REVOLVING LOAN AGREEMENT





         This REVOLVING LOAN AGREEMENT dated as of April 11, 2001 (the

"Agreement"), is entered into by and between AAR CORP., a Delaware corporation

(the "Borrower"), whose address is 1100 North Wood Dale Road, Wood Dale,

Illinois 60191 and LASALLE BANK NATIONAL ASSOCIATION, a national banking

association (the "Bank"), whose address is 135 South LaSalle Street, Chicago,

Illinois 60603.



         In consideration of the mutual agreements hereinafter set forth, the

Borrower and the Bank hereby agree as follows:



1.       DEFINITIONS.



         1.1      DEFINED TERMS. For the purposes of this Agreement, the

following capitalized words and phrases shall have the meanings set forth below.



                  "ACCOUNT" shall have the meaning set forth in Section 12.1.



                  "ACCOUNTS RECEIVABLE" shall have the meaning set forth in

         Section 8.4.



                  "ACQUISITION" means any transaction, or any series of related

         transactions, consummated on or after the date of this Agreement, by

         which the Borrower or any of its Subsidiaries (i) acquires any going

         business or all or substantially all of the assets of any firm,

         corporation or division thereof, whether through purchase of assets,

         merger or otherwise or (ii) directly or indirectly acquires (in one

         transaction or as the most recent transaction in a series of

         transactions) at least a majority (in number of votes) of the

         securities of a corporation which have ordinary voting power for the

         election of directors (other than securities having such power only by

         reason of the happening of a contingency) or a majority (by percentage

         or voting power) of the outstanding partnership interests of a

         partnership.



                  "AFFILIATE" of any Person means any other Person directly or

         indirectly controlling, controlled by or under common control with such

         Person. A Person shall be deemed to control another Person if the

         controlling Person owns 10% or more of any class of voting securities

         (or other ownership interests) of the controlled Person or possesses,

         directly or indirectly, the power to direct or cause the direction of

         the management or policies of the controlled Person, whether through

         ownership of stock, by contract or otherwise.



                  "BUSINESS DAY" shall mean any day other than a Saturday,

         Sunday or a legal holiday on which banks are authorized or required to

         be closed for the conduct of commercial banking business in Chicago,

         Illinois.



                  "BORROWER'S UNSECURED LENDERS" shall mean any lender extending

         credit to Borrower on an unsecured basis under similar revolving loan

         facilities, including, but not



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         limited to, Bank One, Bank of America, N.A. The Northern Trust Company

         and any other lenders who may replace these lenders or be added to

         these facilities from time to time.



                  "CAPITAL LEASE" shall mean, as to any person or entity, a

         lease of any interest in any kind of property or asset, whether real,

         personal or mixed, or tangible or intangible, by such person or entity

         as lessee that is, or should be, in accordance with Financial

         Accounting Standards Board Statement No. 13, as amended from time to

         time, or, if such Statement is not then in effect, such statement of

         GAAP as may be applicable, recorded as a "capital lease" on the balance

         sheet of the Borrower prepared in accordance with GAAP.



                  "CAPITALIZED LEASE OBLIGATIONS" of a person means the amount

         of the obligations of such person under Capitalized Leases which would

         be shown as a liability on a balance sheet of such person prepared in

         accordance with GAAP.



                  "CHANGE IN CONTROL" means (i) the acquisition by any person,

         or two or more persons acting in concert, of beneficial ownership

         (within the meaning of Rule 13d-3 of the Securities and Exchange

         Commission under the Securities Exchange Act of 1934, as amended) of

         20% or more of the outstanding shares of voting stock of the Borrower

         or (ii) a majority of the directors on the Borrower's Board of

         Directors shall cease to be directors of the Borrower during an twelve

         month period.



                  "CODE" shall mean the United States Bankruptcy Code, as now

         existing or hereafter amended.



                  "CONSOLIDATED ASSETS" means the total consolidated assets of

         the Borrower and its Subsidiaries determined in accordance with GAAP.



                  "CONSOLIDATED CURRENT ASSETS" means the total consolidated

         current assets of the Borrower and its Subsidiaries determined in

         accordance with GAAP.



                  "CONSOLIDATED CURRENT LIABILITIES" means the total

         consolidated current liabilities of the Borrower and its Subsidiaries

         determined in accordance with GAAP.



                  "CONSOLIDATED EARNINGS AVAILABLE FOR FIXED CHARGES" means, for

         any period, the sum of (i) Consolidated Net Income (excluding gains and

         losses from the sale of assets other than in the ordinary course of

         business and income or losses derived from discontinued operations),

         PLUS to the extent deducted in determining Consolidated Net Income (ii)

         all provisions for any federal, state, or other income taxes made by

         the Borrower and its Subsidiaries during such period, PLUS (iii)

         Consolidated Fixed Charges during such period, and PLUS (iv) deferred

         financing costs for such period.



                  "CONSOLIDATED FIXED CHARGES" means, without duplication, for

         any period, the sum of (i) current maturities for such period, (ii)

         interest expense on indebtedness (excluding capitalized leases) for

         such period, PLUS (iii) total rental expense under all





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         leases other than capitalized leases, and PLUS (iv) imputed interest

         expense under capitalized leases for the Borrower and its Subsidiaries

         for such period.



                  "CONSOLIDATED FUNDED DEBT" means all Indebtedness having a

         final maturity of more than one year plus unsecured Indebtedness to the

         Bank.. Consolidated Funded Debt shall not include payments due within

         one year from the date as of which a calculation of Consolidated Funded

         Debt is made.



                  "CONSOLIDATED LIABILITIES" means the total consolidated

         liabilities of the Borrower and its Subsidiaries determined in

         accordance with GAAP.



                  "CONSOLIDATED NET INCOME" shall mean, for any period, the net

         income (or loss) of the Borrower and its Subsidiaries on a consolidated

         basis for such period taken as a single accounting period determined in

         accordance with GAAP; PROVIDED, that there shall be excluded (i) the

         income (or loss) of any Affiliate of the Borrower or other Person(other

         than a Subsidiary of the Borrower) in which any Person (other than the

         Borrower or any of its Subsidiaries) has a joint interest, except to

         the extent of the amount of dividends or other distributions actually

         paid to the Borrower, or any of its Subsidiaries by such Affiliate or

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