Exhibit 10.1
AAR CORP.
NON-QUALIFIED STOCK OPTION
AGREEMENT
(“Agreement”)
Subject to the provisions set forth
herein and the terms and conditions of the AAR CORP. Stock Benefit
Plan (“Plan”), the terms of which are hereby
incorporated by reference, and in consideration of the agreements
of the Grantee herein provided, AAR CORP., a Delaware corporation
(“Company”), hereby grants to the Grantee an option
entitling the Grantee to purchase from the Company common stock of
the Company, par value $1.00 per share (“Common
Stock”), in the number of shares at the purchase price per
share, and on the schedule, set forth in the Company’s
notification of option grant letter to Grantee dated
and incorporated herein by reference (“Option”),
subject to the terms and conditions set forth herein:
1.
Acceptance by Grantee
. The exercise of the Option
is conditioned upon the acceptance by the Grantee of the terms and
conditions of the Option as set forth in this Agreement. The
Grantee must confirm acceptance of the Agreement on Smith
Barney’s web site (www.benefitaccess.com). If the Grantee
does not accept the Agreement within 30 days from the date of the
notification of the Agreement, the Option grant referenced herein
shall expire unless the acceptance date is extended in writing
signed by the Company.
2.
Termination of
Employment .
(a)
In General
. If the Grantee’s
employment with the Company and all subsidiaries of the Company is
terminated for any reason other than for Retirement, death,
Disability or Cause, the unvested portion of the Grantee’s
Option shall expire on the date of such termination of employment
and the vested portion of the
Grantee’s Option shall continue to be
exercisable until the earlier of (i) three months after such
termination of employment or (ii) the date the Option expires
in accordance with its terms.
(b)
Retirement
. If the Grantee’s
employment with the Company and all subsidiaries of the Company is
terminated by reason of Retirement, the Option shall continue to
vest and become exercisable in accordance with its terms and may be
exercised by the retired Grantee in the same manner and to the same
extent as if the Grantee had continued employment during that
period; provided, however, that (i) if the Grantee dies within
three months following Retirement but before the Option expires,
paragraph 3(c)(ii) shall apply and (ii) if the Grantee
dies later than three months following Retirement but before the
Option expires, the then unvested portion of the Option shall
expire on the date of such death and the vested portion of the
Option shall continue to be exercisable by the Grantee’s
Successor until the date that the Option expires by its
terms. For this purpose, “Retirement” means the
Grantee’s voluntary termination of 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.
(c)
Death . If (i) the Grantee’s
employment with the Company and all subsidiaries of the Company is
terminated by reason of death or (ii) the Grantee dies within
three months after the termination of employment with the Company
and all subsidiaries for reasons other than Cause, the unvested
portion of the Option shall expire on the date of such death and
the vested portion of the Option shall continue to
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be exercisable until the earlier of (i) one
year after the Grantee’s death or (ii) the date the
Option expires in accordance with its terms.
(d)
Disability
. If the Grantee’s
employment with the Company and all subsidiaries is terminated by
reason of Disability, the Option shall continue to vest and become
exercisable until the earlier of (i) one year after such
termination of employment or (ii) the date the Option expires
in accordance with its terms, and during such period the Option may
be exercised by the disabled Grantee; provided, however, that if
the Grantee dies after termination of employment but prior to the
date the Option expires, the unvested portion of the Option shall
expire on the date of such death and the vested portion of the
Option shall continue to be exercisable until the Option expires as
described herein. 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.
(e)
Cause . If the Grantee’s employment is
terminated by the Company or any subsidiary of the Company for
Cause, the Option shall expire immediately upon such termination of
employment and no portion of the Option shall be exercisable
thereafter. For this purpose, “Cause” means
(i) the Grantee’s dishonesty, fraud or breach of trust,
gross negligence or substantial misconduct in the performance of,
or substantial nonperformance of, his assigned duties or willful
violation of Company policy, (ii) any act or omission by the
Grantee that is a substantial cause for a regulatory body with
jurisdiction over the Company to request or recommend the
suspension or removal of the participant or to impose sanctions
upon the Company or the Grantee, or
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(iii) a material breach by the Grantee of
any applicable employment agreement between him and the
Company. The Company shall have the sole discretion to
determine whether a Grantee’s termination of employment is
for Cause.
(f)
Restrictive Covenant
. If at any time
prior
