Distribution Services Agreement - Rolls-Royce Corp. and Aviall Services Inc.
DISTRIBUTION SERVICES AGREEMENT
THIS DISTRIBUTION SERVICES AGREEMENT ("Agreement") is made as of December 17,
2001 by and between Rolls-Royce Corporation, a corporation with its principal
place of business in Indianapolis, Indiana (the "Company"), and Aviall Services,
Inc. (the "Service Provider").
RECITALS
A. The Company is engaged in the business of designing,
manufacturing, distributing, marketing and selling the
Products (as herein defined).
B. The Service Provider has submitted Proposals dated March 12,
2001 and April 30, 2001 ("Proposals") to the Company to become
the exclusive Service Provider of the Company's Model T56
Products, as hereinafter defined.
C. The Company has relied upon Service Provider's proposals in
appointing the Service Provider under the terms and conditions
of the Agreement.
D. Service Provider has relied upon data and information supplied
by the Company in making its Proposals and entering into this
Agreement.
E. The Company therefore desires to appoint the Service Provider
as its Service Provider to sell, market and otherwise
distribute the Products in the Territory (as herein defined)
as of January 1, 2002 (the "Commencement Date"), and the
Service Provider 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 Rolls-Royce T56
and 501D parts, modules, and all related technical
publications, and all 501K parts that are common with the 501D
or T56 engines 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.
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 2
AGREEMENTS
NOW, THEREFORE, in consideration of the payment by check by Service Provider to
Company of Twenty Million ($20,000,000) dollars on or before December 28, 2001
and the mutual 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 Service Provider. Subject to Section 2 hereof,
effective the "Commencement Date", the Company hereby appoints
the Service Provider as its exclusive Service Provider for
each of the Products in the Territory, and the Service
Provider 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 directly (i) to any airframe original
equipment manufacturer solely for installation on new
airframes, or (ii) to customers requesting normal
levels of spare modules and parts sold together with
new T56 engines.
(b) The Company reserves the right to complement the
Service Provider's marketing efforts and will
maintain relationships with existing customers. In
order to fulfill certain contracting requirements of
governmental entities, the Company may be required to
directly negotiate sales terms with such customers.
In such circumstances, the Service Provider shall
honor the terms and conditions of such contracts as
required by the government customer and in accordance
with Exhibits G and N.
(c) 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, Service Provider shall
cooperate in good faith with the Company and any such
third party, to the extent reasonably requested by
the Company; provided that Service Provider 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 T56 engine
except that Rolls-Royce Engine Services Oakland
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 3
(RR ESO) shall sell repaired parts only to the
Service Provider and will not competitively market
repaired parts as part of its service and overhaul
functions.
(d) The Company is participating in a program with the
United States Air Force in which the USAF turned over
numerous surplus power sections and complete engines
to Company. In exchange for this surplus material,
the Company is obligated to upgrade and deliver to
USAF twenty (20) engines. RR ESO is storing the
surplus material and providing the labor to upgrade
the engines. The Company is providing RR ESO, at no
charge, twenty upgrade kits and associated hardware,
for these engines. The Company retains the right to
ship this Product at no charge to RR ESO.
3. The Service Provider's Obligations. The Service Provider
shall:
(a) use reasonable efforts to establish and maintain an
effective sales force and to promote sales of the
Products throughout the Territory. In addition,
Service Provider 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. Recognizing that
adequate representation in the Territory is a vital
element of the Service Provider's obligations, the
Service Provider shall not significantly decrease its
commercial airline/military sales presence in any
region (North America, South and Latin America,
Europe, the Middle East, Far East/Pacific, and
Africa). Service Provider's presence may be
maintained by sales employees of Service Provider or
an affiliate located within a region or by the use of
third party sales representatives within the region.
Service Provider may change its current level and mix
of sales employees and/or third party sales
representatives within any region but it shall give
Company reasonable prior written notice of any
substantial change within any region and Service
Manager's Product Manager will consult with Company's
Product Manager regarding Service Provider's plans to
maintain adequate representation with such region
prior to the implementation of such substantial
change.
(b) promptly after execution of this Agreement, place an
order to purchase all of those Products as provided
on Exhibit B-1. The initial inventory purchase will
be made in accordance with Exhibit B.
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 4
(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 first retail
purchaser 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, business interruption, inventory
replacement (at replacement costs), and aircraft
product and completed operations insurance. The
Service Provider agrees to waive any right of
subrogation against the Company in this or any other
policy of insurance carried by Service Provider, but
only to the extent that Service Provider 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 C;
(f) administer new engine production support and new
engine sales related parts and modules needs as set
forth on Exhibit D;
(g) administer the Company's Product recall program as
set forth on Exhibit E;
(h) on the effective date of this Agreement, the Service
Provider shall have the information technology
capabilities described in the Service Provider's
Proposal to perform all tasks associated with order
management, distribution and forecasting of spare
parts. Initially, the Service Provider 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. Thereafter, Service Provider shall ensure
that its IT system is kept in good working order and
remains compatible with that of the Company. In the
event that a change to the Service Provider's IT
system is necessary, the Service Provider shall bear
reasonable expenses of ensuring continual
compatibility.
(i) assume the primary forecasting role of new and used
spare parts; provide the Company with detailed part
number level requirements for new parts per the
guidelines established in Exhibit F. The Service
Provider will
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 5
purchase and take physical possession of forecasted
inventory on terms and conditions established and in
accordance with the Agreement.
(j) The parties agree that Company may engage in
advertising, name identification and quality image
programs regarding the Products independent of
Service Provider's programs. The Service Provider and
Company agree to market and advertise products in
accordance with Exhibit J.
(k) maintain an inventory management and traceability
system equal to or better than the inventory
management and traceability system that adheres to
the provisions as identified in Exhibit Q. and as
described in Service Provider's Proposal, and provide
Company access to such system.
(l) except as otherwise agreed in writing between the
parties, and except for contractual obligations
between the Service Provider and third parties in
effect on the date of this Agreement, from the date
of execution and during the term of this Agreement,
in order to promote, and efficiently distribute, the
Products, the Service Provider will not become a
Service Provider for any parts or engines (i) solely
or primarily relating to the Pratt & Whitney PW150,
the General Electric T64, or future engine
derivatives of such engines of the same or other
manufacturers which are clearly intended for
installation on air frames for which the T56 or 501D
engines are approved, (ii) of the 501K engine
industrial engine power class (3500 to 9000 Shaft
Horse Power - sea level static on a standard day)
which are used for industrial applications similar to
that of the 501K engine, (iii) interchangeable with
Products which are proprietary engine components for
the 501D and 501K engines manufactured by the
Company; (iv) interchangeable 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 a T56 part number, provided that
Service Provider may be a Service Provider 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 Service Provider and such
parts are not sold using an T56 part number or a
number confusingly similar to an T56 part number; or
(v) interchangeable 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.
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 6
(m) share in the expense of the Company's foreign sales
agents as set forth on Exhibit H
(n) comply with all statutes, laws, ordinances, rules,
regulations, and any other governmental authority in
connection with its sale and distribution of the
Products, including but not limited to obtaining
export licenses and other authorizations in
accordance with the International Traffic in Arms
Regulation (ITAR) and Export Administration
Regulations (EAR) to export any Product from the
United States. The Service Provider has the ultimate
responsibility for ensuring that it complies with all
U.S. Government export control laws and regulations.
(o) 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 I.
From time to time at the Company's request, Service
Provider shall provide such further reports and
information, including information concerning
marketing activities, sales prospects set forth on
Exhibit J and publicly available financial data
regarding Service Provider'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
Service Provider contemplated under this Agreement;
provided however, that nothing herein shall be deemed
to authorize or permit the Company access to sales
records and data regarding sales of merchandise for
third parties for which Service Provider distributes
merchandise or to non-public financial data of
Service Provider involving sales other than sales of
the Products.
(p) commencing on the date of this Agreement and
continuing for so long as the Company requires the
same for performance under this Agreement, Service
Provider shall provide to Company, at no charge to
Company, the following:
(1) The use of the office space in Service
Provider'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
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 7
resources, Company personnel shall at all
times abide by and act in accordance with
Service Provider's corporate policies
applicable at such site; and
(2) For use by personnel employed or managed by
Company on Service Provider's premises, the
reasonable use of Service Provider's
existing telephone system solely in
connection with such personnel's work on the
Agreement, provided that the Company shall
reimburse Service Provider for all charges
and costs related to such use.
(q) manage order administration efforts from receipt of
order through invoicing. The Service Provider will
adequately staff a call center and incorporate the
Product into the web site as identified in the
proposal. The Service Provider shall allow the
Company to maintain in a prominent place on its 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.
(r) evaluate availability and demand for, and procure as
necessary, serviceable, surplus and repaired T56
spare parts to complement new part sales. The Service
Provider will procure these parts only from sources
approved by the Company. In order to appropriately
compensate the Company for its technical and
engineering support in approving third parties for
use of the Company's name and logo in connection with
repairable, serviceable and surplus Products for
resale, the Service Provider will pay the Company a
percentage of sales price in royalty fees for
repairable, serviceable and surplus product obtained
other than from Company or its affiliates per Exhibit
P.
The Service Provider will be responsible for payment
of shipping between their facility and the repair or
procurement source.
4. The Company's Obligations. The Company shall:
(a) produce, deliver, and sell the Products in the
quantities ordered by Service Provider at the
transfer rate established in Section 3 using
reasonable efforts to deliver such Products within
lead times agreed to by the parties
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 8
from time to time. The Company shall not deliver
orders more than five (5) business days prior to the
requested ship date without the Service Provider's
prior written approval;
(b) refrain from selling Products to any person other
than the Service Provider, except as permitted in
Section 2 above.
(c) promptly refer to Service Provider 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) maintain a suggested list price catalog for new and
repaired Products. The Company will compensate the
Service Provider for honoring governmental contract
pricing requirements below the agreed upon transfer
rate. The Company will pay the Service Provider a
handling fee equal to ***% of list price.
(e) offer training and technical assistance to the
Service Provider and its personnel in the use and
operation of the Products. The Company will bear the
training expense of up to six people per calendar
year at the Company's training facility in
Indianapolis. All travel expenses will be assumed by
the Service Provider.
(f) ensure that all Products sold to Service Provider for
resale or for delivery to third parties on behalf of
the Company have all appropriate governmental and
regulatory approvals such as FAA/PMA, TSO or STC as
required for installation on type certified aircraft
or engines, or on military aircraft or engines.
Additionally, the Company will provide Service
Provider with all certifications required from the
manufacturer of the Products for export oversees.
(g) 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 Service Provider
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.
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 9
(h) at its own cost and expense, procure and maintain in
full force and effect during the term of this
Agreement coverage for Service Provider 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 Service Provider in this or any
other policy of insurance carried by Company, but
only to the extent that Company may be obligated to
indemnify Service Provider pursuant to Section 15 of
the Agreement.
(i) give Service Provider 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.
(j) Commencing on the date of this Agreement and
continuing for so long as Service Provider requires
the same for the performance under this Agreement,
the Company shall provide to Service Provider, at no
charge to Service Provider, the following:
(1) The use of the office space in Company's
premises that Service Provider 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,
Service Provider 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
Service Provider on Company's premises, the
reasonable use of Company's existing
telephone system solely in connection with
Service Provider's provision of the Services
to Company; provided that Service Provider
shall reimburse the Company for all charges
and costs related to such use.
(k) The Company shall insure that its IT system is kept
in good working order. In the event that a change to
the Company's IT system is necessary, the
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 10
Company shall bear the reasonable expense of ensuring
continual compatibility.
5. Terms of Sale.
(a) The Company shall sell the Product to the Service
Provider at the discounts to published list prices
indicated on Exhibit K attached hereto based upon
prior year's sales. 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.
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 Service Provider written
notice of any increase at least 90 days
before the increase takes effect. The price
to Service Provider for all items of Product
ordered before receipt of notice by Service
Provider and for all items of Product
ordered after receipt of notice by Service
Provider but which are deliverable by
Company under established lead times before
the date of the price increase, shall be at
the price applicable prior to the price
increase.
(2) From time-to-time, the Cost of Product sold
to Service Provider may be decreased upon
mutual agreement between the Service
Provider and the Company. Such agreement
shall not be required in any instance
involving airworthiness or flight safety
issues, but in such cases, compensation to
the Service Provider for any economic loss
shall be considered and mutually agreed on a
case by case basis.
(b) Payment of the purchase price for the initial
purchase of Products as described on Exhibit B, shall
be payable by check on or before December 28, 2001.
In consideration of advance payment of the purchase
price referred to above, the Company will discount
the purchase price for the period of advance payment
at ***%.
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 11
(c) Payment of the purchase price for Products delivered
to Service Provider by the Company (except pursuant
to Section 5(b) above) shall be by check payable
thirty-five (35) days from the last to occur of
delivery of the Product or the date of invoice,
except as set forth on Exhibit R. 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 ***% 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.
(d) If any portion of Service Provider'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 Service Provider, 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 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.
(e) 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 Service
Provider's business such as ownership change,
financial difficulty, failure to keep undisputed
accounts current (payments received more than 10 days
beyond terms for more than three consecutive months
will be considered delinquent), bankruptcy, or other
significant change.
(f) Payment of any amounts due Service Provider by
Company under this Agreement will be by an immediate
deduction to current amounts due Company.
(g) each of Service Provider 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
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 12
(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.
(a) Unless otherwise specified by the Company, all
deliveries of Products by the Company to Service
Provider 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 Service Provider. Delivery is deemed to
occur upon the Company's tender of Products to the
common carrier selected by Service Provider for
shipment to Service Provider.
(b) If the Company does not deliver Products within
thirty (30) days of the delivery date specified in a
Purchase Order accepted by the Company, Service
Provider 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.
(c) Service Provider 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 Service
Provider, Service Provider shall reimburse the
Company its full costs.
(d) Service Provider 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.
(a) No Products will be eligible for return if they are
manufactured and/or procured by the Company for
purchase by the Service Provider based solely upon
Service Provider's marketing and sales data or are
part of the
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 13
initial inventory procurement except for those part
numbers noted on Exhibit B.
(b) Newly issued part numbers and/or parts involved in a
reliability campaign will be eligible for return
after 24 months of part number or campaign
introduction if and only if 1) Company has
unilaterally determined Service Provider's stocking
level and 2) remaining stock exceeds 24 month's
usage. If parts meet these requirements, Service
Provider may return all remaining inventory. No
restocking charges will apply to such returns.
(c) Products rendered obsolete due to Company's redesign
with a must conform classification will be eligible
for return by the Service Provider.
(d) 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 Service Provider 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 ***% of list price.
(e) The Company has the right to market and sell any
products the Service Provider returns in accordance
with the above provisions.
8. Warranty Disclaimer.
(a) Service Provider shall pass through the Company's
standard warranty to all parties that purchase
Products from Service Provider, without varying any
of its terms or provisions.
(b) The Company may change the standard warranty on new
Products by giving Service Provider written notice of
such new warranty at least 60 days' prior to its
effective date.
(c) THE COMPANY MAKES NO WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 14
OR USE EVEN IF THAT PURPOSE IS KNOWN TO THE COMPANY,
NOR ANY OTHER EXPRESS OR IMPLIED WARRANTY.
9. Ownership of Company Data.
(a) 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 Service Provider other than in
connection with providing the services
contemplated by this Agreement,
(2) sold, assigned, leased or otherwise provided
to third parties by Service Provider,
(3) commercially exploited by or on behalf of
Service Provider.
(b) Service Provider 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,
Service Provider 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, forecasts and other information
pertaining to the distribution, marketing and sale of
the Products, whether prepared by Company or Service
Provider, 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 Service Provider).
(c) Upon request by Company upon expiration or
termination of this Agreement, Service Provider 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 Service Provider's
possession, in each case to the extent so
requested by Company.
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
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(d) Except as noted above, each party shall be the owner
of its own data customer lists, records, and
intellectual property.
10. Term.
(a) Unless earlier terminated as herein provided, this
Agreement shall commence on the Commencement Date and
terminate on December 31, 2011 (the "Expiry Date");
provided, however, the parties may, before the Expiry
Date, renew or extend this Agreement or the business
relationship contemplated hereby on such terms and
conditions as shall be mutually agreed in writing
between the parties.
11. Termination.
(a) Termination for Convenience. Company may terminate
this Agreement, for convenience, by giving Service
Provider 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
five years after Commencement Date.
(b) 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
Service Provider 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 Service Provider's
receipt of the notice.
(c) Termination for Change in Control of Service
Provider. In the event of a Change in Control of
Service Provider or an Affiliate (defined below) in
which control over Service Provider is acquired by a
Company Competitor or by a party which in the
Company's reasonable judgment does not have the
capability to perform the Service Provider's
obligations (see Section 3), Company or by a party
which in the Company's reasonable judgement does not
have the capability to perform the Service Provider's
obligations (see Section 3), Company may terminate
this Agreement by giving Service Provider 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. At the
Company's option, Company may require
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 16
Service Provider to continue to operate under this
Agreement for up to six (6) months from the notice of
termination in order to permit an orderly transfer
from Service Provider to the Company providing
services to customers internally or to permit the
Company to put in place an agreement in which a third
party provides such services.
In the event of a Change in Control of Service
Provider or an Affiliate exercising control of
Service Provider by which the Service Provider or
such Affiliate, as the case may be, is acquired by a
third party not a Company Competitor which causes
Service Provider's or such Affiliate's credit rating,
as determined by either Standard and Poors or Moody's
to fall one notch below the Service Provider's or
such Affiliate'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 Service Provider
have been adversely affected, and the Company
provides Service Provider with 120 days prior written
notice of termination.
For purposes of this Agreement "Change in Control"
shall mean
(1) the consolidation or merger of a party with
or into any other entity, other than a
consolidation or merger
(a) in which the party is the surviving
corporation or entity in the
consolidation or merger,
(b) with or into an Affiliate or
(c) 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
(2) sale, transfer or other disposition of all
or substantially all of the assets of a
party (other than to an Affiliate), or
(3) 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
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 17
partnership interests of a party; provided
however, that the acquisition by TCG
Holdings, LLC or any of its affiliates of
either convertible preferred stock of
Service Provider's ultimate parent solely in
connection with the initial raising of
capital to fund Service Provider's
consummation of this Agreement or the
possible subsequent conversion of such
preferred stock into common stock of Service
Provider's ultimate parent, shall not be
deemed to be or cause a "Change of Control".
(4) The cessation of control (by virtue of their
not constituting a majority of directors) of
the Service Provider's ultimate parent's
Board of Directors by the individuals who
(x) at the date of this Agreement were
directors or (y) become directors after the
date of this Agreement and whose election or
nomination for election by the ultimate
parent's stockholders, was approved by a
vote of at least two-thirds of the directors
then in office who were directors at the
date of this Agreement or whose election or
nomination for election was previously so
approved.
For purposes of this Agreement, "Company Competitor"
means 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 any entity engaged in such activities,
where such design, manufacture, sale or repair
generates annual sales revenues exceed $100,000,000
in gross sales.
For purposes of this Agreement, "Affiliate" means any
person that directly or indirectly through one or
more intermediary's controls, is controlled by, or
under Common control with the Service Provider.
(d) 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 becomes Insolvent, then the non-defaulting
party may, by giving notice to
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 18
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.
(e) Termination Fees. (1) Set forth in Exhibit S are the
termination fees that would be payable to Service
Provider and inventory repurchase obligations of
Company if Company terminates this Agreement pursuant
to Section 11.a or Section 11.b. 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.
(2) If the Company terminates this Agreement pursuant
to Section 11.(c), the Service Provider shall pay for
the following: (i) the cost of moving Products
purchased by Company pursuant to Section 11.(f)(2);
the cost of novating any contracts to be transferred
to Company pursuant to Section 11.(f)(4), up to $***;
and Service Provider shall at Company's request host
a website for Company dealing with the Product's for
up to one year from the date of termination of the
Agreement.
(f) Post Termination Obligations.
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 19
(1) Option to Repurchase Products. Upon the
expiration or termination of this Agreement,
except as otherwise provided in (f) above,
the Company has the option, but not the
obligation, to purchase from Service
Provider all (but not less than all) of the
Products remaining in Service Provider's
stock at the Service Provider's average cost
net of the Service Provider'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 Service Provider). To
exercise such option, the Company must
notify Service Provider within 45 days after
the date of termination of this Agreement.
Service Provider shall deliver Products to
the Company within 10 business days after
the Company has given Service Provider
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
Service Provider to the Company at the time
of delivery.
(2) Return of Documents. Upon the termination of
this Agreement, Service Provider 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, Service Provider
must furnish the Company with copies of all
data, reports, documents, drawings and
manuals made by Service Provider dealing
with or relating solely to the Products,
except those which are necessary to complete
Service Provider's performance under any
contract that was entered into prior to
receiving the notice of termination.
(3) Customer Lists, Product Lists and Contract
Obligations. Upon the termination of this
Agreement, Service Provider must furnish the
Company with (i) a list of Service
Provider's customers for the Products and
their addresses, (ii) a list of the Products
in stock, and (iii) copies of Service
Provider's contracts relating to the sale of
the Products that have not been fully
performed by Service Provider.
(4) Option to Be Assigned Contracts. Upon the
termination of this Agreement, Service
Provider shall, at the Company's request,
use its reasonable business efforts to
effect an assignment to the
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 20
Company (or a person designated by the
Company) of the Service Provider's then
existing contracts relating to the sale of
the Products specified by the Company in the
request. In order to exercise this option,
the Company must notify Service Provider
within 30 days after the date of its receipt
of the documents specified in (c) above.
Service Provider agrees to use its
reasonable business efforts to effect the
assignment within 10 days after the Company
has notified Service Provider of its
exercise of the option.
(5) Transition. Upon the expiration or
termination of this Agreement and if the
Company so requests, Service Provider 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 Service Provider shall have no
obligation to provide assistance to any
subsequent third party chosen as a Service
Provider of the Products.
Likewise, the Company and the Service
Provider 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 Service
Provider, as its agent and in return for
reasonable compensation for such service.
12. Service Standards.
(a) Designated Service Levels. The Parties shall at all
times from and after perform their obligations
hereunder in accordance with service levels and
performance standards mutually agreed on from time to
time between Company and Service Provider ("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.
Per Exhibit M, the Company and the Service Provider
have agreed that either party will not seek monetary
penalties for non-compliance to the standards.
(b) Adjustment of Service. The Product Managers for
Company and Service Provider shall review the
performance against the Service Standards at least
quarterly during the term, and shall call attention
to any failures in
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 21
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.
(c) 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 M, 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.e).
(d) 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. Marks and Proprietary Rights.
(a) The Service Provider 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").
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 22
(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 Service Provider
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 Service
Provider 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 Service
Provider with respect to the Marks.
(c) Upon termination of this Agreement, the Service
Provider 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 Service Provider's inventory and any reference in
Service Provider's previously published catalogues.
The Service Provider will have no obligation to
return such materials to the Company. Thereafter, the
Service Provider shall no longer use any of the
Marks, except as permitted by law.
14. 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 Service Provider harmless and indemnify it
from and against any and all claims, losses, costs,
damages and expenses (including reasonable attorney's
fees) which Service Provider 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 Service
Provider harmless from any matters covered by Service
Provider's indemnity below. Service Provider shall
hold the Company harmless and indemnify it from and
against any and all claims,
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 23
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
Service Provider, or any other third party acting on
its behalf or under its direction with regard to the
Products; provided however, that the Service Provider
shall have no such obligation to indemnify or hold
the Company harmless from any matters covered by
Company's indemnity above.
15. Propriety Rights Indemnification.
(a) The Company shall, at its own expense, defend any
suit instituted against Service Provider which is
based on an allegation that any Product manufactured
by the Company and sold to Service Provider hereunder
constitute an infringement of any patent, copyright,
trade secret or other proprietary right of any third
party and shall indemnify Service Provider against
any award of damages and costs made against Service
Provider 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 Service Provider 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 thereof with full
authority to enter into a binding settlement or
compromise.
(b) 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 Service Provider 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 Service Provider a credit
for such Product upon its return to the Company,
allowing for reasonable depreciation for use, damage
and obsolescence.
(c) Notwithstanding the above, the Company shall have no
liability whatsoever to Service Provider with respect
to any patent infringement or claim
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 24
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 Service Provider or
any third party which causes the Product to become
infringing.
16. Confidentiality.
(a) General Obligations. All Confidential Information
relating to or obtained from Company or Service
Provider 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 Service
Provider 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 Service Provider 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.
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 25
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 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;
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 26
(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.
(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.
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 27
17. Foreign Corrupt Practices Act: Export Laws.
(a) Service Provider 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. Service
Provider 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.
Service Provider agrees neither to take nor omit to
take any action if such act or omission might cause
the Company or the Service Provider to be in
violation of any such laws. Upon written notice from
the Company, Service Provider shall provide such
information as the Company may reasonably consider
necessary to verify compliance by Service Provider
with the provisions of this Section.
(b) Service Provider 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. The Company may not
enter into any contract or other arrangement or sell
any Product to any third party where Service Provider
shall be required to deliver Products on behalf of
the Company if so doing would cause the Service
Provider to be in violation of any applicable laws,
including without limitation, US laws and regulations
prohibiting export to certain countries.
(c) Service Provider shall indemnify the Company against
any penalties, losses or damages (including legal
fees, penalties and costs of investigation) which the
Company may incur because of a breach of its
obligations under this Section.
(d) In those circumstances where Service Provider is
providing goods or services without charge to third
parties or where Service Provider is compensated by
Company for providing such goods or services,
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:
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 28
(1) the Service Provider 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 Service Provider outside the
United States of America in connection with
Service Provider'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 Service Provider or the Company to be in
violation of any such laws. Upon written
notice from Service Provider, Company shall
provide such information as Service Provider
may reasonably consider necessary to verify
compliance by Company with the provisions of
this Section; and
(2) The Company shall indemnify the Service
Provider against any penalties, losses or
damages (including legal fees, penalties and
costs of investigation) which the Service
Provider may incur because of a breach of
its obligations under this Section.
18. No Partnership or Joint Venture: Independent Contractor. The
parties hereto intend by this Agreement solely to effect the
appointment of the Service Provider as an independent
contractor with the Company for the marketing of the Products
as a Service Provider 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 Service Provider 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 Service Provider, (c) entitling the Service Provider 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 Service Provider's business. The Service Provider 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.
19. 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.
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 29
20. 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 Corporation
P.O. Box 420
Indianapolis, IN 46206
Attention: Norm Britton, Speed Code U21
With copy to Director of Contracts, Speed Code U27
If to the Service Provider:
(need Aviall's point of contact for contractual issues,
address, etc.)
or at such other respective addresses or addressees as may be
designated by notice given in accordance with the provisions
of this Section 21.
21. 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 Service Provider'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,
Defense North America Customer Facing Business Unit,
and to the Service Provider'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.
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 30
(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.
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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 31
(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,
13, 16 and 22 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.
(e) The arbitration shall be conducted in the English
language. This Section 21 provides the sole recourse
for the settlement of any dispute or breach arising
under or in connection with this Agreement
(f) In the event of any dispute, breach, controversy or
claim arising out of or relating to this Agreement,
the transactions contemplated hereby or the subject
matter hereof, resulting in arbitration hereunder,
the prevailing party shall, in addition to such other
relief as an arbitrator may award, be entitled to
recover reasonable attorneys' fees, costs and
expenses (including, without limitation, attorneys'
fees, costs and expenses in any arbitration
proceeding or any settlement prior to or during such
proceeding) from the breaching party.
22. 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.
23. Force Majeure.
(a) 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 Service Provider,
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
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 32
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.
24. 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
Service Provider's purchase orders which the Company has
accepted and except as to the provisions of Sections 8, 9, 11,
13, 14, 15, 16, 17, 21, and 24 hereof, all of which shall
survive the termination of this Agreement.
25. ENTIRE AGREEMENT. THIS AGREEMENT, INCLUDING EXHIBITS A THROUGH
T 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 SERVICE PROVIDERSHIP AGREEMENTS BY AND BETWEEN
COMPANY AND SERVICE PROVIDER AS WELL AS ALL PROPOSALS, ORAL OR
WRITTEN, AND ALL NEGOTIATIONS, CONVERSATIONS OR DISCUSSIONS
HERETOFORE HAD BETWEEN THE PARTIES RELATED TO THIS AGREEMENT.
26. 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.
27. Amendments. This Agreement may not be amended, nor shall any
waiver, change, modification, consent or discharge be
effected, except by an instrument in writing
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 33
executed by or on behalf of the party against whom enforcement
of any such amendment, waiver, change, modification, consent
or discharge is sought.
28. 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.
29. 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.
30. 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.
31. 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.
32. 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.
* * * * *
<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 34
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ROLLS-ROYCE CORPORATION
By: /s/ Richard B. Lewis, II
-------------------------------
Name: Richard B. Lewis, II
Title: Chief Operating Officer -
Indianapolis
AVIALL SERVICES, INC.
By: /s/ Paul E. Fulchino
----------------------------------
Name: Paul E. Fulchino
Title: Chairman, President and CEO
<PAGE>
LIST OF EXHIBITS
Exhibit A List of Products
Exhibit B On-Hand Inventory Purchase
Exhibit B-1 List of Initial Inventory Purchase
Exhibit B-2 Packaging Requirements
Exhibit B-3 Schedule Exceptions
Exhibit C Warranty Return Program
Exhibit D Production Engine Support
Exhibit E Product Recall
Exhibit F Forecasting
Exhibit F-1 Eighteen Month Schedule
Exhibit G Foreign Government Contracts and Agreements
Exhibit G-1 Current Foreign Government Contracts
Exhibit H Foreign Sales Agents
Exhibit I Sales Reports/Metrics
Exhibit J Marketing and Supplier Support Services
Exhibit K Transfer Price
Exhibit L List Prices
Exhibit M Penalties and Late Delivery Fees
Exhibit N U.S. Military Sales
Exhibit O Sales to Industrial Customers
Exhibit P Serviceable, Surplus, and Repaired Parts Sales
Exhibit Q Quality Guidelines
Exhibit R Payment Terms
Exhibit S Termination Fees
Exhibit T AMCs and FMCs
<PAGE>
EXHIBIT A
T56 SERVICE PROVIDER APPLICABLE PRODUCTS
<PAGE>
EXHIBIT B
ON HAND INVENTORY PURCHASE
Service Provider will purchase all Company inventory of Products identified in
Exhibit B-1 for $*** under the following conditions:
o All Products to be purchased must be in new condition, properly marked
and packaged and accompanied by the appropriate documentation (i.e.,
packing list) set forth in Exhibit B-2.
o Transfer of material to the Service Provider's facilities must be
completed by December 31, 2001.
o Thermocouples, part number 23067633, are the only Product in the
initial inventory purchase eligible for return per section 7(b).
o The Service Provider and the Company understand that, due to sales and
production in the last three months of the year (2001), the specific
part number mix and quantities available for transfer will differ from
the inventory identified in Exhibit B-1. In order to maintain value of
transferred inventory (at 2001 prices), parts in same part family as
identified in Exhibit B-1 may be substituted for undelivered parts
provided that the quantity of substituted parts does not exceed one
year's sales history.
o The Service Provider will take responsibility for the remaining 2001
production schedule (October through December) and commits to purchase
this inventory by December 31, 2002 at the negotiated transfer price
but excluding items identified in Exhibit B-3. The Service Provider
will not be required to procure these parts. The Company retains the
right to competitively market these part numbers until the initial
supply is exhausted.
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT B-1
ON HAND INVENTORY AS OF SEPTEMBER 8, 2001
The following table identifies the value (at list price) of each part family as
of September 8, 2001.
TOTAL $***
A PARTS $***
B PARTS $***
C PARTS $***
NO SALES $***
The attached Excel file includes the following information (by part number) in
regards to the September 8, 2001 inventory:
o Part Description
o List Price
o Extended List Price
o Part "Family" (A, B, C, or No Sales)
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT B-2
Packaging Requirements
Parts are to be packaged and shipped in accordance with the specific requirement
of contract between Company and specific customers. Packaging for the majority
of Products is done using commercial practices and in accordance with
ASTM-D-3951 (latest revision). Military packaging and marking is required for a
small amount of U.S. military contracts. This packaging and marking is done in
accordance with the following military specifications predominantly added in
boilerplate language:
o MIL-STD-2047 for packaging
o MIL-STD-129M for marking
Company will notify Service Provider in writing at least thirty (30) days in
advance if 1) it amends the packaging requirements of any contract or 2) it
enters into any new contract with packaging requirements other than those
identified above. Packaging setups for all T56 parts/contracts can be accessed
via the SAP link between the Service Provider and the Company.
<PAGE>
EXHIBIT B-3
Schedule Exceptions
<Caption>
ITEM PART NO DESCRIPTION ITEM PART NO DESCRIPTION
---- -------- --------------- ---- ------- ---------------
1 23005861 SUPPORT ASSY - 45 23060837 LEAD ASSY, SPAR
2 6895689 EXCITER ASSY, I 46 6846368 GEAR, SPUR - OI
3 23001194 HOUSING & DIAPH 47 6854398-38 GEAR
4 23009793 WHEEL, TURBINE- 48 6724756 NUT - 3.188-24
5 23031741 VANE SEGMENT AS 49 6792871 PLUNGER, THRUST
6 6785232 CAGE - TURBINE 50 6720633 CAGE, 2.1661 ID
7 6786556 COUPLING - RING 51 30865 GASKET
8 23008864 WHEEL COMPRESSO 52 23003210 SEPARATOR, MAIN
9 6731153-3 CAGE BRG 1.3779 53 6854945 SPACER, SLEEVE-
10 6792068 TUBE, BEARING L 54 6841728-037 STUD, P.003
11 6845593 WHEEL, TURB 3RD 55 AN100041 COVER, STARTER
12 23031179 WHEEL, COMPR 9T 56 6823167P003 STUD
13 6842683 SPACER ASSY 57 23007462 INSERT, TURB. -
14 6793049 PUMP ASSY, OIL 58 8982160P003 SCREW
15 23058588 BEARING, ROLLER 59 6844619 RETAINER, VANE
16 23001196 HOUSING ASSY, R 60 6780820-5 FERRULE, STRAIG
17 6827186 UNIVERSAL JOINT 61 23063839-03 COVERPLATE ASSY
18 23006660 PUMP AND FILTER 62 6815126 DISTRIBUTION BO
19 23064888 BEARING, ROLLER 63 6842836 TUBE ASSY, OIL-
20 6846567 PUMP ASSY, OIL 64 23007588 INSERT, TURB.-F
21 23031979 ACCELEROMETER, 65 6840383-14 BOLT
22 6827812 CONNECTOR, NO. 66 6846454-061140 SHAFT & GEAR AS
23 23007553 COUPLING, TURBI 67 6877213 HOSE ASSY, TFE
24 6792413 BOLT 68 6823167P001 STUD
25 6787344 SHAFTGEAR, ACC 69 6846063 WASHER - FLAT .
26 23062341 BEARING, ROLLER 70 6748072-775 RING, RETAINING
27 6786386 TUBE ASSY 71 6791530 STUD, .375-16 X
28 6794094 CLAMP ASSY, FIL 72 23032516-1 COVERPLATE, 2 S
29 23052067 BEARING, ROLLER 73 AN151007 STUD
30 23067603 BLADE COMPRESSO 74 6829473-1 PLUG
31 6794716 NUT, COMPR REAR 75 6723117 SPACER, GENERAT
32 23007561 SUPPORT & SUMP 76 MS35202-70 SCREW
<PAGE>
<Caption>
ITEM PART NO DESCRIPTION ITEM PART NO DESCRIPTION
---- -------------- --------------- ---- ------- ---------------
33 6816172 CONNECTOR, RECE 77 6877218 HOSE ASSY, TFE
34 6723126-1 JOURNAL, OIL PU 78 6780746-3 NUT - HEX COUPL
35 23007068 INSULATION BLAN 79 6827810 TUBE ASSY, FUEL
36 6895554 FILTER ELEMENT 80 6841974 BRACKET ASSY, F
37 6814990 DISTRIBUTION BO 81 23073646 PLATE, IDENTIFI
38 23007557 KEY, TURBINE CA 82 AN804D10 TEE, .875-14
39 6892375 HARNESS ASSY, T 83 MS9696-04 BOLT, MACH 12 P
40 6821491 FILTER ASSY, HI 84 6842324-06 PIN
41 6812283-420 NUT, SELF LOCKI 85 6785824 BRACKET
42 6794092 BRACKET ASSY, F 86 AN174-15 BOLT, .250-28 X
43 6847935-219040 SLEEVING S/O
44 6823166P002 STUD
<PAGE>
EXHIBIT C
WARRANTY RETURN PROGRAM
Service Provider will administer the Company's warranty for Products in
accordance with its terms and in a manner consistent with the Company's general
directions and policies as advised to Service Provider in writing from time to
time. Such administration shall include:
o Receipt and processing of warranty claims
o Collection of Product subject to claims
o Tracking of Product subject to claims
o Shipment of Product subject to claims, at the Company's expense, to the
Company
o Communication of warranty disposition to the customer
o Shipment of repaired warranty Product, at the Company's expense, to the
customer when applicable
<PAGE>
EXHIBIT D
PRODUCTION ENGINE SUPPORT
New Engine Production Support
Company may from time to time require Product be returned from Service Provider
to support Company's new engine production.
When such requests are made:
o Company will place an order with Service Provider.
o Service Provider will ship Product to Company's designated address.
o Service Provider will issue an invoice or return order for credit to
Company using Service Provider's *** plus an inventory "buy-back" fee of
***% of list price.
o Company will be responsible for freight cost of such shipments.
o Company will use reasonable efforts to minimize quantity of these
occurrences.
o Company agrees that inventory pulled back for production purposes will not
exceed ***% of sales, at list price, in any given year.
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT E
PRODUCT RECALL
The Service Provider will be notified if Company determines that a product
recall is required.
Service Provider will follow its then current ISO 9002 procedures for recalls.
Service Provider will charge Company only the variable cost associated with any
recall, primarily labor cost related to communication, shipping, tracking and
inspection tasks. Also, Company will bear any freight cost or scrap cost
incurred by the recall.
<PAGE>
EXHIBIT F
FORECASTING
The Service Provider will provide a forecast to the Company. Service Provider
will maintain a rolling 36-month monthly forecast of Product purchases for the
Company's planning purpose.
Within two weeks of signing this Agreement, Service Provider will place a firm
order for that portion of the existing Model T56 spare parts
fabrication/procurement schedule for eighteen months as provided in attached
Exhibit F-1. The Service Provider also commits to purchase production backlog,
based upon the Company's production schedule titled "18 month schedule
revisions.xls 10/10/01" previously delivered to Service Provider. Service
Provider and Company will jointly evaluate that portion of the existing Model
T56 spare parts fabrication/procurement schedule at or within eighteen months to
minimize Service Provider's requirement to purchase excess inventory.
Consideration will be given to rescheduling parts outside of the planning time
fence provided overall volumes do not decline below the forecasted order board
within a given year. The Service Provider is not required to procure those parts
in the initial 18 month schedule within planning time fence if identified in
Exhibit B-3. The Company retains the right to market these parts.
Consideration may also be given to the Service Provider for T56-A-427 parts in
the existing 18 month schedule. Inventory for these parts will be assessed in
July 2002 to determine if T56-A-427 inventory levels are excessive. Inventory
will be considered excessive if remaining inventory is greater than annualized
sales based on January through June activity. For any part numbers deemed to
have excessive inventory, the Company shall re-purchase the inventory for
production requirements or by pay Service Provider an amount equal to ***%
of list price for all such Products per month until the quantity of Service
Provider's inventory of such Products, on a part number by part number basis, is
no longer "excessive" as defined above.
The first eighteen months of the 36-month monthly forecast, or that portion of
the schedule at or within the operations planning time fence, whichever is
greater, would be considered a firm fixed schedule/purchase order with a
provision for fill in orders at lead time. Service Provider may reschedule or
cancel previously scheduled Product outside of the planning time fence in
accordance with the Company's commitment acceptance process provided overall
dollar volumes do not decline below the forecasted order board within a given
year. The remaining portion of the 36-month monthly forecast will be utilized
for capacity planning by the Company.
In accordance with the Statement of Work and the Service Provider's proposal,
the Service Provider will forecast demand to level load the manufacturing
facilities. The Service Provider will work within the Company's SORB acceptance
process to schedule
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
deliveries and bears the responsibility to level pulse buys according to
manufacturing capacity. The Service Provider may be required to build inventory
in advance of major deliveries.
The Service Provider shall, at the Company's request, provide source data used
to compile forecasts. This data may include sales history, customer call
reports, customer orders, forecasting algorithms, etc...
<PAGE>
EXHIBIT G
FOREIGN GOVERNMENT CONTRACTS AND AGREEMENTS
The Company has agreements and contracts with specific foreign government
customers (or contractors on behalf of such governments) (see below) pursuant to
which government customer purchase requirements are such that the government
chooses to contract directly with Company. Copies of these contracts will be
provided to the Service Provider on or before November 15, 2001 and are
summarized in Exhibit G-1. In order to preserve these relationships and fulfill
these government contracting requirements, the Service Provider agrees to honor
these agreements, including the terms of sale. In addition, the Company retains
the right to renew existing agreements with such government customers; provided,
however, that the Company will only commit to same or substantially similar
terms. In some instances, the Company may enter into an agreement with the same
or substantially similar terms with a commercial entity acting on the behalf of
a government customer then under contract with Company or under a government
contract.
Company may also enter into new agreements with other foreign government
customers (or their contractors) not set forth on Exhibit G-1 and Service
Provider agrees to honor these agreements, including the terms of sale; provided
however that the non financial terms of such new agreements are similar to those
set forth on Exhibit G-1. The Company recognizes that Service Provider profits
are predicated upon sales history for commercial and foreign government
customers with an average price of list minus ***%. If the Company negotiates
future agreements with foreign government customers, the Service Provider and
Company must mutually agree on terms.
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT G-1
CURRENT NON U.S. GOVERNMENT CONTRACTS
The types of the military agreements and contracts referenced in Exhibit G are
Basic Ordering Agreements (BOAs), Blanket Purchasing Agreements (BPAs),
Requirements Contracts, General Terms and Agreements (GTAs), and Authorized
Military Overhaul Facility (AMOF) agreements. The agreements are with foreign
government entities. Discount structures of current existing agreements with
such government customers follow.
<Caption>
COMPANY NAME DISCOUNT DOCUMENT
------------ -------- --------
FMS
Ishikawajima-Harima Heavy Ind. ***% Off List GTA
(IHI); expires 2012
Safe Air Limited; expires April 6, 2006 ***% off List BOA
Turkish Air Force Command* ***% off List; ***% off list for
expedite orders BOA
Embassy of Singapore; expires ***% off List to $***, then ***% BOA
March 22, 2005
Republic of Korea; expires ***% off List for new parts; ***% off
December 31, 2003 list for repaired or serviceable parts BOA
Embassy of Australia (RAAF); ***% off List to $***, then ***% BOA
expires June 30, 2002
AMOF
Fiat Avio Inc. (Italian A/F)** ***% off List (*** plus ***) AMOF AGREEMENT
* Agreement with Turkish Air Force Command valid for one year with yearly
renewals. Either Company or Customer can terminate for convenience. All Turkish
Air Force Command sales go through a foreign sales agent (DORMAK).
** Agreement with Fiat Avio expires November 22, 2001. Renewal clause for three
years for one dollar provided no breach of contract.
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT H
FOREIGN SALES AGENCY AGREEMENTS
The Company currently is a party to agreements with certain foreign sales agents
or representatives (see below) for the sale of Products outside the United
States. The Company will continue to administer agreements for these foreign
sales agents; however, the Service Provider agrees to share in commission
expenses. The Service Provider is only responsible for ***% of commission
payments to the following foreign sales agents:
<Caption>
COMMENCE EXPIRATION COMPANY COUNTRY POINT OF COMMISSIONS
DATE DATE NAME CONTACT % OF NET SELLING PRICE
5/31/2001 5/31/2002 United Aviation Engine Company, Ltd. Thailand Joomnanond ***%
10/15/1999 10/16/2001 Inter-State Enterprises Corporation Korea Limb ***%
5/15/2001 5/15/2002 Megamas Sdn Bhd Malaysia Ravi ***%
8/14/2001 8/31/2002 LAI FU Luxembourg SA Taiwan Rehfeldt ***% new
***% repaired
11/16/1999 11/16/2001 DORMAK (Turkish Air Force Command) Turkey Dora ***%
7/3/2001 10/30/2001 ETEL 88 (Spanish Air force) Spain Vazquez ***%
10/10/1994 10/10/2009 Shintoa Japan Fukui ***% (list price)
The Company retains the right to renew agreements with foreign sales agents
provided, however the Company will only commit to same or substantially similar
terms. The Company will make full payment of the commissions due the foreign
sales agents and issue an invoice to the Service Provider for ***% of amount
paid.
The Company will retain order management responsibility for Shintoa
International. All orders received from Shintoa will be forwarded to the Service
Provider for forecasting requirements and order fulfillment, including shipping
Product to Shintoa. If Shintoa requires that parts be shipped directly from the
Company, the Service Provider will return parts to the Company. The Service
Provider will pay the Company a ***% handling fee for parts that are shipped to
Shintoa from the Company. For parts sold to Shintoa, the Service Provider will
take an immediate deduction from amounts due Company for the list
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
price of the Products less associated fees due Company. The fees due Company are
equal to the Service Provider's share of the commission payments and when
applicable, a ***% shipping handling fee.
The Company and the Service Provider will work together in the first year to
gain Shintoa's acceptance of the Service Provider. It is the intention of the
Company and the Service Provider, with Shintoa' approval, to transition all
business functions concerning Shintoa to the Service Provider at the end of the
first year. Upon this transition, Shintoa sales and commission payments will be
handled as any other foreign sales agent.
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT I
SALES REPORTS/METRICS
Service Provider will provide the Company all reports currently available online
through the "supplier services" section of Service Provider's Aviall.com web
site. These reports include:
1. Daily inventory by part number
2. Daily sales by part number
3. Open purchase orders
4. Payment status by invoice number
Service Provider will provide monthly reports as follows through e-mail file
transmission in Microsoft Excel format:
1. Unit sales by part number by customer
2. Dollar sales by part number by customer
3. Order intake by geographical region
Other sales reports will be provided during the term of the Agreement as
mutually agreed by both parties.
Additionally, Service Provider will provide metrics reports monthly for:
1. Error free shipping rates
2. Expedite rates
3. Shipping timeliness
<PAGE>
EXHIBIT J
MARKETING AND SUPPLIER SUPPORT SERVICES
MARKETING AND SUPPLIER SUPPORT SERVICES
The implementation, timing and applicability of each service set forth below
will be determined by mutual agreement of both parties, based on customer and
market requirements.
A. Company Marketing Rights and Obligations
o The Company will lead the development of a marketing plan for new,
repaired, and serviceable parts. This plan will be updated at least
annually. The marketing plan will include a summary of each key product
category, customer targets, technical support requirements, and
advertising methods to be used. The Service Provider will work with
Company personnel to effectively execute the plan through the Service
Provider's organization.
o The Company will make regular calls and visits to select customers,
including U.S. Military and select foreign military customers, to identify
opportunities and address problems. The results of these calls will be
documented in an agreed upon database for the Service Provider's and
Company's review.
B. Service Provider Marketing Rights and Obligations
o The Service Provider will make regular calls and visits to all customers.
For those customers noted above, the Service Provider will provide a draft
agenda to the Company whenever possible. The results of routine sales
calls by area sales personnel will be documented in an agreed upon
database and reviewed by the product line manager assigned to Company and
by the T56 project manager on an ongoing basis. Summaries of important
findings will be reported to Company regularly.
o Area sales personnel will request monthly forecasts of operating hours,
engine overhauls, and parts replacement from key customers. They will also
request information on Product performance. The information will be
accumulated and documented in an agreed upon database.
o The product line manager will evaluate warranty claims, product returns
and other customer activity for indications of developing problems. Where
appropriate, the manager will conduct additional research to determine the
nature of the problems and will communicate findings to Company.
o The product line manager will work closely with Company data analysis and
procurement personnel to evaluate customer buying activity and product
stock levels. The product line manager will communicate findings to
Company.
<PAGE>
o The product line and program managers will attend trade shows and other
industry events to remain up-to-date. They will visit Company production
and technical support operations from time to time for training and
sharing of market intelligence.
C. Advertising and product promotion:
o The Service Provider will work with Company personnel to produce and place
technical articles in appropriate publications. Service Provider's
marketing communications manager will be an important resource in this
effort.
o Service Provider will generate timely news releases for significant events
such as trade shows.
o The Service Provider sales team will actively distribute Company product
literature.
o Service Provider's online electronic catalog will be updated to
incorporate Company Products, including illustrations where appropriate.
o Customers ordering online or browsing Service Provider's electronic
catalog can be prompted on aviall.com to take certain actions, such as
ordering a related Product.
o "What's New" announcements can be placed on the aviall.com home page to
promote new products or services related to Company. Since aviall.com is
accessed over 600,000 times per month, this is an important communications
vehicle for our mutual customers.
o Service Provider's worldwide email system will be used to communicate
promotions, technical data, and selling opportunities to its global sales
team.
o A special Customer web page or link can be incorporated into aviall.com,
if desired, to allow Service Provider personnel and customers to obtain
manuals, technical data, product information and details of promotions.
o Service Provider will incorporate a T56 Parts web page that is accessible
by T56 customers and linked to Rolls-Royce.com.
<PAGE>
EXHIBIT K
TRANSFER PRICES
Company agrees that it will sell Product to Service Provider at a discount of
not more than ***% and not less than ***% off then current list price. The
discount for year *** will be ***% off list. Beginning with the *** full
calendar year, the discount to the Service Provider will be based on sales
growth.
Joint Company and Service Provider sales, at list price, in 2001 (excluding
sales by Company to Service Provider) are estimated at $*** (based on actual
sales through September and an estimate for the remainder of the year). Using
actual Company and Service Provider 2001 sales data (excluding sales by Company
to Service Provider) as the initial baseline, if year over year sales increase
more than ***% (inclusive of inflation and list price changes), the discount
from list will be increased on a sliding scale to no more than ***% in the
subsequent year as set forth below. If sales increase less than ***% (inclusive
of inflation and list price changes) the discount will be reduced to no lower
than ***% off list as set forth below. Delinquent customer orders from 2001 that
are delivered in 2002 will be included in the Service Provider's 2002 sales. All
delinquent customer orders outstanding on 12-31-2001 shall automatically be
assigned by the Company to Service Provider.
<Caption>
Sales Performance Service Provider Sales Performance Service Provider
% of target Discount % of target Discount
*** ***% *** ***%
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT L
List Prices
The following represents the current list prices as of September, 2001.
Historically, list prices have been revised annually. List prices for the
following calendar year will be provided to the Service Provider by September
30th of any given calendar year after 2001.
The Company has initiated an analysis concerning market based pricing in an
effort to recapture market share. Part numbers targeted for price reduction in
2002 have been identified to the Service Provider as Specials in Exhibit B-1.
Year 2002 schedules have been increased in preparation for increased demand of
these part numbers. The Service Provider and the Company will work together to
identify further part numbers to apply market based pricing.
Inventory for all Specials, except those listed in Exhibit B-3, will be assessed
in January 2003 to determine if inventory levels are beyond requirement.
Inventory will be considered beyond requirements if remaining inventory is
greater than 6 month average month sales, with average monthly sales defined as
one half of 2002 sales. For any inventory of Specials greater than 6 months of
average month sales Company will pay the Service Provider for carrying costs
associated with inventory at the rate of ***% of list price per month until the
inventory level is no longer greater than 6 months of average month sales.
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT M
Penalties and Late Delivery Fees
Penalties and Late Delivery Fees
The Company and Service Provider are both incentivized to grow the T56 new parts
business. Meeting customer requirements is a mutual concern. Penalties between
those parties would create friction and result in an effort which does not focus
on the joint goal of maximizing new part sales.
The Company will make every effort to accommodate the Service Provider's
requested expedites through the Sales and Operation Review Board commitment
acceptance process with no penalty to the Service Provider. Service Provider
will make every effort to minimize expedites.
The Company will accept no penalties for late deliveries from the Service
Provider unless they are documented as a pass through penalty from the end user.
The Service Provider will not agree to end user penalties for the Company's
delivery performance unless prior agreement with the Company is obtained.
<PAGE>
EXHIBIT N
U.S. Military Sales
Service provider will fill orders for U.S. Military customers (or their
contractors) per the terms and conditions of the contracts and agreements held
by the Company. Contracts for U.S. military T56 parts include U.S. military
sales to foreign Governments. Discounts to current contracts with U.S. military
customers follow:
US MILITARY
NAVICP Electronic P.O. Negotiated price based on quote. All Military
N00383-01-P-021M (active) pack/mark per boilerplate MIL-STD-2047/MIL-STD-129M
DISC Phil. P.O. Negotiated price based on quote. All Military
SP0560-01-M-Y745 (active) pack/mark per boilerplate MIL-STD-2047/MIL-STD-129M
DSCR Contract Negotiated price based on quote. All Military
SP0480-01-C-1392 (active) pack/mark per boilerplate MIL-STD-2047/MIL-STD-129M
DSCC P.O./Contracts Negotiated price based on quote. All Military
SPO740-01-M-3224 (active) pack/mark per boilerplate MIL-STD-2047/MIL-STD-129M
SP0740-01-C-5027 (active)
SP0740-01-C-5028(active)
BOA (NAVICP) only user NAVICP Delivery Orders negotiated price based on quote.
N00383-01-G-019M (active) Pack/mark MIL-STD-2047/MIL-STD-129M (boilerplate)
BOA (Tinker AFB, OK) Open orders. Delivery Orders negotiated price based on
F34601-98-G-0011 (expired) quote. Pack/mark MIL-STD-2047/MIL-STD-129M (boilerplate)
Used by OC, DLA, NAVICP Replaced by F34601-01-D-0155 below. Once open orders
complete almost all pack/mark will be commercial.
Standard Aero San Antonio Inc. Discount Average of ***% off List
(Kelly AFB, TX) Commercial Direct Government Support, Commercial Pack,
Agreement # A01-560 (active) No Government Acceptance Required.
Blanket Purchase Agreement Discount of ***% off List
(Tinker AFB, OK) Blanket Purchase Agreement, Commercial Pack/Invoice
F41608-97-A-0001 (expired)
Engine Services Oakland Discount of ***% off List
(T56-A-427 Engine Requirements Commercial Pack/Invoice
Repair Contract)
N00019-00-D-0267 (active)
Commercial Corporate Contract Prices were negotiated on a part number by part number
(Tinker AFB, OK) basis forming a unique military price list. Requirements
F34601-01-D-0155 (active) Contract, Commercial Pack/Invoice
The Service Provider will arrange for Government inspection to the level
required and obtain the Government acceptance signatures at Service Provider's
facility. The Company
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
will provide Service Provider with the capability to generate invoices and
DD-250's at Service Provider's facility. The Company's IT system will provide
the other detail as entered by the Company in order for Service Provider to
package and ship to the correct customer location which may be different than
order issuing offices.
Service Provider will have ink stamps available (a sample will be provided by
Company) to apply to the Company commercial invoice to obtain the Government
acceptance signature and Company hereby grants Service Provider the authority to
apply such stamps as it deems necessary. DD-250's and commercial invoices used
in lieu of DD-250's will be sent to the Company accounts receivable designated
point of contact. The Company will provide Service Provider with the Technical
Data required for use by The Government Quality Assurance Representative to
perform inspection and acceptance of Product.
All U.S. military customer (or their contractors) orders for T56 engines and
parts are rated in accordance with the provisions of the Defense Priority
Allocation System (DPAS). Service Provider will treat all military orders with
the preference required by DPAS. Information as to the requirements of DPAS can
be found in Part 700 of Title 15 of the Code of Federal Regulations (15CFR 700)
and the Federal Acquisition Regulations (FAR), FAR Part 11.6.
In filling contracts and other agreements with U.S. military customers (or their
contractors), the Service Provider will be required to fill part orders at a
price below the transfer price. For the parts shipped in fulfillment of the
these contracts, the Service Provider will take an immediate deduction for its
*** of such Products plus a handling fee of ***% of list price against current
amounts due Company. The following calculation is provided as an example:
List price $***
Transfer price (Service Provider's ***) $***
Handling Fee (***% of list price) $***
Deduction from amounts due Company $***
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT O
SALES TO INDUSTRIAL CUSTOMERS
The Company will retain order management responsibility for Industrial
customers. All orders received for part numbers that are common with the T56
engines will be forwarded to the Service Provider. The Service Provider will use
this information for forecasting requirements and will be responsible for order
fulfillment, invoicing, and accounts receivable.
The Company has agreements and contracts with specific industrial customers. In
order to preserve these relationships and fulfill these contracting
requirements, the Service Provider agrees to honor these agreements, including
the terms of sale. In addition, the Company retains the right to renew existing
agreements with such customers; provided, however, that the Company will only
commit to same or substantially similar terms. The Company will provide copies
of these contracts to the Service Provider on or before Dec 1, 2001. The
following table summarizes discount structures per existing agreements:
<Caption>
*being negotiated
AMC / DISTRIBUTOR DISCOUNT
----------------- --------
Bath Iron Works ***% OFF List
Centrax ***% OFF List; ***% embodiment
Hitachi Zosen ***% OFF List; ***% embodiment
IHI & Niasco (JDA; K34 engines) ***% OFF List
IHI & Niasco (501K engines) ***% OFF List; ***% embodiment
Ingalls Shipbuilding ***% OFF List
Kawasaki Heavy Industries ***% OFF List; ***% embodiment
Kobe Steel ***% OFF List; ***% embodiment
Rolls Wood Group ***% OFF List; ***% embodiment*
RR Australia ***% OFF List
RRESI Maineville ***% OFF List
RRESI Mount Vernon ***% OFF List; ***% embodiment
RRESO-Oakland ***% OFF List; ***% embodiment
Shintoa ***% OFF List; ***% embodiment
Sigma ***% OFF List; ***% embodiment
Standard Aero ***% OFF List; ***% embodiment
Turbomeca ***% OFF List; ***% embodiment
Tominaga ***% OFF List
RR Propulsion Systems ***% OFF List
RR Power Engineering ***% OFF List*
Samsung ***% OFF List; ***% embodiment
ITP ***% OFF List
Turbomeca ***% OFF List; ***% embodiment
AIDC ***% OFF List
Military ***
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT P
Serviceable, Surplus, and Repaired Parts Sales
The Service Provider will procure serviceable, surplus and repaired parts to
complement new part sales. The Service Provider, in most instances, is required
to pay Company a royalty fee for sales of these parts in accordance with
existing payment terms (Exhibit R).
Surplus Parts
The Service Provider will procure surplus parts together with appropriate
documentation concerning part origin from approved sources. Company will provide
quality certification, verify the traceability of surplus parts, provide all
necessary documentation required for the sale of the part, and permit Service
Provider to use the Rolls-Royce logo and name in connection with the sale of
such part which will then be added to the Service Provider's inventory. Upon
sale of a surplus part, obtained from a source other than the Company or another
affiliate, the Service Provider will pay Company a royalty fee of ***% of
selling price.
Repaired and Serviceable Parts
The Service Provider will procure used parts and cores. Company will provide
quality certification, verify the traceability of the such parts, provide all
necessary documentation required for the sale of the part, and permit Service
Provider to use the Rolls-Royce logo and name in connection with the sale of the
part which will then be added to the Service Provider's inventory. Upon sale of
such part, obtained from a source other than the Company or an affiliate, the
Service Provider will pay Company a royalty fee of ***% of selling price.
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT Q
QUALITY GUIDELINES
In accordance with this agreement, the Service Provider must be ISO 9002
certified; certification to AS7103/AS7104 is preferred. Certification to the FAA
distributor accreditation program (AC 00-56) is acceptable.
The Service Provider must comply with the Company's approved FAA production
system unless the Service Provider has its own FAA production or maintenance
approval.
If mutually agreed between the Company and Service Provider for the Service
Provider to source from third parties, approval for these sources must comply
with the Company guidelines and it will be the T56 Service Provider's
responsibility to ensure compliance.
<PAGE>
EXHIBIT R
PAYMENT TERMS
Initial payment terms from the Service Provider due the Company are 35 days from
receipt of Product or date of invoice, whichever is later, payable by check.
The Company and United States Air Force are planning to transition from a
Government Furnished Material (GFM) contract to a Contractor Furnished Material
(CFM) contract. Upon successful transition, as set forth below, to a CFM
contract with the Air Force, payment terms will be 30 days payable by check.
The plan for the GFM to CFM transition includes several component packages. Each
component package identifies a unique set of part numbers. Transition of the
component packages is expected to occur in stages. For the purposes of this
agreement, transition from GFM to CFM will be considered sufficient when
component packages which have been changed from GFM to CFM and revenue under
such CFM components meets or exceeds an aggregate value of $*** per year at
Company's invoice price to the customers, but no earlier than June 30, 2002. At
this point, payment terms will change to 30 days from receipt of Product or date
of invoice, whichever is later, payable by check.
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT S
TERMINATION FEES
In the event that the Agreement is terminated by Company pursuant to Sections
11.(a) or 11.(b), as a condition to the effectiveness of such termination,
Company shall pay Service Provider according to the following formula and
amounts:
(A) An amount which equals [$*** + (the product of *** times Excess Sales
Value times ***) times Pro Rata Term Percentage].
For the purpose of the above calculation, the following definitions shall apply:
1. Excess Sales Value shall mean the amount by which the Distributor's
total sales in the previous 12 calendar months preceding notice of
termination exceeds the actual amount of 2001 sales as calculated
pursuant to Exhibit K adjusted by the ***% annual compound growth,
prorated for the month of termination (the Index) calculated for such
previous 12 calendar months.
2. Pro Rata Term Percentage shall be the percentage that results by
taking the number of full calendar months that would remain from the
date of termination of the Agreement to December 31, 2011 and
dividing that number by 120.
The parties agree that the following examples shall serve as instruction to
application of the formula:
Example 1: Termination after 36 months, total sales in preceding 12 months of
$** with adjustment for the Index.
Excess Sales Value: = $***
Full Calendar Months Remaining to December 31, 2011= 84
Pro Rata Term Percentage 84/120= .70
So the calculation is as follows:
***;
and
(B) The Company shall purchase all of Service Provider's inventory of
Products existing on the termination date at Service Provider's average
cost.
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT T
AMCS AND FMCS
The Company has agreements with Rolls-Royce Authorized Maintenance Centers
(AMCs) and Factory Maintenance Centers (FMCs). These organizations support the
route of the Company's Product to the marketplace. The Service Provider will
sell Products to the existing AMCs/FMCs at a price which is not more than ***%
off of the Company's then current published list prices. The T56 AMCs are as
follows:
Hellenic Aerospace Industry Ltd. (HAI), Greece
Israel Aircraft Industries Ltd (IAI), Israel
OGMA - Industria Aeronautica De Portugal, Portugal
Samsung Aerospace Industry, Korea
Sigma Aerospace, England
Snecma Services, France
ST Aerospace Engines Pte Ltd., Singapore
Standard Aero Limited, Canada
Wood Group Turbopower Inc., Florida
The Company has two Factory Maintenance Center (FMC) agreements; however, there
is the possibility that additional FMCs will be identified. The two FMCs are
Rolls-Royce Engine Services Oakland (RRESO) and Rolls-Royce Brazil.
Nothing contained herein shall preclude Service Provider from selling Products
to all other customers at such prices and on such terms, including the prices
and terms at which it sells to AMCs, that Service Provider, in its sole
discretion, shall determine.
***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.