EMPLOYMENT AND SEVERANCE AND CHANGE IN CONTROL AGREEMENT
This Employment and Severance and Change in Control Agreement
("Agreement") made and entered into as of the 1st day of June,
2001, by and between AAR CORP., a Delaware corporation
("Company"), and XXXXXX X. XXXXXXX ("Employee").
WHEREAS, the Employee has been employed with the Company as its Vice
President-Strategic Planning & Acquisitions since March 1, 2001, on an
employment-at-will basis; and
WHEREAS, the Company has offered Employee continued employment for a specified
term, as provided for below, and Employee has accepted such offer of continued
employment pursuant to the terms and conditions set forth herein.
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.
(a) Employee agrees to continue his employment with the Company through
May 31, 2005 subject to the terms and conditions set forth herein.
After May 31, 2005 Employee's employment shall continue on an
employment-at-will basis terminable by either party at any time for
any reason or no reason, and subject to the terms and conditions set
forth herein. The Company may change Employee's title, duties and
location of employment from time to time as the Company determines, in
its sole discretion, to be in the bests interest of the Company.
b. Compensation and benefits shall be as set forth in Attachment A
hereto.
2. DUTIES. During his employment, Employee shall:
(a) well and faithfully serve the Company and do and perform assigned
duties and responsibilities in the ordinary course of his 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 his full time, energy and skill to the business of the Company
and his 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 4 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 his 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 his 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. 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 the 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.
(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,
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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 xxxx registration or otherwise, including executing specific
assignments or such other documents or taking such 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.
4. NON-COMPETE; SEVERANCE.
(a) Employee agrees that through May 31, 2005, or thereafter during
Employee's continuation of employment with the Company and for one
year thereafter, provided that the Company makes severance payments to
Employee pursuant to subsections 4(b) and 4(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 4 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
6(c)(i) below) for any reason other than Cause (as defined in 6(c)(iv)
below), severance each month for
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twelve months in an amount (subject to applicable withholding) equal
to 1/12 of Employee's annual 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), (1) for the completed fiscal
year preceding termination if such bonus has not been paid prior to
termination, and (2) 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 (i) all such monthly payment obligations shall terminate
immediately upon Employee obtaining full time employment in a
comparable position in terms of salary level, and (ii) all such
payment obligations shall terminate or lapse immediately upon any
breach by Employee of Section 4 or 5(a) of this Agreement or if
Employee shall commence any action or proceeding in any court or
before any regulatory agency arising out of or in connection with
termination of Employee's employment.
(c) If Employee terminates Employee's employment prior to May 31, 2005,
Employee shall be subject to the provisions of subsection 4(a) until
May 31, 2005. If Employee's employment is terminated by the Company
for Cause (as defined below) or Employee terminates his employment
after May 31, 2005, and prior to a Change in Control, 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 Change in Control (as defined below), to
pay Employee severance as provided in and subject to the provisions of
subsection 4(b) above.
(d) If at any time, any clause or portion of this Section 4 shall be
deemed invalid or unenforceable by the laws of the jurisdiction in
which it is to be enforced by reason of being vague or unreasonable as
to duration, geographic scope, nature of activities restricted, or for
any other reason, this provision shall be considered divisible as to
such portions and the foregoing restrictions set forth in 4(a) shall
become and be immediately amended to include only such duration, scope
or restriction and such event as shall be deemed reasonable and
enforceable by the court or other body having jurisdiction to enforce
this Agreement; and the parties hereto agree that the restrictions, as
so amended, shall be valid and binding as though the invalid or
unenforceable portion had not been involved herein.
(e) The Employee acknowledges and agrees that the Company would be
irreparably harmed by violations of Section 3 or Section 4(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.
(f) Except as otherwise provided in this Agreement, Section 3 and 4 of
this Agreement shall survive any termination of Employee's employment
with the Company.
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5. TERMINATION OF EMPLOYMENT.
(a) Upon and after termination of employment howsoever arising, Employee
shall, upon request by Company:
(1) immediately return to the Company all correspondence, documents,
business calendars/diaries, or other property belonging to the
Company which is in Employee's possession,
(2) immediately resign from any office Employee holds with the
Company or any Affiliated Company; and
(3) 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.
6. CHANGE IN CONTROL.
(a) In the event (i) a Change in Control of AAR CORP. occurs, and (ii) (A)
at any time during the 18 month period commencing on the date of the
Change in Control 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 opportunity to be heard with respect thereto, or (B)
Employee's employment with the Company terminates for any reason other
than Disability or death during the 30 day period commencing on the
expiration of the aforementioned 18 month period, then:
(1) The Company shall promptly 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 extent
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 Company on the last day of the
fiscal year in which the date of termination occurs (as if all
performance targets have been met 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
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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.
(2) The Company shall promptly pay to Employee in a lump sum, a
cash payment in an amount equal to three 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. Employee may elect to take payment of
any amounts on a schedule of Employee's own choosing; provided
that such schedule shall be completed no later than three
years from the date of Employee's termination of employment.
(3) Employee and his 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 three 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 three 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 three year period.
(4) Employee shall receive an additional retirement benefit, over
and above that which Employee would normally be entitled to
under the Company's retirement plans or programs applicable to
Employee, equal to the additional amount that Employee would
have earned under such retirement plans or programs had
Employee accumulated three additional continuous years of
service. Such amount shall be paid to Employee in a cash lump
sum payment on the earlier to occur of Employee's termination
of employment following a Change in Control or Employee's
Retirement Date, together with a gross-up bonus in an amount
equal to any federal, state and local income taxes and excise
taxes (including FICA and any similar taxes) payable by
Employee on such lump sum payment and such gross-up bonus.
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(5) 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 6(a)(2) above.
(6) 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, whether or not such
Change in Control has the prior written approval of a majority of
the Continuing Directors (as defined in the AAR CORP. Stock Benefit
Plan), and notwithstanding any conditions or restrictions related
to any Award granted to Employee under the Plan, all Options or
Limited Rights, or both, granted to Employee under the Plan will
become immediately exercisable and remain exercisable for the full
remaining life of the option whether or not Employee's employment
continues, and all restrictions on Restricted Stock granted to
Employee under the Plan will immediately lapse.
(c) For purposes of this Agreement
(i) "Change in Control" means the earliest of:
(1) 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
(2) 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
(3) 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
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directors, or (ii) directors constituting a majority of the
number of directors of the Company then in office.
(ii) "Good Reason" means:
(1) 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 at any time
during the two-year period immediately after the Change
in Control; or
(2) if the incumbent in the position of President and CEO of
the Company on the effective date hereof is not the
President and 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 during the
two year period immediately 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
(3) a relocation of the primary place of employment of at
least 100 miles.
(iii) "Disability" means:
(1) 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 handicap 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
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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 3 years from the date of such
termination of this Agreement.
(iv) "Cause" means:
(1) Employee engages, during the performance of his duties
hereunder, in acts or omissions constituting dishonesty,
intentional breach of fiduciary obligation or intentional
wrongdoing or malfeasance;
(2) Employee intentionally disobeys or disregards a lawful and
proper direction of the Board or the Company; or
(3) Employee materially breaches the Agreement and such breach
by its nature, is incapable of being cured, or such breach
remains uncured for more than 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 (3), 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 the employment
of Employee or the modification or diminution of any of his
authority hereunder:
(1) any personal or policy disagreement between Employee and the
Company or any member of the Board, or
(2) any action taken by Employee in connection with his duties
hereunder, or any failure to act, if Employee acted or
failed to act in good faith and in a manner he 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
(3) termination of Employee's employment for overall
unsatisfactory performance (including, but not limited to,
failure to meet financial goals).
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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 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) The Company shall promptly pay Employee a gross-up bonus in an
amount equal to (i) all excise taxes payable under Section 280G of
the Internal Revenue Code on any amounts constituting "golden
parachute" payments, plus (ii) any federal, state, and local income
taxes and excise taxes (including FICA) payable by Employee on such
gross-up bonus in order to put Employee in the same position he
would have been in if the excise tax provision (Section 280G) did
not apply.
(f) 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.
7. 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
4 and 6 of this Agreement.
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8. SEVERANCE PAYMENT AS SOLE OBLIGATION. Except as expressly provided in
Sections 4 and 6 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 4 and 6 of this Agreement
shall be considered severance pay in consideration of Employee's 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.
9. 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 deposited in the United States mail, with proper
postage prepaid, telegram, teletype, cable or facsimile transmission to the
addresses listed below:
(a) If to the Company, to:
AAR CORP.
One AAR Place
0000 X. Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxx 00000
Attention: Chairman
With a copy to:
AAR CORP.
One AAR Place
0000 X. Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxx 00000
Attention: General Counsel
(b) If to Employee, to:
Xxxxxx X. Xxxxxxx
000 X. Xxxxxxxx Xxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
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.
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10. 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 assignment, 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.
11. 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.
12. 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.
13. ENTIRE AGREEMENT. This Agreement, 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.
14. 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
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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.
15. 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.
16. 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.
WITNESS the due execution of this Agreement by the parties hereto as of the day
and year first above written.
Company:
AAR CORP.
By: /s/ Xxxxxxx X. XxXxxxx
-----------------------------
Title: Vice President
Employee:
/s/ Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Employment and
Severance and Change in Control Agreement
Dated June 1, 2001
ATTACHMENT 1
Compensation and Fringe Benefits
1. Base Salary: $420,000 subject to annual merit review (any
increases to be approved by the Compensation
Committee of the Board of Directors).
2. Bonus: Employee's performance incentive bonus opportunity
shall be as follows, measured against an annual plan
determined by the President and CEO and communicated
to Employee:
50% of Base Salary at threshold*
80% of Base Salary at target**
Up to 100% of Base Salary for exceptional
performance as determined in the discretion of
the President and CEO and approved by the
Compensation Committee
3. Stock Benefit Plan participation:
- Eligible to receive stock options and restricted stock awards subject
to terms of the AAR CORP. Stock Benefit Plan.
- CEO recommendation for FY02 of a stock option grant of not less than
75,000 shares (subject to approval by the Compensation Committee in
its sole discretion).
- Restricted stock awards (as may be determined annually by the
Compensation Committee in its sole discretion).
4. Other Benefits: Participation, according to eligibility provisions of each,
in such welfare (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, including:
*Threshold equals 80% of Plan.
**Target equals 100% of Plan.
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- Executive disability program
- Executive financial counseling program
- Country Club membership dues
- Annual executive physical
- Executive Participant in SKERP (50% of eligible Compensation
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)
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