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EXHIBIT 10.6
AMENDMENT NO. 2
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 (the "SKERP" or "Plan"); and
WHEREAS, the Company further amended the Plan on April 10, 2001 (Amendment
No. 1); and
WHEREAS, the Company now desires to further amend the Plan in certain
respects;
NOW THEREFORE, the Company hereby amends the Plan as follows, effective as
of October 1, 2001:
1. Section 1.17 of the Plan 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 (including any
increased amounts payable with respect to any calendar year as described in
Appendix A of the Qualified Retirement Plan) by reason of his termination
of employment with the Company and all Affiliated Companies for any reason
other than death; provided, however, that such benefit shall be determined
in accordance with Section 3.1 or Section 3.2 as applicable.
2. Section 1.26 of the Plan is hereby amended to read as follows:
1.26. "Supplemental Retirement Benefit" means the benefit payable to a
Participant pursuant to Section 3.1 or 3.2 of the Plan by reason of his
termination of employment with the Company and all Affiliated Companies for
any reason other than death, or in connection with the termination of the
Plan or termination of participation in the Plan.
3. Article II of the Plan is hereby amended by adding a new Section 2.3
thereto to read as follows:
2.3 CESSATION OF PARTICIPATION. Notwithstanding the foregoing
provisions of Section 2.1 or Section 2.2, effective as of October 1, 2001:
(a) No Executive Officer or Key Employee who was not already a
Participant in the Plan as of October 1, 2001 shall be eligible to
participate in the
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Plan with respect to the Supplemental Retirement Benefit or Supplemental
Surviving Spouse Benefit set forth in Section 3.1, 3.2 and 3.3 of the Plan;
and
(b) No Participant who is a Key Employee shall accrue any further
Supplemental Retirement Benefit or Supplemental Surviving Spouse Benefit on
or after October 1, 2001.
4. The last paragraph of Section 3.1 of the Plan is hereby amended to
read as follows:
For purposes of determining the Supplemental Retirement Benefit described
above:
(i) The amount described in (a) above for any Participant who
commences participation in the Plan after January 1, 2001 shall be
multiplied by a fraction, the numerator of which shall be years of Credited
Service not to exceed 20, and the denominator of which shall be 20,
determined as of the date of the Participant's termination of employment
with the Company and all Affiliated Companies.
(ii) A Participant's Final Average Earnings described in (a) above
shall be determined as of October 1, 2001, and shall be adjusted by an
amount equal to 25% of the percentage increase in the Participant's base
salary in effect on September 30, 2001 compared to the Participant's base
salary in effect on the date of the Participant's termination of employment
for any reason, including Retirement, Disability or death.
(iii) In determining a Participant's Qualified Retirement Benefit, the
Participant's Cash Account Balance shall not be credited with any Credits
for any period of time on or after October 1, 2001, and the participant
shall be deemed to have received his Cash Account Balance on October 1,
2001; and in the case of a Participant who is a Grandfathered Participant,
the Grandfathered Benefit shall be calculated considering the Participant's
Final Average Earnings, Credited Service (not in excess of 20 years) and
Social Security offset as of October 1, 2001.
(iv) The amounts described in (a) and (b) shall be computed in the
form of an annuity payable over the Participant's lifetime only.
5. Section 3.2 of the Plan is hereby amended to read as follows:
3.2 KEY EMPLOYEES. Effective as of October 1, 2001, no Participant
who is a Key Employee of the Company as described in Section 2.2 shall
accrue any further Supplemental Retirement Benefit. The Supplemental
Retirement Benefit of a Participant who is such a Key Employee shall be a
monthly amount equal to the difference between (a) and (b) below:
(a) The monthly amount of the Qualified Retirement Benefit accrued
as of October 1, 2001 to which the Participant would have been entitled
under the Qualified Retirement Plan without giving effect to the
limitations imposed by Section 401(a)(17) or any other section of the Code;
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LESS
(b) The monthly amount of the Qualified Retirement Benefit accrued
as of October 1, 2001 and payable to the Participant under the Qualified
Retirement Plan at October 1, 2001.
For purposes of determining the Supplemental Retirement Benefit described
above:
(i) For calculating the Qualified Retirement Benefit under Section
3.2(a) only, any Key Employee Participant who was over the age of 55 on
January 1, 2000 shall be deemed a "Grandfathered Participant" as defined
under the Qualified Retirement Plan.
(ii) A Participant's Final Average Earnings shall be determined as of
October 1, 2001, and shall not be based on or include Compensation earned
by a Participant after such date.
(iii) In determining a Participant's Qualified Retirement Benefit, the
Participant's Cash Account Balance shall not be credited with Pay Credits
for any period of time on or after October 1, 2001, and in the case of a
Participant who is a Grandfathered Participant, the Grandfathered Benefit
shall be calculated considering the Participant's Final Average Earnings,
Credited Service (not in excess of 20 years) and Social Security offset as
of October 1, 2001.
(iv) The amounts described in (a) and (b) shall be computed in the
form of an annuity payable over the Participant's lifetime only.
6. Section 3.3 of the Plan is hereby amended to add a final sentence to
the end thereof to read as follows:
Notwithstanding the foregoing provisions of this Section 3.3, no
Participant who is a Key Employee of the Company as described in Section
2.2 shall accrue any further Supplemental Surviving Spouse Benefit on or
after October 1, 2001.
7. The second sentence of Section 7.2 of the Plan is hereby amended to
delete the reference to "Sections 3.4 through 3.8" and insert "Sections 3.4 and
3.5" in lieu thereof.
8. Article VII of the Plan is hereby amended by adding a new Section 7.4
thereto to read as follows:
7.4 TERMINATION OF PARTICIPATION. The Company, in its sole
discretion, shall have the right to terminate the participation in the Plan
or any portion thereof of any Executive Officer or Key Employee whose
initial participation in the Plan was designated by the Compensation
Committee, upon recommendation of management, pursuant to Section 1.6 or
1.7. Upon such termination of participation, distribution of the
Supplemental Retirement Benefit, Supplemental Surviving Spouse Benefit, and
amounts in the Supplemental Salary Deferral Account, Supplemental Company
Account and Supplemental Profit Sharing
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Account, as applicable to such Participant, determined as of the date of
termination of participation, shall be made to such Participant, his
Surviving Spouse or beneficiaries either (i) in the manner and at the time
described in Articles III and IV of the Plan; or (ii) in the sole
discretion of the Company in a lump sum payment as soon as practicable
following such termination of participation. No additional Supplemental
Retirement Benefit or Surviving Spouse Benefit shall be earned by such
Participant after termination of his participation in the Plan with respect
to such benefits, and no additional credits of Supplemental Salary Deferral
Contributions, Supplemental Company Contributions or Supplemental Profit
Sharing Contributions shall be made to the Accounts of such Participant
after termination of his participation in the Plan with respect to such
benefits, but the Company shall continue to credit earnings, gains and
losses to existing Accounts of such Participant pursuant to Section 4.5
until the balances of such Accounts have been fully distributed to the
Participant or his beneficiaries.
IN WITNESS WHEREOF, this Amendment No. 2 has been executed on this 10th day
of October, 2001.
AAR CORP.
By: /s/ David P. Storch
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David P. Storch, President
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