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                              SEVENTH AMENDMENT TO

                          AAR CORP. STOCK BENEFIT PLAN

         WHEREAS, AAR CORP. (the "Company") adopted the AAR CORP. Stock Benefit
Plan (the "Plan") on July 16, 1992, amended the Plan by a First Amendment dated
July 29, 1996, a Second Amendment dated January 2, 1997, a Third Amendment dated
May 6, 1997, a Fourth Amendment dated March 20, 1998, a Fifth Amendment dated
July 14, 1998, and a Sixth Amendment dated December 16, 1999, and reserved the
right to further amend the Plan; and

         WHEREAS, the Company deems it appropriate to further amend the Plan as
described below, effective October 11, 2000, and such amendment was duly adopted
by the Board of Directors through its Compensation Committee at its October 11,
2000 meeting, subject to shareholder approval of the amendment at the next
shareholder annual meeting.

         NOW, THEREFORE, the Plan is hereby amended as follows, effective
October 11, 2000; provided, however, that if this amendment does not receive
shareholder approval at the 2001 annual meeting of shareholders, then this
amendment shall be null and void ab initio:

         Section 4.3 is amended to read as follows:

                  "4.3 The total number of shares with respect to which options
         may be granted under the Plan to any Grantee during any calendar year
         shall not exceed the number of shares available for issue under the
         Plan at the time of grant."

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         This Seventh Amendment has been executed by the Company, by its duly
authorized officer, effective the 11th day of October, 2000, and attested by its
Secretary.

                                    AAR CORP.

                                    By /s/ David P. Storch
                                      -------------------------
                                       David P. Storch
                                       President and Chief Executive Officer

ATTEST:

/s/ Howard A. Pulsifer
--------------------------------
Howard A. Pulsifer, Secretary

SEAL

                                       2<Page>

                               Amendment No. 2 to
                      AAR CORP. Directors' Retirement Plan

         WHEREAS, AAR CORP. ("Company") adopted the AAR CORP. Directors'
Retirement Plan ("Plan") effective April 14, 1992; and

         WHEREAS, the Company reserved the right to amend or terminate the Plan
at any time and from time to time, provided, however, that no such amendment or
termination shall reduce accrued retirement benefits for participants under the
Plan; and

         WHEREAS, the Company desires to amend the Plan in certain respects and
to terminate the Plan prospectively effective April 10, 2001, except as
otherwise provided for below;

         NOW, THEREFORE, the Company hereby amends and terminates the Plan as
set forth below, effective as of April 10, 2001:

     1.   Any individual who was a Director on April 9, 2001, and who was not
          then an employee of the Company, shall be deemed to be a grandfathered
          Participant under the Plan. The rights of a grandfathered Participant
          to receive benefits under the Plan in accordance with Plan provisions
          shall survive termination of the Plan and such benefits shall be
          determined without regard to whether the grandfathered Participant's
          Years of Service are completed before or after termination of the
          Plan.

     2.   The Plan is hereby terminated effective April 10, 2001, subject to the
          rights of (i) all vested Participants and (ii) all Participants who
          are grandfathered pursuant to paragraph 1 above, to receive or
          continue to receive benefits pursuant to the terms of the Plan as the
          Plan was in effect from time to time prior to such termination and
          applicable to such Participant.

         IN WITNESS WHEREOF, the Company has caused this instrument to be
executed in its name by its duly authorized officer as of the 10th day of April,
2001.

                                      AAR CORP.

                                      By /s/ David P. Storch
                                         ---------------------------------
                                            David P. Storch, President<Page>

                               Amendment No. 1 to
                         AAR CORP. Amended and Restated
                    SUPPLEMENTAL KEY EMPLOYEE RETIREMENT PLAN

     WHEREAS, the Company amended and restated the AAR CORP. Supplemental Key
Employee Retirement Plan effective April 11, 2000 as the AAR CORP. Amended and
Restated Supplemental Key Employee Retirement Plan ("SKERP" or "Plan"); and

     WHEREAS, the Company now desires to further amend the Plan in certain
respects;

     NOW, THEREFORE, the Company hereby amends the Plan as follows:

1.   Section 1.17 is hereby amended to read as follows:

          "1.17 "Qualified Retirement Benefit" means the benefit payable to a
     Participant pursuant to the Qualified Retirement Plan, by reason of his
     termination of employment with the Company and all Affiliated Companies for
     any reason other than death."

2.   Sections 3.1, 3.2, 3.3 and 3.4 are hereby amended to read as follows:

          "3.1 EXECUTIVE OFFICERS. 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 the difference between (a) and (b) below:

               (a) The monthly amount equal to, in the case of the President and
          Chief Executive Officer, one-twelfth of 60% of Final Average Earnings,
          without giving effect to the limitations imposed by Section 401(a)(17)
          of the Code or, in the case of all other Executive Officers, the
          monthly amount equal to one-twelfth of 50% of Final Average Earnings
          (or as otherwise specified in a Compensation Committee resolution
          designating an individual an Executive Officer participant), without
          giving effect to the limitations imposed by Section 401(a)(17) of the
          Code, payable at the Participant's Normal Retirement Date, and if
          applicable, reduced for early commencement as provided in Section 3.7;

                                      LESS

               (b) the monthly amount of the Qualified Retirement Benefit
          payable to the Participant under the Qualified Retirement Plan at the
          Participant's Benefit Commencement Date.

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          The amount described in (a) above for any Participant who enters 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
          twenty, and the denominator of which shall be twenty. Final Average
          Earnings and years of Credited Service shall be determined as of the
          Participant's date of termination of employment with the Company and
          all Affiliated Companies. The amounts described in (a) and (b) shall
          be computed in the form of an annuity payable over the Participant's
          lifetime.

               3.2 KEY EMPLOYEES. The Supplemental Retirement Benefit of a
          Participant who is a Key Employee of the Company as described in
          Section 2.2 shall be a monthly amount equal to the difference between
          (a) and (b) below:

                    (a) The monthly amount of the Qualified Retirement Benefit
               to which the Participant would have been entitled under the
               Qualified Retirement Plan without giving effect to the
               limitations imposed by Section 401(a)(17) of the Code, payable to
               the Participant under the Qualified Retirement Plan at the
               Participant's Benefit Commencement Date;

                                      LESS

                    (b) The monthly amount of the Qualified Retirement Benefit
               payable to the Participant under the Qualified Retirement Plan at
               the Participant's Benefit Commencement Date.

          The amounts described in (a) and (b) shall be computed in the form of
          an annuity payable over the Participant's lifetime. For purposes of
          calculating the Qualified Retirement Benefit under this subsection
          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 Plan.

               3.3 SUPPLEMENTAL SURVIVING SPOUSE BENEFITS. 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
          this 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 AAR CORP. Retirement Plan. The Supplemental Surviving Spouse
          Benefit shall be paid to the Surviving Spouse within 45 days of the
          Participant's death.

               3.4 FORM OF SUPPLEMENTAL RETIREMENT BENEFIT. The Supplemental
          Retirement Benefit payable to a Participant shall be paid in the same
          form under which the Qualified Retirement Benefit is payable to the
          Participant. The Participant's election under the Qualified Retirement
          Plan of any optional form of

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          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 payment of his Supplemental
          Retirement Benefit. Notwithstanding the preceding sentence, an
          election made by a Participant under the Qualified Retirement Plan
          with respect to the form of distribution of his benefit thereunder
          following termination of employment, or the date for commencement of
          payment thereof, shall not be effective with respect to the form of
          payment or date for commencement of payment of his Supplemental
          Retirement Benefit unless (i) such election is expressly approved in
          writing by the Company, and (ii) if such benefits are to be paid to a
          Participant in a lump sum distribution, Participant has agreed in
          writing to reimburse Company 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 IV
          below. If the Company shall not approve such election in writing, the
          form of payment or date for commencement of payment under this Section
          shall be selected by the Company in its sole discretion."

3.   Subsection 4.6(d) is hereby amended to read as follows:

                    "(d) TIME AND METHOD OF DISTRIBUTION. All amounts
               distributable under this Article IV to a Participant, or to his
               beneficiary in the event of his death, shall be distributed in
               the same manner and at the same time as is applicable to the
               distribution of the Participant's accounts under the Qualified
               Profit Sharing Plan following his termination of employment with
               the Company and all Affiliated Companies for any reason including
               death. Notwithstanding the preceding sentence, an election made
               by a Participant under the Qualified Profit Sharing Plan with
               respect to the form of distribution of his accounts thereunder
               following termination of employment, or the date for commencement
               of payment thereof, shall not be effective with respect to the
               form of payment or date for commencement of payment of his
               accounts pursuant to this Article IV, unless (i) such election is
               expressly approved in writing by the Company and (ii) if such
               benefits are to be paid to a Participant in a lump sum
               distribution, Participant has agreed, in writing, to reimburse
               Company for all such payment amounts plus interest thereon at 8%
               per annum immediately upon demand in the event of a forfeiture of
               benefits hereunder pursuant to Article V below. If the Company
               shall not approve such election in writing, the form of payment
               or date for commencement of payment under this Article shall be
               selected by the Company in its sole discretion. If a Participant
               does not elect a time or form of distribution under this Article,
               such distribution shall be made at the same time and in the same
               method as is applicable to distributions made with respect to his
               accounts under the Qualified Profit Sharing Plan. In no event may
               a Participant borrow amounts credited to the accounts maintained
               for him pursuant to this Article IV.

                    If the Company shall not approve an election made by a
               Participant pursuant to the preceding paragraph within 10 days of
               the date such

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               election is made, the Participant shall have the right to have
               the approval of the form of payment or date for commencement of
               payment determined by an independent arbitrator mutually selected
               by the Participant and the Company. In making its decision, the
               arbitrator shall consider the financial needs and other interests
               of the Participant and the Company, including the security of
               payment that would be afforded to the Participant if payment is
               not made in a lump sum, and the decision of the arbitrator shall
               be final and conclusive for all purposes of the Plan. The Company
               shall pay the costs of such arbitration, including reasonable
               attorneys' fees and costs of the parties."

     IN WITNESS WHEREOF, this Amendment No. 1 has been executed effective as of
April 10, 2001. AAR CORP.

                                             By /s/ David P. Storch
                                               ------------------------------

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