Significant Subsidiary shall institute proceedings for entry of an
order for relief with respect to the Company or a Significant Subsidiary under
the Bankruptcy Code or for an adjudication of insolvency, or shall consent to
the institution of bankruptcy or insolvency proceedings against it, or shall
file a petition seeking, or seek or consent to reorganization, arrangement,
composition or relief under the Bankruptcy Code or any applicable state law, or
shall consent to filing of such petition or to the appointment of a receiver,
custodian, liquidator, assignee, trustee, sequestrator or similar official
(other than a custodian pursuant to 8 Delaware Code § 226 or any similar
statute under other state laws) of the Company or of substantially all of its
property, or the Company or a Significant Subsidiary shall make a general
assignment for the benefit of creditors as recognized under the Bankruptcy
Code.

 

If an
Event of Default with respect to the Notes then outstanding occurs and is
continuing (other than an Event of Default specified in Section 10.1(h) or
Section 10.1(i)), then and in each and every such case, unless the
principal of all of the Notes shall have already become due and payable, either
the Trustee or the Holders of not less than 25% in aggregate principal amount
of the Notes then outstanding, by notice in writing to the Company (and to the
Trustee if given by Holders), may declare the principal of all the Notes and
the interest, if any, accrued thereon and Liquidated Damages, if any, thereon
to be due and payable immediately, and upon any such declaration the same shall
become and shall be immediately due and payable,

 

59

 

anything in this
Indenture or in the Notes contained to the contrary notwithstanding.  This
provision, however, is subject to the condition that if at any time after the
principal (or such specified amount) of the Notes shall have been so declared
due and payable and before any judgment or decree for the payment of the moneys
due shall have been obtained or entered as hereinafter provided, the Company
shall pay or shall deposit with the Trustee a sum sufficient to pay all matured
installments of interest, if any, and Liquidated Damages, if any, upon all of
the Notes and the principal of any and all Notes, which shall have become due
otherwise than by acceleration (with interest on overdue installments of
interest, if any, to the extent that payment of such interest is enforceable
under applicable law and on such principal at the rate borne by the Notes to
the date of such payment or deposit) and shall pay the reasonable compensation,
disbursements, expenses and advances of the Trustee, and any and all Defaults
under this Indenture, other than the nonpayment of principal of and accrued
interest, if any, and Liquidated Damages, if any, on the Notes, which shall
have become due solely by reason of the acceleration, shall have been cured or
shall have been waived in accordance with this Indenture, then and in every
such case the declaration of acceleration shall be automatically annulled and
rescinded; but no such rescission and annulment shall extend to or shall affect
any subsequent Default, or shall impair any right consequent thereon.  If any Event of Default with respect to the
Company specified in Section 10.1(h) or 10.1(i) occurs, all
unpaid principal and accrued interest and Liquidated Damages, if any, on all
Notes then outstanding shall ipso facto
become and be immediately due and payable without any declaration or other act
by the Trustee or any Holder.

 

If the
Trustee shall have proceeded to enforce any right under this Indenture and such
proceedings shall have been discontinued or abandoned because of such
rescission or annulment or for any other reason or shall have been determined
adversely to the Trustee, then and in every such case the Company, the Trustee
and the Holders shall be restored respectively to their several positions and
rights hereunder, and all rights, remedies and powers of the Company, the
Trustee and the Holders shall continue as though no such proceeding had been
taken.

 

In
determining whether the Holders of the requisite aggregate principal amount of
the Notes outstanding have given any request, demand, authorization or consent
under this Indenture, the principal amount of Notes that will be deemed to be
outstanding will be the amount of the principal of the Notes that would be due
and payable as of the date of the determination upon a declaration of
acceleration of the maturity of the Notes.

 

SECTION 10.2. 
Payment of Notes on Default; Suit Therefor.  The Company covenants that (a) if a
Default shall be made in the payment of any installment of interest upon the
Notes then outstanding as and when the same shall become due and payable, and
such Default shall have continued for a period of 30 days, or (b) if a
Default shall be made in the payment of the principal of any of the Notes as
and when the same shall have become due and payable, whether at maturity of the
Notes or upon redemption or by declaration or otherwise, then, upon demand of
the Trustee, the Company will pay to the Trustee, for the benefit of the
Holders of the Notes, the whole amount that then shall have become due and
payable on all such Notes for principal or interest, if any, or both, as the
case may be, with interest upon the overdue principal and (to the extent that
payment of such interest is enforceable under applicable law) upon the overdue
installments of interest, if any, at the rate borne by the Notes; and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the

 

60

 

reasonable costs and expenses of the Trustee, its agents, attorneys and
counsel and any expenses or liabilities incurred by the Trustee hereunder other
than through its negligence or bad faith.

 

If the
Company shall fail forthwith to pay such amounts upon such demand, the Trustee,
in its own name and as trustee of an express trust, shall be entitled and
empowered to institute any actions or proceedings at law or in equity for the
collection of the sums so due and unpaid, and may prosecute any such action or
proceeding to judgment or final decree, and may enforce any such judgment or
final decree against the Company and collect in the manner provided by law out
of the property of the Company, wherever situated, the moneys adjudged or
decreed to be payable.

 

If
there shall be pending proceedings for the bankruptcy or for the reorganization
of the Company under any bankruptcy, insolvency or other similar law now or
hereafter in effect, or if a receiver or trustee or similar official shall have
been appointed for the property of the Company, or in the case of any other
similar judicial proceedings relative to the Company, or to the creditors or
property of the Company, the Trustee, irrespective of whether the principal of
the Notes shall then be due and payable as therein expressed or by declaration
or otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section 10.2, shall be entitled and
empowered by intervention in such proceedings or otherwise to file and prove a
claim or claims for the whole amount of principal and interest, if any, owing
and unpaid in respect of the Notes, and, in case of any judicial proceedings,
to file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and of the Holders
allowed in such judicial proceedings relative to the Company, its creditors, or
its property, and to collect and receive any moneys or other property payable
or deliverable on any such claims, and to distribute the same after the
deduction of its reasonable expenses, and any receiver, assignee or trustee or
similar official in bankruptcy or reorganization is hereby authorized by each
of the Holders to make such payments to the Trustee, and, if the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due it pursuant to Section 11.7 hereof for reasonable
expenses.  To the extent that such payment of reasonable expenses out of
the estate in any such proceedings shall be denied for any reason, payment of
the same shall be secured by a lien on, and shall be paid out of, any and all
distributions, dividends, moneys, securities and other property which the
Holders of the Notes may be entitled to receive in such proceedings, whether in
liquidation or under any plan of reorganization or arrangement or otherwise.

 

All
rights of action and of asserting claims under this Indenture, or under any of
the Notes, may be enforced by the Trustee without the possession of any of the
Notes, or the production thereof at any trial or other proceeding relative
thereto, and any such suit or proceeding instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment shall be for the ratable benefit of the Holders of the Notes in
respect of which such judgment has been recovered.

 

SECTION 10.3. 
Application of Moneys Collected by Trustee.  Any moneys collected by the Trustee pursuant
to Section 10.2 with respect to the Notes then outstanding shall be
applied in the order following, at the date or dates fixed by the Trustee for
the distribution of such moneys, upon presentation of the several Notes, and
stamping thereon the payment, if only partially paid, and upon surrender
thereof, if fully paid:

 

61

 

FIRST:  To the payment of all amounts due to the
Trustee pursuant to Section 11.7 except as a result of its negligence or
bad faith;

 

SECOND:  If the principal of the outstanding Notes
shall not have become due and be unpaid, to the payment of interest and
Liquidated Damages, if any, on the Notes, in the order of the maturity of the
installments of such interest, if any, with interest (to the extent that such
interest has been collected by the Trustee) upon the overdue installments of
interest and Liquidated Damages, if any, at the rate borne by the Notes, such
payment to be made ratably to the Persons entitled thereto;

 

THIRD:  If the principal of the outstanding Notes
shall have become due, by declaration or otherwise, to the payment of the whole
amount then owing and unpaid upon the Notes for principal and interest, if any,
with interest on the overdue principal and (to the extent that such interest
has been collected by the Trustee) upon overdue installments of interest, if
any, at the rate borne by the Notes; and in case such moneys shall be
insufficient to pay in full the whole amounts so due and unpaid upon the Notes,
then to the payment of such principal and interest and Liquidated Damages, if
any, without preference or priority of principal over interest and Liquidated
Damages or of interest and Liquidated Damages over principal, or of any
installment of interest and Liquidated Damages over any other installment of
interest and Liquidated Damages, or of any Note over any other Note, ratably to
the aggregate of such principal and accrued and unpaid interest; and

 

FOURTH:  To the payment of any surplus then remaining
to the Company, its successors or assigns, or as a court of competent
jurisdiction shall direct in writing.

 

SECTION 10.4. 
Proceedings by Holders.  No
Holder of any Notes then outstanding shall have any right by virtue of or by
availing of any provision of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Indenture
or the Notes or for the appointment of a receiver or trustee or similar
official, or for any other remedy hereunder or thereunder, unless (i) 
such Holder previously shall have given to the Trustee written notice of a
continuing Event of Default, (ii) the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding shall have made a written
request to the Trustee to institute such action, suit or proceeding in its own
name as Trustee hereunder, (iii) the Trustee, after its receipt of such
notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding for 60 days, and (iv) during
such 60-day period the Holders of a majority in aggregate principal amount of
the outstanding Notes do not give the Trustee a direction inconsistent with the
request, it being understood and intended, and being expressly covenanted by
the Holder of every Note with every other Holder and the Trustee, that no one
or more Holders of the Notes shall have any right in any manner whatever by
virtue of or by availing of any provision of this Indenture or of the Notes to
affect, disturb or prejudice the rights of any other Holder of such Notes or to
obtain or seek to obtain priority over or preference as to any other such
Holder, or to enforce any right under this Indenture or the Notes, except in
the manner herein provided and for the equal, ratable and common benefit of all
Holders of Notes.

 

Notwithstanding
any other provisions in this Indenture, the right of any Holder of any Note to
receive payment of the principal of and interest, if any, on such Note, on or
after the

 

62

 

respective due dates
expressed in this Indenture and such Note, to institute suit for the
enforcement of any such payment or any right to convert on or after such
respective dates or to convert its Notes in accordance with the Indenture is
absolute and unconditional and shall not be impaired or affected without the
consent of such Holder.

 

SECTION 10.5. 
Proceedings by Trustee.  In
case of an Event of Default hereunder, the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by this Indenture by
such appropriate judicial proceedings as the Trustee shall deem necessary to
protect and enforce any of such rights, either by suit in equity or by action
at law or by proceedings in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement contained in this Indenture or in aid
of the exercise of any power granted in this Indenture, or to enforce any other
legal or equitable right vested in the Trustee by this Indenture or by law.

 

SECTION 10.6. 
Remedies Cumulative and Continuing.  All powers and remedies given by this Article X
to the Trustee or to the Holders shall, to the extent permitted by law, be
deemed cumulative and not exclusive of any thereof or of any other powers and
remedies available to the Trustee or the Holders, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the Trustee
or of any Holder to exercise any right or power accruing upon any Default
occurring and continuing as aforesaid shall impair any such right or power, or
shall be construed to be a waiver of any such Default or an acquiescence
therein; and, subject to the provisions of Section 10.4, every power and
remedy given by this Article X or by law to the Trustee or to the Holders
may be exercised from time to time, and as often as shall be deemed expedient,
by the Trustee or by the Holders, respectively.

 

SECTION 10.7. 
Direction of Proceedings; Waiver of Defaults by Majority of Holders.  Subject to Sections 10.4 and 13.2, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee with respect to the
Notes; provided, however,
that (subject to the provisions of Section 11.1) the Trustee shall have
the right to decline to follow any such direction if the Trustee shall determine
upon advice of counsel that the action or proceeding so directed may not
lawfully be taken or is in conflict with this Indenture or if the Trustee in
good faith by its board of directors, its executive committee, or a trust
committee of directors or Responsible Officers or both shall determine that the
action or proceeding so directed would involve the Trustee in personal loss,
expense and/or                                   liability
or would be unduly prejudicial to the rights of the other Holders of the
Notes.  The Holders of a majority in aggregate principal amount of the
Notes then outstanding may on behalf of the Holders of all of the Notes waive
any past Default or Event of Default hereunder and its consequences (including
acceleration and any related payment Default from such acceleration) except a
Default in the payment of interest, if any, on, or the principal of, the Notes
or a Default in the compliance with any provision hereunder that cannot be
amended or supplemented pursuant to Article XIV without the consent of
each Holder of Notes affected.  Upon any such waiver the Company, the
Trustee and the Holders of the Notes shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any right
consequent thereon.  Whenever any Default or Event of Default hereunder
shall have been waived as permitted by this Section 10.7, said Default or
Event of

 

63

 

Default shall for all purposes of the Notes and this Indenture be
deemed to have been cured and to be not continuing.

 

SECTION 10.8. 
Notice of Defaults.  The
Trustee shall, within 90 days after the occurrence of a Default or Event of
Default, with respect to the Notes then outstanding, mail to all Holders of the
Notes, as the names and the addresses of such Holders appear upon the Note
Register, notice of all defaults known to the Trustee with respect to the
Notes, unless such defaults shall have been cured before the giving of such
notice (the term “defaults” for the purpose of this Section 10.8 being
hereby defined to be the events specified in clauses (a), (b), (c), (d), (e),
(f), (g), (h) and (i) of Section 10.1, not including periods of
grace, if any, provided for therein and irrespective of the giving of the
written notice specified in said clause (c), but in the case of any default of
the character specified in said clause (c) no such notice to Holders shall
be given until at least 60 days after the giving of written notice thereof to
the Company pursuant to said clause (c)); provided, however, that, except in the case of default in the payment
of the principal of or interest or Liquidated Damages, if any, on any of the
Notes, the Trustee shall be protected in withholding such notice if and so long
as the board of directors, the executive committee, or a trust committee of
directors or Responsible Officers or both of the Trustee in good faith
determines that the withholding of such notice is in the best interests of the
Holders.

 

SECTION 10.9. 
Undertaking to Pay Costs. 
All parties to this Indenture agree, and each Holder of any Note by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken
or omitted by it as Trustee, the filing by any party litigant in such suit of
an undertaking to pay the cost of such suit, and that such court may in its discretion
assess reasonable costs, including reasonable attorneys’ fees and expenses,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 10.9 shall not apply to any suit instituted by
the Trustee, to any suit instituted by any Holder or group of Holders, holding
in the aggregate more than 10% in aggregate principal amount of the Notes then
outstanding, or to any suit instituted by any Holders for the enforcement of
the payment of the principal of or interest, if any, on any Note against the
Company on or after the due date thereto expressed in such Note.

 

ARTICLE XI

TRUSTEE

 

SECTION 11.1. 
Duties of Trustee.

 

(a)                                  If
an Event of Default has occurred and is continuing, the Trustee shall exercise
the rights and powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent Person would exercise or use
under the circumstances in the conduct of such Person’s own affairs; provided that if an Event of Default occurs and is
continuing, the Trustee will be under no obligation to exercise any of the
rights or powers under this Indenture at the request or direction of any of the
Holders unless such Holders have provided the Trustee indemnity or security
reasonably satisfactory to the Trustee against loss, liability or expense.

 

64

 

(b)                                 Except
during the continuance of an Event of Default:

 

(1)                                  the
Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and

 

(2)                                  in
the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon certificates, directions, notices or opinions furnished to the
Trustee.  However, in the case of any such certificates, directions, notices
or opinions which by any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine such certificates and
opinions to determine whether or not they conform to the requirements of this
Indenture (but need not confirm or investigate the accuracy of mathematical
calculations or other facts stated therein).

 

(c)                                  The
Trustee may not be relieved from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:

 

(1)                                  this
paragraph does not limit the effect of paragraph (b) of this Section;

 

(2)                                  the
Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; and

 

(3)                                  the
Trustee shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it pursuant to Section 10.4.

 

(d)                                 The
Trustee shall not be liable for interest on any money received by it except as
the Trustee may agree in writing with the Company.

 

(e)                                  Money
held in trust by the Trustee need not be segregated from other funds except to
the extent required by law.

 

(f)                                    No
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any expenses or financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayment of such
funds or adequate indemnity against such expenses, risk or liability is not
reasonably assured to it.

 

(g)                                 Every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section 11.1 and to the provisions of the TIA.

 

(h)                                 The
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the
Holders unless such Holders shall have provided to the Trustee security or
indemnity reasonably satisfactory to it

 

65

 

against the costs, expenses
(including reasonable attorneys’ fees and expenses) and liabilities that might
be incurred by it in compliance with such request or direction.

 

SECTION 11.2. 
Rights of Trustee.

 

(a)                                  The
Trustee may conclusively rely and shall be protected in acting or refraining
from acting upon any paper or document believed by it to be genuine and to have
been signed or presented by the proper Person or Persons.  The Trustee
need not investigate any fact or matter stated in the document.

 

(b)                                 Before
the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel.  The Trustee shall not be liable for
any action it takes or omits to take in good faith in reliance on the Officers’
Certificate or Opinion of Counsel.

 

(c)                                  The
Trustee may act through its attorneys and agents and shall not be responsible
for the misconduct or negligence of any attorney or agent appointed with due
care.

 

(d)                                 The
Trustee shall not be liable for any action it takes or omits to take in good
faith which it believes to be authorized or within its rights or powers; provided, however, that
the Trustee’s conduct does not constitute willful misconduct or negligence.

 

(e)                                  The
Trustee may consult with counsel of its selection, and the advice or opinion of
such counsel appointed with due care with respect to legal matters relating to
this Indenture and the Notes shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered
by it hereunder in good faith and in accordance with the advice or opinion of
such counsel.

 

(f)                                    The
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, notice,
request, direction, consent, order, bond or other paper or document; but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company at reasonable times, in a reasonable
manner and upon reasonable advance notice, personally or by agent or attorney
at the sole cost of the Company and shall incur no liability or additional
liability of any kind by reason of such inquiry or investigation.

 

(g)                                 The
Trustee shall not be deemed to have knowledge of any Default or Event of
Default except, (i) during any period it is serving as Registrar and
Paying Agent for the Notes, any Event of Default occurring pursuant to Sections
10.1(a), 10.1(b) or 10.1(e) or (ii) any Default or Event of
Default of which a Responsible Officer shall have received written notification
or obtained actual knowledge.  The term “actual knowledge” shall mean the
actual fact or statement of knowing by a Responsible Officer without independent
investigation with respect thereto.

 

(h)                                 Delivery
of the reports, information and documents to the Trustee is for informational
purposes only and the Trustee’s receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein,

 

66

 

including the Company’s
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers’ Certificates).

 

(i)                                     In
no event shall the Trustee be responsible or liable for special, indirect, or
consequential loss or damage of any kind whatsoever (including, but not limited
to, loss of profit) irrespective of whether the Trustee has been advised of the
likelihood of such loss or damage and regardless of the form of action.

 

(j)                                     The
rights, privileges, protections, immunities and benefits given to the Trustee,
including its right to be indemnified, are extended to, and shall be
enforceable by, the Trustee in each of its capacities hereunder, and each
agent, custodian and other Person employed to act hereunder.

 

(k)                                  The
Trustee may request that the Company deliver an Officers’ Certificate setting
forth the names of individuals and/or titles of officers authorized at such
time to take specified actions pursuant to this Indenture, which Officers’
Certificate may be signed by any Person authorized to sign an Officers’
Certificate, including any Person specified as so authorized in any such
certificate previously delivered and not superseded.

 

SECTION 11.3. 
Individual Rights of Trustee.  The Trustee in its individual or any other
capacity may become the owner or pledgee of Notes and may otherwise deal with
the Company or its Affiliates with the same rights it would have if it were not
Trustee.  Any Paying Agent, Registrar, co-registrar or co-paying agent may
do the same with like rights.  However, the Trustee must comply with
Sections 11.10 and 11.11.  In addition, the Trustee shall be permitted to
engage in transactions with the Company; provided, however, that if the Trustee acquires any conflicting
interest (as such term is defined in Section 310(b) of the TIA) the
Trustee must (i) eliminate such conflict within 90 days of acquiring such
conflicting interest, (ii) apply to the Commission for permission to
continue acting as Trustee or (iii) resign as Trustee hereunder.

 

SECTION 11.4. 
Trustee’s Disclaimer.  The
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company’s use of the Notes or the proceeds from the Notes,
and it shall not be responsible for any statement of the Company in this
Indenture or in any document issued or offering circular (or similar document)
used in connection with the sale of the Notes or in the Notes other than the
Trustee’s certificate of authentication or for the use or application of any
funds received by any Paying Agent other than the Trustee.

 

SECTION 11.5. 
Notice of Defaults.  If a
Default or Event of Default occurs and is continuing and if a Responsible
Officer has actual knowledge thereof, the Trustee shall mail to each Holder
notice of the Default or Event of Default within 90 days after it occurs. 
Except in the case of a Default or Event of Default in payment of principal of,
or interest on any Note (including payments pursuant to the required repurchase
provisions of such Note, if any), the Trustee may withhold the notice if and so
long as its board of directors, a committee of its board of directors or a
committee of its Responsible Officers and/or a Responsible Officer in good
faith determines that withholding the notice is in the interests of registered
Holders.

 

67

 

SECTION 11.6. 
Reports by Trustee to Holders. 
As promptly as practicable after each May 15 beginning with the May 15
following the date of this Indenture, and in any event prior to December 15
in each year, the Trustee shall mail to each Holder a brief report dated as of
such May 15 that complies with TIA § 313(a), if and to the extent
such report may be required by the TIA. 
The Trustee also shall comply with TIA § 313(b).  The Trustee shall also transmit by mail all
reports required by TIA § 313(c).

 

A copy
of each report at the time of its mailing to Holders shall be filed with the
Commission and each stock exchange (if any) on which the Notes are
listed.  The Company agrees to notify promptly the Trustee in writing
whenever the Notes become listed on any stock exchange and of any delisting
thereof.

 

SECTION 11.7. 
Compensation and Indemnity. 
The Company shall pay to the Trustee from time to time such reasonable
compensation for its services as the parties shall agree in writing from time
to time.  The Trustee’s compensation shall not be limited by any law on
compensation of a trustee of an express trust.  The Company shall
reimburse the Trustee upon written request for all reasonable and documented
out-of-pocket expenses incurred or made by it, including, but not limited to,
costs of collection, costs of preparing and reviewing reports, certificates and
other documents, costs of preparation and mailing of notices to Holders and
reasonable costs of counsel retained by the Trustee in connection with the delivery
of an Opinion of Counsel or otherwise, in addition to the compensation for its
services.  Such expenses shall include the reasonable compensation and
reasonable and documented out-of-pocket expenses, disbursements and advances of
the Trustee’s agents, counsel, accountants and experts.  The Company shall
indemnify the Trustee, and each of its officers, directors, counsel and agents,
against any and all loss, liability or expense (including, but not limited to,
reasonable attorneys’ fees and expenses) incurred by it in connection with the
administration of this trust and the performance of its duties hereunder,
including the costs and expenses of enforcing this Indenture (including this Section 11.7)
and of defending itself against any claims (whether asserted by any Holder, the
Company or otherwise).  The Trustee shall notify the Company promptly of
any claim of which a Responsible Officer receives written notice for which it
may seek indemnity.  Failure by the Trustee to so notify the Company shall
not relieve the Company of its obligations hereunder except to the extent the
Company is prejudiced thereby.  The Company shall defend the claim and the
Trustee may have separate counsel and, if the Trustee determines in its
reasonable judgment that a conflict of interest exists between the Trustee and
the Company, the Company shall pay the fees and expenses of such counsel. 
The Company need not reimburse any expense or indemnify against any loss,
liability or expense incurred by the Trustee through the Trustee’s own willful
misconduct, negligence or bad faith, subject to the exceptions contained in Section 11.1(c) hereof.

 

To
secure the Company’s payment obligations in this Section 11.7, the Trustee
shall have a lien prior to the Notes on all money or property held or collected
by the Trustee other than money or property held in trust to pay principal of
and interest on particular Notes.

 

The
Company’s payment obligations pursuant to this Section and any lien
arising hereunder shall survive the discharge of this Indenture and the
resignation or removal of the Trustee.  When the Trustee incurs expenses
after the occurrence of a Default specified in

 

68

 

Section 10.1(g) or
(h) with respect to the Company, the expenses are intended to constitute
expenses of administration under the Bankruptcy Code.

 

SECTION 11.8. 
Replacement of Trustee. 
The Trustee may resign at any time by so notifying the Company.  The Holders of a majority in principal amount
of the Notes may remove the Trustee by so notifying the Company and the Trustee
in writing and the Company may appoint a successor Trustee.  The Company
shall remove the Trustee if:

 

(1)                                  the
Trustee fails to comply with Section 11.10;

 

(2)                                  the
Trustee is adjudged bankrupt or insolvent;

 

(3)                                  a
receiver or other public officer takes charge of the Trustee or its property;
or

 

(4)                                  the
Trustee otherwise becomes incapable of acting.

 

If the
Trustee resigns or is removed by the Company or by the Holders of a majority in
principal amount of the Notes and the Company does not reasonably promptly
appoint a successor Trustee, or if a vacancy exists in the office of Trustee
for any reason (the Trustee in such event being referred to herein as the
retiring Trustee), the Holders of a majority in aggregate principal amount of
the Notes may appoint a successor Trustee.

 

A
successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Company.  Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this
Indenture.  The successor Trustee shall
mail a notice of its succession to Holders. 
The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided for in Section 11.7.

 

If the
Company has not appointed a successor Trustee within 60 days after the retiring
Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in
principal amount of the Notes may petition, at the expense of the Company, any
court of competent jurisdiction for the appointment of a successor Trustee.

 

If the
Trustee fails to comply with Section 11.10, unless the Trustee’s duty to resign
is stayed as provided in TIA § 310(b), any Holder may petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee.

 

Notwithstanding
the replacement of the Trustee pursuant to this Section 11.8, the Company’s
obligations under Section 11.7 shall continue for the benefit of the
retiring Trustee.

 

SECTION 11.9. 
Successor Trustee by Merger. 
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Trustee.

 

69

 

In
case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture, any of the Notes shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication
of any predecessor trustee, and deliver such Notes so authenticated; and in
case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee may authenticate such Notes either in the name of any
predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Notes or in this Indenture provided that the certificate of the Trustee
shall have.

 

SECTION 11.10. 
Eligibility; Disqualification. 
The Trustee shall at all times satisfy the requirements of TIA § 310(a). 
The Trustee shall have a combined capital and surplus of at least $50 million
as set forth in its most recently filed annual report of condition.  The
Trustee shall comply with TIA § 310(b).

 

SECTION 11.11. 
Preferential Collection of Claims Against Company.  If and when the Trustee shall be or become a
creditor of the Company, the Trustee shall comply with TIA § 311(a),
excluding any creditor relationship listed in TIA § 311(b).  A
Trustee who has resigned or been removed shall be subject to TIA § 311(a) to
the extent indicated.

 

ARTICLE XII

SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS

 

SECTION 12.1. 
Satisfaction and Discharge of Indenture.  If at any time (a) the Company shall
have paid or caused to be paid the principal of and interest and Liquidated
Damages, if any, on all the Notes outstanding (other than Notes which have been
destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.7)
as and when the same shall have become due and payable, or (b) the Company
shall have delivered to the Trustee for cancellation all Notes theretofore
authenticated (other than Notes which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 2.7); and if, in
any such case, the Company shall also pay or cause to be paid all other sums
payable hereunder by the Company, then this Indenture shall cease to be of
further effect, and the Trustee, on demand of the Company accompanied by an
Officers’ Certificate and an Opinion of Counsel, each stating that all
conditions precedent relating to the satisfaction and discharge contemplated by
this provision have been complied with, and at the cost and expense of the
Company, shall execute proper instruments acknowledging such satisfaction and
discharging this Indenture.  The Company agrees to reimburse the Trustee
for any costs or expenses thereafter reasonably and properly incurred, and to
compensate the Trustee for any services thereafter reasonably and properly
rendered, by the Trustee in connection with this Indenture or the Notes.

 

If at
any time the exact amount described in clause (ii) below can be determined
at the time of making the deposit referred to in such clause (ii), (i) all
of the Notes not theretofore delivered to the Trustee for cancellation shall
have become due and payable, or are by their terms to become due and payable
within one year or are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption, and (ii) (a) the Company shall have irrevocably deposited
or caused to be deposited with the Trustee as

 

70

 

 

funds in trust, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Notes, cash in an amount (other
than moneys repaid by the Trustee or any Paying Agent to the Company in
accordance with Section 12.4) or U.S. Government Obligations, maturing as
to principal and interest, if any, at such times and in such amounts as will
insure the availability of cash sufficient in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay the principal of and
interest, if any, on all of the Notes on each date that such principal or
interest, if any, is due and payable in accordance with the terms of this
Indenture and the Notes, and (b) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; then the Company shall be deemed
to have paid and discharged the entire indebtedness on all the Notes on the
date of the deposit referred to in this clause (ii), and the provisions of this
Indenture with respect to the Notes shall no longer be in effect (except as to
(i) rights of registration of transfer and exchange of Notes, (ii) substitution
of mutilated, defaced, destroyed, lost or stolen Notes, (iii) rights of Holders
of Notes to receive payments of principal thereof and interest, if any, thereon
upon the original stated due dates therefor (but not upon acceleration), (iv)
the rights, obligations, duties and immunities of the Trustee hereunder, (v)
the rights of the Holders of Notes as beneficiaries hereof with respect to the
property so deposited with the Trustee payable to all or any of them (vi)
rights of Holders of Notes to convert the Notes pursuant to Article IX and
(vii) the obligations of the Company under Section 3.3 with respect to the
Notes) and the Trustee, on demand of the Company accompanied by an Officers’
Certificate and an Opinion of Counsel, each stating that all conditions
precedent contemplated by this provision have been complied with, and at the
cost and expense of the Company, shall execute proper instruments acknowledging
such satisfaction and discharging such Indebtedness.

 

SECTION 12.2.  Application
by Trustee of Funds Deposited for Payment of Notes.  All moneys deposited with the Trustee or any
Paying Agent shall be held in trust and applied by it to the payment, either
directly or through any Paying Agent (including the Company acting as its own
paying agent), to the Holders of the Notes for the payment or redemption of
which such moneys have been deposited with the Trustee, of all sums due and to
become due thereon for principal and interest, if any, but such money need not
be segregated from other funds except to the extent required by law.

 

SECTION 12.3.  Repayment
of Moneys Held by Paying Agent.  In
connection with the satisfaction and discharge of this Indenture with respect
to the Notes, all moneys then held by any Paying Agent under the provisions of
this Indenture with respect to the Notes shall, upon demand of the Company, be
repaid to it and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.

 

SECTION 12.4.  Return
of Moneys Held by Trustee and Paying Agent Unclaimed for Two Years.  Any moneys deposited with or paid to the
Trustee or any Paying Agent for the payment of the principal of or interest, if
any, on the Notes and not applied but remaining unclaimed for two years after
the date upon which such principal or interest, if any, shall have become due
and payable, shall, upon the written request of the Company and unless
otherwise required by mandatory provisions of applicable escheat or abandoned
or unclaimed property law, be repaid to the Company by the Trustee or such
Paying Agent, and the Holder of the Notes shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
laws, thereafter look only to the Company for any payment which such

 

71

 

Holder may be entitled to collect, and all liability of the Trustee or
any Paying Agent with respect to such moneys shall thereupon cease; provided, however, that
the Trustee or such Paying Agent, before being required to make any such
repayment with respect to moneys deposited with it for any payment in respect
of the Notes, shall, at the expense of the Company, mail by first-class mail to
Holders of the Notes at their addresses as they shall appear on the Note
register notice that such moneys remain and that, after a date specified therein,
which shall not be less than thirty days from the date of such mailing or
publication, any unclaimed balance of such money then remaining will be repaid
to the Company.

 

SECTION 12.5.  Indemnity
for U.S. Government Obligations.  The
Company shall pay and indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against the U.S. Government Obligations deposited
pursuant to Section 12.1 or the principal or interest received in respect
of such obligations.

 

ARTICLE XIII

 

AMENDMENTS

 

SECTION 13.1. 
Without Consent of Holders.  The
Company and the Trustee may amend this Indenture or the Notes without notice to
or consent of any Holder:

 

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

 

(2)           to provide for the assumption by a Successor
Company of the Company’s obligations under this Indenture and the Notes;

 

(3)           to provide for uncertificated Notes in addition to
or in place of certificated Notes;

 

(4)           to secure the Notes or to provide guarantees of the
Notes;

 

(5)           to add covenants that would benefit the Holders of
the Notes or to surrender any rights of the Company under this Indenture;

 

(6)           to comply with any requirements to effect or
maintain the qualification of this Indenture under the TIA;

 

(7)           to add Events of Default with respect to the Notes;
or

 

(8)           to make any change that does not adversely affect
any outstanding Notes in any material respect.

 

After an amendment under this Section becomes
effective, the Company shall prepare and cause the Trustee to mail to Holders,
a notice briefly describing such amendment.  The failure to give such
notice to all Holders, or any defect therein, shall not impair or affect the
validity of an amendment under this Section.

 

72

 

SECTION 13.2.  With
Consent of Holders.  The Company and
the Trustee may amend this Indenture or the Notes without notice to any Holder
but with the written consent of the Holders of at least a majority in aggregate
principal amount of the Notes then outstanding.  However, without the
consent of each Note then outstanding, an amendment, supplement or waiver may
not:

 

(1)           reduce the amount of Notes whose Holders must
consent to an amendment, supplement or waiver;

 

(2)           reduce the rate of accrual of interest or modify the
method for calculating interest or change the time for payment of interest on
the Notes;

 

(3)           modify the provisions with respect to a Holder’s
rights upon a Designated Event in a manner adverse to the Holders of the Notes,
including the Company’s obligations to repurchase the Notes following a
Designated Event;

 

(4)           reduce the principal amount of Notes or change
their Stated Maturity;

 

(5)           reduce the Redemption Price or Purchase Price of
the Notes or change the time at which the Notes may or must be redeemed or
repurchased;

 

(6)           make payments on the Notes payable in currency
other than as originally stated in the Notes;

 

(7)           impair the Holder’s right to institute suit for the
enforcement of any payment on the Notes;

 

(8)           make any change in the percentage of principal
amount of Notes necessary to waive compliance with provisions of this Indenture
or to make any change to this Section 13.2 or Section 13.3;

 

(9)           waive a continuing Default or Event of Default
regarding any payment on the Notes; or

 

(10)         adversely affect the conversion or repurchase
provisions of the Notes.

 

It shall not be necessary for the consent of the
Holders under this Section 13.2 to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent approves the
substance thereof.

 

After an amendment under this Section 13.2
becomes effective, the Company shall mail to Holders a notice briefly
describing such amendment.  The failure to give such notice to all
Holders, or any defect therein, shall not impair or affect the validity of an
amendment under this Section 13.2.

 

SECTION 13.3.  Compliance
with Trust Indenture Act.  Every
amendment to this Indenture or the Notes shall comply with the TIA as then in
effect.

 

73

 

SECTION 13.4.  Revocation
and Effect of Consents and Waivers. 
A consent to an amendment or a waiver by a Holder of a Note shall bind
the Holder and every subsequent Holder of that Note or portion of the Note that
evidences the same debt as the consenting Holder’s Note, even if notation of
the consent or waiver is not made on the Note. 
However, any such Holder or subsequent Holder may revoke the consent or
waiver as to such Holder’s Note or portion of the Note if the Trustee receives
the notice of revocation before the date the amendment or waiver becomes
effective.  After an amendment or waiver becomes effective, it shall bind
every Holder.  An amendment or waiver made pursuant to Section 13.2
shall become effective upon receipt by the Trustee of the requisite number of
written consents.

 

The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Holders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture.  If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Holders at such record date (or their duly designated proxies), and only those
Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date.  No such consent shall
become valid or effective more than 120 days after such record date.

 

SECTION 13.5.  Notation
on or Exchange of Notes.  If an
amendment changes the terms of a Note, the Trustee may require the Holder of
the Note to deliver it to the Trustee.  The Trustee may place an
appropriate notation on the Note regarding the changed terms and return it to
the Holder.  Alternatively, if the Company or the Trustee so determines,
the Company in exchange for the Note shall issue and the Trustee shall
authenticate a new Note that reflects the changed terms.  Failure to make
the appropriate notation or to issue a new Note shall not affect the validity
of such amendment.

 

SECTION 13.6.  Trustee
To Sign Amendments.  The Trustee
shall sign any amendment authorized pursuant to this Article XIII if the
amendment does not adversely affect the rights, duties, liabilities or
immunities of the Trustee.  If it does, the Trustee may but need not sign
it.  In signing such amendment the Trustee shall be provided with, and
(subject to Section 11.1) shall be fully protected in relying upon, an
Officers’ Certificate and an Opinion of Counsel stating that such amendment is
authorized or permitted by this Indenture.

 

ARTICLE XIV

MISCELLANEOUS

 

SECTION 14.1.  Trust
Indenture Act Controls.  If any
provision of this Indenture limits, qualifies or conflicts with another provision
which is required to be included in this Indenture by the TIA, the provision
required by the TIA shall control.

 

SECTION 14.2.  Notices.  Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:

 

74

 

If to the Company:

 

	
  AAR CORP.

  
	
  One AAR Place

  
	
  1100 Wood Dale Road

  
	
  Wood Dale, Illinois 60191

  
	
  Attention: Howard A. Pulsifer

  
	
  Facsimile No.: (630) 227-2059

  
	
   

  
	
  With copies to:

  
	
   

  
	
  Schiff Hardin LLP

  
	
  6600 Sears Tower

  
	
  Chicago, IL 60606

  
	
  Attention: Robert Regan

  
	
  Facsimile No.: (312) 258-5600

  
	
   

  
	
  If to the Trustee:

  
	
   

  
	
  U.S. Bank National Association

  
	
  60 Livingston Avenue

  
	
  St. Paul, MN 55107

  
	
  Attention: Corporate Trust Services

  
	
  Facsimile No.: (651) 495-8097

  

 

The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.

 

Any notice or communication mailed to a Holder shall
be mailed to the Holder at the Holder’s address as it appears on the Note
Register and shall be sufficiently given if so mailed within the time
prescribed.  Notices shall be deemed to
have been given as of the date of mailing.

 

Failure to mail a notice or communication to a Holder
or any defect in it shall not affect its sufficiency with respect to other
Holders.  If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.

 

SECTION 14.3.  Communication
by Holders with Other Holders. 
Holders may communicate pursuant to TIA § 312(b) with other Holders
with respect to their rights under this Indenture or the Notes.  The
Company, the Trustee, the Registrar and anyone else shall have the protection
of TIA § 312(c).

 

SECTION 14.4.  Certificate
and Opinion as to Conditions Precedent. 
Upon any request or application by the Company to the Trustee to take or
refrain from taking any action under this Indenture, the Company shall furnish
to the Trustee such certificates and opinions as may be required under the
TIA.  Each such certificate or opinion
shall be given in the form of one or more Officers’ Certificates, if to be
given by an Officer, or an Opinion of Counsel, if to be given by counsel, and
shall comply with the requirements of the TIA and any other requirements set
forth in this Indenture.  Notwithstanding the foregoing, in the case of
any such request or application as to which the furnishing of any Officers’
Certificate or Opinion of Counsel is

 

75

 

specifically required by any provision of this Indenture relating to
such particular request or application, no additional certificate or opinion
need be furnished.

 

SECTION 14.5.  Statements
Required in Certificate or Opinion. 
Each certificate or opinion with respect to compliance with a covenant
or condition provided for in this Indenture shall include:

 

(1)           a statement that the individual making such
certificate or opinion has read such covenant or condition;

 

(2)           a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;

 

(3)           a statement that, in the opinion of such
individual, he has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and

 

(4)           a statement as to whether or not, in the opinion of
such individual, such covenant or condition has been complied with.

 

In giving an Opinion of Counsel, counsel may rely as
to factual matters on an Officers’ Certificate or such other certificates of
Officer(s) as it may deem appropriate and on certificates of public officials.

 

SECTION 14.6.  When
Notes Disregarded.  In determining whether
the Holders of the required principal amount of Notes have concurred in any
direction, waiver or consent, Notes owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes which a Responsible Officer of the Trustee actually knows are so owned
shall be so disregarded.  Also, subject to the foregoing, only Notes
outstanding at the time shall be considered in any such determination.

 

SECTION 14.7.  Rules
by Trustee, Paying Agent and Registrar. 
The Trustee may make reasonable rules for action by, or a meeting of,
Holders.  The Registrar and the Paying Agent may make reasonable rules for
their functions.

 

SECTION 14.8.  Governing
Law.  This Indenture and the Notes
shall be governed by, and construed in accordance with, the laws of the State
of New York.

 

SECTION 14.9.  No
Recourse Against Others.  No recourse
for the payment of the principal of, or interest (including Liquidated Damages,
if any) on any Note and no recourse under or upon any obligation, covenant,
agreement of the Company in this Indenture, the Notes or in any supplemental
indenture, or because of the creation of any Indebtedness represented thereby,
shall be had against any incorporator, stockholder, employee, agent, officer,
director, or subsidiary, past, present or future, of the Company or of any
successor corporation or entity, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any 

 

76

 

assessment or penalty or otherwise, it being understood that all such
liability is hereby waived and released as a condition to, and as a
consideration for, the execution and delivery of this Indenture and the issue
of the Notes.

 

SECTION 14.10.  Successors.  All agreements of the Company in this
Indenture and the Notes shall bind its successors.  All agreements of the
Trustee in this Indenture shall bind its successors.

 

SECTION 14.11.  Multiple
Originals.  The parties may sign any
number of copies of this Indenture.  Each signed copy shall be an
original, but all of them together represent the same agreement.  One
signed copy is enough to prove this Indenture.

 

SECTION 14.12.  Variable
Provisions.  The Company initially
appoints the Trustee as Paying Agent and Registrar and custodian with respect
to any Global Notes.

 

SECTION 14.13.  Qualification
of Indenture.  The Company shall
qualify this Indenture under the TIA in accordance with the terms and
conditions of the Registration Rights Agreement and shall pay all reasonable
costs and expenses (including attorneys’ fees and expenses for the Company and
the Trustee) incurred in connection therewith, including, but not limited to,
costs and expenses of qualification of the Indenture and the Notes and printing
this Indenture and the Notes.  The Trustee shall be entitled to receive
from the Company any such Officers’ Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.

 

77

 

SIGNATURES

 

IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed, all as of the date first written above.

 

	
   

  	
  AAR CORP.,

  
	
   

  	
  as Issuer,

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ TIMOTHY J. ROMENESKO

  	
   

  
	
   

  	
  Name:

  	
  Timothy J. Romenesko

  
	
   

  	
  Title:

  	
  Vice President - Chief Financial Officer &

  Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ RAYMOND S. HAVERSTOCK

  	
   

  
	
   

  	
  Name:

  	
  Raymond S. Haverstock

  
	
   

  	
  Title:

  	
  Vice President

  

 

78

 

EXHIBIT A

[FORM OF FACE OF SECURITY]

 

THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE ‘‘SECURITIES ACT’’), OR ANY STATE SECURITIES LAWS.  NEITHER THIS NOTE, THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION OF THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN
OR THEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE
SECURITIES ACT.

 

BY ITS ACQUISITION HEREOF, THE HOLDER AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER THIS NOTE PRIOR TO THE DATE THAT IS TWO YEARS AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH AAR
CORP. (THE ‘‘COMPANY’’) OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS
NOTE (OR ANY PREDECESSOR OF THIS NOTE) (THE ‘‘RESALE RESTRICTION TERMINATION
DATE’’) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER AS
DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, OR (D) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (D) PRIOR TO THE RESALE RESTRICTION TERMINATION DATE TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES,
TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER
SIDE OF THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE.  THIS LEGEND WILL BE REMOVED
UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

 

THE HOLDER OF THIS SECURITY IS ENTITLED TO THE
BENEFITS OF A REGISTRATION RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF,
AGREES TO BE BOUND BY AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION
RIGHTS AGREEMENT.

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING
OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME

 

A-1

 

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

 

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

 

A-2

 

	
  No.

  	
   

  	
  Principal Amount $

  
	
   

  	
   

  	
  As revised by the
  Schedule of Increase

  
	
   

  	
   

  	
  And Decreases in the
  Global Note attached hereto

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CUSIP NO. [000361 AG0]
  [000361AH8]

  

 

AAR CORP.

 

1.75% Convertible Senior
Notes due 2026

 

AAR CORP., a Delaware corporation, promises to pay to
Cede & Co., or registered assigns, the principal sum of $[                 ]
Dollars, as revised by the Schedule of Increases and Decreases in the
Global Note attached hereto, on February 1, 2026.

 

Interest Payment Dates:  February 1, and
August 1.

 

Record Dates:  January 15 and July 15.

 

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

 

	
   

  	
  AAR CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  TRUSTEE’S CERTIFICATE OF

  	
   

  
	
  AUTHENTICATION

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  
	
   

  	
   

  
	
  U.S. BANK NATIONAL ASSOCIATION,

  	
   

  
	
  as Trustee, certifies that this is one of

  	
   

  
	
  the Notes referred to in the within-mentioned
  Indenture.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   Authorized Signatory

  	
   

  
						

 

A-3

 

[FORM OF REVERSE SIDE OF
NOTE]

 

1.75% Convertible Senior
Notes due 2026

 

1.                                       Interest

 

AAR CORP., a
Delaware corporation (such corporation, and its successors and assigns under
the Indenture hereinafter referred to, being herein called the “Company”),
promises to pay interest on the principal amount of this Note at the rate per
annum shown above.  The Company will pay interest semiannually on
February 1 and August 1 of each year.  Interest on the Notes
will accrue from the most recent date to which interest has been paid on the
Notes or, if no interest has been paid, from February 1, 2006.  The
Company shall, to the fullest extent permitted by law,  pay interest on
overdue principal and overdue installments of interest, if any (plus interest
on such interest to the extent lawful), at the rate borne by the Notes, which
interest shall be payable upon demand.  Interest will be computed on the
basis of a 360-day year of twelve 30-day months.

 

2.                                       Method
of Payment

 

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

 

3.                                       Paying
Agent, Conversion Agent and Registrar

 

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

 

4.                                       Indenture

 

The Company issued
the Notes under an Indenture dated as of February 1, 2006 (as it may be
amended or supplemented from time to time in accordance with the terms thereof,
the “Indenture”), among the Company and the Trustee.  The terms of the
Notes include those stated

 

A-4

 

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

 

The Notes are
senior unsecured obligations of the Company limited to $150,000,000 aggregate
principal amount.

 

5.                                       Redemption
at the Option of the Company

 

No sinking fund is
provided for the Notes.  The Notes are redeemable for cash in whole, or in
part, at any time on or after February 6, 2013 at the option of the
Company at a redemption price (“Redemption Price”) equal to 100% of the
principal plus any accrued and unpaid interest (including Liquidated Damages,
if any) to, but not including, the Redemption Date.

 

6.                                       Notice
of Redemption at the Option of the Company

 

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

 

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

 

(a)           Subject
to the terms and conditions of the Indenture, a Holder shall have the option to
require the Company to purchase the Notes held by such Holder on
February 1, 2013, February 1, 2016 and February 1, 2021 (each, a
“Repurchase Date”) at a purchase price (the “Purchase Price”) equal to 100% of
the principal amount of the Notes to be purchased plus any accrued and unpaid
interest, if any (including Liquidated Damages, if any), to but not including
such Repurchase Date, upon delivery of a Purchase Notice containing the
information set forth in the Indenture, from the opening of business on the
date that is 20 Business Days prior to such Repurchase Date until the close of
business on the Business Day immediately prior to such Repurchase Date and upon
delivery of the Notes to the Paying Agent by the Holder as set forth in the
Indenture.  The Company will pay the Purchase Price in cash with respect
each Repurchase Date.

 

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

 

A-5

 

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

 

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

 

8.                                       Conversion

 

Subject to the
procedures set forth in the Indenture, a Holder may convert Notes into Common
Stock on or before the close of business on January 31, 2026 during the
periods and upon satisfaction of the conditions set forth in the Indenture.

 

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

 

The initial
Conversion Rate is 33.9789 shares of Common Stock per $1,000 principal amount,
subject to adjustment in certain events described in the Indenture.  The
Company may, at its option, deliver in lieu of shares of Common Stock, cash or
a combination of cash and shares of Common Stock.

 

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

 

9.                                       Denominations;
Transfer; Exchange

 

The Notes are in
registered form without coupons in denominations of principal amount of $1,000
and whole multiples of $1,000.  A Holder may transfer or exchange Notes in
accordance with the Indenture.  The Registrar may require a Holder, among
other things, to furnish appropriate endorsements or transfer documents and to
pay any taxes and fees required by law or permitted by the Indenture.  The
Registrar need not register the transfer of or exchange any Notes (A) for a
period beginning at the opening of business 15 days before any selection of
Notes for redemption or repurchase and ending at the close of business on the
day notice of such redemption or repurchase is deemed to have been given to all
Holders of Notes to be so

 

A-6

 

redeemed or repurchased or (B) selected for redemption or repurchase in
whole or in part, except for the transfer of the unredeemed portion of any Note
being redeemed in part.

 

10.                                 Persons
Deemed Owners

 

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

 

11.                                 Unclaimed
Money

 

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

 

12.                                 Amendment,
Waiver

 

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

 

13.                                 Defaulted
Interest

 

Except as
otherwise specified with respect to the Notes, any Defaulted Interest on any
Note shall forthwith cease to be payable to the registered Holder thereof on
the relevant Record Date or accrual date, as the case may be, by virtue of
having been such Holder, and such Defaulted Interest may be paid by the Company
as provided for in Section 2.11 of the Indenture.

 

14.                                 No
Recourse Against Others

 

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

 

A-7

 

15.                                 Authentication

 

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

 

16.                                 Abbreviations

 

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

 

17.                                 CUSIP
Numbers

 

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

 

18.                                 Governing
Law

 

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

 

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

 

	
  AAR CORP.

  
	
  One AAR Place

  
	
  1100 Wood Dale Road

  
	
  Wood Dale, Illinois 60191

  
	
  Attention: General Counsel

  
	
  Facsimile No.: (630) 227-2059

  

 

A-8

 

ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

I or we assign and transfer this Note to

 

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

 

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

 

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

 

	
  Date:

  	
   

  	
   

  	
  Your signature:

  	
   

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
   

  
	
  Guarantee:

  	
   

  	
   

  	
   

  
	
  (Signature must be guaranteed)

  	
   

  
								

 

 

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

 

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

 

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

 

CHECK ONE BOX BELOW:

 

	
  1.

  	
   

  	
  o

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  o

  	
   

  	
  transferred to the Company; or

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  o

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  o

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  o

  	
   

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

  

 

A-9

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Signature must be guaranteed)

  	
  Signature

  
	
   

  	
   

  
				

 

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

 

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

 

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

 

	
  Dated:

  	
  NOTICE: To be executed by an executive officer

  
	
   

  	
   

  
	
   

  	
  [INSERT NAME OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

A-10

 

SCHEDULE OF
INCREASES OR DECREASES IN GLOBAL SECURITY

 

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

 

	
  Date of exchange

  	
   

  	
  Amount of decrease in

  Principal Amount of this

  Global Note

  	
   

  	
  Amount of increase in

  Principal Amount of this

  Global Note

  	
   

  	
  Principal Amount of this

  Global Note following such

  decrease or increase

  	
   

  	
  Signature of authorized

  signatory of Trustee or

  Notes Custodian

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-11

 

OPTION OF HOLDER TO ELECT
PURCHASE

 

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

 

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

 

	
  Date:

  	
   

  	
   

  	
  Your signature: 

  	
   

  	
   

  
	
   

  	
   

  	
  Sign exactly as your

  
	
   

  	
   

  	
  name appears on the

  
	
   

  	
   

  	
  other side of this Note

  
	
   

  	
   

  
	
  Signature Guarantee: 

  	
   

  
	
  (Signature must be guaranteed)

  	
   

  	
   

  	
   

  
										

 

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

 

A-12

 

FORM OF CERTIFICATE TO BE
DELIVERED UPON EXCHANGE

OR REGISTRATION OF TRANSFER OF SECURITIES

 

Re:  1.75%
Convertible Senior Notes due 2026 of AAR CORP. (the “Company”).

 

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

 

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

 

In connection with such request and in respect of each
such Note, the Transferor does hereby certify that the Transferor is familiar
with the Indenture, dated as of February 1, 2006 (as amended or
supplemented to date, the “Indenture”), between the Company and U.S. Bank National
Association, as trustee (the “Trustee”), relating to the above-captioned Notes
and that the transfer of this Note does not require registration under the
Securities Act (as defined below) because:*

 

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

 

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

 

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

 

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

 

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

 

A-13

 

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

 

	
   

  	
  [INSERT NAME OF TRANSFEROR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  Date:

  

 

A-14

 

CONVERSION NOTICE

 

To convert this Note into Common Stock of the Company, check the box:

o

 

To convert only part of this Note, state the principal amount to be
converted (must be in integral multiples of $1,000):

 

$                    

 

If you want the stock certificate made out in another person’s name,
fill in the form below:

 

(Insert other person’s soc. sec. or tax I.D. no.)

 

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

 

	
  Date:

  	
   

  	
   

  	
  Your Signature(s)

  	
   

  
	
   

  	
   

  	
  (sign exactly as your
  name appears on this Note)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  *Signature(s) guaranteed by:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  *Signatures must be guaranteed by an “eligible
  guarantor institution” meeting the requirements of the Registrar, which
  requirements include membership or participation in the Security Transfer
  Agent Medallion Program (“STAMP”) or such other “signature guarantee program”
  as may be determined by the Registrar in addition to, or in substitution for,
  STAMP, all in accordance with the Securities Exchange Act of 1934, as
  amended.

  	
   

  
						

 

A-15

 

EXHIBIT B

FORM OF TRANSFER CERTIFICATE FOR
TRANSFER

OF RESTRICTED COMMON STOCK

 

[NAME AND ADDRESS OF COMMON STOCK
TRANSFER AGENT]

 

Re:          AAR CORP. 1.75%
Convertible Senior Notes Due 2026 (the “Notes”)

 

Reference is
hereby made to the Indenture dated as of February 1, 2006 between the
Company and the Trustee (collectively, the “Indenture”).  Capitalized
terms used but not defined herein shall have the meanings given them in the
Indenture.

 

This letter
relates to                    
shares of Common Stock represented by the accompanying certificate(s) that were
issued upon conversion of Notes and which are held in the name of [name of
transferor] (the “Transferor”) to effect the transfer of such Common Stock.

 

In connection with
the transfer of such shares of Common Stock, the undersigned confirms that such
shares of Common Stock are being transferred and do not require registration
under the Securities Act (as defined below) because:

 

CHECK ONE BOX
BELOW:

 

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

 

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

 

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

 

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

 

Unless one of the boxes is checked, the transfer agent
will refuse to register any of the Common Stock evidenced by this certificate
in the name of any person other than the registered holder thereof; provided, however, that
if box (2), (3) or (4) is checked, the transfer agent may require, prior to
registering any such transfer of the Common Stock such certifications and other
information, including opinions of counsel, as the Company has reasonably
requested in writing, by delivery to the transfer agent of a standing letter of
instruction, to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act.

 

B-1

 

	
   

  	
  [Name of Transferor],

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Dated:

  

 

B-2Exhibit 4.3

EXECUTION
COPY

 

AAR CORP.

 

1.75% Convertible Senior Notes due 2026

 

Registration Rights Agreement

 

February 1,
2006

 

 

MERRILL LYNCH & CO.

Merrill Lynch, Pierce, Fenner & Smith

Incorporated

as Representative of the several Purchasers

4 World Financial Center

New York, New York  10080

 

 

Ladies and Gentlemen:

 

AAR CORP., a Delaware corporation (the “Company”),
proposes to issue and sell to the Purchasers (as defined herein) upon the terms
set forth in the Purchase Agreement (as defined herein) its 1.75% Convertible
Notes due 2026 (the “Securities”).  As an
inducement to the Purchasers to enter into the Purchase Agreement and in
satisfaction of a condition to the obligations of the Purchasers thereunder,
the Company agrees with the Purchasers for the benefit of Holders (as defined
herein) from time to time of the Registrable Securities (as defined herein) as
follows:

 

1.             Definitions.

 

(a)           Capitalized terms used herein without
definition shall have the meanings ascribed to them in the Purchase Agreement.  As used in this Agreement, the following
defined terms shall have the following meanings:

 

“Affiliate” of any specified person means any other
person which, directly or indirectly, is in control of, is controlled by, or is
under common control with such specified person.  For purposes of this definition, control of a
person means the power, direct or indirect, to direct or cause the direction of
the management and policies of such person whether by contract or otherwise;
and the terms “controlling” and “controlled” have meanings correlative to the
foregoing.

 

“Closing Date” means the Initial Closing Time as
defined in the Purchase Agreement.

 

1

 

“Commission” means the United States Securities and
Exchange Commission, or any other federal agency at the time administering the
Exchange Act or the Securities Act, whichever is the relevant statute for the
particular purpose.

 

“Common Stock” means the Company’s common stock, par
value $1.00 per share together with any associated share purchase rights.

 

“DTC” means The Depository Trust Company.

 

“Effective Date” has the meaning assigned thereto in Section 2(b)(i) hereof.

 

“Effective Failure” has the meaning assigned thereto
in Section 7(b) hereof.

 

“Effectiveness Period” has the meaning assigned
thereto in Section 2(b)(i) hereof.

 

“Effective Time” means the time at which the
Commission declares the Shelf Registration Statement effective or at which the
Shelf Registration Statement otherwise becomes effective.

 

“Electing Holder” has the meaning assigned thereto in Section 3(a)(iii) hereof.

 

“Exchange Act” means the United States Securities
Exchange Act of 1934, as amended.

 

“Free writing prospectus” has the meaning assigned
thereto in Section 2(d) hereof.

 

“Holder” means any person that is the record owner of
Registrable Securities (and includes any person that has a beneficial interest
in any Registrable Security in book-entry form).

 

“Indenture” means the Indenture, dated as of February 1,
2006, between the Company and U.S. Bank National Association, as amended and
supplemented from time to time in accordance with its terms.

 

“Issuer Free Writing Prospectus” has the meaning
assigned thereto in Section 2(d) hereof.

 

“Liquidated Damages” has the meaning assigned thereto in
Section 7(a) hereof.

 

“Managing Underwriters” means the investment banker or
investment bankers and manager or managers that shall administer an
underwritten offering, if any, conducted pursuant to Section 6 hereof.

 

“NASD Rules” means the Rules of the National
Association of Securities Dealers, Inc., as amended from time to time.

 

“Notice and Questionnaire” means a Notice of
Registration Statement and Selling Securityholder Questionnaire substantially
in the form of Appendix A hereto.

 

The term “person” means an individual, partnership,
corporation, trust or unincorporated organization, or a government or agency or
political subdivision thereof.

 

2

 

“Prospectus” means the prospectus (including, without
limitation, any preliminary prospectus, any final prospectus and any prospectus
that discloses information previously omitted from a prospectus filed as part
of an effective registration statement in reliance upon Rule 430B under
the Securities Act) included in the Shelf Registration Statement, as amended or
supplemented by any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by the Shelf
Registration Statement and by all other amendments and supplements to such
prospectus, including all material incorporated by reference in such prospectus
and all documents filed after the date of such prospectus by the Company under
the Exchange Act and incorporated by reference therein.  Any information included in the Prospectus
that was omitted from the Shelf Registration Statement at the time it became
effective but that is deemed to be part of and included in the Shelf
Registration Statement pursuant to Rule 430B(f) is referred to as the
“Rule 430B Information.”

 

“Purchase Agreement” means the purchase agreement,
dated as of January 26, 2006, between the Purchasers and the Company
relating to the Securities.

 

“Purchasers” means the Purchasers named in Schedule A
to the Purchase Agreement.

 

“Registrable Securities” means all or any portion of
the Securities issued from time to time under the Indenture in registered form
and the shares of Common Stock issuable upon conversion of such Securities;
provided, however, that a security ceases to be a Registrable Security when it
is no longer a Restricted Security.

 

“Registration Default” has the meaning assigned
thereto in Section 7(a) hereof.

 

“Restricted Security” means any Security or share of
Common Stock issuable upon conversion thereof except any such Security or share
of Common Stock that (i) has been effectively registered under the
Securities Act and sold in a manner contemplated by the Shelf Registration
Statement, (ii) has been transferred in compliance with Rule 144
under the Securities Act (or any successor provision thereto) or is
transferable pursuant to paragraph (k) of such Rule 144 (or any successor
provision thereto) or (iii) has otherwise been transferred and a new
Security or share of Common Stock not subject to transfer restrictions under
the Securities Act has been delivered by or on behalf of the Company in
accordance with Section 2.1 of the Indenture.

 

“Rules and Regulations” means the published rules and
regulations of the Commission promulgated under the Securities Act or the
Exchange Act, as in effect at any relevant time.

 

“Securities Act” means the United States Securities
Act of 1933, as amended.

 

“Shelf Registration” means a registration effected
pursuant to Section 2 hereof.

 

“Shelf Registration Statement” means a “shelf”
registration statement filed under the Securities Act providing for the
registration of, and the sale on a continuous or delayed basis by the Holders
of, all of the Registrable Securities pursuant to Rule 415 under the
Securities Act and/or any similar rule that may be adopted by the
Commission, filed by the Company pursuant to the provisions of Section 2
of this Agreement, including the Prospectus contained therein, any amendments
and supplements to such registration statement, including post-effective

 

3

 

amendments, and all exhibits and all material incorporated by reference
in such registration statement.

 

“Suspension Period” has the meaning assigned thereto
in Section 2(c) hereof.

 

“Trust Indenture Act” means the Trust Indenture Act of
1939, or any successor thereto, and the rules, regulations and forms
promulgated thereunder, as the same shall be amended from time to time.

 

“Underwritten Offering” means a registration in which
Registerable Securities are sold to one or more underwriters for reoffering to
the public.

 

The term “underwriter” means any underwriter of
Registrable Securities in connection with an offering thereof under a Shelf
Registration Statement.

 

(b)           Wherever there is a reference in this
Agreement to a percentage of the “principal amount” of Registrable Securities
or to a percentage of Registrable Securities, Common Stock shall be treated as
representing the principal amount of Securities that was surrendered for
conversion or exchange in order to receive such number of shares of Common
Stock.

 

2.             Shelf
Registration.

 

(a)           The Company shall, no later than 90
calendar days following the Closing Date, file with the Commission a Shelf
Registration Statement relating to the offer and sale of the Registrable Securities
by the Holders from time to time in accordance with the methods of distribution
elected by such Holders and set forth in such Shelf Registration Statement and,
thereafter, shall use its reasonable best efforts to cause such Shelf
Registration Statement to be declared effective under the Securities Act no
later than 180 calendar days following the Closing Date; provided, however,
that the Company may, upon written notice to all Holders, postpone having the
Shelf Registration Statement declared effective for a reasonable period not to
exceed 90 days if the Company possesses material non-public information, the
disclosure of which would have a material adverse effect on the Company and its
subsidiaries taken as a whole, if a pending transaction that would be material
to the Company and its subsidiaries, taken as a whole, could be materially
adversely affected as a result, or if the Company is unable to file financial
statements required to be included in a shelf registration statement as a
result of a pending litigation; provided, further, however, that no Holder
shall be entitled to be named as a selling securityholder in the Shelf
Registration Statement or to use the Prospectus forming a part thereof for
resales of Registrable Securities unless such Holder is an Electing Holder.

 

(b)           The Company shall use its reasonable
best efforts:

 

(i)            to
keep the Shelf Registration Statement continuously effective under the
Securities Act in order to permit the Prospectus forming a part thereof to be
usable by Holders until the earliest of (1) the sale of all Registrable
Securities registered under the Shelf Registration Statement; (2) the
expiration of the period referred to in Rule 144(k) of the Securities Act
with respect to all Registrable Securities held by Persons that are not
Affiliates of the Company; and (3) two years from the date (the “Effective
Date”) such

 

4

 

Shelf Registration Statement is declared effective (such period being
referred to herein as the “Effectiveness Period”);

 

(ii)           after
the Effective Time of the Shelf Registration Statement, promptly upon the
request of any Holder of Registrable Securities that is not then an Electing
Holder, to take any action reasonably necessary to enable such Holder to use
the Prospectus forming a part thereof for resales of Registrable Securities,
including, without limitation, any action necessary to identify such Holder as
a selling securityholder in the Shelf Registration Statement; provided,
however, that nothing in this subparagraph shall relieve such Holder of the
obligation to return a completed and signed Notice and Questionnaire to the
Company in accordance with Section 3(a)(ii) hereof; and

 

(iii)          if
at any time the Securities, pursuant to Article 4.2 of the Indenture, are
convertible into securities other than Common Stock, to cause, or to cause any
successor under the Indenture to cause, such securities to be included in the
Shelf Registration Statement no later than the date on which the Securities may
then be convertible into such securities.

 

The Company shall be deemed not to have used its
reasonable best efforts to keep the Shelf Registration Statement effective
during the requisite period if the Company voluntarily takes any action that
would result in Holders of Registrable Securities covered thereby not being
able to offer and sell any of such Registrable Securities during that period,
unless such action is (A) required by applicable law and the Company
thereafter promptly complies with the requirements of paragraph 3(j) below or (B) permitted
pursuant to Section 2(c) below.

 

(c)           The Company may suspend the use of
the Prospectus for a period not to exceed 30 days in any 90-day period or an
aggregate of 90 days in any 12-month period (each, a “Suspension Period”) if
the Board of Directors of the Company shall have determined in good faith that
because of valid business reasons (not including avoidance of the Company’s
obligations hereunder), including the acquisition or divestiture of assets,
pending corporate developments, public filings with the Commission and similar
events, it is in the best interests of the Company to suspend such use, and
prior to suspending such use the Company provides the Holders with written
notice of such suspension, which notice need not specify the nature of the
event giving rise to such suspension.

 

(d)           The Company represents and agrees
that, unless it obtains the prior consent of a majority of the Registrable
Securities that are registered under the Shelf Registration Statement at such
time or the consent of the Managing Underwriter in connection with any
underwritten offering of Registrable Securities, it will not make any offer
relating to the Securities that would constitute an “issuer free writing
prospectus,” as defined in Rule 433 (an “Issuer Free Writing Prospectus”),
or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405,
required to be filed with the Commission. 
Each Holder represents and agrees that, unless it obtains the prior
consent of the Company and any such Managing Underwriter, it will not make any
offer relating to the Securities that would constitute a “free writing
prospectus,” as defined in Rule 405, required to be filed with the
Commission.  The Company represents that
any Issuer Free Writing Prospectus or a “free writing prospectus”will not
include any information that conflicts with the information contained in the
Shelf

 

5

 

Registration Statement or the Prospectus and, any Issuer Free Writing
Prospectus or a “free writing prospectus”, when taken together with the
information in the Shelf Registration Statement and the Prospectus, will not
include any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

 

3.             Registration
Procedures. 
In connection with the Shelf Registration Statement, the following
provisions shall apply:

 

(a)           (i)  Not less than 30 calendar
days prior to the Effective Time of the Shelf Registration Statement, the
Company shall mail the Notice and Questionnaire to the Holders of Registrable
Securities.  No Holder shall be entitled
to be named as a selling securityholder in the Shelf Registration Statement as
of the Effective Time, and no Holder shall be entitled to use the Prospectus
forming a part thereof for resales of Registrable Securities until such Holder
has returned a completed and signed Notice and Questionnaire to the Company;
provided, however, to be included in the Registration Statement as of the
Effective Time, Holders of Registrable Securities shall have at least 28
calendar days from the date on which the Notice and Questionnaire is first
mailed to such Holders to return a completed and signed Notice and
Questionnaire to the Company.

 

(ii)           After
the Effective Time of the Shelf Registration Statement, the Company shall, upon
the request of any Holder of Registrable Securities that is not then an
Electing Holder, promptly send a Notice and Questionnaire to such Holder.  From and after the Effective Time of the
Shelf Registration Statement, the Company shall (A) as promptly as is
practicable after the date a completed and signed Notice and Questionnaire is
delivered to the Company, and in any event within ten Business Days after such
date, prepare and file with the Commission (x) a supplement to the Prospectus
or, if required by applicable law, a post-effective amendment to the Shelf
Registration Statement and (y) any other document required by applicable law,
so that the Holder delivering such Notice and Questionnaire is named as a
selling securityholder in the Shelf Registration Statement and is permitted to
deliver the Prospectus to purchasers of such Holder’s Registrable Securities in
accordance with applicable law, and (B) if the Company shall file a
post-effective amendment to the Shelf Registration Statement, use its
reasonable best efforts to cause such post-effective amendment to become
effective under the Securities Act as promptly as is practicable;  provided, however, that if a Notice and
Questionnaire is delivered to the Company during a Suspension Period, the
Company shall not be obligated to take the actions set forth in this clause (ii) until
the termination of such Suspension Period.

 

(iii)          The
term “Electing Holder” shall mean any Holder of Registrable Securities that has
returned a completed and signed Notice and Questionnaire to the Company in
accordance with Section 3(a)(i) or 3(a)(ii) hereof.

 

(b)           The Company shall furnish to each
Electing Holder, prior to the Effective Time, a copy of the Shelf Registration
Statement initially filed with the Commission, and shall furnish to such
Holders, prior to the filing thereof with the Commission, copies of each amendment
thereto and each amendment or supplement, if any, to the Prospectus included

 

6

 

therein, and shall use its reasonable best efforts to reflect in each
such document, at the Effective Time or when so filed with the Commission, as
the case may be, such comments as such Holders and their respective counsel
reasonably may propose.

 

(c)           The Company shall promptly take such
action as may be necessary so that (i) each of the Shelf Registration
Statement and any amendment thereto and the Prospectus forming a part thereof
and any amendment or supplement thereto (and each report or other document
incorporated therein by reference in each case) complies in all material
respects with the Securities Act and the Exchange Act and the respective rules and
regulations thereunder, (ii) each of the Shelf Registration Statement and
any amendment thereto does not, when it becomes effective, including any Rule 430B
Information, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) each of the Prospectus forming a part of
the Shelf Registration Statement, and any amendment or supplement to such
Prospectus, does not at any time during the Effectiveness Period include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

 

(d)           The Company shall promptly advise
each Electing Holder, and shall confirm such advice in writing if so requested
by any such Electing Holder:

 

(i)            when
a Shelf Registration Statement and any amendment thereto has been filed with
the Commission and when a Shelf Registration Statement or any post-effective
amendment thereto has become effective, in each case making a public
announcement thereof by release made to Reuters Economic Services and Bloomberg
Business News;

 

(ii)           of
any request by the Commission for amendments or supplements to the Shelf
Registration Statement or the Prospectus included therein or for additional
information;

 

(iii)          of
the issuance by the Commission of any stop order suspending the effectiveness
of the Shelf Registration Statement or the initiation of any proceedings for
such purpose;

 

(iv)          of
the receipt by the Company of any notification with respect to the suspension
of the qualification of the securities included in the Shelf Registration
Statement for sale in any jurisdiction or the initiation of any proceeding for
such purpose; and

 

(v)           of
the occurrence of any event or the existence of any state of facts that
requires the making of any changes in the Shelf Registration Statement or the
Prospectus included therein so that, as of such date, such Shelf Registration
Statement and Prospectus do not contain an untrue statement of a material fact
and do not omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading (which
advice shall be accompanied by an instruction to such Holders to suspend the
use of the Prospectus until the requisite changes have been made).

 

7

 

(e)           The Company shall use its reasonable
best efforts to prevent the issuance, and if issued to obtain the withdrawal at
the earliest possible time, of any order suspending the effectiveness of the
Shelf Registration Statement.

 

(f)            The Company shall furnish to each
Electing Holder, without charge, at least one copy of the Shelf Registration
Statement and all post-effective amendments thereto, including financial
statements and schedules, and, if such Electing Holder so requests in writing,
all reports, other documents and exhibits that are filed with or incorporated
by reference in the Shelf Registration Statement.

 

(g)           The Company shall, during the
Effectiveness Period, deliver to each Electing Holder, without charge, as many
copies of the Prospectus (including each preliminary prospectus) included in
the Shelf Registration Statement and any amendment or supplement thereto as
such Electing Holder may reasonably request; and the Company consents (except
during the periods specified in Section 2(c) above or during the
continuance of any event or the existence of any state of facts described in Section 3(d)(v) above)
to the use of the Prospectus and any amendment or supplement thereto by each of
the Electing Holders in connection with the offering and sale of the
Registrable Securities covered by the Prospectus and any amendment or
supplement thereto during the Effectiveness Period.

 

(h)           Prior to any offering of Registrable
Securities pursuant to the Shelf Registration Statement, the Company shall (i) register
or qualify or cooperate with the Electing Holders and their respective counsel
in connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or “blue sky” laws of such
jurisdictions within the United States as any Electing Holder may reasonably
request, (ii) keep such registrations or qualifications in effect and
comply with such laws so as to permit the continuance of offers and sales in
such jurisdictions for so long as may be necessary to enable any Electing
Holder or underwriter, if any, to complete its distribution of Registrable
Securities pursuant to the Shelf Registration Statement, and (iii) take
any and all other actions necessary or advisable to enable the disposition in
such jurisdictions of such Registrable Securities; provided, however, that in
no event shall the Company be obligated to (A) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it would not
otherwise be required to so qualify but for this Section 3(h) or (B) file
any general consent to service of process in any jurisdiction where it is not
as of the date hereof so subject.

 

(i)            Unless any Registrable Securities
shall be in book-entry only form, the Company shall cooperate with the Electing
Holders to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold pursuant to the Shelf
Registration Statement, which certificates, if so required by any securities
exchange upon which any Registrable Securities are listed, shall be penned,
lithographed or engraved, or produced by any combination of such methods, on
steel engraved borders, and which certificates shall be free of any restrictive
legends and in such permitted denominations and registered in such names as
Electing Holders may request in connection with the sale of Registrable
Securities pursuant to the Shelf Registration Statement.

 

(j)            Upon the occurrence of any event or
the existence of any state of facts contemplated by paragraph 3(d)(v) above,
the Company shall promptly prepare a post-effective

 

8

 

amendment to any Shelf Registration Statement or an amendment or
supplement to the related Prospectus or file any other required document so
that, as thereafter delivered to purchasers of the Registrable Securities
included therein, the Prospectus will not include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.  If the Company
notifies the Electing Holders of the occurrence of any event or the existence
of any state of facts contemplated by paragraph 3(d)(v) above, the
Electing Holder shall suspend the use of the Prospectus until the requisite
changes to the Prospectus have been made.

 

(k)           Not later than the Effective Time of
the Shelf Registration Statement, the Company shall provide a CUSIP number for
the Registrable Securities that are debt securities.

 

(l)            The Company shall use its reasonable
best efforts to comply with all applicable Rules and Regulations, and to
make generally available to its securityholders as soon as practicable, but in
any event not later than eighteen months after (i) the effective date (as
defined in Rule 158(c) under the Securities Act) of the Shelf
Registration Statement, (ii) the effective date of each post-effective
amendment to the Shelf Registration Statement, and (iii) the date of each
filing by the Company with the Commission of an Annual Report on Form 10-K
that is incorporated by reference in the Shelf Registration Statement, an
earning statement of the Company and its subsidiaries complying with Section 11(a) of
the Securities Act and the rules and regulations of the Commission
thereunder (including, at the option of the Company, Rule 158).

 

(m)          Not later than the Effective Time of
the Shelf Registration Statement, the Company shall cause the Indenture to be
qualified under the Trust Indenture Act; in connection with such qualification,
the Company shall cooperate with the Trustee under the Indenture and the
Holders (as defined in the Indenture) to effect such changes to the Indenture
as may be required for such Indenture to be so qualified in accordance with the
terms of the Trust Indenture Act; and the Company shall execute, and shall use
all reasonable efforts to cause the Trustee to execute, all documents that may
be required to effect such changes and all other forms and documents required
to be filed with the Commission to enable such Indenture to be so qualified in
a timely manner.  In the event that any
such amendment or modification referred to in this Section 3(m) involves
the appointment of a new trustee under the Indenture, the Company shall appoint
a new trustee thereunder pursuant to the applicable provisions of the
Indenture.

 

(n)           In the event of an underwritten
offering conducted pursuant to Section 6 hereof, the Company shall, if
requested, promptly include or incorporate in a prospectus supplement or
post-effective amendment to the Shelf Registration Statement such information
as the Managing Underwriters reasonably agree should be included therein and to
which the Company does not reasonably object and shall make all required
filings of such prospectus supplement or post-effective amendment as soon as
practicable after it is notified of the matters to be included or incorporated
in such prospectus supplement or post-effective amendment.

 

(o)           The Company shall enter into such
customary agreements (including an underwriting agreement in customary form in
the event of an underwritten offering conducted pursuant to Section 6
hereof) and take all other appropriate action in order to expedite and
facilitate the registration and disposition of the Registrable Securities, and
in connection

 

9

 

therewith, if an underwriting agreement is entered into, cause the same
to contain indemnification provisions and procedures substantially identical to
those set forth in Section 5 hereof with respect to all parties to be
indemnified pursuant to Section 5 hereof.

 

(p)           The Company shall:

 

(i)            (A) make
reasonably available for inspection by the Electing Holders, any underwriter
participating in any disposition pursuant to the Shelf Registration Statement,
and any attorney, accountant or other agent retained by such Electing Holders
or any such underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries, and (B) cause
the Company’s officers, directors and employees to supply all information
reasonably requested by such Electing Holders or any such underwriter,
attorney, accountant or agent in connection with the Shelf Registration
Statement, in each case, as is customary for similar due diligence
examinations; provided, however, that all records, information and documents
that are designated in writing by the Company, in good faith, as confidential
shall be kept confidential by such Electing Holders and any such underwriter,
attorney, accountant or agent, unless such disclosure is made in connection
with a court proceeding or required by law, or such records, information or
documents become available to the public generally or through a third party
without an accompanying obligation of confidentiality; and provided further
that, if the foregoing inspection and information gathering would otherwise
disrupt the Company’s conduct of its business, such inspection and information
gathering shall, to the greatest extent possible, be coordinated on behalf of
the Electing Holders and the other parties entitled thereto by one counsel
designated by and on behalf of the Electing Holders and other parties;

 

(ii)           in
connection with any underwritten offering conducted pursuant to Section 6
hereof, make such representations and warranties to the Electing Holders
participating in such underwritten offering and to the Managing Underwriters,
in form, substance and scope as are customarily made by the Company to
underwriters in primary underwritten offerings of equity and convertible debt
securities and covering matters including, but not limited to, those set forth
in the Purchase Agreement;

 

(iii)          in
connection with any underwritten offering conducted pursuant to Section 6
hereof, obtain opinions of counsel to the Company (which counsel and opinions
(in form, scope and substance) shall be reasonably satisfactory to the Managing
Underwriters) addressed to each Electing Holder participating in such underwritten
offering and the underwriters, covering such matters as are customarily covered
in opinions requested in primary underwritten offerings of equity and
convertible debt securities and such other matters as may be reasonably
requested by such Electing Holders and underwriters (it being agreed that the
matters to be covered by such opinions shall include, without limitation, as of
the date of the opinion, as of the date of pricing of such underwritten
offering and as of the Effective Time of the Shelf Registration Statement or
most recent post-effective amendment thereto, as the case may be, the absence
from the Shelf Registration Statement, including any Rule 430B
Information, and the Prospectus, including the documents incorporated by
reference therein, of an

 

10

 

untrue statement of a material fact or the omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading);

 

(iv)          in
connection with any underwritten offering conducted pursuant to Section 6
hereof, obtain “comfort” letters and updates thereof from the independent
public accountants of the Company (and, if necessary, from the independent
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or are
required to be, included in the Shelf Registration Statement), addressed to
each Electing Holder participating in such underwritten offering (if such Electing
Holder has provided such letter, representations or documentation, if any,
required for such comfort letter to be so addressed) and the underwriters, in
customary form and covering matters of the type customarily covered in “comfort”
letters in connection with primary underwritten offerings;

 

(v)           in
connection with any underwritten offering conducted pursuant to Section 6
hereof, deliver such documents and certificates as may be reasonably requested
by any Electing Holders participating in such underwritten offering and the
Managing Underwriters, if any, including, without limitation, certificates to
evidence compliance with Section 3(j) hereof and with any conditions
contained in the underwriting agreement or other agreements entered into by the
Company.

 

(q)           The Company will use its reasonable
best efforts to cause the Common Stock issuable upon conversion of the
Securities to be listed on the New York Stock Exchange or other stock exchange
or trading system on which the Common Stock primarily trades on or prior to the
Effective Time of the Shelf Registration Statement hereunder.

 

(r)            In the event that any broker-dealer
registered under the Exchange Act shall be an “affiliate” (as defined in Rule 2720(b)(1) of
the NASD Rules (or any successor provision thereto)) of the Company or has
a “conflict of interest” (as defined in Rule 2720(b)(7) of the NASD Rules (or
any successor provision thereto)) and such broker-dealer shall underwrite,
participate as a member of an underwriting syndicate or selling group or assist
in the distribution of any Registrable Securities covered by the Shelf
Registration Statement, whether as a Holder of such Registrable Securities or
as an underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, the Company shall assist such broker-dealer in complying
with the requirements of the NASD Rules, including, without limitation, by (A) engaging
a “qualified independent underwriter” (as defined in Rule 2720(b)(15) of
the NASD Rules (or any successor provision thereto)) to participate in the
preparation of the registration statement relating to such Registrable
Securities, to exercise usual standards of due diligence in respect thereto and
to recommend the public offering price of such Registrable Securities, (B) indemnifying
such qualified independent underwriter to the extent of the indemnification of
underwriters provided in Section 5 hereof, and (C) providing such
information to such broker-dealer as may be required in order for such
broker-dealer to comply with the requirements of the NASD Rules.

 

11

 

(s)           The Company shall use its reasonable
best efforts to take all other steps necessary to effect the registration,
offering and sale of the Registrable Securities covered by the Shelf
Registration Statement contemplated hereby.

 

4.             Registration
Expenses.  Except
as otherwise provided in Section 3, the Company shall bear all fees and
expenses incurred in connection with the performance of its obligations under
Sections 2, 3 and 6 hereof and shall bear or reimburse the Electing Holders for
the reasonable fees and disbursements of a single counsel selected by a
plurality of all Electing Holders who own an aggregate of not less than 25% of
the Registrable Securities covered by the Shelf Registration Statement to act
as counsel therefore in connection therewith or if no counsel is designated by
such Electing Holders, one designated by the Purchasers.  Each Electing Holder shall pay all
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Electing Holder’s Registrable Securities
pursuant to the Shelf Registration Statement.

 

5.             Indemnification
and Contribution.

 

(a)           Indemnification
by the Company.  Upon the
registration of the Registrable Securities pursuant to Section 2 hereof,
the Company shall indemnify and hold harmless each Purchaser, Electing Holder
and each underwriter, selling agent or other securities professional, if any,
which facilitates the disposition of Registrable Securities, and each of their
respective officers and directors and each person who controls such Purchaser,
Electing Holder, underwriter, selling agent or other securities professional
within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act (each such person being sometimes referred to as an “Indemnified
Person”) as follows:

 

(i)            against
any losses, claims, damages or liabilities, joint or several, to which such
Indemnified Person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Shelf Registration Statement,
including any Rule 430B Information, under which such Registrable
Securities are to be registered under the Securities Act, or any Prospectus
contained therein or furnished by the Company to any Indemnified Person, or any
amendment or supplement thereto, or any Issuer Free Writing Prospectus, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading;

 

(ii)           against
any losses, claims, damages or liabilities (or actions in respect thereof), as
incurred, to the extent of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission;  provided that any such
settlement is effected with the written consent of the Company, except as
provided in Section 5(d); and

 

12

 

(iii)          the
Company hereby agrees to reimburse such Indemnified Person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such action or claim as such expenses are incurred;

 

provided,
however, that the Company shall not be liable to any such Indemnified Person in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such Shelf Registration Statement or
Prospectus, or amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company by such Indemnified Person expressly
for use therein.

 

(b)           Indemnification
by the Electing Holders and any Agents and Underwriters.  Each Electing Holder agrees, as a consequence
of the inclusion of any of such Electing Holder’s Registrable Securities in
such Shelf Registration Statement, and each underwriter, selling agent or other
securities professional, if any, which facilitates the disposition of
Registrable Securities shall agree, as a consequence of facilitating such
disposition of Registrable Securities, severally and not jointly, to (i) indemnify
and hold harmless the Company, the Purchasers, the other Electing Holders, the
other underwriters and each of their respective directors and officers and each
person, if any, who controls the Company, the Purchasers, the other Electing Holders,
the other underwriters within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any losses,
claims, damages or liabilities to which the Company or such other persons may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in such Shelf Registration Statement or Prospectus, or any
amendment or supplement, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Electing
Holder, underwriter, selling agent or other securities professional expressly
for use therein, and (ii) reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred.

 

(c)           Notices
of Claims, Etc.  Promptly
after receipt by an indemnified party under subsection (a) or (b) above
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 5, notify such indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party otherwise than
under the indemnification provisions of or contemplated by subsection (a) or
(b) above.  In case any such action
shall be brought against any indemnified party and it shall notify an
indemnifying party of the commencement thereof, such indemnifying party shall
be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying

 

13

 

party to such indemnified party of its election so to assume the
defense thereof, such indemnifying party shall not be liable to such
indemnified party under this Section 5 for any legal expenses of other
counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party
from all liability arising out of such action or claim and (ii) does not
include a statement as to, or an admission of, fault, culpability or a failure
to act, by or on behalf of any indemnified party.

 

(d)           Settlement
without Consent if Failure to Reimburse.  If at any time an indemnified party shall
have requested an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel, such indemnifying party agrees that it shall be
liable for any settlement of the nature contemplated by Section 5(a)(ii) effected
without its written consent if (x) such settlement is entered into more than 45
days after receipt by such indemnifying party of the aforesaid request, (y)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and (z)
such indemnifying party shall not have reimbursed such indemnified party for
fees and expenses of counsel in accordance with such request prior to the date
of such settlement.

 

(e)           Contribution.  If the indemnification provided for in this Section 5
is unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations.  The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by
such indemnifying party or by such indemnified party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.  The parties
hereto agree that it would not be just and equitable if contribution pursuant
to this Section 5(e) were determined by pro rata allocation (even if
the Electing Holders or any underwriters, selling agents or other securities
professionals or all of them were treated as one entity for such purpose) or by
any other method of allocation which does not take account of the equitable
considerations referred to in this Section 5(e).  The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above shall be deemed to include any legal or
other fees or expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. 
The

 

14

 

obligations of the Electing Holders and any underwriters, selling
agents or other securities professionals in this Section 5(e) to
contribute shall be several in proportion to the percentage of principal amount
of Registrable Securities registered or underwritten, as the case may be, by
them and not joint.

 

(f)            Notwithstanding any other provision
of this Section 5, in no event will any (i) Electing Holder be
required to undertake liability to any person under this Section 5 for any
amounts in excess of the dollar amount of the proceeds to be received by such
Holder from the sale of such Holder’s Registrable Securities (after deducting
any fees, discounts and commissions applicable thereto) pursuant to any Shelf
Registration Statement under which such Registrable Securities are to be
registered under the Securities Act and (ii) underwriter, selling agent or
other securities professional be required to undertake liability to any person
hereunder for any amounts in excess of the discount, commission or other
compensation payable to such underwriter, selling agent or other securities
professional with respect to the Registrable Securities underwritten by it and
distributed to the public.

 

(g)           The obligations of the Company under
this Section 5 shall be in addition to any liability which the Company may
otherwise have to any Indemnified Person and the obligations of any Indemnified
Person under this Section 5 shall be in addition to any liability which
such Indemnified Person may otherwise have to the Company.  The remedies provided in this Section 5
are not exclusive and shall not limit any rights or remedies which may
otherwise be available to an indemnified party at law or in equity.

 

6.             Underwritten
Offering.  The Holders of Registrable Securities covered
by the Shelf Registration Statement who desire to do so may sell such
Registrable Securities in an Underwritten Offering.  In any such Underwritten Offering, the
Managing Underwriter will be selected by a majority of the Holders of the
Registrable Securities included in such offering; provided that such
Underwriters must be reasonably acceptable to the Company and; provided further
that the Company shall not be obligated to cooperate with more than one underwritten
offering during the Effectiveness Period.

 

7.             Liquidated
Damages.

 

(a)           Notwithstanding any postponement of
effectiveness permitted by Section 2(a) hereof, if (i) on or
prior to the 90th day following the Closing Date, a Shelf Registration
Statement has not been filed with the Commission or (ii) on or prior to
the 180th day following the Closing Date, such Shelf Registration Statement is
not declared effective by the Commission (each, a “Registration Default”), the
Company shall be required to pay liquidated damages (“Liquidated Damages”),
from and including the day following such Registration Default until such Shelf
Registration Statement is either so filed or so filed and subsequently declared
effective, as applicable, at a rate per annum equal to an additional
one-quarter of one percent (0.25%) of the principal amount of Registrable
Securities, to and including the 90th day following such Registration Default
and one-half of one percent (0.50%) thereof from and after the 91st day
following such Registration Default.

 

(b)           In the event that (i) the Shelf
Registration Statement ceases to be effective, (ii) the Company suspends
the use of the Prospectus pursuant to Section 2(c) or 3(j) hereof, (iii)

 

15

 

the Holders are not authorized to use the Prospectus pursuant to Section 3(g) hereto
or (iv) the Holders are otherwise prevented or restricted by the Company
from effecting sales pursuant to the Shelf Registration Statement (an “Effective
Failure”) for more than 30 days, whether or not consecutive, in any 90-day
period, or for more than 90 days, whether or not consecutive, during any 12-month
period, then the Company shall pay Liquidated Damages at a rate per annum equal
to an additional one-half of one percent (0.50%) of the principal amount of
Registrable Securities from the 31st day of the applicable 90-day period or the
91st day of the applicable 12-month period, as the case may be, that any such
Effective Failure has existed until the earlier of (1) the time the
Holders of Registrable Securities are again able to make sales under the Shelf
Registration Statement or (2) the expiration of the Effectiveness Period.

 

(c)           Any amounts to be paid as Liquidated
Damages pursuant to paragraphs (a) or (b) of this Section 7
shall be paid in cash semi-annually in arrears, with the first semi-annual
payment due on the first Interest Payment Date (as defined in the Indenture),
as applicable, following the date of such Registration Default or Effective
Failure, as applicable.  Such Liquidated
Damages will accrue (1) in respect of the Securities at the rates set
forth in paragraphs (a) or (b) of this Section 7, as applicable,
on the principal amount of the Securities and (2) in respect of the Common
Stock issued upon conversion of the Securities, at the rates set forth in
paragraphs (a) or (b) of this Section 7, as applicable, applied
to the Conversion Price (as defined in the Indenture) at that time.

 

(d)           Except as provided in Section 8(b) hereof,
the Liquidated Damages as set forth in this Section 7 shall be the
exclusive monetary remedy available to the Holders of Registrable Securities
for such Registration Default or Effective Failure. In no event shall the
Company be required to pay Liquidated Damages in excess of the applicable
maximum amount of one-half of one percent (0.50%) set forth above, regardless
of whether one or multiple Registration Defaults or Effective Failures exist.

 

8.             Miscellaneous.

 

(a)           Other
Registration Rights.  The
Company may grant registration rights that would permit any person that is a
third party the right to piggy-back on any Shelf Registration Statement,
provided that if the Managing Underwriter of any underwritten offering
conducted pursuant to Section 6 hereof notifies the Company and the Electing
Holders that the total amount of securities which the Electing Holders and the
holders of such piggy-back rights intend to include in any Shelf Registration
Statement is so large as to materially threaten the success of such offering
(including the price at which such securities can be sold), then the amount,
number or kind of securities to be offered for the account of holders of such
piggy-back rights will be reduced to the extent necessary to reduce the total
amount of securities to be included in such offering to the amount, number and
kind recommended by the Managing Underwriter prior to any reduction in the
amount of Registrable Securities to be included in such Shelf Registration
Statement.

 

(b)           Specific
Performance.  The parties
hereto acknowledge that there would be no adequate remedy at law if the Company
fails to perform any of its obligations hereunder and that the Purchasers and
the Holders from time to time may be irreparably harmed by any such failure,
and accordingly agree that the Purchasers and such Holders, in addition to any
other

 

16

 

remedy to which they may be entitled at law or in equity and without
limiting the remedies available to the Electing Holders under Section 7
hereof, shall be entitled to compel specific performance of the obligations of
the Company under this Registration Rights Agreement in accordance with the
terms and conditions of this Registration Rights Agreement, in any court of the
United States or any State thereof having jurisdiction.

 

(c)           Amendments
and Waivers.  This Agreement,
including this Section 8(c), may be amended, and waivers or consents to
departures from the provisions hereof may be given, only by a written
instrument duly executed by the Company and the holders of a majority in
aggregate principal amount of Registrable Securities then outstanding.  Each Holder of Registrable Securities
outstanding at the time of any such amendment, waiver or consent or thereafter
shall be bound by any amendment, waiver or consent effected pursuant to this Section 8(c),
whether or not any notice, writing or marking indicating such amendment, waiver
or consent appears on the Registrable Securities or is delivered to such
Holder.

 

(d)           Rule 144
and Rule 144A.  For so
long as the Company is subject to the reporting requirements of Section 13
or 15(d) of the 1934 Act, the Company covenants that it will file the
reports required to be filed by it under Section 13(a) or 15(d) of
the 1934 Act and the rules and regulations adopted by the Commission
thereunder.  If the Company ceases to be
so required to file such reports, the Company covenants that it will upon the
request of any Holder of Registrable Securities (a) make publicly
available such information as is necessary to permit sales pursuant to Rule 144
under the 1933 Act, (b) deliver such information to a prospective
purchaser as is necessary to permit sales pursuant to Rule 144A under the
1933 Act and it will take such further action as any Holder of Registrable
Securities may reasonably request for such purpose, and (c) take such
further action that is reasonable in the circumstances, in each case, to the
extent required from time to time to enable such Holder to sell its Registrable
Securities without registration under the 1933 Act within the limitation of the
exemptions provided by (i) Rule 144 under the 1933 Act, as such Rule may
be amended from time to time, (ii) Rule 144A under the 1933 Act, as
such Rule may be amended from time to time, or (iii) any similar rules or
regulations hereafter adopted by the Commission.  Upon the request of any Holder of Registrable
Securities, the Company will deliver to such Holder a written statement as to
whether it has complied with such reporting requirements.

 

(e)           Notices.  All notices and other communications provided
for or permitted hereunder shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Purchasers shall be directed to the Representative at 4 World Financial Center,
New York, New York 10080, attention of John Fortson, Director, notices to the
Company shall be directed to it at One AAR Place, 1100 N. Wood Dale Road, Wood
Dale, Illinois 60191, Attention: Secretary, and notices to a Holder, at the
most current address or fax number given by such Holder to the Company by means
of a notice given in accordance with the provisions of this Section 8(e).
Copies of all such notices or other communications shall be concurrently
delivered by the Person giving the same to the Trustee at  U.S. Bank National Association, 60 Livingston
Avenue, St. Paul, MN  55107,
Attention:  Corporate Trust Services,
Fax: (651) 495-8097.

 

(f)            Parties
in Interest.  The parties to
this Agreement intend that all Holders of Registrable Securities shall be
entitled to receive the benefits of this Agreement and that any

 

17

 

Electing Holder shall be bound by the terms and provisions of this
Agreement by reason of such election with respect to the Registrable Securities
which are included in a Shelf Registration Statement.  All the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of and shall be
enforceable by the respective successors and assigns of the parties hereto and
any Holder from time to time of the Registrable Securities to the aforesaid
extent.  In the event that any transferee
of any Holder of Registrable Securities shall acquire Registrable Securities,
in any manner, whether by gift, bequest, purchase, operation of law or
otherwise, such transferee shall, without any further writing or action of any
kind, be entitled to receive the benefits of and, if an Electing Holder, be
conclusively deemed to have agreed to be bound by and to perform all of the terms
and provisions of this Agreement to the aforesaid extent.

 

(g)           Counterparts.  This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

 

(h)           Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

(i)            Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.

 

(j)            Severability.  In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties hereto shall be enforceable to the fullest extent permitted by law.

 

(k)           Survival.  The respective indemnities, agreements,
representations, warranties and other provisions set forth in this Agreement or
made pursuant hereto shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Electing Holder, any director, officer or partner of such Holder, any
agent or underwriter, any director, officer or partner of such agent or
underwriter, or any controlling person of any of the foregoing, and shall
survive the transfer and registration of the Registrable Securities of such
Holder.

 

18

 

Please confirm that the foregoing correctly sets forth
the agreement between the Company and you.

 

	
   

  	
  Very
  truly yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AAR
  CORP.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  TIMOTHY J. ROMENESKO

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Timothy
  J. Romenesko

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President – Chief Financial

  Officer & Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Accepted as of the date hereof:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  MERRILL LYNCH & CO.

  	
   

  	
   

  
	
  MERRILL LYNCH, PIERCE, FENNER & SMITH

  	
   

  	
   

  
	
   

  	
  INCORPORATED

  	
   

  	
   

  
	
  GOLDMAN, SACHS & CO.

  	
   

  	
   

  
	
  SG COWEN & CO., LLC

  	
   

  	
   

  
	
  As Initial Purchasers

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: MERRILL LYNCH PIERCE FENNER & SMITH

  	
   

  	
   

  
	
   

  	
  INCORPORATED

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ JOHN C. FORTSON

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  	
   

  
	
   

  	
   

  	
   

  
	
  For itself and as Representative of the other
  Purchasers

  	
   

  	
   

  
										

 

19

 

Appendix A

 

AAR CORP.

 

Notice of Registration Statement

and

Selling Securityholder Questionnaire

 

[Date]

 

AAR
CORP. (the “Company”) has filed or intends to file
with the United States Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (the
“Shelf Registration Statement”) for the
registration and resale under Rule 415 of the United States Securities Act
of 1933, as amended (the “Securities Act”),
of the Company’s 1.75% Convertible Senior Notes due February 1, 2026 (the “Securities”) and the shares of common stock, par value $1.00
per share (the “Common Stock”), issuable upon
conversion thereof, in accordance with the Registration Rights Agreement, dated
as of February 1, 2006 (the “Registration Rights
Agreement”), between the Company and the purchasers named therein. A
copy of the Registration Rights Agreement is attached hereto.  All capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Registration Rights
Agreement.

 

In
order to have Registrable Securities included in the Shelf Registration
Statement (or a supplement or amendment thereto), this Notice of Registration
Statement and Selling Securityholder Questionnaire (“Notice and
Questionnaire”) must be completed, executed and delivered to the
Company at the address set forth herein for receipt within 28 calendar days
from the date on which Notice and Questionnaire is first mailed to selling
securityholders.  Beneficial owners of
Registrable Securities who do not complete, execute and return this Notice and
Questionnaire by such date (i) will not be named as selling
securityholders in the Shelf Registration Statement and (ii) may not use
the Prospectus forming a part thereof for resales of Registrable Securities
until they complete, execute and return to the Company this Notice and Questionnaire.

 

Certain
legal consequences arise from being named as a selling securityholder in the
Shelf Registration Statement and related Prospectus. Accordingly, holders and
beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Shelf Registration Statement and
related Prospectus.

 

The
term “Registrable Securities” is defined in
the Registration Rights Agreement to mean all or any portion of the Securities
issued from time to time under the Indenture in registered form and the shares
of Common Stock issuable upon conversion of such Securities; provided, however,
that a security ceases to be a Registrable Security when it is no longer a
Restricted Security.

 

The
term “Restricted Security” is defined in the
Registration Rights Agreement to mean any Security or share of Common Stock
issuable upon conversion thereof except any such Security or share of Common
Stock that (i) has been effectively registered under the Securities Act
and sold

 

20

 

in a manner contemplated by the Shelf Registration Statement, or (ii) has
been transferred in compliance with Rule 144 under the Securities Act (or
any successor provision thereto) or is transferable pursuant to
paragraph (k) of such Rule 144 (or any successor provision thereto),
or (iii) has otherwise been transferred and a new Security or share of
Common Stock not subject to transfer restrictions under the Securities Act has
been delivered by or on behalf of the Company in accordance with the Indenture.

 

ELECTION

 

The
undersigned holder (the “Selling Securityholder”)
of Registrable Securities hereby elects to include in the Shelf Registration
Statement the Registrable Securities beneficially owned by it and listed below
in Item (3). The undersigned, by signing and returning this Notice and
Questionnaire, agrees to be bound with respect to such Registrable Securities
by the terms and conditions of this Notice and Questionnaire and the
Registration Rights Agreement, including, without limitation, Section 6 of
the Registration Rights Agreement, as if the undersigned Selling Securityholder
were an original party thereto.

 

Upon
any sale of Registrable Securities pursuant to the Shelf Registration
Statement, the Selling Securityholder will be required to deliver to the
Company and the Trustee the Notice of Transfer (completed and signed) set forth
in Exhibit 1 to this Notice and Questionnaire.

 

The Selling
Securityholder hereby provides the following information to the Company and
represents and warrants that such information is accurate and complete:

 

QUESTIONNAIRE

 

	
  (1)

  	
  (a)

  	
  Full Legal Name
  of Selling Securityholder:

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Full Legal Name
  of Registered Holder (if not the same as in (a) above) of Registrable
  Securities Listed in Item (3) Below:

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Full legal name
  of the broker-dealer or other third party through which Registrable
  Securities, Listed in Item (3) Below are held:

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Full Legal Name
  of DTC Participant (if applicable and if not the same as (b) above)
  Through Which Registrable Securities Listed in Item (3) Below are
  Held:

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  If Selling
  Securityholder is not, and is not a wholly-owned subsidiary of a company that
  is, required to file periodic and other reports (e.g., Forms 10-K, 10-Q, and
  8-K) with the Commission pursuant to Section 13(a) or 15(d) of
  the Securities Exchange Act of 1934, identify any natural person(s) who
  exercise voting power and investment control over any Registrable Securities
  and provide each such person’s address:

  

 

21

 

	
  (2)

  	
  Address for
  Notices to Selling Securityholder:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Telephone:

  
	
   

  	
   

  
	
   

  	
  Fax:

  
	
   

  	
   

  
	
   

  	
  Contact Person:

  
	
   

  	
   

  
	
  (3)

  	
  Beneficial
  Ownership of the Securities:

  
	
   

  	
   

  
	
   

  	
  Except
  as set forth below in this Item (3), the undersigned Selling
  Securityholder does not beneficially own any Securities or shares of Common
  Stock issued upon conversion, repurchase or redemption of any Securities.

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  Principal
  amount of Registrable Securities (as defined in the Registration Rights
  Agreement) beneficially owned:

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  CUSIP
  No(s). of such Registrable Securities:

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  Number
  of shares of Common Stock (if any) issued upon conversion, repurchase or
  redemption of Registrable Securities:

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  (b)

  	
  Principal
  amount of Securities other than Registrable Securities beneficially owned:

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  CUSIP
  No(s). of such other Securities:

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  Number
  of shares of Common Stock (if any) issued upon conversion of such other Securities:

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  (c)

  	
  Principal
  amount of Registrable Securities which the undersigned wishes to be included
  in the Shelf Registration Statement:

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  CUSIP
  No(s). of such Registrable Securities to be included in the Shelf
  Registration Statement:

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  Number
  of shares of Common Stock (if any) issued upon conversion of Registrable
  Securities which are to be included in the Shelf Registration Statement:

  	 

 

22

 

	
  (4)

  	
  Beneficial
  Ownership of Other Securities of the Company:

  
	
   

  	
   

  
	
   

  	
  Except
  as set forth below in this Item (4), the undersigned Selling
  Securityholder is not the beneficial or registered owner of any shares of
  Common Stock or any other securities of the Company, other than the
  Securities and shares of Common Stock listed above in Item (3).

  
	
   

  	
   

  
	
   

  	
  State
  any exceptions here:

  
	
   

  	
   

  
	
  (5)

  	
  Relationships
  with the Company:

  
	
   

  	
   

  
	
   

  	
  Except
  as set forth below, neither the Selling Securityholder nor any of its
  affiliates, officers, directors or principal equity holders (5% or more) has
  held any position or office or has had any other material relationship with
  the Company (or its predecessors or affiliates) during the past three years.

  
	
   

  	
   

  
	
   

  	
  State
  any exceptions here:

  
	
   

  	
   

  
	
  (6)

  	
  Nature of the
  Selling Securityholder:

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  Is the
  selling Securityholder a reporting company under the Securities Exchange Act,
  a majority owned subsidiary of a reporting company under the Securities
  Exchange Act or a registered investment company under the Investment Company
  Act? If so, please state which one.

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  If the
  entity is a majority owned subsidiary of a reporting company, identify the
  majority stockholder that is a reporting company.

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  If the
  entity is not any of the above, identify the natural person or persons having
  voting and investment control over the Company’s securities that the entity
  owns.

  	 

 

23

 

	
   

  	
  (b)

  	
  Is the
  Selling Securityholder a registered broker-dealer? Yes  o    No  o

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  State
  whether the Selling Securityholder received the Registrable Securities as
  compensation for underwriting activities and, if so, provide a brief
  description of the transaction(s) involved.

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  State
  whether the Selling Securityholder is an affiliate of a broker-dealer and if
  so, list the name(s) of the broker-dealer affiliate(s).

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
  Yes  o    No  o

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  If the
  answer is “Yes,” you must answer the following:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If the Selling
  Securityholder is an affiliate of a registered broker-dealer, the Selling
  Securityholder purchased, the Registrable Securities (i) in the ordinary
  course of business and (ii) at the time of the purchase of the
  Registrable Securities, had no agreements or understandings, directly or
  indirectly, with any person to distribute the Registrable Securities.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Yes  o    No  o

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  If the answer is
  “No,” state any exceptions here:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  If the
  answer is “No,” this may affect your ability to be included in the
  registration statement.

  
	
   

  	
   

  	
   

  	 

	
  (7)

  	
   

  	
  Plan of
  Distribution:

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  Except
  as set forth below, the undersigned Selling Securityholder intends to
  distribute the Registrable Securities listed above in Item (3) only
  as follows (if at all): Such Registrable Securities may be sold from time to
  time directly by the undersigned Selling Securityholder or, alternatively,
  through underwriters, broker-dealers or agents. Such Registrable Securities
  may be sold in one or more transactions at fixed prices, at prevailing market
  prices at the time of sale, at varying prices determined at the time of sale
  or at negotiated prices. Such sales may be effected in transactions (which
  may involve crosses or block transactions) (i) on any national
  securities exchange or quotation service on which the Registrable Securities
  may be listed or quoted at the time of sale, (ii) in the over-the-counter
  market, (iii) in transactions otherwise than on such exchanges or
  services or in the over-the-counter market or (iv) through the writing
  of options. In connection with sales of the Registrable Securities or
  otherwise, the Selling Securityholder may enter into transactions with
  broker-dealers, which may in turn engage in short sales of the Registrable
  Securities in the course of hedging the positions they assume. The Selling
  Securityholder may also sell Registrable Securities short and deliver
  Registrable Securities to close out such short positions, or loan or pledge
  Registrable Securities to broker-dealers that in turn may sell such
  securities. The Selling Securityholder also may transfer and donate
  Registrable Securities in other circumstances in which case the transferees,
  donees, pledgees or other successors in interest will be the Selling
  Securityholder for purposes of the prospectus.

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  State
  any exceptions here:

  	 

					

 

24

 

By
signing below, the Selling Securityholder acknowledges that it understands its
obligation to comply, and agrees that it will comply, with the prospectus
delivery and other provisions of the Securities Act and the Exchange Act and
the rules and regulations thereunder, particularly Regulation M.

 

In the
event that the Selling Securityholder transfers all or any portion of the
Registrable Securities listed in Item (3) above after the date on
which such information is provided to the Company, the Selling Securityholder
agrees to notify the transferee(s) at the time of the transfer of its rights
and obligations under this Notice and Questionnaire and the Registration Rights
Agreement.

 

The Selling Securityholder hereby acknowledges its
obligations under the Registration Rights Agreement to indemnify and hold
harmless some persons as set forth therein.

 

Pursuant to the Registration Rights Agreement, the
Company has agreed under some circumstances to indemnify the Selling
Securityholder against some liabilities.

 

By signing below, the Selling Securityholder consents
to the disclosure of the information contained herein in its answers to
Items (1) through (7) above and the inclusion of such
information in the Shelf Registration Statement and related Prospectus.  The Selling Securityholder understands that
such information will be relied upon by the Company in connection with the
preparation of the Shelf Registration Statement and related Prospectus.  The Selling Securityholder further agrees
that if the Company notifies the Selling Securityholder further that the
Registration Statement is not available, the Selling Securityholder further
will suspend use of the Prospectus until receipt of notice from the Company
that the Prospectus is again available.

 

In
accordance with the Selling Securityholder’s obligation under the Registration
Rights Agreement to provide such information as may be required by law for
inclusion in the Shelf Registration Statement, the Selling Securityholder
agrees to promptly notify the Company of any inaccuracies or changes in the
information provided herein which may occur subsequent to the date hereof at
any time while the Shelf Registration Statement remains in effect. All notices
hereunder and pursuant to the Registration Rights Agreement shall be made in
writing, by hand-delivery, first-class mail or air courier guaranteeing
overnight delivery as follows:

 

	
  (i)

  	
  To the

  Company:

  	
   

  
	
   

  	
   

  	
  Timothy J.
  Romenesko

  Chief Financial Officer

  AAR CORP.

  One AAR Place

  1100 North Wood Dale Road

  Wood Dale, Illinois 60191

  
	
  (ii)

  	
  With a copy to:

  	
   

  
	
   

  	
   

  	
  Howard A.
  Pulsifer

  Vice President, General Counsel & Secretary

  AAR CORP.

  One AAR Place

  1100 North Wood Dale Road

  Wood Dale, Illinois 60191

  

 

25

 

Once
this Notice and Questionnaire is executed by the Selling Securityholder and
received by the Company, the terms of this Notice and Questionnaire, and the
representations and warranties contained herein, shall be binding on, shall
inure to the benefit of and shall be enforceable by the respective successors,
heirs, personal representatives, and assigns of the Company and the Selling
Securityholder (with respect to the Registrable Securities beneficially owned
by such Selling Securityholder and listed in Item (3) above). This
Agreement shall be governed in all respects by the laws of the State of New
York.

 

26

 

IN
WITNESS WHEREOF, the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by
its duly authorized agent.

 

	
  Dated:

  
	
   

  
	
  Selling
  Securityholder

  
	
  (Print/type full
  legal name of beneficial owner of Registrable Securities)

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  
	
  PLEASE RETURN
  THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO THE COMPANY AT:

  
	
   

  
	
  Timothy J. Romenesko

  Chief Financial Officer

  AAR CORP.

  One AAR Place

  1100 North Wood Dale Road

  Wood Dale, Illinois 60191

  
				

 

27

 

Exhibit 1

to Appendix A

 

NOTICE OF
TRANSFER PURSUANT TO REGISTRATION STATEMENT

 

AAR Corp.

One AAR Place

1100 N. Wood Dale Road

Wood Dale, Illinois 60191

Attention:  Howard A. Pulsifer

 

 

U.S. Bank National Association

60 Livingston Avenue

St. Paul, MN  55107

Attention:  Corporate Trust Services

 

Re:          AAR Corp. (the “Company”)

1.75% Convertible Senior Notes due 2026 (the “Notes”)

 

Dear Sirs:

 

Please be advised that                                    
has transferred $                             
aggregate principal amount of the above-referenced Notes or shares of the
Company’s common stock, issued upon conversion, repurchase or redemption of
Notes, pursuant to an effective Registration Statement on Form S-3 (File No. 333-                 )
filed by the Company.

 

We hereby certify that the prospectus delivery
requirements, if any, of the Securities Act of 1933, as amended, have been
satisfied with respect to the transfer described above and that the above-named
beneficial owner of the Notes or common stock is named as a selling
securityholder in the Prospectus dated [date], or in amendments or supplements
thereto, and that the aggregate principal amount of the Notes or number of
shares of common stock transferred are a portion of the Notes or shares of
common stock listed in such Prospectus as amended or supplemented opposite such
owner’s name.

 

	
  Dated:

  	
   

  
	
   

  	
   

  
	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Name)

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  (Authorized
  Signature)

  
				

 

28

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