Document:

Exhibit 10.14

 

Fiscal 2014 Form

 

AAR CORP.

 

Director Restricted Stock Agreement

(“Agreement”)

 

Subject to the provisions of the AAR CORP. Stock Benefit Plan (“Plan”), the terms of which are hereby incorporated by reference herein, and in consideration of the agreements of the Grantee herein provided, AAR CORP. a Delaware corporation (“Company”), hereby grants to Grantee a restricted stock award (“Award”), effective June 1, 2013 (“Date of Award”), of 5,000 shares of common stock (“Common Stock”) of the Company, $1.00 par value (“Award Shares”), subject to the forfeiture and nontransferability provisions hereof and the other terms and conditions set forth herein:

 

1.                                      Acceptance By Grantee.  The Award is conditioned upon the acceptance by the Grantee of the terms and conditions of the Award as set forth in this Agreement.  The Grantee must confirm acceptance of the Award and this Agreement on Smith Barney’s web site (www.benefitaccess.com). If the Grantee does not accept the Award and this Agreement within 30 days from the date of the notification of the Award, the Award referenced herein shall expire unless the acceptance date is extended in writing signed by the Company.

 

2.                                      Restrictions. The Grantee represents that he is accepting the Award Shares without a view toward distribution of said Award Shares and that he will not sell, assign, transfer, pledge or otherwise encumber the Award Shares during the period commencing on the Date of Award and ending on the date the restrictions applicable to such Award Shares are released pursuant to paragraph 3 of this Agreement (“Restrictive Period”).

 

3.                                      Release of Restrictions. Subject to the provisions of paragraph 4 below, the restrictions described in paragraph 2 above shall be released with respect to the Award Shares on the first anniversary of the Date of Award, except as follows:

 

(a)                                 In General.  If the Grantee’s membership on the Company’s Board of Directors terminates prior to the last day of the Restrictive Period for any reason other than death, Disability or Retirement, the Grantee shall forfeit to the Company all Award Shares not previously released from the restrictions of paragraph 2 hereof.

 

(b)                                 Retirement.  If the Grantee’s membership on the Company’s Board of Directors terminates by reason of Retirement prior to the last day of the Restrictive Period, the Restrictive Period shall terminate in accordance with the restriction release schedule set forth above in the first clause of this paragraph 3 as to the Award Shares not previously released; provided, however, that if the Grantee dies after Retirement and prior to the last day of the Restrictive Period, the Grantee’s date of death will be treated as the date on which his membership on the Company’s Board of Directors has terminated, and the provisions of paragraph 3(c) shall apply in determining the release of restrictions as to the Award Shares not

 

 

previously released.  For purposes of this Agreement, “Retirement” means the Grantee’s voluntary termination of membership on the Company’s Board of Directors at or after attaining age 65 with five or more consecutive years of service as a non-employee member of the Company’s Board of Directors.

 

(c)                                  Death or Disability.  If the Grantee’s membership on the Company’s Board of Directors terminates by reason of death or Disability, the Restrictive Period shall terminate on the date of such death or Disability.  For this purpose, “Disability” means the inability of the Grantee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

 

(d)                                 Restrictive Covenant.  If at any time prior to the Award Shares’ release from the restrictions hereunder, the Grantee, without the Company’s express written consent, directly or indirectly, alone or as a member of a partnership, group, or joint venture or as an employee, officer, director, or greater than 1% stockholder of any corporation, or in any capacity engages in any activity which is competitive with any of the businesses conducted by the Company or its affiliated companies at any time during the Grantee’s membership on the Company’s Board of Directors, the Grantee shall forfeit to the Company all Award Shares not previously released from the restrictions of paragraph 2 hereof.

 

4.                                      Change in Control. In the event of a Change in Control of the Company, whether or not such change has the prior written approval of the Continuing Directors, the Restrictive Period shall terminate as to all Award Shares not previously released.

 

5.                                      Change in Outstanding Shares. In the event of any change in the outstanding shares of Common Stock occurring through stock splits, stock dividends, stock consolidations, spin-offs, other distributions of assets to stockholders or assumption or conversion of outstanding Awards due to an acquisition after the Date of Award, the Award Shares shall be treated in the same manner in any such transaction as other shares of Common Stock. Any additional shares of Common Stock received by the Grantee with respect to the Award Shares in any such transaction shall be subject to the same restrictions as are then applicable to those Award Shares for which the additional shares have been issued.

 

6.                                      Rights of Grantee. As the holder of the Award Shares, the Grantee is entitled to all of the rights of a stockholder of AAR CORP. with respect to any of the Award Shares, when issued, including, but not limited to, the right to receive dividends declared and payable since the Date of Award.

 

7.                                      Shares. In aid of the restrictions set forth in paragraph 2, the Grantee will be required to execute a stock power in favor of the Company which will be cancelled upon release of restrictions with respect to Award Shares released. Award Shares shall be held by the Company in electronic book entry form on the records of the Company’s Transfer Agent, together with the executed stock power, for the account of the Grantee until such restrictions are

 

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released pursuant to the terms hereof, or such Award Shares are forfeited to the Company as provided by the Plan or this Agreement. The Grantee shall be entitled to the Award Shares as to which such restrictions have been released, and the Company agrees to issue such Award Shares in electronic form on the records of the Transfer Agent. Upon request by the Grantee, the Transfer Agent will transfer such released Award Shares in electronic form to the Grantee’s broker for the Grantee’s account or issue certificates in the name of the Grantee representing the Award Shares for which restrictions have been released.

 

8.                                      Legend. The Company may, in its discretion, place a legend or legends on any electronic shares or certificates representing Award Shares issued to the Grantee that the Company believes is required to comply with any law or regulation.

 

9.                                      Committee Powers. The Committee may subject the Award Shares to such conditions, limitations or restrictions as the Committee determines to be necessary or desirable to comply with any law or regulation or with the requirements of any securities exchange. At any time during the Restrictive Period, the Committee may reduce or terminate the Restrictive Period otherwise applicable to all or any portion of the Award Shares.

 

10.                               Postponement of Distribution.  Notwithstanding anything herein to the contrary, the distribution of any portion of the Award Shares shall be subject to action by the Board taken at any time in its sole discretion (i) to effect, amend or maintain any necessary registration of the Plan or the Award Shares distributable in satisfaction of this Award under the Securities Act of 1933, as amended, or the securities laws of any applicable jurisdiction, (ii) to permit any action to be taken in order to (a) list such Award Shares on a stock exchange if the Common Stock is then listed on such exchange or (b) comply with restrictions or regulations incident to the maintenance of a public market for its Shares of Common Stock, including any rules or regulations of any stock exchange on which the Award Shares are listed, or (iii) to determine that such Award Shares and the Plan are exempt from such registration or that no action of the kind referred to in (ii)(b) above needs to be taken; and the Company shall not be obligated by virtue of any terms and conditions of this Award or any provision of this Agreement or the Plan to issue or release the Award Shares in violation of the Securities Act of 1933 or the law of any government having jurisdiction thereof.  Any such postponement shall not shorten the term of any restriction attached to the Award Shares and neither the Company nor its directors or officers shall have any obligation or liability to the Grantee or to any other person as to which issuance under the Award Shares was delayed.

 

11.                               Miscellaneous.

 

(a)                                 The Award and this Agreement shall be construed, administered and governed in all respects under and by the laws of the State of Illinois.

 

(b)                                 Capitalized terms used herein and not defined herein will have the meanings set forth in the Plan.

 

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(c)                                  This Agreement has been examined by the parties hereto, and accordingly the rule of construction that ambiguities be construed against a party which causes a document to be drafted shall have no application in the construction or interpretation hereof. If any part of this Agreement is held invalid for any reason, the remainder hereof shall nevertheless remain in full force and effect.

 

(d)                                 This Agreement constitutes the entire agreement between the parties concerning the subject matter hereof and any prior understanding or representation of any kind antedating this Agreement concerning such subject matter shall not be binding upon either party except to the extent incorporated herein. No consent, waiver, modification or amendment hereof, or additional obligation assumed by either party in connection herewith, shall be binding unless evidenced by a writing signed by both parties and referring specifically hereto. No consent, waiver, modification or amendment with respect hereto shall be construed as applicable to any past or future events other than the one in respect of which it was specifically made.

 

(e)                                  This Agreement shall be construed consistent with the provisions of the Plan and in the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control and any terms of this Agreement which conflict with Plan terms shall be void.

 

Questions concerning the provisions of this Agreement should be directed to the Company’s Corporate Secretary: 630/227-2050; fax 630/227-2059.

 

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By accepting this Agreement, you irrevocably agree to be bound by the terms hereof.  To accept this Agreement, please follow the procedures set forth below:

 

Step 1:                        View your Award Summary (confirm that the number of shares awarded is correct)

 

Step 2:                        Read and review the documentation.

 

Step 3:                        Confirm the review/acceptance of your Award and this Agreement.

 

Step 4:                        Receive an online confirmation of your acceptance.

 

4Exhibit 10.26

 

AAR CORP.
  Amended and Restated
 2012 Short-Term Incentive Plan

 

1.              Purpose

 

The purpose of the amended and restated AAR CORP. 2012 Short-Term Incentive Plan (“STIP”) is to provide an incentive for selected senior executives of AAR CORP. (the “Company”) and its subsidiaries to achieve the Company’s short-term performance goals by providing them with an annual cash incentive payment based on the financial and operating success of the Company.

 

2.              Definitions

 

(a)               “Board” means the Board of Directors of the Company.

 

(b)               “Bonus” means the annual cash incentive paid to a Participant under this STIP for a fiscal year of the Company.

 

(c)                “Cause” means the Participant’s unsatisfactory performance or conduct detrimental to the Company and its subsidiaries, as solely determined by the Committee.

 

(d)               “Code” means the Internal Revenue Code of 1986, as amended.

 

(e)                “Committee” means the Compensation Committee of the Board, or if the Committee is not comprised of “outside directors” as defined in Section 162(m) of the Code, then by a subset of the Committee comprised of at least two “outside directors” (the “Committee”).

 

(f)                 “Company” means AAR CORP.

 

(g)                “Disability” means the inability of the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

 

(h)               “Earnings Per Share” means diluted earnings per share as disclosed by the Company in its periodic reports filed with the Securities and Exchange Commission, excluding special charges or unusual or infrequent items incurred during the performance period, and as adjusted for changes in generally accepted accounting principles.

 

(i)                   “Free Cash Flow” means cash flow from operations minus net capital expenditures, excluding acquisitions.

 

(j)                  “Participant” means any active executive of the Company or subsidiary who has been selected by the Committee as eligible to earn a Bonus under the STIP.

 

(k)               “Retirement” means the Participant’s voluntary termination of his employment, or his termination of employment by the Company or a subsidiary without Cause, when he has (i) attained age 65 or (ii) attained age 55 and his age plus the number of his consecutive years of service with the Company and subsidiaries is at least 75.

 

(l)                   “Salary” means a Participant’s base annual salary earned during a fiscal year of the Company while a Participant.

 

(m)           “STIP” means this AAR CORP. 2012 Short-Term Incentive Plan.

 

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3.              Administration

 

The STIP shall be administered by the Committee.  The Committee has full authority to select the senior executives eligible to participate in the STIP and determine when the senior executive’s participation in the STIP will begin and end.  Subject to the express provisions of the STIP, the Committee shall be authorized to interpret the STIP and to establish, amend and rescind any rules and regulations relating to the STIP and to make all other determinations deemed necessary or advisable for the proper administration of the STIP.  The determinations of the Committee in the proper administration of the STIP shall be conclusive and binding.

 

4.              Eligibility and Participation

 

Participation in the STIP is limited to those senior executives of the Company or a subsidiary who the Committee designates as Participants.  When the Committee selects an executive to become a Participant under the STIP, it shall designate the date as of which the executive’s participation shall begin.

 

5.              Annual Bonus Awards

 

(a)                  Determination of Participants, Performance Goals and Target Bonus Amounts. On or before the 90th day of each fiscal year of the Company, the Committee shall (i) determine the Participants for such fiscal year, (ii) establish threshold, target and maximum Earnings Per Share and Free Cash Flow goals for such fiscal year, and (iii) approve the target Bonus payment for each Participant expressed as a percentage of the Participant’s Salary.

 

(b)                  Bonus Payment.  As soon as reasonably practicable after the end of the applicable fiscal year, the Committee shall determine the extent to which each of the Earnings Per Share and Free Cash Flow targets were attained for such fiscal year.  The Bonus payable to each Participant will be equal to the sum of (i) 75% of the Participant’s target Bonus multiplied by the applicable Earnings Per Share Multiplier Percentage and (ii) 25% of the Participant’s target Bonus multiplied by the Free Cash Flow Multiplier Percentage:

 

Earnings Per Share (75%)

 

	
Performance
   Achievement Level
    	
 
    	
Multiplier
   Percentage
    	
 
    
	
Threshold
    	
 
    	
50
    	
%
    
	
Target
    	
 
    	
100
    	
%
    
	
Maximum
    	
 
    	
200
    	
%
    

 

Free Cash Flow (25%)

 

	
Performance
   Achievement Level
    	
 
    	
Multiplier
   Percentage
    	
 
    
	
Threshold
    	
 
    	
50
    	
%
    
	
Target
    	
 
    	
100
    	
%
    
	
Maximum
    	
 
    	
200
    	
%
    

 

For achievement of Earnings Per Share and Free Cash Flow targets between established performance achievement levels, the Multiplier Percentage will be interpolated on a straight-line basis.

 

6.              STIP Limitations

 

Notwithstanding Section 5, no Bonus shall be paid under the STIP for a fiscal year to a Participant whose employment with the Company and all subsidiaries terminates during such fiscal year unless the termination is due to death, Disability or Retirement, or as otherwise approved by the Committee.  If a Participant terminates during the fiscal year due to death, Disability or Retirement, the Participant shall be entitled to a pro rata portion of the Bonus the Participant would have earned under the STIP had the Participant remained employed through the end of the fiscal year.  Such Bonus will be paid at the same time Bonuses are paid to active Participants.

 

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Notwithstanding Section 5, no Bonus shall be payable for a fiscal year if net income (as determined in accordance with generally accepted accounting principles) for such fiscal year is not positive.  No Bonus shall be earned until the end of the fiscal year and only to the extent the performance goals set forth are attained as determined by the Committee in Section 5(b).

 

7.              Payment of Bonuses

 

A Participant’s Bonus for a fiscal year shall be paid in cash to the Participant, or to the Participant’s beneficiary (or beneficiaries) in the event of the Participant’s death, within two and one-half months after the end of such fiscal year, unless the Participant has previously elected to have all or a portion of the Bonus deferred in accordance with the AAR CORP. Supplemental Executive Retirement Plan.  The Company shall deduct all taxes required by law to be withheld from all Bonus payments.

 

8.              No Assignment

 

Except in the event of a Participant’s death, the rights and interests of a Participant under the STIP shall not be assigned, encumbered or transferred.

 

9.              Termination of Participation

 

The Committee reserves the right to cancel a Participant’s participation in the STIP at any time.

 

10.       Employment Rights

 

Nothing contained in the STIP shall be construed as conferring a right upon any employee to continue in the employment of the Company or any subsidiary.

 

11.       Amendment/Termination

 

The Board or the Committee may either amend or terminate the STIP at any time, without the consent of the Participants and without the approval of the stockholders of the Company; provided, that such modification or elimination shall not affect the obligation of the Company to pay any Bonus after it has been earned under the STIP.

 

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