DISTRIBUTION SERVICES AGREEMENT
THIS DISTRIBUTION SERVICES AGREEMENT ("Agreement") is made as of November
3, 1999 by and between Allison Engine Company, Inc. d/b/a Rolls-Royce Allison, a
corporation with its principal place of business in Indianapolis, Indiana (the
"Company"), and Aviall Services, Inc., a corporation with its principal place of
business at 2075 Diplomat Drive, Dallas, Texas 75234-8999, U.S.A. (The
"Distributor").
RECITALS
A. The Company is engaged in the business of manufacturing, distributing,
marketing and selling the Products (as herein defined).
B. The Distributor has submitted a Proposal dated October 27, 1999
("Proposal") to the Company to become the exclusive distributor of the
Company's 250 Products, as hereinafter defined.
C. The Company has relied upon Distributor's proposal in appointing the
Distributor under the terms and conditions of the Agreement.
D. Distributor has relied upon data and information supplied by the Company in
making its Proposal and entering into this Agreement.
E. The Company therefore desires to appoint the Distributor as its distributor
to sell, market and otherwise distribute the Products in the Territory (as
herein defined), and the Distributor desires to be so appointed by the
Company, all upon the terms and conditions set forth in this Agreement.
F. As used in this Agreement, "Products" mean all Allison 250 parts, modules,
and all related technical publications, which, during the Term of this
Agreement are placed on the Company's price list, now or hereafter
manufactured, marketed, produced, re-manufactured or refurbished by
Company. The current list of Products is identified on Exhibit A attached
hereto.
G. As used in the Agreement, "Territory" means the entire world.
AGREEMENTS
NOW, THEREFORE, in consideration of the payment by Distributor to Company
of sixteen million ($16,000,000.00) dollars on or before December 30, 1999, and
the mutual
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agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Appointment of Distributor. Subject to Section 2 hereof, effective
January 1, 2000 the Company hereby appoints the Distributor as its
exclusive distributor for each of the Products in the Territory, and
the Distributor hereby accepts such appointment, all upon the terms
and conditions set forth in this Agreement.
2. Reserved Rights.
(a) Notwithstanding anything to the contrary contained herein,
the Company expressly reserves the right to sell Products
(i) directly to any airframe original equipment manufacturer
solely for installation on new airframes, (ii) to all United
States of America military customers, (iii) to customers
requesting normal levels of spare modules and parts sold
together with new 250 engines, (iv) Fleet Operators pursuant
to Fleet Operator Agreements identified in Exhibit B, except
where the Fleet Agreements have terminated or amended in
contemplation of this Agreement, (v) Long Term Agreements
identified in Exhibit B until these agreements have
terminated; and (vi) pursuant to Agency Agreements
identified in Exhibit I until these agreements have
terminated.
(b) Notwithstanding anything herein to the contrary, Company
shall have the right to contract with a third party to
perform any marketing or promotional service with respect to
its business generally, including the Products; provided
that such activities do not involve the sale or distribution
of Products. In the event the Company contracts with a third
party to perform any such service, Distributor shall
cooperate in good faith with the Company and any such third
party, to the extent reasonably requested by the Company;
provided that Distributor shall not be required to undertake
any duty to perform services beyond those falling within its
obligations under this Agreement. Nothing herein shall
restrict any affiliate of the Company from performing any
aftermarket activities involving the A250 engine including
engine overhaul, parts refurbishment, parts trading,
equipment leasing and related activities.
3. The Distributor's Obligations. The Distributor shall:
(a) use reasonable efforts to establish and maintain an
effective sales force and to promote sales of the Products
throughout the Territory. Recognizing that adequate
representation in the Territory is a vital element of the
Distributor's obligations, the
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Distributor shall not significantly decrease its presence in
any country or region in which there have been sales of more
than 5% of the total sales of the Products by Distributor
during the prior 12 month period, without the Company's
prior written consent, which consent shall not be
unreasonably withheld. In addition, Distributor shall
appoint a technically qualified Product Manager and an
experienced Inventory Planner, each of whom shall be
dedicated exclusively to the Products, and shall maintain
such resources in place during the term.
(b) promptly after execution of this Agreement, place an order
to purchase all of those Products as provided on Exhibit C;
(c) make no warranty or guaranty, orally or in writing,
concerning any of the Products, which might be perceived by
a customer as in any way binding the Company, except for
such warranties as are customarily made by the Company to
end users (retail purchasers) of the Products.
(d) at its own cost and expense, procure and maintain in full
force and effect during the term of this Agreement coverage
for the Company as an additional insured under customary
policies of insurance including, without limitation,
commercial general liability and aircraft product and
completed operations insurance and the Distributor agrees to
waive any right of subrogation against the Company in this
or any other policy of insurance carried by Distributor, but
only to the extent that Distributor may be obligated to
indemnify the Company pursuant to Section 15 of this
Agreement.
(e) administer the Company's warranty return program as set
forth on Exhibit D;
(f) administer new engine production support and new engine
sales related parts and modules needs as set forth on
Exhibit E;
(g) administer the Company's Product recall program as set forth
on Exhibit F;
(h) on the effective date of this Agreement, the Distributor
shall have the information technology capabilities described
in the Distributor's Proposal. Initially, the Distributor
shall also take such actions as may be necessary or
appropriate to ensure that its information technology
systems are compatible with those of the Company's current
system (including any changes contemplated
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to be made by the Company to its IT systems prior to
December 31, 2000.) Thereafter, each party shall ensure that
its IT systems are kept in good working order, and each
shall bear the expense of ensuring that, whenever changes
are made in its IT system, such system remains compatible
with that of the other party.
(i) provide the Company with a detailed part number level of
material requirements as set forth on Exhibit G.
(j) maintain an industry wide advertising program to develop
name identification and a quality image for the aftermarket
use of the Products; including, but not limited to (i)
marketing communications placing general product and service
advertising with an aggregate cost of not less than ***
dollars per calendar year, (ii) expend not less than ***
dollars annually in support of the Company's AMC conference
preceding the HAI show ( or another show which replaces the
HAI show) and the Company's reception and party at HAI (or
another show which replaces HAI) provided that (a) such
events are primarily for the benefit of commercial customers
of the Products and (b) Distributor receives appropriate
recognition and access as a sponsor of such events,
provided, however, that commencing in 2001 each such amount
shall be adjusted annually based upon changes to the PPI
Index as set forth on Exhibit M. Notwithstanding, the above,
the parties agree that Company may engage in advertising,
name identification and quality image programs regarding the
Products independent of Distributor's programs.
(k) maintain an inventory management and traceability system
equal to or better than the inventory management and
traceability system described in Distributor's Proposal, and
provide Company access to such system.
(l) open (within forty-five (45) days of execution) and maintain
open during the term of this Agreement a forward stocking
and sales facility in or near Lafayette, Louisiana adequate
to serve customers of the Products in the Gulf Coast region.
-------------------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
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(m) charge the Company's Authorized Maintenance Center customers
not more than the price set forth on Exhibit H.
(n) except as otherwise agreed in writing between the parties,
and except for contractual obligations between the
Distributor and third parties in effect on the date of this
Agreement, from the date of execution and during the term of
this Agreement, Distributor will not become a distributor
for any parts or engines which are (i) competitive with
Products which are proprietary engine components
manufactured by the Company; (ii) competitive with parts
which are not proprietary parts currently manufactured by
the Company but which are, as of the date of execution of
the Agreement, purchased by the Company from third parties
and resold into the aftermarket by the Company using an A250
part number, provided that Distributor may be a distributor
for such parts only if they are manufactured or sold by any
third party which, as of the date of this Agreement, is
currently a supplier to Distributor and such parts are not
sold using an A250 part number or a number confusingly
similar to an A250 part number; or (iii) competitive with
parts which are not manufactured by the Company and are
purchased by the Company from a third party supplier at any
time during the term of the Agreement and such supplier has
an exclusive supply arrangement with the Company.
(o) support the Company's three foreign sales agents, as set
forth on Exhibit I.
(p) comply with all statutes, laws, ordinances, rules,
regulations, and any other governmental authority in
connection with its sale and distribution of the Products.
(q) distributor shall make available to the Company on-line or
provide to the Company on a periodic basis, as applicable,
in a form mutually agreed by the parties, the sales reports
and other information described in Exhibit J. From time to
time at the Company's request, Distributor shall provide
such further reports and information, including information
concerning marketing activities, competitive intelligence,
sales prospects set forth on Exhibit K and publicly
available financial data regarding Distributor's parent
company, as the Company may reasonably request. In addition,
the Company shall have the right upon reasonable notice and
during normal business hours to examine sales records and
other data relating to the activities of Distributor
contemplated under this Agreement; provided however, that
nothing herein shall be deemed to authorize or permit the
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Company access to sales records and data regarding sales of
merchandise for third parties for which Distributor
distributes merchandise or to non-public financial data of
Distributor involving sales other than sales of the
Products.
(r) commencing on the date of this Agreement and continuing for
so long as the Company requires the same for performance
under this Agreement, Distributor shall provide to Company,
at no charge to Company, the following:
(1) The use of the office space in Distributor's premises
that Company may from time to time reasonably require
in connection with its performance under this
Agreement, together with office support services
(excluding computer equipment) reasonably required in
connection with the performance of the activities
contemplated hereunder. In its occupancy and use of
such resources, Company personnel shall at all times
abide by and act in accordance with Distributor's
corporate policies applicable at such site; and
(2) For use by personnel employed or managed by Company on
Distributor's premises, the reasonable use of
Distributor's existing telephone system solely in
connection with such personnel's work on the Agreement,
provided that the Company shall reimburse Distributor
for all charges and costs related to such use.
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(s) the Distributor shall allow the Company to maintain in a
prominent place on its Aviall.com world wide web site, at no
cost to the Company, a banner designed by the Company which
identifies the Company (and/or its affiliates) and which
provides linked connections to one or more web sites
maintained by the Company (or its affiliates ) for the
promotion of its business, products and services.
4. The Company's Obligations. The Company shall:
(a) produce and deliver the Products in the quantities ordered
by Distributor using reasonable efforts to deliver such
Products with the lead times agreed to by the parties from
time to time, and the Company shall not deliver orders more
than five (5) business days prior to the requested ship date
without the Distributor's prior written approval;
(b) refrain from selling Products to any person other than the
Distributor, except as permitted in Section 2 above.
(c) promptly refer to Distributor all leads, prospects, and
related information which are directed to it or which it
receives regarding potential purchasers of the Products
within the Territory;
(d) develop and offer a reasonable amount of training and
technical assistance to Distributor and its personnel, at
locations to be agreed, in the use and operation of the
Products (provided, however that the Company will have no
obligation to pay travel and entertainment expenses for any
of Distributor's employees undergoing such training).
(e) ensure that all Products sold to Distributor for resale have
all appropriate governmental and regulatory approvals such
as FAA/PMA, TSO or STC as required for installation on type
certified aircraft or engines.
(f) comply with all statutes, laws, ordinances, rules,
regulations and any other governmental authority in
connection with the manufacture of the Products. The Company
shall promptly notify the Distributor whenever it receives
any notice addressed to it by any governmental entity
concerning the application of any new rule, directive,
regulation or other governmental requirement concerning the
sale of Products in the Territory.
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(g) at its own cost and expense, procure and maintain in full
force and effect during the term of this Agreement coverage
for Distributor as an additional insured under a Broad Form
Vendors Endorsement to the Company's liability insurance
policy and the Company agrees to waive any right of
subrogation against Distributor in this or any other policy
of insurance carried by Company, but only to the extent that
Company may be obligated to indemnify Distributor pursuant
to Section 15 of the Agreement.
(h) give Distributor not less than ninety (90) days prior
written notice if any Products will be superceded or
modified, except in cases involving airworthiness or safety
issues, in which case notice shall be given as soon as
reasonably possible.
(i) Commencing on the date of this Agreement and continuing for
so long as Distributor requires the same for the performance
under this Agreement, the Company shall provide to
Distributor, at no charge to Distributor, the following:
(1) The use of the office space in Company's premises that
Distributor may from time to time reasonably require in
connection with its performance under this Agreement,
together with office support services, excluding
computer equipment, reasonably required in connection
with the performance of the activities contemplated
hereunder. In its occupancy and use of such resources,
Distributor personnel shall at all times abide by and
act in accordance with Company's corporate policies
applicable at such site; and
(2) For use by personnel employed or managed by Distributor
on Company's premises, the reasonable use of Company's
existing telephone system solely in connection with
Distributor's provision of the Services to Company;
provided that Distributor shall reimburse the Company
for all charges and costs related to such use.
5. Terms of Sale.
(a) the Company shall charge Distributor the Product discounts
to published list prices indicated on Exhibit L attached
hereto. The current list prices for the Products are shown
on Exhibit L and the Company shall maintain such list prices
unless and until such prices are changed in accordance with
the provisions hereof.
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Additionally, the Company will compensate Distributor under
the sales incentive program set forth on Exhibit M.
All such prices are F.O.B. Company's facility and include packing in
accordance with the Company's standard commercial shipping practices
in effect at the time of shipment.
(1) from time-to-time, the Company may increase the list
prices for its Products but only if it first gives
Distributor written notice of any increase at least 90
days before the increase takes effect. The price to
Distributor for all items of Product ordered before
receipt of notice by Distributor and for all items of
Product ordered after receipt of notice by Distributor
but which are deliverable by Company under established
lead times before the date of the price increase, shall
be at the un-increased price.
(2) from time-to-time, the Company may decrease the list
prices for its Products, but only if it first gives
Distributor written notice of any decrease at least 150
days prior to the date of the price decrease, unless an
earlier date is mutually agreed upon. Such notice shall
not be required in any instance involving airworthiness
or flight safety issues, but in such cases,
compensation to the Distributor for any economic loss
shall be considered and mutually agreed on a case by
case basis.
(b) payment of the purchase price for Products delivered to
Distributor by the Company shall be by wire transfer made on
the 15th of each calendar month (or the next working day in
the case of weekends or holidays) for all proper invoices
that are at least fifteen (15) days old (i.e., invoiced
prior to the first day of the then current month). If
payment is not received by the Company in accordance with
this Section, the Company shall be entitled to charge a late
payment fee at the rate of .05% per day, or the maximum
allowable by law, of any past due amount, on any Purchase
Order undisputed in good faith. All payments hereunder shall
be made in U.S. dollars or such other currency which may be
agreed upon.
(c) If any portion of Distributor's account is more than sixty
(60) calendar days past due pursuant to Section (b) above,
Company may, at its option, cease all deliveries to
Distributor, ship completed Products in place, refuse to
accept new orders, or divert Products already ordered,
unless past due amounts, including interest payments, are
paid in full, or Company is in receipt of an
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irrevocable letter of credit sufficient to cover all
outstanding amounts due confirmed by a United States bank
acceptable to Company; or another method of payment has been
mutually agreed to by the parties.
(d) Company may, at its option, change the payment terms
provided in this section to require letters of credit or
cash in advance or both in the case of a significant change
of occurrence in Distributor's business such as ownership
change, financial difficulty, bankruptcy, or other
significant change.
(e) payment of any amounts due Distributor by Company under this
Agreement shall be credited to the account of the
Distributor on the 14th of each calendar month (or the next
working day in the case of weekends or holidays) for all
proper debit memos that are at least fifteen (15) days old
(i.e., issued prior to the first day of the then current
month). If credit is not received by Distributor in
accordance with this Section, Distributor shall be entitled
to charge a late payment fee at the rate of .05% per day, or
the maximum allowable by law, of any past due amount owing
the Distributor by the Company.
(f) each of Distributor and Company shall appoint an individual
to serve as its Product Manager, who shall be its primary
representative for matters pertaining to the ongoing
activities contemplated under this Agreement. Each party's
Product Manager shall
(1) have overall responsibility for managing and
coordinating the performance of such party's
obligations under this Agreement and
(2) be authorized to act for and on behalf of such party
with respect to all matters relating to this Agreement
(except for any amendment to this Agreement).
6. Delivery Terms.
1. Place of Delivery. Unless otherwise specified by the Company, all
deliveries of Products by the Company to Distributor under this
Agreement must be made FOB the Company's manufacturing location,
at which point title and risk of loss and damage pass from the
Company to Distributor. Delivery is deemed to occur upon the
Company's tender of Products to the common carrier selected by
Distributor for shipment to Distributor.
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2. Date of Delivery. If the Company does not deliver Products within
thirty (30) days of the delivery date specified in a Purchase
Order accepted by the Company, Distributor has the right to (i)
cancel the Purchase Order or (ii) extend the delivery date to a
later date, subject however, to the right to cancel the Purchase
Order if delivery is not made by the extended date.
3. Shipment. Distributor must, at its sole cost, arrange for the
transport and insurance of Products purchased from the Company.
If the Company agrees to arrange for transport and insurance as
agent for Distributor, Distributor shall reimburse the Company
its full costs.
4. Customs/Export. Distributor is solely responsible to cause
shipments of Products to clear customs at the port of entry or
export, including the satisfaction of all documentation
requirements (including special documentation requirements that
may apply to shipments made to certain foreign customers) and
shall pay any applicable customs, duties, import taxes, export
costs and the like that may apply.
7. Returns Provisions. No Products will be eligible for return if they
are manufactured and/or procured by the Company for purchase by the
Distributor based solely upon Distributor's marketing and sales data
or are part of the initial inventory procurement except for those part
numbers noted on Exhibit B-1.
Newly issued part numbers and/or parts involved in a reliability
campaign may be eligible for return after 24 months of part number or
campaign introduction if and only if Company has unilaterally
determined Distributor's stocking level. Only quantities in excess of
24 months usage will be eligible for return.
Products rendered obsolete due to Company's redesign with a must
conform classification will be eligible for return by the Distributor.
Product defined above as eligible for return must be in "new"
condition in the original packaging as supplied by the Company; such
packaging may not be damaged, broken or in any way tampered with
except for ordinary wear incurred in shipping.
The Company shall pay to Distributor in U.S. Dollars an amount equal
to the average inventory cost of the items returned under this section
less restocking charges not to exceed 5%.
8. Warranty Disclaimer. Distributor shall pass through the Company's
standard warranty to all parties that purchase Products from
Distributor, without varying any of its terms or provisions. The
Company may change the standard warranty on new Products by giving
Distributor written notice of such new warranty at least 60 days'
prior to its effective date. THE COMPANY MAKES NO
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WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
USE EVEN IF THAT PURPOSE IS KNOWN TO THE COMPANY, NOR ANY OTHER
EXPRESS OR IMPLIED WARRANTY.
9. Ownership of Company Data. All Company Data is, or will be, and shall
remain the property of Company. Without Company's approval (in its
sole discretion), the Company Data shall not be (1) used by
Distributor other than in connection with providing the services
contemplated by this Agreement, (2) sold, assigned, leased or
otherwise provided to third parties by Distributor, or (3)
commercially exploited by or on behalf of Distributor. Distributor
hereby irrevocably assigns, transfers and conveys to Company without
further consideration all of its right, title, and interest in and to
the Company Data. Upon request by Company, Distributor shall execute
and deliver any documents that may be necessary or desirable to
preserve, or enable Company to enforce, its rights hereunder with
respect to the Company Data. For purposes hereof, "Company Data" shall
include all sales reports and other information pertaining to the
marketing and sale of the Products prepared by Company and all sales
and other reports pursuant to Section 3 (q) above, whether or not such
information is Confidential Information as defined in this Agreement.
(Company Data shall exclude information that is not compiled and
reported pursuant to Section 3(q), or is not segregated from data
regarding other products sold by Distributor).
Upon request by Company upon expiration or termination of this
Agreement, Distributor shall (1) promptly return to Company, all of
the Company Data or (2) eradicate or destroy all or any part of the
Company Data in Distributor's possession, in each case to the extent
so requested by Company.
Except as noted above, each party shall be the owner of its own data
customer lists, records, and intellectual property.
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10. Term. Unless terminated earlier as herein provided, the term of this
Agreement shall commence as of the date hereof and shall continue for
a period of ten (10) years. Thereafter, the term of this Agreement
shall be automatically renewed from year to year unless terminated by
either party upon written notice delivered to the other party not
later than ninety (90) days prior to the expiration of the then
current term.
11. Termination.
11.01. Termination for Convenience. Company may terminate this
Agreement, for convenience, by giving Distributor notice of the
termination at least 120 days prior to the termination date
specified in the notice; provided, however, that no such notice
of termination for convenience shall be given prior to January
1, 2003.
11.02. Termination for Change in Control of Company. In the event of a
Change in Control of the Company, the Company may terminate
this Agreement by giving Distributor notice of the termination.
Such termination will be effective as of the time specified
in the notice of termination, but the effective date of the
termination may not be any earlier than 120 days following
Distributor's receipt of the notice.
11.03. Termination for Change in Control of Distributor. In the event
of a Change in Control of Distributor in which control over
Distributor is acquired by a Company Competitor, Company may
terminate this Agreement by giving Distributor notice of the
termination within 30 days of the occurrence of such Change in
Control and at least 120 days prior to the termination date
specified in the notice. In the event of a Change in Control of
Distributor by which the Distributor is acquired by a third
party not a Company Competitor which causes Distributor's
credit rating, as determined by either Standard and Poors or
Moody's to fall one notch below the Distributor's credit rating
prior to the Change in Control, then the Company shall have up
to one year after the Change in Control to terminate the
Agreement if it reasonably determines that the benefits and
services provided by Distributor have been adversely affected,
and the Company provides Distributor with 120 days prior
written notice of termination.
11.04. Termination for Cause. If either party defaults in any material
respect in the performance of any of its material obligations
(or repeatedly defaults during any rolling eighteen month
period in any material respect in the performance of a material
obligation but cures such default within the cure period
provided) under this Agreement, and does not cure such default
(or provide adequate assurances that such repeated defaults
will not continue to occur) within 45 days of receipt of a
notice of default, or if a party
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becomes Insolvent, then the non-defaulting party may, by giving
notice to the defaulting party, terminate this Agreement as of
the termination date specified in the notice. For purposes of
the foregoing, a party shall be regarded as "Insolvent" if it
(i) institutes proceedings to be adjudicated voluntarily
bankrupt or consents to the filing of bankruptcy proceedings
against it, (ii) files a petition seeking reorganization under
any bankruptcy or similar law for the protection of creditors,
or consents to the filing of such a petition against it, (iii)
consents to the appointment of a receiver, liquidator or
trustee in bankruptcy, or makes any assignment of a substantial
portion of its assets for the benefit of creditors, (iv) admits
in writing its inability to pay its debts generally as they
become due, (v) is subject to the filing of an involuntary
petition in bankruptcy (which is not waived or stayed within 60
days), (vi) is subject to any court order or decree
adjudicating it as a bankrupt or insolvent person by a court of
competent jurisdiction, or (vii) publicly announces that it may
file a petition as a bankrupt or insolvent person under any law
now or hereafter applicable to the discharge or restructuring
of debts.
11.05. Termination Fees. Set forth in Exhibit O are the termination
fees that would be payable to Distributor if Company terminates
this Agreement pursuant to Section 11.01 or Section 11.02.
Except as otherwise specifically set forth in this Section, no
termination fee shall be payable by Company in connection with
the termination of this Agreement.
11.06. Change in Control. For purposes of this Agreement "Change in
Control" shall mean the (a) consolidation or merger of a party
with or into any other entity, other than a consolidation or
merger (1) in which the party is the surviving corporation or
entity in the consolidation or merger, (2) with or into an
Affiliate or (3) a consolidation or merger of a party with or
into an entity which, immediately after the consolidation or
merger, is controlled by persons who, immediately prior to that
consolidation or merger, controlled such party, or (b) sale,
transfer or other disposition of all or substantially all of
the assets of a party (other than to an Affiliate), or (c)
acquisition by any entity, or group of entities (other than an
Affiliate or Affiliates) acting in concert, of beneficial
ownership of 30 percent or more of the outstanding voting
securities or partnership interests of a party.
11.07. Company Competitor. For purposes of this Agreement "Company
Competitor" shall mean any business involved in the design,
manufacture (including without limitation any PMA or other
parts manufacturer), sale or repair of gas turbine engines,
including any business that is an Affiliate of an entity
engaged in such activities, including without limitation (a)
General Electric Company, (b) United Technologies Corporation,
(c)
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Allied Signal Corporation, (d) SNECMA, and (e) Caterpillar, and
their respective joint ventures and successors in interest.
11.08. Post Termination Obligations.
(a) Option to Repurchase Products. Upon the expiration or
termination of this Agreement, other than as a result of a
default by the Company, the Company has the option, but not
the obligation, to purchase from Distributor all (but not
less than all) of the Products remaining in Distributor's
stock at the Distributor's average cost net of the
Distributor's excess and obsolescence reserves with respect
to the Products (which shall be determined on the basis of
Generally Accepted Accounting Principles consistently
applied and on the same basis as reserves are established
for other inventory of the Distributor). To exercise such
option, the Company must notify Distributor within 45 days
after the date of termination of this Agreement.
Distributor shall deliver Products to the Company within 10
business days after the Company has given Distributor
notice of its exercise of the option and the price shall be
paid in cash or as a credit against any indebtedness then
owing by Distributor to the Company at the time of
delivery.
(b) Return of Documents. Upon the termination of this
Agreement, Distributor shall use its reasonable business
efforts to promptly return to the Company all Company Data
and Confidential Information of Company. Upon the request
of the Company, Distributor must furnish the Company with
copies of all data, reports, documents, drawings and
manuals made by Distributor dealing with or relating solely
to the Products, except those which are necessary to
complete Distributor's performance under any contract that
was entered into prior to receiving the notice of
termination.
(c) Customer Lists, Product Lists and Contract Obligations.
Upon the termination of this Agreement, Distributor must
furnish the Company with (i) a list of Distributor's
customers for the Products and their addresses, (ii) a list
of the Products in stock, and (iii) copies of Distributor's
contracts relating to the sale of the Products that have
not been fully performed by Distributor.
(d) Option to Be Assigned Contracts. Upon the termination of
this Agreement, Distributor shall, at the Company's
request, use its reasonable business efforts to effect an
assignment to the Company (or a person designated by the
Company) of the Distributor's then existing contracts
relating to the sale of the Products specified by
<PAGE> 16
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 16
the Company in the request. In order to exercise this
option, the Company must notify Distributor within 30 days
after the date of its receipt of the documents specified in
(c) above. Distributor agrees to use its reasonable
business efforts to effect the assignment within 10 days
after the Company has notified Distributor of its exercise
of the option.
(e) Transition. Upon the expiration or termination of this
Agreement and if the Company so requests, Distributor
agrees to use its reasonable business efforts to cooperate
with the Company in the transition to its own internal
distribution system, for the Territory, and shall provide
such assistance to the Company as is reasonably requested
by the Company; provided however, that Distributor shall
have no obligation to provide assistance to any subsequent
third party chosen as a distributor of the Products.
Likewise, the Company and the Distributor shall establish
reasonable procedures for the collection of outstanding
accounts receivable from customers, which may include the
Company collecting such receivables on behalf of the
Distributor, as its agent and in return for reasonable
compensation for such service.
12. Service Standards.
12.01. Designated Service Levels. The Parties shall at all times from
and after January 1, 2001 perform their obligations hereunder
in accordance with service levels and performance standards
agreed from time to time between Company and Distributor
("Service Standards"). The Service Standards shall be measured
and reported on a monthly basis and reviewed for compliance by
Product Managers on a quarterly basis. The initial Service
Standards and Expedite and Late Delivery Fees are set forth on
Exhibit N. The initial Service Standards must be agreed to by
June 1, 2000. Both parties shall be subject to full
accountability of Service Standards on and after January 1,
2001.
12.02. Adjustment of Service. The Product Managers for Company and
Distributor shall review the performance against the Service
Standards at least quarterly during the term, and shall call
attention to any failures in performance or opportunities to
improve performance. In addition, either party may, at any time
upon notice to the other party, initiate negotiations to review
and, upon agreement by the parties, adjust a Service Standard
which party in good faith believes is inappropriate because of
a fundamental change in circumstances; provided that no such
change shall take effect unless and until agreed in writing.
<PAGE> 17
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 17
12.03. Corrective Action. Upon becoming aware of a failure to perform
in accordance with an applicable Service Standard, a party
asserting a breach of Service Standard shall send written
notice to the Product Manager of the party that has breached
the Service Standard which notice, (1) identifies the cause of
such failure, and (2) provides the other party with a report
detailing the cause of, and expected procedure for correcting,
such failure. The notice detailing the cause and recommended
correction of any performance failure will be deemed
Confidential Information of the parties. The party against whom
the breach of Service Standard is asserted shall have 150 days
from the date of receipt of the notice to correct the
deficiency. If, after the first 150 day period, the Service
Standard is not within the acceptable range set forth in
Exhibit N, the party shall have an additional 150 days to bring
the Service Standard within acceptable range. Failure to have
brought the Service Standard within the acceptable range shall
then be a material breach of the Agreement and be the basis for
immediate termination for cause (i.e. without any further
notice period under Section 11.04).
12.04. Continuous Improvement and Best Practices. Each party shall, on
a continuous basis, as part of its total quality management
process, identify ways to improve its performance and apply
best business practice (including improvements in available
technology) to achieve such performance improvements.
13. Customer Satisfaction
13.01. Baseline Customer Satisfaction. Prior to March 31, 2000,
Company shall submit to Distributor, for Distributor's
reasonable approval, the identity of an independent third party
selected by Company that shall conduct a baseline customer
satisfaction index survey. Upon Distributor's reasonable
approval of such third party, Company shall engage such third
party to conduct a baseline customer satisfaction index survey
for affected end-users of the Products (the "Customer
Satisfaction Index"). The fees and expenses charged by such
third party shall be shared equally by Distributor and Company.
The content and scope of the Customer Satisfaction Index shall
be mutually agreed by Company and Distributor. The results of
the Customer Satisfaction Index shall be the baseline for
measurement of improvements described in Section 13.02 below.
13.02. Customer Satisfaction Survey.
(1) Once every contract year beginning at least one year after
the creation of the Customer Satisfaction Index, Company
may engage an independent third party reasonably
satisfactory to Distributor to conduct a customer
<PAGE> 18
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 18
satisfaction survey in respect of those aspects of the
Services designated by Company. The fees and expenses
charged by such third party shall be shared equally by
Company and Distributor. The timing, content, scope and
method of the survey shall be consistent with that used in
deriving the Customer Satisfaction Index. Distributor
agrees that increased measured customer satisfaction shall
be a consideration in the evaluation of the performance of
Distributor's management employees involved in the sale and
physical distribution of the Products, but that the results
shall not serve as a basis of termination for cause or
preclude or prevent termination for cause for other
reasons.
(2) The Customer Satisfaction Index and the results of any
customer satisfaction survey will be deemed Confidential
Information of both parties pursuant to the terms of this
Agreement.
14. Marks and Proprietary Rights.
(a) The Distributor acknowledges the Company's exclusive
ownership of the Company's trade names, service marks and
trademarks, and all logos and derivations thereof, and all
names and marks licensed to the Company (collectively, the
"Marks)".
(b) Any proposed use of the Marks in connection with the
activities contemplated under this Agreement shall require
the prior written authorization of Rolls-Royce plc, which
may be given or withheld on a case by case basis in its
discretion. If permission to use the marks is granted, the
Distributor shall strictly adhere to all instructions,
limitations and restrictions placed upon such use, and shall
take any necessary steps to protect the Marks in each
jurisdiction of use. The Distributor further agrees to cease
use of the Marks or otherwise restrict use of materials
bearing the Marks whenever so instructed by the Company or
Rolls-Royce plc. No action taken or approval given pursuant
to the foregoing shall in any way create any express or
implied rights in or license in favor of the Distributor
with respect to the Marks.
(c) Upon termination of this Agreement, the Distributor shall
cease using all Marks and Mark-bearing stationery, business
cards, sales literature and the like, except as necessary to
dispose of Products then in Distributor's inventory and any
reference in Distributor's previously published catalogues.
The Distributor will have no obligation to return such
materials to the Company. Thereafter, the
<PAGE> 19
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 19
Distributor shall no longer use any of the Marks, except as
permitted by law.
15. Limitation of Damages; Indemnification
(a) WITH REGARD TO CLAIMS BETWEEN THE PARTIES, NEITHER PARTY
SHALL BE LIABLE TO THE OTHER FOR ANY INCIDENTAL, SPECIAL,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES ARISING OUT OF
ANY OBLIGATION, BREACH ACT OR OMISSION IN CONNECTION WITH
THE PERFORMANCE OF THE AGREEMENT, REGARDLESS OF WHETHER THE
CLAIM IS FOR BREACH OF CONTRACT, BREACH WARRANTY, TORT
(INCLUDING NEGLIGENCE) STRICT LIABILITY, OR OTHERWISE.
(b) With regard to claims from third parties; the Company shall
hold Distributor harmless and indemnify it from and against
any and all claims, losses, costs, damages and expenses
(including reasonable attorney's fees) which Distributor may
suffer as a result of any loss to the persons or property of
a third party arising directly or indirectly from use of a
Product; provided, however, that the Company shall have no
such obligation to indemnify or hold Distributor harmless
from any matters covered by Distributor's indemnity below.
Distributor shall hold the Company harmless and indemnify it
from and against any and all claims, losses, costs, damages
and expenses (including reasonable attorney's fees) which
Company may suffer as a result of any loss to the person or
property of a third person arising directly or indirectly
from the wrongful or negligent action or inaction of
Distributor, or any other third party acting on its behalf
or under its direction with regard to the Products; provided
however, that the Distributor shall have no such obligation
to indemnify or hold the Company harmless from any matters
covered by Company's indemnity above.
16. Proprietary Rights Indemnification. The Company shall, at its own
expense, defend any suit instituted against Distributor which is based
on an allegation that any Product manufactured by the Company and sold
to Distributor hereunder constitute an infringement of any patent,
copyright, trade secret or other proprietary right of any third party
and shall indemnify Distributor against any award of damages and costs
made against Distributor by a final judgment of a court of last resort
if it is determined therein that any such Product constitutes an
infringement of any patent, copyright, trade secret or other
proprietary right of any third party, provided that Distributor gives
the Company timely notice in writing of any notice or claims of
infringement and permits the Company through the Company's counsel to
defend the same and gives the Company all available information,
assistance and authority to enable the Company to assume such defense.
The Company shall have control of the defense of any such suit,
including appeals from any judgment therein and any negotiations for
the settlement or compromise
<PAGE> 20
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 20
thereof with full authority to enter into a binding settlement or
compromise. In the event that any Product is held to infringe and its
use is enjoined, the Company shall, at its option and expense, (i)
procure for Distributor and its customers the right to continue using
such Product, (ii) provide the necessary parts and documentation to
replace or modify such Product so that it no longer infringes, or
(iii) grant Distributor a credit for such Product upon its return to
the Company, allowing for reasonable depreciation for use, damage and
obsolescence.
Notwithstanding the above, the Company shall have no liability
whatsoever to Distributor with respect to any patent infringement or
claim thereof which is based upon or arises out of (i) the use of any
Product in combination with an apparatus or device not manufactured or
supplied by the Company, if such combination causes the infringement,
(ii) the use of any Product in a manner for which it was neither
designed nor contemplated, or (iii) any modification of any Product by
Distributor or any third party which causes the Product to become
infringing.
17. CONFIDENTIALITY
(a) General Obligations All Confidential Information relating to
or obtained from Company or Distributor shall be held in
confidence by the recipient to the same extent and in at
least the same manner as the recipient protects its own
confidential or proprietary information. Neither Company nor
Distributor shall disclose, publish, release, transfer or
otherwise make available Confidential Information of, or
obtained from, the other in any form to, or for the use or
benefit of, any person or entity without the disclosing
party's prior written consent. Each of Company and
Distributor shall, however, be permitted to disclose
relevant aspects of the other's Confidential Information to
its officers, directors, partners, agents, professional
advisors, contractors, subcontractors and employees and to
the officers, directors, partners, agents, professional
advisors, contractors, subcontractors and employees of its
affiliates, (to the extent that such disclosure is not
otherwise restricted under any contract, license, consent,
permit, approval or authorization granted pursuant to
applicable law, rule or regulation, and only to the extent
that such disclosure is reasonably necessary for the
performance of its duties and obligations under this
Agreement (or the determination or preservation of its
rights under the Agreement); provided, however, that the
recipient shall take all reasonable measures to ensure that
Confidential Information of the disclosing party is not
disclosed or duplicated in contravention of the provisions
of this Agreement by such officers, directors, partners,
agents, professional advisors, contractors, subcontractors
and employees. If either party intends to disclose any
Confidential Information in connection with any claim or
action to determine or preserve its rights under this
Agreement, then that party will give prior notice to the
other party and take such
<PAGE> 21
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 21
reasonable actions as may be specified by the other party to
obtain a protective order or cause the Confidential
Information to be filed under seal (or give the other party
an opportunity to obtain a protective order). The
obligations in this Section shall not restrict any
disclosure pursuant to any applicable law or by order of any
court or government agency (provided that the recipient
shall give prompt notice to the disclosing party of such
order, shall disclose only such Confidential Information as
the recipient is required to disclose under the applicable
law or order, and shall take such reasonable actions as may
be specified by the disclosing party to resist providing
such access or to obtain a protective order) and shall not
apply with respect to information that (1) is independently
developed by the recipient without violating the disclosing
party's proprietary rights, (2) is or becomes publicly known
(other than through unauthorized disclosure by a party), (3)
is already known by the recipient at the time of disclosure
without any obligation of confidentiality to the disclosing
party, or (4) is disclosed to a party by a third person
which the recipient reasonably believes has legitimate
possession thereof and the unrestricted right to make such
disclosure.
(b) Unauthorized Acts. Without limiting either party's rights
in respect of a breach of this Section, each party shall:
(1) promptly notify the other party of any unauthorized
possession, use or knowledge, or attempt thereof, of
the other party's Confidential Information by any
person or entity that may become known to such party;
(2) promptly furnish to the other party the details of the
unauthorized possession, use or knowledge, or attempt
thereof, known by such party and assist the other party
in investigating or preventing the recurrence of any
unauthorized possession, use or knowledge, or attempt
thereof, of Confidential Information;
(3) cooperate with the other party in any litigation and
investigation against third parties deemed necessary by
the other party to protect its proprietary rights; and
(4) promptly use its commercially reasonable efforts to
prevent a recurrence of any such unauthorized
possession, use or knowledge, or attempt thereof, of
Confidential Information.
Each party shall bear the cost it incurs as a result of compliance with
this Section.
<PAGE> 22
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 22
(c) Confidential Information. "Confidential Information" of a
party shall mean all information and documentation of such
party (or its affiliates), whether disclosed to or accessed
by the other party (or its affiliates) in connection with
the activities contemplated by this Agreement that has been
marked as "Proprietary" or "Confidential" or bears some
other proprietary designation, or if disclosed orally, has
been designated by a party as confidential in a letter or
other written statement made to the other party promptly
following its disclosure, and shall include, without
limitation, (1) information concerning business plans, (2)
financial information, (3) information concerning operations
and the results of operations, (4) pricing information and
marketing strategies, (5) information that a party is
legally obligated not to disclose, (6) information that
qualifies as a trade secret under applicable law, (7)
patents, unpatented inventions and information regarding
product development and improvements, (8) engine and parts
specifications and drawings, and (9) material and
performance specifications.
18. Foreign Corrupt Practices Act: Export Laws
(a) Distributor represents and warrants that it will comply with
all laws applicable in the Territory relating to the conduct
of business practices, including those that may prohibit
gratuities, inducements, or certain other payments.
Distributor acknowledges that the Company may be subject to
certain United States laws, including the Foreign Corrupt
Practices Act of 1977 and any of its amendments, which may
apply to activities carried out on the Company's behalf
outside the United States of America. Distributor agrees
neither to take nor omit to take any action if such act or
omission might cause the Company or the Distributor to be in
violation of any such laws. Upon written notice from the
Company, Distributor shall provide such information as the
Company may reasonably consider necessary to verify
compliance by Distributor with the provisions of this
Section.
(b) Distributor may not enter into any contract or other
arrangement or sell any Products to any third party if so
doing would cause the Company to be in violation of any
applicable laws, including, without limitation, U.S. laws
and regulations prohibiting exports to certain countries.
(c) Distributor shall indemnify the Company against any
penalties, losses or damages (including legal fees,
penalties and costs of
<PAGE> 23
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 23
investigation) which the Company may incur because of a
breach of its obligations under this Section.
(d) In those circumstances where Distributor is providing goods
or services without charge to third parties, including but
not limited to, support of Company's new engine sales
programs, warranty return, product recall programs and
support of the Company's foreign agents, the Company agrees
that:
(i) the Distributor may be subject to certain United States and
foreign laws, including but not limited to the Foreign
Corrupt Practices Act of 1977 and any of its amendments,
which may apply to activities carried out by Distributor
outside the United States of America in connection with
Distributor's providing goods or services pursuant to the
agreements described in Section (d) above. The Company
agrees neither to take nor omit to take any action if such
act or omission might cause the Distributor or the Company
to be in violation of any such laws. Upon written notice
from Distributor, Company shall provide such information as
Distributor may reasonably consider necessary to verify
compliance by Company with the provisions of this Section;
and
(ii) The Company shall indemnify the Distributor against any
penalties, losses or damages (including legal fees,
penalties and costs of investigation) which the Distributor
may incur because of a breach of its obligations under this
Section.
<PAGE> 24
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 24
19. No Partnership or Joint Venture: Independent Contractor. The parties
hereto intend by this Agreement solely to effect the appointment of the
Distributor as an independent contractor with the Company for the
marketing of the Products as a distributor of the Company in the
Territory. No other relationship is intended to be created between the
parties hereto. Nothing in this Agreement shall be construed as (a)
giving the Distributor any rights as a partner in or owner of the
business of the Company, (b) giving the Company any rights as a partner
in or owner of the business of the Distributor, (c) entitling the
Distributor to control in any manner the conduct of the Company's
business or (d) entitling the Company to control in any manner the
conduct of the Distributor's business. The Distributor shall not have,
nor shall it represent itself as having, the power to make any
contracts or commitments in the name of or binding upon the Company.
20. Expenses. Except as otherwise expressly provided in this Agreement,
each party to this Agreement shall bear its own expenses including,
without limitation, rent, travel, entertainment, secretarial or other
office expense, postage, telephone and other communications costs.
21. Notices. All notices required or permitted to be given hereunder shall
be in writing and shall be deemed given (a) when delivered in person at
the time of such delivery or by telecopy with confirmed receipt of
transmission at the date and time indicated on such receipt or (b) when
received if given by an internationally recognized express courier
service as follows:
If to the Company:
Rolls-Royce Allison
PO Box 420
Indianapolis, IN 46206
Attention: Product Manager, Speed Code _____
With copy to Director of Contracts, Speed Code U20-A
If to the Distributor:
Aviall Services, Inc.
2075 Diplomat Drive
Dallas, Texas 75234-8919, U.S.A.
Attention: Product Manager, A250 Spares
Fax: (972) 406-2074
With copy to Director, Marketing and Supplier Services
or at such other respective addresses or addressees as may be designated by
notice given in accordance with the provisions of this Section 21.
<PAGE> 25
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 25
22. Dispute Resolution.
(a) Product Managers. Any dispute arising under this Agreement
(other than payment delinquencies and matters for which
injunctive relief may be sought pursuant to (d) below shall
be considered at an in person meeting of the Company's
Product Manager and the Distributor's Product Manager within
five business days of receipt by either party of written
notice specifying the nature of the dispute, and proposing a
place for such meeting (which unless otherwise agreed shall
be the principal place of business of the party receiving
such notice). If the Product Managers cannot resolve the
dispute within 30 calendar days of such meeting, the dispute
will be escalated within the parties' respective
organizations as follows: to the company's President,
Helicopter Business Unit, and to the Distributor's
President. If such dispute has not been resolved within 30
days of such escalation, then either party may pursue
arbitration of such dispute pursuant to the terms of this
Agreement.
(b) Conduct Pending Resolution. The parties acknowledge that the
timely performance of obligations pursuant to this Agreement
is critical to their business operations. Accordingly, in
the event of a dispute between the parties, each party shall
continue to perform its obligations, but without prejudice
to its rights to pursue remedies in accordance with the
provisions hereof.
(c) Arbitration. Except as provided in Section (d) below, any
dispute, breach, controversy or claim arising out of or
relating to this Agreement shall be finally settled by
arbitration in New York City in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association in effect on the date of this Agreement and
judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
(d) Other Remedies. Except as may be otherwise expressly
provided herein, the remedies set forth in this Agreement
shall not be exclusive of any others that may be available
under applicable law. In particular, the parties agree that
monetary damages alone are an inadequate remedy for
violations of Sections 9, 11.08, 14, 17 and 23 of this
Agreement and, accordingly, a party may seek equitable
remedies, including injunctive relief, in any court of
competent jurisdiction for a violation of such provisions.
<PAGE> 26
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 26
(e) The arbitration shall be conducted in the English language.
This Section 22 provides the sole recourse for the
settlement of any dispute or breach arising under or in
connection with this Agreement.
23. Non Solicitation. Each party agrees that during the term of this
Agreement they will not directly or indirectly employ, solicit for
employment or assist any third party to employ or solicit for
employment, any employee of the other party, or any employee of any
affiliate of the other party. Nothing in this provision will prohibit
either party from placing advertisements of open positions for
employment in trade and general circulation publications.
24. Force Majeure. Neither party hereto shall be responsible or liable in
any way for its failure to perform its obligations hereunder, other
than for payment of money, if such failure to perform is beyond the
control of the Company or the Distributor, whether caused by acts of
God, unavailability or shortages of raw materials from usual sources of
supply or unavailability or shortages of energy necessary to produce
and/or deliver the Products by usual modes of transportation, fire,
flood, war, embargo, strikes, labor disputes, explosions, riots, or
laws, rules, regulations, restrictions and orders of any governmental
authority to which such entity is subject, or any cause, other than
financial, beyond the reasonable control of the affected party. Such
failure shall not terminate this Agreement, but the obligations of the
affected party shall be suspended during the period when performance is
so suspended, unless such period exists beyond a period of one hundred
and twenty (120) days, in which event either party shall have the right
at any time thereafter during such force majeure to terminate this
Agreement upon written notice to the other party without further
obligation or liability. The party so prevented from complying with its
obligations hereunder shall immediately notify and keep the other party
from time to time apprised thereof, and such party so prevented shall
use reasonable efforts to remove or overcome the cause of such
inability to comply with its obligations under this Agreement. Nothing
herein shall be construed to require the settlement of strikes,
lockouts, or other labor difficulty by the party involved contrary to
its wishes.
25. Effect of Termination. In the event of the termination of this
Agreement, and subject to recovery provided by an arbitrator pursuant
to Section 22, all rights and obligations of the parties hereunder
shall cease and terminate, except as to the payment of any sum or sums
owed to either party as of the date of termination, except the
Company's obligation to fill Distributor's purchase orders which the
Company has accepted and except as to the provisions of Sections 8, 9,
11, 14, 15, 16, 17, 18, 22, and 23 hereof, all of which shall survive
the termination of this Agreement.
26. ENTIRE AGREEMENT. THIS AGREEMENT, INCLUDING EXHIBITS A THROUGH O
ATTACHED HERETO AND INCORPORATED AS AN INTEGRAL PART OF THIS AGREEMENT,
CONSTITUTES THE ENTIRE AGREEMENT OF THE PARTIES WITH RESPECT TO THE
SUBJECT MATTER HEREOF, AND SUPERSEDES ALL PREVIOUS DISTRIBUTORSHIP
AGREEMENTS BY AND BETWEEN COMPANY AND DISTRIBUTOR AS WELL AS ALL
PROPOSALS, ORAL OR WRITTEN, AND ALL
<PAGE> 27
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 27
NEGOTIATIONS, CONVERSATIONS OR DISCUSSIONS HERETOFORE HAD BETWEEN THE PARTIES
RELATED TO THIS AGREEMENT.
27. Applicable Law. This Agreement shall be governed and controlled as to
validity, enforcement, interpretation, construction, effect and in all
other respects by the internal laws of the State of New York applicable
therein, without giving effect to the conflicts of laws principles
thereof.
28. Amendments. This Agreement may not be amended, nor shall any waiver,
change, modification, consent or discharge be effected, except by an
instrument in writing executed by or on behalf of the party against
whom enforcement of any such amendment, waiver, change, modification,
consent or discharge is sought.
29. Severability. The invalidity of any provision of this Agreement, or
portion thereof, shall not affect the validity of the remainder of such
provision or of the remaining provisions of this Agreement.
30. Section Headings. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
31. Assignability. This Agreement shall be binding upon, and inure to the
benefit of, the parties, their successors and their permitted assigns.
Neither this Agreement nor any interest herein may be assigned by
either party without the prior written consent of the other party,
except that either party may assign its interests to an affiliate that
is fully capable of performing all obligations under this Agreement
and, if appropriate, such performance is guaranteed by its corporate
parent.
32. Non-Waiver. Failure, delay or forbearance of either party to insist on
strict performance of the terms and provisions of this Agreement, or to
exercise any and or remedy, shall not be construed as a waiver thereof
and shall not waive subsequent strict performance by a party.
33. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original and all such
counterparts shall constitute but one instrument.
* * * * *
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ALLISON ENGINE COMPANY, INC.
d/b/a ROLLS-ROYCE ALLISON
/s/ Stuart Mullan
-----------------------------------------
By: Stuart Mullan
Title: President, Helicopters
AVIALL SERVICES, INC.
/s/ Charles M. Kienzle
-----------------------------------------
By: Charles M. Kienzle
Title: SVP Operations
<PAGE> 28
EXHIBIT A
Attached is the current list of Products.
<PAGE> 29
<CAPTION>
ENGINE MODEL PUBLICATION NUMBER 2000 LIST PRICE 2000 REVISION SERVICE
------------ ------------------ --------------- ---------------------
OPERATIONS & MAINTENANCE MANUALS
C18 5W2 $ 179.00 $ 142.00
C20 10W2 $ 179.00 $ 142.00
C20R GTP 5232-2 $ 179.00 $ 142.00
C28 16W2 $ 179.00 $ 142.00
C30,S,G,G/2,P,M 14W2 $ 179.00 $ 142.00
C30L,R,U 14W2LRU $ 179.00 $ 142.00
B15 6W2 $ 179.00 $ 142.00
B17 11W2 $ 179.00 $ 142.00
B17F GTP 5243-2 $ 179.00 $ 142.00
C40 CSP 21000 $ 179.00 $ 142.00
C47M CSP 21004 $ 179.00 $ 142.00
C47B CSP 21001 $ 179.00 $ 142.00
OVERHAUL MANUALS
C18 5W3 $ 980.00 $ 630.00
C20 10W3 $ 1,236.00 $ 806.00
C20R GTP 5232-3 $ 1,236.00 $ 806.00
C28 16W3 $ 980.00 $ 630.00
C30 14W3 $ 980.00 $ 630.00
B15 6W3 $ 980.00 $ 859.00
B17 11W3 $ 980.00 $ 630.00
B17F GTP 5243-3 $ 980.00 $ 630.00
C40 CWP 22000 $ 1,236.00 $ 812.00
C47B CSP 22001 $ 1,236.00 $ 812.00
ILLUSTRATED PARTS CATALOGS
C18 5W4 $ 132.00 $ 87.00
C20 10W4 $ 132.00 $ 87.00
C20R GTP 5232-4 $ 132.00 $ 87.00
C28 16W4 $ 132.00 $ 87.00
C30,S,G,G/2,P,M 14W4 $ 132.00 $ 87.00
C30L,R,U 14W4LRU $ 132.00 $ 87.00
B15 6W4 $ 132.00 $ 87.00
B17 11W4 $ 132.00 $ 87.00
B17F GTP 5243-4 $ 132.00 $ 87.00
C47M,B,C40B CSP 23001 $ 132.00 $ 87.00
C30R/3 CSP 23003 $ 132.00 $ 87.00
SERVICE BULLETINS (CURRENT WHEN SHIPPED)
C18 CEB 250C18 $ 1,005.00
C20 CEB 250C20 $ 1,005.00
C20R CEB 250C20R $ 1,005.00
C28 CEB 250C28 $ 1,005.00
C30 CEB 250C30 $ 1,005.00
B15 CEB 250B15 $ 1,005.00
B17 CEB 250B17 $ 1,005.00
B17F CEB 250B17F $ 1,005.00
C40 CEB 250C40 $ 1,005.00
C47 CEB 250C47 $ 1,005.00
<PAGE> 30
SERVICE LETTERS SETS (CURRENT WHEN SHIPPED)
C18 CSL 250C18 $ 622.00
C20 CSL 250C20 $ 622.00
C20R CSL 250C20R $ 622.00
C28 CSL 250C28 $ 622.00
C30 CSL 250C30 $ 622.00
B15 CSL 250B15 $ 622.00
B17 CSL 250B17 $ 622.00
B17F CSL 250B17F $ 622.00
C40 CSL 250C40 $ 622.00
C47M CSL 250C47 $ 622.00
C47B CSL 21001 $ 622.00
SUPPORT EQUIPMENT LIST
TURBOSHAFT/PROP GTP 5235 $ 249.00
2
<PAGE> 31
EXHIBIT A
<CAPTION>
----------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
----------------------------------------------------------------------------
AN101006 BOLT 1 2.57
----------------------------------------------------------------------------
AN101007 BOLT 25 2.63
----------------------------------------------------------------------------
AN101019 BOLT 10 8.38
----------------------------------------------------------------------------
AN101024 BOLT 2 5.56
----------------------------------------------------------------------------
AN101025 BOLT 1 24.17
----------------------------------------------------------------------------
AN101034 BOLT 15 13.82
----------------------------------------------------------------------------
AN101035 BOLT 5 7.06
----------------------------------------------------------------------------
AN101037 BOLT 2 12.51
----------------------------------------------------------------------------
AN101126 BOLT 15 5.23
----------------------------------------------------------------------------
AN104606 BOLT 25 3.09
----------------------------------------------------------------------------
AN104613 BOLT 25 2.63
----------------------------------------------------------------------------
AN104614 BOLT 10 6.17
----------------------------------------------------------------------------
AN104620 BOLT 25 2.53
----------------------------------------------------------------------------
AN104711 BOLT 25 4.21
----------------------------------------------------------------------------
AN104722 BOLT 10 5.31
----------------------------------------------------------------------------
AN106624 BOLT 10 8.74
----------------------------------------------------------------------------
AN107307 BOLT 10 6.45
----------------------------------------------------------------------------
AN116964 SCREW 25 3.31
----------------------------------------------------------------------------
AN117004 SCREW 4 18.14
----------------------------------------------------------------------------
AN121662 PIN 15 14.84
----------------------------------------------------------------------------
AN122581 WASHER 1 1.72
----------------------------------------------------------------------------
AN122704 PIN 50 1.10
----------------------------------------------------------------------------
AN122706 PIN 50 1.89
----------------------------------------------------------------------------
AN122707 PIN 50 1.85
----------------------------------------------------------------------------
AN125402 RIVET 100 0.52
----------------------------------------------------------------------------
AN150206 LOCK 25 2.40
----------------------------------------------------------------------------
AN150233 PIN 10 2.70
----------------------------------------------------------------------------
AN150519 STUD 10 7.50
----------------------------------------------------------------------------
AN150520 STUD 15 6.03
----------------------------------------------------------------------------
AN150521 STUD 15 13.81
----------------------------------------------------------------------------
AN150522 STUD 15 15.47
----------------------------------------------------------------------------
AN150523 STUD 5 8.11
----------------------------------------------------------------------------
AN150524 STUD 5 8.20
----------------------------------------------------------------------------
AN150526 STUD 25 3.53
----------------------------------------------------------------------------
AN150527 STUD 15 14.40
----------------------------------------------------------------------------
AN150528 STUD 15 13.72
----------------------------------------------------------------------------
AN150531 STUD 10 9.68
----------------------------------------------------------------------------
AN150532 STUD 50 4.31
----------------------------------------------------------------------------
AN150533 STUD 15 16.64
----------------------------------------------------------------------------
AN150534 STUD 15 22.76
----------------------------------------------------------------------------
AN150535 STUD 10 9.96
----------------------------------------------------------------------------
AN150536 STUD 10 9.96
----------------------------------------------------------------------------
AN150538 STUD 10 9.03
----------------------------------------------------------------------------
AN150544 STUD 10 8.36
----------------------------------------------------------------------------
AN150545 STUD 10 12.75
----------------------------------------------------------------------------
3
<PAGE> 32
EXHIBIT A
<CAPTION>
------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
------------------------------------------------------------------------------
AN150546 STUD 15 14.87
------------------------------------------------------------------------------
AN150549 STUD 15 6.75
------------------------------------------------------------------------------
AN150550 STUD 15 5.76
------------------------------------------------------------------------------
AN150551 STUD 15 6.22
------------------------------------------------------------------------------
AN150552 STUD 15 6.69
------------------------------------------------------------------------------
AN150553 STUD 15 6.75
------------------------------------------------------------------------------
AN150556 STUD 15 5.29
------------------------------------------------------------------------------
AN150557 STUD 15 14.46
------------------------------------------------------------------------------
AN150558 STUD 15 14.11
------------------------------------------------------------------------------
AN150573 STUD 10 10.58
------------------------------------------------------------------------------
AN150574 STUD 15 6.32
------------------------------------------------------------------------------
AN150575 STUD 10 10.88
------------------------------------------------------------------------------
AN150577 STUD 10 10.35
------------------------------------------------------------------------------
AN150578 STUD 10 10.58
------------------------------------------------------------------------------
AN150586 STUD 15 3.86
------------------------------------------------------------------------------
AN150587 STUD 5 15.22
------------------------------------------------------------------------------
AN150588 STUD 5 15.22
------------------------------------------------------------------------------
AN150591 STUD 10 10.58
------------------------------------------------------------------------------
AN150592 STUD 15 6.10
------------------------------------------------------------------------------
AN150593 STUD 10 13.13
------------------------------------------------------------------------------
AN150594 STUD 15 16.83
------------------------------------------------------------------------------
AN150595 STUD 30 10.58
------------------------------------------------------------------------------
AN150596 STUD 15 10.58
------------------------------------------------------------------------------
AN150820 STUD 15 4.23
------------------------------------------------------------------------------
AN150821 STUD 2 30.99
------------------------------------------------------------------------------
AN150825 STUD 15 4.52
------------------------------------------------------------------------------
AN150826 STUD 10 7.71
------------------------------------------------------------------------------
ANI150827 STUD 15 10.57
------------------------------------------------------------------------------
AN150828 STUD 15 13.94
------------------------------------------------------------------------------
AN150829 STUD 10 15.81
------------------------------------------------------------------------------
AN150830 STUD 5 14.67
------------------------------------------------------------------------------
AN150831 STUD 10 9.68
------------------------------------------------------------------------------
AN150832 STUD 15 4.02
------------------------------------------------------------------------------
AN150833 STUD 10 21.20
------------------------------------------------------------------------------
AN150834 STUD 15 26.24
------------------------------------------------------------------------------
AN150835 STUD 5 18.32
------------------------------------------------------------------------------
AN150849 STUD 10 9.09
------------------------------------------------------------------------------
AN150850 STUD 10 7.23
------------------------------------------------------------------------------
AN150851 STUD 10 9.42
------------------------------------------------------------------------------
AN150852 STUD 10 9.89
------------------------------------------------------------------------------
AN150853 STUD 10 8.88
------------------------------------------------------------------------------
AN150854 STUD 10 9.50
------------------------------------------------------------------------------
AN150861 STUD 10 9.68
------------------------------------------------------------------------------
AN150862 STUD 10 3.51
------------------------------------------------------------------------------
AN150863 STUD 5 31.45
------------------------------------------------------------------------------
4
<PAGE> 33
EXHIBIT A
<CAPTION>
------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
------------------------------------------------------------------------------
AN150864 STUD 10 20.62
------------------------------------------------------------------------------
AN150865 STUD 5 10.74
------------------------------------------------------------------------------
AN150866 STUD 10 9.38
------------------------------------------------------------------------------
AN150939 STUD 5 10.87
------------------------------------------------------------------------------
AN150940 STUD 10 8.03
------------------------------------------------------------------------------
AN150941 STUD 10 9.47
------------------------------------------------------------------------------
AN150942 STUD 10 9.75
------------------------------------------------------------------------------
AN150943 STUD 10 9.47
------------------------------------------------------------------------------
AN150957 STUD 5 10.87
------------------------------------------------------------------------------
AN150958 STUD 10 5.27
------------------------------------------------------------------------------
AN150959 STUD 2 31.25
------------------------------------------------------------------------------
AN150960 STUD 15 18.98
------------------------------------------------------------------------------
AN150961 STUD 10 9.68
------------------------------------------------------------------------------
AN150962 STUD 10 9.09
------------------------------------------------------------------------------
AN150970 STUD 5 10.27
------------------------------------------------------------------------------
AN150971 STUD 4 23.31
------------------------------------------------------------------------------
AN150972 STUD 2 30.65
------------------------------------------------------------------------------
AN151132 STUD 5 5.30
------------------------------------------------------------------------------
AN151133 STUD 10 23.54
------------------------------------------------------------------------------
AN151134 STUD 10 49.60
------------------------------------------------------------------------------
AN151324 STUD 15 4.64
------------------------------------------------------------------------------
AN151325 STUD 5 20.24
------------------------------------------------------------------------------
AN151326 STUD 15 15.27
------------------------------------------------------------------------------
AN154719 STUD 5 18.92
------------------------------------------------------------------------------
AN154720 STUD 15 8.07
------------------------------------------------------------------------------
AN154721 STUD 50 8.23
------------------------------------------------------------------------------
AN154722 STUD 10 1.56
------------------------------------------------------------------------------
AN154723 STUD 25 1.50
------------------------------------------------------------------------------
AN173-20A BOLT 5 14.80
------------------------------------------------------------------------------
AN173C10 BOLT 15 6.71
------------------------------------------------------------------------------
AN173C6 BOLT 15 6.05
------------------------------------------------------------------------------
AN173C7 BOLT 10 6.44
------------------------------------------------------------------------------
AN3-3A BOLT 50 0.35
------------------------------------------------------------------------------
AN364-1032 NUT 100 1.02
------------------------------------------------------------------------------
AN500D4-4 SCREW 50 1.41
------------------------------------------------------------------------------
AN500D4-6 SCREW 50 1.33
------------------------------------------------------------------------------
AN501AD10-6 SCREW 50 1.03
------------------------------------------------------------------------------
AN502-416-14 SCREW 50 0.39
------------------------------------------------------------------------------
AN503-10-10 SCREW 50 0.93
------------------------------------------------------------------------------
AN505C5-6 SCREW 100 0.33
------------------------------------------------------------------------------
AN6227-17 PACKING 1 4.38
------------------------------------------------------------------------------
AN775-16D BOLT 1 75.28
------------------------------------------------------------------------------
AN783-4C TEE 1 93.71
------------------------------------------------------------------------------
AN783-4J TEE 1 90.88
------------------------------------------------------------------------------
AN804-4J TEE 2 46.41
------------------------------------------------------------------------------
5
<PAGE> 34
EXHIBIT A
<CAPTION>
------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
------------------------------------------------------------------------------
AN804C5 TEE 1 75.55
------------------------------------------------------------------------------
AN815-5J UNION 2 22.16
------------------------------------------------------------------------------
AN815-6C UNION 2 24.90
------------------------------------------------------------------------------
AN833-3J ELBOW 1 71.61
------------------------------------------------------------------------------
AN833-5J ELBOW 2 49.36
------------------------------------------------------------------------------
AN833-6C ELBOW 1 62.94
------------------------------------------------------------------------------
AN837-3S ELBOW 1 86.13
------------------------------------------------------------------------------
AN837-4C ELBOW 2 48.37
------------------------------------------------------------------------------
AN837-5C ELBOW 1 71.06
------------------------------------------------------------------------------
AN837-5J ELBOW 1 58.40
------------------------------------------------------------------------------
AN837-8J ELBOW 1 80.77
------------------------------------------------------------------------------
AN893-8D BUSHING 2 40.17
------------------------------------------------------------------------------
AN919-3C REDUCER 4 23.75
------------------------------------------------------------------------------
AN924-3J NUT 15 5.61
------------------------------------------------------------------------------
AN924-3S NUT 10 11.30
------------------------------------------------------------------------------
AN924-6C NUT 10 7.02
------------------------------------------------------------------------------
AN929-5J CAP 10 8.57
------------------------------------------------------------------------------
AN932M3 PLUG 10 7.69
------------------------------------------------------------------------------
AN932M5 PLUG 5 10.63
------------------------------------------------------------------------------
AN938D4 TEE 1 30.61
------------------------------------------------------------------------------
AN939D4 ELBOW 5 18.00
------------------------------------------------------------------------------
AN960-06 WASHER 15 0.66
------------------------------------------------------------------------------
AN960-10 WASHER 100 0.04
------------------------------------------------------------------------------
AN960-716 WASHER 100 0.15
------------------------------------------------------------------------------
AN960C6 WASHER 50 0.06
------------------------------------------------------------------------------
AN960C816L WASHER 100 0.55
------------------------------------------------------------------------------
AN960C916 WASHER 100 0.66
------------------------------------------------------------------------------
AN960C916L WASHER 50 1.41
------------------------------------------------------------------------------
AN960XC916L WASHER 10 4.16
------------------------------------------------------------------------------
AS1033J05050 4 TEE 1 114.76
------------------------------------------------------------------------------
AS3068-14 NUT 1 116.74
------------------------------------------------------------------------------
AS3085-023 PACKING 50 1.08
------------------------------------------------------------------------------
AS3085-170 PACKING 10 27.96
------------------------------------------------------------------------------
AS3209-024 PACKING 1 0.64
------------------------------------------------------------------------------
AS3216-114 RING 10 2.80
------------------------------------------------------------------------------
AS3216-124 RING 10 5.82
------------------------------------------------------------------------------
MS122054 WASHER 100 0.08
------------------------------------------------------------------------------
MS122901 CLAMP 10 2.42
------------------------------------------------------------------------------
MS122902 CLAMP 50 0.82
------------------------------------------------------------------------------
MS122903 CLAMP 50 2.33
------------------------------------------------------------------------------
MS122904 CLAMP 25 1.12
------------------------------------------------------------------------------
MS122907 CLAMP 10 9.10
------------------------------------------------------------------------------
MS122909 CLAMP 25 1.74
------------------------------------------------------------------------------
MS122914 CLAMP 25 3.38
------------------------------------------------------------------------------
MS124659 HELICOIL 10 1.69
------------------------------------------------------------------------------
6
<PAGE> 35
EXHIBIT A
<CAPTION>
-------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
-------------------------------------------------------------------------------
MS124660 INSERT 50 1.33
-------------------------------------------------------------------------------
MS134354 BALL 100 0.35
-------------------------------------------------------------------------------
MS16633-4015 RING 20 2.88
-------------------------------------------------------------------------------
MS16995-16 SCREW 1 1.61
-------------------------------------------------------------------------------
MS171468 PIN 50 1.61
-------------------------------------------------------------------------------
MS171533 PIN 50 0.63
-------------------------------------------------------------------------------
MS171592 PIN 50 0.65
-------------------------------------------------------------------------------
MS17295-031 STUD 10 4.64
-------------------------------------------------------------------------------
MS17295-032 STUD 5 36.22
-------------------------------------------------------------------------------
MS17295-033 STUD 5 11.23
-------------------------------------------------------------------------------
MS17295-034 STUD 10 8.73
-------------------------------------------------------------------------------
MS17301-081 STUD 5 15.60
-------------------------------------------------------------------------------
MS17301-082 STUD 5 95.76
-------------------------------------------------------------------------------
MS17301-083 STUD 5 86.45
-------------------------------------------------------------------------------
MS17825-3 NUT 10 8.17
-------------------------------------------------------------------------------
MS19059-86 BALL 50 1.78
-------------------------------------------------------------------------------
MS20365-524A NUT 100 0.46
-------------------------------------------------------------------------------
MS20392-2-29 PIN 50 1.81
-------------------------------------------------------------------------------
MS20435F3-5 RIVET 50 1.12
-------------------------------------------------------------------------------
MS20435F4-16 RIVET 100 0.58
-------------------------------------------------------------------------------
MS20435F4-8 RIVET 50 1.30
-------------------------------------------------------------------------------
MS20435F6-8 RIVET 25 2.63
-------------------------------------------------------------------------------
MS20470A2-3 RIVET 100 0.05
-------------------------------------------------------------------------------
MS21044N5 NUT 50 0.66
-------------------------------------------------------------------------------
MS21045-3 NUT 25 2.74
-------------------------------------------------------------------------------
MS21056-3W NUT 1 144.51
-------------------------------------------------------------------------------
MS21074-3 NUT 20 5.02
-------------------------------------------------------------------------------
MS21083N3 NUT 25 0.55
-------------------------------------------------------------------------------
MS21092-3003 BOLT 10 12.19
-------------------------------------------------------------------------------
MS21103-13 CLAMP 10 2.47
-------------------------------------------------------------------------------
MS24487D6L UNION 2 63.26
-------------------------------------------------------------------------------
MS24621-7 SCREW 25 3.83
-------------------------------------------------------------------------------
MS24665-1013 PIN, COT 50 0.05
-------------------------------------------------------------------------------
MS24674-14 SCREW 25 2.26
-------------------------------------------------------------------------------
MS24674-18 SCREW 20 4.14
-------------------------------------------------------------------------------
MS24678-8 SCREW 10 6.56
-------------------------------------------------------------------------------
MS25036-101 TERMINAL 10 0.76
-------------------------------------------------------------------------------
MS25171-1S NIPPLE 5 14.15
-------------------------------------------------------------------------------
MS27183-6 WASHER 100 0.05
-------------------------------------------------------------------------------
MS27183-7 WASHER 15 6.98
-------------------------------------------------------------------------------
MS28774-012 RING 25 0.82
-------------------------------------------------------------------------------
MS28774-013 RING 1 1.44
-------------------------------------------------------------------------------
MS28775-015 HYDRAULI 1 0.29
-------------------------------------------------------------------------------
MS29512-04 PACKING 1 1.51
-------------------------------------------------------------------------------
MS29512-14 SEAL 1 1.30
-------------------------------------------------------------------------------
7
<PAGE> 36
EXHIBIT A
<CAPTION>
-----------------------------------------------------------------------------