Document:

Exhibit
10.2

 

CHASE
CORPORATION

AMENDED
AND RESTATED

EMPLOYEES’
SUPPLEMENTAL PENSION AND SAVINGS PLAN

Effective
January 1, 2005

 

 

TABLE OF
CONTENTS

	
  ARTICLE I

  	
   

  	
  NAME, PURPOSE AND EFFECTIVE DATE

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.01   Name
  and Purpose

  	
   

  	
  1

  
	
  1.02   Effective
  Date

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.01   Board

  	
   

  	
  1

  
	
  2.02   Code

  	
   

  	
  1

  
	
  2.03   Compensation

  	
   

  	
  1

  
	
  2.04   Effective
  Date

  	
   

  	
  1

  
	
  2.05   Employee

  	
   

  	
  2

  
	
  2.06   Employer

  	
   

  	
  2

  
	
  2.07   Participant

  	
   

  	
  2

  
	
  2.08   Plan
  Administrator

  	
   

  	
  2

  
	
  2.09   Plan

  	
   

  	
  2

  
	
  2.10   Pension
  Plan

  	
   

  	
  2

  
	
  2.11   Savings
  Plan

  	
   

  	
  2

  
	
  2.12   Supplemental
  Pension Plan Benefit

  	
   

  	
  2

  
	
  2.13   Supplemental
  Savings Plan Benefit

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
  ELIGIBILITY

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.01   Participation

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
  SUPPLEMENTAL PENSION PLAN BENEFITS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.01   Amount
  of Supplemental Pension Plan Benefits

  	
   

  	
  3

  
	
  4.02   Distributions
  Of Supplemental Pension Plan Benefit

  	
   

  	
  3

  
	
  4.03   Commencement
  Of Payment Of Supplemental Pension Plan Benefit

  	
   

  	
  3

  
	
  4.04   Death
  Benefit

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
  SUPPLEMENTAL SAVINGS PLAN BENEFITS

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.01   Supplemental
  Savings Plan Contributions

  	
   

  	
  4

  
	
  5.02   Distributions
  Of Supplemental Savings Plan Benefits

  	
   

  	
  5

  
	
  5.03   Commencement
  Of Payment Of Supplemental Savings Plan Benefits

  	
   

  	
  5

  
	
  5.04   Death
  Benefit

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
  VESTING

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.01   Vesting

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
  FUNDING

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.01   Funding

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 i
 

 

 

	
  ARTICLE VIII

  	
   

  	
  ADMINISTRATION

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.01   Duties
  of the Plan Administrator

  	
   

  	
  6

  
	
  8.02   Finality
  of Decisions

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.01   Non-Guarantee
  Of Employment

  	
   

  	
  6

  
	
  9.02   Rights
  Under Plan

  	
   

  	
  7

  
	
  9.03   Amendments/Termination

  	
   

  	
  7

  
	
  9.04   Nonassignability

  	
   

  	
  7

  
	
  9.05   Entire
  Agreement; Successors

  	
   

  	
  7

  
	
  9.06   Successor
  Company

  	
   

  	
  7

  
	
  9.07   Governing
  Law

  	
   

  	
  7

  

 

 ii

ARTICLE I

NAME, PURPOSE AND EFFECTIVE DATE

1.01        Name and Purpose

The amended and restated supplemental pension and savings plan set
forth herein shall be known as the Chase Corporation Employees’ Supplemental
Pension and Savings Plan (the “Plan”). The Plan is established, and shall be
maintained, solely for the purpose of providing supplemental pension and
savings plan benefits which are not provided under the Pension Plan for
Employees of Chase Corporation and the Chase Corporation Deferred Salary Savings
Plan for certain Participants. The Plan is unfunded and maintained primarily
for the purpose of providing deferred compensation for certain Participants who
are highly compensated employees. The Plan has been amended and restated to
comply with recent changes in the law, including Section 409A of the
Internal Revenue Code of 1986.

1.02        Effective Date

This amended and restated Plan shall be effective as of January 1,
2005. This Plan shall apply to Participants who retire or terminate their
employment with the Employer after January 1, 2005.

ARTICLE
II

DEFINITIONS

When used herein, the
following terms defined hereinafter shall have the following meanings unless a
different meaning is clearly required by the context of the Plan:

2.01                        “Board” means the Board of Directors of the
Employer.

2.02                        “Code”
means the Internal Revenue Code of 1986, as amended from time to time. Reference
to a specific provision of the Code shall include such provision, any valid
regulation or ruling promulgated thereunder, and any provision of future law
that amends, supplements, or supersedes such provision.

2.03                        “Compensation” means the total compensation
(including overtime, commissions and bonuses) payable to an Employee by the
Employer and reportable to the federal government for income tax purposes on Form W-2,
or any form prescribed by the Internal Revenue Service to take its place. Compensation
shall also include disability payments and such amounts as shall be contributed
pursuant to the Employee’s elections pursuant to Section 401(k) of
the Code, and amounts treated as employer contributions pursuant to the
Employee’s elections under Section 125 of the Code. Compensation shall not
include any severance or salary continuation payments.

2.04                        “Effective
Date” means January 1,
2005;  The initial Effective Date was January 1,
1994.

 

 

2.05                        “Employee” means any person employed by the
Employer.

2.06                        “Employer” means Chase Corporation and any
subsidiary and/or affiliated corporation which has adopted this Plan.

2.07                        “Participant” means an Employee who has been named
a Participant in this Plan in the manner set forth in Article III.

2.08                        “Plan
Administrator” means Chase
Corporation, or its duly authorized representative.

2.09                        “Plan” means Chase Corporation Employees’
Supplemental Pension and Savings Plan.

2.10                        “Pension
Plan” means the Pension Plan
for Employees of Chase Corporation, as in effect on January 1, 2005 or as
amended thereafter from time to time.

2.11                        “Savings
Plan” means the Chase
Corporation Deferred Salary Savings Plan, as in effect on January 1, 2005
or as amended thereafter from time to time.

2.12                        “Supplemental
Pension Plan Benefit” means
the benefit payable under Article IV of the Plan.

2.13                        “Supplemental
Savings Plan Benefit” means
the benefit payable under Article V of the Plan.

ARTICLE
III

ELIGIBILITY

3.01        Participation

Any Employee shall become a Participant in the Plan provided:

(a)                                  he
has satisfied the eligibility requirements for participation under the Pension
Plan and/or the Savings Plan;

(b)                                 his
Compensation exceeds or exceeded $200,000 indexed pursuant to Section 401(a)(17)
of the Code ($220,000 for 2006); and

(c)                                  the
Board, acting upon the recommendation of the Compensation Committee, authorizes
his participation in the Plan.

In order to make contributions or have contributions made on his behalf
under Article V,  an Employee who
becomes a Participant must make an election to defer compensation in the manner
provided under Article V.

 2
 

 

 

ARTICLE
IV

SUPPLEMENTAL PENSION PLAN BENEFITS

4.01        Amount of Supplemental Pension Plan Benefits

A Participant shall be entitled to a benefit under the provisions of
this Article if his benefit determined under the provisions of the Pension
Plan is less than such benefit would have been if (a) the definition of
compensation under the Pension Plan included compensation in excess of Section 401(a)(17)
of the Code and/or (b) the limits under Section 415 of the Code did
not apply.

If a Participant’s benefit from the Pension Plan is reduced as a result
of either or both of the conditions described in the preceding paragraph, the
benefit to which the Participant shall be entitled under the Plan shall be
determined as follows:

(i)                                     The
benefit actually payable to the Participant on or after his normal retirement
age under the terms of the Pension Plan shall be calculated.

(ii)                                  The
benefit which would have been payable under the terms of the Pension Plan if
the definition of compensation under the Pension Plan included compensation in
excess of Section 401(a)(17) of the Code and if the limits under Section 415
of the Code did not apply shall be calculated.

(iii)                               The result of step (i) shall
be subtracted from the result of step (ii), and the difference, if any,
shall be the benefit payable to the Participant.

4.02        Distributions Of Supplemental Pension Plan Benefit

All payments of benefits to Participants and/or their designated
beneficiaries under this Article IV shall be made in a lump sum or in
installments over a period not to exceed ten (10) years, as elected by the
Participant. The Participant shall make a distribution election by written
notice to the Company at the time the Participant becomes a Participant in the
Plan. If the Participant fails to make a timely election, the benefits shall be
paid in a single lump sum distribution.

4.03        Commencement Of Payment Of Supplemental Pension Plan Benefit

Distribution of the Supplemental Pension Plan Benefits shall commence
not later than the end of the year in which the Participant has separated from
service with the Employer, including retirement. Any reductions for the
commencement of benefits prior to the Participant’s normal retirement age under
the Pension Plan shall also apply to the payment of benefits under this
Article.

4.04        Death Benefit

If a Participant’s service providing relationship with the Company
terminates by reason of his death or if he dies after he is no longer in a
service providing relationship with the Company but prior to the distribution
to him of all amounts payable to him under the Plan, the amounts that would
otherwise be distributable to him, if living, shall be distributed to his
designated beneficiary or beneficiaries and any reference to a Participant in
Paragraph 4.01, above, shall be deemed to include a reference to his 

 3
 

 

designated beneficiary or beneficiaries. All beneficiary designations
shall be made in such form and manner as from time to time may be prescribed by
the Company. A Participant from time to time may revoke or change any
beneficiary designation on file with the Company. If there is no effective
beneficiary designation on file with the Company at the time of Participant’s
death, distribution of amounts otherwise payable to the deceased Participant
under this Plan shall be made to his Estate. If a beneficiary designated by a
Participant to receive his benefit shall survive the Participant but die before
receiving all distributions hereunder, the balance thereof shall be paid to
such deceased beneficiary’s Estate, unless the deceased Participant’s
beneficiary designation provides otherwise.

ARTICLE V

SUPPLEMENTAL SAVINGS PLAN BENEFITS

5.01        Supplemental Savings Plan Contributions

(a)                                  If
a Participant’s contributions under the Savings Plan are limited as a result of
the limits under Section 401(a)(17) of the Code, such Participant may
participate hereunder by electing, prior to the calendar year in which the
election shall become effective, to defer a portion of his Compensation equal
to the excess of (i) over (ii), where:

(i)                                     is
the amount which the Participant would have contributed under the Savings Plan
if the definition of compensation under the Savings Plan included Compensation
in excess of Section 401 (a)(17) of the Code;

(ii)                                  is
the amount actually contributed by the Participant under the Savings Plan.

The amount of Compensation deferred by the Participant pursuant to this
paragraph (a) shall be credited to an account established for the
Participant under this Plan (his “Supplemental Employee Contribution Account”).

(b)                                 If
a Participant’s contributions under the Savings Plan are limited by the
restrictions of Section 401(a)(17) of the Code, and the Participant
thereby makes Supplemental Employee Contributions pursuant to paragraph (a) above,
the Employer shall credit to an account established for the Participant under
this Plan (his “Supplemental Company Contribution Account”), an amount equal to
the Employer matching: contribution which would have been made pursuant to the
Savings Plan if the Participant’s Supplemental Employee Contributions had been
made pursuant to the Savings Plan.

The Participant’s Supplemental Employee Contribution Account and/or
Supplemental Company Contribution Account shall be adjusted at the end of each
calendar quarter to reflect a rate of return determined as if such accounts
were invested at a rate which is one percent (1%) higher than the prime
interest rate as reported by the Wall Street Journal at the beginning of the
quarter.

 4
 

 

 

Notwithstanding the foregoing, a Participant shall have 30 days from
the date upon which he is informed by the Employer that he is eligible to
participate in the Plan to file an election with the Employer to defer amounts
for any Plan Year. Except as otherwise provided in the Plan, a Participant’s
election to defer any amounts pursuant to the Plan shall be irrevocable when
made and accepted by the Employer and shall not be subject to modification or
amendment in any manner thereafter during the Plan Year.

5.02        Distributions Of Supplemental Savings Plan Benefits

All payments of benefits to Participants and/or their designated
beneficiaries under this Article V shall be made in a lump sum.

5.03        Commencement Of Payment Of Supplemental Savings Plan Benefits

Distribution of the Supplemental Savings Plan Benefits shall commence
not later than the end of the year in which the Participant has separated from
service with the Employer, including retirement.

5.04        Death Benefit

If a Participant’s service providing relationship with the Company
terminates by reason of his death or if he dies after he is no longer in a
service providing relationship with the Company but prior to the distribution
to him of all amounts payable to him under the Plan, the amounts that would
otherwise be distributable to him, if living, shall be distributed to his
designated beneficiary or beneficiaries and any reference to a Participant in
Paragraph 4.01, above, shall be deemed to include a reference to his designated
beneficiary or beneficiaries. All beneficiary designations shall be made in
such form and manner as from time to time may be prescribed by the Company. A
Participant from time to time may revoke or change any beneficiary designation
on file with the Company. If there is no effective beneficiary designation on
file with the Company at the time of Participant’s death, distribution of
amounts otherwise payable to the deceased Participant under this Plan shall be
made to his Estate. If a beneficiary designated by a Participant to receive his
benefit shall survive the Participant but die before receiving all
distributions hereunder, the balance thereof shall be paid to such deceased
beneficiary’s Estate, unless the deceased Participant’s beneficiary designation
provides otherwise.

ARTICLE
VI

VESTING

6.01        Vesting

A Participant shall be vested in his Supplemental Pension Plan benefit,
if any, in accordance with the vesting provisions of the Pension Plan. A
Participant shall be fully vested at all times in his Supplemental Savings Plan
benefits.

 5
 

 

 

ARTICLE
VII

FUNDING

7.01        Funding

There is no fund associated with this Plan. The Employer shall be
required to make payments only as benefits become due and payable. No person
shall have any right, other than the right of an unsecured general creditor,
against the Employer with respect to the benefits payable hereunder, or which
may be payable hereunder, to any Participant, surviving spouse or beneficiary
hereunder. If the Employer, acting in its sole discretion, establishes a
reserve or other fund associated with this Plan, no person shall have any right
to or interest in any specific amount or asset of such reserve or fund by
reason of amounts which may be payable to such person under this Plan, nor
shall such person have any right to receive any payment under this Plan except
as and to the extent expressly provided in this Plan. The assets in any such
reserve or fund shall be subject to the control of the Employer, and need not
be used to pay benefits hereunder.

ARTICLE
VIII

ADMINISTRATION

8.01        Duties of the Plan Administrator

The Plan shall be administered by the Plan Administrator in accordance
with its terms and purposes. The Plan Administrator shall determine the amount
and manner of payment of the benefits due to or on behalf of each Participant
from the Plan and shall cause them to be paid by the Employer accordingly.

8.02        Finality of Decisions

The Plan Administrator is expressly granted, without intending any
limitation, the discretion to construe the terms of the Plan and to determine
eligibility for benefits hereunder. The decisions made by and the actions taken
by the Plan Administrator in the administration of the Plan shall be final and
conclusive on all persons, and neither the Plan Administrator nor the Employer
shall be subject to individual liability with respect to the Plan.

ARTICLE
IX

MISCELLANEOUS

9.01        Non-Guarantee Of Employment

Nothing contained in this Plan shall be construed as a contract of
employment between the Employer and any Participant, or as a right of any such
Participant to be continued in the employment of the Employer, or as a
limitation on the right of the Employer to deal with any Participant, as to
their hiring, discharge, layoff, compensation, and all other conditions of
employment in all respects as though this Plan did not exist.

 6
 

 

 

9.02        Rights Under Plan

Nothing in this Plan shall be construed to limit, broaden, restrict, or
grant any right to a Participant, surviving spouse or any beneficiary thereof
under the Pension Plan or Savings Plan (“Qualified Plans”), nor to grant any
additional rights to any such person under the Qualified Plans, nor in any way
to limit, modify, repeal or otherwise affect the Employer’s right to amend or
modify the Qualified Plans.

9.03        Amendments/Termination

The Employer reserves the right to make from time to time amendments to
or terminate this Plan by vote duly adopted by the Board of Directors, provided
that no such amendment or termination shall reduce any benefits earned under
the terms of this Plan prior to the dale of termination or amendment.

9.04        Nonassignability

The benefits payable under this Plan shall not be subject to
alienation, assignment, garnishment, execution or levy of any kind and any
attempt to cause any benefits to he so subjected shall not be recognized,
except to the extent required by applicable law.

9.05        Entire Agreement; Successors

This Plan, including any subsequently adopted amendments, shall
constitute the entire agreement or contract between the Employer and any
Participant regarding the Plan.

There are no covenants, promises, agreements, conditions or
understandings, either oral or written, between the Employer and any
Participant relating to the subject matter hereof, other than those set forth
in this Plan. This Plan and any amendment shall be binding on the parties
hereto and their respective heirs, administrators, trustees, successors and
assigns, and on all designated beneficiaries of the Participant.

9.06        Successor Company

In the event of the dissolution, merger, consolidation or
reorganization of the Employer, provision may be made by which a successor to
all or a major portion of the Employer’s property or business shall continue
this Plan, and the successor shall have all of the powers, duties and
responsibilities of the Employer under this Plan.

9.07        Governing Law

This Plan shall be construed and enforced in accordance with, and
governed by, the Laws of The Commonwealth of Massachusetts.

 7
 

 

 

IN WITNESS WHEREOF, Chase
Corporation has caused this instrument to be executed in its name and on its
behalf this 14th day of July, 2006.

	
  

  	
  CHASE
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  /s/
  Peter R. Chase

  
	
   

  	
  Peter R. Chase

  President &
  Chief Executive Officer

  

 

 8Exhibit 10.10

 

 

 

 

 

 

 

AAR CORP.

NONEMPLOYEE DIRECTORS’ DEFERRED COMPENSATION PLAN

As Amended and Restated Effective January 1, 2005

 

 

AAR
CORP.

NONEMPLOYEE DIRECTORS’ DEFERRED COMPENSATION PLAN

As Amended and Restated Effective January 1,
2005

TABLE OF
CONTENTS

 

	
  

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION I

  	
   

  	
  INTRODUCTION

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION II

  	
   

  	
  PLAN PARTICIPANTS

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION III

  	
   

  	
  DEFERRAL ELECTIONS

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION IV

  	
   

  	
  PARTICIPANT ACCOUNTS

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION V

  	
   

  	
  DISTRIBUTION OF ACCOUNTS

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION VI

  	
   

  	
  ADMINISTRATION OF THE PLAN

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION VII

  	
   

  	
  AMENDMENT OR TERMINATION

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION VIII

  	
   

  	
  GENERAL PROVISIONS

  	
  14

  

 

 i

AAR
CORP.

NONEMPLOYEE DIRECTORS’ DEFERRD COMPENSATION PLAN

As
Amended and Restated Effective January 1, 2005

SECTION I

INTRODUCTION

Effective January 1,
1996 AAR CORP. (“Company”) established the Nonemployee Directors’ Deferred
Compensation Plan (“Plan”) for members of its Board of Directors (“Board”), who
are not employees of the Company or an affiliate (“Nonemployee Directors”). The
Plan was amended and restated, effective April 8, 1997, and is further
amended and restated to comply with Code Section 409A and guidance and
regulations issued thereunder with respect to benefits earned under the Plan
from and after January 1, 2005. Benefits under the Plan earned and vested
prior to January 1, 2005 shall be administered without giving effect to
Code Section 409A and guidance and regulations issued thereunder

SECTION II

PLAN PARTICIPANTS

Each Nonemployee Director
shall become a Participant under the Plan by filing the written Election Form described
in Section III below with the Plan Administrator appointed by the
Compensation Committee of the Board (“Committee”) with respect to (i) the
annual Board retainer (“Retainer”) and (ii) the Committee retainer and
meeting fees (“Meeting Fees”) payable to the Nonemployee Director for his
services as a member of the Board.

 

SECTION III

DEFERRAL ELECTIONS

(a)           Each
Participant shall make the following election with respect to his Retainer:

(i)            The Participant may elect to defer
receipt of his entire Retainer until the date on which his service on the Board
terminates for any reason, and have the cash value of such Retainer credited to
the Stock Unit Account established for him under the Plan and converted to
Stock Units, pursuant to the provisions of paragraph (a) of Section IV
below; or

(ii)           If an election is not made pursuant
to clause (i) above, a Participant shall receive quarterly payment of
the Retainer in cash.

(b)           Each
Participant shall make the following election with respect to his Meeting Fee:

(i)            The Participant may elect to defer
receipt of his entire Meeting Fee until the date on which his service on the
Board terminates for any reason, and have the cash value of such Meeting Fee
credited to the Cash Account established for him under the Plan, pursuant to
the provisions of paragraph (b) of Section IV below; or

(ii)           If an election is not made pursuant
to clause (i) above, a Participant shall receive his entire Meeting
Fee in cash as soon as practicable after the date on which such Meeting Fee is
otherwise payable.

(c)           Each
election with respect to a Retainer and Meeting Fee for a calendar year shall
be set forth on an Election Form provided by the Plan Administrator. Such
Election Form shall be in writing and shall specify the elections
described above with respect to Retainers and Meeting Fees.

 2
 

 

(d)           An
Election Form effective for a calendar year shall be delivered to the Plan
Administrator prior to the first day of such calendar year. Except as provided
in paragraph (e) below, an initial Election Form shall only
apply to a Retainer or Meeting Fee otherwise payable to a Participant after the
end of the calendar year in which such initial or revised Election Form is
delivered to the Plan Administrator. Any Election Form delivered by a
Participant shall be irrevocable with respect to any Retainer or Meeting Fee,
and shall continue in effect until revoked by a Participant by notice delivered
to the Plan Administrator no later than the last day of the Plan Year
immediately preceding the first day of the Plan Year in which such election is
to become effective. As of each December 31, the election shall become
irrevocable with respect to any Retainer or Meeting Fee payable with respect to
services performed by the Participant in the immediately following calendar
year. If an Election Form is not in effect for a Nonemployee Director for
a calendar year, he shall be deemed to have elected the options specified in
clause (ii) of paragraphs (a) and (b) of this Section for
such calendar year.

(e)           Notwithstanding
the preceding provisions of this Section:

(i)            An election by a Participant with
respect to a Retainer or Meeting Fee payable on or after April 8, 1997 may
be made pursuant to an Election Form delivered to the Plan Administrator
prior to April 8, 1997; and

(ii)           An election made by a Participant in
the calendar year in which he first becomes eligible to participate in the Plan
may be made pursuant to an Election Form delivered to the Plan
Administrator within 30 days after the date on which he first becomes
eligible to participate, and such Election Form shall be effective with
respect to Retainers and Meeting Fees earned from and after the date such
Election Form is delivered to the Plan Administrator.

 3
 

 

(iii)          On and after January 1, 2005,
such Participant shall not be considered first eligible if, on the date he
becomes a Participant, he participates in any other nonqualified account
balance plan that is subject to Section 409A of the Code maintained by the
Company or an affiliate.

(f)            All
Retainers and Meeting Fees deferred by a Participant pursuant to the provisions
of the Plan prior to April 8, 1997, shall be credited to the Cash Account
established for the Participant under the Plan.

SECTION IV

PARTICIPANT ACCOUNTS

(a)           (i) A Retainer of a Participant
deferred pursuant to clause (i) of paragraph (a) of Section III
shall be credited as a dollar amount to the Participant’s Stock Unit Account as
of the quarterly date on which each quarterly payment of such Retainer
otherwise would have been paid, and shall be converted as of such date into
Stock Units equivalent to Common Stock. Such conversion shall be determined by
dividing the dollar balance of the quarterly payment of such Retainer by the
Fair Market Value of a share of Common Stock on such quarterly date. The number
of Stock Units for full shares of Common Stock so determined shall be credited
to the Participant’s Stock Unit Account and the aggregate value thereof shall
be charged to the cash balance of his Stock Unit Account. Any cash balance
remaining in the Participant’s Stock Unit Account after such conversion,
together with other subsequent credits of deferred Retainers thereto and
credits thereto pursuant to clause (ii) next below, shall be
converted into Stock Units on the next quarterly conversion date.

(ii)           Additional credits shall be made to a
Participant’s Stock Unit Account in dollar amounts equal to the cash dividends
(or the Fair Market Value of dividends paid in 

 4
 

 

property other than
Common Stock) that the Participant would have received had he been the owner on
each record date of a number of shares of Common Stock equal to the number of
Stock Units in his Stock Unit Account on such date. In the case of a dividend
in Common Stock or a Common Stock split, additional credits will be made to a
Participant’s Stock Unit Account of a number of Stock Units equal to the number
of full shares of Common Stock that the Participant would have received had he
been the owner on each record date of a number of shares of Common Stock equal
to the number of Stock Units in his Stock Unit Account on such date. Any cash
dividends (or dividends paid in property other than Common Stock) shall be
converted into Stock Units at the next quarterly conversion date as set forth
in clause (i) of this paragraph.

(b)           A
Meeting Fee of a Participant deferred pursuant to clause (i) of
paragraph (b) of Section III shall be credited to the
Participant’s Cash Account as of the date it would otherwise have been paid.
Until the entire balance of a Cash Account has been paid to the Participant, or
to the beneficiaries of a deceased Participant, such balance shall be increased
on the last day of each calendar quarter to reflect accrued interest on such
balance based on the ten-year United States Treasury Bond rate at the end
of the applicable calendar quarter. The Committee may, from time to time,
change prospectively the interest rate applied with respect to Participants’
Cash Accounts.

(c)           Each
Stock Unit Account and each Cash Account shall be maintained on the books of
the Company until full payment of the balance thereof has been made to the
applicable Participant (or the beneficiaries of a deceased Participant). No
funds shall be set aside or earmarked for any Account, which shall be purely a
bookkeeping device.

 5
 

 

SECTION V

DISTRIBUTION OF ACCOUNTS

(a)           The
entire balance of a Participant’s Stock Unit Account and of his Cash Account
shall be paid to him (or to his beneficiaries in the event of his death) in a
single lump sum as of the January 31 next following the date the
Participant’s service on the Board terminates for any reason.

(b)           The balance of a Participant’s Stock Unit Account
shall be distributed in shares of Common Stock or in cash, as designated by the
Participant (or his beneficiaries in the event of his death), by written notice
delivered to the Plan Administrator prior to the applicable January 31
distribution date. If a timely designation is not received by the Plan
Administrator, distribution shall be made in cash or in Common Stock as the
Company shall decide. In the event of a distribution in Common Stock, a
certificate representing a number of shares of Common Stock equal to the number
of Stock Units in the Participant’s Stock Unit Account, registered in the name
of the Participant (or his beneficiaries), and any remaining cash in the Stock
Unit Account, shall be distributed to the Participant (or his beneficiaries).
In the event of a cash distribution, the Participant (or his beneficiaries)
shall receive an amount in cash equal to the aggregate of (i) the number
of Stock Units in the Stock Unit Account multiplied by the Fair Market Value of
a share of Common Stock on the applicable January 31,
and (ii) any remaining cash in the Stock Unit Account.

(c)           The
balance of a Participant’s Cash Account shall be distributed to the Participant
(or his beneficiaries) in cash on the applicable January 31 distribution
date.

(d)           If a Participant’s service on the
Board shall terminate by reason of his death, or if he shall die after becoming
entitled to distribution hereunder, but prior to receipt of his entire distribution,
all cash or Common Stock then distributable hereunder with respect to him shall
be 

 6
 

 

distributed to such beneficiary or beneficiaries as
such Participant shall have designated by an instrument in writing last filed
with the Committee prior to his death, or in the absence of such designation or
of any living beneficiary, to his spouse, or if not then living, to his then
living descendants, per stirpes, or if none is then living,
to the personal representative of his estate, in the same manner as would have
been distributed to the Participant had he continued to live.

(e)           In
the written discretion of the Plan Administrator, and at the written request of
a Participant, up to 100% of the balance in his Stock Unit Account and in his
Cash Account, determined as of the last day of the calendar month prior to the
date of distribution, may be distributed to a Participant in a lump sum in the
case of an Unforeseeable Emergency, subject to the limitations set forth below.
Such a distribution may also include amounts necessary to pay federal, state or
local income taxes or penalties reasonably anticipated to result from a
distribution related to the portion of such Participant’s Stock Unit Account
and Cash Account that are not part of his Pre-2005 Account Balances as
defined in paragraph (f) below. For purposes of this
paragraph an Unforeseeable Emergency is a severe financial hardship to the
Participant resulting from an illness or accident of the Participant, the
Participant’s spouse, or a dependent (as defined in Code Section 152(a))
of the Participant, loss of the Participant’s property due to casualty, or
other similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant. The circumstances that will
constitute an Unforeseeable Emergency will depend upon the facts of each case,
as determined by the Plan Administrator in its discretion, but in any case
payment may not be made to the extent that such hardship is or may be relieved:

(i)            through reimbursement or
compensation by insurance or otherwise,

 7
 

 

(ii)           by liquidation of the Participant’s
assets to the extent the liquidation of such assets would not itself cause
severe financial hardship; or

(iii)          by cessation of deferrals under the
Plan.

Withdrawal of
amounts because of an Unforeseeable Emergency shall be permitted only to the
extent reasonably needed to satisfy the Unforeseeable Emergency.

(f)            Notwithstanding
any other provisions of the Plan, the entire balance of each Participant’s
Stock Unit Account and Cash Account shall be distributed to such Participant on
the earlier to occur of (1) within 10 days after the date the Board,
in its discretion, deems a Change in Control of the Company likely to occur
(provided, however, that this clause (1) shall only apply to the
balance of a Participant’s Stock Unit Account and Cash Account as of December 31,
2004, and earnings thereon (“Pre-2005 Account Balances”)) and (2) the
date a Change in Control actually occurs. Distribution of each Participant’s
Cash Account shall be made in cash. Distribution of each Participant’s Stock
Unit Account shall be made in shares of Common Stock or in cash as designated
by the Participant (or his beneficiaries in the event of his death) pursuant to
the procedures set forth in paragraph (b) of this Section V;
provided that the references to “the applicable January 31” in
paragraph (b) shall be references to the date set forth in this
paragraph for distribution of the Participant’s Stock Unit Account. For
purposes of this paragraph (f), the definition of a Change in Control of
the Company shall mean,

(i)            with respect to Pre-2005
Account Balances,

(1)           the time any person (as such term is
used in Section 13(d) of the Securities Exchange Act of 1934, as
amended (“Exchange Act”)), has acquired (other than directly from the Company)
beneficial ownership (as that term is defined in Rule 13d-3 under
the Exchange Act), of more than 20% of the 

 8
 

 

outstanding capital stock
of the Company entitled to vote for the election of directors;

(2)           the effective time of (i) a
merger or consolidation or other business combination of the Company with one
or more other corporations as a result of which the holders of the outstanding
voting stock of the Company immediately prior to such business combination hold
less than 60% of the voting stock of the surviving or resulting corporation, or
(ii) a transfer of substantially all of the assets of the Company other
than to an entity of which the Company owns at least 80% of the voting stock;
or

(3)           the election, over any period of
time, to the Board of Directors of the Company without the recommendation or
approval of the incumbent Board of Directors of the Company, of the lesser of (i) three
directors, or (ii) directors constituting a majority of the number of
directors of the Company then in office.

(ii)           With respect to the remainder of a
Participant’s Stock Unit Account and Cash Account, the earliest of:

(1)           the time any person (as such term is
used in Section 13(d) of the Exchange Act) has acquired (other than
directly from the Company) beneficial ownership (as that term is defined in Rule 13(d)-3
under the Exchange Act) of more than 35% of the outstanding capital stock of
the Company entitled to vote for the election of directors;

(2)           the effective time of (i) a
merger or consolidation or other business combination of the Company with one
or more other corporations as a result of which the holders of the outstanding
voting stock of the Company immediately 

 9
 

 

prior to such business
combination hold less than 60% of the voting stock of the surviving or resulting
corporation, or (ii) a transfer of substantially all of the assets of the
Company, other than to an entity of which the Company owns at least 80% of the
voting stock; or

(3)           the election, over any 12-month
period, to the Board of Directors of the Company, without the recommendation or
approval of the incumbent Board of Directors of the Company, of directors
constituting a majority of the number of directors of the Company then in
office.

(g)           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 Pre-2005 Account Balances at any time if (i) he
elects such distribution by written instrument delivered to the Plan
Administrator at least six months in advance of the date of distribution is
received, or (ii) the distribution is
subject to a forfeiture penalty equal to 10% of the amount of distribution.
Such distribution shall be made pursuant to the provisions of the Plan.

(h)           Notwithstanding
any provision in the Plan to the contrary, the following provisions shall
apply, prior to January 1, 2008, to the portion of Account Balances
credited on or before March 21, 2006 following the first to occur of: (1) a
drop in the overall credit rating of the Company below S&P BB or Moody’s
Ba; (2) a drop in the Company’s market capitalization below
$75 million for five consecutive trading days; (3) a drop in the
aggregate of cash and existing available bank lines of the Company below
$35 million; and (4) receipt of a notice of material adverse change
under any of the Company’s then existing debt agreements:

(i)            During the thirty day period
commencing on the date an event described in clause (1), (2), (3),
or (4) occurs, the Company, in its sole discretion, may distribute
all or 

 10
 

 

any portion of a
Participant’s Account Balances credited on or before March 21, 2006,
including credits, dividends and interest credited in accordance with Section IV
to the date of distribution, to him in a lump sum as the Company deems
appropriate and in the best interest of the Company.

(ii)           No distribution due to the occurrence
of an event described in clause (1), (2), (3), or (4) shall be
made from and after the thirtieth day following the date of such event.

(iii)          Following the expiration of the thirty-day
period following the date of an event described in clause (1), (2), (3),
or (4), a Participant shall continue to make deferrals pursuant to Section III.

(iv)          The Company shall be entitled to make
separate decisions in accordance with clause (i) with respect to the
interests of each Participant hereunder.

SECTION VI

ADMINISTRATION OF THE PLAN

(a)           The
Committee shall appoint one or more employees of the Company to act as the Plan
Administrator. The Plan Administrator shall be responsible for the general
operation and administration of the Plan, and shall have such powers as are
necessary to discharge its duties under the Plan, including, without
limitation, the following:

(i)            with the advice of the General
Counsel of the Company, to construe and interpret the Plan, to decide all
questions of eligibility, to determine the amount, manner and time of payment
of any benefits hereunder, to prescribe rules and procedures to be
followed by Participants and their beneficiaries under the Plan, and to
otherwise to carry out the purposes of the Plan; and

 11
 

 

(ii)           To appoint or employ individuals to
assist in the administration of the Plan and any other agents deemed advisable.

The decisions of
the Plan Administrator shall be binding and conclusive upon all Participants,
beneficiaries and other persons.

(b)           Any
Participant claiming a benefit, requesting an interpretation or ruling, or
requesting information, under the Plan, shall present the request in writing to
the Plan Administrator, which shall respond in writing as soon as practicable.
If the claim or request is denied, the written notice of denial shall state the
following:

(i)            The reasons for denial, with
specific reference to the Plan provisions upon which the denial is based;

(ii)           A description of any additional
material or information required and an explanation of why it is necessary; and

(iii)          An explanation of the Plan’s review
procedure.

The initial notice
of denial shall normally be given within 90 days after receipt of the
claim. If special circumstances require an extension of time, the claimant
shall be so notified and the time limit shall be 180 days. Any person
whose claim or request is denied, or who has not received a response within
30 days, may request review by notice in writing to the Plan Administrator.
The original decision shall be reviewed by the Plan Administrator, which may,
but shall not be required to, grant a hearing. On review, whether or not there
is a hearing, the claimant may have representation, examine pertinent documents
and submit issues and comments in writing. The decision on review shall
ordinarily be made within 60 days. If an extension of time is required for
a hearing or other special circumstances, the claimant shall be so notified and
the time limit shall be extended to 120 days. The decision on review shall
be in writing and shall state the 

 12
 

 

reasons and the
relevant Plan provisions. All decisions on review shall be final and bind all
parties concerned.

SECTION VII

AMENDMENT OR TERMINATION

(a)           The
Company intends the Plan to be permanent but reserves the right to amend or
terminate the Plan when, in the sole opinion of the Company, such amendment or
termination is advisable. Any such amendment or termination shall be made
pursuant to a resolution of the Board and shall be effective as of the date of
such resolution or such later date as the resolution may expressly state.

(b)           No
amendment or termination of the Plan shall (i) directly or indirectly
deprive any current or former Participant or his beneficiaries of all or any portion
of his Accounts as determined as of the effective date of such amendment or
termination, or (ii) directly or indirectly reduce the balance of any
Account held hereunder as of the effective date of such amendment or
termination. Upon termination of the Plan, distribution of balances in all
Accounts shall be made to Participants or their beneficiaries in the manner and
at the time described in Section V as if each Participant’s service on the
Board had then terminated, except that the remaining balance in each
Participant’s Account, other than the Pre-2005 Account Balances, shall be
distributed in accordance with paragraphs (a), (b), (c) and (d) of
Section V, as applicable, unless otherwise permitted by regulations issued
under Code Section 409A. No additional deferred Retainers or Meeting Fees
shall be credited to the Accounts of Participants after termination of the
Plan, but the Company shall continue to credit earnings, gains and losses to
Accounts pursuant to Section IV until the balances of such Accounts have
been fully distributed to Participants or their beneficiaries.

 13
 

 

SECTION VIII

GENERAL PROVISIONS

(a)           The
Plan at all times shall be entirely unfunded and no provision shall at any time
be made with respect to segregating any assets of the Company for payment of
any benefits hereunder. The right of a Participant or his beneficiary to
receive a benefit hereunder shall be an unsecured claim against the general
assets of the Company, and neither the Participant nor a beneficiary shall have
any rights in or against any specific assets of the Company. All amounts
credited to Accounts shall constitute general assets of the Company.

(b)           For
all purposes of the Plan, the Fair Market Value of a share of Common Stock as
of a given date shall be the closing price per share of the Common Stock on the
New York Stock Exchange on such date, or if such date is not a regular trading
date on such Exchange, on the next following regular trading date.

(c)           Shares
of Common Stock distributed under the Plan may be treasury shares of the
Company or shares purchased by the Company on the open market. The Company
shall reserve such number of shares of Common Stock as may be issuable under
the Plan.

(d)           Nothing
contained in the Plan shall constitute a guaranty by the Company, the
Committee, the Plan Administrator, or any other person or entity, that the
assets of the Company will be sufficient to pay any benefit hereunder. No
Participant or beneficiary shall have any right to receive a distribution under
the Plan except in accordance with the terms of the Plan.

(e)           Establishment
of the Plan shall not be construed to give any Participant the right to be
retained as a member of the Board.

(f)            No
interest of any person or entity in, or right to receive a distribution under,
the Plan, shall be subject in any manner to sale, transfer, assignment, pledge,
attachment, garnishment, or other alienation or encumbrance of any kind; nor
may such interest or right to 

 14
 

 

receive a distribution be taken, either voluntarily or involuntarily,
for the satisfaction of the debts of, or other obligations or claims against,
such person or entity, including claims for alimony, support, separate
maintenance and claims in bankruptcy proceedings.

(g)           The
Plan shall be construed and administered under the laws of the State of
Illinois, except to the extent preempted by federal law.

(h)           If
any person entitled to a payment under the Plan is deemed by the Company to be
incapable of personally receiving and giving a valid receipt for such payment,
then, unless and until claim therefor shall have been made by a duly appointed
guardian or other legal representative of such person, the Company may provide
for such payment or any part thereof to be made to any other person or
institution that is contributing toward or providing for the care and
maintenance of such person. Any such payment shall be a payment for the account
of such person and a complete discharge of any liability of the Company, the
Committee and the Plan Administrator and the Plan therefor.

(i)            The
Plan shall be continued, following a transfer or sale of assets of the Company,
or following the merger or consolidation of the Company into or with any other
corporation or entity, by the transferee, purchaser or successor entity, unless
the Plan has been terminated by the Company pursuant to the provisions of
Section VII prior to the effective date of such transaction.

(j)            Each
Participant or beneficiary shall keep the Plan Administrator informed of his
current address. The Plan Administrator shall not be obligated to search for
the whereabouts of any person. If the location of a Participant is not made
known to the Plan Administrator within three years after the date on which
payment of the Participant’s benefits under the Plan may first be made, payment
may be made as though the Participant had died at the end of the three-year
period. If, within one additional year after such three-year period has
elapsed, or, within 

 15
 

 

three years after the actual death of a Participant, the Plan
Administrator is unable to locate any beneficiary of the Participant, then the
Company shall have no further obligation to pay any benefit hereunder to such
Participant, or beneficiary or any other person and such benefit shall be
forfeited. If such Participant, or his beneficiary or any other person,
subsequently makes a valid claim for distribution of the amount forfeited, such
amount, without gains or earnings thereon, shall be distributed to such
Participant or his beneficiary or such other person pursuant to Section V.

(k)           Notwithstanding any of the preceding provisions of
the Plan, none of the Company, any member of the Committee, any Plan
Administrator or any individual acting as an employee or agent of the Company,
the Committee or the Plan Administrator, shall be liable to any Participant,
former Participant, or any beneficiary or other person for any claim, loss,
liability or expense incurred by such
Participant, or beneficiary or other person in connection with the Plan.

(l)            The
aggregate number of Stock Units that may be issuable under the Plan and the
number of Stock Units in each Stock Unit Account shall all be appropriately
adjusted as the Committee may determine for any increase or decrease in the
number of shares of issued Common Stock resulting from a subdivision or consolidation
of shares, whether through reorganization, recapitalization, stock split-up,
spin-off, stock distribution or combination of shares or other increase
or decrease in the number of such shares outstanding effected without receipt
of consideration by the Company. Adjustments under this
paragraph (l) shall be made in the sole discretion of the Committee,
and its decisions shall be binding and conclusive.

(m)          Notwithstanding
anything to the contrary contained in the Plan, (i) if the Internal
Revenue Service prevails in a claim by it that amounts credited to a
Participant’s Accounts, 

 16
 

 

and/or earnings thereon, constitute taxable income to the Participant
or his beneficiary for any taxable year of his prior to the taxable year in
which such credits and/or earnings are distributed to him or (ii) legal
counsel satisfactory to the Company and the applicable Participant or his
beneficiary renders an opinion that the Internal Revenue Service would likely
prevail in such a claim, (a) the Participant’s Pre-2005 Account
Balances, to the extent constituting taxable income, and (b) the remainder
of such Participants Accounts, to the extent constituting taxable income
pursuant to Code Section 409A and guidance and regulations thereunder,
shall be immediately distributed to the Participant or his beneficiary. For
purposes of this paragraph, the Internal Revenue Service shall be deemed to
have prevailed in a claim if such claim is upheld by. a
court of final jurisdiction, or if the Company, or a Participant or beneficiary,
based upon an opinion of legal counsel satisfactory to the Company and the
Participant or his beneficiary, fails to appeal a decision of the Internal
Revenue Service, or a court of applicable jurisdiction, with respect to such
claim, to an appropriate Internal Revenue Service appeals authority or to a
court of higher jurisdiction, within the appropriate time period.

(n)           The
Company shall withhold from any deferred or nondeferred Retainer or Meeting
Fee, or any payments made pursuant to Section V, any amounts required by
applicable federal, state and local tax laws and regulations thereunder. A
Participant may pay any applicable taxes due with respect to any shares of
Common Stock distributed under the Plan in cash or in Common Stock, either by
having the Company withhold a portion of the shares of Common Stock otherwise
distributable, or by delivering to the Company shares of Common Stock otherwise
owned by the Participant.

(o)           Any
notice under the Plan shall be in writing, or by electronic means, and shall be
received when actually delivered, or mailed postage paid as first class U.S.
Mail. Notices shall 

 17
 

 

be directed to the Company at its principal business office at
One AAR Place, 1100 North Wood Dale Road, Wood Dale, Illinois 60191,
to a Nonemployee Director at the address stated in his Election Form, and to a
beneficiary entitled to benefits at the address stated in the Participant’s
beneficiary designation, or to such other addresses any party may specify by
notice to the other parties.

IN
WITNESS WHEREOF, this amendment and restatement of the Plan
has been executed on behalf of the Company on this 8th day of June, 2006.

 

	
  

  	
  AAR CORP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Timothy O. Skelly

  
	
   

  	
   

  	
  Timothy O. Skelly, Vice President

  

 

 18

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