Exhibit 10.40
AVIALL SERVICES,
INC.
And
ROLLS-ROYCE
CORPORATION
Amendment No. 1 to Distribution
Services Agreement
THIS AMENDMENT, effective as of the 29
th
day of August, 2000, by
and between Rolls-Royce Corporation, formerly known as Allison
Engine Co. d/b/a Rolls-Royce Allison, (hereinafter, ROLLS-ROYCE)
with offices located at 2001 South Tibbs Avenue, Indianapolis,
Indiana 46241, and a mailing address of P.O. Box 420, Indianapolis,
IN 46206, and Aviall Services, Inc. (hereinafter, AVIALL) 2075
Diplomat Drive, Dallas, Texas 75234-8999, provides Terms and
Conditions for the first amendment (hereinafter “Amendment
No. 1”) to the Distribution Services Agreement for Model 250
products dated November 3, 1999 (hereinafter the
“Agreement”). This Amendment No. 1 applies to the
Series II Compressor Case Exchange Program only.
ARTICLE I
DEFINITIONS
Core :
The part defined as the Series II (non-R) compressor case assembly.
It consists of two halves and is a serialized part. Both halves
must have the same serial and part number. Part numbers that
qualify for the Rolls-Royce Compressor Case Exchange program as:
P/N 6877410 and P/N 23057142 and subsequent part
numbers.
Core charge : An invoiced amount that covers the cost of a
compressor case core replacement. The core charge is issued by
Aviall to the compressor case exchange customer at the same time as
an invoice is issued for the exchange part.
Discount : Rolls-Royce’s reduction from the
published retail price of the compressor case half set.
Detail parts : Rolls-Royce Model 250 parts supplied to the
Rolls-Royce approved vendor for the purpose of embodiment into an
overhauled part for an exchange program.
End user : The owner or operator of a Model 250
engine.
Exchange Program : The program described in Article
II.
Product : The overhauled compressor case half set for
the Series II (non-R) Model 250 engine.
Vendor : A Rolls-Royce Authorized Company that is
contracted by the Rolls-Royce Helicopter Business to supply repair
and overhaul services for specific Model 250 parts.
ARTICLE II
EXCHANGE PROGRAM
This Amendment No. 1 establishes a program for
the exchange of refurbished series II (non-R) compressor case half
sets.
Rolls-Royce shall perform the following
functions in support of the program:
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1.
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Contract with
approved Vendor to supply the overhauled compressor case halves to
Aviall;
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2.
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Name Standard
Aero Canada as the sole source approved Vendor until December 31,
2002;
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3.
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Issue Purchase
Orders to Standard Aero Canada for compressor case overhauls to be
performed according to the Rolls-Royce Overhaul
Procedure;
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4.
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Supply detail
parts directly to the approved Vendor from Rolls-Royce Indianapolis
facility;
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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. OMITTED PORTIONS ARE INDICATED IN THIS
DOCUMENT WITH “***”.
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5.
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Supply and own,
with the approved Vendor, all cores supplied to the Rolls-Royce
exchange program;
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6.
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Amend the
Distribution Services Agreement dated November 3, 1999, to include
this program and a discount structure specifically for the
compressor case exchange program;
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7.
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Sell all
compressor case exchanges directly to Aviall;
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8.
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Cause Standard
Aero Canada to perform the following functions in support of the
program:
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Perform
overhaul of the Series II compressor case halves in accordance with
the applicable Rolls-Royce Overhaul Procedure;
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Order
compressor case vanes directly from Rolls-Royce
Indianapolis;
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Ship all
program overhauled compressor cases to Aviall with proper
airworthiness documentation and notify Rolls-Royce to originate
invoice from Rolls-Royce to Aviall;
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Provide a
written workscope to Aviall and Rolls-Royce within five working
days of receipt of each compressor case core returned to Standard
Aero;
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Include with
each exchanged unit to Aviall:
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—
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Detail return
part sheet checklist;
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—
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Compressor Case
airworthiness documentation.
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Aviall will perform the following functions in
support of the exchange program:
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1.
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Issue Purchase
Orders for product to Rolls-Royce;
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2.
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Release
marketing brochures to support the program;
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5.
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Issue the core
charge to the customer concurrent with the invoice;
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6.
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Track the core
through the Aviall inventory control system;
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7.
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Send the core
back to Standard Aero Canada from Aviall locations or customer
direct;
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8.
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Delete the core
charge upon its return to Standard Aero Canada;
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9.
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Issue credit to
adjust the List Price to customer based on workscope issued from
Standard Aero Canada;
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10.
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Aviall and
Rolls-Royce shall maintain a continuous monthly order board
requirement for the six part numbers for the Model 250 Series II
(non-R) compressor case vane bands. If the production of compressor
vane band assemblies does not meet the combined order board
requirements of Aviall and Rolls-Royce, then the number of vanes
actually produced (per part number) in arrears shall be computed as
a percent of the actual order board in place for each company. The
available parts shall then be allocated between Aviall and
Rolls-Royce consistent with this percentage. This percentage
allocation shall remain in effect until such time as the production
levels are at least equal to the combined order board.
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ARTICLE III
DISCOUNT AND SALVAGE
VALUE
Rolls-Royce will supply the Product to Aviall at
a discount of *** off the published retail list price. Rolls-Royce
reserves the right to change the retail price of the Product from
time to time, in accordance with the Agreement. The parties agree
that the salvage value for each repairable or acceptable core shall
be fixed at $*** for the remainder of 2000 and adjusted annually
thereafter.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY
AVIALL, INC. FOR CERTAIN PORTIONS OF THIS DOCUMENT. CONFIDENTIAL
PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
DOCUMENT WITH “***”.
ARTICLE IV
COMPRESSOR CASE EXCHANGE LIST
PRICE
The Year 2000 Retail List Price is as
follows:
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Repairs
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Core Charge
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Plastic only:
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$***
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$***
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1-4 vane replacements
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$***
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$***
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5-8 vane replacements
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$***
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$***
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9-12 vane replacements
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$***
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$***
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Note: Standard Aero will determine the work
scope based upon the condition of the core. Its determination will
be considered final and will determine the price to the
customer.
ARTICLE V
TERM
This Amendment No. 1 shall remain in full force
and effect until such time as the Agreement is terminated or
expires.
ARTICLE V
ENTIRE AGREEMENT
This Amendment No. 1 constitutes the entire
agreement between the parties as to the Series II Compressor Case
Half Sets Exchange Program. This Amendment No. 1 may not be
modified except by another written amendment signed by the
authorized representatives of both parties. This Amendment No. 1
incorporates all the terms of the Rolls-Royce Aviall Distribution
Services Agreement and its amendments, except as amended
herein.
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AVIALL SERVICES, INC.
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ROLLS-ROYCE CORPORATION
(formerly, Allison Engine Co.
d/b/a
Rolls-Royce Allison)
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By:
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/s/ F. Charles Elkins
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By:
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/s/ Gregory A. Young
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Printed name:
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F. Charles Elkins
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Printed name:
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Gregory A. Young
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Title
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Director, Marketing & Supplier
Services
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Title:
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Contracts Administrator
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Date:
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21 Sept. 00
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Date:
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21 Sept. 00
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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. OMITTED PORTIONS ARE INDICATED IN THIS
DOCUMENT WITH “***”.
