Exhibit 10.3


 


FORM OF FIRST AMENDMENT TO SEVERANCE


AND CHANGE IN CONTROL AGREEMENT OF EXECUTIVE


 


This First
Amendment to the Severance and Change in Control Agreement is made and entered
into on December 18, 2008 by and between AAR CORP., a Delaware corporation
(the “Company”), and Executive (the “Employee”).


 


WHEREAS,
the Company and the Employee are parties to a Severance and Change in Control
Agreement dated as of July 9, 2008 (the “Agreement”) and now desire to
amend the Agreement to comply with Internal Revenue Code Section 409A and
the guidance and regulations thereunder, to the extent applicable.


 


NOW,
THEREFORE, in consideration of the mutual covenants
and promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree to
amend the Agreement as follows, effective as of the date hereof:


 


1.                                       By
amending Section 7(a)(1) to delete the reference to “promptly” and
replace with “, within 30 days following such termination of employment,”.


 


2.                                       By
amending Section 7(a)(2) to read as follows:


 


The Company shall, within 30
days following such termination of employment, pay to Employee in a lump sum, a
cash payment in an amount equal to two times Employee’s total compensation (base
salary plus annual cash bonus) for either the fiscal year of the Company most
recently ended prior to the date of termination, or the preceding fiscal year,
whichever is the highest total compensation, subject to applicable withholding;
provided, however, that the Employee may elect to have payment of any such
amounts be made on a schedule of Employee’s own choosing, provided that such
schedule shall be completed no later than two years from the date of Employee’s
termination of employment.


 


3.                                       By
adding a new Section 18 to read as follows:


 


18.           Provisions
Regarding Code §409A.


 


(a)                                  If
at the time of the Employee’s termination of employment for reasons other than
death he is a “Key Employee” as determined in accordance with the procedures
set forth in Treas. Reg. §1.409A-1(i), any amounts payable to the Employee
pursuant to this Agreement that are subject to Section 409A of the
Internal Revenue Code shall not be paid or commence to be paid until six months
following the Employee’s termination of employment, or if earlier, the Employee’s
subsequent death.


 


(b)                                 Reimbursements
or in-kind benefits provided under this Agreement that are subject to Section 409A
of the Internal Revenue Code are subject to the following restrictions:  (1) the amount of expenses eligible for 


 

















 


reimbursements, or in-kind benefits provided, to the
Employee during a calendar year shall not affect the expenses eligible for
reimbursement or the in-kind benefits provided in any other calendar year, and (2) reimbursement
of an eligible expense shall be made as soon as practicable, but in no event
later than the last day of the calendar year following the calendar year in
which the expense was incurred.


 


IN WITNESS
WHEREOF, the parties have executed this First
Amendment as of the date first written above.


 


	
   

  	
  AAR
  CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Its:

  	
  President
  and Chief Operating Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [EXECUTIVE]

  
	
   

  	
   

  
	
   

  	
   

  



 


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