Document:

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                                                                   EXHIBIT 10.26

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
AGREEMENT WITH "***".

                         DISTRIBUTION SERVICES AGREEMENT

THIS DISTRIBUTION SERVICES AGREEMENT ("Agreement") is made as of December 17,
2001 by and between Rolls-Royce Corporation, a corporation with its principal
place of business in Indianapolis, Indiana (the "Company"), and Aviall Services,
Inc. (the "Service Provider").

                                    RECITALS

         A.       The Company is engaged in the business of designing,
                  manufacturing, distributing, marketing and selling the
                  Products (as herein defined).

         B.       The Service Provider has submitted Proposals dated March 12,
                  2001 and April 30, 2001 ("Proposals") to the Company to become
                  the exclusive Service Provider of the Company's Model T56
                  Products, as hereinafter defined.

         C.       The Company has relied upon Service Provider's proposals in
                  appointing the Service Provider under the terms and conditions
                  of the Agreement.

         D.       Service Provider has relied upon data and information supplied
                  by the Company in making its Proposals and entering into this
                  Agreement.

         E.       The Company therefore desires to appoint the Service Provider
                  as its Service Provider to sell, market and otherwise
                  distribute the Products in the Territory (as herein defined)
                  as of January 1, 2002 (the "Commencement Date"), and the
                  Service Provider desires to be so appointed by the Company,
                  all upon the terms and conditions set forth in this Agreement.

         F.       As used in this Agreement, "Products" mean all Rolls-Royce T56
                  and 501D parts, modules, and all related technical
                  publications, and all 501K parts that are common with the 501D
                  or T56 engines which, during the Term of this Agreement are
                  placed on the Company's price list, now or hereafter
                  manufactured, marketed, produced, re-manufactured or
                  refurbished by Company. The current list of Products is
                  identified on Exhibit A attached hereto.

         G.       As used in the Agreement, "Territory" means the entire world.

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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 2

                                   AGREEMENTS

NOW, THEREFORE, in consideration of the payment by check by Service Provider to
Company of Twenty Million ($20,000,000) dollars on or before December 28, 2001
and the mutual agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

         1.       Appointment of Service Provider. Subject to Section 2 hereof,
                  effective the "Commencement Date", the Company hereby appoints
                  the Service Provider as its exclusive Service Provider for
                  each of the Products in the Territory, and the Service
                  Provider hereby accepts such appointment, all upon the terms
                  and conditions set forth in this Agreement.

         2.       Reserved Rights.

                  (a)      Notwithstanding anything to the contrary contained
                           herein, the Company expressly reserves the right to
                           sell Products directly (i) to any airframe original
                           equipment manufacturer solely for installation on new
                           airframes, or (ii) to customers requesting normal
                           levels of spare modules and parts sold together with
                           new T56 engines.

                  (b)      The Company reserves the right to complement the
                           Service Provider's marketing efforts and will
                           maintain relationships with existing customers. In
                           order to fulfill certain contracting requirements of
                           governmental entities, the Company may be required to
                           directly negotiate sales terms with such customers.
                           In such circumstances, the Service Provider shall
                           honor the terms and conditions of such contracts as
                           required by the government customer and in accordance
                           with Exhibits G and N.

                  (c)      Notwithstanding anything herein to the contrary,
                           Company shall have the right to contract with a third
                           party to perform any marketing or promotional service
                           with respect to its business generally, including the
                           Products; provided that such activities do not
                           involve the sale or distribution of Products. In the
                           event the Company contracts with a third party to
                           perform any such service, Service Provider shall
                           cooperate in good faith with the Company and any such
                           third party, to the extent reasonably requested by
                           the Company; provided that Service Provider shall not
                           be required to undertake any duty to perform services
                           beyond those falling within its obligations under
                           this Agreement. Nothing herein shall restrict any
                           affiliate of the Company from performing any
                           aftermarket activities involving the T56 engine
                           except that Rolls-Royce Engine Services Oakland

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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 3

                           (RR ESO) shall sell repaired parts only to the
                           Service Provider and will not competitively market
                           repaired parts as part of its service and overhaul
                           functions.

                  (d)      The Company is participating in a program with the
                           United States Air Force in which the USAF turned over
                           numerous surplus power sections and complete engines
                           to Company. In exchange for this surplus material,
                           the Company is obligated to upgrade and deliver to
                           USAF twenty (20) engines. RR ESO is storing the
                           surplus material and providing the labor to upgrade
                           the engines. The Company is providing RR ESO, at no
                           charge, twenty upgrade kits and associated hardware,
                           for these engines. The Company retains the right to
                           ship this Product at no charge to RR ESO.

         3.       The Service Provider's Obligations. The Service Provider
                  shall:

                  (a)      use reasonable efforts to establish and maintain an
                           effective sales force and to promote sales of the
                           Products throughout the Territory. In addition,
                           Service Provider shall appoint a technically
                           qualified Product Manager and an experienced
                           Inventory Planner, each of whom shall be dedicated
                           exclusively to the Products, and shall maintain such
                           resources in place during the term. Recognizing that
                           adequate representation in the Territory is a vital
                           element of the Service Provider's obligations, the
                           Service Provider shall not significantly decrease its
                           commercial airline/military sales presence in any
                           region (North America, South and Latin America,
                           Europe, the Middle East, Far East/Pacific, and
                           Africa). Service Provider's presence may be
                           maintained by sales employees of Service Provider or
                           an affiliate located within a region or by the use of
                           third party sales representatives within the region.
                           Service Provider may change its current level and mix
                           of sales employees and/or third party sales
                           representatives within any region but it shall give
                           Company reasonable prior written notice of any
                           substantial change within any region and Service
                           Manager's Product Manager will consult with Company's
                           Product Manager regarding Service Provider's plans to
                           maintain adequate representation with such region
                           prior to the implementation of such substantial
                           change.

                  (b)      promptly after execution of this Agreement, place an
                           order to purchase all of those Products as provided
                           on Exhibit B-1. The initial inventory purchase will
                           be made in accordance with Exhibit B.

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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 4

                  (c)      make no warranty or guaranty, orally or in writing,
                           concerning any of the Products, which might be
                           perceived by a customer as in any way binding the
                           Company, except for such warranties as are
                           customarily made by the Company to first retail
                           purchaser of the Products.

                  (d)      at its own cost and expense, procure and maintain in
                           full force and effect during the term of this
                           Agreement coverage for the Company as an additional
                           insured under customary policies of insurance
                           including, without limitation, commercial general
                           liability, business interruption, inventory
                           replacement (at replacement costs), and aircraft
                           product and completed operations insurance. The
                           Service Provider agrees to waive any right of
                           subrogation against the Company in this or any other
                           policy of insurance carried by Service Provider, but
                           only to the extent that Service Provider may be
                           obligated to indemnify the Company pursuant to
                           Section 15 of this Agreement.

                  (e)      administer the Company's warranty return program as
                           set forth on Exhibit C;

                  (f)      administer new engine production support and new
                           engine sales related parts and modules needs as set
                           forth on Exhibit D;

                  (g)      administer the Company's Product recall program as
                           set forth on Exhibit E;

                  (h)      on the effective date of this Agreement, the Service
                           Provider shall have the information technology
                           capabilities described in the Service Provider's
                           Proposal to perform all tasks associated with order
                           management, distribution and forecasting of spare
                           parts. Initially, the Service Provider shall also
                           take such actions as may be necessary or appropriate
                           to ensure that its information technology systems are
                           compatible with those of the Company's current
                           system. Thereafter, Service Provider shall ensure
                           that its IT system is kept in good working order and
                           remains compatible with that of the Company. In the
                           event that a change to the Service Provider's IT
                           system is necessary, the Service Provider shall bear
                           reasonable expenses of ensuring continual
                           compatibility.

                  (i)      assume the primary forecasting role of new and used
                           spare parts; provide the Company with detailed part
                           number level requirements for new parts per the
                           guidelines established in Exhibit F. The Service
                           Provider will

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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 5

                           purchase and take physical possession of forecasted
                           inventory on terms and conditions established and in
                           accordance with the Agreement.

                  (j)      The parties agree that Company may engage in
                           advertising, name identification and quality image
                           programs regarding the Products independent of
                           Service Provider's programs. The Service Provider and
                           Company agree to market and advertise products in
                           accordance with Exhibit J.

                  (k)      maintain an inventory management and traceability
                           system equal to or better than the inventory
                           management and traceability system that adheres to
                           the provisions as identified in Exhibit Q. and as
                           described in Service Provider's Proposal, and provide
                           Company access to such system.

                  (l)      except as otherwise agreed in writing between the
                           parties, and except for contractual obligations
                           between the Service Provider and third parties in
                           effect on the date of this Agreement, from the date
                           of execution and during the term of this Agreement,
                           in order to promote, and efficiently distribute, the
                           Products, the Service Provider will not become a
                           Service Provider for any parts or engines (i) solely
                           or primarily relating to the Pratt & Whitney PW150,
                           the General Electric T64, or future engine
                           derivatives of such engines of the same or other
                           manufacturers which are clearly intended for
                           installation on air frames for which the T56 or 501D
                           engines are approved, (ii) of the 501K engine
                           industrial engine power class (3500 to 9000 Shaft
                           Horse Power - sea level static on a standard day)
                           which are used for industrial applications similar to
                           that of the 501K engine, (iii) interchangeable with
                           Products which are proprietary engine components for
                           the 501D and 501K engines manufactured by the
                           Company; (iv) interchangeable with parts which are
                           not proprietary parts currently manufactured by the
                           Company but which are, as of the date of execution of
                           the Agreement, purchased by the Company from third
                           parties and resold into the aftermarket by the
                           Company using a T56 part number, provided that
                           Service Provider may be a Service Provider for such
                           parts only if they are manufactured or sold by any
                           third party which, as of the date of this Agreement,
                           is currently a supplier to Service Provider and such
                           parts are not sold using an T56 part number or a
                           number confusingly similar to an T56 part number; or
                           (v) interchangeable with parts which are not
                           manufactured by the Company and are purchased by the
                           Company from a third party supplier at any time
                           during the term of the Agreement and such supplier
                           has an exclusive supply arrangement with the Company.

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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 6

                  (m)      share in the expense of the Company's foreign sales
                           agents as set forth on Exhibit H

                  (n)      comply with all statutes, laws, ordinances, rules,
                           regulations, and any other governmental authority in
                           connection with its sale and distribution of the
                           Products, including but not limited to obtaining
                           export licenses and other authorizations in
                           accordance with the International Traffic in Arms
                           Regulation (ITAR) and Export Administration
                           Regulations (EAR) to export any Product from the
                           United States. The Service Provider has the ultimate
                           responsibility for ensuring that it complies with all
                           U.S. Government export control laws and regulations.

                  (o)      make available to the Company on-line or provide to
                           the Company on a periodic basis, as applicable, in a
                           form mutually agreed by the parties, the sales
                           reports and other information described in Exhibit I.
                           From time to time at the Company's request, Service
                           Provider shall provide such further reports and
                           information, including information concerning
                           marketing activities, sales prospects set forth on
                           Exhibit J and publicly available financial data
                           regarding Service Provider's parent company, as the
                           Company may reasonably request. In addition, the
                           Company shall have the right upon reasonable notice
                           and during normal business hours to examine sales
                           records and other data relating to the activities of
                           Service Provider contemplated under this Agreement;
                           provided however, that nothing herein shall be deemed
                           to authorize or permit the Company access to sales
                           records and data regarding sales of merchandise for
                           third parties for which Service Provider distributes
                           merchandise or to non-public financial data of
                           Service Provider involving sales other than sales of
                           the Products.

                  (p)      commencing on the date of this Agreement and
                           continuing for so long as the Company requires the
                           same for performance under this Agreement, Service
                           Provider shall provide to Company, at no charge to
                           Company, the following:

                           (1)      The use of the office space in Service
                                    Provider's premises that Company may from
                                    time to time reasonably require in
                                    connection with its performance under this
                                    Agreement, together with office support
                                    services (excluding computer equipment)
                                    reasonably required in connection with the
                                    performance of the activities contemplated
                                    hereunder. In its occupancy and use of such

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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 7

                                    resources, Company personnel shall at all
                                    times abide by and act in accordance with
                                    Service Provider's corporate policies
                                    applicable at such site; and

                           (2)      For use by personnel employed or managed by
                                    Company on Service Provider's premises, the
                                    reasonable use of Service Provider's
                                    existing telephone system solely in
                                    connection with such personnel's work on the
                                    Agreement, provided that the Company shall
                                    reimburse Service Provider for all charges
                                    and costs related to such use.

                  (q)      manage order administration efforts from receipt of
                           order through invoicing. The Service Provider will
                           adequately staff a call center and incorporate the
                           Product into the web site as identified in the
                           proposal. The Service Provider shall allow the
                           Company to maintain in a prominent place on its web
                           site, at no cost to the Company, a banner designed by
                           the Company which identifies the Company (and/or its
                           affiliates) and which provides linked connections to
                           one or more web sites maintained by the Company (or
                           its affiliates ) for the promotion of its business,
                           products and services.

                  (r)      evaluate availability and demand for, and procure as
                           necessary, serviceable, surplus and repaired T56
                           spare parts to complement new part sales. The Service
                           Provider will procure these parts only from sources
                           approved by the Company. In order to appropriately
                           compensate the Company for its technical and
                           engineering support in approving third parties for
                           use of the Company's name and logo in connection with
                           repairable, serviceable and surplus Products for
                           resale, the Service Provider will pay the Company a
                           percentage of sales price in royalty fees for
                           repairable, serviceable and surplus product obtained
                           other than from Company or its affiliates per Exhibit
                           P.

                           The Service Provider will be responsible for payment
                           of shipping between their facility and the repair or
                           procurement source.

         4.       The Company's Obligations. The Company shall:

                  (a)      produce, deliver, and sell the Products in the
                           quantities ordered by Service Provider at the
                           transfer rate established in Section 3 using
                           reasonable efforts to deliver such Products within
                           lead times agreed to by the parties

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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 8
                           from time to time. The Company shall not deliver
                           orders more than five (5) business days prior to the
                           requested ship date without the Service Provider's
                           prior written approval;

                  (b)      refrain from selling Products to any person other
                           than the Service Provider, except as permitted in
                           Section 2 above.

                  (c)      promptly refer to Service Provider all leads,
                           prospects, and related information which are directed
                           to it or which it receives regarding potential
                           purchasers of the Products within the Territory;

                  (d)      maintain a suggested list price catalog for new and
                           repaired Products. The Company will compensate the
                           Service Provider for honoring governmental contract
                           pricing requirements below the agreed upon transfer
                           rate. The Company will pay the Service Provider a
                           handling fee equal to ***% of list price.

                  (e)      offer training and technical assistance to the
                           Service Provider and its personnel in the use and
                           operation of the Products. The Company will bear the
                           training expense of up to six people per calendar
                           year at the Company's training facility in
                           Indianapolis. All travel expenses will be assumed by
                           the Service Provider.

                  (f)      ensure that all Products sold to Service Provider for
                           resale or for delivery to third parties on behalf of
                           the Company have all appropriate governmental and
                           regulatory approvals such as FAA/PMA, TSO or STC as
                           required for installation on type certified aircraft
                           or engines, or on military aircraft or engines.
                           Additionally, the Company will provide Service
                           Provider with all certifications required from the
                           manufacturer of the Products for export oversees.

                  (g)      comply with all statutes, laws, ordinances, rules,
                           regulations and any other governmental authority in
                           connection with the manufacture of the Products. The
                           Company shall promptly notify the Service Provider
                           whenever it receives any notice addressed to it by
                           any governmental entity concerning the application of
                           any new rule, directive, regulation or other
                           governmental requirement concerning the sale of
                           Products in the Territory.

  ***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
  PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY
  WITH THE SECURITIES AND EXCHANGE COMMISSION.

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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 9

                  (h)      at its own cost and expense, procure and maintain in
                           full force and effect during the term of this
                           Agreement coverage for Service Provider as an
                           additional insured under a Broad Form Vendors
                           Endorsement to the Company's liability insurance
                           policy and the Company agrees to waive any right of
                           subrogation against Service Provider in this or any
                           other policy of insurance carried by Company, but
                           only to the extent that Company may be obligated to
                           indemnify Service Provider pursuant to Section 15 of
                           the Agreement.

                  (i)      give Service Provider not less than ninety (90) days
                           prior written notice if any Products will be
                           superceded or modified, except in cases involving
                           airworthiness or safety issues, in which case notice
                           shall be given as soon as reasonably possible.

                  (j)      Commencing on the date of this Agreement and
                           continuing for so long as Service Provider requires
                           the same for the performance under this Agreement,
                           the Company shall provide to Service Provider, at no
                           charge to Service Provider, the following:

                           (1)      The use of the office space in Company's
                                    premises that Service Provider may from time
                                    to time reasonably require in connection
                                    with its performance under this Agreement,
                                    together with office support services,
                                    excluding computer equipment, reasonably
                                    required in connection with the performance
                                    of the activities contemplated hereunder. In
                                    its occupancy and use of such resources,
                                    Service Provider personnel shall at all
                                    times abide by and act in accordance with
                                    Company's corporate policies applicable at
                                    such site; and

                           (2)      For use by personnel employed or managed by
                                    Service Provider on Company's premises, the
                                    reasonable use of Company's existing
                                    telephone system solely in connection with
                                    Service Provider's provision of the Services
                                    to Company; provided that Service Provider
                                    shall reimburse the Company for all charges
                                    and costs related to such use.

                  (k)      The Company shall insure that its IT system is kept
                           in good working order. In the event that a change to
                           the Company's IT system is necessary, the

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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 10

                           Company shall bear the reasonable expense of ensuring
                           continual compatibility.

         5.       Terms of Sale.

                  (a)      The Company shall sell the Product to the Service
                           Provider at the discounts to published list prices
                           indicated on Exhibit K attached hereto based upon
                           prior year's sales. The current list prices for the
                           Products are shown on Exhibit L and the Company shall
                           maintain such list prices unless and until such
                           prices are changed in accordance with the provisions
                           hereof.

                           All such prices are F.O.B. Company's facility and
                           include packing in accordance with the Company's
                           standard commercial shipping practices in effect at
                           the time of shipment.

                           (1)      From time-to-time, the Company may increase
                                    the list prices for its Products but only if
                                    it first gives Service Provider written
                                    notice of any increase at least 90 days
                                    before the increase takes effect. The price
                                    to Service Provider for all items of Product
                                    ordered before receipt of notice by Service
                                    Provider and for all items of Product
                                    ordered after receipt of notice by Service
                                    Provider but which are deliverable by
                                    Company under established lead times before
                                    the date of the price increase, shall be at
                                    the price applicable prior to the price
                                    increase.

                           (2)      From time-to-time, the Cost of Product sold
                                    to Service Provider may be decreased upon
                                    mutual agreement between the Service
                                    Provider and the Company. Such agreement
                                    shall not be required in any instance
                                    involving airworthiness or flight safety
                                    issues, but in such cases, compensation to
                                    the Service Provider for any economic loss
                                    shall be considered and mutually agreed on a
                                    case by case basis.

                  (b)      Payment of the purchase price for the initial
                           purchase of Products as described on Exhibit B, shall
                           be payable by check on or before December 28, 2001.
                           In consideration of advance payment of the purchase
                           price referred to above, the Company will discount
                           the purchase price for the period of advance payment
                           at ***%.

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>

DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 11

                  (c)      Payment of the purchase price for Products delivered
                           to Service Provider by the Company (except pursuant
                           to Section 5(b) above) shall be by check payable
                           thirty-five (35) days from the last to occur of
                           delivery of the Product or the date of invoice,
                           except as set forth on Exhibit R. If payment is not
                           received by the Company in accordance with this
                           Section, the Company shall be entitled to charge a
                           late payment fee at the rate of ***% per day, or the
                           maximum allowable by law, of any past due amount, on
                           any Purchase Order undisputed in good faith. All
                           payments hereunder shall be made in U.S. dollars or
                           such other currency which may be agreed upon.

                  (d)      If any portion of Service Provider's account is more
                           than sixty (60) calendar days past due pursuant to
                           Section (b) above, Company may, at its option, cease
                           all deliveries to Service Provider, ship completed
                           Products in place, refuse to accept new orders, or
                           divert Products already ordered, unless past due
                           amounts, including interest payments, are paid in
                           full, or Company is in receipt of an irrevocable
                           letter of credit sufficient to cover all outstanding
                           amounts due confirmed by a United States bank
                           acceptable to Company; or another method of payment
                           has been mutually agreed to by the parties.

                  (e)      Company may, at its option, change the payment terms
                           provided in this section to require letters of credit
                           or cash in advance or both in the case of a
                           significant change of occurrence in Service
                           Provider's business such as ownership change,
                           financial difficulty, failure to keep undisputed
                           accounts current (payments received more than 10 days
                           beyond terms for more than three consecutive months
                           will be considered delinquent), bankruptcy, or other
                           significant change.

                  (f)      Payment of any amounts due Service Provider by
                           Company under this Agreement will be by an immediate
                           deduction to current amounts due Company.

                  (g)      each of Service Provider and Company shall appoint an
                           individual to serve as its Product Manager, who shall
                           be its primary representative for matters pertaining
                           to the ongoing activities contemplated under this
                           Agreement. Each party's Product Manager shall

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 12

                           (1)      have overall responsibility for managing and
                                    coordinating the performance of such party's
                                    obligations under this Agreement and

                           (2)      Be authorized to act for and on behalf of
                                    such party with respect to all matters
                                    relating to this Agreement (except for any
                                    amendment to this Agreement).

         6.       Delivery Terms.

                  (a)      Unless otherwise specified by the Company, all
                           deliveries of Products by the Company to Service
                           Provider under this Agreement must be made FOB the
                           Company's manufacturing location, at which point
                           title and risk of loss and damage pass from the
                           Company to Service Provider. Delivery is deemed to
                           occur upon the Company's tender of Products to the
                           common carrier selected by Service Provider for
                           shipment to Service Provider.

                  (b)      If the Company does not deliver Products within
                           thirty (30) days of the delivery date specified in a
                           Purchase Order accepted by the Company, Service
                           Provider has the right to (i) cancel the Purchase
                           Order or (ii) extend the delivery date to a later
                           date, subject however, to the right to cancel the
                           Purchase Order if delivery is not made by the
                           extended date.

                  (c)      Service Provider must, at its sole cost, arrange for
                           the transport and insurance of Products purchased
                           from the Company. If the Company agrees to arrange
                           for transport and insurance as agent for Service
                           Provider, Service Provider shall reimburse the
                           Company its full costs.

                  (d)      Service Provider is solely responsible to cause
                           shipments of Products to clear customs at the port of
                           entry or export, including the satisfaction of all
                           documentation requirements (including special
                           documentation requirements that may apply to
                           shipments made to certain foreign customers) and
                           shall pay any applicable customs, duties, import
                           taxes, export costs and the like that may apply.

         7.       Returns Provisions.

                  (a)      No Products will be eligible for return if they are
                           manufactured and/or procured by the Company for
                           purchase by the Service Provider based solely upon
                           Service Provider's marketing and sales data or are
                           part of the

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DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 13

                           initial inventory procurement except for those part
                           numbers noted on Exhibit B.

                  (b)      Newly issued part numbers and/or parts involved in a
                           reliability campaign will be eligible for return
                           after 24 months of part number or campaign
                           introduction if and only if 1) Company has
                           unilaterally determined Service Provider's stocking
                           level and 2) remaining stock exceeds 24 month's
                           usage. If parts meet these requirements, Service
                           Provider may return all remaining inventory. No
                           restocking charges will apply to such returns.

                  (c)      Products rendered obsolete due to Company's redesign
                           with a must conform classification will be eligible
                           for return by the Service Provider.

                  (d)      Product defined above as eligible for return must be
                           in "new" condition in the original packaging as
                           supplied by the Company; such packaging may not be
                           damaged, broken or in any way tampered with except
                           for ordinary wear incurred in shipping.

                           The Company shall pay to Service Provider in U.S.
                           Dollars an amount equal to the average inventory cost
                           of the items returned under this section less
                           restocking charges not to exceed ***% of list price.

                  (e)      The Company has the right to market and sell any
                           products the Service Provider returns in accordance
                           with the above provisions.

         8.       Warranty Disclaimer.

                  (a)      Service Provider shall pass through the Company's
                           standard warranty to all parties that purchase
                           Products from Service Provider, without varying any
                           of its terms or provisions.

                  (b)      The Company may change the standard warranty on new
                           Products by giving Service Provider written notice of
                           such new warranty at least 60 days' prior to its
                           effective date.

                  (c)      THE COMPANY MAKES NO WARRANTIES OF MERCHANTABILITY OR
                           FITNESS FOR A PARTICULAR PURPOSE

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 14

                           OR USE EVEN IF THAT PURPOSE IS KNOWN TO THE COMPANY,
                           NOR ANY OTHER EXPRESS OR IMPLIED WARRANTY.

         9.       Ownership of Company Data.

                  (a)      All Company Data is, or will be, and shall remain the
                           property of Company. Without Company's approval (in
                           its sole discretion), the Company Data shall not be:

                           (1)      used by Service Provider other than in
                                    connection with providing the services
                                    contemplated by this Agreement,

                           (2)      sold, assigned, leased or otherwise provided
                                    to third parties by Service Provider,

                           (3)      commercially exploited by or on behalf of
                                    Service Provider.

                  (b)      Service Provider hereby irrevocably assigns,
                           transfers and conveys to Company without further
                           consideration all of its right, title, and interest
                           in and to the Company Data. Upon request by Company,
                           Service Provider shall execute and deliver any
                           documents that may be necessary or desirable to
                           preserve, or enable Company to enforce, its rights
                           hereunder with respect to the Company Data. For
                           purposes hereof, "Company Data" shall include all
                           sales reports, forecasts and other information
                           pertaining to the distribution, marketing and sale of
                           the Products, whether prepared by Company or Service
                           Provider, and all sales and other reports pursuant to
                           Section 3(q) above, whether or not such information
                           is Confidential Information as defined in this
                           Agreement. (Company Data shall exclude information
                           that is not compiled and reported pursuant to Section
                           3(q), or is not segregated from data regarding other
                           products sold by Service Provider).

                  (c)      Upon request by Company upon expiration or
                           termination of this Agreement, Service Provider shall

                           (1)      promptly return to Company, all of the
                                    Company Data or

                           (2)      eradicate or destroy all or any part of the
                                    Company Data in Service Provider's
                                    possession, in each case to the extent so
                                    requested by Company.

<PAGE>

DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 15

                  (d)      Except as noted above, each party shall be the owner
                           of its own data customer lists, records, and
                           intellectual property.

         10.      Term.

                  (a)      Unless earlier terminated as herein provided, this
                           Agreement shall commence on the Commencement Date and
                           terminate on December 31, 2011 (the "Expiry Date");
                           provided, however, the parties may, before the Expiry
                           Date, renew or extend this Agreement or the business
                           relationship contemplated hereby on such terms and
                           conditions as shall be mutually agreed in writing
                           between the parties.

         11.      Termination.

                  (a)      Termination for Convenience. Company may terminate
                           this Agreement, for convenience, by giving Service
                           Provider notice of the termination at least 120 days
                           prior to the termination date specified in the
                           notice; provided, however, that no such notice of
                           termination for convenience shall be given prior to
                           five years after Commencement Date.

                  (b)      Termination for Change in Control of Company. In the
                           event of a Change in Control of the Company, the
                           Company may terminate this Agreement by giving
                           Service Provider notice of the termination. Such
                           termination will be effective as of the time
                           specified in the notice of termination, but the
                           effective date of the termination may not be any
                           earlier than 120 days following Service Provider's
                           receipt of the notice.

                  (c)      Termination for Change in Control of Service
                           Provider. In the event of a Change in Control of
                           Service Provider or an Affiliate (defined below) in
                           which control over Service Provider is acquired by a
                           Company Competitor or by a party which in the
                           Company's reasonable judgment does not have the
                           capability to perform the Service Provider's
                           obligations (see Section 3), Company or by a party
                           which in the Company's reasonable judgement does not
                           have the capability to perform the Service Provider's
                           obligations (see Section 3), Company may terminate
                           this Agreement by giving Service Provider notice of
                           the termination within 30 days of the occurrence of
                           such Change in Control and at least 120 days prior to
                           the termination date specified in the notice. At the
                           Company's option, Company may require

<PAGE>

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Rolls-Royce Corporation
Page 16

                           Service Provider to continue to operate under this
                           Agreement for up to six (6) months from the notice of
                           termination in order to permit an orderly transfer
                           from Service Provider to the Company providing
                           services to customers internally or to permit the
                           Company to put in place an agreement in which a third
                           party provides such services.

                           In the event of a Change in Control of Service
                           Provider or an Affiliate exercising control of
                           Service Provider by which the Service Provider or
                           such Affiliate, as the case may be, is acquired by a
                           third party not a Company Competitor which causes
                           Service Provider's or such Affiliate's credit rating,
                           as determined by either Standard and Poors or Moody's
                           to fall one notch below the Service Provider's or
                           such Affiliate's credit rating prior to the Change in
                           Control, then the Company shall have up to one year
                           after the Change in Control to terminate the
                           Agreement if it reasonably determines that the
                           benefits and services provided by Service Provider
                           have been adversely affected, and the Company
                           provides Service Provider with 120 days prior written
                           notice of termination.

                           For purposes of this Agreement "Change in Control"
                           shall mean

                           (1)      the consolidation or merger of a party with
                                    or into any other entity, other than a
                                    consolidation or merger

                                    (a)      in which the party is the surviving
                                             corporation or entity in the
                                             consolidation or merger,

                                    (b)      with or into an Affiliate or

                                    (c)      with or into an entity which,
                                             immediately after the consolidation
                                             or merger, is controlled by persons
                                             who, immediately prior to that
                                             consolidation or merger, controlled
                                             such party, or

                           (2)      sale, transfer or other disposition of all
                                    or substantially all of the assets of a
                                    party (other than to an Affiliate), or

                           (3)      acquisition by any entity, or group of
                                    entities (other than an Affiliate or
                                    Affiliates) acting in concert, of beneficial
                                    ownership of 30 percent or more of the
                                    outstanding voting securities or

<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 17

                                    partnership interests of a party; provided
                                    however, that the acquisition by TCG
                                    Holdings, LLC or any of its affiliates of
                                    either convertible preferred stock of
                                    Service Provider's ultimate parent solely in
                                    connection with the initial raising of
                                    capital to fund Service Provider's
                                    consummation of this Agreement or the
                                    possible subsequent conversion of such
                                    preferred stock into common stock of Service
                                    Provider's ultimate parent, shall not be
                                    deemed to be or cause a "Change of Control".

                           (4)      The cessation of control (by virtue of their
                                    not constituting a majority of directors) of
                                    the Service Provider's ultimate parent's
                                    Board of Directors by the individuals who
                                    (x) at the date of this Agreement were
                                    directors or (y) become directors after the
                                    date of this Agreement and whose election or
                                    nomination for election by the ultimate
                                    parent's stockholders, was approved by a
                                    vote of at least two-thirds of the directors
                                    then in office who were directors at the
                                    date of this Agreement or whose election or
                                    nomination for election was previously so
                                    approved.

                           For purposes of this Agreement, "Company Competitor"
                           means any business involved in the design,
                           manufacture (including, without limitation, any [PMA]
                           or other parts manufacturer), sale or repair of gas
                           turbine engines, including any business that is an
                           [Affiliate] of any entity engaged in such activities,
                           where such design, manufacture, sale or repair
                           generates annual sales revenues exceed $100,000,000
                           in gross sales.

                           For purposes of this Agreement, "Affiliate" means any
                           person that directly or indirectly through one or
                           more intermediary's controls, is controlled by, or
                           under Common control with the Service Provider.

                  (d)      Termination for Cause. If either party defaults in
                           any material respect in the performance of any of its
                           material obligations (or repeatedly defaults during
                           any rolling eighteen month period in any material
                           respect in the performance of a material obligation
                           but cures such default within the cure period
                           provided) under this Agreement, and does not cure
                           such default (or provide adequate assurances that
                           such repeated defaults will not continue to occur)
                           within 45 days of receipt of a notice of default, or
                           if a party becomes Insolvent, then the non-defaulting
                           party may, by giving notice to

<PAGE>

DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 18

                           the defaulting party, terminate this Agreement as of
                           the termination date specified in the notice. For
                           purposes of the foregoing, a party shall be regarded
                           as "Insolvent" if it (i) institutes proceedings to be
                           adjudicated voluntarily bankrupt or consents to the
                           filing of bankruptcy proceedings against it, (ii)
                           files a petition seeking reorganization under any
                           bankruptcy or similar law for the protection of
                           creditors, or consents to the filing of such a
                           petition against it, (iii) consents to the
                           appointment of a receiver, liquidator or trustee in
                           bankruptcy, or makes any assignment of a substantial
                           portion of its assets for the benefit of creditors,
                           (iv) admits in writing its inability to pay its debts
                           generally as they become due, (v) is subject to the
                           filing of an involuntary petition in bankruptcy
                           (which is not waived or stayed within 60 days), (vi)
                           is subject to any court order or decree adjudicating
                           it as a bankrupt or insolvent person by a court of
                           competent jurisdiction, or (vii) publicly announces
                           that it may file a petition as a bankrupt or
                           insolvent person under any law now or hereafter
                           applicable to the discharge or restructuring of
                           debts.

                  (e)      Termination Fees. (1) Set forth in Exhibit S are the
                           termination fees that would be payable to Service
                           Provider and inventory repurchase obligations of
                           Company if Company terminates this Agreement pursuant
                           to Section 11.a or Section 11.b. Except as otherwise
                           specifically set forth in this Section, no
                           termination fee shall be payable by Company in
                           connection with the termination of this Agreement.
                           (2) If the Company terminates this Agreement pursuant
                           to Section 11.(c), the Service Provider shall pay for
                           the following: (i) the cost of moving Products
                           purchased by Company pursuant to Section 11.(f)(2);
                           the cost of novating any contracts to be transferred
                           to Company pursuant to Section 11.(f)(4), up to $***;
                           and Service Provider shall at Company's request host
                           a website for Company dealing with the Product's for
                           up to one year from the date of termination of the
                           Agreement.

                  (f)      Post Termination Obligations.

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 19

                           (1)      Option to Repurchase Products. Upon the
                                    expiration or termination of this Agreement,
                                    except as otherwise provided in (f) above,
                                    the Company has the option, but not the
                                    obligation, to purchase from Service
                                    Provider all (but not less than all) of the
                                    Products remaining in Service Provider's
                                    stock at the Service Provider's average cost
                                    net of the Service Provider's excess and
                                    obsolescence reserves with respect to the
                                    Products (which shall be determined on the
                                    basis of Generally Accepted Accounting
                                    Principles consistently applied and on the
                                    same basis as reserves are established for
                                    other inventory of the Service Provider). To
                                    exercise such option, the Company must
                                    notify Service Provider within 45 days after
                                    the date of termination of this Agreement.
                                    Service Provider shall deliver Products to
                                    the Company within 10 business days after
                                    the Company has given Service Provider
                                    notice of its exercise of the option and the
                                    price shall be paid in cash or as a credit
                                    against any indebtedness then owing by
                                    Service Provider to the Company at the time
                                    of delivery.

                           (2)      Return of Documents. Upon the termination of
                                    this Agreement, Service Provider shall use
                                    its reasonable business efforts to promptly
                                    return to the Company all Company Data and
                                    Confidential Information of Company. Upon
                                    the request of the Company, Service Provider
                                    must furnish the Company with copies of all
                                    data, reports, documents, drawings and
                                    manuals made by Service Provider dealing
                                    with or relating solely to the Products,
                                    except those which are necessary to complete
                                    Service Provider's performance under any
                                    contract that was entered into prior to
                                    receiving the notice of termination.

                           (3)      Customer Lists, Product Lists and Contract
                                    Obligations. Upon the termination of this
                                    Agreement, Service Provider must furnish the
                                    Company with (i) a list of Service
                                    Provider's customers for the Products and
                                    their addresses, (ii) a list of the Products
                                    in stock, and (iii) copies of Service
                                    Provider's contracts relating to the sale of
                                    the Products that have not been fully
                                    performed by Service Provider.

                           (4)      Option to Be Assigned Contracts. Upon the
                                    termination of this Agreement, Service
                                    Provider shall, at the Company's request,
                                    use its reasonable business efforts to
                                    effect an assignment to the

<PAGE>

DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 20
                                    Company (or a person designated by the
                                    Company) of the Service Provider's then
                                    existing contracts relating to the sale of
                                    the Products specified by the Company in the
                                    request. In order to exercise this option,
                                    the Company must notify Service Provider
                                    within 30 days after the date of its receipt
                                    of the documents specified in (c) above.
                                    Service Provider agrees to use its
                                    reasonable business efforts to effect the
                                    assignment within 10 days after the Company
                                    has notified Service Provider of its
                                    exercise of the option.

                           (5)      Transition. Upon the expiration or
                                    termination of this Agreement and if the
                                    Company so requests, Service Provider agrees
                                    to use its reasonable business efforts to
                                    cooperate with the Company in the transition
                                    to its own internal distribution system, for
                                    the Territory, and shall provide such
                                    assistance to the Company as is reasonably
                                    requested by the Company; provided however,
                                    that Service Provider shall have no
                                    obligation to provide assistance to any
                                    subsequent third party chosen as a Service
                                    Provider of the Products.

                                    Likewise, the Company and the Service
                                    Provider shall establish reasonable
                                    procedures for the collection of outstanding
                                    accounts receivable from customers, which
                                    may include the Company collecting such
                                    receivables on behalf of the Service
                                    Provider, as its agent and in return for
                                    reasonable compensation for such service.

         12.      Service Standards.

                  (a)      Designated Service Levels. The Parties shall at all
                           times from and after perform their obligations
                           hereunder in accordance with service levels and
                           performance standards mutually agreed on from time to
                           time between Company and Service Provider ("Service
                           Standards"). The Service Standards shall be measured
                           and reported on a monthly basis and reviewed for
                           compliance by Product Managers on a quarterly basis.
                           Per Exhibit M, the Company and the Service Provider
                           have agreed that either party will not seek monetary
                           penalties for non-compliance to the standards.

                  (b)      Adjustment of Service. The Product Managers for
                           Company and Service Provider shall review the
                           performance against the Service Standards at least
                           quarterly during the term, and shall call attention
                           to any failures in

<PAGE>

DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 21

                           performance or opportunities to improve performance.
                           In addition, either party may, at any time upon
                           notice to the other party, initiate negotiations to
                           review and, upon agreement by the parties, adjust a
                           Service Standard which party in good faith believes
                           is inappropriate because of a fundamental change in
                           circumstances; provided that no such change shall
                           take effect unless and until agreed in writing.

                  (c)      Corrective Action. Upon becoming aware of a failure
                           to perform in accordance with an applicable Service
                           Standard, a party asserting a breach of Service
                           Standard shall send written notice to the Product
                           Manager of the party that has breached the Service
                           Standard which notice, (1) identifies the cause of
                           such failure, and (2) provides the other party with a
                           report detailing the cause of, and expected procedure
                           for correcting, such failure. The notice detailing
                           the cause and recommended correction of any
                           performance failure will be deemed Confidential
                           Information of the parties. The party against whom
                           the breach of Service Standard is asserted shall have
                           150 days from the date of receipt of the notice to
                           correct the deficiency. If, after the first 150 day
                           period, the Service Standard is not within the
                           acceptable range set forth in Exhibit M, the party
                           shall have an additional 150 days to bring the
                           Service Standard within acceptable range. Failure to
                           have brought the Service Standard within the
                           acceptable range shall then be a material breach of
                           the Agreement and be the basis for immediate
                           termination for cause (i.e. without any further
                           notice period under Section 11.e).

                  (d)      Continuous Improvement and Best Practices. Each party
                           shall, on a continuous basis, as part of its total
                           quality management process, identify ways to improve
                           its performance and apply best business practice
                           (including improvements in available technology) to
                           achieve such performance improvements.

         13.      Marks and Proprietary Rights.

                  (a)      The Service Provider acknowledges the Company's
                           exclusive ownership of the Company's trade names,
                           service marks and trademarks, and all logos and
                           derivations thereof, and all names and marks licensed
                           to the Company (collectively, the "Marks").

<PAGE>

DISTRIBUTION SERVICES AGREEMENT
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                  (b)      Any proposed use of the Marks in connection with the
                           activities contemplated under this Agreement shall
                           require the prior written authorization of
                           Rolls-Royce plc, which may be given or withheld on a
                           case by case basis in its discretion. If permission
                           to use the marks is granted, the Service Provider
                           shall strictly adhere to all instructions,
                           limitations and restrictions placed upon such use,
                           and shall take any necessary steps to protect the
                           Marks in each jurisdiction of use. The Service
                           Provider further agrees to cease use of the Marks or
                           otherwise restrict use of materials bearing the Marks
                           whenever so instructed by the Company or Rolls-Royce
                           plc. No action taken or approval given pursuant to
                           the foregoing shall in any way create any express or
                           implied rights in or license in favor of the Service
                           Provider with respect to the Marks.

                  (c)      Upon termination of this Agreement, the Service
                           Provider shall cease using all Marks and Mark-bearing
                           stationery, business cards, sales literature and the
                           like, except as necessary to dispose of Products then
                           in Service Provider's inventory and any reference in
                           Service Provider's previously published catalogues.
                           The Service Provider will have no obligation to
                           return such materials to the Company. Thereafter, the
                           Service Provider shall no longer use any of the
                           Marks, except as permitted by law.

         14.      Limitation of Damages; Indemnification.

                  (a)      WITH REGARD TO CLAIMS BETWEEN THE PARTIES, NEITHER
                           PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
                           INCIDENTAL, SPECIAL, CONSEQUENTIAL, PUNITIVE OR
                           EXEMPLARY DAMAGES ARISING OUT OF ANY OBLIGATION,
                           BREACH ACT OR OMISSION IN CONNECTION WITH THE
                           PERFORMANCE OF THE AGREEMENT, REGARDLESS OF WHETHER
                           THE CLAIM IS FOR BREACH OF CONTRACT, BREACH WARRANTY,
                           TORT (INCLUDING NEGLIGENCE) STRICT LIABILITY, OR
                           OTHERWISE.

                  (b)      With regard to claims from third parties; the Company
                           shall hold Service Provider harmless and indemnify it
                           from and against any and all claims, losses, costs,
                           damages and expenses (including reasonable attorney's
                           fees) which Service Provider may suffer as a result
                           of any loss to the persons or property of a third
                           party arising directly or indirectly from use of a
                           Product; provided, however, that the Company shall
                           have no such obligation to indemnify or hold Service
                           Provider harmless from any matters covered by Service
                           Provider's indemnity below. Service Provider shall
                           hold the Company harmless and indemnify it from and
                           against any and all claims,

<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 23

                           losses, costs, damages and expenses (including
                           reasonable attorney's fees) which Company may suffer
                           as a result of any loss to the person or property of
                           a third person arising directly or indirectly from
                           the wrongful or negligent action or inaction of
                           Service Provider, or any other third party acting on
                           its behalf or under its direction with regard to the
                           Products; provided however, that the Service Provider
                           shall have no such obligation to indemnify or hold
                           the Company harmless from any matters covered by
                           Company's indemnity above.

         15.      Propriety Rights Indemnification.

                  (a)      The Company shall, at its own expense, defend any
                           suit instituted against Service Provider which is
                           based on an allegation that any Product manufactured
                           by the Company and sold to Service Provider hereunder
                           constitute an infringement of any patent, copyright,
                           trade secret or other proprietary right of any third
                           party and shall indemnify Service Provider against
                           any award of damages and costs made against Service
                           Provider by a final judgment of a court of last
                           resort if it is determined therein that any such
                           Product constitutes an infringement of any patent,
                           copyright, trade secret or other proprietary right of
                           any third party, provided that Service Provider gives
                           the Company timely notice in writing of any notice or
                           claims of infringement and permits the Company
                           through the Company's counsel to defend the same and
                           gives the Company all available information,
                           assistance and authority to enable the Company to
                           assume such defense. The Company shall have control
                           of the defense of any such suit, including appeals
                           from any judgment therein and any negotiations for
                           the settlement or compromise thereof with full
                           authority to enter into a binding settlement or
                           compromise.

                  (b)      In the event that any Product is held to infringe and
                           its use is enjoined, the Company shall, at its option
                           and expense, (i) procure for Service Provider and its
                           customers the right to continue using such Product,
                           (ii) provide the necessary parts and documentation to
                           replace or modify such Product so that it no longer
                           infringes, or (iii) grant Service Provider a credit
                           for such Product upon its return to the Company,
                           allowing for reasonable depreciation for use, damage
                           and obsolescence.

                  (c)      Notwithstanding the above, the Company shall have no
                           liability whatsoever to Service Provider with respect
                           to any patent infringement or claim
<PAGE>

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Rolls-Royce Corporation
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                           thereof which is based upon or arises out of (i) the
                           use of any Product in combination with an apparatus
                           or device not manufactured or supplied by the
                           Company, if such combination causes the infringement,
                           (ii) the use of any Product in a manner for which it
                           was neither designed nor contemplated, or (iii) any
                           modification of any Product by Service Provider or
                           any third party which causes the Product to become
                           infringing.

         16.      Confidentiality.

                  (a)      General Obligations. All Confidential Information
                           relating to or obtained from Company or Service
                           Provider shall be held in confidence by the recipient
                           to the same extent and in at least the same manner as
                           the recipient protects its own confidential or
                           proprietary information. Neither Company nor Service
                           Provider shall disclose, publish, release, transfer
                           or otherwise make available Confidential Information
                           of, or obtained from, the other in any form to, or
                           for the use or benefit of, any person or entity
                           without the disclosing party's prior written consent.

                           Each of Company and Service Provider shall, however,
                           be permitted to disclose relevant aspects of the
                           other's Confidential Information to its officers,
                           directors, partners, agents, professional advisors,
                           contractors, subcontractors and employees and to the
                           officers, directors, partners, agents, professional
                           advisors, contractors, subcontractors and employees
                           of its affiliates, (to the extent that such
                           disclosure is not otherwise restricted under any
                           contract, license, consent, permit, approval or
                           authorization granted pursuant to applicable law,
                           rule or regulation, and only to the extent that such
                           disclosure is reasonably necessary for the
                           performance of its duties and obligations under this
                           Agreement (or the determination or preservation of
                           its rights under the Agreement); provided, however,
                           that the recipient shall take all reasonable measures
                           to ensure that Confidential Information of the
                           disclosing party is not disclosed or duplicated in
                           contravention of the provisions of this Agreement by
                           such officers, directors, partners, agents,
                           professional advisors, contractors, subcontractors
                           and employees.

<PAGE>

DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 25

                           If either party intends to disclose any Confidential
                           Information in connection with any claim or action to
                           determine or preserve its rights under this
                           Agreement, then that party will give prior notice to
                           the other party and take such reasonable actions as
                           may be specified by the other party to obtain a
                           protective order or cause the Confidential
                           Information to be filed under seal (or give the other
                           party an opportunity to obtain a protective order).

                           The obligations in this Section shall not restrict
                           any disclosure pursuant to any applicable law or by
                           order of any court or government agency (provided
                           that the recipient shall give prompt notice to the
                           disclosing party of such order, shall disclose only
                           such Confidential Information as the recipient is
                           required to disclose under the applicable law or
                           order, and shall take such reasonable actions as may
                           be specified by the disclosing party to resist
                           providing such access or to obtain a protective
                           order) and shall not apply with respect to
                           information that (1) is independently developed by
                           the recipient without violating the disclosing
                           party's proprietary rights, (2) is or becomes
                           publicly known (other than through unauthorized
                           disclosure by a party), (3) is already known by the
                           recipient at the time of disclosure without any
                           obligation of confidentiality to the disclosing
                           party, or (4) is disclosed to a party by a third
                           person which the recipient reasonably believes has
                           legitimate possession thereof and the unrestricted
                           right to make such disclosure.

                  (b)      Unauthorized Acts. Without limiting either party's
                           rights in respect of a breach of this Section, each
                           party shall:

                           (1)      promptly notify the other party of any
                                    unauthorized possession, use or knowledge,
                                    or attempt thereof, of the other party's
                                    Confidential Information by any person or
                                    entity that may become known to such party;

                           (2)      promptly furnish to the other party the
                                    details of the unauthorized possession, use
                                    or knowledge, or attempt thereof, known by
                                    such party and assist the other party in
                                    investigating or preventing the recurrence
                                    of any unauthorized possession, use or
                                    knowledge, or attempt thereof, of
                                    Confidential Information;

<PAGE>

DISTRIBUTION SERVICES AGREEMENT
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                           (3)      cooperate with the other party in any
                                    litigation and investigation against third
                                    parties deemed necessary by the other party
                                    to protect its proprietary rights; and

                           (4)      promptly use its commercially reasonable
                                    efforts to prevent a recurrence of any such
                                    unauthorized possession, use or knowledge,
                                    or attempt thereof, of Confidential
                                    Information.

                                    Each party shall bear the cost it incurs as
                                    a result of compliance with this Section.

                  (c)      Confidential Information. "Confidential Information"
                           of a party shall mean all information and
                           documentation of such party (or its affiliates),
                           whether disclosed to or accessed by the other party
                           (or its affiliates) in connection with the activities
                           contemplated by this Agreement that has been marked
                           as "Proprietary" or "Confidential" or bears some
                           other proprietary designation, or if disclosed
                           orally, has been designated by a party as
                           confidential in a letter or other written statement
                           made to the other party promptly following its
                           disclosure, and shall include, without limitation,

                           (1)      information concerning business plans,

                           (2)      financial information,

                           (3)      information concerning operations and the
                                    results of operations,

                           (4)      pricing information and marketing
                                    strategies,

                           (5)      information that a party is legally
                                    obligated not to disclose,

                           (6)      information that qualifies as a trade secret
                                    under applicable law,

                           (7)      patents, unpatented inventions and
                                    information regarding product development
                                    and improvements,

                           (8)      engine and parts specifications and
                                    drawings, and

                           (9)      material and performance specifications.

<PAGE>

DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 27

         17.      Foreign Corrupt Practices Act: Export Laws.

                  (a)      Service Provider represents and warrants that it will
                           comply with all laws applicable in the Territory
                           relating to the conduct of business practices,
                           including those that may prohibit gratuities,
                           inducements, or certain other payments. Service
                           Provider acknowledges that the Company may be subject
                           to certain United States laws, including the Foreign
                           Corrupt Practices Act of 1977 and any of its
                           amendments, which may apply to activities carried out
                           on the Company's behalf outside the United States of
                           America.

                           Service Provider agrees neither to take nor omit to
                           take any action if such act or omission might cause
                           the Company or the Service Provider to be in
                           violation of any such laws. Upon written notice from
                           the Company, Service Provider shall provide such
                           information as the Company may reasonably consider
                           necessary to verify compliance by Service Provider
                           with the provisions of this Section.

                  (b)      Service Provider may not enter into any contract or
                           other arrangement or sell any Products to any third
                           party if so doing would cause the Company to be in
                           violation of any applicable laws, including, without
                           limitation, U.S. laws and regulations prohibiting
                           exports to certain countries. The Company may not
                           enter into any contract or other arrangement or sell
                           any Product to any third party where Service Provider
                           shall be required to deliver Products on behalf of
                           the Company if so doing would cause the Service
                           Provider to be in violation of any applicable laws,
                           including without limitation, US laws and regulations
                           prohibiting export to certain countries.

                  (c)      Service Provider shall indemnify the Company against
                           any penalties, losses or damages (including legal
                           fees, penalties and costs of investigation) which the
                           Company may incur because of a breach of its
                           obligations under this Section.

                  (d)      In those circumstances where Service Provider is
                           providing goods or services without charge to third
                           parties or where Service Provider is compensated by
                           Company for providing such goods or services,
                           including but not limited to, support of Company's
                           new engine sales programs, warranty return, product
                           recall programs and support of the Company's foreign
                           agents, the Company agrees that:
<PAGE>

DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 28

                           (1)      the Service Provider may be subject to
                                    certain United States and foreign laws,
                                    including but not limited to the Foreign
                                    Corrupt Practices Act of 1977 and any of its
                                    amendments, which may apply to activities
                                    carried out by Service Provider outside the
                                    United States of America in connection with
                                    Service Provider's providing goods or
                                    services pursuant to the agreements
                                    described in Section (d) above. The Company
                                    agrees neither to take nor omit to take any
                                    action if such act or omission might cause
                                    the Service Provider or the Company to be in
                                    violation of any such laws. Upon written
                                    notice from Service Provider, Company shall
                                    provide such information as Service Provider
                                    may reasonably consider necessary to verify
                                    compliance by Company with the provisions of
                                    this Section; and

                           (2)      The Company shall indemnify the Service
                                    Provider against any penalties, losses or
                                    damages (including legal fees, penalties and
                                    costs of investigation) which the Service
                                    Provider may incur because of a breach of
                                    its obligations under this Section.

         18.      No Partnership or Joint Venture: Independent Contractor. The
                  parties hereto intend by this Agreement solely to effect the
                  appointment of the Service Provider as an independent
                  contractor with the Company for the marketing of the Products
                  as a Service Provider of the Company in the Territory. No
                  other relationship is intended to be created between the
                  parties hereto. Nothing in this Agreement shall be construed
                  as (a) giving the Service Provider any rights as a partner in
                  or owner of the business of the Company, (b) giving the
                  Company any rights as a partner in or owner of the business of
                  the Service Provider, (c) entitling the Service Provider to
                  control in any manner the conduct of the Company's business or
                  (d) entitling the Company to control in any manner the conduct
                  of the Service Provider's business. The Service Provider shall
                  not have, nor shall it represent itself as having, the power
                  to make any contracts or commitments in the name of or binding
                  upon the Company.

         19.      Expenses. Except as otherwise expressly provided in this
                  Agreement, each party to this Agreement shall bear its own
                  expenses including, without limitation, rent, travel,
                  entertainment, secretarial or other office expense, postage,
                  telephone and other communications costs.

<PAGE>

DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 29

         20.      Notices. All notices required or permitted to be given
                  hereunder shall be in writing and shall be deemed given (a)
                  when delivered in person at the time of such delivery or by
                  telecopy with confirmed receipt of transmission at the date
                  and time indicated on such receipt or (b) when received if
                  given by an internationally recognized express courier service
                  as follows:

                         If to the Company:

                         Rolls-Royce Corporation
                         P.O. Box 420
                         Indianapolis, IN 46206
                         Attention: Norm Britton, Speed Code U21
                         With copy to Director of Contracts, Speed Code U27

                         If to the Service Provider:
                         (need Aviall's point of contact for contractual issues,
                         address, etc.)

                  or at such other respective addresses or addressees as may be
                  designated by notice given in accordance with the provisions
                  of this Section 21.

         21.      Dispute Resolution.

                  (a)      Product Managers. Any dispute arising under this
                           Agreement (other than payment delinquencies and
                           matters for which injunctive relief may be sought
                           pursuant to (d) below) shall be considered at an in
                           person meeting of the Company's Product Manager and
                           the Service Provider's Product Manager within five
                           business days of receipt by either party of written
                           notice specifying the nature of the dispute, and
                           proposing a place for such meeting (which unless
                           otherwise agreed shall be the principal place of
                           business of the party receiving such notice). If the
                           Product Managers cannot resolve the dispute within 30
                           calendar days of such meeting, the dispute will be
                           escalated within the parties' respective
                           organizations as follows: to the Company's President,
                           Defense North America Customer Facing Business Unit,
                           and to the Service Provider's President. If such
                           dispute has not been resolved within 30 days of such
                           escalation, then either party may pursue arbitration
                           of such dispute pursuant to the terms of this
                           Agreement.

<PAGE>

DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 30

                  (b)      Conduct Pending Resolution. The parties acknowledge
                           that the timely performance of obligations pursuant
                           to this Agreement is critical to their business
                           operations. Accordingly, in the event of a dispute
                           between the parties, each party shall continue to
                           perform its obligations, but without prejudice to its
                           rights to pursue remedies in accordance with the
                           provisions hereof.

                  (c)      Arbitration. Except as provided in Section (d) below,
                           any dispute, breach, controversy or claim arising out
                           of or relating to this Agreement shall be finally
                           settled by arbitration in New York City in accordance
                           with the Commercial Arbitration Rules of the American
                           Arbitration Association in effect on the date of this
                           Agreement and judgment upon the award rendered by the
                           arbitrator(s) may be entered in any court having
                           jurisdiction thereof.

<PAGE>
DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 31

                  (d)      Other Remedies. Except as may be otherwise expressly
                           provided herein, the remedies set forth in this
                           Agreement shall not be exclusive of any others that
                           may be available under applicable law. In particular,
                           the parties agree that monetary damages alone are an
                           inadequate remedy for violations of Sections 9, 11,
                           13, 16 and 22 of this Agreement and, accordingly, a
                           party may seek equitable remedies, including
                           injunctive relief, in any court of competent
                           jurisdiction for a violation of such provisions.

                  (e)      The arbitration shall be conducted in the English
                           language. This Section 21 provides the sole recourse
                           for the settlement of any dispute or breach arising
                           under or in connection with this Agreement

                  (f)      In the event of any dispute, breach, controversy or
                           claim arising out of or relating to this Agreement,
                           the transactions contemplated hereby or the subject
                           matter hereof, resulting in arbitration hereunder,
                           the prevailing party shall, in addition to such other
                           relief as an arbitrator may award, be entitled to
                           recover reasonable attorneys' fees, costs and
                           expenses (including, without limitation, attorneys'
                           fees, costs and expenses in any arbitration
                           proceeding or any settlement prior to or during such
                           proceeding) from the breaching party.

         22.      Non Solicitation. Each party agrees that during the term of
                  this Agreement they will not directly or indirectly employ,
                  solicit for employment or assist any third party to employ or
                  solicit for employment, any employee of the other party, or
                  any employee of any affiliate of the other party. Nothing in
                  this provision will prohibit either party from placing
                  advertisements of open positions for employment in trade and
                  general circulation publications.

         23.      Force Majeure.

         (a)      Neither party hereto shall be responsible or liable in any way
                  for its failure to perform its obligations hereunder, other
                  than for payment of money, if such failure to perform is
                  beyond the control of the Company or the Service Provider,
                  whether caused by acts of God, unavailability or shortages of
                  raw materials from usual sources of supply or unavailability
                  or shortages of energy necessary to produce and/or deliver the
                  Products by usual modes of transportation, fire, flood, war,
                  embargo, strikes, labor disputes, explosions, riots, or laws,
                  rules, regulations, restrictions and orders of any
                  governmental authority to which such entity is subject, or any
                  cause, other than financial, beyond the reasonable control of
                  the affected party. Such failure shall not terminate this
                  Agreement, but the obligations

<PAGE>

DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 32

                  of the affected party shall be suspended during the period
                  when performance is so suspended, unless such period exists
                  beyond a period of one hundred and twenty (120) days, in which
                  event either party shall have the right at any time thereafter
                  during such force majeure to terminate this Agreement upon
                  written notice to the other party without further obligation
                  or liability. The party so prevented from complying with its
                  obligations hereunder shall immediately notify and keep the
                  other party from time to time apprised thereof, and such party
                  so prevented shall use reasonable efforts to remove or
                  overcome the cause of such inability to comply with its
                  obligations under this Agreement. Nothing herein shall be
                  construed to require the settlement of strikes, lockouts, or
                  other labor difficulty by the party involved contrary to its
                  wishes.

         24.      Effect of Termination. In the event of the termination of this
                  Agreement, and subject to recovery provided by an arbitrator
                  pursuant to Section 22, all rights and obligations of the
                  parties hereunder shall cease and terminate, except as to the
                  payment of any sum or sums owed to either party as of the date
                  of termination, except the Company's obligation to fill
                  Service Provider's purchase orders which the Company has
                  accepted and except as to the provisions of Sections 8, 9, 11,
                  13, 14, 15, 16, 17, 21, and 24 hereof, all of which shall
                  survive the termination of this Agreement.

         25.      ENTIRE AGREEMENT. THIS AGREEMENT, INCLUDING EXHIBITS A THROUGH
                  T ATTACHED HERETO AND INCORPORATED AS AN INTEGRAL PART OF THIS
                  AGREEMENT, CONSTITUTES THE ENTIRE AGREEMENT OF THE PARTIES
                  WITH RESPECT TO THE SUBJECT MATTER HEREOF, AND SUPERSEDES ALL
                  PREVIOUS SERVICE PROVIDERSHIP AGREEMENTS BY AND BETWEEN
                  COMPANY AND SERVICE PROVIDER AS WELL AS ALL PROPOSALS, ORAL OR
                  WRITTEN, AND ALL NEGOTIATIONS, CONVERSATIONS OR DISCUSSIONS
                  HERETOFORE HAD BETWEEN THE PARTIES RELATED TO THIS AGREEMENT.

         26.      Applicable Law. This Agreement shall be governed and
                  controlled as to validity, enforcement, interpretation,
                  construction, effect and in all other respects by the internal
                  laws of the State of New York applicable therein, without
                  giving effect to the conflicts of laws principles thereof.

         27.      Amendments. This Agreement may not be amended, nor shall any
                  waiver, change, modification, consent or discharge be
                  effected, except by an instrument in writing

<PAGE>

DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 33

                  executed by or on behalf of the party against whom enforcement
                  of any such amendment, waiver, change, modification, consent
                  or discharge is sought.

         28.      Severability. The invalidity of any provision of this
                  Agreement, or portion thereof, shall not affect the validity
                  of the remainder of such provision or of the remaining
                  provisions of this Agreement.

         29.      Section Headings. The headings contained in this Agreement are
                  for reference purposes only and shall not in any way affect
                  the meaning or interpretation of this Agreement.

         30.      Assignability. This Agreement shall be binding upon, and inure
                  to the benefit of, the parties, their successors and their
                  permitted assigns. Neither this Agreement nor any interest
                  herein may be assigned by either party without the prior
                  written consent of the other party, except that either party
                  may assign its interests to an affiliate that is fully capable
                  of performing all obligations under this Agreement and, if
                  appropriate, such performance is guaranteed by its corporate
                  parent.

         31.      Non-Waiver. Failure, delay or forbearance of either party to
                  insist on strict performance of the terms and provisions of
                  this Agreement, or to exercise any and or remedy, shall not be
                  construed as a waiver thereof and shall not waive subsequent
                  strict performance by a party.

         32.      Counterparts. This Agreement may be executed in multiple
                  counterparts, each of which shall be deemed to be an original
                  and all such counterparts shall constitute but one instrument.

                                    * * * * *

<PAGE>

DISTRIBUTION SERVICES AGREEMENT
Rolls-Royce Corporation
Page 34

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

                                          ROLLS-ROYCE CORPORATION

                                          By: /s/ Richard B. Lewis, II
                                             -------------------------------
                                          Name:    Richard B. Lewis, II
                                          Title:   Chief Operating Officer -
                                                   Indianapolis

                                          AVIALL SERVICES, INC.

                                          By: /s/ Paul E. Fulchino
                                             ----------------------------------
                                          Name:    Paul E. Fulchino
                                          Title:   Chairman, President and CEO

<PAGE>

LIST OF EXHIBITS

Exhibit A                     List of Products
Exhibit B                     On-Hand Inventory Purchase
Exhibit B-1                   List of Initial Inventory Purchase
Exhibit B-2                   Packaging Requirements
Exhibit B-3                   Schedule Exceptions
Exhibit C                     Warranty Return Program
Exhibit D                     Production Engine Support
Exhibit E                     Product Recall
Exhibit F                     Forecasting
Exhibit F-1                   Eighteen Month Schedule
Exhibit G                     Foreign Government Contracts and Agreements
Exhibit G-1                   Current Foreign Government Contracts
Exhibit H                     Foreign Sales Agents
Exhibit I                     Sales Reports/Metrics
Exhibit J                     Marketing and Supplier Support Services
Exhibit K                     Transfer Price
Exhibit L                     List Prices
Exhibit M                     Penalties and Late Delivery Fees
Exhibit N                     U.S. Military Sales
Exhibit O                     Sales to Industrial Customers
Exhibit P                     Serviceable, Surplus, and Repaired Parts Sales
Exhibit Q                     Quality Guidelines
Exhibit R                     Payment Terms
Exhibit S                     Termination Fees
Exhibit T                     AMCs and FMCs

<PAGE>

                                    EXHIBIT A

                    T56 SERVICE PROVIDER APPLICABLE PRODUCTS

<PAGE>

                                    EXHIBIT B

                           ON HAND INVENTORY PURCHASE

Service Provider will purchase all Company inventory of Products identified in
Exhibit B-1 for $*** under the following conditions:

    o    All Products to be purchased must be in new condition, properly marked
         and packaged and accompanied by the appropriate documentation (i.e.,
         packing list) set forth in Exhibit B-2.

    o    Transfer of material to the Service Provider's facilities must be
         completed by December 31, 2001.

    o    Thermocouples, part number 23067633, are the only Product in the
         initial inventory purchase eligible for return per section 7(b).

    o    The Service Provider and the Company understand that, due to sales and
         production in the last three months of the year (2001), the specific
         part number mix and quantities available for transfer will differ from
         the inventory identified in Exhibit B-1. In order to maintain value of
         transferred inventory (at 2001 prices), parts in same part family as
         identified in Exhibit B-1 may be substituted for undelivered parts
         provided that the quantity of substituted parts does not exceed one
         year's sales history.

    o    The Service Provider will take responsibility for the remaining 2001
         production schedule (October through December) and commits to purchase
         this inventory by December 31, 2002 at the negotiated transfer price
         but excluding items identified in Exhibit B-3. The Service Provider
         will not be required to procure these parts. The Company retains the
         right to competitively market these part numbers until the initial
         supply is exhausted.

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

                                   EXHIBIT B-1

                    ON HAND INVENTORY AS OF SEPTEMBER 8, 2001

The following table identifies the value (at list price) of each part family as
of September 8, 2001.

<Table>

<S>                                           <C>
TOTAL                                         $***
A PARTS                                       $***
B PARTS                                       $***
C PARTS                                       $***
NO SALES                                      $***
</Table>

The attached Excel file includes the following information (by part number) in
regards to the September 8, 2001 inventory:

o   Part Description

o   List Price

o   Extended List Price

o   Part "Family" (A, B, C, or No Sales)

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

                                   EXHIBIT B-2

                             Packaging Requirements

Parts are to be packaged and shipped in accordance with the specific requirement
of contract between Company and specific customers. Packaging for the majority
of Products is done using commercial practices and in accordance with
ASTM-D-3951 (latest revision). Military packaging and marking is required for a
small amount of U.S. military contracts. This packaging and marking is done in
accordance with the following military specifications predominantly added in
boilerplate language:

     o   MIL-STD-2047 for packaging

     o   MIL-STD-129M for marking

Company will notify Service Provider in writing at least thirty (30) days in
advance if 1) it amends the packaging requirements of any contract or 2) it
enters into any new contract with packaging requirements other than those
identified above. Packaging setups for all T56 parts/contracts can be accessed
via the SAP link between the Service Provider and the Company.

<PAGE>

                                   EXHIBIT B-3

                               Schedule Exceptions

<Table>
<Caption>

ITEM       PART NO                  DESCRIPTION      ITEM         PART NO          DESCRIPTION
----      --------                ---------------    ----         -------          ---------------
<S>       <C>                     <C>                <C>          <C>              <C>
  1       23005861                SUPPORT ASSY -      45          23060837         LEAD ASSY, SPAR
  2       6895689                 EXCITER ASSY, I     46          6846368          GEAR, SPUR - OI
  3       23001194                HOUSING & DIAPH     47          6854398-38       GEAR
  4       23009793                WHEEL, TURBINE-     48          6724756          NUT - 3.188-24
  5       23031741                VANE SEGMENT AS     49          6792871          PLUNGER, THRUST
  6       6785232                 CAGE - TURBINE      50          6720633          CAGE, 2.1661 ID
  7       6786556                 COUPLING - RING     51          30865            GASKET
  8       23008864                WHEEL COMPRESSO     52          23003210         SEPARATOR, MAIN
  9       6731153-3               CAGE BRG 1.3779     53          6854945          SPACER, SLEEVE-
 10       6792068                 TUBE, BEARING L     54          6841728-037      STUD, P.003
 11       6845593                 WHEEL, TURB 3RD     55          AN100041         COVER, STARTER
 12       23031179                WHEEL, COMPR 9T     56          6823167P003      STUD
 13       6842683                 SPACER ASSY         57          23007462         INSERT, TURB. -
 14       6793049                 PUMP ASSY, OIL      58          8982160P003      SCREW
 15       23058588                BEARING, ROLLER     59          6844619          RETAINER, VANE
 16       23001196                HOUSING ASSY, R     60          6780820-5        FERRULE, STRAIG
 17       6827186                 UNIVERSAL JOINT     61          23063839-03      COVERPLATE ASSY
 18       23006660                PUMP AND FILTER     62          6815126          DISTRIBUTION BO
 19       23064888                BEARING, ROLLER     63          6842836          TUBE ASSY, OIL-
 20       6846567                 PUMP ASSY, OIL      64          23007588         INSERT, TURB.-F
 21       23031979                ACCELEROMETER,      65          6840383-14       BOLT
 22       6827812                 CONNECTOR, NO.      66          6846454-061140   SHAFT & GEAR AS
 23       23007553                COUPLING, TURBI     67          6877213          HOSE ASSY, TFE
 24       6792413                 BOLT                68          6823167P001      STUD
 25       6787344                 SHAFTGEAR, ACC      69          6846063          WASHER - FLAT .
 26       23062341                BEARING, ROLLER     70          6748072-775      RING, RETAINING
 27       6786386                 TUBE ASSY           71          6791530          STUD, .375-16 X
 28       6794094                 CLAMP ASSY, FIL     72          23032516-1       COVERPLATE, 2 S
 29       23052067                BEARING, ROLLER     73          AN151007         STUD
 30       23067603                BLADE COMPRESSO     74          6829473-1        PLUG
 31       6794716                 NUT, COMPR REAR     75          6723117          SPACER, GENERAT
 32       23007561                SUPPORT & SUMP      76          MS35202-70       SCREW
</Table>

<PAGE>

<Table>
<Caption>

ITEM       PART NO                  DESCRIPTION      ITEM         PART NO          DESCRIPTION
----      --------------          ---------------    ----         -------          ---------------
<S>       <C>                     <C>                <C>          <C>              <C>
 33       6816172                 CONNECTOR, RECE     77          6877218          HOSE ASSY, TFE
 34       6723126-1               JOURNAL, OIL PU     78          6780746-3        NUT - HEX COUPL
 35       23007068                INSULATION BLAN     79          6827810          TUBE ASSY, FUEL
 36       6895554                 FILTER ELEMENT      80          6841974          BRACKET ASSY, F
 37       6814990                 DISTRIBUTION BO     81          23073646         PLATE, IDENTIFI
 38       23007557                KEY, TURBINE CA     82          AN804D10         TEE, .875-14
 39       6892375                 HARNESS ASSY, T     83          MS9696-04        BOLT, MACH 12 P
 40       6821491                 FILTER ASSY, HI     84          6842324-06       PIN
 41       6812283-420             NUT, SELF LOCKI     85          6785824          BRACKET
 42       6794092                 BRACKET ASSY, F     86          AN174-15         BOLT, .250-28 X
 43       6847935-219040          SLEEVING S/O
 44       6823166P002             STUD
</Table>

<PAGE>

                                    EXHIBIT C

                             WARRANTY RETURN PROGRAM

Service Provider will administer the Company's warranty for Products in
accordance with its terms and in a manner consistent with the Company's general
directions and policies as advised to Service Provider in writing from time to
time. Such administration shall include:

     o   Receipt and processing of warranty claims

     o   Collection of Product subject to claims

     o   Tracking of Product subject to claims

     o   Shipment of Product subject to claims, at the Company's expense, to the
         Company

     o   Communication of warranty disposition to the customer

     o   Shipment of repaired warranty Product, at the Company's expense, to the
         customer when applicable

<PAGE>

                                    EXHIBIT D

                            PRODUCTION ENGINE SUPPORT

New Engine Production Support

Company may from time to time require Product be returned from Service Provider
to support Company's new engine production.

When such requests are made:

o   Company will place an order with Service Provider.

o   Service Provider will ship Product to Company's designated address.

o   Service Provider will issue an invoice or return order for credit to
    Company using Service Provider's *** plus an inventory "buy-back" fee of
    ***% of list price.

o   Company will be responsible for freight cost of such shipments.

o   Company will use reasonable efforts to minimize quantity of these
    occurrences.

o   Company agrees that inventory pulled back for production purposes will not
    exceed ***% of sales, at list price, in any given year.

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

                                    EXHIBIT E

                                 PRODUCT RECALL

The Service Provider will be notified if Company determines that a product
recall is required.

Service Provider will follow its then current ISO 9002 procedures for recalls.
Service Provider will charge Company only the variable cost associated with any
recall, primarily labor cost related to communication, shipping, tracking and
inspection tasks. Also, Company will bear any freight cost or scrap cost
incurred by the recall.

<PAGE>

                                    EXHIBIT F

                                   FORECASTING

The Service Provider will provide a forecast to the Company. Service Provider
will maintain a rolling 36-month monthly forecast of Product purchases for the
Company's planning purpose.

Within two weeks of signing this Agreement, Service Provider will place a firm
order for that portion of the existing Model T56 spare parts
fabrication/procurement schedule for eighteen months as provided in attached
Exhibit F-1. The Service Provider also commits to purchase production backlog,
based upon the Company's production schedule titled "18 month schedule
revisions.xls 10/10/01" previously delivered to Service Provider. Service
Provider and Company will jointly evaluate that portion of the existing Model
T56 spare parts fabrication/procurement schedule at or within eighteen months to
minimize Service Provider's requirement to purchase excess inventory.
Consideration will be given to rescheduling parts outside of the planning time
fence provided overall volumes do not decline below the forecasted order board
within a given year. The Service Provider is not required to procure those parts
in the initial 18 month schedule within planning time fence if identified in
Exhibit B-3. The Company retains the right to market these parts.

Consideration may also be given to the Service Provider for T56-A-427 parts in
the existing 18 month schedule. Inventory for these parts will be assessed in
July 2002 to determine if T56-A-427 inventory levels are excessive. Inventory
will be considered excessive if remaining inventory is greater than annualized
sales based on January through June activity. For any part numbers deemed to
have excessive inventory, the Company shall re-purchase the inventory for
production requirements or by pay Service Provider an amount equal to ***%
of list price for all such Products per month until the quantity of Service
Provider's inventory of such Products, on a part number by part number basis, is
no longer "excessive" as defined above.

The first eighteen months of the 36-month monthly forecast, or that portion of
the schedule at or within the operations planning time fence, whichever is
greater, would be considered a firm fixed schedule/purchase order with a
provision for fill in orders at lead time. Service Provider may reschedule or
cancel previously scheduled Product outside of the planning time fence in
accordance with the Company's commitment acceptance process provided overall
dollar volumes do not decline below the forecasted order board within a given
year. The remaining portion of the 36-month monthly forecast will be utilized
for capacity planning by the Company.

In accordance with the Statement of Work and the Service Provider's proposal,
the Service Provider will forecast demand to level load the manufacturing
facilities. The Service Provider will work within the Company's SORB acceptance
process to schedule

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

deliveries and bears the responsibility to level pulse buys according to
manufacturing capacity. The Service Provider may be required to build inventory
in advance of major deliveries.

The Service Provider shall, at the Company's request, provide source data used
to compile forecasts. This data may include sales history, customer call
reports, customer orders, forecasting algorithms, etc...

<PAGE>

                                    EXHIBIT G

                   FOREIGN GOVERNMENT CONTRACTS AND AGREEMENTS

The Company has agreements and contracts with specific foreign government
customers (or contractors on behalf of such governments) (see below) pursuant to
which government customer purchase requirements are such that the government
chooses to contract directly with Company. Copies of these contracts will be
provided to the Service Provider on or before November 15, 2001 and are
summarized in Exhibit G-1. In order to preserve these relationships and fulfill
these government contracting requirements, the Service Provider agrees to honor
these agreements, including the terms of sale. In addition, the Company retains
the right to renew existing agreements with such government customers; provided,
however, that the Company will only commit to same or substantially similar
terms. In some instances, the Company may enter into an agreement with the same
or substantially similar terms with a commercial entity acting on the behalf of
a government customer then under contract with Company or under a government
contract.

Company may also enter into new agreements with other foreign government
customers (or their contractors) not set forth on Exhibit G-1 and Service
Provider agrees to honor these agreements, including the terms of sale; provided
however that the non financial terms of such new agreements are similar to those
set forth on Exhibit G-1. The Company recognizes that Service Provider profits
are predicated upon sales history for commercial and foreign government
customers with an average price of list minus ***%. If the Company negotiates
future agreements with foreign government customers, the Service Provider and
Company must mutually agree on terms.

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

                                   EXHIBIT G-1

                      CURRENT NON U.S. GOVERNMENT CONTRACTS

The types of the military agreements and contracts referenced in Exhibit G are
Basic Ordering Agreements (BOAs), Blanket Purchasing Agreements (BPAs),
Requirements Contracts, General Terms and Agreements (GTAs), and Authorized
Military Overhaul Facility (AMOF) agreements. The agreements are with foreign
government entities. Discount structures of current existing agreements with
such government customers follow.

<Table>
<Caption>

              COMPANY NAME                           DISCOUNT                                             DOCUMENT
              ------------                           --------                                             --------
FMS
<S>     <C>                                         <C>                                                   <C>

        Ishikawajima-Harima Heavy Ind.              ***% Off List                                           GTA
        (IHI); expires 2012

        Safe Air Limited; expires April 6, 2006     ***% off List                                           BOA

        Turkish Air Force Command*                  ***% off List; ***% off list for
                                                    expedite orders                                         BOA

        Embassy of Singapore; expires               ***% off List to $***, then ***%                        BOA
        March 22, 2005

        Republic of Korea; expires                  ***% off List for new parts; ***% off
        December 31, 2003                           list for repaired or serviceable parts                  BOA

        Embassy of  Australia (RAAF);               ***% off List to $***, then ***%                        BOA
        expires June 30, 2002

AMOF

        Fiat Avio Inc. (Italian A/F)**              ***% off List (*** plus ***)                            AMOF AGREEMENT
</Table>
*  Agreement with Turkish Air Force Command valid for one year with yearly
renewals. Either Company or Customer can terminate for convenience. All Turkish
Air Force Command sales go through a foreign sales agent (DORMAK).

** Agreement with Fiat Avio expires November 22, 2001. Renewal clause for three
years for one dollar provided no breach of contract.

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

                                    EXHIBIT H

                         FOREIGN SALES AGENCY AGREEMENTS

The Company currently is a party to agreements with certain foreign sales agents
or representatives (see below) for the sale of Products outside the United
States. The Company will continue to administer agreements for these foreign
sales agents; however, the Service Provider agrees to share in commission
expenses. The Service Provider is only responsible for ***% of commission
payments to the following foreign sales agents:

<Table>
<Caption>
COMMENCE       EXPIRATION      COMPANY                                   COUNTRY       POINT OF           COMMISSIONS
DATE           DATE            NAME                                      CONTACT                          % OF NET SELLING PRICE
<S>            <C>             <C>                                       <C>           <C>                <C>
5/31/2001      5/31/2002       United Aviation Engine Company, Ltd.      Thailand      Joomnanond         ***%

10/15/1999     10/16/2001      Inter-State Enterprises Corporation       Korea         Limb               ***%

5/15/2001      5/15/2002       Megamas Sdn Bhd                           Malaysia      Ravi               ***%

8/14/2001      8/31/2002       LAI FU Luxembourg SA                      Taiwan        Rehfeldt           ***% new
                                                                                                          ***% repaired

11/16/1999     11/16/2001      DORMAK (Turkish Air Force Command)        Turkey        Dora               ***%

7/3/2001       10/30/2001      ETEL 88 (Spanish Air force)               Spain         Vazquez            ***%

10/10/1994     10/10/2009      Shintoa                                   Japan         Fukui              ***% (list price)
</Table>

The Company retains the right to renew agreements with foreign sales agents
provided, however the Company will only commit to same or substantially similar
terms. The Company will make full payment of the commissions due the foreign
sales agents and issue an invoice to the Service Provider for ***% of amount
paid.

The Company will retain order management responsibility for Shintoa
International. All orders received from Shintoa will be forwarded to the Service
Provider for forecasting requirements and order fulfillment, including shipping
Product to Shintoa. If Shintoa requires that parts be shipped directly from the
Company, the Service Provider will return parts to the Company. The Service
Provider will pay the Company a ***% handling fee for parts that are shipped to
Shintoa from the Company. For parts sold to Shintoa, the Service Provider will
take an immediate deduction from amounts due Company for the list

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

price of the Products less associated fees due Company. The fees due Company are
equal to the Service Provider's share of the commission payments and when
applicable, a ***% shipping handling fee.

The Company and the Service Provider will work together in the first year to
gain Shintoa's acceptance of the Service Provider. It is the intention of the
Company and the Service Provider, with Shintoa' approval, to transition all
business functions concerning Shintoa to the Service Provider at the end of the
first year. Upon this transition, Shintoa sales and commission payments will be
handled as any other foreign sales agent.

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

                                    EXHIBIT I

                              SALES REPORTS/METRICS

Service Provider will provide the Company all reports currently available online
through the "supplier services" section of Service Provider's Aviall.com web
site. These reports include:

         1.       Daily inventory by part number

         2.       Daily sales by part number

         3.       Open purchase orders

         4.       Payment status by invoice number

Service Provider will provide monthly reports as follows through e-mail file
transmission in Microsoft Excel format:

         1.       Unit sales by part number by customer

         2.       Dollar sales by part number by customer

         3.       Order intake by geographical region

Other sales reports will be provided during the term of the Agreement as
mutually agreed by both parties.

Additionally, Service Provider will provide metrics reports monthly for:

         1.       Error free shipping rates

         2.       Expedite rates

         3.       Shipping timeliness

<PAGE>

                                    EXHIBIT J

                     MARKETING AND SUPPLIER SUPPORT SERVICES

MARKETING AND SUPPLIER SUPPORT SERVICES

The implementation, timing and applicability of each service set forth below
will be determined by mutual agreement of both parties, based on customer and
market requirements.

A.          Company Marketing Rights and Obligations

o     The Company will lead the development of a marketing plan for new,
      repaired, and serviceable parts. This plan will be updated at least
      annually. The marketing plan will include a summary of each key product
      category, customer targets, technical support requirements, and
      advertising methods to be used. The Service Provider will work with
      Company personnel to effectively execute the plan through the Service
      Provider's organization.

o     The Company will make regular calls and visits to select customers,
      including U.S. Military and select foreign military customers, to identify
      opportunities and address problems. The results of these calls will be
      documented in an agreed upon database for the Service Provider's and
      Company's review.

B.          Service Provider Marketing Rights and Obligations

o     The Service Provider will make regular calls and visits to all customers.
      For those customers noted above, the Service Provider will provide a draft
      agenda to the Company whenever possible. The results of routine sales
      calls by area sales personnel will be documented in an agreed upon
      database and reviewed by the product line manager assigned to Company and
      by the T56 project manager on an ongoing basis. Summaries of important
      findings will be reported to Company regularly.

o     Area sales personnel will request monthly forecasts of operating hours,
      engine overhauls, and parts replacement from key customers. They will also
      request information on Product performance. The information will be
      accumulated and documented in an agreed upon database.

o     The product line manager will evaluate warranty claims, product returns
      and other customer activity for indications of developing problems. Where
      appropriate, the manager will conduct additional research to determine the
      nature of the problems and will communicate findings to Company.

o     The product line manager will work closely with Company data analysis and
      procurement personnel to evaluate customer buying activity and product
      stock levels. The product line manager will communicate findings to
      Company.

<PAGE>

o     The product line and program managers will attend trade shows and other
      industry events to remain up-to-date. They will visit Company production
      and technical support operations from time to time for training and
      sharing of market intelligence.

C.          Advertising and product promotion:

o     The Service Provider will work with Company personnel to produce and place
      technical articles in appropriate publications. Service Provider's
      marketing communications manager will be an important resource in this
      effort.

o     Service Provider will generate timely news releases for significant events
      such as trade shows.

o     The Service Provider sales team will actively distribute Company product
      literature.

o     Service Provider's online electronic catalog will be updated to
      incorporate Company Products, including illustrations where appropriate.

o     Customers ordering online or browsing Service Provider's electronic
      catalog can be prompted on aviall.com to take certain actions, such as
      ordering a related Product.

o     "What's New" announcements can be placed on the aviall.com home page to
      promote new products or services related to Company. Since aviall.com is
      accessed over 600,000 times per month, this is an important communications
      vehicle for our mutual customers.

o     Service Provider's worldwide email system will be used to communicate
      promotions, technical data, and selling opportunities to its global sales
      team.

o     A special Customer web page or link can be incorporated into aviall.com,
      if desired, to allow Service Provider personnel and customers to obtain
      manuals, technical data, product information and details of promotions.

o     Service Provider will incorporate a T56 Parts web page that is accessible
      by T56 customers and linked to Rolls-Royce.com.

<PAGE>

                                    EXHIBIT K

                                 TRANSFER PRICES

Company agrees that it will sell Product to Service Provider at a discount of
not more than ***% and not less than ***% off then current list price. The
discount for year *** will be ***% off list. Beginning with the *** full
calendar year, the discount to the Service Provider will be based on sales
growth.

Joint Company and Service Provider sales, at list price, in 2001 (excluding
sales by Company to Service Provider) are estimated at $*** (based on actual
sales through September and an estimate for the remainder of the year). Using
actual Company and Service Provider 2001 sales data (excluding sales by Company
to Service Provider) as the initial baseline, if year over year sales increase
more than ***% (inclusive of inflation and list price changes), the discount
from list will be increased on a sliding scale to no more than ***% in the
subsequent year as set forth below. If sales increase less than ***% (inclusive
of inflation and list price changes) the discount will be reduced to no lower
than ***% off list as set forth below. Delinquent customer orders from 2001 that
are delivered in 2002 will be included in the Service Provider's 2002 sales. All
delinquent customer orders outstanding on 12-31-2001 shall automatically be
assigned by the Company to Service Provider.

<Table>
<Caption>
Sales Performance         Service Provider        Sales Performance        Service Provider
% of target               Discount                % of target              Discount
<S>                       <C>                     <C>                      <C>
***                       ***%                    ***                      ***%
</Table>

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

                                    EXHIBIT L

                                   List Prices

The following represents the current list prices as of September, 2001.
Historically, list prices have been revised annually. List prices for the
following calendar year will be provided to the Service Provider by September
30th of any given calendar year after 2001.

The Company has initiated an analysis concerning market based pricing in an
effort to recapture market share. Part numbers targeted for price reduction in
2002 have been identified to the Service Provider as Specials in Exhibit B-1.
Year 2002 schedules have been increased in preparation for increased demand of
these part numbers. The Service Provider and the Company will work together to
identify further part numbers to apply market based pricing.

Inventory for all Specials, except those listed in Exhibit B-3, will be assessed
in January 2003 to determine if inventory levels are beyond requirement.
Inventory will be considered beyond requirements if remaining inventory is
greater than 6 month average month sales, with average monthly sales defined as
one half of 2002 sales. For any inventory of Specials greater than 6 months of
average month sales Company will pay the Service Provider for carrying costs
associated with inventory at the rate of ***% of list price per month until the
inventory level is no longer greater than 6 months of average month sales.

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

                                    EXHIBIT M

                        Penalties and Late Delivery Fees

Penalties and Late Delivery Fees

The Company and Service Provider are both incentivized to grow the T56 new parts
business. Meeting customer requirements is a mutual concern. Penalties between
those parties would create friction and result in an effort which does not focus
on the joint goal of maximizing new part sales.

The Company will make every effort to accommodate the Service Provider's
requested expedites through the Sales and Operation Review Board commitment
acceptance process with no penalty to the Service Provider. Service Provider
will make every effort to minimize expedites.

The Company will accept no penalties for late deliveries from the Service
Provider unless they are documented as a pass through penalty from the end user.
The Service Provider will not agree to end user penalties for the Company's
delivery performance unless prior agreement with the Company is obtained.

<PAGE>

                                    EXHIBIT N

                               U.S. Military Sales

Service provider will fill orders for U.S. Military customers (or their
contractors) per the terms and conditions of the contracts and agreements held
by the Company. Contracts for U.S. military T56 parts include U.S. military
sales to foreign Governments. Discounts to current contracts with U.S. military
customers follow:

<Table>
US MILITARY
<S>                                             <C>
       NAVICP Electronic P.O.                   Negotiated price based on quote. All Military
       N00383-01-P-021M (active)                pack/mark per boilerplate MIL-STD-2047/MIL-STD-129M

       DISC Phil. P.O.                          Negotiated price based on quote.  All Military
       SP0560-01-M-Y745 (active)                pack/mark per boilerplate MIL-STD-2047/MIL-STD-129M

       DSCR Contract                            Negotiated price based on quote.  All Military
       SP0480-01-C-1392 (active)                pack/mark per boilerplate MIL-STD-2047/MIL-STD-129M

       DSCC P.O./Contracts                      Negotiated price based on quote.  All Military
       SPO740-01-M-3224 (active)                pack/mark per boilerplate MIL-STD-2047/MIL-STD-129M
       SP0740-01-C-5027 (active)
       SP0740-01-C-5028(active)

       BOA (NAVICP) only user                   NAVICP Delivery Orders negotiated price based on quote.
       N00383-01-G-019M (active)                Pack/mark MIL-STD-2047/MIL-STD-129M (boilerplate)

       BOA (Tinker AFB, OK)                     Open orders. Delivery Orders negotiated price based on
       F34601-98-G-0011 (expired)               quote. Pack/mark MIL-STD-2047/MIL-STD-129M (boilerplate)
       Used by OC, DLA, NAVICP                  Replaced by F34601-01-D-0155 below. Once open orders
                                                complete almost all pack/mark will be commercial.

       Standard Aero San Antonio Inc.           Discount Average of ***% off List
       (Kelly AFB, TX)                          Commercial Direct Government Support, Commercial Pack,
       Agreement # A01-560 (active)             No Government Acceptance Required.

       Blanket Purchase Agreement               Discount of ***% off List
       (Tinker AFB, OK)                         Blanket Purchase Agreement, Commercial Pack/Invoice
       F41608-97-A-0001 (expired)

       Engine Services Oakland                  Discount of ***% off List
       (T56-A-427 Engine Requirements           Commercial Pack/Invoice
       Repair Contract)
       N00019-00-D-0267 (active)

       Commercial Corporate Contract            Prices were negotiated on a part number by part number
       (Tinker AFB, OK)                         basis forming a unique military price list.  Requirements
       F34601-01-D-0155 (active)                Contract, Commercial Pack/Invoice
</Table>

The Service Provider will arrange for Government inspection to the level
required and obtain the Government acceptance signatures at Service Provider's
facility. The Company

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

will provide Service Provider with the capability to generate invoices and
DD-250's at Service Provider's facility. The Company's IT system will provide
the other detail as entered by the Company in order for Service Provider to
package and ship to the correct customer location which may be different than
order issuing offices.

Service Provider will have ink stamps available (a sample will be provided by
Company) to apply to the Company commercial invoice to obtain the Government
acceptance signature and Company hereby grants Service Provider the authority to
apply such stamps as it deems necessary. DD-250's and commercial invoices used
in lieu of DD-250's will be sent to the Company accounts receivable designated
point of contact. The Company will provide Service Provider with the Technical
Data required for use by The Government Quality Assurance Representative to
perform inspection and acceptance of Product.

All U.S. military customer (or their contractors) orders for T56 engines and
parts are rated in accordance with the provisions of the Defense Priority
Allocation System (DPAS). Service Provider will treat all military orders with
the preference required by DPAS. Information as to the requirements of DPAS can
be found in Part 700 of Title 15 of the Code of Federal Regulations (15CFR 700)
and the Federal Acquisition Regulations (FAR), FAR Part 11.6.

In filling contracts and other agreements with U.S. military customers (or their
contractors), the Service Provider will be required to fill part orders at a
price below the transfer price. For the parts shipped in fulfillment of the
these contracts, the Service Provider will take an immediate deduction for its
*** of such Products plus a handling fee of ***% of list price against current
amounts due Company. The following calculation is provided as an example:

List price                                         $***
Transfer price (Service Provider's ***)            $***
Handling Fee (***% of list price)                  $***
Deduction from amounts due Company                 $***

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
                                    EXHIBIT O

                          SALES TO INDUSTRIAL CUSTOMERS

The Company will retain order management responsibility for Industrial
customers. All orders received for part numbers that are common with the T56
engines will be forwarded to the Service Provider. The Service Provider will use
this information for forecasting requirements and will be responsible for order
fulfillment, invoicing, and accounts receivable.

The Company has agreements and contracts with specific industrial customers. In
order to preserve these relationships and fulfill these contracting
requirements, the Service Provider agrees to honor these agreements, including
the terms of sale. In addition, the Company retains the right to renew existing
agreements with such customers; provided, however, that the Company will only
commit to same or substantially similar terms. The Company will provide copies
of these contracts to the Service Provider on or before Dec 1, 2001. The
following table summarizes discount structures per existing agreements:

<Table>
<Caption>

                                                               *being negotiated
AMC / DISTRIBUTOR                                DISCOUNT
-----------------                                --------
<S>                                              <C>
Bath Iron Works                                  ***% OFF List
Centrax                                          ***% OFF List; ***% embodiment
Hitachi Zosen                                    ***% OFF List; ***% embodiment
IHI & Niasco (JDA; K34 engines)                  ***% OFF List
IHI & Niasco (501K engines)                      ***% OFF List; ***% embodiment
Ingalls Shipbuilding                             ***% OFF List
Kawasaki Heavy Industries                        ***% OFF List; ***% embodiment
Kobe Steel                                       ***% OFF List; ***% embodiment
Rolls Wood Group                                 ***% OFF List; ***% embodiment*
RR Australia                                     ***% OFF List
RRESI Maineville                                 ***% OFF List
RRESI Mount Vernon                               ***% OFF List; ***% embodiment
RRESO-Oakland                                    ***% OFF List; ***% embodiment
Shintoa                                          ***% OFF List; ***% embodiment
Sigma                                            ***% OFF List; ***% embodiment
Standard Aero                                    ***% OFF List; ***% embodiment
Turbomeca                                        ***% OFF List; ***% embodiment
Tominaga                                         ***% OFF List
RR Propulsion Systems                            ***% OFF List
RR Power Engineering                             ***% OFF List*
Samsung                                          ***% OFF List; ***% embodiment
ITP                                              ***% OFF List
Turbomeca                                        ***% OFF List; ***% embodiment
AIDC                                             ***% OFF List
Military                                         ***
</Table>

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

                                    EXHIBIT P

                 Serviceable, Surplus, and Repaired Parts Sales

The Service Provider will procure serviceable, surplus and repaired parts to
complement new part sales. The Service Provider, in most instances, is required
to pay Company a royalty fee for sales of these parts in accordance with
existing payment terms (Exhibit R).

Surplus Parts

The Service Provider will procure surplus parts together with appropriate
documentation concerning part origin from approved sources. Company will provide
quality certification, verify the traceability of surplus parts, provide all
necessary documentation required for the sale of the part, and permit Service
Provider to use the Rolls-Royce logo and name in connection with the sale of
such part which will then be added to the Service Provider's inventory. Upon
sale of a surplus part, obtained from a source other than the Company or another
affiliate, the Service Provider will pay Company a royalty fee of ***% of
selling price.

Repaired and Serviceable Parts

The Service Provider will procure used parts and cores. Company will provide
quality certification, verify the traceability of the such parts, provide all
necessary documentation required for the sale of the part, and permit Service
Provider to use the Rolls-Royce logo and name in connection with the sale of the
part which will then be added to the Service Provider's inventory. Upon sale of
such part, obtained from a source other than the Company or an affiliate, the
Service Provider will pay Company a royalty fee of ***% of selling price.

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

                                    EXHIBIT Q

                               QUALITY GUIDELINES

In accordance with this agreement, the Service Provider must be ISO 9002
certified; certification to AS7103/AS7104 is preferred. Certification to the FAA
distributor accreditation program (AC 00-56) is acceptable.

The Service Provider must comply with the Company's approved FAA production
system unless the Service Provider has its own FAA production or maintenance
approval.

If mutually agreed between the Company and Service Provider for the Service
Provider to source from third parties, approval for these sources must comply
with the Company guidelines and it will be the T56 Service Provider's
responsibility to ensure compliance.

<PAGE>

                                    EXHIBIT R

                                  PAYMENT TERMS

Initial payment terms from the Service Provider due the Company are 35 days from
receipt of Product or date of invoice, whichever is later, payable by check.

The Company and United States Air Force are planning to transition from a
Government Furnished Material (GFM) contract to a Contractor Furnished Material
(CFM) contract. Upon successful transition, as set forth below, to a CFM
contract with the Air Force, payment terms will be 30 days payable by check.

The plan for the GFM to CFM transition includes several component packages. Each
component package identifies a unique set of part numbers. Transition of the
component packages is expected to occur in stages. For the purposes of this
agreement, transition from GFM to CFM will be considered sufficient when
component packages which have been changed from GFM to CFM and revenue under
such CFM components meets or exceeds an aggregate value of $*** per year at
Company's invoice price to the customers, but no earlier than June 30, 2002. At
this point, payment terms will change to 30 days from receipt of Product or date
of invoice, whichever is later, payable by check.

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

                                    EXHIBIT S

                                TERMINATION FEES

In the event that the Agreement is terminated by Company pursuant to Sections
11.(a) or 11.(b), as a condition to the effectiveness of such termination,
Company shall pay Service Provider according to the following formula and
amounts:

(A)    An amount which equals [$*** + (the product of *** times Excess Sales
       Value times ***) times Pro Rata Term Percentage].

For the purpose of the above calculation, the following definitions shall apply:

       1.  Excess Sales Value shall mean the amount by which the Distributor's
           total sales in the previous 12 calendar months preceding notice of
           termination exceeds the actual amount of 2001 sales as calculated
           pursuant to Exhibit K adjusted by the ***% annual compound growth,
           prorated for the month of termination (the Index) calculated for such
           previous 12 calendar months.

       2.  Pro Rata Term Percentage shall be the percentage that results by
           taking the number of full calendar months that would remain from the
           date of termination of the Agreement to December 31, 2011 and
           dividing that number by 120.

The parties agree that the following examples shall serve as instruction to
application of the formula:

Example 1:  Termination after 36 months, total sales in preceding 12 months of
$**  with adjustment for the Index.

       Excess Sales Value: = $***
       Full Calendar Months Remaining to December 31, 2011=  84
       Pro Rata Term Percentage 84/120= .70
       So the calculation is as follows:

                                      ***;

and

(B)    The Company shall purchase all of Service Provider's inventory of
       Products existing on the termination date at Service Provider's average
       cost.

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

                                    EXHIBIT T

                                  AMCS AND FMCS

The Company has agreements with Rolls-Royce Authorized Maintenance Centers
(AMCs) and Factory Maintenance Centers (FMCs). These organizations support the
route of the Company's Product to the marketplace. The Service Provider will
sell Products to the existing AMCs/FMCs at a price which is not more than ***%
off of the Company's then current published list prices. The T56 AMCs are as
follows:

Hellenic Aerospace Industry Ltd. (HAI), Greece
Israel Aircraft Industries Ltd (IAI), Israel
OGMA - Industria Aeronautica De Portugal, Portugal
Samsung Aerospace Industry, Korea
Sigma Aerospace, England
Snecma Services, France
ST Aerospace Engines Pte Ltd., Singapore
Standard Aero Limited, Canada
Wood Group Turbopower Inc., Florida

The Company has two Factory Maintenance Center (FMC) agreements; however, there
is the possibility that additional FMCs will be identified. The two FMCs are
Rolls-Royce Engine Services Oakland (RRESO) and Rolls-Royce Brazil.

Nothing contained herein shall preclude Service Provider from selling Products
to all other customers at such prices and on such terms, including the prices
and terms at which it sells to AMCs, that Service Provider, in its sole
discretion, shall determine.

***CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY AVIALL, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.<PAGE>
                                                                   EXHIBIT 10.27

                          SECURITIES PURCHASE AGREEMENT

                                  by and among

                                  AVIALL, INC.

                                       and

                               CERTAIN PURCHASERS
                                IDENTIFIED HEREIN

                          Dated as of December 17, 2001

<PAGE>

                                TABLE OF CONTENTS

<Table>
<Caption>

                                                                                                                PAGE
                                                                                                                ----
<S>                                                                                                             <C>

ARTICLE I. DEFINITIONS............................................................................................1
         1.1      Defined Terms...................................................................................1

ARTICLE II. PURCHASE AND SALE OF SECURITIES.......................................................................9
         2.1      Purchase and Sale of Securities.................................................................9
         2.2      Consideration for Securities....................................................................9

ARTICLE III. CLOSING.............................................................................................10
         3.1      Closing........................................................................................10
         3.2      Deliveries by the Company at Closing...........................................................10
         3.3      Deliveries by the Purchasers at Closing........................................................10
         3.4      Certificates; Opinions.........................................................................10
         3.5      Registration Rights Agreement..................................................................10
         3.6      Standstill Agreement...........................................................................10
         3.7      Management Agreements..........................................................................10
         3.8      Form of Documents and Instruments..............................................................10

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................................11
         4.1      Organization of the Company....................................................................11
         4.2      Capitalization of the Company..................................................................11
         4.3      Authorization of Issuance......................................................................12
         4.4      Due Authorization..............................................................................12
         4.5      No Conflict....................................................................................13
         4.6      Consents and Approvals.........................................................................13
         4.7      Subsidiaries...................................................................................13
         4.8      SEC Filings; Interim Financial Statements......................................................14
         4.9      Absence of Undisclosed Liabilities.............................................................15
         4.10     Absence of Certain Changes.....................................................................15
         4.11     Compliance With Laws...........................................................................15
         4.12     Litigation.....................................................................................16
         4.13     Employee Benefit Plans and Other Agreements....................................................16
         4.14     Taxes..........................................................................................20
         4.15     Environmental Matters..........................................................................21
         4.16     Insurance......................................................................................22
         4.17     Title to Assets, Etc. .........................................................................23
         4.18     Condition of Tangible Assets...................................................................23
         4.19     Labor Matters..................................................................................23
         4.20     Intellectual Property..........................................................................24
         4.21     Government Contracts...........................................................................24
</Table>

                                        i
<PAGE>

<Table>
<S>                                                                                                             <C>

         4.22     Board Recommendations..........................................................................25
         4.23     No Brokers.....................................................................................25
         4.24     Contracts; No Defaults.........................................................................25
         4.25     Customers......................................................................................27
         4.26     Suppliers......................................................................................27
         4.27     Affiliated Transactions........................................................................28
         4.28     Real Property..................................................................................28
         4.29     State Takeover Statutes........................................................................28
         4.30     Minimum Inventory Purchases....................................................................29
         4.31     Rolls Royce T-56 Engine Parts Contract.........................................................29
         4.32     Inventory......................................................................................29
         4.33     Information Technology.........................................................................29
         4.34     Projections....................................................................................29

ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PURCHASERS..........................................................29
         5.1      Organization of Purchaser......................................................................29
         5.2      Due Authorization..............................................................................30
         5.3      No Conflict....................................................................................30
         5.4      Consents and Approvals.........................................................................30
         5.5      Purchase for Investment........................................................................31
         5.6      No Brokers.....................................................................................31

ARTICLE VI. COVENANTS............................................................................................32
         6.1      Meeting of Stockholders; Proxy Statement.......................................................32
         6.2      Continuing Operations..........................................................................33
         6.3      Press Releases.................................................................................34
         6.4      Investigations and Access......................................................................34
         6.5      Notification of Certain Matters................................................................35
         6.6      No Solicitation................................................................................35
         6.7      [Reserved].....................................................................................35
         6.8      Certain Undertakings...........................................................................35
         6.9      Director And Officer Indemnification...........................................................35
         6.10     Listing........................................................................................36
         6.11     Legend.........................................................................................36
         6.12     Payment of Fees................................................................................37
         6.13     Use of Proceeds................................................................................37
         6.14     Confidentiality................................................................................37
         6.15     Issuance of Rights.............................................................................38
         6.16     Transfer of Bridge Preferred Stock.............................................................38

ARTICLE VII. CONDITIONS TO CLOSING...............................................................................39
         7.1      Condition to Each Party's Obligations..........................................................39
         7.2      Conditions to the Company's Obligations........................................................39
         7.3      Conditions to the Purchasers' Obligations......................................................40
</Table>

                                       ii
<PAGE>

<Table>
<S>                                                                                                             <C>
ARTICLE VIII. INDEMNIFICATION....................................................................................42
         8.1      Survival of Representations, Etc. .............................................................42
         8.2      Indemnification by the Company.................................................................42
         8.3      Indemnification by the Purchasers..............................................................42
         8.4      Limitation on Indemnities......................................................................42
         8.5      Losses.........................................................................................43
         8.6      Defense of Claims..............................................................................43
         8.7      Tax Treatment of Indemnity.....................................................................43

ARTICLE IX. MISCELLANEOUS........................................................................................44
         9.1      Termination....................................................................................44
         9.2      In the Event of Termination....................................................................44
         9.3      Expenses.......................................................................................44
         9.4      Injunctive Relief..............................................................................45
         9.5      Assignment.....................................................................................45
         9.6      Notices........................................................................................45
         9.7      Choice of Law..................................................................................47
         9.8      Entire Agreement; Amendments and Waivers.......................................................47
         9.9      Counterparts...................................................................................47
         9.10     Invalidity.....................................................................................47
         9.11     Headings.......................................................................................47
         9.12     Limitation of Liability........................................................................47
</Table>

                                       iii
<PAGE>

                          SECURITIES PURCHASE AGREEMENT

                  This Securities Purchase Agreement (this "Agreement"), dated
as of December 17, 2001, is by and among (i) Aviall, Inc., a Delaware
corporation (the "Company"), and (ii) Carlyle Partners III, L.P., a Delaware
limited partnership ("CPIII"), and CP III Coinvestment, L.P., a Delaware limited
partnership (together with CPIII, the "Purchasers").

                                     RECITAL

                  WHEREAS, the Company desires to sell to the Purchasers, and
the Purchasers desire to purchase from the Company, an aggregate of 45,000
shares (the "Bridge Preferred Shares") of the Series B Senior Convertible
Participating Preferred Stock, $.01 par value per share, of the Company (the
"Bridge Preferred Stock"), having the rights, designations and preferences set
forth in the Bridge Preferred Stock Certificate of Designations (as defined
herein), for the consideration as set forth in Section 2.2.

                  WHEREAS, under certain circumstances set forth in the Bridge
Preferred Stock Certificate of Designations, the Bridge Preferred Stock shall be
(i) convertible, at the option of the holders, into shares of Common Stock (as
defined herein) and shares (the "Mezzanine Preferred Shares") of the Series C
Senior Participating Preferred Stock, $.01 par value per share, of the Company
(the "Mezzanine Preferred Stock"), having the rights, designations and
preferences set forth in the Mezzanine Preferred Stock Certificate of
Designations (as defined herein), or (ii) automatically convertible, under
certain circumstances, into shares (the "Permanent Preferred Shares") of Series
D Senior Convertible Participating Preferred Stock, $.01 par value per share, of
the Company (the "Permanent Preferred Stock"), having the rights, designations
and preferences set forth in the Permanent Preferred Stock Certificate of
Designations (as defined herein).

                                    AGREEMENT

                  NOW, THEREFORE, in consideration of the mutual covenants and
premises contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:

                                   ARTICLE I.
                                   DEFINITIONS

         1.1 Defined Terms. As used herein, the terms below shall have the
following meanings:

<PAGE>

                  "Affiliate" shall mean any entity controlling, controlled by
or under common control with the Company. For the purposes of this definition,
"control" shall have the meaning presently specified for that word in Rule 405
promulgated by the Commission under the Securities Act.

                  "Agreement" shall mean this Securities Purchase Agreement,
together with all schedules and exhibits referenced herein.

                  "Alternative Transaction" has the meaning set forth in Section
6.6 of the Agreement.

                  "Applicable Law" means any statute, law, rule, regulation or
published policy or any judgment, order, writ, injunction or decree of any
Governmental Entity to which a specified Person or property is subject.

                  "As-Adjusted Balance Sheet" has the meaning set forth in
Section 7.3(s) of the Agreement.

                  "Australian Credit Facility" means the credit facility to be
entered into between Aviall Pty Ltd and a lender selected by Aviall Services,
Inc. in an aggregate amount not exceeding 9,637,597.24 Australian dollars.

                  "Benefit Arrangement" shall mean with respect to the Company
and any of its Subsidiaries, any employment, consulting, severance, change in
control or other similar contract, arrangement or policy and each plan,
arrangement (written or oral), program, agreement or commitment providing for
insurance coverage (including without limitation any self-insured arrangements),
workers' compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, retirement benefits, life, health, disability or accident
benefits (including without limitation any "voluntary employees' beneficiary
association" as defined in Section 501(c)(9) of the Code providing for the same
or other benefits), fringe benefits or for deferred compensation, profit-sharing
bonuses, stock options, stock appreciation rights, stock purchases, annual or
long-term cash incentive, base pay or other forms of incentive compensation or
post-retirement insurance, compensation or benefits which (A) is not a Welfare
Plan, Pension Plan or Multiemployer Plan, (B) is entered into, maintained,
contributed to or required to be contributed to, as the case may be, by the
Company and any of its Subsidiaries or any ERISA Affiliate of the Company and
any of its Subsidiaries, and (C) covers any employee or former employee,
director or consultant of the Company and any of its Subsidiaries (with respect
to their relationship with any such entity).

                  "Board of Directors" means the Board of Directors of the
Company.

                  "Bridge Preferred Shares" has the meaning specified in the
Recitals hereto.

                  "Bridge Preferred Stock" has the meaning specified in the
Recitals hereto.

                                       2
<PAGE>

                  "Bridge Preferred Stock Certificate of Designations" means the
Certificate of Designations of the Series B Senior Convertible Participating
Preferred Stock, $.01 par value per share, of the Company, in the form attached
hereto as Exhibit A.

                  "Bylaws" means the Amended and Restated Bylaws of the Company
as in effect on the date hereof.

                  "Business" means the business of the Company as described more
fully in the "Business" section of the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2000.

                  "Business Days" means a day other than a Saturday or Sunday or
any federal or New York holiday.

                  "Canadian Credit Facility" means that certain credit facility
of Aviall (Canada) Ltd. for an aggregate amount of up to 6,000,000 Canadian
dollars.

                  "Carlyle" means TC Group, L.L.C. or (to the extent appropriate
from the context) one or more of its Affiliates.

                  "Carlyle Transaction Expenses" means the reasonable
out-of-pocket fees and expenses incurred by the Purchasers and/or by Carlyle on
behalf of the Purchasers in connection with the transactions contemplated
hereby, including, but not limited to, fees and expenses of legal counsel,
accountants and consultants and travel and other expenses incurred in connection
with the preparation of the Agreement, Carlyle's due diligence examination
relating to the Agreement and the other out-of-pocket expenses incurred by the
Purchasers or Carlyle in connection with the transaction contemplated hereby.

                   "Certificate of Incorporation" means the Certificate of
Incorporation of the Company as amended or restated and as in effect on the date
hereof.

                  "Claim" has the meaning set forth in Section 8.6 of this
Agreement.

                  "Claim Notice" has the meaning set forth in Section 8.6 of
this Agreement.

                  "Closing" has the meaning set forth in Section 3.1 of the
Agreement.

                  "Closing Date" means December 21, 2001 or such other date
agreed to by the parties.

                  "Code" means the Internal Revenue Code of 1986, as it may be
amended from time to time.

                  "Commission" means the United States Securities and Exchange
Commission.

                  "Common Stock" means the common stock, $.01 par value per
share, of the Company.

                                       3
<PAGE>

                  "Company Indemnified Parties" has the meaning set forth in
Section 8.3 of this Agreement.

                  "Contract" has the meaning set forth in Section 4.24(a) of the
Agreement.

                  "Conversion Shares" means (i) the Mezzanine Preferred Shares
and Permanent Preferred Shares issuable upon the conversion of the Bridge
Preferred Shares and (ii) the shares of Common Stock issuable upon the
conversion of the Bridge Preferred Shares and the Permanent Preferred Shares.

                  "Credit Facility" means, collectively, the Revolving Credit
and Term Loan Agreement, dated as of December 23, 1999, among Aviall, Inc., the
lending institutions from time to time parties thereto, BankBoston, N.A., as
administrative agent, and Bank of America, N.A., as documentation agent, as
amended, together will all schedules and exhibits references therein and all
notes executed on account thereof.

                  "Employee Plans" means all Benefit Arrangements, Multiemployer
Plans, Pension Plans and Welfare Plans.

                  "Encumbrance" means any claim, lien, pledge, option, charge,
easement, security interest, right-of-way, encumbrance or other rights of third
parties, and, with respect to any securities, any agreements, understandings or
restrictions affecting the voting rights or other incidents of record or
beneficial ownership pertaining to such securities.

                  "Environmental Conditions" means the Release or threatened
Release of any Hazardous Material (whether or not upon a Facility or any former
facility or other property and whether or not such Release constituted at the
time thereof a violation of any Environmental Law) as a result of which the
Company has or may become liable to any Person or by reason of which any
Facility, any former facility or any of the assets of the Company may suffer or
be subjected to any Encumbrances.

                  "Environmental Laws" means any and all foreign, federal,
state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, legally binding decrees, or other requirement of any
Governmental Entity (including, without limitation, common law) regulating,
relating to or imposing liability or standards of conduct concerning protection
of the environment or of human health relating to exposure of any kind of
Hazardous Materials, as has been, is now, or may at any time hereafter be, in
effect.

                  "Environmental Permits" means any and all permits, licenses,
registrations, notifications, exemptions and any other authorization required
under any Environmental Law.

                  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

                  "ERISA Affiliate" means any entity which is (or at any
relevant time was) a member of a "controlled group of corporations" with, under
"common control" with, a member

                                       4
<PAGE>

of an "affiliated service group" with, or otherwise required to be aggregated
with the Company, as set forth in Section 414(b), (c), (m) or (o) of the Code.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

                  "Facilities" means the offices and buildings and all other
real property which are owned, leased or operated by the Company or any
Subsidiary.

                  "Financing Fee" has the meaning set forth in Section 6.12 of
this Agreement.

                  "Fixtures and Equipment" shall mean all of the furniture,
fixtures, furnishings, machinery and equipment owned by the Company or any
Subsidiary.

                   "GAAP" has the meaning set forth in Section 4.8 of the
Agreement.

                  "Government Contracts" shall mean all contracts, options,
agreements, commitments of sales or purchase orders of the Company with the
United States Government or any department or agency thereof, including, any
contract, option, agreement, commitment or sales order of the Company with any
other party in connection with a contract between a third party and the United
States Government or a department or agency thereof. Such term also includes all
bids, quotations and proposals, which if accepted, would result in a Government
Contract.

                  "Governmental Entity" means any court or tribunal in any
jurisdiction (domestic or foreign) or any governmental or regulatory body,
agency, department, commission, board, bureau, or other authority or
instrumentality (domestic or foreign).

                  "Hazardous Materials" means any hazardous substance, gasoline
or petroleum (including crude oil or any fraction thereof) or petroleum
products, polychlorinated biphenyls, ureaformaldehyde insulation, asbestos or
asbestos-containing materials, pollutants, contaminants, radioactivity, and any
other materials or substances of any kind, whether solid, liquid or gas, and
whether or not any such substance is defined as hazardous under any
Environmental Law, that is regulated pursuant to any Environmental Law or that
could give rise to liability under any Environmental Law.

                  "Indemnified Parties" has the meaning set forth in Section 8.3
of this Agreement.

                  "Initial Increase Date" means the date which is one hundred
(100) days after the Closing Date.

                  "Interim Period" has the meaning set forth in Section 6.2 of
the Agreement. "Investor Nominee" has the meaning set forth in Section 6.9 of
this Agreement.

                  "IRS" has the meaning set forth in Section 4.13 of the
Agreement.

                  "Knowledge of the Company" (or similar language to that
effect) means to the actual knowledge of the Persons listed on Schedule 1
hereto.

                                       5
<PAGE>

                   "Losses" has the meaning set forth in Section 8.2 of this
Agreement.

                  "Material Adverse Effect" or "Material Adverse Change" shall
mean an event, occurrence or condition that has had, or could reasonably be
expected to have, a material adverse change or effect on the business, condition
(financial or otherwise), assets, liabilities, working capital or results of
operations of the Company or its Subsidiaries, taken as a whole.

                  "Mezzanine Preferred Shares" has the meaning specified in the
Recitals hereto.

                  "Mezzanine Preferred Stock" has the meaning specified in the
Recitals hereto.

                  "Mezzanine Preferred Stock Certificate of Designations" means
the Certificate of Designations of the Series C Senior Participating Preferred
Stock, $.01 par value per share, of the Company, in the form attached hereto as
Exhibit B.

                  "Multiemployer Plan" means with respect to the Company and any
of its Subsidiaries any "multiemployer plan," as defined in Section 4001(a)(3)
of ERISA, (A) to which the Company and any of its Subsidiaries or any ERISA
Affiliate of the Company and any of its Subsidiaries maintains, administers,
contributes or is required to contribute and (B) which covers any employee or
former employee of the Company and any of its Subsidiaries or any ERISA
Affiliate of the Company and any of its Subsidiaries (with respect to their
relationship with such entities).

                  "New Credit Facility" means that certain Credit Agreement to
be entered into among Aviall Services, Inc., as borrower, Aviall, Inc., and the
lenders and issuers party thereto and Citicorp USA, Inc., as administrative
agent, attached as Exhibit F.

                  "NOLs" has the meaning set forth in Section 4.14(l) of the
Agreement.

                  "Note Purchase Agreement" means that certain Securities
Purchase Agreement to be entered into by and among the Company, Aviall Services,
Inc., J.H. Whitney Mezzanine Fund, L.P., Whitney Private Debt Fund, L.P. and
other purchasers defined therein, attached as Exhibit G.

                  "Option" means outstanding options to purchase Common Stock of
the Company or any of its Subsidiaries.

                  "Owned Real Property" means all real property owned by the
Company or any of its Subsidiaries.

                  "PBGC" means the Pension Benefit Guaranty Corporation.

                  "Pension Plan" means with respect to the Company and any of
its Subsidiaries any "employee pension benefit plan" as defined in Section 3(2)
of ERISA (other than a Multiemployer Plan) (A) which the Company and any of its
Subsidiaries or any ERISA Affiliate of the Company and any of its Subsidiaries
maintains, administers, contributes to or is required to contribute to and (B)
which covers any current employee or former employee, director or

                                       6
<PAGE>

consultant of the Company and any of its Subsidiaries or any ERISA Affiliate of
the Company and any of its Subsidiaries (with respect to their relationship with
such entities).

                  "Permanent Preferred Shares" has the meaning specified in the
Recitals hereto.

                  "Permanent Preferred Stock" has the meaning specified in the
Recitals hereto.

                  "Permanent Preferred Stock Certificate of Designations" means
the Certificate of Designations, Preferences and Relative, Participating,
Optional and Other Special Rights and Qualifications, Limitations and
Restrictions thereof of the Series D Senior Convertible Participating Preferred
Stock, $.01 par value per share, of the Company, substantially in the form
attached hereto as Exhibit C.

                  "Permits" shall mean all material licenses, permits, orders,
consents, approvals, registrations, authorizations, qualifications and filings
required by any federal, state, local or foreign laws or governmental or
regulatory bodies and all industry or other non-governmental self-regulatory
organizations.

                  "Permitted Encumbrances" means (i) any mechanic's or
materialmen's lien or similar Encumbrances with respect to amounts not yet due
and payable or which are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established, (ii)
Encumbrances for Taxes not yet due and payable or which are being contested in
good faith by appropriate proceeding and for which appropriate reserves have
been established, or (iii) Encumbrances arising under the Credit Facility, the
New Credit Facility, the Canadian Credit Facility and the Australian Credit
Facility.

                  "Person" means any individual, corporation, association,
partnership, joint venture, limited liability company, trust, estate or other
entity or organization.

                  "Pre-Closing Environmental Conditions" means any Environmental
Condition occurring or in existence on or prior to the Closing Date.

                  "Private Placement Legend" has the meaning set forth in
Section 6.11 of the Agreement.

                  "Proceeding" means any action, suit or proceeding by or before
any Governmental Entity, whether civil, criminal, administrative, arbitrative or
investigative, any appeal in such an action, suit or proceeding, and any
investigation that could reasonably be expected to lead to such an action, suit
or proceeding.

                  "Proprietary Rights" has the meaning set forth in Section 4.20
of the Agreement.

                  "Proxy Materials" means the proxy statement and other proxy
materials (as amended and supplemented) to be used to solicit proxies on behalf
of the Board of Directors in connection with the Stockholders Meeting.

                  "Purchaser Indemnified Parties" has the meaning set forth in
Section 8.2 of this Agreement.

                                       7
<PAGE>

                  "Registration Rights Agreement" means the Registration Rights
Agreement by and among the Company and the Purchasers in the form attached
hereto as Exhibit E.

                  "Release" means and includes any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment or the workplace of any Hazardous Materials.

                  "Required Stockholder Approval" means the affirmative vote of
a majority of the shares of the Common Stock and Bridge Preferred Stock
represented in person or by proxy at the Stockholders Meeting in favor of
approval of the Stockholder Proposal.

                  "Rights Plan" means the Aviall, Inc. Preferred Stock Purchase
Rights Plan between Aviall, Inc. and The First National Bank of Boston, dated as
of December 7, 1993, as amended.

                  "Rollover Fee" means an amount in cash equal to 5.00% of the
aggregate Liquidation Preference (as defined in the Bridge Preferred Stock
Certificate of Designations) of the outstanding Bridge Preferred Stock on the
date the Rollover Fee is paid pursuant to Section 6.12.

                  "Rolls Royce T-56 Engine Parts Contract" means the
Distribution Services Agreement to be entered into by and between Aviall
Services, Inc. and Rolls-Royce Corporation, in the form of Exhibit D.

                  "Schedule" has the meaning set forth in Section 9.8 of the
Agreement.

                  "SEC Filings" has the meaning set forth in Section 4.8 of the
Agreement.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Series A Junior Participating Preferred Stock" means the
Series A Junior Participating Preferred Stock, $.01 par value per share, of the
Company.

                  "Standstill Agreement" means the Standstill Agreement by and
among the Company and the Purchasers in the form attached hereto as Exhibit H.

                  "Stockholders Meeting" has the meaning set forth in Section
6.1 of the Agreement.

                  "Stockholder Proposal" has the meaning set forth in Section
6.1 of the Agreement.

                  "Subsidiary" means, with respect to any Person, (a) any
corporation of which at least a majority in interest of the outstanding voting
stock (having by the terms thereof voting power under ordinary circumstances to
elect a majority of the directors of such corporation, irrespective of whether
or not at the time stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any contingency)
is at the time, directly or indirectly, owned or controlled by such Person, by
one or more Subsidiaries of

                                       8
<PAGE>

such Person, or by such Person and one or more of its Subsidiaries, or (b) any
corporate or non-corporate entity in which such Person, one or more Subsidiaries
of such Person, or such Person and one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof, has an ownership
interest and 100% of the revenue of which is included in the consolidated
financial reports of such Person consistent with generally accepted accounting
principles.

                  "Tax" or "Taxes" means any federal, state, local or foreign
net or gross income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax, governmental fee or like assessment or charge of any
kind whatsoever, including any interest, penalty or addition thereto, whether
disputed or not, imposed by any Governmental Authority or arising under any Tax
law or agreement, including, without limitation, any joint venture or
partnership agreement.

                  "Taxpayer" has the meaning set forth in Section 4.14 of this
Agreement.

                  "Tax Return" means any return, report, information return or
other document (including any related or supporting information) relating to
Taxes, including without limitation all information returns, any claims for
refunds of Taxes and any amendments or supplements to any of the foregoing.

                  "Third Party Notice" has the meaning set forth in Section 8.6
of this Agreement.

                  "Transaction" means, taken together, the transactions
contemplated under this Agreement.

                  "Welfare Plan" means with respect to the Company and any of
its Subsidiaries any "employee welfare benefit plan" as defined in Section 3(1)
of ERISA, (A) which the Company and any of its Subsidiaries or any ERISA
Affiliate maintains, administers, contributes to or is required to contribute
to, and (B) which covers any employee or former employee of the Company and any
of its Subsidiaries (with respect to their relationship with such entities).

                                  ARTICLE II.
                         PURCHASE AND SALE OF SECURITIES

         2.1 Purchase and Sale of Securities. Upon the terms and subject to the
conditions contained herein, on the Closing Date, the Company will sell to each
Purchaser, and each Purchaser will purchase from the Company, that number of the
Bridge Preferred Shares set forth opposite such Purchaser's name on Schedule 2
hereto.

         2.2 Consideration for Securities. Upon the terms and subject to the
conditions contained herein, as consideration for the purchase of the Bridge
Preferred Shares, on the Closing Date, each Purchaser shall pay to the Company
by wire transfer of same day funds, the cash purchase price set forth opposite
such Purchaser's name on Schedule 2 hereto.

                                       9
<PAGE>

                                  ARTICLE III.
                                     CLOSING

         3.1 Closing. The closing of the transactions contemplated herein (the
"Closing") shall be held at 10:00 a.m. Eastern Time on the Closing Date at the
offices of Weil, Gotshal & Manges, 767 Fifth Avenue, New York, N.Y. 10153,
unless the parties hereto otherwise agree.

         3.2 Deliveries by the Company at Closing. At Closing, the Company shall
issue and deliver to the Purchasers:

                  (a) certificates evidencing the Bridge Preferred Shares in the
name of the Purchasers (or their permitted assignees) in the respective amounts
set forth on Schedule 2 hereto; and

                  (b) all such other documents and instruments as the Purchasers
or their counsel shall reasonably request to consummate or evidence the
Transaction.

         3.3 Deliveries by the Purchasers at Closing. At Closing, the Purchasers
shall deliver to the Company:

                  (a) same day funds as provided in Section 2.2;

                  (b) all such other documents and instruments as the Company or
its counsel shall reasonably request to consummate or evidence the Transaction.

         3.4 Certificates; Opinions. At Closing, the Purchasers and the Company
shall deliver the certificates, opinion of counsel, and other documents
described in Article 7.

         3.5 Registration Rights Agreement. At Closing, the Company and the
Purchasers shall enter into the Registration Rights Agreement.

         3.6 Standstill Agreement. At Closing, the Company and the Purchasers
shall enter into the Standstill Agreement.

         3.7 Management Agreements. At Closing, the Company and the Purchasers
shall enter into the agreements attached as Exhibit J hereto.

         3.8 Form of Documents and Instruments. All of the documents and
instruments delivered at Closing shall be in form and substance, and shall be
executed and delivered in a manner, reasonably satisfactory to the parties'
respective counsel.

                                       10
<PAGE>

                                  ARTICLE IV.
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

                  The Company represents and warrants to the Purchasers as
follows:

         4.1 Organization of the Company. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to own, lease,
and operate its properties and to carry on its business as presently being
conducted. No actions or proceedings to dissolve the Company are pending or, to
the Knowledge of the Company, threatened. The copies of the Certificate of
Incorporation and Bylaws heretofore delivered by the Company to the Purchasers
are accurate and complete as of the date of this Agreement. The Company is duly
qualified or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which the property owned, leased, or operated
by it or the conduct of its business requires such qualification or licensing,
except where the failure to do so taken in the aggregate would not have a
Material Adverse Effect.

         4.2 Capitalization of the Company.

                  (a) The authorized capital stock of the Company as of the date
hereof, consists solely of 80,000,000 shares of Common Stock and 10,000,000
shares of preferred stock, of which 800,000 shares of preferred stock have been
designated Series A Junior Participating Preferred Stock. As of November 30,
2001, (i) 18,495,990 shares of Common Stock are issued and outstanding and (ii)
2,912,434 shares of Common Stock are reserved for issuance upon exercise of
Options (whether vested or unvested as of the date hereof). Since November 30,
2001, the Company has not issued any capital stock except pursuant to the
exercise of Options other than pursuant to this Agreement. Schedule 4.2 contains
the aggregate number of outstanding Options to purchase shares of Common Stock,
the weighted average exercise price with respect to such Options and the plan or
other arrangements pursuant to which such options were issued. All outstanding
shares of Common Stock have been validly issued and are fully paid and
nonassessable and issued in compliance with the Securities Act and all
applicable state securities laws, and no shares of capital stock of the Company
are subject to, nor have any been issued in violation of, any preemptive or
similar rights.

                  (b) Except as set forth above in paragraph (a) of this Section
4.2, as contemplated by this Agreement and as set forth on Schedule 4.2 hereof,
there are outstanding (i) no shares of capital stock or other voting securities
of the Company; (ii) no securities of the Company convertible into or
exchangeable for shares of capital stock or other voting securities of the
Company; (iii) no subscriptions, options, warrants, calls, commitments,
preemptive rights or other rights of any kind to acquire from the Company, and
no obligation of the Company to issue or sell, any shares of capital stock or
other voting securities of the Company or any securities of the Company
convertible into or exchangeable for such capital stock or voting securities;
and (iv) other than employee compensation plans based on the Company's earnings
and executive officer employment agreements, no equity equivalents, interests in
the ownership or earnings or other similar rights of or with respect to the
Company. Except as set forth on Schedule 4.2 and as set forth in this Agreement,
there are no outstanding contractual obligations of the Company to repurchase,
redeem or otherwise acquire any shares of Common Stock or any other securities
of the type described in clauses (i)-(iv) of the preceding sentence. Except as
provided in this Agreement, there are no restrictions upon the voting or
transfer of any share of the capital stock or other voting securities of the
Company pursuant to the Certificate of

                                       11
<PAGE>

Incorporation, the Bylaws or other governing documents or any agreement or other
instrument to which the Company is a party or by which the Company is bound
other than restricted stock held by certain employees. Consummation of the
transactions contemplated by this Agreement will not result in the acceleration
of vesting of more than 326,500 Options in the aggregate.

                  (c) The Company has amended the Rights Plan and taken such
other action so as to ensure that the Purchasers shall not become Acquiring
Persons (as defined in the Rights Plan) as a result of the execution and
delivery of this Agreement or the acquisition of beneficial or record ownership
of the Bridge Preferred Shares or the Conversion Shares. The Company has
provided to the Purchasers a true and correct copy of the Rights Plan, as
amended to date.

                  (d) The Company has taken any and all action necessary to
amend the Rights Plan and the Rights Plan has been amended in accordance with
Exhibit I hereto.

         4.3 Authorization of Issuance. At the Closing, (i) the Bridge Preferred
Shares to be acquired by the Purchasers from the Company will be duly authorized
and validly issued, fully paid and nonassessable and not subject to, or issued
in violation of, any preemptive or similar rights and (ii) the Conversion Shares
will be duly authorized and reserved for issuance, and upon issuance thereof
upon conversion of the Bridge Preferred Shares and the Permanent Preferred
Shares in accordance with the terms of the Bridge Preferred Stock Certificate of
Designations and the Permanent Preferred Stock Certificate of Designations, as
applicable, will be validly issued, fully paid and nonassessable and not subject
to, or issued in violation of, any preemptive or similar rights. Assuming the
accuracy of the representations and warranties of the Purchasers set forth in
Section 5.5 hereof, the issuance of the Bridge Preferred Shares to the
Purchasers at the Closing and the issuance of the Conversion Shares upon
conversion of the Bridge Preferred Shares and Permanent Preferred Shares will be
exempt from the registration requirements of the Securities Act and applicable
state securities laws.

         4.4 Due Authorization. The Company has all required corporate power and
authority to execute and deliver this Agreement and the Registration Rights
Agreement, perform its obligations hereunder and thereunder, and to consummate
the transactions contemplated hereby and thereby. The execution and delivery by
the Company of this Agreement and the Registration Rights Agreement, and the
consummation by it of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary corporate action of the Company. This
Agreement has been duly executed and delivered by the Company and constitutes,
and the Registration Rights Agreement when executed by the Company at the
closing as provided herein will constitute, a valid and legally binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, and similar laws relating to
or affecting creditors' rights generally, (ii) general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law), and (iii) laws and judicial decisions regarding
indemnification for violations of federal securities laws. The Required
Stockholders Vote is the only vote or approval of the holders of any class or
series of the capital stock of the Company necessary to approve the issuance of
the Permanent Preferred Shares to the Purchasers.

                                       12
<PAGE>

         4.5 No Conflict. The execution and delivery by the Company of this
Agreement and the Registration Rights Agreement and the performance by it of the
transactions contemplated hereby and thereby do not and will not (i) conflict
with or result in a violation of any provision of the Certificate of
Incorporation or the Bylaws, or the charter, bylaws, or other governing
instruments of any Subsidiary, (ii) except as set forth on Schedule 4.5,
conflict with or result in a material violation of any provision of, or
constitute (with or without the giving of notice or the passage of time or both)
a default or event of default under, give rise (with or without the giving of
notice or the passage of time or both) to any loss of material benefit, or of
any right of termination, cancellation, or acceleration under, or require any
consent under any Contract, (iii) result in the creation or imposition of any
material Encumbrance upon the properties of the Company or any Subsidiary, or
(iv) violate in any material respect any Applicable Law binding upon the Company
or any Subsidiary or any rules, regulations or published policies of the New
York Stock Exchange.

         4.6 Consents and Approvals. No material consent, approval, order,
authorization of, or declaration, filing, or registration with, any Governmental
Entity, or any consent of or notice to any party to a Contract is required to be
obtained or made by the Company or any Subsidiary in connection with the
execution and delivery by the Company of this Agreement and the Registration
Rights Agreement or the consummation of the Transaction, other than as otherwise
disclosed on Schedule 4.6.

         4.7 Subsidiaries.

                  (a) Set forth on Schedule 4.7 is a complete and accurate list
of all Subsidiaries of the Company. Each Subsidiary of the Company has been duly
formed and is validly existing under the laws of the jurisdiction of its
formation and has the requisite power and authority to own or lease and operate
its properties and assets and to conduct its business as it is now being
conducted. The Company has previously made available to the Purchasers, or shall
make available to the Purchasers prior to the Closing Date in a form reasonably
acceptable to the Purchasers, copies of the organizational documents, each as
amended to date, of each Subsidiary of the Company. Such copies are true,
correct and complete and in full force and effect. Each such Subsidiary is duly
licensed or qualified and in good standing in each jurisdiction in which its
ownership or leasing and operation of its properties and assets and the conduct
of its business as it is now being conducted requires such Subsidiary to be so
licensed or qualified, except where the failure to be so licensed or qualified
would not have a Material Adverse Effect. Set forth on Schedule 4.7 is a list of
the jurisdiction of incorporation, organization or formation of each such
Subsidiary. Except as set forth on Schedule 4.7 and as listed above, none of the
Company and the Subsidiaries of the Company own, or have the right to acquire,
any shares of stock or any equity interest in any other corporation,
partnership, joint venture or any other Person.

                  (b) The outstanding shares of capital stock of each Subsidiary
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable and were not issued in violation of any preemptive rights or
rights of first refusal or first offer. Except as set forth on Schedule 4.7, (i)
each Subsidiary of the Company is wholly-owned of record and beneficially by the
Company or another wholly-owned Subsidiary and (ii) the ownership interests of
the Company in each such Subsidiary are owned of record and beneficially by the

                                       13
<PAGE>

Company (or another wholly-owned Subsidiary of the Company), free and clear of
any Encumbrances other than Permitted Encumbrances. Set forth on Schedule 4.7 is
the name of the record and, to the Knowledge of the Company, the beneficial
holder of each ownership interest in any Subsidiary that is not held of record
and beneficially by the Company or its wholly-owned Subsidiaries. Except as set
forth on Schedule 4.7, there are (i) no securities of any Subsidiary of the
Company convertible into or exchangeable for shares of capital stock or other
voting securities of any Subsidiary of the Company or the Company; (ii) no
subscriptions, options, warrants, calls, commitments, preemptive rights or other
rights of any kind to acquire from any Subsidiary of the Company, and no
obligation of any Subsidiary of the Company to issue or sell, any shares of
capital stock or other voting securities of any Subsidiary of the Company or the
Company or any securities of any Subsidiary of the Company convertible into or
exchangeable for such capital stock or voting securities; (iii) other than
employee compensation plans based on the Company's earnings and executive
officer employment arrangements, no equity equivalents, interests in the
ownership or earnings or other similar rights of with respect to any Subsidiary
of the Company. There are no outstanding contractual obligations of any
Subsidiary of the Company to repurchase, redeem or otherwise acquire any shares
of capital stock or any other securities of the type describe in clauses (i) -
(iii) of the preceding sentence.

         4.8 SEC Filings; Interim Financial Statements. The Company and its
Subsidiaries have filed with the Commission all forms, reports, schedules,
statements, and other documents required to be filed by it under the Securities
Act, the Exchange Act, and all other federal securities laws and the rules and
regulations promulgated thereunder, since January 1, 1997 (the "SEC Filings").
Each SEC Filing was prepared in accordance with, and at the time of filing
complied in all material respects with, the requirements of the Securities Act,
the Exchange Act or other applicable federal securities law and the rules and
regulations promulgated thereunder, as applicable to such SEC Filing. None of
the SEC Filings, including, without limitation, any financial statements or
schedules included therein, at the time filed, contained any untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements contained therein, in light
of the circumstances under which they were made, and at the time they were made,
not misleading. The consolidated financial statements (including, in each case,
any related notes thereto) contained in the SEC Filings (i) have been prepared
in conformity with United States generally accepted accounting principles
("GAAP") applied on a consistent basis (except as described therein), (ii)
comply in all material respects as to form with applicable requirements and
rules and regulations of the SEC with respect thereto and (iii) and present
fairly the consolidated financial position of the Company and its consolidated
Subsidiaries at the respective dates thereof and the consolidated results of its
operations and changes in cash flows for the period indicated (subject to normal
year-end audit adjustments in the case of any unaudited interim financial
statements). Set forth on Schedule 4.8 hereof are the unaudited consolidated
balance sheet and the related unaudited consolidated statement of income of the
Company and its Subsidiaries as of, and for the nine month period ended,
September 30, 2001, each of which (i) has been prepared in conformity with GAAP
applied on a consistent basis, and (ii) presents fairly, in all material
respects, the consolidated financial position and results of operation of the
Company and its consolidated Subsidiaries as of the date and for the period
indicated (subject to normal year-end audit adjustments). The As-Adjusted
Balance Sheet delivered to the Purchasers fairly presents in all material
respects the assets and liabilities of the Company and its Subsidiaries taken as
a whole

                                       14
<PAGE>

on a consolidated basis as of November 30, 2001, and on an as adjusted basis
after taking into account the consummation of the transactions contemplated by
this Agreement, the New Credit Facility and the Note Purchase Agreement based on
the assumptions set forth therein. The historical information included in the
As-Adjusted Balance Sheet has been prepared in accordance with GAAP,
consistently applied.

         4.9 Absence of Undisclosed Liabilities. Except as set forth on Schedule
4.9, any liabilities incurred pursuant to the New Credit Agreement, the Note
Purchase Agreement, or this Agreement, or to the extent disclosed in the SEC
Filings filed with the Commission after December 31, 2000, and prior to the date
hereof, neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether absolute, contingent, liquidated or
unliquidated, or due or to become due), except for obligations and liabilities
that have arisen in the ordinary course of business consistent with past
practice since September 30, 2001 (all of which are current liabilities similar
in type to those reflected on the consolidated balance sheet of the Company
included in the Company's most recent quarterly report filed with the Commission
on Form 10-Q).

         4.10 Absence of Certain Changes. Except as set forth on Schedule 4.10
or to the extent disclosed in the SEC Filings filed since December 31, 2000,
since December 31, 2000, there has not occurred (i) any Material Adverse Change,
(ii) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of the
Company's currently outstanding capital stock, (iii) any split, combination or
reclassification of any of its outstanding capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of the Company's outstanding capital stock, (iv)
(x) any granting by the Company or any of its Subsidiaries to any director or
executive officer of the Company or any of its Subsidiaries of any material
increase in compensation or material acceleration of benefits, except in the
ordinary course of business consistent with prior practice or as was required
under employment agreements in effect as of the date of the most recent audited
financial statements included in the SEC Filings, (y) granting by the Company or
any of its Subsidiaries to any director, executive officer of the Company or any
of its Subsidiaries of any material increase in, or material acceleration of
benefits in respect of, severance or termination pay, or pay in connection with
a change of control of the Company, except in the ordinary course of business
consistent with prior past practice or as was required under any employment,
severance or termination agreements in effect as of the date of the most recent
audited financial statements included in the SEC Filings or (z) any entry by the
Company or any of its Subsidiaries into any employment, severance, change of
control, or termination or similar agreement with any director, executive
officer or other employee or independent contractor other than in the ordinary
course of business, or (v) any change in accounting methods, principles or
practices by the Company or any of its Subsidiaries materially affecting its
assets, liability or business, except insofar as may have been required by GAAP.

         4.11 Compliance With Laws. Except for matters covered by Sections 4.13,
4.14, 4.15 or 4.21 or as set forth on Schedule 4.11, (i) the Company and its
Subsidiaries are, and at all times during the past three (3) years have been, in
material compliance with all Applicable Laws; (ii) each of the Company and its
Subsidiaries has obtained and holds all Permits necessary for the

                                       15
<PAGE>

lawful conduct of its business or the lawful ownership, use and operation of its
assets; (iii) neither the Company nor any of its Subsidiaries has received any
written notice of any material violation of any Applicable Law, which has not
been dismissed or otherwise disposed of, that the Company or any Subsidiary has
not so materially complied other than with respect to violations of Applicable
Law; (iv) neither the Company nor any of its Subsidiaries is charged or, to the
Knowledge of the Company, threatened with, or, to the Knowledge of the Company,
under investigation with respect to, any material violation of any Applicable
Law relating to any material aspect of the business of the Company or any
Subsidiary; and (v) neither the Company nor any of its Subsidiaries has, during
the past three (3) years, conducted any material internal investigation
concerning any actual or alleged material violation of any Applicable Law on the
part of the Company, any of its Subsidiaries or any of their respective
officers, directors, employees or agents.

         4.12 Litigation. Except as set forth on Schedule 4.12, there are no
Proceedings pending or, to the Knowledge of the Company, threatened against or
involving the Company or any Subsidiary (or any of their respective directors or
officers in connection with the business or affairs of the Company or any
Subsidiary). As of the date hereof, there are no Proceedings pending or, to the
Knowledge of the Company, threatened seeking to restrain, prohibit, or obtain
damages or other relief in connection with this Agreement, the Registration
Rights Agreement or the transactions contemplated hereby or thereby.

         4.13 Employee Benefit Plans and Other Agreements.

                  (a) Disclosure; Delivery of Copies of Relevant Documents and
Other Information. Schedule 4.13 contains a complete list of (i) Employee Plans
which cover present or former employees, directors or consultants of the Company
or any of its Subsidiaries (with respect to their relationship with such
entities); (ii) Employee Plans which cover or have covered present or former
employees, directors or consultants of the Company or any of its Subsidiaries
(with respect to their relationship with such entities) with respect to which
any unsatisfied liability exists; and (iii) Pension Plans covered by Title IV of
ERISA or Multiemployer Plans which cover or have covered within the past five
(5) years present or former employees, directors or consultants of the Company
or any of its Subsidiaries (with respect to their relationship with such
entities).

                  (b) Employee Plans. Except as set forth in Schedule 4.13, the
Company represents and warrants with respect to the Employee Plans listed on
Schedule 4.13 as follows:

                       (i) Pension Plans.

                           (A) To the Knowledge of the Company in reliance on
                  its enrolled actuary, the funding method used in connection
                  with each Pension Plan which is subject to the minimum funding
                  requirements of ERISA is acceptable and the actuarial
                  assumptions used in connection with funding each such plan are
                  reasonable. No "accumulated funding deficiency" (for which an
                  excise tax is due or would be due in the absence of a waiver)
                  as defined in Section 412 of the Code or as defined in Section
                  302(a)(2) of ERISA, whichever may apply, has been incurred
                  with respect to any Pension Plan with respect to any plan
                  year, whether

                                       16
<PAGE>

                  or not waived. Neither the Company nor any ERISA Affiliate has
                  failed to pay when due any "required installment", within the
                  meaning of Section 412(m) of the Code and Section 302(e) of
                  ERISA, whichever may apply, with respect to any Pension Plan.
                  Neither the Company nor any ERISA Affiliate is subject to any
                  lien imposed under Section 412(n) of the Code or Section
                  302(f) of ERISA, whichever may apply, with respect to any
                  Pension Plan. Neither the Company nor any ERISA Affiliate has
                  any liability for unpaid contributions with respect to any
                  Pension Plan.

                           (B) Neither the Company nor any ERISA Affiliate is
                  required to provide security to any Company Pension Plan under
                  Section 401(a)(29) of the Code.

                           (C) Each Pension Plan and each related trust
                  agreement, annuity contract, or other funding instrument that
                  is intended to be qualified is qualified and tax-exempt under
                  the provisions of Code Sections 401(a) (or 403(a), as
                  appropriate) and 501(a) and has been determined by the
                  Internal Revenue Service (the "IRS") to be so qualified from
                  its adoption date.

                           (D) Each Company Pension Plan and each related trust
                  agreement, annuity contract or other funding instrument
                  presently complies and has been maintained in compliance, in
                  all material respects, with its terms and, both as to form and
                  in operation, with the requirements prescribed by any and all
                  statutes, orders, rules and regulations which are applicable
                  to such plans, including without limitation ERISA and the
                  Code, except where such noncompliance has been corrected in
                  accordance with the IRS Employee Plans Compliance Resolution
                  System, or is not reasonably likely to have a Material Adverse
                  Effect.

                           (E) The Company has paid all premiums (and interest
                  charges and penalties for late payment, if applicable) due the
                  PBGC with respect to each Pension Plan for each plan year
                  thereof for which such premiums are required. Neither the
                  Company nor any ERISA Affiliate has engaged in, or is a
                  successor or parent corporation to an entity that has engaged
                  in, a transaction described in Section 4069 of ERISA. There
                  has been no "reportable event" (as defined in Section 4043(b)
                  of ERISA and the PBGC regulations under such Section) with
                  respect to any Pension Plan for which the Company or any ERISA
                  Affiliate has any unsatisfied liability. No filing has been
                  made by the Company or any ERISA Affiliate with the PBGC, and
                  no proceeding has been commenced by the PBGC, to terminate any
                  Pension Plan. To the Knowledge of the Company, no condition
                  exists and no event has occurred that could constitute grounds
                  for the termination of any Pension Plan by the PBGC. Neither
                  the Company nor any ERISA Affiliate has any unsatisfied
                  liability because the Company or any ERISA Affiliate, at any
                  time, (1) ceased operations at a facility so as to become
                  subject to the provisions of Section 4062(e) of ERISA, (2)
                  withdrawn as a substantial employer so as to become subject to
                  the provisions of Section 4063 of ERISA, or (3) ceased making
                  contributions on or before the Closing Date to any Pension
                  Plan subject to Section

                                       17
<PAGE>

                  4064(a) of ERISA to which the Company or any ERISA Affiliate
                  made contributions during the six years prior to the Closing
                  Date.

                       (ii) Multiemployer Plans.

                           (A) Neither the Company nor any ERISA Affiliate has,
                  at any time within the last 72 months, maintained, contributed
                  to or been obligated to maintain or contribute to, or
                  withdrawn from, a Multiemployer Plan.

                       (iii) Welfare Plans.

                           (A) Each Welfare Plan presently complies and has been
                  maintained in compliance, in all material respects, with its
                  terms and, both as to form and operation, with the
                  requirements prescribed by any and all statutes, orders, rules
                  and regulations which are applicable to such Welfare Plan,
                  including without limitation ERISA and the Code.

                           (B) Except as disclosed on Schedule 4.13, none of the
                  Company, any ERISA Affiliate or any Welfare Plan has any
                  present or future obligation to make any payment to, or with
                  respect to any present or former employee of the Company or
                  any ERISA Affiliate pursuant to, any retiree medical benefit
                  plan, or other retiree Welfare Plan, and no condition exists
                  which would prevent the Company from amending or terminating
                  any such benefit plan or Welfare Plan.

                       (iv) Benefit Arrangements. Each Benefit Arrangement has
been maintained in compliance, in all material respects, with its terms and with
the requirements prescribed by any and all statutes, orders, rules and
regulations which are applicable to such Benefit Arrangement, including without
limitation, the Code. Except as set forth in Schedule 4.13 and except as
provided by law, the employment of all persons presently employed or retained by
the Company is terminable at will.

                       (v) Unrelated Business Taxable Income. No Employee Plan
(or trust or other funding vehicle pursuant thereto) is subject to any tax under
Code Section 511.

                       (vi) Deductibility of Payments. Except as disclosed in
Schedule 4.13, there is no contract, agreement, plan or arrangement covering any
present or former employee, director or consultant of the Company or any of its
Subsidiaries (with respect to his or her relationship with such entities) that,
individually or collectively, provides for the payment by the Company of any
amount (i) that is not deductible under Section 162(a)(1) or 404 of the Code or
(ii) that is an "excess parachute payment" pursuant to Section 280G of the Code.

                       (vii) Fiduciary Duties and Prohibited Transactions.
Neither the Company, or to the Knowledge of the Company, any plan fiduciary of
any Welfare Plan or Pension Plan, has engaged in any transaction in violation of
Sections 404 or 406 of ERISA or any "prohibited transaction," as defined in
Section 4975(c)(1) of the Code, for which no exemption exists under Section 408
of ERISA or Section 4975(c)(2) or (d) of the Code, or has

                                       18
<PAGE>

otherwise violated the provisions of Part 4 of Title I, Subtitle B of ERISA. The
Company has not Knowingly participated in a violation of Part 4 of Title I,
Subtitle B of ERISA by any plan fiduciary of any Welfare Plan or Pension Plan
and has not been assessed any civil penalty under Section 502(l) of ERISA.

                       (viii) Validity and Enforceability. Each Employee Welfare
Plan related trust agreement, annuity contract or other funding instrument is
legally valid and binding and in full force and effect.

                       (ix) Litigation. To the Knowledge of the Company, there
is no action, order, writ, injunction, judgment or decree outstanding or claim,
suit, litigation, proceeding, arbitral action, governmental audit or
investigation relating to or seeking benefits under any Employee Plan that is
pending, threatened or anticipated against the Company, any ERISA Affiliate or
any Employee Plan other than routine claims for benefits.

                       (x) No Amendments. Except as disclosed in Schedule 4.13,
neither the Company nor any ERISA Affiliate has any announced plan or legally
binding commitment to create any additional Employee Plans which are intended to
cover present or former employees, directors or consultants of the Company or
any of its Subsidiaries (with respect to their relationship with such entities)
or to amend or modify any existing Employee Plan.

                       (xi) No Other Material Liability. To the Knowledge of the
Company, no event has occurred in connection with which the Company or any ERISA
Affiliate or any Employee Plan, directly or indirectly, could be subject to any
material liability (A) under any statute, regulation or governmental order
relating to any Employee Plan or (B) pursuant to any obligation of the Company
to indemnify any Person against liability incurred under any such statute,
regulation or order as they relate to the Employee Plans.

                       (xii) Unpaid Contributions. Neither the Company nor any
ERISA Affiliate has any liability for unpaid contributions under Section 515 of
ERISA with respect to any Multiemployer Plan.

                       (xiii) Insurance Contracts. Neither the Company nor any
Employee Plan (other than a Multiemployer Plan) holds as an asset of any
Employee Plan any interest in any annuity contract, guaranteed investment
contract or any other investment or insurance contract issued by an insurance
company that is the subject of bankruptcy, conservatorship or rehabilitation
proceedings.

                       (xiv) No Acceleration or Creation of Rights. Except as
disclosed on Schedule 4.13, neither the execution and delivery of this Agreement
by the Company nor the consummation of the transactions contemplated hereby will
result in the acceleration or creation of any rights of any person to benefits
under any Employee Plan (including, without limitation, the acceleration of the
vesting or exercisability of any stock options, the acceleration of the vesting
of any restricted stock, the acceleration of the accrual or vesting of any
benefits under any Pension Plan or the acceleration or creation of any rights
under any severance, parachute or change in control agreement).

                                       19
<PAGE>

         4.14 Taxes.

                  (a) The Company and each of its Subsidiaries (hereinafter
sometimes referred to collectively as the "Taxpayers" or individually as a
"Taxpayer") have timely filed with the appropriate Tax authorities all Tax
Returns required to be filed by each of them, and such Tax Returns are true,
complete, and correct in all material respects.

                  (b) The Taxpayers have duly paid in full all Taxes that are
payable by each such Taxpayer on or prior to the Closing Date, or have accrued
such Taxes in the Taxpayers' financial records and in the financial statements
contained in the SEC Filings.

                  (c) There is no audit or other matter in controversy with
respect to any Taxes due and owing by any Taxpayer, and there is no Tax
deficiency or claim assessed or, to the Knowledge of any Taxpayer, proposed or
threatened in writing against any Taxpayer, other than in respect of any such
audits, controversies, deficiencies, assessments, or proposed assessments that
are being contested in good faith.

                  (d) The Taxpayers each have withheld all material Taxes
required to have been withheld and paid by them on their behalf in connection
with amounts paid or owing to any employee, independent contractor, creditor,
shareholder, or other third party, and such withheld Taxes have either been duly
paid to the proper Governmental Authority or set aside in accounts for such
purpose.

                  (e) None of the Taxpayers (i) has waived any statutory period
of limitations for the assessment of any Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency other than in the case of
any such waivers or extensions in respect of an assessment or deficiency of Tax
the liability of which has been satisfied or settled or has expired, (ii) has
filed a consent under Internal Revenue Code Section 341(f) concerning
collapsible corporations, or (iii) except as set forth in Schedule 4.14, has any
liability for the Taxes of any other person as defined in Section 7701(a)(1) of
the Internal Revenue Code under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee, successor
or by contract other than with respect to the other Taxpayers.

                  (f) No claim has been made in any taxable year which remains
open by an authority in a jurisdiction where a Taxpayer does not file Tax
Returns that such Taxpayer is or may be subject to taxation by that
jurisdiction.

                  (g) None of the Taxpayers has agreed to or is required to make
any adjustment pursuant to Internal Revenue Code Section 481(a) by reason of a
change in accounting method initiated by such Taxpayer and none of the Taxpayers
have Knowledge that the IRS has proposed any such adjustment or change in
accounting method.

                  (h) Except as set forth in Schedule 4.14, none of the
Taxpayers has any obligation under any Tax allocation or sharing agreement, and
after the Closing Date, no Taxpayer shall be a party to, bound by or have any
obligation under any Tax allocation or sharing agreement or have any liability
thereunder for amounts due in respect of periods prior to and including the
Closing Date.

                                       20
<PAGE>

                  (i) None of the Taxpayers (i) has made any payments, (ii) is
obligated to make any payments (whether as a result of the transactions
contemplated hereby or otherwise), and (iii) except as set forth on Schedule
4.14, is a party to any agreement as of the Closing Date that could obligate it
to make any payments, in each case, that will not be deductible under Internal
Revenue Code Section 280G.

                  (j) Since January 1, 1995, none of the Taxpayers has been a
United States real property holding corporation within the meaning of Internal
Revenue Code Section 897(c)(2) during the applicable period specified in
Internal Revenue Code Section 897(c)(1)(A)(ii).

                  (k) To the Knowledge of the Taxpayers based on written
confirmation from Ryder Systems, Inc., the statute of limitations on the
assessment of federal income Taxes for the taxable year of Ryder System, Inc.,
ending December 31, 1993, has expired.

                  (l) As of December 31, 2000, for federal income tax purposes,
the Company had net operating loss carryforwards ("NOLs") arising in the taxable
years, and for each such taxable year, in the amounts disclosed on Schedule 4.14
hereto.

                  (m) There has been no ownership change (within the meaning of
Section 382(g)(1) of the Code) of the Company from the time any of the NOLs set
forth on Schedule 4.14 have arisen, and as of the date hereof, the percentage of
stock of the Company owned by one or more 5-percent shareholders has increased
by no more than ten and one-half percentage points over the lowest percentage of
stock owned by such shareholders at any time during the three-year period
immediately prior to the date hereof. The foregoing determination of the extent
of the ownership change of the Company has been made in accordance with Section
382 of the Code, the regulations thereunder, and the law applicable thereto.

                  (n) The NOLs of the Taxpayers are not separate return
limitation year ("SRLY") losses within the meaning of Code section 1502 and the
Treasury Regulations promulgated thereunder.

                  (o) The Purchasers and the accounting firm representing the
Purchasers have been made aware by the Company of all transfers and issuances of
the Company's shares which have occurred during the three-year testing period
ending on the date hereof of which the Company has knowledge and that (i)
involved more than 5% of the Company's outstanding shares or (ii) were issued
to, or acquired by, an owner of more than 5% of the Company's outstanding
shares.

         4.15     Environmental Matters.

                  (a) For purposes of this Section, the term "Company" shall
include the Company and the Business.

                  (b) Except as disclosed in Schedule 4.15 and to the extent
disclosed in the SEC Filings, the Company and its Subsidiaries: (i) are in
material compliance with all applicable Environmental Laws; (ii) hold all
material Environmental Permits (each of which is in full force

                                       21
<PAGE>

and effect) required for any of their current operations or for any property
owned, leased or otherwise operated by any of them; (iii) are in material
compliance with all of their Environmental Permits; and (iv) reasonably believe
that each of their Environmental Permits will be renewed effective prior to the
expiration of such Environmental Permit currently in effect.

                  (c) Except as set forth on Schedule 4.15 and to the extent
disclosed in the SEC Filings, the Company and its Subsidiaries have not received
any written notice of alleged, actual or potential responsibility for, or any
inquiry or investigation regarding, any material Environmental Condition. Except
as set forth on Schedule 4.15 and to the extent disclosed in the SEC Filings,
the Company has not received any notice of any other claim, demand or action by
any individual or entity alleging any actual or threatened material injury or
damage to any Person, property, natural resource or the environment arising from
or relating to any Release or threatened Release at, on, under, in, to or from
any Facility or any former Facilities, or in connection with any operations or
activities of the Company or any of its Subsidiaries.

                  (d) Except as disclosed in Schedule 4.15 or with respect to
such matters as have been fully and finally resolved and as to which there are
no remaining material obligations known by the Company or its Subsidiaries,
neither the Company nor any of its Subsidiaries has entered into or agreed to
any consent decree, order, or settlement or other agreement, nor is subject to
any judgment, decree, or order or other agreement, in any judicial,
administrative, arbitral, or other forum, relating to compliance with or
liability under any Environmental Law which would result in a Material Adverse
Effect.

                  (e) Except as disclosed in Schedule 4.15 and to the extent
disclosed in the SEC Filings, Hazardous Materials have not been transported,
disposed of or otherwise Released, to or at any real property presently owned or
leased by the Company or any of its Subsidiaries, or, to the Knowledge of the
Company, any other location, which Hazardous Materials are reasonably expected
to (i) give rise to any material liability of the Company or any Subsidiary
under any applicable Environmental Law, or (ii) interfere in any material
respect with the Company's or any Subsidiary's continued operations, or (iii)
impair, in any material respect, the fair saleable value of any real property
owned or leased by the Company or any Subsidiary.

                  (f) Except as disclosed in Schedule 4.15, neither the Company
nor any of its Subsidiaries has assumed or retained, by contract or operation of
law in connection with the sale or transfer of any assets or business, any
material liabilities arising from or associated with or otherwise in connection
with such assets or business of any kind, fixed or contingent, known or not
known, under any applicable Environmental Law.

                  (g) True, complete and correct copies of all material written
reports, and all parts thereof, of all material environmental audits or
assessments which have been conducted in respect of any Facility or any former
Facility within the past five years, either by the Company or any attorney,
environmental consultant or engineer engaged for such purpose by the Company,
have been made available to the Purchasers.

         4.16 Insurance. Schedule 4.16 sets forth a list of the insurance
policies held by, or for the benefit of, the Company and its Subsidiaries as of
the date hereof. Each of the Company and its Subsidiaries carry insurance with
reputable insurers (except as to self-insurance) with respect

                                       22
<PAGE>

to each of their respective properties and business, in such amounts and against
such risks as is customarily maintained by other entities of similar size
engaged in similar businesses (which may include self-insurance in amounts
customarily maintained by companies similarly situated or has been maintained in
the past by the Company and its Subsidiaries).Neither the Company nor any of its
Subsidiaries has received any notice of cancellation or non-renewal of any
insurance policies or binders set forth on Schedule 4.16.

         4.17 Title to Assets, Etc. Except for Permitted Encumbrances and except
as set forth on Schedule 4.17, the Company and its Subsidiaries have good and
marketable title to, or valid and subsisting leasehold interests in, all
tangible assets and valid ownership or licensing rights to all intangible assets
material to their businesses as currently conducted. Except for Permitted
Encumbrances and as set forth on Schedule 4.17, none of the material assets is
subject to any Encumbrance, except for Encumbrances which, individually or in
the aggregate, are not substantial in amount and do not materially detract from
the value of the property or assets of the Company and its Subsidiaries, taken
as a whole, or materially interfere with the present use of such property or
assets (taken as a whole) and have not arisen other than in the ordinary course
of business. The Company and each Subsidiary has in all material respects
performed all the obligations required to be performed by it with respect to all
material assets leased by it through the date hereof. All such material leases
are valid, binding and enforceable with respect to the Company and its
Subsidiaries, to the extent each is a party thereto, in accordance with their
terms (except that such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, and similar laws relating to
or affecting creditors' rights generally, and (ii) general equitable principles)
and are in full force and effect; no event of default has occurred which
constitutes a default thereunder on the part of the Company or any Subsidiary
and the Company has no Knowledge of the occurrence of any event of default which
constitutes a default thereunder by any other party.

         4.18 Condition of Tangible Assets. The Facilities of the Company and
its Subsidiaries and the Fixtures and Equipment taken as a whole are in good
operating condition and repair in all material respects (except for ordinary
wear and tear) are reasonably sufficient for the operation of the business of
the Company and its Subsidiaries as presently conducted.

         4.19 Labor Matters. Neither the Company nor any of its Subsidiaries is
a party to any collective bargaining or similar agreement with any labor union,
collective bargaining unit or similar organization. Since December 31, 1998,
neither the Company nor any of its Subsidiaries has experienced any attempt by
organized labor or its representatives to make the Company or such Subsidiary
conform to demands of organized labor relating to its employees or to enter into
a binding agreement with organized labor that would cover the employees of the
Company or any Subsidiary. There is no material unfair labor practice charge or
complaint against the Company or any Subsidiary pending before the National
Labor Relations Board or any other governmental agency arising out of the
activities of the Company or any of its Subsidiaries. There is no labor strike
or labor disturbance pending or, to the Company's Knowledge, threatened against
the Company or any of its Subsidiaries. To the Knowledge of the Company, there
is no material grievance currently being asserted against the Company or its
Subsidiaries and neither the Company nor any Subsidiary has experienced since
December 31, 1998, the assertion of a material grievance, a work stoppage or
other labor difficulty.

                                       23
<PAGE>

         4.20 Intellectual Property.

                  (a) The Company and its Subsidiaries either own or have valid
licenses or other rights to use all patents, copyrights, trademarks, tradenames,
software, databases, data, technical information, know-how and other
intellectual property used in their businesses as presently conducted
("Proprietary Rights"), subject to the limitations contained in the agreements
governing the use of the same. There are no limitations contained in the
agreements of the type described in the immediately preceding sentence which,
upon consummation of the transactions contemplated hereunder, will alter or
impair any such rights, breach any such agreement with any third party vendor,
or require payments of additional sums thereunder. The Company and its
Subsidiaries are in compliance in all material respects with the material
licenses and agreements with respect to their Proprietary Rights and, except as
set forth on Schedule 4.20, there are no pending or, to the Knowledge of the
Company or any Subsidiary, threatened Proceedings challenging the validity or
effectiveness of any license or agreement relating to such property or the right
of the Company or any Subsidiary to use, copy, modify or distribute the same.

                  (b) The Proprietary Rights constitute all material
intellectual property rights necessary to conduct the business as presently
conducted. No Person has a right, other than those set forth on Schedule 4.20 to
receive a royalty or similar payment in respect of any material Proprietary
Rights whether or not pursuant to any contractual arrangements entered into by
the Company or its Subsidiaries.

                  (c) To the Knowledge of the Company, the use by the Company
and its Subsidiaries of the Proprietary Rights does not infringe in any material
respect on the intellectual property or other Proprietary Rights of any other
Person, and, to the Knowledge of the Company, no other Person is infringing, in
any material respects, on the Proprietary Rights.

         4.21 Government Contracts.

                  (a) Except for the Rolls Royce T-56 Engine Parts Contract, the
Company has no material Government Contracts.

                  (b) Except as set forth in Schedule 4.21, (i) each of the
Company and its Subsidiaries is in compliance, and has complied, in all material
respects during the past three years with all requirements of any statute, law,
rule or regulation pertaining to its Government Contracts; (ii) all
representations and certifications made by each of the Company and its
Subsidiaries during the past three years with respect to such Government
Contracts were accurate in all material respects as of their effective date, and
each of the Company and its Subsidiaries has fully complied in all material
respects with such representations and certifications, and (iii) as of the date
hereof, to the Knowledge of the Company, no termination or default, cure notice
or show cause notice has been issued and remains unresolved.

                  (c) Except as set forth in Schedule 4.21, (i) to the Knowledge
of the Company, as of the date of this Agreement, none of the employees,
consultants or agents of the Company or any of its Subsidiaries is under any
administrative, civil or criminal investigation or indictment by any
Governmental Entity with respect to the conduct of the business of each of the
Company and its Subsidiaries, (ii) to the Knowledge of the Company, there is no
pending

                                       24
<PAGE>

material U.S. governmental investigation of the Company or any of its
Subsidiaries, or any of their respective officers, employees, consultants or
agents, nor has there been any material U.S. governmental investigation of the
Company or any of its Subsidiaries, or any of their respective officers,
employees, consultants or agents resulting in any material adverse finding with
respect to any material alleged irregularity, misstatement or omission arising
under or relating to any Government Contract, and (iii) during the last three
years, neither the Company nor any of its Subsidiaries has made any voluntary
disclosure in writing to any Governmental Entity with respect to any material
alleged irregularity, misstatement or omission arising under or relating to any
Government Contract.

                  (d) Except as set forth in Schedule 4.21, as of the date of
this Agreement, there are no outstanding written material claims that have been
asserted against the Company, or any of its Subsidiaries, by any Governmental
Entity or by any prime contractor, subcontractor, vendor or other third party
arising under or relating to any Government Contract to which the Company or any
of its Subsidiaries is a party.

                  (e) The Company and its Subsidiaries are not subject to the
United States Government cost accounting rules.

                  (f) Each of the Company and its Subsidiaries is in material
compliance with all national security obligations, including, without
limitation, those specified in the National Industrial Security Program
Operating Manual, DOD 5220.22-M (January 1995).

         4.22 Board Recommendations. The Board of Directors has duly (i)
approved and adopted (A) this Agreement, including the issuance of the Bridge
Preferred Shares and the issuance of the Conversion Shares upon conversion of
the Bridge Preferred Shares and the Permanent Preferred Shares, and (B) the
Company's entering into the Registration Rights Agreement, and (ii) resolved to
recommend to the Company's stockholders approval of the Stockholder Proposal.

         4.23 No Brokers. Except for the Advisory Fee and the Rollover Fee and
the fees described on Schedule 4.23 hereof, the Company has not employed, and is
not subject to the valid claim of, any broker, finder, consultant or other
intermediary in connection with the transactions contemplated hereby who might
be entitled to a fee or commission from the Company in connection with such
transactions.

         4.24 Contracts; No Defaults.

                  (a) Schedule 4.24(a) contains a complete and accurate list of
all contracts and arrangements described below in clauses (i) through (xi) below
to which the Company or any Subsidiary of the Company is a party ("Contracts"):

                       (i) each contract or arrangement currently in effect
involving performance of services or delivery of goods or materials by the
Company or any of its Subsidiaries of an amount or value in any fiscal year in
excess of $5,000,000;

                                       25
<PAGE>

                       (ii) each note, debenture, other evidence of
indebtedness, guarantee, loan, letter of credit, surety bond or financing
agreement or instrument or other contract for money borrowed, including any
agreement or commitment for future loans, credit or financing entered into by
the Company or any of its Subsidiaries evidencing Indebtedness in excess of
$500,000, individually or in the aggregate;

                       (iii) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other contract or arrangement
affecting the ownership of, leasing of, title to, use of, or any leasehold or
other interest in, any real or personal property and involving payments in any
fiscal year in excess of $500,000;

                       (iv) each licensing agreement or other agreement with
respect to any material Propriety Right;

                       (v) each collective bargaining agreement or other
agreement to or with any labor union or other employee representative of a group
of employees relating to wages, hours and other conditions of employment;

                       (vi) each joint venture agreement, partnership agreement,
or limited liability company agreement or other agreement (however named)
involving a sharing of profits, losses, costs or liabilities by the Company or
any of its Subsidiaries with any other Person;

                       (vii) each agreement that commits capital expenditures
after the date hereof in an amount in excess of $500,000;

                       (viii) each written warranty, guaranty or other similar
undertaking with respect to contractual performance of a third person extended
by the Company or any of its Subsidiaries other than in the ordinary course of
business;

                       (ix) each contract containing covenants which in any way
purport to limit the freedom of the Company or any of its Subsidiaries or any
Affiliate of the Company or any Subsidiary to engage in any line of business,
other than the Business (other than leases that limit the operations or
activities of the Company, any of its Subsidiaries or any Affiliate of the
Company or any Subsidiary at specific facilities), or to compete with any
Person; and

                       (x) each material contract entered into other than in the
ordinary course of business that contains or provides for an express undertaking
by the Company or any of its Subsidiaries to be responsible for consequential
damages.

                  (b) Schedule 4.24(a) sets forth the parties to the Contracts,
the name of the Contract and the date thereof. True and correct copies of each
written Contract have been made available to the Purchasers.

                  (c) Except as set forth on Schedule 4.24(c), each of the
Contracts listed on Schedule 4.24(a): (i) is in full force and effect, (ii)
represents the legally, valid and binding obligations of the Company or the
Subsidiary of the Company party thereto and is enforceable against the Company
or such Subsidiary in accordance with its terms (subject to applicable

                                       26
<PAGE>

bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights generally and general equitable principles), and (iii) to the
Knowledge of the Company, represent the legally, valid and binding obligations
of the other parties thereto and are enforceable against such parties in
accordance with their terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights
generally and general equitable principles). Except as set forth on Schedule
4.24(c), and to the Knowledge of the Company, no condition exists or event has
occurred which, with notice or lapse of time or both, would constitute a
material default or a basis for force majeure or the claim of excusable delay or
nonperformance under such Contracts.

                  (d) Except as set forth on Schedule 4.24(d), there are no
renegotiations of, or, to the Knowledge of the Company, threats to renegotiate
any material amounts paid or payable to the Company or any of its Subsidiaries
under the Contracts, with any Person having the contractual or statutory right
to demand or require such renegotiation. To the Knowledge of the Company,
neither the Company nor any of its Subsidiaries has received any written demand
for such renegotiation in respect of any such Contract. Except as set forth on
Schedule 4.24(d), no customer has delivered written notice to the Company
asserting that any material adjustments are required to the terms of any
Contracts.

                  (e) Except as specifically noted on Schedule 4.6, no notice,
consent or approval of any party to any Contract is required in connection with
the transactions contemplated hereby.

                  (f) Except as set forth on Schedule 4.24(f), neither the
Company nor any of its Subsidiaries has committed any act or omission which
would result in, and there has been, to the Knowledge of the Company, no
occurrence which would give rise to, any material product liability or liability
for breach of warranty on the part of the Company or any of its Subsidiaries not
fully covered by the Company's insurance or assumed by a third party who the
Company reasonably believes has adequate resources to pay such claims (excluding
costs of administering supplier warranty programs incurred in the ordinary
course of business) other than liabilities the claims relating to which have
been barred by the applicable statute of limitations.

         4.25 Customers. Listed in Schedule 4.25 are the names and addresses of
all the customers of the Company or any of its Subsidiaries that ordered goods,
merchandise or services from the Company or such Subsidiary with an aggregate
value in excess of (i) $5,000,000 during the fiscal year ended December 31,
1999, (ii) $5,000,000 during the Company's fiscal year ended December 31, 2000,
and (iii) $5,000,000 during the nine (9) month period ended September 30, 2001,
and the amount during such period for which each such customer was invoiced.
Except as disclosed in Schedule 4.25, (a) neither the Company nor any Subsidiary
has received any actual notice or has any valid reason to believe that any of
its customers listed in Schedule 4.25 has ceased, or intends to cease, to use
its products, equipment, goods or services, or has substantially reduced, or
intends to substantially reduce, the use of such products, equipment, goods or
services at any time, and (b) the Company and each of its Subsidiaries enjoys
good relations with each of the customers listed on Schedule 4.25.

         4.26 Suppliers. Listed in Schedule 4.26 are the names and addresses of
all the suppliers of the Company or of any of its Subsidiaries that sold goods,
merchandise or services

                                       27
<PAGE>

to the Company or such Subsidiary with an aggregate value in excess of (i)
$5,000,000 during the fiscal year ended December 31, 1999, (ii) $5,000,000
during the Company's fiscal year ended December 31, 2000, and (iii) $5,000,000
during the nine (9) month period ended September 30, 2001 and the amount during
such period for which the Company or such Subsidiary was invoiced by each such
supplier. Except as disclosed in Schedule 4.26 (a) neither the Company nor any
of its Subsidiaries has received any actual notice or has any valid reason to
believe that any such supplier will not sell raw materials, supplies,
merchandise and other goods or services to the Company or its Subsidiaries at
any time after the Closing Date on terms and conditions substantially similar to
those currently in effect, subject only to general and customary price
increases, and (b) the Company and each of its Subsidiaries enjoys good
relations with each of the suppliers listed on Schedule 4.26.

         4.27 Affiliated Transactions. Other than this Agreement, except as set
forth in Schedule 4.27, or to the extent disclosed in the SEC Filings filed
since December 31, 2000 and except for payments under an individual's
compensation or other benefit arrangements with the Company or any of its
Subsidiaries and reimbursement of expenses in the ordinary course of employment,
none of the officers, directors or other Affiliates of the Company or any of its
Subsidiaries or members of their families is, or at any time in the last three
(3) years has been, a party to any agreement, understanding, indebtedness or
transaction with the Company or any of its Subsidiaries or is directly or
indirectly interested in any Contract with, or received payments from, the
Company or any of its Subsidiaries other than (i) ordinary course employment
arrangements between the Company and its Subsidiaries and their respective
employees, (ii) payment of customary directors fees to directors of the Company
(and reimbursement of related expenses) and (iii) transactions between or among
the Company and its Subsidiaries. Except as set forth on Schedule 4.27 or as set
forth in the SEC Filings, neither the Company nor any of its Subsidiaries has
guaranteed or assumed any obligations of their respective officers, directors or
other Affiliates or members of any of their families.

         4.28 Real Property. The Company and its Subsidiaries have no Owned Real
Property. Schedule 4.28 lists the address of all real property now used or
occupied by the Company or any of its Subsidiaries.

         4.29 State Takeover Statutes. The Board of Directors of the Company has
approved the terms of this Agreement, the consummation of the transactions
contemplated by this Agreement, the issuance of the Bridge Preferred Shares
contemplated hereby and the issuance of the Conversion Shares upon the
conversion of the Bridge Preferred Shares and the Permanent Preferred Shares,
and such approval is sufficient to render inapplicable to the transactions
contemplated by this Agreement (including, without limitation, the issuance of
the Bridge Preferred Shares contemplated hereby and the issuance of the
Conversion Shares upon the conversion of the Bridge Preferred Shares and the
Permanent Preferred Shares) the provisions of Section 203 of the Delaware Code.
No other state takeover statute or similar statute or regulation applies or
purports to apply to this Agreement or any of the transactions contemplated by
this Agreement (including, without limitation, the issuance of the Bridge
Preferred Shares contemplated hereby and the issuance of the Conversion Shares
upon the conversion of the Bridge Preferred Shares and the Permanent Preferred
Shares) and no provision of the Certificate of Incorporation, Bylaws or other
governing instrument of the Company or any of its

                                       28
<PAGE>

Subsidiaries would, directly or indirectly restrict or impair the ability of the
Company to consummate the transactions contemplated by the Agreement.

         4.30 Minimum Inventory Purchases. Schedule 4.30 contains a complete and
accurate list of all contracts currently in effect to which the Company or any
Subsidiary of the Company is a party that obligates the Company or any
Subsidiary of the Company to purchase a minimum amount of inventory in an amount
of $5,000,000 or more in any fiscal year. Schedule 4.30 sets forth the parties
to the contract and such minimum annual purchase requirements.

         4.31 Rolls Royce T-56 Engine Parts Contract. Schedule 4.31 contains the
actual revenues received by Rolls-Royce Corporation as prepared by the
Rolls-Royce Corporation and delivered to Aviall Services, Inc. for the type and
quantity of engine parts that will be sold by the Company and its Subsidiaries
pursuant to the terms of the Rolls Royce T-56 Engine Parts Contract for
calendars year 1997, 1998, 1999, 2000 and, for the first nine (9) months of
2001, through and including September 30, 2001. Schedule 4.31 set forth such
revenue data for the following categories: U.S. Military and Other. The Company
has no reason to believe that such information is not correct in all material
respects.

         4.32 Inventory. Other than excess and obsolete inventory reserved in
the financial statements of the Company in accordance with GAAP, all of the
inventory of the Company and its Subsidiaries is saleable in the ordinary course
of business and reflected on the financial statements of the Company at fair
market value. The Company expects all of such inventory to be saleable in the
ordinary course of business over the next twenty four (24) months, except to the
extent such inventory has been reserved on the Company's financial statements.

         4.33 Information Technology. The Company and its Subsidiaries have
sufficient information technology capabilities, including, without limitation,
sufficient computer hardware and software, and adequately trained operators,
facilitators and management, to fulfill the Company's or its Subsidiaries'
obligations pursuant to the terms of the Rolls Royce T-56 Engine Parts Contract.

         4.34 Projections. The projections of the Company and its Subsidiaries
heretofore delivered to the Purchasers (i) were prepared by the Company, (ii)
are the most current projections prepared by the Company relating to the periods
covered thereby, and (iii) are based on assumptions which were reasonable when
made and such assumptions and projections are reasonable on the date of this
Agreement. Neither the Company nor any of its Subsidiaries has delivered to any
Person any later dated projections.

                                   ARTICLE V.
                  REPRESENTATIONS AND WARRANTIES OF PURCHASERS

                  Each Purchaser hereby represents and warrants to the Company
as follows:

         5.1 Organization of Purchaser. Such Purchaser is a limited partnership
duly formed and validly existing and in good standing as a limited partnership
under the laws of its

                                       29
<PAGE>

jurisdiction of formation and has full partnership power and authority to carry
on its business as currently being conducted.

         5.2 Due Authorization. Such Purchaser has full partnership power and
authority to execute and deliver this Agreement, the Registration Rights
Agreement, and the Standstill Agreement perform its obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by Purchaser of this Agreement, the Registration
Rights Agreement and the Standstill Agreement, and the consummation by it of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary partnership action of such Purchaser. This Agreement has been duly
executed and delivered by such Purchaser and constitutes, the Registration
Rights Agreement has been duly executed and delivered by such Purchaser and
constitutes, and the Standstill Agreement has been duly executed and delivered
by such Purchaser and constitutes, a valid and legally binding obligation of
such Purchaser, enforceable against Purchaser in accordance with its terms,
except that such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws affecting creditors'
rights generally and (ii) general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law and (iii)
laws and judicial decisions regarding indemnification for violations of federal
securities laws).

         5.3 No Conflict. The execution and delivery by such Purchaser of this
Agreement and the Registration Rights Agreement and the performance by it of the
transactions contemplated hereby and thereby do not and will not (i) conflict
with or result in a violation of any provision of the agreement of limited
partnership or other governing agreement of such Purchaser, (ii) conflict with
or result in a violation of any provision of, or constitute (with or without the
giving of notice or the passage of time or both) a default under, or give rise
(with or without the giving of notice or the passage of time or both) to any
right of termination, cancellation, or acceleration under, any material bond,
debenture, note, mortgage, indenture, lease, agreement, or other instrument or
obligation to which such Purchaser is a party or by which such Purchaser or any
of its properties may be bound, (iii) result in the creation or imposition of
any Encumbrance upon the properties of such Purchaser, or (iv) violate in any
material respect any Applicable Law binding upon such Purchaser, except, in the
case of clauses (ii), (iii), and (iv) above, for any such conflicts, violations,
defaults, terminations, cancellations, accelerations, or Encumbrances which
would not, individually or in the aggregate, materially and adversely affect the
ability of such Purchaser to consummate the transactions contemplated hereby.

         5.4 Consents and Approvals. No consent, approval, order or
authorization of, or declaration, filing or registration with, any Government
Entity or third party is required to be obtained or made by Purchaser in
connection with the execution and delivery by Purchaser of this Agreement and
the Registration Rights Agreement or the consummation of the transaction
contemplated hereby and thereby other than (i) any filings required under
Section 13 of the Exchange Act and Rule 13d-1 under the Exchange Act and (ii)
such consents, approvals, orders or authorization which, if not made, would not,
individually or in the aggregate, materially and adversely affect the ability of
the Purchaser to consummate the transactions contemplated hereby.

                                       30
<PAGE>

         5.5 Purchase for Investment.

                  (a) Such Purchaser has been furnished with all information
that it has requested for the purpose of evaluating the proposed acquisition of
the Bridge Preferred Shares pursuant hereto, and such Purchaser has had an
opportunity to ask questions of and receive answers from the Company regarding
the Company and its business, assets, results of operations, financial condition
and prospects and the terms and conditions of the issuance of the Bridge
Preferred Shares.

                  (b) Such Purchaser is acquiring the Bridge Preferred Shares
solely by and for its own account, for investment purposes only and not for the
purpose of resale or distribution; and such Purchaser has no contract,
undertaking, agreement or arrangement with any Person to sell, transfer of
pledge to such Person or anyone else any Bridge Preferred Shares; and such
Purchaser has no present plans or intentions to enter into any such contract,
undertaking or arrangement.

                  (c) Such Purchaser acknowledges and understands that (i) no
registration statement relating to the Bridge Preferred Shares or the Conversion
Shares has been filed with the Commission under the Securities Act or pursuant
to the securities laws of any state; (ii) the Bridge Preferred Shares and the
Conversion Shares cannot be sold or transferred without compliance with the
registration provisions of the Securities Act or compliance with exemptions, if
any, available thereunder; (iii) the certificates representing the respective
Bridge Preferred Shares will include a legend thereon that refers to the
foregoing; and (iv) the Company has no obligation or intention to register the
Bridge Preferred Shares or the Conversion Shares under any federal or state
securities act or law, except as provided in the Registration Rights Agreement.

                  (d) Such Purchaser (i) is an "accredited investor" as defined
in Rule 501 of Regulation D promulgated under the Securities Act; (ii) has such
knowledge and experience in financial and business matters in general that it
has the capacity to evaluate the merits and risks of an investment in the Bridge
Preferred Shares and to protect its own interest in connection with an
investment in the Bridge Preferred Shares; (iii) has such a financial condition
that it has no need for liquidity with respect to its investment in the Bridge
Preferred Shares to satisfy any existing or contemplated undertaking, obligation
or indebtedness; and (iv) is able to bear the economic risk of its investment in
the Bridge Preferred Shares for an indefinite period of time.

         5.6 No Brokers. Purchaser has not employed, and is not subject to the
valid claim of, any broker, finder, consultant or other intermediary in
connection with the transactions contemplated by this Agreement who might be
entitled to a fee or commission in connection with such transactions.

                                       31
<PAGE>

                                   ARTICLE VI.
                                    COVENANTS

         6.1 Meeting of Stockholders; Proxy Statement.

                  (a) The Company shall take all action necessary in accordance
with Applicable Law and the Certificate of Incorporation and Bylaws to duly
call, give notice of, convene and hold a meeting of its stockholders (the
"Stockholders Meeting") as promptly as practicable after the date hereof, but in
no event later than the Initial Increase Date, to obtain the Required
Stockholder Approval. The Board of Directors shall (i) recommend to the
Company's stockholders that they vote in favor of the adoption and approval of a
proposal that the stockholders of the Company approve the issuance of the
Permanent Preferred Shares issuable upon conversion of the Bridge Preferred
Shares and the issuance of the shares of Common Stock issuable upon conversion
of the Permanent Preferred Shares (the "Stockholder Proposal"), (ii) use its
best efforts to solicit from the Company's stockholders proxies in favor of the
Stockholder Proposal, and (iii) take all other action reasonably necessary to
secure the Required Stockholder Approval. If the Required Stockholder Approval
is not obtained as set forth above prior to the Initial Increase Date, the
Company shall submit a proposal for the Required Stockholder Approval at the
next two annual meetings of the stockholders of the Company and at two special
meetings of the stockholders of the Company convened at the request of the
holders of the Bridge Preferred Shares. The Purchasers agree to attend in person
or by proxy, and to vote all shares of Bridge Preferred Stock or Common Stock
owned by the Purchasers in favor of the Stockholder Proposal at any special or
annual meeting of the Company's stockholders at which the Stockholder Proposal
is presented for approval.

                  (b) As promptly as practicable after the date hereof, the
Company shall take or cause to be taken, all actions, and to do, or cause to be
done, all things reasonably necessary, proper or advisable to (i) prepare and
file with the Commission, no later than January 15, 2002, any documents or
materials, including, but not limited to, the preliminary Proxy Materials,
pertaining to the Stockholders Meeting and the Stockholder Proposal and (ii)
have the Proxy Materials cleared by the Commission (including with respect to
clauses (i) and (ii) by consulting with the Purchasers and responding promptly
to any comments from the Commission). The Proxy Materials shall contain the
recommendation of the Board of Directors that stockholders of the Company vote
in favor of the adoption and approval of the Stockholder Proposal and all other
matters necessary to effectuate the transactions contemplated hereunder. The
Company shall notify the Purchasers promptly of the receipt of any comments on,
or any requests for amendments or supplements to, the Proxy Materials by the
Commission, and the Company shall supply the Purchasers with copies of all
written correspondence between the Company and its representatives, on the one
hand, and the Commission or members of its staff, on the other, with respect to
the Proxy Materials. The Company, after consultation with the Purchasers, shall
use its reasonable best efforts to respond promptly to any comments made by the
Commission with respect to the Proxy Materials. The Company and the Purchasers
shall cooperate with each other in preparing the Proxy Materials, and the
Company and the Purchasers shall each use its reasonable best efforts to obtain
and furnish the information required to be included in the Proxy Materials. The
Company and the Purchasers each agrees promptly to correct any information
provided by it for use in the Proxy Materials if and to the extent that such
information shall have become false or misleading in any material respect, and
the Company further agrees to take all steps necessary to cause the Proxy
Materials, as so corrected, to be filed with the Commission and to be
disseminated promptly to holders of shares of the Common Stock, in each case as
and to the extent required by Applicable Law.

                                       32
<PAGE>

                  (c) The information contained in the Proxy Materials (other
than information with respect to (i) the Purchasers or any of their Affiliates
and (ii) the holders of notes pursuant to the Note Purchase Agreement which, in
either case, shall have been supplied in writing by them or any of their
authorized representatives expressly for use in or in preparing the Proxy
Materials) will not, at the date of mailing to the Company's stockholders or at
the date of the Stockholders Meeting, contain any statement which, at the time
and in light of the circumstances under which it is made, is false or misleading
with respect to any material fact required to be stated therein or necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Stockholders Meeting. The Proxy Materials will
comply as to form in all material respects with the Exchange Act and the rules
and regulations of the SEC thereunder. The Company shall deliver or cause to be
delivered to the Purchasers a draft of the Proxy Materials no later than January
10, 2002.

         6.2 Continuing Operations. From the date of this Agreement to the
earlier of (i) the Closing Date and (ii) the termination of this Agreement in
accordance with Section 9.1 (the "Interim Period"), the Company and its
Subsidiaries shall conduct their businesses in the ordinary and usual course
consistent with past practices, and, except as set forth on Schedule 6.2 or as
contemplated by this Agreement, the Note Purchase Agreement or the New Credit
Facility, neither the Company nor any Subsidiary shall, without the prior
consent of Purchasers:

                  (a) except in the ordinary course of business consistent with
past practice, (i) incur any material liability or obligation, (ii) become
liable or responsible for the material obligations of any other Person (other
than wholly owned Subsidiaries) or (iii) pay, discharge, or satisfy any material
claims, liabilities, or obligations (whether accrued, absolute, contingent,
unliquidated, or otherwise, and whether asserted or unasserted), other than the
payment, discharge, or satisfaction, in the ordinary course of business
consistent with past practice, of liabilities reflected or reserved against in
the financial statements; provided that, in no event shall any of the Companies
enter into any settlement or compromise of any litigation or claims involving
liability in excess of $1,000,000, without the prior written approval of the
Purchasers;

                  (b) make any loans or advances to any Person, other than (i)
advances to employees in the ordinary and usual course of business and (ii)
transactions among or between the Company and its Subsidiaries conducted in the
ordinary and usual course of business;

                  (c) sell, lease, transfer or otherwise dispose of, all or any
substantial portion of the assets of the Company or its Subsidiaries, taken as a
whole (other than the sale of inventory in the ordinary course), or any equity
securities of the Company or its Subsidiaries (other than the issuance of shares
of Common Stock upon exercise of Options currently outstanding);

                  (d) enter into, adopt, or (except as may be required by law)
amend or terminate any collective bargaining agreement or any material Benefit
Arrangement; approve or implement any employment severance arrangements (other
than payments made under the Company's existing severance policy in accordance
with past practice) or hire or discharge any executive officers; authorize or
enter into any employment, severance, consulting services or other agreement
with any directors, officers and executive management personnel or any of their
Affiliates; or change the compensation or benefits provided to any director,
officer, or employee

                                       33
<PAGE>

as of December 31, 2000, other than arrangements previously disclosed to
Purchaser (other than ordinary course changes in base compensation for foreign
employees which in the aggregate is not material);

                  (e) enter into any speculative or commodity swaps, hedges or
other derivatives transactions or purchase any securities for investment
purposes, other than in connection with cash management of the Company;

                  (f) grant any option or preferential right to purchase or
enter into any other agreements that could adversely affect the marketability of
any material asset of the Company or any Subsidiary;

                  (g) issue any shares of capital stock (other than shares of
Common Stock issuable upon exercise of currently outstanding Options);

                  (h) declare or pay dividends on, or make any other
distribution in respect of, any outstanding shares of the Company's capital
stock or repurchase, redeem or otherwise retire for value any shares of its
capital stock;

                  (i) take any action that would require the consent of the
holders of the Bridge Preferred Stock (if outstanding) under the Bridge
Preferred Stock Certificate of Designations; or

                  (j) agree to do any of the foregoing.

         6.3 Press Releases. Except as may be required by Applicable Law or by
the rules of any national securities exchange, neither Purchasers nor the
Company shall issue any press release with respect to this Agreement or the
transactions contemplated hereby without the prior consent of the Company in the
case of the Purchasers and the Purchasers in the case of the Company (which
consent shall not be unreasonably withheld under the circumstances). Any such
press release required by Applicable Law or by the rules of any national
securities exchange shall only be made after reasonable notice to the other
party, except as required by Applicable Law.

         6.4 Investigations and Access. The Company agrees to permit the
Purchasers and their agents and representatives, until such time that the
Purchasers no longer own ten percent (10%) of the Bridge Preferred Stock or the
Conversion Shares, reasonable access during normal business hours to (i) the
premises of the Company and its Subsidiaries and (ii) all the books, computer
software application systems, files and records of the Company and its
Subsidiaries, including, but not limited to, lease, loan, real estate,
financial, tax and personnel files and records, and to furnish the Purchasers
such financial and operating data and other information with respect to the
business, assets and properties of the Company as the Purchasers shall
reasonably request. The Company will authorize its accountants to provide the
Purchasers, in accordance with such accountant's internal policies, with their
working papers for the Company's financial statements. The Company shall deliver
true, correct and complete copies of all resolutions, and minutes of all
meetings, reflecting any action taken by the Company's stockholders, board of
directors or committees of the board of directors and by each Subsidiary during
the period from the date hereof through the Closing Date.

                                       34
<PAGE>

         6.5 Notification of Certain Matters. During the Interim Period, the
Company shall give prompt notice to the Purchasers, and the Purchasers shall
give prompt notice to the Company, of (i) the occurrence, or failure to occur,
of any event which occurrence or failure would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect any time from the date hereof to the Closing
Date and (ii) any material failure of the Company or the Purchasers, as the case
may be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder, and each party shall use all
commercially reasonable efforts to remedy such failure. In addition, the Company
shall give prompt notice to the Purchasers of any material developments
involving the operations or activities of the Company or its Subsidiaries.

         6.6 No Solicitation. Prior to the Closing (or the earlier termination
of this Agreement by the Purchasers), neither the Company nor any of its
Affiliates nor any of their respective directors, officers, employees,
representatives or agents, shall directly or indirectly, solicit or initiate any
discussions, submissions of proposals or offers or negotiations with,
participate in any negotiations or discussions with, or provide any information
or data of any nature whatsoever to, or otherwise cooperate in any other way
with, or assist or participate in, facilitate or encourage any effort or attempt
by any Person, other than Purchasers and their respective partners, employees,
representatives, agents and Affiliates, concerning any Alternative Transaction.
For purposes of this Agreement, "Alternative Transaction" means any merger,
consolidation, sale of all or substantially all of the assets, sale of shares of
capital stock or other equity securities, recapitalization, debt restructuring
or similar transaction involving the Company or any Subsidiary, or any division
of the Company or any Subsidiary. The Company shall not release any third party
from, or waive any provision of, any confidentiality or standstill agreement to
which the Company is a party. The foregoing restrictions shall not restrict the
ability of the Company and its Subsidiaries to consummate the transactions
contemplated by the New Credit Facility and the Note Purchase Agreement or to
issue shares of Common Stock upon exercise of currently outstanding Options to
purchase shares of Common Stock.

         6.7 [Reserved].

         6.8 Certain Undertakings. The Company shall use reasonable best efforts
to enter into the Rolls Royce T-56 Engine Parts Contract on or before the
Closing Date and use reasonable best efforts to consummate the transactions
contemplated by the New Credit Facility and the Note Purchase Agreement on or
before the Closing Date. The Company agrees not to enter into any agreement to
provide for anti-dilution protection with respect to any equity securities
issued pursuant to the Note Purchase Agreement unless the terms of such
anti-dilution protection are acceptable to the Purchasers.

         6.9 Director And Officer Indemnification.

                  (a) The Company shall provide to each individual elected to
the Board of Directors by the holders of the Bridge Preferred Stock, the
Mezzanine Preferred Stock or the Permanent Preferred Stock (an "Investor
Nominee") indemnification and directors' and officers' insurance having terms
and provisions no less favorable to such individuals than the indemnification
and directors' and officers' insurance provided to other directors and officers
of the Company (including, without limitation, coverage for matters based in
whole or in part on, or

                                       35
<PAGE>

arising in whole or in part out of, any matter existing or occurring while such
Investor Nominee was a director, even though such Investor Nominee may no longer
be a director at the time any claim for indemnification or coverage under
insurance is made).

                  (b) So long as any Investor Nominee serves as a member of the
Board of Directors, the Company shall not amend the Certificate of Incorporation
or Bylaws so as to adversely affect the rights of any such person with respect
to indemnification by the Company for any losses incurred by such person in such
person's capacity as an officer of the Company.

         6.10 Listing. So long as any Bridge Preferred Shares or Conversion
Shares remain outstanding, the Company shall use its best efforts to ensure that
the Common Stock continues to be listed for trading on the NYSE. The Company
will take all action necessary to ensure that, at Closing, all shares of Common
Stock issuable upon conversion of the Bridge Preferred Shares and Permanent
Preferred Shares will be listed for trading on the New York Stock Exchange.

         6.11 Legend.

                  (a) The Purchaser agrees to the placement on certificates
representing Bridge Preferred Shares and the Conversion Shares a legend (the
"Private Placement Legend") substantially as set forth below:

                  THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
                  (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW, AND MAY
                  NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
                  EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
                  PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
                  TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
                  APPLICABLE STATE SECURITIES LAWS.

                  THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
                  CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN THAT CERTAIN
                  SECURITIES PURCHASE AGREEMENT, DATED AS OF DECEMBER 17, 2001,
                  A COPY OF WHICH IS ON FILE AT THE OFFICES OF THE COMPANY.

                  (b) The Private Placement Legend shall be removed from any
such certificate if (i) the securities represented thereby are sold pursuant to
an effective registration statement under the Securities Act, (ii) there is
delivered to the Company such satisfactory evidence, which may include an
opinion of counsel, as reasonably may be requested by the Company, to confirm
that neither such legend nor the restrictions on transfer set forth therein are
required to ensure that transfers of such securities will not violate the
registration and prospectus delivery requirements of the Securities Act, or
(iii) the securities represented thereby may be resold pursuant to Rule 144(k)
promulgated under the Securities Act. Other than as required by Section 151(f)
of the Delaware General Corporation Law, no other legends shall be placed on
such certificates, without the consent of the Purchasers (other than an
appropriate legend pursuant to

                                       36
<PAGE>

the Rights Plan, as amended pursuant to Section 6.15). Notwithstanding the
foregoing, the second paragraph of the Private Placement Legend shall be removed
from any such certificate after the Initial Increase Date and shall not be
placed on any such certificate for shares of Bridge Preferred Shares or
Conversion Shares issued after the Initial Increase Date.

         6.12 Payment of Fees. On the Closing Date (immediately prior to the
Closing) the Company shall pay to Carlyle $1,125,000 in cash (the "Financing
Fee"), by wire transfer of immediately available funds to an account designated
by Carlyle. In the event that the Required Stockholder Approval is not obtained
on or prior to the Initial Increase Date, the Company shall pay to Carlyle the
Rollover Fee by wire transfer of immediately available funds to an account
designated by Carlyle, on the first Business Day following the Initial Increase
Date. The payment of the Financing Fee and the Rollover Fee pursuant to this
Section 6.12 shall be in addition to, and not in substitution of, any other
payment obligation of the Company under this Agreement or pursuant to the terms
of the Bridge Preferred Shares, the Mezzanine Preferred Shares and the Permanent
Preferred Shares.

         6.13 Use of Proceeds.

                  The Company shall use the gross proceeds of the sale of the
Bridge Preferred Stock and the securities sold pursuant to the Note Purchase
Agreement and the initial borrowing under the New Credit Facility solely (i) for
the payment of fees and expenses in connection with the transactions
contemplated hereunder, the Note Purchase Agreement and the New Credit Facility,
including the Carlyle Fee and the Carlyle Transaction Expenses; (ii) to purchase
inventory from and to pay a fee to be an exclusive service provider to
Rolls-Royce Corporation in accordance with the Rolls-Royce T-56 Engine Part
Contract; and (iii) to repay in full all amounts outstanding under the Credit
Facility.

         6.14 Confidentiality. (a) Without limiting the Purchasers' obligations
under the Confidentiality Agreement with the Company dated as of October 26,
2001, each of the Purchasers 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 its customary
procedures for handling confidential information of the same nature and in
accordance with safe and sound commercial practices, any confidential non-public
information supplied to it by the Company or any of its Subsidiaries pursuant to
this Agreement that is identified by such Person as being confidential at the
time the same is delivered to such Purchaser; provided that nothing herein shall
limit the disclosure of such information (a) after such information shall have
become public other than through a violation of this Section 6.14, (b) to the
extent required pursuant to a subpoena, civil investigative demand (or similar
process), order, statute, rule or other legal requirement promulgated or imposed
by a court or by a judicial, regulatory, self-regulatory or legislative body,
organization, agency or committee or otherwise in connection with any judicial
or administrative proceeding (including, without limitation, in response to oral
questions, interrogatories or requests for information or documents), (c) to
counsel, auditors, accountants or other Representative (as defined in the
Confidentiality Agreement) for any of the Purchasers, (d) to any other
Purchaser, (e) in connection with any litigation to which any one or more of the
Purchasers is a party, or in connection with the enforcement of rights or
remedies hereunder, (f) to a Subsidiary, Affiliate, partner, director, officer
or employee of such Purchaser provided that such parties agree to be bound by
provisions

                                       37
<PAGE>

substantially similar to this Section 6.14 or (g) such information has been
independently developed by such Purchasers or its Representative (as defined in
the Confidentiality Agreement).

                  (b) Unless specifically prohibited by applicable law or court
order, each of the Purchasers shall, to the extent practical, prior to
disclosure thereof, notify the Company of any request for disclosure of any such
non-public information by any governmental agency or representative thereof or
pursuant to legal process, and shall consult with the Company on the
advisability of the Company (at the Company's request) taking legally available
steps to resist or narrow any such request. Such Purchaser shall be entitled to
reimbursement from the Company for expenses incurred by it, including the fees
and expense of counsel, in connection with any action taken pursuant to this
Section 6.14.

         6.15 Issuance of Rights.

                  At the Closing, the Company shall issue to each Purchaser a
number of Rights (as defined in the Rights Plan), which shall be attached to the
Bridge Preferred Stock and Permanent Preferred Stock upon conversion of the
Bridge Preferred Stock, equal to the number of shares of Common Stock issuable
upon conversion of the shares of Permanent Preferred Stock that will be issuable
to such Purchaser upon conversion of the shares of Bridge Preferred Stock into
shares of Permanent Preferred Stock upon receipt of the Required Stockholder
Approval. Upon any subsequent issuance of any shares of Permanent Preferred
Stock or Bridge Preferred Stock to any holder of the Permanent Preferred Stock
or Bridge Preferred Stock as dividends on the Permanent Preferred Stock or
Bridge Preferred Stock, as applicable, the Company will issue to the Person to
whom such shares are issued (i) in the case of such issuance of shares of
Permanent Preferred Stock, a number of Rights equal to the number of shares of
Common Stock issuable upon conversion of the shares of Permanent Preferred Stock
so issued, and (ii) in the case of such issuance of shares of Bridge Preferred
Stock, a number of Rights equal to the number of shares of Common Stock issuable
upon conversion of the shares of Permanent Preferred Stock that would be issued
upon conversion of such shares of Bridge Preferred Stock into Permanent
Preferred Stock following receipt of the Required Stockholder Approval. Prior to
the Closing, the Company shall amend the Rights Plan, to the Purchasers'
reasonable satisfaction, to provide for such issuance of Rights pursuant to this
Section 6.15. Except as set forth in this Section 6.15, before the date hereof
and the Closing, the Company will not amend the Rights Plans without the consent
of the Purchasers.

         6.16 Transfer of Bridge Preferred Stock. Unless the Company sells all
or substantially all of its assets, mergers, consolidates with or into another
Person, enters into, effects or announces any similar transaction, enters into
any agreement to effect such transaction, effects any liquidation, dissolution
or winding-up of the Company, reclassifies any shares of Common Stock, or enters
into any agreement or consummates any transaction that would constitute a Change
of Control (as defined in the Bridge Preferred Stock Certificate of
Designations), the Purchasers shall not sell, assign, convey or otherwise
transfer, except to an Affiliate of such Purchaser, the Bridge Preferred Stock
or Conversion Shares prior to the earlier of (i) the Initial Increase Date and
(ii) the date on which the Required Stockholder Approval has been obtained.

                                       38
<PAGE>

                                  ARTICLE VII.
                              CONDITIONS TO CLOSING

         7.1 Condition to Each Party's Obligations. Neither party shall be
obligated to consummate the transactions contemplated hereby, if on or prior to
the Closing Date, there shall (i) be any injunction or court order restraining
consummation of the transactions contemplated hereunder; (ii) be any pending or
threatened action or proceeding by or before a court or governmental body
brought by or on behalf of any Governmental Entity seeking to restrain or
invalidate all or any portion of the transactions contemplated hereunder, or
(iii) have been adopted any law or regulation making all or any portion of the
transactions contemplated hereunder illegal.

         7.2 Conditions to the Company's Obligations. The obligations of the
Company to consummate the transactions contemplated hereby on the Closing Date
is subject to the satisfaction or waiver on the Closing Date, of each of the
following conditions:

                  (a) Representations, Warranties and Covenants. All
representations and warranties of the Purchasers contained in this Agreement
shall be true and correct in all material respects (i) on the date hereof and
(ii) at and as of the Closing Date, as if such representations and warranties
were made at and as of the Closing Date, and the Purchasers shall have performed
in all material respects all agreements and covenants required hereby to be
performed by it prior to or at the Closing Date. There shall be delivered to the
Company a certificate (signed by a general partner of each Purchaser) to the
foregoing effect.

                  (b) Consents. All consents, approvals, Permits and waivers
from Governmental Entities and other parties required to be obtained in
connection with the consummation of the transactions contemplated hereby shall
have been obtained, unless the failure to obtain any such consent, approval,
Permit or waiver would not have a Material Adverse Effect.

                  (c) Certificates. Each Purchaser will furnish the Company with
such certificates of its general partner and others to evidence compliance with
the conditions set forth in this Article VII as may be reasonably requested by
the Company.

                  (d) Rolls Royce Contract. The Company shall have entered into
the Rolls Royce T-56 Engine Parts Contract and such contract shall be in the
form of Exhibit D attached hereto.

                  (e) Refinancing of Senior Credit Facility. The Company shall
have entered into a new senior credit facility providing for $200,000,000 in
aggregate principal amount of senior debt financing in the form of Exhibit F
attached hereto.

                  (f) Mezzanine Financing. The Company shall issue $80,000,000
principal amount of senior notes of the Company for aggregate consideration of
$80,000,000 substantially in the form of Exhibit G attached hereto.

                                       39
<PAGE>

                  (g) Standstill Agreement. The Purchasers and Carlyle High
Yield Partners, L.P., a Delaware limited partnership, shall have executed and
delivered to the Company the Standstill Agreement.

         7.3 Conditions to the Purchasers' Obligations. The obligation of the
Purchasers to consummate the transactions contemplated hereby on the Closing
Date is subject to the satisfaction or waiver on the Closing Date of each of the
following conditions:

                  (a) Representations, Warranties and Covenants. All
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects (i) on the date hereof and (ii) at
and as of the Closing Date, as if such representations and warranties were made
at and as of the Closing Date, and the Company shall have performed in all
material respects all agreements and covenants required hereby to be performed
prior to or at the Closing Date. There shall be delivered to the Purchasers a
certificate (signed by the President and Chief Executive Officer of the Company)
to the foregoing effect.

                  (b) Consents. All consents, approvals, Permits and waivers
from Governmental Entities and other parties required to be obtained in
connection with the consummation of the transactions contemplated hereby shall
have been obtained.

                  (c) Opinions of Counsel. The Company shall have delivered to
the Purchasers the opinions of Haynes and Boone, LLP, counsel for the Company,
with respect to the matters set forth in a form reasonably acceptable to the
Purchasers.

                  (d) Certificates. The Company shall furnish the Purchasers
with such certificates of the Chief Executive Officer and the Secretary of the
Company and others to evidence compliance with the conditions set forth in this
Article VII as may be reasonably requested by the Purchasers.

                  (e) No Adverse Changes. Since the date of this Agreement,
there shall not have occurred any Material Adverse Change.

                  (f) Elections of Directors. All actions shall have been taken
by the Company and its Board of Directors so that, immediately upon the
Purchasers' purchase of the Bridge Preferred Shares, the Board of Directors
shall consist of no more than eight directors (including the directors elected
as provided below) and the Purchasers may, by execution and delivery of a
written consent, elect two (2) members of the Board of Directors effective as of
the Closing Date.

                  (g) Certificate of Designations. The Company shall have filed
with the Secretary of State of Delaware the Bridge Preferred Stock Certificate
of Designations, the Mezzanine Preferred Stock Certificate of Designations and
the Permanent Preferred Stock Certificate of Designations and such instruments
shall have become effective.

                  (h) Rights Plan. The Company shall have complied with Section
6.15.

                                       40
<PAGE>

                  (i) Liability Insurance. The Company shall have provided to
the Purchasers a copy of the insurance policies, together with the riders and
schedules thereto, which evidence compliance with the provisions set forth in
Section 6.9 effective as of the Closing Date.

                  (j) Rolls Royce Contract. The Company shall have entered into
the Rolls Royce T-56 Engine Parts Contract and such contract shall be in the
form of Exhibit D attached hereto and shall be in full force and effect.

                  (k) Refinancing of Senior Credit Facility. The New Credit
Facility shall be in effect, the conditions set forth in Article III thereof
shall have been satisfied or waived and not less than $32 million shall be
available for borrowing thereunder.

                  (l) Mezzanine Financing. The Company shall issue $80,000,000
principal amount of senior notes of the Company for aggregate consideration of
$80,000,000 on the terms set forth in the Note Purchase Agreement.

                  (m) Registration Rights Agreement. The Company shall have
executed and delivered to the Purchasers the Registration Rights Agreement.

                  (n) NYSE Listing. The shares of Common Stock issuable upon
conversion of the Bridge Preferred Shares and the Permanent Preferred Shares
shall have been approved (to the extent permitted by the rules of the New York
Stock Exchange) for listing on the New York Stock Exchange (subject to official
notice of listing and subject, in the case of the shares of Common Stock
issuable upon conversion of the Permanent Preferred Shares, to receipt of the
Required Stockholder Approval).

                  (o) Financing Fee and Carlyle Transaction Expenses. The
Company shall have paid to Carlyle the Financing Fee as provided in Section 6.12
hereof and shall have reimbursed the Purchasers for the Carlyle Transaction
Expenses as provided in Section 9.3.

                  (p) Benefit Arrangements. The Company shall have obtained such
consents and waivers and taken all such other necessary action such that the
consummation of the transactions contemplated hereby (including the issuance of
the Bridge Preferred Stock contemplated hereby and the Conversion Shares upon
conversion thereof) shall not cause or constitute a "change of control" under,
or otherwise result in the acceleration, creation or increase of any benefits of
rights or payments under any Benefit Arrangement or contract or agreement listed
on Schedule 4.5 or Schedule 4.13 (other than the acceleration or vesting of
options to purchase not more than 326,500 shares of Common Stock issued pursuant
to (i) the Aviall, Inc. Stock Incentive Plan, (ii) the Aviall, Inc. 1998 Stock
Incentive Plan and (iii) the Aviall, Inc. Amended and Restated 1998 Directors
Stock Plan).

                  (q) Rolls Royce 250 Engine Parts Contract. The Company shall
have obtained a waiver from Rolls-Royce Allison of the termination option of
Rolls-Royce for a change of control of the Company pursuant to the terms and
conditions of that certain Distribution Services Agreement, dated as of November
3, 1999, by and between Allison Engine Company, Inc. d/b/a Rolls-Royce Allison
and Aviall Services, Inc., as amended.

                                       41
<PAGE>

                  (r) Management Rights Agreement. The Company shall have
executed and delivered to the Purchasers the agreements attached as Exhibit J
hereto.

                  (s) As-Adjusted Balance Sheet. The Purchasers shall have
received an as adjusted consolidated balance sheet (the "As-Adjusted Balance
Sheet") of the Company and its Subsidiaries and certified by the principal
accounting officer and principal finance officer of the Company, that it fairly
presents the consolidated preliminary balance sheet of the Company and its
Subsidiaries as of November 30, 2001 and has been adjusted to reflect the
consummation of the transactions contemplated by this Agreement, the New Credit
Facility and the Note Purchase Agreement, including all material fees and
expenses in connection therewith.

                                  ARTICLE VIII.
                                 INDEMNIFICATION

         8.1 Survival of Representations, Etc. The representations, warranties,
covenants and agreements of the parties hereto contained herein shall survive
the Closing for a period of eighteen (18) months after the Closing Date;
provided, however, that (i) the representations and warranties set forth in
Sections 4.13 and 4.14 shall survive until six months after expiration of the
applicable statute of limitations and (ii) termination of the survival period of
any representation or warranty shall not relieve any party of liability for any
breach of any representation or warranty as to which a claim has been asserted
prior to such date of termination.

         8.2 Indemnification by the Company. The Company shall indemnify and
hold harmless each of the Purchasers and their respective Affiliates, directors,
officers, advisors, agents and employees (the "Purchaser Indemnified Parties")
from and against any and all demands, losses, damages, penalties, claims,
liabilities, obligations, actions, causes of action, and expenses (including
without limitation, costs of investigating, preparing or defending any such
claim or action and reasonable legal fees and expenses) (collectively,
"Losses"), (i) arising out of, relating to, or in connection with this
Agreement, the transactions contemplated hereby, and/or the delivery,
enforcement and performance of this Agreement or the Registration Rights
Agreement other than matters covered in clause (ii) of this Section 8.2, and
(ii) arising by reason of or resulting from any material breach of any warranty,
representation, covenant or agreement of the Company contained in this
Agreement, the Registration Rights Agreement, or in any certificate delivered
pursuant hereto or thereto.

         8.3 Indemnification by the Purchasers. Each Purchaser shall indemnify
and hold harmless the Company and its Affiliates, directors, officers, advisors,
agents and employees (the "Company Indemnified Parties" and, together with the
Purchasers Indemnified Parties, the "Indemnified Parties") from and against any
and all Losses arising by reason of or resulting from any material breach of any
warranty, representation, covenant or agreement of such Purchaser contained in
this Agreement or in any certificate delivered pursuant thereto.

         8.4 Limitation on Indemnities. No claim may be made against an
indemnifying party for indemnification pursuant to either clause (ii) of Section
8.2 or Section 8.3 until the aggregate dollar amount of all Losses indemnifiable
pursuant to such section exceeds $1,000,000. The

                                       42
<PAGE>

aggregate amount of all Losses for which any indemnifying party shall be
required to indemnify any indemnifying parties pursuant to this Article 8 (other
than pursuant to clause (i) of Section 8.2) shall not exceed $45,000,000.

         8.5 Losses. The term "Losses" as used in this Article 8 is not limited
to matters asserted by third parties, but includes Losses incurred or sustained
by an Indemnified Party in the absence of third party claims. Payments by an
Indemnified Party of amounts for which such Indemnified Party is indemnified
hereunder shall not necessarily be a condition precedent to recovery.

         8.6 Defense of Claims. If a claim for Losses (a "Claim") is to be made
by an Indemnified Party, such Indemnified Party shall give written notice (a
"Claim Notice") to the indemnifying party as soon as practicable after such
Indemnified Party becomes aware of any fact, condition or event which may give
rise to Losses for which indemnification may be sought under this Article 8. If
any lawsuit or enforcement action is filed against any Indemnified Party
hereunder, notice thereof (a "Third Party Notice") shall be given to the
indemnifying party as promptly as practicable (and in any event within fifteen
(15) calendar days after the service of the citation or summons). The failure of
any indemnified party to give timely notice hereunder shall not affect rights to
indemnification hereunder, except to the extent that the indemnifying party
demonstrates actual damage caused by such failure. After receipt of a Third
Party Notice, if the indemnifying party shall acknowledge in writing to the
indemnified party that the indemnifying party shall be obligated under the terms
of its indemnity hereunder in connection with such lawsuit or action, then the
indemnifying party shall be entitled, if it so elects, (i) to take control of
the defense and investigation of such lawsuit or action, (ii) to employ and
engage attorneys of its own choice to handle and defend the same, at the
indemnifying party's cost, risk and expense unless the named parties to such
action or proceeding include both the indemnifying party and the indemnified
party and the indemnified party has been advised in writing by counsel that
there may be one or more legal defenses available to such indemnified party that
are different from or additional to those available to the indemnifying party,
and (iii) to compromise or settle such claim, which compromise or settlement
shall be made only with the written consent of the Indemnified Party. The
Indemnified Party shall cooperate in all reasonable respects with the
indemnifying party and such attorneys in the investigation, trial and defense of
such lawsuit or action and any appeal arising therefrom; and the Indemnified
Party may, at its own cost, participate in the investigation, trial and defense
of such lawsuit or action and any appeal arising therefrom and appoint its own
counsel therefor, at its own cost. The parties shall also cooperate with each
other in any notifications to insurers. If the indemnifying party fails to
assume the defense of such claim within fifteen (15) calendar days after receipt
of the Third Party Notice, the Indemnified Party against which such claim has
been asserted will (upon delivering notice to such effect to the indemnifying
party) have the right to undertake the defense, compromise or settlement of such
claim and the indemnifying party shall have the right to participate therein at
its own cost. In the event the Indemnified Party assumes the defense of the
claim, the Indemnified Party will keep the indemnifying party reasonably
informed of the progress of any such defense, compromise or settlement.

         8.7 Tax Treatment of Indemnity. The parties agree that any
indemnification payments made pursuant to this Agreement shall be treated for
Tax purposes as an adjustment to

                                       43
<PAGE>

the consideration for the purchase of the Bridge Preferred Shares, unless
otherwise required by Applicable Law, in which event indemnification payments
shall be made in an amount sufficient to indemnify the party on a net after-Tax
basis.

                                   ARTICLE IX.
                                  MISCELLANEOUS

         9.1 Termination. Prior to the Closing, this Agreement may be
terminated:

                  (a) by mutual written consent of the Company and the
Purchasers;

                  (b) by the Purchasers or the Company if the Closing shall not
have occurred on or before December 31, 2001; provided however, that this
provision shall not be available to the Purchaser if the Company has the right
to terminate this Agreement under Section 9.1(d), and this provision shall not
be available to the Company if Purchaser has the right to terminate this
Agreement under Section 9.1(c);

                  (c) by the Purchasers, if there is a material breach of any
representation or warranty set forth in Article 4 hereof or any covenant or
agreement to be complied with or performed by the Company pursuant to the terms
of this Agreement; or

                  (d) by the Company, if there is a material breach of any
representation or warranty set forth in Article 5 hereof or of any covenant or
agreement to be complied with or performed by the Purchasers pursuant to the
terms of this Agreement.

         9.2 In the Event of Termination. In the event of termination of this
Agreement, no party hereto shall have any liability or further obligation to any
other party under this Agreement (other than the obligations of the parties
pursuant to Section 9.3), provided that no such termination shall relieve any
party from liability relating to breach of this Agreement occurring prior to
such termination.

         9.3 Expenses. The Company shall be responsible for the payment of all
expenses incurred by the Company in connection with the transactions
contemplated hereby, regardless of whether such transactions close, including,
without limitation, all fees and expenses incurred in connection with the Proxy
Materials and the fees and expenses of the Company's legal counsel and all third
party consultants engaged by the Company to assist in the transactions. On the
Closing Date, the Company shall reimburse the Purchasers for the Carlyle
Transaction Expenses by wire transfer of immediately available funds to an
account designated by the Purchasers in the amount of the Carlyle Transaction
Expenses. In the event that the Agreement is terminated, the Company shall
reimburse the Purchasers for the Carlyle Transaction Expenses by wire transfer
of immediately available funds to an account designated by the Purchasers in the
amount of the Carlyle Transaction Expenses. In the event that the Agreement is
terminated pursuant to Section 9.1(c) or Section 9.1(b) as a result of any
material breach of the Agreement by the Company, (i) the Company shall pay to
Carlyle on the date of such termination the Financing Fee and the Carlyle
Transaction Expenses and (ii) the Purchasers shall be entitled to recover from
the Company all Losses incurred by the Purchasers arising out of or relating to
or incurred as a result of any pre-termination breach of this Agreement by the
Company; provided that the

                                       44
<PAGE>

aggregate liability of the Company pursuant to this Section 9.3 shall not exceed
$45,000,000. In the event that the Agreement is terminated pursuant to Section
9.1(d) or Section 9.1(b) as a result of any material breach of the Agreement by
the Purchasers, (i) the Purchasers shall pay to the Company on the date of such
termination, the fees and expenses of the Company's legal counsel and all third
party consultants and advisors engaged by the Company to assist in the
transactions and (ii) the Company shall be entitled to recover from the
Purchasers all Losses incurred by the Company arising out of or relating to or
incurred as a result of any pre-termination breach of this Agreement by the
Purchasers; provided that the aggregate liability of the Purchasers pursuant to
this Section 9.3 shall not exceed $45,000,000. Following Closing, promptly upon
a written request therefore, the Company shall reimburse each Purchaser for the
reasonable out-of-pocket expenses incurred following the Closing in connection
with the transactions contemplated hereby and in connection with such
Purchaser's ongoing monitoring of its investment in the Company.

         9.4 Injunctive Relief. The parties hereto acknowledge and agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement, and shall be entitled to enforce specifically the provisions of this
Agreement, in any court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which the parties may be
entitled under the Agreement or at law or in equity.

         9.5 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by the Company without the prior written
consent of the Purchasers. Each Purchaser may, without the consent of the
Company, assign, in whole or in part, such Purchaser's rights under this
Agreement to an Affiliate of such Purchaser. After the Closing Date, each
Purchaser may, without the consent of the Company, assign this Agreement, in
whole or in part, to a third party; provided, however, no Purchaser shall assign
its rights pursuant to Section 6.4 hereunder unless such third party purchases
ten percent (10%) or more of the Bridge Preferred Stock and/or Conversion Shares
issued to the Purchasers, in the aggregate, pursuant to the terms of this
Agreement. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, and no other Person shall have any right, benefit or obligation
hereunder.

         9.6 Notices. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by any party to the other
shall be in writing and delivered by hand-delivery, registered first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery, as follows:

         If to the Company:

                  Aviall, Inc.
                  2750 Regent Blvd
                  DFW Airport, Texas 75261
                  Telephone: (972) 586-1800
                  Facsimile:  (972)  586-1010
                  Attn:  Jeffrey J. Murphy

                                       45
<PAGE>

         With a copies to:

                  Aviall, Inc.
                  2750 Regent Blvd
                  DFW Airport, Texas 75261
                  Telephone: (972) 586-1001
                  Facsimile:  (972)  586-1006
                  Attn:  Paul E. Fulchino

                  and

                  Haynes and Boone, LLP
                  901 Main Street
                  Dallas, Texas 75214
                  Telephone: (214) 651-5000
                  Facsimile:  (214) 200-0676
                  Attn:  Janice V. Sharry

         If to any Purchaser:

                  c/o The Carlyle Group
                  1001 Pennsylvania Avenue, N.W.
                  Suite 220 South
                  Washington, D.C. 20004
                  Telephone: (202) 347-2626
                  Facsimile:  (202) 347-1818
                  Attn:    Allan M. Holt
                           Peter J. Clare

         With a copy to:

                  Latham & Watkins
                  555 Eleventh Street, N.W.
                  Suite 1000
                  Washington, D.C. 20004
                  Telephone: (202) 637-2200
                  Facsimile:  (202) 637-2201
                  Attn:  Daniel T. Lennon

or to such other place and with such other copies as either party may designate
as to itself by written notice to the other.

                  All such notices, requests, instructions or other documents
shall be deemed to have been duly given; at the time delivered by hand, if
personally delivered; four Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed;

                                       46
<PAGE>

when receipt acknowledged by addressee, if by telecopier transmission; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.

         9.7 Choice of Law. This Agreement shall be construed, interpreted and
the rights of the parties determined in accordance with the internal laws of the
State of New York, without regard to the conflict of law principles thereof,
except with respect to matters of law concerning the internal corporate affairs
of any corporate entity which is a party to or the subject of this Agreement,
and as to those matters the law of the jurisdiction under which the respective
entity derives its powers shall govern.

         9.8 Entire Agreement; Amendments and Waivers. This Agreement, including
all schedules attached hereto (each, a "Schedule" and, collectively, the
"Schedules"), the exhibits attached hereto, the Confidentiality Agreement dated
as of October 26, 2001 between the parties hereto, the Registration Rights
Agreement, the Standstill Agreement, the Bridge Preferred Stock Certificate of
Designations, the Mezzanine Preferred Stock Certificate of Designations, the
Permanent Preferred Stock Certificate of Designations constitute the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, including the written summary of
proposed terms between the Company and the Purchasers. Capitalized terms used in
the Schedules but not defined therein shall have the respective meanings
ascribed to such terms in this Agreement. Any item disclosed in one Schedule
shall be deemed to have been disclosed in all other Schedules.

         9.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         9.10 Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.

         9.11 Headings. The headings of the Articles and Sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.

         9.12 Limitation of Liability. In no event shall any partner or
representative of any Purchaser (except for any Purchaser which is a general
partnership) or of any partnership which is a partner of any Purchaser or any
partner of any such partnership, or any direct or indirect stockholder, officer,
director, partner, employee or any other such person, be personally liable for
any obligation of the Purchasers under this Agreement.

                                       47
<PAGE>
                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.

                                      AVIALL, INC.

                                      By:         /s/ Paul E. Fulchino
                                            ------------------------------------
                                      Name: Paul E. Fulchino

                                      CARLYLE PARTNERS III L.P.
                                      By:   TC Group III, L.P., its General
                                            Partner

                                      By:   TC Group III, L.L.C., its General
                                            Partner

                                      By:   TC Group, L.L.C., its Managing
                                            Member

                                      By:   TCG Holdings, L.L.C., its Managing
                                            Member

                                      By:    /s/ Peter J. Clare
                                            ------------------------------------
                                      Name: Peter J. Clare

                                      CP III COINVESTMENT, L.P.

                                      By:   TC Group III, L.P., its General
                                            Partner

                                      By:   TC Group III, L.L.C., its General
                                            Partner

                                      By:   TC Group, L.L.C., its Managing
                                            Member

                                      By:   TCG Holdings, L.L.C., its Managing
                                            Member

                                      By:    /s/ Peter J. Clare
                                            ------------------------------------
                                      Name: Peter J. Clare

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