Exhibit 10.3

 

AR CORP.

 

Director Restricted Stock Agreement

(“Agreement”)

 

Subject to the provisions of the AAR CORP. Stock Benefit Plan (“Plan”), the
terms of which are hereby incorporated by reference herein, and in consideration
of the agreements of the Grantee herein provided, AAR CORP. a Delaware
corporation (“Company”), hereby grants to Grantee a restricted stock award
(“Award”), effective                      (“Date of Award”), of           
shares of common stock (“Common Stock”) of the Company, $1.00 par value (“Award
Shares”), subject to the forfeiture and nontransferability provisions hereof and
the other terms and conditions set forth herein:

 

1.             Acceptance By Grantee.  The Award is conditioned upon the
acceptance by the Grantee of the terms and conditions of the Award as set forth
in this Agreement.  The Grantee must confirm acceptance of the Agreement on
Smith Barney’s web site (www.benefitaccess.com). If the Grantee does not accept
the Agreement within 30 days from the date of the notification of the Agreement,
the Award referenced herein shall expire unless the acceptance date is extended
in writing signed by the Company.

 

2.             Restrictions. The Grantee represents that he is accepting the
Award Shares without a view toward distribution of said Award Shares and that he
will not sell, assign, transfer, pledge or otherwise encumber the Award Shares
during the period commencing on the Date of Award and ending on the date the
restrictions applicable to such Award Shares are released pursuant to this
Agreement (“Restrictive Period”).

 

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3.             Release of Restrictions. Subject to the provisions of paragraph 4
below, the restrictions described in paragraph 2 above shall be released with
respect to 1/3 of the Award Shares on each successive anniversary of the Date of
Award, except as follows:

 

(a)           In General.  If the Grantee’s membership on the Company’s Board of
Directors terminates prior to the last day of the Restrictive Period for any
reason other than death, Disability or Retirement, the Grantee shall forfeit to
the Company all Award Shares not previously released from the restrictions of
paragraph 2 hereof.

 

(b)           Retirement.  If the Grantee’s membership on the Company’s Board of
Directors terminates by reason of Retirement prior to the last day of the
Restrictive Period, the Restrictive Period shall terminate in accordance with
the restriction release schedule set forth above in the first clause of this
paragraph 3 as to the Award Shares not previously released; provided, however,
that if the Grantee dies after Retirement and prior to the last day of the
Restrictive Period, the Grantee’s date of death will be treated as the date on
which his membership on the Company’s Board of Directors has terminated, and the
provisions of paragraph 3(c) shall apply in determining the release of
restrictions as to the Award Shares not previously released.  For purposes of
this Agreement, “Retirement” means the Grantee’s voluntary termination of
membership on the Company’s Board of Directors at or after attaining age 65 with
five or more consecutive years of service as a non-employee member of the
Company’s Board of Directors

 

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(c)           Death or Disability.

 

(i)            If the Grantee’s membership on the Company’s Board of Directors
terminates by reason of death or Disability before the second anniversary of the
Date of Award, the Restrictive Period shall terminate as to the difference
between half of the total number of Award Shares and those Shares previously
released. The remaining shares shall be forfeited to the Company.  For this
purpose, “Disability” means the inability of the Grantee to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months.

 

(ii)           If the Grantee’s membership on the Company’s Board of Directors
terminates by reason of death or Disability after the second anniversary of the
Date of Award, the Restrictive Period shall immediately terminate as to all of
the Award Shares not previously released.

 

(d)           Restrictive Covenant.  If at any time prior to the Award Shares’
release from restrictions hereunder, the Grantee, without the Company’s express
written consent, directly or indirectly, alone or as a member of a partnership,
group, or joint venture or as an employee, officer, director, or greater than 1%
stockholder of any corporation, or in any capacity engages in any activity which
is competitive with any of the businesses conducted by the Company or its
affiliated companies at any time during the Grantee’s membership on the
Company’s Board of Directors, the Grantee shall forfeit to the Company all Award
Shares not previously released from the restrictions of Section 2 hereof.

 

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4.             Change in Control. In the event the Grantee’s membership on the
Company’s Board of Directors terminates within one year following a Change in
Control of the Company, whether or not such change has the prior written
approval of the Continuing Directors, the Restrictive Period shall terminate as
to all Award Shares not previously released.

 

5.             Change in Outstanding Shares. In the event of any change in the
outstanding shares of Common Stock occurring through stock splits, stock
dividends, stock consolidations, spin-offs, other distributions of assets to
stockholders or assumption or conversion of outstanding Awards due to an
acquisition after the Date of Award, the Award Shares shall be treated in the
same manner in any such transaction as other shares of Common Stock. Any
additional shares of Common Stock received by the Grantee with respect to the
Award Shares in any such transaction shall be subject to the same restrictions
as are then applicable to those Award Shares for which the additional shares
have been issued.

 

6.             Rights of Grantee. As the holder of the Award Shares, the Grantee
is entitled to all of the rights of a stockholder of AAR CORP. with respect to
any of the Award Shares, when issued, including, but not limited to, the right
to receive dividends declared and payable since the Date of Award.

 

7.             Shares. In aid of the restrictions set forth in paragraph 2, the
Grantee will be required to execute a stock power in favor of the Company which
will be cancelled upon release of restrictions with respect to Award Shares
released. Award Shares shall be held by the Company in electronic book entry
form on the records of the Company’s Transfer Agent, together with the executed
stock power, for the account of

 

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the Grantee until such restrictions are released pursuant to the terms hereof,
or such Award Shares are forfeited to the Company as provided by the Plan or
this Agreement. The Grantee shall be entitled to the Award Shares as to which
such restrictions have been released, and the Company agrees to issue such Award
Shares in electronic form on the records of the Transfer Agent. Upon request by
the Grantee, the Transfer Agent will transfer such released Award Shares in
electronic form to the Grantee’s broker for the Grantee’s account or issue
certificates in the name of the Grantee representing the Award Shares for which
restrictions have been released.

 

8.             Legend. The Company may, in its discretion, place a legend or
legends on any electronic shares or certificates representing Award Shares
issued to the Grantee that the Company believes is required to comply with any
law or regulation.

 

9.             Committee Powers. The Committee may subject the Award Shares to
such conditions, limitations or restrictions as the Committee determines to be
necessary or desirable to comply with any law or regulation or with the
requirements of any securities exchange. At any time during the Restrictive
Period, the Committee may reduce or terminate the Restrictive Period otherwise
applicable to all or any portion of the Award Shares.

 

10.           Miscellaneous.

 

(a)           The Award and this Agreement shall be construed, administered and
governed in all respects under and by the laws of the State of Illinois.

 

(b)           This Agreement has been examined by the parties hereto, and
accordingly the rule of construction that ambiguities be construed against a
party which causes a document to be drafted shall have no application in the
construction or

 

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interpretation hereof. If any part of this Agreement is held invalid for any
reason, the remainder hereof shall nevertheless remain in full force and effect.

 

(c)           This Agreement constitutes the entire agreement between the
parties concerning the subject matter hereof and any prior understanding or
representation of any kind antedating this Agreement concerning such subject
matter shall not be binding upon either party except to the extent incorporated
herein. No consent, waiver, modification or amendment hereof, or additional
obligation assumed by either party in connection herewith, shall be binding
unless evidenced by a writing signed by both parties and referring specifically
hereto. No consent, waiver, modification or amendment with respect hereto shall
be construed as applicable to any past or future events other than the one in
respect of which it was specifically made.

 

(d)           This Agreement shall be construed consistent with the provisions
of the Plan and in the event of any conflict between the terms of this Agreement
and the terms of the Plan, the terms of the Plan shall control and any terms of
this Agreement which conflict with Plan terms shall be void.

 

(e)           Capitalized terms used herein and not defined herein will have the
meaning set forth in the Plan.

 

Questions concerning the provisions of this Agreement should be directed to the
Company’s Corporate Secretary: 630/227-2050; fax 630/227-2059.

 

*              *              *

 

By accepting this Agreement, you irrevocably agree to be bound by the terms
hereof. To accept this Agreement, please follow the procedures set forth below:

 

Step 1:

 

View your Award Summary (confirm that the number of shares awarded is correct)

 

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Step 2:

 

Read and review the documentation.

 

 

 

Step 3:

 

Confirm the review/acceptance of this Agreement.

 

 

 

Step 4:

 

Receive an online confirmation of your acceptance of this Agreement.

 

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