Capital Goods

SPLIT-DOLLAR INSURANCE AGREEMENT

     THIS AGREEMENT is entered into this 21st day of November, 1994, by and between General Dynamics (the Company), and the Mellor Family Irrevocable Trust (the Trust), and James R. Mellor, Jr., Deborah Mellor Rye and Diane Mellor Liljestrom, as trustees of the Trust (the Trustees).

     NOW THEREFORE, the Company and the Trust agree as follows:

     1.     The life insurance policy (the Policy) with which the agreement deals is Policy Number ______issued by The Massachusetts Mutual Life Insurance Company (Insurer) on the lives of James R. and Suzanne S. Mellor (the Insureds). The Trust shall be the sole owner of the Policy.

     2.     The entire premium on the Policy shall be paid by the Company as it becomes due. The Company shall pay an annual premium of $535,806 for a period of ten years to the Insurer. No contributory amount shall be paid by the Trust or the Trustees.

     3.     Dividends shall be applied to purchase paid-up additional insurance protection.

     4.     To secure the Companys share of the premiums paid by it in paragraph 2 above, the Trust has executed an assignment of the Policy to the Company in substantially the form as attached hereto as Exhibit A for the Policy.

     5.     In the event the Policy becomes a claim by reason of the Insureds deaths, the Company shall have an interest in the proceeds of the Policy equal to the total value of its share of the premiums paid under paragraph 2 of this agreement. The balance, if any, of the proceeds of the Policy shall be paid directly by the Insurer to the Trustees.


234870

Composite Form
of
SPLIT DOLLAR INSURANCE AGREEMENT

This Split Dollar Agreement (the �Agreement�) is made and entered into as of the          day of                               , by and between AAR CORP., a corporation duly organized and existing under the laws of the State of Delaware (the �Corporation�) and                  . . .