Exhibit 10.6




 




THIRD AMENDMENT TO


AAR CORP. AMENDED AND RESTATED




SUPPLEMENTAL KEY EMPLOYEE RETIREMENT PLAN




 




 




WHEREAS,

AAR CORP., a Delaware corporation (the “Company”) maintains the

AAR CORP. Supplemental Key Employee Retirement Plan as amended and

restated effective April 11, 2000 (the “Plan”); and




 




WHEREAS,

the Company has reserved the right to amend the Plan and now deems it desirable

to do so to permit distributions from a Participant’s supplemental accounts in

the Plan, in certain circumstances, prior to the Participant’s termination of

employment with the Company.




 




NOW,

THEREFORE, the Plan is hereby amended, effective

October 10, 2002, to add Sections 4.6(e), (f) and (g) to the Plan as

follows:




 




“(e)         Notwithstanding

any provision in the Plan to the contrary, a Participant may elect a

distribution of all or any portion of the amounts credited to his Supplemental

Salary Deferral Account, his Supplemental Company Account, and his Supplemental

Profit Sharing Account, including gains and losses credited to the date of

distribution in accordance with Section 4.5, at any time if (i) he

elects such distribution by written instrument delivered to the Committee at

least six months in advance of the date such distribution is received, or

(ii) the distribution is subject to a forfeiture penalty equal to 10% of

the amount of the distribution.  Such

distribution shall be made in a method determined pursuant to

Section 4.6(d).




 




(f)            Notwithstanding

any provision in the Plan to the contrary, in the event of a potential change

in control of the Company, as determined solely by the Board in its discretion,

all amounts credited to each Participant’s Supplemental Salary Deferral

Account, his Supplemental Company Account, and his Supplemental Profit Sharing

Account, including gains and losses credited to the date of distribution in

accordance with Section 4.5, shall be distributed to him in a lump sum as

soon as practicable following the date of such determination by the Board.




 




(g)           Notwithstanding

any provision in the Plan to the contrary, in the event that the credit rating

of the Company drops below Investment Grade, all amounts credited to each

Participant’s Supplemental Salary Deferral Account, his Supplemental Company

Account, and his Supplemental Profit Sharing Account, including gains and

losses credited in accordance with Section 4.5 to the date of

distribution, shall be distributed to him in a lump sum as soon as practicable

following the first to occur of:  (i) a

drop in the credit rating of the Company below S&P BB or Moody’s Ba; (ii) a

drop in the Company’s market capitalization below $75 million for five (5)

consecutive trading days; (iii) a drop in the aggregate of cash and existing

available bank lines of the Company below $35 million; and (iv) receipt of a

notice of material adverse change under any of the Company’s then existing debt

agreements.




 





























 




IN

WITNESS WHEREOF, this First Amendment has been

executed on this 19th day of December, 2002.




 




	

   


  	

  AAR CORP.


  
	

   


  	

   


  
	

   


  	

   


  
	

   


  	

   


  
	

   


  	

  By:


  	

  /s/ DAVID P. STORCH


  
	

   


  	

   


  	

  David P. Storch, President


  





 




2






















 













FOURTH AMENDMENT TO THE




AAR CORP.

SUPPLEMENTAL KEY EMPLOYEE RETIREMENT PLAN




 




 




                WHEREAS, AAR

CORP. (“Company”) adopted the Amended and Restated AAR CORP. Supplemental Key

Employee Retirement Plan (“SKERP”), effective April 11, 2000; and




 




                WHEREAS,

the Company amended the SKERP effective October 10, 2001, April 10, 2002 and

October 10, 2002, and deems it appropriate to further amend the SKERP in

certain respects;




 




                NOW, THEREFORE, the SKERP is hereby further amended, as follows, effective December

18, 2002:




 




                               1.      ARTICLE IV, SUPPLEMENTAL CONTRIBUTIONS, is

hereby amended to add a new section 4.3.1 as follows:




 




4.3.1        The

Compensation Committee of the Board may at any time, in its discretion,

designate any Participant to receive the benefit of an Additional Supplemental

Company Contributions from time to time in amounts specified by resolution of

the Compensation Committee.




 




Any

Additional Supplemental Company Contributions to be made for the benefit of a

Participant shall be credited to a Supplemental Company Account maintained

under the Plan under the name of such Participant as and when specified in the

Compensation Committee resolution authorizing and directing the Additional

Supplemental Company Contributions. 

Such Additional Supplemental Company Contributions shall be held and

administered hereunder in the same manner as regular Supplemental

Contributions.




 




“Additional

Supplemental Company Contribution” means the contribution made by the Company

for the benefit of a Participant pursuant to this Section 4.3.1 of the

Plan  in any Plan Year.




 





























 




                IN WITNESS WHEREOF, this Fourth Amendment has been executed this 18th day of

December, 2002.




 




	

   


  	

  AAR CORP.


  
	

   


  	

   


  
	

   


  	

  By: 


  	

  /s/ DAVID P. STORCH


  
	

   


  	

  David P. Storch, President