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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-12380
--------------------------------------
AVIALL, INC.
(Exact name of Registrant as specified in its Charter)
DELAWARE 65-0433083
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2075 DIPLOMAT DRIVE
DALLAS, TEXAS 75234-8999
(Address of principal executive offices) (Zip Code)
(972) 406-2000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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<S> <C>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- --------------------------------------- -----------------------------------------
Common Stock, par value, $.01 per share New York Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained herein,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
---
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of March 10, 2000 was approximately $149.7 million.
The number of shares of Common Stock outstanding at March 10, 2000 was
18,270,594.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be filed with the Securities and Exchange Commission are
incorporated herein by reference in Part III.
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AVIALL, INC.
CONTENTS
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PAGE
PART I
<S> <C> <C>
ITEM 1: BUSINESS....................................................................................................3
INTRODUCTION............................................................................................3
PARTS DISTRIBUTION......................................................................................3
INVENTORY LOCATOR SERVICE...............................................................................4
SALES AND MARKETING.....................................................................................4
COMPETITION.............................................................................................6
CUSTOMERS...............................................................................................6
SUPPLIERS...............................................................................................6
EMPLOYEES...............................................................................................6
REGULATION..............................................................................................6
DISCONTINUED OPERATIONS.................................................................................6
EXECUTIVE OFFICERS OF AVIALL............................................................................7
ITEM 2: PROPERTIES..................................................................................................7
ITEM 3: LEGAL PROCEEDINGS...........................................................................................8
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........................................................8
PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.................................................................................................9
ITEM 6: SELECTED FINANCIAL DATA....................................................................................10
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS..................................................................................11
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.................................................17
ITEM 8: CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...................................................17
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE...................................................................................17
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.........................................................17
ITEM 11: EXECUTIVE COMPENSATION.....................................................................................18
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............................................18
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............................................................18
PART IV
ITEM 14: EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K...............................................................................................18
SIGNATURES ...........................................................................................................21
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.......................................................F-1
</TABLE>
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PART I
ITEM 1: BUSINESS
INTRODUCTION. Aviall, Inc. ("Aviall" or the "Company") is the largest
independent global distributor of new aviation parts and supplies ("Parts
Distribution"). Aviall also provides an electronic marketplace, both traditional
dial-up and web-based, serving the aviation, marine and defense industries
through Inventory Locator Service, Inc. ("ILS"), which is wholly owned by
Aviall. As used in this report, "Aviall" or the "Company" refers to Aviall and
all of its direct and indirect subsidiaries. Parts Distribution and ILS are
separate segments for financial reporting purposes.
PARTS DISTRIBUTION. Aviall is the largest independent global distributor of new
aviation parts and supplies, serving both the commercial and general aviation
markets providing a link between parts manufacturers, sellers and buyers
throughout the world. Product lines distributed by Aviall include a variety of
turbine engine parts, airframe spares (e.g., oxygen systems, filters, control
cables, batteries, actuators and motors), undercarriage items (e.g., wheels,
brakes and tires), piston engines and parts, and other supplies. Aviall
purchases these new parts from suppliers for its own account and resells these
parts to its customers which include commercial airlines, freight carriers,
maintenance and overhaul shops, fixed-base operators, aircraft original
equipment manufacturers ("OEMs"), corporate aircraft operators, brokers,
governmental agencies and other distributors. Aviall has developed strong
relationships with suppliers who seek indepth sales and marketing coverage,
advanced inventory management, order processing, forecasting and direct
electronic communications with end users of their products.
Aviall is an authorized distributor for manufacturers such as BFGoodrich
(ice protection systems, wheel and brake parts, lighting systems, sensors and
emergency equipment), Scott Aviation (oxygen systems), Telair International
(motors, actuators and cargo handling systems), Lord Corporation (engine
vibration isolators), Federal Mogul Aviation, formerly Champion (ignition
systems), Textron Lycoming (piston engines, parts and components) and Honeywell
(turbochargers). In January 2000, Aviall began distributing the Rolls-Royce
model 250 turbine engine line ("RR250") under a ten-year exclusive agreement.
Aviall's Parts Distribution business also maintains a network of battery, wheel
and brake repair, and hose assembly shops offering a wide range of product
repair services. Approximately 63,000 unique part numbers are sold to
approximately 13,000 customers. This diversity of product offerings
distinguishes Aviall from most other aviation parts distributors which carry a
narrower range of products.
Aviall distributes aircraft and engine parts from 41 customer service
centers located throughout the world, including North America, Europe and the
Asia-Pacific region. Field sales representatives located in each of these
regions call upon current and potential customers on a regular basis to solicit
orders and provide technical input such as product and operational information.
Each service center is staffed to receive and process telephone, facsimile and
mail orders. Aviall also maintains a central sales support center in Dallas,
known as AviallOne, which provides the ability to proactively engage in special
marketing and related telemarketing programs and to capture overflow calls from
the service centers. Approximately 67% of the parts sold by Aviall are from its
Dallas, Texas warehouse complex, with the remaining parts distributed from its
customer service centers worldwide.
Aviall's integrated data system permits its employees to access information
on stock availability, pricing and order status, and to perform order entry on a
real time basis from anywhere in the world through its new enterprise resource
planning ("ERP") system implemented in 1999. The system facilitates immediate
shipment from Dallas, Texas to customers throughout North America and overnight
fulfillment of European customer orders. In addition, a newly enhanced
fully-functional order management system directly linked to the Company's ERP
system is available on the internet at the Company's website, AVIALL.COM. This
system enables customers to review parts availability, place orders and check
order status, and provides enhanced reporting capabilities for Aviall's
suppliers. Aviall also offers advanced electronic data interchange ("EDI")
communications with other networks used by customers and suppliers. Aviall's EDI
system provides direct customer access to Aviall's central inventory management
and retrieval system. The Company believes its advanced
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technologies in customer order management and electronic commerce ("e-commerce")
are key factors accentuating Aviall's high standards for customer service and
providing the Company with a competitive advantage.
INVENTORY LOCATOR SERVICE. ILS brings buyers and sellers together into a global
electronic marketplace serving the aviation, marine and defense industries.
Suppliers of parts, equipment and services from around the world list their
inventories and capabilities on the ILS system for access by buyers such as
airlines, ship management companies and defense logistics agencies. ILS provides
the largest independent database of inventory information in the commercial
aviation industry, covering essentially every aircraft and engine type in
commercial service. Aviall management believes that ILS is generally the first
database to be accessed by buyers seeking parts availability and sellers
desiring to list their parts for sale. ILS links these buyers and sellers
through both internet-based systems and traditional dial-up on-line services.
With access available through either ILSmart.com or ILS' private data network,
buyers can quickly locate the suppliers that have the items or capabilities they
need. In addition, ILS provides the information for buyers to send Request for
Quotes ("RFQ") directly to the sellers by using ILS' fax and e-mail service, ILS
Direct. As an independent provider of information, ILS does not hold inventory.
ILS charges a subscription fee to access or list data. In this respect, ILS is
the largest independent information source of its type serving the commercial
aviation industry.
ILS recently introduced powerful new tools on ILSMART.COM to facilitate the
buying and selling process for its internet subscribers. The ILS e-Supplier
Directory enables buyers to locate suppliers by the types of equipment they sell
or service and provides additional company information that aids in the
purchasing decision, including access to credit reporting information from
business affiliate Dunn and Bradstreet. Suppliers can provide links directly to
their own websites for greater exposure. The ILS Auction, one of the first
exclusively business-to-business auctions on the internet, provides an effective
method for sellers to liquidate excess and surplus items while helping buyers
search for bargains in dozens of categories of equipment. Subscribers can bid
interactively or let the system bid for them to a pre-set limit.
In addition to parts and services availability information, ILS maintains
approximately 92 million records of government data. Provided on a supplemental
basis, this information may be used in locating alternate parts and suppliers,
identifying unknown items, finding new applications for parts and establishing
the value of parts.
The ILS system provides information on approximately 40 million line items
of parts and equipment, representing more than five billion parts. ILS users
access the system more than 25,000 times each business day. Aviall believes its
large customer base; depth and breadth of aftermarket product offerings;
electronic marketplace innovation and e-commerce developments; and its position
as an independent, unbiased provider of information are key competitive
differentiating factors.
SALES AND MARKETING. Aviall emphasizes leading edge e-commerce capabilities,
breadth of product offering, competitive pricing, attention to customer service
and value-added functions through advanced systems and inventory
management/logistics applications.
Aviall's Parts Distribution operation serves the different requirements of
the commercial airline, regional airline, and corporate and general aviation
market sectors. It conducts direct sales and marketing efforts through a team of
district sales managers, field sales representatives and third-party sales
representatives who meet regularly with Parts Distribution's major customers.
Their function is not only to sell and provide technical support for existing
products, but also to work with Parts Distribution's customers and suppliers in
order to identify new market opportunities.
The Company opened AviallOne in April 1999 as the first phase of its sales
process enhancement initiative. In addition to enhanced sales assistance,
AviallOne provides capacity to capture overflow call volume from the domestic
customer service centers and has enabled Parts Distribution to extend its normal
operating hours and initiate Saturday sales coverage. Beginning with a new sales
force structure implemented in January 2000 aimed at improving sales coverage of
major customers, the Company has continued to enhance its Parts Distribution
sales model and processes through improved organization, recruitment and
training of sales professionals, and the introduction of systems to raise
productivity and increase the flow of information regarding product performance,
sales activities and customer feedback.
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The Company's website, AVIALL.COM, was significantly enhanced in 1999 in
connection with implementing the new ERP system. The additional functionality
and user-friendly design of the new web-based system resulted in its recognition
as one of the leading e-commerce sites serving the aviation industry. The
Company will continue to enhance the functionality of this leading edge
e-commerce portal as the sales volume through AVIALL.COM continues to grow.
Aviall locates critical parts inventories in its domestic and international
customer service centers to meet customer requirements. The Company's sales
staff works closely with the customer service center managers and the inventory
provisioning group to ensure that inventory availability and customer service
levels are maintained. Frequent meetings are conducted with suppliers to provide
new product introductions as well as marketing and sales training. From time to
time, the Company also undertakes primary research of its customers to ascertain
first hand an understanding of its performance to expectations and opportunities
for improvement.
Aviall also sponsors parts and maintenance symposiums with participation by
both manufacturers and customers. These symposiums feature new products and
experienced representatives from Aviall suppliers who provide technical
training. In addition, management believes that the Company's parts catalog,
which is published every three years, is the recognized industry standard for
parts and applications in the corporate and general aviation sectors. In 2000,
the Company will introduce an electronic catalog on the AVIALL.COM website with
advanced parametric search capabilities. The new electronic catalog will be
linked directly to the AVIALL.COM order entry system, further simplifying the
order entry process for Aviall's customers. Aviall also uses institutional
advertising, co-op advertising programs with suppliers and direct mail programs,
as well as sending representatives to a number of industry trade shows around
the world to ensure that its name, products and services are visible in the
market.
ILS' services are marketed to both the buyers and suppliers in the
aviation, marine and defense industries. Suppliers use ILS' services to open new
markets and find additional customers for their products and services. Buyers
use ILS to locate the parts and services they require. Enhancements to ILS'
services are driven by customer needs and their hardware/software capabilities.
ILS routinely uses focus groups, questionnaires, industry meetings and surveys
to obtain customer feedback on current and prospective services.
ILS is represented by area sales managers and independent representatives
strategically located throughout the world. ILS, with headquarters in Memphis,
Tennessee, also maintains regional offices in Atlanta, Georgia; Seattle,
Washington; and Hong Kong as well as independent representatives in London and
Newcastle, England; Athens, Greece; Melbourne, Australia; Pusan, Korea; and
Toronto, Canada. In addition, field service representatives are located in the
major customer concentration areas to provide customers with training and
technical support.
Each year, ILS demonstrates its services at a number of trade shows around
the world as a means of reaching prospective customers. Advertising in major
aviation and marine industry publications also provides additional exposure and
generates leads for the ILS sales team. In addition, ILS offers seminars and
training sessions to assist customers in maximizing the value from ILS'
services. The ILS website, ILSMART.COM, is also a marketing tool to provide
information to current and prospective customers. In 2000, ILS announced plans
for its evolution to a technically advanced full service internet-based complete
order inquiry, processing and fulfillment system known as Contact to
Contract(tm). Through its ILSMART.COM website, these new services will
significantly broaden the range of e-commerce options available to ILS'
customers, including enhanced market research, electronic product cataloging,
expanded around-the-clock electronic auction sites, more comprehensive quotation
management, and improved buyer-to-seller communications. The ultimate goal is to
enable buyers to research their requirements, locate items, order, receive and
pay for items via the internet. Sellers will be able to furnish up-to-date
inventory information, accept orders, secure payment and ship products.
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COMPETITION. Aviall's primary competitors for sales of new aircraft parts and
supplies are other independent distributors and the OEMs. The aviation parts
distribution market is extremely fragmented and no single competitor holds a
dominant position. While Aviall historically competes in the parts distribution
sector on the basis of price and availability of parts, management believes that
a key differentiating factor in the future will be the ability to tailor
services to improve customer service and lower costs by leveraging new
e-commerce technologies.
ILS is in the twenty-first year of serving buyers and sellers of parts,
equipment and services in the aviation, marine and defense marketplaces.
Subscribers can list, search, send or receive RFQs as well as use the ILS
internet auction to sell surplus parts or equipment. ILS is the only such
e-marketplace business that provides customers with both internet and dial-up
(x.25) access capability to its extensive data systems. The dial-up access helps
serve large customers with legacy operating systems. ILS has a number of
competitors who only compete on the internet, including AvSupport and PartsBase.
CUSTOMERS. In 1999, Aviall's ten largest customers represented, in the
aggregate, approximately 12% of total sales, and the single largest customer
accounted for approximately 2% of sales.
ILS' customers for aviation services include OEMs, distributors, resellers,
repair and overhaul facilities, fixed-base operators, most of the world's major
airlines and defense logistics agencies. Marine services customers include
manufacturers repair facilities, distributors, ship owners and operators. ILS'
users number approximately 4,600 and are located in 80 countries.
SUPPLIERS. Aviall purchases supplies from more than 180 suppliers and operates
under distribution agreements with most of its largest suppliers. Aviall
believes the size and scope of its operations, including its unique
international presence, provide an attractive market advantage for its
suppliers. In 1999, Aviall's top ten suppliers represented approximately 40% of
Parts Distribution net sales.
In January 2000, Aviall began distributing RR250 components under a
ten-year exclusive distribution contract with Rolls-Royce. Management expects
sales of RR250 products will represent over 20% of Parts Distribution net sales
in 2000.
EMPLOYEES. As of December 31, 1999, Aviall had 751 employees, none of whom are
represented by collective bargaining units. Management believes that Aviall's
market leadership allows it to attract highly skilled and competent employees.
Aviall believes its relations with its employees are good.
REGULATION. Aviall is regulated by certain federal, state and local government
agencies within the United States with authority over businesses generally, such
as the United States Environmental Protection Agency and the United States
Occupational Safety and Health Administration, as well as agencies of foreign
governments with similar authority in those foreign jurisdictions where Aviall
does business.
In addition to general regulation by these agencies, certain of Aviall's
operations are regulated by agencies with responsibilities over civil aviation.
Aviall's product repair services facilities are regulated in the United States
by the Federal Aviation Administration ("FAA"). Overseas locations are regulated
by the various countries' civil aviation authorities and the FAA.
DISCONTINUED OPERATIONS. In January 1996, Aviall announced its intention to exit
the commercial engine services businesses consisting of its airline engine,
component and accessories repair operations. The sales of these businesses were
completed in 1996. See Note 3 to the Consolidated Financial Statements included
in Item 8 of this report.
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EXECUTIVE OFFICERS OF AVIALL. The following information concerning the executive
officers of Aviall is as of March 10, 2000.
Paul E. Fulchino, 53, is the Chairman of the Board, President and Chief
Executive Officer of Aviall. He assumed these positions on January 1, 2000. From
1996 through 1999, Mr. Fulchino was President and Chief Operating Officer of B/E
Aerospace, Inc., a leading supplier of aircraft cabin products and services.
Prior to 1996, Mr. Fulchino was Vice-Chairman and President of Mercer Management
Consulting, Inc., an international general management consulting firm.
Bruce Langsen, 53, is the President of ILS, a position he has held since
June 1996. Previously, Mr. Langsen was Executive Vice President of ILS. Mr.
Langsen joined ILS as Vice President of Marketing and Sales in 1993.
Jacqueline K. Collier, 46, is the Vice President and Controller of Aviall.
Ms. Collier joined a predecessor to Aviall in 1976 and has held various
financial positions with Aviall since that date.
Charles M. Kienzle, 47, is the Senior Vice President, Operations of Aviall.
Mr. Kienzle served as Senior Vice President, Operations, U.S. Engine Services
from January to June 1996. From 1993 to January 1996, Mr. Kienzle was Senior
Vice President, Human Resources and Administration of Aviall.
Joseph Y. Lacik, 44, joined Aviall in January 2000 as Vice President of
Information Services. From January to December 1999, Mr. Lacik was Senior
Director of Information Technology for AMFM. Mr. Lacik served as Vice President,
Strategic Information Systems for Metrocall from January to December 1998. From
February 1997 to January 1998, Mr. Lacik served PRONET as Vice President and
Chief Information Officer. Mr. Lacik provided high-level technology consulting
services for a number of communications firms from July 1996 to January 1997.
Prior to that, Mr. Lacik was Vice President of Information Technology for
Cameron Ashley Building Products, Inc.
Jeffrey J. Murphy, 53, is the Senior Vice President of Law and Human
Resources, Secretary and General Counsel of Aviall, a position he has held since
December 1993.
James T. Quinn, 51, is the Vice President of Sales and Marketing of Aviall,
a position he has held since August 1999. From July 1997 to August 1999, Mr.
Quinn was Vice President of Marketing and Supplier Services. Mr. Quinn joined
Aviall as Director, Distribution Services Marketing in 1994.
Cornelius Van Den Handel, 44, is the Vice President and Treasurer of
Aviall. From June 1996 to December 1997, he served as Treasurer and Director of
Planning. Mr. Van Den Handel served as the Company's Director of Financial
Planning and Analysis from 1993 to 1996.
Officers are elected annually by Aviall's Board of Directors and may be
removed at any time by the Board of Directors. There are no family relationships
among the executive officers listed, and there are no arrangements or
understandings pursuant to which any of them were elected as officers, with the
exception of Mr. Fulchino. Mr. Fulchino was elected President and Chief
Executive Officer under the terms of his employment agreement with Aviall.
ITEM 2: PROPERTIES
Aviall maintains its headquarters in Dallas, Texas and currently occupies
45 facilities worldwide, including administrative, sales and distribution and
operations/repair facilities. Aviall maintains a central warehouse in Dallas,
Texas from which it operates its Parts Distribution activities. All of Aviall's
domestic real property is held under operating leases.
The principal operating facilities maintained by Aviall as of December 31,
1999 are detailed in the following table.
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Square
Location Footage Function
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<S> <C> <C>
Dallas, TX 137,600 Parts Distribution
Dallas, TX 75,000 Parts Distribution and Product Repair Services
Memphis, TN 31,000 Inventory Information Services
</TABLE>
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At December 31, 1999, Aviall operated 41 customer service centers worldwide
in support of its Parts Distribution operation. Aviall believes its facilities,
machinery and equipment are suitable for the purposes for which they are used
and are adequately maintained. Aviall also believes that the capacity of its
distribution and other facilities is adequate for current requirements and
projected normal growth. The operating leases on the facilities listed in the
Properties table expire in 2000, and management is exploring alternatives for
these facilities, including renewal of the existing leases.
ITEM 3: LEGAL PROCEEDINGS
The Company, together with approximately 50 other parties, were defendants
in numerous separate lawsuits alleging personal injury and/or property damage
arising out of the alleged release of toxic substances, including
trichloroethylene, perchloroethylene, trichloroethane and hexavalent chromium,
into the air, soil and/or groundwater in the City of Burbank, California. The
damages for personal injuries claimed are broad and varied, and include cancer,
fear of cancer, fear of injury, birth defects, reproductive harm, injuries to
immune systems, future medical monitoring, emotional distress and loss of
consortium. These cases, which were filed in the Superior Court of California
for the County of Los Angeles and involved over 3,000 plaintiffs, were
consolidated for pretrial purposes. In May 1999, the court approved a settlement
of this suit between the plaintiffs and certain defendants, including the
Company. The payment the Company made pursuant to this settlement was not
material.
In July 1996, the spouse of a former employee filed suit in Hidalgo County,
Texas against Aviall and certain chemical manufacturers alleging that the
cancer-related death of her husband was the result of his exposure to metals and
toxic chemicals while working for the Company at facilities used in the
operation of the Company's former commercial engine services businesses. The
plaintiffs sought to find the Company and the other defendants jointly and
severally liable for actual and punitive damages in an amount not less than $50
million. This suit was settled in December 1999 for an immaterial amount.
Aviall is routinely involved in legal proceedings incidental to its
business. Pending matters include actions involving alleged breach of contract,
alleged employment discrimination, alleged liability for certain environmental
matters, tort claims and other matters. For information concerning environmental
matters, see "Management Discussion and Analysis of Financial Condition and
Results of Operations - Environmental Matters" in Item 7 of this report. In each
instance, Aviall is defending the pending legal or regulatory action. While any
legal proceeding has an element of uncertainty, based on information presently
available, management believes that the ultimate disposition of all such
proceedings and environmental matters will not have a material adverse effect on
Aviall's results of operations, financial condition or cash flows, although
certain matters could be material to cash flows in any one year.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on December 16, 1999,
at which meeting the stockholders took action with respect to three proposals:
(i) the election of Richard J. Schnieders and Bruce N. Whitman to serve as
directors of the Company for a term expiring at the Company's 2002 Annual
Meeting of Stockholders, (ii) the ratification of the appointment of
PricewaterhouseCoopers LLP to serve as independent auditors for the Company and
its subsidiaries for the fiscal year ending December 31, 1999 and (iii) a
stockholder proposal recommending that the Company's Board of Directors redeem
the rights granted under Aviall's Stockholder Rights Plan.
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The number of votes cast for, against or withheld, as well as the number of
abstentions and broker non-votes as to each proposal is set forth below.
Election of Directors
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Votes For Votes Withheld
--------- --------------
<S> <C> <C>
Richard J. Schnieders 9,310,447 7,143,517
Bruce N. Whitman 9,312,277 7,141,687
</TABLE>
Ratification of Selection of Independent Auditors
<TABLE>
<CAPTION>
Votes For Votes Against Abstentions
- --------- ------------- -----------
<S> <C> <C>
16,033,338 253,017 167,609
</TABLE>
Redemption of the Rights Granted Under Rights Plan
<TABLE>
<CAPTION>
Votes For Votes Against Abstentions Broker Non-Votes
- --------- ------------- ----------- ----------------
<S> <C> <C> <C>
9,902,824 2,614,662 135,867 3,800,611
</TABLE>
PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the New York Stock Exchange, the
Chicago Stock Exchange and the Pacific Stock Exchange with the ticker symbol
AVL. The high and low sales prices for the common stock for each calendar
quarter and the full year during 1998 and 1999 are shown below.
<TABLE>
<CAPTION>
Prices
--------------
Quarters High Low
- ---- ------ ------ ------
<S> <C> <C> <C>
1998 First $15.56 $12.12
Second $15.62 $13.00
Third $14.62 $10.31
Fourth $12.69 $ 9.94
Year $15.62 $ 9.94
- ---- ------ ------ ------
1999 First $16.38 $10.06
Second $19.00 $14.38
Third $18.63 $ 9.94
Fourth $10.25 $ 7.00
Year $19.00 $ 7.00
- ---- ------ ------ ------
</TABLE>
No cash dividends were paid by the Company in 1998 or 1999. Under the terms
of its existing credit facilities, the Company may not pay cash dividends in
excess of $1.0 million annually and may only pay cash dividends if certain
financial ratios are met. In any event, the Company does not anticipate paying
cash dividends in the near future.
The approximate number of shareholders of record of the Company's common
stock as of March 10, 2000 was 11,246.
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ITEM 6: SELECTED FINANCIAL DATA
The following table summarizes certain selected financial information with
respect to Aviall that has been derived from the audited Consolidated Financial
Statements of the Company. In 1995, the Company sold its business aviation
engine overhaul and aircraft and terminal services businesses. In January 1996,
the Company announced its intention to exit the commercial engine services
businesses consisting of its airline engine, component and accessories repair
operations and, accordingly, reported these businesses as discontinued
operations in 1995. The sales of these businesses were completed in 1996. The
continuing operations consist of Parts Distribution and ILS. The information set
forth below should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations and the Consolidated
Financial Statements and Notes thereto included elsewhere in this report.
<TABLE>
<CAPTION>
(Dollars in Thousands) 1999 1998 1997 1996 1995
- -------------------------------------------------- ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Selected Operating Data:
Net sales $ 368,472 400,032 386,060 374,038 346,511
Nonrecurring (loss) gain (a) $ (6,029) -- 1,436 (6,613) (28,964)
Provision (benefit) for income taxes (b) $ 4,949 (32,175) 1,096 1,657 (1,574)
Earnings (loss) from continuing operations (b) $ 5,115 61,736 26,424 (2,946) (28,117)
Earnings (loss) from discontinued operations $ 4,588 2,821 2,673 16,946 (212,958)
Extraordinary loss (c) $ -- -- -- (3,421) --
Net earnings (loss) $ 9,703 64,557 29,097 10,579 (241,075)
============ ============ =========== ============ ============
Financial Position:
Total assets $ 340,640 304,646 259,392 260,877 538,927
Total debt $ 78,011 45,628 36,560 54,208 295,610
Total debt to total capital 30.33% 21.30% 22.30% 36.59% 78.17%
============ ============ =========== ============ ============
Basic Per Share Data:
Net earnings (loss) from continuing operations $ 0.28 3.22 1.34 (0.15) (1.45)
Net earnings (loss) from discontinued operations 0.25 0.15 0.14 0.87 (10.96)
Net loss from extraordinary item -- -- -- (0.18) --
------------ ------------ ----------- ------------ ------------
Net earnings (loss) per share (a) (b) (c) $ 0.53 3.37 1.48 0.54 (12.41)
============ ============ =========== ============ ============
Weighted average common shares 18,222,526 19,150,869 19,711,105 19,494,561 19,418,671
============ ============ =========== ============ ============
Diluted Per Share Data:
Net earnings (loss) from continuing operations $ 0.28 3.17 1.32 (0.15) (1.45)
Net earnings (loss) from discontinued operations 0.25 0.15 0.13 0.87 (10.96)
Net loss from extraordinary item -- -- -- (0.18) --
------------ ------------ ----------- ------------ ------------
Net earnings (loss) per share (a) (b) (c) $ 0.53 3.32 1.45 0.54 (12.41)
============ ============ =========== ============ ============
Weighted average common and dilutive potential
common shares 18,474,038 19,466,419 20,061,205 19,494,561 19,418,671
============ ============ =========== ============ ============
Cash dividends per share $ -- -- -- -- 0.04
============ ============ =========== ============ ============
</TABLE>
(a) The nonrecurring loss in 1999 resulted from costs incurred during the year
related to the strategic review process, executive severance pay and the
write-down of inventory for discontinued product lines. The 1997
nonrecurring gain resulted from the repayment of a discounted note received
in connection with the sale of the business aviation operations in 1995.
The nonrecurring loss in 1996 resulted from the effect of final contract
terms and transaction-related expenses in connection with the 1996 sale of
the fastener business. The 1995 nonrecurring loss reflected the write-down
of the fastener business assets (primarily inventory), the write-off of
certain deferred charges and income from the finalization of the accounting
related to certain businesses previously sold.
(b) Earnings from continuing operations and net earnings in 1998 included a
$32.2 million tax benefit resulting from the release of $33.5 million of
the federal deferred tax valuation allowance offset by provisions of
certain U.S. state and foreign taxes.
(c) The extraordinary loss in 1996 resulted from the write-off of unamortized
financing costs associated with the Company's 1993 credit agreement which
was refinanced in 1996.
10
<PAGE> 11
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW. The Company experienced a decline in sales and gross profit in 1999
stemming from several factors, including implementation of the new ERP system at
its Parts Distribution business, the impact of the Company's review of the
strategic alternatives and a weakening aviation marketplace. Expense increases
in 1999 reflected the operational problems that the Company encountered and
several new initiatives that were undertaken. A discussion of the financial
condition and results of continuing operations for the Company follows and
should be read in conjunction with the Consolidated Financial Statements and
Notes included elsewhere in this report.
RESULTS OF OPERATIONS - 1999 VERSUS 1998. Net sales for the Parts Distribution
business decreased $32.8 million, or 8.8%, in 1999 compared to 1998. The
implementation of the new ERP system, the impact of the Company's strategic
review process and a weakening aviation marketplace impacted sales for Parts
Distribution. Sales for the Parts Distribution unit were lower in each major
market segment and geographic region. Sales decreased $26.9 million, or 9.6%, in
the Americas region, $0.3 million, or 0.9%, in Europe and $5.6 million, or
10.3%, in the Asia-Pacific region. ILS revenue increased $1.3 million, or 4.5%.
Gross profit decreased $3.9 million, or 3.9%, in 1999 compared with 1998
primarily as a result of lower sales volume. Gross profit as a percentage of
sales increased from 25.3% to 26.3% year over year.
Selling and administrative expenses increased $8.9 million in 1999
primarily the result of higher freight expense resulting from residual effects
of the Company's new ERP system implementation, start-up expenses related to
AviallOne and the enhanced AVIALL.COM website, additional ERP-related
depreciation expenses and adjustments for accounts receivable and obsolete
inventory.
The $6.0 million nonrecurring loss resulted from costs related to the
strategic review process, executive severance pay and write-down of inventory
for discontinued product lines.
Interest expense increased $0.7 million in 1999 reflecting higher debt and
higher interest rates.
RESULTS OF OPERATIONS - 1998 VERSUS 1997. Net sales for the Parts Distribution
business increased $12.0 million, or 3.4%, in 1998 compared to 1997. Parts
Distribution sales increased $10.0 million, or 3.7%, in the Americas region,
$1.7 million, or 4.9%, in Europe and $0.3 million, or 0.6%, in the Asia-Pacific
region. ILS revenue increased $1.9 million, or 7.2%.
Gross profit increased $3.8 million, or 3.9%, in 1998 compared with 1997
due to higher sales volume. Gross profit as a percentage of sales was slightly
higher year over year.
Selling and administrative expenses increased $0.9 million, or 1.3%, in
1998 primarily as a result of higher depreciation expenses from the first phase
of the Company's new ERP system.
The $1.4 million nonrecurring gain was related to the repayment in January
1997 of a $12.0 million unsecured subordinated note received in connection with
the 1995 sale of the business aviation engine overhaul and aircraft and terminal
services operations. The Company had carried the note at a discounted value of
$10.5 million.
Interest expense in 1998 decreased $0.5 million reflecting lower average
debt amounts versus 1997.
EARNINGS PER SHARE. The 1999 diluted net earnings per share ("EPS") was $0.28
for the continuing operations. Excluding nonrecurring amounts and using a 43%
effective tax rate, continuing operations diluted EPS in 1999 would have
reflected $0.50 per share. The weighted average dilutive shares decreased 5.1%
due to the share repurchase program completed in 1998.
The diluted EPS for continuing operations in 1998 was $3.17. Earnings from
continuing operations in 1998, excluding the tax benefit of $33.5 million and
using a 43% effective tax rate, resulted in $0.87 per share. The 1997 diluted
EPS using a 43% effective tax rate and excluding a nonrecurring gain would have
been $0.74 per share. The weighted average dilutive shares decreased 3.0% due to
the timing of the share repurchase program that was undertaken and completed
during 1998.
11
<PAGE> 12
FOREIGN OPERATIONS. The Company operates Parts Distribution customer service
centers in Australia, Canada, Hong Kong, the Netherlands, New Zealand, and
Singapore, and a repair facility in the United Kingdom. These foreign operations
use the U.S. dollar as their functional currency because the majority of sales
and inventory purchases are denominated in U.S. dollars. There are no current
legal restrictions regarding the repatriation of cash from the foreign
operations to the U.S. However, the Company's general policy is not to
repatriate such cash. Net sales and earnings before income taxes for the foreign
operations were $79.3 million and $5.3 million, respectively, for 1999, $89.4
million and $4.4 million, respectively, for 1998 and $93.1 million and $6.2
million, respectively, for 1997.
INCOME TAXES. The Company's income tax expense reported in the Consolidated
Statement of Income for 1999 was $7.6 million. The effective tax rate for 1999
of 43.9% exceeded the statutory rate primarily due to the amortization of
non-deductible goodwill and an increase in the valuation allowance due to
increases in certain state and foreign net operating losses ("NOL") in the
current year. The Company had an income tax benefit of $32.2 million in 1998.
The benefit was attributable to the release of $33.5 million of a U.S. federal
valuation allowance in the fourth quarter of 1998 offset by certain U.S. state
and foreign taxes. An additional $11.9 million of net valuation allowance was
released in 1998 based on NOL utilization from actual current year earnings.
Management periodically assesses the realizability of deferred tax assets and
adjusts the related valuation allowance based on the amount of these assets that
management believes is more likely than not to be realized. During the fourth
quarter of 1998, management assessed the Company's historical earnings and
expected future operating results, and determined that the realization of all
U.S. federal tax assets was more likely than not and therefore released the
valuation allowance for these assets. However, management believes it may not
generate sufficient future income in certain U.S. state and foreign tax
jurisdictions to realize all NOL carryforwards before expiration. In 1999, the
valuation allowance decreased $2.4 million to $12.3 million primarily due to
expiring state NOLs. The Company will continue to monitor and assess the
realizability of deferred tax assets. Future changes in the valuation allowance
may occur.
At December 31, 1999, the Company had NOL carryforwards for U.S. federal
income taxes of approximately $167.3 million expiring from 2009 to 2011. If
certain substantial changes in the Company's ownership should occur, there would
be an annual limitation on the amount of U.S. federal NOL carryforward that can
be utilized. The amount of the annual limitation can vary significantly based on
certain factors existing at the date of the change. Unless an ownership change
occurs that significantly limits the amount of NOL that can be utilized, the
Company will pay only alternative minimum taxes for U.S. federal income tax
purposes until the NOLs are fully utilized. Based on current and expected future
earnings levels, the NOLs may not be fully utilized for several years. Cash
payments made for federal, state and foreign income taxes were $1.9 million in
1999, $1.4 million in 1998 and $1.1 million in 1997.
Income tax expense in 1997 was $1.1 million representing an effective tax
rate of 3.7%. The effective tax rate was substantially below the U.S. federal
statutory rate due to release of valuation allowance as a result of utilizing
NOLs based on actual earnings in 1997.
FINANCIAL RESOURCES AND LIQUIDITY. The Company's working capital and operating
needs are met through a combination of cash flow from operations and borrowings
under revolving lines of credit. In December 1999, the Company replaced its
existing bank credit facilities to support its new Rolls-Royce distribution
agreement. Aviall's new senior secured credit facilities consist of a $40
million secured term loan due through 2004 (the "Term Loan"), and a $90 million
revolving loan due in 2004 (the "Revolver") with availability determined by
reference to a borrowing base of eligible accounts receivable and inventory of
the Company. The credit facilities contain various covenants, including
financial covenants and limitations on debt, dividends and capital expenditures.
See Note 9 to the Consolidated Financial Statements included in Item 8 of this
report.
12
<PAGE> 13
In January 1998, the Company announced a share repurchase program to
buyback up to 10% of the Company's outstanding common stock in open market
transactions, depending on market, economic and other factors. The Company
completed this share repurchase program in the third quarter of 1998, having
purchased a total of two million shares. The Company utilized its existing
credit facility to partially finance the stock repurchases. The total cost of
the shares was $27.7 million.
In January 1997, a $12 million subordinated note received in connection
with the March 1995 asset sale of the business aviation operations was repaid.
The Company applied the proceeds to repay outstanding bank borrowings. The
subordinated note bore interest at 12% per annum payable semiannually, and
accrued interest of $0.3 million was received by the Company at the time of the
note repayment. Because of the uncertainty regarding the collection of the note
in March 1995, the Company carried the note at a discounted value of $10.5
million.
The Company believes that its expected cash flow from operations and
availability under its revolving lines of credit are sufficient to meet its
current working capital and operating needs.
CASH FLOWS. Cash flow from continuing operations, excluding working capital
changes, was $20.9 million in 1999 compared to $34.6 million in 1998 and $30.5
million in 1997. The decrease in 1999 principally resulted from decreased sales
and higher expenses while the increase in 1998 resulted from increased sales and
gross profits. Continuing operations working capital increased $32.8 million in
1999 compared to 1998 and $14.4 million in 1998 compared to 1997. The increase
in 1999 was due principally to the new RR250 product line, increased accounts
receivable due to implementation issues with the new ERP system, and lower
accrued expenses due to the settlement of sales and use tax audits and payments
made for retained environmental liabilities. The 1998 working capital increase
reflected higher inventory levels for higher anticipated sales volume and
payments for retained liabilities for businesses sold.
Capital spending was $4.3 million, $3.7 million and $4.3 million in 1999,
1998 and 1997, respectively. In addition, the Company paid $17.0 million in 1999
to Rolls-Royce for the acquisition of distribution rights for the RR250 product
line and $5.8 million in 1998 for the acquisition of distribution rights for
Honeywell remanufactured aviation turbochargers. Major projects in 1999, 1998
and 1997 included information systems-related investments, principally the new
ERP system and e-commerce initiatives. Based on the Company's present plans for
improving its information technology capabilities, annual capital expenditures
are expected to be approximately $10 to $12 million in 2000. Also, the Company
expects to spend approximately $3.7 million on retained environmental
liabilities in 2000.
Net cash flows for financing activities were $31.3 million in 1999, $(15.3)
million in 1998 and $(14.5) million in 1997. The Company obtained a new credit
facility in December 1999 that replaced the previous 1996 credit facility. In
1998, the Company purchased two million shares of its common stock at a total
cost of $27.7 million.
ENVIRONMENTAL MATTERS. The Company's Parts Distribution business, which includes
parts repair operations, requires the use, storage and disposition of certain
chemicals in small quantities which are regulated under various federal and
state environmental protection laws. These laws require the Company to eliminate
or mitigate the impact of these substances on the environment. In response to
these requirements, the Company has upgraded facilities and implemented programs
to detect and minimize contamination. Due to the small quantities of chemicals
used and the current programs in place, the Company does not anticipate any
material environmental liabilities or significant capital expenditures will be
incurred in the future related to these operations to comply or remain in
compliance with existing environmental regulations.
Certain of the Company's previously owned businesses required the use of
certain chemicals classified by various state and federal agencies as hazardous
substances. The Company retains environmental liabilities related to these
businesses for the period during which they were operated by the Company. The
Company is involved in various stages of investigation and cleanup to comply
with state and federal regulations at these locations. The primary locations are
Dallas (Forest Park), Texas, Dallas (Love Field), Texas, Irving (Carter Field),
Texas, McAllen, Texas and Prestwick, Scotland.
13
<PAGE> 14
The Company has completed required remediation on soil and ground water
issues and received state agency closure letters requiring no further action for
the Carter Field and McAllen locations. The Company received notification in
1999 of approved closure with continuing care from the Scotland Environmental
Protection Agency on soil and ground water issues for the Prestwick, Scotland
site. State agency approved corrective measures are being implemented at its
former Forest Park facility. A proposed closure report with continuing care was
submitted in 1999 to the state agency for approval for this facility. In
addition, a Conceptual Exposure Assessment Model for the Love Field site has
been submitted by the Company to the state agency for approval. Based on current
information, the Company believes existing financial reserves for these
previously owned properties are sufficient. Also, the Company is in litigation
with a previous owner of various of these locations as to their potential shared
liability associated with the cleanup of these sites. Due to the uncertainty of
recoverability of this claim, the Company has not recorded a receivable. In
March 1999, a $1.5 million settlement was paid by insurers of the properties
related to claims made by the Company.
The Company has been named a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act and the
Superfund Amendments and Reauthorization Act at five third-party disposal sites
to which wastes were allegedly sent by the previous owner of assets used in the
Company's former engine services operations. The Company did not use these
identified disposal sites. Accordingly, the previous owner has retained, and has
been discharging, all liability associated with the cleanup of these sites
pursuant to the sales agreement. Although the Company could be potentially
liable in the event of nonperformance by the previous owner, it does not
anticipate nonperformance. Based on this information, the Company has not
accrued any costs associated with these third-party sites. The Company has also
received notices or inquiries from certain state agencies and other private
parties with respect to certain other environmental matters. These matters are
under investigation. Any probable costs are estimated and accrued in
environmental reserves.
At December 31, 1999 and 1998, accrued environmental liabilities amounted
to $17.0 million and $18.3 million, respectively. No environmental expense was
recorded in 1999, 1998 or 1997. The ultimate cost of the Company's environmental
liabilities has been estimated, including exit costs related to previously owned
businesses. The Company's estimates will change in the future as more
information becomes available with respect to the level of contamination, the
effectiveness of selected remediation methods, the stage of management's
investigation at the individual sites and the recoverability of such costs from
third parties. The expected cash funding requirements for 2000 related to
environmental liabilities are $3.7 million. The estimated environmental
remediation expense to be recorded with respect to the ongoing business is not
expected to be significant in the foreseeable future based on the nature of the
activities presently conducted. Based on information presently available and
Company programs to detect and minimize contamination, management believes that
the ultimate disposition of environmental matters will not have a material
adverse effect on the Company's results of operations, cash flows or financial
condition although certain environmental matters could be material to cash flows
in any one year (see Note 14 to the Consolidated Financial Statements).
NEW ACCOUNTING PRONOUNCEMENTS. The Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities" in June 1998.
SFAS 133 requires companies to recognize all derivatives as either assets or
liabilities and measure those instruments at fair value. Changes in the fair
value of derivatives that do not qualify as hedges are recognized in earnings
when they occur. Changes in the fair value of derivatives that qualify as hedges
are generally recognized in earnings in the same period as the item being
hedged. SFAS 133 was originally effective for fiscal years beginning after June
15, 1999. However, the FASB issued Statement of Financial Accounting Standards
No. 137, "Accounting for Derivative Instruments and Hedging Activities-Deferral
of the Effective Date of FASB Statement No. 133" in June 1999, which defers the
effective date of SFAS 133 for one year, to fiscal years beginning after June
15, 2000. The Company does not expect the adoption of this statement to have a
significant impact on the consolidated financial statements.
14
<PAGE> 15
YEAR 2000 ISSUE. The Company did not experience any significant malfunctions or
errors in its operating or business systems upon the date change from 1999 to
2000. Further, based on its operational experiences since January 1, 2000, the
Company does not expect any significant impact to its ongoing business
operations or its financial condition as a result of the Year 2000 computer date
issue. However, it is possible the full impact of the date change has not been
fully recognized. Year 2000 or leap year-related computer date problems may
occur as operating and business systems proceed through financial closings at
month, quarter or year end. The Company is not aware of any current Year 2000
issues experienced by its suppliers and customers.
In anticipation of Year 2000, the Company replaced its Parts Distribution
applications and financial software with an ERP system at a cost of
approximately $5.0 million, which was capitalized. The replacement resulted from
both the need to enhance the efficiencies and effectiveness of the Parts
Distribution operating system and to address the Year 2000 issue. Approximately
$200,000 was expensed related to Year 2000 issues for Parts Distribution. ILS
utilizes internally developed applications software. The cost expensed to modify
the ILS applications software was $125,000.
OUTLOOK. Aviall primarily participates in the global aviation aftermarket
through its core aviation Parts Distribution and ILS businesses. The Company is
affected by the general economic cycle, particularly as it influences flight
activity in commercial, business and general aviation. Aviall serves a
significant number of customers in the Asia-Pacific and Latin American regions.
Since 1998, countries in these regions have experienced financial market
volatility and the currencies of certain countries have fallen in value relative
to the U.S. dollar. These factors reduced demand for air travel in the
Asia-Pacific region in 1998 and 1999, and as a result reduced customers' needs
for aircraft parts and their ability to pay in a timely manner. Although key
Asian economies began a slow recovery in 1999, continued volatility in Latin
America led to financial problems for major air carriers in that region and
significantly hampered the general aviation business in Latin America.
Management believes the Company's results in 2000 will reflect continued
stabilization in the Asia-Pacific region; however, continued volatility in Latin
America is expected.
Commercial airlines in North America and Europe continue to effectively
manage their capacity by retiring older aircraft as new aircraft are delivered,
limiting growth in demand for replacement parts. Management is actively seeking
new sources of supply for airline products to expand Aviall's growth in this
segment.
The strong domestic economy continued in 1999; however, all aviation
operators began to respond to significantly higher fuel prices and resulting
higher operating costs by reducing inventories of new parts. Impact from these
changes was felt first in the airline market, although general aviation
operators have also reacted by reducing flying activity and inventory levels.
Management believes that Aviall's competitive strengths in service and
availability position the Company to benefit from the resumption in purchasing
activity that is expected to occur as key customers achieve inventory reduction
targets.
The Company's ability to manage its inventory is affected by the relative
efficiency of its suppliers and the inventory investments required to secure new
suppliers. Also, changes in the Company's portfolio of products and suppliers
can result in periodic noncash charges to write down inventory of discontinued
products.
Information and communication technology is evolving rapidly and
developments on the internet could affect proprietary database companies such as
ILS and traditional distribution companies. Management believes that the active
deployment by the Company of these new innovative technologies in their
websites, AVIALL.COM and ILSMART.COM, will enable the Company to maintain its
technological leadership and minimize the risk of obsolescence. ILS expects to
partner with various companies in further developing the ILS e-commerce
capabilities. The Company recognizes that there are a number of entrants in the
e-commerce marketplace arena that will compete with ILS, including
manufacturers, distributors and independent companies.
15
<PAGE> 16
In November 1999, the Company entered into a ten-year exclusive agreement
to distribute RR250 engine parts beginning January 1, 2000. Under this
agreement, in December 1999, the Company paid $17 million for the RR250
distribution rights and purchased $18 million of related inventory. Aviall's net
sales are expected to increase by more than $90 million in 2000 related to this
contract. The Company's overall gross profit percentage, which includes
amortization of the RR250 distribution rights, is expected to decline by
approximately 2% in 2000 as a result of this contract. In addition, incremental
selling and administrative expenses of approximately $3 million are expected to
be incurred in 2000 in connection with distributing RR250 engine parts.
In order to fund its obligations under the RR250 agreement, including
additional working capital requirements, the Company replaced its existing
credit facility with a new bank agreement in December 1999, increasing its
borrowing capacity by $30 million. The Company's interest expense is expected to
increase significantly in 2000 due to higher borrowings related to the RR250
agreement and increased interest rates.
The Company's existing Dallas warehouse lease will expire in the fourth
quarter of 2000. The Company is evaluating whether to renew this lease or to
relocate its Dallas warehouse to a new location. The Company would incur a
one-time cost of approximately $2.5 million if it elects to relocate this
warehouse and could experience a short-term disruption in Parts Distribution
sales in connection with the warehouse relocation.
The Company in 2000 expects to spend approximately $4 million in Parts
Distribution to enhance AVIALL.COM to a full service web-based order management
system for both customers and suppliers, and implement a new customer
relationship module ("CRM") into Parts Distribution's standard order management
system. Aviall intends to expand AVIALL.COM services and functionality,
including transforming the e-catalog into a highly searchable database and
utilizing supplier technical information and customer data to develop additional
value-added OEM-to-customer supply chain features. The CRM system enhancement is
aimed at creatively making the customer interface very friendly and service
oriented.
In addition, the Parts Distribution business will enhance its sales
coverage model in 2000 through improved organization, training and recruitment
of the Company's sales professionals. The Company believes the introduction of
the new system will raise productivity and increase the flow of information
regarding product performance, sales activities and customer feedback. The
Company expects to incur up to $2 million in expenses in 2000 related to
enhancements to the sales coverage model and start-up expenses for the new CRM
software.
ILS is in the final planning stages in support of their ongoing program to
evolve ILSMART.COM into a full service Contact to Contract(tm) resource for its
customers. The plans include "Purchase On-line" customer catalogs, expanded
electronic auction sites and web-hosting for ILS subscribers. Over the next
year, ILS expects to incur an additional $3 million in expenses and $6 million
in capital expenditures to bring the Contact to Contract(tm) strategy to
fruition.
CERTAIN FORWARD-LOOKING STATEMENTS. This report contains certain forward-looking
statements (as such term is defined in the Private Securities Litigation Reform
Act of 1995) relating to the Company that are based on the beliefs of the
management of the Company, as well as assumptions and estimates made by and
information currently available to the Company's management. When used in this
report, the words "anticipate," "believe," "estimate," "expect," "intend" and
similar expressions, as they relate to the Company or the Company's management,
identify forward-looking statements. Such statements reflect the current views
of the Company with respect to future events and are subject to certain risks,
uncertainties and assumptions relating to the operations and results of
operations of the Company as well as its customers and suppliers, including as a
result of competitive factors and pricing pressures, shifts in market demand,
Year 2000 issues, general economic conditions and other factors including, among
others, those that effect flight activity in commercial, business and general
aviation, the business activities of the Company's customers and suppliers and
developments in information and communication technology. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions or
estimates prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated, expected or intended.
16
<PAGE> 17
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
MARKET RISK. The Company has market risk exposure arising from changes in
interest rates and foreign exchange rates. The Company from time to time has
used financial instruments to offset these risks. Financial instruments are not
used for trading or speculative purposes.
The Company's earnings are affected by changes in short-term interest rates
as a result of borrowings under its bank credit facilities which bear interest
based on floating rates. The Company has periodically entered into interest rate
caps, swaps and other similar instruments to reduce the impact of fluctuation in
interest rates on its floating rate debt and may do so in the future. The 1999
credit facilities require the Company to enter into a hedging arrangement in
order to convert the Term Loan's floating interest rate to a fixed rate. In the
first quarter of 2000, the Company fixed the interest rate on the $40 million
Term Loan for a period of two years at an average Eurodollar Rate of 6.95% plus
the applicable margin. As of December 31, 1999 and 1998, there were no interest
rate hedges in place.
At December 31, 1999, the Company had approximately $78.0 million of
variable-rate debt obligations outstanding with a weighted average interest rate
of 9.05%. A hypothetical 10% change in the effective interest rate for these
borrowings, assuming debt levels at December 31, 1999, would change interest
expense by approximately $706,000.
The Company's foreign operations utilize the U.S. dollar as their
functional currency. Foreign currency translation and transaction gains and
losses are included in earnings. Foreign currency transaction exposure relates
primarily to foreign currency denominated accounts receivables and the transfer
of foreign currency from subsidiaries to the parent company. The Company has
sale transactions denominated in foreign currencies in Australia, Canada and New
Zealand. Currency transaction exposures are not hedged. Unrealized currency
translation gains and losses are recognized each month upon translation of the
foreign subsidiaries' balance sheets to U.S. dollars. In certain situations, the
Company uses foreign currency borrowings as a hedge against foreign denominated
net assets. As of December 31, 1999 and 1998, the Company had a Canadian dollar
denominated loan of $2.8 million and $1.7 million, respectively.
ITEM 8: CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and supplementary data are included
as an annex to this report. See the Index to Consolidated Financial Statements
and Supplementary Data on page F-1.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item with respect to the directors of
Aviall is set forth under the caption "Election of Directors" of Aviall's Proxy
Statement for the 2000 Annual Meeting of Stockholders ("Proxy Statement") to be
filed with the Commission, which is incorporated herein by reference.
The information required by this item regarding executive officers is set
forth in Item 1 of Part I of this report, and incorporated herein by reference.
17
<PAGE> 18
ITEM 11: EXECUTIVE COMPENSATION
The information required by this item is set forth under the captions
"Compensation of Directors," "Compensation of Executive Officers," "Option/SAR
Grants in 1999," "Aggregated Option/SAR Exercises in 1999 and December 31, 1999
Option/SAR Values" and "Retirement Benefits" of the Proxy Statement, to be filed
with the Commission, which is incorporated herein by reference.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is set forth under the caption
"Beneficial Ownership of Common Stock" of the Proxy Statement, to be filed with
the Commission pursuant to Regulation 14A, which is incorporated herein by
reference.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14: EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM
8-K
(a) Documents filed as part of this report:
(1) Consolidated Financial Statements of Aviall, Inc. and its
subsidiaries:
Report of Independent Accountants
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(2) Consolidated Financial Statement Schedule:
Schedule II - Valuation Accounts
All other schedules have been omitted because they are not
applicable or the required information is shown in the Consolidated
Financial Statements or the Notes to the Consolidated Financial
Statements.
18
<PAGE> 19
(3) Exhibits:
Exhibit
No. Description
3.1* Restated Certificate of Incorporation of Aviall (Exhibit 3.1 to
Aviall's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 (the "1993 Form 10-K"))
3.2* Amended and Restated By-Laws of Aviall, Inc. (Exhibit 3.1 to
Aviall's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1999 (the "March 31, 1999 Form 10-Q"))
4.1* Form of Common Stock Certificate of Aviall (Exhibit 4 to
Aviall's Registration Statement on Form 10, as amended
(Commission File No. 1-12380)
4.2* Aviall, Inc. Preferred Stock Purchase Rights Plan between Aviall
and The First National Bank of Boston dated as of December 7,
1993 (Exhibit 10.7 to the 1993 Form 10-K)
4.3 Amendment No. 1 to Preferred Stock Purchase Rights Plan
10.1*+ Aviall, Inc. Stock Incentive Plan (Exhibit 10.1 to the 1993 Form
10-K)
10.2*+ Amendment to Aviall, Inc. Stock Incentive Plan (Exhibit 10.3 to
the March 31, 1999 Form 10-Q)
10.3*+ Aviall, Inc. 1998 Stock Incentive Plan (Exhibit 10.2 to Aviall's
Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1998)
10.4*+ Amendment to Aviall, Inc. 1998 Stock Incentive Plan (Exhibit
10.4 to the March 31, 1999 Form 10-Q)
10.5*+ Aviall, Inc. Amended and Restated 1998 Directors Stock Plan
(Exhibit 10.3 to Aviall's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998)
10.6* Distribution and Indemnity Agreement by and between Aviall and
Ryder dated November 23, 1993 (Exhibit 10.3 to the 1993 Form
10-K)
10.7* Tax Sharing Agreement by and between Aviall and Ryder dated
November 23, 1993 (Exhibit 10.4 to the 1993 Form 10-K)
10.8*+ Form of Amended and Restated Severance Agreement between Aviall,
Inc. and each of its executive officers (Exhibit 10.1 to the
March 31, 1999 Form 10-Q)
10.9*+ Addendum to Amended and Restated Severance Agreement between
Aviall, Inc. and Bruce Langsen (Exhibit 10.2 to the March 31,
1999 Form 10-Q)
10.10*+ Amended and Restated Severance Pay Plan (Exhibit 10.7 to the
March 31, 1999 Form 10-Q)
10.11* Asset Purchase Agreement, dated as of May 31, 1994, by and
between Aviall Services, Inc. and Dallas Airmotive, Inc., as
amended (Exhibit 10.3 to Aviall's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1994 and Exhibits 10.17
through 10.23 to Aviall's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994
10.12*+ Aviall, Inc. Employee Stock Purchase Plan (Exhibit 10.27 to
Aviall's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995)
19
<PAGE> 20
Exhibit
No. Description
10.13*+ Aviall, Inc. Benefit Restoration Plan (Exhibit 10.5 to the March
31, 1999 Form 10-Q)
10.14*+ Amendment No. One to the Aviall, Inc. Benefit Restoration Plan
(Exhibit 10.6 to the March 31, 1999 Form 10-Q)
10.15* Agreement of Purchase and Sale among Aviall, Inc., Aviall
Services, Inc., Greenwich Air Services, Inc. and GASI Engine
Services, Inc., dated April 19, 1996 (Exhibit 2.1 to Aviall's
Current Report on Form 8-K dated April 19, 1996)
10.16+ Employment Agreement, dated December 16, 1999, between Aviall,
Inc. and Paul E. Fulchino
10.17+ Non-Qualified Stock Option Agreement, dated December 21, 1999
between Aviall, Inc. and Paul E. Fulchino
10.18 Revolving Credit and Term Loan Agreement, dated December 23,
1999, among Aviall, Inc. and the financial institutions thereto
10.19 Distribution Services Agreement, dated November 3, 1999, between
Allison Engine Company, Inc. d/b/a Rolls-Royce Allison and
Aviall Services, Inc. (Confidential treatment has been requested
for certain confidential portions of this exhibit pursuant to
Rule 24b-2 under the Exchange Act. In accordance with Rule
24b-2, these confidential portions have been omitted from this
exhibit and filed separately with the Commission)
21.1 Subsidiaries of Aviall
23.1 Consent of PricewaterhouseCoopers LLP
24.1 Powers of attorney of directors and officers of Aviall
27.1 Financial Data Schedule
- --------------------
* Each document marked with an asterisk is incorporated herein by reference
to the designated document previously filed with the Commission.
+ Each document marked with a dagger constitutes a management contract or
compensatory plan or arrangement.
(b) Reports on Form 8-K.
None.
20
<PAGE> 21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AVIALL, INC.
March 15, 2000 By /s/ Paul E. Fulchino
----------------------------------------
Paul E. Fulchino
Chairman, President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Paul E. Fulchino Chairman, President and Chief Executive Officer
- ------------------------------------------------- (Principal Executive Officer)
Paul E. Fulchino
/s/ Jacqueline K. Collier Vice President and Controller
- ------------------------------------------------- (Principal Accounting Officer)
Jacqueline K. Collier
/s/ Cornelius Van Den Handel Vice President and Treasurer
- ------------------------------------------------- (Principal Financial Officer)
Cornelius Van Den Handel
Henry A. McKinnell* Director
- -------------------------------------------------
Henry A. McKinnell
Donald R. Muzyka* Director
- -------------------------------------------------
Donald R. Muzyka
Richard J. Schnieders* Director
- -------------------------------------------------
Richard J. Schnieders
Bruce N. Whitman* Director
- -------------------------------------------------
Bruce N. Whitman
</TABLE>
* The undersigned, by signing his name hereto, does hereby sign this Annual
Report on Form 10-K pursuant to the Powers of Attorney executed on behalf
of the above-named officers and directors of the Registrant and
contemporaneously filed herewith with the Securities and Exchange
Commission.
March 15, 2000 /s/ Jeffrey J. Murphy
-----------------------------------------
Jeffrey J. Murphy
Attorney-in-Fact
21
<PAGE> 22
AVIALL, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
PAGE
<S> <C>
ITEM 14(a)(1): CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS..................................................................................F-2
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME..............................................................................F-3
CONSOLIDATED BALANCE SHEETS....................................................................................F-4
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY................................................................F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS..........................................................................F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.....................................................................F-7
ITEM 14(a)(2): CONSOLIDATED FINANCIAL STATEMENT SCHEDULE
SCHEDULE II - VALUATION ACCOUNTS..................................................................................F-25
</TABLE>
F-1
<PAGE> 23
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of Aviall, Inc.
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page 18 present fairly, in all material
respects, the financial position of Aviall, Inc. and its subsidiaries at
December 31, 1999 and 1998, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States.
In addition, in our opinion, the financial statement schedule listed in the
index appearing under Item 14(a)(2) on page 18 presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements. These financial statements and
financial statement schedule are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United States which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Dallas, Texas
February 4, 2000
F-2
<PAGE> 24
AVIALL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net sales $ 368,472 400,032 386,060
Cost of sales 271,385 299,017 288,863
----------- ----------- -----------
Gross profit 97,087 101,015 97,197
Operating and other expenses:
Selling and administrative expenses 77,649 68,773 67,912
Nonrecurring loss (gain) 6,029 -- (1,436)
Interest expense 3,345 2,681 3,201
----------- ----------- -----------
Earnings from continuing operations before income taxes 10,064 29,561 27,520
Provision (benefit) for income taxes 4,949 (32,175) 1,096
----------- ----------- -----------
Earnings from continuing operations 5,115 61,736 26,424
Discontinued operations:
Gain on disposal (net of income tax expense of $2,640 in 1999) 4,588 2,821 2,673
----------- ----------- -----------
Earnings from discontinued operations 4,588 2,821 2,673
----------- ----------- -----------
Net earnings $ 9,703 64,557 29,097
=========== =========== ===========
Basic net earnings per share:
Earnings from continuing operations $ 0.28 3.22 1.34
Earnings from discontinued operations 0.25 0.15 0.14
----------- ----------- -----------
Net earnings $ 0.53 3.37 1.48
=========== =========== ===========
Weighted average common shares 18,222,526 19,150,869 19,711,105
=========== =========== ===========
Diluted net earnings per share:
Earnings from continuing operations $ 0.28 3.17 1.32
Earnings from discontinued operations 0.25 0.15 0.13
----------- ----------- -----------
Net earnings $ 0.53 3.32 1.45
=========== =========== ===========
Weighted average common and dilutive potential common shares 18,474,038 19,466,419 20,061,205
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 25
AVIALL, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
December 31,
---------------------
1999 1998
-------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,385 3,136
Receivables 62,752 59,357
Inventories 107,562 84,078
Prepaid expenses and other current assets 2,424 1,849
Deferred income taxes 12,809 7,674
-------- -------
Total current assets 186,932 156,094
-------- -------
Property and equipment 10,637 10,331
Intangible assets 72,902 58,709
Deferred income taxes 65,746 76,222
Other assets 4,423 3,290
-------- -------
Total assets $340,640 304,646
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 8,811 13,628
Accounts payable 35,063 31,615
Accrued expenses 29,493 34,934
-------- -------
Total current liabilities 73,367 80,177
-------- -------
Long-term debt 69,200 32,000
Other liabilities 18,840 23,880
Commitments and contingencies -- --
Shareholders' equity (common stock of $.01 par value per share; 20,272,596 shares and
20,180,267 shares issued at December 31, 1999 and 1998, respectively; 18,272,596 shares
and 18,180,267 shares outstanding at December 31, 1999 and 1998, respectively) 179,233 168,589
-------- -------
Total liabilities and shareholders' equity $340,640 304,646
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 26
AVIALL, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Common Stock
---------------------------- Additional Retained
Shares Treasury Unearned Paid-In Earnings
Outstanding Amount Stock Compensation Capital (Deficit) Total
----------- ----------- ------- ------------ ------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
At December 31, 1996 19,551,688 $ 195 -- -- 316,068 (222,302) $ 93,961
Net earnings -- -- -- -- -- 29,097 29,097
Restricted stock awards -- -- -- (947) 947 -- --
Compensation expense -- -- -- 294 -- -- 294
Common stock issued 348,507 4 -- -- 4,005 -- 4,009
---------- ----------- ------- ---- ------- -------- -----------
At December 31, 1997 19,900,195 199 -- (653) 321,020 (193,205) 127,361
Net earnings -- -- -- -- -- 64,557 64,557
Restricted stock awards -- -- -- (383) 383 -- --
Compensation expense -- -- -- 323 -- -- 323
Common stock issued 280,072 3 -- -- 3,360 -- 3,363
Treasury stock, at cost (2,000,000) -- (27,733) -- -- -- (27,733)
Reversal of valuation
allowance on tax benefit
from exercise
of stock options in
prior years -- -- -- -- 455 -- 455
Tax benefit from exer-
cise of stock options -- -- -- -- 263 -- 263
---------- ----------- ------- ---- ------- -------- -----------
At December 31, 1998 18,180,267 202 (27,733) (713) 325,481 (128,648) 168,589
Net earnings -- -- -- -- -- 9,703 9,703
Restricted stock
cancellations (2,935) -- -- 346 (346) -- --
Compensation expense -- -- -- 104 -- -- 104
Common stock issued 95,264 1 -- -- 708 -- 709
Tax benefit from exer-
cise of stock options -- -- -- -- 128 -- 128
---------- ----------- ------- ---- ------- -------- -----------
At December 31, 1999 18,272,596 $ 203 (27,733) (263) 325,971 (118,945) $ 179,233
========== =========== ======= ==== ======= ======== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 27
AVIALL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------
1999 1998 1997
-------- ------ ------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 9,703 64,557 29,097
Gain on disposal of discontinued operations (4,588) (2,821) (2,673)
Nonrecurring loss (gain) 6,029 -- (1,436)
Depreciation and amortization 6,775 5,695 5,426
Compensation expense on restricted stock awards 104 323 294
Deferred income taxes 2,709 (33,870) (181)
Reversal of valuation allowance on tax benefit from
exercise of stock options in prior years -- 455 --
Tax benefit from exercise of stock options 128 263 --
Changes in:
Receivables (3,395) 424 (8,090)
Inventories (24,880) (10,564) (200)
Accounts payable 3,448 3,850 (724)
Accrued expenses (5,213) (3,489) (8,420)
Other, net (2,800) (4,571) (2,982)
-------- ------ ------
(11,980) 20,252 10,111
-------- ------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of distribution rights (17,000) (5,753) --
Capital expenditures (4,256) (3,726) (4,348)
Sales of property, plant and equipment 167 109 110
Proceeds from repayment of note receivable -- -- 12,000
-------- ------ ------
(21,089) (9,370) 7,762
-------- ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt proceeds 40,000 -- --
Debt repaid (28,004) (8,555) (16,339)
Net change in revolving credit facility 20,387 17,623 (2,178)
Debt issue costs paid (1,774) -- --
Issuance of common stock 709 3,363 4,009
Purchase of treasury stock -- (27,733) --
-------- ------ ------
31,318 (15,302) (14,508)
-------- ------ ------
Change in cash and cash equivalents (1,751) (4,420) 3,365
Cash and cash equivalents, beginning of year 3,136 7,556 4,191
-------- ------ ------
Cash and cash equivalents, end of year $ 1,385 3,136 7,556
======== ====== ======
CASH PAID FOR INTEREST AND INCOME TAXES:
Interest $ 3,018 2,643 3,655
Income taxes $ 1,930 1,430 1,080
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 28
AVIALL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BACKGROUND AND ORGANIZATION
Aviall, Inc. ("Aviall" or the "Company") is the largest independent global
distributor of new aviation parts ("Parts Distribution") and provider of related
electronic marketplace services to the aviation, marine and defense industries
("ILS"). The Company reports Parts Distribution and ILS as separate operating
segments (see Note 16).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION. The accompanying consolidated financial statements
include the accounts of Aviall and its wholly owned subsidiaries. All
significant intercompany transactions and balances have been eliminated. The
process of preparing financial statements in conformity with accounting
principles generally accepted in the United States requires the use of estimates
and assumptions regarding certain types of assets, liabilities, revenues and
expenses. Such estimates primarily relate to unsettled transactions and events
as of the date of the consolidated financial statements. Accordingly, upon
settlement, actual results may differ from estimated amounts.
REVENUE RECOGNITION. Income from parts sales is recognized upon shipment of the
product to customers. Income from inventory information services is recognized
as services are rendered.
CASH AND CASH EQUIVALENTS. The Company considers all highly-liquid,
interest-bearing instruments with an original maturity of three months or less
to be cash equivalents. The Company reclassifies cash overdrafts to accounts
payable. Cash overdrafts included in accounts payable were $4.5 million and $5.2
million at December 31, 1999 and 1998, respectively.
INVENTORIES. Inventories, composed of aviation parts, are valued at the lower of
average cost or market. Provision is made for estimated excess and obsolete
inventories. Reserves for excess and obsolete inventory amounted to $6.7 million
and $3.2 million at December 31, 1999 and 1998, respectively.
PROPERTY AND EQUIPMENT. Property and equipment are carried at cost and
depreciated over the estimated useful lives of the related assets using the
straight-line method. Internal and external costs incurred to develop or
purchase internal-use computer software during the application development
stage, including upgrades and enhancements, are capitalized. Lives assigned to
asset categories are 3 to 12 years for software, hardware and equipment, and the
remaining lease term, if shorter than the estimated useful life, for leasehold
improvements.
INTANGIBLE ASSETS. Goodwill represents the excess of the purchase price over the
fair value of the net assets acquired and is amortized using the straight-line
method over the expected life which is forty years. Other intangible assets,
principally distribution rights, are amortized using the straight-line method
over the life of the contract.
LONG-LIVED ASSETS. The Company periodically reviews the net realizable value of
its long-lived assets, including goodwill and other intangible assets, through
an assessment of the estimated future cash flows related to such assets. In the
event that assets are found to be carried at amounts which are in excess of
estimated gross future cash flows, then the assets will be adjusted for
impairment to a level commensurate with a discounted cash flow analysis of the
underlying assets. The Company believes no impairment of long-lived assets
exists at December 31, 1999.
F-7
<PAGE> 29
ENVIRONMENTAL COSTS. A liability for environmental assessments and/or cleanup is
accrued when it is probable a loss has been incurred and is estimable.
Generally, the timing of these accruals coincides with the identification of an
environmental obligation through the Company's internal procedures or upon
notification from regulatory agencies. Recoveries from insurers or other third
parties of these liabilities, if any, are recognized upon receipt of payment.
FINANCING COSTS. Fees associated with the incurrence of long-term debt are
reflected as a discount on the associated debt. Issue costs associated with
obtaining debt are recorded as a deferred charge. All fees and issue costs are
included in interest expense and amortized over the term of the related debt
utilizing an effective interest rate method. Amortization of financing costs
amounted to $0.3 million, $0.3 million and $0.4 million in 1999, 1998 and 1997,
respectively.
FOREIGN CURRENCY TRANSLATION. The Company's foreign operations utilize the U.S.
dollar as their functional currency. Translation gains and losses are included
in earnings.
FINANCIAL INSTRUMENTS. The Company periodically uses financial instruments to
offset defined market risks arising from changes in interest rates and foreign
exchange rates. The Company does not use financial instruments for trading or
speculative purposes. The fair values of financial instruments are based on
quoted market prices of similar instruments and represent the amounts the
Company would pay or receive to terminate such agreements. Gains and losses on
foreign currency forward contracts are recognized concurrently with the related
transaction gains and losses. The differential to be received or paid on
interest rate swaps is recognized over the terms of the agreements as an
adjustment to interest expense. Premiums paid for purchased interest rate cap
agreements are amortized to interest expense over the terms of such agreements,
and any payments received reduce interest expense. Unamortized premiums are
included in "Prepaid Expenses and Other Current Assets" on the balance sheet.
There were no financial instruments outstanding at December 31, 1999 and 1998.
FAIR VALUE OF FINANCIAL INSTRUMENTS. The carrying values of current assets and
liabilities approximate fair value due to the short-term maturities of these
assets and liabilities. At December 31, 1999 and 1998, the carrying value of
debt approximates fair value.
STOCK-BASED COMPENSATION. The Company accounts for stock-based compensation
plans in accordance with Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB 25") and makes the appropriate disclosures
as required by Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS 123").
NEW ACCOUNTING PRONOUNCEMENTS. The Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting
for Derivative Instruments and Hedging Activities" in June 1998. SFAS 133
requires companies to recognize all derivatives as either assets or liabilities
and measure those instruments at fair value. Changes in the fair value of
derivatives that do not qualify as hedges are recognized in earnings when they
occur. Changes in the fair value of derivatives that qualify as hedges are
generally recognized in earnings in the same period as the item being hedged.
SFAS 133 was originally effective for fiscal years beginning after June 15,
1999. However, the FASB issued Statement of Financial Accounting Standards No.
137, "Accounting for Derivative Instruments and Hedging Activities-Deferral of
the Effective Date of FASB Statement No. 133" in June 1999, which defers the
effective date of SFAS 133 for one year, to fiscal years beginning after June
15, 2000. The Company does not expect the adoption of this statement to have a
significant impact on the consolidated financial statements.
F-8
<PAGE> 30
NOTE 3 - DISCONTINUED OPERATIONS
In January 1996, the Company announced its intention to exit the commercial
engine services businesses consisting of its airline engine, component and
accessories repair operations and, accordingly, reported these businesses as
discontinued operations in its 1995 Consolidated Financial Statements. A $212.5
million charge, net of tax, was recorded in 1995 to reflect the estimated fair
market value of the assets and disposal costs associated with the sales.
Operations during the phase-out period were expected to break even. These
businesses were sold in 1996.
The sale agreements required the Company to retain certain liabilities,
primarily environmental, product liability insurance and pension. The losses
associated with these liabilities were estimated and included in the 1995
discontinued operations provision. The actual cost of these obligations may not
become known for a number of years. In the case of environmental, factors
included in the original estimate of loss, such as level of remediation
required, could change significantly from the Company's original estimate.
Accordingly, certain adjustments may be required in future periods to reflect
changes in these estimates.
During 1999, 1998 and 1997, the Company recognized a gain on disposal of
$4.6 million (net of tax expense of $2.6 million), $2.8 million and $2.7
million, respectively, related to changes in estimates of certain liabilities as
a result of the expiration of the indemnification periods under the asset sale
contracts and revised projections for certain nonenvironmental liabilities based
on recent experiences.
NOTE 4 - NONRECURRING ITEMS
1999 LOSS. During 1999, the Company recorded a $6.0 million loss related to
costs incurred during the year for the strategic review process, executive
severance pay and the write-down of inventory for discontinued product lines.
1997 GAIN. During 1997, the Company received payment on a $12.0 million
unsecured, subordinated note received in connection with the 1995 sale of the
business aviation operations. The Company recorded a $1.4 million gain in
connection with the repayment of the note, which had been carried at a
discounted value of $10.5 million.
NOTE 5 - RECEIVABLES
<TABLE>
<CAPTION>
(In Thousands) 1999 1998
- -------------- -------- ------
<S> <C> <C>
Trade $ 61,990 58,202
Other 4,917 4,430
-------- ------
66,907 62,632
Allowance for doubtful accounts (4,155) (3,275)
-------- ------
$ 62,752 59,357
======== ======
</TABLE>
NOTE 6 - PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
(In Thousands) 1999 1998
- -------------- -------- ------
<S> <C> <C>
Software and hardware $ 15,902 18,813
Equipment 14,710 15,104
Leasehold improvements 3,918 4,053
Capital projects in progress -- 2,462
-------- ------
34,530 40,432
Accumulated depreciation (23,893) (30,101)
-------- ------
$ 10,637 10,331
======== ======
</TABLE>
F-9
<PAGE> 31
NOTE 7 - INTANGIBLE ASSETS
<TABLE>
<CAPTION>
(In Thousands) 1999 1998
- -------------- --------- ------
<S> <C> <C>
Goodwill $ 79,405 79,405
Distribution rights 22,753 5,753
Other -- 140
--------- ------
102,158 85,298
Accumulated amortization (29,256) (26,589)
--------- ------
$ 72,902 58,709
========= ======
</TABLE>
In 1999, the Company paid $17.0 million to Rolls-Royce for the exclusive
rights to distribute the model 250 turbine engine line for a ten-year period. In
1998, the Company paid $5.8 million to Honeywell for the exclusive right to
distribute factory rebuilt turbochargers for a ten-year period.
NOTE 8 - ACCRUED EXPENSES
<TABLE>
<CAPTION>
(In Thousands) 1999 1998
- -------------- ------- -----
<S> <C> <C>
Salaries, wages and benefits $12,417 9,266
Environmental reserves 3,708 4,290
Operating taxes 2,968 9,094
Self-insurance reserves 1,442 2,224
Other 8,958 10,060
------- -----
$29,493 34,934
======= ======
</TABLE>
NOTE 9 - DEBT
<TABLE>
<CAPTION>
(In Thousands) 1999 1998
- -------------- -------- ------
<S> <C> <C>
1999 Credit Facilities:
Term Loan $ 40,000 --
Revolver 35,200 --
1996 Credit Facilities:
Term Loan -- 28,000
Revolver -- 16,000
Other 2,811 1,628
-------- ------
78,011 45,628
Less current portion (8,811) (13,628)
-------- ------
$ 69,200 32,000
======== ======
</TABLE>
In December 1999, the Company replaced its existing senior secured credit
facilities. The new senior secured credit facilities (the "1999 Credit
Facilities") consist of a $40.0 million secured term loan due through 2004 (the
"Term Loan") and a $90.0 million revolving loan due in 2004 (the "Revolver"),
with availability determined by reference to a borrowing base of eligible
accounts receivable and inventory. Borrowings under the 1999 Credit Facilities
bear interest, at the option of the Company, based upon either of two floating
rate options: the Eurodollar Rate plus an applicable margin ranging from 1.25%
to 2.25%, depending upon certain of the Company's financial ratios, or the Base
Rate. The Base Rate is the higher of the agent bank's prime rate or the federal
funds rate plus 0.5%, plus an applicable margin ranging from 0.25% to 1.25%,
depending upon certain of the Company's financial ratios. The applicable margin
for the period from December 1999 through July 2000 is 2.25% and 1.25% for the
Eurodollar and Base Rate options, respectively. Interest is payable on a
quarterly basis.
F-10
<PAGE> 32
At December 31, 1999, the interest rate on the Term Loan and the Revolver
was 8.82% and 9.51%, respectively. The 1999 Credit Facilities require the
Company to enter into a hedging arrangement in order to convert the Term Loan's
floating interest rate to a fixed rate. In the first quarter of 2000, the
Company fixed the interest rate on the Term Loan for a period of two years at an
average Eurodollar Rate of 6.95% plus the applicable margin.
The 1999 Credit Facilities provide for the issuance of up to $10.0 million
of letters of credit under the Revolver subject to the borrowing base, of which
$5.2 million was utilized at December 31, 1999. As of December 31, 1999, the
Company had $49.6 million available under the Revolver. Commitment fees ranging
from 0.25% to 0.5% are payable on the unused portion of the Revolver.
Obligations under the 1999 Credit Facilities are collateralized by substantially
all of the Company's domestic assets and 65% of the stock of each of the
Company's foreign subsidiaries. The 1999 Credit Facilities contain various
covenants, including financial covenants and limitations on debt, dividends and
capital expenditures.
As of December 31, 1998, the Company's senior secured credit facilities
(the "1996 Credit Facilities") consisted of a $50.0 million secured term loan
due through 2001 (the "1996 Term Loan") and a $50.0 million secured revolving
loan (the "1996 Revolver") due in 2001. The Company repaid the 1996 Credit
Facilities in December 1999 with borrowings under the 1999 Credit Facilities. At
December 31, 1998, the interest rate on the 1996 Term Loan and the 1996 Revolver
was 6.38% and 6.38%, respectively.
Other debt consists of a revolving credit facility with a Canadian bank. At
December 31, 1999 and 1998, the interest rate on this facility was 6.75% and
6.75%, respectively.
Scheduled debt maturities for the years subsequent to December 31, 1999 are
as follows (in thousands):
<TABLE>
<CAPTION>
Year Ending
- -----------
<S> <C>
2000 $ 8,811
2001 7,000
2002 8,000
2003 9,000
2004 45,200
--------
$ 78,011
========
</TABLE>
NOTE 10 - INCOME TAXES
Net earnings before income taxes were taxed under the following
jurisdictions:
<TABLE>
<CAPTION>
(In Thousands) 1999 1998 1997
- -------------- ------- ------ ------
<S> <C> <C> <C>
Domestic $14,708 31,235 28,444
Foreign 2,584 1,147 1,749
------- ------ ------
Net earnings before income taxes $17,292 32,382 30,193
======= ====== ======
</TABLE>
F-11
<PAGE> 33
The provision (benefit) for income taxes consisted of the following
components:
<TABLE>
<CAPTION>
(In Thousands) 1999 1998 1997
- -------------- -------- ------- -----
<S> <C> <C> <C>
Current tax expense:
U.S. federal $ 269 455 385
U.S. state 554 102 49
Foreign 1,417 1,138 843
-------- ------- -----
2,240 1,695 1,277
-------- ------- -----
Deferred tax expense (benefit):
U.S. federal 5,434 (33,944) (385)
Foreign (85) 74 204
-------- ------- -----
5,349 (33,870) (181)
-------- ------- -----
Provision (benefit) for income taxes $ 7,589 (32,175) 1,096
======== ======= =====
</TABLE>
A reconciliation of the U.S. federal statutory tax rate with the effective
tax rate follows:
<TABLE>
<CAPTION>
(Dollars in Thousands) 1999 1998 1997
- ---------------------- -------------------- -------------------- --------------------
Amount % Amount % Amount %
------- ---- ------- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
Provision at the statutory rate $ 6,052 35.0 11,334 35.0 10,567 35.0
Valuation allowance 496 2.9 (46,080) (142.3) (10,437) (34.6)
Amortization of goodwill 765 4.4 765 2.4 765 2.5
State income taxes, net of federal income tax benefit 280 1.6 773 2.4 (246) (0.8)
Miscellaneous items, net (4) -- 1,033 3.1 447 1.5
------- ---- ------- ------ ------- -----
$ 7,589 43.9 (32,175) (99.4) 1,096 3.7
======= ==== ======= ====== ======= =====
</TABLE>
F-12
<PAGE> 34
The significant temporary differences which gave rise to deferred income
taxes as of December 31 consisted of the following:
<TABLE>
<CAPTION>
(In Thousands) 1999 1998
- -------------- --------- ------
<S> <C> <C>
Deferred income tax assets:
Loss carryforwards and credits
U.S. federal $ 59,611 63,544
U.S. state 9,004 11,600
Foreign 3,313 3,140
Compensation-related items 6,652 6,725
Inventory-related items 5,316 3,920
Environmental-related items 6,396 6,889
Property and equipment basis differences 940 701
Accounts receivable allowances 1,448 1,053
Other items 395 2,740
--------- ------
93,075 100,312
Valuation allowance (12,316) (14,740)
--------- ------
Deferred income tax assets 80,759 85,572
--------- ------
Deferred income tax liabilities:
Other items (2,204) (1,676)
--------- ------
Deferred income tax liabilities (2,204) (1,676)
--------- ------
Net deferred income tax asset $ 78,555 83,896
========= ======
</TABLE>
The Company periodically assesses the realizability of deferred tax assets
and adjusts the related valuation allowance based on the amount of deferred tax
assets management believes is more likely than not to be realized. Management
believes it may not generate sufficient future income in certain U.S. state and
foreign tax jurisdictions to realize all net operating loss ("NOL")
carryforwards before their expiration and as a result has retained a valuation
allowance of $12.3 million. In 1999, the valuation allowance decreased $2.4
million primarily due to expiring state NOLs. In the fourth quarter of 1998, the
Company released $33.5 million of valuation allowance associated with U.S.
federal deferred tax assets based on management's assessment of historical
earnings and expected future operating results. An additional $11.9 million of
net valuation allowance was released in 1998 due to utilization of the NOL from
actual current year earnings. In total, $45.4 million of the valuation allowance
was released in 1998, resulting in a net income tax benefit of $32.2 million.
The Company has an NOL carryforward for U.S. federal income tax purposes of
approximately $167.3 million substantially expiring in 2009 through 2011. If
certain substantial changes in the Company's ownership should occur, there would
be an annual limitation on the amount of the NOL carryforward that could be
utilized.
Deferred taxes have not been provided on temporary differences related to
investments in foreign subsidiaries that are considered permanent in duration.
These temporary differences consist primarily of undistributed foreign earnings
of $6.0 million and $3.8 million at December 31, 1999 and 1998, respectively.
These earnings could become subject to additional tax if such amounts are
remitted as dividends to the U.S. parent. It is not practicable to estimate the
amount of additional tax that may be payable on these foreign earnings.
F-13
<PAGE> 35
NOTE 11 - PENSION PLANS AND POSTRETIREMENT BENEFITS
PENSION PLANS. Substantially all domestic employees are covered by a defined
benefit plan maintained by the Company (the "Aviall Pension Plan"). These
employees were given credit under the Aviall Pension Plan for prior service in
the Ryder System, Inc. Retirement Plan which retained the pension fund assets
and accumulated benefit obligation related to participants for services rendered
through the date of distribution. In addition to the Aviall Pension Plan, the
Company maintains two other defined benefit pension plans.
The following table reflects the components of net pension expense for all
defined benefit plans:
<TABLE>
<CAPTION>
(In Thousands) 1999 1998 1997
- -------------- ------- ------ ------
<S> <C> <C> <C>
Service cost - benefits earned during the year $ 1,218 982 888
Interest cost on projected benefit obligation 2,928 2,788 2,624
Expected return on plan assets (2,575) (2,398) (2,264)
Prior service cost amortization 101 101 126
Net loss recognition 194 115 47
------- ------ ------
Net pension expense $ 1,866 1,588 1,421
======= ====== ======
</TABLE>
As a result of the sale of certain businesses and assets, the Company
recognized a net curtailment gain related to its pension plans of $0.4 million
in 1997 which was recorded in the reserves established for each sale.
The following table reflects the reconciliations of the beginning and
ending balances of the fair value of plan assets and benefit obligation and the
funded status for all plans:
<TABLE>
<CAPTION>
(In Thousands) 1999 1998
- -------------- -------- ------
<S> <C> <C>
Fair value of plan assets at beginning of period $ 41,169 34,712
Actual return on plan assets 2,073 8,056
Contributions by the employer 904 829
Benefits paid (2,083) (2,014)
Expenses paid (324) (414)
-------- ------
Fair value of plan assets at end of period 41,739 41,169
-------- ------
Projected benefit obligation at beginning of period 45,507 38,589
Service cost 1,218 982
Interest cost 2,928 2,788
Actuarial (gains) losses (7,258) 5,576
Benefits paid (2,083) (2,014)
Expenses paid (324) (414)
-------- ------
Projected benefit obligation at end of period 39,988 45,507
-------- ------
Funded status 1,751 (4,338)
Unrecognized net (gains) losses (6,766) 184
Unamortized prior service cost 323 424
-------- ------
Accrued pension expense $ (4,692) (3,730)
======== ======
</TABLE>
F-14
<PAGE> 36
The following table sets forth the year end actuarial assumptions used in
the accounting for the plans:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Discount rate for determining projected benefit obligation 8.00% 6.50% 7.25%
Rate of increase in compensation levels 4.50% 4.50% 4.50%
Expected long-term rate of return on plan assets 7.75% 7.75% 7.75%
</TABLE>
POSTRETIREMENT BENEFITS. The Company maintains plans which provide retired
employees with certain health care and life insurance benefits.
The following tables reflect the components of net periodic postretirement
benefit expense, the reconciliation of the beginning and ending balances of the
accumulated postretirement benefit obligation and the funded status for all
plans:
<TABLE>
<CAPTION>
(In Thousands) 1999 1998 1997
- -------------- ----- ---- ----
<S> <C> <C> <C>
Present value of benefits earned during the year $ 68 55 49
Interest cost on postretirement benefit obligation 245 259 250
Net amortization and deferral (119) (182) (248)
----- ---- ----
Net periodic postretirement benefit expense $ 194 132 51
===== ==== ====
</TABLE>
<TABLE>
<CAPTION>
(In Thousands) 1999 1998
- --------------- ------- ------
<S> <C> <C>
Accumulated postretirement benefit obligation at beginning of period $ 4,038 3,444
Service cost 68 55
Interest cost 245 259
Expected benefits paid (net of contributions) (331) (296)
Actuarial (gain) loss (1,045) 576
------- ------
Accumulated postretirement benefit obligation at end of period 2,975 4,038
------- ------
Funded status (2,975) (4,038)
Unrecognized net gain (2,185) (1,086)
------- ------
Accrued unfunded postretirement benefit obligation $(5,160) (5,124)
======= ======
</TABLE>
The discount rate used for determining the accumulated postretirement
benefit obligation was 8.00%, 6.50% and 7.25% in 1999, 1998 and 1997,
respectively.
The health care cost trend rate for 1999 was assumed to be 6.38%,
decreasing gradually to a rate in 2006 of approximately 5.0%. Increasing and
decreasing the assumed health care cost trend rates by one percentage point in
each future year would have no impact on the accumulated postretirement benefit
obligation as of December 31, 1999 or the 1999 net periodic postretirement
benefit expense because Company contributions have reached the maximum allowed
amount.
NOTE 12 - COMMON STOCK, PREFERRED STOCK AND INCENTIVE PLANS
COMMON AND PREFERRED STOCK. The Company is authorized to issue 80,000,000 shares
of common stock, $.01 par value, and 10,000,000 shares of preferred stock, $.01
par value. Preferred stock is issuable in series, with terms fixed by resolution
of the Board of Directors. No preferred stock had been issued at December 31,
1999.
F-15
<PAGE> 37
PREFERRED SHARE PURCHASE RIGHTS. The Company has adopted a Preferred Share
Rights Plan (the "Rights Plan") under which each share of common stock is
accompanied by one preferred share purchase right (a "Right"). Each Right
entitles the holder to purchase 1/100th of a share of Series A Junior
Participating Preferred Stock (the "Series A Preferred Shares") of the Company
(800,000 shares authorized) at a price (the "Purchase Price") of $52.50 per
1/100th of a Series A Preferred Share (subject to adjustment).
In general, the Rights will not become exercisable or transferable apart
from the shares of common stock with which they were issued unless a person or
group of affiliated or associated persons becomes the beneficial owner of, or
commences a tender offer that would result in beneficial ownership of, 15% or
more of the outstanding shares of common stock (any such person or group of
persons being referred to as an "Acquiring Person"). Thereafter, under certain
circumstances, each Right (other than any Rights that are or were beneficially
owned by an Acquiring Person, which Rights will be void) could become
exercisable to purchase at the Purchase Price a number of shares of common stock
having a market value equal to two times the Purchase Price. The Rights will
expire on December 7, 2003, unless earlier redeemed by the Company at a
redemption price of $.01 per Right (subject to adjustment).
The Company's Board of Directors has implemented a Three-year Independent
Director Evaluation ("TIDE") policy with respect to the Rights Plan. The TIDE
policy requires a committee comprised solely of independent directors of the
Company to review the Rights Plan at least once every three years. In this
review, the committee will determine whether the Rights Plan should be modified
or the Rights redeemed in light of all relevant factors.
STOCK INCENTIVE PLANS. The Aviall, Inc. stock incentive plans (the "Incentive
Plans") provide for grants of qualified and nonqualified stock options to key
employees at a price not less than the fair market value of shares underlying
such options at the date of grant. Options are for terms not exceeding 10 years.
Options granted under the Incentive Plans vest over periods up to four years.
The Incentive Plans also provide for grants of restricted stock, stock
appreciation rights and performance units.
The following table summarizes the status of stock options granted under
the Incentive Plans:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------ ------------------------ -----------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
-------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 1,770,438 $ 12.07 1,944,260 $ 11.84 1,998,461 $ 12.07
Granted:
Exercise price equals market price 1,070,000 $ 9.25 411,000 $ 14.68 428,000 $ 11.10
Exercised (56,327) $ 9.97 (270,978) $ 11.98 (335,570) $ 11.48
Expired or cancelled (583,797) $ 12.38 (313,844) $ 14.13 (146,631) $ 13.61
--------- --------- ---------
Outstanding at end of year 2,200,314 $ 10.67 1,770,438 $ 12.07 1,944,260 $ 11.84
========= ========= =========
Exercisable at end of year 1,079,155 854,643 1,103,764
========= ========= =========
Available for grant at end of year 552,500 930,000 511,016
========= ========= =========
</TABLE>
F-16
<PAGE> 38
The following table summarizes information about stock options outstanding
under the Incentive Plans at December 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------------- --------------------------
Weighted Weighted Weighted
Number Average Average Number Average
Range of Outstanding Remaining Exercise Exercisable Exercise
Exercise Prices at 12/31/99 Life (Years) Price at 12/31/99 Price
----------- ------------ -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$ 6.65 to $ 8.31 712,407 8.4 $ 7.49 192,407 $ 7.94
$ 8.32 to $ 9.98 200,000 5.0 $ 9.74 200,000 $ 9.74
$ 9.99 to $ 11.64 673,340 7.5 $10.98 231,516 $ 10.86
$ 11.65 to $ 13.30 96,832 2.8 $12.45 90,166 $ 12.50
$ 13.31 to $ 14.97 492,735 5.3 $14.62 340,066 $ 14.55
$ 14.98 to $ 16.63 25,000 0.2 $16.00 25,000 $ 16.00
--------- ---------
2,200,314 6.8 $10.67 1,079,155 $ 11.55
========= =========
</TABLE>
The Company applies APB 25 in accounting for compensation cost associated
with the Incentive Plans. Had compensation cost been determined consistent with
SFAS 123, the Company's net earnings and earnings per share would have been
reduced to the pro forma amounts below:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------ -------------------- ---------------------
(In Thousands, Except Per Share Data) Basic Diluted Basic Diluted Basic Diluted
- ------------------------------------- --------- ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Net earnings:
As reported $ 9,703 9,703 64,557 64,557 29,097 29,097
Pro forma $ 8,506 8,506 63,041 63,041 27,732 27,732
Net earnings per share:
As reported $ 0.53 0.53 3.37 3.32 1.47 1.45
Pro forma $ 0.47 0.46 3.29 3.25 1.40 1.39
</TABLE>
Options were granted at exercise prices equal to the market price of the
Company's stock on the date of grant during 1999, 1998 and 1997. The weighted
average fair value of options granted was $4.75 per option in 1999, $7.46 per
option in 1998 and $5.59 per option in 1997. In accordance with SFAS 123, the
fair value of options at the date of grant was estimated using the Black-Scholes
option-pricing model with the following weighted average assumptions:
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Risk-free interest rate 5.70% 5.64% 6.55%
Expected life (years) 7.3 6.9 7.0
Expected volatility 38.75% 39.21% 34.53%
Expected dividend yield 0.00% 0.00% 0.00%
</TABLE>
F-17
<PAGE> 39
During 1998, 32,509 shares and 700 shares of restricted stock with a stock
price on the date of grant of $11.50 per share and $13.75 per share,
respectively, were awarded under the Incentive Plans. In 1997, 73,438 shares and
500 shares of restricted stock with a stock price on the date of grant of $12.78
per share and $15.91 per share, respectively, were also awarded under the
Incentive Plans. There were no awards of restricted stock under the Incentive
Plans during 1999. The restricted stock vests three years from the date of
grant. All restricted stock carries full dividend rights. Recipients of
restricted stock awards granted under the 1998 Incentive Plan have full voting
rights. Recipients of grants of restricted stock made under the Company's other
Incentive Plan are not entitled to vote the shares until the awards have vested.
Unearned compensation is charged to shareholders' equity based on the market
value of the Company's common stock at the date of the award. Compensation
expense of $0.1 million, $0.3 million and $0.3 million was recognized in 1999,
1998 and 1997, respectively, related to restricted stock awards.
DIRECTORS STOCK PLAN. The Company has reserved 147,500 shares of common stock
for issuance under its Directors Stock Plan of which 43,759 shares had been
issued at December 31, 1999. Of the total issued, 8,245 shares, 8,784 shares and
8,764 shares of common stock were issued during 1999, 1998 and 1997,
respectively, with fair values at date of issuance of $18.19 per share, $13.66
per share and $13.69 per share, respectively. Under the terms of this plan, each
nonemployee director may make an election to receive shares of common stock in
lieu of the annual cash retainer for services as a director. In addition, grants
of options to purchase up to 3,000 shares of common stock may be made to each
nonemployee director under this plan each fiscal year. No options have been
granted under this plan.
NOTE 13 - EARNINGS PER SHARE
The Company computes earnings per share ("EPS") in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings Per Share". Basic
EPS is computed by dividing net earnings by the weighted average number of
common shares outstanding during the period. Diluted EPS is computed by dividing
net earnings by the weighted average number of common and dilutive potential
common shares outstanding during the period. Quarterly and year-to-date
computations of per share amounts are made independently; therefore, the sum of
per share amounts for the quarters may not equal per share amounts for the year.
A reconciliation of the denominator of the basic and diluted EPS
calculations for income from continuing operations follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Weighted average common shares 18,222,526 19,150,869 19,711,105
Effect of dilutive securities:
Stock options 195,926 232,957 331,760
Restricted stock 55,586 82,593 18,340
---------- ---------- ----------
Weighted average common and dilutive potential common shares 18,474,038 19,466,419 20,061,205
========== ========== ==========
</TABLE>
Options to purchase 579,567, 891,534 and 632,767 shares of common stock at
exercise prices ranging from $12.75 to $16.00, $11.75 to $16.00 and $14.50 to
$16.00 were outstanding at December 31, 1999, 1998 and 1997, respectively, but
were not included in the computation of diluted EPS because the options'
exercise price was greater than the average market price of the common stock.
F-18
<PAGE> 40
NOTE 14 - ENVIRONMENTAL MATTERS
OVERVIEW. The Company's Parts Distribution business, which includes parts repair
operations, uses certain chemicals in small quantities which have been
classified by various state and federal agencies as hazardous material. The
Company is not currently involved in any cleanup related to these facilities to
comply with state and federal regulations. Due to the small quantities of
chemicals used, it is not expected that any material environmental liabilities
will be incurred related to these operations.
Certain of the Company's previously owned businesses used certain chemicals
classified by various state and federal agencies as hazardous substances. The
Company retains environmental liabilities related to these businesses for the
period during which they were operated by the Company. The Company is involved
in various stages of investigation, cleanup and closure to comply with state and
federal regulations at certain of these locations. The primary locations are
Dallas (Forest Park), Texas, Dallas (Love Field), Texas, Irving (Carter Field),
Texas, McAllen, Texas and Prestwick, Scotland.
PREVIOUSLY OWNED PROPERTIES. The Company completed required remediation on soil
and ground water issues and received state agency closure letters requiring no
further action for the Carter Field and McAllen locations. The Company received
notification in 1999 of approved closure with continuing care from the Scotland
Environmental Protection Agency on soil and ground water issues for the
Prestwick, Scotland site. State agency approved corrective measures are being
implemented for its former Forest Park facility. A proposed closure report with
continuing care was submitted in 1999 to the state agency for approval for this
facility. In addition, a Conceptual Exposure Assessment Model for the Love Field
site has been submitted by the Company to the state agency for approval. Based
on current information, the Company believes existing financial reserves for
these previously owned properties are sufficient. In addition, the Company is in
litigation with a previous owner of various of these locations as to their
potential shared liability associated with the cleanup of these sites. Due to
the uncertainty of recoverability of this claim, the Company has not recorded a
receivable. In March 1999, a $1.5 million settlement was paid by insurers of the
properties related to claims made by the Company.
THIRD-PARTY SITES AND OTHER MATTERS. The Company has been named a potentially
responsible party under the Comprehensive Environmental Response, Compensation
and Liability Act and the Superfund Amendments and Reauthorization Act at five
third-party disposal sites to which wastes were allegedly sent by the previous
owner of assets used in the Company's discontinued engine services operations.
The Company did not use the identified disposal sites. Accordingly, the previous
owner has retained, and has been discharging, all liability associated with the
cleanup of these sites pursuant to the sales agreement. Although the Company
could be potentially liable in the event of nonperformance by the previous
owner, it does not anticipate nonperformance. Based on this information, the
Company has not accrued for any costs associated with third-party sites. The
Company has also received notices or inquiries from certain state agencies and
other private parties with respect to certain environmental matters. These
matters are under investigation. All probable costs are estimated and accrued in
environmental reserves.
ACCOUNTING AND REPORTING. At December 31, 1999 and 1998, accrued environmental
liabilities were $17.0 million and $18.3 million, respectively. No environmental
expense was recorded in 1999, 1998 or 1997. The Company's probable environmental
loss estimates are based on information obtained from independent environmental
engineers and/or from Company experts regarding the nature and extent of
environmental contamination, remedial alternatives available and the cleanup
criteria required by relevant governmental agencies. The estimated costs include
anticipated site testing, consulting, remediation, disposal, post-remediation
monitoring and related legal fees based on available information and represent
the undiscounted costs to resolve the environmental matters in accordance with
prevailing federal, state and local requirements.
F-19
<PAGE> 41
The Company's reserves for environmental liabilities are estimates. These
estimates may change in the future as more information becomes available with
respect to the level of contamination, the effectiveness of selected remediation
methods, the stage of management's investigation at the individual sites, the
recoverability of such costs from third parties and changes in federal and state
statutes and regulations or their interpretation. Based on information presently
available and Company programs to detect and minimize contamination, management
believes that the ultimate disposition of these matters will not have a material
adverse effect on the Company's results of operations, cash flows or financial
condition, although certain environmental matters could be material to cash
flows in any one year.
NOTE 15 - COMMITMENTS AND CONTINGENCIES
Under leases, primarily for parts distribution facilities, rent expense
included in earnings from continuing operations was $6.1 million, $6.2 million
and $6.7 million in 1999, 1998 and 1997, respectively, and was offset by
sublease income of $0.4 million, $0.4 million and $0.5 million in 1999, 1998 and
1997, respectively.
Future minimum payments under noncancellable operating leases with initial
or remaining terms of one year or more at the end of 1999 are as follows (in
thousands):
<TABLE>
<CAPTION>
Year Ending
<S> <C>
2000 $ 5,270
2001 2,019
2002 1,516
2003 1,091
2004 357
Thereafter 247
---------
10,500
Less amounts representing sublease income (968)
---------
Total minimum lease payments $ 9,532
=========
</TABLE>
In July 1996, the spouse of a former employee filed suit in Hidalgo County,
Texas against Aviall and certain chemical manufacturers alleging that the
cancer-related death of her husband was the result of his exposure to metals and
toxic chemicals while working for the Company at facilities used in the
operation of the Company's former commercial engine services businesses. The
plaintiffs sought to find the Company and the other defendants jointly and
severally liable for actual and punitive damages in an amount not less than $50
million. This suit was settled in December 1999 for an immaterial amount.
In addition to the environmental-related matters discussed in Note 14, the
Company is a party to various other claims, legal actions and complaints arising
in the ordinary course of business. Based on information presently available,
management believes that the ultimate disposition of these other matters will
not have a material adverse effect on the Company's results of operations, cash
flows or financial condition, although certain matters could be material to cash
flows in any one year.
The Company, through its participation in the global aviation aftermarket,
can be affected by the general economic cycle, particularly as it influences
flight activity in commercial, business and general aviation. The services
provided by ILS can be influenced by the rapidly evolving information and
communication industry.
The Company uses the U.S. dollar as the functional currency for all foreign
operations and, therefore, recognizes all translation gains and losses in
earnings. Changes in foreign currency exchange rates could impact the Company's
earnings. In addition, the Company's earnings are affected by changes in
short-term interest rates as a result of borrowings under its revolving credit
facilities which bear interest based on floating rates.
F-20
<PAGE> 42
NOTE 16 - SEGMENT AND RELATED INFORMATION
The Company has two reportable operating segments: new aviation parts
distribution and on-line inventory information services. This results from
differences in the nature of the products and services sold and the related
distribution methods. The Company distributes new aviation parts servicing both
the commercial and general aviation markets. It provides a link between parts
manufacturers, sellers and buyers by purchasing parts for its own account and
reselling such parts. In addition, Aviall is a provider of traditional dial-up
on-line and web-based inventory information services to the aviation, marine and
defense industries through ILS, a wholly owned subsidiary. Suppliers of parts,
equipment and services list their inventory and capabilities on the ILS system
for access by buyers. ILS charges a subscription fee to access or list data.
Aviall's reportable segments are managed separately due to current marketing
strategies.
The accounting policies of the reportable segments are the same as those
described in Note 2 - Summary of Significant Accounting Policies. Segment profit
reflects operating income. Corporate includes treasury, general accounting,
human resources, legal and office of the president. Corporate expenses,
corporate assets, nonrecurring items and interest expense are not allocated to
segments. Corporate assets include assets retained from divested activities. The
deferred tax asset, due primarily to losses from the sales of businesses, is
shown separately.
The following tables present information by operating segment (in
thousands):
<TABLE>
<CAPTION>
Revenues 1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
Parts Distribution $338,579 371,422 359,373
ILS 29,893 28,610 26,687
--------- ------- -------
Total revenue $368,472 400,032 386,060
========= ======= =======
Profit
Parts Distribution $ 8,750 22,031 20,847
ILS 16,720 16,466 14,903
--------- ------- -------
Reportable segment profit 25,470 38,497 35,750
Nonrecurring (loss) gain (6,029) -- 1,436
Corporate (6,032) (6,255) (6,465)
Interest expense (3,345) (2,681) (3,201)
--------- ------- -------
Earnings from continuing operations before income taxes $ 10,064 29,561 27,520
========= ======= =======
Depreciation and amortization
Parts Distribution $ 5,706 4,605 4,132
ILS 582 491 580
--------- ------- -------
Reportable segment depreciation and amortization 6,288 5,096 4,712
Corporate 222 258 358
Debt issue cost included in interest expense 265 341 356
--------- ------- -------
Total depreciation and amortization $ 6,775 5,695 5,426
========= ======= =======
</TABLE>
F-21
<PAGE> 43
<TABLE>
<CAPTION>
Assets 1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
Parts Distribution $252,162 212,210 201,769
ILS 7,773 7,589 7,556
-------- ------- -------
Reportable segment assets 259,935 219,799 209,325
Corporate 2,150 951 742
Deferred tax asset 78,555 83,896 49,325
-------- ------- -------
Total assets $340,640 304,646 259,392
======== ======= =======
Long-lived asset additions
Parts Distribution $ 20,426 9,085 4,125
ILS 808 409 267
-------- ------- -------
Reportable segment long-lived asset additions 21,234 9,494 4,392
Corporate 22 25 6
-------- ------- -------
Total long-lived asset additions $ 21,256 9,519 4,398
======== ======= =======
</TABLE>
The following table presents revenues by geographic area based on sales
destination (in thousands):
<TABLE>
<CAPTION>
Revenues 1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
United States $262,376 279,015 269,626
Foreign countries 106,096 121,017 116,434
-------- ------- -------
Total revenue $368,472 400,032 386,060
======== ======= =======
</TABLE>
The following table presents long-lived assets by physical location (in
thousands):
<TABLE>
<S> <C> <C> <C>
Long-lived assets
United States $81,046 66,384 61,899
Foreign countries 2,493 2,656 2,993
------- ------ ------
Total long-lived assets $83,539 69,040 64,892
======= ====== ======
</TABLE>
The Company did not derive 10% or more of its total net sales from any
individual customer.
F-22
<PAGE> 44
NOTE 17 - QUARTERLY RESULTS OF OPERATIONS
The following is a summary of the unaudited quarterly results of operations
for 1999 and 1998 (in thousands, except share data):
<TABLE>
<CAPTION>
First Second Third Fourth
1999 (Unaudited) Quarter Quarter Quarter Quarter
--------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 87,408 95,318 92,811 92,935
Cost of sales 63,322 70,753 68,528 68,782
--------------- -------------- ------------- --------------
Gross profit 24,086 24,565 24,283 24,153
Operating and other expenses:
Selling and administrative expenses 18,210 18,457 18,907 22,075
Nonrecurring loss -- -- 1,772 4,257
Interest expense 720 796 889 940
--------------- -------------- ------------- --------------
Earnings (loss) from continuing operations before
income taxes 5,156 5,312 2,715 (3,119)
Provision (benefit) for income taxes 2,070 2,230 1,171 (522)
--------------- -------------- ------------- --------------
Earnings (loss) from continuing operations 3,086 3,082 1,544 (2,597)
Earnings from discontinued operations -- 1,426 1,228 1,934
--------------- -------------- ------------- --------------
Net earnings (loss) $ 3,086 4,508 2,772 (663)
=============== ============== ============= ==============
Basic net earnings (loss) per share:
Earnings (loss) from continuing operations $ 0.17 0.17 0.08 (0.14)
Earnings from discontinued operations -- 0.08 0.07 0.10
--------------- -------------- ------------- --------------
Net earnings (loss) $ 0.17 0.25 0.15 (0.04)
=============== ============== ============= ==============
Weighted average common shares 18,190,455 18,211,120 18,241,764 18,243,852
=============== ============== ============= ==============
Diluted net earnings (loss) per share:
Earnings (loss) from continuing operations $ 0.17 0.17 0.08 (0.14)
Earnings from discontinued operations -- 0.07 0.07 0.10
--------------- -------------- ------------- --------------
Net earnings (loss) $ 0.17 0.24 0.15 (0.04)
=============== ============== ============= ==============
Weighted average common and dilutive potential
common shares 18,470,381 18,554,391 18,590,107 18,243,852
=============== ============== ============= ==============
Common stock price range per share $10.06 to 16.38 14.38 to 19.00 9.94 to 18.63 7.00 to 10.25
=============== ============== ============= ==============
Common stock trading volume, number of shares 12,581,100 8,358,400 12,341,700 7,433,000
=============== ============== ============= ==============
</TABLE>
F-23
<PAGE> 45
<TABLE>
<CAPTION>
First Second Third Fourth
1998 (Unaudited) Quarter Quarter Quarter Quarter
--------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 98,030 104,949 102,126 94,927
Cost of sales 72,990 78,970 76,672 70,385
--------------- -------------- -------------- -------------
Gross profit 25,040 25,979 25,454 24,542
Operating and other expenses:
Selling and administrative expenses 17,187 17,481 17,132 16,973
Interest expense 507 576 809 789
--------------- -------------- -------------- -------------
Earnings from continuing operations before
income taxes 7,346 7,922 7,513 6,780
Provision (benefit) for income taxes 367 94 232 (32,868)
--------------- -------------- -------------- -------------
Earnings from continuing operations 6,979 7,828 7,281 39,648
Earnings from discontinued operations -- 2,083 -- 738
--------------- -------------- -------------- -------------
Net earnings $ 6,979 9,911 7,281 40,386
=============== ============== ============== =============
Basic net earnings per share:
Earnings from continuing operations $ 0.35 0.40 0.39 2.18
Earnings from discontinued operations -- 0.10 -- 0.04
--------------- -------------- -------------- -------------
Net earnings $ 0.35 0.50 0.39 2.22
=============== ============== ============== =============
Weighted average common shares 19,968,503 19,727,636 18,742,140 18,179,957
=============== ============== ============== =============
Diluted net earnings per share:
Earnings from continuing operations $ 0.34 0.39 0.38 2.16
Earnings from discontinued operations -- 0.10 -- 0.04
--------------- -------------- -------------- -------------
Net earnings $ 0.34 0.49 0.38 2.20
=============== ============== ============== =============
Weighted average common and dilutive potential
common shares 20,388,350 20,119,859 19,038,745 18,358,727
=============== ============== ============== =============
Common stock price range per share $12.12 to 15.56 13.00 to 15.62 10.31 to 14.62 9.94 to 12.69
=============== ============== ============== =============
Common stock trading volume, number of shares 4,200,000 3,231,500 3,472,900 6,703,000
=============== ============== ============== =============
</TABLE>
F-24
<PAGE> 46
AVIALL, INC. SCHEDULE II
VALUATION ACCOUNTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Balance at Charged Balance
Beginning to Costs at End
of Year and Expense Other Deductions of Year
------- ----------- ----- ---------- -------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1999:
Accounts receivable allowance $3,275 1,481 101(1) (702)(2) 4,155
Reserves for excess and obsolete inventories $3,208 3,987 -- (466)(3) 6,729
====== ===== === ====== =====
Year ended December 31, 1998:
Accounts receivable allowance $4,238 306 163(1) (1,432)(2) 3,275
Reserves for excess and obsolete inventories $3,941 1,867 -- (2,600)(3) 3,208
====== ===== === ====== =====
Year ended December 31, 1997:
Accounts receivable allowance $4,541 1,430 (323)(1) (1,410)(2) 4,238
Reserves for excess and obsolete inventories $4,007 721 -- (787)(3) 3,941
====== ===== === ====== =====
</TABLE>
(1) Collection of accounts receivable previously written off.
(2) Write-off of doubtful accounts.
(3) Write-off of excess and obsolete inventories.
F-25
<PAGE> 47
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description
- --------------- -------------------------------------------------------------------------------------------------------
<S> <C>
3.1* Restated Certificate of Incorporation of Aviall (Exhibit 3.1 to Aviall's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 (the "1993 Form 10-K"))
3.2* Amended and Restated By-Laws of Aviall, Inc. (Exhibit 3.1 to Aviall's Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1999 (the "March 31, 1999 Form 10-Q"))
4.1* Form of Common Stock Certificate of Aviall (Exhibit 4 to Aviall's Registration Statement on Form 10,
as amended (Commission File No. 1-12380)
4.2* Aviall, Inc. Preferred Stock Purchase Rights Plan between Aviall and The First National Bank of
Boston dated as of December 7, 1993 (Exhibit 10.7 to the 1993 Form 10-K)
4.3 Amendment No. 1 to Preferred Stock Purchase Rights Plan
10.1*+ Aviall, Inc. Stock Incentive Plan (Exhibit 10.1 to the 1993 Form 10-K)
10.2*+ Amendment to Aviall, Inc. Stock Incentive Plan (Exhibit 10.3 to the March 31, 1999 Form 10-Q)
10.3*+ Aviall, Inc. 1998 Stock Incentive Plan (Exhibit 10.2 to Aviall's Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 1998)
10.4*+ Amendment to Aviall, Inc. 1998 Stock Incentive Plan (Exhibit 10.4 to the March 31, 1999 Form 10-Q)
10.5*+ Aviall, Inc. Amended and Restated 1998 Directors Stock Plan (Exhibit 10.3 to Aviall's Annual Report
on Form 10-K for the fiscal year ended December 31, 1998)
10.6* Distribution and Indemnity Agreement by and between Aviall and Ryder dated November 23, 1993 (Exhibit
10.3 to the 1993 Form 10-K)
10.7* Tax Sharing Agreement by and between Aviall and Ryder dated November 23, 1993 (Exhibit 10.4 to the
1993 Form 10-K)
10.8*+ Form of Amended and Restated Severance Agreement between Aviall, Inc. and each of its executive
officers (Exhibit 10.1 to the March 31, 1999 Form 10-Q)
10.9*+ Addendum to Amended and Restated Severance Agreement between Aviall, Inc. and Bruce Langsen (Exhibit
10.2 to the March 31, 1999 Form 10-Q)
10.10*+ Amended and Restated Severance Pay Plan (Exhibit 10.7 to the March 31, 1999 Form 10-Q)
10.11* Asset Purchase Agreement, dated as of May 31, 1994, by and between Aviall Services, Inc. and Dallas
Airmotive, Inc., as amended (Exhibit 10.3 to Aviall's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1994 and Exhibits 10.17 through 10.23 to Aviall's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994
10.12*+ Aviall, Inc. Employee Stock Purchase Plan (Exhibit 10.27 to Aviall's Annual Report on Form 10-K for
the fiscal year ended December 31, 1995)
</TABLE>
<PAGE> 48
<TABLE>
<CAPTION>
Exhibit
No. Description
- --------------- -------------------------------------------------------------------------------------------------------
<S> <C>
10.13*+ Aviall, Inc. Benefit Restoration Plan (Exhibit 10.5 to the March 31, 1999 Form 10-Q)
10.14*+ Amendment No. One to the Aviall, Inc. Benefit Restoration Plan (Exhibit 10.6 to the March 31, 1999
Form 10-Q)
10.15* Agreement of Purchase and Sale among Aviall, Inc., Aviall Services, Inc., Greenwich Air Services,
Inc. and GASI Engine Services, Inc., dated April 19, 1996 (Exhibit 2.1 to Aviall's Current Report on
Form 8-K dated April 19, 1996)
10.16+ Employment Agreement, dated December 16, 1999, between Aviall, Inc. and Paul E. Fulchino
10.17+ Non-Qualified Stock Option Agreement, dated December 21, 1999 between Aviall, Inc. and Paul E.
Fulchino
10.18 Revolving Credit and Term Loan Agreement, dated December 23, 1999, among Aviall, Inc. and the
financial institutions thereto
10.19 Distribution Services Agreement, dated November 3, 1999, between Allison Engine Company, Inc. d/b/a
Rolls-Royce Allison and Aviall Services, Inc. (Confidential treatment has been requested for certain
confidential portions of this exhibit pursuant to Rule 24b-2 under the Exchange Act. In accordance
with Rule 24b-2, these confidential portions have been omitted from this exhibit and filed separately
with the Commission)
21.1 Subsidiaries of Aviall
23.1 Consent of PricewaterhouseCoopers LLP
24.1 Powers of attorney of directors and officers of Aviall
27.1 Financial Data Schedule
</TABLE>
- -----------------------
* Each document marked with an asterisk is incorporated herein by reference to
the designated document previously filed with the Commission.
+ Each document marked with a dagger constitutes a management contract or
compensatory plan or arrangement.
<PAGE> 1
Exhibit 4.3
AMENDMENT NO. 1 TO
RIGHTS AGREEMENT
Amendment No. 1 to Rights Agreement, dated as of March 14, 2000 (this
"Amendment"), is made and entered into by Aviall, Inc., a Delaware corporation
(the Company"). Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Rights Agreement, dated as of December 7,
1993 (the "Rights Agreement"), by and between the Company and BankBoston, N.A.,
a national banking association (as successor to The First National Bank of
Boston) (the "Rights Agent").
RECITALS
WHEREAS, Section 27 of the Rights Agreement provides that the Company may
from time to time supplement or amend any provision of the Rights Agreement as
the Company may deem necessary or desirable.
NOW, THEREFORE, in accordance with Section 27 of the Rights Agreement, the
Company hereby amends the Rights Agreement as follows:
1. Section 1(a) of the Rights Agreement is hereby amended and restated
in its entirety as follows:
"Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person,
shall be the Beneficial Owner (as such term is hereinafter defined) of
15% or more of the Common Shares of the Company then outstanding, but
shall not include the Company, any Subsidiary (as such term is
hereinafter defined) of the Company, any employee benefit plan of the
Company or any Subsidiary of the Company, or any entity holding Common
Shares for or pursuant to the terms of any such plan. Notwithstanding
the foregoing, no Person shall become an "Acquiring Person" as the
result of an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 15% or more of
the Common Shares of the Company then outstanding; provided, however,
that if a Person shall become the Beneficial Owner of 15% or more of
the Common Shares of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the
Company, become the Beneficial Owner of any additional Common Shares
of the Company, then such Person shall be deemed to be an "Acquiring
Person". Notwithstanding the
<PAGE> 2
foregoing, if the Board of Directors of the Company determines in good
faith that a Person who would otherwise be an "Acquiring Person", as
defined pursuant to the foregoing provisions of this paragraph (a),
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person
would no longer be an Acquiring Person, as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not
be deemed to be an "Acquiring Person" for any purposes of this
Agreement.
2. The Rights Agreement is hereby amended in the following additional
respects:
(a) Section 2 is hereby amended by adding the following after the word
"desirable": ", upon ten (10) days' prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no
event be liable for, the acts or omissions of any such co-Rights Agent."
(b) Section 18 is hereby amended by adding the word "gross" between
the words "without" and "negligence" in the second sentence of Section 18.
(c) Section 20(c) is hereby amended by adding the word "gross" between
the words "own" and "negligence."
(d) Section 26 is hereby amended by inserting the following address as
the notice address for the Rights Agent:
"BankBoston, N.A.
c/o EquiServe Limited Partnership
150 Royall Street
Canton, MA 02021
Attention: Client Administration"
3. This Amendment shall be effective as of the date first above
written, and all references to the Rights Agreement shall, from and after such
time, be deemed to be references to the Rights Agreement as amended hereby.
4. The Rights Agreement shall not otherwise be supplemented or amended
by virtue of this Amendment, but shall remain in full force and effect.
5. Exhibits B and C to the Rights Agreement shall be deemed amended in
a manner consistent with this Amendment.
6. This Amendment shall be deemed to be a contract made under the
substantive laws of the State of New York and for all purposes shall be governed
by and
2
<PAGE> 3
construed in accordance with the substantive laws of the State of New York
applicable to contracts to be made and performed within such State.
7. This Amendment may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the Company and the Rights Agent have caused this
Amendment to be duly executed as of the date first above written.
AVIALL, INC.
By: /s/ JEFFREY J. MURPHY
----------------------------------------
Name: Jeffrey J. Murphy
Title: Senior Vice President and General Counsel
AGREED AND ACCEPTED:
BANKBOSTON, N.A.
By: /s/ JOSHUA P. MCGINN
-----------------------------
Name: Joshua P. Mcginn
Title: Senior Account Manager
3
<PAGE> 1
Exhibit 10.16
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), dated as of
December 16, 1999, is made and entered into by and between Aviall, Inc., a
Delaware corporation (the "Company") and Paul E. Fulchino (the "Executive").
WHEREAS, the Company desires to obtain the Executive's
management and executive services by engaging the Executive as its President and
Chief Executive Officer and by the Executive serving as a director of the
Company;
WHEREAS, in order to induce the Executive to serve in such
positions, the Company desires to provide the Executive with compensation and
other benefits on the terms and conditions set forth in this Agreement; and
WHEREAS, the Executive is willing to accept such employment
and perform services for the Company, on the terms and conditions hereinafter
set forth;
NOW THEREFORE, in consideration of the promises and of the
mutual covenants herein contained, it is agreed as follows:
1. Employment, Positions and Duties.
1.1 The Company hereby agrees to employ the Executive and the
Executive hereby agrees to undertake employment with the Company upon the terms
and conditions herein set forth.
1.2 Effective as of January 1, 2000, and thereafter during the
Term (as hereafter defined), the Executive will serve in the positions of
President and Chief Executive Officer of the Company. As promptly as practicable
following the Start Date (as hereinafter defined), the Executive will be
appointed to fill an open position as a member of the Board of Directors of the
Company (the "Board") and appointed to serve as Chairman of the Board.
Throughout the Term, the Company will use its best efforts to cause the
Executive to be included in the management slate for election as a director at
every stockholders' meeting at which his term as a director would otherwise
expire.
1.3 During the Term, the Executive will devote substantially
all of his working time and efforts to the performance of services, duties and
responsibilities in accordance with this Agreement. The Executive will have such
duties, functions, responsibilities and authority as are (i) consistent with the
positions set forth in Section 1.2, (ii) assigned to his positions by the bylaws
of the Company or (iii) reasonably assigned to him by the Board. The Executive
will report directly to the Board.
1.4 Notwithstanding the foregoing, the Executive may (i)
subject to the approval of the Board, serve as the director of a noncompeting
company, and (ii) serve as an
<PAGE> 2
officer, director, trustee or otherwise participate in solely educational,
welfare, charitable, social, religious and civic organizations.
1.5 In connection with his employment during the Term, unless
otherwise agreed by the Executive and the Board, the Executive will be based at
the Company's principal executive offices in Dallas, Texas. The Executive will
undertake normal business travel on behalf of the Company, the reasonable
expenses of which will be paid by the Company pursuant to Section 5.
2. Term of Employment. The Executive's term of employment under this
Agreement (the "Term") will commence on December 21, 1999 (the "Start Date")
and, subject to the provisions of this Agreement, will terminate on the earlier
of (i) December 31, 2002 or (ii) termination of the Executive's employment
pursuant to Section 7 of this Agreement (the "Termination Date").
3. Compensation.
3.1 Salary. During the Term, the Company will pay the
Executive an annual base salary ("Base Salary") of not less than $450,000. Base
Salary will be payable at the times and in the manner consistent with the
Company's general policies regarding compensation of executive employees. Base
Salary may be increased (but not decreased) in the discretion of the Board.
3.2 Annual Incentive Compensation. The Executive will be
eligible to participate in the current and any future management incentive
program of the Company on terms commensurate with the Executive's position and
level of responsibility; provided, however, that the Executive's annual
incentive opportunity will be not less than 100% of Base Salary. Nothing in this
Section 3.2 will guarantee to the Executive any specific amount of incentive
compensation, or prevent the Board from establishing an additional enhanced
annual incentive compensation program with performance goals and compensation
targets applicable only to the Executive.
3.3 Other Compensation. Nothing in this Section 3 will
preclude the Board from authorizing such additional compensation to the
Executive, in cash or in property, as the Board may determine in its sole
discretion to be appropriate.
3.4 Annual Performance Review. The Executive will receive an
annual performance review by the Board within a reasonable time following the
close of the Company's fiscal year.
4. Employee Benefits.
4.1 Employee Benefit Programs, Plans and Practices. (i) During
the Term, subject to Section 3 and this Section 4, the Company will provide the
Executive and his eligible dependents, subject to the terms and conditions of
the applicable plans, with the opportunity to participate in all
Company-sponsored employee benefit plans, including all employee retirement
income and welfare benefit policies, plans, programs or arrangements in which
senior executives of the Company participate, in a manner commensurate with his
position and level of responsibility in the Company.
-2-
<PAGE> 3
(ii) The Company will arrange for supplemental term
life insurance covering the Executive in the amount of $900,000.
(iii) The Company will arrange for a supplemental
disability policy such that, in the aggregate, the long-term disability benefits
provided to the Executive will be 60% of Base Salary.
(iv) The Company will pay, or reimburse the Executive
for, the reasonable cost of a physical examination each calendar year during the
Term.
(v) The Executive acknowledges that the Company's
obligations to provide the benefits contemplated pursuant to Sections 4.1(ii)
and 4.1(iii) are conditioned on the Executive taking and passing any required
physical and other related examinations.
4.2 Vacation and Fringe Benefits. Executive will be entitled
to three weeks' vacation per year, effective on the Start Date. In addition, the
Executive will be entitled to the perquisites and other fringe benefits made
available to senior executives of the Company, commensurate with his position
and level of responsibility with the Company.
4.3 Temporary Living Allowance. The Executive will be entitled
to reimbursement of reasonable temporary living expenses through March 31, 2000.
5. Expenses. The Company will promptly reimburse the Executive for all
travel and other business expenses that the Executive incurs in the course of
the performance of his duties to the Company under this Agreement in a manner
commensurate with the Executive's position and level of responsibility with the
Company and in accordance with the Company's policies relating to the
reimbursement of such expenses.
6. Stock Option.
6.1 The Company will grant to Executive, effective as of
December 21, 1999, an option (the "Option") to purchase 500,000 shares of the
Company's common stock. The Option will have a 10-year term and an exercise
price equal to the closing sales price of the Company's common stock as reported
on the New York Stock Exchange on December 21, 1999. The Option will become
exercisable with respect to one-third of the shares underlying the Option on
each of the first three anniversary dates of the Start Date.
6.2 The definitive terms of the grant of the Option will be as
set forth in an agreement previously provided to the Executive.
7. Termination of Employment. Notwithstanding the Term specified in
Section 2, the termination of the Executive's employment hereunder will be
governed by the following provisions:
7.1 Death. The Executive's employment will terminate upon his
death during the Term. In the event of the Executive's death during the Term,
the Company will pay to the
-3-
<PAGE> 4
Executive's beneficiaries or estate, as appropriate, as soon as practicable
after the Executive's death, (i) the unpaid Base Salary to which the Executive
is entitled through the date of his death, and (ii) for any accrued and unused
vacation days. This Section 7.1 will not limit the entitlement of the
Executive's estate or beneficiaries to any death or other benefits then
available to the Executive under any life insurance, stock ownership, stock
options, or other benefit plan or policy that is maintained by the Company for
the Executive's benefit or otherwise.
7.2 Permanent Disability. If the Executive becomes totally and
permanently disabled (as defined in the Company's long-term disability benefit
plan available to senior executive officers as in effect at the time Executive's
disability is incurred) ("Permanent Disability") during the Term, the Company or
the Executive may terminate the Executive's employment on written notice thereof
and the Company will pay to the Executive as soon as practicable: (i) the unpaid
Base Salary to which the Executive is entitled through his Termination Date,
(ii) for any accrued and unused vacation days, and (iii) such payments under
applicable plans or programs, including but not limited to those referred to in
Section 4.1, to which the Executive is entitled pursuant to the terms of such
plans or programs.
7.3 Voluntary Termination by Executive; Discharge for Cause.
(i) During the Term, the Company may terminate the Executive's employment
hereunder for Cause (as defined below). In the event that during the Term the
Executive's employment is terminated by the Company for Cause or by the
Executive other than for Good Reason (as defined below) or other than as a
result of the Executive's Permanent Disability or death, the Company will pay as
soon as practicable to the Executive (or his representative) (a) the unpaid Base
Salary to which the Executive is entitled through his Termination Date, and (b)
for any accrued and unused vacation days. Executive will not be entitled, among
other things, to the payment of any bonus or other incentive compensation in
respect of all or any portion of the fiscal year in which such termination
occurs.
(ii) For purposes of this Agreement, "Cause" shall
mean (a) the willful breach or habitual neglect of assigned duties related to
the Company, including compliance with Company policies, and such breach or
neglect is materially detrimental to the Company; (b) conviction (including any
plea of nolo contendere) of the Executive of any felony or crime involving
dishonesty or moral turpitude; (c) any act of personal dishonesty knowingly
taken by the Executive in connection with his responsibilities as an employee
and intended to result in personal enrichment of the Executive or any other
person; (d) bad faith conduct that is materially detrimental to the Company; (e)
inability of the Executive to perform the Employee's duties due to alcohol or
illegal drug use; (f) the Executive's failure to comply with any material legal
written directive of the Board; (g) any act or omission of the Executive which
is of substantial detriment to the Company because of the Executive's
intentional failure to comply with any statute, rule or regulation, except any
act or omission believed by the Executive in good faith to have been in or not
opposed to the best interest of the Company (without intent of the Executive to
gain, directly or indirectly, a profit to which the Executive was not legally
entitled) and except that Cause shall not mean bad judgment or negligence other
than habitual neglect of duty; or (h) a material breach by the Executive of the
covenants set forth in Sections 10.1, 10.2 or 10.3.
(iii) The Company may not terminate the Executive's
employment for Cause under this Section 7.3 unless and until the Company
provides the Executive with written
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<PAGE> 5
notice from the Company accompanied by a copy of a resolution duly adopted by
the affirmative vote of not less than a majority of the Board (excluding the
Executive) finding Cause and terminating Executive's employment for Cause. A
notice of termination for Cause given under this Section 7.3 must set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
such termination.
7.4 Involuntary Termination. During the Term, the Executive's
employment hereunder may be terminated by the Company for any reason other than
Cause by delivery to the Executive of a written notice of termination and a copy
of a resolution duly adopted by the affirmative vote of a majority of the full
number of directors constituting the Board at a meeting of the Board called and
held for the purpose of terminating Executive's employment. The Executive will
be treated for purposes of this Agreement as having been involuntarily
terminated other than for Cause if during the Term the Executive terminates his
employment with the Company prior to termination for Cause for any of the
following reasons (each, a "Good Reason"): without the Executive's written
consent, (a) the Company has breached any material provision of this Agreement
and within 30 days after notice thereof from the Executive, the Company fails to
cure such breach; (b) a successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company fails to assume liability under the
Agreement; (c) the failure to elect or reelect or otherwise to maintain the
Executive as President, Chief Executive Officer and as a director of the Company
(or any successor entity by operation of law or otherwise); or (d) if the
employment of the Executive is terminated by reason of the failure of the
Company to renew or extend this Agreement at the end of the Term.
7.5 Termination Payments and Benefits.
(i) Form and Amount. Upon the Executive's involuntary
termination other than for Cause pursuant to Section 7.4, the Company will pay
to the Executive (a) the unpaid Base Salary to which the Executive is entitled
through his Termination Date, (b) for any accrued and unused vacation days, (c)
a severance payment in an amount equal to the greater of (1) the Base Salary for
the remaining of the then-current Term, or (2) two times the Base Salary.
Notwithstanding anything contained in this Agreement to the contrary, the
severance payment provided in Section 7.5(i)(c) shall be in lieu of any other
severance benefit provided under any other policy or program maintained by the
Company, provided, further, that if at the time at which the Executive's
employment with the Company is terminated, he is eligible to receive the
severance benefits intended to be provided under the Severance Agreement (as
hereinafter defined), the Executive shall receive the benefits under the
Severance Agreement in lieu of the benefits provided under this Section 7.5(i)
unless the Executive elects, by giving written notice to the Company within five
business days of his Termination Date, to receive the benefits under this
Section 7.5(i) in lieu of the benefits provided under the Severance Agreement.
(ii) Time and Manner of Payment. The amounts due to
Executive pursuant to Section 7.5(i)(a) and Section 7.1(i)(b) will be paid by
the Company within ten days after the Executive's Termination Date. The amounts
due to the Executive pursuant to Section 7.5(i)(c) will be paid by the Company
in equal monthly installments over a period of 24 months, or if longer, the
remainder of the Term.
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<PAGE> 6
7.6 Release and Resignation. Immediately upon Executive's
termination of employment with the Company for any reason, Executive will resign
as a member of the Board and of the board of directors of each subsidiary of the
Company and from all other positions with the Company and its subsidiaries. The
Company's obligations to Executive under this Section 7 (other than Section 7.1)
will be conditioned on Executive furnishing such resignations and on the
Executive executing a release in a form satisfactory to the Company.
8. Mitigation and Offset. The Executive is under no obligation to
mitigate damages or the amount of any payment or benefit provided for hereunder
by seeking other employment or otherwise and no amounts earned by the Executive,
whether from self-employment, as common-law employee or otherwise, will reduce
the amount of any payment or benefit under any provision of this Agreement.
9. Change-in-Control Provisions.
9.1 The Executive will be offered the Company's form of
change-in-control severance agreement (the "Severance Agreement"), to be
effective as of the Start Date and continue throughout the Term.
9.2 The agreement evidencing the grant of the Options will
provide that upon the occurrence of a "Change in Control" (as defined in the
Severance Agreement), the Option will become fully vested and exercisable.
10. Covenants.
10.1 Confidentiality. During the Term, the Company agrees that
it will disclose to Executive its confidential or proprietary information (as
defined in this Section 10.1) to the extent necessary for Executive to carry out
his obligations under this Agreement. The Executive hereby covenants and agrees
that he will not, without the prior written consent of the Board, during the
Term or thereafter intentionally and wrongfully disclose to any person not
employed by, representing, or engaged by, the Company or any of its
subsidiaries, or to any director of the Company or any of its subsidiaries, or
intentionally and wrongfully use in connection with engaging in competition with
the Company, any confidential or proprietary information of the Company. For
purposes of this Agreement, the term "confidential or proprietary information"
means all material information of a confidential and proprietary nature and in
any form that is owned by the Company and that is not publicly available (other
than by Executive's breach of this Section 10.1) or generally known to persons
engaged in businesses similar or related to those of the Company. Confidential
or proprietary information may include, without limitation, the Company's
financial matters, customers, employees, industry contracts, strategic business
plans, product development (or other proprietary product data), marketing plans,
and all other secrets and all other information of a confidential or proprietary
nature. The foregoing obligations imposed by this Section 10.1 will not apply
(i) during the Term, in the course of the business of and for the benefit of the
Company, (ii) if such confidential or proprietary information is or will have
become, through no fault of the Executive, known to the public or (iii) if the
Executive is required by law to make disclosure (after giving the Company notice
and an opportunity to contest such requirement).
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<PAGE> 7
10.2 Covenant Against Competition. During the Term and for a
period of two years following the Termination Date, the Executive shall not,
without the prior written consent of the Board, directly or indirectly engage or
become a partner, director, officer, principal, employee, consultant, investor,
creditor or stockholder in any business, proprietorship, association, firm or
corporation not owned or controlled by the Company or its subsidiaries which is
engaged or proposes to engage or hereafter engages in a business competitive
directly with the business conducted by the Company or any of its subsidiaries
in any geographic area where such business of the Company or any of its
subsidiaries or affiliates is conducted; provided, however, that the Executive
is not prohibited from owning one percent or less of the outstanding capital
stock of any corporation whose stock is listed on a national securities
exchange.
10.3 Nonsolicitation. The Executive hereby covenants and
agrees that during the Term and for two years thereafter he will not, without
the prior written consent of the Board, on his own behalf or on behalf of any
person, firm or company, directly or indirectly, solicit or attempt to solicit
any employee of the Company or its subsidiaries to give up employment with the
Company or its subsidiaries.
10.4 Enforcement. The Executive and the Company agree that the
covenants contained in Sections 10.1, 10.2 and 10.3 are reasonable under the
circumstances, and further agree that if in the opinion of any court of
competent jurisdiction any such covenant is not reasonable in any respect, such
court will have the right, power and authority to excise or modify any provision
or provisions of such covenants as to the court will appear not reasonable and
to enforce the remainder of the covenants as so amended. The Executive
acknowledges and agrees that the remedy at law available to the Company for
breach of any of his obligations under Sections 10.1, 10.2 and 10.3 would be
inadequate and that damages flowing from such a breach may not readily be
susceptible to being measured in monetary terms. Accordingly, the Executive
acknowledges, consents and agrees that, in addition to any other rights or
remedies that the Company may have at law, in equity or under this Agreement,
upon adequate proof of his violation of any such provision of this Agreement,
the Company will be entitled to immediate injunctive relief and may obtain a
temporary order restraining any threatened or further breach, without the
necessity of proof of actual damage.
10.5 Post-termination Assistance. The Executive agrees that
after his employment with the Company has terminated he will provide, upon
reasonable notice, such information and assistance to the Company as may
reasonably be requested by the Company in connection with any litigation in
which it or any of its affiliates is or may become a party; provided, however,
that the Company agrees to reimburse the Executive for any related out-of-
pocket expenses, including travel expenses.
11. Survival. The expiration or termination of the Term will not impair
the rights or obligations of any party hereto that accrue hereunder prior to
such expiration or termination, except to the extent specifically stated herein.
In addition to the foregoing, the Parties' rights and obligations under Sections
7, 10.1, 10.2, 10.3, 10.4, 10.5 and 12.1 will survive the expiration or
termination of this Agreement or termination of Executive's employment.
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<PAGE> 8
12. Miscellaneous Provisions.
12.1 Dispute Resolution. Any dispute between the parties under
this Agreement will be resolved (except as provided below) through arbitration
(located in the county in which the Company's principal executive offices are
based) by an arbitrator selected under the rules of the American Arbitration
Association ("AAA") and the arbitration will be conducted in that location under
the rules of the AAA. Each party will be entitled to present evidence and
argument to the arbitrator. The arbitrator will have the right only to interpret
and apply the provisions of this Agreement and may not change any of its
provisions. The arbitrator will permit reasonable pre-hearing discovery of
facts, to the extent necessary to establish a claim or a defense to a claim,
subject to supervision by the arbitrator. The determination of the arbitrator
will be conclusive and binding upon the parties and judgment upon the same may
be entered in any court having jurisdiction thereof. The arbitrator will give
written notice to the parties stating his or their determination, and will
furnish to each party a signed copy of such determination. The expenses of
arbitration will be borne equally by the Executive and the Company or as the
arbitrator otherwise equitably determines. Notwithstanding the foregoing, the
Company will not be required to seek or participate in arbitration regarding any
breach of the Executive's covenants contained in Sections 10.1 10.2 or 10.3, but
may pursue its remedies for such breach in a court of competent jurisdiction in
the county in which the Company's principal executive offices are located. Any
arbitration or action pursuant to this Section 12.1 will be governed by and
construed in accordance with the substantive laws of the State of Texas, without
giving effect to the principles of conflict of laws of such State.
12.2 Binding on Successors; Assignment. This Agreement will be
binding upon and inure to the benefit of the Company, the Executive and each of
their respective successors, assigns, personal and legal representatives,
executors, administrators, heirs, distributees, devisees, and legatees, as
applicable; provided, however, that neither this Agreement nor any rights or
obligations hereunder will be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
succession) or by the Company, except that the Company may assign this Agreement
to any successor (whether by merger, purchase or otherwise) to all or
substantially all of the stock, assets or businesses of the Company, if such
successor expressly agrees to assume the obligations of the Company hereunder.
12.3 Governing Law. This Agreement will be governed,
construed, interpreted and enforced in accordance with the substantive laws of
the State of Texas, without regard to the principles of conflict of laws of such
State.
12.4 Severability. Any provision of this Agreement that is
deemed invalid, illegal or unenforceable in any jurisdiction will, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provisions of this Agreement
invalid, illegal, or unenforceable in any other jurisdiction. If any covenant
should be deemed invalid, illegal or unenforceable because its scope is
considered excessive, such covenant will be modified so that the scope of the
covenant is reduced only to the minimum extent necessary to render the modified
covenant valid, legal and enforceable.
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<PAGE> 9
12.5 Notices. For all purposes of this Agreement, all
communications, including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder will be in writing and
will be deemed to have been duly given when hand delivered or dispatched by
electronic facsimile transmission (with receipt thereof confirmed), or five
business days after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, or three business days after
having been sent by a nationally recognized overnight courier service such as
Federal Express, UPS, or Purolator, addressed to the Company (to the attention
of the Secretary of the Company) at its principal executive office and to the
Executive at his principal residence, or to such other address as any party may
have furnished to the other in writing and in accordance herewith, except that
notices of changes of address will be effective only upon receipt.
12.6 Counterparts. This Agreement may be executed in several
counterparts, each of which will be deemed to be an original, but all of which
together will constitute one and the same Agreement.
12.7 Entire Agreement. The terms of this Agreement are
intended by the parties to be the final expression of their agreement with
respect to the Executive's employment by the Company and may not be contradicted
by evidence of any prior or contemporaneous agreement. The parties further
intend that this Agreement will constitute the complete and exclusive statement
of its terms and that no extrinsic evidence whatsoever may be introduced in any
judicial, administrative or other legal proceeding to vary the terms of this
Agreement.
12.8 Amendments; Waivers. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, approved by the
Company and signed by the Executive and the Company. Failure on the part of
either party to complain of any action or omission, breach or default on the
part of the other party, no matter how long the same may continue, will never be
deemed to be a waiver of any rights or remedies hereunder, at law or in equity.
The Executive or the Company may waive compliance by the other party with any
provision of this Agreement that such other party was or is obligated to comply
with or perform only through an executed writing; provided, however, that such
waiver will not operate as a waiver of, or estoppel with respect to, any other
or subsequent failure.
12.9 Headings and Section References. The headings used in
this Agreement are intended for convenience or reference only and will not in
any manner amplify, limit, modify or otherwise be used in the construction or
interpretation of any provision of this Agreement. All section references are to
sections of this Agreement, unless otherwise noted.
12.10 Withholding. The Company will be entitled to withhold
from payment any amount of withholding required by law.
12.11 Legal Fees and Expenses. The Company will reimburse the
Executive for all legal fees and expenses incurred by the Executive in
connection with the review and negotiation, prior to the execution thereof, of
this Agreement and the other agreements expressly contemplated by this
Agreement, but not in excess, in the aggregate, of $5,000.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
AVIALL, INC.
By: /s/ JEFFREY J. MURPHY
-----------------------------------------
Jeffrey J. Murphy, Senior Vice President
and General Counsel
/s/ PAUL E. FULCHINO
--------------------------------------------
Paul E. Fulchino
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<PAGE> 1
Exhibit 10.17
NON-QUALIFIED STOCK OPTION AGREEMENT
This AGREEMENT (the "Agreement") is made as of December 21, 1999 (the
"Date of Grant") by and between Aviall, Inc., a Delaware corporation (the
"Company"), and Paul E. Fulchino (the "Optionee").
1. CERTAIN DEFINED TERMS. As used in this Agreement, the terms listed
below have the respective meanings indicated.
(a) "BOARD" means the Board of Directors of the Company and to
the extent of any delegation by the Board to a committee (or
subcommittee thereof), such committee (or subcommittee).
(b) "CAUSE" means (a) the willful breach or habitual neglect of
assigned duties related to the Company, including compliance
with Company policies, and such breach or neglect is
materially detrimental to the Company; (b) conviction
(including any plea of nolo contendere) of the Optionee of
any felony or crime involving dishonesty or moral turpitude;
(c) any act of personal dishonesty knowingly taken by the
Optionee in connection with his responsibilities as an
employee and intended to result in personal enrichment of the
Optionee or any other person; (d) bad faith conduct that is
materially detrimental to the Company; (e) inability of the
Optionee to perform the Employee's duties due to alcohol or
illegal drug use; (f) the Optionee's failure to comply with
any material legal written directive of the Board; or (g) any
act or omission of the Optionee which is of substantial
detriment to the Company because of the Optionee's
intentional failure to comply with any statute, rule or
regulation, except any act or omission believed by the
Optionee in good faith to have been in or not opposed to the
best interest of the Company (without intent of the Optionee
to gain, directly or indirectly, a profit to which the
Optionee was not legally entitled) and except that Cause
shall not mean bad judgment or negligence other than habitual
neglect of duty.
(c) "CHANGE OF CONTROL" shall have the meaning provided in
Section 11 of this Agreement.
(d) "CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
(e) "COMMON SHARES" means the shares of Common Stock, par value
$.01 per share of the Company or any security into which such
Common Shares may be changed by reason of any transaction or
event.
(f) "DIRECTOR" means a member of the Board of Directors of the
Company.
(g) "SUBSIDIARY" means a corporation, company or other entity (i)
more than 50 percent of whose outstanding shares or
securities (representing the right to vote generally in the
election of directors or other managing authority) are, or
(ii) which
<PAGE> 2
does not have outstanding shares or securities (as may be the
case in a partnership, joint venture or unincorporated
association), but more than 50 percent of whose ownership
interest representing the right generally to make decisions
for such other entity is, now or hereafter, owned or
controlled, directly or indirectly, by the Company.
(h) "VOTING POWER" means at any time, the total votes relating to
the then-outstanding securities entitled to vote generally in
the election of Directors.
2. GRANT OF STOCK OPTION. Subject to and upon the terms, conditions, and
restrictions set forth in this Agreement, the Company hereby grants to
the Optionee as of the Date of Grant a stock option (the "Option") to
purchase 500,000 Common Shares (the "Optioned Shares"). The price
which the Optioned Shares may be purchased pursuant to this Option
shall be $7.3125 per share subject to adjustment as hereinafter
provided (the "Option Price").
3. TERM OF OPTION. The term of the Option shall commence on the Date of
Grant and, unless earlier terminated in accordance with Section 6
hereof, shall expire ten (10) years from the Date of Grant.
4. RIGHT TO EXERCISE. Subject to the expiration or earlier termination of
the Option, on the first anniversary of the Date of Grant, 166,666 of
the Optioned Shares specified in this Agreement shall become
exercisable, on the second anniversary of the Date of Grant, 166,667
of the Optioned Shares shall become exercisable, and on the third
anniversary of the Date of Grant, 166,666 of the Optioned Shares
specified in this Agreement shall become exercisable, on a cumulative
basis until the Option is fully exercisable. To the extent the Option
is exercisable, it may be exercised in whole or in part, but may not
be exercised for less than one thousand (1,000) Optioned Shares unless
such lesser number of Optioned Shares represents all of the remaining
balance then exercisable. In no event shall the Optionee be entitled
to acquire a fraction of one Optioned Share pursuant to this Option.
The Optionee shall be entitled to the privileges of ownership with
respect to Optioned Shares purchased and delivered to the Optionee
upon the exercise of all or part of this Option.
5. TRANSFERABILITY. (a) Except as provided in Section 5(b), the Option
granted hereby shall be neither transferable nor assignable by the
Optionee other than by will or by the laws of descent and distribution
and may be exercised, during the lifetime of the Optionee, only by the
Optionee, or in the event of his legal incapacity, by his guardian or
legal representative acting on behalf of the Optionee in a fiduciary
capacity under state law and court supervision.
(b) Notwithstanding the provisions of Section 5(a), the Option shall
be transferable by the Optionee, without payment of consideration
therefor by the transferee, to any one or more members of the
Optionee's Immediate Family (or to one or more trusts established
solely for the benefit of one or more members of the Optionee's
Immediate Family or to one or more partnerships in which the only
partners are members of the Optionee's Immediate
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<PAGE> 3
Family); provided, however, that (i) no such transfer shall be
effective unless reasonable prior notice thereof is delivered to the
Company and such transfer is thereafter effected in accordance with
any terms and conditions that shall have been made applicable thereto
by the Company or the Board and (ii) any such transferee shall be
subject to the same terms and conditions hereunder as the Optionee.
For this purpose, "Immediate Family" has the meaning ascribed thereto
in Rule 16a-1(e) under the Securities and Exchange Act of 1934, as
amended, as in effect from time to time (the "Exchange Act").
6. NOTICE OF EXERCISE; PAYMENT. To the extent then exercisable, the
Option may be exercised by written notice to the Company stating the
number of Optioned Shares for which the Option is being exercised and
the intended manner of payment. Payment equal to the aggregate Option
Price of the Optioned Shares for which the Option is being exercised
shall be tendered in full with the notice of exercise to the Company
in cash in the form of currency, certified check or other cash
equivalent acceptable to the Company. At the Company's option, the
Optionee may also tender the Option Price by (a) the actual or
constructive transfer to the Company of nonforfeitable, nonrestricted
Common Shares that have been owned by the Optionee for (i) more than
one year prior to the date of exercise and for more than two years
from the date on which the option was granted, if they were originally
acquired by the Optionee pursuant to the exercise of an incentive
stock option, within the meaning of Section 422 of the Code or (ii)
more than six months prior to the date of exercise, if they were
originally acquired by the Optionee other than pursuant to the
exercise of an incentive stock option, or (b) by any combination of
the foregoing methods of payment, including a partial tender in cash
and a partial tender in nonforfeitable, nonrestricted Common Shares.
Within ten days thereafter, the Company shall direct the due issuance
of the Optioned Shares so purchased. Nonforfeitable, nonrestricted
Common Shares that are transferred by the Optionee in payment of all
or any part of the Option Price shall be valued on the basis of their
fair market value per Common Share (as determined in good faith by the
Board). The requirement of payment in cash shall be deemed satisfied
if the Optionee makes arrangements that are satisfactory to the
Company with a bank or broker that is a member of the National
Association of Securities Dealers, Inc. to sell on the exercise date a
sufficient number of Optioned Shares that are being purchased pursuant
to the exercise, so that the net proceeds of the sale transaction will
at least equal the amount of the aggregate Option Price plus payment
of any applicable withholding taxes, and pursuant to which the bank or
broker undertakes to deliver to the Company the amount of the
aggregate Option Price plus payment of any applicable withholding
taxes, on a date satisfactory to the Company, but not later than the
date on which the sale transaction will settle in the ordinary course
of business. As a further condition precedent to the exercise of this
Option, the Optionee shall comply with all regulations and
requirements of any regulatory authority having control of, or
supervision over, the issuance of Common Shares and in connection
therewith shall execute any documents that the Board shall in its sole
discretion deem necessary or advisable. The date of such notice shall
be the exercise date.
7. TERMINATION OF AGREEMENT. This Agreement and the Option granted hereby
shall terminate automatically and without further notice on the
earliest of the following dates:
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<PAGE> 4
(a) One year after the Optionee's death or permanent and total
disability, if the Optionee dies or becomes permanently and
totally disabled while in the employ of the Company or during
the ninety (90) day period specified in Section 7(c) hereof;
(b) One year after the Optionee's retirement under a retirement
plan of the Company or one of its Subsidiaries at or after
the earliest voluntary retirement age provided for in such
retirement plan or retirement at any earlier age with the
consent of the Board;
(c) Except as provided on a case-by-case basis, ninety (90)
calendar days after the Optionee ceases to be an employee of
the Company and its Subsidiaries for any reason other than as
described in Section 7(a) or 7(b) hereof; or
(d) Ten (10) years from the Date of Grant.
In the event that the Optionee's employment is terminated for Cause, the
Agreement shall terminate at the time of such termination notwithstanding any
other provision of this Agreement. This Agreement shall not be exercisable for
any number of Optioned Shares in excess of the number of Optioned Shares for
which this Agreement is then exercisable, pursuant to Sections 4 and 8 hereof,
on the date of termination of employment. For the purposes of this Agreement,
the continuous employment of the Optionee with the Company shall not be deemed
to have been interrupted, and the Optionee shall not be deemed to have ceased
to be an employee of the Company, by reason of the transfer of his employment
among the Company and its Subsidiaries or a leave of absence of not more than
ninety (90) days approved by the Board. For the purposes of this Agreement,
"permanent and total disability" shall be defined by Section 22(e)(3) of the
Code.
8. ACCELERATION OF OPTION. The Option granted hereby shall become
immediately exercisable in full in the event of (i) a Change of
Control, (ii) the Optionee's permanent and total disability if the
Optionee becomes permanently and totally disabled while an employee of
the Company or one of its Subsidiaries, or (iii) the death of the
Optionee if such death occurs while the Optionee is employed by the
Company or one of its Subsidiaries.
9. NO EMPLOYMENT CONTRACT. Nothing contained in this Agreement shall
confer upon the Optionee any right with respect to continuance of
employment by the Company, nor limit or affect in any manner the right
of the Company to terminate the employment or adjust the compensation
of the Optionee.
10. TAXES AND WITHHOLDING. To the extent that the Company shall be
required to withhold any federal, state, local or foreign taxes in
connection with the exercise of the Option, and the amounts available
to the Company for such withholdings are insufficient, it shall be a
condition to the exercise of the Option that the Optionee shall pay
such taxes or make provisions that are satisfactory to the Company for
the payment thereof. The Optionee may elect to satisfy all or any part
of any such withholding obligation by (a) surrendering to the Company
a portion of the Optioned Shares that are issued or transferred to the
Optionee upon the exercise of the Option, and the Optioned Shares so
surrendered by the
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<PAGE> 5
Optionee shall be credited against any such withholding obligation at
the Fair Market Value per Common Share of such shares on the date of
such surrender or (b) utilizing the bank or broker assistance
arrangement provided in Section 6. The Company will pay any and all
issue and other taxes in the nature thereof which may be payable by
the Company in respect of any issue or delivery upon a purchase
pursuant to this Option.
11. FRACTIONAL SHARES. The Company shall not be required to issue any
fractional Common Shares pursuant to this Agreement. The Board may
provide for the elimination of fractions or for the settlement of
fractions in cash.
12. CHANGE IN CONTROL. For purposes of this Agreement, a "Change in
Control" shall mean if at any time any of the following events shall
have occurred:
(a) The Company is merged or consolidated or reorganized into or
with another corporation or other legal person, and as a
result of such merger, consolidation or reorganization less
than a majority of the combined voting power of the
then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate
by the holders of securities entitled to vote generally in
the election of Directors immediately prior to such
transaction;
(b) The Company sells or otherwise transfers all or substantially
all of its assets to any other corporation or other legal
person, and less than a majority of the combined voting power
of the then-outstanding securities of such corporation or
person immediately after such sale or transfer is held in the
aggregate by the holders of Common Shares immediately prior
to such sale or transfer;
(c) There is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated
pursuant to the Exchange Act, disclosing that any person (as
the term "person" is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) has become the beneficial owner
(as the term "beneficial owner" is defined under Rule 13d-3
or any successor rule or regulation promulgated under the
Exchange Act) of securities representing 20% or more of the
Voting Power;
(d) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange
Act disclosing in response to Form 8-K or Section 14A (or any
successor schedule, form or report or item therein) that a
change in control of the Company has or may have occurred or
will or may occur in the future pursuant to any then-existing
contract or transaction; or
(e) If during any period of two consecutive years, individuals
who at the beginning of any such period constitute the
Directors cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for
election by the Company's stockholders, of each Director
first elected during such period was approved by a vote of at
least two-thirds of the Directors then still in office who
were Directors at the beginning of any such period.
5
<PAGE> 6
Notwithstanding the foregoing provisions of Sections 11(c) and (d)
above, a "Change in Control" shall not be deemed to have occurred for
purposes of this Agreement (i) solely because (A) the Company; (B) a
Subsidiary; or (C) any Company-sponsored employee stock ownership plan
or other employee benefit plan of the Company either files or becomes
obligated to file a report or proxy statement under or in response to
Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) under the Exchange
Act, disclosing beneficial ownership by it of shares, whether in
excess of 20% of the Voting Power or otherwise, or because the Company
reports that a change of control of the Company has or may have
occurred or will or may occur in the future by reason of such
beneficial ownership or (ii) solely because of a change in control of
any Subsidiary.
13. COMPLIANCE WITH LAW. The Company will file a registration statement on
Form S-8 with the Securities and Exchange Commission in order to
register the Common Shares issuable upon exercise of the Option and
shall use reasonable efforts to cause such registration statement to
be declared effective and to remain effective during any period in
which the Option is exercisable. The Company shall make reasonable
efforts to comply with all applicable federal and state securities
laws; provided, however, notwithstanding any other provision of this
Agreement, the Option shall not be exercisable if the exercise thereof
would result in a violation of any such law.
14. ADJUSTMENTS. The Board may make or provide for such adjustments in the
number of Optioned Shares covered by this Option, in the Option Price
applicable to such Option, and in the kind of shares covered thereby,
as the Board, in its sole discretion, exercised in good faith, may
determine is equitably required to prevent dilution or enlargement of
the Optionee's rights that otherwise would result from (a) any stock
dividend, stock split, combination of shares, recapitalization, or
other change in the capital structure of the Company, (b) any merger,
consolidation, spin-off, split-off, spin-out, split-up,
reorganization, partial or complete liquidation, or other distribution
of assets or issuance of rights or warrants to purchase securities, or
(c) any other corporate transaction or event having an effect similar
to any of the foregoing. In the event of any such transaction or
event, the Board, in its discretion, may provide in substitution for
this Option such alternative consideration as it may determine to be
equitable in the circumstances and may require in connection therewith
the surrender of this Option.
15. AVAILABILITY OF COMMON SHARES. The Company shall at all times until
the expiration of the Option reserve and keep available, either in its
treasury or out of its authorized but unissued Common Shares, the full
number of Optioned Shares deliverable upon the exercise of this
Option.
16. AMENDMENTS. The Board and the Optionee may at any time and from time
to time amend this Agreement in whole or in part; provided, however,
that any amendment which must be approved by the stockholders of the
Company in order to comply with applicable law or the rules of the New
York Stock Exchange or, if the Common Shares are not traded on the New
York Stock Exchange, the principal national securities exchange upon
which the
6
<PAGE> 7
Common Shares are traded or quoted, shall not be effective unless and
until such approval has been obtained.
17. SEVERABILITY. In the event that one or more of the provisions of this
Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be
separable from the other provisions hereof, and the remaining
provisions hereof shall continue to be valid and fully enforceable.
18. INTERPRETATION. The interpretation and construction by the Board of
any provision of this Agreement and any determination by the Board
pursuant to any provision of this Agreement shall be final and
conclusive. No member of the Board shall be liable for any such
determination made in good faith. The Board shall, except as expressly
provided otherwise herein, have the right to determine any questions
which arise in connection with this Option or its exercise. Any
reference herein to a provision of a statute, rule or regulation shall
also include any successor provision thereto.
19. SUCCESSORS AND ASSIGNS. Without limiting Section 5 hereof, the
provisions of this Agreement shall inure to the benefit of, and be
binding upon, the successors, administrators, heirs, legal
representatives and assigns of the Optionee, and the successors and
assigns of the Company.
20. GOVERNING LAW. The interpretation, performance, and enforcement of
this Agreement shall be governed by the laws of the State of Texas,
without giving effect to the principles of conflict of laws thereof.
21. NOTICES. Any notice to the Company provided for herein shall be in
writing to the Company, marked Attention: General Counsel, and any
notice to the Optionee shall be addressed to the Optionee at his
address on file with the Company. Except as otherwise provided herein,
any written notice shall be deemed to be duly given if and when
delivered personally or deposited in the United States mail, first
class certified or registered mail, postage and fees prepaid, return
receipt requested, and addressed as aforesaid. Any party may change
the address to which notices are to be given hereunder by written
notice to the other party as herein specified (provided that for this
purpose any mailed notice shall be deemed given of the third business
day following deposit of the same in the United States mail.
7
<PAGE> 8
IN WITNESS WHEREOF, The Company has caused this Agreement to be
executed on its behalf by its duly authorized officer and Optionee has also
executed this Agreement in duplicate, as of the day and year first above
written.
ATTEST AVIALL, INC.
/s/ JEFFREY J. MURPHY
- -------------------------- --------------------------------------------
Jeffrey J. Murphy
Senior Vice President and General Counsel
OPTIONEE
/s/ PAUL E. FULCHINO
----------------------------------
Paul E. Fulchino
Social Security Number:
----------
8
<PAGE> 1
EXHIBIT 10.18
EXECUTION COPY
REVOLVING CREDIT
AND
TERM LOAN AGREEMENT
dated as of December 23, 1999
among
AVIALL, INC.
and
THE LENDING INSTITUTIONS LISTED ON SCHEDULE 1 HERETO
and
BANKBOSTON, N.A.,
as Administrative Agent
and
BANK OF AMERICA, N.A.,
as Documentation Agent
-------------------------------------
FLEETBOSTON ROBERTSON STEPHENS INC.,
having acted as Syndication Agent and Co-Lead Arranger
BANC OF AMERICA SECURITIES LLC,
having acted as Co-Lead Arranger
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
1. DEFINITIONS AND RULES OF INTERPRETATION.........................................................1
1.1. Definitions..........................................................................1
1.2. Rules of Interpretation..............................................................23
2. THE REVOLVING CREDIT FACILITY...................................................................24
2.1. Commitment to Lend...................................................................24
2.2. Commitment Fee.......................................................................24
2.3. Reduction of Total Commitment........................................................25
2.4. The Revolving Credit Notes...........................................................25
2.5. Interest on Revolving Credit Loans...................................................25
2.6. Requests for Revolving Credit Loans..................................................26
2.7. Conversion Options...................................................................26
2.7.1. Conversion to Different Type of Revolving Credit Loan.....................26
2.7.2. Continuation of Type of Revolving Credit Loan.............................27
2.7.3. Eurodollar Rate Loans.....................................................27
2.8. Funds for Revolving Credit Loans.....................................................27
2.8.1. Funding Procedures........................................................27
2.8.2. Advances by Agent.........................................................28
2.9. Change in Borrowing Base.............................................................28
3. REPAYMENT OF THE REVOLVING CREDIT LOANS.........................................................29
3.1. Maturity.............................................................................29
3.2. Mandatory Repayments of Revolving Credit Loans.......................................29
3.3. Optional Prepayments of Revolving Credit Loans.......................................29
4. THE TERM LOAN...................................................................................30
4.1. Commitment to Lend...................................................................30
4.2. The Term Notes.......................................................................30
4.3. Mandatory Payments of Principal of Term Loan.........................................30
4.4. Optional Prepayment of Term Loan.....................................................31
4.5. Interest on Term Loan................................................................31
4.5.1. Interest Rates............................................................31
4.5.2. Notification by Borrower..................................................32
4.5.3. Amounts, Etc..............................................................32
5. LETTERS OF CREDIT...............................................................................32
5.1. Letter of Credit Commitments.........................................................32
5.1.1. Commitment to Issue Letters of Credit.....................................32
5.1.2. Letter of Credit Applications.............................................33
5.1.3. Terms of Letters of Credit................................................33
5.1.4. Reimbursement Obligations of Banks........................................33
5.1.5. Participations of Banks...................................................34
5.1.6. Notice of Agent...........................................................34
5.2. Reimbursement Obligation of the Borrower.............................................34
5.3. Letter of Credit Payments............................................................35
</TABLE>
<PAGE> 3
-ii-
<TABLE>
<S> <C> <C> <C>
5.4. Obligations Absolute.................................................................36
5.5. Reliance by Issuer...................................................................36
5.6. Letter of Credit Fee.................................................................37
6. CERTAIN GENERAL PROVISIONS......................................................................37
6.1. Closing Fee; Agent's Fee.............................................................37
6.2. Certain Mandatory Prepayments........................................................37
6.3. Funds for Payments...................................................................38
6.3.1. Payments to Agent.........................................................38
6.3.2. No Offset, Etc............................................................38
6.3.3. Certification by Non-U.S. Banks...........................................38
6.4. Computations.........................................................................39
6.5. Inability to Determine Eurodollar Rate...............................................40
6.6. Illegality...........................................................................40
6.7. Additional Costs, Etc................................................................41
6.8. Capital Adequacy.....................................................................42
6.9. Certificate..........................................................................43
6.10. Indemnity...........................................................................43
6.11. Interest After Default..............................................................43
6.12. Bank's Obligation to Mitigate.......................................................43
6.13. Replacement of Banks................................................................44
6.14. Interest Limitation.................................................................44
7. COLLATERAL SECURITY AND GUARANTIES..............................................................45
7.1. Security of Borrower.................................................................45
7.2. Guaranties and Security of Domestic Subsidiaries.....................................46
8. REPRESENTATIONS AND WARRANTIES..................................................................46
8.1. Corporate Authority..................................................................46
8.1.1. Incorporation; Good Standing..............................................46
8.1.2. Authorization.............................................................47
8.1.3. Enforceability............................................................47
8.2. Governmental Approvals...............................................................47
8.3. Title to Properties; Leases..........................................................47
8.4. Financial Statements and Projections.................................................48
8.4.1. Fiscal Year...............................................................48
8.4.2. Pro Forma Financial Statements............................................48
8.4.3. Audited Financial Statements..............................................48
8.4.4. Interim Financial Statements..............................................48
8.4.5. Projections...............................................................48
8.5. No Material Changes, Solvency, Etc...................................................49
8.6. Franchises, Patents, Copyrights, Etc.................................................49
8.7. Litigation...........................................................................49
8.8. No Materially Adverse Contracts, Etc.................................................50
8.9. Compliance with Other Instruments, Laws, Etc.........................................50
8.10. Tax Status..........................................................................50
8.11. No Event of Default.................................................................51
</TABLE>
<PAGE> 4
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<TABLE>
<S> <C> <C> <C>
8.12. Holding Company and Investment Company Acts.........................................51
8.13. Absence of Financing Statements, Etc................................................51
8.14. Perfection of Security Interests....................................................51
8.15. Certain Transactions................................................................51
8.16. Employee Benefit Plans..............................................................52
8.16.1. In General...............................................................52
8.16.2. Terminability of Welfare Plans...........................................52
8.16.3. Guaranteed Pension Plans.................................................52
8.16.4. Multiemployer Plans......................................................53
8.17. Use of Proceeds; Regulations U and X, etc...........................................53
8.18. Environmental Compliance............................................................53
8.19. Subsidiaries, etc...................................................................55
8.20. Chief Executive Offices.............................................................55
8.21. No Amendments to Certain Documents..................................................55
8.22. Disclosure..........................................................................55
8.23. Representations Under the Distribution Agreement....................................56
8.24. Insurance...........................................................................56
8.25. Year 2000 Problem...................................................................56
9. AFFIRMATIVE COVENANTS...........................................................................56
9.1. Punctual Payment.....................................................................56
9.2. Maintenance of Office................................................................57
9.3. Records and Accounts.................................................................57
9.4. Financial Statements, Certificates and Information...................................57
9.5. Notices..............................................................................59
9.5.1. Defaults..................................................................59
9.5.2. Environmental Events......................................................59
9.5.3. Notification of Claim against Collateral..................................59
9.5.4. Notice of Litigation and Judgments........................................60
9.5.5. New Leases................................................................60
9.6. Corporate Existence; Maintenance of Properties.......................................60
9.7. Insurance............................................................................61
9.8. Taxes................................................................................61
9.9. Inspection of Properties and Books, Etc..............................................62
9.9.1. General...................................................................62
9.9.2. Environmental Assessments.................................................62
9.10. Compliance with Laws, Contracts, Licenses, and Permits..............................63
9.11. Employee Benefit Plans..............................................................63
9.12. Use of Proceeds.....................................................................63
9.13. Fair Labor Standards Act............................................................64
9.14. Additional Mortgaged Property.......................................................64
9.15. Interest Rate Protection............................................................64
9.16. Mortgages...........................................................................64
9.17. Title Insurance.....................................................................64
</TABLE>
<PAGE> 5
-iv-
<TABLE>
<S> <C> <C> <C>
9.18. Landlord Waivers....................................................................65
9.19. Opinions Regarding Foreign Stock Pledges............................................65
9.20. Further Assurances..................................................................65
10. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.....................................................65
10.1. Indebtedness........................................................................65
10.2. Liens...............................................................................68
10.3. Investments.........................................................................70
10.4. Distributions.......................................................................72
10.5. Merger, Consolidation and Disposition of Assets.....................................73
10.5.1. Mergers and Acquisitions.................................................73
10.5.2. Disposition of Assets....................................................74
10.6. Sale and Leaseback..................................................................74
10.7. Compliance with Environmental Laws..................................................74
10.8. Employee Benefit Plans..............................................................75
10.9. Change in Terms of Capital Stock....................................................76
10.10. Fiscal Year........................................................................76
10.11. Modification of Documents..........................................................76
10.12. Negative Pledges...................................................................76
10.13. Transactions with Affiliates.......................................................76
10.14. Upstream Limitations...............................................................76
10.15. Inconsistent Agreements............................................................77
10.16. Capital Expenditures...............................................................77
11. FINANCIAL COVENANTS OF THE BORROWER............................................................77
11.1. Debt Service Coverage Ratio.........................................................77
11.2. Leverage Ratio......................................................................77
11.3. Current Ratio.......................................................................78
11.4. Consolidated Tangible Net Worth.....................................................78
12. CLOSING CONDITIONS.............................................................................78
12.1. Loan Documents Etc..................................................................78
12.1.1. Loan Documents...........................................................78
12.1.2. Acquisition Documents....................................................78
12.2. Certified Copies of Charter Documents...............................................78
12.3. Corporate Action....................................................................78
12.4. Incumbency Certificate..............................................................79
12.5. Validity of Liens...................................................................79
12.6. Perfection Certificates and UCC Search Results......................................79
12.7. Certificates of Insurance...........................................................79
12.8. Solvency Certificate................................................................79
12.9. Opinion of Counsel..................................................................79
12.10. Payment of Fees and other Arrangements.............................................80
12.11. Disbursement Instructions..........................................................80
12.12. Payoff Letters.....................................................................80
12.13. Completion of Acquisition, Etc.....................................................80
12.14. Borrowing Base Report..............................................................80
</TABLE>
<PAGE> 6
-v-
<TABLE>
<S> <C> <C> <C>
12.15. Consents and Approvals..............................................................80
12.16. Closing Date Leverage Ratio.........................................................80
13. CONDITIONS TO ALL BORROWINGS...................................................................80
13.1. Representations True; No Event of Default...........................................80
13.2. No Legal Impediment.................................................................81
13.3. Governmental Regulation.............................................................81
13.4. Proceedings and Documents...........................................................81
13.5. Borrowing Base Report...............................................................81
14. EVENTS OF DEFAULT; ACCELERATION; ETC...........................................................81
14.1. Events of Default and Acceleration..................................................81
14.2. Termination of Commitments..........................................................85
14.3. Remedies............................................................................85
14.4. Distribution of Collateral Proceeds.................................................85
15. SETOFF.........................................................................................86
16. THE AGENT......................................................................................87
16.1. Authorization.......................................................................87
16.2. Employees and Agents................................................................87
16.3. No Liability........................................................................88
16.4. No Representations..................................................................88
16.4.1. General..................................................................88
16.4.2. Closing Documentation, Etc...............................................88
16.5. Payments............................................................................89
16.5.1. Payments to Agent........................................................89
16.5.2. Distribution by Agent....................................................89
16.5.3. Delinquent Banks.........................................................89
16.6. Holders of Notes....................................................................90
16.7. Indemnity...........................................................................90
16.8. Agent as Bank.......................................................................90
16.9. Resignation.........................................................................90
16.10. Notification of Defaults and Events of Default.....................................91
16.11. Duties in the Case of Enforcement..................................................91
17. EXPENSES.......................................................................................91
18. INDEMNIFICATION................................................................................92
19. SURVIVAL OF COVENANTS, ETC.....................................................................93
20. ASSIGNMENT AND PARTICIPATION...................................................................93
20.1. Conditions to Assignment by Banks...................................................93
20.2. Certain Representations and Warranties; Limitations; Covenants......................94
20.3. Register............................................................................95
20.4. New Notes...........................................................................95
20.5. Participations......................................................................96
20.6. Disclosure..........................................................................96
20.7. Assignee or Participant Affiliated with the Borrower................................96
20.8. Miscellaneous Assignment Provisions.................................................97
</TABLE>
<PAGE> 7
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<TABLE>
<S> <C> <C> <C>
20.9. Assignment by Borrower...............................................................98
21. NOTICES, ETC....................................................................................98
22. GOVERNING LAW...................................................................................98
23. HEADINGS........................................................................................99
24. COUNTERPARTS....................................................................................99
25. ENTIRE AGREEMENT, ETC...........................................................................99
26. WAIVER OF JURY TRIAL............................................................................99
27. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION..................................................100
27.1. Sharing of Information with Section 20 Subsidiary...................................100
27.2. Confidentiality.....................................................................100
27.3. Prior Notification..................................................................101
27.4. Other...............................................................................101
28. CONSENTS, AMENDMENTS, WAIVERS, ETC.............................................................101
29. SEVERABILITY...................................................................................102
</TABLE>
<PAGE> 8
Exhibits
Exhibit A Form of Borrowing Base Report
Exhibit B [Intentionally Omitted]
Exhibit C Form of Guaranty
Exhibit D Form of Security Agreement
Exhibit E Form of Stock Pledge Agreement
Exhibit F Form of Revolving Credit Note
Exhibit G Form of Loan Request
Exhibit H Form of Term Loan Note
Exhibit I Form of Compliance Certificate
Exhibit J Form of Assignment and Acceptance
Schedules
Schedule 1 Banks; Commitments; Commitment
Percentages' Term Loan Percentages;
Lending Offices
Schedule 2 Existing Letters of Credit
Schedule 3 Landlord Lien Reserves
Schedule 8.1 Exceptions to Good Standing
Schedule 8.3 Title to Property
Schedule 8.7 Litigation
Schedule 8.15 Certain Transactions
Schedule 8.16 ERISA Matters
Schedule 8.18 Environmental Disclosure
Schedule 8.19 Subsidiaries
Schedule 8.20 Chief Executive Offices
Schedule 8.24 Insurance
Schedule 10.1 Permitted Indebtedness
Schedule 10.2 Permitted Liens
Schedule 10.3 Permitted Investments
<PAGE> 9
REVOLVING CREDIT
AND
TERM LOAN AGREEMENT
This REVOLVING CREDIT AND TERM LOAN AGREEMENT is made as of December
23, 1999, by and among (a) AVIALL, INC., a Delaware corporation (the
"Borrower"), (b) the Banks (as hereinafter defined), (c) BANKBOSTON, NA., as
administrative agent for itself and the other Banks and as an Issuing Bank and
(d) BANK OF AMERICA, N.A., as documentation agent and as an Issuing Bank.
WHEREAS, the Borrower has requested that the Banks make loans and
otherwise extend credit to the Borrower to finance the Acquisition (as defined
below), to pay associated transaction fees and expenses, to refinance existing
indebtedness, to finance capital expenditures and for working capital and
general corporate purposes; and
WHEREAS, the Banks are willing to make such loans and extend such
credit on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. DEFINITIONS. The following terms shall have the meanings set forth
in this Section 1 or elsewhere in the provisions of this Credit Agreement
referred to below:
ABO. See Section 8.16.3.
Accounts Receivable. All rights of the Borrower or any of its
Subsidiaries to payment for goods sold, leased or otherwise marketed in the
ordinary course of business and all rights of the Borrower or any of its
Subsidiaries to payment for services rendered in the ordinary course of business
and all sums of money or other proceeds due thereon pursuant to transactions
with account debtors, except for that portion of the sum of money or other
proceeds due thereon that relate to sales, use or property taxes in conjunction
with such transactions, recorded on books of account of the Borrower and its
Subsidiaries in accordance with generally accepted accounting principles.
Acquisition. The acquisition by Services from Rolls-Royce of (a)
exclusive aftermarket distribution rights to Rolls-Royce Allison Model 250
turboshaft and turboprop engine parts for a ten year period, and (b) certain
related inventory, all pursuant to the terms of the Acquisition Documents.
<PAGE> 10
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Acquisition Documents. The Distribution Agreement and all agreements
and documents required to be entered into or delivered pursuant thereto, each in
the form delivered to the Banks and the Agent on or before the Closing Date.
Adjustment Date. The first day of the month immediately following the
month in which a Compliance Certificate is to be delivered by the Borrower
pursuant to Section 9.4(c).
Affiliate. Any Person that would be considered to be an affiliate of
the Borrower under Rule 144(a) of the Rules and Regulations of the Securities
and Exchange Commission, as in effect on the date hereof, if the Borrower were
issuing securities.
Agent. BankBoston, N.A. acting as administrative agent for the Banks.
Agent's Fee. See Section 6.1(b).
Agent's Head Office. The Agent's head office located at 100 Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent may
designate from time to time.
Agent's Special Counsel. Bingham Dana LLP or such other counsel as may
be approved by the Agent.
Applicable Margin. For each period commencing on an Adjustment Date
through the date immediately preceding the next Adjustment Date (each a "Rate
Adjustment Period"), the Applicable Margin shall be the applicable margin set
forth below with respect to the Borrower's Leverage Ratio, as determined for the
Reference Period ending immediately prior to the applicable Rate Adjustment
Period.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
Base Rate Eurodollar Rate Commitment
Level Leverage Ratio Loans Loans Fees
------------ ------------------------------ ------------------ ------------------- ---------------------
<S> <C> <C> <C> <C>
Greater than or equal to
I 3.00:1.00 1.25% 2.25% 0.50%
------------ ------------------------------ ------------------ ------------------- ---------------------
Less than 3.00:1.00 but
II greater than or equal to 1.00% 2.00% 0.45%
2.50:1.00
------------ ------------------------------ ------------------ ------------------- ---------------------
Less than 2.50:1.00 but
III greater than or equal to 0.75% 1.75% 0.35%
2.00:1.00
------------ ------------------------------ ------------------ ------------------- ---------------------
IV Less than 2.00:1.00 but 0.50% 1.50% 0.30%
greater than or equal to
1.50:1.00
------------ ------------------------------ ------------------ ------------------- ---------------------
IV Less than 1.50:1.00 0.25% 1.25% 0.250%
--------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 11
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Notwithstanding the foregoing, (a) until the delivery by the Borrower
to the Agent of the Compliance Certificate pursuant to Section 9.4(c) for the
Reference Period ending June 30, 2000, the Applicable Margin shall be the
Applicable Margin set forth above in Level I, and (b) if the Borrower fails to
deliver any Compliance Certificate when required by Section 9.4(c) hereof then,
for the period commencing on the next Adjustment Date to occur subsequent to
such failure through the date immediately following the date on which such
Compliance Certificate is delivered, the Applicable Margin shall be the
Applicable Margin set forth above in Level I.
Assignment and Acceptance. See Section 20.1.
Balance Sheet Date. December 31, 1998.
Banks. The lending institutions listed on Schedule 1 hereto and any
other Person who becomes an assignee of any rights and obligations of a Bank
pursuant to Section 20.
BAS. Banc of America Securities LLC.
Base Rate. The higher of (i) the annual rate of interest announced from
time to time by BKB at its head office in Boston, Massachusetts, as its "base
rate" and (ii) one-half of one percent (1/2%) above the Federal Funds Effective
Rate. For the purposes of this definition, "Federal Funds Effective Rate" shall
mean for any day, the rate per annum equal to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York and reported in The Wall Street Journal or any other
publication of national circulation selected by the Agent, or, if such rate is
not so published and reported for any day that is a Business Day, the average of
the quotations for such day on such transactions received by the Agent from
three funds brokers of recognized standing selected by the Agent.
Base Rate Loans. Revolving Credit Loans and all or any portion of the
Term Loan bearing interest calculated by reference to the Base Rate.
BKB. BankBoston, N.A., a national banking association, in its capacity
as a Bank.
Borrower. See the preamble hereto.
Borrowing Base. At the relevant time of reference thereto, an amount
determined by the Agent by reference to the most recent Borrowing Base Report,
which is equal to:
<PAGE> 12
-4-
(a) 80.00% of the Dollar Equivalent of Eligible Accounts
Receivable; plus
(b) 50.00% of the Dollar Equivalent of the book value
(determined on an average cost basis at lower of cost or market) of
Eligible Inventory; minus
(c) the aggregate amount of any Landlord Lien Reserves with
respect to all Specified Leases at such time,
provided, however, the Agent reserves its right to decrease the advance rates
set forth herein if, in the Agent's reasonable discretion, the results of any
commercial finance examination indicates a material deterioration in the
Borrower's or the Guarantors' Eligible Accounts Receivable or Eligible
Inventory, such that a lower advance rate for Eligible Accounts Receivable
and/or Eligible Inventory is warranted.
Borrowing Base Report. A Borrowing Base Report signed by the chief
financial officer, treasurer or controller of the Borrower and in substantially
the form of Exhibit A hereto.
Business Day. Any day on which banking institutions in Boston,
Massachusetts or Dallas, Texas are open for the transaction of banking business
and, in the case of Eurodollar Rate Loans, also a day which is a Eurodollar
Business Day.
Capital Assets. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); provided that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.
Capital Expenditures. Amounts paid or indebtedness incurred by any
Person in connection with (i) the purchase or lease by such Person of Capital
Assets that would be required to be capitalized and shown on the balance sheet
of such Person in accordance with generally accepted accounting principles,
other than amounts paid in connection with the purchase or lease of Capital
Assets with insurance or condemnation proceeds or (ii) the lease of any assets
by the Borrower or any of its Subsidiaries as lessee under any synthetic lease
referred to in clause (vi) of the definition of the term "Indebtedness" to the
extent that such assets would have been Capital Assets had the synthetic lease
been treated for accounting purposes as a Capitalized Lease.
Capitalized Leases. Leases under which the Borrower or any of its
Subsidiaries is the lessee or obligor, the obligations under which are required
to be capitalized on the balance sheet of the lessee or obligor in accordance
with generally accepted accounting principles.
<PAGE> 13
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Cash Equivalents. Investments owned by the Borrower or its Subsidiaries
of the types described in clauses (a) through (f) of Section 10.3.
CERCLA. See Section 8.18.
Closing Date. The first date on which the conditions set forth in
Section 12 have been satisfied and any Revolving Credit Loans may be advanced,
the Term Loan is advanced or any Letter of Credit may be issued hereunder.
Code. The Internal Revenue Code of 1986.
Collateral. All of the property, rights and interests of the Borrower
and its Subsidiaries that are or are intended to be subject to the security
interests and mortgages created by the Security Documents.
Commitment. With respect to each Bank, the amount set forth on Schedule
1 hereto (as such schedule may be replaced by a revised Schedule 1 pursuant to
an assignment in accordance with Section 20) as the amount of such Bank's
commitment to make Revolving Credit Loans to, and to participate in the
issuance, extension and renewal of Letters of Credit for the account of, the
Borrower, as the same may be reduced from time to time; or if such commitment is
terminated pursuant to the provisions hereof, zero.
Commitment Percentage. With respect to each Bank, the percentage set
forth on Schedule 1 hereto (as such schedule may be replaced by a revised
Schedule 1 pursuant to an assignment in accordance with Section 20) as such
Bank's percentage of the aggregate Commitments of all of the Banks.
Compliance Certificate. See Section 9.4(c).
Consolidated or consolidated. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
Consolidated Current Assets. All assets of the Borrower and its
Subsidiaries on a consolidated basis consisting of (i) cash, (ii) Cash
Equivalents, (iii) Accounts Receivable and (iv) component parts and finished
goods inventory ready and available for shipment to purchasers thereof; provided
that Accounts Receivable shall be valued at face value less reserves determined
to be sufficient in accordance with generally accepted accounting principles.
<PAGE> 14
-6-
Consolidated Current Liabilities. The aggregate amount of all
liabilities of the Borrower and its Subsidiaries on a consolidated basis
consisting of (a) accounts payable of such Person and its Subsidiaries, (b)
accrued and unpaid expenses, taxes and other proper charges and (c) the current
portion of long-term Indebtedness of such Person and its Subsidiaries, in each
case determined in accordance with generally accepted accounting principles.
Consolidated Net Income. With respect to the Borrower and its
Subsidiaries for any period, the consolidated net income (or deficit) of the
Borrower and its Subsidiaries, after (a) deduction of all expenses, taxes, other
proper charges and all extraordinary nonrecurring items of income, and (b)
addition of all extraordinary nonrecurring items of expense to the extent
deducted in the calculation of consolidated net income (or deficit), all
determined in accordance with generally accepted accounting principles.
Consolidated Operating Cash Flow. With respect to the Borrower and its
Subsidiaries for any period, an amount equal to EBITDA for such period, minus
Capital Expenditures made by the Borrower and its Subsidiaries during such
period, minus cash income taxes paid by the Borrower and its Subsidiaries during
such period.
Consolidated Tangible Net Worth. The excess of Consolidated Total
Assets over Consolidated Total Liabilities, and less the sum of:
(a) the total book value of all assets of the Borrower and its
Subsidiaries properly classified as intangible assets under generally
accepted accounting principles, including such items as goodwill, the
purchase price of acquired assets in excess of the fair market value
thereof, trademarks, trade names, service marks, brand names,
copyrights, patents and licenses, and rights with respect to the
foregoing; plus
(b) all amounts representing any write-up in the book value of
any assets of the Borrower or its Subsidiaries resulting from a
revaluation thereof subsequent to the Balance Sheet Date; plus
(c) to the extent otherwise includable in the computation of
Consolidated Tangible Net Worth, any subscriptions receivable.
Consolidated Total Assets. All assets of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles.
Consolidated Total Interest Expense. For any period, the aggregate
amount of interest required to be paid or accrued by the Borrower and its
Subsidiaries during such period on all Indebtedness of the Borrower and its
Subsidiaries outstanding during all or any part of such period, determined on a
consolidated basis in accordance with generally accepted accounting principles
(including all non-cash interest expense, the interest portion of any deferred
payment obligation and the interest component of Capitalized Lease obligations
or any synthetic lease referred to in clause (vi) of the definition of the term
"Indebtedness", but excluding amortization of debt issuance costs).
Consolidated Total Liabilities. All liabilities of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles.
<PAGE> 15
-7-
Conversion Request. A notice given by the Borrower to the Agent of the
Borrower's election to convert or continue a Loan in accordance with Section 2.7
or Section 4.5.2.
Credit Agreement. This Revolving Credit and Term Loan Agreement,
including the Schedules and Exhibits hereto.
Debt Service Coverage Ratio. As at the date of determination, the ratio
of (a) the Consolidated Operating Cash Flow for the Reference Period ending on
such date to (b) the Total Debt Service for such Reference Period.
Default. See Section 14.1.
Delinquent Bank. See Section 16.5.3.
Designated Subsidiary. Those Subsidiaries of the Borrower designated as
such on Schedule 8.19, each of which is a Foreign Subsidiary that is either (a)
in the process dissolving or otherwise terminating its existence in accordance
with the laws of the jurisdiction of its incorporation through liquidation or
merger with a Subsidiary that is not a Designated Subsidiary, or (b) conducting
no business activities.
Distribution. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of the Borrower, other than
dividends payable solely in shares of such class of capital stock of the
Borrower; the purchase, redemption, or other retirement of any shares of any
class of capital stock of the Borrower, directly or indirectly through a
Subsidiary of the Borrower or otherwise; the return of capital by the Borrower
to its shareholders as such; or any other distribution on or in respect of any
shares of any class of capital stock of the Borrower.
Distribution Agreement. The Distribution Services Agreement dated as of
November 3, 1999 between Services and Rolls-Royce, in the form delivered to the
Agent on or before the Closing Date.
Documentation Agent. Bank of America, N.A. acting as documentation
agent for the Banks.
Dollar Equivalent. On any date of determination, with respect to an
amount denominated in a currency other than Dollars (the "Second Currency"), the
amount of Dollars which could be purchased by the Agent in accordance with its
usual practice with that amount of such Second Currency at the spot rate of
exchange quoted by the Agent in the London foreign exchange market at or about
11:00 a.m. (London time) on the date of determination for the purchase of
Dollars with such Second Currency.
Dollars or $. Dollars in lawful currency of the United States of
America.
<PAGE> 16
-8-
Domestic Lending Office. Initially, the office of each Bank designated
as such in Schedule 1 hereto; thereafter, such other office of such Bank, if
any, located within the United States that will be making or maintaining Base
Rate Loans as to which written notice has been given by such Bank to the Agent
and the Borrower.
Domestic Subsidiaries. Each Subsidiary (direct or indirect, existing on
the date hereof or acquired or formed hereafter in accordance with the
provisions hereof) of the Borrower which is incorporated under the laws of a
State or other political subdivision of the United States of America.
Drawdown Date. The date on which any Loan is made or is to be made, and
the date on which any Revolving Credit Loan is converted or continued in
accordance with Section 2.7 or all or any portion of any Term Loan is converted
or continued in accordance with Section 4.5.2.
EBITDA. With respect to the Borrower and its Subsidiaries for any
fiscal period, an amount equal to Consolidated Net Income for such period, plus,
to the extent deducted in the calculation of Consolidated Net Income and without
duplication, (a) depreciation and amortization for such period, (b) other
noncash charges for such period, (c) income tax expense for such period, (d)
Consolidated Total Interest Expense paid or accrued during such period, and (e)
all noncash losses for such period (other than extraordinary non-recurring items
of expense), minus, to the extent added in computing Consolidated Net Income and
without duplication, all noncash gains (including income tax benefits) for such
period, all as determined in accordance with generally accepted accounting
principles.
Eligible Accounts Receivable. The aggregate of the unpaid portions of
Accounts Receivable (net of any credits, rebates, offsets, holdbacks or other
adjustments or commissions payable to third parties that are adjustments to such
Accounts Receivable) of the Borrower and the Domestic Subsidiaries, which meet
all of the following requirements:
(a) Not evidenced by negotiable instruments (except a
negotiable instrument in which Agent, for the benefit of Banks, has a
first and prior perfected security interest) or documents;
(b) Legal, valid and binding obligations of the account
debtor;
(c) Payable by account debtors that are not Affiliates of the
Borrower;
(d) Payable on customary terms;
(e) Obligations for products shipped and subject to invoice,
in compliance with all applicable laws;
(f) If arising pursuant to a contract with the United States
government, an Account Receivable in respect of which notice has been
<PAGE> 17
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given pursuant to the Assignment of Claims Act, or, if arising pursuant
to a contract with any other government, an Account Receivable which is
insured by an insurer satisfactory to Agent;
(g) Denominated and payable in Dollars or another freely
convertible currency with conversion rates reported in The Wall Street
Journal (or any other publication of national circulation selected by
the Agent),
(h) If a domestic Account Receivable, an "account" as defined
by the Uniform Commercial Code in the appropriate jurisdiction;
(i) Not more than ninety (90) days past the date payment
thereof is due;
(j) Not modified, extended, or renegotiated in any way not
permitted in the Security Documents and not charged off;
(k) Not owed by an account debtor as to whom more than ten
percent (10%) of its aggregate accounts owing to the Borrower and the
Guarantors are in dispute or subject to any defense, withholding,
offset, or counterclaim, in each case for more than thirty (30) days
past the invoice date;
(l) As to which there exists a first and prior perfected
security interest in favor of Agent for the benefit of Banks to secure
the Obligations and no other security interests except as permitted by
Section 10.2 (other than pursuant to clauses (f), (g) or (j) thereof);
(m) Secured by a prior perfected security interest in the
underlying security, if any;
(n) Not owed by an account debtor that is the subject of a
proceeding under any bankruptcy or insolvency law unless the obligor is
the subject of a proceeding under Chapter 11 of the Bankruptcy Code of
the United States of America and then only to the extent the claim in
respect of such Account Receivable is an administrative expense claim
in such proceeding;
(o) Not owed by an account debtor as to which more than twenty
percent (20%) of its aggregate accounts owed to the Borrower and the
Domestic Subsidiaries would be excluded from Eligible Accounts
Receivable by virtue of clause (i) above, or for whom a material credit
loss has been recognized or reserved against (but without duplication
of amounts which have already been deducted in calculating net accounts
receivable) and not reversed during the previous three years;
(p) Not that portion of an Account Receivable which, when
aggregated with other accounts receivable owing by the same account
<PAGE> 18
-10-
debtor, is in excess of 5% of aggregate Accounts Receivable of the
Borrower and the Domestic Subsidiaries, unless approved by the Majority
Banks; and
(q) Not that portion of amounts owed by account debtors whose
residence or principal place of business, as the case may be, is
located outside the United States of America, the United Kingdom or
Canada, in excess of 25% of the aggregate amount of all Accounts
Receivable of the Borrower and the Domestic Subsidiaries, unless the
entire amount of such Account Receivable is insured by an insurer
satisfactory to the Agent or unless otherwise approved by the Majority
Banks.
Eligible Assignee. Any of (a) (i) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000; (ii)
a savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $100,000,000, calculated in accordance with generally
accepted accounting principles; (iii) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having total assets in excess of $1,000,000,000, provided that such
bank is acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (iv) the
central bank of any country which is a member of the OECD; (v) any investment
company, investment fund, financial institution or other institutional lender
(other than any financial institution which but for the amount of its total
assets would have been an Eligible Assignee under clauses (i) through (iv)
above) having total assets in excess of $100,000,000; and (vi) if, but only if,
any Event of Default has occurred and is continuing, any other bank, insurance
company, commercial finance company or other financial institution or other
Person approved by the Agent, such approval not to be unreasonably withheld; and
(b) any Bank and any Affiliate of any Bank and, with respect to any Bank that is
a fund that invests in loans, any other fund that invests in loans and is
managed by the same investment adviser as such Bank or by an Affiliate of such
investment adviser (and treating all such funds so managed as a single Eligible
Assignee); provided that no Affiliate of the Borrower shall be an Eligible
Assignee.
Eligible Inventory. With respect to the Borrower or any of the Domestic
Subsidiaries, finished goods and component parts inventory owned by the Borrower
or such Domestic Subsidiaries; provided that Eligible Inventory shall not
include any inventory (a) held on consignment, or not otherwise owned by the
Borrower or such Domestic Subsidiary, or of a type no longer sold by the
Borrower or such Domestic Subsidiary including without limitation any that has
not been sold within two years of purchase, (b) which is damaged or subject to
any legal encumbrance except as permitted by Section 10.2 (other than pursuant
to clauses (f), (g) or (j) thereof), (c) which is not in the possession of the
Borrower or such Domestic Subsidiary unless the Agent has received a waiver of
any
<PAGE> 19
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possessory or other liens (other landlord's liens) from the party in possession
of such inventory in form and substance satisfactory to the Agent, (d) in which
the Agent does not have a valid and perfected first priority security interest
(subject only to landlords' liens, if any, to the extent such liens may be
entitled to priority by the operation of law), (e) which is held by the Borrower
or such Domestic Subsidiary on leased property as to which more than twelve
months' rent is overdue, (f) which has been shipped to a customer of the
Borrower or such Domestic Subsidiary regardless of whether such shipment is on a
consignment basis, or (g) which is not located within the United States.
Employee Benefit Plan. Any employee benefit plan within the meaning of
Section 3(3) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan.
Environmental Budget. A budget prepared by the Borrower and its
Subsidiaries on a consolidated basis reflecting (a) the Borrower's good faith
estimate (including a statement as to the basis or rationale for the estimate)
of the amount and nature of any probable environmental liabilities, losses,
fines, costs and expenses known to the Borrower or any of its Subsidiaries that
are reasonably anticipated to result in expenditures by the Borrower or any of
its Subsidiaries in the applicable fiscal year or those that may result in
future expenditures by the Borrower or any of its Subsidiaries upon the
occurrence of any contingency, and (b) the amount of any reserves or other
provisions for loss if such liabilities, losses, fines, costs or expenses result
in actual expenditures by the Borrower or any of its Subsidiaries.
Environmental Laws. See Section 8.18(a).
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA Affiliate. Any Person which is treated as a single employer with
the Borrower under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of Section 4043 of ERISA and the regulations
promulgated thereunder.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar
Rate Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or
<PAGE> 20
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such other Eurodollar interbank market as may be selected by the Agent in its
sole discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other office of such
Bank, if any, that shall be making or maintaining Eurodollar Rate Loans as to
which written notice has been given by such Bank to the Agent and the Borrower.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar
Rate Loan, the rate of interest equal to (a) the rate per annum (rounded upwards
to the nearest 1/100 of one percent) at which the Reference Bank's Eurodollar
Lending Office is offered Dollar deposits two Eurodollar Business Days prior to
the beginning of such Interest Period in the Eurodollar interbank market where
the eurodollar and foreign currency and exchange operations of such Eurodollar
Lending Office are customarily conducted, for delivery on the first day of such
Interest Period for the number of days comprised therein and in an amount
comparable to the amount of the Eurodollar Rate Loan of the Reference Bank to
which such Interest Period applies, divided by (b) a number equal to 1.00 minus
the Eurocurrency Reserve Rate, if applicable.
Eurodollar Rate Loans. Revolving Credit Loans and all or any portion of
Term Loan bearing interest calculated by reference to the Eurodollar Rate.
Existing Letters of Credit. The letters of credit described on Schedule
2.
Event of Default. See Section 14.1.
FBRS. FleetBoston Robertson Stephens Inc.
Fee Letter. The fee letter dated November 23, 1999 among the Borrower,
FBRS and the Agent.
Foreign Subsidiaries. Each Subsidiary (direct or indirect, existing on
the date hereof or acquired or formed hereafter in accordance with the
provisions hereof) of the Borrower which is incorporated under the laws of a
jurisdiction other than a State or other political subdivision of the United
States of America.
generally accepted accounting principles. (a) When used in Section 11,
whether directly or indirectly through reference to a capitalized term used
therein, means (i) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and
(ii) to the extent consistent with such principles, the accounting practice of
the Borrower reflected in its financial statements for the period ended on the
Balance Sheet Date, and (b) when used in general, other than as provided above,
means principles that are (i) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, as in
effect from time to time, and (ii) consistently applied with past financial
statements of the Borrower adopting the same principles, provided that in each
case referred to in this
<PAGE> 21
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definition of "generally accepted accounting principles" a certified public
accountant would, insofar as the use of such accounting principles is pertinent,
be in a position to deliver an unqualified opinion (other than a qualification
regarding changes in generally accepted accounting principles) as to financial
statements in which such principles have been properly applied.
Granting Bank. See Section 20.8(b).
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower or
any ERISA Affiliate the benefits of which are guaranteed on termination in full
or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Guarantors. The Domestic Subsidiaries party to the Guaranty and any
other Domestic Subsidiary guarantying the payment and performance of the
Obligations to the Banks and the Agent pursuant to a guaranty substantially in
the form of Exhibit C attached hereto.
Guaranty. The Guaranty, dated or to be dated on or prior to the Closing
Date, made by each Domestic Subsidiary of the Borrower in favor of the Banks and
the Agent, pursuant to which each Domestic Subsidiary of the Borrower guaranties
to the Banks and the Agent the payment and performance of the Obligations,
substantially in the form of Exhibit C attached hereto, and any other guaranty
in favor of the Banks and the Agent made by any additional Domestic Subsidiary
of the Borrower substantially in the form of Exhibit C attached hereto.
Hazardous Substances. See Section 8.18(b).
Indebtedness. As to any Person and whether recourse is secured by or is
otherwise available against all or only a portion of the assets of such Person
and whether or not contingent, but without duplication:
(i) every obligation of such Person for money borrowed,
(ii) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or
businesses,
(iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person,
(iv) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including securities
repurchase agreements but excluding trade accounts payable or accrued
<PAGE> 22
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liabilities arising in the ordinary course of business which are not
overdue or which are being contested in good faith),
(v) every obligation of such Person under any Capitalized
Lease,
(vi) every obligation of such Person under any lease (a
"synthetic lease") treated as an operating lease under generally
accepted accounting principles and as a loan or financing for U.S.
income tax purposes,
(vii) all sales by such Person of (A) accounts or general
intangibles for money due or to become due, (B) chattel paper,
instruments or documents creating or evidencing a right to payment of
money or (C) other receivables (collectively "receivables"), whether
pursuant to a purchase facility or otherwise, other than in connection
with the disposition of the business operations of such Person relating
thereto or a disposition of defaulted receivables for collection and
not as a financing arrangement, and together with any obligation of
such Person to pay any discount, interest, fees, indemnities,
penalties, recourse, expenses or other amounts in connection therewith,
(viii) every obligation of such Person (an "equity related
purchase obligation") to purchase, redeem, retire or otherwise acquire
for value any shares of capital stock of any class issued by such
Person, any warrants, options or other rights to acquire any such
shares, or any rights measured by the value of such shares, warrants,
options or other rights, other than stock options, warrants or other
rights granted to employees under employee compensation agreements,
(ix) every obligation of such Person under any forward
contract, futures contract, swap, option or other financing agreement
or arrangement (including, without limitation, caps, floors, collars
and similar agreements), the value of which is dependent upon interest
rates, currency exchange rates, commodities or other indices (a
"derivative contract"),
(x) every obligation in respect of Indebtedness of any other
entity (including any partnership in which such Person is a general
partner) to the extent that such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such
entity, except to the extent that the terms of such Indebtedness
provide that such Person is not liable therefor and such terms are
enforceable under applicable law,
(xi) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise
acting as surety for, any obligation of a type described in any of
clauses (i)
<PAGE> 23
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through (x) (the "primary obligation") of another Person (the "primary
obligor"), in any manner, whether directly or indirectly, and
including, without limitation, any obligation of such Person (A) to
purchase or pay (or advance or supply funds for the purchase of) any
security for the payment of such primary obligation, (B) to purchase
property, securities or services for the purpose of assuring the
payment of such primary obligation, or (C) to maintain working capital,
equity capital or other financial statement condition or liquidity of
the primary obligor so as to enable the primary obligor to pay such
primary obligation.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (u) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with generally accepted
accounting principles, (v) any Capitalized Lease shall be the principal
component of the aggregate of the rentals obligation under such Capitalized
Lease payable over the term thereof that is not subject to termination by the
lessee, (w) any sale of receivables shall be the amount of unrecovered capital
or principal investment of the purchaser (other than the Borrower or any of its
wholly-owned Subsidiaries) thereof, excluding amounts representative of yield or
interest earned on such investment, (x) any synthetic lease shall be the
stipulated loss value, termination value or other equivalent amount, (y) any
derivative contract shall be the maximum amount of any termination or loss
payment required to be paid by such Person if such derivative contract were, at
the time of determination, to be terminated by reason of any event of default or
early termination event thereunder, whether or not such event of default or
early termination event has in fact occurred and (z) any equity related purchase
obligation shall be the maximum fixed redemption or purchase price thereof
inclusive of any accrued and unpaid dividends to be comprised in such redemption
or purchase price.
Ineligible Securities. Securities which may not be underwritten or
dealt in by member banks of the Federal Reserve System under Section 16 of the
Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.
Interest Payment Date. (a) As to any Base Rate Loan, the last day of
the calendar quarter with respect to interest accrued during such calendar
quarter, including, without limitation, the calendar quarter which includes the
Drawdown Date thereof and (b) as to any Eurodollar Rate Loan in respect of which
the Interest Period is (i) three (3) months or less, the last day of such
Interest Period and (ii) more than three (3) months, the dates that are three
(3) and (if applicable) six (6) months from the first day of such Interest
Period and, in addition, the last day of such Interest Period.
Interest Period. With respect to each Revolving Credit Loan or all or
any relevant portion of the Term Loan, (a) initially, the period commencing on
the Drawdown Date of such Loan and ending on the last day of one of the periods
set forth below, as selected by the Borrower in a Loan Request (i) for any Base
Rate
<PAGE> 24
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Loan, the last day of the calendar quarter; and (ii) for any Eurodollar Rate
Loan, 1, 2, 3, 6 or 9 months (in each case only if available to all of the
Banks); and (b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Revolving Credit Loan or all or
such portion of the Term Loan and ending on the last day of one of the periods
set forth above, as selected by the Borrower in a Conversion Request; provided
that all of the foregoing provisions relating to Interest Periods are subject to
the following:
(a) if any Interest Period with respect to a Eurodollar Rate
Loan would otherwise end on a day that is not a Eurodollar Business
Day, that Interest Period shall be extended to the next succeeding
Eurodollar Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the immediately preceding Eurodollar
Business Day;
(b) if any Interest Period with respect to a Base Rate Loan
would end on a day that is not a Business Day, that Interest Period
shall end on the next succeeding Business Day;
(c) if the Borrower shall fail to give notice as provided in
Section 2.7, the Borrower shall be deemed to have requested a
conversion of the affected Eurodollar Rate Loan to a Base Rate Loan and
the continuance of all Base Rate Loans as Base Rate Loans on the last
day of the then current Interest Period with respect thereto;
(d) any Interest Period relating to any Eurodollar Rate Loan
that begins on the last Eurodollar Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the
last Eurodollar Business Day of a calendar month; and
(e) any Interest Period relating to any Eurodollar Rate Loan
that would otherwise extend beyond the Maturity Date shall end on the
Maturity Date.
International Standby Practices. With respect to any standby Letter of
Credit, International Standby Practices (ISP98), International Chamber of
Commerce Publication No. 590, or any successor code of standby letter of credit
practices among banks adopted by the applicable Issuing Bank in the ordinary
course of its business as a standby letter of credit issuer and in effect at the
time of issuance of such Letter of Credit.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property (other than
transfers for value in the ordinary course of business) to, or in respect of any
guaranties (or other commitments as described under Indebtedness), or
obligations of, any Person, excluding loans or advances made to employees in the
<PAGE> 25
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ordinary course of business consistent with past practices. In determining the
aggregate amount of Investments outstanding at any particular time: (a) the
amount of any Investment represented by a guaranty shall be taken at not less
than the principal amount of the obligations guaranteed and still outstanding;
(b) there shall be included as an Investment all interest accrued with respect
to Indebtedness constituting an Investment unless and until such interest is
paid; (c) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, dividend or distribution); (d) there shall not be deducted in respect
of any Investment any amounts received as earnings on such Investment, whether
as dividends, interest or otherwise, except that accrued interest included as
provided in the foregoing clause (b) may be deducted when paid; and (e) there
shall not be deducted from the aggregate amount of Investments any decrease in
the value thereof.
Issuing Bank. BankBoston, N.A. in its capacity as issuer of the Letters
of Credit, Bank of America, N.A. in its capacity as issuer of the Existing
Letters of Credit and any other Bank that agrees, with the consent of the Agent,
to issue a Letter of Credit for the account of the Borrower hereunder.
Landlord Lien Reserve. At any time of reference, with respect to each
Specified Lease, an amount reasonably determined by the Agent and notified to
the Borrower as a reserve against inventory located on the leasehold created by
such Specified Lease with respect to which the landlord thereof may have a
common law or statutory landlord's lien for unpaid rental obligations senior in
priority to the liens thereon in favor of the Agent for the benefit of the
Banks; provided that the amount of such reserve shall be determined solely by
reference to (a) the amount of periodic rental payments due from time to time
under the terms of the Specified Lease that may be subject to such landlord's
lien under the laws of the state in which such leasehold is located and (b) the
value of the inventory that may be subject to such landlord's lien under the
laws of the state in which such leasehold is located; and provided further that
such amount may be adjusted by the Agent from time to time to reflect changes in
the amounts of such periodic rental payments and changes in the laws of such
states. The Landlord Lien Reserve for any Specified Lease as to which more than
twelve months' rent is overdue shall be $0. The Landlords Lien Reserve in effect
on the Closing Date for each Specified Lease is set forth on Schedule 3.
Landlord Waiver. A waiver from the lessor or sublessor of property
leased by the Borrower as lessee in form and substance satisfactory to the
Agent.
Letter of Credit. See Section 5.1.1.
Letter of Credit Application. See Section 5.1.1.
Letter of Credit Fee. See Section 5.6.
<PAGE> 26
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Letter of Credit Participation. See Section 5.1.4.
Leverage Ratio. As at any date of determination, the ratio of (a) Total
Funded Indebtedness outstanding on such date to (b) EBITDA for the Reference
Period ended on such date; provided that for purposes of calculating the
Leverage Ratio only, EBITDA shall be increased by $2,375,000 for each of the
Borrower's fiscal quarters ending March 31, 1999, June 30, 1999, September 30,
1999 and December 31, 1999 (but only to the extent the applicable Reference
Period includes such fiscal quarters).
Loan Documents. This Credit Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit, the Security Documents and the Fee Letter.
Loan Request. See Section 2.6.
Loans. The Revolving Credit Loans and the Term Loan.
Majority Banks. As of any date, (a) if there are fewer than three (3)
Banks on such date, all Banks and (b) if there are three (3) or more Banks on
such date, any two or more Banks holding at least fifty-one percent (51%) of the
sum of the outstanding principal amount of the Notes, plus the Letter of Credit
Participations, plus the unused portion of the Commitments on such date.
Maturity Date. December 31, 2004.
Maximum Drawing Amount. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.
Mortgaged Property. Any Real Estate which is subject to any Mortgage.
Mortgages. Collectively (a) the mortgages and/or deeds of trust dated
as of a date no later than ninety (90) days after the Closing Date, from certain
Subsidiaries of the Borrower to the Agent with respect to the leasehold
interests of such Subsidiaries in the Real Estate located in Farmers Branch,
Texas, Dallas, Texas, Van Nuys, California, and on Mendenhall Road in Memphis,
Tennessee and in form and substance satisfactory to the Agent and (b) any
additional mortgage or deed of trust from the Borrower or its Subsidiaries with
respect to fee and leasehold interests in Real Estate and granted in favor of
the Agent in accordance with Section 9.14.
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate.
Notes. The Term Notes and the Revolving Credit Notes.
<PAGE> 27
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Obligations. All indebtedness, obligations and liabilities of any of
the Borrower and its Subsidiaries to any of the Banks or the Agent, individually
or collectively, existing on the date of this Credit Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, arising or incurred under this
Credit Agreement or any of the other Loan Documents or in respect of any of the
Loans made or Reimbursement Obligations incurred or any of the Notes, Letter of
Credit Applications or Letters of Credit, or arising or incurred in connection
with any interest rate protection arrangements contemplated by Section 9.15 or
any documents, agreements or instruments executed in connection therewith, or
other instruments at any time evidencing any thereof.
outstanding. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
Patent Assignments. The several Patent Collateral Assignment and
Security Agreements, dated or to be dated on or prior to the Closing Date, made
by the Borrower or its Subsidiaries in favor of the Agent and in form and
substance satisfactory to the Agent.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002
of ERISA and any successor entity or entities having similar responsibilities.
Perfection Certificates. The Perfection Certificates as defined in the
Security Agreements.
Permitted Liens. Liens, security interests and other encumbrances
permitted by Section 10.2.
Person. Any individual, corporation, limited liability company,
partnership, limited partnership, trust, unincorporated association, business,
or other legal entity, and any government or any governmental agency or
political subdivision thereof.
Rate Adjustment Period. See the definition of Applicable Margin.
Real Estate. All real property owned or leased (as lessee or sublessee)
by the Borrower or any of its Subsidiaries.
Record. The grid attached to a Note, or the continuation of such grid,
or any other similar record, including computer records, maintained by any Bank
with respect to any Loan referred to in such Note.
Reference Bank. BKB.
Reference Period. A period of four consecutive fiscal quarters.
<PAGE> 28
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Reimbursement Obligation. The Borrower's obligation to reimburse the
Agent and the Banks on account of any drawing under any Letter of Credit as
provided in Section 5.2.
Revolving Credit Loans. Revolving credit loans made or to be made by
the Banks to the Borrower pursuant to Section 2.
Revolving Credit Note Record. A Record with respect to a Revolving
Credit Note.
Revolving Credit Notes. See Section 2.4.
Rolls-Royce. Allison Engine Company, Inc. d/b/a Rolls-Royce Allison, a
Delaware corporation.
Section 20 Subsidiary. A Subsidiary of the bank holding company
controlling any Bank, which Subsidiary has been granted authority by the Federal
Reserve Board to underwrite and deal in certain Ineligible Securities.
Security Agreements. The several Security Agreements, dated or to be
dated on or prior to the Closing Date, between the Borrower or Domestic
Subsidiaries of the Borrower and the Agent, substantially in the form of Exhibit
D hereto.
Security Documents. The Guaranty, the Security Agreements, the
Mortgages, the Trademark Assignments, the Patent Assignments and the Stock
Pledge Agreement.
Services. Aviall Services, Inc., a Delaware corporation and a
wholly-owned Subsidiary of the Borrower.
SPC. See Section 20.8(b).
Specified Lease. Each lease by the Borrower or a Domestic Subsidiary as
Lessee of real property at which Eligible Inventory is held and as to which the
Agent has not from time to time received evidence, in form and substance
satisfactory to the Agent, that based upon then existing law, the landlord of
such property would not have or be entitled to claim a lien on inventory
superior to the security interest granted to the Agent under the Security
Agreements, securing obligations past due or securing future obligations;
provided that no lease for which the Agent shall have received a Landlord Waiver
shall be a Specified Lease.
Stock Pledge Agreement. The Stock Pledge Agreement dated or to be dated
on or prior to the Closing Date, between the Borrower and Services as pledgors
and the Agent as pledgee in respect of one hundred percent (100%) of the stock
of the Domestic Subsidiaries and sixty-five (65%) of the stock of the Foreign
Subsidiaries (other than the Designated Subsidiaries) and substantially in the
form of Exhibit E hereto, and any supplemental pledge agreements in
<PAGE> 29
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respect of sixty-five (65%) of the stock of any of the Foreign Subsidiaries in
form and substance satisfactory to the Agent.
Subsidiary. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock.
Supermajority Banks. As of any date, (a) if there are fewer than three
(3) Banks on such date, all Banks, and (b) if there are three (3) or more Banks
on such date, any two or more Banks holding at least seventy-five percent (75%)
of the sum of the outstanding principal amount of the Notes, plus the Letter of
Credit Participations, plus the unused portion of the Commitments on such date.
Survey. In relation to each Mortgaged Property, a recent instrument
survey of such Mortgaged Property, which shall show the location of all
buildings, structures, easements and utility lines on such Mortgaged Property,
shall be sufficient to remove the survey exception from the Title Policy, shall
show that all buildings and structures are within the lot lines of such
Mortgaged Property, shall not show any encroachments by others, shall show the
zoning district or districts in which such Mortgaged Property is located in a
flood hazard district as established by the Federal Emergency Management Agency
or any successor agency or is located in any flood plain, flood hazard or
wetland protection district established under federal, state or local law.
Surveyor Certificate. In relation to each Mortgaged Property for which
a Survey has been conducted, a certificate executed by the surveyor who prepared
such Survey dated as of a recent date and containing such information relating
to such Mortgaged Property as the Agent or the Title Insurance Company may
reasonably require, such certificate to be reasonably satisfactory to the Agent
in form and substance.
Term Loan. The term loan made or to be made by the Banks to the
Borrower on the Closing Date in the aggregate principal amount of $40,000,000
pursuant to Section 4.1.
Term Loan Note Record. A Record with respect to a Term Loan Note.
Term Loan Notes. See Section 4.2.
Term Loan Percentage. With respect to each Bank, the percentage set
forth on Schedule 1 hereto as such Bank's percentage of the Term Loan.
Title Insurance Company. In relation to each Mortgaged Property, the
company that issues the Title Policy with respect thereto, which company shall
be reasonably acceptable to the Agent.
Title Policy. In relation to each Mortgaged Property, an ALTA standard
form title insurance policy issued by the Title Insurance Company (with such
<PAGE> 30
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reinsurance or co-insurance as the Agent may require, any such reinsurance to be
with direct access endorsements) in such amount as may be determined by the
Agent insuring the priority of the Mortgage of such Mortgaged Property and that
the Borrower or one of its Subsidiaries holds marketable fee simple or leasehold
title, as the case may be, to such Mortgaged Property, subject only to the
encumbrances permitted by such Mortgage and which shall not contain exceptions
for mechanics liens or persons in occupancy, shall not insure over any matter
except to the extent that any such affirmative insurance is acceptable to the
Agent in its sole discretion, and shall contain such endorsements and
affirmative insurance as the Agent in its discretion may require, including but
not limited to (a) comprehensive endorsement, (b) variable rate of interest
endorsement, (c) usury endorsement, (d) revolving credit endorsement, (e) tie-in
endorsement, (f) doing business endorsement, and (g) ALTA form 3.1 zoning
endorsement, but subject in each case to the laws, rules and policies of title
insurance companies where the applicable Mortgaged Properties are located.
Total Commitment. The sum of the Commitments of the Banks to make
Revolving Credit Loans to, and to participate in the issuance, extension and
renewal of Letters of Credit for the account of, the Borrower, as in effect from
time to time. On the Closing Date the Total Commitment is $90,000,000.
Total Debt Service. For any period, the sum of (a) all scheduled
mandatory payments of principal on Indebtedness of the Borrower and its
Subsidiaries made or required to be made during that period, plus (b)
Consolidated Total Interest Expense for that period.
Total Funded Indebtedness. On any date of determination, all
Indebtedness of the Borrower and its Subsidiaries for borrowed money (including
in respect of notes and bonds), purchase money Indebtedness and Indebtedness
with respect to Capitalized Leases outstanding on such date, determined on a
consolidated basis in accordance with generally accepted accounting principles.
Trademark Assignments. The several Trademark Collateral Security and
Pledge Agreements, dated or to be dated on or prior to the Closing Date, made by
the Borrower or its Subsidiaries in favor of the Agent and in form and substance
satisfactory to the Banks and the Agent.
Type. As to any Revolving Credit Loan or all or any portion of the Term
Loan, its nature as a Base Rate Loan or a Eurodollar Rate Loan.
Uniform Customs. With respect to any Letter of Credit, the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500 or any successor version thereto adopted
by the applicable Issuing Bank in the ordinary course of its business as a
letter of credit issuer and in effect at the time of issuance of such Letter of
Credit.
<PAGE> 31
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United States. The United States of America, including its territories
and possessions.
Unpaid Reimbursement Obligation. Any Reimbursement Obligation for which
the Borrower does not reimburse the Agent and the Banks on the date specified
in, and in accordance with, Section 5.2.
Voting Stock. Stock or similar equity interests of a Person pursuant to
which the holders thereof have, at the time of determination, the general voting
power under ordinary circumstances to vote for the election of directors (or
persons performing similar functions), managers, trustees or general partners of
such Person (irrespective of whether or not at the time any other class or
classes will have or might have voting power by reason of the happening of a
contingency).
1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or supplemented from
time to time in accordance with its terms and the terms of this Credit
Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they
refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts, have
the meanings assigned to them therein, with the term "instrument" being
that defined under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "Section " refers to that
section of this Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Credit Agreement as a whole and not to
any particular section or subdivision of this Credit Agreement.
<PAGE> 32
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(j) Unless otherwise expressly indicated, in the computation
of periods of time from a specified date to a later specified date, the
word "from" means "from and including," the words "to" and "until" each
mean "to but excluding," and the word "through" means "to and
including."
(k) This Credit Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate the
same or similar matters. All such limitations, tests and measurements
are, however, cumulative and are to be performed in accordance with the
terms thereof.
(l) This Credit Agreement and the other Loan Documents are the
result of negotiation among, and have been reviewed by counsel to,
among others, the Agent and the Borrower and are the product of
discussions and negotiations among all parties. Accordingly, this
Credit Agreement and the other Loan Documents are not intended to be
construed against the Agent or any of the Banks merely on account of
the Agent's or any Bank's involvement in the preparation of such
documents.
2. THE REVOLVING CREDIT FACILITY.
2.1. COMMITMENT TO LEND. Subject to the terms and conditions set forth
in this Credit Agreement, each of the Banks severally agrees to lend to the
Borrower and the Borrower may borrow, repay, and reborrow from time to time from
the Closing Date up to but not including the Maturity Date upon notice by the
Borrower to the Agent given in accordance with Section 2.6, such sums as are
requested by the Borrower up to a maximum aggregate amount outstanding (after
giving effect to all amounts requested) at any one time equal to such Bank's
Commitment minus such Bank's Commitment Percentage of the sum of the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations, provided that the sum
of the outstanding amount of the Revolving Credit Loans (after giving effect to
all amounts requested) plus the Maximum Drawing Amount and all Unpaid
Reimbursement Obligations shall not at any time exceed the lesser of (a) the
Total Commitment or (b) the Borrowing Base. The Revolving Credit Loans shall be
made pro rata in accordance with each Bank's Commitment Percentage. Each request
for a Revolving Credit Loan hereunder shall constitute a representation and
warranty by the Borrower that the conditions set forth in Section 12 and Section
13, in the case of the initial Revolving Credit Loans to be made on the Closing
Date, and Section 13, in the case of all other Revolving Credit Loans, have been
satisfied on the date of such request.
2.2. COMMITMENT FEE. The Borrower agrees to pay to the Agent for the
accounts of the Banks in accordance with their respective Commitment Percentages
a commitment fee calculated at the applicable rate per annum set forth in the
definition of Applicable Margin under the column "Commitment Fees" on the
average daily amount during each calendar quarter or portion thereof from the
Closing Date to the Maturity Date by which the Total Commitment minus the sum of
the Maximum Drawing Amount and all Unpaid
<PAGE> 33
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Reimbursement Obligations exceeds the outstanding amount of Revolving Credit
Loans during such calendar quarter. The commitment fee shall be payable
quarterly in arrears on the first day of each calendar quarter for the
immediately preceding calendar quarter, commencing on the first such date
following the date hereof, with a final payment on the Maturity Date or any
earlier date on which the Commitments shall terminate.
2.3. REDUCTION OF TOTAL COMMITMENT. The Borrower shall have the right
at any time and from time to time upon five (5) Business Days prior written
notice to the Agent to reduce by $500,000 or an integral multiple of $100,000 in
excess thereof the unborrowed portion of the Total Commitment or terminate
entirely the Total Commitment, whereupon the Commitments of the Banks shall be
reduced pro rata in accordance with their respective Commitment Percentages of
the amount specified in such notice or, as the case may be, terminated. Promptly
after receiving any notice of the Borrower delivered pursuant to this Section
2.3, the Agent will notify the Banks of the substance thereof. Upon the
effective date of any such reduction or termination, the Borrower shall pay to
the Agent for the respective accounts of the Banks the full amount of any
commitment fee then accrued on the amount of the reduction. No reduction or
termination of the Commitments or the Total Commitment may be reinstated.
2.4. THE REVOLVING CREDIT NOTES. The Revolving Credit Loans shall be
evidenced by separate promissory notes of the Borrower in substantially the form
of Exhibit F hereto (each a "Revolving Credit Note"), dated as of the Closing
Date and completed with appropriate insertions. A Revolving Credit Note shall be
payable to the order of each Bank in a principal amount equal to such Bank's
Commitment. The Borrower irrevocably authorizes each Bank to make or cause to be
made, at or about the time of the Drawdown Date of any Revolving Credit Loan or
at the time of receipt of any payment of principal on such Bank's Revolving
Credit Note, an appropriate notation on such Bank's Revolving Credit Note Record
reflecting the making of such Revolving Credit Loan or (as the case may be) the
receipt of such payment. The outstanding amount of the Revolving Credit Loans of
such Bank set forth on such Bank's Revolving Credit Note Record shall be prima
facie evidence of the principal amount thereof owing and unpaid to such Bank,
but the failure to record, or any error in so recording, any such amount on such
Bank's Revolving Credit Note Record shall not limit or otherwise affect the
obligations of the Borrower hereunder or under any Revolving Credit Note to make
payments of principal of or interest on any Revolving Credit Note when due.
2.5. INTEREST ON REVOLVING CREDIT LOANS. Except as otherwise provided
in Section 6.11,
(a) Each Revolving Credit Loan that is a Base Rate Loan shall
bear interest for the period commencing with the Drawdown Date thereof
and ending on the last day of the Interest Period with respect thereto
at the rate per annum equal to the Base Rate plus the Applicable Margin
for Base Rate Loans.
<PAGE> 34
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(b) Each Revolving Credit Loan that is a Eurodollar Rate Loan
shall bear interest for the period commencing with the Drawdown Date
thereof and ending on the last day of the Interest Period with respect
thereto at the rate per annum equal to the Eurodollar Rate determined
for such Interest Period plus the Applicable Margin for Eurodollar Rate
Loans.
(c) The Borrower promises to pay interest in arrears on each
Revolving Credit Loan on each Interest Payment Date with respect
thereto.
2.6. REQUESTS FOR REVOLVING CREDIT LOANS. The Borrower shall give to
the Agent written notice in the form of Exhibit G hereto (or telephonic notice
confirmed in a writing in the form of Exhibit G hereto) of each Revolving Credit
Loan requested hereunder (a "Loan Request") no later than (a) 11:00 a.m. (Boston
time) on the proposed Drawdown Date of any Base Rate Loan and (b) 12:00 noon
(Boston time) three (3) Eurodollar Business Days prior to the proposed Drawdown
Date of any Eurodollar Rate Loan. Each such Loan Request shall specify (i) the
principal amount of the Revolving Credit Loan requested, (ii) the proposed
Drawdown Date of such Revolving Credit Loan, (iii) the Interest Period for such
Revolving Credit Loan and (iv) the Type of such Revolving Credit Loan. Promptly
upon receipt of any such Loan Request, the Agent shall notify each of the Banks
thereof. Each such Loan Request shall be irrevocable and binding on the Borrower
and shall obligate the Borrower to accept the Revolving Credit Loan requested
from the Banks on the proposed Drawdown Date. Each Loan Request for a Base Rate
Loan shall be in a minimum aggregate amount of $500,000 or a larger integral
multiple of $100,000, and each Loan Request for a Eurodollar Rate Loan shall be
in a minimum aggregate amount of $1,000,000 or a larger integral multiple of
$100,000.
2.7. CONVERSION OPTIONS.
2.7.1. CONVERSION TO DIFFERENT TYPE OF REVOLVING CREDIT LOAN.
The Borrower may elect from time to time to convert any outstanding
Revolving Credit Loan to a Revolving Credit Loan of another Type,
provided that (a) with respect to any such conversion of a Eurodollar
Rate Loan to a Base Rate Loan, the Borrower shall give the Agent
written notice of such election no later than 11:00 a.m. (Boston time)
on the date of conversion; (b) with respect to any such conversion of a
Base Rate Loan to a Eurodollar Rate Loan, the Borrower shall give the
Agent at least three (3) Eurodollar Business Days prior written notice
of such election; (c) with respect to any such conversion of a
Eurodollar Rate Loan into a Base Rate Loan, no such conversion shall be
made on a day other than the last day of the Interest Period with
respect thereto unless the Borrower shall have complied with Section
6.10; and (d) no Base Rate Loan may be converted into a Eurodollar Rate
Loan when any Default or Event of Default has occurred and is
continuing. On the date on which such
<PAGE> 35
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conversion is being made each Bank shall take such action as is
necessary to transfer its Commitment Percentage of such Revolving
Credit Loans to its Domestic Lending Office or its Eurodollar Lending
Office, as the case may be. All or any part of outstanding Revolving
Credit Loans of any Type may be converted into a Revolving Credit Loan
of another Type as provided herein, provided that any partial
conversion into a Base Rate Loan shall be in an aggregate principal
amount of $500,000 or a larger integral multiple of $100,000 and any
partial conversion into a Eurodollar Rate Loan shall be in an aggregate
principal amount of $1,000,000 or a larger integral multiple of
$100,000. Each Conversion Request relating to the conversion of a Base
Rate Loan to a Eurodollar Rate Loan shall be irrevocable by the
Borrower.
2.7.2. CONTINUATION OF TYPE OF REVOLVING CREDIT LOAN. Any
Revolving Credit Loan of any Type may be continued as a Revolving
Credit Loan of the same Type upon the expiration of an Interest Period
with respect thereto by compliance by the Borrower with the notice
provisions contained in Section 2.7.1; provided that no Eurodollar Rate
Loan may be continued as such when any Default or Event of Default has
occurred and is continuing, but shall be automatically converted to a
Base Rate Loan on the last day of the first Interest Period relating
thereto ending during the continuance of any Default or Event of
Default of which officers of the Agent active upon the Borrower's
account have actual knowledge. In the event that the Borrower fails to
provide any such notice with respect to the continuation of any
Eurodollar Rate Loan as such, then such Eurodollar Rate Loan shall be
automatically converted to a Base Rate Loan on the last day of the
first Interest Period relating thereto. The Agent shall notify the
Banks promptly when any such automatic conversion contemplated by this
Section 2.7.2 is scheduled to occur.
2.7.3. EURODOLLAR RATE LOANS. Any conversion to or from
Eurodollar Rate Loans shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate
principal amount of all Eurodollar Rate Loans having the same Interest
Period shall not be less than $1,000,000 or a larger integral multiple
of $100,000. At no time with respect to all Loans under this Credit
Agreement shall there be more than six (6) Eurodollar Rate Loans having
different interest periods outstanding.
2.8. FUNDS FOR REVOLVING CREDIT LOANS.
2.8.1. FUNDING PROCEDURES. Not later than 2:00 p.m. (Boston
time) on the proposed Drawdown Date of any Revolving Credit Loans, each
of the Banks will make available to the Agent, at the Agent's Head
Office, in immediately available funds, such Bank's Commitment
Percentage of the amount of the requested Revolving Credit Loans. Upon
receipt from each Bank of such amount, and upon receipt of the
documents required by Sections 12 and 13 to be delivered on or prior to
such
<PAGE> 36
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Drawdown Date and the satisfaction of the other conditions set forth
therein, to the extent applicable, the Agent will make available to the
Borrower the aggregate amount of such Revolving Credit Loans made
available to the Agent by the Banks; provided that the Agent shall use
reasonable efforts to inform the Borrower in the event any Bank fails
to provide to the Agent the amount of such Bank's Commitment Percentage
of such Revolving Credit Loans, promptly after the Agent obtains
knowledge of such failure. The failure or refusal of any Bank to make
available to the Agent at the aforesaid time and place on any Drawdown
Date its Commitment Percentage of the requested Revolving Credit Loans
shall not relieve any other Bank from its several obligation hereunder
to make available to the Agent such other Bank's Commitment Percentage
of any requested Revolving Credit Loans.
2.8.2. ADVANCES BY AGENT. The Agent may, unless notified to
the contrary by any Bank prior to a Drawdown Date, assume that such
Bank has made available to the Agent on such Drawdown Date such Bank's
Commitment Percentage of the Revolving Credit Loans to be made on such
Drawdown Date, and the Agent may (but it shall not be required to), in
reliance upon such assumption, make available to the Borrower a
corresponding amount. If any Bank makes available to the Agent such
amount on a date after such Drawdown Date, such Bank shall pay to the
Agent on demand an amount equal to the product of (a) the average
computed for the period referred to in clause (c) below, of the
weighted average interest rate paid by the Agent for federal funds
acquired by the Agent during each day included in such period, times
(b) the amount of such Bank's Commitment Percentage of such Revolving
Credit Loans, times (c) a fraction, the numerator of which is the
number of days that elapse from and including such Drawdown Date to the
date on which the amount of such Bank's Commitment Percentage of such
Revolving Credit Loans shall become immediately available to the Agent,
and the denominator of which is 365. A statement of the Agent submitted
to such Bank with respect to any amounts owing under this paragraph
shall be prima facie evidence of the amount due and owing to the Agent
by such Bank. If the amount of such Bank's Commitment Percentage of
such Revolving Credit Loans is not made available to the Agent by such
Bank within three (3) Business Days following such Drawdown Date, the
Agent shall be entitled to recover such amount from the Borrower on
demand, with interest thereon at the rate per annum applicable to the
Revolving Credit Loans made on such Drawdown Date.
2.9. CHANGE IN BORROWING BASE. The Borrowing Base shall be determined
monthly by the Agent by reference to the Borrowing Base Report delivered to the
Banks and the Agent, commercial finance and collateral audit reports, and other
information obtained by or provided to the Agent. The Agent shall give to the
Borrower written notice of any change in the Borrowing Base determined by the
Agent. In the case of a reduction in the advance rates with
<PAGE> 37
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respect to Eligible Accounts Receivable or Eligible Inventory, such notice shall
be effective 5 days after its receipt by the Borrower.
3. REPAYMENT OF THE REVOLVING CREDIT LOANS.
3.1. MATURITY. The Borrower promises to pay on the Maturity Date, and
there shall become absolutely due and payable on the Maturity Date, all of the
Revolving Credit Loans outstanding on such date, together with any and all
accrued and unpaid interest thereon.
3.2. MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS. (a) If at any time
the sum of the outstanding amount of the Revolving Credit Loans, the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations exceeds the lesser of
(i) the Total Commitment or (ii) the Borrowing Base, then the Borrower shall
immediately pay the amount of such excess to the Agent for the respective
accounts of the Banks for application: first, to any Unpaid Reimbursement
Obligations; second, to the Revolving Credit Loans; and third, to provide to the
Agent cash collateral for Reimbursement Obligations as contemplated by Section
5.2(b) and (c). Each payment of any Unpaid Reimbursement Obligations or
prepayment of Revolving Credit Loans shall be allocated among the Banks, in
proportion, as nearly as practicable, to each Reimbursement Obligation or (as
the case may be) the respective unpaid principal amount of each Bank's Revolving
Credit Note, with adjustments to the extent practicable to equalize any prior
payments or repayments not exactly in proportion.
(b) The Borrower promises to repay the Revolving Credit Loans as and
when required by Section 6.2.
3.3. OPTIONAL PREPAYMENTS OF REVOLVING CREDIT LOANS. The Borrower shall
have the right, at its election, to prepay the outstanding amount of the
Revolving Credit Loans, as a whole or in part, at any time without penalty or
premium, provided that no prepayment of the outstanding amount of any Eurodollar
Rate Loans pursuant to this Section 3.3 may be made on a day other than the last
day of the Interest Period relating thereto unless the Borrower shall have
complied with Section 6.10. The Borrower shall give the Agent prior written
notice of any proposed prepayment pursuant to this Section 3.3 of Base Rate
Loans no later than 11:00 a.m. (Boston time) on the Business Day of any proposed
prepayment, and prior written notice of any proposed prepayment pursuant to this
Section 3.3 of Eurodollar Rate Loans no later than 12:00 noon (Boston time)
three (3) Eurodollar Business Days prior to the date of proposed prepayment, in
each case specifying the proposed date of prepayment of Revolving Credit Loans
and the principal amount to be prepaid. Each such partial prepayment of the
Revolving Credit Loans shall be in the amount of $500,000 or a greater integral
multiple of $100,000, shall be accompanied by the payment of accrued interest on
the principal prepaid to the date of prepayment and shall be applied, in the
absence of instruction by the Borrower, first to the principal of Base Rate
Loans and then to the principal of Eurodollar Rate Loans. Each partial
prepayment shall be allocated among the Banks, in proportion, as nearly as
practicable, to
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the respective unpaid principal amount of each Bank's Revolving Credit Note,
with adjustments to the extent practicable to equalize any prior repayments not
exactly in proportion.
4. THE TERM LOAN.
4.1. COMMITMENT TO LEND.
Subject to the terms and conditions set forth in this Credit Agreement,
each Bank severally agrees to lend to the Borrower on the Closing Date its Term
Loan Percentage of the Term Loan in the aggregate principal amount of
$40,000,000.
4.2. THE TERM NOTES.
The Term Loan shall be evidenced by separate promissory notes of the
Borrower in substantially the form of Exhibit H hereto (each a "Term Loan
Note"), dated the Closing Date and completed with appropriate insertions. A Term
Loan Note shall be payable to the order of each Bank in a principal amount equal
to such Bank's Term Loan Percentage of the Term Loan and representing the
obligation of the Borrower to pay to such Bank such principal amount or, if
less, the outstanding amount of such Bank's Term Loan Percentage of the Term
Loan, plus interest accrued thereon, as set forth below. The Borrower
irrevocably authorizes each Bank to make or cause to be made a notation on such
Bank's Term Loan Note Record reflecting the original principal amount of such
Bank's Term Loan Percentage of the Term Loan and, at or about the time of such
Bank's receipt of any principal payment on such Bank's Term Loan Note, an
appropriate notation on such Bank's Term Loan Note Record reflecting such
payment. The aggregate unpaid amount set forth on such Bank's Term Loan Note
Record shall be prima facie evidence of the principal amount thereof owing and
unpaid to such Bank, but the failure to record, or any error in so recording,
any such amount on such Bank's Term Loan Note Record shall not affect the
obligations of the Borrower hereunder or under any Term Loan Note to make
payments of principal of and interest on any Term Loan Note when due.
4.3. MANDATORY PAYMENTS OF PRINCIPAL OF TERM LOAN.
(a) The Borrower promises to pay to the Agent for the account of the
Banks the principal amount of the Term Loan in nineteen (19) consecutive
quarterly payments, payable on the last Business Day of each calendar quarter
ending within any period set forth below in the amount set forth opposite such
period, commencing on March 31, 2000 with a twentieth and final payment on the
Maturity Date in an amount equal to the unpaid balance of the Term Loan.
<PAGE> 39
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<TABLE>
<CAPTION>
-------------------------------------------------------------------------
Amount of
Each Quarterly
Quarter Ending: Payment
--------------- --------------
<S> <C> <C>
January 1, 2000 - December 31, 2000 $ 1,500,000.00
-------------------------------------------- ----------------------------
January 1, 2001 - December 31, 2001 $ 1,750,000.00
-------------------------------------------- ----------------------------
January 1, 2002 - December 31, 2002 $ 2,000,000.00
-------------------------------------------- ----------------------------
January 1, 2003 - December 31, 2003 $ 2,250,000.00
-------------------------------------------- ----------------------------
January 1, 2004 - September 30, 2004 $ 2,500,000.00
-------------------------------------------- ----------------------------
Maturity Date Unpaid Balance of the
Term Loan
-------------------------------------------------------------------------
</TABLE>
(b) The Borrower promises to prepay the Term Loan as and when required
by Section 6.2.
4.4. OPTIONAL PREPAYMENT OF TERM LOAN. The Borrower shall have the
right at any time to prepay the Term Notes on or before the Maturity Date as a
whole, or in part, without premium or penalty, provided that (a) each partial
prepayment shall be in the principal amount of $500,000 or a larger integral
multiple of $100,000 in excess thereof, (b) no portion of the Term Loan bearing
interest at the Eurodollar Rate may be prepaid pursuant to this Section 4.4 on a
day other than the last day of the Interest Period relating thereto unless the
Borrower shall have complied with Section 6.10, and (c) each partial prepayment
shall be allocated among the Banks, in proportion, as nearly as practicable, to
the respective outstanding amount of each Bank's Term Loan Note with adjustments
to the extent practicable to equalize any prior prepayments not exactly in
proportion. The Borrower shall give the Agent prior written notice of any
proposed prepayment pursuant to this Section 4.4 of Base Rate Loans no later
than 11:00 a.m. (Boston time) on the Business Day of such proposed prepayment
and of Eurodollar Rate Loans no later than 12:00 noon (Boston time) three (3)
Eurodollar Business Days prior to the date of such proposed prepayment, in each
case specifying the proposed date of prepayment and the principal amount to be
prepaid. Any prepayment of principal of the Term Loan shall include all interest
accrued to the date of prepayment and shall be applied against the remaining
scheduled installments of principal due on such Term Loan on a pro rata basis.
No amount repaid with respect to the Term Loan may be reborrowed.
4.5. INTEREST ON TERM LOAN.
4.5.1. INTEREST RATES. Except as otherwise provided in
Section 6.11, the Term Loan shall bear interest during each Interest
Period relating to all or any portion of the Term Loan at the following
rates:
(a) to the extent that all or any portion of the Term
Loan bears interest during such Interest Period at the Base
Rate, the Term Loan or such portion shall bear interest during
such Interest Period at the rate per annum equal to the Base
Rate plus the Applicable Margin for Base Rate Loans.
(b) To the extent that all or any portion of the Term
Loan bears interest during such Interest Period at the
Eurodollar Rate,
<PAGE> 40
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the Term Loan or such portion shall bear interest during such
Interest Period at the rate per annum equal to the Eurodollar
Rate plus the Applicable Margin for Eurodollar Rate Loans.
The Borrower promises to pay interest in arrears on the Term Loan or
any portion thereof outstanding during each Interest Period on each
Interest Payment Date applicable to such Interest Period.
4.5.2. NOTIFICATION BY BORROWER. The Borrower shall notify the
Agent, such notice to be irrevocable, no later than 11:00 a.m. (Boston
time) on the Drawdown Date of the Term Loan if all or any portion of
the Term Loan is to bear interest at the Base Rate and no later than
12:00 noon (Boston time) three (3) Eurodollar Business Days prior to
the Drawdown Date of the Term Loan if all or any portion of the Term
Loan is to bear interest at the Eurodollar Rate. After the Term Loan
has been made, the provisions of Section 2.7 shall apply mutatis
mutandis with respect to all or any portion of the Term Loan so that
the Borrower may have the same interest rate options with respect to
all or any portion of the Term Loan as it would be entitled to with
respect to the Revolving Credit Loans, subject to the same limitations
as applied to Revolving Credit Loans.
4.5.3. AMOUNTS, ETC. Any portion of the Term Loan bearing
interest at the Eurodollar Rate relating to any Interest Period shall
be in the amount of $1,000,000 or a larger integral multiple of
$100,000. No Interest Period relating to the Term Loan or any portion
thereof bearing interest at the Eurodollar Rate shall extend beyond the
date on which a regularly scheduled installment payment of the
principal of the Term Loan is to be made unless a portion of the Term
Loan at least equal to such installment payment has an Interest Period
ending on such date or is then bearing interest at the Base Rate.
5. LETTERS OF CREDIT.
5.1. LETTER OF CREDIT COMMITMENTS.
5.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the
terms and conditions hereof and the execution and delivery by the
Borrower of a letter of credit application on the Issuing Bank's
customary form (a "Letter of Credit Application"), the Issuing Bank on
behalf of the Banks and in reliance upon the agreement of the Banks set
forth in Section 5.1.4 and upon the representations and warranties of
the Borrower contained herein, agrees, in its individual capacity, to
issue, extend and renew for the account of the Borrower one or more
standby or documentary letters of credit (individually, a "Letter of
Credit"), in such form as may be requested from time to time by the
Borrower and agreed to by the Issuing Bank; provided, however, that,
after giving effect to such request, (a) the sum of the aggregate
Maximum Drawing Amount and all Unpaid
<PAGE> 41
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Reimbursement Obligations shall not exceed $10,000,000 at any one time
and (b) the sum of (i) the aggregate Maximum Drawing Amount on all
Letters of Credit, (ii) all Unpaid Reimbursement Obligations, and (iii)
the amount of all Revolving Credit Loans outstanding shall not exceed
the lesser of (A) the Total Commitment or (B) the Borrowing Base.
Effective on the Closing Date the Existing Letters of Credit shall be
deemed to be "Letters of Credit" for all purposes under this Credit
Agreement and shall be subject to all of the provisions of this Section
5, including without limitation the reimbursement provisions of Section
5.1.4, the participation provisions of Section 5.1.5 and the provisions
of Section 5.2. BankBoston, N.A. and Bank of America, N.A. shall
cooperate to replace the Existing Letters of Credit on or before the
expiry date thereof with Letters of Credit issued by BankBoston, N.A.
at such times as may be mutually satisfactory to them, and Bank of
America, N.A. shall have no obligation to extend or renew the Existing
Letters of Credit. Upon the replacement of all of the Existing Letters
of Credit, Bank of America, N.A. shall cease to be an Issuing Bank for
all purposes of this Credit Agreement.
5.1.2. LETTER OF CREDIT APPLICATIONS. Each Letter of Credit
Application shall be completed to the satisfaction of the Issuing Bank.
In the event that any provision of any Letter of Credit Application
shall be inconsistent with any provision of this Credit Agreement, then
the provisions of this Credit Agreement shall, to the extent of any
such inconsistency, govern.
5.1.3. TERMS OF LETTERS OF CREDIT. Each Letter of Credit
issued, extended or renewed hereunder shall, among other things, (a)
provide for the payment of sight drafts for honor thereunder when
presented in accordance with the terms thereof and when accompanied by
the documents described therein, and (b) have an expiry date no later
than the date which is fourteen (14) days (or, if the Letter of Credit
is confirmed by a confirmer or otherwise provides for one or more
nominated persons, thirty (30) days) prior to the Maturity Date. Each
Letter of Credit so issued, extended or renewed shall be subject to the
Uniform Customs or, in the case of a standby Letter of Credit, either
the Uniform Customs or the International Standby Practices.
5.1.4. REIMBURSEMENT OBLIGATIONS OF BANKS. Each Bank severally
agrees that it shall be absolutely liable, without regard to the
occurrence of any Default or Event of Default or any other condition
precedent whatsoever, to the extent of such Bank's Commitment
Percentage, to reimburse the Issuing Bank on demand for the amount of
each draft paid by the Issuing Bank under each Letter of Credit to the
extent that such amount is not reimbursed by the Borrower pursuant to
Section 5.2 (such agreement for a Bank being called herein the "Letter
of Credit Participation" of such Bank).
<PAGE> 42
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5.1.5. PARTICIPATIONS OF BANKS. Each such payment made by a
Bank shall be treated as the purchase by such Bank of a participating
interest in the Borrower's Reimbursement Obligation under Section 5.2
in an amount equal to such payment. Each Bank shall share in accordance
with its participating interest in any interest which accrues pursuant
to Section 5.2.
5.1.6. NOTICE OF AGENT. At the time of any issuance, extension
or renewal of a Letter of Credit, the Issuing Bank shall notify the
Agent of the Maximum Drawing Amount of such Letter of Credit and the
other terms of such Letter of Credit.
5.2. REIMBURSEMENT OBLIGATION OF THE BORROWER. In order to induce the
Issuing Bank to issue, extend and renew each Letter of Credit and the Banks to
participate therein, the Borrower hereby agrees to reimburse or pay to the
Agent, for the account of the Issuing Bank or (as the case may be) the Banks,
with respect to each Letter of Credit issued, extended or renewed by the Issuing
Bank hereunder,
(a) except as otherwise expressly provided in Section 5.2(b)
and (c), within one (1) Business Day following the date that any draft
presented under such Letter of Credit is honored by the Issuing Bank
and the Issuing Bank has notified the Borrower thereof, or within one
(1) Business Day following the date the Issuing Bank otherwise makes a
payment with respect thereto and the Issuing Bank has notified the
Borrower thereof, (i) the amount paid by the Issuing Bank under or with
respect to such Letter of Credit, and (ii) the amount of any taxes,
fees, charges or other costs and expenses whatsoever incurred by the
Issuing Bank or any Bank in connection with any payment made by the
Issuing Bank or any Bank under, or with respect to, such Letter of
Credit,
(b) upon the reduction (but not termination) of the Total
Commitment to an amount less than the Maximum Drawing Amount, or if the
Borrowing Base is less than the Maximum Drawing Amount, an amount equal
to such difference, which amount shall be held by the Issuing Bank for
the benefit of the Banks and the Issuing Bank as cash collateral for
all Reimbursement Obligations in a segregated interest-bearing cash
collateral account in the name of the Issuing Bank, and
(c) upon the termination of the Total Commitment, or the
acceleration of the Reimbursement Obligations with respect to all
Letters of Credit in accordance with Section 14, an amount equal to the
then Maximum Drawing Amount on all Letters of Credit, which amount
shall be held by the Issuing Bank for the benefit of the Banks and the
Issuing Bank as cash collateral for all Reimbursement Obligations in a
segregated interest-bearing cash collateral account in the name of the
Issuing Bank.
<PAGE> 43
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Interest on any cash collateral account referred to above shall be held in such
cash collateral account. Upon payment by the Borrower of any Reimbursement
Obligations or upon the expiry on other termination of any Letter of Credit and
so long as no Default or Event of Default is then continuing, the Issuing Bank
shall return to the Borrower any cash collateral being held in respect of such
Reimbursement Obligations or such Letter of Credit, as the case may be, together
with any interest accrued thereon through the date of such return. Each payment
referred to in (a), (b) or (c) above shall be made to the Agent for the account
of the Issuing Bank at the Agent's Head Office in immediately available funds.
The Borrower hereby agrees to pay to the Agent for the account of the Issuing
Bank interest on any payment made or draft honored by the Issuing Bank for the
period commencing with the making of such payment or the honoring of such draft
until the date such amounts become due and payable (whether as stated in this
Section 5.2, by acceleration or otherwise) at the rate per annum equal to the
Base Rate plus the Applicable Margin for Base Rate Loans. Interest on any and
all amounts remaining unpaid by the Borrower under this Section 5.2 at any time
from and after the date such amounts become due and payable (whether as stated
in this Section 5.2, by acceleration or otherwise) until payment in full
(whether before or after judgment) shall be payable to the Agent on demand at
the rate specified in Section 6.11 for overdue principal on Revolving Credit
Loans that are Base Rate Loans.
5.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or
other demand for payment shall be made under any Letter of Credit, the Issuing
Bank shall, promptly following receipt thereof, notify the Borrower and the
Agent of the date and amount of the draft presented or demand for payment and of
the date and time when it expects to pay such draft or honor such demand for
payment. If the Borrower fails to reimburse the Issuing Bank as provided in
Section 5.2 on or before the Business Day following the date that such draft is
paid or other payment is made by the Issuing Bank, the Issuing Bank may at any
time thereafter notify the Banks and the Agent of the amount of any such Unpaid
Reimbursement Obligation. No later than 3:00 p.m. (Boston time) on the Business
Day next following the receipt of such notice, each Bank shall make available to
the Agent for the account of the Issuing Bank, at the Agent's Head Office, in
immediately available funds, such Bank's Commitment Percentage of such Unpaid
Reimbursement Obligation, together with an amount equal to the product of (a)
the average, computed for the period referred to in clause (c) below, of the
weighted average interest rate paid by the Issuing Bank for federal funds
acquired by the Issuing Bank during each day included in such period, times (b)
the amount equal to such Bank's Commitment Percentage of such Unpaid
Reimbursement Obligation, times (c) a fraction, the numerator of which is the
number of days that elapse from and including the date the Issuing Bank paid the
draft presented for honor or otherwise made payment to the date on which such
Bank's Commitment Percentage of such Unpaid Reimbursement obligation shall
become immediately available to the Agent for the account of the Issuing Bank,
and the denominator of which is 360. The responsibility of the Issuing Bank to
the Borrower and the Banks shall be only to determine that the documents
(including each draft) delivered under each Letter of Credit in
<PAGE> 44
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connection with such presentment shall be in conformity in all material respects
with such Letter of Credit.
5.4. OBLIGATIONS ABSOLUTE. Subject to the provisions of this Section
5.4, the Borrower's obligations under this Section 5 shall be absolute and
unconditional under any and all circumstances and irrespective of the occurrence
of any Default or Event of Default or any condition precedent whatsoever or any
setoff, counterclaim or defense to payment which the Borrower may have or have
had against the Issuing Bank, the Agent, any Bank or any beneficiary of a Letter
of Credit. The Borrower further agrees with the Issuing Bank, the Agent and the
Banks that the Issuing Bank, the Agent and the Banks shall not be responsible
for, and the Borrower's Reimbursement Obligations under Section 5.2 shall not be
affected by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even if such documents should in fact prove to be in
any or all respects invalid, fraudulent or forged, or any dispute between or
among the Borrower, the beneficiary of any Letter of Credit or any financial
institution or other party to which any Letter of Credit may be transferred or
any claims or defenses whatsoever of the Borrower against the beneficiary of any
Letter of Credit or any such transferee. The Issuing Bank, the Agent and the
Banks shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit. The Borrower agrees that
any action taken or omitted by the Issuing Bank, the Agent or any Bank under or
in connection with each Letter of Credit and the related drafts and documents,
if done in good faith, shall be binding upon the Borrower and shall not result
in any liability on the part of the Issuing Bank, the Agent or any Bank to the
Borrower. The Issuing Bank agrees that it will give the same care and attention
to the Letters of Credit as it gives to other letters of credit issued by it.
5.5. RELIANCE BY ISSUER. To the extent not inconsistent with Section
5.4, the Issuing Bank shall be entitled to rely, and shall be fully protected in
relying upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Issuing Bank. The Issuing Bank shall be fully
justified in failing or refusing to take any action under this Credit Agreement
unless it shall first have received such advice or concurrence of the Majority
Banks as it reasonably deems appropriate or it shall first be indemnified to its
reasonable satisfaction by the Banks against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. The Issuing Bank shall in all cases be fully protected in acting, or in
refraining from acting, under this Credit Agreement in accordance with a request
of the Majority Banks, and such request and any action taken or failure to act
pursuant thereto shall be binding upon the Banks and all future holders of the
Revolving Credit Notes or of a Letter of Credit Participation.
<PAGE> 45
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5.6. LETTER OF CREDIT FEE. The Borrower shall pay to the Agent a fee
(in each case, a "Letter of Credit Fee") in respect of each Letter of Credit
issued or deemed issued pursuant to this Credit Agreement, equal to the sum of
(a) the Applicable Margin for Eurodollar Rate Loans per annum multiplied by the
face amount of each such Letter of Credit, which shall be for the accounts of
the Banks in accordance with their respective Commitment Percentages, and (b)
one-eighth percent (0.125%) per annum multiplied by the face amount of each such
Letter of Credit, which shall be for the account of the Issuing Bank, as a
fronting fee. The Letter of Credit Fee for each Letter of Credit shall be
payable quarterly in arrears on the last day of each calendar quarter for such
calendar quarter. In addition, the Borrower shall pay to the Agent for the
account of the Issuing Bank, at such other time or times as such charges are
customarily made by the Issuing Bank, the Issuing Bank's standard issuance,
processing, negotiation, amendment and administrative fees, determined in
accordance with customary fees and charges for similar facilities.
6. CERTAIN GENERAL PROVISIONS.
6.1. CLOSING FEE; AGENT'S FEE. (a) The Borrower agrees to pay to the
Agent and FBRS a closing fee and certain other fees in the amounts and at the
times set forth in the Fee Letter.
(b) The Borrower shall pay to the Agent an Agent's fee (the "Agent's
Fee") in the amounts and at the times set forth in the Fee Letter.
6.2. CERTAIN MANDATORY PREPAYMENTS. (a) In the event the Borrower or
any of its Subsidiaries receives any (i) net cash proceeds from the sale or
other disposition of assets permitted by Section 10.5.2 (other than the sale of
inventory in the ordinary course of business) which have not been reinvested by
the Borrower or such Subsidiary in replacement assets substantially similar in
nature within ninety (90) days of receipt by such Person of such proceeds, (ii)
proceeds of insurance claims or condemnation awards which have not been
reinvested by the Borrower or such Subsidiary in replacement assets
substantially similar in nature or used to repair the asset so damaged, as the
case may be, within ninety (90) days of receipt by such Person of such proceeds
or (iii) net cash proceeds from any new equity or debt issuances by the Borrower
or its Subsidiaries after the Closing Date (other than equity issuances
resulting from the exercise of employee stock options), the Borrower shall
promptly following the end of such ninety (90) day period (in the case of (i)
and (ii) above) and within fifteen (15) days of receipt thereof (in the case of
(iii) above), repay the outstanding Loans in an amount equal to 100% of such net
cash proceeds (other than in the case of equity issuances referred to in (iii)
above, in respect of which the Borrower shall repay the outstanding Loans in an
amount equal to 75% of such net cash proceeds).
(b) All mandatory prepayments of the Loans pursuant to this Section 6.2
shall be applied first to the Term Loan until repaid in full and shall be
applied on a pro rata basis to the remaining scheduled installments of principal
due thereon,
<PAGE> 46
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and second to the outstanding amount of the Revolving Credit Loans. Upon each
such prepayment of the Revolving Credit Loans, the Total Commitment shall be
reduced automatically by the amount of such prepayment, whereupon the respective
Commitments of the Banks shall be reduced pro rata in accordance with their
Commitment Percentages. Any prepayment of principal of the Loans in accordance
with this Section 6.2 shall include all interest accrued to the date of
prepayment. No amount repaid with respect to the Loans in accordance with this
Section 6.2 may be reborrowed.
6.3. FUNDS FOR PAYMENTS.
6.3.1. PAYMENTS TO AGENT. All payments of principal, interest,
Reimbursement Obligations, commitment fees, Letter of Credit Fees and
any other amounts due hereunder or under any of the other Loan
Documents shall be made to the Agent in Dollars, for the respective
accounts of the Banks and the Agent, at the Agent's Head Office or at
such other location in the Boston, Massachusetts, area that the Agent
may from time to time designate, in each case in immediately available
funds.
6.3.2. NO OFFSET, ETC. All payments by the Borrower hereunder
and under any of the other Loan Documents shall be made without
recoupment, setoff or counterclaim and free and clear of and without
deduction for any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans, restrictions or conditions
of any nature now or hereafter imposed or levied by any jurisdiction or
any political subdivision thereof or taxing or other authority therein
(other than taxes based on the net income or profits of the Agent, the
Issuing Bank or any Bank payable to the jurisdiction in which the
Agent, Issuing Bank or such Bank (or agency or branch thereof making
the Loans, as the case may be) is organized or doing business) unless
the Borrower is compelled by law to make such deduction or withholding.
If any such obligation is imposed upon the Borrower with respect to any
amount payable by it hereunder or under any of the other Loan
Documents, the Borrower will pay to the Agent, for the account of the
Banks, the Issuing Bank or the Agent (as the case may be), on the date
on which such amount is due and payable hereunder or under such other
Loan Document, such additional amount in Dollars as shall be necessary
to enable the Banks, the Issuing Bank or the Agent to receive the same
net amount which the Banks, the Issuing Bank or the Agent (as the case
may be) would have received on such due date had no such obligation
been imposed upon the Borrower. The Borrower will deliver promptly to
the Agent certificates or other valid vouchers for all taxes or other
charges deducted from or paid with respect to payments made by the
Borrower hereunder or under such other Loan Document.
6.3.3. CERTIFICATION BY NON-U.S. BANKS. On or before the date
it becomes a party to this Credit Agreement and from time to time
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thereafter upon any change in status rendering any certificate or
document previously delivered pursuant to this Section 6.3.3 invalid or
inaccurate, each Bank that is organized under the laws of a
jurisdiction outside the United States shall (but, with respect to any
renewal or change in status, only if legally able to do so) deliver to
the Borrower either (a) such certificates, documents or other evidence,
as required by the Code or Treasury Regulations issued pursuant
thereto, including Internal Revenue Service Form 1001 or Form 4224 and
any other certificate or statement of exemption required by Treasury
Regulation Section 1.1441-1, 1.1441-4 or 1.1441-6(c) or any subsequent
version thereof or subsequent version thereto, properly completed and
duly executed by such Bank establishing that such payment is (i) not
subject to United States Federal withholding tax under the Code because
such payment is effectively connected with conduct by such Bank of a
trade or business in the United States or (ii) totally exempt from
United States Federal withholding tax, or (other than in the case of
such Bank on the date such Bank became a party to this Credit
Agreement), subject to a reduced rate of such tax under a provision of
an applicable tax treaty or (b) in the case of such Bank that is not
legally entitled to deliver either form listed in clause (a) above, (x)
a certificate of a duly authorized officer of such Bank to the effect
that such Bank is not (A) a "bank" within the meaning of
Section 881(c)(3)(A) of the Code, (B) a "10 percent shareholder" of the
Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C)
a controlled foreign corporation receiving interest from a related
person within the meaning of Section 881(c)(3)(C) of the Code and (y)
two duly completed copies of Internal Revenue Service Form W-8 or
applicable successor form. The Borrower shall not be required to pay
any additional amounts to any Bank pursuant to Section 6.3.2 to the
extent that the obligation to pay such additional amounts would not
have arisen but for a failure by such Bank to comply with the
provisions of the preceding sentence.
Any Bank claiming any additional amounts payable
pursuant to Section 6.3.2 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document
reasonably requested in writing by the Borrower or to change the
jurisdiction of its applicable lending office if the making of such a
filing or change would avoid the need for or substantially reduce the
amount of any such additional amounts which may thereafter accrue and
would not, in the sole and absolute determination of such Bank, be
otherwise disadvantageous to such Bank, which determination by such
Bank shall be conclusive.
6.4. COMPUTATIONS. All computations of interest on the Loans (other
than Base Rate Loans) and of commitment fees, Letter of Credit Fees and other
fees under this Credit Agreement and the other Loan Documents shall be based on
a 360-day year and paid for the actual number of days elapsed. All computation
of interest on Base Rate Loans shall be based on a 365-day year and paid for the
actual number of days elapsed. Except as otherwise provided in
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the definition of the term "Interest Period" with respect to Eurodollar Rate
Loans, whenever a payment hereunder or under any of the other Loan Documents
becomes due on a day that is not a Business Day, the due date for such payment
shall be extended to the next succeeding Business Day, and interest shall accrue
during such extension. The outstanding amount of the Loans as reflected on the
Revolving Credit Note Records and the Term Note Records from time to time shall
be considered correct and binding on the Borrower, absent manifest error, unless
within five (5) Business Days after receipt of any notice by the Agent or any of
the Banks of such outstanding amount, the Agent or such Bank shall notify the
Borrower to the contrary.
6.5. INABILITY TO DETERMINE EURODOLLAR RATE. In the event, prior to the
commencement of any Interest Period relating to any Eurodollar Rate Loan, the
Agent shall determine or be notified by the Majority Banks that adequate and
reasonable methods do not exist for ascertaining the Eurodollar Rate that would
otherwise determine the rate of interest to be applicable to any Eurodollar Rate
Loan during any Interest Period, the Agent shall forthwith give notice of such
determination (which shall be conclusive and binding on the Borrower and the
Banks) to the Borrower and the Banks. In such event (a) any Loan Request or
Conversion Request with respect to Eurodollar Rate Loans shall be automatically
withdrawn and shall be deemed a request for Base Rate Loans, (b) each Eurodollar
Rate Loan will automatically, on the last day of the then current Interest
Period relating thereto, become a Base Rate Loan unless such Loan is prepaid on
such date pursuant to Section 3.3 or Section 4.4, as applicable, and (c) the
obligations of the Banks to make Eurodollar Rate Loans shall be suspended until
the Agent or the Majority Banks determines that the circumstances giving rise to
such suspension no longer exist, whereupon the Agent or, as the case may be, the
Agent upon the instruction of the Majority Banks, shall so notify the Borrower
and the Banks.
6.6. ILLEGALITY. Notwithstanding any other provisions herein, if any
present or future law, regulation, treaty or directive or in the interpretation
or application thereof shall make it unlawful for any Bank to make or maintain
Eurodollar Rate Loans, such Bank shall forthwith give notice of such
circumstances to the Borrower and the other Banks and thereupon (a) the
commitment of such Bank to make Eurodollar Rate Loans or convert Loans of
another Type to Eurodollar Rate Loans shall forthwith be suspended and (b) such
Bank's Loans then outstanding as Eurodollar Rate Loans, if any, shall be
converted automatically to Base Rate Loans on the last day of each Interest
Period applicable to such Eurodollar Rate Loans or within such earlier period as
may be required by law. The Borrower hereby agrees promptly to pay the Agent for
the account of such Bank, within ten (10) Business Days following demand by such
Bank, any additional amounts necessary to compensate such Bank for any costs
incurred by such Bank in making any conversion in accordance with this Section
6.6, including any interest or fees payable by such Bank to lenders of funds
obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder.
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6.7. ADDITIONAL COSTS, ETC. If any present or future applicable law,
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Bank, any Issuing Bank or the Agent by any central bank
or other fiscal, monetary or other authority (whether or not having the force of
law), shall:
(a) subject any Bank, any Issuing Bank or the Agent to any
tax, levy, impost, duty, charge, fee, deduction or withholding of any
nature with respect to this Credit Agreement, the other Loan Documents,
any Letters of Credit, such Bank's Commitment or the Loans (other than
taxes based upon or measured by the income or profits of such Bank,
Issuing Bank or the Agent), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to any Bank of the
principal of or the interest on any Loans or any other amounts payable
to any Bank, any Issuing Bank or the Agent under this Credit Agreement
or any of the other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement)
any special deposit, reserve, assessment, liquidity, capital adequacy
or other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or letters of credit issued by, or commitments of an office of any
Bank, or
(d) impose on any Bank, any Issuing Bank or the Agent any
other conditions or requirements with respect to this Credit Agreement,
the other Loan Documents, any Letters of Credit, the Loans, such Bank's
Commitment, or any class of loans, letters of credit or commitments of
which any of the Loans or such Bank's Commitment forms a part,
and the result of any of the foregoing is:
(i) to increase the cost to any Bank or any Issuing
Bank of making, funding, issuing, renewing, extending or
maintaining any of the Loans or such Bank's Commitment or any
Letter of Credit, or
(ii) to reduce the amount of principal, interest,
Reimbursement Obligation or other amount payable to such Bank
or the Agent hereunder on account of such Bank's Commitment,
any Letter of Credit or any of the Loans, or
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(iii) to require such Bank, such Issuing Bank or the
Agent to make any payment or to forego any interest or
Reimbursement Obligation or other sum payable hereunder, the
amount of which payment or foregone interest or Reimbursement
Obligation or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received by such
Bank, such Issuing Bank or the Agent from the Borrower
hereunder,
then, and in each such case, the Borrower will, within ten (10) Business Days
following demand made by such Bank, such Issuing Bank or (as the case may be)
the Agent at any time and from time to time and as often as the occasion
therefor may arise, pay to such Bank, such Issuing Bank or the Agent such
additional amounts as will be sufficient to compensate such Bank, such Issuing
Bank or the Agent for such additional cost, reduction, payment or foregone
interest or Reimbursement Obligation or other sum.
6.8. CAPITAL ADEQUACY. If after the date hereof any Bank, any Issuing
Bank or the Agent determines that (a) the adoption of or change in any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) regarding capital requirements for banks or bank
holding companies or any change in the interpretation or application thereof by
a court or governmental authority with appropriate jurisdiction, or (b)
compliance after the date hereof by such Bank, such Issuing Bank or the Agent or
any corporation controlling such Bank, such Issuing Bank or the Agent with any
law, governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) of any such entity regarding capital adequacy, has
the effect of reducing the return on such Bank's commitment with respect to any
Loans or the Loans to a level below that which such Bank or the Agent could have
achieved but for such adoption, change or compliance (taking into consideration
such Bank's, such Issuing Bank's or the Agent's then existing policies with
respect to capital adequacy and assuming full utilization of such entity's
capital) by any amount deemed by such Bank, such Issuing Bank or (as the case
may be) the Agent to be material, then such Bank, such Issuing Bank or the Agent
may notify the Borrower of such fact. To the extent that the amount of such
reduction in the return on capital is not reflected in the Base Rate or
Eurodollar Rate, or in amounts paid or payable by the Borrower pursuant to
Section 6.7 or Section 6.10 hereof, the Borrower and such Bank, such Issuing
Bank or (as the case may be) the Agent shall thereafter attempt to negotiate in
good faith, within thirty (30) days of the day on which the Borrower receives
such notice, an adjustment payable hereunder which will adequately compensate
such Bank, such Issuing Bank or the Agent in light of such circumstances. If the
Borrower and such Bank, such Issuing Bank or the Agent are unable to agree to
such adjustment within thirty (30) days of the date on which the Borrower
receives such notice, then commencing on the date of such notice (but not
earlier than the effective date of any such increased capital requirement), the
Borrower shall pay such Bank, such Issuing Bank or (as the case may be) the
Agent an amount that will, in such Bank's, such Issuing Bank's or the Agent's
reasonable determination, provide adequate compensation. Each Bank, Issuing Bank
and
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the Agent shall allocate such cost increases among its customers in good faith
and on an equitable basis.
6.9. CERTIFICATE. A certificate signed by an officer of any Bank,
Issuing Bank or the Agent setting forth any additional amounts required to be
paid by the Borrower to such Bank under Section 6.7 or Section 6.8 and the
computations made by such Bank, such Issuing Bank or the Agent to determine such
additional amount, shall be submitted by such Bank, such Issuing Bank or the
Agent to the Borrower in connection with each demand made at any time by such
Bank, such Issuing Bank or the Agent upon the Borrower under Section 6.7 or
Section 6.8. Without limiting the negotiation requirements of Section 6.8 (with
respect to the certificates issued on account of additional amounts required to
be paid pursuant to Section 6.8), such certificate shall constitute prima facie
evidence as to the additional amount owed.
6.10. INDEMNITY. The Borrower agrees to indemnify each Bank and to hold
each Bank harmless from and against any loss, cost or expense (including loss of
anticipated profits) that such Bank may sustain or incur as a consequence of (a)
default by the Borrower in payment of the principal amount of or any interest on
any Eurodollar Rate Loans as and when due and payable, including any such loss
or expense arising from interest or fees payable by such Bank to lenders of
funds obtained by it in order to maintain its Eurodollar Rate Loans, (b) default
by the Borrower in making a borrowing or conversion after the Borrower has given
(or is deemed to have given) a Loan Request in accordance with Section 2.6,
notice (in the case of all or any portion of the Term Loan) pursuant to Section
4.5.2 or a Conversion Request relating thereto in accordance with Section 2.7 or
Section 4.5.2 or (c) the making of any payment of a Eurodollar Rate Loan or the
making of any conversion of any such Loan to a Base Rate Loan on a day that is
not the last day of the applicable Interest Period with respect thereto,
including interest or fees payable by such Bank to lenders of funds obtained by
it in order to maintain any such Loans.
6.11. INTEREST AFTER DEFAULT. During the continuance of an Event of
Default (i) all Loans and other amounts payable hereunder or under any of the
other Loan Documents shall bear interest compounded monthly and payable on
demand at a rate per annum equal to two percent (2%) above the rate of interest
otherwise applicable thereto (or, if no such rate is specified, two percent (2%)
above the highest rate of interest applicable to Base Rate Loans) and (ii) the
rate by which the Letter of Credit Fees hereunder are calculated shall be
increased by two percent (2%) per annum, in each case until such amount shall be
paid in full (after as well as before judgment) or all Events of Default are
cured or waived
6.12. BANK'S OBLIGATION TO MITIGATE. Any Bank that makes demand for
payment of additional amounts under Section 6.7 or Section 6.8 or notifies the
Agent of any circumstances pursuant to Section 6.6, shall use reasonable efforts
(consistent with its internal policies and legal and regulatory restrictions) to
change the
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jurisdiction of its applicable lending office so as to avoid thereafter the
circumstances that give rise to such demand or notification.
6.13. REPLACEMENT OF BANKS. (a) In the event that any Bank makes a
demand for payment under Section 6.7 or Section 6.8 or notifies the Agent of any
circumstances requiring payment pursuant to Section 6.6, the Borrower may within
one hundred twenty (120) days of such demand, if no Event of Default or Default
is then continuing, replace such Bank in whole with an Eligible Assignee in
accordance with Section 20 (including execution of an appropriate Assignment and
Acceptance). If the Borrower accomplishes the replacement of such Bank within
120 days following the demand, the Borrower shall only owe any such Bank amounts
under Section 6.6, Section 6.7 or Section 6.8, as applicable, through the date
of replacement and any amounts required to be paid by it pursuant to Section
6.10 in the event such replacement occurs on any day other than the last day of
the applicable Interest Period. If the Borrower does not accomplish either
replacement or repayment of such Bank within such one hundred twenty (120) days,
the Borrower shall owe such Bank in accordance with the terms and provisions of
Section 6.6, Section 6.7 or Section 6.8, as applicable (or any separate written
agreement between the Borrower or the Bank in respect thereof).
(b) In the event that any Bank refuses to consent to any amendment,
waiver or consent to any provision hereof or in the other Loan Documents in
accordance with the terms of Section 28 (other than an amendment to increase the
Commitment of such Bank) but to which each other Bank constituting the Majority
Banks has previously consented, the Borrower may, with the prior consent of the
Agent, within ninety (90) days of such amendment, waiver or consent, if no Event
of Default or Default is then continuing, replace such Bank in whole with an
Eligible Assignee in accordance with Section 20 (including execution of an
appropriate Assignment and Acceptance).
6.14. INTEREST LIMITATION. It is the intention of the parties hereto
that each Bank shall conform strictly to usury laws applicable to it.
Accordingly, if the transactions contemplated hereby would be usurious as to any
Bank under laws applicable to it (including the laws of the United States of
America or any other jurisdictions whose laws may be mandatorily applicable to
such Bank), then, in that event, notwithstanding anything to the contrary in the
Loan Documents, the Credit Agreement or any other agreements entered into in
connection with or as security for the Obligations, it is agreed as follows: (a)
the aggregate of all consideration which constitutes interest under laws
applicable to any Bank that is contracted for, taken, reserved, charged or
received by such Bank under the Loan Documents, the Credit Agreement or any
other agreements entered into in connection with or as security for the
Obligations or otherwise in connection with the Obligations shall under no
circumstances exceed the maximum amount allowed by such applicable law, and any
excess shall be cancelled automatically and if theretofore paid shall be
credited by such Bank on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have been or would
thereby be paid in full, refunded by such Bank to the Borrower); and (b) in the
event that the
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maturity of the Loans is accelerated, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest under
law applicable to any Bank may not include more than the maximum amount allowed
by such applicable law, and excess interest, if any, provided for in this Credit
Agreement or otherwise shall be cancelled automatically by such Bank as of the
date of such acceleration or prepayment and, if therefore paid, shall be
credited by such Bank on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have been or would
thereby be paid in full, refunded by such Bank to the Borrower). All sums paid
or agreed to be paid to any Bank for the use, forbearance or detention of sums
due hereunder shall, to the extent permitted by laws applicable to such Bank, be
amortized, prorated, allocated and spread through the term of the Loans until
payment in full so that the rate or amount of interest on account of any Loans
does not exceed the maximum amount allowed by such applicable law. If at any
time and from time to time (a) the amount of interest payable to any Bank on any
date shall be computed at the highest lawful rate applicable to such Bank
pursuant to this paragraph and (b) in respect of any subsequent interest
computation period the amount of interest otherwise payable to such Bank would
be less than the amount of interest payable to such Bank computed at the highest
lawful rate applicable to such Bank, then the amount of interest payable to such
Bank in respect of such subsequent interest computation period shall continue to
be computed at the highest lawful rate applicable to such Bank until the total
amount of interest payable to such Bank shall equal the total amount of interest
which would have been payable to such Bank if the total amount of interest had
been computed without giving effect to this paragraph.
To the extent that the Texas Finance Code is relevant to any Bank for
the purpose of determining the highest lawful rate, each such Bank hereby elects
to determine the applicable rate ceiling under such Finance Code by the weekly
rate ceiling described in and computed in accordance with Section 303.003 of the
Texas Finance Code.
7. COLLATERAL SECURITY AND GUARANTIES.
7.1. SECURITY OF BORROWER. The Obligations shall be secured by (i) a
perfected first priority security interest (subject only to Permitted Liens
entitled to priority under applicable law) in substantially all of the assets of
the Borrower, whether now owned or hereafter acquired, pursuant to the terms of
the Security Documents to which the Borrower is a party and (ii) a pledge by the
Borrower of (A) one hundred percent (100%) of the capital stock of each of its
Domestic Subsidiaries and (B) all of the capital stock of each of its Foreign
Subsidiaries (other than the Designated Subsidiaries) up to a maximum of
sixty-five percent (65%) of such Foreign Subsidiary's capital stock, pursuant to
the terms of its Stock Pledge Agreement; provided that with respect to leases of
Real Estate to which the Borrower is a party on the Closing Date, the Borrower
shall be obligated to provide Mortgages with respect thereto only to the extent
provided in clause (a) of the definition of Mortgages and in any event subject
to Section 9.16.
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7.2. GUARANTIES AND SECURITY OF DOMESTIC SUBSIDIARIES. The Obligations
shall also be guaranteed pursuant to the terms of the Guaranty. The obligations
of the Borrower's Domestic Subsidiaries under the Guaranty shall be secured by
(i) a perfected first priority security interest (subject only to Permitted
Liens entitled to priority under applicable law) in substantially all of the
assets of each such Domestic Subsidiary, whether now owned or hereafter
acquired, pursuant to the terms of the Security Documents to which such Domestic
Subsidiary is a party, and (ii) a pledge by each such Domestic Subsidiary of (A)
one hundred percent (100%) of the capital stock of each of its Domestic
Subsidiaries and (B) all of the capital stock of each of such Domestic
Subsidiary's Foreign Subsidiaries (other than the Designated Subsidiaries) up to
a maximum of sixty-five percent (65%) of such Foreign Subsidiary's capital
stock, pursuant to the terms of such Subsidiary's Stock Pledge Agreement;
provided that with respect to leases of Real Estate to which the Borrower's
Domestic Subsidiaries are a party on the Closing Date, such Domestic
Subsidiaries shall be obligated to provide Mortgages with respect thereto only
to the extent provided in clause (a) of the definition of Mortgages and in any
event subject to Section 9.16.
8. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Banks and the Agent as
follows:
8.1. CORPORATE AUTHORITY.
8.1.1. INCORPORATION; GOOD STANDING. The Borrower and each of
its Subsidiaries other than the Designated Subsidiaries (a) is a
corporation or other limited liability entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has all requisite power to own its property and
conduct its business as now conducted and as presently contemplated,
and (c) except in the jurisdictions set forth on Schedule 8.1, is in
good standing and is duly authorized to do business in each
jurisdiction where such qualification is necessary, except (i) where a
failure to be so qualified would not have a materially adverse effect
on the business, assets or financial condition of the Borrower and its
Subsidiaries, taken as a whole or (ii) where such failure (A) involves
a Subsidiary of the Borrower that was acquired pursuant to Section
10.5.1 within thirty (30) days prior to the date on and as of which
this representation and warranty is being made or repeated and (B) the
Borrower and such Subsidiary are using reasonable best efforts to
qualify such subsidiary to do business in such jurisdiction.
8.1.2. AUTHORIZATION. The execution, delivery and performance
of this Credit Agreement, the other Loan Documents and the Acquisition
Documents to which the Borrower or any of its Subsidiaries is or is to
become a party and the transactions contemplated hereby and thereby (a)
are within the authority (corporate or otherwise) of each such Person,
(b)
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have been duly authorized by all necessary proceedings (except that in
the case of a Subsidiary of the Borrower acquired pursuant to Section
10.5.1, such authorization shall have been completed no later than the
later to occur of (i) the date of such acquisition or (ii) promptly
following receipt by the Borrower or such Subsidiary of Loan Documents
or amendments thereto, as appropriate, to which such Subsidiary is to
become a party), (c) do not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to
which the Borrower or any of its Subsidiaries is subject or any
judgment, order, writ, injunction, license or permit applicable to the
Borrower or any of its Subsidiaries, except where such conflict, breach
or contravention would not have a material adverse effect on the
business, assets or financial condition of the Borrower and its
Subsidiaries taken as a whole and would not limit the enforceability of
the Loan Documents or the ability of the Borrower and its Subsidiaries
to perform their obligations under the Loan Documents, and (d) do not
conflict with any provision of the charter or bylaws of the Borrower or
any of its Subsidiaries and (e) do not conflict with any provision of
any agreement or other instrument binding upon, the Borrower or any of
its Subsidiaries, except where such conflict would not have a material
adverse effect on the business, assets or financial condition of the
Borrower and its Subsidiaries taken as a whole.
8.1.3. ENFORCEABILITY. The execution and delivery of this
Credit Agreement, the other Loan Documents and the Acquisition
Documents to which the Borrower or any of its Subsidiaries is or is to
become a party will result in valid and legally binding obligations of
such Person enforceable against it in accordance with the respective
terms and provisions hereof and thereof, except as enforceability is
limited by bankruptcy, insolvency, reorganization, moratorium or other
laws relating to or affecting generally the enforcement of creditors'
rights and except to the extent that availability of the remedy of
specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding therefor may be brought.
8.2. GOVERNMENTAL APPROVALS. The execution, delivery and performance by
each of the Borrower and its Subsidiaries of this Credit Agreement, the other
Loan Documents and the Acquisition Documents to which the Borrower or any of its
Subsidiaries is or is to become a party and the transactions contemplated hereby
and thereby do not require the approval or consent of, or filing with, any
governmental agency or authority other than those already obtained.
8.3. TITLE TO PROPERTIES; LEASES. Except as indicated on Schedule 8.3
hereto, the Borrower and its Subsidiaries own all of the assets reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries as at the
Balance Sheet Date or acquired since that date (except property and assets sold
or otherwise disposed of in the ordinary course of business or other
dispositions
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permitted hereunder since that date), subject to no rights of others, including
any mortgages, liens or other encumbrances, except Permitted Liens.
8.4. FINANCIAL STATEMENTS AND PROJECTIONS.
8.4.1. FISCAL YEAR. The Borrower and each of its Subsidiaries
(other than Aviall Australia Pty Ltd.) has a fiscal year which is the
period of twelve months ending on December 31 of each calendar year.
Aviall Australia Pty Ltd. has a fiscal year which is the period of
twelve months ending on November 30 of each calendar year.
8.4.2. PRO FORMA FINANCIAL STATEMENTS. There has been
furnished to the Agent a pro forma consolidated and consolidating
balance sheet of the Borrower and its Subsidiaries as at the Closing
Date, which properly gives effect to the Loans to be made on such date
and the Acquisition. Such balance sheet fairly presents the financial
condition of the Borrower and its Subsidiaries on a pro forma basis as
at the close of business on the date thereof, but does not include
footnotes or year-end adjustments.
8.4.3. AUDITED FINANCIAL STATEMENTS. There has been furnished
to the Agent a consolidated balance sheet of the Borrower and its
Subsidiaries as at the Balance Sheet Date, and a consolidated statement
of income of the Borrower and its Subsidiaries for the fiscal year then
ended, certified by PricewaterhouseCoopers LLP. Such balance sheet and
statement of income have been prepared in accordance with generally
accepted accounting principles and fairly present the financial
condition of the Borrower and its Subsidiaries as of the close of
business on the date thereof and the results of operations for the
fiscal year then ended. There are no contingent liabilities of the
Borrower or any of its Subsidiaries as of such date involving material
amounts which were not disclosed in such balance sheet and the notes
related thereto.
8.4.4. INTERIM FINANCIAL STATEMENTS. There has been furnished
to the Agent an unaudited consolidated balance sheet of the Borrower
and its Subsidiaries as at each of March 31, 1999, June 30, 1999 and
September 30, 1999, and an unaudited consolidated statement of income
of the Borrower and its Subsidiaries for the portion of the Borrower's
fiscal year then ended. Such balance sheets and statements of income
have been prepared in accordance with generally accepted accounting
principles and fairly present the financial condition of the Borrower
and its Subsidiaries as at the close of business on the date thereof
and the results of operations for the portion of the Borrower's fiscal
year then ended, but does not include footnotes or year-end
adjustments.
8.4.5. PROJECTIONS. The projections of the annual operating
budgets of the Borrower and its Subsidiaries and their balance sheets
and cash flow statements for the Borrower's 2000 to 2004 fiscal years,
copies
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of which have been delivered to the Agent, disclose all material
assumptions made with respect to general economic, financial and market
conditions used in formulating such projections. The projections are
based upon estimates and assumptions which the Borrower considers
reasonable and reflect the good faith estimates of the Borrower and its
Subsidiaries of the results of operations and other information
projected therein. To the knowledge of the Borrower and its
Subsidiaries, no facts exist that (individually or in the aggregate)
would result in any material adverse change in any of such projections,
as the same may be updated from time to time pursuant to Section
9.4(h).
8.5. NO MATERIAL CHANGES, SOLVENCY, ETC. (a) Since the Balance Sheet
Date there has occurred no materially adverse change in the assets, financial
condition or business of the Borrower and its Subsidiaries, taken as a whole, as
shown on or reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries as at the Balance Sheet Date, or the consolidated statement of
income for the fiscal year then ended, other than changes in the ordinary course
of business that have not had any materially adverse effect in the aggregate on
the assets, business or financial condition of the Borrower and its
Subsidiaries, taken as a whole. Since the Balance Sheet Date, the Borrower has
not made any Distribution, other than as permitted by Section 10.4.
(b) The Borrower and each of its Domestic Subsidiaries (both before and
after giving effect to the transactions contemplated by this Credit Agreement,
the other Loan Documents and the Acquisition Documents) (i) is solvent (after
giving effect to rights of contribution from the Borrower and the Domestic
Subsidiaries with respect to the Guaranty), (ii) has assets having a fair value
in excess of its liabilities, (iii) has assets having a fair value in excess of
the amount required to pay its liabilities on existing debts as such debts
become absolute and matured, and (iv) has, and expects to continue to have,
access to adequate capital for the conduct of its business and the ability to
pay its debts from time to time incurred in connection therewith as such debts
mature.
8.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. Each of the Borrower and its
Subsidiaries possesses all franchises, patents, copyrights, trademarks, trade
names, licenses and permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now conducted by it, except to
the extent the absence of any of the foregoing would not have a material adverse
effect on the business, assets or financial condition of the Borrower and its
Subsidiaries, taken as a whole. None of the Borrower or its Subsidiaries has
received notice that any of the foregoing conflict with any rights of others.
8.7. LITIGATION. Except as set forth in Schedule 8.7 hereto, there are
no actions, suits, proceedings or investigations of any kind pending or, to the
knowledge of the Borrower or its Subsidiaries, threatened against the Borrower
or any of its Subsidiaries before any court, tribunal or administrative agency
or board that, if adversely determined, might, either in any case or in the
aggregate, materially adversely affect the properties, assets, financial
condition
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or business of the Borrower and its Subsidiaries, taken as a whole, or
materially impair the right of the Borrower and its Subsidiaries, taken as a
whole, to carry on business substantially as now conducted by them, or result in
any substantial liability not adequately covered by insurance, or for which
adequate reserves are not maintained on the consolidated balance sheet of the
Borrower and its Subsidiaries, or which question the validity of this Credit
Agreement, any of the other Loan Documents or the Acquisition Documents, or any
action taken or to be taken pursuant hereto or thereto.
8.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrower nor any
of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected in the future to have a materially adverse effect on the business,
assets or financial condition of the Borrower and its Subsidiaries, taken as a
whole. Neither the Borrower nor any of its Subsidiaries is a party to any
contract or agreement that has or is expected, in the judgment of the Borrower's
officers, to have any materially adverse effect on the business, assets or
financial condition of the Borrower and its Subsidiaries, taken as a whole.
8.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the Borrower
nor any of its Subsidiaries is in violation of any provision of its charter
documents, bylaws, or any agreement or instrument to which it may be subject or
by which it or any of its properties may be bound or any decree, order,
judgment, statute, license, rule or regulation, in any of the foregoing cases in
a manner that could reasonably be expected to have a material adverse effect on
the business, assets or financial condition of the Borrower and its Subsidiaries
taken as whole.
8.10. TAX STATUS. The Borrower and its Subsidiaries (a) have made or
filed all United States federal and state income and all other material tax
returns, reports and declarations required by any jurisdiction to which any of
them is subject other than those nonfederal returns, reports and declarations as
to which the failure to so file would not create an outstanding liability for
taxes due or interest and penalties thereon which would have a material adverse
effect on the business, assets or financial condition of the Borrower and its
Subsidiaries, taken as a whole or result in any material liability for which
adequate reserves are not maintained on the consolidated balance sheet of the
Borrower and its Subsidiaries, (b) have paid all United States federal, state
and all other taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and by appropriate proceedings and other than
those nonfederal taxes, assessments and charges as to which the failure to so
pay and any interest and penalties thereon would not have a material adverse
effect on the business, assets or financial condition of the Borrower and its
Subsidiaries, taken as a whole, and (c) have made reasonable provisions for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material
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amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Borrower know of no basis for any such claim.
8.11. NO EVENT OF DEFAULT. No Default or Event of Default has occurred
and is continuing.
8.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the Borrower
nor any of its Domestic Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935; nor is
it an "investment company", or a company "controlled by" an "investment
company", as such terms are defined in the Investment Company Act of 1940.
8.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to
Permitted Liens and notice filings by lessors of equipment leased under
operating leases, and after giving effect to the transactions contemplated
hereby there is no financing statement, security agreement, chattel mortgage,
real estate mortgage or other document filed or recorded with any filing
records, registry or other public office, that names the Borrower or a
Subsidiary as debtor and that purports to cover, affect or give notice of any
present or possible future lien on, or security interest in, any assets or
property of the Borrower or any of its Subsidiaries or any rights relating
thereto.
8.14. PERFECTION OF SECURITY INTERESTS. Subject to the filing in
applicable jurisdictions of all UCC financing statements which have been
executed and delivered to the Agent, all filings, assignments, pledges and
deposits of documents or instruments have been made and all other actions have
been taken that are necessary or advisable, under applicable federal and state
law, to establish and perfect the Agent's security interest in the Collateral;
provided that the only fixture filings that have been made are in respect of
certain premises in Carlstadt, New Jersey and on Willowbrook Road and 2055
Diplomat Drive in Dallas, Texas. To the knowledge of the Borrower and its
Subsidiaries, the Collateral and the Agent's rights with respect to the
Collateral are not subject to any setoff, claims, withholdings or other
defenses. The Borrower, or a Guarantor party to the applicable Security
Documents, is the owner of the Collateral free from any lien, security interest,
encumbrance and any other claim or demand, except for Permitted Liens.
8.15. CERTAIN TRANSACTIONS. Except as set forth on Schedule 8.15,
except for arm's length transactions pursuant to which the Borrower or any of
its Subsidiaries makes payments upon terms no less favorable than the Borrower
or such Subsidiary could obtain from third parties, and except for transactions
between the Borrower and its Subsidiaries and the Guarantors, no Affiliate of
the Borrower or any of its Subsidiaries is presently a party to any transaction
with the Borrower or any of its Subsidiaries (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
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rental of real or personal property to or from, or otherwise requiring payments
to or from any such Affiliate or, to the knowledge of the Borrower, any
corporation, limited liability company, partnership, limited partnership, trust
or other entity in which any such Affiliate has a substantial interest or is an
officer, director, member, trustee or partner.
8.16. EMPLOYEE BENEFIT PLANS. Except as set forth on Schedule 8.16:
8.16.1. IN GENERAL. Each Employee Benefit Plan and each
Guaranteed Pension Plan has been maintained and operated in compliance
with the provisions of ERISA and, to the extent applicable, the Code,
including but not limited to the provisions thereunder respecting
prohibited transactions and the bonding of fiduciaries and other
persons handling plan funds as required by Section 412 of ERISA, except
where such noncompliance would not have a material adverse effect on
the business, assets or financial condition of the Borrower and its
Subsidiaries taken as whole.
8.16.2. TERMINABILITY OF WELFARE PLANS. No Employee Benefit
Plan which is an employee welfare benefit plan within the meaning of
Section 3(1) or Section 3(2)(B) of ERISA, provides benefit coverage
subsequent to termination of employment (except as required by Title I,
Part 6 of ERISA or applicable state insurance laws and except
individual employment, severance or termination agreements with
employees, directors, officers or independent contractors of the
Borrower of any ERISA Affiliate). The Borrower or an ERISA Affiliate,
as appropriate, may terminate each such Plan at any time (or at any
time subsequent to the expiration of any applicable bargaining
agreement) in the discretion of the Borrower or such ERISA Affiliate
without liability to any Person other than for claims arising prior to
termination.
8.16.3. GUARANTEED PENSION PLANS. Each contribution required
to be made to a Guaranteed Pension Plan to avoid the incurrence of an
accumulated funding deficiency or the notice or lien provisions of
Section 302(f) of ERISA has been timely made. No waiver of an
accumulated funding deficiency or extension of amortization periods has
been received with respect to any Guaranteed Pension Plan, and neither
the Borrower nor any ERISA Affiliate has been required to or has posted
security in connection with an amendment to a Guaranteed Pension Plan
pursuant to Section 307 of ERISA or Section 401(a)(29) of the Code. No
liability to the PBGC (other than required insurance premiums, all of
which have been paid) has been incurred by the Borrower or any ERISA
Affiliate with respect to any Guaranteed Pension Plan and there has not
been any ERISA Reportable Event (other than an ERISA Reportable Event
as to which the requirement of thirty (30) days notice has been
waived), or any other event or condition which presents a material risk
of termination of any Guaranteed Pension Plan by the PBGC. Based on the
latest valuation of each Guaranteed Pension Plan (which in each case
occurred within twelve
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months of the date of this representation), and on the actuarial
methods and assumptions employed for that valuation, the aggregate
accrued benefit obligation (the "ABO") of all such Guaranteed Pension
Plans as determined for purposes of the Borrower's audited financial
statements did not exceed the aggregate value of the assets of all such
Guaranteed Pension Plans, disregarding for this purpose the ABO and
assets of any Guaranteed Pension Plan with assets in excess of ABO, by
an amount in excess of $5,000,000.
8.16.4. MULTIEMPLOYER PLANS. Neither the Borrower nor any
ERISA Affiliate has incurred any material liability (including
secondary liability) to any Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan under
Section 4201 of ERISA or as a result of a sale of assets described in
Section 4204 of ERISA. Neither the Borrower nor any ERISA Affiliate has
been notified that any Multiemployer Plan is in reorganization or
insolvent under and within the meaning of Section 4241 or Section 4245
of ERISA or is at risk of entering reorganization or becoming insolvent
or that any Multiemployer Plan intends to terminate or has been
terminated under Section 4041A of ERISA.
8.17. USE OF PROCEEDS; REGULATIONS U AND X, ETC. The proceeds of the
Loans shall be used for financing the Acquisition, for refinancing certain
existing Indebtedness, for payment of transaction fees and expenses in
connection with the Acquisition and the transactions contemplated by this Credit
Agreement, for Capital Expenditures and for working capital and general
corporate purposes. The Borrower will obtain Letters of Credit solely for
working capital and general corporate purposes. No portion of any Loan is to be
used, and no portion of any Letter of Credit is to be obtained, for the purpose
of purchasing or carrying any "margin security" or "margin stock" as such terms
are used in Regulations U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R. Parts 221 and 224. No portion of the proceeds of any Loans is
to be used, and no portion of any Letter of Credit is to be maintained, for the
purpose of knowingly purchasing, or providing credit support for the purchase
of, during the underwriting or placement period or within 30 days thereafter,
any Ineligible Securities underwritten or privately placed by a Section 20
Subsidiary.
8.18. ENVIRONMENTAL COMPLIANCE. The Borrower has taken all reasonably
necessary steps to investigate the past and present condition and usage of the
Real Estate and the operations conducted thereon and has determined that, except
as disclosed on Schedule 8.18 hereto:
(a) none of the Borrower, its Subsidiaries or any of their
operations on the Real Estate is in violation, nor has the Borrower or
any of its Subsidiaries received written notice that it is in alleged
violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without
limitation, those arising under the Resource Conservation and Recovery
Act ("RCRA"), the Comprehensive Environmental Response, Compensation
and Liability Act
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of 1980 as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the
Federal Clean Air Act, the Toxic Substances Control Act, or any state
or local statute, regulation, ordinance, order or decree relating to
health, safety or the environment (hereinafter "Environmental Laws"),
which violation would have a material adverse effect on the business,
assets or financial condition of the Borrower and its Subsidiaries,
taken as a whole;
(b) neither the Borrower nor any of its Subsidiaries has
received notice from any third party including, without limitation, any
federal, state or local governmental authority, (i) that any one of
them has been identified by the United States Environmental Protection
Agency ("EPA") as a potentially responsible party under CERCLA with
respect to a site listed on the National Priorities List, 40 C.F.R.
Part 300 Appendix B (1986); (ii) that any hazardous waste, as defined
by 42 U.S.C. Section 6903(5), any hazardous substances as defined by 42
U.S.C. Section 9601(14), any pollutant or contaminant as defined by 42
U.S.C. Section 9601(33) and any toxic substances, oil or hazardous
materials or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") which any one of them has
generated, transported or disposed of has been found at any site at
which a federal, state or local agency or other third party has
conducted or has ordered that the Borrower or any of its Subsidiaries
conduct a remedial investigation, removal or other response action
pursuant to any Environmental Law; or (iii) that it is or shall be a
named party to any claim, action, cause of action, complaint, or legal
or administrative proceeding (in each case, contingent or otherwise)
arising out of any third party's incurrence of costs, expenses, losses
or damages of any kind whatsoever in connection with the release of
Hazardous Substances;
(c) (i) to the best of the knowledge of the Borrower and its
Subsidiaries no portion of the Real Estate has been used by the
Borrower or its Subsidiaries for the handling, processing, storage or
disposal of Hazardous Substances other than in accordance with
applicable Environmental Laws, and no underground tank or other
underground storage receptacle for Hazardous Substances is located on
any portion of the Real Estate; (ii) in the course of any activities
conducted by the Borrower, its Subsidiaries or, to the best of the
knowledge of the Borrower, operators of such Person's properties, no
Hazardous Substances have been generated or are being used on the Real
Estate except in accordance with applicable Environmental Laws; (iii)
to the best of the knowledge of the Borrower and its Subsidiaries,
there have been no releases (i.e. any past or present releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, disposing or dumping) or threatened releases of
Hazardous Substances on, upon, into or from the properties of the
Borrower or its Subsidiaries, (A) in a quantity that requires any
report or other notice to any governmental authority pursuant to any
Environmental Law that has not been
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submitted to the appropriate governmental authority, or (B) that has
resulted or that threatens to result in the presence of any Hazardous
Substance in the environment in a quantity, concentration, state, or
other condition that exceeds any applicable standard for the protection
of human health or the environment under any Environmental Law, and
(iv) to the best of the knowledge of the Borrower and its Subsidiaries,
any Hazardous Substances that have been generated on any of the Real
Estate have been transported offsite, treated and disposed of as
required under applicable Environmental Laws; and
(d) none of the Borrower and its Subsidiaries, or any of the
Real Estate is subject to any applicable Environmental Law requiring
the performance of Hazardous Substances site assessments, or the
removal or remediation of Hazardous Substances, or the giving of notice
to any governmental agency or the recording or delivery to other
Persons of an environmental disclosure document or statement by virtue
of the transactions set forth herein and contemplated hereby, or as a
condition to the recording of any Mortgage or to the effectiveness of
any other transactions contemplated hereby.
8.19. SUBSIDIARIES, ETC. The only direct or indirect Subsidiaries of
the Borrower are as set forth on Schedule 8.19. Except as set forth on Schedule
8.19 or, with respect to transactions occurring after the Closing Date, as
otherwise permitted by this Credit Agreement, neither the Borrower nor any
Subsidiary of the Borrower is engaged in any joint venture or partnership with
any other Person.
8.20. CHIEF EXECUTIVE OFFICES. The Borrower's chief executive office is
located at 2075 Diplomat Drive, Dallas, Texas, 75234, at which location its
books and records are kept. The chief executive office of each of the
Subsidiaries of the Borrower party to any of the Security Documents is located
at the address set forth opposite its name on Schedule 8.20, at which location
each of its books and records are kept.
8.21. NO AMENDMENTS TO CERTAIN DOCUMENTS. Neither Borrower nor any of
its Subsidiaries has amended any of the Acquisition Documents in any material
respect. Each of the representations and warranties made by the Borrower or any
of its Subsidiaries in any of the Acquisition Documents was true and correct in
all material respects when made and continues to be true and correct in all
material respects on the Closing Date, except to the extent that any of such
representations and warranties relate, by the express terms thereof, solely to a
date falling prior to the Closing Date, and except to the extent that any of
such representations and warranties may have been affected by the consummation
of the transactions contemplated and permitted or required by the Loan Documents
or the Acquisition.
8.22. DISCLOSURE No representation or warranty made by the Borrower or
any of its Subsidiaries in this Credit Agreement or any of the other Loan
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Documents contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances in which they are made.
There is no fact known to any of the Borrower or its Subsidiaries, which
materially adversely affects, or which is reasonably likely in the future to
materially adversely affect, the business, assets or financial condition of the
Borrower and its Subsidiaries, taken as a whole, exclusive of effects resulting
from changes in general economic conditions, legal standards or regulatory
conditions.
8.23. REPRESENTATIONS UNDER THE DISTRIBUTION AGREEMENT. To the best of
the Borrower's knowledge, each of the representations and warranties of
Rolls-Royce contained in the Distribution Agreement was true and correct when
made and continues to be true and correct in all material respects on and as of
the Closing Date.
8.24. INSURANCE. The Borrower and each of its Subsidiaries maintains
with financially sound and reputable insurers insurance (or, as to workers
compensation or similar insurance, with an insurance fund or by self-insurance
authorized by the jurisdiction in which it operates) with respect to its
properties and businesses against such casualties and contingencies as are
ordinary and customary for similar business engaged in the jurisdiction in which
the Borrower and its Subsidiaries operate. Each such insurance policy maintained
by the Borrower and its Subsidiaries is set forth on Schedule 8.24 hereto.
8.25. YEAR 2000 PROBLEM. The Borrower and its Subsidiaries have
reviewed the areas within their businesses and operations which could be
materially and adversely affected by failure to become "Year 2000 Compliant"
(i.e. that computer applications, imbedded microchips and other systems used by
the Borrower or any of its Subsidiaries, will be able properly to recognize and
perform properly date-sensitive functions involving certain dates prior to and
any date after December 31, 1999). Based upon such review, the Borrower
reasonably believes that the Borrower and its Subsidiaries will become "Year
2000 Compliant" in a timely manner except to the extent that failure to do so
will not have any materially adverse effect on the business or financial
condition of the Borrower and its Subsidiaries, taken as a whole.
9. AFFIRMATIVE COVENANTS.
The Borrower hereby covenants and agrees that, so long as any
Obligations are outstanding or any Bank has any obligation to make any Loans or
any Issuing Bank has any obligation to issue, extend or renew any Letters of
Credit:
9.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or
cause to be paid the principal and interest on the Loans, all Reimbursement
Obligations, the Letter of Credit Fees, the commitment fees, the Agent's fee and
all other amounts provided for in this Credit Agreement and the other Loan
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Documents to which the Borrower or any of its Subsidiaries is a party, all in
accordance with the terms of this Credit Agreement and such other Loan
Documents.
9.2. MAINTENANCE OF OFFICE. The Borrower will, and will cause each of
its Subsidiaries that is a party to any of the Security Documents to, maintain
its chief executive office at the address set forth in Section 8.20, or at such
other place in the United States of America as the Borrower shall designate upon
written notice to the Agent, where notices, presentations and demands to or upon
the Borrower or such Subsidiary in respect of the Loan Documents to which the
Borrower or such Subsidiary is a party may be given or made.
9.3. RECORDS AND ACCOUNTS. The Borrower will (a) keep, and cause each
of its Subsidiaries to keep, true and accurate records and books of account in
which full, true and correct entries will be made in accordance with generally
accepted accounting principles, (b) maintain adequate accounts and reserves for
all taxes (including income taxes), depreciation, depletion, obsolescence and
amortization of its properties and the properties of its Subsidiaries,
contingencies, and other reserves, and (c) at all times engage
PricewaterhouseCoopers LLP or other independent certified public accountants
reasonably satisfactory to the Agent as the independent certified public
accountants of the Borrower and its Subsidiaries and will not permit more than
thirty (30) days to elapse between the cessation of such firm's (or any
successor firm's) engagement as the independent certified public accountants of
the Borrower and its Subsidiaries and the appointment in such capacity of a
successor firm as shall be satisfactory to the Agent. The Borrower and its
Subsidiaries will maintain their respective inventory accounting practices in a
manner consistent with their existing practices.
9.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrower
will deliver to the Agent (and the Agent will in turn deliver to each of the
Banks):
(a) as soon as practicable, but in any event not later than
one hundred twenty (120) days after the end of each fiscal year of the
Borrower, (i) the consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such year, and the related consolidated
statement of income and consolidated statement of cash flows for such
year, each setting forth in comparative form the figures for the
previous fiscal year and all such consolidated statements to be in
reasonable detail, prepared in accordance with generally accepted
accounting principles, and certified without qualification by
PricewaterhouseCoopers LLP or by other independent certified public
accountants reasonably satisfactory to the Agent, together with a
written certification from such accountants to the effect that they
have read a copy of this Credit Agreement and that, in making the
examination necessary to said certification, they have obtained no
knowledge of any Default or Event of Default, or if such accountants
have obtained such knowledge they shall disclose in such
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statement any such Default or Event of Default; provided that such
accountants shall not be liable to the Banks for failure to obtain
knowledge of any Default or Event of Default; and (ii) the unaudited
consolidating balance sheets of the Borrower and its Subsidiaries
prepared along management reporting lines as at the end of such year,
and the related unaudited consolidating (except with respect to cash
flow) statements of income for such Persons, each setting forth in
comparative form the figures for the previous fiscal year and all such
consolidating statements to be in reasonable detail, prepared by
management in accordance with the past financial practice of the
Borrower and its Subsidiaries and with a certification by the chief
financial officer, treasurer or controller of the Borrower that such
financial statements fairly present the financial condition of the
Borrower and its Subsidiaries on the date thereof and the results of
operations of the Borrower and its Subsidiaries for the period covered
thereby;
(b) as soon as practicable, but in any event not later than
sixty (60) days after the end of each of the first three fiscal
quarters in each fiscal year of the Borrower, and not later than ninety
(90) days after the end of the fourth fiscal quarter in each fiscal
year of the Borrower, copies of the unaudited consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries as at
the end of such quarter, and the related consolidated and consolidating
statements of income and consolidated statements of cash flow for the
portion of the Borrower's fiscal year then elapsed, all in reasonable
detail and prepared in accordance with generally accepted accounting
principles (except for provisions for footnotes and year-end
adjustments), and in each case together with a certification by the
chief financial officer, treasurer or controller of the Borrower that
such financial statements fairly present the financial condition of the
Borrower and its Subsidiaries on the date thereof (subject to the
foregoing) and the results of operations of the Borrower and its
Subsidiaries for the period covered thereby;
(c) simultaneously with the delivery of the financial
statements referred to in subsections (a) and (b) above, a statement
certified by the chief financial officer, treasurer or controller of
the Borrower in substantially the form of Exhibit I (the "Compliance
Certificate") hereto and setting forth in reasonable detail
computations evidencing compliance with the covenants contained in
Section 11 and (if applicable) reconciliations to reflect changes in
generally accepted accounting principles since the Balance Sheet Date;
(d) as soon as practicable, but in any event within fifteen
(15) Business Days after the end of each calendar month, a Borrowing
Base Report setting forth the Borrowing Base calculated as at the end
of such calendar month;
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(e) promptly and in any event within twenty (20) days of the
filing or mailing thereof, copies of all material reports or filings of
a financial nature filed with the Securities and Exchange Commission or
sent to the stockholders of the Borrower;
(f) not later than thirty (30) days after the beginning of
each fiscal year of the Borrower, the annual budget of the Borrower and
its Subsidiaries;
(g) promptly upon receipt thereof, copies of all accountants'
management letters received by the Borrower or any of its Subsidiaries;
(h) from time to time upon reasonable request by the Agent,
but no more frequently than annually, projections of the Borrower and
its Subsidiaries updating those projections referred to in Section
8.4.5 or any other projections delivered pursuant to this Section
9.4(h);
(i) not later than thirty (30) days prior to the beginning of
each fiscal year of the Borrower, a proposed Environmental Budget for
the forthcoming fiscal year, which shall be a forecast of (but not a
restriction on) expenditures of the Borrower and its Subsidiaries in
respect of environmental matters for such forthcoming fiscal year;
provided that if any material expenditures occur (or are reasonably
expected by the Borrower or its Subsidiaries to occur) during such
forthcoming fiscal year that are not reflected in the Environmental
Budget for such fiscal year, the Borrower shall notify the Agent and
the Banks of the relevant facts and circumstances within thirty (30)
days of obtaining knowledge thereof, and if requested in writing by the
Majority Banks shall prepare and deliver to the Agent and each of the
Banks an appropriately revised Environmental Budget; and
(j) from time to time, such other financial data and
information as the Agent or any Bank may reasonably request.
9.5. NOTICES.
9.5.1. DEFAULTS. The Borrower will promptly notify in writing
the Agent and each of the Banks of the occurrence of any Default or
Event of Default. If any Person shall give any notice or take any other
action in respect of a claimed default (whether or not constituting an
Event of Default) under this Credit Agreement or any other note,
evidence of indebtedness, indenture or other obligation to which or
with respect to which the Borrower or any of its Subsidiaries is a
party or obligor, whether as principal, guarantor, surety or otherwise,
the Borrower shall forthwith give written notice thereof to the Agent
and each of the Banks, describing the notice or action and the nature
of the claimed default.
9.5.2. ENVIRONMENTAL EVENTS. The Borrower will promptly give
notice to the Agent and each of the Banks (a) of any violation of any
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Environmental Law that the Borrower or any of its Subsidiaries reports
in writing or is reportable by such Person in writing (or for which any
written report supplemental to any oral report is made) to any federal,
state or local environmental agency and (b) upon becoming aware
thereof, of any inquiry, proceeding, investigation, or other action,
including a notice from any agency of potential environmental
liability, of any federal, state or local environmental agency or
board, as to matters that could reasonably be expected to have a
material adverse effect on the assets, liabilities, financial
conditions or operations of the Borrower and its Subsidiaries taken as
a whole, or the Mortgages or security interests of the Agent pursuant
to the Security Documents.
9.5.3. NOTIFICATION OF CLAIM AGAINST COLLATERAL. The Borrower
will, immediately upon becoming aware thereof, notify the Agent in
writing of any setoff, claims (including, with respect to the Real
Estate, environmental claims), withholdings or other defenses to which
any of the Collateral, or the Agent's rights with respect to the
Collateral, are subject.
9.5.4. NOTICE OF LITIGATION AND JUDGMENTS. The Borrower will,
and will cause each of its Subsidiaries to, give notice to the Agent in
writing promptly and in any event within fifteen (15) days of becoming
aware of any litigation or proceedings threatened in writing or any
pending litigation and proceedings affecting the Borrower or any of its
Subsidiaries or to which the Borrower or any of its Subsidiaries is or
becomes a party involving an uninsured claim against the Borrower or
any of its Subsidiaries, that could reasonably be expected to have a
material adverse effect on the assets, financial condition or business
of the Borrower and its Subsidiaries, taken as a whole, stating the
nature and status of such litigation or proceedings. The Borrower will,
and will cause each of its Subsidiaries to, give notice to the Agent,
in writing, in form and detail reasonably satisfactory to the Agent,
within ten (10) days of any judgment not covered by insurance, final or
otherwise, against the Borrower or any of its Subsidiaries in an amount
in excess of $1,000,000.
9.5.5. NEW LEASES. No later than fifteen (15) days prior to
the commencement date of any new Specified Lease (or on the renewal or
extension of any existing Specified Lease) to which the Borrower or a
Domestic Subsidiary is a party as lessee or sublessee, the Borrower
will provide the Agent with notice thereof setting forth the principal
terms thereof (including a description of the premises covered thereby,
the term thereof and the periodic rent payable thereunder) sufficient
for the Agent to determine the appropriate Landlord Lien Reserve with
respect thereto.
9.6. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. The Borrower will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, rights and franchises and those of its
Subsidiaries (other than the Designated Subsidiaries) except as permitted under
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Section 10.5 hereof. Except as permitted by Section 10.5, Borrower (a) will
cause all of its material properties and those of its Subsidiaries used or
useful in the conduct of its business or the business of its Subsidiaries to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment, except where the failure to do so would not have a
material adverse effect on the business, assets or financial condition of the
Borrower and its Subsidiaries, taken as a whole, (b) will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Borrower may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times, and (c) will, and will cause each of its Subsidiaries (other than
the Designated Subsidiaries) to, continue to engage primarily in the businesses
now conducted by them and in related businesses; provided that nothing in this
Section 9.6 shall prevent the Borrower or any of its Subsidiaries from
discontinuing the operation and maintenance of any of its properties or any of
those of its Subsidiaries if such discontinuance is, in the judgment of the
Borrower desirable in the conduct of its or their business and that do not in
the aggregate materially adversely affect the business of the Borrower and its
Subsidiaries taken as a whole. The Borrower will take all steps reasonably
necessary to cause the Subsidiaries listed on Schedule 8.1 to be duly authorized
to do business and in good standing in each jurisdiction where such
qualification is necessary no later than sixty (60) days after the Closing Date.
The Borrower will take all steps reasonably necessary to (i) cause the
Designated Subsidiaries organized in France and Germany to dissolve or otherwise
terminate their existence in accordance with the laws of their respective
jurisdictions of organization through liquidation or merger with a Subsidiary
that is not a Designated Subsidiary and (ii) cause all other Designated
Subsidiaries to conduct no material business activities at any time after the
Closing Date.
9.7. INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers (or
pursuant to a plan of self-insurance established in accordance with applicable
law) insurance with respect to its properties and business against such
casualties and contingencies as shall be ordinary and customary for businesses
engaged in similar activities in similar geographic areas and in amounts,
containing such terms, in such forms and for such periods as may be reasonable
and prudent and in accordance with the terms of the Security Agreements, the
Mortgages and the coverages described on Schedule 8.24.
9.8. TAXES. The Borrower will, and will cause each of its Subsidiaries
to, duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
imposed upon it and its real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies that if unpaid might by law become a lien or
charge upon any of its property; provided that any such tax, assessment, charge,
levy or claim need not be paid if (a) the validity or amount thereof shall
currently be contested in good faith by appropriate proceedings and if the
Borrower or such
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Subsidiary shall have set aside on its books adequate reserves with respect
thereto or (b) adequate surety or similar bonds have been obtained with respect
thereto; provided further that with respect to liens or charges securing an
amount of less than $100,000, the Borrower or such Subsidiary shall have a
period of thirty (30) days to accomplish such discharge; and provided still
further that the Borrower and each Subsidiary of the Borrower will pay all such
taxes, assessments, charges, levies or claims forthwith upon the commencement of
proceedings to foreclose any lien that may have attached as security therefor.
9.9. INSPECTION OF PROPERTIES AND BOOKS, ETC.
9.9.1. GENERAL. The Borrower shall permit the Banks, through
the Agent or any of the Banks' other designated representatives, to (a)
visit and inspect any of the properties of the Borrower or any of its
Subsidiaries, (b) to examine the books of account of the Borrower or
any of its Subsidiaries (and to make copies thereof and extracts
therefrom), (c) to discuss the affairs, finances and accounts of the
Borrower or any of its Subsidiaries with, and to be advised as to the
same by, its and their officers and independent public accountants, all
during ordinary business hours and upon reasonable notice from the
Agent or any Bank; provided that, notwithstanding the foregoing, prior
to the occurrence of a Default or an Event of Default, the Agent (or
its representatives) or any such Bank will obtain the prior approval of
an officer of the Borrower (such approval not to be unreasonably
withheld) prior to any such discussions with officers, directors, or
public accountants of the Borrower or any of its Subsidiaries, and (d)
conduct commercial finance examinations and appraisals of assets, all
at the reasonable expense of the Borrower and at such reasonable times
and at such reasonable intervals as the Agent or any Bank may
reasonably request; provided that the Borrower shall be required to pay
for such examinations and appraisals no more than once in any calendar
year unless an Event of Default shall be continuing. At the request of
the Agent, the Borrower shall deliver a letter addressed to the
Borrower's independent public accountants in respect of any discussions
with them permitted under this Section 9.9.1 instructing them to comply
with the provisions of this Section 9.9.1.
9.9.2. ENVIRONMENTAL ASSESSMENTS. The Agent may, from time to
time, when required by governmental regulations or its internal
policies and procedures, obtain one or more environmental assessments
or audits of any Mortgaged Property prepared by a hydrogeologist, an
independent engineer or other qualified consultant or expert approved
by the Agent to evaluate or confirm (a) whether any Hazardous Materials
are present in the soil or water at such Mortgaged Property and (b)
whether the use and operation of such Mortgaged Property complies with
all Environmental Laws. Environmental assessments may include, without
limitation, detailed visual inspections of such Mortgaged Property
including any and all storage areas, storage tanks, drains, dry wells,
and leaching areas, and the taking of soil samples, surface water
samples and
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ground water samples, as well as such other investigations or analysis
as the Agent deems appropriate. All such environmental assessments
shall be conducted and made at the expense of the Borrower.
9.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. The
Borrower will, and will cause each of its Subsidiaries to, comply with (a) the
applicable laws and regulations to which it is subject, including all
Environmental Laws the noncompliance with which would have a material adverse
affect on the business, assets or financial condition of the Borrower and its
Subsidiaries taken as a whole or the ability of any of the Borrower or its
Subsidiaries to fulfill its obligations under this Credit Agreement or the other
Loan Documents to which it is a party, (b) the provisions of its charter
documents and by-laws, (c) all agreements and instruments by which it or any of
its properties may be bound the noncompliance with which would have a material
adverse affect on the business, assets or financial condition of the Borrower
and its Subsidiaries taken as a whole or the ability of any of the Borrower or
its Subsidiaries to fulfill its obligations under this Credit Agreement or the
other Loan Documents to which it is a party, and (d) all applicable decrees,
orders, and judgments the noncompliance with which would have a material adverse
affect on the business, assets or financial condition of the Borrower and its
Subsidiaries taken as a whole or the ability of any of the Borrower or its
Subsidiaries to fulfill its obligations under this Credit Agreement or the other
Loan Documents to which it is a party. If any authorization, consent, approval,
permit or license from any officer, agency or instrumentality of any government
shall become necessary or required in order that any of the Borrower or its
Subsidiaries may fulfill any of its obligations hereunder or any of the other
Loan Documents to which it is a party, the Borrower will, or (as the case may
be) will cause such Subsidiary to, immediately take or cause to be taken all
reasonable steps within its power to obtain such authorization, consent,
approval, permit or license and furnish the Agent with evidence thereof.
9.11. EMPLOYEE BENEFIT PLANS. The Borrower will (a) upon request of the
Agent, furnish to the Agent a copy of the most recent actuarial statement
required to be submitted under Section 103(d) of ERISA and Annual Report, Form
5500, with all required attachments, in respect of each Guaranteed Pension Plan
and (b) promptly upon receipt or dispatch, furnish to the Agent any notice,
report or demand sent or received in respect of a Guaranteed Pension Plan under
Sections 302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in
respect of a Multiemployer Plan, under Sections 4041A, 4202, 4219, 4242, or 4245
of ERISA.
9.12. USE OF PROCEEDS. The Borrower will use the proceeds of the Loans
for the Acquisition, to refinance existing Indebtedness, for payment of
transaction fees and expenses, for Capital Expenditures and for working capital
and general corporate purposes. The Borrower will obtain Letters of Credit
solely for general corporate and working capital purposes.
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9.13. FAIR LABOR STANDARDS ACT. The Borrower will, and will cause each
of its Subsidiaries to, at all times operate its business in compliance with all
material applicable provisions of the Fair Labor Standards Act of 1938, as
amended. To the best of the knowledge of the Borrower, none of the inventory of
any of the Borrower or its Subsidiaries is or will be produced by employees of
suppliers who are employed in violation of the minimum wage or maximum hour
provisions of the Fair Labor Standards Act (29 U.S.C. Sections 206 and 207) or
any regulations promulgated thereunder, as in effect from time to time.
9.14. ADDITIONAL MORTGAGED PROPERTY. If, after the Closing Date, the
Borrower or any Subsidiary acquires any Real Estate with either a fair market
value or acquisition price of more than $500,000, or leases any Real Estate
where the present value (at a discount rate of eight percent (8%)) of the
remaining required Lease payments exceeds $500,000, the Borrower or such
Subsidiary shall, within thirty (30) days after such acquisition, deliver to the
Agent a fully executed Mortgage over such Real Estate together with title
insurance policies, appraisals, surveys, evidences of insurance with the Agent
named as loss payee, legal opinions and other documents and certificates with
respect to such real estate consistent with the existing Mortgages and related
documents delivered hereunder. The Borrower further agrees that, following the
taking of any such actions with respect to such real estate, the Agent shall
have for the benefit of the Banks and the Agent a valid and enforceable first
priority Mortgage over such real estate, free and clear of all defects and
encumbrances except for Permitted Liens.
9.15. INTEREST RATE PROTECTION. The Borrower will, not later than
ninety (90) days after the Closing Date, purchase an interest rate cap or swap
or effect other interest rate protection arrangements with the Agent or any Bank
in a notional amount equal to the amount of the Term Loan outstanding from time
to time, including without limitation as to the rate and tenor thereof,
reasonably satisfactory to the Agent in all respects.
9.16. MORTGAGES. No later then ninety (90) days following the Closing
Date, the Borrower shall use reasonable best efforts to, or shall cause the
applicable Subsidiary to use reasonable best efforts to, execute and deliver to
the Agent Mortgages with respect to each leasehold described in clause (a) of
the definition of the term Mortgage in form and substance satisfactory to the
Agent. In addition, the Borrower shall, or shall cause such Subsidiary to, use
its reasonable best efforts to deliver to the Agent such consents as may be
required for the Agent to receive such Mortgages and such estoppel certificates
with respect to such leasehold as the Agent may reasonably request. If any
landlord of such a leasehold or any mortgagee thereof refuses, after request
made by the Borrower or the applicable Subsidiary in writing, to permit a
Mortgage with respect to such leasehold, the Borrower will be deemed to have
satisfied this Section 9.16 with respect to such Mortgaged Property.
9.17. TITLE INSURANCE. No later then ninety (90) days following the
Closing Date, the Borrower shall, or shall cause the applicable Subsidiary to,
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deliver a Title Policy covering each Mortgaged Property as to which a Mortgage
has been executed and delivered pursuant to Section 9.16 (or commitments to
issue such policies, with all conditions to issuance of the Title Policy deleted
by an authorized agent of the Title Insurance Company) together with proof of
payment of all fees and premiums for such policies, from the Title Insurance
Company and in amounts reasonably satisfactory to the Agent, insuring the
interest of the Agent and each of the Banks as mortgagee under the Mortgage with
respect to such real property.
9.18. LANDLORD WAIVERS. No later than ninety (90) days following the
Closing Date, the Borrower shall use reasonable best efforts to, or shall cause
the applicable Subsidiary to use reasonable best efforts to, deliver to the
Agent Landlord Waivers in respect of each Specified Lease. If any landlord in
respect of a Specified Lease refuses, after request made by the Borrower or the
applicable Subsidiary in writing, to execute a Landlord Waiver with respect to
such Specified Lease, the Borrower will be deemed to have satisfied the
requirements of this Section 9.18 with respect to such Specified Lease; provided
that notwithstanding such satisfaction such Specified Lease shall remain a
Specified Lease for all purposes of this Credit Agreement (including the
determination of the Landlord Lien Reserves hereunder).
9.19. OPINIONS REGARDING FOREIGN STOCK PLEDGES. No later than sixty
(60) days following the Closing Date, the Borrower shall provide to the Banks
and the Agent favorable legal opinions of counsel in the applicable
jurisdictions addressed to the Banks and the Agent as to the pledges of 65% of
the stock of the Foreign Subsidiaries (other than the Designated Subsidiaries),
in each case in form and substance reasonably satisfactory to the Agent.
9.20. FURTHER ASSURANCES. The Borrower will, and will cause each of its
Subsidiaries to execute such further instruments and documents and take such
other steps as the Banks or the Agent shall reasonably request to carry out to
their reasonable satisfaction the transactions contemplated by this Credit
Agreement and the other Loan Documents.
10. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Obligations are
outstanding or any Bank has any obligation to make any Loans or any Issuing Bank
has any obligation to issue, extend or renew any Letters of Credit:
10.1. INDEBTEDNESS. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume, guarantee or be or remain liable,
contingently or otherwise, with respect to any Indebtedness other than:
(a) Indebtedness to the Banks and the Agent arising under any
of the Loan Documents;
(b) current liabilities and accrued expenses of the Borrower
or such Subsidiary incurred in the ordinary course of business not
incurred
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through (i) the borrowing of money, or (ii) the obtaining of credit
except for credit on an open account basis customarily extended and in
fact extended in connection with normal purchases of goods and
services, and documentary letters of credit issued for the account of
the Borrower or such Subsidiary to support the same;
(c) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, worker's
compensation, materials and supplies to the extent that payment
therefor shall not at the time be required to be made in accordance
with the provisions of Section 9.8;
(d) Indebtedness in respect of judgments or awards that have
been in force for less than the applicable period for taking an appeal
so long as execution is not levied thereunder or in respect of which
the Borrower or such Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of which
a stay of execution shall have been obtained pending such appeal or
review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(f) Indebtedness of the Borrower and its Subsidiaries
consisting of (i) obligations under Capitalized Leases and (ii)
purchase money Indebtedness incurred in connection with the acquisition
after the date hereof of any real or personal property by the Borrower
or such Subsidiary; provided that the aggregate principal amount of all
such Indebtedness permitted under this clause (f) shall not exceed
$5,000,000 outstanding at any one time;
(g) Indebtedness of the Borrower and its Subsidiaries existing
on the date hereof and listed and described on Schedule 10.1 hereto;
(h) Indebtedness of the Foreign Subsidiaries (other than as
provided in (g) above) in an aggregate amount not to exceed $5,000,000
at any time outstanding;
(i) Indebtedness in respect of performance, surety, statutory,
insurance, appeal or similar bonds obtained in the ordinary course of
business;
(j) unsecured Indebtedness of the Borrower to any Domestic
Subsidiary or any Domestic Subsidiary to the Borrower or any other
Domestic Subsidiary; provided that (x) if such Indebtedness is
evidenced by promissory notes of the applicable obligor thereunder,
such promissory notes shall have been pledged by the holder thereof to
the Agent as security for the Obligations on terms and conditions
reasonably satisfactory to the Agent and the Banks and (y) any such
Subsidiary has executed and delivered to the Agent, for the benefit of
the Banks and the
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Agent, a guaranty in substantially the form of Exhibit C attached
hereto, a security agreement in substantially the form of Exhibit D
attached hereto, and any other agreements, documents or instruments
necessary to grant to the Agent a first priority perfected security
interest in such Subsidiary's assets as contemplated by Section 7.2;
(k) Indebtedness consisting of borrowings against the cash
surrender value of life insurance polices owned by the Borrower or its
Subsidiaries and of which the Borrower or such Subsidiary is the
beneficiary, such Indebtedness not to exceed an aggregate amount of
$3,000,000 at any time outstanding;
(l) unsecured Indebtedness of the Borrower and its
Subsidiaries which is subordinated to the Obligations on terms and
conditions reasonably satisfactory to the Banks and the Agent; provided
that the net cash proceeds thereof are applied as a mandatory
prepayment of the Obligations pursuant to Section 6.2;
(m) Indebtedness incurred by the Borrower to the Agent or any
Bank under the interest rate protection arrangements described in
Section 9.15;
(n) Indemnities by the Borrower or any of its Subsidiaries of
liabilities of directors and officers pursuant to provisions contained
in such Person's charter documents or bylaws, and otherwise permitted
by applicable laws;
(o) Indebtedness of Foreign Subsidiaries (other than the
Designated Subsidiaries) to the Borrower and other Subsidiaries of the
Borrower so long as the Investment in such Foreign Subsidiaries in
respect of such Indebtedness is permitted by Section 10.3(h);
(p) Indebtedness of the Borrower and any Subsidiary in the
form of guaranties by the Borrower or any Subsidiary of the Borrower of
(i) Indebtedness of any Subsidiary which such Subsidiary is permitted
to incur pursuant to this Section 10.1, subject to any limitations set
forth in this Section 10.1, and (ii) Indebtedness of the Borrower or
any Subsidiary with respect to operating lease obligations;
(q) Indebtedness of the Borrower and its Subsidiaries assumed
with respect to acquisitions permitted by Section 10.5.1 or consisting
of guaranties of such Indebtedness, so long as such Indebtedness was
not created, increased or guaranteed in anticipation of such
acquisition;
(r) Indebtedness of the Borrower and its Subsidiaries under
deferred compensation plans, employees separation agreements, and
employee stock purchase plans of the Borrower and/or its Subsidiaries;
(s) Indebtedness of the Borrower and its Subsidiaries with
respect to currency swap arrangements in an aggregate amount
(determined as
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provided in clause (y) of the definition of Indebtedness) not to exceed
$5,000,000 at any time outstanding; provided that such arrangements are
solely for hedging purposes and not for purposes of speculation;
(t) unsecured Indebtedness of the Borrower and its
Subsidiaries consisting of commercial or stand-by letters of credit
issued by financial institutions that are not Banks for the benefit of
third parties organized and located outside of the United States of
America in an aggregate amount outstanding at any one time not to
exceed $5,000,000;
(u) other unsecured Indebtedness not otherwise permitted by
clauses (a) through (t) above not to exceed $3,000,000 in the aggregate
at any one time outstanding; and
(v) extensions, renewals and refinancings of the Indebtedness
described in (g), (k), (l) and (q) above; provided that (i) the terms
thereof are no less favorable to the Borrower or the applicable
Subsidiary (as the case may be) than the Indebtedness to be so
refinanced, (ii) there are no increases in the principal amount
thereof, (iii) no additional security for such Indebtedness is
provided, (iv) the ranking of such Indebtedness is not favorably
modified in any material respect and (v) the weighted average life to
maturity of such Indebtedness is not decreased.
10.2. LIENS. The Borrower will not, and will not permit any of its
Subsidiaries to, (i) create or incur or suffer to be created or incurred or to
exist any lien, encumbrance, mortgage, pledge, charge, restriction or other
security interest of any kind upon any of its property or assets of any
character whether now owned or hereafter acquired, or upon the income or profits
therefrom; (ii) transfer any of such property or assets or the income or profits
therefrom for the purpose of subjecting the same to the payment of Indebtedness
or performance of any other obligation in priority to payment of its general
creditors; (iii) acquire, or agree or have an option to acquire, any property or
assets upon conditional sale or other title retention or purchase money security
agreement, device or arrangement; (iv) suffer to exist for a period of more than
thirty (30) days after the same shall have been incurred any Indebtedness or
claim or demand against it that if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over its general
creditors; or (v) sell, assign, pledge or otherwise transfer any "receivables"
as defined in clause (vii) of the definitions of Indebtedness (and subject to
the exceptions set for the therein) with or without recourse; provided that the
Borrower or any of its Subsidiaries, as the case may be, may create or incur or
suffer to be created or incurred or to exist:
(a) liens against the Borrower or any of its Subsidiaries to
secure taxes, assessments and other government charges in respect of
obligations not overdue or to the extent payment therefor shall not at
the time be required to be made in accordance with Section 9.8, or
liens on properties to secure claims for labor, materials or supplies
in respect of
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obligations not overdue or to the extent payment therefor shall not at
the time be required to be made in accordance with Section 9.8;
(b) deposits or pledges made by the Borrower or any of its
Subsidiaries in connection with, or to secure payment of, workmen's
compensation, unemployment insurance, old age pensions or other social
security obligations or to secure the performance of bids, trade
contracts, public or statutory obligations, surety or appeal bonds and
other obligations of like nature;
(c) liens against the Borrower or any of its Subsidiaries on
properties other than the Mortgaged Properties in respect of judgments
or awards, the Indebtedness with respect to which is permitted by
Section 10.1(d);
(d) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens on properties other than Mortgaged
Properties, in existence less than one hundred twenty (120) days from
the date of creation thereof in respect of obligations not overdue or
to the extent payment therefor shall not at the time be required to be
made in accordance with Section 9.8;
(e) encumbrances on Real Estate other than the Mortgaged
Properties consisting of easements, rights of way, zoning restrictions,
restrictions on the use of real property and defects and irregularities
in the title thereto, landlord's or lessor's liens under leases to
which the Borrower or a Subsidiary of the Borrower is a party, and
other minor liens or encumbrances none of which in the opinion of the
Borrower interferes materially with the use of the property affected in
the ordinary conduct of the business of the Borrower and its
Subsidiaries, which defects do not individually or in the aggregate
have a materially adverse effect on the business of the Borrower
individually or of the Borrower and its Subsidiaries on a consolidated
basis;
(f) liens against the Borrower or any of its Subsidiaries
existing on the date hereof and listed on Schedule 10.2 hereto,
together with renewals and extensions thereof upon the same property
theretofore subject thereto, so long as such liens do not extend to
cover any assets other than those being refinanced and any Indebtedness
being renewed or extended is permitted by Section 10.1(v);
(g) (i) liens to secure Capitalized Lease obligations of the
type and amount permitted by Section 10.1(f)(i), so long as such liens
cover only the property subject to such Capitalized Leases; and (ii)
purchase money security interests in or purchase money mortgages on
real or personal property of the Borrower or any of its Subsidiaries
other than Mortgaged Properties acquired after the date hereof to
secure purchase money Indebtedness of the type and amount permitted by
Section 10.1(f)(ii), incurred in
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connection with the acquisition of such property, which security
interests or mortgages cover only the real or personal property so
acquired;
(h) liens against the Borrower or any of its Subsidiaries in
favor of the Agent for the benefit of the Banks and the Agent under the
Loan Documents;
(i) liens and encumbrances on each Mortgaged Property of the
Borrower or any of its Subsidiaries as and to the extent permitted by
the Mortgage applicable thereto; and
(j) liens on property acquired by the Borrower or a Subsidiary
pursuant to acquisitions permitted by Section 10.5.1, so long as such
liens were not created or extended in anticipation of such acquisition,
do not extend to cover any other property of the Borrower or its
Subsidiaries, secure only Indebtedness permitted under Section 10.1(q),
and do not secure Indebtedness of the Borrower or such Subsidiary in
excess of the fair market value of such property.
10.3. INVESTMENTS. The Borrower will not, nor will it permit any of its
Subsidiaries to, make or permit to exist or to remain outstanding any Investment
except:
(a) Investments by the Borrower or its Subsidiaries in
marketable direct or guaranteed obligations of the United States of
America that mature within one (1) year from the date of purchase;
(b) Investments by the Borrower or any of its Subsidiaries in
demand deposits, certificates of deposit, bankers acceptances and time
deposits of United States banks having total assets in excess of
$1,000,000,000;
(c) Investments by the Borrower or any of its Subsidiaries in
securities commonly known as "commercial paper" issued by a corporation
organized and existing under the laws of the United States of America
or any state thereof that at the time of purchase have been rated and
the ratings for which are not less than "P 1" if rated by Moody's
Investors Service, Inc., and not less than "A 1" if rated by Standard
and Poor's;
(d) Investments by the Borrower of any of its Subsidiaries
(directly or through a money market mutual fund) in debt securities
(including, without limitation, bankers' acceptances, bearer deposit
notes, loan participations, promissory notes and medium-term notes)
which have an average maturity of not more than three hundred
sixty-five (365) days after the date of purchase, and
(i) for any such investment issued by a financial institution, the
issuer (A) maintains a long-term debt rating of at least "A"
(or its equivalent) according to Standard & Poor's Rating
Group, Division
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of McGraw-Hill, Inc. or Thompson Bankwatch rating of at least
"A", and (B) has a combined capital and surplus and undivided
profits of not less than $1,000,000,000 or any other financial
institutions if the amount of such investment is fully insured
by the Federal Deposit Insurance Corporation, and
(ii) for any corporate issuer, such investment is rated "P-1" (or
its then equivalent) according to Moody's Investors Service,
Inc., "A-1" (or its then equivalent) according to Standard &
Poor's Ratings Group, a Division of McGraw-Hill, Inc., "F-1"
(or its then equivalent) according to Fitch's Investors
Service, Inc. or "D-1" (or its then equivalent) according to
Duff & Phelps, or a better rating, or, which, if unrated, are
determined by the applicable fund to be of comparable quality
to debt securities have such ratings;
(e) Investments by the Borrower or any of its Subsidiaries in
direct obligations issued by any state or political subdivision of the
United States, which mature within one year from the date of investment
and have a rating of A or higher from Standard & Poor's Rating Group, a
Division of McGraw-Hill, Inc., or a comparable rating from Moody's
Investors Service, Inc., or an equivalent thereto, on the date of
investment;
(f) Investments by the Borrower or any of its Subsidiaries in
repurchase agreements secured by any one or more of the foregoing;
(g) Investments existing on the date hereof and listed on
Schedule 10.3 hereto and in amounts not to exceed the amounts listed on
Schedule 10.3 hereto;
(h) (i) Investments by the Guarantors in other Guarantors,
(ii) Investments by any Subsidiary in the Borrower, (iii) Investments
by the Borrower in any of its Domestic Subsidiaries, provided, that,
each such Subsidiary has executed and delivered to the Agent for the
benefit of the Agent and the Banks a guaranty, security agreement and
any and all other agreements, documents or instruments necessary to
grant to the Agent a first priority perfected lien in such Subsidiary's
assets and (iv) Investments whether now existing or made hereafter by
the Borrower or any Domestic Subsidiary in any of the Foreign
Subsidiaries (other than Designated Subsidiaries) not to exceed
$40,000,000 at any time outstanding;
(i) Investments by the Borrower or any of its Domestic
Subsidiaries made in connection with any Indebtedness permitted under
Section 10.1(j) hereof; and
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(j) Investments by the Borrower or its Subsidiaries consisting
of any promissory note or other instrument received by the Borrower or
such Subsidiary in connection with a sale of assets permitted by
Section 10.5.2;
(k) advances to employees to meet travel or business expenses
incurred by such employees or in connection with relocation by
employees, in each case in the ordinary course of business;
(l) Investments in Designated Subsidiaries that do not exceed
an any time $2,000,000 in the aggregate for all Designated Subsidiaries
or $500,000 for any single Designated Subsidiary;
(m) Investments consisting of trade receivables incurred in
the ordinary course of business;
(n) Investments in endorsements of negotiable instruments for
collection in the ordinary course of business;
(o) Investments by the Borrower in Subsidiaries that have not
executed a Guaranty in connection with invoices representing
obligations incurred, and payments required the ordinary course of
business under operating leases and paid by the Borrower to third
parties on behalf of such Subsidiaries;
(p) Investments by the Borrower in Subsidiaries consisting of
loans to such Subsidiaries to the extent permitted by Section 10.1;
(q) Investments in Subsidiaries acquired or created pursuant
to Section 10.5.1 in the amounts permitted by clause (iv) of such
section;
(r) Investments in respect of deferred compensation plans for
former and current directors, officers, consultants and employees; and
(s) other Investments not otherwise permitted in Subsections
(a)-(r) of this Section 10.3 in an aggregate amount not to exceed
$1,000,000 at any time outstanding.
10.4. DISTRIBUTIONS. The Borrower will not make any Distributions;
provided that so long as no Default or Event of Default has occurred and is
continuing (i) the Borrower may pay cash dividends on its common stock and/or
make stock repurchases in an aggregate amount not to exceed $1,000,000 per
fiscal year so long as at the time of declaration and payment of such dividend
or the making of such repurchases the Borrower and its Subsidiaries shall
demonstrate that they are or have been in compliance, on the last day of each of
the four (4) most recent Reference Periods occurring since the Closing Date,
with the covenant set forth in Section 11.2 (Leverage Ratio), decreasing, for
this purpose, the required maximum ratio level by 0.25 so that, by way of
example, if the covenant set forth in Section 11.2 prohibits the Leverage Ratio
from exceeding 3.25 to 1.00, the Borrower shall demonstrate that the Leverage
Ratio does not exceed
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3.00 to 1.00, and (ii) the Borrower may pay other cash dividends on its common
stock in an aggregate amount not to exceed $250,000 during the term of this
Credit Agreement.
10.5. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
10.5.1. MERGERS AND ACQUISITIONS. The Borrower will not nor
will it permit any of its Subsidiaries to, become a party to any merger
or consolidation, or agree to or effect any asset acquisition or stock
acquisition (other than the acquisition of assets in the ordinary
course of business consistent with past practices) except:
(a) the merger or consolidation of one or more of the
Subsidiaries of the Borrower with and into the
Borrower or any other Domestic Subsidiary of the
Borrower, provided, that the Borrower has taken or
caused to be taken all action necessary to grant to
the Agent a first priority perfected security
interest in all of the Borrower's or such
Subsidiary's Collateral after such merger;
(b) the merger or consolidation of one or more of the
Foreign Subsidiaries into any other Foreign
Subsidiary, so long as the Borrower has taken or
caused to be taken all action necessary to grant to
the Agent a first priority perfected security
interest on sixty-five percent (65%) of the stock of
the surviving Subsidiary;
(c) as may be previously approved in writing by the
Majority Banks; or
(d) the acquisition (whether of stock or assets or by
means of a merger) of any other Person, provided
that:
(i) both immediately before and immediately after
such acquisition, and after giving effect thereto on
a pro forma basis (as demonstrated by the Borrower to
the reasonable satisfaction of the Agent), no Default
or Event of Default shall then exist;
(ii) the board of directors and the shareholders (or
the equivalent), of such Person shall have approved
such acquisition;
(iii) such other Person is in, or immediately after
such acquisition is converted into, the same or
substantially similar line of business of the
Borrower and its Subsidiaries;
<PAGE> 82
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(iv) the aggregate consideration (including
assumption of Indebtedness) paid in connection with
any such acquisition shall not exceed $5,000,000; and
(v) if the Borrower or a Domestic Subsidiary and such
other Person merge, the Borrower (or such Domestic
Subsidiary) is the surviving entity;
provided that if such acquisition is a stock acquisition or if the
Borrower incorporates or otherwise establishes a new Domestic
Subsidiary for purposes of effecting such acquisition, then promptly
following such acquisition or (as the case may be) such incorporation
the Borrower shall take all steps as may be necessary to cause such
Domestic Subsidiary to be a guarantor hereunder and to grant security
to the Agent over substantially all of its assets pursuant to Loan
Documents reasonably satisfactory to the Agent.
10.5.2. DISPOSITION OF ASSETS. The Borrower will not, nor will
it permit any of its Subsidiaries to, become a party to or agree to or
effect any disposition of assets, other than (a) the sale or lease of
inventory, the licensing of intellectual property and the disposition
of obsolete assets, in each case in the ordinary course of business,
consistent with past practices, (b) occasional sales of immaterial
assets for consideration of not less than the fair market value thereof
and in an aggregate amount during the term of this Credit Agreement not
to exceed $5,000,000, (c) the sale, discount, or transfer of delinquent
accounts receivable in the ordinary course of business for the purpose
of collection; and (d) sales, leases or other disposition of assets
from any Subsidiaries of the Borrower to the Borrower or any of its
Domestic Subsidiaries.
10.6. SALE AND LEASEBACK. The Borrower will not, nor will it permit any
of its Subsidiaries to, enter into any arrangement, directly or indirectly,
whereby the Borrower or any Subsidiary of the Borrower shall sell or transfer
any property owned by it in order then or thereafter to lease such property or
lease other property that the Borrower or any Subsidiary of the Borrower intends
to use for substantially the same purpose as the property being sold or
transferred unless (a) the proceeds from such sale are at least as great as the
fair market value of the assets which have been or are to be sold and all
proceeds from such sale are immediately applied as a prepayment of the
Obligations in accordance with Section 6.2(b) (but without any permitted
reinvestment period) and are accompanied, in the case of a prepayment of the
Revolving Credit Loans, by a corresponding reduction of the aggregate Total
Commitment and (b) no Default or Event of Default exists at the time of such
sale or would exist after giving effect to such transaction.
10.7. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Borrower will not, nor
will it permit any of its Subsidiaries to, (a) use any of the Real Estate or any
portion thereof for the handling, processing, storage or disposal of Hazardous
<PAGE> 83
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Substances in violation of any Environmental Law to which such Person or such
Real Estate is subject, (b) cause or permit to be located on any of the Real
Estate any underground tank or other underground storage receptacle for
Hazardous Substances in violation of any Environmental Law to which such Person
or such Real Estate is subject, (c) generate any Hazardous Substances on any of
the Real Estate in violation of any Environmental Law to which such Person or
such Real Estate is subject, (d) conduct any activity at any Real Estate or use
any Real Estate in any manner so as to cause a release (i.e. releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing or dumping) or threatened release of Hazardous
Substances on, upon or into the Real Estate in violation of any Environmental
Law to which such Person or such Real Estate is subject, or (e) otherwise
conduct any activity at any Real Estate or use any Real Estate in any manner
that would violate any Environmental Law to which such Person or such Real
Estate is subject or bring such Real Estate in violation of any Environmental
Law to which such Person or such Real Estate is subject, except to the extent
any of the foregoing matters described in (a) through (e) above would not
reasonably be likely to result in any liability, loss, expense, fine, penalty,
charge, damage, or cost in an aggregate amount in excess of $2,500,000.
10.8. EMPLOYEE BENEFIT PLANS. Neither the Borrower nor any ERISA
Affiliate will
(a) engage in any "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975 of the Code which could result
in a material liability for the Borrower or any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in Section
302 of ERISA, whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the
assets of the Borrower or any of its Subsidiaries pursuant to Section
302(f) or Section 4068 of ERISA; or
(d) amend any Guaranteed Pension Plan in circumstances
requiring the posting of security pursuant to Section 307 of ERISA or
Section 401(a)(29) of the Code; or
(e) permit or take any action which would result in the ABO of
all Guaranteed Pension Plans as determined for purposes of the
Borrower's audited financial statements exceeding the value of the
aggregate assets of such Plans, disregarding for this purpose the ABO
and assets of any such Plan with assets in excess of ABO, by more than
$5,000,000.
<PAGE> 84
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10.9. CHANGE IN TERMS OF CAPITAL STOCK. Except pursuant to transactions
permitted by Section 10.5, Borrower will not, nor will it permit any of its
Subsidiaries to, effect or permit any change in or amendment to any document or
instrument pertaining to the terms of such Person's capital stock unless such
change or amendment is of an immaterial or ministerial nature that would not
have any material adverse effect on the Agent's or the Banks' rights or
interests under the Loan Documents or the Borrower's obligations under the Loan
Documents.
10.10. FISCAL YEAR. The Borrower will not, nor will it permit any of
its Subsidiaries to, change the date of the end of their respective fiscal years
from that set forth in Section 8.4.1 hereof.
10.11. MODIFICATION OF DOCUMENTS. The Borrower will not, nor will it
permit Services to, consent to or agree to any amendment, supplement or other
modification to the Distribution Agreement which affects, in a manner materially
adverse to the Borrower or Services, the amount or timing of payments required
to be made by Services thereunder, or the rights of Services thereunder, or if
such amendment, supplement or modification could reasonably be expected to
materially adversely affect the Agent's or the Banks' rights or interests or
impact the Borrower's abilities to fulfill its obligations under the Loan
Documents.
10.12. NEGATIVE PLEDGES. The Borrower will not, nor will it permit any
of its Subsidiaries to enter into any agreement (other than this Credit
Agreement and the other Loan Documents) prohibiting the creation or assumption
of any lien upon its properties, revenues or assets or those of any of its
Subsidiaries, whether now owned or hereafter acquired other than agreements with
Persons prohibiting any such lien on assets in which such Person has a prior
security interest which is permitted by Section 10.2.
10.13. TRANSACTIONS WITH AFFILIATES. The Borrower will not, nor will it
permit any of its Subsidiaries to, enter into, or cause, suffer or permit to
exist any arrangement or contract with any Affiliate (other than with the
Guarantors and other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
Affiliate or any corporation, partnership, trust or other Person in which such
Affiliate has a substantial interest or is an officer, director, trustee, or
partner, on terms more favorable than would have been obtainable on an
arm's-length basis in the ordinary course of business.
10.14. UPSTREAM LIMITATIONS. The Borrower will not, nor will the
Borrower permit any of its Subsidiaries to enter into any agreement, contract or
arrangement (other than this Credit Agreement and the other Loan Documents)
restricting the ability of any Subsidiary to pay or make dividends or
distributions in cash or kind, to make loans, advances or other payments of
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whatsoever nature or to make transfers or distributions of all or any part of
its assets to the Borrower or to any Subsidiary of which such Subsidiary is a
Subsidiary.
10.15. INCONSISTENT AGREEMENTS. The Borrower will not, nor will it
permit any of its Subsidiaries to, enter into any agreement containing any
material provision which would be violated or breached by the performance by the
Borrower or such Subsidiary of its obligations hereunder or under any of the
Loan Documents.
10.16. CAPITAL EXPENDITURES. The Borrower will not make, or permit any
of its Subsidiaries to make, Capital Expenditures in any of the periods set
forth in the table below that exceed the amount set forth opposite such period:
<TABLE>
<CAPTION>
Period Maximum Capital Expenditures
------ ----------------------------
<S> <C>
Closing Date through $8,400,000
December 31, 2000
Fiscal Year ending $6,000,000
December 31, 2001
Fiscal Year ending $6,000,000
December 31, 2002
Fiscal Year ending $6,000,000
December 31, 2003
Fiscal Year ending $6,000,000
December 31, 2004
</TABLE>
If during any period the amount of Capital Expenditures permitted for
period is not utilized, such unutilized amount may be utilized in the next
succeeding period (after first utilizing the maximum amount for such following
period) but not in any subsequent period.
11. FINANCIAL COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Obligations are
outstanding or any Bank has any obligation to make any Loans or any Issuing Bank
has any obligation to issue, extend or renew any Letters of Credit:
11.1. DEBT SERVICE COVERAGE RATIO. The Borrower will not, as of the end
of any Reference Period, permit the Debt Service Coverage Ratio for such
Reference Period to be less than 1.50 to 1.00.
11.2. LEVERAGE RATIO. The Borrower will not, as of the end of any
Reference Period ending on any date or during any period described in the table
set forth below, permit the Leverage Ratio to exceed the ratio set forth
opposite such period in such table:
<PAGE> 86
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<TABLE>
<CAPTION>
--------------------------------------------------------------
Period Ratio
-------------------------------------------- -----------------
<S> <C>
Closing Date - December 30, 2000 3.25 to 1.00
-------------------------------------------- -----------------
December 31, 2000 - December 30, 2001 3.00 to 1.00
-------------------------------------------- -----------------
December 31, 2001 - December 30, 2002 2.75 to 1.00
-------------------------------------------- -----------------
December 31, 2002 and thereafter 2.50 to 1.00
-------------------------------------------- -----------------
</TABLE>
11.3. CURRENT RATIO. The Borrower will not permit the ratio of
Consolidated Current Assets to Consolidated Current Liabilities to be less than
1.50 to 1.00 at any time.
11.4. CONSOLIDATED TANGIBLE NET WORTH. The Borrower will not permit
Consolidated Tangible Net Worth at any time to be less than the sum of
$100,000,000 plus, on a cumulative basis, fifty percent (50%) of positive
Consolidated Net Income for each fiscal quarter subsequent to the Closing Date
(with no deductions for any quarter in which there is a net loss).
12. CLOSING CONDITIONS.
The obligations of the Banks to make the initial Revolving Credit Loans
and the Term Loan and of any Issuing Bank to issue any initial Letters of Credit
shall be subject to the satisfaction of the following conditions precedent on or
prior to the Closing Date:
12.1. LOAN DOCUMENTS ETC.
12.1.1. LOAN DOCUMENTS. Each of the Loan Documents (other than
the Mortgages) shall have been duly executed and delivered by the
respective parties thereto, shall be in full force and effect and shall
be in form and substance satisfactory to each of the Banks. The Agent
shall have received a fully executed counterpart (or original, as the
case may be) of each such document.
12.1.2. ACQUISITION DOCUMENTS. Each of the Acquisition
Documents shall have been duly executed and delivered by the respective
parties thereto, shall be in full force and effect and shall be in form
and substance satisfactory to each of the Banks. The Agent shall have
received a fully executed copy of each such document.
12.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. The Agent shall have
received from the Borrower and its Domestic Subsidiaries a copy, certified by a
duly authorized officer of such Person to be true and complete on the Closing
Date, of each of (a) its charter or other incorporation documents as in effect
on such date of certification, and (b) its by-laws as in effect on such date.
12.3. CORPORATE ACTION. All corporate action necessary for the valid
execution, delivery and performance by each of the Borrower and its Domestic
Subsidiaries of this Credit Agreement and the other Loan Documents to which it
<PAGE> 87
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is or is to become a party shall have been duly and effectively taken, and
evidence thereof satisfactory to the Banks shall have been provided to each of
the Banks.
12.4. INCUMBENCY CERTIFICATE. The Agent shall have received from the
Borrower and each of its Domestic Subsidiaries an incumbency certificate, dated
as of the Closing Date, signed by a duly authorized officer of such Person, and
giving the name and bearing a specimen signature of each individual who shall be
authorized: (a) to sign, in the name and on behalf of such Person each of the
Loan Documents to which such Person is or is to become a party; (b) in the case
of the Borrower, to make Loan Requests and Conversion Requests and to apply for
Letters of Credit; and (c) to give notices and to take other action on its
behalf under the Loan Documents.
12.5. VALIDITY OF LIENS. The Security Documents shall be effective to
create in favor of the Agent a legal, valid and enforceable first priority
security interest and lien upon the Collateral other than the Mortgaged Property
(subject only to Permitted Liens entitled to priority under applicable law);
provided that the only fixture filings that shall be required are in respect of
certain premises in Carlstadt, New Jersey and on Willowbrook Road and 2055
Diplomat Drive in Dallas, Texas. The Agent shall have been provided with duly
executed originals of all such instruments, agreements and documents for filing,
recording or delivery (as the case may be) with or to the appropriate offices,
as may be necessary or reasonably desirable in the opinion of the Agent to
protect and preserve such security interests, each in form and substance
reasonably satisfactory to the Agent.
12.6. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS. The Agent shall
have received from each of the Borrower and its Domestic Subsidiaries a
completed and fully executed Perfection Certificate and the results of UCC
searches with respect to the Collateral, indicating no liens other than
Permitted Liens and otherwise in form and substance reasonably satisfactory to
the Agent.
12.7. CERTIFICATES OF INSURANCE. The Agent shall have received a
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained in accordance with
the provisions of the Security Agreements.
12.8. SOLVENCY CERTIFICATE. The Agent shall have received an officer's
certificate of the Borrower dated as of the Closing Date as to the solvency of
the Borrower and its Domestic Subsidiaries following the consummation of the
transactions contemplated herein in form and substance satisfactory to the
Banks.
12.9. OPINION OF COUNSEL. The Banks and the Agent shall have received a
favorable legal opinion addressed to the Banks and the Agent, dated as of the
Closing Date, in form and substance reasonably satisfactory to the
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Agent, from (a) Jones, Day, Reavis & Pogue, special counsel to the Borrower and
its Subsidiaries, (b) local Tennessee counsel and (c) in-house counsel to the
Borrower and its Subsidiaries.
12.10. PAYMENT OF FEES AND OTHER ARRANGEMENTS. The Borrower shall have
paid to the Banks or the Agent, as appropriate, the closing fee and the Agent's
Fee and complied with all other arrangements set forth in the Fee Letter.
12.11. DISBURSEMENT INSTRUCTIONS. The Agent shall have received
disbursement instructions from the Borrower with respect to the proceeds of the
Term Loan and the initial Revolving Credit Loan.
12.12. PAYOFF LETTERS. The Agent shall have received Payoff Letters
from all existing lenders to the Borrower and/or its Subsidiaries indicating the
amount of the loan obligations of such Person to such lender to be discharged on
the Closing Date and an acknowledgement from such lender that it will release
from escrow all termination statements or releases and take such other actions
as may be necessary to discharge all mortgages, deeds of trust and security
interests granted by such Person to such lender.
12.13. COMPLETION OF ACQUISITION, ETC. The Acquisition shall have been
completed pursuant to the Distribution Agreement and otherwise on terms and
conditions that are satisfactory to the Agent in all respects.
12.14. BORROWING BASE REPORT. The Agent shall have received from the
Borrower the initial Borrowing Base Report dated as of the Closing Date
determined on a pro forma basis after giving effect to the Acquisition.
12.15. CONSENTS AND APPROVALS. The Agent shall have received evidence
that all consents and approvals necessary to complete the Acquisition and the
transactions contemplated hereby.
12.16. CLOSING DATE LEVERAGE RATIO. The Agent shall have received a
statement certified by the principal financial or accounting officer of the
Borrower setting forth in reasonable detail computations evidencing that the
Leverage Ratio on the Closing Date, calculated on a pro forma basis after giving
effect to the Loans and other transactions contemplated hereby, is not greater
than 3.25 to 1.00.
13. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loan, including any Revolving
Credit Loan and the Term Loan, and of any Issuing Bank to issue, extend or renew
any Letter of Credit, in each case whether on or after the Closing Date, shall
also be subject to the satisfaction of the following conditions precedent:
13.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of any of the Borrower and its Subsidiaries
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contained in this Credit Agreement, the other Loan Documents or in any document
or instrument delivered pursuant to or in connection with this Credit Agreement
shall be true in all material respects as of the date as of which they were made
and shall also be true in all material respects at and as of the time of the
making of such Loan or the issuance, extension or renewal of such Letter of
Credit, with the same effect as if made at and as of that time (except to the
extent of changes resulting from transactions contemplated or permitted by this
Credit Agreement and the other Loan Documents and changes occurring in the
ordinary course of business that singly or in the aggregate are not materially
adverse, and to the extent that such representations and warranties relate
expressly to an earlier date) and no Default or Event of Default shall have
occurred and be continuing.
13.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Bank would make it illegal for such Bank to make such Loan or to
participate in the issuance, extension or renewal of such Letter of Credit or in
the reasonable opinion of the Issuing Bank would make it illegal for the Issuing
Bank to issue, extend or renew such Letter of Credit.
13.3. GOVERNMENTAL REGULATION. Each Bank shall have received such
statements from the Borrower in substance and form reasonably satisfactory to
such Bank as such Bank shall require for the purpose of compliance with any
applicable regulations of the Comptroller of the Currency or the Board of
Governors of the Federal Reserve System.
13.4. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be reasonably satisfactory in
substance and in form to the Banks and to the Agent and the Agent's Special
Counsel, and the Banks, the Agent and such counsel shall have received all
information and such counterpart originals or certified or other copies of such
documents as the Agent may reasonably request.
13.5. BORROWING BASE REPORT. The Agent shall have received the most
recent Borrowing Base Report required to be delivered to the Agent in accordance
with Section 9.4(d).
14. EVENTS OF DEFAULT; ACCELERATION; ETC.
14.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following
events ("Events of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "Defaults") shall
occur:
(a) the Borrower shall fail to pay any principal of the Loans
or any Reimbursement Obligation when the same shall become due and
payable, whether at the stated date of maturity or any accelerated date
of maturity or at any other date fixed for payment;
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(b) the Borrower or any of its Subsidiaries shall fail to pay
any interest on the Loans, the commitment fee, any Letter of Credit
Fee, the Agent's Fee, or other sums due hereunder or under any of the
other Loan Documents, within three (3) Business Days of when the same
shall become due and payable, whether at the stated date of maturity or
any accelerated date of maturity or at any other date fixed for
payment;
(c) the Borrower or any of its Subsidiaries shall fail to
comply with any of its covenants contained in Sections 9.1, 9.4, 9.5,
9.6 (as it relates to corporate existence), 9.8, 10 or 11;
(d) the Borrower or any of its Subsidiaries shall fail to
perform any term, covenant or agreement contained herein or in any of
the other Loan Documents (other than those specified elsewhere in this
Section 14.1) for thirty (30) days after written notice of such failure
has been given to the Borrower by the Agent;
(e) any representation or warranty of the Borrower or any of
its Subsidiaries in this Credit Agreement or any of the other Loan
Documents or in any other document or instrument delivered pursuant to
or in connection with this Credit Agreement shall prove to have been
false in any material respect upon the date when made or deemed to have
been made or repeated;
(f) any of the Borrower or its Subsidiaries shall (i) fail to
pay at maturity, or within any applicable period of grace, any
obligation for borrowed money or credit received or in respect of any
Capitalized Leases in an aggregate amount in excess of $2,500,000, or
(ii) fail to observe or perform any material term, covenant or
agreement contained in any agreement by which it is bound, evidencing
or securing borrowed money or credit received or in respect of any
Capitalized Leases in an aggregate amount in excess of $2,500,000 for
such period of time as would permit (assuming the giving of appropriate
notice if required) the holder or holders thereof or of any obligations
issued thereunder to accelerate the maturity thereof; or any such
holder or holders shall rescind or shall have a right to rescind the
purchase of any such obligations;
(g) any of the Borrower or its Subsidiaries (other than
Designated Subsidiaries) shall make an assignment for the benefit of
creditors, or admit in writing its inability to pay or generally fail
to pay its debts as they mature or become due, or shall petition or
apply for the appointment of a trustee or other custodian, liquidator
or receiver of such Person or of any substantial part of the assets of
such Person or shall commence any case or other proceeding relating to
such Person under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar
law of any jurisdiction, now or hereafter in effect, or shall take any
action to authorize or in furtherance any of the foregoing, or if any
such petition or application shall be filed or
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any such case or other proceeding shall be commenced against such
Person and such Person shall indicate its approval thereof, consent
thereto or acquiescence therein or such petition or application shall
not have been dismissed within sixty (60) days following the filing
thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower or any
of its Subsidiaries (other than Designated Subsidiaries) bankrupt or
insolvent, or approving a petition in any such case or other
proceeding, or a decree or order for relief is entered in respect of
any such Person in an involuntary case under federal bankruptcy laws as
now or hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than sixty (60) days, whether or not consecutive,
any final judgment against, the Borrower or any of its Subsidiaries
that, with other outstanding final judgments, undischarged, against
such Persons exceeds in the aggregate $1,000,000;
(j) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded or the Agent's security interests,
mortgages or liens in any material part of the Collateral shall cease
to be perfected, or shall cease to have the priority contemplated by
the Security Documents, in each case otherwise than in accordance with
the terms thereof or with the express prior written agreement, consent
or approval of the Banks, or any action at law, suit or in equity or
other legal proceeding to cancel, revoke or rescind any of the Loan
Documents shall be commenced by or on behalf of the Borrower or any of
its Subsidiaries party thereto or any of their respective stockholders,
or any court or any other governmental or regulatory authority or
agency of competent jurisdiction shall make a determination that, or
issue a judgment, order, decree or ruling to the effect that, any one
or more of the Loan Documents is illegal, invalid or unenforceable in
accordance with the terms thereof;
(k) the Borrower or any ERISA Affiliate incurs any liability
to the PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA
in an aggregate amount exceeding $1,000,000, or the Borrower or any
ERISA Affiliate is assessed withdrawal liability pursuant to Title IV
of ERISA by a Multiemployer Plan requiring aggregate annual payments
exceeding $1,000,000, or any of the following occurs with respect to a
Guaranteed Pension Plan: (i) an ERISA Reportable Event, or a failure to
make a required installment or other payment (within the meaning of
Section 302(f)(1) of ERISA), provided that the Agent determines in its
reasonable discretion that such event (A) reasonably could be expected
to result in liability of the Borrower or any of its Subsidiaries to
the PBGC or such Guaranteed Pension Plan in an aggregate amount
exceeding $1,000,000 and (B) could reasonably constitute grounds for
the termination of such Guaranteed Pension Plan by the PBGC, for the
appointment by the
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appropriate United States District Court of a trustee to administer
such Guaranteed Pension Plan or for the imposition of a lien against
the assets of the Borrower or any of its Subsidiaries in favor of such
Guaranteed Pension Plan; or (ii) the appointment by a United States
District Court of a trustee to administer such Guaranteed Pension Plan;
or (iii) the institution by the PBGC of proceedings to terminate such
Guaranteed Pension Plan;
(l) any of the Borrower or its Subsidiaries (other than
Designated Subsidiaries) shall be enjoined, restrained or in any way
prevented by the order of any court or any administrative or regulatory
agency from conducting any material part of its business and such order
shall continue in effect for more than thirty (30) days;
(m) there shall occur any material damage to, or loss, theft
or destruction of, any Collateral, whether or not insured, or any
strike, lockout, labor dispute, embargo, condemnation, act of God or
public enemy, or other casualty, which in any such case causes, for
more than thirty (30) consecutive days, the cessation or substantial
curtailment of revenue producing activities at any facility of the
Borrower or any of its Subsidiaries if such event or circumstance is
not covered by business interruption insurance and would have a
material adverse effect on the business or financial condition of the
Borrower and its Subsidiaries, taken as a whole;
(n) there shall occur the loss, suspension or revocation of,
or failure to renew, any license or permit now held or hereafter
acquired by the Borrower or any of its Subsidiaries if such loss,
suspension, revocation or failure to renew would have a material
adverse effect on the business or financial condition of the Borrower
and its Subsidiaries, taken as a whole;
(o) any person or group of persons (within the meaning of
Sections 13 or 14 of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said
Act) of twenty percent (20%) or more of the outstanding shares of
common stock of the Borrower; or during any period of twelve
consecutive calendar months, individuals who were directors of the
Borrower on the first day of such period shall cease to constitute a
majority of the board of directors of the Borrower;
then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Banks shall, by notice in writing to
the Borrower declare all amounts owing with respect to this Credit Agreement,
the Notes and the other Loan Documents and all Reimbursement Obligations to be,
and they shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which
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are hereby expressly waived by the Borrower; provided that in the event of any
Event of Default specified in Sections 14.1(g) or 14.1(h), all such amounts
shall become immediately due and payable automatically and without any
requirement of notice from the Agent or any Bank.
14.2. TERMINATION OF COMMITMENTS. If any one or more of the Events of
Default specified in Section 14.1(g) or Section 14.1(h) shall occur, any unused
portion of the credit hereunder shall forthwith terminate and each of the Banks
shall be relieved of all further obligations to make Loans to the Borrower and
the Issuing Banks shall be relieved of all further obligations to issue, extend
or renew Letters of Credit. If any other Event of Default shall have occurred
and be continuing, the Agent may and, upon the request of the Majority Banks,
shall, by notice to the Borrower, terminate the unused portion of the Total
Commitment, and upon such notice being given such unused portion of the Total
Commitment shall terminate immediately and each of the Banks shall be relieved
of all further obligations to make Loans and the Issuing Banks shall be relieved
of all further obligations to issue, extend or renew Letters of Credit. No
termination of the Total Commitment shall relieve the Borrower or any of its
Subsidiaries of any of the Obligations then or thereafter outstanding.
14.3. REMEDIES. In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Banks shall have
accelerated the maturity of the Loans pursuant to Section 14.1, each Bank, if
owed any amount with respect to the Loans or the Reimbursement Obligations, may,
with the consent of the Majority Banks but not otherwise, proceed to protect and
enforce its rights by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Credit Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations to such Bank are evidenced,
including as permitted by applicable law the obtaining of the ex prate
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank. No remedy herein conferred upon any Bank
or the Agent or the holder of any Note or purchaser of any Letter of Credit
Participation is intended to be exclusive of any other remedy and each and every
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or any
other provision of law.
14.4. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that following
the occurrence or during the continuance of any Default or Event of Default, the
Agent or any Bank, as the case may be, receives any monies in connection with
the enforcement of any the Security Documents, or otherwise with respect to the
realization upon any of the Collateral, such monies shall be distributed for
application as follows:
(a) first, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs,
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expenses, disbursements and losses which shall have been incurred or
sustained by the Agent in connection with the collection of such monies
by the Agent, for the exercise, protection or enforcement by the Agent
of all or any of the rights, remedies, powers and privileges of the
Agent under this Credit Agreement or any of the other Loan Documents or
in respect of the Collateral or in support of any provision of adequate
indemnity to the Agent against any taxes or liens which by law shall
have, or may have, priority over the rights of the Agent to such
monies;
(b) second, to all other Obligations in such order or
preference as the Majority Banks may determine; provided, however, that
(i) distributions in respect of such Obligations shall be made pari
passu with respect to the Agent's Fee payable pursuant to Section
6.1(b) and all other Obligations and (ii) Obligations owing to the
Banks with respect to each type of Obligation such as interest,
principal, fees (other than the Agent's Fee) and expenses, shall be
made among the Banks pro rata; and provided, further, that the Agent
may in its discretion make proper allowance to take into account any
Obligations not then due and payable;
(c) third, upon payment and satisfaction in full or other
provision for payment in full satisfactory to the Banks and the Agent
of all of the Obligations, to the payment of any obligations required
to be paid pursuant to Section 9-504(1)(c) of the Uniform Commercial
Code of the Commonwealth of Massachusetts; and
(e) fourth, the excess, if any, shall be returned to the
Borrower or to such other Persons as are entitled thereto.
15. SETOFF.
Regardless of the adequacy of the Collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from any of
the Banks to the Borrower and any securities or other property of the Borrower
in the possession of such Bank may be applied to or set off by such Bank against
the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrower to such Bank. Each of the Banks agrees with
each other Bank that (a) if an amount to be set off is to be applied to
Indebtedness of the Borrower to such Bank, other than Indebtedness evidenced by
the Notes held by such Bank or constituting Reimbursement Obligations owed to
such Bank, such amount shall be applied ratably to such other Indebtedness and
to the Indebtedness evidenced by all such Notes held by such Bank or
constituting Reimbursement Obligations owed to such Bank, and (b) if such Bank
shall receive from the Borrower, whether by voluntary payment, exercise of the
right of setoff, counterclaim, cross action, enforcement of the claim evidenced
by the Notes held by, or constituting Reimbursement Obligations owed to, such
Bank by proceedings against the Borrower at law or in equity or by proof thereof
in bankruptcy, reorganization, liquidation, receivership or similar proceedings,
or
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otherwise, and shall retain and apply to the payment of the Note or Notes held
by, or Reimbursement Obligations owed to, such Bank any amount in excess of its
ratable portion of the payments received by all of the Banks with respect to the
Notes held by, and Reimbursement Obligations owed to, all of the Banks, such
Bank will make such disposition and arrangements with the other Banks with
respect to such excess, either by way of distribution, pro tanto assignment of
claims, subrogation or otherwise as shall result in each Bank receiving in
respect of the Notes held by it or Reimbursement Obligations owed it, its
proportionate payment as contemplated by this Credit Agreement; provided that if
all or any part of such excess payment is thereafter recovered from such Bank,
such disposition and arrangements shall be rescinded and the amount restored to
the extent of such recovery, but without interest.
16. THE AGENT.
16.1. AUTHORIZATION. (a) The Agent is authorized to take such action on
behalf of each of the Banks and to exercise all such powers as are hereunder and
under any of the other Loan Documents and any related documents delegated to the
Agent, together with such powers as are reasonably incident thereto, provided
that no duties or responsibilities not expressly assumed herein or therein shall
be implied to have been assumed by the Agent.
(b) The relationship between the Agent and each of the Banks is that of
an independent contractor. The use of the term "Agent" is for convenience only
and is used to describe, as a form of convention, the independent contractual
relationship between the Agent and each of the Banks. Nothing contained in this
Credit Agreement or any of the other Loan Documents shall be construed to create
an agency, trust or other fiduciary relationship between the Agent and any of
the Banks.
(c) As an independent contractor empowered by the Banks to exercise
certain rights and perform certain duties and responsibilities hereunder and
under the other Loan Documents, the Agent is nevertheless a "representative" of
the Banks, as that term is defined in Article 1 of the Uniform Commercial Code,
for purposes of actions for the benefit of the Banks and the Agent with respect
to all collateral security and guaranties contemplated by the Loan Documents.
Such actions include the designation of the Agent as "secured party",
"mortgagee" or the like on all financing statements and other documents and
instruments, whether recorded or otherwise, relating to the attachment,
perfection, priority or enforcement of any security interests, mortgages or
deeds of trust in collateral security intended to secure the payment or
performance of any of the Obligations, all for the benefit of the Banks and the
Agent.
16.2. EMPLOYEES AND AGENTS. The Agent may exercise its powers and
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to its
rights and duties under this Credit Agreement and the other Loan Documents. The
Agent may utilize the services of such Persons as the Agent in its sole
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discretion may reasonably determine, and all reasonable fees and expenses of any
such Persons shall be paid by the Borrower.
16.3. NO LIABILITY. Neither the Agent nor any of its shareholders,
affiliates, directors, officers or employees nor any other Person assisting them
in their duties nor any agent or employee thereof, shall be liable for any
waiver, consent or approval given or any action taken, or omitted to be taken,
in good faith by it or them hereunder or under any of the other Loan Documents,
or in connection herewith or therewith, or be responsible for the consequences
of any oversight or error of judgment whatsoever, except that the Agent or such
other Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
16.4. NO REPRESENTATIONS.
16.4.1. GENERAL. The Agent shall not be responsible for the
execution or validity or enforceability of this Credit Agreement, the
Notes, the Letters of Credit, any of the other Loan Documents or any
instrument at any time constituting, or intended to constitute,
collateral security for the Notes, or for the value of any such
collateral security or for the validity, enforceability or
collectability of any such amounts owing with respect to the Notes, or
for any recitals or statements, warranties or representations made
herein or in any of the other Loan Documents or in any certificate or
instrument hereafter furnished to it by or on behalf of the Borrower or
any of its Subsidiaries, or be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions, covenants or
agreements herein or in any instrument at any time constituting, or
intended to constitute, collateral security for the Notes or to inspect
any of the properties, books or records of the Borrower or any of its
Subsidiaries. The Agent shall not be bound to ascertain whether any
notice, consent, waiver or request delivered to it by the Borrower or
any holder of any of the Notes shall have been duly authorized or is
true, accurate and complete. The Agent has not made nor does it now
make any representations or warranties, express or implied, nor does it
assume any liability to the Banks, with respect to the credit
worthiness or financial condition of the Borrower or any of its
Subsidiaries. Each Bank acknowledges that it has, independently and
without reliance upon the Agent or any other Bank, and based upon such
information and documents as it has deemed appropriate, made its own
credit analysis and decision to enter into this Credit Agreement.
16.4.2. CLOSING DOCUMENTATION, ETC. For purposes of
determining compliance with the conditions set forth in Section 12,
each Bank that has executed this Credit Agreement shall be deemed to
have consented to, approved or accepted, or to be satisfied with, each
document and matter either sent, or made available, by the Agent or
FBRS as lead arranger to such Bank for consent, approval, acceptance or
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satisfaction, or required thereunder to be consented to or approved by
or acceptable or satisfactory to such Bank, unless an officer of the
Agent or FBRS active upon the Borrower's account shall have received
notice from such Bank prior to the Closing Date specifying such Bank's
objection thereto and such objection shall not have been withdrawn by
notice to the Agent or FBRS to such effect on or prior to the Closing
Date.
16.5. PAYMENTS.
16.5.1. PAYMENTS TO AGENT. A payment by the Borrower to the
Agent hereunder or under any of the other Loan Documents for the
account of any Bank shall constitute a payment to such Bank. The Agent
agrees promptly to distribute to each Bank such Bank's pro rata share
of payments received by the Agent for the account of the Banks except
as otherwise expressly provided herein or in any of the other Loan
Documents.
16.5.2. DISTRIBUTION BY AGENT. If in the opinion of the Agent
the distribution of any amount received by it in such capacity
hereunder, under the Notes or under any of the other Loan Documents
might involve it in liability, it may refrain from making distribution
until its right to make distribution shall have been adjudicated by a
court of competent jurisdiction. If a court of competent jurisdiction
shall adjudge that any amount received and distributed by the Agent is
to be repaid, each Person to whom any such distribution shall have been
made shall either repay to the Agent its proportionate share of the
amount so adjudged to be repaid or shall pay over the same in such
manner and to such Persons as shall be determined by such court.
16.5.3. DELINQUENT BANKS. Notwithstanding anything to the
contrary contained in this Credit Agreement or any of the other Loan
Documents, any Bank that fails (a) to make available to the Agent its
pro rata share of any Loan or to purchase any Letter of Credit
Participation or (b) to comply with the provisions of Section 15 with
respect to making dispositions and arrangements with the other Banks,
where such Bank's share of any payment received, whether by setoff or
otherwise, is in excess of its pro rata share of such payments due and
payable to all of the Banks, in each case as, when and to the full
extent required by the provisions of this Credit Agreement, shall be
deemed delinquent (a "Delinquent Bank") and shall be deemed a
Delinquent Bank until such time as such delinquency is satisfied. A
Delinquent Bank shall be deemed to have assigned any and all payments
due to it from the Borrower, whether on account of outstanding Loans,
Unpaid Reimbursement Obligations, interest, fees or otherwise, to the
remaining nondelinquent Banks for application to, and reduction of,
their respective pro rata shares of all outstanding Loans and Unpaid
Reimbursement Obligations. The Delinquent Bank hereby authorizes the
Agent to distribute such payments to the nondelinquent Banks in
proportion to their respective pro rata shares of all outstanding Loans
and Unpaid Reimbursement Obligations. A Delinquent Bank shall be deemed
to have satisfied in full a delinquency when and if, as a result of
application of the assigned payments to all outstanding Loans and
Unpaid Reimbursement
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Obligations of the nondelinquent Banks, the Banks' respective pro rata
shares of all outstanding Loans and Unpaid Reimbursement Obligations
have returned to those in effect immediately prior to such delinquency
and without giving effect to the nonpayment causing such delinquency.
16.6. HOLDERS OF NOTES. The Agent may deem and treat the payee of any
Note or the purchaser of any Letter of Credit Participation as the absolute
owner or purchaser thereof for all purposes hereof until it shall have been
furnished in writing with a different name by such payee or by a subsequent
holder, assignee or transferee.
16.7. INDEMNITY. The Banks ratably agree hereby to indemnify and hold
harmless the Agent and its affiliates from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages, costs,
expenses (including any expenses for which the Agent or such affiliate has not
been reimbursed by the Borrower as required by Section 17), and liabilities of
every nature and character arising out of or related to this Credit Agreement,
the Notes, or any of the other Loan Documents or the transactions contemplated
or evidenced hereby or thereby, or the Agent's actions taken hereunder or
thereunder, except to the extent that any of the same shall be directly caused
by the Agent's willful misconduct or gross negligence.
16.8. AGENT AS BANK. In its individual capacity, BKB shall have the
same obligations and the same rights, powers and privileges in respect to its
Commitment and the Loans made by it, and as the holder of any of the Notes and
as the purchaser of any Letter of Credit Participations, as it would have were
it not also the Agent.
16.9. RESIGNATION. The Agent may resign at any time by giving sixty
(60) days prior written notice thereof to the Banks and the Borrower. Upon any
such resignation, the Majority Banks shall have the right to appoint a successor
Agent from among the Banks. Unless a Default or Event of Default shall have
occurred and be continuing, such successor Agent shall be reasonably acceptable
to the Borrower. If no successor Agent shall have been so appointed by the
Majority Banks and shall have accepted such appointment within thirty (30) days
after the retiring Agent's giving of notice of resignation, then the Agent may,
on behalf of the Banks, appoint a successor Agent, which shall be any Bank or a
financial institution having a rating of not less than A or its equivalent by
Standard & Poor's Corporation. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation, the provisions of
this Credit Agreement and the other Loan Documents shall continue in effect
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for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Agent.
16.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each Bank hereby
agrees that, upon learning of the existence of a Default or an Event of Default,
it shall promptly notify the Agent thereof. The Agent hereby agrees that upon
receipt of any notice under this Section 16.10 it shall promptly notify the
other Banks of the existence of such Default or Event of Default.
16.11. DUTIES IN THE CASE OF ENFORCEMENT. In case one of more Events of
Default have occurred and shall be continuing, and whether or not acceleration
of the Obligations shall have occurred, the Agent shall, if (a) so requested by
the Majority Banks and (b) the Banks have provided to the Agent such additional
indemnities and assurances against expenses and liabilities as the Agent may
reasonably request, proceed to enforce the provisions of the Security Documents
authorizing the sale or other disposition of all or any part of the Collateral
and exercise all or any such other legal and equitable and other rights or
remedies as it may have in respect of such Collateral. The Majority Banks may
direct the Agent in writing as to the method and the extent of any such sale or
other disposition, the Banks hereby agreeing to indemnify and hold the Agent
harmless from all liabilities incurred in respect of all actions taken or
omitted in accordance with such directions, provided that the Agent need not
comply with any such direction to the extent that the Agent reasonably believes
the Agent's compliance with such direction to be unlawful or commercially
unreasonable in any applicable jurisdiction.
17. EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, the Borrower promises to pay (a) the reasonable costs of (i)
producing and reproducing this Credit Agreement, the other Loan Documents and
the other agreements and instruments mentioned herein and (ii) any taxes
(including any interest and penalties in respect thereto), filing fees or
recording fees or taxes payable by any Bank (other than taxes based upon the
Bank's net income) on or with respect to the transactions contemplated by this
Credit Agreement or the other Loan Documents (the Borrower hereby agreeing to
indemnify each Bank with respect thereto), (b) the reasonable fees, expenses and
disbursements of the Agent's Special Counsel and any local counsel to the Agent
incurred in connection with the preparation of this Credit Agreement, the other
Loan Documents and other instruments mentioned herein, the closing hereunder,
amendments, modifications, approvals, consents or waivers hereto or hereunder,
and the syndication and the termination hereof, (c) all reasonable fees,
expenses and disbursements incurred by the Agent or FBRS in connection with the
preparation of this Credit Agreement and the other Loan Documents and the
closing hereunder, (d) all reasonable fees, expenses and disbursements incurred
by the Agent or FBRS, in connection with the syndication of its Commitment and
its portion of the Term Loan hereunder, (e) all reasonable expenses of the Agent
(including fees and expenses of counsel to the Agent)
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incurred in connection with any restructuring or "work-out" of any Obligations,
and (f) all out-of-pocket expenses (including reasonable attorneys' fees and
costs), incurred by any Bank or the Agent, and reasonable consulting,
accounting, appraisal, investment banking and similar professional fees and
charges incurred by any Bank or the Agent in connection with (A) the enforcement
of or preservation of rights under any this Credit Agreement, the Notes and the
other Loan Documents against the Borrower or any of its Subsidiaries or the
administration thereof after the occurrence of a Default or Event of Default and
(B) any litigation, proceeding or dispute whether arising hereunder or
otherwise, in any way related to any Bank's or the Agent's relationship with the
Borrower or any of its Subsidiaries and (g) all reasonable fees, expenses and
disbursements of the Agent incurred in connection with UCC searches, UCC filings
or mortgage recordings. The covenants of this Section 17 shall survive payment
or satisfaction of all other Obligations.
18. INDEMNIFICATION.
The Borrower agrees to indemnify and hold harmless the Agent, the
Issuing Banks, FBRS, the Documentation Agent, BAS and the Banks as well as each
such Person's shareholders, directors, agents, officers, Subsidiaries and
affiliates (each, an "Indemnified Person"), from and against all damages,
losses, settlement payments, obligations, liabilities, claims, actions or causes
of action, and costs and expenses incurred, suffered, sustained or required to
be paid by an indemnified party by reason of or resulting from the transactions
contemplated hereby, including, without limitation, (i) any actual or proposed
use by the Borrower or any of its Subsidiaries of the proceeds of any of the
Loans or Letters of Credit, (ii) any actual or alleged infringement of any
patent, copyright, trademark, service mark or similar right of the Borrower or
any of its Subsidiaries comprised in the Collateral, (iii) the Borrower or any
of its Subsidiaries entering into or performing this Credit Agreement or any of
the other Loan Documents or (iv) with respect to the Borrower and its
Subsidiaries and their respective properties and assets, the violation of any
Environmental Law, the presence, disposal, escape, seepage, leakage, spillage,
discharge, emission, release or threatened release of any Hazardous Substances
or any action, suit, proceeding or investigation brought or threatened with
respect to any Hazardous Substances (including, but not limited to, claims with
respect to wrongful death, personal injury or damage to property), in each case
including, without limitation, the reasonable fees and disbursements of counsel
and allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding, except to the extent such claims,
actions, damages, liabilities, losses or damages have arisen solely out of the
gross negligence or willful misconduct of such Indemnified Person. In any
investigation, proceeding or litigation, or the preparation therefor, the Agent
and FBRS shall be entitled to select their own counsel (to the extent deemed
reasonably necessary by the Agent and FBRS), and the Banks, the Documentation
Agent and BAS as a group shall be entitled to select their own counsel, and in
addition to the foregoing indemnity, the Borrower agrees to pay promptly the
reasonable fees and expenses of each such counsel. If, and to the
<PAGE> 101
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extent that the obligations of the Borrower under this Section 18 are
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment in satisfaction of such obligations which is
permissible under applicable law. The covenants contained in this Section 18
shall survive payment or satisfaction in full of all other Obligations.
19. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein,
in the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Borrower or any of its Subsidiaries
pursuant hereto shall be deemed to have been relied upon by the Banks and the
Agent, notwithstanding any investigation heretofore or hereafter made by any of
them, and shall survive the making by the Banks of any of the Loans and the
issuance, extension or renewal of any Letters of Credit, as herein contemplated,
and shall continue in full force and effect so long as any Letter of Credit or
any amount due under this Credit Agreement or the Notes or any of the other Loan
Documents remains outstanding or any Bank has any obligation to make any Loans
or any Issuing Bank has any obligation to issue, extend or renew any Letter of
Credit, and for such further time as may be otherwise expressly specified in
this Credit Agreement. All statements contained in any certificate or other
paper delivered to any Bank or the Agent at any time by or on behalf of the
Borrower or any of its Subsidiaries pursuant hereto or in connection with the
transactions contemplated hereby shall constitute representations and warranties
by the Borrower or such Subsidiary hereunder.
20. ASSIGNMENT AND PARTICIPATION.
20.1. CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided herein,
each Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Credit Agreement (including all or
a portion of its Commitment Percentage with respect to Revolving Credit Loans,
the Term Loan, and the same portion of the Loans at the time owing to it, the
Notes held by it and its participating interest in the risk relating to any
Letters of Credit); provided that (a) each of the Agent and, unless a Default or
Event of Default shall have occurred and be continuing, the Borrower shall have
given its prior written consent to such assignment, which such consent will not
be unreasonably withheld, (b) each such assignment shall be of a constant, and
not a varying, percentage of all the assigning Bank's rights and obligations in
respect of the Revolving Credit Loans and its portion of the Term Loan under
this Credit Agreement, provided, however that nothing contained herein shall
restrict any Bank from assigning its Revolving Credit Loans and Commitments and
portion of the Term Loan separately and not on a pro rata basis, (c) each
assignment (if less than one hundred percent (100%) of such Bank's interests)
shall be in an amount that is not less than $2,500,000, and (d) the parties to
such assignment shall execute and deliver to the Agent, for recording in the
Register (as hereinafter defined), an Assignment and Acceptance, substantially
in the form of Exhibit J hereto (an "Assignment and Acceptance"), together with
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any Notes subject to such assignment. Upon such execution, delivery, acceptance
and recording, from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least five (5) Business Days
after the execution thereof, (i) the assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Bank hereunder, and (ii) the assigning Bank shall, to the
extent provided in such assignment and upon payment to the Agent of the
registration fee referred to in Section 20.3, be released from its obligations
under this Credit Agreement.
20.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS.
By executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, the assigning Bank makes no
representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto or the
attachment, perfection or priority of any security interest or
mortgage,
(b) the assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of
the Borrower and its Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations, or the
performance or observance by the Borrower and its Subsidiaries or any
other Person primarily or secondarily liable in respect of any of the
Obligations of any of their obligations under this Credit Agreement or
any of the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this
Credit Agreement, together with copies of the most recent financial
statements referred to in Section 8.4 and Section 9.4 and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Acceptance;
(d) such assignee will, independently and without reliance
upon the assigning Bank, the Agent or any other Bank and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
action under this Credit Agreement;
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(e) such assignee represents and warrants that it is an
Eligible Assignee;
(f) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under
this Credit Agreement and the other Loan Documents as are delegated to
the Agent by the terms hereof or thereof, together with such powers as
are reasonably incidental thereto;
(g) such assignee agrees that it will perform in accordance
with their terms all of the obligations that by the terms of this
Credit Agreement are required to be performed by it as a Bank;
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and
(i) such assignee acknowledges that it has made arrangements
with the assigning Bank satisfactory to such assignee with respect to
its pro rata share of Letter of Credit Fees in respect of outstanding
Letters of Credit.
20.3. REGISTER. The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Banks and the Commitment
Percentage of, and principal amount of the Revolving Credit Loans, and portion
of the Term Loan owing to and Letter of Credit Participations purchased by, the
Banks from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Agent and the Banks may treat
each Person whose name is recorded in the Register as a Bank hereunder for all
purposes of this Credit Agreement. The Register shall be available for
inspection by the Borrower and the Banks at any reasonable time and from time to
time upon reasonable prior notice. Upon each such recordation, the assigning
Bank agrees to pay to the Agent a registration fee in the sum of $3,500.00.
20.4. NEW NOTES. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject to
such assignment, the Agent shall (a) record the information contained therein in
the Register, and (b) give prompt notice thereof to the Borrower and the Banks
(other than the assigning Bank). Within five (5) Business Days after receipt of
such notice, the Borrower, at its own expense, shall execute and deliver to the
Agent, in exchange for each surrendered Note, a new Note to the order of such
Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank
has retained some portion of its obligations hereunder, a new Note to the order
of the assigning Bank in an amount equal to the amount retained by it hereunder.
Such new Notes shall provide that they are replacements for the surrendered
Notes, shall be in an aggregate principal amount equal to the aggregate
principal amount of the surrendered Notes, shall be dated the
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effective date of such in Assignment and Acceptance and shall otherwise be
substantially the form of the assigned Notes. The surrendered notes shall be
cancelled and returned to the Borrower.
20.5. PARTICIPATIONS. Each Bank may sell participations to one or more
banks or other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan Documents; provided
that (a) each such participation shall be in an amount of not less than
$2,500,000, (b) any such sale or participation shall not affect the rights and
duties of the selling Bank hereunder to the Borrower and (c) the only rights
granted to the participant pursuant to such participation arrangements with
respect to waivers, amendments or modifications of the Loan Documents shall be
the rights to approve waivers, amendments or modifications that would forgive
any principal of or reduce the interest rate on any Loans, extend the term or
increase the amount of the Commitment of such Bank as it relates to such
participant, release any Guarantor or substantially all of the Collateral,
reduce the amount of any commitment fees or Letter of Credit Fees to which such
participant is entitled or extend any regularly scheduled payment date for
principal or interest.
20.6. DISCLOSURE. The Borrower agrees that in addition to disclosures
made in accordance with standard and customary banking practices any Bank may
disclose information obtained by such Bank pursuant to this Credit Agreement to
assignees or participants and potential assignees or participants hereunder;
provided that such assignees or participants or potential assignees or
participants shall agree in writing (a) to be bound by the provisions of Section
27.3 and (b) not to make use of such information for purposes of transactions
unrelated to such contemplated assignment or participation.
20.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER. If any
assignee Bank is an Affiliate of the Borrower, then any such assignee Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Agent pursuant to Section 14.1 or Section
14.2, and the determination of the Majority Banks shall for all purposes of this
Credit Agreement and the other Loan Documents be made without regard to such
assignee Bank's interest in any of the Loans or Reimbursement Obligations. If
any Bank sells a participating interest in any of the Loans or Reimbursement
Obligations to a participant, and such participant is the Borrower or an
Affiliate of the Borrower, then such transferor Bank shall promptly notify the
Agent of the sale of such participation. A transferor Bank shall have no right
to vote as a Bank hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or modifications to any of the Loan Documents or for purposes of
making requests to the Agent pursuant to Section 14.1 or Section 14.2 to the
extent that such participation is beneficially owned by the Borrower or any
Affiliate of the Borrower, and the determination of the Majority Banks shall for
all purposes of this Credit
<PAGE> 105
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Agreement and the other Loan Documents be made without regard to the interest of
such transferor Bank in the Loans or Reimbursement Obligations to the extent of
such participation.
20.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. (a) Any assigning Bank shall
retain its rights to be indemnified pursuant to Section 18 with respect to any
claims or actions arising prior to the date of such assignment. If any assignee
Bank is not incorporated under the laws of the United States of America or any
state thereof, it shall, on or before the date it becomes a party to this Credit
Agreement, deliver to the Borrower and the Agent the certificates and other
documents referred to in Section 6.3.3. If BKB transfers all of its interest,
rights and obligations under this Credit Agreement, the Agent shall, in
consultation with the Borrower and with the consent of the Borrower and the
Majority Banks, appoint another Bank to act as the Reference Bank hereunder.
Anything contained in this Section 20 to the contrary notwithstanding, (i) any
Bank may at any time pledge all or any portion of its interest and rights under
this Credit Agreement (including all or any portion of its Notes) to any of the
twelve Federal Reserve Banks organized under Section 4 of the Federal Reserve
Act, 12 U.S.C. Section 341 and (ii) any Bank may at any time pledge all or any
portion of its interests and rights with respect to its Notes to any trustee
for, or any other representative of, holders of obligations owed or securities
issued by such Bank as security for such obligations or securities, provided
that any foreclosure or similar action by such trustee or other representative
shall be subject to the other provisions of this Section 20. No such pledge or
the enforcement thereof shall release the pledgor Bank from its obligations
hereunder or under any of the other Loan Documents.
(b) Notwithstanding anything to the contrary contained in this
Agreement, any Bank (a "Granting Bank") may grant to a special purpose funding
vehicle (an "SPC") of such Granting Bank, identified as such in writing from
time to time by the Granting Bank to the Agent and the Borrower, the option to
provide to the Borrower all or any part of any Loan that such Granting Bank
would otherwise be obligated to make the Borrower pursuant to Sections 2.1 or
4.1 hereof, provided that (i) nothing herein shall constitute a commitment to
make any Loan by any SPC and (ii) if an SPC elects not to exercise such option
or otherwise fails to provide all or any part of such Loan, the Granting Bank
shall be obligated to make such Loan pursuant to the terms hereof. The making of
a Loan by a SPC hereunder shall utilize the Commitment of the Granting Bank to
the same extent, and as if, such Loan were made by the Granting Bank. Each party
hereto hereby agrees that no SPC shall be liable for any payment under this
Credit Agreement for which a Bank would otherwise be liable, for so long as, and
to the extent, the related Granting Bank makes such payment. In addition,
notwithstanding anything to the contrary contained in this Section 20.8(b), any
SPC may (i) with notice to, but without the prior written consent of, the
Borrower or the Agent and without paying any registration fee therefor, assign
all or a portion of its interests in any Loans to its Granting Bank or to any
financial institutions providing liquidity and/or credit facilities to or for
the account of such SPC to fund the Loans made by such SPC or to support the
securities (if any) issued by such SPC to fund such Loans and (ii) disclose on a
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confidential basis any nonpublic information relating to its Loans to any rating
agency, commercial paper dealer or provider of a surety, guarantee or credit or
liquidity enhancement to such SPC; provided that such Persons shall be subject
to the same restrictions as apply to participants and assignees as set forth in
Section 20.6. In no event shall the Borrower be obligated to pay to an SPC that
has made a Loan any greater amount than the Borrower would have been obligated
to pay under this Agreement if the Granting Bank had made such Loan.
20.9. ASSIGNMENT BY BORROWER. The Borrower shall not assign or transfer
any of its rights or obligations under any of the Loan Documents without the
prior written consent of each of the Banks.
21. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Notes or any Letter of Credit Applications shall be in
writing and shall be delivered in hand, mailed by United States registered or
certified first class mail, postage prepaid, sent by overnight courier, or sent
by telegraph, telecopy, facsimile or telex and confirmed by delivery via courier
or postal service, addressed as follows:
(a) if to the Borrower, at 2075 Diplomat Drive, Dallas, Texas
75234, Attention: Chief Financial Officer, or at such other address for
notice as the Borrower shall last have furnished in writing to the
Person giving the notice;
(b) if to the Agent, at 100 Federal Street, Mail Stop
01-08-01, Boston, Massachusetts 02110, USA, Attention: Katherine Brand,
or at such other address for notice as the Agent shall last have
furnished in writing to the Person giving the notice, with a copy to
Amy L. Kyle, Bingham Dana LLP, 150 Federal Street, Boston,
Massachusetts 02110; and
(c) if to any Bank, at such Bank's address set forth on
Schedule 1 hereto, or such other address for notice as such Bank shall
have last furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (a) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(b) if sent by registered or certified first-class mail, postage prepaid, on the
third Business Day following the mailing thereof.
22. GOVERNING LAW.
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN
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DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND
SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF SAID COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO
CONFLICTS OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT
SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND
SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE
ADDRESS SPECIFIED IN SECTION 21. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR
THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
23. HEADINGS.
The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
24. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of which
when executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Credit Agreement it shall not
be necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.
25. ENTIRE AGREEMENT, ETC.
THE LOAN DOCUMENTS AND ANY OTHER DOCUMENTS EXECUTED IN CONNECTION
HEREWITH OR THEREWITH REPRESENT THE FINAL AGREEMENT OF THE PARTIES WITH RESPECT
TO THE TRANSACTIONS CONTEMPLATED HEREBY AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT BY SUCH PARTIES. NEITHER
THIS CREDIT AGREEMENT NOR ANY TERM HEREOF MAY BE CHANGED, WAIVED, DISCHARGED OR
TERMINATED, EXCEPT AS PROVIDED IN SECTION 28. THERE ARE NO ORAL AGREEMENTS
BETWEEN THE PARTIES.
26. WAIVER OF JURY TRIAL.
Each of the Borrower, the Banks, the Issuing Bank and the Agent hereby
waives its right to a jury trial with respect to any action or claim arising out
of any dispute in connection with this Credit Agreement, the Notes or any of the
<PAGE> 108
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other Loan Documents, any rights or obligations hereunder or thereunder or the
performance of which rights and obligations. Except as prohibited by law, the
Borrower hereby waives any right it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Borrower (a) certifies that no representative, agent or
attorney of any Bank or the Agent has represented, expressly or otherwise, that
such Bank or the Agent would not, in the event of litigation, seek to enforce
the foregoing waivers and (b) acknowledges that the Agent and the Banks have
been induced to enter into this Credit Agreement and the other Loan Documents to
which it is a party by, among other things, the waivers and certifications
contained herein.
27. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
27.1. SHARING OF INFORMATION WITH SECTION 20 SUBSIDIARY. The Borrower
acknowledges that from time to time financial advisory, investment banking and
other services may be offered or provided to the Borrower or one or more of its
Subsidiaries, in connection with this Credit Agreement or otherwise, by a
Section 20 Subsidiary. The Borrower, for itself and each of its Subsidiaries,
hereby authorizes (a) such Section 20 Subsidiary to share with the Agent and
each Bank any information delivered to such Section 20 Subsidiary by the
Borrower or any of its Subsidiaries, and (b) the Agent and each Bank to share
with such Section 20 Subsidiary any information delivered to the Agent or such
Bank by the Borrower or any of its Subsidiaries pursuant to this Credit
Agreement, or in connection with the decision of such Bank to enter into this
Credit Agreement; it being understood, in each case, that any such Section 20
Subsidiary receiving such information shall be bound by the confidentiality
provisions of this Credit Agreement. Such authorization shall survive the
payment and satisfaction in full of all of Obligations.
27.2. CONFIDENTIALITY. Each of the Banks and the Agent agrees, on
behalf of itself and each of its affiliates, directors, officers, employees and
representatives, to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of the same nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by any of the Borrower or its Subsidiaries
pursuant to this Credit Agreement or by any Section 20 Subsidiary that is
identified by such Person as being confidential at the time the same is
delivered to the Banks or the Agent, provided that nothing herein shall limit
the disclosure of any such information (a) after such information shall have
become public other than through a violation of this Section 27, (b) to the
extent required by statute, rule, regulation or judicial process, (c) to counsel
for any of the Banks or the Agent, (d) to bank examiners or any other regulatory
authority having jurisdiction over any Bank or the Agent, or to auditors or
accountants, (e) to the Agent, any Bank or any Section 20 Subsidiary, (f) in
connection with any litigation to which any one or more of the Banks, the Agent
or any Section 20 Subsidiary is a party, or in connection with the enforcement
of rights or remedies hereunder or under any other Loan Document, (g) to a
Subsidiary or
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affiliate of such Bank as provided in Section 18.1 or (h) to any assignee or
participant (or prospective assignee or participant) so long as such assigneE or
participant agrees to be bound by the provisions of Section 20.6.
27.3. PRIOR NOTIFICATION. Unless specifically prohibited by applicable
law or court order, each of the Banks and the Agent shall, prior to disclosure
thereof, notify the Borrower of any request for disclosure of any such
non-public information by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) or pursuant to legal
process.
27.4. OTHER. In no event shall any Bank or the Agent be obligated or
required to return any materials furnished to it or any Section 20 Subsidiary by
any of the Borrower or its Subsidiaries. The obligations of each Bank under this
Section 27 shall supersede and replace the obligations of such Bank under any
confidentiality letter iN respect of this financing signed and delivered by such
Bank to the Borrower prior to the date hereof and shall be binding upon any
assignee of, or purchaser of any participation in, any interest in any of the
Loans or Reimbursement Obligations from any Bank.
28. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this Credit Agreement
to be given by all of the Banks may be given, and any term of this Credit
Agreement, the other Loan Documents or any other instrument related hereto or
mentioned herein may be amended, and the performance or observance by the
Borrower or any of its Subsidiaries of any terms of this Credit Agreement, the
other Loan Documents or such other instrument or the continuance of any Default
or Event of Default may be waived (either generally or in a particular instance
and either retroactively or prospectively) with, but only with, the written
consent of the Borrower and the written consent of the Majority Banks.
Notwithstanding the foregoing, a decrease in the rate of interest on the Notes,
forgiveness of any principal of the Notes, an extension of the maturity of or
extension of scheduled payments on the Notes, an increase in the Total
Commitment, an increase in the principal amount of the Term Loan and a decrease
in the amount of commitment fee or Letter of Credit Fees hereunder may not be
effected without the written consent of each Bank affected thereby; the
definition of Majority Banks and this Section 28 may not be amended, and
substantially all of the Collateral may not be released, and no Guarantor may be
released, without the written consent of all of the Banks; the definition of
Borrowing Base or any defined term used therein may not be amended in any
material way, nor may the advance rates used in the determination of the
Borrowing Base be increased, without the written consent of the Supermajority
Banks; the amount of the Agent's Fee or any Letter of Credit Fees payable for
the Agent's account and Section 16 may not be amended without the written
consent of the Agent; and Section 5 may not be amended without the written
consent of the Issuing Bank affected thereby. No waiver shalL extend to or
affect any obligation not expressly waived or impair any right consequent
thereon. No
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course of dealing or delay or omission on the part of the Agent or any Bank in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. No notice to or demand upon the Borrower shall entitle the
Borrower to other or further notice or demand in similar or other circumstances.
29. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Credit Agreement in any jurisdiction.
IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
AVIALL, INC.
By: /s/ C. VAN DEN HANDEL
--------------------------------
Name: C. Van Den Handel
Title: Vice President and Treasurer
BANKBOSTON, N.A., individually,
as Administrative Agent and as an
Issuing Bank
By: /s/ MICHAEL J. BLAKE
--------------------------------
Name: Michael J. Blake
Title: Director
<PAGE> 111
BANK OF AMERICA, N,A.,
individually, as Documentation
Agent
By: /s/ NATALIE E. HEBERT
--------------------------------
Name: Natalie E. Hebert
Title: Vice President
<PAGE> 112
TRANSAMERICA BUSINESS
CREDIT CORPORATION
By: /s/ PERRY VAVOULES
--------------------------------
Name: Perry Vavoules
Title: Senior Vice President
<PAGE> 113
NATIONAL CITY BANK
By: /s/ TODD ETHINGTON
--------------------------------
Name: Todd Ethington
Title: Vice President
<PAGE> 114
SANWA BANK CALIFORNIA
By: /s/ JOHN F. KING, JR.
--------------------------------
Name: John F. King, Jr.
Title: Assistant Vice President
<PAGE> 115
MERCANTILE BANK
NATIONAL ASSOCIATION
By: /s/ GREGORY L. DRYDEN
--------------------------------
Name: Gregory L. Dryden
Title: Vice President
<PAGE> 116
NATIONAL BANK OF CANADA
By: /s/ JOHN DIXON
--------------------------------
Name: John Dixon
Title: Vice President
By: /s/ LARRY L. SEERS
--------------------------------
Name: Larry L. Seers
Title: Vice President and Manager
<PAGE> 117
BANK OF SCOTLAND
By: /s/ ANNIE GLYNN
--------------------------------
Name: Annie Glynn
Title: Senior Vice President
<PAGE> 118
COMERICA BANK
By: /s/ T. BANCROFT MATTEI
--------------------------------
Name: T. Bancroft Mattei
Title: Account Officer
<PAGE> 119
COMPASS BANK
By: /s/ T. RAY SANDEFUR
--------------------------------
Name: T. Ray Sandefur
Title: Senior Vice President
<PAGE> 120
ALLFIRST BANK
By: /s/ JOHN T. PENNY
--------------------------------
Name: John T. Penny
Title: Vice President
<PAGE> 1
EXHIBIT 10.19
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.
DISTRIBUTION SERVICES AGREEMENT
THIS DISTRIBUTION SERVICES AGREEMENT ("Agreement") is made as of November
3, 1999 by and between Allison Engine Company, Inc. d/b/a Rolls-Royce Allison, a
corporation with its principal place of business in Indianapolis, Indiana (the
"Company"), and Aviall Services, Inc., a corporation with its principal place of
business at 2075 Diplomat Drive, Dallas, Texas 75234-8999, U.S.A. (The
"Distributor").
RECITALS
A. The Company is engaged in the business of manufacturing, distributing,
marketing and selling the Products (as herein defined).
B. The Distributor has submitted a Proposal dated October 27, 1999
("Proposal") to the Company to become the exclusive distributor of the
Company's 250 Products, as hereinafter defined.
C. The Company has relied upon Distributor's proposal in appointing the
Distributor under the terms and conditions of the Agreement.
D. Distributor has relied upon data and information supplied by the Company in
making its Proposal and entering into this Agreement.
E. The Company therefore desires to appoint the Distributor as its distributor
to sell, market and otherwise distribute the Products in the Territory (as
herein defined), and the Distributor desires to be so appointed by the
Company, all upon the terms and conditions set forth in this Agreement.
F. As used in this Agreement, "Products" mean all Allison 250 parts, modules,
and all related technical publications, which, during the Term of this
Agreement are placed on the Company's price list, now or hereafter
manufactured, marketed, produced, re-manufactured or refurbished by
Company. The current list of Products is identified on Exhibit A attached
hereto.
G. As used in the Agreement, "Territory" means the entire world.
AGREEMENTS
NOW, THEREFORE, in consideration of the payment by Distributor to Company
of sixteen million ($16,000,000.00) dollars on or before December 30, 1999, and
the mutual
<PAGE> 2
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 2
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Appointment of Distributor. Subject to Section 2 hereof, effective
January 1, 2000 the Company hereby appoints the Distributor as its
exclusive distributor for each of the Products in the Territory, and
the Distributor hereby accepts such appointment, all upon the terms
and conditions set forth in this Agreement.
2. Reserved Rights.
(a) Notwithstanding anything to the contrary contained herein,
the Company expressly reserves the right to sell Products
(i) directly to any airframe original equipment manufacturer
solely for installation on new airframes, (ii) to all United
States of America military customers, (iii) to customers
requesting normal levels of spare modules and parts sold
together with new 250 engines, (iv) Fleet Operators pursuant
to Fleet Operator Agreements identified in Exhibit B, except
where the Fleet Agreements have terminated or amended in
contemplation of this Agreement, (v) Long Term Agreements
identified in Exhibit B until these agreements have
terminated; and (vi) pursuant to Agency Agreements
identified in Exhibit I until these agreements have
terminated.
(b) Notwithstanding anything herein to the contrary, Company
shall have the right to contract with a third party to
perform any marketing or promotional service with respect to
its business generally, including the Products; provided
that such activities do not involve the sale or distribution
of Products. In the event the Company contracts with a third
party to perform any such service, Distributor shall
cooperate in good faith with the Company and any such third
party, to the extent reasonably requested by the Company;
provided that Distributor shall not be required to undertake
any duty to perform services beyond those falling within its
obligations under this Agreement. Nothing herein shall
restrict any affiliate of the Company from performing any
aftermarket activities involving the A250 engine including
engine overhaul, parts refurbishment, parts trading,
equipment leasing and related activities.
3. The Distributor's Obligations. The Distributor shall:
(a) use reasonable efforts to establish and maintain an
effective sales force and to promote sales of the Products
throughout the Territory. Recognizing that adequate
representation in the Territory is a vital element of the
Distributor's obligations, the
<PAGE> 3
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 3
Distributor shall not significantly decrease its presence in
any country or region in which there have been sales of more
than 5% of the total sales of the Products by Distributor
during the prior 12 month period, without the Company's
prior written consent, which consent shall not be
unreasonably withheld. In addition, Distributor shall
appoint a technically qualified Product Manager and an
experienced Inventory Planner, each of whom shall be
dedicated exclusively to the Products, and shall maintain
such resources in place during the term.
(b) promptly after execution of this Agreement, place an order
to purchase all of those Products as provided on Exhibit C;
(c) make no warranty or guaranty, orally or in writing,
concerning any of the Products, which might be perceived by
a customer as in any way binding the Company, except for
such warranties as are customarily made by the Company to
end users (retail purchasers) of the Products.
(d) at its own cost and expense, procure and maintain in full
force and effect during the term of this Agreement coverage
for the Company as an additional insured under customary
policies of insurance including, without limitation,
commercial general liability and aircraft product and
completed operations insurance and the Distributor agrees to
waive any right of subrogation against the Company in this
or any other policy of insurance carried by Distributor, but
only to the extent that Distributor may be obligated to
indemnify the Company pursuant to Section 15 of this
Agreement.
(e) administer the Company's warranty return program as set
forth on Exhibit D;
(f) administer new engine production support and new engine
sales related parts and modules needs as set forth on
Exhibit E;
(g) administer the Company's Product recall program as set forth
on Exhibit F;
(h) on the effective date of this Agreement, the Distributor
shall have the information technology capabilities described
in the Distributor's Proposal. Initially, the Distributor
shall also take such actions as may be necessary or
appropriate to ensure that its information technology
systems are compatible with those of the Company's current
system (including any changes contemplated
<PAGE> 4
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 4
to be made by the Company to its IT systems prior to
December 31, 2000.) Thereafter, each party shall ensure that
its IT systems are kept in good working order, and each
shall bear the expense of ensuring that, whenever changes
are made in its IT system, such system remains compatible
with that of the other party.
(i) provide the Company with a detailed part number level of
material requirements as set forth on Exhibit G.
(j) maintain an industry wide advertising program to develop
name identification and a quality image for the aftermarket
use of the Products; including, but not limited to (i)
marketing communications placing general product and service
advertising with an aggregate cost of not less than ***
dollars per calendar year, (ii) expend not less than ***
dollars annually in support of the Company's AMC conference
preceding the HAI show ( or another show which replaces the
HAI show) and the Company's reception and party at HAI (or
another show which replaces HAI) provided that (a) such
events are primarily for the benefit of commercial customers
of the Products and (b) Distributor receives appropriate
recognition and access as a sponsor of such events,
provided, however, that commencing in 2001 each such amount
shall be adjusted annually based upon changes to the PPI
Index as set forth on Exhibit M. Notwithstanding, the above,
the parties agree that Company may engage in advertising,
name identification and quality image programs regarding the
Products independent of Distributor's programs.
(k) maintain an inventory management and traceability system
equal to or better than the inventory management and
traceability system described in Distributor's Proposal, and
provide Company access to such system.
(l) open (within forty-five (45) days of execution) and maintain
open during the term of this Agreement a forward stocking
and sales facility in or near Lafayette, Louisiana adequate
to serve customers of the Products in the Gulf Coast region.
- -------------------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 5
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 5
(m) charge the Company's Authorized Maintenance Center customers
not more than the price set forth on Exhibit H.
(n) except as otherwise agreed in writing between the parties,
and except for contractual obligations between the
Distributor and third parties in effect on the date of this
Agreement, from the date of execution and during the term of
this Agreement, Distributor will not become a distributor
for any parts or engines which are (i) competitive with
Products which are proprietary engine components
manufactured by the Company; (ii) competitive with parts
which are not proprietary parts currently manufactured by
the Company but which are, as of the date of execution of
the Agreement, purchased by the Company from third parties
and resold into the aftermarket by the Company using an A250
part number, provided that Distributor may be a distributor
for such parts only if they are manufactured or sold by any
third party which, as of the date of this Agreement, is
currently a supplier to Distributor and such parts are not
sold using an A250 part number or a number confusingly
similar to an A250 part number; or (iii) competitive with
parts which are not manufactured by the Company and are
purchased by the Company from a third party supplier at any
time during the term of the Agreement and such supplier has
an exclusive supply arrangement with the Company.
(o) support the Company's three foreign sales agents, as set
forth on Exhibit I.
(p) comply with all statutes, laws, ordinances, rules,
regulations, and any other governmental authority in
connection with its sale and distribution of the Products.
(q) distributor shall make available to the Company on-line or
provide to the Company on a periodic basis, as applicable,
in a form mutually agreed by the parties, the sales reports
and other information described in Exhibit J. From time to
time at the Company's request, Distributor shall provide
such further reports and information, including information
concerning marketing activities, competitive intelligence,
sales prospects set forth on Exhibit K and publicly
available financial data regarding Distributor's parent
company, as the Company may reasonably request. In addition,
the Company shall have the right upon reasonable notice and
during normal business hours to examine sales records and
other data relating to the activities of Distributor
contemplated under this Agreement; provided however, that
nothing herein shall be deemed to authorize or permit the
<PAGE> 6
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 6
Company access to sales records and data regarding sales of
merchandise for third parties for which Distributor
distributes merchandise or to non-public financial data of
Distributor involving sales other than sales of the
Products.
(r) commencing on the date of this Agreement and continuing for
so long as the Company requires the same for performance
under this Agreement, Distributor shall provide to Company,
at no charge to Company, the following:
(1) The use of the office space in Distributor's premises
that Company may from time to time reasonably require
in connection with its performance under this
Agreement, together with office support services
(excluding computer equipment) reasonably required in
connection with the performance of the activities
contemplated hereunder. In its occupancy and use of
such resources, Company personnel shall at all times
abide by and act in accordance with Distributor's
corporate policies applicable at such site; and
(2) For use by personnel employed or managed by Company on
Distributor's premises, the reasonable use of
Distributor's existing telephone system solely in
connection with such personnel's work on the Agreement,
provided that the Company shall reimburse Distributor
for all charges and costs related to such use.
<PAGE> 7
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 7
(s) the Distributor shall allow the Company to maintain in a
prominent place on its Aviall.com world wide web site, at no
cost to the Company, a banner designed by the Company which
identifies the Company (and/or its affiliates) and which
provides linked connections to one or more web sites
maintained by the Company (or its affiliates ) for the
promotion of its business, products and services.
4. The Company's Obligations. The Company shall:
(a) produce and deliver the Products in the quantities ordered
by Distributor using reasonable efforts to deliver such
Products with the lead times agreed to by the parties from
time to time, and the Company shall not deliver orders more
than five (5) business days prior to the requested ship date
without the Distributor's prior written approval;
(b) refrain from selling Products to any person other than the
Distributor, except as permitted in Section 2 above.
(c) promptly refer to Distributor all leads, prospects, and
related information which are directed to it or which it
receives regarding potential purchasers of the Products
within the Territory;
(d) develop and offer a reasonable amount of training and
technical assistance to Distributor and its personnel, at
locations to be agreed, in the use and operation of the
Products (provided, however that the Company will have no
obligation to pay travel and entertainment expenses for any
of Distributor's employees undergoing such training).
(e) ensure that all Products sold to Distributor for resale have
all appropriate governmental and regulatory approvals such
as FAA/PMA, TSO or STC as required for installation on type
certified aircraft or engines.
(f) comply with all statutes, laws, ordinances, rules,
regulations and any other governmental authority in
connection with the manufacture of the Products. The Company
shall promptly notify the Distributor whenever it receives
any notice addressed to it by any governmental entity
concerning the application of any new rule, directive,
regulation or other governmental requirement concerning the
sale of Products in the Territory.
<PAGE> 8
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 8
(g) at its own cost and expense, procure and maintain in full
force and effect during the term of this Agreement coverage
for Distributor as an additional insured under a Broad Form
Vendors Endorsement to the Company's liability insurance
policy and the Company agrees to waive any right of
subrogation against Distributor in this or any other policy
of insurance carried by Company, but only to the extent that
Company may be obligated to indemnify Distributor pursuant
to Section 15 of the Agreement.
(h) give Distributor not less than ninety (90) days prior
written notice if any Products will be superceded or
modified, except in cases involving airworthiness or safety
issues, in which case notice shall be given as soon as
reasonably possible.
(i) Commencing on the date of this Agreement and continuing for
so long as Distributor requires the same for the performance
under this Agreement, the Company shall provide to
Distributor, at no charge to Distributor, the following:
(1) The use of the office space in Company's premises that
Distributor may from time to time reasonably require in
connection with its performance under this Agreement,
together with office support services, excluding
computer equipment, reasonably required in connection
with the performance of the activities contemplated
hereunder. In its occupancy and use of such resources,
Distributor personnel shall at all times abide by and
act in accordance with Company's corporate policies
applicable at such site; and
(2) For use by personnel employed or managed by Distributor
on Company's premises, the reasonable use of Company's
existing telephone system solely in connection with
Distributor's provision of the Services to Company;
provided that Distributor shall reimburse the Company
for all charges and costs related to such use.
5. Terms of Sale.
(a) the Company shall charge Distributor the Product discounts
to published list prices indicated on Exhibit L attached
hereto. The current list prices for the Products are shown
on Exhibit L and the Company shall maintain such list prices
unless and until such prices are changed in accordance with
the provisions hereof.
<PAGE> 9
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 9
Additionally, the Company will compensate Distributor under
the sales incentive program set forth on Exhibit M.
All such prices are F.O.B. Company's facility and include packing in
accordance with the Company's standard commercial shipping practices
in effect at the time of shipment.
(1) from time-to-time, the Company may increase the list
prices for its Products but only if it first gives
Distributor written notice of any increase at least 90
days before the increase takes effect. The price to
Distributor for all items of Product ordered before
receipt of notice by Distributor and for all items of
Product ordered after receipt of notice by Distributor
but which are deliverable by Company under established
lead times before the date of the price increase, shall
be at the un-increased price.
(2) from time-to-time, the Company may decrease the list
prices for its Products, but only if it first gives
Distributor written notice of any decrease at least 150
days prior to the date of the price decrease, unless an
earlier date is mutually agreed upon. Such notice shall
not be required in any instance involving airworthiness
or flight safety issues, but in such cases,
compensation to the Distributor for any economic loss
shall be considered and mutually agreed on a case by
case basis.
(b) payment of the purchase price for Products delivered to
Distributor by the Company shall be by wire transfer made on
the 15th of each calendar month (or the next working day in
the case of weekends or holidays) for all proper invoices
that are at least fifteen (15) days old (i.e., invoiced
prior to the first day of the then current month). If
payment is not received by the Company in accordance with
this Section, the Company shall be entitled to charge a late
payment fee at the rate of .05% per day, or the maximum
allowable by law, of any past due amount, on any Purchase
Order undisputed in good faith. All payments hereunder shall
be made in U.S. dollars or such other currency which may be
agreed upon.
(c) If any portion of Distributor's account is more than sixty
(60) calendar days past due pursuant to Section (b) above,
Company may, at its option, cease all deliveries to
Distributor, ship completed Products in place, refuse to
accept new orders, or divert Products already ordered,
unless past due amounts, including interest payments, are
paid in full, or Company is in receipt of an
<PAGE> 10
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 10
irrevocable letter of credit sufficient to cover all
outstanding amounts due confirmed by a United States bank
acceptable to Company; or another method of payment has been
mutually agreed to by the parties.
(d) Company may, at its option, change the payment terms
provided in this section to require letters of credit or
cash in advance or both in the case of a significant change
of occurrence in Distributor's business such as ownership
change, financial difficulty, bankruptcy, or other
significant change.
(e) payment of any amounts due Distributor by Company under this
Agreement shall be credited to the account of the
Distributor on the 14th of each calendar month (or the next
working day in the case of weekends or holidays) for all
proper debit memos that are at least fifteen (15) days old
(i.e., issued prior to the first day of the then current
month). If credit is not received by Distributor in
accordance with this Section, Distributor shall be entitled
to charge a late payment fee at the rate of .05% per day, or
the maximum allowable by law, of any past due amount owing
the Distributor by the Company.
(f) each of Distributor and Company shall appoint an individual
to serve as its Product Manager, who shall be its primary
representative for matters pertaining to the ongoing
activities contemplated under this Agreement. Each party's
Product Manager shall
(1) have overall responsibility for managing and
coordinating the performance of such party's
obligations under this Agreement and
(2) be authorized to act for and on behalf of such party
with respect to all matters relating to this Agreement
(except for any amendment to this Agreement).
6. Delivery Terms.
1. Place of Delivery. Unless otherwise specified by the Company, all
deliveries of Products by the Company to Distributor under this
Agreement must be made FOB the Company's manufacturing location,
at which point title and risk of loss and damage pass from the
Company to Distributor. Delivery is deemed to occur upon the
Company's tender of Products to the common carrier selected by
Distributor for shipment to Distributor.
<PAGE> 11
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 11
2. Date of Delivery. If the Company does not deliver Products within
thirty (30) days of the delivery date specified in a Purchase
Order accepted by the Company, Distributor has the right to (i)
cancel the Purchase Order or (ii) extend the delivery date to a
later date, subject however, to the right to cancel the Purchase
Order if delivery is not made by the extended date.
3. Shipment. Distributor must, at its sole cost, arrange for the
transport and insurance of Products purchased from the Company.
If the Company agrees to arrange for transport and insurance as
agent for Distributor, Distributor shall reimburse the Company
its full costs.
4. Customs/Export. Distributor is solely responsible to cause
shipments of Products to clear customs at the port of entry or
export, including the satisfaction of all documentation
requirements (including special documentation requirements that
may apply to shipments made to certain foreign customers) and
shall pay any applicable customs, duties, import taxes, export
costs and the like that may apply.
7. Returns Provisions. No Products will be eligible for return if they
are manufactured and/or procured by the Company for purchase by the
Distributor based solely upon Distributor's marketing and sales data
or are part of the initial inventory procurement except for those part
numbers noted on Exhibit B-1.
Newly issued part numbers and/or parts involved in a reliability
campaign may be eligible for return after 24 months of part number or
campaign introduction if and only if Company has unilaterally
determined Distributor's stocking level. Only quantities in excess of
24 months usage will be eligible for return.
Products rendered obsolete due to Company's redesign with a must
conform classification will be eligible for return by the Distributor.
Product defined above as eligible for return must be in "new"
condition in the original packaging as supplied by the Company; such
packaging may not be damaged, broken or in any way tampered with
except for ordinary wear incurred in shipping.
The Company shall pay to Distributor in U.S. Dollars an amount equal
to the average inventory cost of the items returned under this section
less restocking charges not to exceed 5%.
8. Warranty Disclaimer. Distributor shall pass through the Company's
standard warranty to all parties that purchase Products from
Distributor, without varying any of its terms or provisions. The
Company may change the standard warranty on new Products by giving
Distributor written notice of such new warranty at least 60 days'
prior to its effective date. THE COMPANY MAKES NO
<PAGE> 12
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 12
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
USE EVEN IF THAT PURPOSE IS KNOWN TO THE COMPANY, NOR ANY OTHER
EXPRESS OR IMPLIED WARRANTY.
9. Ownership of Company Data. All Company Data is, or will be, and shall
remain the property of Company. Without Company's approval (in its
sole discretion), the Company Data shall not be (1) used by
Distributor other than in connection with providing the services
contemplated by this Agreement, (2) sold, assigned, leased or
otherwise provided to third parties by Distributor, or (3)
commercially exploited by or on behalf of Distributor. Distributor
hereby irrevocably assigns, transfers and conveys to Company without
further consideration all of its right, title, and interest in and to
the Company Data. Upon request by Company, Distributor shall execute
and deliver any documents that may be necessary or desirable to
preserve, or enable Company to enforce, its rights hereunder with
respect to the Company Data. For purposes hereof, "Company Data" shall
include all sales reports and other information pertaining to the
marketing and sale of the Products prepared by Company and all sales
and other reports pursuant to Section 3 (q) above, whether or not such
information is Confidential Information as defined in this Agreement.
(Company Data shall exclude information that is not compiled and
reported pursuant to Section 3(q), or is not segregated from data
regarding other products sold by Distributor).
Upon request by Company upon expiration or termination of this
Agreement, Distributor shall (1) promptly return to Company, all of
the Company Data or (2) eradicate or destroy all or any part of the
Company Data in Distributor's possession, in each case to the extent
so requested by Company.
Except as noted above, each party shall be the owner of its own data
customer lists, records, and intellectual property.
<PAGE> 13
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 13
10. Term. Unless terminated earlier as herein provided, the term of this
Agreement shall commence as of the date hereof and shall continue for
a period of ten (10) years. Thereafter, the term of this Agreement
shall be automatically renewed from year to year unless terminated by
either party upon written notice delivered to the other party not
later than ninety (90) days prior to the expiration of the then
current term.
11. Termination.
11.01. Termination for Convenience. Company may terminate this
Agreement, for convenience, by giving Distributor notice of the
termination at least 120 days prior to the termination date
specified in the notice; provided, however, that no such notice
of termination for convenience shall be given prior to January
1, 2003.
11.02. Termination for Change in Control of Company. In the event of a
Change in Control of the Company, the Company may terminate
this Agreement by giving Distributor notice of the termination.
Such termination will be effective as of the time specified
in the notice of termination, but the effective date of the
termination may not be any earlier than 120 days following
Distributor's receipt of the notice.
11.03. Termination for Change in Control of Distributor. In the event
of a Change in Control of Distributor in which control over
Distributor is acquired by a Company Competitor, Company may
terminate this Agreement by giving Distributor notice of the
termination within 30 days of the occurrence of such Change in
Control and at least 120 days prior to the termination date
specified in the notice. In the event of a Change in Control of
Distributor by which the Distributor is acquired by a third
party not a Company Competitor which causes Distributor's
credit rating, as determined by either Standard and Poors or
Moody's to fall one notch below the Distributor's credit rating
prior to the Change in Control, then the Company shall have up
to one year after the Change in Control to terminate the
Agreement if it reasonably determines that the benefits and
services provided by Distributor have been adversely affected,
and the Company provides Distributor with 120 days prior
written notice of termination.
11.04. Termination for Cause. If either party defaults in any material
respect in the performance of any of its material obligations
(or repeatedly defaults during any rolling eighteen month
period in any material respect in the performance of a material
obligation but cures such default within the cure period
provided) under this Agreement, and does not cure such default
(or provide adequate assurances that such repeated defaults
will not continue to occur) within 45 days of receipt of a
notice of default, or if a party
<PAGE> 14
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 14
becomes Insolvent, then the non-defaulting party may, by giving
notice to the defaulting party, terminate this Agreement as of
the termination date specified in the notice. For purposes of
the foregoing, a party shall be regarded as "Insolvent" if it
(i) institutes proceedings to be adjudicated voluntarily
bankrupt or consents to the filing of bankruptcy proceedings
against it, (ii) files a petition seeking reorganization under
any bankruptcy or similar law for the protection of creditors,
or consents to the filing of such a petition against it, (iii)
consents to the appointment of a receiver, liquidator or
trustee in bankruptcy, or makes any assignment of a substantial
portion of its assets for the benefit of creditors, (iv) admits
in writing its inability to pay its debts generally as they
become due, (v) is subject to the filing of an involuntary
petition in bankruptcy (which is not waived or stayed within 60
days), (vi) is subject to any court order or decree
adjudicating it as a bankrupt or insolvent person by a court of
competent jurisdiction, or (vii) publicly announces that it may
file a petition as a bankrupt or insolvent person under any law
now or hereafter applicable to the discharge or restructuring
of debts.
11.05. Termination Fees. Set forth in Exhibit O are the termination
fees that would be payable to Distributor if Company terminates
this Agreement pursuant to Section 11.01 or Section 11.02.
Except as otherwise specifically set forth in this Section, no
termination fee shall be payable by Company in connection with
the termination of this Agreement.
11.06. Change in Control. For purposes of this Agreement "Change in
Control" shall mean the (a) consolidation or merger of a party
with or into any other entity, other than a consolidation or
merger (1) in which the party is the surviving corporation or
entity in the consolidation or merger, (2) with or into an
Affiliate or (3) a consolidation or merger of a party with or
into an entity which, immediately after the consolidation or
merger, is controlled by persons who, immediately prior to that
consolidation or merger, controlled such party, or (b) sale,
transfer or other disposition of all or substantially all of
the assets of a party (other than to an Affiliate), or (c)
acquisition by any entity, or group of entities (other than an
Affiliate or Affiliates) acting in concert, of beneficial
ownership of 30 percent or more of the outstanding voting
securities or partnership interests of a party.
11.07. Company Competitor. For purposes of this Agreement "Company
Competitor" shall mean any business involved in the design,
manufacture (including without limitation any PMA or other
parts manufacturer), sale or repair of gas turbine engines,
including any business that is an Affiliate of an entity
engaged in such activities, including without limitation (a)
General Electric Company, (b) United Technologies Corporation,
(c)
<PAGE> 15
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 15
Allied Signal Corporation, (d) SNECMA, and (e) Caterpillar, and
their respective joint ventures and successors in interest.
11.08. Post Termination Obligations.
(a) Option to Repurchase Products. Upon the expiration or
termination of this Agreement, other than as a result of a
default by the Company, the Company has the option, but not
the obligation, to purchase from Distributor all (but not
less than all) of the Products remaining in Distributor's
stock at the Distributor's average cost net of the
Distributor's excess and obsolescence reserves with respect
to the Products (which shall be determined on the basis of
Generally Accepted Accounting Principles consistently
applied and on the same basis as reserves are established
for other inventory of the Distributor). To exercise such
option, the Company must notify Distributor within 45 days
after the date of termination of this Agreement.
Distributor shall deliver Products to the Company within 10
business days after the Company has given Distributor
notice of its exercise of the option and the price shall be
paid in cash or as a credit against any indebtedness then
owing by Distributor to the Company at the time of
delivery.
(b) Return of Documents. Upon the termination of this
Agreement, Distributor shall use its reasonable business
efforts to promptly return to the Company all Company Data
and Confidential Information of Company. Upon the request
of the Company, Distributor must furnish the Company with
copies of all data, reports, documents, drawings and
manuals made by Distributor dealing with or relating solely
to the Products, except those which are necessary to
complete Distributor's performance under any contract that
was entered into prior to receiving the notice of
termination.
(c) Customer Lists, Product Lists and Contract Obligations.
Upon the termination of this Agreement, Distributor must
furnish the Company with (i) a list of Distributor's
customers for the Products and their addresses, (ii) a list
of the Products in stock, and (iii) copies of Distributor's
contracts relating to the sale of the Products that have
not been fully performed by Distributor.
(d) Option to Be Assigned Contracts. Upon the termination of
this Agreement, Distributor shall, at the Company's
request, use its reasonable business efforts to effect an
assignment to the Company (or a person designated by the
Company) of the Distributor's then existing contracts
relating to the sale of the Products specified by
<PAGE> 16
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 16
the Company in the request. In order to exercise this
option, the Company must notify Distributor within 30 days
after the date of its receipt of the documents specified in
(c) above. Distributor agrees to use its reasonable
business efforts to effect the assignment within 10 days
after the Company has notified Distributor of its exercise
of the option.
(e) Transition. Upon the expiration or termination of this
Agreement and if the Company so requests, Distributor
agrees to use its reasonable business efforts to cooperate
with the Company in the transition to its own internal
distribution system, for the Territory, and shall provide
such assistance to the Company as is reasonably requested
by the Company; provided however, that Distributor shall
have no obligation to provide assistance to any subsequent
third party chosen as a distributor of the Products.
Likewise, the Company and the Distributor shall establish
reasonable procedures for the collection of outstanding
accounts receivable from customers, which may include the
Company collecting such receivables on behalf of the
Distributor, as its agent and in return for reasonable
compensation for such service.
12. Service Standards.
12.01. Designated Service Levels. The Parties shall at all times from
and after January 1, 2001 perform their obligations hereunder
in accordance with service levels and performance standards
agreed from time to time between Company and Distributor
("Service Standards"). The Service Standards shall be measured
and reported on a monthly basis and reviewed for compliance by
Product Managers on a quarterly basis. The initial Service
Standards and Expedite and Late Delivery Fees are set forth on
Exhibit N. The initial Service Standards must be agreed to by
June 1, 2000. Both parties shall be subject to full
accountability of Service Standards on and after January 1,
2001.
12.02. Adjustment of Service. The Product Managers for Company and
Distributor shall review the performance against the Service
Standards at least quarterly during the term, and shall call
attention to any failures in performance or opportunities to
improve performance. In addition, either party may, at any time
upon notice to the other party, initiate negotiations to review
and, upon agreement by the parties, adjust a Service Standard
which party in good faith believes is inappropriate because of
a fundamental change in circumstances; provided that no such
change shall take effect unless and until agreed in writing.
<PAGE> 17
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 17
12.03. Corrective Action. Upon becoming aware of a failure to perform
in accordance with an applicable Service Standard, a party
asserting a breach of Service Standard shall send written
notice to the Product Manager of the party that has breached
the Service Standard which notice, (1) identifies the cause of
such failure, and (2) provides the other party with a report
detailing the cause of, and expected procedure for correcting,
such failure. The notice detailing the cause and recommended
correction of any performance failure will be deemed
Confidential Information of the parties. The party against whom
the breach of Service Standard is asserted shall have 150 days
from the date of receipt of the notice to correct the
deficiency. If, after the first 150 day period, the Service
Standard is not within the acceptable range set forth in
Exhibit N, the party shall have an additional 150 days to bring
the Service Standard within acceptable range. Failure to have
brought the Service Standard within the acceptable range shall
then be a material breach of the Agreement and be the basis for
immediate termination for cause (i.e. without any further
notice period under Section 11.04).
12.04. Continuous Improvement and Best Practices. Each party shall, on
a continuous basis, as part of its total quality management
process, identify ways to improve its performance and apply
best business practice (including improvements in available
technology) to achieve such performance improvements.
13. Customer Satisfaction
13.01. Baseline Customer Satisfaction. Prior to March 31, 2000,
Company shall submit to Distributor, for Distributor's
reasonable approval, the identity of an independent third party
selected by Company that shall conduct a baseline customer
satisfaction index survey. Upon Distributor's reasonable
approval of such third party, Company shall engage such third
party to conduct a baseline customer satisfaction index survey
for affected end-users of the Products (the "Customer
Satisfaction Index"). The fees and expenses charged by such
third party shall be shared equally by Distributor and Company.
The content and scope of the Customer Satisfaction Index shall
be mutually agreed by Company and Distributor. The results of
the Customer Satisfaction Index shall be the baseline for
measurement of improvements described in Section 13.02 below.
13.02. Customer Satisfaction Survey.
(1) Once every contract year beginning at least one year after
the creation of the Customer Satisfaction Index, Company
may engage an independent third party reasonably
satisfactory to Distributor to conduct a customer
<PAGE> 18
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 18
satisfaction survey in respect of those aspects of the
Services designated by Company. The fees and expenses
charged by such third party shall be shared equally by
Company and Distributor. The timing, content, scope and
method of the survey shall be consistent with that used in
deriving the Customer Satisfaction Index. Distributor
agrees that increased measured customer satisfaction shall
be a consideration in the evaluation of the performance of
Distributor's management employees involved in the sale and
physical distribution of the Products, but that the results
shall not serve as a basis of termination for cause or
preclude or prevent termination for cause for other
reasons.
(2) The Customer Satisfaction Index and the results of any
customer satisfaction survey will be deemed Confidential
Information of both parties pursuant to the terms of this
Agreement.
14. Marks and Proprietary Rights.
(a) The Distributor acknowledges the Company's exclusive
ownership of the Company's trade names, service marks and
trademarks, and all logos and derivations thereof, and all
names and marks licensed to the Company (collectively, the
"Marks)".
(b) Any proposed use of the Marks in connection with the
activities contemplated under this Agreement shall require
the prior written authorization of Rolls-Royce plc, which
may be given or withheld on a case by case basis in its
discretion. If permission to use the marks is granted, the
Distributor shall strictly adhere to all instructions,
limitations and restrictions placed upon such use, and shall
take any necessary steps to protect the Marks in each
jurisdiction of use. The Distributor further agrees to cease
use of the Marks or otherwise restrict use of materials
bearing the Marks whenever so instructed by the Company or
Rolls-Royce plc. No action taken or approval given pursuant
to the foregoing shall in any way create any express or
implied rights in or license in favor of the Distributor
with respect to the Marks.
(c) Upon termination of this Agreement, the Distributor shall
cease using all Marks and Mark-bearing stationery, business
cards, sales literature and the like, except as necessary to
dispose of Products then in Distributor's inventory and any
reference in Distributor's previously published catalogues.
The Distributor will have no obligation to return such
materials to the Company. Thereafter, the
<PAGE> 19
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 19
Distributor shall no longer use any of the Marks, except as
permitted by law.
15. Limitation of Damages; Indemnification
(a) WITH REGARD TO CLAIMS BETWEEN THE PARTIES, NEITHER PARTY
SHALL BE LIABLE TO THE OTHER FOR ANY INCIDENTAL, SPECIAL,
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES ARISING OUT OF
ANY OBLIGATION, BREACH ACT OR OMISSION IN CONNECTION WITH
THE PERFORMANCE OF THE AGREEMENT, REGARDLESS OF WHETHER THE
CLAIM IS FOR BREACH OF CONTRACT, BREACH WARRANTY, TORT
(INCLUDING NEGLIGENCE) STRICT LIABILITY, OR OTHERWISE.
(b) With regard to claims from third parties; the Company shall
hold Distributor harmless and indemnify it from and against
any and all claims, losses, costs, damages and expenses
(including reasonable attorney's fees) which Distributor may
suffer as a result of any loss to the persons or property of
a third party arising directly or indirectly from use of a
Product; provided, however, that the Company shall have no
such obligation to indemnify or hold Distributor harmless
from any matters covered by Distributor's indemnity below.
Distributor shall hold the Company harmless and indemnify it
from and against any and all claims, losses, costs, damages
and expenses (including reasonable attorney's fees) which
Company may suffer as a result of any loss to the person or
property of a third person arising directly or indirectly
from the wrongful or negligent action or inaction of
Distributor, or any other third party acting on its behalf
or under its direction with regard to the Products; provided
however, that the Distributor shall have no such obligation
to indemnify or hold the Company harmless from any matters
covered by Company's indemnity above.
16. Proprietary Rights Indemnification. The Company shall, at its own
expense, defend any suit instituted against Distributor which is based
on an allegation that any Product manufactured by the Company and sold
to Distributor hereunder constitute an infringement of any patent,
copyright, trade secret or other proprietary right of any third party
and shall indemnify Distributor against any award of damages and costs
made against Distributor by a final judgment of a court of last resort
if it is determined therein that any such Product constitutes an
infringement of any patent, copyright, trade secret or other
proprietary right of any third party, provided that Distributor gives
the Company timely notice in writing of any notice or claims of
infringement and permits the Company through the Company's counsel to
defend the same and gives the Company all available information,
assistance and authority to enable the Company to assume such defense.
The Company shall have control of the defense of any such suit,
including appeals from any judgment therein and any negotiations for
the settlement or compromise
<PAGE> 20
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 20
thereof with full authority to enter into a binding settlement or
compromise. In the event that any Product is held to infringe and its
use is enjoined, the Company shall, at its option and expense, (i)
procure for Distributor and its customers the right to continue using
such Product, (ii) provide the necessary parts and documentation to
replace or modify such Product so that it no longer infringes, or
(iii) grant Distributor a credit for such Product upon its return to
the Company, allowing for reasonable depreciation for use, damage and
obsolescence.
Notwithstanding the above, the Company shall have no liability
whatsoever to Distributor with respect to any patent infringement or
claim thereof which is based upon or arises out of (i) the use of any
Product in combination with an apparatus or device not manufactured or
supplied by the Company, if such combination causes the infringement,
(ii) the use of any Product in a manner for which it was neither
designed nor contemplated, or (iii) any modification of any Product by
Distributor or any third party which causes the Product to become
infringing.
17. CONFIDENTIALITY
(a) General Obligations All Confidential Information relating to
or obtained from Company or Distributor shall be held in
confidence by the recipient to the same extent and in at
least the same manner as the recipient protects its own
confidential or proprietary information. Neither Company nor
Distributor shall disclose, publish, release, transfer or
otherwise make available Confidential Information of, or
obtained from, the other in any form to, or for the use or
benefit of, any person or entity without the disclosing
party's prior written consent. Each of Company and
Distributor shall, however, be permitted to disclose
relevant aspects of the other's Confidential Information to
its officers, directors, partners, agents, professional
advisors, contractors, subcontractors and employees and to
the officers, directors, partners, agents, professional
advisors, contractors, subcontractors and employees of its
affiliates, (to the extent that such disclosure is not
otherwise restricted under any contract, license, consent,
permit, approval or authorization granted pursuant to
applicable law, rule or regulation, and only to the extent
that such disclosure is reasonably necessary for the
performance of its duties and obligations under this
Agreement (or the determination or preservation of its
rights under the Agreement); provided, however, that the
recipient shall take all reasonable measures to ensure that
Confidential Information of the disclosing party is not
disclosed or duplicated in contravention of the provisions
of this Agreement by such officers, directors, partners,
agents, professional advisors, contractors, subcontractors
and employees. If either party intends to disclose any
Confidential Information in connection with any claim or
action to determine or preserve its rights under this
Agreement, then that party will give prior notice to the
other party and take such
<PAGE> 21
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 21
reasonable actions as may be specified by the other party to
obtain a protective order or cause the Confidential
Information to be filed under seal (or give the other party
an opportunity to obtain a protective order). The
obligations in this Section shall not restrict any
disclosure pursuant to any applicable law or by order of any
court or government agency (provided that the recipient
shall give prompt notice to the disclosing party of such
order, shall disclose only such Confidential Information as
the recipient is required to disclose under the applicable
law or order, and shall take such reasonable actions as may
be specified by the disclosing party to resist providing
such access or to obtain a protective order) and shall not
apply with respect to information that (1) is independently
developed by the recipient without violating the disclosing
party's proprietary rights, (2) is or becomes publicly known
(other than through unauthorized disclosure by a party), (3)
is already known by the recipient at the time of disclosure
without any obligation of confidentiality to the disclosing
party, or (4) is disclosed to a party by a third person
which the recipient reasonably believes has legitimate
possession thereof and the unrestricted right to make such
disclosure.
(b) Unauthorized Acts. Without limiting either party's rights
in respect of a breach of this Section, each party shall:
(1) promptly notify the other party of any unauthorized
possession, use or knowledge, or attempt thereof, of
the other party's Confidential Information by any
person or entity that may become known to such party;
(2) promptly furnish to the other party the details of the
unauthorized possession, use or knowledge, or attempt
thereof, known by such party and assist the other party
in investigating or preventing the recurrence of any
unauthorized possession, use or knowledge, or attempt
thereof, of Confidential Information;
(3) cooperate with the other party in any litigation and
investigation against third parties deemed necessary by
the other party to protect its proprietary rights; and
(4) promptly use its commercially reasonable efforts to
prevent a recurrence of any such unauthorized
possession, use or knowledge, or attempt thereof, of
Confidential Information.
Each party shall bear the cost it incurs as a result of compliance with
this Section.
<PAGE> 22
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 22
(c) Confidential Information. "Confidential Information" of a
party shall mean all information and documentation of such
party (or its affiliates), whether disclosed to or accessed
by the other party (or its affiliates) in connection with
the activities contemplated by this Agreement that has been
marked as "Proprietary" or "Confidential" or bears some
other proprietary designation, or if disclosed orally, has
been designated by a party as confidential in a letter or
other written statement made to the other party promptly
following its disclosure, and shall include, without
limitation, (1) information concerning business plans, (2)
financial information, (3) information concerning operations
and the results of operations, (4) pricing information and
marketing strategies, (5) information that a party is
legally obligated not to disclose, (6) information that
qualifies as a trade secret under applicable law, (7)
patents, unpatented inventions and information regarding
product development and improvements, (8) engine and parts
specifications and drawings, and (9) material and
performance specifications.
18. Foreign Corrupt Practices Act: Export Laws
(a) Distributor represents and warrants that it will comply with
all laws applicable in the Territory relating to the conduct
of business practices, including those that may prohibit
gratuities, inducements, or certain other payments.
Distributor acknowledges that the Company may be subject to
certain United States laws, including the Foreign Corrupt
Practices Act of 1977 and any of its amendments, which may
apply to activities carried out on the Company's behalf
outside the United States of America. Distributor agrees
neither to take nor omit to take any action if such act or
omission might cause the Company or the Distributor to be in
violation of any such laws. Upon written notice from the
Company, Distributor shall provide such information as the
Company may reasonably consider necessary to verify
compliance by Distributor with the provisions of this
Section.
(b) Distributor may not enter into any contract or other
arrangement or sell any Products to any third party if so
doing would cause the Company to be in violation of any
applicable laws, including, without limitation, U.S. laws
and regulations prohibiting exports to certain countries.
(c) Distributor shall indemnify the Company against any
penalties, losses or damages (including legal fees,
penalties and costs of
<PAGE> 23
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 23
investigation) which the Company may incur because of a
breach of its obligations under this Section.
(d) In those circumstances where Distributor is providing goods
or services without charge to third parties, including but
not limited to, support of Company's new engine sales
programs, warranty return, product recall programs and
support of the Company's foreign agents, the Company agrees
that:
(i) the Distributor may be subject to certain United States and
foreign laws, including but not limited to the Foreign
Corrupt Practices Act of 1977 and any of its amendments,
which may apply to activities carried out by Distributor
outside the United States of America in connection with
Distributor's providing goods or services pursuant to the
agreements described in Section (d) above. The Company
agrees neither to take nor omit to take any action if such
act or omission might cause the Distributor or the Company
to be in violation of any such laws. Upon written notice
from Distributor, Company shall provide such information as
Distributor may reasonably consider necessary to verify
compliance by Company with the provisions of this Section;
and
(ii) The Company shall indemnify the Distributor against any
penalties, losses or damages (including legal fees,
penalties and costs of investigation) which the Distributor
may incur because of a breach of its obligations under this
Section.
<PAGE> 24
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 24
19. No Partnership or Joint Venture: Independent Contractor. The parties
hereto intend by this Agreement solely to effect the appointment of the
Distributor as an independent contractor with the Company for the
marketing of the Products as a distributor of the Company in the
Territory. No other relationship is intended to be created between the
parties hereto. Nothing in this Agreement shall be construed as (a)
giving the Distributor any rights as a partner in or owner of the
business of the Company, (b) giving the Company any rights as a partner
in or owner of the business of the Distributor, (c) entitling the
Distributor to control in any manner the conduct of the Company's
business or (d) entitling the Company to control in any manner the
conduct of the Distributor's business. The Distributor shall not have,
nor shall it represent itself as having, the power to make any
contracts or commitments in the name of or binding upon the Company.
20. Expenses. Except as otherwise expressly provided in this Agreement,
each party to this Agreement shall bear its own expenses including,
without limitation, rent, travel, entertainment, secretarial or other
office expense, postage, telephone and other communications costs.
21. Notices. All notices required or permitted to be given hereunder shall
be in writing and shall be deemed given (a) when delivered in person at
the time of such delivery or by telecopy with confirmed receipt of
transmission at the date and time indicated on such receipt or (b) when
received if given by an internationally recognized express courier
service as follows:
If to the Company:
Rolls-Royce Allison
PO Box 420
Indianapolis, IN 46206
Attention: Product Manager, Speed Code _____
With copy to Director of Contracts, Speed Code U20-A
If to the Distributor:
Aviall Services, Inc.
2075 Diplomat Drive
Dallas, Texas 75234-8919, U.S.A.
Attention: Product Manager, A250 Spares
Fax: (972) 406-2074
With copy to Director, Marketing and Supplier Services
or at such other respective addresses or addressees as may be designated by
notice given in accordance with the provisions of this Section 21.
<PAGE> 25
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 25
22. Dispute Resolution.
(a) Product Managers. Any dispute arising under this Agreement
(other than payment delinquencies and matters for which
injunctive relief may be sought pursuant to (d) below shall
be considered at an in person meeting of the Company's
Product Manager and the Distributor's Product Manager within
five business days of receipt by either party of written
notice specifying the nature of the dispute, and proposing a
place for such meeting (which unless otherwise agreed shall
be the principal place of business of the party receiving
such notice). If the Product Managers cannot resolve the
dispute within 30 calendar days of such meeting, the dispute
will be escalated within the parties' respective
organizations as follows: to the company's President,
Helicopter Business Unit, and to the Distributor's
President. If such dispute has not been resolved within 30
days of such escalation, then either party may pursue
arbitration of such dispute pursuant to the terms of this
Agreement.
(b) Conduct Pending Resolution. The parties acknowledge that the
timely performance of obligations pursuant to this Agreement
is critical to their business operations. Accordingly, in
the event of a dispute between the parties, each party shall
continue to perform its obligations, but without prejudice
to its rights to pursue remedies in accordance with the
provisions hereof.
(c) Arbitration. Except as provided in Section (d) below, any
dispute, breach, controversy or claim arising out of or
relating to this Agreement shall be finally settled by
arbitration in New York City in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association in effect on the date of this Agreement and
judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
(d) Other Remedies. Except as may be otherwise expressly
provided herein, the remedies set forth in this Agreement
shall not be exclusive of any others that may be available
under applicable law. In particular, the parties agree that
monetary damages alone are an inadequate remedy for
violations of Sections 9, 11.08, 14, 17 and 23 of this
Agreement and, accordingly, a party may seek equitable
remedies, including injunctive relief, in any court of
competent jurisdiction for a violation of such provisions.
<PAGE> 26
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 26
(e) The arbitration shall be conducted in the English language.
This Section 22 provides the sole recourse for the
settlement of any dispute or breach arising under or in
connection with this Agreement.
23. Non Solicitation. Each party agrees that during the term of this
Agreement they will not directly or indirectly employ, solicit for
employment or assist any third party to employ or solicit for
employment, any employee of the other party, or any employee of any
affiliate of the other party. Nothing in this provision will prohibit
either party from placing advertisements of open positions for
employment in trade and general circulation publications.
24. Force Majeure. Neither party hereto shall be responsible or liable in
any way for its failure to perform its obligations hereunder, other
than for payment of money, if such failure to perform is beyond the
control of the Company or the Distributor, whether caused by acts of
God, unavailability or shortages of raw materials from usual sources of
supply or unavailability or shortages of energy necessary to produce
and/or deliver the Products by usual modes of transportation, fire,
flood, war, embargo, strikes, labor disputes, explosions, riots, or
laws, rules, regulations, restrictions and orders of any governmental
authority to which such entity is subject, or any cause, other than
financial, beyond the reasonable control of the affected party. Such
failure shall not terminate this Agreement, but the obligations of the
affected party shall be suspended during the period when performance is
so suspended, unless such period exists beyond a period of one hundred
and twenty (120) days, in which event either party shall have the right
at any time thereafter during such force majeure to terminate this
Agreement upon written notice to the other party without further
obligation or liability. The party so prevented from complying with its
obligations hereunder shall immediately notify and keep the other party
from time to time apprised thereof, and such party so prevented shall
use reasonable efforts to remove or overcome the cause of such
inability to comply with its obligations under this Agreement. Nothing
herein shall be construed to require the settlement of strikes,
lockouts, or other labor difficulty by the party involved contrary to
its wishes.
25. Effect of Termination. In the event of the termination of this
Agreement, and subject to recovery provided by an arbitrator pursuant
to Section 22, all rights and obligations of the parties hereunder
shall cease and terminate, except as to the payment of any sum or sums
owed to either party as of the date of termination, except the
Company's obligation to fill Distributor's purchase orders which the
Company has accepted and except as to the provisions of Sections 8, 9,
11, 14, 15, 16, 17, 18, 22, and 23 hereof, all of which shall survive
the termination of this Agreement.
26. ENTIRE AGREEMENT. THIS AGREEMENT, INCLUDING EXHIBITS A THROUGH O
ATTACHED HERETO AND INCORPORATED AS AN INTEGRAL PART OF THIS AGREEMENT,
CONSTITUTES THE ENTIRE AGREEMENT OF THE PARTIES WITH RESPECT TO THE
SUBJECT MATTER HEREOF, AND SUPERSEDES ALL PREVIOUS DISTRIBUTORSHIP
AGREEMENTS BY AND BETWEEN COMPANY AND DISTRIBUTOR AS WELL AS ALL
PROPOSALS, ORAL OR WRITTEN, AND ALL
<PAGE> 27
DISTRIBUTION SERVICES AGREEMENT
Allison Engine Company d/b/a Rolls-Royce Allison
Page 27
NEGOTIATIONS, CONVERSATIONS OR DISCUSSIONS HERETOFORE HAD BETWEEN THE PARTIES
RELATED TO THIS AGREEMENT.
27. Applicable Law. This Agreement shall be governed and controlled as to
validity, enforcement, interpretation, construction, effect and in all
other respects by the internal laws of the State of New York applicable
therein, without giving effect to the conflicts of laws principles
thereof.
28. Amendments. This Agreement may not be amended, nor shall any waiver,
change, modification, consent or discharge be effected, except by an
instrument in writing executed by or on behalf of the party against
whom enforcement of any such amendment, waiver, change, modification,
consent or discharge is sought.
29. Severability. The invalidity of any provision of this Agreement, or
portion thereof, shall not affect the validity of the remainder of such
provision or of the remaining provisions of this Agreement.
30. Section Headings. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
31. Assignability. This Agreement shall be binding upon, and inure to the
benefit of, the parties, their successors and their permitted assigns.
Neither this Agreement nor any interest herein may be assigned by
either party without the prior written consent of the other party,
except that either party may assign its interests to an affiliate that
is fully capable of performing all obligations under this Agreement
and, if appropriate, such performance is guaranteed by its corporate
parent.
32. Non-Waiver. Failure, delay or forbearance of either party to insist on
strict performance of the terms and provisions of this Agreement, or to
exercise any and or remedy, shall not be construed as a waiver thereof
and shall not waive subsequent strict performance by a party.
33. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original and all such
counterparts shall constitute but one instrument.
* * * * *
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
ALLISON ENGINE COMPANY, INC.
d/b/a ROLLS-ROYCE ALLISON
/s/ Stuart Mullan
-----------------------------------------
By: Stuart Mullan
Title: President, Helicopters
AVIALL SERVICES, INC.
/s/ Charles M. Kienzle
-----------------------------------------
By: Charles M. Kienzle
Title: SVP Operations
<PAGE> 28
EXHIBIT A
Attached is the current list of Products.
<PAGE> 29
<TABLE>
<CAPTION>
ENGINE MODEL PUBLICATION NUMBER 2000 LIST PRICE 2000 REVISION SERVICE
- ------------ ------------------ --------------- ---------------------
<S> <C> <C> <C>
OPERATIONS & MAINTENANCE MANUALS
C18 5W2 $ 179.00 $ 142.00
C20 10W2 $ 179.00 $ 142.00
C20R GTP 5232-2 $ 179.00 $ 142.00
C28 16W2 $ 179.00 $ 142.00
C30,S,G,G/2,P,M 14W2 $ 179.00 $ 142.00
C30L,R,U 14W2LRU $ 179.00 $ 142.00
B15 6W2 $ 179.00 $ 142.00
B17 11W2 $ 179.00 $ 142.00
B17F GTP 5243-2 $ 179.00 $ 142.00
C40 CSP 21000 $ 179.00 $ 142.00
C47M CSP 21004 $ 179.00 $ 142.00
C47B CSP 21001 $ 179.00 $ 142.00
OVERHAUL MANUALS
C18 5W3 $ 980.00 $ 630.00
C20 10W3 $ 1,236.00 $ 806.00
C20R GTP 5232-3 $ 1,236.00 $ 806.00
C28 16W3 $ 980.00 $ 630.00
C30 14W3 $ 980.00 $ 630.00
B15 6W3 $ 980.00 $ 859.00
B17 11W3 $ 980.00 $ 630.00
B17F GTP 5243-3 $ 980.00 $ 630.00
C40 CWP 22000 $ 1,236.00 $ 812.00
C47B CSP 22001 $ 1,236.00 $ 812.00
ILLUSTRATED PARTS CATALOGS
C18 5W4 $ 132.00 $ 87.00
C20 10W4 $ 132.00 $ 87.00
C20R GTP 5232-4 $ 132.00 $ 87.00
C28 16W4 $ 132.00 $ 87.00
C30,S,G,G/2,P,M 14W4 $ 132.00 $ 87.00
C30L,R,U 14W4LRU $ 132.00 $ 87.00
B15 6W4 $ 132.00 $ 87.00
B17 11W4 $ 132.00 $ 87.00
B17F GTP 5243-4 $ 132.00 $ 87.00
C47M,B,C40B CSP 23001 $ 132.00 $ 87.00
C30R/3 CSP 23003 $ 132.00 $ 87.00
SERVICE BULLETINS (CURRENT WHEN SHIPPED)
C18 CEB 250C18 $ 1,005.00
C20 CEB 250C20 $ 1,005.00
C20R CEB 250C20R $ 1,005.00
C28 CEB 250C28 $ 1,005.00
C30 CEB 250C30 $ 1,005.00
B15 CEB 250B15 $ 1,005.00
B17 CEB 250B17 $ 1,005.00
B17F CEB 250B17F $ 1,005.00
C40 CEB 250C40 $ 1,005.00
C47 CEB 250C47 $ 1,005.00
</TABLE>
<PAGE> 30
<TABLE>
SERVICE LETTERS SETS (CURRENT WHEN SHIPPED)
<S> <C> <C>
C18 CSL 250C18 $ 622.00
C20 CSL 250C20 $ 622.00
C20R CSL 250C20R $ 622.00
C28 CSL 250C28 $ 622.00
C30 CSL 250C30 $ 622.00
B15 CSL 250B15 $ 622.00
B17 CSL 250B17 $ 622.00
B17F CSL 250B17F $ 622.00
C40 CSL 250C40 $ 622.00
C47M CSL 250C47 $ 622.00
C47B CSL 21001 $ 622.00
SUPPORT EQUIPMENT LIST
TURBOSHAFT/PROP GTP 5235 $ 249.00
</TABLE>
2
<PAGE> 31
EXHIBIT A
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
AN101006 BOLT 1 2.57
- ----------------------------------------------------------------------------
AN101007 BOLT 25 2.63
- ----------------------------------------------------------------------------
AN101019 BOLT 10 8.38
- ----------------------------------------------------------------------------
AN101024 BOLT 2 5.56
- ----------------------------------------------------------------------------
AN101025 BOLT 1 24.17
- ----------------------------------------------------------------------------
AN101034 BOLT 15 13.82
- ----------------------------------------------------------------------------
AN101035 BOLT 5 7.06
- ----------------------------------------------------------------------------
AN101037 BOLT 2 12.51
- ----------------------------------------------------------------------------
AN101126 BOLT 15 5.23
- ----------------------------------------------------------------------------
AN104606 BOLT 25 3.09
- ----------------------------------------------------------------------------
AN104613 BOLT 25 2.63
- ----------------------------------------------------------------------------
AN104614 BOLT 10 6.17
- ----------------------------------------------------------------------------
AN104620 BOLT 25 2.53
- ----------------------------------------------------------------------------
AN104711 BOLT 25 4.21
- ----------------------------------------------------------------------------
AN104722 BOLT 10 5.31
- ----------------------------------------------------------------------------
AN106624 BOLT 10 8.74
- ----------------------------------------------------------------------------
AN107307 BOLT 10 6.45
- ----------------------------------------------------------------------------
AN116964 SCREW 25 3.31
- ----------------------------------------------------------------------------
AN117004 SCREW 4 18.14
- ----------------------------------------------------------------------------
AN121662 PIN 15 14.84
- ----------------------------------------------------------------------------
AN122581 WASHER 1 1.72
- ----------------------------------------------------------------------------
AN122704 PIN 50 1.10
- ----------------------------------------------------------------------------
AN122706 PIN 50 1.89
- ----------------------------------------------------------------------------
AN122707 PIN 50 1.85
- ----------------------------------------------------------------------------
AN125402 RIVET 100 0.52
- ----------------------------------------------------------------------------
AN150206 LOCK 25 2.40
- ----------------------------------------------------------------------------
AN150233 PIN 10 2.70
- ----------------------------------------------------------------------------
AN150519 STUD 10 7.50
- ----------------------------------------------------------------------------
AN150520 STUD 15 6.03
- ----------------------------------------------------------------------------
AN150521 STUD 15 13.81
- ----------------------------------------------------------------------------
AN150522 STUD 15 15.47
- ----------------------------------------------------------------------------
AN150523 STUD 5 8.11
- ----------------------------------------------------------------------------
AN150524 STUD 5 8.20
- ----------------------------------------------------------------------------
AN150526 STUD 25 3.53
- ----------------------------------------------------------------------------
AN150527 STUD 15 14.40
- ----------------------------------------------------------------------------
AN150528 STUD 15 13.72
- ----------------------------------------------------------------------------
AN150531 STUD 10 9.68
- ----------------------------------------------------------------------------
AN150532 STUD 50 4.31
- ----------------------------------------------------------------------------
AN150533 STUD 15 16.64
- ----------------------------------------------------------------------------
AN150534 STUD 15 22.76
- ----------------------------------------------------------------------------
AN150535 STUD 10 9.96
- ----------------------------------------------------------------------------
AN150536 STUD 10 9.96
- ----------------------------------------------------------------------------
AN150538 STUD 10 9.03
- ----------------------------------------------------------------------------
AN150544 STUD 10 8.36
- ----------------------------------------------------------------------------
AN150545 STUD 10 12.75
- ----------------------------------------------------------------------------
</TABLE>
3
<PAGE> 32
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
AN150546 STUD 15 14.87
- ------------------------------------------------------------------------------
AN150549 STUD 15 6.75
- ------------------------------------------------------------------------------
AN150550 STUD 15 5.76
- ------------------------------------------------------------------------------
AN150551 STUD 15 6.22
- ------------------------------------------------------------------------------
AN150552 STUD 15 6.69
- ------------------------------------------------------------------------------
AN150553 STUD 15 6.75
- ------------------------------------------------------------------------------
AN150556 STUD 15 5.29
- ------------------------------------------------------------------------------
AN150557 STUD 15 14.46
- ------------------------------------------------------------------------------
AN150558 STUD 15 14.11
- ------------------------------------------------------------------------------
AN150573 STUD 10 10.58
- ------------------------------------------------------------------------------
AN150574 STUD 15 6.32
- ------------------------------------------------------------------------------
AN150575 STUD 10 10.88
- ------------------------------------------------------------------------------
AN150577 STUD 10 10.35
- ------------------------------------------------------------------------------
AN150578 STUD 10 10.58
- ------------------------------------------------------------------------------
AN150586 STUD 15 3.86
- ------------------------------------------------------------------------------
AN150587 STUD 5 15.22
- ------------------------------------------------------------------------------
AN150588 STUD 5 15.22
- ------------------------------------------------------------------------------
AN150591 STUD 10 10.58
- ------------------------------------------------------------------------------
AN150592 STUD 15 6.10
- ------------------------------------------------------------------------------
AN150593 STUD 10 13.13
- ------------------------------------------------------------------------------
AN150594 STUD 15 16.83
- ------------------------------------------------------------------------------
AN150595 STUD 30 10.58
- ------------------------------------------------------------------------------
AN150596 STUD 15 10.58
- ------------------------------------------------------------------------------
AN150820 STUD 15 4.23
- ------------------------------------------------------------------------------
AN150821 STUD 2 30.99
- ------------------------------------------------------------------------------
AN150825 STUD 15 4.52
- ------------------------------------------------------------------------------
AN150826 STUD 10 7.71
- ------------------------------------------------------------------------------
ANI150827 STUD 15 10.57
- ------------------------------------------------------------------------------
AN150828 STUD 15 13.94
- ------------------------------------------------------------------------------
AN150829 STUD 10 15.81
- ------------------------------------------------------------------------------
AN150830 STUD 5 14.67
- ------------------------------------------------------------------------------
AN150831 STUD 10 9.68
- ------------------------------------------------------------------------------
AN150832 STUD 15 4.02
- ------------------------------------------------------------------------------
AN150833 STUD 10 21.20
- ------------------------------------------------------------------------------
AN150834 STUD 15 26.24
- ------------------------------------------------------------------------------
AN150835 STUD 5 18.32
- ------------------------------------------------------------------------------
AN150849 STUD 10 9.09
- ------------------------------------------------------------------------------
AN150850 STUD 10 7.23
- ------------------------------------------------------------------------------
AN150851 STUD 10 9.42
- ------------------------------------------------------------------------------
AN150852 STUD 10 9.89
- ------------------------------------------------------------------------------
AN150853 STUD 10 8.88
- ------------------------------------------------------------------------------
AN150854 STUD 10 9.50
- ------------------------------------------------------------------------------
AN150861 STUD 10 9.68
- ------------------------------------------------------------------------------
AN150862 STUD 10 3.51
- ------------------------------------------------------------------------------
AN150863 STUD 5 31.45
- ------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 33
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
AN150864 STUD 10 20.62
- ------------------------------------------------------------------------------
AN150865 STUD 5 10.74
- ------------------------------------------------------------------------------
AN150866 STUD 10 9.38
- ------------------------------------------------------------------------------
AN150939 STUD 5 10.87
- ------------------------------------------------------------------------------
AN150940 STUD 10 8.03
- ------------------------------------------------------------------------------
AN150941 STUD 10 9.47
- ------------------------------------------------------------------------------
AN150942 STUD 10 9.75
- ------------------------------------------------------------------------------
AN150943 STUD 10 9.47
- ------------------------------------------------------------------------------
AN150957 STUD 5 10.87
- ------------------------------------------------------------------------------
AN150958 STUD 10 5.27
- ------------------------------------------------------------------------------
AN150959 STUD 2 31.25
- ------------------------------------------------------------------------------
AN150960 STUD 15 18.98
- ------------------------------------------------------------------------------
AN150961 STUD 10 9.68
- ------------------------------------------------------------------------------
AN150962 STUD 10 9.09
- ------------------------------------------------------------------------------
AN150970 STUD 5 10.27
- ------------------------------------------------------------------------------
AN150971 STUD 4 23.31
- ------------------------------------------------------------------------------
AN150972 STUD 2 30.65
- ------------------------------------------------------------------------------
AN151132 STUD 5 5.30
- ------------------------------------------------------------------------------
AN151133 STUD 10 23.54
- ------------------------------------------------------------------------------
AN151134 STUD 10 49.60
- ------------------------------------------------------------------------------
AN151324 STUD 15 4.64
- ------------------------------------------------------------------------------
AN151325 STUD 5 20.24
- ------------------------------------------------------------------------------
AN151326 STUD 15 15.27
- ------------------------------------------------------------------------------
AN154719 STUD 5 18.92
- ------------------------------------------------------------------------------
AN154720 STUD 15 8.07
- ------------------------------------------------------------------------------
AN154721 STUD 50 8.23
- ------------------------------------------------------------------------------
AN154722 STUD 10 1.56
- ------------------------------------------------------------------------------
AN154723 STUD 25 1.50
- ------------------------------------------------------------------------------
AN173-20A BOLT 5 14.80
- ------------------------------------------------------------------------------
AN173C10 BOLT 15 6.71
- ------------------------------------------------------------------------------
AN173C6 BOLT 15 6.05
- ------------------------------------------------------------------------------
AN173C7 BOLT 10 6.44
- ------------------------------------------------------------------------------
AN3-3A BOLT 50 0.35
- ------------------------------------------------------------------------------
AN364-1032 NUT 100 1.02
- ------------------------------------------------------------------------------
AN500D4-4 SCREW 50 1.41
- ------------------------------------------------------------------------------
AN500D4-6 SCREW 50 1.33
- ------------------------------------------------------------------------------
AN501AD10-6 SCREW 50 1.03
- ------------------------------------------------------------------------------
AN502-416-14 SCREW 50 0.39
- ------------------------------------------------------------------------------
AN503-10-10 SCREW 50 0.93
- ------------------------------------------------------------------------------
AN505C5-6 SCREW 100 0.33
- ------------------------------------------------------------------------------
AN6227-17 PACKING 1 4.38
- ------------------------------------------------------------------------------
AN775-16D BOLT 1 75.28
- ------------------------------------------------------------------------------
AN783-4C TEE 1 93.71
- ------------------------------------------------------------------------------
AN783-4J TEE 1 90.88
- ------------------------------------------------------------------------------
AN804-4J TEE 2 46.41
- ------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 34
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
AN804C5 TEE 1 75.55
- ------------------------------------------------------------------------------
AN815-5J UNION 2 22.16
- ------------------------------------------------------------------------------
AN815-6C UNION 2 24.90
- ------------------------------------------------------------------------------
AN833-3J ELBOW 1 71.61
- ------------------------------------------------------------------------------
AN833-5J ELBOW 2 49.36
- ------------------------------------------------------------------------------
AN833-6C ELBOW 1 62.94
- ------------------------------------------------------------------------------
AN837-3S ELBOW 1 86.13
- ------------------------------------------------------------------------------
AN837-4C ELBOW 2 48.37
- ------------------------------------------------------------------------------
AN837-5C ELBOW 1 71.06
- ------------------------------------------------------------------------------
AN837-5J ELBOW 1 58.40
- ------------------------------------------------------------------------------
AN837-8J ELBOW 1 80.77
- ------------------------------------------------------------------------------
AN893-8D BUSHING 2 40.17
- ------------------------------------------------------------------------------
AN919-3C REDUCER 4 23.75
- ------------------------------------------------------------------------------
AN924-3J NUT 15 5.61
- ------------------------------------------------------------------------------
AN924-3S NUT 10 11.30
- ------------------------------------------------------------------------------
AN924-6C NUT 10 7.02
- ------------------------------------------------------------------------------
AN929-5J CAP 10 8.57
- ------------------------------------------------------------------------------
AN932M3 PLUG 10 7.69
- ------------------------------------------------------------------------------
AN932M5 PLUG 5 10.63
- ------------------------------------------------------------------------------
AN938D4 TEE 1 30.61
- ------------------------------------------------------------------------------
AN939D4 ELBOW 5 18.00
- ------------------------------------------------------------------------------
AN960-06 WASHER 15 0.66
- ------------------------------------------------------------------------------
AN960-10 WASHER 100 0.04
- ------------------------------------------------------------------------------
AN960-716 WASHER 100 0.15
- ------------------------------------------------------------------------------
AN960C6 WASHER 50 0.06
- ------------------------------------------------------------------------------
AN960C816L WASHER 100 0.55
- ------------------------------------------------------------------------------
AN960C916 WASHER 100 0.66
- ------------------------------------------------------------------------------
AN960C916L WASHER 50 1.41
- ------------------------------------------------------------------------------
AN960XC916L WASHER 10 4.16
- ------------------------------------------------------------------------------
AS1033J05050 4 TEE 1 114.76
- ------------------------------------------------------------------------------
AS3068-14 NUT 1 116.74
- ------------------------------------------------------------------------------
AS3085-023 PACKING 50 1.08
- ------------------------------------------------------------------------------
AS3085-170 PACKING 10 27.96
- ------------------------------------------------------------------------------
AS3209-024 PACKING 1 0.64
- ------------------------------------------------------------------------------
AS3216-114 RING 10 2.80
- ------------------------------------------------------------------------------
AS3216-124 RING 10 5.82
- ------------------------------------------------------------------------------
MS122054 WASHER 100 0.08
- ------------------------------------------------------------------------------
MS122901 CLAMP 10 2.42
- ------------------------------------------------------------------------------
MS122902 CLAMP 50 0.82
- ------------------------------------------------------------------------------
MS122903 CLAMP 50 2.33
- ------------------------------------------------------------------------------
MS122904 CLAMP 25 1.12
- ------------------------------------------------------------------------------
MS122907 CLAMP 10 9.10
- ------------------------------------------------------------------------------
MS122909 CLAMP 25 1.74
- ------------------------------------------------------------------------------
MS122914 CLAMP 25 3.38
- ------------------------------------------------------------------------------
MS124659 HELICOIL 10 1.69
- ------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 35
EXHIBIT A
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
MS124660 INSERT 50 1.33
- -------------------------------------------------------------------------------
MS134354 BALL 100 0.35
- -------------------------------------------------------------------------------
MS16633-4015 RING 20 2.88
- -------------------------------------------------------------------------------
MS16995-16 SCREW 1 1.61
- -------------------------------------------------------------------------------
MS171468 PIN 50 1.61
- -------------------------------------------------------------------------------
MS171533 PIN 50 0.63
- -------------------------------------------------------------------------------
MS171592 PIN 50 0.65
- -------------------------------------------------------------------------------
MS17295-031 STUD 10 4.64
- -------------------------------------------------------------------------------
MS17295-032 STUD 5 36.22
- -------------------------------------------------------------------------------
MS17295-033 STUD 5 11.23
- -------------------------------------------------------------------------------
MS17295-034 STUD 10 8.73
- -------------------------------------------------------------------------------
MS17301-081 STUD 5 15.60
- -------------------------------------------------------------------------------
MS17301-082 STUD 5 95.76
- -------------------------------------------------------------------------------
MS17301-083 STUD 5 86.45
- -------------------------------------------------------------------------------
MS17825-3 NUT 10 8.17
- -------------------------------------------------------------------------------
MS19059-86 BALL 50 1.78
- -------------------------------------------------------------------------------
MS20365-524A NUT 100 0.46
- -------------------------------------------------------------------------------
MS20392-2-29 PIN 50 1.81
- -------------------------------------------------------------------------------
MS20435F3-5 RIVET 50 1.12
- -------------------------------------------------------------------------------
MS20435F4-16 RIVET 100 0.58
- -------------------------------------------------------------------------------
MS20435F4-8 RIVET 50 1.30
- -------------------------------------------------------------------------------
MS20435F6-8 RIVET 25 2.63
- -------------------------------------------------------------------------------
MS20470A2-3 RIVET 100 0.05
- -------------------------------------------------------------------------------
MS21044N5 NUT 50 0.66
- -------------------------------------------------------------------------------
MS21045-3 NUT 25 2.74
- -------------------------------------------------------------------------------
MS21056-3W NUT 1 144.51
- -------------------------------------------------------------------------------
MS21074-3 NUT 20 5.02
- -------------------------------------------------------------------------------
MS21083N3 NUT 25 0.55
- -------------------------------------------------------------------------------
MS21092-3003 BOLT 10 12.19
- -------------------------------------------------------------------------------
MS21103-13 CLAMP 10 2.47
- -------------------------------------------------------------------------------
MS24487D6L UNION 2 63.26
- -------------------------------------------------------------------------------
MS24621-7 SCREW 25 3.83
- -------------------------------------------------------------------------------
MS24665-1013 PIN, COT 50 0.05
- -------------------------------------------------------------------------------
MS24674-14 SCREW 25 2.26
- -------------------------------------------------------------------------------
MS24674-18 SCREW 20 4.14
- -------------------------------------------------------------------------------
MS24678-8 SCREW 10 6.56
- -------------------------------------------------------------------------------
MS25036-101 TERMINAL 10 0.76
- -------------------------------------------------------------------------------
MS25171-1S NIPPLE 5 14.15
- -------------------------------------------------------------------------------
MS27183-6 WASHER 100 0.05
- -------------------------------------------------------------------------------
MS27183-7 WASHER 15 6.98
- -------------------------------------------------------------------------------
MS28774-012 RING 25 0.82
- -------------------------------------------------------------------------------
MS28774-013 RING 1 1.44
- -------------------------------------------------------------------------------
MS28775-015 HYDRAULI 1 0.29
- -------------------------------------------------------------------------------
MS29512-04 PACKING 1 1.51
- -------------------------------------------------------------------------------
MS29512-14 SEAL 1 1.30
- -------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 36
EXHIBIT A
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
MS29512-28 PACKING 25 1.97
- -----------------------------------------------------------------------------
MS29513-014 PACKING 25 2.91
- -----------------------------------------------------------------------------
MS29513-019 PACKING 1 2.57
- -----------------------------------------------------------------------------
MS29513-212 PACKING 1 2.16
- -----------------------------------------------------------------------------
MS3115-14W RECEPTAC 1 53.55
- -----------------------------------------------------------------------------
MS3115-8W RECEPTAC 1 56.24
- -----------------------------------------------------------------------------
MS3367-3-9 STRAP 1 13.90
- -----------------------------------------------------------------------------
MS3417-10N CLAMP 1 25.24
- -----------------------------------------------------------------------------
MS3417-12N CLAMP 1 25.28
- -----------------------------------------------------------------------------
MS3417-16N CLAMP 1 26.03
- -----------------------------------------------------------------------------
MS3418-14N CLAMP 1 29.77
- -----------------------------------------------------------------------------
MS3418-8N CLAMP 1 25.87
- -----------------------------------------------------------------------------
MS3459KT8S1S CONNECTR 1 717.44
- -----------------------------------------------------------------------------
MS35206-241 SCREW 100 0.16
- -----------------------------------------------------------------------------
MS35276-260 SCREW 50 1.46
- -----------------------------------------------------------------------------
MS35276-261 SCREW 100 0.76
- -----------------------------------------------------------------------------
MS35276-263 SCREW 25 2.29
- -----------------------------------------------------------------------------
MS35333-71 WASHER 50 0.12
- -----------------------------------------------------------------------------
MS35333-73 LOCKWASH 50 0.13
- -----------------------------------------------------------------------------
MS51522B4S ELBOW 1 80.77
- -----------------------------------------------------------------------------
MS51830-106 INSERT 25 8.57
- -----------------------------------------------------------------------------
MS51957-15 SCREW 25 0.33
- -----------------------------------------------------------------------------
MS5195-44 BOLT 100 0.46
- -----------------------------------------------------------------------------
MS8000E062E1 40 HOSE 1 652.18
- -----------------------------------------------------------------------------
MS9015-03 PLUG 10 17.66
- -----------------------------------------------------------------------------
MS9015-04 PLUG 10 7.44
- -----------------------------------------------------------------------------
MS9015-06 PLUG 10 7.29
- -----------------------------------------------------------------------------
MS9016-10 BUSHING 10 12.86
- -----------------------------------------------------------------------------
MS9016-16 BUSHING 10 9.79
- -----------------------------------------------------------------------------
MS9016-17 BUSHING 2 35.44
- -----------------------------------------------------------------------------
MS9016-18 BUSHING 2 26.08
- -----------------------------------------------------------------------------
MS9016-19 BUSHING 5 16.66
- -----------------------------------------------------------------------------
MS9016-20 BUSHING 5 43.77
- -----------------------------------------------------------------------------
MS9016-21 BUSHING 5 49.15
- -----------------------------------------------------------------------------
MS9020-03 PACKING 1 1.52
- -----------------------------------------------------------------------------
MS9020-28 SEAL 1 3.85
- -----------------------------------------------------------------------------
MS9021-008 SEAL 1 2.59
- -----------------------------------------------------------------------------
MS9021-012 SEAL 1 3.17
- -----------------------------------------------------------------------------
MS9021-024 PACKING 25 0.82
- -----------------------------------------------------------------------------
MS9021-10 SEAL 1 0.58
- -----------------------------------------------------------------------------
MS9021-232 PACKING 1 4.71
- -----------------------------------------------------------------------------
MS9024-02 CLAMP 25 2.18
- -----------------------------------------------------------------------------
MS9047-065 PIN 100 0.05
- -----------------------------------------------------------------------------
MS9047-068 PIN 100 0.66
- -----------------------------------------------------------------------------
MS9060-06 BOLT 10 7.39
- -----------------------------------------------------------------------------
</TABLE>
8
<PAGE> 37
EXHIBIT A
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
MS9060-07 BOLT 10 7.08
- -----------------------------------------------------------------------------
MS9060-28 BOLT 10 9.42
- -----------------------------------------------------------------------------
MS9088-06 BOLT 15 5.70
- -----------------------------------------------------------------------------
MS9088-09 BOLT 15 5.96
- -----------------------------------------------------------------------------
MS9088-17 BOLT 10 7.69
- -----------------------------------------------------------------------------
MS9100-05 NUT 2 27.05
- -----------------------------------------------------------------------------
MS9101-25 BRACKET 4 6.93
- -----------------------------------------------------------------------------
MS9105-01 PIN 100 0.83
- -----------------------------------------------------------------------------
MS9105-05 PIN 25 2.26
- -----------------------------------------------------------------------------
MS9105-31 PIN 25 2.05
- -----------------------------------------------------------------------------
MS9105-57 PIN 50 1.81
- -----------------------------------------------------------------------------
MS9165-02 BRACKET 20 5.28
- -----------------------------------------------------------------------------
MS9165-04 BRACKET 20 4.65
- -----------------------------------------------------------------------------
MS9165-14 BRACKET 1 24.99
- -----------------------------------------------------------------------------
MS9165-22 BRACKET 5 1.91
- -----------------------------------------------------------------------------
MS9167-60 BRACKET 25 2.57
- -----------------------------------------------------------------------------
MS9193-03 NIPPLE 5 49.22
- -----------------------------------------------------------------------------
MS9217-04 BOLT 2 19.32
- -----------------------------------------------------------------------------
MS9217-05 BOLT 10 9.20
- -----------------------------------------------------------------------------
MS9217-07 BOLT 20 10.61
- -----------------------------------------------------------------------------
MS9217-12 BOLT 10 8.96
- -----------------------------------------------------------------------------
MS9217-15 BOLT 10 7.26
- -----------------------------------------------------------------------------
MS9217-28 BOLT 10 29.15
- -----------------------------------------------------------------------------
MS9218-06 BOLT 10 7.80
- -----------------------------------------------------------------------------
MS9218-12 BOLT 10 8.41
- -----------------------------------------------------------------------------
MS9218-16 BOLT 10 9.94
- -----------------------------------------------------------------------------
MS9218-20 BOLT 2 38.14
- -----------------------------------------------------------------------------
MS9218-23 BOLT 1 63.67
- -----------------------------------------------------------------------------
MS9241-020 PACKING 1 1.24
- -----------------------------------------------------------------------------
MS9245-24 PIN 100 0.37
- -----------------------------------------------------------------------------
MS9360-09 NUT 2 23.83
- -----------------------------------------------------------------------------
MD9365-09 BRACKET 10 5.49
- -----------------------------------------------------------------------------
MS9365-13 BRACKET 5 5.28
- -----------------------------------------------------------------------------
MS9372-023 SEAL 10 9.37
- -----------------------------------------------------------------------------
MS9395-04 BRACKET 1 4.23
- -----------------------------------------------------------------------------
MS9432-05 BOLT 10 12.04
- -----------------------------------------------------------------------------
MS9451-23 BOLT 5 83.49
- -----------------------------------------------------------------------------
MS9452-17 BOLT 1 22.27
- -----------------------------------------------------------------------------
MS9486-01 PIN 50 1.03
- -----------------------------------------------------------------------------
MS9486-06 PIN 50 1.44
- -----------------------------------------------------------------------------
MS9486-07 PIN 30 2.19
- -----------------------------------------------------------------------------
MS9486-76 PIN 10 6.58
- -----------------------------------------------------------------------------
MS9489-10 BOLT 5 3.09
- -----------------------------------------------------------------------------
MS9489-16 BOLT 10 3.51
- -----------------------------------------------------------------------------
MS9489-20 BOLT 5 12.57
- -----------------------------------------------------------------------------
</TABLE>
9
<PAGE> 38
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
MS9489-27 BOLT 50 9.34
- --------------------------------------------------------------------------------
MS9490-26 BOLT 10 12.51
- --------------------------------------------------------------------------------
MS9501-20 BOLT 3 24.69
- --------------------------------------------------------------------------------
MS9529-06 BOLT 5 15.24
- --------------------------------------------------------------------------------
MS9552-020 BRACKET 5 6.19
- --------------------------------------------------------------------------------
MS9552-026 BRACKET 1 6.19
- --------------------------------------------------------------------------------
MS9552-032 BRACKET 3 23.73
- --------------------------------------------------------------------------------
MS9555-07 BOLT 10 4.68
- --------------------------------------------------------------------------------
MS9555-09 SCREW 5 13.45
- --------------------------------------------------------------------------------
MS9556-24 BOLT 5 10.11
- --------------------------------------------------------------------------------
MS9556-32 BOLT 6 4.47
- --------------------------------------------------------------------------------
MS9564-02 SCREW 3 16.78
- --------------------------------------------------------------------------------
MS9564-03 SCREW 5 20.29
- --------------------------------------------------------------------------------
MS9565-04 BOLT 10 7.34
- --------------------------------------------------------------------------------
MS9565-06 BOLT 10 7.62
- --------------------------------------------------------------------------------
MS9566-24 BOLT 10 47.37
- --------------------------------------------------------------------------------
MS9574-05 BOLT 2 24.72
- --------------------------------------------------------------------------------
MS9584-04 BOLT 5 12.75
- --------------------------------------------------------------------------------
MS9584-05 BOLT 5 19.27
- --------------------------------------------------------------------------------
MS9592-052 BRACKET 1 28.72
- --------------------------------------------------------------------------------
MS9592-130 BRACKET 10 5.12
- --------------------------------------------------------------------------------
MS9592-133 BRACKET 4 21.77
- --------------------------------------------------------------------------------
MS9592-137 BRACKET 1 3.50
- --------------------------------------------------------------------------------
MS9592-138 BRACKET 10 7.85
- --------------------------------------------------------------------------------
MS9592-210 BRACKET 10 6.04
- --------------------------------------------------------------------------------
MS9592-214 BRACKET 5 11.49
- --------------------------------------------------------------------------------
MS9593-015 BRACKET 5 5.65
- --------------------------------------------------------------------------------
MS9593-074 BRACKET 5 5.48
- --------------------------------------------------------------------------------
MS9593-314 BRACKET 5 4.84
- --------------------------------------------------------------------------------
MS9593-546 BRACKET 5 4.97
- --------------------------------------------------------------------------------
MS9602-010 BRACKET 1 13.58
- --------------------------------------------------------------------------------
MS9602-073 BRACKET 1 58.21
- --------------------------------------------------------------------------------
MS9705-14 BOLT 10 24.86
- --------------------------------------------------------------------------------
MS9902-08 PLUG 1 71.80
- --------------------------------------------------------------------------------
M23053/6A TUBING 8 5.63
- --------------------------------------------------------------------------------
M25988/1-012 PACKING 1 0.46
- --------------------------------------------------------------------------------
M25988/1-015 PACKING 1 0.66
- --------------------------------------------------------------------------------
M25988/1-016 PACKING 1 0.89
- --------------------------------------------------------------------------------
M25988/1-017 PACKING 1 0.97
- --------------------------------------------------------------------------------
M25988/1-019 PACKING 1 0.99
- --------------------------------------------------------------------------------
M25988/1-023 PACKING 1 1.33
- --------------------------------------------------------------------------------
M25988/1-138 PACKING 1 4.26
- --------------------------------------------------------------------------------
M25988/1-142 PACKING 1 5.08
- --------------------------------------------------------------------------------
M25988/1-232 PACKING 1 8.77
- --------------------------------------------------------------------------------
M25988/1-905 PACKING 1 0.56
- --------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 39
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
M25988/4-904 PACKING 1 0.59
- --------------------------------------------------------------------------------
M27426-1108D RETAIN R 1 49.49
- --------------------------------------------------------------------------------
M27500-20RB2 T14 CABLE 10 3.70
- --------------------------------------------------------------------------------
M39006/21-01 8 CAPACIT 1 78.29
- --------------------------------------------------------------------------------
M39006/21-01 0 CAPACIT 1 78.29
- --------------------------------------------------------------------------------
M83248/1-122 PACKING 1 1.15
- --------------------------------------------------------------------------------
M83723-13R08 3N CONNECT 1 87.18
- --------------------------------------------------------------------------------
M83723-15A08 CONNECTR 1 28.38
- --------------------------------------------------------------------------------
M83723-28-20 SEAL 25 0.82
- --------------------------------------------------------------------------------
M83723-75R08 3-6 CONNECT 1 99.82
- --------------------------------------------------------------------------------
M83723-75R08 3N CONNECT 1 114.22
- --------------------------------------------------------------------------------
M83723-75R14 5N CONNECT 1 160.41
- --------------------------------------------------------------------------------
M83723/61-20 R CONNECT 1 80.45
- --------------------------------------------------------------------------------
M83723/61-21 R CONNECT 1 80.94
- --------------------------------------------------------------------------------
M83723/61-21 R RECEPTA 1 75.62
- --------------------------------------------------------------------------------
M83723/61-28 RECEPTA 1 75.79
- --------------------------------------------------------------------------------
NAS1057T3-13 9 SPACER 4 23.63
- --------------------------------------------------------------------------------
NAS1057W3-01 2 SPACER 10 10.69
- --------------------------------------------------------------------------------
NAS1057W3-07 5 SPACER 10 22.82
- --------------------------------------------------------------------------------
NAS1149CN616 R WASHER 1 0.20
- --------------------------------------------------------------------------------
NAS1149C0532 R WASHER 1 0.05
- --------------------------------------------------------------------------------
NAS1163-2N SCREW 2 32.78
- --------------------------------------------------------------------------------
NAS1352N3H12 SCREW 1 13.78
- --------------------------------------------------------------------------------
NAS1394-3 INSERT 15 6.34
- --------------------------------------------------------------------------------
NAS1394-3L INSERT 15 6.80
- --------------------------------------------------------------------------------
NAS1394-5 INSERT 10 9.94
- --------------------------------------------------------------------------------
NAS1395-3L INSERT 10 8.97
- --------------------------------------------------------------------------------
NAS1593-15 PACKING 1 31.16
- --------------------------------------------------------------------------------
NAS1745-2 SPLICE 10 3.80
- --------------------------------------------------------------------------------
NAS1745-4 SPLICE 10 5.56
- --------------------------------------------------------------------------------
NAS43DD1-8 SPACER 5 1.17
- --------------------------------------------------------------------------------
NAS509-7 NUT 10 11.98
- --------------------------------------------------------------------------------
NAS509-9C NUT 5 39.29
- --------------------------------------------------------------------------------
NAS617-5 PACKING 1 2.88
- --------------------------------------------------------------------------------
NAS813-16Y CAP 50 0.25
- --------------------------------------------------------------------------------
NAS814-3 CAP 100 0.14
- --------------------------------------------------------------------------------
NAS814-4B CAP 10 0.02
- --------------------------------------------------------------------------------
NAS815-16A PLUG 15 0.46
- --------------------------------------------------------------------------------
NAS816-11 CAP 50 0.12
- --------------------------------------------------------------------------------
NAS816-17 CAP 25 1.33
- --------------------------------------------------------------------------------
NAS816-23 CAP 100 0.05
- --------------------------------------------------------------------------------
NAS816-29 CAP 100 0.03
- --------------------------------------------------------------------------------
NAS816-33 CAP 100 0.05
- --------------------------------------------------------------------------------
NAS816-53 CAP 100 0.03
- --------------------------------------------------------------------------------
02-15097 SHAFT 1 1629.94
- --------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 40
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
1N5550 DIODE 5 7.34
- --------------------------------------------------------------------------------
1730791-02-4 1 ELEMENT 1 255.96
- --------------------------------------------------------------------------------
23000431 NUT 1 62.49
- --------------------------------------------------------------------------------
23000469 RING 1 61.96
- --------------------------------------------------------------------------------
23001756 SCREW 10 0.57
- --------------------------------------------------------------------------------
23001783 ELBOW 1 251.53
- --------------------------------------------------------------------------------
23001801 NUT 1 511.00
- --------------------------------------------------------------------------------
23001804 TUBE 1 197.95
- --------------------------------------------------------------------------------
23001806 PLATE 1 1890.63
- --------------------------------------------------------------------------------
23001815 RING 1 1143.22
- --------------------------------------------------------------------------------
23001816 KEY 1 292.01
- --------------------------------------------------------------------------------
23001819 NOZZLE 1 329.14
- --------------------------------------------------------------------------------
23001822 TUBE 1 160.63
- --------------------------------------------------------------------------------
23001826 TUBE 1 137.25
- --------------------------------------------------------------------------------
23001829 PLATE 5 19.82
- --------------------------------------------------------------------------------
23001832 NOZZLE 1 926.58
- --------------------------------------------------------------------------------
23001839 NOZZLE 1 310.68
- --------------------------------------------------------------------------------
23001843 BRACKET 5 11.25
- --------------------------------------------------------------------------------
23001846 TUBE 1 138.35
- --------------------------------------------------------------------------------
23001924 INSERT 25 1.84
- --------------------------------------------------------------------------------
23001925 NOZZLE 1 1298.09
- --------------------------------------------------------------------------------
23001926 NOZZLE 1 1424.16
- --------------------------------------------------------------------------------
23001928-0 STUD 1 69.24
- --------------------------------------------------------------------------------
23001928-1 STUD 1 78.34
- --------------------------------------------------------------------------------
23001928-2 STUD 1 89.76
- --------------------------------------------------------------------------------
23001928-3 STUD 1 178.85
- --------------------------------------------------------------------------------
23001928-4 STUD 1 178.85
- --------------------------------------------------------------------------------
23001928-5 STUD 1 178.85
- --------------------------------------------------------------------------------
23001929-1 STUD 1 244.22
- --------------------------------------------------------------------------------
23001929-2 STUD 1 257.66
- --------------------------------------------------------------------------------
23001929-3 STUD 1 260.09
- --------------------------------------------------------------------------------
23001929-4 STUD 1 287.53
- --------------------------------------------------------------------------------
23001929-5 STUD 1 296.13
- --------------------------------------------------------------------------------
23001946 RING 2 36.65
- --------------------------------------------------------------------------------
23001949 BEARING 1 835.80
- --------------------------------------------------------------------------------
23001955 INDICATO 1 713.22
- --------------------------------------------------------------------------------
23001959 BEARING 1 87.72
- --------------------------------------------------------------------------------
23001967 WHEEL 1 9557.98
- --------------------------------------------------------------------------------
23001981 KIT 1 3580.69
- --------------------------------------------------------------------------------
23001986 TUBE 1 318.03
- --------------------------------------------------------------------------------
23003100 PICKUP 1 2667.07
- --------------------------------------------------------------------------------
23003101 BOLT 1 271.58
- --------------------------------------------------------------------------------
23003102-01 ORIFICE 1 279.41
- --------------------------------------------------------------------------------
23003102-02 ORIFICE 1 280.75
- --------------------------------------------------------------------------------
23003102-03 ORIFICE 1 198.99
- --------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 41
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
23003102-04 ORIFICE 1 198.99
- --------------------------------------------------------------------------------
23003108 SPACER 1 225.90
- --------------------------------------------------------------------------------
23003109 CHAMBER 1 747.31
- --------------------------------------------------------------------------------
23003110 SPACER 1 217.28
- --------------------------------------------------------------------------------
23003111 SPACER 5 35.56
- --------------------------------------------------------------------------------
23003113 NUT 2 26.37
- --------------------------------------------------------------------------------
23003130 COVER 1 63.36
- --------------------------------------------------------------------------------
23003142 BEARING 1 222.00
- --------------------------------------------------------------------------------
23003143 FILTER 1 4216.75
- --------------------------------------------------------------------------------
23003739 OP-AMPLF 1 6.85
- --------------------------------------------------------------------------------
23003741 OP-AMPLF 1 4.20
- --------------------------------------------------------------------------------
23003742 OP-AMPLF 1 12.95
- --------------------------------------------------------------------------------
23004111 GASKET 1 2.61
- --------------------------------------------------------------------------------
23004130 TRANSIST 1 2.44
- --------------------------------------------------------------------------------
23004157 TRANSDCR 1 15.94
- --------------------------------------------------------------------------------
23004201 KIT 1 1448.26
- --------------------------------------------------------------------------------
23004203 SEAL 1 722.48
- --------------------------------------------------------------------------------
23004204 COVER 1 114.19
- --------------------------------------------------------------------------------
23004205 COVER 1 50.05
- --------------------------------------------------------------------------------
23004206 RING 1 1521.63
- --------------------------------------------------------------------------------
23004207 DIAPHRAG 1 355.16
- --------------------------------------------------------------------------------
23004208 DIAPHRAG 1 826.98
- --------------------------------------------------------------------------------
23004214 KEY 5 148.81
- --------------------------------------------------------------------------------
23004223 WHEEL 1 6874.29
- --------------------------------------------------------------------------------
23004224 BRACKET 1 650.88
- --------------------------------------------------------------------------------
23004230 TUBE 1 211.64
- --------------------------------------------------------------------------------
23004241 BRACKET 4 21.75
- --------------------------------------------------------------------------------
23004248 SPLITTER 1 1096.41
- --------------------------------------------------------------------------------
23004498 COVER 1 154.39
- --------------------------------------------------------------------------------
23004505 SHAFT 1 7127.82
- --------------------------------------------------------------------------------
23004515 RING 2 40.29
- --------------------------------------------------------------------------------
23004528 SWIRLER 1 1780.60
- --------------------------------------------------------------------------------
23004529 DOME 1 1517.87
- --------------------------------------------------------------------------------
23004534 CUP 2 50.72
- --------------------------------------------------------------------------------
23004552-1 SEAL 1 1194.92
- --------------------------------------------------------------------------------
23004552-2 SEAL 1 1194.92
- --------------------------------------------------------------------------------
23004553 BEARING 1 769.71
- --------------------------------------------------------------------------------
23004554 BEARING 1 1214.28
- --------------------------------------------------------------------------------
23004560 SHIELD 1 443.34
- --------------------------------------------------------------------------------
23004561 SHIELD 1 694.65
- --------------------------------------------------------------------------------
23004562 CHAMBER 1 622.11
- --------------------------------------------------------------------------------
23004596 TUBE 1 120.62
- --------------------------------------------------------------------------------
23004597 TUBE 1 139.43
- --------------------------------------------------------------------------------
23004822 CONTROL 1 6006.40
- --------------------------------------------------------------------------------
23004826 FITTING 2 207.97
- --------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 42
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
23004962 GASKET S 5 1.08
- --------------------------------------------------------------------------------
23004964 BRACKET 1 217.77
- --------------------------------------------------------------------------------
23005203 FITTING 2 134.54
- --------------------------------------------------------------------------------
23005205 HOSE 1 198.92
- --------------------------------------------------------------------------------
23005218 RING 1 1143.22
- --------------------------------------------------------------------------------
23005224 TUBE 1 123.19
- --------------------------------------------------------------------------------
23005229 BRACKET 1 883.89
- --------------------------------------------------------------------------------
23005267 RACE 1 253.03
- --------------------------------------------------------------------------------
23005268 TUBE 1 214.77
- --------------------------------------------------------------------------------
23005269 TUBE 1 172.56
- --------------------------------------------------------------------------------
23005271-1 ADAPTER 1 2172.80
- --------------------------------------------------------------------------------
23005271-2 ADAPTER 1 2172.80
- --------------------------------------------------------------------------------
23005271-3 ADAPTER 1 2172.80
- --------------------------------------------------------------------------------
23005273 SPACER 1 105.19
- --------------------------------------------------------------------------------
23005287 PLUG 1 440.36
- --------------------------------------------------------------------------------
23005291-1 ADAPTER 1 140.86
- --------------------------------------------------------------------------------
23005291-2 ADAPTER 1 229.95
- --------------------------------------------------------------------------------
23005292 ELBOW 1 78.36
- --------------------------------------------------------------------------------
23005297 HOUSING 1 22562.01
- --------------------------------------------------------------------------------
23005366 VALVE 1 5587.72
- --------------------------------------------------------------------------------
23005367 VALVE 1 6040.38
- --------------------------------------------------------------------------------
23005368 BODY 1 1135.14
- --------------------------------------------------------------------------------
23005369 BODY 1 2379.69
- --------------------------------------------------------------------------------
23005396 BRACKET 1 190.01
- --------------------------------------------------------------------------------
23005462 SEAL 1 1825.55
- --------------------------------------------------------------------------------
23005667 TUBE 1 143.52
- --------------------------------------------------------------------------------
23005680 NUT 1 195.12
- --------------------------------------------------------------------------------
23005682 RING 1 639.32
- --------------------------------------------------------------------------------
23005690 BOLT 8 55.44
- --------------------------------------------------------------------------------
23005696 PIN 10 9.79
- --------------------------------------------------------------------------------
23005719 COVER 1 324.25
- --------------------------------------------------------------------------------
23005720 COVER 2 41.45
- --------------------------------------------------------------------------------
23005728 BRACKET 1 189.13
- --------------------------------------------------------------------------------
23005735 SHAFT 1 11283.23
- --------------------------------------------------------------------------------
23005741 COVER 1 216.53
- --------------------------------------------------------------------------------
23005742 COVER 1 105.20
- --------------------------------------------------------------------------------
23005743 BLANKET 1 453.56
- --------------------------------------------------------------------------------
23005746 BEARING 1 481.23
- --------------------------------------------------------------------------------
23005747 BEARING 1 444.71
- --------------------------------------------------------------------------------
23005749 BEARING 1 170.87
- --------------------------------------------------------------------------------
23006266 IGNITER 1 1351.67
- --------------------------------------------------------------------------------
23006590-01 NUT 2 24.87
- --------------------------------------------------------------------------------
23007007 CHAMBER 1 1846.76
- --------------------------------------------------------------------------------
23007011 KIT 1 22816.77
- --------------------------------------------------------------------------------
23007151 BEARING 1 171.13
- --------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 43
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
23007152 BEARING 1 797.20
- ------------------------------------------------------------------------------
23007153 TUBE 1 155.07
- ------------------------------------------------------------------------------
23007157 BEARING 1 1058.54
- ------------------------------------------------------------------------------
23007164 BRACKET 1 199.18
- ------------------------------------------------------------------------------
23007182 TUBE 1 1344.39
- ------------------------------------------------------------------------------
23007189 NOZZLE 1 5854.76
- ------------------------------------------------------------------------------
23007190 PIN 2 39.43
- ------------------------------------------------------------------------------
23007202 BEARING 1 460.16
- ------------------------------------------------------------------------------
23007208 DIFFUSER 1 26020.43
- ------------------------------------------------------------------------------
23007210 DIFFUSER 1 29876.58
- ------------------------------------------------------------------------------
23007217 MOUNT 1 4286.00
- ------------------------------------------------------------------------------
23007219 PLUG 1 80.79
- ------------------------------------------------------------------------------
23007220 RING 1 928.66
- ------------------------------------------------------------------------------
23007222 RING 1 793.14
- ------------------------------------------------------------------------------
23007243 JET 1 331.32
- ------------------------------------------------------------------------------
23007246 SHAFT 1 5151.25
- ------------------------------------------------------------------------------
23007247 SHAFT 1 2083.66
- ------------------------------------------------------------------------------
23007248 SHAFT 1 4051.77
- ------------------------------------------------------------------------------
23007500 PICKUP 1 3144.46
- ------------------------------------------------------------------------------
23007531 FERRULE 1 126.45
- ------------------------------------------------------------------------------
23007826 VALVE 1 1593.50
- ------------------------------------------------------------------------------
23007827 VALVE 1 2006.92
- ------------------------------------------------------------------------------
23007979 PICKUP 1 1982.49
- ------------------------------------------------------------------------------
23007981 PICKUP 1 2695.44
- ------------------------------------------------------------------------------
23007991 FERRULE 1 52.77
- ------------------------------------------------------------------------------
23007993 FITTING 1 138.56
- ------------------------------------------------------------------------------
23007995 PLATE 1 220.90
- ------------------------------------------------------------------------------
23007996 TUBE 1 98.59
- ------------------------------------------------------------------------------
23008001 SHIM 10 8.81
- ------------------------------------------------------------------------------
23008002 SHIM 10 9.29
- ------------------------------------------------------------------------------
23008008-1 BUSHING 1 84.26
- ------------------------------------------------------------------------------
23008008-2 BUSHING 1 105.54
- ------------------------------------------------------------------------------
23008008-3 BUSHING 1 81.95
- ------------------------------------------------------------------------------
23008018 SHAFT 5 34.06
- ------------------------------------------------------------------------------
23008020 BOLT 1 187.36
- ------------------------------------------------------------------------------
23008030 BOLT 1 463.94
- ------------------------------------------------------------------------------
23008036 TUBE 1 401.55
- ------------------------------------------------------------------------------
23008037 CONE 1 314.90
- ------------------------------------------------------------------------------
23008038 BAFFLE 1 197.14
- ------------------------------------------------------------------------------
23008039 CYLINDER 1 317.23
- ------------------------------------------------------------------------------
23008054 NOZZLE 1 12453.31
- ------------------------------------------------------------------------------
23008057 DOUBLER 1 219.62
- ------------------------------------------------------------------------------
23008065 BEARING 1 255.86
- ------------------------------------------------------------------------------
23008072 SPACER 5 19.89
- ------------------------------------------------------------------------------
23008096 TUBE 1 324.74
- ------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 44
EXHIBIT A
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
23008250-5 STANDOFF 1 16.10
- -------------------------------------------------------------------------------
23008413 TUBE 1 1930.64
- -------------------------------------------------------------------------------
23009453 TUBE 1 97.58
- -------------------------------------------------------------------------------
23008454-1 BUSHING 1 88.52
- -------------------------------------------------------------------------------
23008454-2 BUSHING 1 82.20
- -------------------------------------------------------------------------------
23008454-3 BUSHING 1 138.01
- -------------------------------------------------------------------------------
23008457 PUMP 1 11629.77
- -------------------------------------------------------------------------------
23008458 BODY 1 2033.33
- -------------------------------------------------------------------------------
23008469 BEARING 1 275.09
- -------------------------------------------------------------------------------
23008495-1 ORIFICE 1 153.89
- -------------------------------------------------------------------------------
23008495-2 ORIFICE 1 182.59
- -------------------------------------------------------------------------------
23008495-3 ORIFICE 1 182.59
- -------------------------------------------------------------------------------
23008495-4 ORIFICE 1 182.59
- -------------------------------------------------------------------------------
23008495-5 ORIFICE 1 182.59
- -------------------------------------------------------------------------------
23008495-6 ORIFICE 1 182.59
- -------------------------------------------------------------------------------
23008555 BLANKET 1 610.81
- -------------------------------------------------------------------------------
23008579 SHAFT 1 11619.54
- -------------------------------------------------------------------------------
23008614 LINER 1 10264.97
- -------------------------------------------------------------------------------
23008648 TUBE 1 128.42
- -------------------------------------------------------------------------------
23009167 RAN ACCM 1 61.66
- -------------------------------------------------------------------------------
23009342 RING 1 125.15
- -------------------------------------------------------------------------------
23009557 BOLT 4 22.58
- -------------------------------------------------------------------------------
23009568 ADAPTER 1 895.73
- -------------------------------------------------------------------------------
23009574 PLUG 1 154.54
- -------------------------------------------------------------------------------
23009586 RING 1 26.69
- -------------------------------------------------------------------------------
23009590 RING 5 11.32
- -------------------------------------------------------------------------------
23009596 SUPPORT 1 14469.04
- -------------------------------------------------------------------------------
23009608 WASHER 1 101.49
- -------------------------------------------------------------------------------
23009609 BEARING 1 2293.29
- -------------------------------------------------------------------------------
23009615 WASHER 2 17.46
- -------------------------------------------------------------------------------
23009626 KIT 1 127.76
- -------------------------------------------------------------------------------
23009630 PLATE 1 875.93
- -------------------------------------------------------------------------------
23009648 TUBE 1 142.34
- -------------------------------------------------------------------------------
23009670 BEARING 1 2793.14
- -------------------------------------------------------------------------------
23009749 GEAR 1 9996.14
- -------------------------------------------------------------------------------
23009813 STUD 10 27.00
- -------------------------------------------------------------------------------
23009851 TERMINAL 1 277.56
- -------------------------------------------------------------------------------
23009870 COVER 1 379.33
- -------------------------------------------------------------------------------
23009871 GASKET 1 58.04
- -------------------------------------------------------------------------------
23030393 HOUSING 1 1463.22
- -------------------------------------------------------------------------------
23030644 LEVER 1 1769.94
- -------------------------------------------------------------------------------
23030799-16 CAP 50 0.18
- -------------------------------------------------------------------------------
23030844 NOZZLE 1 11714.11
- -------------------------------------------------------------------------------
23030880 FILTER 1 475.83
- -------------------------------------------------------------------------------
23030895 FLANGE 1 4550.71
- -------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 45
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
23030911 CASE 1 16728.41
- --------------------------------------------------------------------------------
23030931 TUBE 1 144.36
- --------------------------------------------------------------------------------
23030974 ADAPTER 1 1196.11
- --------------------------------------------------------------------------------
23030975 IMPELLER 1 54021.14
- --------------------------------------------------------------------------------
23030976 IMPELLER 1 53528.40
- --------------------------------------------------------------------------------
23030977 CLAMP 1 356.47
- --------------------------------------------------------------------------------
23030978-1 SEAL 1 1503.91
- --------------------------------------------------------------------------------
23030978-2 SEAL 1 1503.91
- --------------------------------------------------------------------------------
23030979 CLAMP 1 208.33
- --------------------------------------------------------------------------------
23030980 TEE 1 185.65
- --------------------------------------------------------------------------------
23030981 NUT 1 112.60
- --------------------------------------------------------------------------------
23030982 NUT 1 246.10
- --------------------------------------------------------------------------------
23030986 SEPARATO 1 1754.37
- --------------------------------------------------------------------------------
23030988 SHAFT 1 266.74
- --------------------------------------------------------------------------------
23030989 GEAR 1 564.26
- --------------------------------------------------------------------------------
23030990 GEARSHAF 1 1940.54
- --------------------------------------------------------------------------------
23030993 COUPLING 1 643.54
- --------------------------------------------------------------------------------
23030999 BODY 1 1810.91
- --------------------------------------------------------------------------------
23031200 BODY 1 1984.65
- --------------------------------------------------------------------------------
23031216 BEARING 1 1051.49
- --------------------------------------------------------------------------------
23031218 TUBE 1 151.78
- --------------------------------------------------------------------------------
23031247 TUBE 1 492.74
- --------------------------------------------------------------------------------
23031260 CASE ASY 1 13681.13
- --------------------------------------------------------------------------------
23031268-2 CAGE 1 3285.06
- --------------------------------------------------------------------------------
23031268-3 CAGE 1 3285.06
- --------------------------------------------------------------------------------
23031291 PLATE 1 1368.07
- --------------------------------------------------------------------------------
23031296 HOUSING 1 22552.88
- --------------------------------------------------------------------------------
23031401 HOUSING 1 25461.14
- --------------------------------------------------------------------------------
23031404 HOUSING 1 22552.88
- --------------------------------------------------------------------------------
23031415 DOME 1 134.21
- --------------------------------------------------------------------------------
23031419 PLATE 1 807.92
- --------------------------------------------------------------------------------
23031467 PLATE 1 435.53
- --------------------------------------------------------------------------------
23031478 BEARING 1 1430.80
- --------------------------------------------------------------------------------
23031489 NOZZLE 1 849.54
- --------------------------------------------------------------------------------
23031491-1 PLUG 1 140.03
- --------------------------------------------------------------------------------
23031491-2 PLUG 1 194.02
- --------------------------------------------------------------------------------
23031491-3 PLUG 1 85.20
- --------------------------------------------------------------------------------
23031491-4 PLUG 1 315.81
- --------------------------------------------------------------------------------
23031491-5 PLUG 1 88.70
- --------------------------------------------------------------------------------
23031494 SEAL 1 1048.36
- --------------------------------------------------------------------------------
23031496 BEARING 1 2242.00
- --------------------------------------------------------------------------------
23031497 BEARING 1 1992.08
- --------------------------------------------------------------------------------
23031507 WASHER 10 3.00
- --------------------------------------------------------------------------------
23031869 PLATE 1 1479.50
- --------------------------------------------------------------------------------
23031904-05 SLEEVING 1 157.59
- --------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 46
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
23031904-07 SLEEVING 1 60.17
- --------------------------------------------------------------------------------
23031909 RING 1 5311.01
- --------------------------------------------------------------------------------
23031917 NUT 1 158.22
- --------------------------------------------------------------------------------
23031918 TUBE AS 1 1452.30
- --------------------------------------------------------------------------------
23031919 TUBE AS 1 1778.20
- --------------------------------------------------------------------------------
23031922 SHAFT 1 3115.36
- --------------------------------------------------------------------------------
23031934 DIAPHRGM 1 3604.80
- --------------------------------------------------------------------------------
23031938 NOZZLE 1 7095.75
- --------------------------------------------------------------------------------
23032241 GOVERNOR 1 9710.78
- --------------------------------------------------------------------------------
23032255 TUBE 1 189.17
- --------------------------------------------------------------------------------
23032264 NOZZLE 1 9145.20
- --------------------------------------------------------------------------------
23032268 FITTING 1 130.54
- --------------------------------------------------------------------------------
23032277 BOSS 6 112.94
- --------------------------------------------------------------------------------
23032280 WHEEL 1 10295.67
- --------------------------------------------------------------------------------
23032283-1 CAGE 1 2533.60
- --------------------------------------------------------------------------------
23032283-2 CAGE 1 2533.60
- --------------------------------------------------------------------------------
23032283-3 CAGE 1 2533.60
- --------------------------------------------------------------------------------
23032326 FIREWALL 1 3336.02
- --------------------------------------------------------------------------------
23032327 SEAL 1 1459.42
- --------------------------------------------------------------------------------
23032328 SEAL 1 233.63
- --------------------------------------------------------------------------------
23032344 GEARSHAF 1 6163.95
- --------------------------------------------------------------------------------
23032345 COUPLING 1 2139.75
- --------------------------------------------------------------------------------
23032621 WHEEL 1 5896.21
- --------------------------------------------------------------------------------
23032623 WHEEL 1 6056.52
- --------------------------------------------------------------------------------
23032626 DIFFUSER 1 13746.09
- --------------------------------------------------------------------------------
23032630 CASE 1 49536.90
- --------------------------------------------------------------------------------
23032631 VANE 1 3235.90
- --------------------------------------------------------------------------------
23032632 VANE 1 3235.90
- --------------------------------------------------------------------------------
23032633 VANE 1 3235.90
- --------------------------------------------------------------------------------
23032634 VANE 1 3235.90
- --------------------------------------------------------------------------------
23032941 TUBE 1 499.99
- --------------------------------------------------------------------------------
23032942 INSERT 1 121.19
- --------------------------------------------------------------------------------
23032943 FLANGE 1 595.52
- --------------------------------------------------------------------------------
23032944 ADAPTER 1 313.75
- --------------------------------------------------------------------------------
23032947 STOP 1 398.45
- --------------------------------------------------------------------------------
23032949 KIT 1 4198.38
- --------------------------------------------------------------------------------
23033109 SUPPORT 1 57867.99
- --------------------------------------------------------------------------------
23033126 BAFFLE 1 409.73
- --------------------------------------------------------------------------------
23033251 CONTROL 1 9212.25
- --------------------------------------------------------------------------------
23033359 TUBE 1 238.77
- --------------------------------------------------------------------------------
23033399-01 BOLT 3 35.11
- --------------------------------------------------------------------------------
23033399-02 BOLT 3 46.21
- --------------------------------------------------------------------------------
23033399-03 BOLT 2 27.21
- --------------------------------------------------------------------------------
23033399-04 BOLT 2 25.90
- --------------------------------------------------------------------------------
23033400 FILTER 1 711.79
- --------------------------------------------------------------------------------
</TABLE>
18
<PAGE> 47
EXHIBIT A
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
23033404 FITTING 1 409.53
- -------------------------------------------------------------------------------
23033437 COVER 1 23011.32
- -------------------------------------------------------------------------------
23033439 DAMPER 7 28.82
- -------------------------------------------------------------------------------
23033441 SEAL 1 1419.80
- -------------------------------------------------------------------------------
23033729 COUPLING 1 1931.12
- -------------------------------------------------------------------------------
23033855 HOUSING 1 2839.30
- -------------------------------------------------------------------------------
23033861 SUMP 1 544.06
- -------------------------------------------------------------------------------
23033876 TUBE 1 1636.97
- -------------------------------------------------------------------------------
23033882 GEARSHAF 1 5255.78
- -------------------------------------------------------------------------------
23033883 RING 1 202.00
- -------------------------------------------------------------------------------
23033885 TUBE 1 235.87
- -------------------------------------------------------------------------------
23033887 TUBE 1 61.08
- -------------------------------------------------------------------------------
23033888 TUBE 1 114.34
- -------------------------------------------------------------------------------
23033890 TUBE 1 145.10
- -------------------------------------------------------------------------------
23033891 TUBE 1 58.60
- -------------------------------------------------------------------------------
23033896 TUBE 1 124.34
- -------------------------------------------------------------------------------
23034101 NOZZLE 1 304.75
- -------------------------------------------------------------------------------
23034102 TUBE 1 1931.66
- -------------------------------------------------------------------------------
23034104 TUBE AS 1 117.89
- -------------------------------------------------------------------------------
23034105 TUBE 1 195.90
- -------------------------------------------------------------------------------
23034114 CASE 1 12334.67
- -------------------------------------------------------------------------------
23034122 SPACER 1 220.62
- -------------------------------------------------------------------------------
23034140 NOZZLE 1 7923.12
- -------------------------------------------------------------------------------
23034601 NOZZLE 1 178.57
- -------------------------------------------------------------------------------
23034605 TUBE 1 99.54
- -------------------------------------------------------------------------------
23034606 TUBE 1 103.19
- -------------------------------------------------------------------------------
23034609 TUBE 1 128.04
- -------------------------------------------------------------------------------
23034649 TUBE 1 8515.63
- -------------------------------------------------------------------------------
23024711 HOUSING 1 170.56
- -------------------------------------------------------------------------------
23034751 TUBE 1 152.30
- -------------------------------------------------------------------------------
23034752 TUBE 1 158.42
- -------------------------------------------------------------------------------
23034755 TUBE 1 90.50
- -------------------------------------------------------------------------------
23034757 TUBE 1 323.49
- -------------------------------------------------------------------------------
23034759 TUBE 1 166.26
- -------------------------------------------------------------------------------
23034771 TUBE 1 104.03
- -------------------------------------------------------------------------------
23034772 SEPARTO 1 1095.83
- -------------------------------------------------------------------------------
23034778 ORIFICE 1 132.43
- -------------------------------------------------------------------------------
23034786 RACE 1 152.68
- -------------------------------------------------------------------------------
23034787 BEARING 1 578.81
- -------------------------------------------------------------------------------
23034792 TUBE 1 127.46
- -------------------------------------------------------------------------------
23035106-1 BUSHING 1 122.06
- -------------------------------------------------------------------------------
23035106-2 BUSHING 1 138.62
- -------------------------------------------------------------------------------
23035106-3 BUSHING 1 227.25
- -------------------------------------------------------------------------------
23035107 ELBOW 1 105.67
- -------------------------------------------------------------------------------
23035120 SHIELD 1 974.71
- -------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 48
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
23035129 BRACKET 1 38.99
- --------------------------------------------------------------------------------
23035136 TIEBOLT 1 3821.75
- --------------------------------------------------------------------------------
23035137 HOUSING 1 25594.89
- --------------------------------------------------------------------------------
23035138 HOUSING 1 25347.73
- --------------------------------------------------------------------------------
23035139 HOUSING 1 25749.65
- --------------------------------------------------------------------------------
23035140 HOUSING 1 26708.74
- --------------------------------------------------------------------------------
23035150 SEAL LAB 1 1566.32
- --------------------------------------------------------------------------------
23035157 NOZZLE 1 282.45
- --------------------------------------------------------------------------------
23035174 NOZZLE 1 233.58
- --------------------------------------------------------------------------------
23035175 RING 1 4308.64
- --------------------------------------------------------------------------------
23035191 SUMP 1 7689.24
- --------------------------------------------------------------------------------
23035225 MANIFOLD 1 8901.79
- --------------------------------------------------------------------------------
23035227 PLUG 1 183.46
- --------------------------------------------------------------------------------
23035248 SCROLL 1 20543.54
- --------------------------------------------------------------------------------
23035249 PLATE 1 510.33
- --------------------------------------------------------------------------------
23035250 CHAMBER 1 2374.86
- --------------------------------------------------------------------------------
23035252 WHEEL 1 5328.45
- --------------------------------------------------------------------------------
23035256 TUBE ASS 1 82.50
- --------------------------------------------------------------------------------
23035257 TUBE 1 160.58
- --------------------------------------------------------------------------------
23035258 NUT 1 1182.93
- --------------------------------------------------------------------------------
23035259 PIN 2 48.98
- --------------------------------------------------------------------------------
23035262 BEARING 1 596.97
- --------------------------------------------------------------------------------
23035270 KIT 1 1461.57
- --------------------------------------------------------------------------------
23035272 CAGE 1 783.59
- --------------------------------------------------------------------------------
23035275 FITTING 1 647.49
- --------------------------------------------------------------------------------
23035284 VALVE 1 1510.18
- --------------------------------------------------------------------------------
23035286 PISTON 1 397.90
- --------------------------------------------------------------------------------
23035287 TUBE 1 151.26
- --------------------------------------------------------------------------------
23035288 TUBE 1 176.38
- --------------------------------------------------------------------------------
23035299 SHAFT 1 6120.32
- --------------------------------------------------------------------------------
23036570 BRACKET 1 148.05
- --------------------------------------------------------------------------------
23036819 CABLE 1 871.11
- --------------------------------------------------------------------------------
23037403 SHAFT 1 2146.35
- --------------------------------------------------------------------------------
23037404 BAFFLE 1 33.22
- --------------------------------------------------------------------------------
23037405 BAFFLE 1 33.22
- --------------------------------------------------------------------------------
23037406 BAFFLE 1 45.67
- --------------------------------------------------------------------------------
23037413 SHAFT 1 2265.28
- --------------------------------------------------------------------------------
23037423 VANE AS 1 810.87
- --------------------------------------------------------------------------------
23037424 VANE AS 1 775.61
- --------------------------------------------------------------------------------
23037425 VANE AS 1 659.66
- --------------------------------------------------------------------------------
23037426 VANE AS 1 659.66
- --------------------------------------------------------------------------------
23037435 TUBE ASY 1 80.97
- --------------------------------------------------------------------------------
23037438 TUBE ASY 1 61.15
- --------------------------------------------------------------------------------
23037440 TUBE ASY 1 164.48
- --------------------------------------------------------------------------------
23037444 SEAL ASY 1 1105.14
- --------------------------------------------------------------------------------
</TABLE>
20
<PAGE> 49
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
23037445 SEAL ASY 1 1096.03
- --------------------------------------------------------------------------------
23037446 SEAL ASY 1 1166.48
- --------------------------------------------------------------------------------
23037447 COVER AS 1 4103.65
- --------------------------------------------------------------------------------
23037448 COVER AS 1 2809.09
- --------------------------------------------------------------------------------
23037765 ELEMENT 1 129.70
- --------------------------------------------------------------------------------
23038127 GEARSHAF 1 8779.85
- --------------------------------------------------------------------------------
2303834 GROMMET 1 442.55
- --------------------------------------------------------------------------------
23038136 SHAFT-OU 1 4369.11
- --------------------------------------------------------------------------------
23038137 SHAFT-IN 1 2898.99
- --------------------------------------------------------------------------------
23038140 SLEEVE 1 260.26
- --------------------------------------------------------------------------------
23038155 BRACKET 1 102.28
- --------------------------------------------------------------------------------
23038156 BRACKET 1 114.65
- --------------------------------------------------------------------------------
2338179 KIT 1 946.21
- --------------------------------------------------------------------------------
23038184 KIT 1 1093.24
- --------------------------------------------------------------------------------
23038185 FLANGE 1 123.83
- --------------------------------------------------------------------------------
23038191 GEARSHAF 1 6425.15
- --------------------------------------------------------------------------------
23038193 TUBE 1 252.85
- --------------------------------------------------------------------------------
23038195 FLANGE 1 309.56
- --------------------------------------------------------------------------------
23038196 NOZZLE 1 1110.70
- --------------------------------------------------------------------------------
23038197 NOZZLE 1 11599.70
- --------------------------------------------------------------------------------
23038203 FITTING 1 317.59
- --------------------------------------------------------------------------------
23038206 TUBE AS 1 151.87
- --------------------------------------------------------------------------------
23038221 TUBE 1 1792.63
- --------------------------------------------------------------------------------
23038232 TUBE ASY 1 183.18
- --------------------------------------------------------------------------------
23038235 TUBE ASY 1 85.55
- --------------------------------------------------------------------------------
23038238 TUBE-OIL 1 1636.97
- --------------------------------------------------------------------------------
23038239 PLUG-OIL 1 278.17
- --------------------------------------------------------------------------------
23038243 SEALANT 1 844.67
- --------------------------------------------------------------------------------
23038953 COVER 1 1148.08
- --------------------------------------------------------------------------------
23039030-14 CLAMP 5 7.02
- --------------------------------------------------------------------------------
23039043 SPACER 1 26.37
- --------------------------------------------------------------------------------
23039051 PLATE RE 1 1011.92
- --------------------------------------------------------------------------------
23039053 SLEEVE 1 1832.16
- --------------------------------------------------------------------------------
23039065 IMPELLER 1 32558.23
- --------------------------------------------------------------------------------
23039070 BRACKET 10 86.25
- --------------------------------------------------------------------------------
23039071-1 ADAPTER 1 3523.26
- --------------------------------------------------------------------------------
23039072 COUPLING 1 1500.55
- --------------------------------------------------------------------------------
23039077 WHEEL 1 12436.41
- --------------------------------------------------------------------------------
23039079 GEARSHAF 1 5929.26
- --------------------------------------------------------------------------------
23039086 NOZZLE 1 13709.97
- --------------------------------------------------------------------------------
23039090 TUBE ASY 1 236.00
- --------------------------------------------------------------------------------
23039173 VALVE 1 299.11
- --------------------------------------------------------------------------------
23039175 DIAPHRAG 1 81.09
- --------------------------------------------------------------------------------
23039176 PLATE 1 229.16
- --------------------------------------------------------------------------------
23039177 PISTON 1 260.98
- --------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 50
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
23039178 WASHER 2 55.78
- --------------------------------------------------------------------------------
23039764 TUBE ASY 1 179.20
- --------------------------------------------------------------------------------
23039768 TUBE ASY 1 226.32
- --------------------------------------------------------------------------------
23039775 RING 1 200.22
- --------------------------------------------------------------------------------
23039776 RING 1 138.83
- --------------------------------------------------------------------------------
23039777 GEARSHAF 1 12568.32
- --------------------------------------------------------------------------------
23039778 GEARSHAF 1 8984.09
- --------------------------------------------------------------------------------
23039785 TUBE AS 1 74.90
- --------------------------------------------------------------------------------
23039786 BRACKET 1 162.04
- --------------------------------------------------------------------------------
23039788 KIT 1 3482.92
- --------------------------------------------------------------------------------
23039791-1 COUPLING 1 1458.17
- --------------------------------------------------------------------------------
23039791-2 COUPLING 1 1458.17
- --------------------------------------------------------------------------------
23039791-3 COUPLING 1 1458.17
- --------------------------------------------------------------------------------
23039792 HOUSING 1 7309.80
- --------------------------------------------------------------------------------
23039793 BODY ASM 1 3186.97
- --------------------------------------------------------------------------------
23039794 PUMP ASM 1 16622.62
- --------------------------------------------------------------------------------
23039798 TUBE AS 1 122.90
- --------------------------------------------------------------------------------
23039907 BODY 1 1472.01
- --------------------------------------------------------------------------------
23O39909-1 BUSHING 1 142.48
- --------------------------------------------------------------------------------
23039909-2 BUSHING 1 142.48
- --------------------------------------------------------------------------------
23050521 KIT 1 10488.87
- --------------------------------------------------------------------------------
23050812 PLATE 1 42.41
- --------------------------------------------------------------------------------
23050813 GASKET 5 0.63
- --------------------------------------------------------------------------------
23050818 BOLT 2 23.27
- --------------------------------------------------------------------------------
23050824 TUBE ASY 1 542.03
- --------------------------------------------------------------------------------
23050841 RING 1 804.76
- --------------------------------------------------------------------------------
23050842 SEAL 1 449.83
- --------------------------------------------------------------------------------
23050886 HARNESS 1 5164.25
- --------------------------------------------------------------------------------
23050887 HARNESS 1 6229.93
- --------------------------------------------------------------------------------
23050888 HARNESS 1 3020.92
- --------------------------------------------------------------------------------
23051050 TUBE ASY 1 119.46
- --------------------------------------------------------------------------------
23051058 SEAL 1 19.35
- --------------------------------------------------------------------------------
23051064 SEAL 1 99.87
- --------------------------------------------------------------------------------
23051071 TUBE ASY 1 691.80
- --------------------------------------------------------------------------------
23051090 BOSS 1 295.71
- --------------------------------------------------------------------------------
23051091 BOSS 1 295.71
- --------------------------------------------------------------------------------
23051092 BOSS 1 295.71
- --------------------------------------------------------------------------------
23051095 DOUBLER 1 432.11
- --------------------------------------------------------------------------------
23051096 DOUBLER 1 390.21
- --------------------------------------------------------------------------------
23051099 COVER 1 2116.80
- --------------------------------------------------------------------------------
23051106 SUPPORT 1 13503.74
- --------------------------------------------------------------------------------
23051114 TUBE ASY 1 1993.70
- --------------------------------------------------------------------------------
23051117-1 ADAPTER 1 3240.45
- --------------------------------------------------------------------------------
23051117-2 ADAPTER 1 3440.45
- --------------------------------------------------------------------------------
23051117-3 ADAPTER 1 3240.45
- --------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 51
EXHIBIT A
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
23051123 MOUNT AS 1 4406.74
- -------------------------------------------------------------------------------
23051144 KIT 1 3858.31
- -------------------------------------------------------------------------------
23051146 TUBE 1 213.67
- -------------------------------------------------------------------------------
23051147 BRACKET 1 49.44
- -------------------------------------------------------------------------------
23051149 TUBE ASY 1 442.75
- -------------------------------------------------------------------------------
23051606 VALVE 1 8841.68
- -------------------------------------------------------------------------------
23051611 WHEEL 1 6486.87
- -------------------------------------------------------------------------------
23051612 WHEEL 1 8267.33
- -------------------------------------------------------------------------------
23051613 WHEEL 1 5220.08
- -------------------------------------------------------------------------------
23051614 WHEEL 1 6992.95
- -------------------------------------------------------------------------------
23051624 TUBE ASY 1 104.04
- -------------------------------------------------------------------------------
23051626 DIAPHRAG 1 1778.15
- -------------------------------------------------------------------------------
23051629 RING 1 1176.77
- -------------------------------------------------------------------------------
23051630 KEY 1 196.15
- -------------------------------------------------------------------------------
23051631 DIAPHRAM 1 646.50
- -------------------------------------------------------------------------------
23051642 CLAMP 5 13.32
- -------------------------------------------------------------------------------
23051646 SHAFT 1 3923.81
- -------------------------------------------------------------------------------
23051647-1 STUD 15 18.66
- -------------------------------------------------------------------------------
23051647-2 STUD 4 21.87
- -------------------------------------------------------------------------------
23051647-3 STUD 15 19.37
- -------------------------------------------------------------------------------
23051648-1 STUD 5 18.85
- -------------------------------------------------------------------------------
23051648-2 STUD 5 19.54
- -------------------------------------------------------------------------------
23051648-3 STUD 5 19.54
- -------------------------------------------------------------------------------
23051649 SHAFT 1 5548.79
- -------------------------------------------------------------------------------
23051992 KIT 1 82.02
- -------------------------------------------------------------------------------
23052262 HOUSING 1 22127.04
- -------------------------------------------------------------------------------
23052287 FILTER A 1 1087.66
- -------------------------------------------------------------------------------
23052358 RACE 1 448.17
- -------------------------------------------------------------------------------
23052359 HOUSING 1 2315.37
- -------------------------------------------------------------------------------
23052360 BODY 1 3843.28
- -------------------------------------------------------------------------------
23052375 SHAFT-OU 1 6761.95
- -------------------------------------------------------------------------------
23052380 SHAFT-IN 1 8260.66
- -------------------------------------------------------------------------------
23052387 TUBE ASY 1 3323.91
- -------------------------------------------------------------------------------
23052392 KIT 1 1629.58
- -------------------------------------------------------------------------------
23053176 VALVE AS 1 1867.87
- -------------------------------------------------------------------------------
23053184 VALVE AS 1 2769.92
- -------------------------------------------------------------------------------
23053190 VALVE AS 1 2205.35
- -------------------------------------------------------------------------------
23053191 LEVER 1 30.01
- -------------------------------------------------------------------------------
23053192 VALVE AS 1 1062.35
- -------------------------------------------------------------------------------
23053280 DIAPHRAG 1 2757.30
- -------------------------------------------------------------------------------
23053286 PLUG ASY 1 1603.51
- -------------------------------------------------------------------------------
23053293 TUBE 1 354.80
- -------------------------------------------------------------------------------
23053294 ADAPTER 1 1843.61
- -------------------------------------------------------------------------------
23053296 TUBE ASY 1 205.60
- -------------------------------------------------------------------------------
23053297 BEARING 1 720.73
- -------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 52
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
23053299 WHEEL T1 1 6739.04
- --------------------------------------------------------------------------------
23053308 KIT 1 2454.48
- --------------------------------------------------------------------------------
23053311 KIT 1 3767.85
- --------------------------------------------------------------------------------
23053312 KIT 1 4614.09
- --------------------------------------------------------------------------------
23053313 KIT 1 4665.81
- --------------------------------------------------------------------------------
23053314 KIT 1 5435.55
- --------------------------------------------------------------------------------
23053315 SEAL 1 1395.55
- --------------------------------------------------------------------------------
23053320 SUMP 1 779.53
- --------------------------------------------------------------------------------
23053322 SUMP AS 1 4043.04
- --------------------------------------------------------------------------------
23053327 BEARING 1 348.04
- --------------------------------------------------------------------------------
23053330 NOZZLE 1 10564.41
- --------------------------------------------------------------------------------
23053335 NOZZLE 1 7051.80
- --------------------------------------------------------------------------------
23053340 NOZZLE 1 14593.36
- --------------------------------------------------------------------------------
23053343 TUBE 1 117.88
- --------------------------------------------------------------------------------
23053345 SUPPORT 1 31782.29
- --------------------------------------------------------------------------------
23053346 HOUSING 1 4298.82
- --------------------------------------------------------------------------------
23053702 PICKUP 1 12924.12
- --------------------------------------------------------------------------------
23053961 BEARING 1 1320.41
- --------------------------------------------------------------------------------
23053962 BEARING 1 5011.58
- --------------------------------------------------------------------------------
23053964-1 BRG. CAGE 1 1066.00
- --------------------------------------------------------------------------------
23053964-2 BRG. CAGE 1 1066.07
- --------------------------------------------------------------------------------
23053964-3 BRG. CAGE 1 1066.07
- --------------------------------------------------------------------------------
23053968 SEAL 1 666.53
- --------------------------------------------------------------------------------
23053971-1 SHIM 1 42.67
- --------------------------------------------------------------------------------
23053971-2 SHIM 1 55.53
- --------------------------------------------------------------------------------
23053971-3 SHIM 1 55.23
- --------------------------------------------------------------------------------
23053971-4 SHIM 1 55.23
- --------------------------------------------------------------------------------
23053971-5 SHIM 1 55.23
- --------------------------------------------------------------------------------
23053974 TIE BOLT 1 293.67
- --------------------------------------------------------------------------------
23053982-1 BRG. CAGE 1 681.39
- --------------------------------------------------------------------------------
23053982-2 BRG. CAGE 1 681.39
- --------------------------------------------------------------------------------
23053992 ORIFICE 1 424.23
- --------------------------------------------------------------------------------
23054051 CONTROL 1 7014.86
- --------------------------------------------------------------------------------
23054052 CONTROL 1 7014.86
- --------------------------------------------------------------------------------
23054053 CONTROL 1 7014.86
- --------------------------------------------------------------------------------
23054163 N1 PICKU 1 2070.09
- --------------------------------------------------------------------------------
23054164 N2 PICKU 1 3727.46
- --------------------------------------------------------------------------------
23054605 GASKET 50 1.09
- --------------------------------------------------------------------------------
23054609 COVER 1 18172.43
- --------------------------------------------------------------------------------
23054618 HOUSING 1 17459.38
- --------------------------------------------------------------------------------
23054619 COVER 1 18224.59
- --------------------------------------------------------------------------------
23054628 TUBE AS 1 105.43
- --------------------------------------------------------------------------------
23054634 SUPPORT 1 34298.57
- --------------------------------------------------------------------------------
23054635 RECEPTAC 1 1546.35
- --------------------------------------------------------------------------------
23054648 INT-RING 1 4513.69
- --------------------------------------------------------------------------------
</TABLE>
24
<PAGE> 53
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
23055357-318 PLUG 1 0.12
- --------------------------------------------------------------------------------
23055409 HARNESS 1 11841.92
- --------------------------------------------------------------------------------
23055430 NOZZLE-2 1 14617.60
- --------------------------------------------------------------------------------
23055438 NOZZLE-2 1 10809.69
- --------------------------------------------------------------------------------
23055440 ELBOW 1 187.35
- --------------------------------------------------------------------------------
23055441-01 KEY 2TNO 5 74.47
- --------------------------------------------------------------------------------
23055441-02 KEY 2TNO 5 72.44
- --------------------------------------------------------------------------------
23055442 BRACKET 1 243.94
- --------------------------------------------------------------------------------
23055454 HARNESS 1 3661.17
- --------------------------------------------------------------------------------
23055457 SUPPORT 1 11649.39
- --------------------------------------------------------------------------------
23056100 KIT 1 4458.21
- --------------------------------------------------------------------------------
23056111 SLINGER 1 171.49
- --------------------------------------------------------------------------------
23056135 NOZZLE 3 1 6530.63
- --------------------------------------------------------------------------------
23056144 SEAL LA 1 234.80
- --------------------------------------------------------------------------------
23056147 DAMPER B 1 406.76
- --------------------------------------------------------------------------------
23056148 ISOLATOR 1 219.73
- --------------------------------------------------------------------------------
23056451 FUEL FIL 1 337.43
- --------------------------------------------------------------------------------
23056634 SHAFT 1 3746.43
- --------------------------------------------------------------------------------
23056643 HOUSING 1 17026.52
- --------------------------------------------------------------------------------
23056644 HOUSING 1 15571.06
- --------------------------------------------------------------------------------
23056645 PLATE 1 312.10
- --------------------------------------------------------------------------------
23056646 HOUSING 1 18358.41
- --------------------------------------------------------------------------------
23056648 TUBE AS 1 287.24
- --------------------------------------------------------------------------------
23056649 HOSE AS 1 211.62
- --------------------------------------------------------------------------------
23056915 SENSOR 1 1085.11
- --------------------------------------------------------------------------------
23057111 WHEEL 1C 1 4522.14
- --------------------------------------------------------------------------------
23057112 WHEEL 2/3 1 6149.45
- --------------------------------------------------------------------------------
23057113 OIL NOZZ 1 1038.97
- --------------------------------------------------------------------------------
23057114 DISK,C4S 1 3895.72
- --------------------------------------------------------------------------------
23057115 WHEEL 5C 1 3952.01
- --------------------------------------------------------------------------------
23057116 WHEEL 6C 1 3977.63
- --------------------------------------------------------------------------------
23057136 SPACER 1 29.36
- --------------------------------------------------------------------------------
23057137 TUBE AS 1 62.54
- --------------------------------------------------------------------------------
23057142 CASE ASM 1 29976.82
- --------------------------------------------------------------------------------
23057145 NOZZLE 1 7528.39
- --------------------------------------------------------------------------------
23057146 RETAINER 1 863.50
- --------------------------------------------------------------------------------
23057147 TUBE 1 130.99
- --------------------------------------------------------------------------------
23057750 RETAINER 1 405.35
- --------------------------------------------------------------------------------
23057772 PLUG 1 50.46
- --------------------------------------------------------------------------------
23057780 PISTON R 1 59.38
- --------------------------------------------------------------------------------
23057782 TUBE AS 1 103.58
- --------------------------------------------------------------------------------
23057788 GEAR&BEA 1 1367.60
- --------------------------------------------------------------------------------
23057882 INSULATI 1 209.97
- --------------------------------------------------------------------------------
23058100 BRACKET 1 116.04
- --------------------------------------------------------------------------------
23058101 PIN 5 15.45
- --------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 54
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
23058102 NUT SPAN 1 77.67
- --------------------------------------------------------------------------------
23058108 KIT HEAT 1 3819.08
- --------------------------------------------------------------------------------
23058109 BRACKET 2 27.54
- --------------------------------------------------------------------------------
23058110 TUBE AS 1 169.06
- --------------------------------------------------------------------------------
23058112 TUBE AS 1 270.82
- --------------------------------------------------------------------------------
23058121 SHIELD 1 2853.18
- --------------------------------------------------------------------------------
23058122 PANEL 1 167.32
- --------------------------------------------------------------------------------
23059123 PANEL 1 667.61
- --------------------------------------------------------------------------------
23058127 GEARSHAF 1 4196.77
- --------------------------------------------------------------------------------
23058128 SLEEVE 1 225.46
- --------------------------------------------------------------------------------
23058129 WHEEL T1 1 7207.71
- --------------------------------------------------------------------------------
23058131 BEARING 1 1655.64
- --------------------------------------------------------------------------------
23058136 PANEL 1 253.15
- --------------------------------------------------------------------------------
23058137 PLATE 1 169.88
- --------------------------------------------------------------------------------
23058142 PANEL 1 342.44
- --------------------------------------------------------------------------------
23058145 SUPPORT 1 18944.91
- --------------------------------------------------------------------------------
23058147 IMPELLER 1 9248.71
- --------------------------------------------------------------------------------
23058149-1 PLUG 1 33.80
- --------------------------------------------------------------------------------
23058149-2 PLUG 1 33.35
- --------------------------------------------------------------------------------
23058149-3 PLUG 1 71.24
- --------------------------------------------------------------------------------
23058149-4 PLUG 1 105.91
- --------------------------------------------------------------------------------
23058149-5 PLUG 1 105.91
- --------------------------------------------------------------------------------
23058537 LUBE FIL 1 22454.19
- --------------------------------------------------------------------------------
23058770 FADEC 1 36430.01
- --------------------------------------------------------------------------------
23059551 PLATE 1 866.53
- --------------------------------------------------------------------------------
23059552 WASHER 1 40.47
- --------------------------------------------------------------------------------
23059565 SUPPORT 1 2503.50
- --------------------------------------------------------------------------------
23059566-136 O-RING 1 20.66
- --------------------------------------------------------------------------------
23059566-142 O-RING 1 22.19
- --------------------------------------------------------------------------------
23059568-1 BEARING 1 3474.80
- --------------------------------------------------------------------------------
23059568-2 BEARING 1 3474.80
- --------------------------------------------------------------------------------
23059568-3 CAGE 1 3474.80
- --------------------------------------------------------------------------------
23059575 SPACER 1 334.10
- --------------------------------------------------------------------------------
23059577 GB COVER 1 25390.99
- --------------------------------------------------------------------------------
23059592 RING 1 125.51
- --------------------------------------------------------------------------------
23059593 RING 5 91.39
- --------------------------------------------------------------------------------
23059594 RING 1 120.49
- --------------------------------------------------------------------------------
23059598 SCROLL A 1 6797.34
- --------------------------------------------------------------------------------
23060164 SEAL O-R 1 718.67
- --------------------------------------------------------------------------------
23060166 OIL NOZZ 1 675.95
- --------------------------------------------------------------------------------
23060171 TUBE ASY 1 52.43
- --------------------------------------------------------------------------------
23060179 BRACKET 1 144.15
- --------------------------------------------------------------------------------
23060409 TUBE AS 1 2270.02
- --------------------------------------------------------------------------------
23060420 CARBON S 1 532.43
- --------------------------------------------------------------------------------
23060421-1 SHIM 019 1 25.04
- --------------------------------------------------------------------------------
</TABLE>
26
<PAGE> 55
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
23060421-2 SHIM 009 1 79.66
- --------------------------------------------------------------------------------
23060421-3 SHIM 005 1 21.29
- --------------------------------------------------------------------------------
23060421-4 SHIM 002 1 48.88
- --------------------------------------------------------------------------------
23060426 MANIFOLD 1 2783.62
- --------------------------------------------------------------------------------
23060429 COM. LIN 1 4392.73
- --------------------------------------------------------------------------------
23060435 TUBE ASY 1 216.80
- --------------------------------------------------------------------------------
23060438 FUEL TUB 1 174.89
- --------------------------------------------------------------------------------
23060443 RETAINER 1 693.56
- --------------------------------------------------------------------------------
23060467 WASHER 1 35.55
- --------------------------------------------------------------------------------
23060491 ELECT SY 1 80500.26
- --------------------------------------------------------------------------------
23060492 SHIP PAR 1 258.26
- --------------------------------------------------------------------------------
23060495 SUPPORT 1 41631.51
- --------------------------------------------------------------------------------
23060813 LEAD ASY 1 692.22
- --------------------------------------------------------------------------------
23060814 LEAD AS 1 650.96
- --------------------------------------------------------------------------------
23060815 LEAD AS 1 751.02
- --------------------------------------------------------------------------------
23060816 LEAD AS 1 710.86
- --------------------------------------------------------------------------------
23060818 LEAD AS 1 799.73
- --------------------------------------------------------------------------------
23061212 COMB-AFT 1 982.74
- --------------------------------------------------------------------------------
23061213 CONE 1 915.04
- --------------------------------------------------------------------------------
23061214 FLANGE 1 186.40
- --------------------------------------------------------------------------------
23061223 RING 1 167.23
- --------------------------------------------------------------------------------
23061229 HARNESS 1 1802.73
- --------------------------------------------------------------------------------
23061239 MANIFOLD 1 2490.33
- --------------------------------------------------------------------------------
23061246 SLEEVE 1 466.04
- --------------------------------------------------------------------------------
23061520 RTD 1 900.56
- --------------------------------------------------------------------------------
23061827 KIT N2 S 1 66.09
- --------------------------------------------------------------------------------
23061828 KIT N2 S 1 576.36
- --------------------------------------------------------------------------------
23061904 COVER SQ 1 93.15
- --------------------------------------------------------------------------------
23061912 BRACKET 5 6.28
- --------------------------------------------------------------------------------
23061918 DRIVE RE 1 4838.71
- --------------------------------------------------------------------------------
23061920 TUBE ASY 1 194.52
- --------------------------------------------------------------------------------
23061922 NOZZLE 4 1 9720.14
- --------------------------------------------------------------------------------
23061923 DIAPHRAG 1 691.77
- --------------------------------------------------------------------------------
23061928 SHRD HOU 1 7424.80
- --------------------------------------------------------------------------------
23061936 PLATE-1D 1 4.47
- --------------------------------------------------------------------------------
23061943 G/B COVE 1 17667.26
- --------------------------------------------------------------------------------
23061944 PLUG ADA 1 890.85
- --------------------------------------------------------------------------------
23062006 LOCKOUT 1 1687.64
- --------------------------------------------------------------------------------
23062021 OIL TUBE 1 1822.23
- --------------------------------------------------------------------------------
23062023 TUBE ASY 1 573.99
- --------------------------------------------------------------------------------
23062024 TUBE ASY 1 127.67
- --------------------------------------------------------------------------------
23062025 SHIELD 1 1712.67
- --------------------------------------------------------------------------------
23062026 PLUG 1 1085.28
- --------------------------------------------------------------------------------
23062028 1ST NOZZ 1 7898.56
- --------------------------------------------------------------------------------
23062029 2ND NOZZ 1 10809.69
- --------------------------------------------------------------------------------
</TABLE>
27
<PAGE> 56
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
23062056 PT SUPPO 1 26172.37
- --------------------------------------------------------------------------------
23062061 1ST NOZZ 1 25282.37
- --------------------------------------------------------------------------------
23062062 PT COVER 1 3626.39
- --------------------------------------------------------------------------------
23062070 SUP & CV 1 34767.67
- --------------------------------------------------------------------------------
23062091 TUBE ASY 1 115.71
- --------------------------------------------------------------------------------
23062332 STRAP AS 1 57.31
- --------------------------------------------------------------------------------
23062750 SHIELD A 1 3410.93
- --------------------------------------------------------------------------------
23062751 HOUSING 1 2759.96
- --------------------------------------------------------------------------------
23062752 SHIELD A 1 3758.95
- --------------------------------------------------------------------------------
23062753 NOZZLE 1 5455.61
- --------------------------------------------------------------------------------
23062754 NOZZLE 1 1 5591.54
- --------------------------------------------------------------------------------
23062765 SHIELD A 1 3474.60
- --------------------------------------------------------------------------------
23062775 TUBE ASY 1 90.83
- --------------------------------------------------------------------------------
23062792 TUBE ASY 1 103.30
- --------------------------------------------------------------------------------
23063144 LUBE FIL 1 184.90
- --------------------------------------------------------------------------------
23063357 TUBE-OIL 1 1188.02
- --------------------------------------------------------------------------------
23063373 OIL-TUBE 1 1348.78
- --------------------------------------------------------------------------------
23063390 THERMO A 1 924.96
- --------------------------------------------------------------------------------
23063398 HOUSING 1 6336.40
- --------------------------------------------------------------------------------
23063409 TUBE ASY 1 619.16
- --------------------------------------------------------------------------------
23063411 BRACKET 1 99.44
- --------------------------------------------------------------------------------
23063412 HOSE ASY 1 816.88
- --------------------------------------------------------------------------------
23063413 GEARSHAF 1 3036.23
- --------------------------------------------------------------------------------
23063434 BRACKET 1 89.20
- --------------------------------------------------------------------------------
23064007 PLATE-ID 1 4.47
- --------------------------------------------------------------------------------
23064032 PLATE-ID 1 4.29
- --------------------------------------------------------------------------------
23064033 PLATE-ID 1 3.16
- --------------------------------------------------------------------------------
23064034 PLATE-ID 1 4.97
- --------------------------------------------------------------------------------
23064035 PLATE-ID 1 4.07
- --------------------------------------------------------------------------------
23064036 PLATE-ID 1 3.61
- --------------------------------------------------------------------------------
23064037 PLATE-ID 2 8.27
- --------------------------------------------------------------------------------
23064038 PLATE-ID 1 3.16
- --------------------------------------------------------------------------------
23064039 PLATE-ID 2 3.16
- --------------------------------------------------------------------------------
23064040 PLATE-ID 2 3.16
- --------------------------------------------------------------------------------
23064041 ID-PLATE 1 7.90
- --------------------------------------------------------------------------------
23064042 PLATE-ID 1 4.97
- --------------------------------------------------------------------------------
23064043 PLATE-ID 1 3.16
- --------------------------------------------------------------------------------
23064044 PLATE-ID 5 9.17
- --------------------------------------------------------------------------------
23064045 ID-PLATE 1 2.26
- --------------------------------------------------------------------------------
23064046 PLATE-ID 10 2.03
- --------------------------------------------------------------------------------
23064048 PLATE-ID 1 3.16
- --------------------------------------------------------------------------------
23064061 PLATE-ID 1 3.70
- --------------------------------------------------------------------------------
23064128 ALTERNAT 1 5190.91
- --------------------------------------------------------------------------------
23064129 ALTERNAT 1 5142.45
- --------------------------------------------------------------------------------
23064130 EXCITER 1 2186.77
- --------------------------------------------------------------------------------
</TABLE>
28
<PAGE> 57
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
23064207 STRAP AS 1 59.82
- --------------------------------------------------------------------------------
23064208 STRAP AS 1 45.10
- --------------------------------------------------------------------------------
23064209 STRAP AS 1 51.99
- --------------------------------------------------------------------------------
23064493 HARNESS 1 12965.14
- --------------------------------------------------------------------------------
23064560 TUBE 1 739.62
- --------------------------------------------------------------------------------
23064561 FITTING 1 195.84
- --------------------------------------------------------------------------------
23064568 TUBE 1 151.99
- --------------------------------------------------------------------------------
23064570 LINER 1 10849.86
- --------------------------------------------------------------------------------
23064590 SUPPORT 1 21291.89
- --------------------------------------------------------------------------------
23064593 SUPPORT 1 19603.80
- --------------------------------------------------------------------------------
23064596 NOZZLE-4 1 11562.94
- --------------------------------------------------------------------------------
23064601 HOUSING 1 26103.24
- --------------------------------------------------------------------------------
23064602 HOUSING 1 25903.22
- --------------------------------------------------------------------------------
23064603 HOUSING 1 24547.39
- --------------------------------------------------------------------------------
23064604 HOUSING 1 24711.28
- --------------------------------------------------------------------------------
23064605 HOUDING 1 30721.70
- --------------------------------------------------------------------------------
23064606 COVER AS 1 18475.80
- --------------------------------------------------------------------------------
23064607 COVER AS 1 18787.05
- --------------------------------------------------------------------------------
23064608 COVER AS 1 22871.31
- --------------------------------------------------------------------------------
23064612 TUBE 1 1491.17
- --------------------------------------------------------------------------------
23064614 SPACER 1 321.93
- --------------------------------------------------------------------------------
23064615 RETAINER 1 922.39
- --------------------------------------------------------------------------------
23064616 SPACER 1 171.92
- --------------------------------------------------------------------------------
23064620 TUBE ASS 1 50.08
- --------------------------------------------------------------------------------
23064622 NOZZLE 1 12816.69
- --------------------------------------------------------------------------------
23064624 TUBE ASS 1 53.86
- --------------------------------------------------------------------------------
23064625 TUBE ASS 1 151.63
- --------------------------------------------------------------------------------
23064626 PLUG 1 935.47
- --------------------------------------------------------------------------------
23064637 DIFFUSER 1 21665.94
- --------------------------------------------------------------------------------
23064638 OIL SCRE 1 48.34
- --------------------------------------------------------------------------------
23064640 G/B HOUS 1 21589.21
- --------------------------------------------------------------------------------
23064647 TUBE ASS 1 238.46
- --------------------------------------------------------------------------------
23064648 TUBE ASS 1 85.88
- --------------------------------------------------------------------------------
23064649 TUBE ASS 1 112.76
- --------------------------------------------------------------------------------
23064781 FILTER A 1 9540.45
- --------------------------------------------------------------------------------
23065462 TUBE ASS 1 2261.55
- --------------------------------------------------------------------------------
23065464 RESTRICT 1 169.19
- --------------------------------------------------------------------------------
23065470 G/B COVE 1 20622.76
- --------------------------------------------------------------------------------
23065475 IMPELLER 1 20839.35
- --------------------------------------------------------------------------------
23065484 TUBE ASS 1 108.76
- --------------------------------------------------------------------------------
23065487 COVER AS 1 4103.65
- --------------------------------------------------------------------------------
23065489 TUBE ASS 1 108.76
- --------------------------------------------------------------------------------
23065495 SLEEVE 1 46.71
- --------------------------------------------------------------------------------
23065496 SLEEVE 1 59.71
- --------------------------------------------------------------------------------
23065552 BRACKET 1 116.17
- --------------------------------------------------------------------------------
</TABLE>
29
<PAGE> 58
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
23065555 SUPPORT 1 14601.67
- --------------------------------------------------------------------------------
23065556 NOZZLE 1 1950.92
- --------------------------------------------------------------------------------
23065575 DOME 1 109.10
- --------------------------------------------------------------------------------
23065579 FITTING 1 35.31
- --------------------------------------------------------------------------------
23065580 DEFLECTO 1 104.76
- --------------------------------------------------------------------------------
23065581 IMPELLER 1 20839.35
- --------------------------------------------------------------------------------
23065590 TUBE ASS 1 107.19
- --------------------------------------------------------------------------------
23065591 IMPELLER 1 19677.72
- --------------------------------------------------------------------------------
23065594 BEARING 1 1571.27
- --------------------------------------------------------------------------------
23065595 BEARING 1 1779.22
- --------------------------------------------------------------------------------
23065805 HARNESS 1 7048.68
- --------------------------------------------------------------------------------
23065817 SUPPORT 1 14921.20
- --------------------------------------------------------------------------------
23065829 GB COVER 1 22083.89
- --------------------------------------------------------------------------------
23066399 WASHER 1 8.91
- --------------------------------------------------------------------------------
23066650 WASHER 1 8.91
- --------------------------------------------------------------------------------
23066652 TUBE ASS 1 287.15
- --------------------------------------------------------------------------------
23066671 FILTER 1 9570.04
- --------------------------------------------------------------------------------
23066672 FILTER A 1 9939.03
- --------------------------------------------------------------------------------
23066678 BEARING 1 2288.46
- --------------------------------------------------------------------------------
23066683 CEFA 1 9939.03
- --------------------------------------------------------------------------------
23066684 TUBE ASS 1 854.49
- --------------------------------------------------------------------------------
23066689 BRACKET 1 66.35
- --------------------------------------------------------------------------------
23066692 NOZZLE 1 12877.20
- --------------------------------------------------------------------------------
23066696 FIREWALL 1 2061.20
- --------------------------------------------------------------------------------
23066699 HOUSING 1 18336.01
- --------------------------------------------------------------------------------
23066703 NOZZLE 3 1 7019.01
- --------------------------------------------------------------------------------
23066708-012 SHIM 1 168.56
- --------------------------------------------------------------------------------
23066708-018 SHIM 1 174.89
- --------------------------------------------------------------------------------
23066708-024 SHIM 1 190.79
- --------------------------------------------------------------------------------
23066715 PIN 10 17.34
- --------------------------------------------------------------------------------
23066716 BEARING 1 696.10
- --------------------------------------------------------------------------------
23066728 BLD ADAP 1 2840.90
- --------------------------------------------------------------------------------
23066744 WHEEL 4T 1 7606.41
- --------------------------------------------------------------------------------
23066748 FITTING 1 868.70
- --------------------------------------------------------------------------------
23067663 HARNESS 1 4742.11
- --------------------------------------------------------------------------------
23067665 HARNESS 1 6302.77
- --------------------------------------------------------------------------------
23067720 HARNESS 1 7483.03
- --------------------------------------------------------------------------------
23068020 GB COVER 1 18217.15
- --------------------------------------------------------------------------------
23068021 GB HOUSI 1 18702.60
- --------------------------------------------------------------------------------
23068212 ADAPTER 1 343.45
- --------------------------------------------------------------------------------
23068247 KIT 1 2133.28
- --------------------------------------------------------------------------------
23068261 DIFF ASS 1 7249.17
- --------------------------------------------------------------------------------
23068295 GEARSH A 1 6872.49
- --------------------------------------------------------------------------------
23068298 JET 1 79.63
- --------------------------------------------------------------------------------
23068851 HARNESS 1 3523.89
- --------------------------------------------------------------------------------
</TABLE>
30
<PAGE> 59
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
23069728 SUMP 1 551.88
- --------------------------------------------------------------------------------
23069740 KIT 1 2115.54
- --------------------------------------------------------------------------------
23070254 FADEC 1 47511.71
- --------------------------------------------------------------------------------
23070297 TRANSDUC 1 2021.,98
- --------------------------------------------------------------------------------
23070459 PUMP, FU 1 7665.00
- --------------------------------------------------------------------------------
23070704 TURB WHE 1 7051.80
- --------------------------------------------------------------------------------
23070708 TURB WHE 1 7920.50
- --------------------------------------------------------------------------------
23070709 TURB WHE 1 9709.00
- --------------------------------------------------------------------------------
23070710 TURB WHE 1 8380.40
- --------------------------------------------------------------------------------
23071549 IMPELLER 1 9248.71
- --------------------------------------------------------------------------------
47070 HOUSING 1 401.34
- --------------------------------------------------------------------------------
47072 SHROUD 1 161.83
- --------------------------------------------------------------------------------
47073 METER 1 403.07
- --------------------------------------------------------------------------------
47076 SPACER 1 260.82
- --------------------------------------------------------------------------------
47077 SHIM 1 15.84
- --------------------------------------------------------------------------------
47078 SPRING 1 34.04
- --------------------------------------------------------------------------------
47079 SEAT 1 37.13
- --------------------------------------------------------------------------------
47080 PISTON 1 526.92
- --------------------------------------------------------------------------------
47085 PIN 5 51.59
- --------------------------------------------------------------------------------
47086 FILTER 1 100.53
- --------------------------------------------------------------------------------
47089 SHROUD 1 619.81
- --------------------------------------------------------------------------------
47102 BODY 1 409.20
- --------------------------------------------------------------------------------
47104 NUT 1 356.50
- --------------------------------------------------------------------------------
47105 METER 1 734.06
- --------------------------------------------------------------------------------
47107 SPACER 1 334.39
- --------------------------------------------------------------------------------
47108 SPRING 1 22.46
- --------------------------------------------------------------------------------
47109 SHROUD 1 727.47
- --------------------------------------------------------------------------------
49280 CAGE AS 1 1635.34
- --------------------------------------------------------------------------------
49299 SPRING 1 105.21
- --------------------------------------------------------------------------------
49447 SEAL 5 85.51
- --------------------------------------------------------------------------------
5232399 SPACER 1 68.68
- --------------------------------------------------------------------------------
56856 TIP 1 621.78
- --------------------------------------------------------------------------------
5710-66-60 WASHER 10 3.56
- --------------------------------------------------------------------------------
6716013 STRAP 15 16.56
- --------------------------------------------------------------------------------
6726656-125 RING 100 0.98
- --------------------------------------------------------------------------------
6726656-267 RING 10 2.65
- --------------------------------------------------------------------------------
6726656-314 RING 1 6.61
- --------------------------------------------------------------------------------
6728014-3 SLEEVE 10 21.18
- --------------------------------------------------------------------------------
6728014-5 SLEEVE 10 21.18
- --------------------------------------------------------------------------------
6728014-8 SLEEVE 4 21.16
- --------------------------------------------------------------------------------
6728015-3 NUT 4 21.26
- --------------------------------------------------------------------------------
6728015-4 NUT 4 21.26
- --------------------------------------------------------------------------------
6728015-5 NUT 5 20.00
- --------------------------------------------------------------------------------
6735102-12 BUSHING 10 11.50
- --------------------------------------------------------------------------------
6735102-8 BUSH 10 9.38
- --------------------------------------------------------------------------------
</TABLE>
31
<PAGE> 60
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
6748072-131 RING 5 1.33
- --------------------------------------------------------------------------------
6748072-137 RING 15 3.18
- --------------------------------------------------------------------------------
6748072-150 RING 25 1.78
- --------------------------------------------------------------------------------
6748072-157 RING 5 5.48
- --------------------------------------------------------------------------------
6748072-187 RING 5 3.38
- --------------------------------------------------------------------------------
6748072-283 RING 5 11.39
- --------------------------------------------------------------------------------
6748072-337 RING 5 11.75
- --------------------------------------------------------------------------------
67844119-2 SEAL 5 12.26
- --------------------------------------------------------------------------------
6784419-5 SEAL 2 26.43
- --------------------------------------------------------------------------------
6784798-160 SEAL 1 11.33
- --------------------------------------------------------------------------------
6793068 STANDPIP 2 27.47
- --------------------------------------------------------------------------------
6794655 FLANGE 2 70.66
- --------------------------------------------------------------------------------
6800088-18 COVER 10 9.64
- --------------------------------------------------------------------------------
6800193-170 CAP 25 1.21
- --------------------------------------------------------------------------------
6808392 NUT 1 84.49
- --------------------------------------------------------------------------------
6808397 SPACER 5 59.13
- --------------------------------------------------------------------------------
6808813 SPRING 1 62.64
- --------------------------------------------------------------------------------
6809796 SPRING 5 15.67
- --------------------------------------------------------------------------------
6810357 GEAR 1 416.70
- --------------------------------------------------------------------------------
6810358 GEAR 1 555.10
- --------------------------------------------------------------------------------
6810388-96 SCREW 15 5.31
- --------------------------------------------------------------------------------
6810409 PLUG 5 18.05
- --------------------------------------------------------------------------------
6810434 NUT 2 78.99
- --------------------------------------------------------------------------------
6810448 BUSHING 10 10.42
- --------------------------------------------------------------------------------
6810461 RING 5 36.53
- --------------------------------------------------------------------------------
6810498 PLUG 2 35.71
- --------------------------------------------------------------------------------
6816237-45 SCREW 5 19.55
- --------------------------------------------------------------------------------
6818735-46 RING 50 1.23
- --------------------------------------------------------------------------------
6819889 WEIGHT 1 95.13
- --------------------------------------------------------------------------------
6820055-7 BOLT 50 1.08
- --------------------------------------------------------------------------------
6820084 WASHER 15 6.04
- --------------------------------------------------------------------------------
6820512-1 SHIM 25 3.93
- --------------------------------------------------------------------------------
6820512-2 SHIM 25 2.66
- --------------------------------------------------------------------------------
6820512-3 SHIM 25 2.44
- --------------------------------------------------------------------------------
6820512-4 SHIM 25 3.00
- --------------------------------------------------------------------------------
6820556-1 SEAT 5 10.16
- --------------------------------------------------------------------------------
6820556-2 SEAT 4 23.61
- --------------------------------------------------------------------------------
6820556-3 SEAT 4 22.96
- --------------------------------------------------------------------------------
6820556-4 SEAT 4 22.96
- --------------------------------------------------------------------------------
6820556-5 SEAT 4 22.96
- --------------------------------------------------------------------------------
6820556-6 SEAT 3 29.58
- --------------------------------------------------------------------------------
6820586 SHAFT 1 86.70
- --------------------------------------------------------------------------------
6820651 CONNECTO 1 56.78
- --------------------------------------------------------------------------------
6820657 NUT 1 149.20
- --------------------------------------------------------------------------------
6820668 WASHER 5 13.43
- --------------------------------------------------------------------------------
</TABLE>
32
<PAGE> 61
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
6820764 WASHER 10 7.52
- --------------------------------------------------------------------------------
6821557 SPRING 1 10.20
- --------------------------------------------------------------------------------
823122-632 NUT 25 2.70
- --------------------------------------------------------------------------------
6823169 NUT 2 53.81
- --------------------------------------------------------------------------------
6823170 WASHER 15 13.60
- --------------------------------------------------------------------------------
6823218-1 INSERT 15 14.46
- --------------------------------------------------------------------------------
6823218-2 INSERT 1 102.96
- --------------------------------------------------------------------------------
6823218-3 INSERT 2 103.93
- --------------------------------------------------------------------------------
6823221 INSERT 15 34.96
- --------------------------------------------------------------------------------
6823221P003 INSERT 3 29.88
- --------------------------------------------------------------------------------
6823221P006 INSERT 1 56.80
- --------------------------------------------------------------------------------
6823260 SPACER 10 9.04
- --------------------------------------------------------------------------------
6823412-271 PACKING 1 58.16
- --------------------------------------------------------------------------------
6823977 PLUG 2 32.66
- --------------------------------------------------------------------------------
6823993 RETAINER 2 35.44
- --------------------------------------------------------------------------------
6824307 ROLLER 2 57.07
- --------------------------------------------------------------------------------
6824964 SPACER 5 19.65
- --------------------------------------------------------------------------------
6824977 GEAR 1 813.90
- --------------------------------------------------------------------------------
6825528 BOLT 5 13.15
- --------------------------------------------------------------------------------
6825546-1 INSERT 5 47.50
- --------------------------------------------------------------------------------
6825546-2 INSERT 1 215.72
- --------------------------------------------------------------------------------
6825546-3 INSERT 1 221.91
- --------------------------------------------------------------------------------
6826835 GEAR 1 1043.95
- --------------------------------------------------------------------------------
6828782-8321 NUT 5 17.60
- --------------------------------------------------------------------------------
6828843 PIN 5 14.83
- --------------------------------------------------------------------------------
6829044 BRACKET 5 51.64
- --------------------------------------------------------------------------------
6840115 TUBE 2 25.89
- --------------------------------------------------------------------------------
6840117 TUBE 2 47.94
- --------------------------------------------------------------------------------
684136 SCREEN 2 36.04
- --------------------------------------------------------------------------------
6840323 VALVE 1 323..05
- --------------------------------------------------------------------------------
6840364-12 PLUG 1 1.29
- --------------------------------------------------------------------------------
6840364-6 PLUG 1 0.90
- --------------------------------------------------------------------------------
6840372-12 PLUG 5 20.66
- --------------------------------------------------------------------------------
6840380-78 RING 5 2.70
- --------------------------------------------------------------------------------
6840407 NUT 1 36.83
- --------------------------------------------------------------------------------
6840420 SCREW 2 26.38
- --------------------------------------------------------------------------------
6840421-1 INSERT 1 61.54
- --------------------------------------------------------------------------------
6840421-2 INSERT 1 61.25
- --------------------------------------------------------------------------------
6840421-3 INSERT 1 62.60
- --------------------------------------------------------------------------------
6841675 GASKET 10 26.08
- --------------------------------------------------------------------------------
6841714-1 INSERT 1 71.27
- --------------------------------------------------------------------------------
6841714-2 INSERT 1 64.15
- --------------------------------------------------------------------------------
6841714-3 INSERT 2 71.27
- --------------------------------------------------------------------------------
6842058 SEAL 1 2812.71
- --------------------------------------------------------------------------------
6842094 COUPLING 1 356.46
- --------------------------------------------------------------------------------
</TABLE>
33
<PAGE> 62
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
6842095 ADAPTER 1 589.31
- --------------------------------------------------------------------------------
6842308-0 SLEEVE 5 34.49
- --------------------------------------------------------------------------------
6842308-1 BUSHING 10 34.49
- --------------------------------------------------------------------------------
6842308-2 BUSHING 10 37.67
- --------------------------------------------------------------------------------
6842523 BRACKET 1 902.46
- --------------------------------------------------------------------------------
6842758-75 RING RE 1 4.17
- --------------------------------------------------------------------------------
6843333-027 PACKING 1 12.30
- --------------------------------------------------------------------------------
6843333-116 SEAL 10 2.57
- --------------------------------------------------------------------------------
6843356-1 CAGE 1 121.43
- --------------------------------------------------------------------------------
6843356-2 CAGE 1 255.50
- --------------------------------------------------------------------------------
6843356-3 CAGE 1 255.50
- --------------------------------------------------------------------------------
6843356-4 CAGE 1 351.92
- --------------------------------------------------------------------------------
6843356-5 CAGE 1 351.92
- --------------------------------------------------------------------------------
6843357-1 CAGE 1 241.75
- --------------------------------------------------------------------------------
6843357-2 CAGE 1 292.66
- --------------------------------------------------------------------------------
6843357-3 CAGE 1 292.66
- --------------------------------------------------------------------------------
6843357-4 CAGE 1 292.66
- --------------------------------------------------------------------------------
6843357-5 CAGE 1 315.18
- --------------------------------------------------------------------------------
6843358-1 CAGE 1 182.11
- --------------------------------------------------------------------------------
6843358-2 CAGE 1 255.50
- --------------------------------------------------------------------------------
6843358-3 CAGE 1 255.50
- --------------------------------------------------------------------------------
6843358-4 CAGE 1 301.40
- --------------------------------------------------------------------------------
6843358-5 CAGE 1 301.40
- --------------------------------------------------------------------------------
6843359-1 CAGE 1 95.67
- --------------------------------------------------------------------------------
6843359-3 CAGE 1 95.67
- --------------------------------------------------------------------------------
6843360-1 CAGE 1 171.46
- --------------------------------------------------------------------------------
6843360-2 CAGE 1 677.65
- --------------------------------------------------------------------------------
6843360-3 CAGE 1 704.77
- --------------------------------------------------------------------------------
6843360-4 CAGE 1 197.45
- --------------------------------------------------------------------------------
6843360-5 CAGE 1 195.66
- --------------------------------------------------------------------------------
6843361-1 CAGE 1 128.41
- --------------------------------------------------------------------------------
6843361-2 CAGE 1 443.76
- --------------------------------------------------------------------------------
6843361-3 CAGE 1 443.76
- --------------------------------------------------------------------------------
6843361-4 CAGE 1 205.91
- --------------------------------------------------------------------------------
6843361-5 CAGE 1 218.47
- --------------------------------------------------------------------------------
6843362-1 CAGE 1 210.88
- --------------------------------------------------------------------------------
6843362-2 CAGE 1 584.85
- --------------------------------------------------------------------------------
6843362-3 CAGE 1 689.49
- --------------------------------------------------------------------------------
6843362-4 CAGE 1 229.04
- --------------------------------------------------------------------------------
6843362-5 CAGE 1 234.72
- --------------------------------------------------------------------------------
6843363-1 CAGE 1 156.44
- --------------------------------------------------------------------------------
6843363-2 CAGE 1 195.89
- --------------------------------------------------------------------------------
6843363-3 CAGE 1 195.89
- --------------------------------------------------------------------------------
6843363-4 CAGE 1 195.87
- --------------------------------------------------------------------------------
6843363-5 CAGE 1 202.13
- --------------------------------------------------------------------------------
</TABLE>
34
<PAGE> 63
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
6843386 GUIDE 2 129.77
- --------------------------------------------------------------------------------
6843609 WASHER 5 11.10
- --------------------------------------------------------------------------------
6844003 RING 2 24.73
- --------------------------------------------------------------------------------
6844006 COVER 1 1219.70
- --------------------------------------------------------------------------------
6844007 SHAFT 5 51.78
- --------------------------------------------------------------------------------
6844043 TUBE 1 34.00
- --------------------------------------------------------------------------------
6844044 TUBE 1 287.57
- --------------------------------------------------------------------------------
6844154 TUBE 1 231.38
- --------------------------------------------------------------------------------
6844157 TUBE 1 410.85
- --------------------------------------------------------------------------------
6844169 TUBE 1 119.95
- --------------------------------------------------------------------------------
6844317 BRACKET 15 6.81
- --------------------------------------------------------------------------------
6844326 NUT 5 12.84
- --------------------------------------------------------------------------------
6844414 ELBOW 1 84.93
- --------------------------------------------------------------------------------
6844422 DAMPER 5 46.10
- --------------------------------------------------------------------------------
6844434 FLANGE 1 91.43
- --------------------------------------------------------------------------------
6844453 BAFFLE 5 14.84
- --------------------------------------------------------------------------------
6844456 BAFFLE 5 13.01
- --------------------------------------------------------------------------------
6844457 BAFFLE 5 23.83
- --------------------------------------------------------------------------------
6844458 BAFFLE 5 14.13
- --------------------------------------------------------------------------------
6845919 HOUSING 1 5921.02
- --------------------------------------------------------------------------------
6845965-10 NUT 1 149.22
- --------------------------------------------------------------------------------
6846237 FITTING 1 326.32
- --------------------------------------------------------------------------------
6846669 VALVE 1 282.28
- --------------------------------------------------------------------------------
6847449 WHEEL 1 12996.73
- --------------------------------------------------------------------------------
6848194 CONNECTO 1 500.33
- --------------------------------------------------------------------------------
6848470 TUBE 1 102.21
- --------------------------------------------------------------------------------
6848471 TUBE 1 100.34
- --------------------------------------------------------------------------------
6848473 TUBE 1 244.60
- --------------------------------------------------------------------------------
6848474 TUBE 1 259.48
- --------------------------------------------------------------------------------
6848996-1 SPACER 10 20.57
- --------------------------------------------------------------------------------
6848996-2 SPACER 10 20.57
- --------------------------------------------------------------------------------
6848996-3 SPACER 5 19.59
- --------------------------------------------------------------------------------
68478996-4 WASHER 2 24.55
- --------------------------------------------------------------------------------
6848996-5 WASHER 4 21.66
- --------------------------------------------------------------------------------
6849037 TUBE 1 70.75
- --------------------------------------------------------------------------------
6849468-0804 2 BOLT 10 7.10
- --------------------------------------------------------------------------------
6849468-0806 BOLT 5 7.34
- --------------------------------------------------------------------------------
6849468-0807 BOLT 5 16.97
- --------------------------------------------------------------------------------
6849468-0809 BOLT 5 8.06
- --------------------------------------------------------------------------------
6849468-1214 2 BOLT 2 14.69
- --------------------------------------------------------------------------------
6849469-0430 90 HOSE 1 196.81
- --------------------------------------------------------------------------------
6849490-2 BUSHING 2 103.45
- --------------------------------------------------------------------------------
6850314 BOLT 5 15.19
- --------------------------------------------------------------------------------
6850597 TUBE 1 322.99
- --------------------------------------------------------------------------------
6850716 CLAMP 15 17.27
- --------------------------------------------------------------------------------
</TABLE>
35
<PAGE> 64
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
6850734 RING 3 28.41
- --------------------------------------------------------------------------------
6850746 BOLT 2 79.01
- --------------------------------------------------------------------------------
6850921 ELBOW 1 110.97
- --------------------------------------------------------------------------------
6851354 ACCMLTR 1 841.93
- --------------------------------------------------------------------------------
6851391 TUBE 1 102.89
- --------------------------------------------------------------------------------
6851392 TUBE 1 228.05
- --------------------------------------------------------------------------------
6851393 WASHER 5 22.49
- --------------------------------------------------------------------------------
6851394 TUBE 1 47.38
- --------------------------------------------------------------------------------
6851395 PLUG 5 13.47
- --------------------------------------------------------------------------------
6851430 DIFFUSER 1 10599.91
- --------------------------------------------------------------------------------
6851488 KIT 1 741.44
- --------------------------------------------------------------------------------
6854199 DIAPH 1 356.09
- --------------------------------------------------------------------------------
6851500 SEAL 1 260.85
- --------------------------------------------------------------------------------
6851530 SEAL 1 855.48
- --------------------------------------------------------------------------------
6851574 SCROLL 1 8913.21
- --------------------------------------------------------------------------------
6851995 NOZZLE 1 1584.22
- --------------------------------------------------------------------------------
6852020 NOZZLE 1 6956.09
- --------------------------------------------------------------------------------
6852074 TUBE 1 349.26
- --------------------------------------------------------------------------------
6852176 GUIDE 1 476.59
- --------------------------------------------------------------------------------
6853133 SHIELD 1 1098.89
- --------------------------------------------------------------------------------
6853136 GEAR 1 7736.38
- --------------------------------------------------------------------------------
6853156 TUBE 1 678.34
- --------------------------------------------------------------------------------
6853158 TUBE 1 139.04
- --------------------------------------------------------------------------------
6853238 HOUSING 1 9532.15
- --------------------------------------------------------------------------------
6853249 TUBE 1 136.46
- --------------------------------------------------------------------------------
6853265 GEARSHAF 1 4711.92
- --------------------------------------------------------------------------------
6853279 WHEEL 1 7328.50
- --------------------------------------------------------------------------------
6853290 SHIELD 1 1245.79
- --------------------------------------------------------------------------------
6853304 TUBE 1 190.57
- --------------------------------------------------------------------------------
6853308 TUBE 1 226.92
- --------------------------------------------------------------------------------
6853362 BRACKET 1 243.54
- --------------------------------------------------------------------------------
6853366 BRACKET 1 39.79
- --------------------------------------------------------------------------------
6853379 TUBE 1 172.05
- --------------------------------------------------------------------------------
6853444 COVER 1 3539.45
- --------------------------------------------------------------------------------
6853446 SHAFT 1 64.81
- --------------------------------------------------------------------------------
6853448 SHAFT 1 5266.41
- --------------------------------------------------------------------------------
6853449 GEAR 1 992.32
- --------------------------------------------------------------------------------
6853454 TUBE 1 97.46
- --------------------------------------------------------------------------------
6853455 TUBE 1 40.19
- --------------------------------------------------------------------------------
6853463 TUBE 1 172.10
- --------------------------------------------------------------------------------
6853464 TUBE 1 151.37
- --------------------------------------------------------------------------------
6853473 TUBE 1 199.79
- --------------------------------------------------------------------------------
6853483 SPACER 2 43.47
- --------------------------------------------------------------------------------
6853540 PUMP 1 10151.04
- --------------------------------------------------------------------------------
6853543 BODY 1 1360.09
- --------------------------------------------------------------------------------
</TABLE>
36
<PAGE> 65
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
6853544 COVER 1 1330.58
- --------------------------------------------------------------------------------
6854056 BRACKET 10 7.27
- --------------------------------------------------------------------------------
6854139 TUBE 1 531.70
- --------------------------------------------------------------------------------
6854149 GEAR 1 4440.17
- --------------------------------------------------------------------------------
6854255 VALVE 1 191.46
- --------------------------------------------------------------------------------
6854519 PLUG 1 83.42
- --------------------------------------------------------------------------------
6854851 SHAFT 1 3136.25
- --------------------------------------------------------------------------------
6854852 SHAFT 1 3101.04
- --------------------------------------------------------------------------------
6854857 GEAR 1 4593.54
- --------------------------------------------------------------------------------
6854936-1 INSERT 2 51.78
- --------------------------------------------------------------------------------
6854936-2 INSERT 5 184.26
- --------------------------------------------------------------------------------
6854936-3 INSERT 1 74.43
- --------------------------------------------------------------------------------
6855319 GLATE 5 16.15
- --------------------------------------------------------------------------------
6855444 GEAR 1 613.23
- --------------------------------------------------------------------------------
6855876 KIT 1 51.65
- --------------------------------------------------------------------------------
6855878 KIT 1 21.84
- --------------------------------------------------------------------------------
6855879 KIT 1 7.28
- --------------------------------------------------------------------------------
6856059 SHAFT 1 662.08
- --------------------------------------------------------------------------------
6856067 TUBE 1 51.58
- --------------------------------------------------------------------------------
6856076 HOUSING 1 6530.23
- --------------------------------------------------------------------------------
6856145 CAGE 1 1013.03
- --------------------------------------------------------------------------------
6856147 NUT 1 363.19
- --------------------------------------------------------------------------------
685249 EXPANDER 1 96.80
- --------------------------------------------------------------------------------
6856362 PISTON 1 1825.65
- --------------------------------------------------------------------------------
6856381 SLEEVE 1 1345.48
- --------------------------------------------------------------------------------
6856386 TUBE 1 193.25
- --------------------------------------------------------------------------------
6856963 TUBE 1 161.83
- --------------------------------------------------------------------------------
6856964 TUBE 1 125.04
- --------------------------------------------------------------------------------
6856970 TUBE 1 95.99
- --------------------------------------------------------------------------------
6856972 TUBE 1 134.30
- --------------------------------------------------------------------------------
6856973 TUBE 1 165.76
- --------------------------------------------------------------------------------
6856974 TUBE 1 182.86
- --------------------------------------------------------------------------------
6850976 TUBE 1 118.70
- --------------------------------------------------------------------------------
6856977 TUBE 2 139.48
- --------------------------------------------------------------------------------
6856978 TUBE 1 153.03
- --------------------------------------------------------------------------------
6856981 FITTING 1 282.66
- --------------------------------------------------------------------------------
6856984 BODY 1 580.44
- --------------------------------------------------------------------------------
6856986 POPPET 1 250.48
- --------------------------------------------------------------------------------
6856988 SEAT 2 36.63
- --------------------------------------------------------------------------------
6857280 MANIFOLD 1 1284.22
- --------------------------------------------------------------------------------
6857285 TUBE 1 141.70
- --------------------------------------------------------------------------------
6857290 BRACKET 1 392.50
- --------------------------------------------------------------------------------
6857410 WASHER 10 8.83
- --------------------------------------------------------------------------------
6857719-3 NUT 2 55.88
- --------------------------------------------------------------------------------
6857866 BUSHING 10 5.40
- --------------------------------------------------------------------------------
</TABLE>
37
<PAGE> 66
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
6858277-1 CAGE 1 726.52
- --------------------------------------------------------------------------------
6858277-2 CAGE 1 720.44
- --------------------------------------------------------------------------------
6858277-3 CAGE 1 767.27
- --------------------------------------------------------------------------------
6859073 RING 15 28.82
- --------------------------------------------------------------------------------
6859080 NUT 1 298.80
- --------------------------------------------------------------------------------
6859172 TUBE 1 183.00
- --------------------------------------------------------------------------------
6859177 TUBE 1 179.00
- --------------------------------------------------------------------------------
6859192 BRACKET 1 63.75
- --------------------------------------------------------------------------------
6859330 TUBE 1 95.99
- --------------------------------------------------------------------------------
6859367 SHAFT 1 2481.43
- --------------------------------------------------------------------------------
6859373 NOZZLE 1 636.14
- --------------------------------------------------------------------------------
6859433 BEARING 1 389.62
- --------------------------------------------------------------------------------
6859734-2 RING 15 49.90
- --------------------------------------------------------------------------------
6859897 BUSHING 2 155.60
- --------------------------------------------------------------------------------
6859956 TUBE 1 185.47
- --------------------------------------------------------------------------------
6864045-02 CLIP 2 25.10
- --------------------------------------------------------------------------------
6864045-06 CLIP 2 26.22
- --------------------------------------------------------------------------------
6864046-02 CLIP 3 26.46
- --------------------------------------------------------------------------------
6864046-06 CLIP 5 51.28
- --------------------------------------------------------------------------------
6864061-02 BUSHING 5 8.83
- --------------------------------------------------------------------------------
6864061-04 BUSHING 1 10.12
- --------------------------------------------------------------------------------
6864061-08 BUSHING 5 8.32
- --------------------------------------------------------------------------------
6864061-12 BUSHING 1 9.66
- --------------------------------------------------------------------------------
6864061-16 BUSHING 2 31.89
- --------------------------------------------------------------------------------
6866501 DAMPER 1 67.17
- --------------------------------------------------------------------------------
6867908-03 SEAL 50 1.40
- --------------------------------------------------------------------------------
6870035 TUBE 1 108.77
- --------------------------------------------------------------------------------
6870036 TUBE 1 290.89
- --------------------------------------------------------------------------------
6870219 TUBE 1 142.83
- --------------------------------------------------------------------------------
6870264 PIN 1 125.95
- --------------------------------------------------------------------------------
6870692 TUBE 1 386.03
- --------------------------------------------------------------------------------
6870736 RING 1 127.18
- --------------------------------------------------------------------------------
6870740 TUBE 1 150.54
- --------------------------------------------------------------------------------
6870796 PLATE 10 10.41
- --------------------------------------------------------------------------------
6870813 VANE 1 7280.03
- --------------------------------------------------------------------------------
6870832 COUPLING 1 1420.34
- --------------------------------------------------------------------------------
6870925 BODY 1 786.78
- --------------------------------------------------------------------------------
6870926 COVER 1 1434.15
- --------------------------------------------------------------------------------
6870927 SHAFT 1 56.79
- --------------------------------------------------------------------------------
6870937 NOZZLE 1 382.96
- --------------------------------------------------------------------------------
6871014 TUBE 1 473.27
- --------------------------------------------------------------------------------
6871035 TUBE 1 94.10
- --------------------------------------------------------------------------------
6871041 SHIELD 1 2360.51
- --------------------------------------------------------------------------------
6871076-12 SPACER 1 34.38
- --------------------------------------------------------------------------------
6871076-4 SPACER 10 3.09
- --------------------------------------------------------------------------------
</TABLE>
38
<PAGE> 67
EXHIBIT A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MIN.
ORDER
PART NUMBER DESC. QTY 1999 LIST
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
6871076-6 SPACER 10 12.47
- --------------------------------------------------------------------------------
6871089 BUSHING 1 110.55
- --------------------------------------------------------------------------------
6871090 BUSHING 2 104.24
- --------------------------------------------------------------------------------
6871232 NOZZLE 1 219.19
- --------------------------------------------------------------------------------
6871234 TUBE 1 207.54
- --------------------------------------------------------------------------------
6871257 TUBE 1 210.59
- --------------------------------------------------------------------------------
6871259 TIEBOLT 1 751.20
- --------------------------------------------------------------------------------
6871311 TUBE 1 306.90
- --------------------------------------------------------------------------------
6871315 TUBE 1 402.31
- --------------------------------------------------------------------------------
6871318 SUPPORT 1 20754.91
- --------------------------------------------------------------------------------
6871461 TUBE 1 72.65
- --------------------------------------------------------------------------------
6871470 TUBE 1 143.88
- --------------------------------------------------------------------------------
6871473 TUBE 1 120.46
- --------------------------------------------------------------------------------
6871492 PLUG 1 301.88
- --------------------------------------------------------------------------------
6871504 WASHER 25 3.93
- --------------------------------------------------------------------------------
6871505 BEARING 1 612.11
- --------------------------------------------------------------------------------
6871533 PIN 10 11.13
- --------------------------------------------------------------------------------
6871533-1 PIN 2 44.28
- --------------------------------------------------------------------------------
6871533-2 PIN 2 42.18
- --------------------------------------------------------------------------------
6871533-3 PIN 2 43.85
- --------------------------------------------------------------------------------
6871533-4 PIN 2 47.17
- --------------------------------------------------------------------------------
6871534 PLUG 2 187.64
- --------------------------------------------------------------------------------
6871564 PLATE 1 37.91
- --------------------------------------------------------------------------------
6871604 BEARING 1 2587.81
- --------------------------------------------------------------------------------
6871658 WASHER 2 61.44
- --------------------------------------------------------------------------------
6871663 NOZZLE 1 223.90
- --------------------------------------------------------------------------------
6871784 GUIDE 1 62.49
- --------------------------------------------------------------------------------
6871937 TUBE 1 103.00
- --------------------------------------------------------------------------------
6872007-1 NOZZLE 1 94.36
- --------------------------------------------------------------------------------
6872007-2 NOZZLE 1 91.78
- --------------------------------------------------------------------------------
6872007-3 NOZZLE 1 91.78
- --------------------------------------------------------------------------------
6872007-4 NOZZLE 1 90.92
- --------------------------------------------------------------------------------
6872007-5 NOZZLE 1 80.02
- --------------------------------------------------------------------------------
6872007-6 NOZZLE 1 90.92
- --------------------------------------------------------------------------------
6872010 PISTON 5 67.12
- --------------------------------------------------------------------------------
6872018 BUSHING 2 38.84
- --------------------------------------------------------------------------------
6872020 DIAPHRAM 1 370.77
- --------------------------------------------------------------------------------
6873252 SHAFT 1 704.52
- --------------------------------------------------------------------------------
6873287 GOVERNOR 1 9111.75
- --------------------------------------------------------------------------------
6873482 CABLE 1 205.89
- --------------------------------------------------------------------------------
6873483 CABLE 1 164.52
- --------------------------------------------------------------------------------
6873833 KIT 1 52.59
- --------------------------------------------------------------------------------
6873835 KIT 1 20.94
- --------------------------------------------------------------------------------
6873836 KIT 15 5.24
- --------------------------------------------------------------------------------
6873837 KIT 1 95.81
- --------------------------------------------------------------------------------
</TABLE>
39
<PAGE> 68
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
6873838 KIT 15 6.05
- ------------------------------------------------------
6873857 BRACKET 2 37.03
- ------------------------------------------------------
6873858 BRACKET 5 44.69
- ------------------------------------------------------
6873860 BRACKET 1 74.47
- ------------------------------------------------------
6873861 BRACKET 2 227.30
- ------------------------------------------------------
6873862 BRACKET 2 180.54
- ------------------------------------------------------
6873916 BEARING 1 1919.52
- ------------------------------------------------------
6873949 SPACER 2 26.91
- ------------------------------------------------------
6874169 SEAL 1 1002.62
- ------------------------------------------------------
6874446 VANE 1 682.98
- ------------------------------------------------------
6874447 VANE 1 740.93
- ------------------------------------------------------
6874495 SHAFT 1 474.93
- ------------------------------------------------------
6874513 BUSHING 2 113.47
- ------------------------------------------------------
6874553 BRACKET 2 113.55
- ------------------------------------------------------
6874576 FILTER 1 546.11
- ------------------------------------------------------
6874672 TUBE 1 601.16
- ------------------------------------------------------
6874725 DIAPHRAG 1 151.00
- ------------------------------------------------------
6874727 SEAT 1 180.41
- ------------------------------------------------------
6874729 SPRING 2 40.73
- ------------------------------------------------------
6874751 BODY 1 636.48
- ------------------------------------------------------
6874752 SEAT 2 104.05
- ------------------------------------------------------
6874759 SHAFT 1 903.86
- ------------------------------------------------------
6874765 SHAFT 1 771.53
- ------------------------------------------------------
6874770 STOP 1 276.04
- ------------------------------------------------------
6874815 COVER 1 1313.89
- ------------------------------------------------------
6874816 VALVE 1 357.29
- ------------------------------------------------------
6874817 FILTER 2 45.37
- ------------------------------------------------------
6874818-1 NOZZLE 1 343.39
- ------------------------------------------------------
6874818-2 NOZZLE 1 343.39
- ------------------------------------------------------
6874818-3 NOZZLE 1 343.39
- ------------------------------------------------------
6874818-4 NOZZLE 1 343.39
- ------------------------------------------------------
6874818-5 NOZZLE 1 343.39
- ------------------------------------------------------
6874818-6 NOZZLE 1 343.39
- ------------------------------------------------------
6874818-7 NOZZLE 1 343.39
- ------------------------------------------------------
6874818-8 NOZZLE 1 343.39
- ------------------------------------------------------
6874818-9 NOZZLE 1 343.39
- ------------------------------------------------------
6874844 BRACKET 1 475.83
- ------------------------------------------------------
6874888 INSERT 1 629.59
- ------------------------------------------------------
6874924-0 ORIFICE 2 47.92
- ------------------------------------------------------
6874924-1 ORIFICE 1 62.90
- ------------------------------------------------------
6874924-10 ORIFICE 1 76.65
- ------------------------------------------------------
6874924-11 ORIFICE 1 70.42
- ------------------------------------------------------
6874924-12 ORIFICE 1 73.36
- ------------------------------------------------------
6874924-2 ORIFICE 1 55.27
- ------------------------------------------------------
6874924-3 ORIFICE 1 53.45
- ------------------------------------------------------
</TABLE>
40
<PAGE> 69
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
6874924-4 ORIFICE 1 54.10
- ------------------------------------------------------
6874924-5 ORIFICE 1 58.42
- ------------------------------------------------------
6874924-6 ORIFICE 1 55.60
- ------------------------------------------------------
6874924-7 ORIFICE 1 55.60
- ------------------------------------------------------
6874924-8 ORIFICE 1 70.42
- ------------------------------------------------------
6874924-9 ORIFICE 1 70.42
- ------------------------------------------------------
6874950 COVER 1 621.23
- ------------------------------------------------------
6874979 VALVE 1 2992.52
- ------------------------------------------------------
6875008 PIN 50 4.93
- ------------------------------------------------------
6875011-1 INSERT 1 84.06
- ------------------------------------------------------
6875011-2 INSERT 1 123.25
- ------------------------------------------------------
6875011-3 INSERT 10 76.65
- ------------------------------------------------------
6875012-1 INSERT 1 144.79
- ------------------------------------------------------
6875012-2 INSERT 1 235.33
- ------------------------------------------------------
6875012-3 INSERT 1 144.79
- ------------------------------------------------------
6875035 BEARING 1 963.02
- ------------------------------------------------------
6875069-1 FOLLOWER 1 475.89
- ------------------------------------------------------
6874069-2 FOLLOWER 1 475.89
- ------------------------------------------------------
6875087 ROD 1 574.52
- ------------------------------------------------------
6875087-1 ROD 2 145.64
- ------------------------------------------------------
6875089 BRACKET 1 255.99
- ------------------------------------------------------
6875090 BRACKET 1 366.27
- ------------------------------------------------------
6875093 POINTER 25 3.66
- ------------------------------------------------------
6875094 DECAL 10 6.15
- ------------------------------------------------------
6875098-68 JET 1 100.29
- ------------------------------------------------------
6875115 SHAFT 1 1431.59
- ------------------------------------------------------
6875147 ELBOW 1 973.81
- ------------------------------------------------------
6875224 ACCMLTR 1 521.60
- ------------------------------------------------------
6875248 INSERT 1 550.63
- ------------------------------------------------------
6875261 PLATE 1 373.10
- ------------------------------------------------------
6875510 PIN 15 4.96
- ------------------------------------------------------
6875589 COVER 1 2012.60
- ------------------------------------------------------
6875592 LEVER 1 646.68
- ------------------------------------------------------
6875593 LEVER 1 391.51
- ------------------------------------------------------
6875595 LEVER 1 675.29
- ------------------------------------------------------
6875596 LEVER 1 763.82
- ------------------------------------------------------
6875621 TUBE 1 147.72
- ------------------------------------------------------
6875622 TUBE 1 147.72
- ------------------------------------------------------
6875630 TUBE 1 186.17
- ------------------------------------------------------
6875631 TUBE 1 141.34
- ------------------------------------------------------
6875632 TUBE 1 132.39
- ------------------------------------------------------
6875633 TUBE 2 136.59
- ------------------------------------------------------
6875636 TUBE 1 211.53
- ------------------------------------------------------
6875637 TUBE 1 104.87
- ------------------------------------------------------
6875639 TUBE 1 78.58
- ------------------------------------------------------
</TABLE>
41
<PAGE> 70
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
6875641 TUBE 1 239.66
- ------------------------------------------------------
6875647 TUBE 1 157.45
- ------------------------------------------------------
6875663 FILTER 1 1072.88
- ------------------------------------------------------
6875708 GOVERNOR 1 18754.50
- ------------------------------------------------------
6875709 VALVE 1 1129.99
- ------------------------------------------------------
6875736 RING 4 21.19
- ------------------------------------------------------
6875741 PLATE 2 53.20
- ------------------------------------------------------
6875808 GEAR 1 1087.11
- ------------------------------------------------------
6875809 SHAFT 1 2826.17
- ------------------------------------------------------
6875999 TUBE 1 153.66
- ------------------------------------------------------
6876025 ELBOW 1 83.56
- ------------------------------------------------------
6876027-03 PACKING 1 3.73
- ------------------------------------------------------
6876028 BRACKET 5 20.03
- ------------------------------------------------------
6876030-1 STUD 1 198.74
- ------------------------------------------------------
6876030-2 STUD 1 240.60
- ------------------------------------------------------
6876030-3 STUD 1 240.60
- ------------------------------------------------------
6876030-4 STUD 1 230.25
- ------------------------------------------------------
6876030-5 STUD 1 236.52
- ------------------------------------------------------
6876034 BOLT 1 95.12
- ------------------------------------------------------
6876049 STUD 10 47.47
- ------------------------------------------------------
6876073 PLUG 1 267.32
- ------------------------------------------------------
6876097-01 BOLT 3 32.06
- ------------------------------------------------------
6876097-02 BOLT 5 31.67
- ------------------------------------------------------
6876100 ROD 1 601.84
- ------------------------------------------------------
6876100-1 ROD 2 145.64
- ------------------------------------------------------
6876204 TUBE 1 199.18
- ------------------------------------------------------
6876241 KIT 50 5.56
- ------------------------------------------------------
6876242 KIT 50 5.08
- ------------------------------------------------------
6876243 KIT 25 3.59
- ------------------------------------------------------
6876294 TUBE 1 128.51
- ------------------------------------------------------
6876315 DAMPER 1 338.98
- ------------------------------------------------------
6876333 TUBE 1 151.13
- ------------------------------------------------------
6876367 IMPELLER 1 16538.24
- ------------------------------------------------------
6876375 TUBE 1 157.59
- ------------------------------------------------------
6876376 TUBE 1 151.55
- ------------------------------------------------------
6876485 BRACKET 1 313.14
- ------------------------------------------------------
6876527 SPACER 2 36.92
- ------------------------------------------------------
6876528 GEAR 1 2875.31
- ------------------------------------------------------
6876529 GEAR 1 3420.35
- ------------------------------------------------------
6876542 TUBE 1 289.81
- ------------------------------------------------------
6876551 LEVER 1 407.78
- ------------------------------------------------------
6876553 ROD 1 380.32
- ------------------------------------------------------
6876554 ROD 1 227.25
- ------------------------------------------------------
6876557 VALVE 1 1633.68
- ------------------------------------------------------
6876617 VALVE 1 692.54
- ------------------------------------------------------
</TABLE>
42
<PAGE> 71
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
6876677 PLATE 10 11.81
- ------------------------------------------------------
6876685 BRACKET 1 292.17
- ------------------------------------------------------
6876689 PUMP 1 11945.29
- ------------------------------------------------------
6876739 PLATE 2 160.08
- ------------------------------------------------------
6876741 STUD 10 7.35
- ------------------------------------------------------
6876770 SEAL 1 1751.61
- ------------------------------------------------------
6876771 COVER 1 203.40
- ------------------------------------------------------
6876793 TUBE 1 145.54
- ------------------------------------------------------
6876814 THERMO 1 1885.98
- ------------------------------------------------------
6876834-1 SEAL 1 1133.20
- ------------------------------------------------------
6876834-2 SEAL 1 1133.20
- ------------------------------------------------------
6876872 SEAL 1 190.16
- ------------------------------------------------------
6876877 SLINGER 1 89.55
- ------------------------------------------------------
6876878 NUT 1 81.23
- ------------------------------------------------------
6876925 TUBE 1 320.99
- ------------------------------------------------------
6876941-1 CAGE 1 4719.92
- ------------------------------------------------------
6876941-3 CAGE 1 4719.92
- ------------------------------------------------------
6877060 TUBE 1 156.97
- ------------------------------------------------------
6877081 KEY 2 44.69
- ------------------------------------------------------
6877146 TUBE 1 470.48
- ------------------------------------------------------
6877237-1 STUD 1 272.17
- ------------------------------------------------------
6877237-3 STUD 1 347.07
- ------------------------------------------------------
6877259 BRACKET 5 18.39
- ------------------------------------------------------
6877276 BRACKET 2 171.46
- ------------------------------------------------------
6877277 TUBE 1 296.40
- ------------------------------------------------------
6877518 IGNITER 1 324.78
- ------------------------------------------------------
6877736-1 SEAL 1 1305.47
- ------------------------------------------------------
6877736-2 SEAL 1 1273.19
- ------------------------------------------------------
6877896 FITTING 2 193.97
- ------------------------------------------------------
6878426 NOZZLE 1 11854.93
- ------------------------------------------------------
6878447 SPRING 50 14.85
- ------------------------------------------------------
6878498 NOZZLE 1 7666.42
- ------------------------------------------------------
6879874 SUPPORT 1 28452.85
- ------------------------------------------------------
6879879 SUPPORT 1 20164.62
- ------------------------------------------------------
6879879-9 CLAMP 1 222.04
- ------------------------------------------------------
6879880E123C HOSE 1 156.41
- ------------------------------------------------------
6879880E16F 270 HOSE 1 301.27
- ------------------------------------------------------
6886116 CONTROL 1 14797.79
- ------------------------------------------------------
6886117 LEVER 1 545.26
- ------------------------------------------------------
6886126 SHAFT 1 4847.10
- ------------------------------------------------------
6886407 WHEEL 1 5817.34
- ------------------------------------------------------
6886430E062E 140 HOSE 1 201.58
- ------------------------------------------------------
6886430E070A HOSE 1 52.69
- ------------------------------------------------------
6886430E480F 106 HOSE 1 177.17
- ------------------------------------------------------
6886430G050B 000 HOSE 1 146.38
- ------------------------------------------------------
</TABLE>
43
<PAGE> 72
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
6886434 PIN 10 7.53
- ------------------------------------------------------
6886435 CUPWASHE 1 112.22
- ------------------------------------------------------
6886436 PIN 10 23.96
- ------------------------------------------------------
6886437 SPRING 5 73.76
- ------------------------------------------------------
6886446 SUPPORT 1 620.33
- ------------------------------------------------------
6886945 COVER 1 19251.91
- ------------------------------------------------------
6887089 WASHER 5 20.41
- ------------------------------------------------------
6887097 SCREW 5 13.60
- ------------------------------------------------------
6887099-3 STUD 10 24.27
- ------------------------------------------------------
6887121 TUBE 5 30.74
- ------------------------------------------------------
6887139 GEAR 1 418.02
- ------------------------------------------------------
6887160 TUBE 1 213.98
- ------------------------------------------------------
6887645 KIT 1 1843.85
- ------------------------------------------------------
6887761 THERMOCO 1 1886.73
- ------------------------------------------------------
6888529 GEAR 1 3577.00
- ------------------------------------------------------
6888602 SLINGER 1 108.50
- ------------------------------------------------------
6888621 PIN 25 2.63
- ------------------------------------------------------
6889054 WHEEL 1 7135.07
- ------------------------------------------------------
6889069 COUPLING 1 1516.94
- ------------------------------------------------------
6889093 BEARING 1 947.92
- ------------------------------------------------------
6889157 SHAFT 1 4624.25
- ------------------------------------------------------
6889158 SHAFT 1 3424.62
- ------------------------------------------------------
6889161 WASHER 15 6.50
- ------------------------------------------------------
6889162 WASHER 10 11.04
- ------------------------------------------------------
6889163 NUT 1 334.01
- ------------------------------------------------------
6889164 PISTON 1 1688.24
- ------------------------------------------------------
6889168 COVER 1 1046.63
- ------------------------------------------------------
6889169 BODY 1 3221.96
- ------------------------------------------------------
6889172-1 CAGE 1 278.09
- ------------------------------------------------------
6889172-2 CAGE 1 362.53
- ------------------------------------------------------
6889172-3 CAGE 1 336.64
- ------------------------------------------------------
6889173 TUBE 1 116.52
- ------------------------------------------------------
6889176 TUBE 1 97.63
- ------------------------------------------------------
6889177 TUBE 1 125.10
- ------------------------------------------------------
6889178 TUBE 1 105.44
- ------------------------------------------------------
6889182-1 CAGE 1 398.98
- ------------------------------------------------------
6889182-2 CAGE 1 419.91
- ------------------------------------------------------
6889182-3 CAGE 1 2443.25
- ------------------------------------------------------
6889191 SUPPORT 1 1677.59
- ------------------------------------------------------
6889193 JOURNAL 1 505.62
- ------------------------------------------------------
6889196 ADAPTER 1 642.96
- ------------------------------------------------------
6889197 RING 2 16.14
- ------------------------------------------------------
6889198 SPACER 2 147.24
- ------------------------------------------------------
5889199 COUPLING 1 432.71
- ------------------------------------------------------
6889300 SUPPORT 1 829.54
- ------------------------------------------------------
</TABLE>
44
<PAGE> 73
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
6889302 SHAFT 1 2840.12
- ------------------------------------------------------
6889314-1 CAGE 1 210.98
- ------------------------------------------------------
6889314-2 CAGE 1 320.89
- ------------------------------------------------------
6889314-3 CAGE 1 255.41
- ------------------------------------------------------
6889315-1 CAGE 1 365.56
- ------------------------------------------------------
6889315-2 CAGE 1 414.64
- ------------------------------------------------------
6889315-3 CAGE 1 356.68
- ------------------------------------------------------
6889316-1 CAGE 1 295.40
- ------------------------------------------------------
6889316-2 CAGE 1 299.55
- ------------------------------------------------------
6889316-3 CAGE 1 322.06
- ------------------------------------------------------
6889318 NUT 1 214.68
- ------------------------------------------------------
6889319 WASHER 1 340.14
- ------------------------------------------------------
6889326 BEARING 1 1339.51
- ------------------------------------------------------
6889336 BEARING 1 1161.33
- ------------------------------------------------------
6889337 BEARING 1 1758.64
- ------------------------------------------------------
6889351-1 STUD 2 31.23
- ------------------------------------------------------
6889351-2 STUD 1 27.41
- ------------------------------------------------------
6889351-3 STUD 3 81.04
- ------------------------------------------------------
6889351-4 STUD 2 27.66
- ------------------------------------------------------
6889351-5 STUD 2 38.87
- ------------------------------------------------------
6889700 GEAR 1 2309.81
- ------------------------------------------------------
6889735 BOLT 5 14.58
- ------------------------------------------------------
6889814 BODY 1 1437.61
- ------------------------------------------------------
6890027 PLATE 1 2658.95
- ------------------------------------------------------
6890029 PIN 1 85.05
- ------------------------------------------------------
6890035 RING 1 177.34
- ------------------------------------------------------
6890044 PLUG 1 54.29
- ------------------------------------------------------
6890470-3 NUT 5 9.15
- ------------------------------------------------------
6890530 SUPPORT 1 9500.43
- ------------------------------------------------------
6890574 TUBE 2 38.89
- ------------------------------------------------------
6890576 TUBE 1 177.83
- ------------------------------------------------------
6890578 TUBE 1 84.76
- ------------------------------------------------------
6890580 TUBE 1 87.96
- ------------------------------------------------------
6890581 TUBE 1 92.67
- ------------------------------------------------------
6890583 TUBE 1 102.20
- ------------------------------------------------------
6890584 TUBE 1 84.17
- ------------------------------------------------------
6890586 TUBE 1 102.17
- ------------------------------------------------------
6890909-66 JET 2 154.47
- ------------------------------------------------------
6890917 NOZZLE 1 2172.73
- ------------------------------------------------------
6891586 TEE 1 143.51
- ------------------------------------------------------
6891606 GEAR 1 382.61
- ------------------------------------------------------
6891633 TUBE 1 107.42
- ------------------------------------------------------
6891634 TUBE 1 137.25
- ------------------------------------------------------
6891639 BRACKET 1 496.25
- ------------------------------------------------------
6891640 RING 1 105.73
- ------------------------------------------------------
</TABLE>
45
<PAGE> 74
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
6891963 LEAD 1 820.64
- ------------------------------------------------------
6891965 ELEMENT 1 192.24
- ------------------------------------------------------
6891966 HOUSING 1 858.45
- ------------------------------------------------------
6891967 SEAL 1 103.13
- ------------------------------------------------------
6891980-250 TUBING 1 3153.66
- ------------------------------------------------------
6892069-1 BUSHING 2 24.44
- ------------------------------------------------------
6892069-2 BUSHING 1 24.44
- ------------------------------------------------------
6892069-3 BUSHING 10 29.19
- ------------------------------------------------------
6892070 HOUSING 1 2773.30
- ------------------------------------------------------
6892071 BODY 1 1651.51
- ------------------------------------------------------
6892073 RING 2 110.80
- ------------------------------------------------------
6892074 RING 1 80.75
- ------------------------------------------------------
6892099 SHIELD 1 220.58
- ------------------------------------------------------
6892285 SHAFT 1 4305.78
- ------------------------------------------------------
6892287-1 CAGE 1 160.72
- ------------------------------------------------------
6892287-2 CAGE 1 189.33
- ------------------------------------------------------
6892287-3 CAGE 1 162.24
- ------------------------------------------------------
6892313 BRACKET 5 20.16
- ------------------------------------------------------
6892314 BRACKET 5 17.60
- ------------------------------------------------------
6892780 DIAPHRAG 1 180.78
- ------------------------------------------------------
6892823 RING 1 76.49
- ------------------------------------------------------
6892824 MOUNT 1 1453.75
- ------------------------------------------------------
6892826 FITTING 1 314.45
- ------------------------------------------------------
6892832 SHIELD 1 4457.05
- ------------------------------------------------------
6892836 TUBE 1 200.44
- ------------------------------------------------------
6892838 RING 1 135.76
- ------------------------------------------------------
6892846 TUBE 1 122.66
- ------------------------------------------------------
6893002 BEARING 1 1882.84
- ------------------------------------------------------
6893008 SLINGER 1 184.38
- ------------------------------------------------------
6893011 KEY 1 128.56
- ------------------------------------------------------
6893014 TUBE 1 106.94
- ------------------------------------------------------
6893015-1 ORIFICE 1 161.59
- ------------------------------------------------------
6893015-1.5 ORIFICE 1 172.86
- ------------------------------------------------------
6893015-2 ORIFICE 1 182.59
- ------------------------------------------------------
6893015-2.5 ORIFICE 1 167.87
- ------------------------------------------------------
6893015-3 ORIFICE 1 170.47
- ------------------------------------------------------
6893015-3.5 ORIFICE 1 163.85
- ------------------------------------------------------
6893015-4 ORIFICE 1 164.83
- ------------------------------------------------------
6893015-4.5 ORIFICE 1 169.47
- ------------------------------------------------------
6893015-5 ORIFICE 1 173.89
- ------------------------------------------------------
6893029 SUMP 1 1109.02
- ------------------------------------------------------
6893031 SEAL 1 363.06
- ------------------------------------------------------
6893071 RING 5 58.39
- ------------------------------------------------------
6893072 TUBE 1 140.92
- ------------------------------------------------------
6893073 TUBE 1 134.37
- ------------------------------------------------------
</TABLE>
46
<PAGE> 75
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
6893478 SPRING 1 56.62
- ------------------------------------------------------
6893479 PISTON 1 325.49
- ------------------------------------------------------
6893481 PLATE 1 263.54
- ------------------------------------------------------
6893483 BELLOWS 1 743.72
- ------------------------------------------------------
6893484 SPRING 10 28.50
- ------------------------------------------------------
6893485 SCREW 1 376.20
- ------------------------------------------------------
6893488 DAMPENER 1 170.12
- ------------------------------------------------------
6893614 NUT 1 245.03
- ------------------------------------------------------
6893617 HOUSING 1 1679.60
- ------------------------------------------------------
6893626 TUBE 1 130.86
- ------------------------------------------------------
6893627 TUBE 1 274.51
- ------------------------------------------------------
6893628 TUBE 1 81.55
- ------------------------------------------------------
6893634 SPACER 2 24.55
- ------------------------------------------------------
6893636 BRACKET 1 95.84
- ------------------------------------------------------
6893647 SEAL 1 1581.98
- ------------------------------------------------------
6893648 ADAPTER 1 551.10
- ------------------------------------------------------
6893650 TUBE 1 92.93
- ------------------------------------------------------
6893657 BODY 1 2098.96
- ------------------------------------------------------
6893658 GEAR 1 409.83
- ------------------------------------------------------
6893659 GEAR 1 586.50
- ------------------------------------------------------
6893662 SHAFT 1 1951.03
- ------------------------------------------------------
6893663 TUBE 1 151.66
- ------------------------------------------------------
6893665 POPPET 1 311.91
- ------------------------------------------------------
6893672 GEAR 1 2809.46
- ------------------------------------------------------
6893673 SHAFT 1 7950.63
- ------------------------------------------------------
6893676 DEFLECTO 2 167.96
- ------------------------------------------------------
6894058 RETAINER 1 215.84
- ------------------------------------------------------
6894075 BRACKET 1 89.39
- ------------------------------------------------------
6894104 PANEL 1 109.68
- ------------------------------------------------------
6894106 TUBE 1 132.42
- ------------------------------------------------------
6894110 KIT 1 1290.62
- ------------------------------------------------------
6894123 KIT 1 369.56
- ------------------------------------------------------
6894137 COVER 1 89.53
- ------------------------------------------------------
6894196-1 PIN 1 58.58
- ------------------------------------------------------
6894196-2 PIN 5 72.55
- ------------------------------------------------------
6894196-3 PIN 5 69.19
- ------------------------------------------------------
6894196-4 PIN 5 58.81
- ------------------------------------------------------
6894196-5 PIN 5 58.81
- ------------------------------------------------------
6894627 COUNTER 1 912.56
- ------------------------------------------------------
6895007 BEARING 1 2459.56
- ------------------------------------------------------
6895011 BRACKET 2 33.62
- ------------------------------------------------------
6895012 BRACKET 1 44.19
- ------------------------------------------------------
6805028 KIT 1 78.95
- ------------------------------------------------------
6895029 KIT 1 113.30
- ------------------------------------------------------
6895053 ROD 1 362.43
- ------------------------------------------------------
</TABLE>
47
<PAGE> 76
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
6895054 BAFFLE 5 10.93
- ------------------------------------------------------
6895090 HOUSING 1 2650.99
- ------------------------------------------------------
6895094 STANDPIP 1 128.99
- ------------------------------------------------------
6895096 CAP 1 563.92
- ------------------------------------------------------
6895097 INDICATO 1 699.02
- ------------------------------------------------------
6895171 VALVE 1 785.14
- ------------------------------------------------------
6895150 GUIDE 1 340.21
- ------------------------------------------------------
6895183 BODY 1 2416.47
- ------------------------------------------------------
6895551 SPRING 1 101.26
- ------------------------------------------------------
6895801 WHEEL 1 10015.47
- ------------------------------------------------------
6895807 SLEEVE 1 1196.15
- ------------------------------------------------------
6895832 TUBE 1 209.56
- ------------------------------------------------------
6895845 BODY 1 1695.66
- ------------------------------------------------------
6895846 HOUSING 1 2755.51
- ------------------------------------------------------
6896004 NOZZLE 1 10452.91
- ------------------------------------------------------
6896011 SUPPORT 1 19191.11
- ------------------------------------------------------
6896023 TUBE 1 1727.28
- ------------------------------------------------------
6896024 NOZZLE 1 786.21
- ------------------------------------------------------
6896080 TUBE 1 155.22
- ------------------------------------------------------
6896081 TUBE 1 157.90
- ------------------------------------------------------
6896096 GASKET 2 13.34
- ------------------------------------------------------
6896097 PLATE 1 67.53
- ------------------------------------------------------
6896098 SEAL 1 233.80
- ------------------------------------------------------
6896194 SEAT 1 315.89
- ------------------------------------------------------
6896301 PLUG 1 155.99
- ------------------------------------------------------
6896303 JUMPER 1 52.24
- ------------------------------------------------------
6896305 COVER 1 12.38
- ------------------------------------------------------
6896402 ROD 1 785.95
- ------------------------------------------------------
6896407 SUPPORT 1 13666.40
- ------------------------------------------------------
6896408 NUT 1 456.12
- ------------------------------------------------------
6896437 SHAFT 1 3163.07
- ------------------------------------------------------
6896449 TUBE 1 131.29
- ------------------------------------------------------
6896451 TUBE 1 131.29
- ------------------------------------------------------
6896482 PLUG 1 544.88
- ------------------------------------------------------
6896483-1 INSERT 1 212.91
- ------------------------------------------------------
6896483-2 INSERT 1 294.10
- ------------------------------------------------------
6896483-3 INSERT 1 279.90
- ------------------------------------------------------
6896810 PUMP 1 21158.90
- ------------------------------------------------------
6896822 PUMP 1 8110.71
- ------------------------------------------------------
6896875 NUT 1 743.46
- ------------------------------------------------------
6897953-9 COVER 100 0.36
- ------------------------------------------------------
6898507 PISTON 1 163.38
- ------------------------------------------------------
6898508 PLATE 1 170.41
- ------------------------------------------------------
6898558 SUPPORT 1 533.95
- ------------------------------------------------------
6898560 TUBE 1 150.11
- ------------------------------------------------------
</TABLE>
48
<PAGE> 77
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
6898576 FIREWALL 1 716.18
- ------------------------------------------------------
6898577-1 BUSHING 1 267.50
- ------------------------------------------------------
6898577-2 BUSHING 1 281.64
- ------------------------------------------------------
6898577-3 BUSHING 1 303.31
- ------------------------------------------------------
6898598 COVER 1 203.00
- ------------------------------------------------------
6898604 SKIN AS 1 238.35
- ------------------------------------------------------
6898605 DOUBLER 1 136.67
- ------------------------------------------------------
6898606 BEARING 1 1831.26
- ------------------------------------------------------
6898607 BEARING 1 478.68
- ------------------------------------------------------
6898613 BRACKET 2 45.51
- ------------------------------------------------------
6898622 TUBE 1 149.77
- ------------------------------------------------------
6898623 TUBE 1 166.37
- ------------------------------------------------------
6898628 PIN 25 9.03
- ------------------------------------------------------
6898639 TUBE 1 152.95
- ------------------------------------------------------
6898641 HOSE 1 252.93
- ------------------------------------------------------
6898642 SHAFT 1 3893.87
- ------------------------------------------------------
6898643 KIT 1 1279.27
- ------------------------------------------------------
6898645 RIVET 50 4.32
- ------------------------------------------------------
6898661 CAP 1 273.29
- ------------------------------------------------------
6898663 WHEEL 1 8918.52
- ------------------------------------------------------
6898677 SPACER 1 70.66
- ------------------------------------------------------
6898707 SCREEN 5 48.10
- ------------------------------------------------------
6898726 BRACKET 1 497.70
- ------------------------------------------------------
6898732 BRACKET 1 445.46
- ------------------------------------------------------
6898748 SEAL 1 45.65
- ------------------------------------------------------
6898761 ELBOW 1 324.77
- ------------------------------------------------------
6898764 SEAL ASY 1 853.09
- ------------------------------------------------------
6898769 MANIFOLD 1 1993.91
- ------------------------------------------------------
6898770 SEAL 2 94.76
- ------------------------------------------------------
6898779 NOZZLE 1 139.05
- ------------------------------------------------------
6898782 WHEEL 1 6842.30
- ------------------------------------------------------
6898784 ADAPTER 1 1122.05
- ------------------------------------------------------
6898808 TUBE 1 218.55
- ------------------------------------------------------
6898809 GUIDE 5 42.72
- ------------------------------------------------------
6898810 BODY 1 376.50
- ------------------------------------------------------
6898811 VALVE 1 571.94
- ------------------------------------------------------
6898824 MANIFOLD 1 2040.22
- ------------------------------------------------------
6898825 TUBE 1 344.07
- ------------------------------------------------------
6898826 GEAR 1 7694.65
- ------------------------------------------------------
6898827 GEAR 1 2762.75
- ------------------------------------------------------
6898829 GEAR 1 4374.31
- ------------------------------------------------------
6898830 RING 15 6.78
- ------------------------------------------------------
6898835 SHAFT 1 4875.31
- ------------------------------------------------------
6898836 BODY 1 322.14
- ------------------------------------------------------
6898840 VALVE 1 626.86
- ------------------------------------------------------
</TABLE>
49
<PAGE> 78
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
6898847 TUBE 1 109.74
- ------------------------------------------------------
6898920 SHIELD 1 2685.97
- ------------------------------------------------------
6898933 BRACKET 1 89.63
- ------------------------------------------------------
6898936 TUBE 1 142.35
- ------------------------------------------------------
6898937 BRACKET 1 588.49
- ------------------------------------------------------
6898945 COVER 1 826.70
- ------------------------------------------------------
6898947 ELEMENT 1 281.35
- ------------------------------------------------------
6898958 NOZZLE 1 191.98
- ------------------------------------------------------
6898972 TEE 1 399.55
- ------------------------------------------------------
6898976 TEE 1 432.07
- ------------------------------------------------------
6898977 COUPLING 1 869.73
- ------------------------------------------------------
6898979 TUBE 1 482.61
- ------------------------------------------------------
6898981 SHAFT 1 2881.71
- ------------------------------------------------------
6898986 RESTRICT 1 142.71
- ------------------------------------------------------
6899001 INJECTOR 1 2355.36
- ------------------------------------------------------
6899019 VALVE 1 190.57
- ------------------------------------------------------
6899023 TEE 1 149.84
- ------------------------------------------------------
6899025 BODY 1 867.98
- ------------------------------------------------------
6899027 SPRING 5 122.57
- ------------------------------------------------------
6899049 BUSHING 1 188.23
- ------------------------------------------------------
6899050 VALVE 1 597.51
- ------------------------------------------------------
6899051 VALVE 1 473.33
- ------------------------------------------------------
6899059 BODY 1 837.51
- ------------------------------------------------------
6899061 PISTON 1 440.51
- ------------------------------------------------------
6899074 SEAT 1 326.21
- ------------------------------------------------------
6899076 COVER 1 1530.65
- ------------------------------------------------------
6899078 PLATE 1 765.79
- ------------------------------------------------------
6899079 CLAMP 1 510.48
- ------------------------------------------------------
6899080 VALVE 1 1866.91
- ------------------------------------------------------
6899081 LINER 1 10085.14
- ------------------------------------------------------
6899084 IGNITER 1 277.84
- ------------------------------------------------------
6899093 EXCITER 1 4006.31
- ------------------------------------------------------
6899124 BRACKET 1 384.80
- ------------------------------------------------------
6899141 HARNESS 1 6403.85
- ------------------------------------------------------
6898143 SWITCH 1 1037.05
- ------------------------------------------------------
6899149 BRACKET 1 237.08
- ------------------------------------------------------
6899154 TUBE 1 178.98
- ------------------------------------------------------
6899162 KIT 1 128.89
- ------------------------------------------------------
6899165 TUBE 1 149.28
- ------------------------------------------------------
6899166-5 BRACKET 1 19.54
- ------------------------------------------------------
6899168 RETAINER 1 681.91
- ------------------------------------------------------
6899170 SUPPORT 1 16241.05
- ------------------------------------------------------
6899180 BRACKET 5 20.42
- ------------------------------------------------------
6899185 TUBE 1 254.46
- ------------------------------------------------------
6899191 TUBE 1 361.83
- ------------------------------------------------------
</TABLE>
50
<PAGE> 79
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
6899208 TUBE 1 114.20
- ------------------------------------------------------
6899215 DOUBLER 1 241.89
- ------------------------------------------------------
6899216 DOUBLER 1 192.73
- ------------------------------------------------------
6899217 BRACKET 2 8.29
- ------------------------------------------------------
6899218 GEAR 1 4010.59
- ------------------------------------------------------
6899219 COUPLING 1 3747.08
- ------------------------------------------------------
6899227 HOUSING 1 6565.32
- ------------------------------------------------------
6899233 TUBE 1 263.62
- ------------------------------------------------------
6899238 BRACKET 1 163.19
- ------------------------------------------------------
6899246 HOUSING 1 3116.51
- ------------------------------------------------------
6899249 TUBE 1 142.99
- ------------------------------------------------------
6899279 FILTER 1 4249.46
- ------------------------------------------------------
6899282-1 ORIFICE 1 250.95
- ------------------------------------------------------
6899282-10 ORIFICE 1 242.95
- ------------------------------------------------------
6899282-11 ORIFICE 1 245.26
- ------------------------------------------------------
6899282-13 ORIFICE 1 242.95
- ------------------------------------------------------
6899282-16 ORIFICE 1 242.95
- ------------------------------------------------------
6899282-17 ORIFICE 1 245.26
- ------------------------------------------------------
6899282-18 ORIFICE 1 245.26
- ------------------------------------------------------
6899282-19 ORIFICE 1 245.26
- ------------------------------------------------------
6899282-2 ORIFICE 1 244.87
- ------------------------------------------------------
6899282-20 ORIFICE 1 242.25
- ------------------------------------------------------
6899282-21 ORIFICE 1 242.25
- ------------------------------------------------------
6899282-22 ORIFICE 1 242.25
- ------------------------------------------------------
6899282-23 ORIFICE 1 242.25
- ------------------------------------------------------
6899282-24 ORIFICE 1 242.25
- ------------------------------------------------------
6899282-25 ORIFICE 1 239.98
- ------------------------------------------------------
6899282-26 ORIFICE 1 242.25
- ------------------------------------------------------
6899282-27 ORIFICE 1 242.25
- ------------------------------------------------------
6899282-28 ORIFICE 1 242.25
- ------------------------------------------------------
6899282-29 ORIFICE 1 245.26
- ------------------------------------------------------
6899282-3 ORIFICE 1 235.92
- ------------------------------------------------------
6899282-30 ORIFICE 1 239.98
- ------------------------------------------------------
6899282-31 ORIFICE 1 239.98
- ------------------------------------------------------
6899282-32 ORIFICE 1 245.26
- ------------------------------------------------------
6899282-33 ORIFICE 1 239.98
- ------------------------------------------------------
6899282-34 ORIFICE 1 245.26
- ------------------------------------------------------
6899282-35 ORIFICE 1 245.26
- ------------------------------------------------------
6899282-36 ORIFICE 1 245.26
- ------------------------------------------------------
6899282-37 ORIFICE 1 242.95
- ------------------------------------------------------
6899282-38 ORIFICE 1 245.26
- ------------------------------------------------------
6899282-39 ORIFICE 1 245.26
- ------------------------------------------------------
6899282-4 ORIFICE 1 244.87
- ------------------------------------------------------
6899282-5 ORIFICE 1 244.87
- ------------------------------------------------------
6899282-6 ORIFICE 1 239.98
- ------------------------------------------------------
</TABLE>
51
<PAGE> 80
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
6899282-8 ORIFICE 1 239.98
- ------------------------------------------------------
6899282-9 ORIFICE 1 239.98
- ------------------------------------------------------
6899310 BRACKET 1 163.34
- ------------------------------------------------------
6899311 SWITCH 1 1074.56
- ------------------------------------------------------
6899312 SWITCH 1 376.06
- ------------------------------------------------------
6899318 VALVE 1 930.80
- ------------------------------------------------------
6899382 MOUNT 1 1542.08
- ------------------------------------------------------
6899383 WHEEL 1 8107.36
- ------------------------------------------------------
6899388 BLOWER 1 47851.25
- ------------------------------------------------------
6899391 VANE 1 353.63
- ------------------------------------------------------
6899392 VANE 1 406.74
- ------------------------------------------------------
6899393 VANE 1 407.52
- ------------------------------------------------------
6899394 VANE 1 422.44
- ------------------------------------------------------
6899395 VANE 1 460.16
- ------------------------------------------------------
6899396 VANE 1 392.17
- ------------------------------------------------------
6899402 GEARSHAF 1 5941.76
- ------------------------------------------------------
6899403 TUBE 1 114.04
- ------------------------------------------------------
6899407 CAP 1 275.13
- ------------------------------------------------------
6899409 OUTER 1 3104.17
- ------------------------------------------------------
6899410 MOUNT 1 1391.02
- ------------------------------------------------------
6899439 KIT 1 426.86
- ------------------------------------------------------
6899443 COVER 1 29.07
- ------------------------------------------------------
6899444 COVER 1 58.25
- ------------------------------------------------------
7592471-101 FILTER 1 1 984.31
- ------------------------------------------------------
7592560-001 BYPASS S 1 71.46
- ------------------------------------------------------
7592836-001 POPPETT 1 88.12
- ------------------------------------------------------
7592842-101 LUBE IND 1 940.21
- ------------------------------------------------------
7592843-001 LUBE BOW 1 551.91
- ------------------------------------------------------
7592844-001 FUEL BOW 1 652.26
- ------------------------------------------------------
7593183-001 ID PLATE 1 16.35
- ------------------------------------------------------
7593315-001 PORT ADA 1 538.37
- ------------------------------------------------------
9005-146-70 SEAL 5 10.88
- ------------------------------------------------------
AN100036 COVER 1 121.52
- ------------------------------------------------------
AN101008 BOLT 50 0.82
- ------------------------------------------------------
AN101009 BOLT 25 1.14
- ------------------------------------------------------
AN101010 BOLT 10 2.19
- ------------------------------------------------------
AN101011 BOLT 10 1.80
- ------------------------------------------------------
AN101013 BOLT 25 3.47
- ------------------------------------------------------
AN101016 BOLT 25 2.26
- ------------------------------------------------------
AN101020 BOLT 2 5.68
- ------------------------------------------------------
AN102807 BOLT 15 6.08
- ------------------------------------------------------
AN103706 BOLT 15 4.43
- ------------------------------------------------------
AN104607 BOLT 50 1.66
- ------------------------------------------------------
AN104624 BOLT 10 9.86
- ------------------------------------------------------
AN16965 BOLT 50 1.33
- ------------------------------------------------------
</TABLE>
52
<PAGE> 81
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
AN122578 WASHER 100 0.64
- ------------------------------------------------------
AN122582 WASHER 25 0.43
- ------------------------------------------------------
AN122683 PIN 5 0.38
- ------------------------------------------------------
AN122717 PIN 50 1.86
- ------------------------------------------------------
AN123324 RIVET 10 1.28
- ------------------------------------------------------
AN123471 RIVET 50 0.25
- ------------------------------------------------------
AN123480 RIVET 25 1.94
- ------------------------------------------------------
AN150208 PIN 50 0.42
- ------------------------------------------------------
AN151005 STUD 15 5.16
- ------------------------------------------------------
AN151006 STUD 15 4.02
- ------------------------------------------------------
AN151007 STUD 15 26.08
- ------------------------------------------------------
AN151008 STUD 5 15.46
- ------------------------------------------------------
AN315C4L NUT 10 8.74
- ------------------------------------------------------
AN505C8-4 SCREW 4 1.19
- ------------------------------------------------------
AN804J4 TEE 1 65.18
- ------------------------------------------------------
AN814-4DL PLUG 10 4.58
- ------------------------------------------------------
AN815-4J UNION 2 23.83
- ------------------------------------------------------
AN815-6J UNION 2 38.91
- ------------------------------------------------------
AN815-8J UNION 2 28.56
- ------------------------------------------------------
AN821-4J ELBOW 1 30.99
- ------------------------------------------------------
AN832-4J UNION 2 30.55
- ------------------------------------------------------
AN832-6J UNION 1 39.81
- ------------------------------------------------------
AN833-4D ELBOW 1 19.25
- ------------------------------------------------------
AN833-4J ELBOW 2 49.43
- ------------------------------------------------------
AN833-6J ELBOW 1 89.25
- ------------------------------------------------------
AN833-8J ELBOW 1 103.64
- ------------------------------------------------------
AN919-1J REDUCER 3 13.49
- ------------------------------------------------------
AN919-2J REDUCER 1 35.46
- ------------------------------------------------------
AN919-3J REDUCER 5 15.74
- ------------------------------------------------------
AN924-4D NUT 1 0.60
- ------------------------------------------------------
AN924-4J NUT 10 4.79
- ------------------------------------------------------
AN924-5J NUT 10 7.26
- ------------------------------------------------------
AN924-6J NUT 5 8.80
- ------------------------------------------------------
AN924-6S NUT 1 8.18
- ------------------------------------------------------
AN924-8J NUT 5 9.92
- ------------------------------------------------------
AN924-8S NUT 5 16.74
- ------------------------------------------------------
AN929-2J CAP 10 10.42
- ------------------------------------------------------
AN929-4J CAP 1 8.33
- ------------------------------------------------------
AN929-4S CAP 5 10.69
- ------------------------------------------------------
AN929-6J CAP 2 4.71
- ------------------------------------------------------
AN960-10L WASHER 100 0.02
- ------------------------------------------------------
AN960-416 WASHER 100 0.18
- ------------------------------------------------------
AN960-516 WASHER 100 0.05
- ------------------------------------------------------
AN960-8L WASHER 100 0.02
- ------------------------------------------------------
AN960C10 WASHER 100 0.03
- ------------------------------------------------------
</TABLE>
53
<PAGE> 82
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
AN960C10L WASHER 100 0.05
- ------------------------------------------------------
AN960C1216L WASHER 100 0.31
- ------------------------------------------------------
AN960C3L WASHER 1 0.10
- ------------------------------------------------------
AN960C4 WASHER 5 72.92
- ------------------------------------------------------
AN960C416 WASHER 100 0.06
- ------------------------------------------------------
AN960C416L WASHER 100 0.03
- ------------------------------------------------------
AN960C516 WASHER 25 0.56
- ------------------------------------------------------
AN960C516L WASHER 25 0.40
- ------------------------------------------------------
AN960C616 WASHER 50 0.09
- ------------------------------------------------------
AN960C616L WASHER 50 0.41
- ------------------------------------------------------
AN960C716 WASHER 5 0.26
- ------------------------------------------------------
AN960C8 WASHER 10 0.05
- ------------------------------------------------------
AS1985-04 ADAPTER 1 92.34
- ------------------------------------------------------
AS1986-06 ADAPTER 1 61.92
- ------------------------------------------------------
AS1986-08 ADAPTER 1 94.13
- ------------------------------------------------------
AS3066-10 NUT 10 2.02
- ------------------------------------------------------
AS3066-12 NUT 1 2.60
- ------------------------------------------------------
AS3067-09 NUT 15 1.91
- ------------------------------------------------------
AS3084-07 PACKING 1 1.85
- ------------------------------------------------------
AS3084-10 PACKING 1 3.14
- ------------------------------------------------------
AS3084-12 PACKING 1 1.83
- ------------------------------------------------------
AS3084-16 PACKING 3 9.88
- ------------------------------------------------------
AS3085-004 PACKING 10 0.17
- ------------------------------------------------------
AS3085-009 PACKING 1 2.70
- ------------------------------------------------------
AS3085-010 PACKING 1 1.23
- ------------------------------------------------------
AS3085-012 PACKING 1 1.23
- ------------------------------------------------------
AS3085-013 PACKING 1 1.45
- ------------------------------------------------------
AS3085-014 PACKING 1 1.24
- ------------------------------------------------------
AS3085-021 PACKING 1 0.33
- ------------------------------------------------------
AS3085-027 PACKING 1 4.38
- ------------------------------------------------------
AS3085-029 PACKING 1 2.22
- ------------------------------------------------------
AS3085-043 PACKING 1 0.76
- ------------------------------------------------------
AS3085-044 PACKING 10 4.14
- ------------------------------------------------------
AS3085-048 PACKING 1 2.40
- ------------------------------------------------------
AS3085-05 0 RING 1 0.24
- ------------------------------------------------------
AS3085-108 PACKING 15 0.85
- ------------------------------------------------------
AS3085-109 PACKING 1 0.37
- ------------------------------------------------------
AS3085-110 PACKING 1 1.49
- ------------------------------------------------------
AS3085-111 PACKING 1 2.43
- ------------------------------------------------------
AS3085-112 PACKING 1 1.83
- ------------------------------------------------------
AS3085-115 PACKING 15 1.74
- ------------------------------------------------------
AS3085-116 PACKING 1 2.14
- ------------------------------------------------------
AS3085-118 PACKING 1 1.99
- ------------------------------------------------------
AS3085-119 PACKING 1 2.18
- ------------------------------------------------------
AS3085-123 PACKING 1 2.64
- ------------------------------------------------------
</TABLE>
54
<PAGE> 83
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
AS3085-124 PACKING 1 4.36
- ------------------------------------------------------
AS3085-127 PACKING 1 5.66
- ------------------------------------------------------
AS3085-130 PACKING 1 3.96
- ------------------------------------------------------
AS3085-133 PACKING 1 11.78
- ------------------------------------------------------
AS3085-138 PACKING 10 3.99
- ------------------------------------------------------
AS3085-140 PACKING 1 5.00
- ------------------------------------------------------
AS3085-147 PACKING 1 2.51
- ------------------------------------------------------
AS3085-151 PACKING 1 10.54
- ------------------------------------------------------
AS3085-152 PACKING 1 5.27
- ------------------------------------------------------
AS3085-153 PACKING 1 17.93
- ------------------------------------------------------
AS3085-154 PACKING 1 10.54
- ------------------------------------------------------
AS3085-156 PACKING 1 2.29
- ------------------------------------------------------
AS3085-157 PACKING 1 2.45
- ------------------------------------------------------
AS3085-159 PACKING 1 16.90
- ------------------------------------------------------
AS3085-160 PACKING 1 5.11
- ------------------------------------------------------
AS3085-214 PACKING 1 4.17
- ------------------------------------------------------
AS3085-223 PACKING 1 1.96
- ------------------------------------------------------
AS3085-239 PACKING 1 14.61
- ------------------------------------------------------
AS3085-241 PACKING 1 2.40
- ------------------------------------------------------
AS3085-252 PACKING 1 22.87
- ------------------------------------------------------
AS3085-255 PACKING 1 10.24
- ------------------------------------------------------
AS3123-07 PLUG 1 22.34
- ------------------------------------------------------
AS3124-07 PIN 2 1.66
- ------------------------------------------------------
AS3125-03 PLUG 5 4.35
- ------------------------------------------------------
AS3126-03 PIN 1 1.76
- ------------------------------------------------------
AS3131-09 PLUG 3 45.14
- ------------------------------------------------------
AS3132-09 PIN 3 10.64
- ------------------------------------------------------
AS3208-04 PACKING 1 0.82
- ------------------------------------------------------
AS3208-08 PACKING 10 0.49
- ------------------------------------------------------
AS3209-010 PACKING 1 0.38
- ------------------------------------------------------
AS3209-014 O-RING 1 0.18
- ------------------------------------------------------
AS3209-114 PACKING 1 0.60
- ------------------------------------------------------
AS3209-127 PACKING 1 0.99
- ------------------------------------------------------
AS3209-133 PACKING 1 0.99
- ------------------------------------------------------
AS3209-138 PACKING 1 0.99
- ------------------------------------------------------
AS3209-152 PACKING 1 4.08
- ------------------------------------------------------
AS3209-153 O-RING 1 1.74
- ------------------------------------------------------
AS3209-154 O-RING 1 2.29
- ------------------------------------------------------
AS3209-158 PACKING 1 6.91
- ------------------------------------------------------
AS3209-174 PACKING 1 0.99
- ------------------------------------------------------
AS3209-255 PACKING 1 0.99
- ------------------------------------------------------
AS3217-138 RING 5 0.99
- ------------------------------------------------------
AS3217-143 RETAINER 5 16.78
- ------------------------------------------------------
AS3217-163 RING 2 13.27
- ------------------------------------------------------
AS3217-189 RING 1 31.38
- ------------------------------------------------------
</TABLE>
55
<PAGE> 84
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
AS3217-201 RING 1 16.79
- ------------------------------------------------------
AS3217-212 RING 1 7.47
- ------------------------------------------------------
AS3217-216 RING 2 6.04
- ------------------------------------------------------
AS3221 COVER 1 48.62
- ------------------------------------------------------
AS3222 COVER 1 86.26
- ------------------------------------------------------
AS3237-14 BOLT 20 7.84
- ------------------------------------------------------
AS3397-09 NUT 5 1.25
- ------------------------------------------------------
AS3397-10 NUT 15 1.97
- ------------------------------------------------------
AS3397-11 NUT 20 1.22
- ------------------------------------------------------
AS3477-10 NUT 2 41.25
- ------------------------------------------------------
AS3483-03 NUT 6 13.09
- ------------------------------------------------------
AS3563-11 NUT 1 2.45
- ------------------------------------------------------
MS122029 WASHER 25 0.39
- ------------------------------------------------------
MS122910 CLAMP 5 10.81
- ------------------------------------------------------
MS122911 CLAMP 5 10.82
- ------------------------------------------------------
MS124658 HELICOIL 20 1.38
- ------------------------------------------------------
MS16625-4037 RING 25 3.45
- ------------------------------------------------------
MS16625-4112 RING 10 7.73
- ------------------------------------------------------
MS16625-4165 RING 2 14.05
- ------------------------------------------------------
MS20995C20 WIRE 1 28.14
- ------------------------------------------------------
MS20995C32 WIRE 1 25.62
- ------------------------------------------------------
MS21043-04 NUT 10 8.05
- ------------------------------------------------------
MS21043-06 NUT 25 3.63
- ------------------------------------------------------
MS21043-3 NUT 25 2.79
- ------------------------------------------------------
MS21043-4 NUT 25 3.10
- ------------------------------------------------------
MS21043-5 NUT 15 6.24
- ------------------------------------------------------
MS21044C3 NUT 50 1.78
- ------------------------------------------------------
MS21044N4 NUT 50 0.94
- ------------------------------------------------------
MS21048-3W NUT 5 11.55
- ------------------------------------------------------
MS21060L3 NUT 1 1.24
- ------------------------------------------------------
MS21224-4 NUT 15 3.26
- ------------------------------------------------------
MS21919WCJ20 CLAMP 3 45.93
- ------------------------------------------------------
MS21919WCJ40 CLAMP 2 14.26
- ------------------------------------------------------
MS24665-151 PIN 50 0.04
- ------------------------------------------------------
MS24673-2 SCREW 6 3.40
- ------------------------------------------------------
MS25036-103 TERMINAL 1 35.77
- ------------------------------------------------------
MS29512-06 PACKING 1 0.42
- ------------------------------------------------------
MS3367-1-9 STRAP 5 0.43
- ------------------------------------------------------
MS3368-1-9A STRAP 25 1.71
- ------------------------------------------------------
MS3368-1-9B STRAP 25 1.75
- ------------------------------------------------------
MS3417-8N CLAMP 1 23.18
- ------------------------------------------------------
MS3420-4 BUSHING 15 2.35
- ------------------------------------------------------
MS35338-139 WASHER 50 1.02
- ------------------------------------------------------
MS51525B4S ADAPTER 1 54.55
- ------------------------------------------------------
MS51830CA201 INSERT 20 6.55
- ------------------------------------------------------
</TABLE>
56
<PAGE> 85
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
MS51830CA201 L INSERT 10 7.88
- ------------------------------------------------------
MS51830CA202 L INSERT 8 11.82
- ------------------------------------------------------
MS51831CA202 L INSERT 1 12.26
- ------------------------------------------------------
MS51831CA204 L INSERT 8 14.95
- ------------------------------------------------------
MS51833A201- 7 STUD 10 21.51
- ------------------------------------------------------
MS51833A201- 8 STUD 2 20.90
- ------------------------------------------------------
MS51833A201- 9 STUD 5 10.68
- ------------------------------------------------------
MS51833A202- 10 STUD 5 22.00
- ------------------------------------------------------
MS51922-5 NUT 25 3.31
- ------------------------------------------------------
MS51958-62 SCREW 4 0.68
- ------------------------------------------------------
MS51960-65 SCREW 10 0.57
- ------------------------------------------------------
MS9015-05 PLUG 5 10.57
- ------------------------------------------------------
MS9015-08 PLUG 10 14.70
- ------------------------------------------------------
MS9020-02 PACKING 25 1.62
- ------------------------------------------------------
MS9020-04 SEAL 1 0.94
- ------------------------------------------------------
MS9020-08 SEAL 1 1.47
- ------------------------------------------------------
MS9102-20 BRACKET 5 7.42
- ------------------------------------------------------
MS9105-02 PIN 50 0.68
- ------------------------------------------------------
MS9105-28 PIN 25 2.64
- ------------------------------------------------------
MS9110-13 BOLT 10 4.56
- ------------------------------------------------------
MS9110-14 BOLT 10 4.20
- ------------------------------------------------------
MS9110-15 BOLT 10 4.56
- ------------------------------------------------------
MS9142-041 GASKET 6 2.66
- ------------------------------------------------------
MS9165-05 BRACKET 25 3.18
- ------------------------------------------------------
MS9176-07 PLUG 1 2.90
- ------------------------------------------------------
MS9176-17 PLUG 5 10.03
- ------------------------------------------------------
MS9193-04 NIPPLE 2 17.57
- ------------------------------------------------------
MS9193-05 NIPPLE 1 37.31
- ------------------------------------------------------
MS9193-06 NIPPLE 2 22.72
- ------------------------------------------------------
MS9193-08 NIPPLE 1 62.44
- ------------------------------------------------------
MS9193-12 NIPPLE 1 86.21
- ------------------------------------------------------
MS9194-04 ELBOW 1 88.93
- ------------------------------------------------------
MS9194-05 ELBOW 1 102.20
- ------------------------------------------------------
MS9194-06 ELBOW 1 75.86
- ------------------------------------------------------
MS9194-08 ELBOW 1 103.41
- ------------------------------------------------------
MS9201-08 NUT 1 88.60
- ------------------------------------------------------
MS9204-026 GASKET 10 3.97
- ------------------------------------------------------
MS9241-113 PACKING 25 1.50
- ------------------------------------------------------
MS9245-26 PIN 15 0.78
- ------------------------------------------------------
MS9245-44 PIN 6 0.80
- ------------------------------------------------------
MS9276-09 WASHER 100 0.44
- ------------------------------------------------------
MS9276-10 WASHER 25 2.35
- ------------------------------------------------------
MS9726-16 WASHER 5 32.57
- ------------------------------------------------------
MS9276-19 WASHER 10 3.27
- ------------------------------------------------------
MS9314-03 CAP 2 43.23
- ------------------------------------------------------
</TABLE>
57
<PAGE> 86
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
MS9314-04 CAP ASY 5 31.08
- ------------------------------------------------------
MS9320-06 WASHER 50 1.88
- ------------------------------------------------------
MS9320-10 WASHER 50 0.69
- ------------------------------------------------------
MS9320-11 WASHER 50 0.81
- ------------------------------------------------------
MS9321-09 WASHER 25 0.66
- ------------------------------------------------------
MS9321-10 WASHER 50 0.27
- ------------------------------------------------------
MS9321-14 WASHER 25 3.84
- ------------------------------------------------------
MS9365-05 BRACKET 10 7.59
- ------------------------------------------------------
MS9372-021 GASKET 10 32.14
- ------------------------------------------------------
MS9372-029 GASKET 10 10.38
- ------------------------------------------------------
MS9389-53 PIN 10 4.03
- ------------------------------------------------------
MS9390-010 PIN 10 2.13
- ------------------------------------------------------
MS9390-080 PIN 10 1.90
- ------------------------------------------------------
MS9390-160 PIN 20 1.92
- ------------------------------------------------------
MS9390-170 PIN 5 2.13
- ------------------------------------------------------
MS9390-180 PIN 6 1.08
- ------------------------------------------------------
MS9390-290 PIN 2 3.50
- ------------------------------------------------------
MS9390-440 PIN 4 2.17
- ------------------------------------------------------
MS9391-09 CLAMP 20 3.05
- ------------------------------------------------------
MS9432-06 SCREW 10 11.36
- ------------------------------------------------------
MS9432-08 BOLT 5 18.18
- ------------------------------------------------------
MS9486-02 PIN 50 1.29
- ------------------------------------------------------
MS9486-03 PIN 50 1.29
- ------------------------------------------------------
MS9486-25 PIN 50 1.37
- ------------------------------------------------------
MS9486-26 PIN 50 1.33
- ------------------------------------------------------
MS9486-49 PIN 50 1.50
- ------------------------------------------------------
MS9489-04 BOLT 15 5.76
- ------------------------------------------------------
MS9489-05 BOLT 10 4.15
- ------------------------------------------------------
MS9489-06 BOLT 10 5.42
- ------------------------------------------------------
MS9489-07 BOLT 10 6.55
- ------------------------------------------------------
MS9489-08 BOLT 10 4.11
- ------------------------------------------------------
MS9489-09 BOLT 10 5.71
- ------------------------------------------------------
MS9490-12 BOLT 10 2.58
- ------------------------------------------------------
MS9491-11 BOLT 10 8.26
- ------------------------------------------------------
MS9491-20 BOLT 5 26.87
- ------------------------------------------------------
MS9549-09 WASHER 50 0.85
- ------------------------------------------------------
MS9549-10 WASHER 10 0.92
- ------------------------------------------------------
MS9549-12 WASHER 50 3.45
- ------------------------------------------------------
MS9552-004 BRACKET 15 4.74
- ------------------------------------------------------
MS9552-010 BRACKET 1 2.23
- ------------------------------------------------------
MS9555-06 BOLT 15 4.19
- ------------------------------------------------------
MS9556-05 BOLT 10 5.28
- ------------------------------------------------------
MS9556-06 BOLT 10 3.24
- ------------------------------------------------------
MS9556-07 BOLT 30 3.39
- ------------------------------------------------------
MS9556-08 BOLT 10 3.58
- ------------------------------------------------------
</TABLE>
58
<PAGE> 87
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
MS9556-09 BOLT 10 5.13
- ------------------------------------------------------
MS9556-10 BOLT 3 3.61
- ------------------------------------------------------
MS9556-14 BOLT 5 19.15
- ------------------------------------------------------
MS9556-16 BOLT 5 8.15
- ------------------------------------------------------
MS9556-18 BOLT 5 7.57
- ------------------------------------------------------
MS9557-06 BOLT 5 5.37
- ------------------------------------------------------
MS9557-08 BOLT 15 6.31
- ------------------------------------------------------
MS9557-09 BOLT 5 6.37
- ------------------------------------------------------
MS9557-10 BOLT 15 6.68
- ------------------------------------------------------
MS9557-14 BOLT 8 8.33
- ------------------------------------------------------
MS9557-17 BOLT 10 1.90
- ------------------------------------------------------
MS9557-20 BOLT 5 4.81
- ------------------------------------------------------
MS9557-22 BOLT 5 13.36
- ------------------------------------------------------
MS9581-09 WASHER 10 4.60
- ------------------------------------------------------
MS9582-10 WASHER 25 1.06
- ------------------------------------------------------
MS9593-052 BRACKET 5 18.01
- ------------------------------------------------------
MS9600-210 BRACKET 2 6.28
- ------------------------------------------------------
MS9696-05 BOLT 10 2.68
- ------------------------------------------------------
MS9696-06 BOLT 10 20.49
- ------------------------------------------------------
MS9696-07 BOLT 10 3.55
- ------------------------------------------------------
MS9696-08 BOLT 5 2.13
- ------------------------------------------------------
MS9696-09 BOLT 15 4.42
- ------------------------------------------------------
MS9696-11 BOLT 1 8.00
- ------------------------------------------------------
MS9696-30 BOLT 2 12.86
- ------------------------------------------------------
MS9697-07 BOLT 5 12.27
- ------------------------------------------------------
MS9697-08 BOLT 5 20.58
- ------------------------------------------------------
MS9697-09 BOLT 5 20.58
- ------------------------------------------------------
MS9697-10 BOLT 5 14.73
- ------------------------------------------------------
MS9697-11 BOLT 5 20.58
- ------------------------------------------------------
MS9697-14 BOLT 5 20.58
- ------------------------------------------------------
MS9697-18 BOLT 10 38.33
- ------------------------------------------------------
MS9901-07 PLUG 5 17.63
- ------------------------------------------------------
MS9951-24 NUT 1 82.70
- ------------------------------------------------------
MS9951-27 NUT 1 88.84
- ------------------------------------------------------
MS9952-24 WASHER 1 103.08
- ------------------------------------------------------
MS9952-27 WASHER 1 100.24
- ------------------------------------------------------
MS9953-04 PLUG 2 42.05
- ------------------------------------------------------
MS9967-113 PACKING 1 6.85
- ------------------------------------------------------
M22759/4-20- 9 WIRE 1 81.38
- ------------------------------------------------------
M45932/1-25C L INSERT 1 42.40
- ------------------------------------------------------
M83248/1-011 PACKING 1 4.08
- ------------------------------------------------------
M83248/1-012 O-RING 5 8.06
- ------------------------------------------------------
M83248/1-014 PACKING 1 2.12
- ------------------------------------------------------
M83248/1-015 O-RING 1 1.35
- ------------------------------------------------------
M83248/2-904 O-RING 1 0.21
- ------------------------------------------------------
</TABLE>
59
<PAGE> 88
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
NAS1101E08-4 SCREW 10 1.43
- ------------------------------------------------------
NAS1102E3-8 SCREW 5 8.76
- ------------------------------------------------------
NAS1149C0332 R WASHER 50 0.03
- ------------------------------------------------------
NAS1149C0416 R WASHER 20 3.99
- ------------------------------------------------------
NAS1291C3M NUT 50 4.25
- ------------------------------------------------------
NAS1789C3 NUT 5 30.21
- ------------------------------------------------------
NAS509-08C JAM NUT 10 19.88
- ------------------------------------------------------
NAS815-4A PLUG 10 0.16
- ------------------------------------------------------
NAS820-14A PLUG 100 0.30
- ------------------------------------------------------
NAS820-16A PLUG 100 0.15
- ------------------------------------------------------
NAS9110-14 BOLT 1 2.38
- ------------------------------------------------------
NAS9310C-4-0 1 RIVET 1 16.31
- ------------------------------------------------------
NAS9310C-4-0 2 RIVET 1 31.38
- ------------------------------------------------------
NAS9310C-4-0 5 RIVET 15 22.36
- ------------------------------------------------------
NAS9310C-4-0 6 RIVET 12 42.54
- ------------------------------------------------------
18326 PLUG 15 5.75
- ------------------------------------------------------
23000314 PIN 5 68.79
- ------------------------------------------------------
23001407 RIVET 25 3.04
- ------------------------------------------------------
23004351 MARKER 10 3.57
- ------------------------------------------------------
23004716 FITTING 1 80.46
- ------------------------------------------------------
23005204 HOSE 1 184.92
- ------------------------------------------------------
23006590-04 NUT 30 66.75
- ------------------------------------------------------
23006590-07 NUT 1 128.41
- ------------------------------------------------------
23007270 STUD 10 21.74
- ------------------------------------------------------
23007270P001 1 STUD 3 34.26
- ------------------------------------------------------
23007270P002 2 STUD 2 34.59
- ------------------------------------------------------
23007270P003 3 STUD 2 34.59
- ------------------------------------------------------
23007406 KEY ASY 1 153.18
- ------------------------------------------------------
23007594-141 8 BOLT 1 71.98
- ------------------------------------------------------
23007595-17 BOLT 10 28.79
- ------------------------------------------------------
23009249 NUT 25 1.04
- ------------------------------------------------------
23030575 FITTING 1 724.79
- ------------------------------------------------------
23030799-10 CAP 50 0.05
- ------------------------------------------------------
23031398 BOLT 20 5.01
- ------------------------------------------------------
23031581 PLATE 1 172.31
- ------------------------------------------------------
23031582 PLATE 1 490.24
- ------------------------------------------------------
23034092 BOLT 15 15.35
- ------------------------------------------------------
23034166-05- 11 BOLT 5 35.59
- ------------------------------------------------------
23034670 HOUSING 1 8987.06
- ------------------------------------------------------
23034676 BEARING 1 1509.90
- ------------------------------------------------------
23034692 KEY LOCK 2 300.81
- ------------------------------------------------------
23034693 NUT 1 387.43
- ------------------------------------------------------
23034694-050 SHIM 1 43.93
- ------------------------------------------------------
23034694-052 SHIM 2 43.93
- ------------------------------------------------------
23034694-054 SHIM 1 43.93
- ------------------------------------------------------
</TABLE>
60
<PAGE> 89
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
23034694-056 SHIM 1 43.93
- ------------------------------------------------------
23034694-058 SHIM 1 43.93
- ------------------------------------------------------
23034694-060 SHIM 1 43.93
- ------------------------------------------------------
23034694-062 SHIM 1 43.93
- ------------------------------------------------------
23034694-064 SHIM 1 43.93
- ------------------------------------------------------
23034694-066 SHIM 1 43.93
- ------------------------------------------------------
23034694-068 SHIM 1 43.93
- ------------------------------------------------------
23034694-070 SHIM 1 43.93
- ------------------------------------------------------
23034694-072 SHIM 1 43.93
- ------------------------------------------------------
23034694-074 SHIM 1 43.93
- ------------------------------------------------------
23034694-076 SHIM 1 43.93
- ------------------------------------------------------
23034694-078 SHIM 1 43.93
- ------------------------------------------------------
23034694-080 SHIM 1 43.93
- ------------------------------------------------------
23034694-082 SHIM 1 43.93
- ------------------------------------------------------
23034694-084 SHIM 1 43.93
- ------------------------------------------------------
23034694-086 SHIM 1 43.93
- ------------------------------------------------------
23034694-088 SHIM 1 43.93
- ------------------------------------------------------
23034694-090 SHIM 1 43.93
- ------------------------------------------------------
23034694-092 SHIM 1 43.93
- ------------------------------------------------------
23034694-094 SHIM 1 43.93
- ------------------------------------------------------
23034694-096 SHIM 1 43.93
- ------------------------------------------------------
23034694-098 SHIM 1 43.93
- ------------------------------------------------------
23034694-100 SHIM 1 43.93
- ------------------------------------------------------
23034694-102 SHIM 1 13.28
- ------------------------------------------------------
23034694-104 SHIM 1 13.28
- ------------------------------------------------------
23034694-106 SHIM 1 13.28
- ------------------------------------------------------
23034694-108 SHIM 1 13.28
- ------------------------------------------------------
23034897 PIN 3 25.28
- ------------------------------------------------------
23034925 TRANSDCR 1 2087.57
- ------------------------------------------------------
23035322 NUT 1 1515.97
- ------------------------------------------------------
23035323 WASHER 1 1508.00
- ------------------------------------------------------
23035420 NUT 1 2025.67
- ------------------------------------------------------
23035422 NUT 1 1947.85
- ------------------------------------------------------
23035507 NUT 2 936.27
- ------------------------------------------------------
230035513 SEAL 1 259.29
- ------------------------------------------------------
23035526 NUT 1 436.30
- ------------------------------------------------------
23035655 TUBE 7 49.83
- ------------------------------------------------------
23035657 E-SEAL 1 804.11
- ------------------------------------------------------
23035688 GASKET 20 13.81
- ------------------------------------------------------
23035694 E-SEAL 1 827.88
- ------------------------------------------------------
23035733 PIN 1 510.35
- ------------------------------------------------------
23035734 RETAINER 8 11.46
- ------------------------------------------------------
23035786 PLUG 1 263.41
- ------------------------------------------------------
23035788 PLATE 5 300.08
- ------------------------------------------------------
23035795-4 WEIGHT 4 112.56
- ------------------------------------------------------
</TABLE>
61
<PAGE> 90
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
23035795-5 WEIGHT 4 104.85
- ------------------------------------------------------
23035795-6 WEIGHT 4 105.25
- ------------------------------------------------------
23035795-8 WEIGHT 4 112.86
- ------------------------------------------------------
23035795-9 WEIGHT 4 109.13
- ------------------------------------------------------
23035805 NUT 1 2359.93
- ------------------------------------------------------
23035806-011 PACKING 1 21.85
- ------------------------------------------------------
23035806-013 PACKING 1 83.14
- ------------------------------------------------------
23035806-018 PACKING 1 116.29
- ------------------------------------------------------
23035806-159 PACKING 1 856.06
- ------------------------------------------------------
23035806-237 PACKING 1 477.76
- ------------------------------------------------------
23035806-257 PACKING 1 1190.53
- ------------------------------------------------------
23035806-266 O RING 1 1860.31
- ------------------------------------------------------
23035809 BOLT 1 249.24
- ------------------------------------------------------
23035815-020 9 STUD 3 23.23
- ------------------------------------------------------
23035815-021 2 STUD 3 25.84
- ------------------------------------------------------
23035815-031 0 STUD 2 61.61
- ------------------------------------------------------
23035826-9 STUD 6 56.98
- ------------------------------------------------------
23035827-04 NUT 5 140.45
- ------------------------------------------------------
23035827-07 NUT 16 28.76
- ------------------------------------------------------
23035828-4 NUT 2 83.27
- ------------------------------------------------------
23035939 SPRING 1 321.09
- ------------------------------------------------------
23035955 NOZZLE 1 621.43
- ------------------------------------------------------
23036647 PIN 2 16.94
- ------------------------------------------------------
23036813 ROTOR 1 2186.65
- ------------------------------------------------------
23036888 WHEEL 1 388.78
- ------------------------------------------------------
23036892 NOZZLE 1 700.12
- ------------------------------------------------------
23036897 BRACKET 5 59.41
- ------------------------------------------------------
23037035-1 SCREEN 1 200.96
- ------------------------------------------------------
23037256-07 SLEEVING 1 224.29
- ------------------------------------------------------
23037256-08 SLEEVING 1 254.81
- ------------------------------------------------------
23037304-13 BOLT 5 3.35
- ------------------------------------------------------
23037304-16 BOLT 10 9.05
- ------------------------------------------------------
23037309-01 INSERT 1 43.28
- ------------------------------------------------------
23037309-02 INSERT 1 55.79
- ------------------------------------------------------
23037317-10 BOLT 15 3.56
- ------------------------------------------------------
23037317-18 BOLT 6 25.61
- ------------------------------------------------------
23037317-19 BOLT 20 1.44
- ------------------------------------------------------
23037401 SLEEVING 1 1061.41
- ------------------------------------------------------
23037622 GASKET 2 63.55
- ------------------------------------------------------
23037666 COVER 4 218.31
- ------------------------------------------------------
23037667 GASKET 5 60.43
- ------------------------------------------------------
23037669 SPACER 1 108.23
- ------------------------------------------------------
23037672 TIP 1 979.58
- ------------------------------------------------------
23037741 TUBE ASM 1 570.07
- ------------------------------------------------------
23037770-3 NUT 10 27.09
- ------------------------------------------------------
</TABLE>
62
<PAGE> 91
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
23037860-13 CLAMP 1 19.66
- ------------------------------------------------------
23037873-04 CLAMP 10 2.48
- ------------------------------------------------------
23037873-06 CLAMP 1 5.14
- ------------------------------------------------------
23037873-07 CLAMP 5 12.52
- ------------------------------------------------------
23037873-08 CLAMP 10 5.37
- ------------------------------------------------------
23037873-09 CLAMP 6 4.22
- ------------------------------------------------------
23037873-10 CLAMP 1 9.97
- ------------------------------------------------------
23037873-12 CLAMP 5 9.97
- ------------------------------------------------------
23037873-16 CLAMP 2 7.40
- ------------------------------------------------------
23038381 TUBE AS 1 791.59
- ------------------------------------------------------
23038853-1 WEIGHT 1 101.52
- ------------------------------------------------------
23038853-2 WEIGHT 1 101.52
- ------------------------------------------------------
2308853-3 WEIGHT 1 101.52
- ------------------------------------------------------
23038853-4 WEIGHT 1 101.52
- ------------------------------------------------------
23038853-5 WEIGHT 1 101.52
- ------------------------------------------------------
23038853-6 WEIGHT 1 101.52
- ------------------------------------------------------
23038853-7 WEIGHT 4 101.52
- ------------------------------------------------------
23038853-8 WEIGHT 4 101.52
- ------------------------------------------------------
23038910 COVER 1 252.09
- ------------------------------------------------------
23038911 GASKET 5 24.15
- ------------------------------------------------------
23039005-06 CAP 1 309.29
- ------------------------------------------------------
23039027 RING 1 262.75
- ------------------------------------------------------
23039030-01 CLAMP 1 8.02
- ------------------------------------------------------
230309030-02 CLAMP 10 5.62
- ------------------------------------------------------
23039030-03 CLAMP 5 5.97
- ------------------------------------------------------
23039030-05 CLAMP 10 6.92
- ------------------------------------------------------
23039030-06 CLAMP 20 4.11
- ------------------------------------------------------
23039030-07 CLAMP 2 8.69
- ------------------------------------------------------
23039030-09 CLAMP 10 7.12
- ------------------------------------------------------
23039030-10 CLAMP 10 7.50
- ------------------------------------------------------
23039030-11 CLAMP 1 11.25
- ------------------------------------------------------
23039030-12 CLAMP 5 13.82
- ------------------------------------------------------
23039030-15 CLAMP 10 10.63
- ------------------------------------------------------
23039030-20 CLAMP 1 12.72
- ------------------------------------------------------
23039030-27 CLAMP 2 15.66
- ------------------------------------------------------
23039033-09 STUD 10 23.65
- ------------------------------------------------------
23039033-11 STUD 2 667.88
- ------------------------------------------------------
23039569 IMPELLER 1 2399.07
- ------------------------------------------------------
23039573 SEAL 1 780.21
- ------------------------------------------------------
23039590 PIN 40 19.60
- ------------------------------------------------------
23039621 PLUG 1 60.94
- ------------------------------------------------------
23039855 SWIRLER 1 504.24
- ------------------------------------------------------
23039874 PLUG 1 179.76
- ------------------------------------------------------
23039892-018 SHIM 1 81.89
- ------------------------------------------------------
23039892-020 SHIM 1 81.89
- ------------------------------------------------------
</TABLE>
63
<PAGE> 92
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
23039892-022 SHIM 1 81.89
- ------------------------------------------------------
23039892-024 SHIM 1 81.89
- ------------------------------------------------------
23039892-026 SHIM 1 81.89
- ------------------------------------------------------
23039892-028 SHIM 1 38.47
- ------------------------------------------------------
23039892-030 SHIM 1 76.27
- ------------------------------------------------------
23039892-032 SHIM 1 38.47
- ------------------------------------------------------
23039892-034 SHIM 1 38.47
- ------------------------------------------------------
23039892-036 SHIM 1 38.47
- ------------------------------------------------------
23039892-038 SHIM 1 38.47
- ------------------------------------------------------
23039892-040 SHIM 1 38.47
- ------------------------------------------------------
23039892-042 SHIM 1 81.89
- ------------------------------------------------------
23039892-044 SHIM 1 81.89
- ------------------------------------------------------
23039892-046 SHIM 1 81.89
- ------------------------------------------------------
23039892-048 SHIM 1 81.89
- ------------------------------------------------------
23039892-050 SHIM 1 81.89
- ------------------------------------------------------
23039952 THERMOCO 1 629.13
- ------------------------------------------------------
23039976 BRG 1 956.15
- ------------------------------------------------------
23039979 PLATE 1 472.20
- ------------------------------------------------------
23039996 PLATE 1 213.36
- ------------------------------------------------------
23050323 WASHER 20 15.74
- ------------------------------------------------------
23050345 BUTTON 18 17.51
- ------------------------------------------------------
23050348 BEARING 1 141.48
- ------------------------------------------------------
23050349 BEARING 1 141.48
- ------------------------------------------------------
23050529 GEARSHAF 1 5742.82
- ------------------------------------------------------
23050530 SPACER 1 765.35
- ------------------------------------------------------
23050543 BEARING 1 1244.88
- ------------------------------------------------------
23050544 SPACER 1 399.64
- ------------------------------------------------------
23050546 BAFFLE 1 574.40
- ------------------------------------------------------
23050566 GASKET 10 14.61
- ------------------------------------------------------
23050595 EXTENSIO 1 1478.38
- ------------------------------------------------------
23050728 CONE ASM 1 9008.32
- ------------------------------------------------------
23050752 WHEEL C2 1 12563.24
- ------------------------------------------------------
23050754 WHEEL C4 1 16003.56
- ------------------------------------------------------
23050797 STRIP 28 3.66
- ------------------------------------------------------
23050938 SMASH 5 136.14
- ------------------------------------------------------
23051300 INSERT 1 10734.39
- ------------------------------------------------------
23051326 WASHER 18 11.76
- ------------------------------------------------------
23051330 WEIGHT 5 65.81
- ------------------------------------------------------
23051331 WEIGHT 2 61.33
- ------------------------------------------------------
23051556 BOLT 20 17.19
- ------------------------------------------------------
23051562 SEAL AS 1 9025.23
- ------------------------------------------------------
23051810 TIE BOLT 1 34282.03
- ------------------------------------------------------
23051811 WASHER 1 3615.84
- ------------------------------------------------------
23052126 SUPPORT 1 3698.02
- ------------------------------------------------------
23052131 RETAINER 5 105.92
- ------------------------------------------------------
</TABLE>
64
<PAGE> 93
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
23052219 WASHER 1 1159.56
- ------------------------------------------------------
23052220 WASHER 1 1228.32
- ------------------------------------------------------
23052227 GASKET 4 28.85
- ------------------------------------------------------
23052249 BUCKLE 1 547.62
- ------------------------------------------------------
23052613 SENSOR 1 11918.40
- ------------------------------------------------------
23052662-11 STUD 10 225.62
- ------------------------------------------------------
23052667 WASHER 5 13.13
- ------------------------------------------------------
23052721 BEARING 1 5026.85
- ------------------------------------------------------
23052723 RET PIN 1 342.62
- ------------------------------------------------------
23052734-08 SHIM 1 49.74
- ------------------------------------------------------
23052734-09 SHIM 1 49.74
- ------------------------------------------------------
23052734-10 SHIM 1 49.74
- ------------------------------------------------------
23052734-11 SHIM 1 49.74
- ------------------------------------------------------
23052734-12 SHIM 1 49.74
- ------------------------------------------------------
23052734-13 SHIM 1 49.74
- ------------------------------------------------------
23052734-14 SHIM 1 49.74
- ------------------------------------------------------
23052734-15 SHIM 1 49.74
- ------------------------------------------------------
23052734-16 SHIM 1 49.74
- ------------------------------------------------------
23052734-17 SHIM 1 49.74
- ------------------------------------------------------
23052734-18 SHIM 1 49.74
- ------------------------------------------------------
23052734-19 SHIM 1 49.74
- ------------------------------------------------------
23052735-20 SHIM 1 49.74
- ------------------------------------------------------
23052734-21 SHIM 1 208.88
- ------------------------------------------------------
23052734-22 SHIM 1 261.73
- ------------------------------------------------------
23052734-23 SHIM 1 49.74
- ------------------------------------------------------
23052734-24 SHIM 1 49.74
- ------------------------------------------------------
23052734-25 SHIM 1 49.74
- ------------------------------------------------------
23052734-26 SHIM 1 49.74
- ------------------------------------------------------
23052734-27 SHIM 1 260.75
- ------------------------------------------------------
23052734-28 SHIM 1 249.37
- ------------------------------------------------------
23052735 RETAINER 1 613.06
- ------------------------------------------------------
23052736 PLUG 1 80.24
- ------------------------------------------------------
23052738 SCREEN 1 470.86
- ------------------------------------------------------
23052739 COVER 1 178.18
- ------------------------------------------------------
23052740 PLUG 1 73.42
- ------------------------------------------------------
23052746 PLUG 1 25.91
- ------------------------------------------------------
23052951 NUT 5 19.45
- ------------------------------------------------------
23052953-16 GASKET 25 7.60
- ------------------------------------------------------
23053008 STRAINER 1 526.81
- ------------------------------------------------------
23053009 NOZZLE 1 433.27
- ------------------------------------------------------
23053011 NOZZLE 1 1875.42
- ------------------------------------------------------
23053012 BEARING 1 1931.20
- ------------------------------------------------------
23053014 COVER AS 1 2258.82
- ------------------------------------------------------
23053015 NOZZLE 1 776.38
- ------------------------------------------------------
23053017 NOZZLE 1 776.38
- ------------------------------------------------------
</TABLE>
65
<PAGE> 94
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
23053018 BEARING 1 1481.54
- ------------------------------------------------------
23053019 GEARSHAF 1 9862.25
- ------------------------------------------------------
23053025 STRAINER 1 716.21
- ------------------------------------------------------
23053032 COVER AS 1 1484.34
- ------------------------------------------------------
23053107 BOLT 10 95.70
- ------------------------------------------------------
23053110-1 CAGE 1 903.67
- ------------------------------------------------------
23053110-2 CAGE 1 901.90
- ------------------------------------------------------
23053110-3 CAGE 1 901.90
- ------------------------------------------------------
23053110-4 CAGE 1 901.90
- ------------------------------------------------------
23053113 TUBE AS 1 1307.69
- ------------------------------------------------------
23053126 SMASHPLT 1 147.47
- ------------------------------------------------------
23053132 HOUSING 1 16554.03
- ------------------------------------------------------
23053133 PLUG ASM 1 868.18
- ------------------------------------------------------
23053355 RING 1 1169.21
- ------------------------------------------------------
23053364 STUD 10 52.21
- ------------------------------------------------------
23053365-20 STUD 16 55.38
- ------------------------------------------------------
23053385-201 -10 STUD 10 12.58
- ------------------------------------------------------
23053385-201 -13 STUD 2 13.17
- ------------------------------------------------------
23053385-201 -14 STUD 5 14.27
- ------------------------------------------------------
23053385-201 -15 STUD 5 18.96
- ------------------------------------------------------
23053385-201 -19 STUD 6 12.79
- ------------------------------------------------------
23053385-201 -7STUD 2 79.59
- ------------------------------------------------------
23053385-201 -8 STUD 15 13.72
- ------------------------------------------------------
23053385-201 -9 STUD 6 9.45
- ------------------------------------------------------
23053386-201 -08 STUD 2 26.79
- ------------------------------------------------------
23053386-201 -10 STUD 5 13.49
- ------------------------------------------------------
23053396 ARM&BALL 5 110.19
- ------------------------------------------------------
23053397 ARM&BALL 10 110.19
- ------------------------------------------------------
23053398 ARM&BALL 10 110.19
- ------------------------------------------------------
23053648 PLATE 2 462.76
- ------------------------------------------------------
23053917 TUBE ASM 1 1165.33
- ------------------------------------------------------
23053935 SHAFT 1 3672.34
- ------------------------------------------------------
23054238-101 BLADE 1 2218.02
- ------------------------------------------------------
23054238-102 BLADE 1 2493.66
- ------------------------------------------------------
23054238-103 BLADE 1 2493.66
- ------------------------------------------------------
23055151 GASKET 1 143.26
- ------------------------------------------------------
23055204 NOZZLE 1 212.44
- ------------------------------------------------------
23055239 COVERPLT 1 119.15
- ------------------------------------------------------
23055240-1 COVERPLT 2 52.90
- ------------------------------------------------------
23055240-2 COVERPLT 5 53.01
- ------------------------------------------------------
23055240-3 COVERPLT 2 52.90
- ------------------------------------------------------
23055247 STUD 2 325.01
- ------------------------------------------------------
23055249 WASHER 1 371.62
- ------------------------------------------------------
23055373-WW- 13 CAP 1 0.08
- ------------------------------------------------------
23055393 SHAFT 1 8065.71
- ------------------------------------------------------
</TABLE>
66
<PAGE> 95
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
23055884 GEARSHAF 1 6320.68
- ------------------------------------------------------
23056153 GASKET 1 471.99
- ------------------------------------------------------
23056335 COUPLING 1 827.23
- ------------------------------------------------------
23056336 COVER AS 1 1817.05
- ------------------------------------------------------
23056352 COVER AS 1 2407.12
- ------------------------------------------------------
23056363 COUPLING 1 622.89
- ------------------------------------------------------
23056381 TUBE 1 146.83
- ------------------------------------------------------
23056398 SPACER 1 1111.85
- ------------------------------------------------------
23056662 SEAL 1 960.40
- ------------------------------------------------------
23056663 STUD 25 26.27
- ------------------------------------------------------
23056677 INSERT 1 1968.95
- ------------------------------------------------------
23057079 RUB PAD 2 259.27
- ------------------------------------------------------
23057101-018 PACKING 1 83.43
- ------------------------------------------------------
23057289 BOLT 50 3.96
- ------------------------------------------------------
23057290 TEE 1 542.58
- ------------------------------------------------------
23057364 VANE AS 1 4300.72
- ------------------------------------------------------
23057365-11 STUD 10 13.76
- ------------------------------------------------------
23057386 COVERPLT 1 119.15
- ------------------------------------------------------
23057395-1 COVERPLT 5 29.33
- ------------------------------------------------------
23057395-2 COVERPLT 1 52.87
- ------------------------------------------------------
23057395-3 COVERPLT 5 26.01
- ------------------------------------------------------
23057720 SEAL 1 7059.09
- ------------------------------------------------------
23057902 SPLASH P 1 888.28
- ------------------------------------------------------
23057907 GASKET 1 70.27
- ------------------------------------------------------
23057935 THRUST 1 7076.07
- ------------------------------------------------------
23057940 SEAL 2 89.86
- ------------------------------------------------------
23057980 SPACER 1 526.77
- ------------------------------------------------------
23058072 CLAMP 1 9.27
- ------------------------------------------------------
23058084 SEAL 25 9.47
- ------------------------------------------------------
23058153 NUT 8 67.85
- ------------------------------------------------------
23058181 PIN 2 33.43
- ------------------------------------------------------
23058311 SHIELD 1 2457.59
- ------------------------------------------------------
23058365 BAL WGMT 5 8.29
- ------------------------------------------------------
23058366 BUSHING 10 13.90
- ------------------------------------------------------
23058369 SPACER 1 16895.60
- ------------------------------------------------------
23058518 PIN 1 243.48
- ------------------------------------------------------
23058911 ACTUATOR 1 17170.83
- ------------------------------------------------------
23059715 BRACKET 1 133.29
- ------------------------------------------------------
23059818 SEAL 1 2588.72
- ------------------------------------------------------
23059823 RETAINER 1 1713.59
- ------------------------------------------------------
23059824 E-SEAL 1 481.01
- ------------------------------------------------------
23059825 PIN 1 42.11
- ------------------------------------------------------
23059843 SHIM 2 11.89
- ------------------------------------------------------
23059878 WHEEL T3 1 57669.82
- ------------------------------------------------------
23059879 PIN 5 41.57
- ------------------------------------------------------
</TABLE>
67
<PAGE> 96
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
23059908 SEAL RUN 1 6601.05
- ------------------------------------------------------
23059909 SEAL 1 1178.56
- ------------------------------------------------------
23059926 HARNESS 1 3131.17
- ------------------------------------------------------
23060015-04 CLAMP 10 8.45
- ------------------------------------------------------
23060015-06 CLAMP 2 10.68
- ------------------------------------------------------
23060015-07 CLAMP 3 15.69
- ------------------------------------------------------
23060015-08 CLAMP 10 9.01
- ------------------------------------------------------
23060015-09 CLAMP 2 16.46
- ------------------------------------------------------
23060015-10 CLAMP 2 51.51
- ------------------------------------------------------
23060015-11 CLAMP 2 87.67
- ------------------------------------------------------
23060015-12 CLAMP 1 190.15
- ------------------------------------------------------
23060015-13 CLAMP 1 25.49
- ------------------------------------------------------
23060016-01 CLAMP 5 5.23
- ------------------------------------------------------
23060016-02 CLAMP 8 5.20
- ------------------------------------------------------
23060016-03 CLAMP 5 5.53
- ------------------------------------------------------
23060016-04 CLAMP 3 8.89
- ------------------------------------------------------
23060017-13 CUSHION 1 110.20
- ------------------------------------------------------
23060017-15 CUSHION 1 104.69
- ------------------------------------------------------
23060017-25 CUSHION 1 128.09
- ------------------------------------------------------
23060017-26 CUSHION 1 164.29
- ------------------------------------------------------
23060017-27 CUSHION 1 105.51
- ------------------------------------------------------
23060017-28 CUSHION 1 290.21
- ------------------------------------------------------
23060017-35 CUSHION 1 125.22
- ------------------------------------------------------
23060017-50 CUSHION 1 328.77
- ------------------------------------------------------
23060025 BRACKET 1 115.49
- ------------------------------------------------------
23060029 PIN 1 122.17
- ------------------------------------------------------
23060054 BOLT 5 29.71
- ------------------------------------------------------
23060055 PLUG 14 12.72
- ------------------------------------------------------
23060273 RING SEA 1 4047.51
- ------------------------------------------------------
23060274-1 BAL WEIG 4 181.12
- ------------------------------------------------------
23060274-2 BAL WEIG 4 135.30
- ------------------------------------------------------
23060274-3 BAL WEIG 6 135.30
- ------------------------------------------------------
23060274-4 BAL WEIG 6 135.30
- ------------------------------------------------------
23060274-5 BAL WEIG 6 136.30
- ------------------------------------------------------
23060274-6 BAL WEIG 6 146.11
- ------------------------------------------------------
23060274-7 BAL WEIG 6 135.30
- ------------------------------------------------------
23060274-8 BAL WEIG 6 146.11
- ------------------------------------------------------
23060274-9 BAL WEIG 6 149.41
- ------------------------------------------------------
23060842 RING 1 6816.12
- ------------------------------------------------------
23060891 BUSHING 5 54.11
- ------------------------------------------------------
23060892 BUSHING 2 63.67
- ------------------------------------------------------
23060893 BUSHING 10 40.35
- ------------------------------------------------------
23060896 RING 2 270.63
- ------------------------------------------------------
23060964 RETAINER 1 398.10
- ------------------------------------------------------
23061056 VALVE AS 1 1385.70
- ------------------------------------------------------
</TABLE>
68
<PAGE> 97
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
23061076 SEAL 1 1980.99
- ------------------------------------------------------
23061084 BEARING 1 9097.34
- ------------------------------------------------------
23061165 GASKET 3 26.51
- ------------------------------------------------------
23061442 HARNESS 1 16720.68
- ------------------------------------------------------
23061465-202 INSERT 10 18.57
- ------------------------------------------------------
23061607 RING 1 841.46
- ------------------------------------------------------
23061628 WHEEL C8 1 16381.17
- ------------------------------------------------------
23061629 WHEEL C9 1 17559.96
- ------------------------------------------------------
23061630 WHEEL C10 1 20104.62
- ------------------------------------------------------
23061631 WHEEL C11 1 19309.71
- ------------------------------------------------------
23061632 WHEEL C12 1 18514.81
- ------------------------------------------------------
23061633 WHEEL C13 1 15771.73
- ------------------------------------------------------
23061634 WHEEL C14 1 16773.87
- ------------------------------------------------------
23061702 RUNNER 1 1900.78
- ------------------------------------------------------
23061705 RUNNER 1 780.69
- ------------------------------------------------------
23061706 RUNNER 1 2220.81
- ------------------------------------------------------
23061707 RUNNER 1 948.09
- ------------------------------------------------------
23061727 STRIP 20 5.06
- ------------------------------------------------------
23061729 BOLT 4 34.88
- ------------------------------------------------------
23062173-103 2 NUT 5 19.10
- ------------------------------------------------------
23062185 VALVE 1 1052.25
- ------------------------------------------------------
23062281 STRIP 20 5.70
- ------------------------------------------------------
23062282 STRIP 20 3.39
- ------------------------------------------------------
23062361 MANIFOLD 1 4941.45
- ------------------------------------------------------
23062362 MANIFOLD 1 3280.59
- ------------------------------------------------------
23062365 SEAL ASM 1 29789.79
- ------------------------------------------------------
23062458 BRACKET 1 615.08
- ------------------------------------------------------
23062497 BOLT 4 10.65
- ------------------------------------------------------
23062529 RETAINER 1 590.91
- ------------------------------------------------------
23062530 BEARING 1 1683.73
- ------------------------------------------------------
23062537 BEARING 1 865.38
- ------------------------------------------------------
23062538 BEARING 1 865.38
- ------------------------------------------------------
23062547 BEARING 1 1197.00
- ------------------------------------------------------
23062555 SCREW 20 15.50
- ------------------------------------------------------
23062666 WHEEL C- 1 16159.37
- ------------------------------------------------------
23062667 WHEEL C7 1 18404.82
- ------------------------------------------------------
23062695 GASKET 1 447.06
- ------------------------------------------------------
23063015 SENSOR 1 3089.00
- ------------------------------------------------------
23063066 BRACKET 1 167.20
- ------------------------------------------------------
23063175 NUT 10 2.72
- ------------------------------------------------------
23063231 SEAL 1 11706.00
- ------------------------------------------------------
23063258 SEAL, ST 15 3.90
- ------------------------------------------------------
23063260 SEAL AS 1 6011.88
- ------------------------------------------------------
23063262 VANE HPT 1 5511.34
- ------------------------------------------------------
23063265-101 BLADE TR 1 409.06
- ------------------------------------------------------
</TABLE>
69
<PAGE> 98
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
23063265-102 BLADE TR 1 409.06
- ------------------------------------------------------
23063265-103 BLADE TR 1 409.06
- ------------------------------------------------------
23063282 BAFFLE 1 1521.54
- ------------------------------------------------------
23063285 CAGE BRG 1 540.26
- ------------------------------------------------------
23063756 SEAL ASS 1 9944.79
- ------------------------------------------------------
23063760 DIFFUSER 1 174738.40
- ------------------------------------------------------
23063761 VANE C1 1 776.07
- ------------------------------------------------------
23063762 VANE C2 1 772.28
- ------------------------------------------------------
23063763 VANE C3 1 379.38
- ------------------------------------------------------
23063764 VANE C4 1 767.60
- ------------------------------------------------------
23063765 VANE C5 1 699.69
- ------------------------------------------------------
23063850 RETAINER 1 284.93
- ------------------------------------------------------
23063866 PIN 5 1.19
- ------------------------------------------------------
23063876 SUPRT & 1 56539.60
- ------------------------------------------------------
23063879 TUBE OIL 1 6960.36
- ------------------------------------------------------
23063975 SEAL ASS 1 4997.27
- ------------------------------------------------------
23064002 PLATE ID 1 1.49
- ------------------------------------------------------
23064004 PLATE ID 1 4.02
- ------------------------------------------------------
23064021 PLATE ID 1 2.48
- ------------------------------------------------------
23064024 ID PLATE 1 6.78
- ------------------------------------------------------
23064113 BEARING 1 5026.85
- ------------------------------------------------------
23064115 BEARING 1 2420.87
- ------------------------------------------------------
23064116 BEARING 1 1902.84
- ------------------------------------------------------
23064123 NUT 1 1912.33
- ------------------------------------------------------
23064218 BEARING 1 1933.58
- ------------------------------------------------------
23064219 BEARING 1 1519.18
- ------------------------------------------------------
23064220 BEARING 1 1519.18
- ------------------------------------------------------
23064223 BEARING 1 4682.51
- ------------------------------------------------------
23064224 BEARING 1 5576.51
- ------------------------------------------------------
23064226 BEARING 1 1456.40
- ------------------------------------------------------
23064227 BEARING 1 1933.58
- ------------------------------------------------------
23064228 BEARING 1 1197.00
- ------------------------------------------------------
23064323 VANE ASY 1 4562.34
- ------------------------------------------------------
23064387-02 SHIM 1 43.93
- ------------------------------------------------------
23064387-03 SHIM 1 43.93
- ------------------------------------------------------
23064387-04 SHIM 1 43.93
- ------------------------------------------------------
23064387-05 SHIM 1 44.55
- ------------------------------------------------------
23064387-06 SHIM 1 44.55
- ------------------------------------------------------
23064387-07 SHIM 1 44.55
- ------------------------------------------------------
23064387-08 SHIM 1 36.01
- ------------------------------------------------------
23064387-09 SHIM 1 44.70
- ------------------------------------------------------
23064387-10 SHIM 1 44.70
- ------------------------------------------------------
23064387-11 SHIM 1 44.70
- ------------------------------------------------------
23064387-12 SHIM 1 44.70
- ------------------------------------------------------
23064387-13 SHIM 1 45.16
- ------------------------------------------------------
</TABLE>
70
<PAGE> 99
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
23064387-14 SHIM 1 45.16
- ------------------------------------------------------
23064387-15 SHIM 1 45.16
- ------------------------------------------------------
23064387-16 SHIM 1 45.16
- ------------------------------------------------------
23064387-17 SHIM 1 45.16
- ------------------------------------------------------
23064387-18 SHIM 1 45.16
- ------------------------------------------------------
23064387-19 SHIM 1 45.16
- ------------------------------------------------------
23064387-20 SHIM 1 45.16
- ------------------------------------------------------
23064387-21 SHIM 1 46.23
- ------------------------------------------------------
23064387-22 SHIM 1 46.23
- ------------------------------------------------------
23064402 BAFFLE 1 204.30
- ------------------------------------------------------
23064434 SEAL AS 1 6771.20
- ------------------------------------------------------
23064484 RUNNER 1 2156.16
- ------------------------------------------------------
23064760 PLUG 1 89.00
- ------------------------------------------------------
23064793 VANE C3 1 578.42
- ------------------------------------------------------
23064794 VANE C4 1 577.17
- ------------------------------------------------------
23064795 VANE C5 1 533.22
- ------------------------------------------------------
23064998 SEAL 5 122.58
- ------------------------------------------------------
23065041 WHEEL C- 1 16754.71
- ------------------------------------------------------
23065332 SHAFT 1 13239.62
- ------------------------------------------------------
23065341 BEARING 1 2780.59
- ------------------------------------------------------
23065345 TAPE 1 111.86
- ------------------------------------------------------
23065870 HSG FRNT 1 16966.62
- ------------------------------------------------------
23065891 WHEEL T1 1 74569.75
- ------------------------------------------------------
23065892 WHEEL T2 1 71424.58
- ------------------------------------------------------
23065942 TUBE 1 886.56
- ------------------------------------------------------
23065949 TUBE 1 886.56
- ------------------------------------------------------
23066013 GEAR 1 11200.95
- ------------------------------------------------------
23066168 PLUG 3 25.59
- ------------------------------------------------------
23066203 SEAL ASY 1 6706.96
- ------------------------------------------------------
23066240 CLVS & A 1 355.56
- ------------------------------------------------------
23066241 CLVS & A 1 332.89
- ------------------------------------------------------
23066242 CLVS & A 1 332.89
- ------------------------------------------------------
23066243 CLVS & A 1 332.89
- ------------------------------------------------------
23066244 CLVS & A 1 332.89
- ------------------------------------------------------
23066402 BEARING 1 3563.29
- ------------------------------------------------------
23066406-1 SLEEVE 1 449.05
- ------------------------------------------------------
23066406-2 SLEEVE 1 449.05
- ------------------------------------------------------
23066406-3 SLEEVE 1 449.05
- ------------------------------------------------------
23066406-4 SLEEVE 1 449.05
- ------------------------------------------------------
23066406-5 SLEEVE 1 449.05
- ------------------------------------------------------
23066406-6 SLEEVE 1 449.05
- ------------------------------------------------------
23066411 BEARING 1 1683.73
- ------------------------------------------------------
23066739 PLUG 1 187.76
- ------------------------------------------------------
23066780 HSG ASY 1 3201.08
- ------------------------------------------------------
23066797 BEARING 1 1611.18
- ------------------------------------------------------
</TABLE>
71
<PAGE> 100
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
23066982 NUT 2 3.99
- ------------------------------------------------------
23067052 SPACER 1 657.81
- ------------------------------------------------------
23067099 CASING 1 26270.34
- ------------------------------------------------------
23067707 BOLT 10 5.11
- ------------------------------------------------------
23067753 BLADE T3 1 1105.71
- ------------------------------------------------------
23067754 BLADE T4 1 723.58
- ------------------------------------------------------
23067858 BLADE C8 1 222.58
- ------------------------------------------------------
23067859 BLADE C9 1 215.43
- ------------------------------------------------------
23067860 BLADE C10 1 215.43
- ------------------------------------------------------
23067861 BLADE 1 215.43
- ------------------------------------------------------
23067862 BLADE C12 1 215.43
- ------------------------------------------------------
23067863 BLADE C13 1 215.43
- ------------------------------------------------------
23067864 BLADE 1 215.43
- ------------------------------------------------------
23068400 SEAL RUN 1 1187.92
- ------------------------------------------------------
23068447 SHAFT 1 15923.54
- ------------------------------------------------------
23069271 BLADE C1 1 338.89
- ------------------------------------------------------
23069272 BLADE C2 1 281.34
- ------------------------------------------------------
23069273 BLADE C3 1 243.07
- ------------------------------------------------------
23069274 BLADE C4 1 223.35
- ------------------------------------------------------
23069275 BLADE C5 1 216.81
- ------------------------------------------------------
23069276 BLADE C6 1 210.46
- ------------------------------------------------------
23069277 BLADE C7 1 222.58
- ------------------------------------------------------
23069418 SEAL STR 16 6.32
- ------------------------------------------------------
23069442 SHAFT 1 28637.36
- ------------------------------------------------------
23069629 TORQ TUB 1 6974.57
- ------------------------------------------------------
23069641 RING SEG 1 845.50
- ------------------------------------------------------
23069642 RING SEG 1 878.77
- ------------------------------------------------------
23069643 RING SEG 1 891.93
- ------------------------------------------------------
23069644 RING SEG 1 2550.86
- ------------------------------------------------------
23069645 RING SEG 1 2550.86
- ------------------------------------------------------
23070039 BLADE T1 1 3360.16
- ------------------------------------------------------
23070176-101 BLADE TR 1 1108.45
- ------------------------------------------------------
23070176-102 BLADE TR 1 1141.50
- ------------------------------------------------------
23070178 SEAL 5 14.24
- ------------------------------------------------------
23070180 ACT RING 1 1758.74
- ------------------------------------------------------
23070181 ACT RING 1 1235.32
- ------------------------------------------------------
23070182 ACT RING 1 1235.32
- ------------------------------------------------------
23070183 ACT RING 1 1235.32
- ------------------------------------------------------
23070184 ACT RING 1 1235.32
- ------------------------------------------------------
23070185 ACT RING 1 1235.32
- ------------------------------------------------------
23070329 PLUG 1 1816.53
- ------------------------------------------------------
23070330 HARNESS 1 5494.99
- ------------------------------------------------------
23070393 RING 1ST 1 1083.11
- ------------------------------------------------------
23070438 HARNESS 1 3787.70
- ------------------------------------------------------
23070662 PLUG 1 25.99
- ------------------------------------------------------
</TABLE>
72
<PAGE> 101
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
23070723 SEAL ASS 1 2862.91
- ------------------------------------------------------
23070725 SEAL KIT 1 23089.57
- ------------------------------------------------------
23070792 SEAL 10 7.13
- ------------------------------------------------------
23070793 SEAL 10 7.13
- ------------------------------------------------------
23070936 SEAL 1 343.61
- ------------------------------------------------------
23071407 CENTER S 1 49832.58
- ------------------------------------------------------
28536-4 CAP 50 0.18
- ------------------------------------------------------
38-18607-200 3-3 CHIP 1 650.49
- ------------------------------------------------------
42520-401 REP KIT 1 1194.41
- ------------------------------------------------------
436-635 ADAPTER 1 2599.54
- ------------------------------------------------------
5228317 CAP 50 0.27
- ------------------------------------------------------
5231692 SPRING 10 4.33
- ------------------------------------------------------
5233424 CAP 10 0.28
- ------------------------------------------------------
6718476 TERMINAL 5 14.82
- ------------------------------------------------------
6718477 TERMINAL 10 8.54
- ------------------------------------------------------
6726656-356 RING 25 3.92
- ------------------------------------------------------
6728014-6 NUT 2 21.50
- ------------------------------------------------------
6828015-6 NUT 2 21.52
- ------------------------------------------------------
6728015-8 NUT 2 21.26
- ------------------------------------------------------
6735707-44 CAP PLUG 1 3.99
- ------------------------------------------------------
6739844-12 CLAMP 10 2.91
- ------------------------------------------------------
6739844-5 CLAMP 25 2.98
- ------------------------------------------------------
6739844-6 CLAMP 15 6.48
- ------------------------------------------------------
6739844-7 CLAMP 10 1.73
- ------------------------------------------------------
6739844-9 CLAMP 10 1.54
- ------------------------------------------------------
6743301-6 NUT 1 56.60
- ------------------------------------------------------
6743301-8 NUT 1 51.19
- ------------------------------------------------------
6748072-267 RING 10 11.11
- ------------------------------------------------------
6784728 BUSHING 5 33.96
- ------------------------------------------------------
6786764 SPACER 1 297.76
- ------------------------------------------------------
6786766 RING 2 23.42
- ------------------------------------------------------
6787375 DOWEL 15 38.58
- ------------------------------------------------------
6800088-8 COVER 1 4.78
- ------------------------------------------------------
6800193-165 CAP 25 1.39
- ------------------------------------------------------
6800193-173 CAP 10 0.94
- ------------------------------------------------------
6800193-181 CAP 4 1.61
- ------------------------------------------------------
6800193-188 CAP 50 1.95
- ------------------------------------------------------
6800193-206 CAP 1 0.33
- ------------------------------------------------------
6800193-229 CAP 10 2.60
- ------------------------------------------------------
6800287 ENVELOPE 1 1.25
- ------------------------------------------------------
6805335 BODY 1 516.84
- ------------------------------------------------------
6809133 SEAT 2 152.46
- ------------------------------------------------------
6809134 PISTON 1 190.76
- ------------------------------------------------------
6810247 SPRING 2 41.44
- ------------------------------------------------------
6812254 BRACKET 10 8.84
- ------------------------------------------------------
</TABLE>
73
<PAGE> 102
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
6816047 GASKET 4 3.55
- ------------------------------------------------------
6816336 RING 2 50.82
- ------------------------------------------------------
6818682-1032 NUT 15 6.04
- ------------------------------------------------------
6820074 DISK 2 31.16
- ------------------------------------------------------
6821844 PAD 25 0.22
- ------------------------------------------------------
6821845 PAD 25 0.33
- ------------------------------------------------------
6823112 WASHER 10 7.99
- ------------------------------------------------------
6823201-1799 0 SLEEVING 1 194.42
- ------------------------------------------------------
6823224-1699 0 SLEEVING 1 182.35
- ------------------------------------------------------
6825488-3 FASTENER 20 4.29
- ------------------------------------------------------
6840364-4 PLUG 10 1.14
- ------------------------------------------------------
6840364-8 PLUG 25 1.78
- ------------------------------------------------------
6840372-4 PIN 5 4.75
- ------------------------------------------------------
6840372-7 PIN 1 13.36
- ------------------------------------------------------
6840372-9 PIN 5 6.33
- ------------------------------------------------------
6842615 NUT 1 370.24
- ------------------------------------------------------
6843618-02 NUT 1 8.86
- ------------------------------------------------------
6843623-836 NUT 10 12.93
- ------------------------------------------------------
6844224 SCREEN 1 589.19
- ------------------------------------------------------
6844316 BRACKET 5 6.28
- ------------------------------------------------------
6846182-1011 SCREW 6 6.59
- ------------------------------------------------------
6847906-1007 BOLT 10 4.89
- ------------------------------------------------------
6847906-1209 BOLT 50 4.98
- ------------------------------------------------------
6847935-2190 40 SLEEVIN 1 75.90
- ------------------------------------------------------
6849500 RING 5 12.50
- ------------------------------------------------------
6857737 NUT 1 1723.40
- ------------------------------------------------------
6866149 PIN 25 26.98
- ------------------------------------------------------
6869704-990 WIRE 1 903.98
- ------------------------------------------------------
6870327-4 NUT 15 5.79
- ------------------------------------------------------
6870327-5 NUT 10 9.32
- ------------------------------------------------------
6870327-6 NUT 10 31.51
- ------------------------------------------------------
6878884-31 STRAP 50 0.83
- ------------------------------------------------------
6886430E087A HOSE 1 73.83
- ------------------------------------------------------
6888894 COUPLING 1 1118.78
- ------------------------------------------------------
6889140-09 INSUL 4 4.23
- ------------------------------------------------------
6889140-11 INSUL SL 3 7.49
- ------------------------------------------------------
6892948-2 STUD 5 13.64
- ------------------------------------------------------
6897953-12 CAP 10 0.03
- ------------------------------------------------------
6897953-14 CAP 15 0.13
- ------------------------------------------------------
6897953-16 CAP 25 0.32
- ------------------------------------------------------
6897953-18 CAP 25 0.04
- ------------------------------------------------------
6897953-20 CAP 2 0.10
- ------------------------------------------------------
6897953-22 CAP 100 0.10
- ------------------------------------------------------
6897953-24 CAP PROT 3 0.15
- ------------------------------------------------------
6899578 SEAL 1 99.68
- ------------------------------------------------------
</TABLE>
74
<PAGE> 103
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
77151154 SPRING 1 197.53
- ------------------------------------------------------
77151205 BRACKET 5 42.85
- ------------------------------------------------------
MS9556-04 BOLT 1 1.45
- ------------------------------------------------------
23066663 KIT, ACC 1 681.19
- ------------------------------------------------------
23068246 KIT 1 20498.03
- ------------------------------------------------------
AN901-16A GASKET 25 3.76
- ------------------------------------------------------
AS3084-03 PACKING 1 1.83
- ------------------------------------------------------
AS3084-04 PACKING 1 1.83
- ------------------------------------------------------
AS3084-05 PACKING 1 1.83
- ------------------------------------------------------
AS3084-06 PACKING 1 2.42
- ------------------------------------------------------
AS3084-08 PACKING 1 2.42
- ------------------------------------------------------
AS3084-007 PACKING 1 1.24
- ------------------------------------------------------
AS3085-008 PACKING 1 0.55
- ------------------------------------------------------
AS3085-011 PACKING 1 1.23
- ------------------------------------------------------
AS3085-015 PACKING 1 1.47
- ------------------------------------------------------
AS3085-016 PACKING 1 2.10
- ------------------------------------------------------
AS3085-017 PACKING 1 1.59
- ------------------------------------------------------
AS3085-018 PACKING 1 1.23
- ------------------------------------------------------
AS3085-019 PACKING 1 1.59
- ------------------------------------------------------
AS3085-020 PACKING 1 3.33
- ------------------------------------------------------
AS3085-022 PACKING 1 1.76
- ------------------------------------------------------
AS3085-024 PACKING 1 2.40
- ------------------------------------------------------
AS3085-028 PACKING 1 3.50
- ------------------------------------------------------
AS3085-031 PACKING 1 4.16
- ------------------------------------------------------
AS3085-113 PACKING 1 1.91
- ------------------------------------------------------
AS3085-122 PACKING 1 1.99
- ------------------------------------------------------
AS3085-126 PACKING 1 4.77
- ------------------------------------------------------
AS3085-129 PACKING 1 4.07
- ------------------------------------------------------
AS3085-158 PACKING 1 15.33
- ------------------------------------------------------
AS3085-227 PACKING 1 4.65
- ------------------------------------------------------
AS3209-028 O-RING 1 0.63
- ------------------------------------------------------
MS16627-4075 RING 25 2.63
- ------------------------------------------------------
MS29513-137 PACKING 1 3.45
- ------------------------------------------------------
MS9020-05 SEAL 1 1.22
- ------------------------------------------------------
MS9060-05 BOLT 25 4.46
- ------------------------------------------------------
MS9320-09 WASHER 25 0.29
- ------------------------------------------------------
MS9432-07 BOLT 10 10.21
- ------------------------------------------------------
MS9565-28 BOLT 10 7.34
- ------------------------------------------------------
MS9565-31 BOLT 10 9.21
- ------------------------------------------------------
MS9565-33 BOLT 10 7.93
- ------------------------------------------------------
MS9565-34 BOLT 10 8.55
- ------------------------------------------------------
MS9566-06 BOLT 10 6.69
- ------------------------------------------------------
MS9593-198 BRACKET 2 37.27
- ------------------------------------------------------
23001757 COVER 20 4.67
- ------------------------------------------------------
23001827 SCREEN 2 30.04
- ------------------------------------------------------
</TABLE>
75
<PAGE> 104
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
23004212 SHIM 100 0.52
- ------------------------------------------------------
23004513 SEAL 1 173.71
- ------------------------------------------------------
23004514 SEAL 1 85.16
- ------------------------------------------------------
23004538 NUT 10 4.45
- ------------------------------------------------------
23005274 RING 25 12.42
- ------------------------------------------------------
23005678 SEAL 1 153.22
- ------------------------------------------------------
23005684 WASHER 10 7.22
- ------------------------------------------------------
23007167 GASKET 10 15.06
- ------------------------------------------------------
23008014 KIT 1 129.01
- ------------------------------------------------------
23008017 WASHER 25 11.72
- ------------------------------------------------------
23009312 GASKET 20 3.23
- ------------------------------------------------------
23009572 SEAL 1 70.75
- ------------------------------------------------------
23009573 PLUG 5 32.37
- ------------------------------------------------------
23033862 SEAL 1 87.81
- ------------------------------------------------------
23039030-04 CLAMP 5 5.29
- ------------------------------------------------------
23039059 RING 10 9.43
- ------------------------------------------------------
23039060 RING 4 20.75
- ------------------------------------------------------
23039911 GASKET 1 307.79
- ------------------------------------------------------
23050814 PIN 10 7.30
- ------------------------------------------------------
23052363 DECAL 1 1.87
- ------------------------------------------------------
23052954 GASKET 25 0.73
- ------------------------------------------------------
23052955 GASKET 25 0.92
- ------------------------------------------------------
23053258 GASKET 1 11.32
- ------------------------------------------------------
23053259 GASKET 5 11.34
- ------------------------------------------------------
23053263 GASKET 4 1.97
- ------------------------------------------------------
23053993 GASKET 50 0.80
- ------------------------------------------------------
23053995 GASKET 50 0.59
- ------------------------------------------------------
23053996 GASKET 25 0.41
- ------------------------------------------------------
23054602 GASKET 50 0.94
- ------------------------------------------------------
23054604 GASKET 50 0.46
- ------------------------------------------------------
23054637 GASKET 25 0.80
- ------------------------------------------------------
23056114 SEAL OIL 1 5.93
- ------------------------------------------------------
23056115 SEAL NUT 1 6.90
- ------------------------------------------------------
23057790 SEAL 1 29.85
- ------------------------------------------------------
23061822 GASKET 25 1.71
- ------------------------------------------------------
23064633 QUAD RIN 20 1.02
- ------------------------------------------------------
23065485-990 PACKING 1 3773.00
- ------------------------------------------------------
23068210 TUBE ASS 1 387.59
- ------------------------------------------------------
6719546 SPACER 10 4.46
- ------------------------------------------------------
6726656-118 RING 50 0.94
- ------------------------------------------------------
6726656-168 RING 50 0.99
- ------------------------------------------------------
6726656-200 RING 25 2.65
- ------------------------------------------------------
6726656-244 RING 25 2.78
- ------------------------------------------------------
6726656-90 RING 50 0.77
- ------------------------------------------------------
6726656-96 RING 25 1.08
- ------------------------------------------------------
</TABLE>
76
<PAGE> 105
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
6730623 SEAL 25 2.27
- ------------------------------------------------------
6746974 NUT 10 10.48
- ------------------------------------------------------
6746975 NUT 4 11.11
- ------------------------------------------------------
6784419-3 SEAL 3 12.53
- ------------------------------------------------------
6784419-8 SEAL 5 19.64
- ------------------------------------------------------
6800088-10 COVER 10 23.86
- ------------------------------------------------------
6800088-11 COVER 5 17.53
- ------------------------------------------------------
6800088-16 COVER 5 17.53
- ------------------------------------------------------
6800088-17 COVER 10 6.08
- ------------------------------------------------------
6800088-3 COVER 15 4.50
- ------------------------------------------------------
6800193-164 CAP 100 0.20
- ------------------------------------------------------
6800193-167 CAP 50 1.17
- ------------------------------------------------------
6800193-171 CAP 50 1.45
- ------------------------------------------------------
6800193-178 CAP 50 1.49
- ------------------------------------------------------
6800193-220 CAP 50 1.62
- ------------------------------------------------------
6800218-321 PLUG 100 0.89
- ------------------------------------------------------
6800218-322 COVER 100 1.00
- ------------------------------------------------------
6800218-325 PLUG 50 0.89
- ------------------------------------------------------
6800218-326 PLUG 50 1.59
- ------------------------------------------------------
6800218-327 PLUG 25 1.35
- ------------------------------------------------------
6810345 SPRING 10 8.29
- ------------------------------------------------------
6810421 WASHER 25 2.42
- ------------------------------------------------------
6810436 RING 10 3.51
- ------------------------------------------------------
6820291 RING 5 14.60
- ------------------------------------------------------
6820557 POPPET 5 48.77
- ------------------------------------------------------
6823481-4990 PACKING 1 497.73
- ------------------------------------------------------
6823481-7990 PACKING 1 1201.05
- ------------------------------------------------------
6825392 WASHER 10 6.96
- ------------------------------------------------------
6829641 NUT 1 75.85
- ------------------------------------------------------
6840109 RETAINER 5 27.72
- ------------------------------------------------------
6840111 POPPET 5 27.35
- ------------------------------------------------------
6840364-5 PLUG 50 1.41
6840380-98 RING 25 1.52
- ------------------------------------------------------
6840406 NUT 1 132.98
- ------------------------------------------------------
6840476 SCREEN 5 27.30
- ------------------------------------------------------
6841676 GASKET 5 14.81
- ------------------------------------------------------
6843610 PACKING 2 2.25
- ------------------------------------------------------
6849468-0805 BOLT 25 4.45
- ------------------------------------------------------
6851501-160 PACKING 1 15.88
- ------------------------------------------------------
6851501-57 O-RING 1 11.53
- ------------------------------------------------------
6854086 SEAL 2 7.41
- ------------------------------------------------------
6854424 SEAL 1 4.21
- ------------------------------------------------------
6854521 SEAL 2 4.12
- ------------------------------------------------------
6855877 KIT 1 47.84
- ------------------------------------------------------
6856211 SEAL 10 3.34
- ------------------------------------------------------
</TABLE>
77
<PAGE> 106
EXHIBIT A
<TABLE>
<CAPTION>
- ------------------------------------------------------
MIN
ORDER
PART NUMBER DESC. QTY 1999 LIST
- ------------------------------------------------------
<S> <C> <C> <C>
6856248 RING 2 28.14
- ------------------------------------------------------
6859922 CAP 2 8.40
- ------------------------------------------------------
6859823 COVER 10 8.50
- ------------------------------------------------------
6859880 NUT 50 1.35
- ------------------------------------------------------
6866246 TAG 25 3.15
- ------------------------------------------------------
6868675-1 COVER 15 17.53
- ------------------------------------------------------
6870031 RACE 1 222.17
- ------------------------------------------------------
6870032 FILTER 1 188.23
- ------------------------------------------------------
6870737 RING 1 128.75
- ------------------------------------------------------
6871162 SHIM 12 0.27
- ------------------------------------------------------
6873834 KIT 15 5.10
- ------------------------------------------------------
6873905 RING 5 8.29
- ------------------------------------------------------
6875350 GASKET 1 16.13
- ------------------------------------------------------
6875351 GASKET 1 15.96
- ------------------------------------------------------
6875491 SEAL 1 123.44
- ------------------------------------------------------
6876637 RING 35 1.53
- ------------------------------------------------------
6887099-1 STUD 5 17.91
- ------------------------------------------------------
6889096 PISTON 1 141.76
- ------------------------------------------------------
6889160 RING 1 88.87
- ------------------------------------------------------
6889347 RING 15 6.40
- ------------------------------------------------------
6893603 GASKET 1 103.41
- ------------------------------------------------------
6893698 COVER 1 99.16
- ------------------------------------------------------
6895805 WASHER 1 203.65
- ------------------------------------------------------
6898517 PACKING 1 10.30
- ------------------------------------------------------
6898657 RING 1 166.31
- ------------------------------------------------------
6898930 SPACER 10 6.96
- ------------------------------------------------------
6898987 BODY 1 108.12
- ------------------------------------------------------
6898989 REDUCER 1 231.63
- ------------------------------------------------------
6899098 SCREEN 6 35.64
- ------------------------------------------------------
6899114 DIAPHRAG 2 57.76
- ------------------------------------------------------
6899266 COVER 1 131.25
- ------------------------------------------------------
6899354 GASKET 20 1.91
- ------------------------------------------------------
6899408 SHIM 10 7.30
- ------------------------------------------------------
</TABLE>
78
<PAGE> 107
EXHIBIT B
FLEET OPERATOR EXISTING CUSTOMERS
The Company may be obligated to sell Products to certain third parties
referred to as Fleet Operators through December 31, 2001. A list of such Fleet
Operators is set forth on Exhibit B-1.
The parties agree that they will jointly make a commercially reasonable
effort to obtain the agreement of each Fleet Operator to terminate its
respective agreement as of December 31, 1999 so as to take advantage of the full
benefits of this Agreement.
In the event any or all of such Fleet Operators choose not to terminate
their existing agreements, between January 1, 2000 and December 31, 2001 Company
is permitted to continue to sell Products to such Fleet Operators, but only
pursuant to the terms set forth below:
1. When Company receives an order from an applicable Fleet Operator
it shall promptly inform Distributor of such order.
2. Such orders will be filled by Distributor from its inventory of
Products for the benefit of Company, in the quantity and within
the shipping dates given to Distributor by Company, along with
the notice of such order from the Fleet Operator.
3. Distributor shall bill Company for the cost of each such order at
***% off list price, plus normal shipping expenses, and such
amounts shall be offset against amounts otherwise due by
Distributor to Company pursuant to Section 5 of the Agreement.
4. Company shall be responsible for billing to and collecting from
each such Fleet Operator for any and all amounts due Company for
any such orders.
5. Following December 31, 2001, and for the remainder of this
Agreement, the Company shall no longer have the right to sell
Products to Fleet Operators pursuant to this reservation of
rights.
- --------------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 108
EXHIBIT B-1
MODEL 250 FLEET OPERATORS
ALL FLEET OPERATOR AGREEMENTS ARE EXACTLY LIKE THE AEROTECNICA AGREEMENT; ALL
HAVE ENDING DATES OF DEC. 31, 2001.
Aerotecnica, S.A.
P.O. Box 60107
Av. La. Estancancia, Torre Las
Mercedes
Piso 2, Ofic. 210
Caracas 1060, Venezuela
Attention: Mr. Antonio Dugarte
Telephone: 58-1-424-1300
Fax: 58-2-917-390
- --------------------------------------------------------------------------------
Aero Asahi Corporation
Sunshine 60, Floor, No. 1-1-3-chome
Higashi-Ikebukuro, Toshima-ku, Tokyo, 170-607
Japan
Attention: Mr. M. Iijima
Telephone: 81-3-3988-9947
Fax: 81-3-3980-9043
- --------------------------------------------------------------------------------
Air Logistics
4605 Industrial Drive
New Iberia, Louisiana 70560
Attention: Mr. Neill Osborne
Telephone: 318-365-6771
Fax: 318-364-8222
- --------------------------------------------------------------------------------
<PAGE> 109
Airwork (NZ) Limited
P. 0. Box 516
Papakura, New Zealand
Attention: Mr. Rick Starr, Engine Shop Manager
- --------------------------------------------------------------------------------
Chevron, U.S.A.
Production Company
New Orleans Lakefront Airport
New Orleans, Louisiana 70186
Attention: Mr. Steve Sabree
Telephone: 504-241-2120
Fax: 504-244-4121
- --------------------------------------------------------------------------------
Custom Helicopters, Ltd.
401 Helicopter Drive
St. Andrews Airport
St. Andrews, MB
Canada R1A 3P7
Attention: Mr. Jim Hawes
Telephone: 204-338-7953
Fax: 204-663-5037
- --------------------------------------------------------------------------------
Eagle Copters Maintenance, Ltd.
825 McTavish Road, N.E.
Calgary, Alberta
Canada T2E 7G9
Attention: Mr. Mike O'Reilly
Telephone: 403-250-7370
Fax: 403-250-7110
- --------------------------------------------------------------------------------
<PAGE> 110
El Paso Energy
16951 JFK Boulevard
Houston, Texas 77032
Attention: Mr. Bill Davidson
Telephone: 281-765-4857
Fax: 281-765-4859
- --------------------------------------------------------------------------------
Era Aviation, Inc. Era Aviation (branch location)
6160 Carl Brady Drive Lake Charles Regional Airport
Anchorage, Alaska 99502 Lake Charles, Louisiana 70605
Attention: Mr. Mark B. Jones Attention: Mr. Tom Young
Telephone: 907-248-4422 Telephone: 318-478-6131
Fax: 907-266-8350 Fax: 318-474-3918
- --------------------------------------------------------------------------------
Highland Helicopters, Inc.
4240 Agar Drive
Vancouver Airport, South
Richmond, B.C., Canada V7B 1A3
Attention: Mr. Howie Pinchbeck
Telephone: 604-273-6161
Fax: 604-273-6088
- --------------------------------------------------------------------------------
Houston Helicopters
3506 Lockheed
Pearland, Texas 77581
Attention: Mr. Felton Baker, President
Telephone: 281-485-1777
Fax: 281-485-3701
- --------------------------------------------------------------------------------
<PAGE> 111
Metro Aviation, Inc.
1400 Airport Drive, Hangar 120
Shreveport, Louisiana 71107
Attention: Mr. Milton Geltz
Telephone: 318-222-5529
Fax: 318-222-0503
- --------------------------------------------------------------------------------
Mobil Business Resources Corporation (MBRC)
Global Aircraft Services
1200 Youngs Road
Morgan City, Louisiana 70380
Attention: Mr. Daryl McLafferty, Aircraft Maintenance Chief
Telephone: 504-380-5601
Fax: 504-380-5722
- --------------------------------------------------------------------------------
Northern Mountain Helicopters, Inc.
Prince George Airport
Prince George, B.C.
Canada V2L 4S2
Attention: Mr. Bob Randall
Telephone: 250-963-9622
Fax: 250-963-9015
- --------------------------------------------------------------------------------
Omniflight
4650 Airport Parkway
Dallas, Texas 75248
Attention: Mr. Scott Parsenin
Telephone: 972-776-0130
Fax: 972-776-0131
- --------------------------------------------------------------------------------
<PAGE> 112
Vancouver Island Helicopters, Inc.
#1-9600 Canora Road
Sidney, B.C.
Canada V8L 5V5
Attention: Mr. Dave Heyer, Director of Maintenance
Telephone: 250-656-3987
Fax: 250-655-1180
- --------------------------------------------------------------------------------
<PAGE> 113
LONG TERM AGREEMENTS
The Company may be obligated to sell Products to certain third parties referred
to as LTA parties. A list of such LTA parties and the expiration date for each
agreement is set forth below.
Company is permitted to continue to sell Products to such LTA parties between
January 1, 2000 and the dates set forth below, but only pursuant to the terms
set forth below:
1. When Company receives an order from an applicable LTA party it
shall promptly inform Distributor of such order.
2. Distributor will fill such orders from its inventory of Products
for the benefit of the Company, in the quantity and within the
shipping dates given to Distributor by the Company, along with
the notice of such order from the LTA party.
3. Distributor shall bill the Company for the cost of each such
order at ***% off list price, plus normal shipping expenses, and
such amounts shall be offset against amounts otherwise due by
Distributor to the Company pursuant to Section 5 of the
Agreement.
4. The Company shall be responsible for billing to and collecting
from each such LTA party for any and all amounts due the Company
for any such orders.
5. Following the respective termination date for each such agreement
and for the remainder of this Agreement, the Company shall no
longer have the right to sell Products to LTA parties pursuant to
this reservation of rights.
The existing LTAs are:
o H&S Aviation (Expires ***) for sales to Belgian army
o Aeromaritime (Expires ***) -- U.S. Army NTH Program
- ------------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 114
EXHIBIT C
ON HAND INVENTORY PURCHASE
Distributor will purchase all Company inventory of Products on hand at year-end
1999 under the following conditions:
o Inventory with sales in the preceding 24 months and an on-hand balance of
less than or equal to the quantity sold in the preceding 24 months
(hereinafter "X Parts") will be purchased at ***% off list price.
o All Products with sales in the preceding 24 months and an on-hand balance
greater than the quantity sold in the preceding 24 months (hereinafter "Y
Parts") will be purchased at ***% off list price, except for those part
numbers set forth on Exhibit C-1 which will be purchased to the pricing set
forth on Exhibit C-1. With respect to Y Parts not listed on Exhibit C-1,
the following shall apply:
o A semi-annual refund will be paid by the Distributor to the Company as
follows:
o January 1, 2000 through December 31, 2000: a refund of ***% of
Gross Margins from the sale of Y Parts
o January 1, 2001 through December 31, 2001: a refund of ***% of
Gross Margins from the sale of Y Parts
o This provision for refund expires on December 31, 2001
o In no circumstance will any refund be paid for quantities of Product
sold in excess of those purchased by Distributor in its original
inventory acquisition during November and December 1999.
o Any payments hereunder will be made within 30 days of the end of each
semi-annual calculation period.
o For purposes of the foregoing, "Gross Margin" shall mean the total
sales revenue received by Distributor with respect to sales made
during the semi-annual calculation period less the acquisition cost of
the Product from the Company (i.e. list price less ***% discount).
o All Products with no sales in preceding 24 months (hereinafter "Z Parts"),
will be purchased as a single lot for $*** regardless of the number of part
numbers or quantities.
o New Products on hand at year-end and not yet introduced to the aftermarket
will be purchased at ***% off list price.
o All Products to be purchased must be in new or factory-overhauled
condition, properly marked and packaged and accompanied by the appropriate
documentation (i.e. packing list) set forth in Exhibit C-2.
o The Company's inventory position of Products as of the 1st of November,
1999 will be target date for making the "On Hand Inventory Purchase".
Inventory on that date, plus inventory of Products produced per the
manufacturing schedules of November and December 1999 will be purchased by
Distributor subject to the price terms noted above.
- -----------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 115
o Payment to the Company by Distributor for these Products is to be made
within 30 days of shipment; provided, however, that for all Products
received through December 20, 1999, payment will be made no later than
December 30, 1999.
INITIAL PROVISIONING ORDER
In addition to purchasing Company's on hand inventory as set forth above, The
Distributor will make an initial provisioning order of at least $*** at
Distributor's cost. This order will be issued within two weeks of the date of
the Agreement. Distributor will work with Company to identify Products Company
can produce and deliver in 1999 and that Distributor is willing to take delivery
of in 1999. If the entire $*** cannot be delivered in 1999 the remaining portion
will be scheduled for delivery in 2000.
- -----------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 116
EXHIBIT C-1
<TABLE>
<CAPTION>
AVIALL DISCOUNT
PART # OFF LIST PRICE
- ------ --------------
<S> <C>
23065833 ***%
23071311 ***%
23071896 ***%
23030975 ***% (a category Z part)
7593315-001 ***% New part per Section 7
23069789 ***% New part per Section 7
</TABLE>
- -----------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 117
EXHIBIT C-2
PACKAGING LIST, MARKING AND PART PACKAGING REQUIREMENTS
The Distributor has set the following standard for packing lists that are
received with Products from the Company. These requirements include:
o Packing list should be on white paper with black ink.
o The top copy of the packing list (or copy) is preferred because triplicate
copies tend to smudge easily and handwritten data is hard to read.
o The packing list should be on 8 1/2" x 11" paper and not thin paper (print
bleeds through from the back to front when thin paper is copied).
o The packing list should have a Certificate statement either attached to the
packing list or hard-copied to print on the packing list.
o A QA representative should sign the statement.
o The statement should state that the parts were produced in accordance
with FAA requirements (FAR 21 in most cases.)
o The packing list should include the FAA approved part number (not
subcontractors P/N).
o The packing list should include manufacture date and expiration
date, when applicable for shelf life items.
o The font size should be readable, nothing less than a size
10-point font.
Part marking or identification is a FAA requirement for all manufactures of FAA
approved product. The part identification should include:
o Compliance with FAA rules (FAR 45.15)
o Name of manufacturer or symbol.
o Part number that is FAA approved,
o Description of part/nomenclature,
o Eligibility of the part (if part is too small then a label
must be attached or a reference book that contains the
information must be readily available to Distributor).
o If the item has a shelf life, it should be marked with date of
manufacture and expiration date.
o If the item has a serial number, it should be shown on the
outside of the part package as well as on the part.
o Standard items (AN, MS, AS, and NAS) should be marked
accordingly.
Part packaging should be adequate to preclude damage during shipping, storage
and handling.
<PAGE> 118
o Items with serial numbers must be packaged individually.
o Serial number identification should be on the package.
o Items should be packaged, as they would be sold.
<PAGE> 119
EXHIBIT D
Warranty Return Program
Distributor 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 Distributor 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, and
o When applicable, shipment of repaired warranty Product, at
the Company's expense, to the customer.
<PAGE> 120
EXHIBIT E
NEW ENGINE SALES SUPPORT:
Company may, to support any new engine sales and associated normal levels of
spare modules and parts, require Distributor to ship parts and modules to such
customers at no charge to the customer.
When such requests are made:
o Company will place an order with Distributor.
o Distributor will ship the part or module directly to the designated
customer address and include an appropriate packing slip.
o Distributor will issue an invoice to Company using *** at order time plus
***%.
o Freight cost will be borne by the customer or Company, determined on a case
by case basis.
NEW ENGINE PRODUCTION SUPPORT:
Company may from time to time require Product be returned from Distributor to
support Company's new engine production.
When such requests are made:
o Company will place an order with Distributor.
o Distributor will ship Product to Company's designated address.
o Distributor will issue an invoice or return order for credit to Company
using Distributor's average inventory cost.
o Company will be responsible for freight cost of such shipments.
o Company will use reasonable efforts to minimize quantity of these
occurrences.
- -----------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 121
EXHIBIT F
PRODUCT RECALL:
When Company determines that a product recall is required, Distributor will be
notified by Company.
Distributor will follow its then current ISO 9002 procedures for recalls.
Distributor 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> 122
EXHIBIT G
FORECASTING
Distributor will maintain a rolling 36-month monthly forecast of Product
purchases for Company's planning purpose. Company acknowledges that
Distributor's planning system does not provide for a longer than 24-month
horizon and the parties agree that for planning purposes month 13-24 will be
duplicated as months 25-36.
Within 14 days after the signing of a definitive agreement, Distributor will
place a firm order for that portion of the existing Model 250 spare parts
fabrication/procurement schedule at or within the operations planning time fence
(procurement plus manufacturing lead time) plus 2 months. Distributor and the
Company will jointly evaluate that portion of the existing Model 250 spare parts
fabrication/procurement schedule at or within the operations planning time fence
(procurement plus manufacturing lead time) plus two months at the part number
level to ensure that Distributor will not be required to purchase excess
inventory. Excess inventory position is defined as having a projected on hand
balance in excess of 24 months historical usage. Exceptions based upon replacing
part number, alternate part numbers or new part numbers must be mutually agreed.
Beginning in 2000, the first six (6) months, or that portion of the schedule at
or within the operations planning time fence, whichever is greater, would be
considered a firm fixed schedule/order with a provision for fill in orders at
lead time. The remaining portion of the schedule through the 36-month would be
utilized for capacity planning by the Company.
<PAGE> 123
EXHIBIT H
PRICING TO AUTHORIZED MAINTENANCE CENTERS:
In order to provide the Company's Authorized Maintenance Centers (a list of such
centers is attached as Exhibit H-1) with competitive pricing and provide the
Company, those Authorized Maintenance Centers and their customers with the
continuing benefits of those Authorized Maintenance Center relationship with
Company, during the first five (5) years of the Term, Distributor proposes and
commits to sell Products to those Authorized Maintenance Centers which meet
Distributor's then current minimum purchase requirements at a price which is not
more than ***% off of the Company's then current published list prices. During
years six (6) through ten (10) of the Term, Distributor proposes and commits to
sell Products to those Authorized Maintenance Centers which meet Distributor's
then current minimum purchase requirements at a price which is not more than
***% off of the Company's then current published list prices.
Nothing contained herein shall preclude Distributor from selling Products to all
other customers at such prices and on such terms that Distributor, in its sole
discretion, shall determine; provided however, that Distributor will not sell
Products to other customers at prices less than the prices at which it sells
Products to those Authorized Maintenance Centers which meet Distributor's then
current minimum purchase requirements.
- -----------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 124
EXHIBIT I
Foreign Sales Agency Agreements
The Company currently is a party to three (3) agreements with certain sales
agents or representatives which expire after January 1, 2000 for the sale of
Products outside the United States. On or prior to December 1, 1999, the Company
shall identify which, if any, of these Agreements it wishes to assign to
Distributor, and shall furnish copies of such Agreements to Distributor for its
review. Distributor shall make reasonable effort to assume all obligations
arising under such agency agreements from and after January 1, 2000, unless
Distributor determines that it is prevented from doing so by reason of a
conflict between such agreements and Distributor's other existing contractual
relationships.
Notwithstanding the above, with regard to Company's existing agreement with ***
if the Distributor assumes such agreement, and orders any Product at a discount
to list, Distributor shall assume the risk of the first $*** annually in such
orders. If *** requests discount pricing of orders in excess of $*** annually,
then the Company and Distributor will mutually agree whether to take such order,
and if the order is accepted, Company agrees to reimburse Distributor for the
amount of discount off list for all such sales over $*** at discount.
If Distributor is unable or unwilling to assume a sales agent or representative
agreement as set forth above, the Company may be obligated to sell Products to
such sales agent or representative. In such event the Company is permitted to
continue to sell Products to such sales agent or representative but only
pursuant to the terms set forth below:
I ***
1. When Company receives an order from ***, it shall promptly inform
Distributor of such order.
2. Such orders will be filled by Distributor from its inventory of
Products for the benefit of Company, in the quantity and within
the shipping dates given to Distributor by Company, along with
the notice of such order from ***.
3. Distributor shall bill Company for the cost of each such order at
***% off list price, plus normal shipping expenses, and such
amounts shall be offset against amounts otherwise due by
Distributor to Company pursuant to Section 5 of the Agreement.
4. Company shall be responsible for billing to and collecting from
*** for any and all amounts due Company for any such orders.
- -----------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 125
5. Following ***, and for the remainder of this Agreement, the
Company shall no longer have the right to sell Products to ***
pursuant to this reservation of rights.
II ***
1. When Company receives an order from ***, it shall promptly inform
Distributor of such order.
2. Such orders will be filled by Distributor from its inventory of
Products for the benefit of Company, in the quantity and within
the shipping dates given to Distributor by Company, along with
the notice of such order from ***.
3. Distributor shall bill Company for the cost of each such order at
***% off list price, plus normal shipping expenses, and such
amounts shall be offset against amounts otherwise due by
Distributor to Company pursuant to Section 5 of the Agreement.
4. Company shall be responsible for billing to and collecting from
*** for any and all amounts due Company for any such orders.
5. Following ***, and for the remainder of this Agreement, the
Company shall no longer have the right to sell Products to ***
pursuant to this reservation of rights.
III ***
1. When Company receives an order from ***, it shall promptly inform
Distributor of such order.
2. Such orders will be filled by Distributor from its inventory of
Products for the benefit of Company, in the quantity and within
the shipping dates given to Distributor by Company, along with
the notice of such order from ***.
3. Distributor shall bill Company for the cost of each such order at
***% off list price, plus normal shipping expenses, and such
amounts shall be offset against amounts otherwise due by
Distributor to Company pursuant to Section 5 of the Agreement.
- -----------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 126
4. Company shall be responsible for billing to and collecting from
*** for any and all amounts due Company for any such orders.
5. Following ***, and for the remainder of this Agreement, the
Company shall no longer have the right to sell Products to Canada
pursuant to this reservation of rights.
- -----------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 127
EXHIBIT J
Sales Reports
Distributor will provide the Company all reports currently available online
through the "supplier services" section of Distributor'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
Additionally, Distributor 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
Other sales reports will be provided during the term of the Agreement as
mutually agreed by both parties.
<PAGE> 128
EXHIBIT K
MARKETING AND SUPPLIER SUPPORT SERVICES
The implementation, timing and applicability of each service set forth below
will determined by mutual agreement of both parties, based on customer and
market requirements.
A. Market information and data gathering by Distributor:
o Area sales personnel will request periodic 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 reported to Company by the product line manager.
o The results of routine sales calls by area sales personnel will be
documented on standardized call reports. This information will be reviewed
by the product line manager assigned to Company and by the helicopter
program manager on an ongoing basis. Summaries of important findings will
be reported to Company regularly.
o The helicopter program manager will make frequent calls to key customers,
including AMCs, with area sales personnel to identify opportunities and
address problems. The results of these calls will also be reported to
Company.
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 assigned 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 and the helicopter program manager.
o The product line and program managers will attend trade shows and other
helicopter 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.
B. Market strategy development in coordination with Company
o The product line and helicopter program managers will develop a marketing
plan in cooperation with counterparts at Company. This plan will be updated
at least annually. The marketing plan will include a summary of each key
product category, pricing strategies, stocking levels and locations,
customer targets, technical support requirements, and advertising methods
to be used. The product line and helicopter program managers will work with
Company personnel to effectively execute the plan through the Distributor's
organization. Both managers will be particularly sensitive to potential
opportunities that would expand A250 repair and overhaul volume at Company
facilities, such as
<PAGE> 129
rotable/exchange programs using factory overhauled units. As such
opportunities are identified, short-term plans will be developed to exploit
them.
C. Advertising and product promotion:
o The product line and helicopter program managers will work with Company
personnel to produce and place technical articles in appropriate
publications. Distributor's marketing communications manager will be an
important resource in this effort.
o Distributor will generate timely news releases for significant events such
as trade shows.
o Company will be offered a key role in Distributor's Parts and Maintenance
Symposia including a two-hour technical presentation at each event and a
prime position at the related trade show.
o The Distributor sales team will actively distribute Company product
literature.
o Distributor will conduct direct mail campaigns to targeted customer lists
as appropriate.
o Distributor's online electronic catalog will be updated to incorporate
Customer Products, including illustrations.
o Customers ordering online or browsing Distributor'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 Distributor's Intranet web page and worldwide email system will be used to
communicate promotions, technical data, and selling opportunities to our
global sales team.
o A special Customer web page or link can be incorporated into aviall.com, if
desired, to allow Distributor personnel and customers to obtain manuals,
technical data, product information and details of promotions.
Promotions and new product announcements will be communicated via the printed
"Sales Check" which is mailed monthly to the homes of Company sales personnel.
<PAGE> 130
EXHIBIT L
COMPANY PRICING
Company agrees that during the first *** years of the Term it will sell Product
to Distributor at a discount of not less than ***% off Company's then current
list price. For years *** through ten of the Term, the discount will be not less
than ***% off the then current list price.
- -----------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 131
EXHIBIT M
AVIALL MODEL 250 SERVICE PARTS SALES INCENTIVE PROGRAM
The intent of the Model 250 Parts Sales Incentive Program is to ensure RRA has
an active Distribution partner that will maximize the placement of RRA 250 parts
in the marketplace. This will be achieved through effective Marketing, Sales,
Forecasting and Pricing guidance provided by the successful Distribution
partner.
The Model 250 Financial Program is as follows:
1. Baseline Sales Value (BSV) $*** (in CY2000 US$)
2. For all RRA sales to Aviall in excess of the BSV (escalated to the
appropriate year of delivery), Aviall will receive a rebate at year end
equal to an additional ***% discount. The calculation is as follows:
[(AVIALL CY PURCHASES-BSV AT DELIVERY YEAR)/(1-DISCOUNT RATE)] x ***%=REBATE
That is, if Aviall buys $*** from RRA in 2000 (RRA sales), the rebate will be
calculated as: [(***)]. The rebate will be paid no later than February 28th of
the next year.
3. Floor Sales Value (FSV) = BSV x ***% - If sales fall below this number
($*** in 2000), a "Loss Carry Forward" will apply to the following sales
year. That is, if Aviall purchases in 2000 equal $***, a $*** reduction to
the total Aviall purchases achieved in 2001 would apply (ie, if Aviall
procures *** in 2001, the Rebate calculation would be based on $*** to
reflect the 2000 shortfall). The purpose for this provision is to normalize
peaks and valleys due to market conditions.
4. The BSV will be subject to an Aerospace Economic Index during the life of
the Contract. The formula to be used will be:
BSVn = BSVn-1 (PPIn-1/PPIn-2), whereby
BSVn = new BSV adjusted for escalation, rounded to the nearest $Million
BSVn-1 = BSV for previous selling year (i.e., in 2001 this value equals
$***)
PPI = the Producer Price Index Revision - Current Series, Series ID:
PCU3724#, Aircraft Engines and Engine Parts as published by the US
Bureau of Labor Statistics(*)
- -----------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 132
EXHIBIT M
(CONTINUED)
PPIn-1 = the arithmetic average of the PPI for the period 1 November to
31 October for the year immediately preceding the period being
calculated (BSVn)
PPIn2 = the arithmetic average of the PPI for the period 1 November to
31 October two years preceding the period being calculated (BSVn)
*Data can be accessed via the Internet on the Bureau of Labor
Statistics web site. After gaining web site access, select "Data,"
"Selective Access," "PPI Current Series," "Aircraft" text, "3724"
next form, "#" next form, then configure report as desired.
5. Distributor will receive a rebate at year end equal to ***% of purchases
from Company above BSV. All of Distributor's initial provisioning order,
whether delivered in 1999 or 2000 will be considered a purchase in 2000.
The rebate for each year will be paid by the end of the first month of the
following year.
- -----------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 133
EXHIBIT N
SERVICE STANDARDS
Service Standards for Company
(a) Back Order Recovery Rate
(b) Aviall Supplier Performance Measurement progress
(c) Delivery of Orders Within Lead Time
Service Standards for Distributor
(1) Error-free Shipping Rates
(2) Shipping Timeliness
(3) Expedite Orders as a percent of line items ordered
(4) Customer Service levels
The parties agree to set mutually acceptable objective ranges for each of the
above Service Standards before June 1, 2000.
<PAGE> 134
EXHIBIT N
(CONTINUED)
LATE DELIVERY FEES
DEFINITIONS:
A "Distributor scheduled purchase order line item" is defined as a line item on
a purchase order placed at standard lead time. The Company accepts and confirms
the purchase order line item.
A "late delivery line item" is defined as a "Distributor scheduled purchase
order line item" which was not shipped on the date agreed and/or in the quantity
required.
"Late Delivery %" is defined as the total "late delivery line items" for the
calendar year divided by the total number of "Distributor scheduled purchase
order line items" for the calendar year.
"Late Delivery Fee Calculation":
Within 30 days after the end of the calendar year the "Late Delivery %"
will be calculated. If the percentage does not exceed the Company schedule
performance maximum found in Exhibit N then no late delivery fee is due
Distributor.
If the "Late Delivery %" exceeds the scheduled performance maximum found in
Exhibit N, the amount by which the percentage exceeds the maximum will be used
to calculate the late delivery fee. This percent will be referred to as the
"percent eligible for reimbursement".
The amount due Distributor will be determined by the following formula:
*** multiplied by the "percent eligible for reimbursement" multiplied
by the dollar amount of the "Distributor scheduled purchase order line items".
The Late Delivery fee will be paid by the Company to Distributor no later than
February 15 following the calendar year of calculation.
Example: Calendar year 1
# $
----- ------
Distributor scheduled Purchase order line items 1,000 $5,000,000
Late Delivery line items 150
Late Delivery % (150 /1000) = 15%
Schedule Performance
- -----------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 135
EXHIBIT N
(CONTINUED)
Goal ***
Maximum ***
Percent eligible for reimbursement ***
Late delivery fee = ***
EXPIDITE FEES
DEFINITIONS:
"Distributor purchase order line item" is defined as all line items on all
Distributor purchase orders placed for delivery in the calendar year.
A "Distributor expedite order line item" is defined as a line item on a
Distributor purchase order placed at less than standard lead time.
"Expedite percent" is defined as the total "Distributor expedite order line
items" for the calendar year divided by the total number of "Distributor
purchase order line items".
"Expedite Fee Calculation":
Within 30 days after the end of the calendar year the "expedite %" will be
calculated. If the percentage does not exceed the Distributor expedite
performance maximum level in Exhibit N, then no expedite fee is due the Company.
If the "expedite %" exceeds the Distributor expedite performance maximum
found in Exhibit N the amount by which the percentage exceeds the maximum will
be used to calculate the expedite fee. This percent will be referred to as the
"percent eligible for reimbursement".
The expedite fee will be the total dollars on all "Distributor purchase
order line items" multiplied by the "percent eligible for reimbursement"
multiplied by ***.
The expedite fee will be paid by Distributor to the Company no later than
February 15 following the calendar year of calculation.
- -----------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 136
Example:
- -------
$
No. Amount
----- ------
Distributor scheduled Purchase order line items 2,000 $10,000,000
Distributor expedite purchase order line items 500
Expedite percent (500/2,000) = 25%
Expedite Performance
Goal ***
Maximum ***
Percent eligible for reimbursement = ***
Expedite fee ***
- -----------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 137
EXHIBIT 0
In the event that the Agreement is terminated by Company pursuant to Sections
11.01 or 11.02, as a condition to the effectiveness of such termination, Company
shall pay Distributor according to the following formula:
An amount which equals [*** + (the product of *** times Excess Sales Value times
***) times Pro Rata Term Percentage].
For the purpose of this 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 $***, adjusted by the PPI Index as set forth in
Exhibit M 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, 2009 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
$*** and no adjustment for PPI Index.
Excess Sales Value: $***
Full Calendar Months Remaining to December 31, 2009= 84
Pro Rata Term Percentage 84/120= .70
So the calculation is as follows:
***
Example 2: Termination after 60 months, total sales in preceding 12 calendar
months of $*** and the $*** as adjusted for PPI Index is $***
Excess Sales Value: $***
Full Calendar Months Remaining to December 31, 2009 = 60
Pro Rata Term Percentage = 60/120 = .50
So the calculation is as follows:
***
- -----------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR THE REDACTED
PORTIONS. THE CONFIDENTIAL REDACTED PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF AVIALL
Aviall, Inc. [Delaware]
Inventory Locator Service, Inc. [Tennessee]
Aviall Services, Inc. [Delaware]
Aviall Product Repair Services, Inc. [Delaware]
Aviall (UK) Limited [England]
Aviall Pte Ltd [Singapore]
Aviall Foreign Sales Corporation [Barbados]
Aviall Asia Limited [Hong Kong]
Aviall Airstocks Limited [Hong Kong]
Aviall (Canada) Ltd. [Ontario]
Aviall de Mexico, S.A. de C.V. [Mexico]
Aviall of Texas GmbH [Germany]
Aviall S.A.R.L. [France]
Aviall Australia Pty Ltd [Australia]
Mulayl Pty Ltd [Australia]
Van Dusen Aircraft Supplies Ltd [Australia]
Aviall New Zealand Limited [New Zealand]
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Nos. 33-72602, 33-72600, 33-72598, 33-90722 and
333-62633) of Aviall, Inc. of our report dated February 4, 2000 relating to the
consolidated financial statements and financial statement schedule, which
appears in this Form 10-K.
PricewaterhouseCoopers LLP
Dallas, Texas
March 15, 2000
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, on behalf of
Aviall, Inc., a Delaware corporation (the "Company"), hereby constitutes and
appoints Jeffrey J. Murphy, Jacqueline K. Collier and James E. O'Bannon and each
of them, the true and lawful attorney or attorneys-in-fact, with full power of
substitution and resubstitution, for the Company, to sign on behalf of the
Company and on behalf of the undersigned in his or her capacity as an officer
and/or a director of the Company, the Company's Annual Report on Form 10-K for
the year ended December 31, 1999, and to sign any or all amendments thereto, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, to or with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended, and the regulations promulgated
thereunder, granting unto said attorney or attorneys-in-fact, and each of them
with or without the others, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as the
undersigned might or could in person, hereby ratifying and confirming all that
said attorney or attorneys-in-fact, or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
effective as of March 14, 2000.
/s/ Paul E. Fulchino /s/ Richard J. Schnieders
- ------------------------ ---------------------------
Paul E. Fulchino Richard J. Schnieders
/s/ Henry A. McKinnell /s/ Bruce N. Whitman
- ------------------------ ---------------------------
Henry A. McKinnell Bruce N. Whitman
/s/ Donald R. Muzyka /s/ Jacqueline K. Collier
- ------------------------ ---------------------------
Donald R. Muzyka Jacqueline K. Collier
/s/ Cornelius Van Den Handel
---------------------------
Cornelius Van Den Handel
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AVIALL,
INC.'S 1999 ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH ANNUAL 1999 FORM 10-K.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,385
<SECURITIES> 0
<RECEIVABLES> 66,907
<ALLOWANCES> 4,155
<INVENTORY> 107,562
<CURRENT-ASSETS> 186,932
<PP&E> 34,530
<DEPRECIATION> 23,893
<TOTAL-ASSETS> 340,640
<CURRENT-LIABILITIES> 73,367
<BONDS> 69,200
0
0
<COMMON> 203
<OTHER-SE> 179,030
<TOTAL-LIABILITY-AND-EQUITY> 340,640
<SALES> 368,472
<TOTAL-REVENUES> 368,472
<CGS> 271,385
<TOTAL-COSTS> 271,385
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,345
<INCOME-PRETAX> 10,064
<INCOME-TAX> 4,949
<INCOME-CONTINUING> 5,115
<DISCONTINUED> 4,588
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,703
<EPS-BASIC> 0.53
<EPS-DILUTED> 0.53
</TABLE>
