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Amendment No. 1 to
AAR CORP. Directors' Retirement Plan
WHEREAS, AAR CORP. ("Company") adopted the AAR CORP. Directors'
Retirement Plan ("Plan") effective April 14, 1992; and
WHEREAS, the Company now desires to amend the Plan in certain respects;
NOW, THEREFORE, the Company hereby amends the Plan as follows:
1. A new subsection 1.03.5 is added as follows:
"1.03.05 "Change in Control" means the earliest of:
(a) 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;
(b) 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
(c) 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 directors, or (ii)
directors constituting a majority of the number of directors
of the Company then in office."
2. A new subsection 3.01(b) is added as follows:
"3.01(b) Notwithstanding the provisions of Section
3.01(a) above, the Company shall enter into a trust agreement
("Trust Agreement") with a bank or trust company (with a
combined capital and surplus in excess of $100 million
dollars), located in the Continental United States, as
trustee, whereby the Company shall agree to contribute to a
trust ("Trust") initially and annually thereafter, for the
purpose of accumulating assets actuarially sufficient to
satisfy accrued obligations to Participants under Article II
hereof, in the event of a Change in Control of the Company.
The Trust
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Agreement shall obligate the Company to make contributions
sufficient to satisfy the obligations to Participants, under
Article II hereof; provided, however, that such initial
contribution shall be made on the earlier to occur of (i)
within 10 days after the date the Board, in its discretion,
deems a Change in Control of the Company likely to occur and
(ii) the date a Change in Control actually occurs. The
discretion of the Board shall be binding and conclusive with
respect to the likelihood of a Change in Control of the
Company to occur. Such Trust Agreement shall be substantially
in the form of the model trust agreement set forth in Internal
Revenue Service Revenue Procedure 92-64, or any subsequent
Internal Revenue Service Revenue Procedure, and shall include
provisions required in such model trust agreement that all
assets of the Trust shall be subject to the creditors of the
Company in the event of insolvency. The Trust provided for
herein may be the same trust as the Company establishes for
funding of benefits under the Company's AAR CORP. Supplemental
Key Employee Retirement Plan ("SKERP").
AAR CORP.
By /s/ David P. Storch
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Dated: May 26, 2000
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