Document:

Exhibit 10.43

 

Freddie Mac Loan Number: 948843233

Property Name: Verandas
at Mitylene

 

GUARANTY

 

MULTISTATE

 

(Revised 5-5-2017)

 

THIS GUARANTY (“Guaranty”)
is entered into to be effective as of July 27, 2017, by INLAND RESIDENTIAL PROPERTIES TRUST, INC., a Maryland corporation
(“Guarantor”, collectively if more than one), for the benefit of BERKADIA COMMERCIAL MORTGAGE LLC, a
Delaware limited liability company (“Lender”).

 

RECITALS

 

		A.	Pursuant to the terms of a Multifamily Loan and Security Agreement dated the same date as this
Guaranty (as amended, modified or supplemented from time to time, the "Loan Agreement"), IRESI Montgomery Mitylene,
L.L.C., a Delaware limited liability company (“Borrower”) has requested that Lender make a loan to Borrower
in the amount of $21,930,000.00 (“Loan”). The Loan will be evidenced by one or more Multifamily Note(s) from
Borrower to Lender dated effective as of the effective date of this Guaranty (as amended, modified or supplemented from time to
time, and collectively if applicable, the “Note”). The Note will be secured by a Multifamily Mortgage, Deed
of Trust, or Deed to Secure Debt dated effective as of the effective date of the Note (as amended, modified or supplemented from
time to time, the “Security Instrument”), encumbering the Mortgaged Property described in the Loan Agreement.

 

		B.	As a condition to making the Loan to Borrower, Lender requires that Guarantor execute this Guaranty.

 

		C.	Guarantor has a direct or indirect ownership or other financial interest in Borrower and/or will
otherwise derive a material benefit from the making of the Loan.

 

AGREEMENT

 

NOW, THEREFORE, in
order to induce Lender to make the Loan to Borrower, and in consideration thereof and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Guarantor agrees as follows:

 

		1.	Defined Terms. The terms “Indebtedness”, “Loan Documents”, and “Property
Jurisdiction”, and other capitalized terms used but not defined in this Guaranty, will have the meanings assigned to them
in the Loan Agreement.

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		2.	Scope of Guaranty.

 

		(a)	Guarantor hereby absolutely, unconditionally and irrevocably guarantees to Lender each of the following:

 

		(i)	Guarantor guarantees the full and prompt payment when due, whether at the Maturity Date or earlier,
by reason of acceleration or otherwise, and at all times thereafter, of each of the following:

 

		(A)	Guarantor guarantees a portion of the Indebtedness (including interest at the Note rate) equal
to 0% of the original principal balance of the Note (“Base Guaranty”).

 

		(B)	In addition to the Base Guaranty, Guarantor guarantees all other amounts for which Borrower is
personally liable under Sections 9(c), 9(d) and 9(f) of the Note (provided, however, that Guarantor will have no liability
for failure of Borrower or SPE Equity Owner to comply with (I) Section 6.13(a)(xviii) of the Loan Agreement, and (II) the requirement
in Section 6.13(a)(x)(B) of the Loan Agreement as to payment of trade payables within 60 days of the date incurred).

 

		(C)	Guarantor guarantees all costs and expenses, including reasonable Attorneys’ Fees and Costs
incurred by Lender in enforcing its rights under this Guaranty.

 

		(ii)	Guarantor guarantees the full and prompt payment and performance of, and compliance with, all of
Borrower’s obligations under Sections 6.12, 10.02(b) and 10.02(d) of the Loan Agreement when due and the accuracy of Borrower’s
representations and warranties under Section 5.05 of the Loan Agreement.

 

		(iii)	Guarantor guarantees the full and prompt payment and performance of, and compliance with, Borrower’s
obligations under Section 6.09(e)(v) of the Loan Agreement to the extent Property Improvement Alterations have commenced and remain
uncompleted.

 

(iv)
through (vi)Reserved.

		(b)	If the Base Guaranty stated in Section 2(a)(i)(A) is 100% of the original principal balance
of the Note, then the following will be applicable:

 

    Guaranty - Multistate                                                                                                                                                                  Page 2

     

    

 

		(i)	The Base Guaranty will mean and include, and Guarantor hereby absolutely, unconditionally and irrevocably
guarantees to Lender, the full and complete prompt payment of the entire Indebtedness, the performance of and/or compliance with
all of Borrower’s obligations under the Loan Documents when due, and the accuracy of Borrower’s representations and
warranties contained in the Loan Documents.

 

		(ii)	For so long as the Base Guaranty remains in effect (there being no limit to the duration of the
Base Guaranty unless otherwise expressly provided in this Guaranty), the obligations guaranteed pursuant to Sections 2(a)(i)(B)
and 2(a)(i)(C) will be part of, and not in addition to or in limitation of, the Base Guaranty.

 

		(c)	If the Base Guaranty stated in Section 2(a)(i)(A) is less than 100% of the original principal
balance of the Note, then Section 2(b) will be completely inapplicable.

 

		(d)	If Guarantor is not liable for the entire Indebtedness, then all payments made by Borrower with
respect to the Indebtedness and all amounts received by Lender from the enforcement of its rights under the Loan Agreement and
the other Loan Documents (except this Guaranty) will be applied first to the portion of the Indebtedness for which neither Borrower
nor Guarantor has personal liability.

 

3.Additional
Guaranty Relating to Bankruptcy. 

 

		(a)	Notwithstanding any limitation on liability provided for elsewhere
in this Guaranty, Guarantor hereby absolutely, unconditionally and irrevocably guarantees to Lender the full and prompt payment
when due, whether at the Maturity Date or earlier, by reason of acceleration or otherwise, and at all times thereafter, the entire
Indebtedness, in the event that:

 

		(i)	Borrower or any SPE Equity Owner voluntarily files for bankruptcy protection under the Bankruptcy
Code.

 

		(ii)	Borrower or any SPE Equity Owner voluntarily becomes subject to any reorganization, receivership,
insolvency proceeding, or other similar proceeding pursuant to any other federal or state law affecting debtor and creditor rights.

 

		(iii)	The Mortgaged Property or any part of the Mortgaged Property becomes an asset in a voluntary bankruptcy
or becomes subject to any voluntary reorganization, receivership, insolvency proceeding, or other similar voluntary proceeding
pursuant to any other federal or state law affecting debtor and creditor rights.

 

    Guaranty - Multistate                                                                                                                                                                 Page 3

     

    

 

		(iv)	An order of relief is entered against Borrower or any SPE Equity Owner pursuant to the Bankruptcy
Code or other federal or state law affecting debtor and creditor rights in any involuntary bankruptcy proceeding initiated or joined
in by a Related Party.

 

		(v)	An involuntary bankruptcy or other involuntary insolvency proceeding is commenced against Borrower
or any SPE Equity Owner (by a party other than Lender) but only if Borrower or such SPE Equity Owner has failed to use commercially
reasonable efforts to dismiss such proceeding or has consented to such proceeding. “Commercially reasonable efforts”
will not require any direct or indirect interest holders in Borrower or any SPE Equity Owner to contribute or cause the contribution
of additional capital to Borrower or any SPE Equity Owner.

 

		(b)	For purposes of Section 3(a) the term “Related Party” will include all
of the following:

 

(i)       Borrower,
any Guarantor or any SPE Equity Owner.

 

		(ii)	Any Person that holds, directly or indirectly, any ownership interest (including any shareholder,
member or partner) in Borrower, any Guarantor or any SPE Equity Owner or any Person that has a right to manage Borrower, any Guarantor
or any SPE Equity Owner.

 

		(iii)	Any Person in which Borrower, any Guarantor or any SPE Equity Owner has any ownership interest
(direct or indirect) or right to manage.

 

		(iv)	Any Person in which any partner, shareholder or member of Borrower, any Guarantor or any SPE Equity
Owner has an ownership interest or right to manage.

 

		(v)	Any Person in which any Person holding an interest in Borrower, any Guarantor or any SPE Equity
Owner also has any ownership interest.

 

		(vi)	Any creditor (as defined in the Bankruptcy Code) of Borrower that is related by blood, marriage
or adoption to Borrower, any Guarantor or any SPE Equity Owner.

 

		(vii)	Any creditor (as defined in the Bankruptcy Code) of Borrower that is related to any partner, shareholder
or member of, or any other Person holding an interest in, Borrower, any Guarantor or any SPE Equity Owner.

 

    Guaranty - Multistate                                                                                                                                                                 Page 4

     

    

 

		(c)	If Borrower, any Guarantor, any SPE Equity Owner or any Related Party has solicited creditors to
initiate or participate in any proceeding referred to in Section 3(a), regardless of whether any of the creditors solicited
actually initiates or participates in the proceeding, then such proceeding will be considered as having been initiated by a Related
Party.

 

		4.	Guarantor’s Obligations Survive Foreclosure. The obligations of Guarantor under this
Guaranty will survive any foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any
release of record of the Security Instrument, and, in addition, the obligations of Guarantor relating to Borrower’s representations
and warranties under Section 5.05 of the Loan Agreement, and Borrower’s obligations under Sections 6.12 and 10.02(b)
of the Loan Agreement will survive any repayment or discharge of the Indebtedness. Notwithstanding the foregoing, if Lender has
never been a mortgagee-in-possession of or held title to the Mortgaged Property, Guarantor will have no obligation under this Guaranty
relating to Borrower’s representations and warranties under Section 5.05 of the Loan Agreement or Borrower’s obligations
relating to environmental matters under Sections 6.12 and 10.02(b) of the Loan Agreement after the date of the release of record
of the lien of the Security Instrument as a result of the payment in full of the Indebtedness on the Maturity Date or by voluntary
prepayment in full.

 

		5.	Guaranty of Payment and Performance. Guarantor’s obligations under this Guaranty constitute
an unconditional guaranty of payment and performance and not merely a guaranty of collection.

 

		6.	No Demand by Lender Necessary; Waivers by Guarantor. The obligations of Guarantor under
this Guaranty must be performed without demand by Lender and will be unconditional regardless of the genuineness, validity, regularity
or enforceability of the Note, the Loan Agreement, or any other Loan Document, and without regard to any other circumstance which
might otherwise constitute a legal or equitable discharge of a surety, a guarantor, a borrower or a mortgagor. Guarantor hereby
waives, to the fullest extent permitted by applicable law, all of the following:

 

		(a)	The benefit of all principles or provisions of law, statutory or otherwise, which are or might
be in conflict with the terms of this Guaranty and agrees that Guarantor’s obligations will not be affected by any circumstances,
whether or not referred to in this Guaranty, which might otherwise constitute a legal or equitable discharge of a surety, a guarantor,
a borrower or a mortgagor.

 

		(b)	The benefits of any right of discharge under any and all statutes or other laws relating to a guarantor,
a surety, a borrower or a mortgagor, and any other rights of a surety, a guarantor, a borrower or a mortgagor under such statutes
or laws.

 

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		(c)	Diligence in collecting the Indebtedness, presentment, demand for payment, protest, all notices
with respect to the Note and this Guaranty which may be required by statute, rule of law or otherwise to preserve Lender’s
rights against Guarantor under this Guaranty, including notice of acceptance, notice of any amendment of the Loan Documents, notice
of the occurrence of any default or Event of Default, notice of intent to accelerate, notice of acceleration, notice of dishonor,
notice of foreclosure, notice of protest, and notice of the incurring by Borrower of any obligation or indebtedness.

 

		(d)	All rights to cause a marshalling of the Borrower’s assets or to require Lender to do any
of the following:

 

		(i)	Proceed against Borrower or any other guarantor of Borrower’s payment or performance under
the Loan Documents (an “Other Guarantor”).

 

		(ii)	Proceed against any general partner of Borrower or any Other Guarantor if Borrower or any Other
Guarantor is a partnership.

 

		(iii)	Proceed against or exhaust any collateral held by Lender to secure the repayment of the Indebtedness.

 

		(iv)	Pursue any other remedy it may now or hereafter have against Borrower, or, if Borrower is a partnership,
any general partner of Borrower.

 

		(e)	Any right to object to the timing, manner or conduct of Lender’s enforcement of its rights
under any of the Loan Documents.

 

		(f)	Any right to revoke this Guaranty as to any future advances by Lender under the terms of the Loan
Agreement to protect Lender’s interest in the Mortgaged Property.

 

		7.	Modification of Loan Documents. At any time or from time to time and any number of times,
without notice to Guarantor and without affecting the liability of Guarantor, all of the following will apply:

 

		(a)	Lender may extend the time for payment of the principal of or interest on the Indebtedness or renew
the Indebtedness in whole or in part.

 

		(b)	Lender may extend the time for Borrower’s performance of or compliance with any covenant
or agreement contained in the Note, the Loan Agreement or any other Loan Document, whether presently existing or entered into after
the date of this Guaranty, or waive such performance or compliance.

 

    Guaranty - Multistate                                                                                                                                                               Page 6

     

    

 

		(c)	Lender may accelerate the Maturity Date of the Indebtedness as provided in the Note, the Loan Agreement,
or any other Loan Document.

 

		(d)	Lender and Borrower may modify or amend the Note, the Loan Agreement, or any other Loan Document
in any respect, including an increase in the principal amount.

 

		(e)	Lender may modify, exchange, surrender or otherwise deal with any security for the Indebtedness
or accept additional security that is pledged or mortgaged for the Indebtedness.

 

		8.	Joint and Several Liability. The obligations of Guarantor (and each party named as a Guarantor
in this Guaranty) and any Other Guarantor will be joint and several. Lender, in its sole and absolute discretion, may take any
of the following actions:

 

		(a)	Lender may bring suit against Guarantor, or any one or more of the parties named as a Guarantor
in this Guaranty, and any Other Guarantor, jointly and severally, or against any one or more of them.

 

		(b)	Lender may compromise or settle with Guarantor, any one or more of the parties named as a Guarantor
in this Guaranty, or any Other Guarantor, for such consideration as Lender may deem proper.

 

		(c)	Lender may release one or more of the parties named as a Guarantor in this Guaranty, or any Other
Guarantor, from liability.

 

		(d)	Lender may otherwise deal with Guarantor and any Other Guarantor, or any one or more of them, in
any manner.

 

No action
of Lender described in this Section 8 will affect or impair the rights of Lender to collect from any one or more of the parties
named as a Guarantor under this Guaranty any amount guaranteed by Guarantor under this Guaranty.

 

		9.	Limited Release of Guarantor Upon Transfer of Mortgaged Property. If Guarantor requests
a release of its liability under this Guaranty in connection with a Transfer which Lender has approved pursuant to Section 7.05(a)
of the Loan Agreement, and Borrower has provided a replacement Guarantor acceptable to Lender, then one of the following will apply:

 

    Guaranty - Multistate                                                                                                                                                                  Page 7

     

    

 

		(a)	If Borrower delivers to Lender a Clean Site Assessment, then Lender will release Guarantor from
all of Guarantor’s obligations except Guarantor’s obligation to guaranty Borrower’s liability under Section 6.12
(Environmental Hazards) or Section 10.02(b) (Environmental Indemnification) of the Loan Agreement with respect to any loss,
liability, damage, claim, cost or expense which directly or indirectly arises from or relates to any Prohibited Activities or Conditions
existing prior to the date of the Transfer.

 

		(b)	If Borrower does not deliver a Clean Site Assessment as described in Section 7.05(b)(i) of
the Loan Agreement, then Lender will release Guarantor from all of Guarantor’s obligations except for Guarantor’s obligation
to guaranty Borrower’s liability under Section 6.12 (Environmental Hazards) or Section 10.02(b)
(Environmental Indemnification) of the Loan Agreement.

 

		10.	Subordination of Borrower’s Indebtedness to Guarantor. Any indebtedness of Borrower
held by Guarantor now or in the future is and will be subordinated to the Indebtedness and Guarantor will collect, enforce and
receive any such indebtedness of Borrower as trustee for Lender, but without reducing or affecting in any manner the liability
of Guarantor under the other provisions of this Guaranty.

 

		11.	Waiver of Subrogation. Guarantor will have no right of, and hereby waives any claim for,
subrogation or reimbursement against Borrower or any general partner of Borrower by reason of any payment by Guarantor under this
Guaranty, whether such right or claim arises at law or in equity or under any contract or statute, until the Indebtedness has been
paid in full and there has expired the maximum possible period thereafter during which any payment made by Borrower to Lender with
respect to the Indebtedness could be deemed a preference under the United States Bankruptcy Code.

 

		12.	Preference. If any payment by Borrower is held to constitute a preference under any applicable
bankruptcy, insolvency, or similar laws, or if for any other reason Lender is required to refund any sums to Borrower, such refund
will not constitute a release of any liability of Guarantor under this Guaranty. It is the intention of Lender and Guarantor that
Guarantor’s obligations under this Guaranty will not be discharged except by Guarantor’s performance of such obligations
and then only to the extent of such performance.

 

		13.	Financial Information and Litigation. Guarantor will deliver each of the following to Lender
within 10 Business Days following a Notice from Lender requesting such information:

 

		(a)	Guarantor’s balance sheet and profit and loss statement as of the end of (A) the quarter
that ended at least 30 days prior to the due date of the requested items, and/or (B) the fiscal year that ended at least
90 days prior to the due date of the requested items.

 

    Guaranty - Multistate                                                                                                                                                            Page 8

     

    

 

(b)       Other
Guarantor financial statements as Lender may reasonably require.

 

		(c)	Written updates on the status of all litigation proceedings that Guarantor disclosed or should
have disclosed to Lender as of the date of this Guaranty.

 

		(d)	If an Event of Default has occurred and is continuing, copies of Guarantor’s most recent
filed state and federal tax returns, including any current tax return extensions.

 

		14.	Assignment. Lender may assign its rights under this Guaranty in whole or in part and upon
any such assignment, all the terms and provisions of this Guaranty will inure to the benefit of such assignee to the extent so
assigned. The terms used to designate any of the parties in this Guaranty will be deemed to include the heirs, legal representatives,
successors and assigns of such parties, and the term “Lender” will also include any lawful owner, holder or pledgee
of the Note.

 

		15.	Complete and Final Agreement. This Guaranty and the other Loan Documents represent the final
agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements.
There are no unwritten oral agreements between the parties. All prior or contemporaneous agreements, understandings, representations,
and statements, oral or written, are merged into this Guaranty and the other Loan Documents. Guarantor acknowledges that Guarantor
has received a copy of the Note and all other Loan Documents. Neither this Guaranty nor any of its provisions may be waived, modified,
amended, discharged, or terminated except by a writing signed by the party against which the enforcement of the waiver, modification,
amendment, discharge, or termination is sought, and then only to the extent set forth in that writing.

 

		16.	Governing Law. This Guaranty will be governed by and enforced in accordance with the laws
of the Property Jurisdiction, without giving effect to the choice of law principles of the Property Jurisdiction that would require
the application of the laws of a jurisdiction other than the Property Jurisdiction.

 

		17.	Jurisdiction; Venue. Guarantor agrees that any controversy arising under or in relation
to this Guaranty may be litigated in the Property Jurisdiction, and that the state and federal courts and authorities with jurisdiction
in the Property Jurisdiction will have jurisdiction over all controversies which may arise under or in relation to this Guaranty.
Guarantor irrevocably consents to service, jurisdiction and venue of such courts for any such litigation and waives any other venue
to which it might be entitled by virtue of domicile, habitual residence or otherwise. However, nothing in this Guaranty is intended
to limit Lender’s right to bring any suit, action or proceeding relating to matters arising under this Guaranty against Guarantor
or any of Guarantor’s assets in any court of any other jurisdiction.

 

    Guaranty - Multistate                                                                                                                                                               Page 9

     

    

 

		18.	Guarantor’s Interest in Borrower. Guarantor represents to Lender that Guarantor has
a direct or indirect ownership or other financial interest in Borrower and/or will otherwise derive a material financial benefit
from the making of the Loan.

 

		19.	Reserved.

 

		20.	Reserved.

 

		21.	Reserved.

 

		22.	Reserved.

 

		23.	Reserved.

 

24.       Reserved.

 

		25.	State-Specific Provisions. State-specific provisions, if any, are included on Schedule 1
to this Guaranty.

 

		26.	Community Property. If Guarantor (or any Guarantor, if more than one) is a married person,
and the state of residence of Guarantor or his or her spouse (“Guarantor Spouse”) is a community property jurisdiction,
then each of the following apply:

 

		(a)	Guarantor (or each such married Guarantor, if more than one) agrees that Lender may satisfy Guarantor’s
obligations under this Guaranty to the extent of all of Guarantor’s separate property and against the marital community property
of Guarantor and Guarantor Spouse.

 

		(b)	If Guarantor Spouse is not also a Guarantor of the Loan, Guarantor certifies that none of the assets
shown on his or her financial statements submitted to Lender for purposes of underwriting the Loan were either (i) Guarantor Spouse’s
individual property, or (ii) community property under the sole management, control, and disposition of Guarantor Spouse.

 

		(c)	If Guarantor or Guarantor Spouse resides in Alaska, Arizona, Idaho, Louisiana, Nevada, New Mexico,
Washington or Wisconsin, Guarantor has caused Guarantor Spouse to acknowledge this Guaranty as required on the signature page of
this Guaranty.

 

		27.	WAIVER OF TRIAL BY JURY. 

 

		(a)	GUARANTOR AND LENDER EACH COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO
ANY ISSUE ARISING OUT OF THIS GUARANTY OR THE RELATIONSHIP BETWEEN THE PARTIES AS GUARANTOR AND LENDER THAT IS TRIABLE OF RIGHT
BY A JURY. 

    Guaranty - Multistate                                                                                                                                                              Page 10

     

    

 

		(b)	GUARANTOR AND LENDER EACH WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT
THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY
AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

 

		28.	Notices.  All Notices required under this Guaranty will be provided in accordance with
the requirements of Section 11.03 of the Loan Agreement. Guarantor’s address for Notices is as set forth on the signature
page of this Guaranty unless changed in accordance with this Section 28.

 

		29.	Attached Schedules and Riders. The following Schedules and Riders, if marked with an “X”
in the space provided, are attached to this Guaranty:

 

	X	 	Schedule 1 – State Specific Provisions
	 	 	 
	 	 	Material Adverse Change Rider
	 	 	 
	 	 	Minimum Net Worth/Liquidity Rider
	 	 	 
	 	 	Other:  
	 	 	 

 

		30.	Attached Exhibit. The following Exhibit, if marked with an “X” in the space
provided, is attached to this Guaranty:

 

	 	 	Exhibit A	Modifications to Guaranty

 

IN WITNESS WHEREOF, Guarantor has signed and
delivered this Guaranty under seal or has caused this Guaranty to be signed and delivered under seal by its duly authorized representative.
Where applicable law provides, Guarantor intends that this Guaranty will be deemed to be signed and delivered as a sealed instrument.

 

 

(Remainder of page
intentionally left blank; signature pages follow.)

 

    Guaranty - Multistate                                                                                                                                                              Page 11

     

    

 

	 	 	
        GUARANTOR:

         

        Inland
        Residential Properties Trust, Inc.,

        a Maryland corporation, its general partner

	 	 	 	 
	 	 	By:	/s/ David Z. Lichterman
	 	 	 	
        David Z. Lichterman

        Chief Accounting Officer, Treasurer

        and Vice President

 

    Guaranty - Multistate                                                                                                                                                                Page 12

     

    

		(a)	Guarantor’s Notice Address:

 

Name:Inland Residential Properties Trust, Inc.

		Address:	2901 Butterfield Road

Oak Brook, Illinois 60523

 

		(b)	Guarantor represents and warrants that Guarantor is:

 

[____] married

[____] single

[ X ] an entity

 

		(c)	If Guarantor is married, then Guarantor represents and warrants that
Guarantor’s state of residence is    N/A    and Guarantor Spouse’s state of residence
is    N/A   .

 

		(d)	If Guarantor (i) is married, and (ii) Guarantor Spouse is not also a Guarantor of this Loan, and
(iii) Guarantor or Guarantor Spouse’s state of residence is Alaska, Arizona, Idaho, Louisiana, Nevada, New Mexico, Washington,
or Wisconsin, then Guarantor must cause Guarantor Spouse to sign below in accordance with Section 26 of this Guaranty.

 

Any person
signing this Guaranty solely as a Guarantor Spouse will bind only Guarantor Spouse’s marital community property and will
not bind Guarantor Spouse’s separate property to the payment and performance of the Guarantor’s obligations under this
Guaranty.

 

Guarantor
Spouse’s Signature: N/A          

 

Guarantor
Spouse’s Printed Name:N/A          

 

Guarantor
Spouse’s Address:N/A          

 

 

 

 

    Guaranty - Multistate                                                                                                                                                             Page 13

     

    

SCHEDULE 1

 

STATE SPECIFIC PROVISIONS

 

 

	Alabama	
        None

         

 

 

Guaranty
- Multistate                                                                                                                                                 Schedule
1 - Page 1Exhibit 10.1

 

AMENDED AND RESTATED
  SEVERANCE AND CHANGE IN CONTROL AGREEMENT

 

This Amended and Restated Severance and Change in Control Agreement (“Agreement”) is made and entered into as of the 11th day of October, 2017, by and between AAR CORP., a Delaware corporation (the “Company”), and Robert J. Regan (“Employee”).

 

WHEREAS, the Company currently employs Employee as an employee at will in the capacity of Vice President, General Counsel and Secretary;

 

WHEREAS, the Company and Employee are parties to a Severance and Change in Control Agreement dated as of July 9, 2008, which was further amended as of December 18, 2008 and October 6, 2015 (the “Prior Agreement”); and

 

WHEREAS, the Company and Employee desire to further amend and restate the Prior Agreement in its entirety as herein set forth to reflect certain mutually agreed changes to the terms and conditions thereof.

 

NOW, THEREFORE, in consideration of the mutual agreements herein set forth and other good and valuable consideration, the parties hereto agree as follows:

 

1.                                      Employment.  Employee will continue employment with the Company as an at-will employee subject to the terms and conditions hereinafter set forth.

 

2.                                      Duties.  During the continuation of Employee’s employment, Employee shall:

 

(a)                                 Well and faithfully serve the Company and do and perform assigned duties and responsibilities in the ordinary course of Employee’s employment and the business of the Company (within such limits as the Company may from time to time prescribe), professionally, faithfully and diligently.

 

(b)                                 Devote Employee’s full time, energy and skill to the business of the Company and Employee’s assigned duties and responsibilities, and to the promotion of the best interests of the Company; provided that Employee shall not (to the extent not inconsistent with Section 5 below) be prevented from (a) serving as a director of any corporation consented to in advance in writing by the Company, (b) engaging in charitable, religious, civic or other non-profit community activities, or (c) investing his personal assets in such form or manner as will not require any substantial services on Employee’s part in the operation or affairs of the business in which such investments are made or which would detract from or interfere or cause a conflict of interest with performance of Employee’s duties hereunder.

 

(c)                                  Observe all policies and procedures of the Company in effect from time to time applicable to employees of the Company including, without limitation, policies with respect to employee loyalty and prohibited conflicts of interest.

 

3.                                      Benefits.  Employee shall be entitled to participate, according to the eligibility provisions of each, in such welfare plans (including but not limited to medical, dental, life, accident and disability insurance programs), vacation, retirement plans and other fringe benefits as may be in effect from time to time and available to other officers of the Company during Employee’s employment term.  Employee shall also be entitled to participate in such additional executive fringe benefits as may be authorized from time to time by the President and Chief Executive Officer of the Company.  Employee shall be eligible to participate in the Company’s Supplemental Key Employee Retirement Plan (the “SKERP”) as an executive level participant.

 

1

 

4.                                      Confidential Information, Assignment of Inventions.

 

(a)                                 Employee acknowledges that the trade secrets, confidential information, secret processes and know-how developed and acquired by AAR CORP. and its affiliates or subsidiaries (together the “Affiliated Companies”) are among their most valuable assets and that the value of such information may be destroyed by unauthorized disclosure.  All such trade secrets, confidential information, secret processes and know-how imparted to or learned by Employee in the course of his employment with respect to the business of the Affiliated Companies (whether acquired before or after the date hereof) will be deemed to be confidential and will not be used or disclosed by Employee, except to the extent necessary to perform Employee’s duties and, in no event, disclosed to anyone outside the employ of the Affiliated Companies and their authorized consultants and advisors, unless (i) such information is or has been made generally available to the public, (ii) disclosure of such information is required by law in the opinion of Employee’s counsel (provided that written notice thereof is given to Company as soon as possible but not less than 24 hours prior to such disclosure), or (iii) express written authorization to use or disclose such information has been given by the Company.  If Employee ceases to be employed by the Company for any reason, Employee shall not take any electronically stored data, documents or other papers containing or reflecting trade secrets, confidential information, secret processes, know-how, or computer software programs from Company.  Employee acknowledges that Employee’s employment hereunder will place Employee in a position of utmost confidence and that Employee will have access to confidential information concerning the operation of the business of the Affiliated Companies, including, but not limited to, manufacturing methods, developments, secret processes, know-how, computer software programs, costs, prices and pricing methods, sources of supply and customer names and relations.  All such information is in the nature of a trade secret and is the sole and exclusive property of the Affiliated Companies and shall be deemed confidential information for the purposes of this paragraph.  Nothing herein shall prohibit Employee from (i) reporting a suspected violation of law to any governmental or regulatory agency and cooperating with such agency, or from receiving a monetary recovery for information provided to such agency, (ii) testifying truthfully under oath pursuant to subpoena or other legal process or (iii) making disclosures that are otherwise protected under applicable law or regulation.  However, if Employee is required by subpoena or other legal process to disclose confidential information, Employee first shall notify the Company promptly upon receipt of the subpoena or other notice, unless otherwise required by law.

 

(b)                                 Employee hereby assigns to the Company all rights that Employee may have as author, designer, inventor or otherwise as creator of any written or graphic material, design, invention, improvement, or any other idea or thing whatever that Employee may write, draw, design, conceive, perfect, or reduce to practice during employment with the Company or within 120 days after termination of such employment, whether done during or outside of normal work hours, and whether done alone or in conjunction with others (“Intellectual Property”), provided, however, that Employee reserves all rights in anything done or developed entirely by Employee on Employee’s own personal time and without the use of any Company equipment, supplies, facilities or information, or the participation of any other Company employee, unless it relates to the Company’s business or reasonably anticipated business, or grows out of any work performed by Employee for the Company.  Employee will promptly disclose all such Intellectual Property developed by Employee to the Company, and fully cooperate at the Company’s request and expense in any efforts by the Company or its assignees to secure protection for such Intellectual Property by way of domestic or foreign patent, copyright, trademark or service mark registration or otherwise, including executing specific assignments or such other documents or taking such

 

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further action as may be considered necessary to vest title in Company or its assignees and obtain patents or copyrights in any and all countries.

 

5.                                      Non-Compete; Severance.

 

(a)                                 Employee agrees that during Employee’s continuation of employment with the Company and for one (1) year thereafter so long as the Company makes severance payments to Employee pursuant to subsections 5(b) or 5(c) below, Employee shall not, without the express written consent of the Company, either alone or as a consultant to, or partner, employee, officer, director, or stockholder of any organization, entity or business, (i) take or convert for Employee’s personal gain or benefit or for the benefit of any third party, any business opportunities which may be of interest to the Company or any Affiliated Company which Employee becomes aware of during the term of his employment; (ii) engage in direct or indirect competition with the Company or any Affiliated Company within 100 miles of any location within the United States of America or any other country where the Company or any Affiliated Company does business from time to time during the term hereof; (iii) solicit in connection with any activity which is competitive with any of the businesses of the Company or any Affiliated Company, any customers of the Company or any Affiliated Company; (iv) solicit for employment any sales, marketing or management employee of Company or any Affiliated Company or induce or attempt to induce any customer or supplier of the Company or any Affiliated Company to terminate or materially change such relationship.  Company and Employee acknowledge the reasonableness of the foregoing covenants not to compete and non-solicitation, including but not limited to the geographic area and duration of time which are a part hereof, and further, that the restrictions stated in this Section 5 are reasonably necessary for the protection of Employer’s legitimate proprietary interests.  This covenant not to compete may be enforced with respect to any geographic area in which the Company or any Affiliated Company does business during the term hereof.  Nothing herein shall prohibit Employee from being the legal or equitable holder, solely for investment purposes, of less than 5% of the capital stock of any publicly held corporation which may be in direct or indirect competition with the Company or any Affiliated Company.

 

(b)                                 The Company will pay Employee, upon termination of Employee’s employment by the Company prior to a Change in Control (as defined in 7(c)(i) below) for any reason other than Cause (as defined in 7(c)(iv) below), severance each month for 12 months, in an amount (subject to applicable withholding) equal to 1/12 of Employee’s then current base salary; and further, if the Company pays discretionary bonuses to its officers for the fiscal year in which Employee’s employment is terminated, Employee will be paid a bonus in a lump sum at the time any such bonuses are paid to other officers or at such time as the severance period is complete, whichever is later (with interest at prime rate plus one percentage point from the earlier of such dates), for the completed fiscal year preceding termination if such bonus has not been paid prior to termination, and for the fiscal year in which employment is terminated, prorata for the period prior to termination of employment based on Employee’s performance during such period; provided, however, that all such monthly payment obligations shall terminate immediately upon Employee obtaining full time employment in a comparable position in terms of salary level, and all such payment obligations shall terminate or lapse immediately upon any breach by Employee of Section 4 or 5(a) of this Agreement.

 

(c)                                  If Employee terminates Employee’s employment or Employee’s employment is terminated by the Company for Cause (as defined below), the Company may elect (but is not required to), by written notice thereof to Employee, within five (5) days of any such termination of Employee’s employment with the Company prior to a

 

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Change in Control (as defined below), to pay Employee severance as provided in and subject to the provisions of subsection 5(b) above.

 

(d)                                 Employee may terminate this Severance and Change in Control Agreement effective immediately upon notice thereof in writing to Company at any time while still employed within a sixty (60) calendar day period immediately following the effective date of any reduction by Company in (i) Employee’s level of responsibility or position from that held by Employee on the effective date of this Agreement, or (ii) Employee’s level of compensation, including retirement benefits in effect immediately prior to any such change.

 

(e)                                  The Employee acknowledges and agrees that the Company would be irreparably harmed by violations of Section 4 or Section 5(a) above, and in recognition thereof, the Company shall be entitled to an injunction or other decree of specific performance with respect to any violation thereof (without any bond or other security being required) in addition to other available legal and equitable remedies.

 

6.                                      Termination of Employment.  Upon and after termination of employment howsoever arising, Employee shall, upon request by Company:

 

(a)                                 immediately return to the Company all correspondence, documents, business calendars/diaries, or other property belonging to the Company which is in Employee’s possession;

 

(b)                                 immediately resign from any office Employee holds with the Company or any Affiliated Company; and

 

(c)                                  cooperate fully and in good faith with the Company in the resolution of all matters Employee worked on or was involved in during Employee’s employment with the Company.  Employee’s cooperation will include reasonable consultation by telephone.  Further, in connection therewith, Employee will, at Company’s request upon reasonable advance notice and subject to Employee’s availability, make Employee available to Company in person at Company’s premises, for testimony in court, or elsewhere; provided, however, that in such event, Company shall reimburse all Employee’s reasonable expenses and pay Employee a reasonable per diem or hourly stipend.

 

7.                                      Change in Control.

 

(a)                                 In the event a Change in Control of the Company occurs, and at any time during the eighteen (18) month period commencing on the date of the Change in Control either the Company terminates Employee’s employment for other than Cause or Disability, or Employee terminates Employee’s employment for Good Reason, in either case by written notice to the other party (including the particulars thereof), and having given the other party the opportunity to be heard with respect thereto, then:

 

(i)            The Company shall, within thirty (30) days following such termination of employment, pay to Employee, in a lump sum, a cash payment in an amount equal to the sum of (A) all base salary earned through the date of termination, (B) any annual cash bonus earned by Employee for the fiscal year of the Company most recently ended prior to the date of termination to the extend unpaid on the date of termination, (C) a prorata portion of the annual cash bonus, including the value of any restricted stock grant in lieu of annual cash bonus, Employee would have earned had Employee been employed by the

 

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Company on the last day of the fiscal year in which the date of termination occurs (as if all performance goals have been met at target level or, in the event the bonus is of the “discretionary” type, the bonus shall be based on a percentage of base salary which is not less than percentage of base salary received as bonus for the preceding fiscal year) that is applicable to the period commencing on the first day of such fiscal year and ending on the date of termination, and (D) any and all other benefits and amounts earned by Employee prior to the date of termination to the extent unpaid, all subject to applicable withholding.

 

(ii)           The Company shall, within thirty (30) days following such termination of employment, pay to Employee in a lump sum, a cash payment in an amount equal to two times Employee’s total compensation (base salary plus annual cash bonus) for either the fiscal year of the Company most recently ended prior to the date of termination, or the preceding fiscal year, whichever is the highest total compensation, subject to applicable withholding.

 

(iii)          Employee and Employee’s dependents shall continue to be covered by, and receive employee welfare and executive fringe benefits (including but not limited to medical, dental, life, accident and disability insurance available to officers of the Company and additional executive retirement and other fringe benefits approved by the President and CEO of the Company) in accordance with the terms of the Company’s benefit plans and executive fringe benefit programs, for two (2) years following the date of termination, and at no less than the levels Employee and Employee’s dependents were receiving immediately prior to the Change in Control.  Employee’s dependents shall be entitled to continued benefits coverage pursuant to the preceding sentence for the balance of such two (2) year period in the event of Employee’s death during such period.  The period during which Employee and Employee’s dependents are entitled to continuation of group health plan coverage pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended, and Part 6 of Title I of the Employee Retirement Income Security Act of 1974, as amended, shall commence on the date next following the expiration of the aforementioned two (2) year period.

 

(iv)          Notwithstanding any conditions or restrictions related to any Award granted to Employee under the AAR CORP. Stock Benefit Plan or the AAR CORP. 2013 Stock Plan (or successor plan), (A) all performance opportunity restricted stock shares and units eligible for award hereunder shall be immediately awarded based on the higher of target or actual performance through the employment termination date using the latest data then available to determine goals applicable for the partial performance period, and all restrictions thereon shall be immediately released, and (B) all outstanding option grants, stock appreciation rights, restricted stock and restricted stock units granted or awarded under the Plan which have not then become vested or exercisable or which remain restricted, shall immediately become vested or exercisable and restrictions will lapse, as the case may be, and any such options shall remain exercisable for the full remaining life of the option(s).

 

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(v)           The Company, at its expense, shall provide Employee with outplacement services of a nationally recognized outplacement firm of the Employee’s choosing until the earlier of (A) the Employee’s attainment of employment, or (B) the date eighteen (18) months from the date of Employee’s termination of employment; provided, however, that the cost of such outplacement services shall not exceed 3.5% of the cash payment due to Employee pursuant to subsection 7(a)(ii) above.

 

The amounts paid to Employee under this Change in Control provision applicable to Employee shall be considered severance pay in consideration of past service Employee has rendered to the Company and in consideration of Employee’s continued service from the date hereof to entitlement of those payments.

 

(b)                                 In the event that a Change in Control occurs, the Company will continue to provide SKERP retirement benefits to Employee and Employee’s spouse at no less than the level they are receiving or entitled to receive under the SKERP as it was in effect immediately prior to the Change in Control.

 

(c)                                  For purposes of this Agreement:

 

(i)            “Change in Control” means the earliest of:

 

(A)          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; or

 

(B)          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

 

(C)          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 (3) directors, or (II) directors constituting a majority of the number of directors of the Company then in office.

 

(ii)           “Good Reason” means:

 

(A)          a material reduction in the nature or scope of Employee’s duties, responsibilities, authority, power or functions from those enjoyed by Employee immediately prior to the Change in Control, or a material reduction in Employee’s compensation (including benefits), occurring after the Change in Control; or

 

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(B)                               if the incumbent in the position of CEO of the Company on August 8, 1997 is not the CEO of the Company at the time of termination, a good faith determination by Employee that as the result of a Change in Control and a material change in employment circumstances at any time after the Change in Control, Employee is unable to carry out Employee’s assigned duties and responsibilities in a manner consistent with the practices, standards, values or philosophy of the Company immediately prior to the Change in Control; or

 

(C)          a relocation of the primary place of employment of at least 50 miles.

 

(iii)          “Disability” means a physical or mental condition which has prevented Employee from substantially performing Employee’s assigned duties for a period of 180 consecutive days and which is expected to continue to render Employee unable to substantially perform Employee’s duties on a full-time basis and otherwise meets the benefit eligibility requirements of the Company’s Long Term Disability Welfare Benefit Plan or any executive program in which Employee was a participant at the time of a Change in Control.  The Company will make reasonable accommodation for any disability of Employee as may be required by applicable law.  In the event of termination by the Company for Disability after a Change in Control, a good faith determination of the existence of a Disability shall be made by resolution of the Compensation Committee of the Board of Directors of the Company, in its sole discretion, setting forth the particulars of the Disability which shall be final and binding upon the Employee.  The Company may require the submission of such medical evidence as to the condition of the Employee as it may deem necessary in order to arrive at its determination of the occurrence of a Disability, and Employee will cooperate in providing any such information.  Employee will be provided with reasonable opportunity to present additional medical evidence as to the medical condition of Employee for consideration prior to the Board making its determination of the occurrence of a Disability.  Upon termination of Employment by Company for Disability after a Change in Control, Employee will receive Disability payments pursuant to the Company’s short and long term Disability welfare benefit plans then in effect according to the terms of such plans and  continue to be eligible to participate in the Company’s medical, dental and life insurance programs then in effect and available to officers of the Company in accordance with their terms for a period of three (3) years from the date of such termination of this Agreement.

 

(iv)          “Cause” means:

 

(A)                               Employee engages, during the performance of Employee’s duties hereunder, in acts or omissions constituting dishonesty, intentional breach of fiduciary obligation or intentional wrongdoing or malfeasance;

 

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(B)                               Employee intentionally disobeys or disregards a lawful and proper direction of the Board or the Company; or

 

(C)                               Employee materially breaches the Agreement and such breach by its nature, is incapable of being cured, or such breach remains uncured for more than ten (10) days following receipt by Employee of written notice from the Company specifying the nature of the breach and demanding the cure thereof.  For purposes of this clause (C), a material breach of the Agreement that involves inattention by Employee to Employee’s duties under the Agreement shall be deemed a breach capable of cure.

 

Without limiting the generality of the foregoing, the following shall not constitute Cause for the termination of employment of Employee or the modification or diminution of any of Employee’s authority hereunder:

 

(X)                               any personal or policy disagreement between Employee and the Company or any member of the Board;

 

(Y)                               any action taken by Employee in connection with Employee’s duties hereunder, or any failure to act, if Employee acted or failed to act in good faith and in a manner Employee reasonably believed to be in and not opposed to the best interest of the Company and Employee had no reasonable cause to believe Employee’s conduct was unlawful; or

 

(Z)                                termination of Employee’s employment for overall unsatisfactory performance (including, but not limited to, failure to meet financial goals).

 

Termination for Cause shall be limited to a good faith finding by resolution of the Compensation Committee of the Board, setting forth the particulars thereof.  Any such action shall be taken at a regular or specially called meeting of the Compensation Committee of the Board, after a minimum ten (10) days notice thereof to Employee, with termination of Employee’s employment with the Company for Cause listed as an agenda item.  Employee will be given a reasonable opportunity to be heard at such meeting with counsel present if Employee desires.  Any such resolution shall be final and binding.

 

Upon termination of employment by Company for Cause, no further compensation or benefits shall accrue or be payable to Employee by the Company, except for any compensation, bonus or other benefits which have accrued to Employee prior to the date of any such termination.

 

Nothing herein shall be construed to prevent the Company from terminating Employee’s employment at any time for any reason or for no reason.

 

(d)                                 The Company will pay reasonable legal/attorney’s fees (including court costs and other costs of litigation) incurred by Employee in connection with enforcement of any right or benefit under this Agreement.

 

(e)                                  If in connection with the Change in Control or other event Employee would be or is subject to an excise tax under Section 4999 of the Internal Revenue Code (an “Excise Tax”) with respect to any cash, benefits or other property received, or any acceleration of vesting of any benefit or award (the “Change in Control Benefits”),

 

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Employee may elect to have the Change in Control Benefits otherwise payable under this Agreement reduced to the largest amount payable without resulting in the imposition of such Excise Tax.  Within 15 days after the occurrence of the event that triggers the Excise Tax, a nationally recognized accounting firm selected by the Company shall make a determination as to whether any Excise Tax would be reported with respect to the Change in Control Benefits and, if so, the amount of the Excise Tax, the total net after-tax amount of the Change in Control Benefits (after taking into account federal, state and local income and employment taxes and the Excise Tax) and the amount of reduction to the Change in Control Benefits necessary to avoid such Excise Tax.  Any reduction to the Change in Control Benefits shall first be made from any cash benefits payable pursuant to this Agreement, if any, and thereafter, as determined by Employee, and the Company shall provide Employee with such information as is necessary to make such determination. The Company shall be responsible for all fees and expenses connected with the determinations by the accounting firm pursuant to this Section 10(e). Employee agrees to notify the Company in the event of any audit or other proceeding by the IRS or any taxing authority in which the IRS or other taxing authority asserts that any Excise Tax should be assessed against Employee and to cooperate with the Company in contesting any such proposed assessment with respect to such Excise Tax (a “Proposed Assessment”). Employee agrees not to settle any Proposed Assessment without the consent of the Company.  If the Company does not consent to allow Employee to settle the Proposed Assessment, within 30 days following such demand therefor, the Company shall indemnify and hold harmless Employee with respect to any additional taxes, interest and/or penalties that Employee is required to pay by reason of the delay in finally resolving Employee’s tax liability (such indemnification to be made as soon as practicable, but in no event later than the end of the calendar year following the calendar year in which Employee makes such remittance).

 

8.                                      Changes in Business.  The Company, acting through its Board of Directors, will at all times have complete control over the Company’s business and retirement and other employee health and welfare benefit plans (“Plans”).  Without limiting the generality of the foregoing, the Company may at any time or times change or discontinue any or all of its present or future operations or Plans (subject to their terms), may close or move any one or more of its divisions or offices, may undertake any new servicing or sales operation, may sell any one or more of its divisions or offices to any company not controlled, directly or indirectly, by the Company or may take any and all other steps which its Board of Directors, in its exclusive judgment, shall deem desirable, and Employee shall have no claim or recourse against the Company, its officers, directors or employees by reason of such action except for enforcement of the provisions of Sections 5 and 7 of this Agreement.

 

9.                                      Severance Payment as Sole Obligation.  Except as expressly provided in Sections 5 and 7 above, no further compensation, payments, liabilities or benefits shall accrue or be payable to Employee upon or as a result of termination of Employee’s employment for any reason whatsoever except for any compensation, bonus or other benefits which accrued to Employee prior to the date of employment termination.

 

The amounts paid to the Employee under Section 5 and 7 of this Agreement shall be considered severance pay in consideration of past services Employee has rendered to the Company and in consideration of Employee’s continued service from the date hereof to entitlement to those payments.

 

10.                               Notices.  Any notice or other instrument or thing required or permitted to be given, served or delivered to any of the parties hereto shall be delivered personally, or via United States mail, overnight delivery or facsimile transmission to the addresses listed below:

 

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(a)                                 If to the Company, to:

AAR CORP.

1100 N. Wood Dale Road

Wood Dale, Illinois   60191

Attention:  Chairman

 

With a copy to:

AAR CORP.

1100 N. Wood Dale Road

Wood Dale, Illinois   60191

Attention:  General Counsel

 

(b)                                 If to Employee, to:

Robert J. Regan

9549 Monticello Avenue

Evanston, Illinois 60203

 

or to such other address as either party may from time to time designate by notice to the other.  Each notice shall be effective when such notice and any required copy are delivered to the applicable address.

 

11.                               Non-Assignment.

 

(a)           The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of Employee, and any attempted unpermitted assignment shall be null and void and without further effect; provided, however, that, upon the sale or transfer of all or substantially all of the assets of the Company, or upon the merger by the Company into or the combination with another corporation or other business entity, or upon the liquidation or dissolution of the Company, this Agreement will inure to the benefit of and be binding upon the person, firm or corporation purchasing such assets, or the corporation surviving such merger or consolidation, or the shareholder effecting such liquidation or dissolution, as the case may be.  After any such transaction, the term Company in this Agreement shall refer to the entity which conducts the business now conducted by the Company.  The provisions of this Agreement shall be binding upon and inure to the benefit of the estate and beneficiaries of Employee and upon and to the benefit of the permitted successors and assigns of the parties hereto.

 

(b)           The Employee agrees on behalf of Employee, Employee’s heirs, executors and administrators, and any other person or person claiming any benefit under Employee by virtue of this Agreement, that this Agreement and all rights, interests and benefits hereunder shall not be assigned, transferred, pledged or hypothecated in any way by the Employee or by any beneficiary, heir, executor, administrator or other person claiming under the Employee by virtue of this Agreement and shall not be subject to execution, attachment or similar process.  Any attempted assigned, transfer, pledge or hypothecation or any other disposition of this Agreement or of such rights, interests and benefits contrary to the foregoing provisions or the levy or any execution, attachment or similar process thereon shall be null and void and without further effect.

 

12.                               Severability.  If any term, clause or provision contained herein is declared or held invalid by any court of competent jurisdiction, such declaration or holding shall not affect the validity of any other term, clause or provision herein contained.

 

13.                               Construction.  Careful scrutiny has been given to this Agreement by the Company, Employee, and their respective legal counsel.  Accordingly, the rule of construction that the ambiguities of the contract shall be resolved against the party which caused the contract to be drafted shall have no application in the construction or interpretation of this Agreement or any clause or provision hereof.

 

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14.                               Entire Agreement. This Agreement as amended and restated herein and the other agreements referred to herein set forth the entire understanding of the parties and supersede all prior agreements, arrangements and communications, whether oral or written, pertaining to the subject matter hereof.

 

15.                               Waiver.  No provision of this Agreement may be amended, modified, waived or discharged unless such amendment, modification, waiver or discharge is agreed to in writing signed by Employee and an authorized officer of the Company.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

 

16.                               Governing Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without regard to its conflicts of law principles.

 

17.                               Execution.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and which shall constitute but one and the same Agreement.

 

18.                               Provisions Regarding Code §409A.

 

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

 

(b)           Reimbursements or in-kind benefits provided under this Agreement that are subject to Section 409A of the Internal Revenue Code are subject to the following restrictions:  (i) the amount of expenses eligible for reimbursements, or in-kind benefits provided, to Employee during a calendar year shall not affect the expenses eligible for reimbursement or the in-kind benefits provided in any other calendar year, and (ii) reimbursement of an eligible expense shall be made as soon as practicable, but in no event later than the last day of the calendar year following the calendar year in which the expense was incurred.

 

(c)           Employee’s right to receive installment payments pursuant to this Agreement shall be treated as the right to receive a series of separate and distinct payments.

 

WITNESS the due execution of this Agreement by the parties hereto as of the day and year first above written.

 

	
Employer:
    	
 
    
	
 
    	
 
    
	
AAR CORP.
    	
 
    
	
 
    	
 
    
	
/s/DAVID   P. STORCH
    	
 
    
	
By:   David P. Storch
    	
 
    
	
Title:   Chairman and Chief Executive Officer
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Employee:
    	
 
    
	
 
    	
 
    
	
/s/ROBERT   J. REGAN
    	
 
    
	
Robert   J. Regan
    	
 
    

 

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