Document:

Exhibit 10.1

 

IMMUCOR, INC.

RESTRICTED STOCK
AGREEMENT

2005 LONG TERM INCENTIVE
PLAN

 

 

                THIS RESTRICTED
STOCK AGREEMENT (this “Agreement”), dated as of «GrantDate»,
is by and between IMMUCOR, INC., a Georgia corporation (the “Company”), and «Name» (the “HOLDER”).

 

                The duly appointed
committee of the Board of Directors of the Company (the “Committee”) has
determined that the Holder is to be granted a restricted stock award (the “Restricted
Stock Award”) under the Company’s 2005 Long Term Incentive Plan (the “Plan”),
on the terms and conditions set forth herein, for a specified number of shares
of the common stock, par value $0.10 per share, of the Company (the “Common
Stock”), as additional incentive for the Holder’s services and as an inducement
to the continued services by the Holder to the Company.

 

                NOW, THEREFORE,
the Company and the Holder hereby agree as follows:

 

1.             Grant
of Restricted Stock Award.  The
Restricted Stock Award grants the Holder «Total_Shares»
shares of Common Stock (the “Restricted Shares”). The Restricted Shares are
granted pursuant to the Plan and are subject to the terms and conditions
thereof, which are incorporated herein by this reference.  To the extent any provision in this Agreement
is inconsistent with the Plan, the provisions of the Plan shall govern.  The Holder hereby acknowledges receipt of, or
access to, a copy of the Plan.

 

2.             Grant
Date.  The Restricted Stock Award was
granted on the date of this Agreement stated above (the “Grant Date”).

 

3.             Restrictions
on Transfer.  On and after the Grant
Date and until each portion of the Restricted Shares vests as provided in
Section 4 hereof, the Holder shall not be permitted to sell, assign, margin,
transfer, encumber, convey, gift, alienate, hypothecate, pledge or otherwise
dispose of that portion of the Restricted except pursuant to a Qualified
Domestic Relations Order (the “Restrictions”).

 

4.             Vesting
of Restricted Shares.  Subject to
Sections 8.1 through 8.3 of the Plan, the Restrictions on the Restricted Shares
will lapse in installments, and portions of the Restricted Shares will thereby
vest in amounts and on the dates set forth on Exhibit A hereto.  The Committee shall have the power, in its
sole discretion, to accelerate the vesting of all or a portion of the
Restricted Shares, to waive any Restriction with respect to any part or all of
the Restricted Shares, or to waive the forfeiture of the Restricted Shares and
to retain restrictions on Restricted Shares that would have been forfeited
pursuant to the terms of the Plan and the terms of this Agreement.

 

5.             Forfeiture
of Restricted Shares.  The Restricted
Shares will be forfeited upon a Termination of Employment to the extent
provided in Section 8.3(4) of the Plan.

 

6.             Withholding.  In accordance with the Plan, including but not
limited to Section 13.6 of the Plan, Holder must pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any federal,
state, or local taxes of any kind (including any employment taxes) required by
law to be withheld with respect to the income realized by Holder in connection
with the ownership of the Restricted Shares. 
In connection therewith, and without limiting any of the Company’s
rights under the Plan:

 

 

(a)           the
Company and its Affiliates shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment otherwise due to Holder,
including but not limited to salary payments; and

 

(b)           Holder
hereby authorizes the Company, at the Company’s election, to transfer to the
Company shares of Stock owned by Holder (including but not limited to
Restricted Shares) with an aggregate Fair Market Value (as of the date the
withholding is effected) that would satisfy the required statutory minimum (but
no more than such required minimum) with respect to the Company’s withholding
obligation.  In connection with such
authorization Holder hereby constitutes and appoints each of the Chief
Executive Officer, President, Chief Financial Officer and Secretary of the
Company as the undersigned’s attorney-in-fact, with full power of substitution,
to cause the transfer to the Company of such Restricted Shares or other shares
together with all dividends, income, cash, options, warrants, rights,
instruments and other property, interests or proceeds from time to time in
effect, received, receivable or otherwise distributed in respect of, or in
exchange, replacement, renewal or substitution for, any or all of those
Restricted Shares or other shares; and Holder acknowledges that such
appointment is being made in connection with a grant of Restricted Stock under
the Plan, is coupled with an interest and is therefore irrevocable.

 

7.             Legends
and Restrictions.  If a share
certificate is issued evidencing the Restricted Shares, such certificate shall
be registered in the name of the Holder but shall be held in custody by the
Company, and such share certificate may contain such legends as may be
appropriate to evidence restrictions imposed under applicable state corporation
and securities laws, and under the Plan and this Agreement.  If a share certificate is not issued
evidencing the Restricted Shares but the Restricted Shares are otherwise
registered in the Company’s stock transfer records, the Restricted Shares shall
be registered in the name of the Holder but the Company shall be authorized to
put in place such procedures as will require the above restrictions to be
honored by the transfer agent for the Stock.

 

8.             Adjustment
in Number of Shares.  The number of
Restricted Shares shall be subject to adjustment for stock dividends, stock
splits, or similar corporate changes involving the Common Stock to the extent
set forth in Section 4.5 of the Plan.

 

                9.             Change in Control.  In the event of a Change in Control (as
defined in Section 2.7 of the Plan), Article XI of the Plan shall govern.

 

10.           Investment
Representations.

 

(a)           The
Holder acknowledges that, unless and until the Company notifies the Holder
otherwise, the issuance of the Restricted Shares has not been registered under
the Securities Act of 1933, as amended (the “Securities Act”), or under
applicable state securities laws.

 

(b)           The
Holder acknowledges that the Company may delay the issuance of the Restricted
Shares, the delivery of certificates for the Restricted Shares, and the release
of any restrictions on the transfer of the Restricted Shares for such time as
the Company deems necessary or desirable to enable the Company to comply with
(i) the requirements of the Securities Act or the Securities Exchange Act
or 1934, as amended, or any rules or regulations of the Securities and Exchange
Commission or any stock exchange promulgated thereunder; or (ii) the
requirements of applicable state laws relating to authorization, issuance or
sale of such securities.  The Holder shall
provide such information as the Company deems necessary or desirable to secure
such compliance.

 

11.           Notices.  Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been given when delivered by personal delivery, by fax transmission or by mail,
to the following address:

 

 

	
   

  	
  To Holder:

  	
   

  	
  At the address shown under the Holder’s signature
  below.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  To the Company:

  	
   

  	
  Immucor, Inc.

  
	
   

  	
   

  	
   

  	
  3130 Gateway Drive

  
	
   

  	
   

  	
   

  	
  PO Box 5625

  
	
   

  	
   

  	
   

  	
  Norcross, Georgia 30091-5625

  
	
   

  	
   

  	
   

  	
  FAX: (404) 242-8930

  
	
   

  	
   

  	
   

  	
  Attention:  Chief
  Financial Officer

  

 

or at such other address or fax number as the parties hereto shall have
last designated by notice to the other party. 
Any notice given by personal delivery or mail shall be deemed to have
been delivered on the date of receipt of such delivery at such address; and any
notice given by fax transmission shall be deemed to have been delivered on the
date of transmission if received during business hours on a business day, or
the next business day after transmission if received after business hours on a
business day or at any time on a non-business day.

 

12.           Failure
to Enforce Not a Waiver.  The failure
of the Company or the Holder to enforce at any time any provision of this
Agreement shall in no way be construed to be a waiver of such provisions or of
any other provision hereof.

 

13.           Amendments.  This Agreement may be amended or modified
only by an instrument in writing signed by the Holder and an authorized
representative of the Company.  Except as
provided in Section 16 hereof, no third party shall be entitled to claim the
benefit of or enforce this Agreement.

 

14.           Governing
Law.  This Agreement has been entered
into, and shall be governed by and construed according to the laws of the State
of Georgia, without regard to the conflicts of law rules thereof.

 

15.           Regulatory
Approvals.  The vesting of the
Restricted Shares shall be subject to the condition that if at any time the
Committee or the Company shall determine in its discretion that the
satisfaction of withholding tax or other tax liabilities, or the listing,
registration, or qualification of any shares of Stock upon any securities
exchange or quotation system or under any federal or state law, or the consent
or approval of any regulatory body, is necessary or desirable as a condition
of, or in connection with, such vesting, then in any such event such vesting
shall not be effective unless such liabilities have been satisfied or such
listing, registration, qualification, consent, or approval shall have been
effected or obtained.

 

16.           Successors
and Assigns.  This Agreement shall
inure to the benefit of, and be binding on, the successors and assigns of the
Company, and such persons as may be permitted to succeed to the rights of the
Holder hereunder with respect to the Restricted Shares.  The parties shall take such steps as
reasonably may be necessary, including but not limited to the execution and
delivery of an agreement or replacement of this Agreement, to give effect to
the provisions of this Section 16 in a way that the relative benefits and
obligations of the parties (and their successors and assigns) under this
Agreement are preserved as closely as possible.

 

17.           Defined
Terms.  Capitalized terms used in
this Agreement but not defined in this Agreement will have the meanings given
in the Plan.

 

 

                The parties hereto
have executed this Agreement as of the day and year first written above.

 

 

	
   

  	
  IMMUCOR, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Holder Signature)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fax (if any):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
								

 

 

EXHIBIT A

 

Restricted
Stock Agreement Dated As of «GrantDate»

Lapse of
Restrictions - Vesting Schedule

 

 

Subject to the other terms of this Agreement, the Restrictions on the
Restricted Shares shall lapse on a certain percentage of the Restricted Shares,
and that portion of the Restricted Shares will thereby vest, on the following
schedule:

 

Restrictions will lapse on 20% of the Restricted Shares on «DateYr1».

 

Restrictions will lapse on 20% of the Restricted Shares on «DateYr2».

 

Restrictions will lapse on 20% of the Restricted Shares on «DateYr3».

 

Restrictions will lapse on 20% of the Restricted Shares on «DateYr4»

 

Restrictions will lapse on 20% of the Restricted Shares on «DateYr5».Exhibit 10.6

AAR CORP.

SUPPLEMENTAL KEY EMPLOYEE RETIREMENT PLAN

    

As Amended and Restated Effective January 1, 2005

AAR CORP.

SUPPLEMENTAL KEY EMPLOYEE RETIREMENT PLAN

    

As Amended and Restated Effective January 1, 2005

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  I

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  	
   

  	
  ELIGIBILITY

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
  SUPPLEMENTAL RETIREMENT BENEFIT AND SUPPLEMENTAL
  SURVIVING SPOUSE BENEFIT

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
  SUPPLEMENTAL CONTRIBUTIONS

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  V

  	
   

  	
  FORFEITURES

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
  ADMINISTRATION OF THE PLAN

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
  AMENDMENT OR TERMINATION

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
  GENERAL PROVISIONS

  	
   

  	
  21

  

 

 i

AAR CORP. 

SUPPLEMENTAL KEY EMPLOYEE RETIREMENT PLAN

As Amended and Restated Effective
January 1, 2005

WHEREAS, the AAR CORP.
Supplemental Key Employee Retirement Plan (“SKERP”) was adopted effective June 1,
1994, for the Executive Officers, and other designated officers and key
employees, of AAR CORP. and its Affiliated Companies who participate in the
qualified retirement plans from time to time established and maintained by AAR
CORP. The purpose of the Plan is to ensure that the retirement benefits provided
to Executive Officers and certain other officers and key employees enhance the
overall effectiveness of the AAR CORP. executive compensation program and
attract, retain and motivate such individuals;

WHEREAS, the Company amended the
Plan on June 1, 1995, January 1, 1996 and June 1, 1996, amended
and restated the Plan effective April 11, 2000, and further amended the
Plan effective July 1, 2003;

WHEREAS, the Company now desires
to further amend the Plan to comply with Code Section 409A and guidance
and regulations issued thereunder with respect to benefits earned and vested
under the Plan from and after January 1, 2005; and

WHEREAS, 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.

NOW, THEREFORE, the AAR CORP.
Supplemental Key Employee Retirement Plan is hereby amended and restated,
effective January 1, 2005, as set forth below:

ARTICLE I

DEFINITIONS

Wherever
used herein the following terms shall have the meanings hereinafter set forth:

1.1           “Additional Supplemental Company
Account” means the account maintained by the Company for a Participant under
the Plan that is credited with Additional Supplemental Company Contributions.

1.2           “Additional Supplemental Company
Contribution” means the contribution made by the Company for the benefit of a
Participant pursuant to Section 4.5 of the Plan.

1.3           “Affiliated Company” means a business
entity, or predecessor of such entity, if any, which controls, or is under
common control with, the Company.

1.4           “Board” means the Board of Directors
of the Company.

1.5           “Change in Control” means:

(a)           With respect to a Pre-2005
Benefit the earliest of:

 

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

(ii)           the effective time of (1) 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
(2) 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

(iii)          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 (1) three
directors, or (2) directors constituting a majority of the number of
directors of the Company then in office.

(b)           With respect to a Post-2004
Benefit, the earliest of:

(i)            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;

(ii)           the effective time of (1) 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
(2) 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

(iii)          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 directors
constituting a majority of the number of directors of the Company then in
office.

1.6            “Code” means the Internal Revenue
Code of 1986, as amended from time to time, and any regulations relating
thereto.

1.7           “Committee” means the Retirement
Committee responsible for the administration of the Qualified Retirement Plan.

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1.8           “Company” means AAR CORP., a Delaware
corporation, or, to the extent provided in Section 8.11 below, any
successor corporation or other entity resulting from a merger or consolidation
into or with the Company or a transfer or sale of substantially all of the assets
of the Company.

1.9            “Executive Officer” means each of (a) the
President and Chief Executive Officer and (b) the Vice President, General
Counsel and Secretary of the Company holding office on June 1, 1994. The
Compensation Committee of the Board, upon recommendation of management, shall
have the discretion from time to time to designate individuals occupying other
executive positions with the Company or an Affiliated Company as Executive
Officers for purposes of the Plan.

1.10         “Key Employee” means each employee of
the Company who may from time to time be designated as such for purposes of the
Plan by and in the discretion of the Compensation Committee of the Board, upon
recommendation of management.

1.11         “Normal Retirement Date” means the
first day of the calendar month coincident with or next following the date a
Participant attains age 65.

1.12         “Participant” means any individual who
has been designated an Executive Officer or Key Employee of the Company or an
Affiliated Company for purposes of the Plan.

1.13         “Plan” means the AAR CORP. Supplemental
Key Employee Retirement Plan.

1.14         “Plan Year” means the calendar year or
any other 12 consecutive month period that constitutes the fiscal year of
the Qualified Profit Sharing Plan.

1.15         “Post-2004 Benefit” means the
portion of a Participant’s Supplemental Retirement Benefit and Supplemental
Accounts, as applicable, equal to the present value, determined as of a
Participant’s date of separation from service after December 31, 2004, of
the excess of (a) such Benefit or Account balances to which the
Participant would be entitled under the Plan if he separated from service after
December 31, 2004, over (b) his Pre-2005 Benefit, and received
a full payment of benefits from the Plan on the earliest possible date allowed
under the Plan following separation from service pursuant to Articles III
and IV, calculated from and after January 1, 2005 to the date of
separation from service.

1.16         “Pre-2005 Benefit” means the
portion of a Participant’s Supplemental Retirement Benefit and/or Supplemental
Profit Sharing Account, Supplemental Company Account and Supplemental Deferral
Account, as applicable, equal to the present value of the Benefit or Account
balances, determined as of December 31, 2004, to which the Participant would
be entitled under the Plan if he voluntarily separated from service without
cause on December 31, 2004 and received a full payment of benefits from
the Plan on the earliest possible date allowed under the Plan following
separation from service pursuant to Articles III and IV, calculated
as of December 31, 2004.

1.17         “Qualified Company Account” means the
account maintained for a Participant under the Qualified Profit Sharing Plan
that is credited with Qualified Company Contributions.

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1.18         “Qualified Company Contribution” means
the Company Contribution made by the Company or an Affiliated Company for the
benefit of a Participant under and in accordance with the terms of the
Qualified Profit Sharing Plan in any Plan Year.

1.19         “Qualified Profit Sharing Account”
means the account maintained for a Participant under the Qualified Profit
Sharing Plan that is credited with Qualified Profit Sharing Contributions.

1.20         “Qualified Profit Sharing Contribution”
means the Profit Sharing Contribution made by the Company or an Affiliated
Company for the benefit of a Participant under and in accordance with the terms
of the Qualified Profit Sharing Plan.

1.21         “Qualified Profit Sharing Plan” means
the AAR CORP. Employees’ Profit Sharing Plan, established effective June 1,
1965, and as amended from time to time, and each successor or replacement plan.

1.22         “Qualified Retirement Benefit” means
the benefit payable to a Participant pursuant to the Qualified Retirement Plan
(including any increased amounts payable with respect to any calendar year as
described in Appendix A of the Qualified Retirement Plan) by reason of his
separation from service with the Company and all Affiliated Companies for any
reason other than death; provided, however, that such benefit shall be determined
in accordance with Section 3.1 or Section 3.2 as applicable.

1.23         “Qualified Retirement Plan” means the
AAR CORP. Retirement Plan, established effective August 1, 1988, and as
amended from time to time, and each successor or replacement plan.

1.24         “Qualified Salary Deferral Account”
means the account maintained for a Participant under the Qualified Profit
Sharing Plan that is credited with Qualified Salary Deferral Contributions.

1.25         “Qualified Salary Deferral Contribution”
means the Salary Deferral Contribution made by the Company or an Affiliated
Company for the benefit of a Participant under and in accordance with the terms
of the Qualified Profit Sharing Plan in any Plan Year.

1.26         “Qualified Surviving Spouse Benefit”
means the aggregate benefit payable to the Surviving Spouse of a Participant
pursuant to the Qualified Retirement Plan, and all annuities provided with
respect to the Participant under the Qualified Retirement Plan, in the event of
the death of the Participant at any time prior to the commencement of payment
of his Qualified Retirement Benefit.

1.27         “Specified Employee” means a key
employee (as defined in Code Section 416(i) without regard to
paragraph (5) thereof), including, without limitation, a Key Employee
or an Executive Officer. A Participant shall be deemed to be a Specified
Employee with respect to a calendar year if he is a Specified Employee during
the 12-month period ending on September 30th of the preceding calendar year.

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1.28         “Supplemental Accounts” means,
collectively, the Supplemental Profit Sharing Account, the Supplemental Company
Account, the Supplemental Company Account #2, the Supplemental Deferral
Account and the Additional Supplemental Company Account maintained by the
Company for a Participant under the Plan.

1.29         “Supplemental Base Salary Deferral
Agreement” means a written agreement entered into by a Participant pursuant to
the provisions of Section 4.2.

1.30          “Supplemental Base Salary Deferral
Contribution” means the base salary contribution made by the Company for the
benefit of a Participant pursuant to Section 4.1 of the Plan in any Plan
Year.

1.31          “Supplemental Bonus Deferral Agreement”
means a written agreement entered into by a Participant pursuant to the
provisions of Section 4.3.

1.32         “Supplemental Bonus Deferral
Contribution” means the bonus contribution made by the Company for the benefit
of a Participant pursuant to Section 4.1 in any Plan Year.

1.33         “Supplemental Company Account” means
the account maintained by the Company for a Participant under the Plan that is
credited with Supplemental Company Contributions.

1.34         “Supplemental Company Account #2”
means, effective June 1, 2006, the account maintained by the Company for a
Participant under the Plan that is credited with Supplemental Company
Contributions #2.

1.35         “Supplemental Company Contribution”
means the contribution made by the Company for the benefit of a Participant
pursuant to Sections 4.4 and 4.5 of the Plan in any Plan Year.

1.36         “Supplemental Company
Contribution #2” means, effective June 1, 2006, the contribution made
by the Company for the benefit of a Participant pursuant to Section 4.7 of
the Plan.

1.37          “Supplemental Deferral Account” means
the account maintained by the Company for a Participant under the Plan that is
credited with Supplemental Base Salary and Bonus Deferral Contributions.

1.38          “Supplemental Profit Sharing Account”
means the account maintained by the Company for a Participant under the Plan
that is credited with Supplemental Profit Sharing Contributions.

1.39         “Supplemental Profit Sharing
Contribution” means the contribution made by the Company for the benefit of a
Participant pursuant to Section 4.6 of the Plan in any Plan Year.

1.40         “Supplemental Retirement Benefit” means
the benefit payable to a Participant pursuant to Section 3.1 or 3.2
of the Plan by reason of his separation from service with the 

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Company and all Affiliated Companies for any reason
other than death, or in connection with the termination of the Plan or
termination of participation in the Plan.

1.41          “Supplemental Surviving Spouse Benefit”
means the benefit payable to a Surviving Spouse pursuant to Section 3.3 of
the Plan.

1.42         “Surviving Spouse” means a person who
is married to a Participant throughout the one-year period ending on the
date of his death.

1.43         “Unforeseeable Emergency” means 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.

1.44         Except as otherwise provided in this Article I,
all defined terms used in the Plan that are defined in the Qualified Retirement
Plan or in the Qualified Profit Sharing Plan, as applicable, shall have the
same meaning in the Plan as is set forth in the definition in the Qualified
Retirement Plan or the Qualified Profit Sharing Plan.

1.45         Words in the masculine gender shall
include the feminine and the singular shall include the plural, and vice versa,
unless qualified by the context. Any headings used herein are included for ease
of reference only and are not to be construed so as to alter the terms hereof.

ARTICLE II

ELIGIBILITY

2.1           Executive Officers. Each
Executive Officer shall be a Participant in the Plan with respect to the
Supplemental Retirement Benefit and Supplemental Surviving Spouse Benefit set
forth in Sections 3.1 and 3.3, and the Supplemental Salary Deferral
Contributions, the Supplemental Bonus Deferral Contributions, the Supplemental
Company Contributions and the Supplemental Profit Sharing Contributions set
forth in Article IV.

2.2           Key Employees. Each Key
Employee shall be a Participant in the Plan with respect to the Supplemental
Retirement Benefit and the Supplemental Surviving Spouse Benefit set forth in
Sections 3.2 and 3.3, and the Supplemental Salary Deferral
Contributions, the Supplemental Bonus Deferral Contributions, the Supplemental
Company Contributions and the Supplemental Profit Sharing Contributions set
forth in Article IV.

2.3           Cessation of Participation.
Notwithstanding the foregoing provisions of Section 2.1 or Section 2.2,
effective as of October 1, 2001:

(a)           No Executive Officer or Key Employee
who was not already a Participant in the Plan as of October 1, 2001 shall
be eligible to participate in the Plan with respect to the Supplemental
Retirement Benefit or Supplemental Surviving Spouse Benefit set forth in Section 3.1,
3.2 and 3.3 of the Plan; and

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(b)           No Participant who is a Key Employee
shall accrue any further Supplemental Retirement Benefit or Supplemental
Surviving Spouse Benefit on or after October 1, 2001.

ARTICLE III

SUPPLEMENTAL RETIREMENT BENEFIT AND

SUPPLEMENTAL SURVIVING SPOUSE BENEFIT

3.1           Executive Officers. Effective June 1,
2006:

(a)           The
Supplemental Retirement Benefit of an Executive Officer who is a Participant as
described in Section 2.1 shall be a monthly amount equal to (i) below
minus the sum of (ii) and (iii) below:

(i)            The monthly amount equal to, in the
case of the President and Chief Executive Officer, 1/12th of 60% of Final
Average Earnings, without giving effect to the limitations imposed by Code Section 401(a)(17)
or any other Code section, or, in the case of all other Executive Officers, the
monthly amount equal to 1/12th of 50% of Final Average Earnings (or as
otherwise specified in a Compensation Committee resolution designating an
individual as an Executive Officer Participant) without giving effect to the
limitations imposed by Code Section 401(a)(17) or any other Code section,
payable at the Participant’s Normal Retirement Date, and, if applicable,
reduced for early commencement as provided in Section 3.6;

LESS

(ii)           The
monthly amount of the Qualified Retirement Benefit payable to the Participant
under the Qualified Retirement Plan at the Participant’s Benefit Commencement
Date;

LESS

(iii)          The
Supplemental Retirement Benefits of the Participant transferred pursuant to Section 4.7.

(b)           For purposes of determining the
Supplemental Retirement Benefit described above:

(i)            The amount described in (a)(i) above
for any Participant who commences participation in the Plan after January 1,
2001 shall be multiplied by a fraction, the numerator of which shall be years
of Credited Service not to exceed 20, and the denominator of which shall
be 20, determined as of the date of the Participant’s separation from
service with the Company and all Affiliated Companies.

 7
 

 

(ii)           A Participant’s Final Average
Earnings described in (a)(i) above shall be determined as of October 1,
2001, and shall be adjusted by an amount equal to 25% of the percentage
increase in the Participant’s base salary in effect on September 30, 2001
compared to the Participant’s base salary in effect on the date of the
Participant’s separation from service for any reason, including Retirement,
Disability or death.

(iii)          In determining a Participant’s
Qualified Retirement Benefit, the Participant’s Cash Account Balance shall not
be credited with any Credits for any period of time on or after October 1,
2001, and the Participant shall be deemed to have received his Cash Account
Balance on October 1, 2001; and in the case of a Participant who is a
Grandfathered Participant, the Grandfathered Benefit shall be calculated
considering the Participant’s Final Average Earnings, Credited Service (not in
excess of 20 years) and Social Security offset as of October l, 2001.

(iv)          The amounts described in (i), (ii) and (iii) shall
be computed in the form of an annuity payable over the Participant’s lifetime
only.

3.2           Key Employees. Effective as of
October 1, 2001, no Participant who is a Key Employee of the Company as
described in Section 1.10 shall accrue any further Supplemental Retirement
Benefit. The Supplemental Retirement Benefit of a Participant who is such a Key
Employee shall be a monthly amount equal to the difference between (a) and (b) below:

(a)           The monthly amount of the Qualified
Retirement Benefit accrued as of October 1, 2001 to which the Participant
would have been entitled under the Qualified Retirement Plan without giving
effect to the limitations imposed by Code Section 401(a)(17) or any other
Code section;

LESS

(b)           The monthly amount of the Qualified
Retirement Benefit accrued as of October 1, 2001 and payable to the
Participant under the Qualified Retirement Plan at October 1, 2001.

For purposes of determining the Supplemental
Retirement Benefit described above:

(i)            For calculating the Qualified
Retirement Benefit under Section 3.2(a) only, any Key Employee
Participant who was over the age of 55 on January 1, 2000 shall be
deemed a “Grandfathered Participant” as defined under the Qualified Retirement
Plan.

(ii)           A Participant’s Final Average
Earnings shall be determined as of October 1, 2001, and shall not be based
on or include Compensation earned by a Participant after such date.

 8
 

 

(iii)          In determining a Participant’s
Qualified Retirement Benefit, the Participant’s Cash Account Balance shall not
be credited with Pay Credits for any period of time on or after October 1,
2001, and in the case of a Participant who is a Grandfathered Participant, the
Grandfathered Benefit shall be calculated considering the Participant’s Final
Average Earnings, Credited Service (not in excess of 20 years) and Social
Security offset as of October 1, 2001.

(iv)          The amounts described in (a) and (b) shall
be computed in the form of an annuity payable over the Participant’s lifetime
only.

3.3           Supplemental Surviving Spouse
Benefit. If a Participant described in Section 2.1 or 2.2 dies
prior to commencement of payment of his Qualified Retirement Benefit under
circumstances in which a Qualified Surviving Spouse Benefit is payable to his
Surviving Spouse, then a Supplemental Surviving Spouse Benefit shall be payable
under the Plan. The Supplemental Surviving Spouse Benefit shall be paid in a
lump sum that is the actuarial equivalent of the amount that would have been
payable to the Participant under Section 3.1 or 3.2 at the date of
death. Actuarial equivalence shall be determined using the mortality and
interest rate assumptions for lump sums then in effect under the Qualified
Retirement Plan. The Supplemental Surviving Spouse Benefit shall be paid to the
Surviving Spouse within 45 days of the Participant’s death. Notwithstanding
the foregoing provisions of this Section 3.3, no Participant who is a Key
Employee of the Company as described in Section 2.2 shall accrue any
further Supplemental Surviving Spouse Benefit on or after October 1, 2001.

3.4           Form and Time of Commencement
of Supplemental Retirement Benefit.

(a)           The Supplemental Retirement Benefit
of a Participant who terminated employment with the Company and all Affiliated
Companies prior to January 1, 2005 shall be paid in the same form, and
commencing at the same time, as is applicable to the Qualified Retirement
Benefit payable to the Participant. Such Participant’s election under the
Qualified Retirement Plan of any optional form of payment, or time for
commencement of payment, of his Qualified Retirement Benefit (with the valid
consent of his Surviving Spouse where required under the Qualified Retirement
Plan) shall also be applicable to the form and time of commencement of payment
of his Supplemental Retirement Benefit. Notwithstanding the preceding sentence,
an election made by such Participant under the Qualified Retirement Plan with
respect to the form or time of commencement of payment of his benefit
thereunder following termination of employment, shall not be effective with
respect to the form or time of commencement of payment of the Supplemental
Retirement Benefit unless (i) such Participant has then attained
age 55 and his age plus years of Credited Service is at least equal
to 62, (ii) such election is expressly approved in writing by the
Company in its sole discretion acting through the AAR CORP. Retirement
Committee, and (iii) if such Supplemental Retirement Benefit is to be paid
to the Participant in a lump sum distribution, such Participant has agreed in
writing to reimburse the Company for such payment amount, plus interest thereon
at 8% per annum, immediately upon demand, in the event of forfeiture of
benefits under this Article III, pursuant to Article V below. If 

 9
 

 

any of the criteria
specified in the preceding sentence, applicable to the effectiveness of an
election made by such Participant under the Qualified Retirement Plan with
respect to the form or time of commencement of payment of his Supplemental
Retirement Benefit under this Article III is not satisfied, the form and
time of commencement of payment under this Article shall be selected by
the Company in its sole discretion acting through the AAR CORP. Retirement
Committee.

(b)           The Supplemental Retirement Benefit
of a Participant who terminates employment with the Company and all Affiliated Companies
on and after January 1, 2005 shall be paid or commence to be paid to him
on the date on which he attains the age of 65 years. Notwithstanding the
preceding sentence, such a Participant who has then attained age 55 and
whose age plus years of Credited Service is at least equal to 62 shall, at the
Participant’s election, be paid or commence to be paid to him either (a) as
of the date of his separation from service with the Company and all Affiliated
Companies, or (b) as of the first day of a calendar month and year elected
by the Participant (which shall be no later than 15 years after the date
of his separation from service).

(c)           A distribution of a Supplemental
Retirement Benefit shall be paid to any Participant in either (i) a single
lump sum, or (ii) installments over a number of years (not to
exceed 15) payable in monthly, quarterly or annual installments, as
elected by the Participant.

(d)           Any Participant in the Plan on December 31,
2004 shall make such time and form elections described in paragraphs (b) and/or (c) of
this Section on or before December 31, 2005. If a Participant does
not make timely elections with respect to the time, if applicable, and form of
payment pursuant to paragraphs (b) and/or (c), such payment
shall be made to him as of his separation from service in a lump sum. Notwithstanding
the preceding provisions of this Section 3.4, a Supplemental Retirement
Benefit will not be paid to a Participant in a lump sum unless the Participant
has agreed in writing, prior to receipt of the distribution, to reimburse the
Company for such payment amount, plus interest thereon at 8% per annum,
immediately upon demand, in the event of a forfeiture of his Supplemental
Retirement Benefit under this Article III pursuant to Article V
below.

(e)           Notwithstanding the preceding
sentences of this Section 3.4, the single sum value of the Supplemental
Retirement Benefit of each Key Employee, determined as of October 1, 2001,
under Section 3.2 shall be paid to him as soon as administratively
practicable after such date.

3.5           Change in Form or Time of
Payment. Notwithstanding any provision of the Plan to the contrary, a
Participant may elect distribution of all or any part of the portion of his Pre-2005
Benefit applicable to his Supplemental Retirement Benefit at any time if (a) 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 (b) the
distribution is subject to a forfeiture penalty 

 10
 

 

equal to 10% of the amount of the distribution. Such
distribution shall be made in a method determined pursuant to Section 3.4.

Notwithstanding
any other provisions of the Plan, a Participant may modify his election as to
the form or time of distribution of his Post-2004 Benefit applicable to
his Supplemental Retirement Benefit if (i) such election does not take
effect until at least 12 months after the date on which the election is
made, (ii) the first payment with respect to which such election is made
is deferred for a period of not less than five years from the date on which
such payment would otherwise have been made, and (iii) any election
related to a payment to be made at a specified date is made at least
12 months prior to the date of the first scheduled payment.

Notwithstanding
any other provisions of this Section 3.5, a Participant may change an
election with respect to the time and form of payment of the portion of his
Post-2004 Benefit applicable to his Supplemental Retirement Benefit
without regard to the restrictions imposed under the preceding paragraph on or
before December 31, 2006, provided that such election (1) applies
only to amounts that would not otherwise be payable in calendar year 2006,
and (2) shall not cause any amount to be paid in calendar year 2006
that would not otherwise be payable in such year.

3.6           Equivalencies. A Supplemental
Retirement Benefit that is payable in any form other than an annuity over the
lifetime of the Participant only, or that commences at any time prior to the
Participant’s Normal Retirement Date, shall be the equivalent of the
Supplemental Retirement Benefit determined pursuant to Section 3.1
or 3.2 above, as applicable, based upon the same adjustments and
assumptions as those specified in the Qualified Retirement Plan with respect to
determination of the amount of the Qualified Retirement Benefit or the date for
commencement of payment thereunder.

ARTICLE IV

SUPPLEMENTAL CONTRIBUTIONS

4.1           Supplemental Base Salary and
Supplemental Bonus Deferral Contributions. The aggregate Supplemental Base
Salary Contribution and Supplemental Bonus Deferral Contribution to be made by
the Company for the benefit of a Participant for any Plan Year shall be an
amount equal to the difference between (a) and (b) below:

(a)           The Qualified Salary Deferral
Contribution that would have been withheld and deposited to the Qualified
Salary Deferral Account of the Participant for the Plan Year, as determined by
the Salary Deferral Agreement between the Participant and the Company or an
Affiliated Company in effect for such Year pursuant to the terms of the
Qualified Profit Sharing Plan, without giving effect to any limitations imposed
by the Code on the Qualified Profit Sharing Plan;

LESS

(b)           The amount of the Qualified Salary
Deferral Contribution actually allocated to the Qualified Salary Deferral
Account of the Participant for the Plan Year.

 11
 

 

The
aggregate Supplemental Base Salary and Supplemental Bonus Deferral
Contributions made for the benefit of a Participant for any Plan Year shall be
credited to a Supplemental Deferral Account maintained under the Plan in the
name of such Participant at the same time as Qualified Salary Deferral
Contributions are made for such Plan Year.

4.2           Supplemental Base Salary Deferral
Agreement. As a condition to the Company’s obligation to make a
Supplemental Salary Deferral Contribution for the benefit of a Participant
pursuant to Section 4.1, the Participant must execute a Supplemental
Salary Deferral Agreement in the form attached hereto. Any Participant in the
Plan as of December 31, 2004 who was an employee of the Company or an
Affiliated Company and a Participant in the Plan as of January 1, 2005
shall deliver to the Committee a Supplemental Salary Deferral Agreement with
respect to his base salary earned from and after January 1, 2006 no later
than December 31, 2005. An Executive Officer or Key Employee who becomes a
Participant on or after January 1, 2005 shall deliver the aforementioned
Supplemental Salary Deferral Agreement to the Committee within 30 days
after the date the Participant first becomes eligible to participate and such
Agreement shall be effective with respect to base salary related to services to
be performed subsequent to the election; provided that 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
Code Section 409A maintained by the Company or an Affiliated Company. If
the individual referred to in the preceding sentence does not deliver the
aforementioned written Supplemental Salary Deferral Agreement to the Committee
within such 30 day period, he shall be entitled to deliver to the
Committee a written Supplemental Salary Deferral Agreement with respect to his
base salary earned from and after the first day of the Plan Year next following
the Plan Year in which the Agreement is delivered. Any election made pursuant
to a written Supplemental Salary Deferral Agreement delivered pursuant to the
preceding sentences shall continue in effect until revoked by a Participant by
notice delivered to the Committee 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, and as of each December 31 the election shall become
irrevocable with respect to base salary payable with respect to services
performed by the Participant in the immediately following calendar year.

4.3           Supplemental Bonus Deferral
Agreement. As a condition to the Company’s obligation to make a Supplemental
Bonus Deferral Contribution for the benefit of a Participant pursuant to Section 4.1,
the Participant must execute a Supplemental Bonus Deferral Agreement in the
form or forms attached hereto. Except as set forth below with respect to a
performance based bonus (as defined in Code Section 409A and guidance and
regulations thereunder), a Supplemental Bonus Deferral Agreement related to a
bonus earned by a Participant during a fiscal year of the Company shall be
delivered to the Committee no later than the last day of the preceding fiscal
year of the Company. A Supplemental Bonus Deferral Agreement with respect to a
performance based bonus shall be delivered to the Company no later than the
date six months after the first day of the fiscal year of the Company in which
such performance based bonus is earned. A Supplemental Bonus Deferral Agreement
shall only be effective with respect to the bonus specified in such Agreement.

 12

 

4.4           Supplemental Company Contributions.
The Supplemental Company Contribution to be made by the Company for the benefit
of a Participant for any Plan Year shall be an amount equal to the difference
between (a) and (b) below:

(a)           The Qualified Company Contribution
that would have been allocated to the Qualified Company Account of the
Participant for the Plan Year without giving effect to any limitations imposed
by the Code on the Qualified Profit Sharing Plan;

LESS

(b)           The amount of the Qualified Company
Contribution actually allocated to the Qualified Company Account of the
Participant for the Plan Year.

A
Supplemental Company Contribution made for the benefit of a Participant for any
Plan Year shall be credited to a Supplemental Company Account maintained under
the Plan in the name of such Participant at the same time as Qualified Company
Contributions are made for such Plan Year.

4.5           Additional Supplemental Company
Contributions. 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 Contribution 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 an
Additional 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, administered and invested hereunder in the same manner as regular
Supplemental Contributions. The terms of any such Additional Supplemental
Company Contributions shall be reflected on an appendix to the Plan.

4.6           Supplemental Profit Sharing
Contributions. The Supplemental Profit Sharing Contribution to be made by
the Company for the benefit of a Participant for any Plan Year shall be an
amount equal to the difference between (a) and (b) below:

(a)           The Qualified Profit Sharing
Contribution that would have been allocated to the Qualified Profit Sharing
Account of the Participant for the Plan Year without giving effect to any
limitations imposed by the Code on the Qualified Profit Sharing Plan;

LESS

(b)           The amount of the Qualified Profit
Sharing Contribution actually allocated to the Qualified Profit Sharing Account
of the Participant for the Plan Year.

 13
 

 

A
Supplemental Profit Sharing Contribution made for the benefit of a Participant
for any Plan Year shall be credited to a Supplemental Profit Sharing Account
maintained under the Plan in the name of such Participant at the same time as
Qualified Profit Sharing Contributions are made for such Plan Year.

4.7           Supplemental Company Contributions
#2. Effective June 1, 2006, 33-1/3% of the Supplemental
Retirement Benefit of each Executive Officer who is then an active employee of
the Company or an Affiliated Company and a Participant shall
be converted to an equivalent single sum, based upon the same adjustments and
assumptions as those then specified in the Qualified Retirement Plan. This
single sum shall be transferred as of June 1, 2006 to a Supplemental
Company Account #2 established for the Participant that shall be held, administered
and invested under Article IV of the Plan, and be subject to the remaining
applicable provisions of the Plan, except as otherwise required by Code Section 409A.

Effective June 1, 2007, 50% of the Supplemental
Retirement Benefit of each Executive Officer who is then an active employee of
the Company or an Affiliated Company and a Participant shall
be converted to an equivalent single sum, based upon the same adjustments and
assumptions as those then specified in the Qualified Retirement Plan. This
single sum shall be transferred as of June 1, 2007 to a Supplemental
Company Account #2 established for the Participant that shall be held,
administered and invested under Article IV of the Plan, and be subject to
the remaining applicable provisions of the Plan, except as otherwise required
by Code Section 409A.

Effective June 1, 2008, 100% of the Supplemental
Retirement Benefit of each Executive Officer who is then an active employee of
the Company or an Affiliated Company and a Participant shall
be converted to an equivalent single sum, based upon the same adjustments and
assumptions as those then specified in the Qualified Retirement Plan. This
single sum shall be transferred as of June 1, 2008 to a Supplemental
Company Account #2 established for the Participant that shall be held,
administered and invested under Article IV of the Plan, and be subject to
the remaining applicable provisions of the Plan, except as otherwise required
by Code Section 409A.

4.8           Investment of Supplemental
Contributions.

(a)           Investments. Amounts credited
hereunder to the Supplemental Accounts of a Participant shall be treated as if
they were actually invested in various investment funds that are made available
by the Committee from time to time and as are designated by each Participant
pursuant to investment directions given to the Committee. Such Accounts shall
be credited with earnings, gains and losses of the applicable investment funds
on the last day of each calendar quarter or on such other date selected by the
Committee. Investment directions shall be made by a Participant in specified
multiples of 10%.

(b)           Investment Changes. Each
Participant shall have the right to direct the Committee to modify his
investment directions made pursuant to paragraph (a) above with
respect to amounts credited to his Supplemental Accounts after the date such 

 14
 

 

modification direction
becomes effective, in specified multiples of 10%. Each Participant shall also
have the right to direct the Committee to change the investment directions made
pursuant to paragraph (a) above with respect to amounts credited to
his Accounts on the date such direction to change becomes effective, in
specified multiples of 10%.

(c)           Effective Date of Investment
Direction. Any investment direction, or modification or change of an
investment direction, made pursuant to paragraph (a) or (b) above,
shall be effective as soon as practicable after (and in any event not later
than the first day of the month that occurs at least 30 days after) the
date the applicable direction is given to the Committee. A modification or
change of an investment direction made pursuant to paragraph (b) may,
if required by an administrative rule promulgated by the Committee, be
made only once in each calendar quarter.

In
the event that the sponsor of the investment funds permits more frequent fund
transfers than permitted above, or does not require written direction to
authorize fund transactions, the Committee may waive or modify the requirements
set forth in the preceding provisions of this Section as it deems
appropriate.

(d)           Investment Funds. Any
investments made by the Company or by the Trustee of Trust Agreement No. 2
referred to in paragraph (f) below to conform to directions made by a
Participant pursuant to this Section shall be in investment funds
maintained in the name of the Company, or in the name of such Trustee, and no
Participant shall at any time have any interest in the assets of any such
investment fund.

(e)           Statement of Accounts. A
statement of accounts for each Participant, showing contributions, earnings,
gains and losses and current balances of the Accounts provided for under this Article IV
shall be provided to each Participant on not less than a quarterly basis.

(f)            Trust Agreement No. 2.
Notwithstanding the preceding provisions of this Section, during the existence
of Trust Agreement No. 2 referred to in Section 8.3, the Company
shall direct the Trustee of Trust Agreement No. 2 to invest and reinvest
amounts to conform to directions made by a Participant pursuant to the preceding
provisions of this Section 4.8. Directions shall be given by the Company
to the Trustee of Trust Agreement No. 2 as soon as practicable after such
directions are given to the Company by the Participant.

 15
 

 

4.9           Distributions.

(a)           Separation From Service Prior to
Death. Following a Participant’s separation from service with the Company
and all Affiliated Companies for any reason other than death, a Participant
shall receive a distribution of all amounts credited to his Supplemental
Accounts, including gains and losses credited in accordance with Section 4.8.

(b)           Distribution Due to Death. If
a Participant dies before distribution to him of the full amount of his
Supplemental Accounts, any remaining amount shall be distributed to his
beneficiary designated under the Qualified Profit Sharing Plan. If a
Participant has not designated a beneficiary under the Qualified Profit Sharing
Plan, or if no designated beneficiary is living on the date of distribution
hereunder, amounts distributable pursuant to this paragraph shall be
distributed to those persons or entities entitled to receive distributions of
the Participant’s accounts under the Qualified Profit Sharing Plan.

(c)           Unforeseeable Emergency
Distribution. A Participant shall be entitled to request a distribution
from his Supplemental Deferral Account, prior to his separation from service
with the Company and all Affiliated Companies, in order to satisfy an
Unforeseeable Emergency. 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 applicable to the Participant’s Post-2004
Benefit. Except with respect to eligibility for such a distribution, the
procedures for requesting and receiving such a distribution shall satisfy the
requirements set forth in the Qualified Profit Sharing Plan with respect to a
hardship distribution from his Qualified Salary Deferral Account. A request for
a distribution pursuant to this paragraph shall be made separate and apart from
a request for a distribution under the Qualified Profit Sharing Plan, and a
request for a hardship distribution under the Qualified Profit Sharing Plan
shall not automatically be deemed a request for a distribution hereunder.

(d)           Time and Form of Payment of
Supplemental Accounts. Payment of the balance of a Participant’s
Supplemental Accounts shall be paid or commence to be paid to him either (i) as
of the date of his separation from service with the Company and all Affiliated
Companies, or (ii) as of the first day of a calendar month and year
elected by the Participant (which shall be no later than 15 years after
the date of his separation from service). Such distribution shall be paid or
commence to be paid to the Participant in either (1) a single lump sum, or
(2) installments over a number of years (not to exceed 15) payable in
monthly, quarterly or annual installments, as elected by the Participant. Any
Participant in the Plan on December 31, 2004 shall make such time and form
elections on or before December 31, 2005. If a Participant does not make
timely elections with respect to the time or form of payment pursuant to the
preceding sentence, such payment shall be made to him as of his separation from
service in a lump sum. Notwithstanding the preceding sentence, in the case of
an Executive Officer or Key Employee who becomes a Participant on or after January 1,
2005, the aforementioned elections with respect to the time and form of payment
shall be made within 30 days after 

 16
 

 

the individual first
becomes eligible to participate and such elections shall be effective with
respect to the portion of his Supplemental Accounts related to services to be
performed subsequent to the election; provided that any portion of such
Accounts related to services performed prior to the election shall be payable
to him in a single lump sum as of his date of separation from service; and
provided further that such an individual 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 Code Section 409A
maintained by the Company or any Affiliated Company.

(e)           Notwithstanding any provision in the
Plan to the contrary, a Participant may elect a distribution of all or any
portion of his Pre-2005 Benefit applicable to the amounts credited to his
Supplemental 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 4.8, 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 4.9(d).

(f)            Notwithstanding any other provision
of this Section 4.9, a Participant may modify his election as to the form
or time of distribution of all or any portion of his Post-2004 Benefit
applicable to amounts credited to his Supplemental Accounts, and earnings
thereon, if (i) such election does not take effect until at least
12 months after the date on which the election is made, (ii) the
first payment with respect to which such election is made is deferred for a
period of not less than five years from the date on which such payment would
otherwise have been made, and (iii) any election related to a payment to
be made at a specified date is made at least 12 months prior to the date
of the first scheduled payment.

Notwithstanding any other
provision of this Section 4.9, a Participant may change an election with
respect to the time and form of payment of such portion of his Post-2004
Benefit, without regard to the restrictions imposed under the preceding
paragraph on or before December 31, 2006; provided that such election (1) applies
only to amounts that would not otherwise be payable in calendar year 2006, and (2) shall
not cause an amount to be paid in calendar year 2006 that would not
otherwise be payable in such year.

(g)           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, the portion of
the Pre-2005 Benefit applicable to all amounts credited to each
Participant’s Supplemental Salary 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 4.8, shall
be distributed to him in a lump sum as soon as practicable following the date
of such determination by the Board.

 17
 

 

(h)           Notwithstanding any provision in the
Plan to the contrary, the following provisions shall apply, prior to January 1,
2008, to the amounts credited to such Participant’s Supplemental Accounts on or
before March 21, 2006 following the first to occur of: (i) a drop in
the overall 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
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:

(i)            During the 30-day period
commencing on the date an event described in clause (i), (ii), (iii),
or (iv) occurs, the Company, in its sole discretion, may distribute
all or any part of such portion of a Participant’s Benefit credited  to his Supplemental Accounts on or before March 21,
2006 , including gains and losses credited in accordance with Section 4.8
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 (i), (ii), (iii), or (iv) shall
be made from and after the 30th day following the date of such event.

(iii)          Following the expiration of the 30-day
period after the date of an event described in clause (i),
(ii), (iii), or (iv), a Participant shall continue to accrue benefits
pursuant to Article III if he is an Executive Officer, and make deferrals
and receive contributions pursuant to Article IV.

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

(i)            In no event may a Participant borrow
amounts credited to the Accounts maintained for him pursuant to this Article IV.

ARTICLE V

FORFEITURES

5.1           Forfeiture of Supplemental
Benefit, Supplemental Surviving Spouse Benefit [and
Supplemental Company Account #2]. Notwithstanding any other
provisions of the Plan, (a) if the employment of a Participant with the Company
and all Affiliated Companies terminates due to Cause, or (b) if a
Participant during his employment with the Company and all Affiliated Companies
or at any time during the one-year period after the termination of such
employment, violates the covenant not to compete with the Company and its
Affiliated Companies set forth in Section 5.3, all rights of the
Participant and his Surviving Spouse to a Supplemental Retirement Benefit or a
Supplemental Surviving Spouse Benefit, [and to a Supplemental
Company Account #2,] shall be forfeited and shall be retained
by the Company free of any and all claims 

 18
 

 

of the Participant, his Surviving Spouse or any other
person claiming with respect to the Participant or his Surviving Spouse.

5.2           Termination For Cause. For
purposes of this Section, a termination for Cause shall mean termination of a
Participant’s employment by the Company or any Affiliated Company because of (a) the
Participant’s conduct, involving theft, embezzlement or fraud, or (b) the
Participant’s willful misconduct in the performance of his duties that
materially injures the Company or any Affiliated Company, as determined by the
Board.

5.3           Covenant Not to Compete. A
Participant shall not, during the term of the Participant’s employment with the
Company and all Affiliated Companies, and for a period of one year thereafter,
without the Company’s express written consent, directly or indirectly, alone or
as a member of a partnership, group, or joint stock venture, or as an employee,
officer, director or stockholder of any corporation, or in any capacity (a) engage
in any activity which is competitive with any of the businesses conducted by
the Company or its Affiliated Companies from time to time or at any time during
the Participant’s term of employment, provided that the foregoing provision
shall not be deemed to prohibit the Participant from purchasing for investment
any securities or interest in any publicly-owned organization which is
competitive with the business of the Company and its Affiliated Companies, so
long as the Participant’s investment in such organization does not exceed the
lesser of one percent of its total outstanding equity securities or Two Hundred
Fifty Thousand Dollars ($250,000); (b) solicit in connection with any
activity which is competitive with any of the businesses of the Company and its
Affiliated Companies, any customers or suppliers of the Company and its
Affiliated Companies; (c) use the name “AAR” or any variant thereof; or (d) actively
solicit, directly or indirectly, any employee or induce any customer or
supplier of the Company or any of its Affiliated Companies to terminate or
materially change such relationship.

5.4           In the event of a Participant’s
separation from service with the Company under circumstances which trigger
Change in Control employment termination benefits under the change in control
provisions of an employment agreement or severance and change in control
agreement between the Participant and the Company, the provisions of
subsections 5.1, 5.2 and 5.3 above shall be deemed waived by the
Company and null and void.

ARTICLE VI

ADMINISTRATION OF THE PLAN

6.1           Administration by the Committee.
The Committee shall be responsible for the general operation and administration
of the Plan and for carrying out the provisions thereof.

6.2           General Powers of Administration.
All provisions set forth in the Qualified Retirement Plan with respect to the
administrative powers and duties of the Committee, expenses of administration,
and procedures for filing claims, shall also be applicable with respect to the
Plan. The Committee shall be entitled to rely conclusively upon all tables,
valuations, certificates, opinions and reports furnished by any actuary,
accountant, controller, counsel or other person employed or engaged by the Committee
with respect to the Plan.

 19
 

 

ARTICLE VII

AMENDMENT OR TERMINATION

7.1           Amendment or Termination. 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.

7.2           Effect of Amendment or Termination.
No amendment or termination of the Plan shall (a) directly or indirectly
deprive any current or former Participant or Surviving Spouse of all or any
portion of any Supplemental Retirement Benefit or Supplemental Surviving Spouse
Benefit, the right to which has accrued prior to the effective date of such
amendment or termination, or which would be payable if the Participant
terminated employment for any reason, including death, on such effective date,
or (b) directly or indirectly reduce the balance of any Supplemental
Deferral Account, Supplemental Company Account or Supplemental Profit Sharing
Account held hereunder as of the effective date of such amendment or
termination. Upon termination of the Plan, distribution of Supplemental Retirement
Benefits and Supplemental Surviving Spouse Benefits, and of amounts in
Supplemental Deferral Accounts, Supplemental Company Accounts and Supplemental
Profit Sharing Accounts shall be made to Participants, their Surviving Spouses
or beneficiaries as soon as administratively feasible following the date of
Plan termination, and within the timeframe permitted by regulations issued
under Code Section 409A, in the manner described in Sections 3.4
and 4.9(d) of the Plan, except that payment of his Post-2004
Benefit shall be made only at the time set forth in Sections 3.4
and 4.9(d) unless otherwise permitted by regulations issued under
Code Section 409A. No additional Supplemental Retirement Benefits or
Supplemental Surviving Spouse Benefits shall be earned after termination of the
Plan, and no additional credits of Supplemental Salary Reduction Contributions,
Supplemental Company Contributions or Supplemental Profit Sharing Contributions
shall be made to the accounts of Participants after termination of the Plan,
but the Company shall continue to credit gains and losses to accounts pursuant
to Section 4.8 until the balances of such accounts have been fully
distributed to Participants or their beneficiaries.

7.3           Effect of a Change in Control.
Notwithstanding subsections 7.1 and 7.2 above, in the event of a
Change in Control, (i) the SKERP shall continue in effect as to any
Participant or Surviving Spouse who is a Participant or Surviving Spouse
immediately prior to a Change in Control, and (ii) no amendment to or termination
of the Plan shall be effective as to any such Participant or Surviving Spouse
to the extent the effect of such amendment or termination would be to reduce
such Participant’s or Surviving Spouse’s benefits or rights under the Plan from
those available to Participant under the Plan immediately prior to any such
amendment or termination.

7.4           Termination of Participation.
The Company, in its sole discretion, shall have the right to terminate the
participation in the Plan or any portion thereof of any Executive Officer or
Key Employee whose initial participation in the Plan was designated by the
Compensation Committee, upon recommendation of management. Upon such
termination of participation, distribution of the Supplemental Retirement
Benefit, Supplemental Surviving Spouse Benefit, 

 20
 

 

and amounts in the Supplemental Accounts, as
applicable, to such Participant, determined as of the date of termination of
participation, shall be made to such Participant, his Surviving Spouse or
beneficiaries either (a) in the manner and at the time described in
Articles III and IV of the Plan, or (b) in the sole discretion
of the Company, only with respect to the part of the Pre-2004 Benefit
applicable to such Benefit and Accounts, in a lump sum payment as soon as
practicable following such termination of participation. No additional
Supplemental Retirement Benefit or Surviving Spouse Benefit shall be earned by
such Participant after termination of his participation in the Plan with
respect to such benefits, and no additional credits of Supplemental Salary
Deferral Contributions, Supplemental Company Contributions or Supplemental
Profit Sharing Contributions shall be made to the Accounts of such Participant
after termination of his participation in the Plan with respect to such
benefits, but the Company shall continue to credit earnings, gains and losses
to existing Accounts of such Participant pursuant to Section 4.8 until the
balances of such Accounts have been fully distributed to the Participant or his
beneficiaries.

ARTICLE VIII

GENERAL PROVISIONS

8.1           Specified Employee. Notwithstanding
any other provision of the Plan, in no event will distribution of a Participant’s
Post-2004 Benefit begin earlier than six months following separation
from service, unless due to such Participant’s disability or death, if the
Participant was a Specified Employee of the Company or an Affiliated Company,
at a time during which the Company’s capital stock or capital stock of an
Affiliated Company is publicly traded on an established securities market, in
the calendar year of his separation from service.

If a Specified Employee will
receive payments hereunder in the form of installments, the first payment made
as of the date six months after the date of the Participant’s separation from
service with the Company and all Affiliated Companies shall be a lump sum, paid
as soon as practicable after the end of such six-month period, that
includes all payments that would otherwise have been made during such six-month
period. From and after the end of such six-month period, any such
installment payments shall be made pursuant to the terms of the applicable
installment form of payment.

8.2           Participants’ Rights Unsecured.
Except as set forth in Section 8.3, 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 or an Affiliated Company for payment of
any benefits hereunder. The right of a Participant or his Surviving Spouse or
beneficiary to receive a benefit hereunder shall be an unsecured claim against
the general assets of the Company, and neither the Participant nor a Surviving
Spouse or beneficiary shall have any rights in or against any specific assets
of the Company or any Affiliated Company. All amounts credited to Supplemental
Salary Deferral Accounts, Supplemental Company Accounts and Supplemental Profit
Sharing Accounts of Participants shall constitute general assets of the
Company.

8.3           Trust Agreement.
Notwithstanding the provisions of Section 8.2, the Company, promptly after
the Plan effective date, shall enter into a trust agreement (“Trust Agreement”)
with a bank or trust company (with a combined capital and surplus in excess of
$100 million dollars), located in the Continental United States, as
trustee, whereby the Company shall agree to 

 21
 

 

contribute to a trust (“Trust”) initially and annually
thereafter, for the purpose of accumulating assets actuarially sufficient to
satisfy accrued obligations to Participants and Surviving Spouses under Article III
hereof, in the event of a Change in Control of the Company. The Trust Agreement
shall obligate the Company to make contributions sufficient to satisfy the
obligations to Participants, and Surviving Spouses under Article III
hereof; provided, however, that such initial contribution shall be made within
ten days after the date the Board, in its discretion, deems a Change in Control
of the Company likely to occur. The discretion of the Board shall be binding
and conclusive with respect to the likelihood of a Change in Control of the
Company to occur. Such Trust Agreement shall be substantially in the form of
the model trust agreement set forth in Internal Revenue Service Revenue
Procedure 92-64, or any subsequent Internal Revenue Service Revenue
Procedure, and shall include provisions required in such model trust agreement
that all assets of the Trust shall be subject to the creditors of the Company
in the event of insolvency. Notwithstanding the provisions of Section 8.2,
the Company, on or as soon as practicable after January 1, 1996, shall
enter into a Trust Agreement (“Trust Agreement No. 2”) with a bank or
trust company (with a combined capital and surplus in excess of $100,000,000)
located in the continental United States as Trustee, whereby the Company shall
agree to contribute to a trust (“Trust No. 2”) initially and annually
thereafter for the purpose of accumulating assets sufficient to provide for
Supplemental Salary Deferral Contributions, Supplemental Company Contributions
and Supplemental Profit Sharing Contributions with respect to Participants
under Article IV hereof. Trust Agreement No. 2 shall be substantially
in the form of the model trust agreement set forth in Internal Revenue Service
Procedure 92-64, or any subsequent Internal Revenue Service Procedure,
and shall include provisions required in such model trust agreement that all
assets of Trust No. 2 shall be subject to the creditors of the Company in
the event of insolvency. Trust Agreement No. 2 shall include such
provisions as are applicable with respect to the investment and reinvestment of
such Contributions pursuant to directions given by Participants to the Company
and transmitted by the Company to the Trustee of Trust Agreement No. 2
pursuant to paragraph (f) of Section 4.8.

8.4           General Conditions. Except as
otherwise expressly provided herein, all terms and conditions of the Qualified
Retirement Plan applicable to a Qualified Retirement Benefit, or a Qualified
Surviving Spouse Benefit, shall also be applicable to a Supplemental Retirement
Benefit or a Supplemental Surviving Spouse Benefit payable hereunder, and all
terms and conditions of the Qualified Profit Sharing Plan applicable to a
Qualified Salary Deferral Contribution, a Qualified Company Contribution or a
Qualified Profit Sharing Contribution shall also be applicable to a
Supplemental Salary Deferral Contribution, Supplemental Company Contribution or
Supplemental Profit Sharing Contribution to be made hereunder. Any Qualified
Retirement Benefit or Qualified Surviving Spouse Benefit or any other benefit
payable under the Qualified Retirement Plan shall be paid solely in accordance
with the terms and conditions of the Qualified Retirement Plan, any Qualified
Salary Deferral Contribution, Qualified Company Contribution or Qualified Profit
Sharing Contribution, or any other contribution to be made under the Qualified
Profit Sharing Plan shall be made solely in accordance with the terms and
conditions of the Qualified Profit Sharing Plan, and nothing in the Plan shall
operate or be construed in any way to modify, amend or affect the terms and
provisions of the Qualified Retirement Plan or the Qualified Profit Sharing
Plan.

 22
 

 

8.5           No Guaranty of Benefits.
Nothing contained in the Plan shall constitute a guaranty by the Company, any
Affiliated Company, or any other person or entity that the assets of the
Company or any Affiliated Company will be sufficient to pay any benefit
hereunder. No Participant, Surviving Spouse or beneficiary shall have any right
to receive a benefit or a distribution of contributions under the Plan except
in accordance with the terms of the Plan.

8.6           No Enlargement of Employee Rights.
Establishment of the Plan shall not be construed to give any Participant the
right to be retained in the service of the Company or any Affiliated Company.

8.7           Spendthrift Provision. 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 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.

8.8           Applicable Law. The Plan shall
be construed and administered under the laws of the State of Illinois except to
the extent preempted by federal law.

8.9           Small Benefits. If the
actuarial value of any Supplemental Retirement Benefit or Supplemental
Surviving Spouse Benefit is $5,000 or less, the Company may pay the actuarial
value of such Benefit to the Participant or Surviving Spouse in a single lump
sum in lieu of any further Benefit payments hereunder. Notwithstanding the
preceding sentence, in no event may a distribution be made to a Participant
pursuant to this section with respect to the portion of a Participant’s Post-2004
Benefit applicable to his Supplemental Retirement Benefit unless (a) payment
accompanies the termination of the Participant’s entire interest in his
benefits under Article III of the Plan and his interest under all other
nonqualified non-account balance plans subject to Code Section 409A
maintained by the Company or any Affiliated Company, and (b) the payment
is made on or before the later of December 31 of the calendar year in
which occurs the Participant’s separation from service with the Company and all
Affiliated Companies, or the 15th day of the third month following such
separation from service.

8.10         Incapacity of Recipient. 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 then 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 and the Plan
therefor.

8.11         Corporate Successors. 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 

 23
 

 

has been terminated by the Company pursuant to the
provisions of Article VII prior to the effective date of such transaction.

8.12         Unclaimed Benefit. Each
Participant, Surviving Spouse or beneficiary shall keep the Company informed of
his current address. The Company shall not be obligated to search for the
whereabouts of any person. If the location of a Participant is not made known
to the Company 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 three
years after the actual death of a Participant, the Company is unable to locate
any Surviving Spouse or beneficiary of the Participant, then the Company shall
have no further obligation to pay any benefit hereunder to such Participant,
Surviving Spouse or beneficiary or any other person and such benefit shall be
irrevocably forfeited.

8.13         Limitations on Liability.
Notwithstanding any of the preceding provisions of the Plan, none of the
Company, any Affiliated Company, any member of the Committee, nor any
individual acting as an employee or agent of the Company, any Affiliated
Company or the Committee, shall be liable to any Participant, former
Participant, Surviving Spouse or any other beneficiary or other person for any
claim, loss, liability or expense incurred by such Participant, Surviving
Spouse or other beneficiary or other person in connection with the Plan.

8.14         Tax Savings. Not withstanding
anything to the contrary contained in the Plan, (a) if the Internal
Revenue Service prevails in a claim by it that amounts credited to a
Participant’s Accounts, 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 (b) 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, (i) the balance of such Participant’s Accounts
that are part of his Pre-2005 Benefit, to the extent constituting taxable
income, and (ii) the balance of such Participants Accounts that are part
of his Post-2004 Benefit, 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.

 24
 

 

IN WITNESS WHEREOF, this
Plan has been executed this 9th day of June, 2006.

AAR CORP.

By /s/ Timothy O. Skelly                     

      Timothy O. Skelly, Vice President

ATTEST:

/s/
Howard A. Pulsifer                                         

Howard A. Pulsifer,
Secretary

 25
 

 

APPENDIX

Additional Supplemental Company Contributions

Effective June 1,
2006, the Company shall provide for Additional Supplemental Company
Contributions under Section 4.5 of the following percentages of base
salary and bonus :

	
   

  	
  Participant Type

  	
   

  	
   

  	
   

  	
  Contribution

  	
   

  
	
  Chief Executive
  Officer

  	
   

  	
  22%

  
	
   

  	
   

  	
   

  
	
  Other Executive
  Officers designated from time to time by the Compensation Committee

  	
   

  	
  10%

  
	
   

  	
   

  	
   

  
	
  Key Employees
  designated from time to time by the Compensation Committee

  	
   

  	
  5%

  

 

Additional
Supplemental Company Contributions made pursuant to this Appendix shall be made
prior to the end of each applicable Plan Year based on base salary and bonus [payable/earned] during such Plan Year. For Plan
Year 2006, base salary and bonus for the entire Plan Year shall be used
notwithstanding the June 1, 2006 effective date of this Appendix.

Condition
to Allocation

Each
Participant eligible for an Additional Supplemental Company Contribution
hereunder shall receive an allocation of such Contribution to his Additional
Supplemental Company Account with respect to a Plan Year if, and only if such
Participant is a regular full-time Employee on the day immediately
preceding the date the Contribution is made [unless the
Participant terminated employment during the Plan Year due to disability or
death].

Vesting

An
applicable Participant shall fully vest in the balance of his Additional
Supplemental Company Account upon the earlier of the Participant attaining (1) age 57
with 15 Years of Service and (2) age 65.

Forfeitures

Subject
to Section 5.4, any unvested Additional Supplemental Company Contributions
shall be forfeited upon the Participant’s termination of employment with the
Company and its Affiliated Companies. Notwithstanding any other provisions of
the Plan, (1) if the employment of the Participant with the Company and
all Affiliated Companies terminates due to Cause, or (2) if the
Participant during his employment with the Company and all Affiliated Companies
or at any time during the one-year period after the termination of such
employment for any reason (except 

 26
 

 

in
the case of termination of employment for any reason on or after attaining
age 60), violates the covenant not to compete with the Company and its
Affiliated Companies set forth in Section 5.3, all rights of the
Participant and his Surviving Spouse to vested and unvested portions of his
Additional Supplemental Company Account shall be forfeited. Any amounts
forfeited pursuant to this paragraph shall be retained by the Company free of
any and all claims of the Participant, his Surviving Spouse or any other person
claiming with respect to the Participant or his Surviving Spouse.

 27

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