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Executive Vice President Severance Agreement

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AMENDED AND RESTATED
SEVERANCE AND CHANGE IN CONTROL AGREEMENT


This Amended and Restated Severance and Change in Control
Agreement ("Agreement") made and entered into as of the 11th
day of April, 2000, by and between AAR CORP., a Delaware
corporation ("Company"), and Philip C. Slapke ("Employee").


WHEREAS, the Company currently employs Employee as an employee at will in the capacity of Executive Vice President; and


WHEREAS, the Company and Employee entered into a Severance and Change in Control Agreement dated February 24, 1995 ("Agreement"); and


WHEREAS, the Company and Employee amended and restated the Agreement as of the 8th day of April, 1997, and further amended the Agreement as of the 14th day of July, 1998 ("Original Agreement"); and


WHEREAS, the Company and Employee desire to further amend the Agreement as herein set forth to reflect certain mutually agreed changes to the terms and conditions thereof; and


WHEREAS, for their mutual convenience, the Company and Employee desire to restate the Agreement, as so amended, in its entirety.


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. Employee will continue employment with the Company as an at
will employee subject to the terms and conditions hereinafter set
forth.


2. DUTIES. During the continuation of Employee's employment, Employee
shall:


(a) well and faithfully serve the Company and do and perform
assigned duties and responsibilities in the ordinary course of
Employee's 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 Employee's full time, energy and skill to the business
of the Company and Employee's 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 5 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
Employee's 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
Employee's 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. BENEFITS. Employee shall be entitled to participate, according to the
eligibility provisions of each, in such welfare plans (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. Employee shall be eligible to
participate in the Company's Supplemental Key Employee Retirement Plan
as an executive legal participant.


4. 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 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"),


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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, 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 mark 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.


5. NON-COMPETE; SEVERANCE.


(a) Employee agrees that during Employee's continuation of
employment with the Company and for one (1) year thereafter so
long as the Company makes the severance payments to Employee
pursuant to subsections 4(b) or 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 5 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) Upon termination of Employee's employment by the Company prior
to a Change in Control (as defined in 7(c)(i) below) for any
reason other than Cause (as defined in 7(c)(iv) below), the
Company will pay Employee severance each month


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for 12 months ("Severance Period"), in an amount (subject to
applicable withholding) equal to 1/12 of Employee's base
salary; and, further, the Company will pay Employee a PIP
bonus award in accordance with and subject to the terms and
conditions of Employee's PIP in a lump sum at the time any
such PIP bonuses are payable under the PIP 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), for any PIP bonuses earned (1) in the
completed fiscal year preceding termination but not due and
payable prior to termination, and (2) prorata for the period
prior to termination of employment in any partial PIP fiscal
year based on Employee's performance against Employee's PIP
during such partial 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 or Employee's
employment is terminated by the Company for Cause (as defined
below), 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 5(b) above.


(d) Employee may terminate this Severance and Change in Control
Agreement effective immediately upon notice thereof in writing
to Company at any time while still employed within a sixty
(60) calendar day period immediately following the effective
date of any reduction by Company in (i) Employee's level of
responsibility or position from that held by Employee as
Executive Vice President on the effective date of this
Agreement, or (ii) Employee's level of compensation, including
retirement benefits in effect immediately prior to any such
change.


(e) If at any time, any clause or portion of this Section 5 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 5(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.


(f) The Employee acknowledges and agrees that the Company would be
irreparably harmed by violations of Section 4 or Section 5(a)
above, and in recognition thereof, the Company shall be
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