Document:

Exhibit
10.1

 

REDEMPTION AND RELEASE AGREEMENT

This
Redemption and Release Agreement (this “Agreement”) is entered into as of
January 31, 2006 (the “Effective Date”),
by and among International Business Associates Holding Co., Ltd., a British
Virgin Islands company (“IBAH”),
International Business Associates (USA), Inc., a Delaware corporation (“IBA USA”), International Business Associates, Ltd., an
exempt Turks and Caicos company (the “Company”), John
Kean, Jr., and Stanley J. Brownell (together with Mr. Kean, the “Stockholders”).

WHEREAS,
IBAH owns (i) 12,500 Preferred Shares, (ii) the Warrant, and (iii) 24 shares of
IBA USA Common Stock;

WHEREAS,
the Stockholders own 26 shares of Common Stock, being all of the issued and
outstanding Common Stock and all of the issued and outstanding ownership
interests in the Company other than the 12,500 Preferred Shares owned by IBAH;

WHEREAS,
IBAH and the Company desire to restructure their relationship on the terms and
conditions set forth herein;

WHEREAS,
the Company, IBA USA, IBAH, and the Stockholders each desire to effect the
Redemption and to settle and compromise fully and finally any and all disputes,
controversies, entitlements, and claims that IBAH may have against the Company,
IBA USA, or the Stockholders or that the Company, IBA USA, or the Stockholders
may have against IBAH, on the terms and conditions set forth herein.

WHEREAS,
capitalized terms used in this Agreement are used as defined on ATTACHMENT A to
this Agreement, unless the context otherwise requires.

NOW,
THEREFORE, in consideration of the promises, covenants, and agreements
contained herein, the parties agree as follows:

1.     Redemption.

1.1           Redemption.  Subject to the terms and conditions set forth
in this Agreement, IBAH agrees to sell to the Company, and the Company agrees
to purchase and redeem from IBAH, 7,500 Preferred Shares and the Warrant, and
IBAH agrees to sell to IBA USA, and IBA USA agrees to purchase and redeem from
IBAH, 24 shares of IBA USA Common Stock.

1.2           Closing.

(a)           The closing of the Redemption (the “Closing”) shall be effective as of the Effective Date.

(b)           (IBAH’s Deliveries)  At Closing, IBAH shall deliver to the Company
and to IBA USA:

(i)                                     One or more
share certificates evidencing 7,500 Preferred Shares, together with a stock
power executed in blank;

 

(ii)                                  One or more
share certificates evidencing 24 shares of IBA USA Common Stock held by IBAH
accompanied by a stock power executed in blank;

(iii)                               The Warrant;

(iv)                              Resignation
letters executed by Alan Quasha and Elmer Johnston whereby such persons resign
from their positions as directors of the Company and IBA USA; and

(v)                                 Copies of
minutes or consents of the Board of Directors of IBAH authorizing IBAH’s
execution, delivery and performance of this Agreement.

(c)           (The Company’s Deliveries)  At Closing, the Company and IBA USA shall
deliver to IBAH:

(i)                                     US$7,500,000 by
wire transfer of immediately available funds to an account or accounts
designated by IBAH;

(ii)                                  to the extent
that the stock certificates delivered by IBAH evidence ownership of an amount
in excess of 7,500 Preferred Shares, a replacement stock certificate issued by
the Company in the name of IBAH evidencing such excess number of Preferred
Shares;

(iii)                               Copies of
minutes or consents of the Company’s Board of Directors authorizing the Company’s
execution, delivery and performance of this Agreement by the Company; and

(iv)                              Copies of
minutes or consents of IBA USA’s Board of Directors authorizing IBA USA’s
execution, delivery and performance of this Agreement.

(d)           (Mutual Deliveries)  IBAH, the Company and IBA USA shall have
executed and mutually delivered a Confidentiality Agreement substantially in
the form attached to this Agreement as ATTACHMENT B.

1.3           Termination
and Modification of Agreements.  From
and after the Closing, except as otherwise set forth in this Agreement or any
agreement, instrument, or document executed in connection herewith or delivered
at Closing, all agreements between IBAH and its affiliates, on the one hand,
and the Company, IBA USA, the Stockholders, and their respective affiliates, on
the other hand, shall be terminated. 
Without limiting the generality of the foregoing, the Warrant and that
certain letter agreement dated September 10, 2004, between the Company and
Harken shall be terminated and of no further force or effect from and after the
Closing.

 

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2.     Releases.

2.1           IBAH
Release.

(a)           IBAH and Harken hereby acknowledge that, in consideration
for the Redemption and the releases contained herein made by the Company, IBA
USA, and the Stockholders, and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, from and after the Closing, IBAH
and Harken hereby fully, finally, and completely releases each of the Company,
IBA USA, the Stockholders, and their respective predecessors, successors,
subsidiaries, affiliates, owners, partners (both general and limited),
stockholders, officers, directors, employees, agents, attorneys,
representatives and representatives of each of them (the “Company
Released Parties”), of and from any and all claims, actions,
demands, and/or causes of action, of whatever kind or character, whether now
known or unknown, arising from, relating to, or in any way connected with,
facts or events occurring on or before the Closing, including as a stockholder
of the Company; provided, however, that neither IBAH nor Harken is not
releasing any claims for breach of any representation, warranty, covenant or
agreement of this Agreement or any agreement, instrument, or document executed
or delivered in connection with the Closing by any Company Released
Parties.  IBAH and Harken agree that this
Agreement includes a release of any negligence claims, contractual claims for
breach or default, and any claims for any alleged breach of fiduciary duties
owed by the Company, IBA USA, the Stockholders, or any of the other Company
Released Parties in any capacity, and any related attorneys’ fees and costs, if
any, that IBAH or Harken may have against the Company, IBA USA, the
Stockholders, or any other Company Released Parties.  IBAH and Harken waive and release the Company
Released Parties from each and every claim that this Agreement was procured by
fraud or signed under duress or coercion so as to make this release not
binding.  IBAH and Harken understand and
agree that by signing this Agreement they are giving up the right to pursue
legal claims that it may have against any of the Company Released Parties.

(b)           The release set forth in this Section
2.1 is intended as a release of all claims against the Company Released
Parties, whether now known or unknown. 
In furtherance thereof, IBAH and Harken expressly waive any right or
claim of right to assert hereafter that any claim, demand, obligation and/or
cause of action has, through ignorance, oversight, error or otherwise, been
omitted from the terms of this Agreement. 
IBAH and Harken make this waiver with full knowledge of their rights,
after consulting with legal counsel, and with specific intent to release both their
known and unknown claims.

(c)           IBAH and Harken hereby represent and
warrant that neither IBAH nor Harken has assigned or otherwise transferred to
any other person or entity any interest in any claim, action, demand and/or
cause of action it has, or may have, or may claim to have in connection with
the matters released hereby and/or the persons and entities released herein,
and hereby agrees to indemnify and hold harmless all persons or entities hereby
released from any and all injuries, harm, damages, penalties, costs, losses,
expenses and/or liability or other detriment including all reasonable attorneys’
fees incurred as a result of any and all claims, actions, demands, and/or
causes of 

 

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action
of whatever nature or character that may hereafter be asserted against any of
the Company Released Parties by any person or entity claiming by, through or
under IBAH or Harken by virtue of such an assignment or other transfer.

2.2           Company
Release.

(a)           The Company, IBA USA, and the Stockholders (collectively,
the “Releasing Parties”) hereby acknowledges
that in consideration for the releases contained herein made by IBAH and
Harken, and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, from and after the Closing, the Releasing Parties
hereby fully, finally, and completely release IBAH, Harken, and their
respective predecessors, successors, subsidiaries, affiliates, owners, partners
(both general and limited), stockholders, officers, directors, employees,
agents, attorneys, representatives and representatives of each of them (the “IBAH Released Parties”), of and from any and all claims,
actions, demands, and/or causes of action, of whatever kind or character,
whether now known or unknown, arising from, relating to, or in any way
connected with, facts or events occurring on or before the Closing, including
as an employee, director or stockholder of the Company or IBA USA; provided,
however, that the Releasing Parties are not releasing hereby any claim
for breach of any representation, warranty, covenant or agreement of this
Agreement or any agreement, instrument, or document executed or delivered in
connection with the Closing by any IBAH Released Parties.  The Releasing Parties agree that this
Agreement includes a release of any negligence claims, contractual claims for
breach or default, and any claims for any alleged breach of fiduciary duties
owed by IBAH, Harken or any of the other IBAH Released Parties in any capacity,
and any related attorneys’ fees and costs, if any, that the Releasing Parties
may have against IBAH, Harken or any other IBAH Released Parties.  The Releasing Parties waive and release the
IBAH Released Parties from any claim that this Agreement was procured by fraud
or signed under duress or coercion so as to make this release not binding.  The Releasing Parties understand and agree
that by signing this Agreement they are jointly and severally giving up the
right to pursue any legal claim that they may have against any of the IBAH
Released Parties.

(b)           The release set forth in this Section
2.2 is intended as a release of all claims against the IBAH Released Parties,
whether now known or unknown.  In
furtherance thereof, the Releasing Parties expressly waive any right or claim
of right to assert hereafter that any claim, demand, obligation and/or cause of
action has, through ignorance, oversight, error or otherwise, been omitted from
the terms of this Agreement.  The Releasing
Parties make this waiver with full knowledge of their respective rights, after
consulting with legal counsel, and with specific intent to release all of their
respective known and unknown claims.

(c)           The Releasing Parties hereby
represent and warrant that they have not assigned or otherwise transferred to
any other person or entity any interest in any claim, action, demand and/or
cause of action they have, or may have, or may claim to have in connection with
the matters released hereby and/or the persons and entities released herein,
and hereby agree, jointly and severally, to indemnify and hold harmless all
persons or entities hereby released from any and all injuries, harm, 

 

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damages,
penalties, costs, losses, expenses and/or liability or other detriment
including all reasonable attorneys’ fees incurred as a result of any and all
claims, actions, demands, and/or causes of action of whatever nature or
character that may hereafter be asserted against any of the IBAH Released
Parties by any person or entity claiming by, through or under the Releasing
Parties by virtue of such an assignment or other transfer.

3.     Certain Covenants and
Agreements.  IBAH, IBA USA,
the Company and the Stockholders hereby covenant and agree with each other as
follows:

3.1           Financial Statements.

(a)           The Company and
IBA USA shall reasonably cooperate with IBAH, its parent company, and their
auditors in IBAH’s 2005 fiscal year end audit and the preparation of IBAH’s
2005 fiscal year end audited financial statements.

(b)           If and so long
as IBAH holds of record any of the capital stock of the Company, the Company
shall provide to IBAH on or before the 20th day of April, July,
October, and January, in respect of the immediately preceding calendar quarter,
quarterly and year-to-date consolidated income statements and balance sheets
through December 31, 2006, and, in January, the year end financial statements
for the preceding year.

3.2           Management.                If and so long as IBAH
holds of record any of the capital stock of the Company, the Company and IBA USA shall continue to
operate their respective businesses through the earlier to occur of December
31, 2006, or a Conversion Event (defined below), consistent in all respects with the management guidelines set forth in “Exhibit
A” to the Stockholders Agreement.

3.3           Certain Liabilities.  IBAH shall indemnify the
Company, IBA USA, and the Stockholders from and against any obligation that may
arise or may have arisen under that certain Fee Agreement between Emerging
Markets Group and the Company dated September 8, 2004, to pay fees to Emerging
Markets Group.

3.4           Cooperation.  IBAH,
at its own expense, shall reasonably cooperate in good faith with the Company
in its efforts to find new sources of capital funding.

3.5           Additional Redemption.

(a)           At
any time from and after the Closing until December 31, 2006, subject to the
terms and conditions of this Agreement, the Company shall have the
right, at its sole option, to redeem all, but not less than all, of the
Preferred Shares held by IBAH for
cash consideration equal to US $5,000,000. 
The Company shall give IBAH written notice (the “Redemption
Notice”) of its intention to redeem the Preferred Shares, which
notice shall state the date for such redemption.  Such date shall be not more than sixty (60)
and not less than twenty (20) days from the date the Redemption Notice is
received by IBAH.

 

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(b)           At the closing for any such
redemption of such Preferred Shares, IBAH shall surrender to the Company the certificates
evidencing such Preferred Shares,
duly endorsed in blank or accompanied by an appropriate stock power executed in
blank, in exchange for US $5,000,000 paid by wire transfer of immediately
available funds to an account or accounts designated by IBAH.

3.6           Conversion.  At any time that IBAH holds of record any
Preferred Shares, if the Company shall have received cash proceeds of not less
than US $2,000,000 through, or as a result of, any investment in the Company or
any financing, recapitalization, reorganization, or sale of capital stock of
the Company (or any rights thereto) (a “Conversion Event”),
the Company shall immediately convert IBAH’s Preferred Shares into a number of
shares of Common Stock equal to nineteen (19%) percent (on a fully diluted
basis after issuance of such Common Stock to IBAH) of the Company’s total
outstanding and issued Common Stock. 
Upon any such conversion, IBAH shall surrender one or more share
certificates evidencing IBAH’s ownership of its Preferred Shares, and the Company
shall deliver to IBAH share certificates evidencing the shares of Common Stock
issued to IBAH.  For as long as the
Preferred Shares are outstanding, the foregoing conversion obligation shall be
in addition to the mandatory redemption obligations set forth in Section 3 of
the Terms of Issuance of the Preferred Shares.

4.     Representations and Warranties of IBAH. 
IBAH represents and warrants to the Company, IBA USA and the
Stockholders as follows:

4.1           Ownership.  IBAH owns the Redeemed Securities beneficially
and of record free and clear of all liens, claims, encumbrances, proxies and
restrictions of any kind or nature whatsoever, except restrictions on transfer
imposed by applicable securities laws and the Stockholders Agreement.  Except for the Stockholders Agreement, there
are no outstanding options, warrants, subscriptions or other rights or
obligations to purchase or acquire any of the Redeemed Securities, nor any
outstanding securities convertible into or exchangeable for any of the Redeemed
Securities.

4.2           Authority.  Upon the execution and delivery by IBAH of
this Agreement and the other agreements contemplated hereby, this Agreement and
the other agreements contemplated hereby will constitute the legal, valid, and
binding obligations of IBAH.  IBAH has
the right, power, and authority to execute and deliver this Agreement and to
perform its obligations under this Agreement. 
IBAH is not, nor will be, required to obtain any consent from any person
in connection with the execution and delivery of this Agreement and the other
agreements contemplated hereby, the consummation or performance of any of the
transactions contemplated hereby or thereby, or the sale and delivery of the
Redeemed Securities or termination of the Warrant.

5.     Representations and Warranties of the Company.  The Company and IBA USA represent
and warrant to IBAH as follows:

5.1           Capital
Structure.  The Company’s authorized
capital stock (immediately prior to Closing) is US$5,000 divided in 4,000
shares of Common Stock, of which 26 shares are currently issued and
outstanding, and 100,000 shares of par value US$0.01 each, of which 12,500
shares have been designated as the Preferred Shares and are outstanding.  The 26 outstanding shares of Common Stock and
the 12,500 Preferred Shares represent all of the 

 

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outstanding equity interests in the Company.  There are no outstanding or authorized
options, warrants (other than the Warrant), purchase rights, subscription
rights, conversion rights, exchange rights or other contracts or commitments
that require the Company to issue, sell or otherwise cause to become
outstanding any of its capital stock. 
There are no outstanding stock appreciation, phantom stock or similar
rights with respect to the Company.  The
Company has no obligation of any kind to issue any additional equity interests
in the Company to any person.

5.2           Authority.  Upon the execution and delivery by the
Company of this Agreement and the other agreements contemplated hereby, this
Agreement and the other agreements contemplated hereby will constitute the
legal, valid, and binding obligations of the Company.  The Company has the right, power, and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement.  The Company is
not, nor will be, required to obtain any consent from any person in connection
with the execution and delivery of this Agreement and the other agreements
contemplated hereby, the consummation or performance of any of the transactions
contemplated hereby or thereby, or the redemption of the Redeemed Securities.

6.     Representations and Warranties of the Stockholders.  Each Stockholder, severally for
himself only, represents and warrants to IBAH as follows:

6.1           Ownership.  Such Stockholder owns 13 shares of Common
Stock free and clear of all liens, claims, encumbrances, proxies and
restrictions of any kind or nature whatsoever, except those imposed by
applicable securities laws and the Stockholders Agreement.  Except for the Stockholders Agreement, there
are no outstanding options, warrants, subscriptions or other rights or
obligations to purchase or acquire any of such Stockholder’s Common Stock, nor
any outstanding securities convertible into or exchangeable for any of such
Stockholder’s Common Stock.

6.2           Authority.  Upon the execution and delivery by such
Stockholder of this Agreement and the other agreements contemplated hereby,
this Agreement and the other agreements contemplated hereby will constitute the
legal, valid, and binding obligations of such Stockholder.  Such Stockholder has the right, power, and
authority to execute and deliver this Agreement and to perform his obligations
under this Agreement.  Such Stockholder
is not, nor will be, required to obtain any consent from any person in
connection with the execution and delivery of this Agreement and the other
agreements contemplated hereby, the consummation or performance of any of the
transactions contemplated hereby or thereby.

7.     Amendments to Stockholders Agreement.  The Stockholders Agreement shall remain in
full force and effect, as hereby amended effective as of the Effective
Date.  The Stockholders Agreement is
hereby amended as follows:

7.1           Ownership.  Section 1.1 of the Stockholders Agreement is
hereby amended to read in its entirety as follows:

(a)           Ownership. Without the
consent of the Purchaser, at any time that any shares of the Company’s Series A
Preferred shall remain outstanding, the Founders shall not acquire, by purchase
or otherwise, ownership of capital stock representing more than eighty-one
percent (81%) of the outstanding 

 

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shares
of capital stock of the Company, on a Fully Diluted Basis, except in accordance
with this Agreement. Without the consent of the Founders and subject to the
terms and conditions of that certain Redemption and Release Agreement dated
January 31, 2006, at any time that any shares of the Company’s Series A
Preferred shall remain outstanding, the Purchaser shall not acquire, by purchase
or otherwise, ownership of capital stock representing more than nineteen (19%)
of the outstanding shares of capital stock of the Company, on a Fully Diluted
Basis, except in accordance with this Agreement.  As used in this Agreement, “Fully Diluted Basis”
means, as the context requires, either (a) the aggregate number of Common Stock
issued and outstanding at the relevant time, after giving effect to all then
outstanding options, warrants, convertible securities or other rights to
acquire Common Stock (whether or not then exercisable or exercisable at a price
below the then market value of the Common Stock) of all shareowners, and/or (b)
the number of Common Stock owned by a particular shareholder at the relevant
time, after giving effect to all then outstanding options, warrants,
convertible securities or other rights to acquire Common Stock (whether or not
then exercisable or exercisable at a price below the then market value of the
Common Stock) held by such shareholder.

7.2           Board of Directors.

(a)           Section 1.2 of the
Stockholders Agreement is hereby amended to read in its entirety as follows:

The
management of the Company and the preparation and adoption of the Company’s
business plan will be vested in the Board of Directors and such officers as the
Board may designate from time to time. 
Subject to the management guidelines attached hereto as Exhibit A (prior
to the earlier to occur of December 31, 2006, or an Investment  Event (defined below)) and the other terms of
this Agreement, the day-to-day management of the Company will be at the
direction of the Board of Directors.  The
Board and the members appointed thereto (each a “Director”) shall be proposed
by and shall serve at the direction of the Stockholders as provided for herein
and in the Memorandum of Association and Articles of Association.  An “Investment Event” shall mean Company’s
receipt of cash proceeds of not less than US $2,000,000 through, or as a result
of, any investment in the Company or any financing, recapitalization,
reorganization, or sale of capital stock of the Company (or any rights
thereto).

(b)           Section 1.2(a) of
the Stockholders Agreement is hereby amended to read in its entirety as
follows:

The Board of Directors shall be comprised of
five (5) Directors or such other number of directors as may be established in
accordance with the Company’s organizational documents from time to time.  So long as the Purchaser holds of record any
shares of the Series A Preferred or 

 

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ordinary shares of the Company that entitle
the Purchaser to vote at least fifteen percent (15%) of all the votes that may
be cast in an election of directors of the Company, the Purchaser shall be
entitled to nominate one (1) director for membership on the Board of Directors
of the Company, and the Founders shall be entitled to nominate four (4)
directors for membership on the Board of Directors of the Company.  The Purchaser and the Founders agree to vote
for the nominees of each of them.  If a
Founder is unable to serve or has transferred his shares of Common Stock in the
manner permitted by Section 3.3(a), then the Founder’s successor in interest as
holder of his Shares or his legal representative shall be entitled to nominate
directors in the same manner and to the same extent as if the Founder were
himself acting.

(c)           Section 1.2(b) of
the Stockholders Agreement is hereby amended to read in its entirety as
follows:

Subject to the Company’s Memorandum of
Association and Articles of Association (as in effect on the date hereof and
from time to time thereafter) and the terms and conditions of this Agreement,
the Board will have the authority on behalf and in the name of the Company to
perform all acts necessary and desirable to the objects and purposes of the
Company and to comply, as deemed necessary in the Board’s sole discretion, with
any and all applicable laws, regulations, orders or decrees without a vote of
the Stockholders (including but not limited to opening bank or other accounts
and negotiating, effecting and authorizing the purchase and sale of Shares);
provided (prior to the earlier of December 31, 2006, or an Investment Event)
that those matters which, under the terms of Exhibit A, are within the scope of
powers and authority of the Company’s management shall remain with Company’s
management unless otherwise modified by the Board as deemed necessary in its
sole discretion to comply with any laws, regulations, orders or decrees as set
forth in this Subsection (b).  In
addition, the Board is hereby authorized to amend the terms of Exhibit A
at any time after of earlier of December 31, 2006, or an Investment Event.  The Purchaser and the Founders agree to
instruct their Board of Directors nominees to elect John Kean Jr. as the
Chairperson of the Board, so long as he is able to serve and remains a
Stockholder.  He shall preside over all
Board meetings.  As used in this
Agreement, “Shares” means and includes any and all shares of Common Stock
and/or shares of capital stock of the Company, by whatever name called, which
carry voting rights and shall include any such shares now owned or subsequently
acquired by a Stockholder, however acquired, including without limitation stock
splits and stock dividends.

7.3           Certain
Actions Requiring Special Unanimous Approval.  The clause “(so long as any shares of the
Series A Preferred remain outstanding)” in Section 2.1 of the Stockholders
Agreement is hereby amended to read as “(except in connection with an
Investment Event or

 

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after the conversion of the Series A Preferred to
Common Stock as a result of such Investment Event)”.

7.4           Rights
of First Refusal and Purchase Options. 
From and after an Investment Event, the term “Purchaser” as used in
Sections 3.4 through 3.7, inclusive, of the Stockholders Agreement shall be
deemed to refer to all shareholders of the Company other than the
Founders.  In addition, for purposes of
Sections 3.4 through 3.7, inclusive, of the Stockholders Agreement, the
purchase rights of all shareholders of the Company other than the Founders
shall be pro rata in accordance with such shareholders’ respective ownership
interests in the Company (or such other allocation as may be agreeable among
such shareholders if any shareholder desires to purchase less than its pro rata
share).

7.5           Pre-Emptive
Rights.  A new Section 3.9 shall be
added to the Stockholders Agreement, which shall read in its entirety as
follows:

3.9           Preemptive Rights.  The Company hereby grants to Purchaser a
right of first refusal to purchase its Pro Rata Share (as defined herein) of
New Securities (as defined herein) that the Company may, from time to time,
propose to issue and sell at any time that the Purchaser holds of record any
shares of the Series A Preferred or ordinary shares of the Company that entitle
the Purchaser to vote at least fifteen percent (15%) of all the votes that may
be cast in an election of directors of the Company.

(a)           Notice.  If the Company proposes to undertake an
issuance or sale of New Securities the Company shall give the Purchaser written
notice of its intention, describing the amount and type of New
Securities and the price and terms upon which the Company proposes to issue the
same.  The Purchaser shall have thirty
(30) days from the date of receipt of any such notice to agree to purchase up
to its respective Pro Rata Share of such New Securities for the price and upon
the terms specified in the notice by giving written notice to the Company and
stating therein the quantity of New Securities to be purchased.  The closing of the purchase of the New
Securities to be issued and sold to the Purchaser shall occur at the same time
as the closing of the sale of New Securities not elected or eligible to be
purchased by Purchaser shall occur.

(b)           Eligible Sales to Third Parties.  After giving the notice and opportunity for
Purchaser to participate as required under Section 3.9(a) above, the Company
shall have ninety (90) days thereafter to issue and sell the New Securities not
elected nor eligible to be purchased by the Purchaser at the price and upon the
terms no more favorable to the purchasers of such securities than specified in
the Company’s notice under Section 3.9(a). 
In the event the Company has not sold such New Securities within said
ninety (90) day period, the Company shall not thereafter issue or sell any New
Securities without first offering such securities to the Purchaser in the
manner provided above.

(c)           Definitions.  For purposes of this Agreement, the following
terms have the following definitions:

 

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(i)                                     “New
Securities” means any shares of capital stock of the Company, including
Common Stock and any series of preferred stock, whether now authorized or not,
of any type whatsoever that are, or may become, convertible into or exchangable
for said shares of Common Stock and rights, options or warrants to purchase
said shares of Common Stock or preferred stock, and securities of any type
whatsoever that are, or may become, convertible into or exchangeable for said
shares of Common Stock or such preferred stock; provided, however,
that for purposes hereunder, “New Securities” does not include (A)
Common Stock offered to the public generally pursuant to a registration
statement under the Securities Act of 1933, as amended; or (B) securities
issued in connection with any stock split or stock dividend by the Company.

(ii)                                  “Pro Rata
Share” means the ratio that (A) the sum of the total number of shares of Common Stock
that are then held by the Purchaser, on a Fully Diluted Basis, bears
to (B) the sum of the total number of shares of Common Stock then outstanding, on a Fully
Diluted Basis.

7.6           Balance
of Agreement.  Except as modified by
this Agreement, the Stockholders Agreement shall continue in full force and
effect after Closing.

8.     Choice of Law.  This Agreement shall be governed
by and construed in accordance with the laws of the State of New York (without
reference to the conflicts of law provisions thereof).  To the extent that any conflict may arise
between the terms and conditions of this Agreement and the terms and conditions
of the Company’s Memorandum of Association or Articles of Association or any
other organizational document, the terms and conditions of this Agreement shall
prevail.

9.     Terms Confidential.  The parties shall use reasonable
commercial efforts to keep the terms, amounts and facts of this Agreement
completely confidential to avoid disclosure hereafter of any information
concerning this Agreement to anyone except their respective attorneys, accountants,
or other professional advisors. 
Notwithstanding the foregoing prohibition, (a) the parties shall not be
prohibited from disclosing the terms, amounts and facts of this Agreement or
this Agreement itself as may be requested by governmental entities or as may be
required by law, including any Federal or state securities laws or regulations,
and (b) the Company shall not be prohibited from disclosing the terms, amounts
and facts of this Agreement or this Agreement itself as may be requested by any
person or entity with whom the Company is engaged in discussions with
concerning any investment in the Company or any financing, recapitalization,
reorganization, or sale of the capital stock of Company (or any rights thereto)
or all or substantially all of the assets of the Company.  The Company may inform its employees the
transactions contemplated by this Agreement.

10.   Entire Agreement.  In addition to the Stockholders
Agreement, the Executive Employment Agreements dated September 10, 2004,
between the Company and each of the Stockholders shall remain in full force and
effect.  Otherwise, this Agreement, and
the other agreements, 

 

11

 

instruments, or documents executed in connection
herewith or delivered at Closing, constitute the entire agreement among the
parties with respect to the subject matter hereof and thereof, and supersede
any other agreement with respect hereto and thereto, and there are no other or
continuing agreements or understandings between IBAH, on one hand, and the
Company, IBA USA, or the Stockholders, on the other hand, except as expressly
recited herein or therein; provided, that, the foregoing shall not affect any
agreements solely between the Company, IBA USA, and the Stockholders to the
extent that the IBAH Released Parties are not affected thereby.

11.   Execution in Counterparts.  This Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
constitute an original, but such counterparts together shall constitute but one
and the same Agreement.  The exchange of
copies of this Agreement and of signature pages by facsimile transmission shall
constitute effective execution and delivery of this Agreement as to the parties
and may be used in lieu of the original Agreement for all purposes.  Signatures of the parties transmitted by
facsimile shall be deemed to be their original signatures for all purposes.

12.   Legal Advice.  Each party hereto acknowledges
that such party has had the advice of independent counsel selected by such
party in connection with the terms of this Agreement and the other agreements
executed in connection herewith, and that no offer, promise, inducement or
consideration of any kind or degree, except as expressly stated in this
Agreement, has been provided or promised to such party by any other party or
person in connection with such party’s entry into this Agreement and the other
agreements executed in connection herewith.

13.   Severability.  Should any provision of this Agreement
be declared and/or be determined by any court to be illegal or invalid, the
validity of the remaining parts, terms or provisions shall not be affected
thereby.

14.   Expenses.  Except as otherwise provided in this
Agreement, each party to this Agreement will bear its respective fees and
expenses incurred in connection with the preparation, negotiation, execution
and performance of this Agreement and the transactions contemplated by this
Agreement, including all fees and expenses of its agents and representatives.  If any party hereto is institutes a
Proceeding to enforce such party’s rights in accordance with the provisions of
this Agreement, the prevailing party shall be entitled to recover its
reasonable expenses, including attorneys’ fees, in connection with any such
action.

15.   Further Assurances.  At any time and from time to time,
upon the reasonable of a party hereto, each other party hereto shall promptly
execute and deliver all such further agreements, documents, and instruments and
take such further action as may be necessary or appropriate to carry out the
provisions and purposes of this Agreement or any other agreement executed in
connection herewith.

16.   Miscellaneous.  This Agreement shall be binding
upon, and inure to the benefit of the parties hereto and their respective
heirs, successors and assigns. A modification or waiver of any of the
provisions of this Agreement shall be effective only if made in writing and
signed by each of the parties hereto. 
The failure of any party to insist upon the strict performance of any of
the provisions of this Agreement shall not be construed as a waiver of any
subsequent default of the same or any other provision.

 

12

 

17.   Notices.  Any notices required to be given
pursuant to the provisions hereof shall be given in writing to the parties
below by certified mail, return receipt requested, or electronically confirmed
facsimile transmission as follows:

If to the Company or IBA
USA:

35 Mill Street, P.O. Box 444

Bernardsville, NJ  07924

Attention: John Kean, Jr. & Stanley J. Brownell

Fax:  (908) 766-5912

 

If to IBAH:

 

c/o Harken Energy Corporation

180 State Street

Southlake, Texas 76092

Attention: Mikel D. Faulkner, President

Fax:  (817) 288-0971

 

If to John Kean, Jr.:

 

40 Mountain Top Road

Bernardsville, NJ   07924

Fax:  (908) 766-5912

 

                If to Stanley J. Brownell:

 

P.O. Box 314

18 Old Turnpike Road

Oldwich, NJ  08858

Fax:  (908) 766-5912

 

 

 

[SIGNATURE
PAGE FOLLOWS]

 

13

 

IN
WITNESS WHEREOF, the undersigned have caused this Agreement to be executed and
entered into as of the day and year first above written.

	
  International Business
  Associates Holding Co.,

  
	
  Ltd., a British Virgin
  Islands company

  
	
   

  	
   

  
	
  By:

  	
  /s/  Mikel D. Faulkner

  
	
   

  	
  Mikel D. Faulkner,
  President

  
	
   

  	
  and Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  International Business
  Associates, Ltd.,

  
	
  an exempt Turks and Caicos
  company

  
	
   

  	
   

  
	
  By:

  	
  /s/  John Kean, Jr.

  
	
   

  	
  John Kean, Jr., Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  International Business
  Associates (USA), Inc.,

  
	
  a Delaware corporation

  
	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/  John Kean, Jr.

  
	
  Name:

  	
  John Kean, Jr.

  
	
  Title:

  	
  President & CEO

  
	
   

  
	
   

  
	
  /s/  John Kean, Jr.

  
	
  John Kean, Jr. ,
  individually

  
	
   

  
	
   

  
	
  /s/  Stanley J. Brownell

  
	
  Stanley J. Brownell,
  individually

  

 

 

 

Harken
hereby executes this agreement for the sole purpose of agreeing to be bound by
the provisions of Section 2.1 of this Agreement.

	
  Harken Energy Corporation

  
	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/  Mikel D. Faulkner

  
	
   

  	
  Mikel D. Faulkner,
  President

  

 

 

 

ATTACHMENT
A

CERTAIN
DEFINED TERMS

 

Capitalized terms used in the foregoing
agreement but not otherwise defined therein shall have the following meanings:

 

“Common Stock”
means the Company’s ordinary stock, US$1.00 par value per share.

 

“Governmental Body”
means any: nation, state, county, city, town, borough, village, district or
other jurisdiction; federal, state, local, municipal, foreign or other
government; governmental or quasi-governmental body of any nature (including
any agency, branch, department, board, commission, court, tribunal or other
entity exercising governmental or quasi-governmental powers); multinational
organization or body; body exercising, or entitled or purporting to exercise,
any administrative, executive, judicial, legislative, police, regulatory or
taxing authority or power; or official of any of the foregoing.

 

“Harken” means
Harken Energy Corporation, a corporation with offices at 180 State Street,
Southlake, TX 76092.

 

“IBA USA Common Stock”
means the IBA USA’s common stock, US$0.01 par value per share.

 

“Including,”
“includes” and “include” mean, respectively, “including, without limitation,”
“includes, without limitation” and “include, without limitation.”

 

“Preferred Shares”
means collectively the Company’s Series A Redeemable Preferred Shares, par
value US$.01 per share.

 

“Proceedings”
means any action, arbitration, audit, hearing, investigation, litigation or
suit (whether civil, criminal, administrative, judicial or investigative,
whether formal or informal, whether public or private) commenced, brought,
conducted or heard by or before, or otherwise involving, any Governmental Body
or arbitrator.

 

“Redeemed Securities”
means collectively 7,500 Preferred Shares, the Warrant, and 24 shares of Common
Stock, US$0.01 par value per share, of IBA USA.

 

“Redemption” means
collectively the acquisition of the Redeemed Securities by the Company and by
IBA USA.

 

“Stockholders Agreement”
means the Stockholders Agreement dated September 10, 2004, among the Company,
the Stockholders and IBAH.

 

“Warrant” means
that certain Ordinary Share Purchase Warrant issued September 10, 2004, to
purchase 24 shares of Common Stock.

 

 

 

 

ATTACHMENT
B

FORM
OF

CONFIDENTIALITY
AGREEMENT

 

 

CONFIDENTIALITY
AND NONDISCLOSURE AGREEMENT

 

                This
Confidentiality and Nondisclosure Agreement (“Agreement”)
is made and entered into as of January 31, 2006, by and among International
Business Associates Holding Co., Ltd., a British Virgin Islands company,
International Business Associates (USA), Inc., a Delaware corporation,
International Business Associates, Ltd., an exempt Turks and Caicos company
(collectively referred to herein as the “Parties” and individually as a “Party”).

 

                WHEREAS, the Parties have recently had or will have business
relationships with respect to business opportunities involving natural gas
trading and other related activities in Eastern Europe and the United
States.  Each of the foregoing items
being referred to herein individually as a “Project” and collectively as the “Projects.”  As a result of such discussions, it is deemed
desirable by each Party or its Affiliates to disclose certain information to
the other Party or its Affiliates; and

 

                WHEREAS, it is a
condition to the disclosure of such information that the Parties enter into
this Agreement to evidence the Parties’ undertakings and agreement with respect
to the treatment as confidential, and the control and use of, information that
may be furnished to the Parties;

 

                NOW, THEREFORE, in consideration of the foregoing premises,
the mutual covenants contained herein and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties hereby agree as follows:

 

                1.             Defined Terms. 
As used in this Agreement each of the following terms shall have the
meanings assigned to such term as set forth below:

                                1.1.          “Affiliate”
means any Person that directly or indirectly (through one or more
intermediaries) controls or is controlled by or is under common control with
the relevant Person specified herein.

 

                                1.2.          “Confidential
Information” means (a) all information, whether of a business , technical,
engineering, economic or other nature and regardless of the form in which it is
communicated or maintained, relating to a party (the “Disclosing Party”), its
Affiliates and/or the Projects that is provided to the other Party (the “Receiving
Party”) or any of its Representatives by the Disclosing Party or any of its
Representatives, (b) all sketches, drawings, reports, analysis, compilations,
studies and notes containing or reflecting all information described in 1.2(a),
regardless of who prepares such materials, (c) the fact that the Confidential
information has been made available to or is being inspected or evaluated by
the Receiving Party, and (d) the fact that such discussions and negotiations
are taking place concerning a Project or Projects or other related transactions
between the Parties, except that Confidential Information shall not include:

 

 

(i)            information which was already in the
receiving Party’s or its Representatives’ possession on a non-confidential
basis prior to disclosure hereunder;

 

(ii)           information which prior to disclosure
was already in the public domain, or which after disclosure entered the public
domain other than by a breach of this Agreement by the Receiving Party or any
of its Representatives; and

 

(iii)          information which was received from a
third party which the Receiving Party reasonably believes was not an is not
violating an obligation of confidentiality to the Disclosing Party or its
Affiliates; provide that use or disclosure by the Receiving Party of
information which the Receiving Party obtains in the manner described by this Section
1.2(iii) does not violate any of the terms under which it was disclosed by
said third party.

 

                                1.3.          “Person”
means any natural person, corporation, company, partnership, limited liability
company, joint venture, trust, organization, association, sole proprietorship
or other entity.

 

                                1.4.          “Representatives”
means the directors, officers, employees, partners, managers, agents,
representatives, advisors, consultants, or contractors of the person specified
or of its Affiliates.

 

                2.             Restrictions
on Disclosure and Use of Confidential Information.

 

                                2.1.          The
Receiving Party Agrees to, and to cause its Representatives to, treat all
Confidential Information as confidential and secret and comply with the terms
and conditions contained herein.  The
Receiving Party shall not, and shall not permit its Representatives to,
disclose Confidential Information to any person (except as set forth in this Section
2), without the prior written consent of the Disclosing Party.

 

                                2.2.          Without
the prior written consent of the Disclosing Party, the Receiving Party shall
not, and shall not permit its Representatives to, make any use whatsoever of
the Confidential Information other than as may be necessary to evaluate the
possible joint development of a Project or Projects.  Without limiting the generality of the
foregoing, the Receiving Party shall not, and shall not permit its Representatives
to, use the Confidential Information for its own business or benefit or for
other than for the specific purpose set forth in this Agreement during the term
hereof.

 

                                2.3.          Except
as set forth in Section 2.4, the Receiving Party shall only disclose
Confidential Information to its Representatives who need to know the contents
of the Confidential Information for the purpose of evaluating and pursuing the
Projects and Persons chosen by the Receiving Party as potential lenders or
investors in the Projects or other Persons 

 

 

 

that are concerned with
the Projects and whose knowledge of such Confidential Information is necessary
or advisable for such purpose.  Each such
Person receiving Confidential Information from the Receiving Party shall have
the same obligations with respect too such Confidential Information as the
Receiving Party hereunder, and the Receiving Party shall so instruct each such
Person receiving Confidential Information and shall use all reasonable efforts
to prevent and prosecute unauthorized use or disclose of Confidential
Information by such Persons.  The
Receiving Party shall be liable to the Disclosing Party for any breach of such
obligations by any such Persons.

 

                                2.4.          If
the Receiving Party or any of its Representatives is requested or required (by
deposition, interrogatories, requests for information or documents in legal
proceedings, subpoenas or similar process) in connection with any proceeding to
disclose or otherwise becomes legally compelled to disclose any Confidential
Information, the Receiving Party shall provide the Disclosing Party with prompt
written notice and reasonable assistance (subject to reimbursement by the
Disclosing Party of all reasonable and out of pocket expenses incurred by the
Receiving Party in providing such assistance) so as to enable the Disclosing
Party to seek a protective order or other appropriate remedy or waive
compliance with this Agreement.  If such
a protective order or other remedy is not obtained, or if the Disclosing Party
waives compliance with this Agreement, the Receiving Party (or such other
Persons to which such request is directed) may disclose Confidential
Information, but only such Confidential Information as it is legally required
to disclose to avoid contempt or other penalty in the reasonable opinion of
counsel to the Receiving Party, and shall exercise reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded such
Confidential Information disclosed.

 

                3.             Safekeeping
and Return of Confidential Information.

 

                                3.1.          The
Receiving Party shall take all reasonable steps to prevent the unauthorized
use, distribution or reproduction of all copies of written materials relating
to or containing any party of Confidential Information, including all sketches,
drawings, reports, analysis, compilations, studies and notes, and all copies,
reproductions, reprints and translations thereof.  The Receiving Party shall not, and shall not
permit its Representatives to, directly or indirectly, duplicate or otherwise produce,
in whole or in part, such Confidential Information in any manner inconsistent
with the terms hereof.

 

                                3.2.          The
Receiving Party shall return to the Disclosing Party, within ten (10) days
after receipt of such a request by the Disclosing Party, all materials
containing or reflecting Confidential Information that are in the possession of
the Receiving Party and its Representatives, without retaining copies, except
to the extent prohibited or required by applicable law in the reasonable
opinion of counsel to the Receiving Party and except in the case of reports,
analysis, compilations, studies, notes or other documents or records prepared
by the Receiving Party which contain or otherwise reflect or are generated from
Confidential Information, the Receiving Party may retain copies, but shall keep
such copies confidential in accordance with this Agreement.  Notwithstanding the return of such materials,
the receiving Party and its Representatives shall continue to be bound by the
obligations of confidentiality and other obligations hereunder.

 

 

                4.             Notice.  Any notices required to be given pursuant to
the provisions hereof shall be given in writing to the parties below by
certified mail, return receipt requested, or electronically confirmed facsimile
transmission as follows:

If to the International
Business Associates, Ltd. or International Business Associates (USA), Inc.:

35 Mill Street, P.O. Box 444

Bernardsville, NJ  07924

Attention: John Kean, Jr. & Stanley J. Brownell

Fax:  (908) 766-5912

 

If to International Business
Associates Holding Co.:

 

c/o Harken Energy Corporation

180 State Street

Southlake, Texas 76092

Attention: Mikel D. Faulkner, President

Fax:  (817) 288-0971

 

                5.             Term.      This Agreement and the obligations of
confidentiality undertaken hereby shall terminate and be of no further force
and effect after one (1) year from the date of this Agreement.

 

                6.             No
Waiver; Amendments.  No failure or
delay by the Disclosing Party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any right, power or privilege hereunder. 
Any modification of and amendment to this Agreement and any waiver of
any provision of this Agreement must be in writing signed by the Parties.

 

                7.             Governing
Law.  This Agreement shall be
governed by and construed and enforced in accordance with the laws of the state
of New York, USA without reference to the conflict of laws or principles
thereof.

 

                8.             Severability.          If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by
the illegal, invalid or unenforceable provision or by its severance from this
Agreement.  Furthermore, in lieu of such
illegal, invalid or unenforceable provision, there shall be added automatically
as a part of this Agreement a provision as similar in its terms to such
illegal, invalid or unenforceable provision as may be possible and be legal,
valid and enforceable.

 

                9.             Remedies.  It is agreed that each Party shall be
entitled to relief both at law and in equity, including, but not limited to
injunctive relief and specific performance, in the event of 

 

 

 

any breach or anticipated
breach of this Agreement, without proof of any actual or special damages
provided that in no event will a party or its Representatives be liable for
punitive or exemplary damages.

 

                10.           Successors
and Assigns.  Neither Party may
assign this Agreement or any of its rights hereunder except with the prior
written consent of the other Party and except that either Party may, without
the consent of the other Party, but with written notice to the other Party,
assign this Agreement and the rights hereunder to any of its Affiliates that own
or propose to acquire an interest in the Project provided that the assigning
Party shall continue to be bound by its obligations as a Receiving Party with
respect to the Confidential Information of a Disclosing Party in accordance
with this Agreement.  This Agreement
shall be binding upon and inure to the benefit of the successors and permitted
assigns of the parties.

 

                11.           No
Obligation or Joint Venture.  The
Parties agree that unless and until a definitive agreement has been executed
and delivered, no contract or agreement providing for a business relationship
between the Parties shall be deemed to exist between the Parties, and neither
Party will be under any legal obligation of any kind whatsoever with respect to
such relationship by virtue of this Agreement or any written or oral expression
thereof, except, in the case of this Agreement, for the matters specifically
agreed to herein.  For purposes of this
Agreement, the term “definitive agreement” does not include an executed letter
of intent or any other preliminary written agreement or offer, unless
specifically so designated in writing and executed by both Parties.  This Agreement does not obligate either Party
to deal exclusively with the Other Party.

 

                12.           Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.  Any executed counterpart transmitted by
facsimile or similar transmission by any Party shall be deemed an original and
shall be binding upon such Party.

 

                13.           No
Warranty.  The Parties hereby
acknowledge that neither Party, nor any of its representatives, agents,
affiliates or assigns makes any representations or warranties whatsoever
concerning the accuracy, completeness or correctness of the Confidential
Information supplied hereunder, nor must such representation or warranty be
implied.

 

                14.           Entire
Agreement.  This Agreement represents
the entire agreement between the Parties with respect to the subject matter hereof
and supersedes all prior agreements, whether oral or written.

 

 

                IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first written above.

 

 

	
  International Business
  Associates Holding Co.,

  
	
  Ltd., a British Virgin
  Islands company

  
	
   

  	
   

  
	
  By:

  	
  /s/  Mikel D. Faulkner

  
	
   

  	
  Mikel D. Faulkner,
  President

  
	
   

  	
  and Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  International Business
  Associates, Ltd.,

  
	
  an exempt Turks and Caicos
  company

  
	
   

  	
   

  
	
  By:

  	
  /s/  John Kean, Jr.

  
	
   

  	
  John Kean, Jr., Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  International Business
  Associates (USA), Inc.,

  
	
  a Delaware corporation

  
	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/  John Kean, Jr.

  
	
  Name:

  	
  John Kean, Jr.

  
	
  Title:

  	
  President & CEOExhibit 4.1

 

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

 

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

 

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

 

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

 

1

 

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.

 

2

 

	
  No. 1

  	
  Principal
  Amount $150,000,000

  
	
   

  	
  As revised
  by the Schedule of Increase

  
	
   

  	
  And
  Decreases in the Global Note attached hereto

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CUSIP NO.
  000361 AG0

  

 

AAR CORP.

 

1.75% Convertible Senior
Notes due 2026

 

AAR CORP., a Delaware
corporation, promises to pay to Cede & Co., or registered assigns, the
principal sum of One Hundred Fifty Million Dollars ($150,000,000), as revised
by the Schedule of Increases and Decreases in the Global Note attached
hereto, on February 1, 2026.

 

Interest Payment
Dates:  February 1, and August 1.

 

Record Dates:  January 15
and July 15.

 

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

 

	
   

  	
  AAR
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  TIMOTHY J. ROMENESKO

  
	
   

  	
   

  	
  Name:

  	
  Timothy
  J. Romenesko

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President-Chief Financial Officer

  & Treasurer

  

 

	
  TRUSTEE’S CERTIFICATE OF

  	
   

  
	
  AUTHENTICATION

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  
	
   

  	
   

  
	
  U.S. BANK NATIONAL ASSOCIATION,

  	
   

  
	
  as Trustee, certifies that this is one of

  	
   

  
	
  the Notes referred to in the within-mentioned
  Indenture.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ RAYMOND S. HAVERSTOCK

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  	
   

  
				

 

3

 

[FORM OF REVERSE
SIDE OF NOTE]

 

1.75% Convertible Senior
Notes due 2026

 

1.                                       Interest

 

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

 

2.                                       Method
of Payment

 

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

 

3.                                       Paying
Agent, Conversion Agent and Registrar

 

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

 

4.                                       Indenture

 

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

 

4

 

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

 

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

 

5.                                       Redemption
at the Option of the Company

 

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

 

6.                                       Notice
of Redemption at the Option of the Company

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

8.                                       Conversion

 

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

 

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

 

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

 

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

 

9.                                       Denominations;
Transfer; Exchange

 

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

 

6

 

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

 

10.                                 Persons
Deemed Owners

 

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

 

11.                                 Unclaimed
Money

 

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

 

12.                                 Amendment,
Waiver

 

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

 

13.                                 Defaulted
Interest

 

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

 

14.                                 No
Recourse Against Others

 

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

 

7

 

15.                                 Authentication

 

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

 

16.                                 Abbreviations

 

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

 

17.                                 CUSIP
Numbers

 

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

 

18.                                 Governing
Law

 

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

 

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

 

AAR
CORP.

One AAR Place

1100 Wood Dale Road

Wood Dale, Illinois 60191

Attention:  General Counsel

Facsimile No.:  (630) 227-2059

 

8

 

ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

I or we assign and transfer this Note to

 

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

 

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

 

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

 

	
  Date:

  	
   

  	
   

  	
  Your signature:

  	
   

  	
   

  
	
   

  	
   

  
	
  Signature

  	
   

  
	
  Guarantee:

  	
   

  	
   

  	
   

  
	
  (Signature must be guaranteed)

  	
   

  
								

 

 

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

 

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

 

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

 

CHECK ONE BOX BELOW:

 

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

 

2.                                       o                                    transferred
to the Company; or

 

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

 

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

 

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

 

9

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature Guarantee:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Signature must be guaranteed)

  	
  Signature

  
				

 

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

 

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

 

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

 

	
  Dated:

  	
  NOTICE: To be executed by an executive officer

  
	
   

  	
   

  
	
   

  	
  [INSERT NAME OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

10

 

SCHEDULE OF
INCREASES OR DECREASES IN GLOBAL SECURITY

 

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

 

	
  Date of

  exchange

  	
   

  	
  Amount of decrease in

  Principal Amount of this

  Global Note

  	
   

  	
  Amount of increase in

  Principal Amount of this

  Global Note

  	
   

  	
  Principal Amount of this

  Global Note following such

  decrease or increase

  	
   

  	
  Signature of authorized

  signatory of Trustee or

  Notes Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

11

 

OPTION OF HOLDER TO ELECT
PURCHASE

 

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

 

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

 

	
  Date:

  	
   

  	
   

  	
  Your signature:

  	
   

  	
   

  
	
   

  	
   

  	
  Sign exactly as your

  name appears on the

  other side of this Note

  

 

	
  Signature Guarantee:

  	
   

  
	
  (Signature must be guaranteed)

  	
   

  	
   

  	
   

  
				

 

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

 

12

 

FORM OF CERTIFICATE TO BE DELIVERED UPON
EXCHANGE

OR REGISTRATION OF TRANSFER OF SECURITIES

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

	
   

  	
  [INSERT
  NAME OF TRANSFEROR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  Date:

  

 

14

 

CONVERSION NOTICE

 

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

 

o

 

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

 

$

 

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

 

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

 

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

 

	
  Date:

  	
   

  	
   

  	
  Your Signature(s)

  	
   

  	
   

  
	
   

  	
   

  	
  (sign exactly as your name appears on this Note)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  *Signature(s) guaranteed by:

  	
   

  	
   

  	
   

  
	
   

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

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