Document:

Exhibit 4.4

 

EXECUTION COPY

 

 

 

 

 

 

 

AAR CORP.

 

as Issuer,

 

and

 

U.S. Bank National Association,

 

as Trustee

 

INDENTURE

 

Dated as of February 11, 2008

 

 

2.25% Convertible Senior Notes due 2016

 

 

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)

  	
   

  	
  11.3, 11.8; 11.10

  
	
   

  	
   

  	
  (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)

  	
   

  	
  3.7

  
	
   

  	
   

  	
  (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

  
	
   

  	
   

  	
  (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

  

 

i

 

N.A.  means not applicable

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

 

ii

 

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

  	
   

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
  THE NOTES

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.1. Form, Dating and Terms

  	
   

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.2. Execution and Authentication

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.3. Registrar, Conversion Agent and
  Paying Agent

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.4. Paying Agent To Hold Money and
  Securities in Trust

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.5. Holder Lists

  	
   

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.6. Transfer and Exchange

  	
   

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.7. Mutilated, Destroyed, Lost or
  Stolen Notes

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.8. Outstanding Notes

  	
   

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.9. Temporary Notes

  	
   

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.10. Cancellation

  	
   

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  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

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.15. Calculations in Respect of the
  Notes

  	
   

  	
  26

  

 

iii

 

	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
  COVENANTS

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.1. Payment of Notes

  	
   

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.2. Maintenance of Office or Agency

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.3. Money and Securities for Note
  Payments To Be Held in Trust

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.4. Corporate Existence

  	
   

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.5. Further Instruments and Acts

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.6. Liquidated Damages Notices

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.7. SEC Reports

  	
   

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.8. Compliance Certificates

  	
   

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.9. Rule 144A Information
  Requirement

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.10. Stay, Extension and Usury Laws

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.11. Notice of Default

  	
   

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
  SUCCESSOR COMPANY

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.1. Merger and Consolidation

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.2. Successor Corporation Substituted

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
  [RESERVED]

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
  NOTICE OF DESIGNATED EVENT OR OTHER MAKE WHOLE EVENT

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.1. Notice of Designated Event or
  Other Make Whole Event

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
  [RESERVED]

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
  PURCHASE AT OPTION OF HOLDER UPON A DESIGNATED EVENT

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.1. Purchase at the Option of the
  Holder upon a Designated Event

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.2. Company Notice of Designated Event

  	
   

  	
  33

  

 

iv

 

	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.3. Exercise of Option

  	
   

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.4. Effect of a Designated Event Purchase
  Notice.

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.5. Procedures

  	
   

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.6. Notes Purchased in Part

  	
   

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.7. Covenant to Comply with Securities
  Laws upon Purchase of Notes

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.8. Repayment to the Company

  	
   

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.9. Exchange in Lieu of Repurchase

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  
	
  CONVERSION OF NOTES

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.1. Right To Convert

  	
   

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.2. Determination of Satisfaction of
  Certain Conversion Triggers

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.3. Conversion Procedures

  	
   

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.4. Cash Payments in Lieu of
  Fractional Shares

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.5. Taxes on Conversion

  	
   

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.6. Exchange in Lieu of Conversion

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.7. Covenants of the Company

  	
   

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.8. Adjustments to Conversion Rate

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.9. Calculation Methodology

  	
   

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.10. When No Adjustment Required

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.11. Notice of Adjustment

  	
   

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.12. Voluntary Increase

  	
   

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.13. Notice to Holders Prior to
  Certain Actions

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.15. Responsibility of Trustee

  	
   

  	
   

  	
  51

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.16. Successive Adjustments

  	
   

  	
   

  	
  51

  

 

v

 

	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.17. General Considerations

  	
   

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.18. Settlement Upon Conversion

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  
	
  DEFAULTS AND REMEDIES

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.1. Events of Default

  	
   

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.2. Payment of Notes on Default; Suit
  Therefor

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.3. Application of Moneys Collected
  by Trustee

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.4. Proceedings by Holders

  	
   

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.5. Proceedings by Trustee

  	
   

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.6. Remedies Cumulative and
  Continuing

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.7. Direction of Proceedings; Waiver
  of Defaults by Majority of Holders

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.8. Notice of Defaults

  	
   

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.9. Undertaking to Pay Costs

  	
   

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  
	
  TRUSTEE

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.1. Duties of Trustee

  	
   

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.2. Rights of Trustee

  	
   

  	
   

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.3. Individual Rights of Trustee

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.4. Trustee’s Disclaimer

  	
   

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.5. Notice of Defaults

  	
   

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.6. Reports by Trustee to Holders

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.7. Compensation and Indemnity

  	
   

  	
  63

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.8. Replacement of Trustee

  	
   

  	
   

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.9. Successor Trustee by Merger

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.10. Eligibility; Disqualification

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.11. Preferential Collection of
  Claims Against Company

  	
   

  	
  65

  

 

vi

 

	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  
	
  SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED
  MONEYS

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12.1. Satisfaction and Discharge of
  Indenture

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12.2. Application by Trustee of Funds
  Deposited for Payment of Notes

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12.3. Repayment of Moneys Held by
  Paying Agent

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12.4. Return of Moneys Held by Trustee
  and Paying Agent Unclaimed for Two Years

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12.5. Indemnity for U.S. Government
  Obligations

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  
	
  AMENDMENTS

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 13.1. Without Consent of Holders

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 13.2. With Consent of Holders

  	
   

  	
  68

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 13.3. Compliance with Trust Indenture
  Act

  	
   

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 13.4. Revocation and Effect of Consents
  and Waivers

  	
   

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 13.5. Notation on or Exchange of Notes

  	
   

  	
  69

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 13.6. Trustee To Sign Amendments

  	
   

  	
  70

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.1. Trust Indenture Act Controls

  	
   

  	
  70

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.2. Notices

  	
   

  	
   

  	
  70

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.3. Communication by Holders with
  Other Holders

  	
   

  	
  71

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.4. Certificate and Opinion as to
  Conditions Precedent

  	
   

  	
  71

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.5. Statements Required in
  Certificate or Opinion

  	
   

  	
  71

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.6. When Notes Disregarded

  	
   

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.7. Rules by Trustee, Paying
  Agent and Registrar

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.8. Governing Law

  	
   

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.9. No Recourse Against Others

  	
   

  	
  72

  

 

vii

 

	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.10. Successors

  	
   

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.11. Multiple Originals

  	
   

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.12. Variable Provisions

  	
   

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 14.13. Qualification of Indenture

  	
   

  	
  72

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT A    Form of Note

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT B    Form of Transfer Certificate for
  Transfer of Restricted Stock

  	
   

  	
   

  

 

viii

 

INDENTURE,
dated as of February 11, 2008, 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 $100,000,000 (or if the Initial Purchasers
exercise the Overallotment Option, $112,500,000) aggregate principal amount of
the Company’s 2.25% Convertible Senior Notes due 2016, 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)(ii).

 

“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” and “Beneficial Ownership” have the meanings 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 company and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.

 

1

 

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

 

“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 Percentage” has the meaning set forth in Section 9.18(b).

 

A “Change of 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 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.

 

(c)           the adoption of a plan of liquidation or dissolution
of the Company.

 

Notwithstanding
the foregoing provisions, a Change of 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 of
Control or the public announcement of the Change of Control, in the case of a
Change of Control relating to an acquisition of Capital Stock under
paragraph (a) of this definition, or the period of ten consecutive
Trading Days ending immediately before the Change of Control, in the 

 

2

 

case of a Change of 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 of
Control under paragraph (a) and/or paragraph (b) of this
definition consists of shares of Capital Stock traded or quoted on a national
securities exchange (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
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
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.

 

“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 6.1.

 

3

 

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

 

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

 

“Conversion
Reference Period”
means (i) for Notes that are converted during the two-month period prior
to the Stated Maturity, the 30 consecutive Trading Days commencing on the
32nd Scheduled Trading Day preceding the Stated Maturity, subject to
any extension due to a Market Disruption Event; and (ii) in all other
instances, the 30 consecutive Trading Days beginning on the third Trading
Day following the Conversion Date.

 

“Conversion
Value” means the
average of the Daily Conversion Values for each of the 30 consecutive Trading
Days of the Conversion Reference Period.

 

“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 Closing
Price of the Common Stock on the Time of Determination.

 

“Daily
Conversion Value”
means, with respect to any Trading Day, the product of (1) the applicable
Conversion Rate and (2) the Volume Weighted Average Price per share of the
Common Stock on such Trading Day.

 

“Daily
Share Amount”
means, for each Trading Day during the Conversion Reference Period and each
$1,000 principal amount of Notes surrendered for conversion, a number of shares
(but in no event less than zero) determined by the following formula:

 

	
  (VWAP × CR) - $1,000

  
	
  VWAP× 30

  

 

VWAP =     the
Volume Weighted Average Price per share of Common Stock for such Trading Day

CR =                                      the applicable Conversion Rate

 

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

 

4

 

“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 of Control or a Termination of Trading.

 

“Designated Event Purchase Date” has the
meaning set forth in Section 8.1.

 

“Designated Event Purchase Notice” has the
meaning set forth in Section 8.3.

 

“Designated Event Purchase Price” has the
meaning set forth in Section 8.1.

 

“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)(iv)(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.

 

5

 

“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 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.

 

6

 

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

 

“Market
Disruption Event”
means the occurrence or existence for more than one half hour period in the
aggregate on any Scheduled Trading Day for the Common Stock of any suspension
or limitation imposed on trading (by reason of movements in price exceeding
limits permitted by the New York Stock Exchange or otherwise) in the Common
Stock or in any options, contracts or future contracts relating to the Common
Stock, and such suspension or limitation occurs or exists at any time before
1:00 p.m. (New York City time) on such day.

 

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

 

“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.

 

7

 

“Overallotment Option” means the option of the Initial
Purchasers to purchase up to $12,500,000 aggregate principal amount of the
Notes under the purchase agreement between the Company and the Initial
Purchasers, dated February 5, 2008.

 

“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.

 

“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.

 

“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 relating to the Notes dated as of the
date of this Indenture by and between the Company and the Initial Purchasers.

 

“Remaining Shares” has the meaning set forth in Section 9.18(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).

 

“Scheduled
Trading Day”
means a day that is scheduled to be a Trading Day on the principal U.S.
national or regional securities exchange or market on which the Common Stock is
listed or admitted for trading or, if the Common Stock is not listed or
admitted for trading on any exchange or market, a Business Day.

 

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

 

8

 

“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” has the meaning set
forth in Section 10.01.

 

“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 consecutive 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 consecutive
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 initial public offering 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 March 1, 2016.

 

“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 of Control and, (ii) in
all other cases, the average of the Closing Prices 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 

 

9

 

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.

 

“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 Global Select Market or the
NASDAQ Global Market (or their respective successors).

 

“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 date of the determination of stockholders
entitled to receive rights, warrants or options or a distribution, in each
case, to which Section 9.1(a)(iv)(B) or Section 9.8(b) through
(e) 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 (i) there is no
Market Disruption Event and (ii) the New York Stock Exchange is open for
trading or, if the Common Stock is not listed on the New York Stock Exchange,
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 listed on a
national securities exchange, any Business Day. 
A Trading Day only includes those days that have a 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 for $5.0 million
principal amount of Notes at approximately 3:30 p.m., New York City time,
on such determination date from three independent 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.

 

10

 

“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.

 

“Volume
Weighted Average Price” per share of the Common Stock on any Trading Day means such price as
displayed on Bloomberg (or any successor service) page AIR.N
<equity> VAP in respect of the period from 9:30 a.m. to 4:00 p.m.,
New York City time, on such Trading Day, or if such price is not available, the
Volume Weighted Average Price means the market value per share of our Common
Stock on such day as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company.

 

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.

 

11

 

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;

 

(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.

 

12

 

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 $100,000,000, or if
the Initial Purchasers exercise the Overallotment Option, $112,500,000.  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 2.25% Convertible Senior Notes due
2016.  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 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.

 

(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.

 

13

 

(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 WHICH IS ONE YEAR 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 BECOME 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 WHICH 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 

 

14

 

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 become
effective under the Securities Act (and which continues to be effective at the
time of such transfer) or such Common Stock has been issued upon conversion of
Notes that have been transferred pursuant to a registration statement that has
become 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 

 

15

 

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  BECOME 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 WHICH 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 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:

 

16

 

“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 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.

 

17

 

(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.

 

In the
event that the Certificated Notes are not issued to each such beneficial owner
promptly after the Registrar has received a request from 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.

 

18

 

(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 $100,000,000, or if the Initial Purchasers
exercise the Overallotment Option, $112,500,000 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 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 

 

19

 

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 conversion 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 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 

 

20

 

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 one year 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 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:

 

21

 

(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 8.5 or as
otherwise provided in Section 9.5).

 

(iii)          Prior to the
due presentation for registration of transfer of any Note, the Company, the
Trustee, the 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.

 

(iv)          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 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, 

 

22

 

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
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 

 

23

 

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 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 5:00 p.m. New York City time 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 

 

24

 

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 5:00 p.m.
New York City time 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
5:00 p.m. New York City time 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 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 

 

25

 

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 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 

 

26

 

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 100 Wall
Street, Suite 1600; New York, New York 10005, 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 

 

27

 

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 10:00 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

 

(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.

 

28

 

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 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 with the Trustee, within 15 days after the Company is required to
file the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may by Rules and Regulations prescribe)
that the Company files with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act. In the event the Company is at any time no longer subject to
the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall file all reports, if any, as may be required by the
provisions of Section 314(a) of the TIA with the Trustee.

 

29

 

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,
2008), 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 the Company 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.

 

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.

 

30

 

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) 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 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.

 

31

 

ARTICLE V

 

[RESERVED]

 

 

ARTICLE VI

 

NOTICE OF DESIGNATED EVENT OR
OTHER MAKE WHOLE EVENT

 

SECTION 6.1. 
Notice of Designated Event or Other Make Whole 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 notice of the occurrence of a Designated Event, or a Make Whole Event that is
not a Designated Event, and of the purchase and/or conversion right arising as a
result thereof, including the information required by Section 8.2 or
9.1(b), as the case may be, not later than ten Trading Days prior to the
anticipated effective date of any Designated Event or other Make Whole Event
that the Company either knows or reasonably should know will occur (a “Company
Notice”).  If the Company does not know,
or should not reasonably know, that a Designated Event or other Make Whole
Event will occur until a date that is within ten Trading Days before the
anticipated effective date of such event, the Company will issue the Company
Notice promptly upon learning of such event. 
In addition, the Company will disseminate a press release containing
information about the Designated Event or other Make Whole Event and the
repurchase and/or conversion right arising as a result thereof 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.

 

ARTICLE VII

 

[RESERVED]

 

 

ARTICLE VIII

 

PURCHASE AT OPTION OF HOLDER UPON
A DESIGNATED EVENT

 

SECTION 8.1. 
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 for cash on the date that is 30
Business Days after the date on which the Designated Event occurs (or on which
the transaction constituting the Designated Event becomes effective) (subject to
extension to comply with applicable law, as provided in Section 8.7) (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 

 

32

 

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 8.2. 
Company Notice of Designated Event.  The Company shall send a Company Notice to
the Holders (and to Beneficial Owners as required by applicable law) at their
addresses shown in the Note Register on or before the date specified in Section 6.1
hereof and otherwise in accordance with Section 6.1 hereof.  The Company shall also deliver a copy of such
Company Notice to the Trustee and any Paying Agent.  Each Company Notice
relating to a Designated Event shall include a form of Designated Event
Purchase Notice to be completed by a Holder and shall state:

 

(i)            the applicable
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 Designated Event Purchase Date;

 

(ii)           the events
causing the Designated Event and the date of the Designated Event;

 

(iii)          the 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 Designated Event
Purchase Price;

 

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

 

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

 

(ix)           the procedures
the Holder must follow under this Article VIII;

 

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

 

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

 

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

 

33

 

(xiii)         the procedures
for withdrawing a 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 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 8.3. 
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 5:00 p.m. New York City time on the Business Day prior to the
Designated Event Purchase Date, subject to extension to comply with applicable
law, as provided in Section 8.7. 
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;

 

(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 5 of the Notes and in this
Indenture.

 

SECTION 8.4.  Effect of a Designated Event Purchase Notice. Upon receipt by the Company of a properly
completed and executed Designated Event Purchase Notice specified in Section 8.3
the Holder of the Notes in respect of which such Designated Event Purchase
Notice was given shall (unless such Designated Event Purchase Notice is
withdrawn as specified in the following two paragraphs) thereafter be entitled
to receive solely the Designated Event Purchase Price with respect to such
Notes.  Such Designated Event Purchase Price shall be paid by the Paying
Agent to such Holder promptly following the later of (i) the Designated
Event Purchase Date with respect to such Notes (provided the conditions in Section 6.1
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 8.5.  Notes in respect of which a Designated Event
Purchase Notice has been given by the Holder thereof may not be converted for
shares of 

 

34

 

Common Stock on or after
the date of the delivery of such Designated Event Purchase Notice unless such
Designated Event Purchase Notice has first been validly withdrawn as specified
in the following two paragraphs.

 

A
Designated Event Purchase Notice 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 Designated Event Purchase Date 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

 

(iii)          the principal
amount, if any, of such Notes which remains subject to the original Designated
Event Purchase Notice 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 Designated Event Purchase Notice has been withdrawn in
compliance with this Indenture.

 

SECTION 8.5. 
Procedures.  The Company
shall purchase from a Holder, pursuant to this Article VIII, 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 VIII
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 10:00 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 VIII.  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 

 

35

 

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.

 

SECTION 8.6. 
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 8.7. 
Covenant to Comply with Securities Laws upon Purchase of Notes.  In connection with any offer to purchase
Notes under this Article VIII, 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 this Article VIII to be exercised in the time and in the
manner specified in this Article VIII.

 

SECTION 8.8. 
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 9 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 Designated
Event Purchase Price; provided, however, that to the extent that the
aggregate amount of cash or property deposited by the Company pursuant to Section 8.5,
exceeds the aggregate Designated Event Purchase Price of the Notes or portions
thereof which the Company is obligated to purchase as of the Designated Event
Purchase Date then promptly on and after the Business Day immediately following
the Designated Event Purchase Date, 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 8.9. 
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, 

 

36

 

financial institution (a “Purchase Party”) to which
Notes surrendered by a Holder for repurchase in accordance with this Article VIII
will be initially offered by the Paying 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 Designated Event Purchase Price for
such Notes in the amount that would be payable if the Notes were repurchased by
the Company in accordance with this Article VIII.  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 Designated Event Purchase Price 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 Designated Event Purchase Price to the
Paying Agent by the Designated Event Purchase Date, the Notes will be
repurchased by the Company in accordance with this Article VIII, and the
Company will, as promptly as practical thereafter, but not later than one
Business Day following the Designated Event Purchase Date, cause the Designated
Event Purchase Price for the Notes to be paid (provided, however, that interest shall continue to
accrue on the Notes to be repurchased until the Designated Event Purchase Price
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 at any time during
which the following conditions are met:

 

(i)            on any Business
Day in any calendar quarter commencing at any time after March 31, 2008,
and only during such calendar quarter, if, as of the last day of the
immediately preceding calendar quarter, the Closing Price per share of 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 130% of the applicable 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 then applicable Conversion Rate.

 

37

 

(iii)          upon the
occurrence of a Designated Event or other Make Whole Event, at any time
beginning on the effective date of the Designated Event or other Make Whole
Event and ending on the Trading Day prior to the date that is 30 Business Days
after the date on which the Designated Event or other Make Whole Event occurs
(or on which the transaction constituting such event becomes effective);

 

(iv)          (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 effective date for such
transaction or event until the Trading Day prior to the date that is 30
Business Days after the date on which such transaction or event occurs;

 

(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 in good faith 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 in the case of either of the foregoing clauses (x) or
(y), 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, even if the Notes are not otherwise convertible at that
time, Holders may surrender their Notes for conversion at any time thereafter
until the earlier of 5:00 p.m. New York City time on the Business Day immediately
prior to the ex-dividend date or the Company’s announcement that such
distribution will not take place; 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

 

(v)           at any time
during the period beginning on February 1, 2016 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. 
Further, in the event the Company becomes party to any transaction or
event as described in Section 9.1(a)(iv)(A), the Company shall issue a
Company Notice to the Holders not later than ten Trading Days prior to the
anticipated effective date of such transaction or event that the Company either
knows or 

 

38

 

reasonably should know will occur.  If the Company does not know, or should not
reasonably know, that such a transaction or event will occur until a date that
is within ten Trading Days before the anticipated effective date of such
transaction or event, the Company shall issue the Company Notice promptly upon
learning of such event.

 

(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 6 in the Notes, subject to adjustment as
herein set forth.  The initial Conversion
Rate is 28.1116 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 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, 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 is 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 $120.00 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 $29.70 per share, subject to adjustment as
set forth herein, no adjustment to the applicable Conversion Rate will be made.

 

For
the purposes of this Section 9.1(d), a conversion of notes will be deemed
to be “in connection with” a Make Whole Event if the conversion notice is
received by the Conversion Agent from and including the date that is ten
Trading Days prior to the anticipated effective date of the Make Whole Event
and, if applicable, prior to and including 5:00 p.m. New York City time on
the Business Day immediately preceding the Designated Event Purchase Date.

 

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

  	
   

  	
  2/11/2008

  	
   

  	
  3/1/2009

  	
   

  	
  3/1/2010

  	
   

  	
  3/1/2011

  	
   

  	
  3/1/2012

  	
   

  	
  3/1/2013

  	
   

  	
  3/1/2014

  	
   

  	
  3/1/2015

  	
   

  	
  3/1/2016

  
	
  $27.90

  	
   

  	
  7.7307

  	
   

  	
  7.7307

  	
   

  	
  7.7307

  	
   

  	
  7.7307

  	
   

  	
  7.7307

  	
   

  	
  7.7307

  	
   

  	
  7.7307

  	
   

  	
  7.7307

  	
   

  	
  7.7307

  
	
  $30.00

  	
   

  	
  6.7852

  	
   

  	
  6.8398

  	
   

  	
  6.9674

  	
   

  	
  6.9026

  	
   

  	
  6.8056

  	
   

  	
  6.6148

  	
   

  	
  6.2798

  	
   

  	
  5.6274

  	
   

  	
  5.2217

  
	
  $32.50

  	
   

  	
  5.8775

  	
   

  	
  5.8666

  	
   

  	
  5.9091

  	
   

  	
  5.7728

  	
   

  	
  5.5859

  	
   

  	
  5.2909

  	
   

  	
  4.8260

  	
   

  	
  3.9843

  	
   

  	
  2.6576

  
	
  $35.00

  	
   

  	
  5.1467

  	
   

  	
  5.0895

  	
   

  	
  5.0735

  	
   

  	
  4.8854

  	
   

  	
  4.6430

  	
   

  	
  4.2846

  	
   

  	
  3.7431

  	
   

  	
  2.8131

  	
   

  	
  0.4598

  

 

39

 

	
  $40.00

  	
   

  	
  4.0597

  	
   

  	
  3.9470

  	
   

  	
  3.8613

  	
   

  	
  3.6214

  	
   

  	
  3.3246

  	
   

  	
  2.9137

  	
   

  	
  2.3351

  	
   

  	
  1.4348

  	
   

  	
  0.0000

  
	
  $50.00

  	
   

  	
  2.7506

  	
   

  	
  2.6063

  	
   

  	
  2.4773

  	
   

  	
  2.2298

  	
   

  	
  1.9382

  	
   

  	
  1.5684

  	
   

  	
  1.0983

  	
   

  	
  0.5121

  	
   

  	
  0.0000

  
	
  $60.00

  	
   

  	
  2.0148

  	
   

  	
  1.8758

  	
   

  	
  1.7541

  	
   

  	
  1.5388

  	
   

  	
  1.2967

  	
   

  	
  1.0047

  	
   

  	
  0.6650

  	
   

  	
  0.3098

  	
   

  	
  0.0000

  
	
  $80.00

  	
   

  	
  1.2367

  	
   

  	
  1.1324

  	
   

  	
  1.0487

  	
   

  	
  0.9008

  	
   

  	
  0.7534

  	
   

  	
  0.5740

  	
   

  	
  0.3860

  	
   

  	
  0.1999

  	
   

  	
  0.0000

  
	
  $100.00

  	
   

  	
  0.8689

  	
   

  	
  0.7780

  	
   

  	
  0.7242

  	
   

  	
  0.6172

  	
   

  	
  0.5185

  	
   

  	
  0.3968

  	
   

  	
  0.2721

  	
   

  	
  0.1457

  	
   

  	
  0.0000

  
	
  $120.00

  	
   

  	
  0.6301

  	
   

  	
  0.5588

  	
   

  	
  0.5255

  	
   

  	
  0.4467

  	
   

  	
  0.3785

  	
   

  	
  0.2912

  	
   

  	
  0.2015

  	
   

  	
  0.1098

  	
   

  	
  0.0000

  

 

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 38.8422
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) and (e) of
Section 9.8.

 

(e)           The ability to surrender Notes for
conversion shall expire at 5:00 p.m. New York City time on the Business
Day immediately preceding the Stated Maturity.

 

SECTION 9.2. 
Determination of Satisfaction of Certain Conversion Triggers.

 

(a)           For each calendar quarter, beginning with the
calendar quarter commencing after March 31, 2008, 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.

 

(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.

 

40

 

SECTION 9.3. 
Conversion Procedures.  To
convert Notes, a Holder must satisfy the requirements in this Section 9.3
and in paragraph 6 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”) with respect to
such Notes.  Upon conversion of a Note,
the Company shall deliver to the Holder, through the Conversion Agent, the
amounts determined in accordance with Section 9.18, which shall be owing
upon such conversion on the third Business Day following the last Trading Day
of the relevant Conversion Reference Period. 
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 5:00 p.m. New York City time 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 immediately preceeding an Interest Payment Date but
prior to such 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 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 that no such payment need be made:

 

·                                          in connection with a conversion following
the Regular Record Date immediately preceding the Stated Maturity;

 

·                                          if a Designated Event Purchase Date is
after a Regular Record Date and on or prior to the corresponding Interest Payment
Date; or

 

·                                          to the extent of any overdue interest, if
any overdue interest exists at the time of conversion with respect to the
Notes.

 

41

 

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 Designated Event Purchase Notice with respect to
a Note, may not surrender such Note for conversion until the Designated Event
Purchase Notice has been withdrawn in accordance with the procedures set forth
in Section 8.4.

 

 

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 deliver cash for the Fair Market Value of the
fractional share.  The Fair Market Value
of a fractional share determined to the nearest 1/10,000th of a
share, shall be equal to the applicable portion of the arithmetic average of
the Volume Weighted Average Price of our Common Stock for each of the
30 consecutive Trading Days of the Conversion Reference Period, rounding
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 

 

42

 

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, the shares of Common Stock and/or cash which would otherwise be due upon
conversion in accordance with Section 9.3. 
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 and/or cash which would otherwise be due
upon conversion.  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 last Trading Day of the applicable Conversion Reference Period, 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 last Trading Day of the applicable Conversion
Reference Period, deliver to the Holder shares of Common Stock and/or cash
which would otherwise be due upon conversion 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 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.

 

43

 

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 then Current Market Price per share of Common
Stock, 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 5:00 p.m. New York City time 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 

 

44

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 stockholders 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 5:00 p.m.
New York City time 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 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.

 

45

(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 5:00 p.m. New York City time 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 distribution (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 5:00 p.m.
New York City time 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 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 such Note immediately prior to the record date for the
determination of stockholders entitled to receive the distribution.

 

(f)            In case a repurchase, tender or exchange offer for
Common Stock made by the Company or any Subsidiary shall expire and such
repurchase, 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 date of repurchase or the
last time (the “Expiration Time”) tenders or exchanges may be made pursuant to
such tender or exchange offer 

 

46

(as it may be amended) exceeds the Closing
Price of a share of Common Stock on the Trading Day next succeeding the date of
repurchase or Expiration Time, as the case may be, 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, or repurchased, (the shares deemed so accepted up to any such
maximum, or repurchased 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 or date of repurchase, as the case may be, and
the Closing Price of a share of Common Stock on the Trading Day next succeeding
the Expiration Time or date of repurchase, as the case may be, and

 

(ii)           the denominator
of which shall be the number of shares of Common Stock outstanding (including
any repurchased or tendered or exchanged shares) at the Expiration Time or date
of repurchase, as the case may be, multiplied by the Closing Price of a share
of Common Stock on the Trading Day next succeeding the Expiration Time or date
of repurchase, as the case may be, such adjustment to become effective immediately
prior to the opening of business on the day following the Expiration Time or
date of repurchase, as the case may be. 
If the Company is obligated to purchase shares pursuant to any such
repurchase, 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 repurchase, 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.

 

(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
35.8422 shares of Common Stock issuable

 

47

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) or (e) of
this Section 9.8.  This Section 9.8
shall not apply to any event or occurrence that is subject to Section 9.14.

 

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.

 

No
adjustment need be made for a transaction referred to in Sections 9.8(b), (c) or
(e) if Holders of the Notes otherwise participate in the transaction
without conversion 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 

 

48

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

 

(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

 

49

 

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).

 

(b)           In the event holders of Common Stock have the
opportunity to elect the form of consideration to be received in such Business
Combination, for purposes of the supplemental indenture referred to in Section 9.14(a),
such consideration shall be deemed to be the weighted average of the types and
amounts of consideration received by the Holders of the Common Stock that
affirmatively make such an election. The Company may not become a party to any
such transaction unless its terms are materially consistent with this Section 9.14.

 

50

(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 VIII
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.

 

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.

 

51

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. 
Settlement Upon Conversion.

 

(a)           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 Notes as set forth in Section 9.3,
then upon conversion, such Holder shall receive, for each $1,000 principal
amount of Notes surrendered for conversion: 
(A) cash in an amount equal to the lesser of (1) $1,000 and (2) the
Conversion Value; and (B) if the Conversion Value is greater than $1,000,
a number of shares of Common Stock (the “Remaining Shares”) equal to the sum of
the Daily Share Amounts for each of the 30 consecutive Trading Days in the
Conversion Reference Period, appropriately adjusted to reflect events occurring
during the Conversion Reference Period that would result in an adjustment to
the Conversion Rate in accordance with the provisions of Section 9.8,
subject to the Company’s right to deliver cash in lieu of all or a portion of
such Remaining Shares as set forth in Section 9.18(b).  The Company will deliver such cash and any
shares of Common Stock, together with any cash payable for fractional shares,
to such Holder in accordance with Section 9.4.

 

(b)           The Company may elect to pay cash to a Holder of
Notes surrendered for conversion in lieu of all or a portion of the Remaining
Shares otherwise issuable pursuant to Section 9.18(a).  In such event, on any day prior to the first
Trading Day of the applicable Conversion Reference Period, the Company may
specify a percentage of the Daily Share Amount that will be settled in cash
(the “Cash Percentage”).  If the Company
elects to specify a Cash Percentage, the amount of cash that the Company will
deliver in respect of the Daily Share Amount for each Trading Day in the
applicable Conversion Reference Period shall equal the product of:  (1) the Cash Percentage, (2) the
Daily Share Amount for such Trading Day and (3) the Volume Weighted
Average Price per share of Common Stock on such Trading Day.  The number of shares that the Company shall
deliver in respect of the Daily Share Amount for each Trading Day in the
applicable Conversion Reference Period shall be a percentage of the Daily Share
Amount equal to 100% minus the Cash Percentage. 
If the Company does not specify a Cash Percentage by the start of the
applicable Conversion Reference Period, the Company shall settle 100% of the
Daily Share Amount for each Trading Day in the applicable Conversion Reference
Period with shares of Common Stock; provided, however, that the Company shall pay cash in lieu of
fractional shares otherwise issuable upon conversion of the Notes in accordance
with Section 9.4.  Notwithstanding
the foregoing, in the event of a Designated Event in which the consideration is
comprised entirely of cash, the Conversion Value will be calculated based
solely on the amount of cash that Holders of Common Stock are entitled to
receive in respect of each share of Common Stock upon such Designated Event.  In such event, the Company shall pay the
Holders in cash, as promptly as practicable but in any event not later than the
third Trading Day following the surrender of the Notes for conversion.

 

52

(c)           The Company shall determine the Conversion Value,
Daily Share Amount and the number of shares, if any, to be issued upon
conversion of the Notes at the end of the relevant Conversion Reference Period.

 

(d)           For the purposes of Sections 9.18(a) and (b),
in the event that any of Conversion Value, Daily Conversion Value, Daily Share
Amount, or Volume Weighted Average Price is not calculable for all portions of
the Conversion Reference Period, the Company’s Board of Directors shall in good
faith determine the values necessary to calculate the Conversion Value, Daily
Conversion Value, Daily Share Amount, and Volume Weighted Average Price (which
calculations shall be evidenced by an Officer’s Certificate delivered to the
Trustee).

 

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 required repurchase, by declaration or
otherwise (including the failure to purchase Notes in accordance with Article VIII);
or

 

(c)           failure on the
part of the Company to perform any of the covenants or agreements on the part
of the Company in the Notes or in this Indenture other than a failure described
in clause (a), (b), (f) or (g) of this Section 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
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

 

53

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 to 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, 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

 

54

 

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.

 

Notwithstanding
the foregoing, to the extent elected by the Company, the sole remedy for an
Event of Default relating to the failure to comply with the reporting
obligations set forth in Section 3.7 hereof or the failure to comply with
the requirements of Section 314(a)(1) of the Trust Indenture Act,
shall for the first 60 days after the occurrence of such an Event of
Default consist exclusively of the right to receive Special Interest (“Special
Interest”) on the Notes at an annual rate equal to 0.25% of the principal
amount of the Notes. This Special Interest will be paid semi-annually in
arrears, with the first semi-annual payment due on the first Interest Payment
Date following the date on which the Special Interest began to accrue on any
Notes.  The Special Interest will accrue
on all outstanding Notes from and including the date on which an Event of
Default relating to a failure to comply with the reporting obligations herein first
occurs to but not including the 60th day thereafter (or such earlier date on
which the Event of Default shall have been cured or waived).  On such 60th day (or earlier, if the Event of
Default relating to the reporting obligations is cured or waived prior to such
60th day), such Special Interest will cease to accrue and, if the Event of
Default relating to reporting obligations has not been cured or waived prior to
such 60th day, the Notes shall be subject to acceleration as 

 

55

 

provided above. 
The provisions described in this paragraph will not affect the rights of
Holders in the event of the occurrence of any other Event of Default.  In the event the Company does not elect to
pay Special Interest upon an Event of Default in accordance with this
paragraph, the notes will be subject to acceleration as provided above.

 

If the
Company elects to pay Special Interest in connection with an Event of Default
relating to the failure to comply with reporting obligations in Section 3.7
or the  failure to comply with the
requirements of Section 314(a)(l) of the Trust Indenture Act in
accordance with the immediately preceding paragraph, the Company shall notify
all Holders of Notes and the Trustee and Paying Agent of such election on or
before 5:00 p.m. New York City time on the date on which such Event of
Default first occurs.

 

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 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 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 

 

56

 

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:

 

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

 

57

 

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 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 

 

58

 

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 XIII
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 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 

 

59

 

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.

 

(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;

 

60

 

(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 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.

 

61

 

(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(f) 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, 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.

 

62

 

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.

 

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 

 

63

 

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 Section 10.1(h) or (i) 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.

 

64

 

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.

 

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.

 

65

 

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, and (ii) (a) the
Company shall have irrevocably deposited or caused to be deposited with the
Trustee as 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 

 

66

 

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
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:

 

67

 

(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.

 

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 the Holder of
each Note affected, 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)           make payments
on the Notes payable in currency other than as originally stated in the Notes;

 

68

 

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

 

(7)           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;

 

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

 

(9)           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.

 

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 

 

69

 

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:

 

If to
the Company:

 

AAR
CORP.

One AAR Place

1100 Wood Dale Road

Wood Dale, Illinois  60191

Attention:  General Counsel

Facsimile No.:  (630) 227-2059

 

With
copies to:

 

Schiff
Hardin LLP

6600 Sears Tower

Chicago, IL  60606

Attention:  Robert J. Minkus

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.

 

70

 

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 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.

 

71

 

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
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.

 

72

 

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/ Michael J.
  Sharp

  	
   

  
	
   

  	
  Name:

  	
  Michael J. Sharp

  
	
   

  	
  Title:

  	
  Vice President,
  Controller, 

  
	
   

  	
   

  	
  Chief Accounting
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S. BANK
  NATIONAL ASSOCIATION,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard
  Prokosch

  	
   

  
	
   

  	
  Name:

  	
  Richard Prokosch

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

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 WHICH IS ONE YEAR 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 BECOME 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 WHICH 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.

  	
   

  	
  CUSIP NO.

  

 

 

 

 

AAR CORP.

 

2.25% Convertible Senior Notes due 2016

 

AAR
CORP., a Delaware corporation, promises to pay to Cede & Co., or
registered assigns, the principal sum set forth on the Schedule of
Increases and Decreases in the Global Note attached hereto, on March 1,
2016.

 

Interest
Payment Dates:  March 1, and September 1.

 

Record
Dates:  February 15 and August 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: February 11, 2008

  
	
   

  
	
  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]

 

2.25% Convertible Senior Notes due 2016

 

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 March 1 and September 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 11, 2008.  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 10:00 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 March 1 and September 1 to the Persons who are
registered Holders of Notes at 5:00 p.m. New York City time on the February 15
and August 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 11, 2008
(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 $100,000,000,
or if the Initial Purchasers exercise their Overallotment Option, $112,500,000
aggregate principal amount.

 

5.                                       Purchase at the Option of the Holder Upon
a Designated Event

 

(a)           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 date that is
30 Business Days after the date on which the Designated Event occurs (or on
which the transaction constituting the Designated Event becomes effective)
(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.

 

(b)           Holders have the right to withdraw
any Designated Event Purchase Notice by delivery to the Paying Agent of a
written notice of withdrawal in accordance with the provisions of the
Indenture.

 

6.                                       Conversion

 

Subject
to the procedures set forth in the Indenture, a Holder may convert Notes on or
before 5:00 p.m. New York City time on the Business Day immediately
preceding March 1, 2016.

 

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 VIII 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 28.1116 shares of Common Stock per $1,000 principal
amount, subject to adjustment in certain events described in the
Indenture.  Upon conversion of the Notes,
the Company shall deliver the amount of cash and the number of shares of Common
Stock, if any, determined pursuant to Section 9.18 of the Indenture.

 

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 

 

A-5

 

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.

 

7.                                       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.

 

8.                                       Persons Deemed Owners

 

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

 

9.                                       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.

 

10.                                 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.

 

11.                                 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.

 

12.                                 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 

 

A-6

 

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.

 

13.                                 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.

 

14.                                 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).

 

15.                                 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.

 

16.                                 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

 

ASSIGNMENT FORM

 

A-7

 

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.

  

 

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, 

 

A-8

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-9

 

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

 

The initial outstanding principal amount of this
Global Note is $      .

 

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-10

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you
want to elect to have this Note purchased by the Company pursuant to Article VIII
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 Article VIII 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-11

 

 

FORM OF CERTIFICATE TO BE DELIVERED UPON EXCHANGE

OR REGISTRATION OF TRANSFER OF SECURITIES

 

Re: 2.25%
Convertible Senior Notes due 2016 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 11, 2008 (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-12

 

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-13

 

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-14

 

EXHIBIT B

 

FORM OF TRANSFER CERTIFICATE FOR TRANSFER

OF RESTRICTED COMMON STOCK

 

[NAME AND ADDRESS OF COMMON STOCK TRANSFER AGENT]

 

Re:                               AAR CORP. 2.25% Convertible Senior Notes
Due 2016 (the “Notes”)

 

Reference
is hereby made to the Indenture dated as of February 11, 2008 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 4.5

 

EXECUTION VERSION

 

 

AAR CORP.

 

1.625% Convertible Senior Notes
due 2014

 

Registration Rights Agreement

 

February 11, 2008

 

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 1.625% Convertible Senior Notes due 2014 (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.

 

“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.

 

“FINRA
Rules” means the Rules of the Financial Industry Regulatory Authority, as
amended from time to time.

 

“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 11, 2008, between the Company and U.S. Bank
National Association, as trustee, 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.

 

“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, limited liability
company, trust or unincorporated organization, or a government or agency or
political subdivision thereof.

 

“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 

 

 

2

 

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 February 5, 2008, 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 or a
share of Common Stock 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
Securities” means any Securities or shares of Common Stock issuable upon
conversion thereof except any such Securities or shares of Common Stock where (i) a
Shelf Registration Statement with respect to such Securities or shares of
Common Stock shall have become effective under the Securities Act and such
Securities or shares of Common Stock shall have been disposed of pursuant to
such Shelf Registration Statement, (ii) such Securities or shares of
Common Stock shall have been sold to the public pursuant to Rule l44
(or any similar provision then in force, but not Rule 144A) under the
Securities Act, (iii) one
year has passed since the issue date of the Securities or (iv) such
Securities or shares of Common Stock shall have ceased to be outstanding.

 

“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 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.

 

 

3

 

“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 Registrable 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, shares of 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)           Subject to Section 2(e) of this Agreement, the
Company shall, no later than six months of the Closing Date, file with the
Commission a Shelf Registration Statement or designate an existing Shelf
Registration Statement filed with the Commission 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 or otherwise
become effective under the Securities Act no later than six months of the
Closing Date; provided, however, that the Company may, upon written notice to
all Holders, postpone having the Shelf Registration Statement become 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)           Subject to Section 2(e) of this Agreement, 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 earlier of (1) the date on which all of the Securities and the shares
of Common Stock issued and issuable upon conversion thereof have been sold
pursuant to the Shelf Registration Statement, (2) the date on which all of
the outstanding Securities and shares of Common Stock issued and issuable upon
conversion thereof and held by Holders who are not Affiliates of the Company
may be freely transferred immediately 

 

 

4

 

pursuant
to the second sentence of Rule 144(b)(1)(i) (as such rule shall
become effective on February 15, 2008) or any successor rule thereto, (3) one
year after the issue date of the Securities and (4) the date on which
there are no outstanding Registrable Securities (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 the Holders 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 

 

 

5

 

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 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.

 

(e)           The Company’s obligations pursuant to Sections 2 and 3 of
this Agreement shall be suspended during any period in which Holders that are
not Affiliates of the Company (and have not been Affiliates of the Company
during the preceding three months) (i) do not hold any Registrable
Securities or (ii) may freely transfer their Registrable Securities
immediately pursuant to Rule 144 (or any similar provision then in force)
under the Securities Act, including Rule 144(b)(1)(i) (as such rule shall
become effective on February 15, 2008).

 

3.             Registration
Procedures.  In connection with the Shelf Registration
Statement, the following provisions shall apply subject to Section 2(e) of
this Agreement:

 

(a)           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.

 

(i)            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) use reasonable best
efforts, within 15 Business Days after receipt, to prepare and file with the
Commission (x) any Exchange Act report, (y) a supplement to the
Prospectus or, if required by applicable law, a post-effective amendment to the
Shelf Registration Statement and (z) 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;
provided further, the Company shall not be obligated to file more than one
post-effective amendment in any 90-day period. 
Notwithstanding the 

 

 

6

 

foregoing,
if the Registrable Securities are converted as provided under the Indenture,
the Company shall use its reasonable best efforts to file the Exchange Act
filing, prospectus supplement, post-effective amendment or other document
within 10 Business Days of the end of the Conversion Reference Period, as
defined in the Indenture; provided, however, that the Company shall not be
obligated to take the actions set forth in this sentence during a Suspension
Period.

 

(ii)           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 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;

 

 

7

 

(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).

 

(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 a Suspension Period
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 

 

 

8

 

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 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 Holders 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 applicable Rules and Regulations (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 

 

 

9

 

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 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 

 

 

10

 

 

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
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 registered public
accountants of the Company (and, if necessary, from the independent registered
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 shares of 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 FINRA Rules (or any successor provision thereto)) of the Company or
has a “conflict of interest” (as defined in Rule 2720(b)(7) of the
FINRA Rules (or any successor provision thereto)) and such broker-dealer
shall 

 

 

11

 

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 FINRA
Rules, including, without limitation, by (A) engaging a “qualified
independent underwriter” (as defined in Rule 2720(b)(15) of the FINRA 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 FINRA Rules.

 

(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 therefor 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 

 

 

12

 

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

 

(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 or 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.

 

 

13

 

(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 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 

 

 

14

 

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 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 the holders
of a majority in aggregate principal amount of Registrable Securities then
outstanding 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.

 

 

15

 

7.             Liquidated Damages. 
(a) Notwithstanding
any postponement of effectiveness permitted by Section 2(a) hereof,
if, at any time the Company’s obligations regarding the Shelf Registration
Statement are not suspended pursuant to Section 2(e) hereof,

 

(i) a Shelf
Registration Statement has not been filed and become effective within six
months of the Closing Date,

 

(ii) the Company has
failed, through its omission, to name, pursuant to Section 3(a) hereof,
a Holder as a selling securityholder in the Prospectus, prospectus supplement,
an Exchange Act filing or post-effective amendment within the time periods
required in Section 3(a) hereof, or

 

(iii) at any time after
the effective date, the Shelf Registration Statement ceases to be effective or
is not usable by the Holders and (Y) the Company does not cure the lapse
of effectiveness or usability within 10 Business Days by a post-effective
amendment, prospectus supplement or report filed under the Exchange Act,
subject to Section 2(e) of this Agreement, or (Z) a Suspension
Period, when aggregated with other Suspension Periods during the prior 90-day
or 360-day period, continues, without being terminated, for more than 30 or 90
days, respectively

 

(each, a “Registration Default”), the Company shall be required to pay
liquidated damages (“Liquidated Damages”), from and including the day following
such Registration Default for as long as it is continuing 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)           Any amounts to be paid as Liquidated
Damages pursuant to paragraph (a) 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
paragraph (a) 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 paragraph (a) of
this Section 7, as applicable, applied to the Conversion Price (as defined
in the Indenture) at that time.

 

                                (c)           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.

 

 

16

 

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 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 Exchange 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 Exchange Act and the
applicable Rules and Regulations. 
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 Securities Act, (b) deliver
such information to a prospective purchaser as is necessary to permit sales
pursuant to Rule 144A under the Securities 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
Securities Act within the limitation of the exemptions provided by (i) Rule 144
under the Securities Act, as such Rule may be amended from time to time, (ii) Rule 144A

 

 

17

 

under the Securities 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 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.

 

 

18

 

(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.

 

 

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

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  AAR CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael J.
  Sharp

  
	
   

  	
   

  	
  Name:

  	
  Michael J. Sharp

  
	
   

  	
   

  	
  Title:

  	
  Vice President,
  Controller,

  
	
   

  	
   

  	
   

  	
  Chief Accounting
  Officer

  
					

 

Accepted as of the date hereof:

 

 

	
  MERRILL LYNCH & CO.

  
	
  MERRILL LYNCH, PIERCE, FENNER & SMITH

  
	
   

  	
  INCORPORATED

  
	
  STIFEL, NICOLAUS & COMPANY INCORPORATED

  
	
  As Purchasers

  
	
   

  
	
  By: 

  	
  MERRILL LYNCH PIERCE FENNER & SMITH

  
	
   

  	
   

  	
  INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ John C. Fortson

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  
						

 

For itself and as Representative of the other Purchaser

 

 

19

 

 

Appendix A

 

AAR CORP.

 

Notice of Registration Statement

 

and

 

Selling Securityholder Questionnaire

 

[Date]

 

                AAR CORP. (the “Company”) has filed or may 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 1.625% Convertible Senior
Notes due March 1, 2014 (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 11, 2008 (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 such Securities or shares of Common Stock cease to be a Registrable
Securities when (i) a
shelf registration statement with respect to such Securities or shares of
Common Stock shall have become effective and such Securities or shares of
Common Stock shall have been disposed of pursuant to such shelf registration
statement, (ii) such Securities or shares of Common Stock have been sold
to the public pursuant to Rule 144 (or any similar provision then in
force, but not 

 

 

20

 

Rule 144A) under the
Securities Act, (iii) one year has passed since the issue date of such
Securities or (iv) such Securities or shares of Common Stock shall have
ceased to be outstanding.

 

 

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:

  
	
  (2)

  	
  Address for notices to Selling
  Securityholder:

  

 

 

21

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  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:

  
	
   

  	
   

  	
   

  
	
  (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

  
						

 

 

22

 

 

	
   

  	
  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:

  	
   

  
	
   

  	
   

  	
  Richard
  J. Poulton

  
	
   

  	
   

  	
  Vice
  President, Chief Financial Officer and Treasurer

  
	
   

  	
   

  	
  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.

  

 

 

25

 

 

	
   

  	
  One
  AAR Place

  
	
   

  	
  1100
  North Wood Dale Road

  
	
   

  	
  Wood
  Dale, Illinois 60191

  

 

                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:

 

Richard J. Poulton

Vice President, Chief Financial Officer and Treasurer

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”)

1.625% Convertible Senior Notes due 2014 (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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