Employment Agreement - AAR CORP - 8-20-1996

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Employment Agreement - AAR CORP - 8-20-1996 Powered By Docstoc
					AMENDMENT NO. 2 TO FURTHER RESTATED AND AMENDED EMPLOYMENT AGREEMENT DATED AUGUST 1, 1985 BY AND BETWEEN AAR CORP. AND IRA A. EICHNER THIS AMENDMENT NO. 2 made this 25th day of MAY, 1990 by and between AAR CORP., a Delaware corporation (the "Company") and Ira A. Eichner ("Employee"). WHEREAS, the Company and Employee entered into the Further Restated and Amended Employment Agreement dated August 1, 1985 (the "Employment Agreement"); and WHEREAS, the Company and Employee heretofore amended the Employment Agreement and now desire to further amend the Employment Agreement as herein set forth to reflect certain mutually agreed upon changes to the terms and conditions thereof; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the Company and Employee do hereby covenant and agree as follows: 1. The second sentence of subparagraph (b) of paragraph 7 of the Employment Agreement is hereby amended to read as follows: "During, or as soon as practicable after the end of, each calendar year, the Company shall pay to Employee a bonus in cash equal to the aggregate of (1) the federal, state and local income taxes, if any, incurred by Employee as a result of income generated by the Trust, and (2) the federal, state and local income taxes incurred by Employee as a result of such bonus." 2. The first and second sentences of subparagraph (c) of paragraph 11 of the Employment Agreement are hereby amended to read as follows: "If within twenty-four months from the date hereof the Company does not receive the private letter ruling, hereinafter described, from the Internal Revenue Service, the discretion vested in Employee by the preceding subparagraph (b) shall instead be vested in the Board of Directors of the Company and Employee shall not participate in such discretion either as a member of the Board of Directors or individually. The private letter ruling referred to in the preceding sentence shall hold that Employee shall not recognize income for federal tax purposes under Section 83 or Section 451 of the Internal Revenue Code of 1986, or pursuant to the constructive receipt or economic benefit doctrines, merely by being vested with the discretion set forth in subparagraph (b) above in any taxable year prior to the first to occur of (i) the taxable year in which a contribution to the Trust is made pursuant to subparagraph (b) above, and (ii) the taxable year in which Employee's Involuntary Retirement occurs." IN WITNESS WHEREOF, the Company has caused this Amendment No. 2 to be executed, and Employee has hereunto set his hand, on the date first set forth above. AAR CORP.
By: /s/ David P. Storch ------------------------------------David P. Storch /s/ Ira A. Eichner ---------------------------------------IRA A. EICHNER

AMENDMENT NO. 3 TO

AMENDMENT NO. 3 TO FURTHER RESTATED AND AMENDED EMPLOYMENT AGREEMENT DATED AUGUST 1, 1985 BY AND BETWEEN AAR CORP. AND IRA A. EICHNER THIS AMENDMENT NO. 3 made this 13th day of July, 1994 by and between AAR CORP., a Delaware corporation (the "Company") and Ira A. Eichner ("Employee"). WHEREAS, the Company and Employee entered into the Further Restated and Amended Employment Agreement dated August 1, 1985 (the "Employment Agreement"); and WHEREAS, the Company and Employee further amended the Employment Agreement by amendments dated August 12, 1985 and May 25, 1990; and WHEREAS, the Company and Employee desire to further amend the Employment Agreement as herein set forth to reflect certain mutually agreed upon changes to the terms and conditions thereof; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the Company and Employee do hereby covenant and agree as follows: 1. The first sentence of subparagraph (h) of paragraph 14 of the Employment Agreement is hereby amended to read as follows: "(h) 'Retirement Benefit' shall mean an annual amount equal (subject to adjustment as hereafter provided) to 60% of Employee's Average Annual Total Cash Compensation, reduced by (1) the Income Tax Offset and (2) the Defined Benefit Plan Offset." IN WITNESS WHEREOF, the Company has caused this Amendment No. 3 to be executed in its name by its duly authorized officer, and Employee has hereunto set his hand, on this 13th day of July, 1994. AAR CORP.
By: /s/ Howard A. Pulsifer ------------------------------------Howard A. Pulsifer Vice President

/s/ Ira A. Eichner ---------------------------------------Ira A. Eichner

AMENDMENT I TO TRUST AGREEMENT DATED AUGUST 12, 1988 BY AND AMONG AAR CORP., THE NORTHERN TRUST COMPANY AND IRA A. EICHNER WHEREAS, AAR CORP., The Northern Trust Company and Ira A. Eichner (the "Parties") entered into a trust agreement dated August 12, 1988 (the "Trust Agreement"); and WHEREAS, the Parties reserved the right to amend the Trust Agreement and now deem it appropriate to amend the Trust Agreement in certain respects; NOW, THEREFORE, the Trust Agreement is hereby amended in the following respects: 1. Section 2.5 of the Trust Agreement is hereby deleted in its entirety. 2. Section 22.1 of the Trust Agreement is hereby amended to read as follows:

AMENDMENT I TO TRUST AGREEMENT DATED AUGUST 12, 1988 BY AND AMONG AAR CORP., THE NORTHERN TRUST COMPANY AND IRA A. EICHNER WHEREAS, AAR CORP., The Northern Trust Company and Ira A. Eichner (the "Parties") entered into a trust agreement dated August 12, 1988 (the "Trust Agreement"); and WHEREAS, the Parties reserved the right to amend the Trust Agreement and now deem it appropriate to amend the Trust Agreement in certain respects; NOW, THEREFORE, the Trust Agreement is hereby amended in the following respects: 1. Section 2.5 of the Trust Agreement is hereby deleted in its entirety. 2. Section 22.1 of the Trust Agreement is hereby amended to read as follows: "If within twenty-four months after the date hereof, the Company has not received a private letter ruling, hereinafter described, from the Internal Revenue Service with respect to this Trust Agreement, the Trustee shall, upon the written request of the Company, return the entire balance of the Trust Fund, as constituted on the date of receipt of such written request from the Company, to the Company and thereafter the Trustee shall have no further obligation or liability to Eichner or his Beneficiary. Any such request pursuant to this Section 22.1 shall be made by the Company during the thirty-day period commencing on the date twenty-four months after the date hereof and such payment to the Company shall be made by the Trustee within thirty days after receipt of such written request. The private letter ruling referred to in this Section 22.1 shall hold that (i) amounts contributed by the Company to the Trust Fund shall be deductible by the Company for federal income tax purposes in the taxable year or years in which such amounts are contributed and (ii) amounts contributed by the Company to the Trust Fund shall be includable in the gross income of Eichner for federal income tax purposes in the taxable year or years in which such amounts are contributed. The Company shall, at its expense, make written application to the Internal Revenue Service for such private letter ruling during the thirty-day period commencing on the date hereof." IN WITNESS WHEREOF, the Parties have caused this Amendment I to the Trust Agreement to be executed as of the 25th day of MAY, 1990.
Attest: AAR CORP.

/s/ Ben C. Brostoff - -------------------------

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

Attest:

THE NORTHERN TRUST COMPANY

- -------------------------

By: /s/ Winifred H. Date -------------------------------------

/s/ Ira A. Eichner ---------------------------------------IRA A. EICHNER

First Amendment to the AAR CORP. Supplemental Key Employee Retirement Plan WHEREAS, AAR CORP. ("Company") adopted the AAR CORP. Supplemental Key Employee Retirement

First Amendment to the AAR CORP. Supplemental Key Employee Retirement Plan WHEREAS, AAR CORP. ("Company") adopted the AAR CORP. Supplemental Key Employee Retirement Plan ("SKERP") effective as of June 1, 1994; and WHEREAS, the Company has reserved the right to amend the SKERP and deems it appropriate to do so in certain respects; NOW, THEREFORE, the SKERP is hereby amended as follows, effective as of June 1, 1995: 1. The following language is added at the end of Section 3.1(a): "and (3) his Compensation was subject to any maximum annual limits established by the Company from time to time for Executive or Key Employee participants through its Retirement Plan Administrative Committee upon recommendation of management" 2. The title of Section 3.7 is deleted and the word "Equivalencies" is substituted in lieu thereof, and the word "actuarial" is deleted from the third and fifth lines of Section 3.7. 3. The words "no later than 60 days after the last day of such Plan Year" at the end of Section 4.1 are deleted and the following is substituted in lieu thereof: "at the same time as Qualified Salary Deferral Contributions are made for such Plan Year." 4. The last sentence of Section 4.2 is deleted and the following is substituted in lieu thereof: "A Supplemental Salary Deferral Agreement shall be made at least thirty days prior to the effective date thereof and shall remain in full force and effect subsequently until revised or revoked by a Participant by written instrument delivered to the Committee at least 30 days prior to the date the revision or revocation is to become effective." 5. The words "no later than 60 days after the last day of such Plan Year" at the end of Section 4.3 are deleted and the following is substituted in lieu thereof: "at the same time as Qualified Company Contributions are made for such Plan Year." 6. The words "no later than 120 days after the last day of such Plan Year" at the end of Section 4.4 are deleted and the following is substituted in lieu thereof:

"at the same time as Qualified Profit Sharing Contributions are made for such Plan Year." 7. The first line of Section 4.6(a) is amended to read as follows: "(a) TERMINATION OF EMPLOYMENT PRIOR TO DEATH. Following termination of a" 8. The word "two" in line 5 of Section 5.1 is deleted and the word "one" is substituted in lieu thereof. IN WITNESS WHEREOF, this First Amendment has been executed this 25th day of July, 1995, effective as of June 1, 1995.

AAR CORP.
By: /s/ Ira A. Eichner ------------------------------------Ira A. Eichner, Chairman

"at the same time as Qualified Profit Sharing Contributions are made for such Plan Year." 7. The first line of Section 4.6(a) is amended to read as follows: "(a) TERMINATION OF EMPLOYMENT PRIOR TO DEATH. Following termination of a" 8. The word "two" in line 5 of Section 5.1 is deleted and the word "one" is substituted in lieu thereof. IN WITNESS WHEREOF, this First Amendment has been executed this 25th day of July, 1995, effective as of June 1, 1995.

AAR CORP.
By: /s/ Ira A. Eichner ------------------------------------Ira A. Eichner, Chairman

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SECOND AMENDMENT TO THE AAR CORP. SUPPLEMENTAL KEY EMPLOYEE RETIREMENT PLAN WHEREAS, AAR CORP. ("Company") adopted the AAR CORP. Supplemental Key Employee Retirement Plan ("SKERP"), effective June 1, 1994; and WHEREAS, the Company amended the SKERP effective June 1, 1995, and deems it appropriate to further amend the SKERP in certain respects; NOW, THEREFORE, the SKERP is hereby amended, as follows, effective as of January 1, 1996: 1. The following paragraph (f) is hereby added at the end of Section 4.5: (f) TRUST AGREEMENT NO. 2 - Notwithstanding the preceding provisions of this Section, during the existence of Trust Agreement No. 2 referred to in the second paragraph of Section 8.2, the Company shall direct the Trustee of Trust Agreement No. 2 to invest and reinvest amounts credited to a Participant's Supplemental Salary Deferral Account, Supplemental Company Account, and Supplemental Profit Sharing Account as directed by the Participant pursuant to the preceding provisions of this Section 4.5. Such directions shall be given by the Company to the Trustee of Trust Agreement No. 2 as soon as practicable after such directions are given to the Company by the Participant. 2. The following paragraph is added to Section 8.2: Notwithstanding the provisions of Section 8.1, the Company on or as soon as practicable after January 1, 1996, shall enter into a Trust Agreement ("Trust Agreement No. 2") with a bank or trust company (with a combined capital and surplus in excess of $100,000,000) located in the continental United States as Trustee, whereby the Company shall agree to contribute to a trust ("Trust No. 2") initially and annually thereafter for the purpose of accumulating assets sufficient to provide for Supplemental Salary Deferral Contributions, Supplemental Company Contributions and Supplemental Profit Sharing Contributions with respect to Participants under Article IV hereof. Trust Agreement No. 2

shall be substantially in the form of the model trust agreement set forth in Internal Revenue Service Procedure 9264, or any subsequent Internal Revenue Service Procedure, and shall include provisions required in such model trust agreement that all assets of Trust No. 2 shall be subject to the creditors of the Company in the event of insolvency. Trust Agreement No. 2 shall include such provisions as are applicable with respect to the investment and reinvestment of such Contributions pursuant to directions given by Participants to the Company and transmitted by the Company to the Trustee of Trust Agreement No. 2 pursuant to paragraph (f) of Section 4.5. IN WITNESS WHEREOF, this Second Amendment has been executed this 8th day of January, 1996, effective

SECOND AMENDMENT TO THE AAR CORP. SUPPLEMENTAL KEY EMPLOYEE RETIREMENT PLAN WHEREAS, AAR CORP. ("Company") adopted the AAR CORP. Supplemental Key Employee Retirement Plan ("SKERP"), effective June 1, 1994; and WHEREAS, the Company amended the SKERP effective June 1, 1995, and deems it appropriate to further amend the SKERP in certain respects; NOW, THEREFORE, the SKERP is hereby amended, as follows, effective as of January 1, 1996: 1. The following paragraph (f) is hereby added at the end of Section 4.5: (f) TRUST AGREEMENT NO. 2 - Notwithstanding the preceding provisions of this Section, during the existence of Trust Agreement No. 2 referred to in the second paragraph of Section 8.2, the Company shall direct the Trustee of Trust Agreement No. 2 to invest and reinvest amounts credited to a Participant's Supplemental Salary Deferral Account, Supplemental Company Account, and Supplemental Profit Sharing Account as directed by the Participant pursuant to the preceding provisions of this Section 4.5. Such directions shall be given by the Company to the Trustee of Trust Agreement No. 2 as soon as practicable after such directions are given to the Company by the Participant. 2. The following paragraph is added to Section 8.2: Notwithstanding the provisions of Section 8.1, the Company on or as soon as practicable after January 1, 1996, shall enter into a Trust Agreement ("Trust Agreement No. 2") with a bank or trust company (with a combined capital and surplus in excess of $100,000,000) located in the continental United States as Trustee, whereby the Company shall agree to contribute to a trust ("Trust No. 2") initially and annually thereafter for the purpose of accumulating assets sufficient to provide for Supplemental Salary Deferral Contributions, Supplemental Company Contributions and Supplemental Profit Sharing Contributions with respect to Participants under Article IV hereof. Trust Agreement No. 2

shall be substantially in the form of the model trust agreement set forth in Internal Revenue Service Procedure 9264, or any subsequent Internal Revenue Service Procedure, and shall include provisions required in such model trust agreement that all assets of Trust No. 2 shall be subject to the creditors of the Company in the event of insolvency. Trust Agreement No. 2 shall include such provisions as are applicable with respect to the investment and reinvestment of such Contributions pursuant to directions given by Participants to the Company and transmitted by the Company to the Trustee of Trust Agreement No. 2 pursuant to paragraph (f) of Section 4.5. IN WITNESS WHEREOF, this Second Amendment has been executed this 8th day of January, 1996, effective as of January 1, 1996. AAR CORP.
By /s/ Ira A. Eichner -------------------------------------Ira A. Eichner, Chairman

THIRD AMENDMENT TO THE AAR CORP. SUPPLEMENTAL KEY EMPLOYEE RETIREMENT PLAN WHEREAS, AAR CORP. (the "Company") adopted the AAR CORP. Supplemental Key Employee Retirement Plan ("SKERP"), effective June 1, 1994; and WHEREAS, the Company amended the SKERP, effective June 1, 1995 and January 1, 1996, and deems it appropriate to further amend the SKERP in certain respects; NOW THEREFORE, Section 4.5 of the SKERP is hereby amended, effective as of June 1, 1996, as follows: 4.5 Investment of Supplemental Contributions. (a) INVESTMENTS. Amounts credited hereunder to the Supplemental Salary Deferral Account, Supplemental Company Account, and Supplemental Profit Sharing Account of a Participant shall be treated as if they were actually invested in various investment funds that are made available by the Committee from time to time and as

shall be substantially in the form of the model trust agreement set forth in Internal Revenue Service Procedure 9264, or any subsequent Internal Revenue Service Procedure, and shall include provisions required in such model trust agreement that all assets of Trust No. 2 shall be subject to the creditors of the Company in the event of insolvency. Trust Agreement No. 2 shall include such provisions as are applicable with respect to the investment and reinvestment of such Contributions pursuant to directions given by Participants to the Company and transmitted by the Company to the Trustee of Trust Agreement No. 2 pursuant to paragraph (f) of Section 4.5. IN WITNESS WHEREOF, this Second Amendment has been executed this 8th day of January, 1996, effective as of January 1, 1996. AAR CORP.
By /s/ Ira A. Eichner -------------------------------------Ira A. Eichner, Chairman

THIRD AMENDMENT TO THE AAR CORP. SUPPLEMENTAL KEY EMPLOYEE RETIREMENT PLAN WHEREAS, AAR CORP. (the "Company") adopted the AAR CORP. Supplemental Key Employee Retirement Plan ("SKERP"), effective June 1, 1994; and WHEREAS, the Company amended the SKERP, effective June 1, 1995 and January 1, 1996, and deems it appropriate to further amend the SKERP in certain respects; NOW THEREFORE, Section 4.5 of the SKERP is hereby amended, effective as of June 1, 1996, as follows: 4.5 Investment of Supplemental Contributions. (a) INVESTMENTS. Amounts credited hereunder to the Supplemental Salary Deferral Account, Supplemental Company Account, and Supplemental Profit Sharing Account of a Participant shall be treated as if they were actually invested in various investment funds that are made available by the Committee from time to time and as are designated by each Participant pursuant to investment directions given to the Committee. Such Accounts shall be credited with earnings, gains and losses of the applicable investment funds on the last day of each calendar quarter or on such other date selected by the Committee. Investment directions shall be made by a Participant in specified multiples of 10%. (b) INVESTMENT CHANGES. Each Participant shall have the right to direct the Committee to modify his investment directions made pursuant to paragraph (a) above with respect to amounts credited to his Supplemental Salary Deferral Account, Supplemental Company Account and Supplemental Profit Sharing Account

after the date such modification direction becomes effective, in specified multiples of 10%. Each Participant shall also have the right to direct the Committee to change the investment directions made pursuant to paragraph (a) above with respect to amounts credited to his Accounts on the date such direction to change becomes effective, in specified multiples of 10%. (c) EFFECTIVE DATE OF INVESTMENT DIRECTION. Any investment direction, or modification or change of an investment direction, made pursuant to paragraph (a) or (b) above, shall be effective as soon as practicable (and in any event not later than the first day of the month that occurs at least 30 days) after the date the applicable direction is given to the Committee. A modification or change of an investment direction made pursuant to paragraph (b) may, if required by an administrative rule promulgated by the Committee, be made only once in each calendar quarter. In the event that the sponsor of the investment funds permits more frequent fund transfers than permitted above, or does not require written direction to authorize fund transactions, the Committee may waive or modify the requirements set forth in the preceding provisions of this Section as it deems appropriate. (d) INVESTMENT FUNDS. Any investments made by the Company or by the Trustee of Trust Agreement No. 2 referred to in paragraph (f) below to conform to directions made by a Participant pursuant to this Section shall be in investment funds maintained in the name of the Company, or in the name of such Trustee, and no Participant shall at any time have any interest in the assets of any such investment fund.

THIRD AMENDMENT TO THE AAR CORP. SUPPLEMENTAL KEY EMPLOYEE RETIREMENT PLAN WHEREAS, AAR CORP. (the "Company") adopted the AAR CORP. Supplemental Key Employee Retirement Plan ("SKERP"), effective June 1, 1994; and WHEREAS, the Company amended the SKERP, effective June 1, 1995 and January 1, 1996, and deems it appropriate to further amend the SKERP in certain respects; NOW THEREFORE, Section 4.5 of the SKERP is hereby amended, effective as of June 1, 1996, as follows: 4.5 Investment of Supplemental Contributions. (a) INVESTMENTS. Amounts credited hereunder to the Supplemental Salary Deferral Account, Supplemental Company Account, and Supplemental Profit Sharing Account of a Participant shall be treated as if they were actually invested in various investment funds that are made available by the Committee from time to time and as are designated by each Participant pursuant to investment directions given to the Committee. Such Accounts shall be credited with earnings, gains and losses of the applicable investment funds on the last day of each calendar quarter or on such other date selected by the Committee. Investment directions shall be made by a Participant in specified multiples of 10%. (b) INVESTMENT CHANGES. Each Participant shall have the right to direct the Committee to modify his investment directions made pursuant to paragraph (a) above with respect to amounts credited to his Supplemental Salary Deferral Account, Supplemental Company Account and Supplemental Profit Sharing Account

after the date such modification direction becomes effective, in specified multiples of 10%. Each Participant shall also have the right to direct the Committee to change the investment directions made pursuant to paragraph (a) above with respect to amounts credited to his Accounts on the date such direction to change becomes effective, in specified multiples of 10%. (c) EFFECTIVE DATE OF INVESTMENT DIRECTION. Any investment direction, or modification or change of an investment direction, made pursuant to paragraph (a) or (b) above, shall be effective as soon as practicable (and in any event not later than the first day of the month that occurs at least 30 days) after the date the applicable direction is given to the Committee. A modification or change of an investment direction made pursuant to paragraph (b) may, if required by an administrative rule promulgated by the Committee, be made only once in each calendar quarter. In the event that the sponsor of the investment funds permits more frequent fund transfers than permitted above, or does not require written direction to authorize fund transactions, the Committee may waive or modify the requirements set forth in the preceding provisions of this Section as it deems appropriate. (d) INVESTMENT FUNDS. Any investments made by the Company or by the Trustee of Trust Agreement No. 2 referred to in paragraph (f) below to conform to directions made by a Participant pursuant to this Section shall be in investment funds maintained in the name of the Company, or in the name of such Trustee, and no Participant shall at any time have any interest in the assets of any such investment fund. 2

(e) STATEMENT OF ACCOUNTS. A statement of accounts for each Participant, showing contributions, earnings, gains and losses and current balances of the Accounts provided for under this Article IV shall be provided to each Participant on not less than a quarterly basis. (f) TRUST AGREEMENT NO. 2. Notwithstanding the preceding provisions of this Section, during the existence of Trust Agreement No. 2 referred to in the second paragraph of Section 8.2, the Company shall direct the Trustee of Trust Agreement No. 2 to invest and reinvest amounts to conform to directions made by a Participant pursuant to the preceding provisions of this Section 4.5. Directions shall be given by the Company to the Trustee of Trust Agreement No. 2 as soon as practicable after such directions are given to the Company by the Participant. IN WITNESS WHEREOF, this Third Amendment has been executed, this 30th day of May, 1996, effective as of June 1, 1996. AAR CORP.

after the date such modification direction becomes effective, in specified multiples of 10%. Each Participant shall also have the right to direct the Committee to change the investment directions made pursuant to paragraph (a) above with respect to amounts credited to his Accounts on the date such direction to change becomes effective, in specified multiples of 10%. (c) EFFECTIVE DATE OF INVESTMENT DIRECTION. Any investment direction, or modification or change of an investment direction, made pursuant to paragraph (a) or (b) above, shall be effective as soon as practicable (and in any event not later than the first day of the month that occurs at least 30 days) after the date the applicable direction is given to the Committee. A modification or change of an investment direction made pursuant to paragraph (b) may, if required by an administrative rule promulgated by the Committee, be made only once in each calendar quarter. In the event that the sponsor of the investment funds permits more frequent fund transfers than permitted above, or does not require written direction to authorize fund transactions, the Committee may waive or modify the requirements set forth in the preceding provisions of this Section as it deems appropriate. (d) INVESTMENT FUNDS. Any investments made by the Company or by the Trustee of Trust Agreement No. 2 referred to in paragraph (f) below to conform to directions made by a Participant pursuant to this Section shall be in investment funds maintained in the name of the Company, or in the name of such Trustee, and no Participant shall at any time have any interest in the assets of any such investment fund. 2

(e) STATEMENT OF ACCOUNTS. A statement of accounts for each Participant, showing contributions, earnings, gains and losses and current balances of the Accounts provided for under this Article IV shall be provided to each Participant on not less than a quarterly basis. (f) TRUST AGREEMENT NO. 2. Notwithstanding the preceding provisions of this Section, during the existence of Trust Agreement No. 2 referred to in the second paragraph of Section 8.2, the Company shall direct the Trustee of Trust Agreement No. 2 to invest and reinvest amounts to conform to directions made by a Participant pursuant to the preceding provisions of this Section 4.5. Directions shall be given by the Company to the Trustee of Trust Agreement No. 2 as soon as practicable after such directions are given to the Company by the Participant. IN WITNESS WHEREOF, this Third Amendment has been executed, this 30th day of May, 1996, effective as of June 1, 1996. AAR CORP.
By /s/ Ira A. Eichner -------------------------------------Ira A. Eichner, Chairman

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EXHIBIT 21.1 SUBSIDIARIES OF AAR CORP. (1)
STA NAME OF CORPORATION INCOR - ------------------------------------------------------------------------------------------------- ---AAR Aircraft Group, Inc. (2)..................................................................... AAR Allen Group, Inc. (3)........................................................................ AAR Allen Services, Inc. (4)..................................................................... AAR Engine Group, Inc. (5)....................................................................... AAR Engine Services, Inc. (6).................................................................... AAR Financial Services Corp...................................................................... AAR Hardware Corp. (7)........................................................................... AAR International, Inc. (8)...................................................................... AAR Manufacturing Group, Inc. (9)................................................................ AAR PowerBoss, Inc. (10).........................................................................

(e) STATEMENT OF ACCOUNTS. A statement of accounts for each Participant, showing contributions, earnings, gains and losses and current balances of the Accounts provided for under this Article IV shall be provided to each Participant on not less than a quarterly basis. (f) TRUST AGREEMENT NO. 2. Notwithstanding the preceding provisions of this Section, during the existence of Trust Agreement No. 2 referred to in the second paragraph of Section 8.2, the Company shall direct the Trustee of Trust Agreement No. 2 to invest and reinvest amounts to conform to directions made by a Participant pursuant to the preceding provisions of this Section 4.5. Directions shall be given by the Company to the Trustee of Trust Agreement No. 2 as soon as practicable after such directions are given to the Company by the Participant. IN WITNESS WHEREOF, this Third Amendment has been executed, this 30th day of May, 1996, effective as of June 1, 1996. AAR CORP.
By /s/ Ira A. Eichner -------------------------------------Ira A. Eichner, Chairman

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EXHIBIT 21.1 SUBSIDIARIES OF AAR CORP. (1)
STA NAME OF CORPORATION INCOR - ------------------------------------------------------------------------------------------------- ---AAR Aircraft Group, Inc. (2)..................................................................... AAR Allen Group, Inc. (3)........................................................................ AAR Allen Services, Inc. (4)..................................................................... AAR Engine Group, Inc. (5)....................................................................... AAR Engine Services, Inc. (6).................................................................... AAR Financial Services Corp...................................................................... AAR Hardware Corp. (7)........................................................................... AAR International, Inc. (8)...................................................................... AAR Manufacturing Group, Inc. (9)................................................................ AAR PowerBoss, Inc. (10).........................................................................

(1) Subsidiaries required to be listed pursuant to Regulation S-K Item 601(b)(21). (2) Also does business under the name of AAR Oklahoma. (3) Also does business under the names AAR Allen Aircraft, AAR Expendables and AAR Defense Systems. (4) Also does business under the names AAR Landing Gear Center, AAR Technical Service Center and Mars Aircraft Radio. (5) Also does business under the names AAR Aircraft Turbine Center and AAR Engine Sales & Leasing. (6) Also does business under the name AAR Engine Component Services. (7) Also does business under the name AAR Hardware. (8) Also does business under the names AAR Allen Group International, AAR Engine Group International, AAR Aircraft Group International and AAR Manufacturing Group International.

EXHIBIT 21.1 SUBSIDIARIES OF AAR CORP. (1)
STA NAME OF CORPORATION INCOR - ------------------------------------------------------------------------------------------------- ---AAR Aircraft Group, Inc. (2)..................................................................... AAR Allen Group, Inc. (3)........................................................................ AAR Allen Services, Inc. (4)..................................................................... AAR Engine Group, Inc. (5)....................................................................... AAR Engine Services, Inc. (6).................................................................... AAR Financial Services Corp...................................................................... AAR Hardware Corp. (7)........................................................................... AAR International, Inc. (8)...................................................................... AAR Manufacturing Group, Inc. (9)................................................................ AAR PowerBoss, Inc. (10).........................................................................

(1) Subsidiaries required to be listed pursuant to Regulation S-K Item 601(b)(21). (2) Also does business under the name of AAR Oklahoma. (3) Also does business under the names AAR Allen Aircraft, AAR Expendables and AAR Defense Systems. (4) Also does business under the names AAR Landing Gear Center, AAR Technical Service Center and Mars Aircraft Radio. (5) Also does business under the names AAR Aircraft Turbine Center and AAR Engine Sales & Leasing. (6) Also does business under the name AAR Engine Component Services. (7) Also does business under the name AAR Hardware. (8) Also does business under the names AAR Allen Group International, AAR Engine Group International, AAR Aircraft Group International and AAR Manufacturing Group International. (9) Also does business under the names AAR Advanced Structures, AAR Cadillac Manufacturing and AAR Skydyne. AAR Manufacturing Group, Inc. was formerly known as AAR Brooks & Perkins Corp. (10) Also does business under the name AAR PowerBoss.

EXHIBIT 23.1 The Board of Directors AAR CORP.: We consent to the incorporation by reference in Registration Statement Nos. 33-19767, 33-26783, 33-38042, 33-43839, 33-58456, 33-56023, 33-57753 and 333-00205 on Form S-8 and in Registration Statement Nos., 33-30222 and 33-42326 on Form S-3 of AAR CORP. of our report dated June 28, 1996, relating to the consolidated balance sheets of AAR CORP. and subsidiaries as of May 31, 1996 and 1995 and the related consolidated statements of income, stockholders' equity and cash flows for each of the years in the three-year period ended May 31, 1996, which report appears in the May 31, 1996 annual report on Form 10-K of AAR CORP. KPMG Peat Marwick LLP

EXHIBIT 23.1 The Board of Directors AAR CORP.: We consent to the incorporation by reference in Registration Statement Nos. 33-19767, 33-26783, 33-38042, 33-43839, 33-58456, 33-56023, 33-57753 and 333-00205 on Form S-8 and in Registration Statement Nos., 33-30222 and 33-42326 on Form S-3 of AAR CORP. of our report dated June 28, 1996, relating to the consolidated balance sheets of AAR CORP. and subsidiaries as of May 31, 1996 and 1995 and the related consolidated statements of income, stockholders' equity and cash flows for each of the years in the three-year period ended May 31, 1996, which report appears in the May 31, 1996 annual report on Form 10-K of AAR CORP. KPMG Peat Marwick LLP Chicago, Illinois August 15, 1996

ARTICLE 5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED MAY 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED
1 2

YEAR MAY 31 1996 JUN 01 1995 MAY 31 1996 33,606 0 109,628 2,490 138,200 338,012 129,490 74,659 437,846 79,385 118,292 0 0 16,404 188,231 437,846 504,990 504,990 414,225 472,548 0 900 9,660 22,782 6,770 16,012 0 0 0 16,012 1.00 1.00

1 2

Provisions for doubtful accounts is included in Total Costs and Expenses. Interest expense is presented net of $956 of interest income.

ARTICLE 5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED MAY 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED
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YEAR MAY 31 1996 JUN 01 1995 MAY 31 1996 33,606 0 109,628 2,490 138,200 338,012 129,490 74,659 437,846 79,385 118,292 0 0 16,404 188,231 437,846 504,990 504,990 414,225 472,548 0 900 9,660 22,782 6,770 16,012 0 0 0 16,012 1.00 1.00

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Provisions for doubtful accounts is included in Total Costs and Expenses. Interest expense is presented net of $956 of interest income.