Document:

Ex-10.134

 

EXHIBIT 10.134

AMENDMENT NO. 2 TO

EMPLOYMENT AGREEMENT

     THIS AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT (“Amendment No. 2”) is entered into effective as
of the 1st day of January, 2006, by and between TIMCO AVIATION SERVICES, INC., a
Delaware corporation (“Company”), and KEVIN CARTER (“Employee”)

Preliminary Statements

     A.     The parties have previously entered into that certain Employment Agreement dated June 8,
2004, as previously amended on February 15, 2005 (collectively, the “Agreement”). Unless otherwise
defined, capitalized terms used herein shall have the meanings given to them in the Agreement.

     B.     The parties wish to further amend the Agreement to reflect the terms set forth below.

Agreement

     NOW, THEREFORE, in consideration of the premises, the mutual covenants set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

1.     Section 2(a) of the Agreement is hereby amended by deleting all of its text and replacing it
with the following text:

     (a) Base Salary. In consideration for the Employee’s services
hereunder and the restrictive covenants contained herein, effective as of January 1,
2006, the Employee’s base salary shall be $200,000 per annum (the “Salary”), payable
in accordance with TIMCO’s customary payroll practices. Notwithstanding the
foregoing, Employee’s annual Salary may be increased at any time and from time to
time to levels greater than the level set forth in the preceding sentence at the
sole discretion of the Compensation Committee of the Board of Directors of TIMCO
(“Committee”) to reflect merit or other increases.

2.     Except as amended hereby, the Agreement, as previously amended, remains in full force and
effect.

[Signatures on next page]

 

 

     IN WITNESS WHEREOF, the parties have executed this Amendment, effective as of the date set
forth above.

	 	 	 	 	 
	 	TIMCO AVIATION SERVICES, INC., a Delaware corporation

 	 
	 	By:  	/s/ Roy T. Rimmer Jr.
 	 
	 	 	Roy T. Rimmer, Jr. 	 
	 	 	Chairman and Chief Executive Officer 	 
	 
	 	EMPLOYEE:

 	 
	 	/s/ Kevin Carter
 	 
	 	Kevin CarterEx-10.136

 

EXHIBIT 10.136

AMENDMENT NO. 4 TO

FINANCING AGREEMENT

     THIS AMENDMENT NO. 4 TO FINANCING AGREEMENT (“Amendment”), dated this 20th day of April, 2006,
by and among

     AIRCRAFT INTERIOR DESIGN, INC., a Florida corporation (“AID”), BRICE MANUFACTURING COMPANY,
INC., a California corporation (“Brice”), TIMCO AVIATION SERVICES, INC., a Delaware corporation
(“Parent”), TIMCO ENGINE CENTER, INC., a Delaware corporation (“Engine”), TIMCO ENGINEERED SYSTEMS,
INC., a Delaware corporation (“Engineered Systems”), and TRIAD INTERNATIONAL MAINTENANCE
CORPORATION, a Delaware corporation (“TIMCO”; AID, Brice, Parent, Engine, Engineered Systems and
TIMCO being collectively called the “Borrowers” and individually, a “Borrower”);

     AVIATION SALES DISTRIBUTION SERVICES COMPANY, a Delaware corporation (“Distribution
Services”), AVIATION SALES LEASING COMPANY, a Delaware corporation (“Leasing”), AVIATION SALES
PROPERTY MANAGEMENT CORP., a Delaware corporation (“Property Management”), AVS/CAI, INC., a Florida
corporation (“AVS/CAI”), AVS/M-1, INC., a Delaware corporation (“AVS/M-1”), AVS/M-2, INC., a
Delaware corporation (“AVS/M-2”), AVS/M-3, INC., an Arizona corporation (“AVS/M-3”), AVSRE, L.P., a
Delaware limited partnership (“AVSRE”), HYDROSCIENCE, INC., a Texas corporation (“Hydroscience”),
TMAS/ASI, INC., an Arkansas corporation (“TMAS/ASI”), and WHITEHALL CORPORATION, a Delaware
corporation (“Whitehall”; Distribution Services, Leasing, Property Management, AVS/CAI, AVS/M-1,
AVS/M-2, AVS/M-3, AVSRE, Hydroscience, TMAS/ASI and Whitehall being collectively called the
“Guarantors” and, individually, a “Guarantor”; and the Borrowers and the Guarantors being
collectively called the “Companies” and, individually, a “Company”);

     THE CIT GROUP/BUSINESS CREDIT, INC., in its capacity as collateral and administrative agent
for the Lenders (“Agent”); and

     THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation, the sole lender (the “Lender”)

to Financing Agreement, dated April 5, 2004, as amended by Amendment No. 1 thereto, dated July 20,
2004, by Amendment No. 2 thereto, dated April 8, 2005, and by Amendment No. 3 thereto, dated
September 28, 2005 (the Financing Agreement, as amended, modified, supplemented or restated from
time to time, being hereinafter referred to as the “Financing Agreement”), among the Borrowers, the
Guarantors, the Agent and the Lenders party thereto from time to time. All capitalized terms used
herein without definition shall have the meanings ascribed to such terms in the Financing
Agreement.

 

 

RECITALS

     A. Pursuant to the Financing Agreement, upon the terms and subject to the conditions contained
therein, the Lender has agreed to make loans and extend credit to and for the benefit of the
Borrowers secured by the Collateral.

     B. The Borrowers have requested that the Agent and the Lender (a) reduce the Revolving Line of
Credit from $35,000,000 to $30,000,000, (b) increase the Letter of Credit Sub-line from $13,000,000
to $15,000,000, (c) make certain conforming changes to reflect the assignment and assumption by
LJH, Ltd. of the Indebtedness owing by the Borrowers to Monroe Capital Advisors LLC and the
amendment of the Hilco Documents, (d) amend certain covenants and other provisions of the Financing
Agreement, and (e) consent to amendments to the Hilco Financing Agreement, the amendment and
restatement of the Hilco Intercreditor Agreement and the termination of the LJH Goodyear Lease.

     C. Additionally, the Borrowers are not in compliance with certain provisions of the Financing
Agreement and have requested that the Lender waive the Events of Default arising from such
violations and continue to extend to the Borrowers the financial accommodations under the Financing
Agreement.

     D. The Agent and the Lender have agreed with such requests and, to accomplish the foregoing,
the Borrowers, the Agent and the Lender have agreed to make and execute this Amendment and the
Guarantors have agreed to grant their consent to such amendments to the Financing Agreement.

STATEMENT OF AGREEMENT

     NOW, THEREFORE, for and in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby expressly acknowledged, each
Borrower, each Guarantor, the Agent and the Lender hereby agree as follows:

ARTICLE I

AMENDMENTS TO FINANCING AGREEMENT

     Subject to the satisfaction of each of the conditions precedent set forth in Article IV below,
the Financing Agreement is hereby amended as follows:

     1.1 Definitions. Section 1, Definitions, is amended as follows:

          (a) The following definition of “Adjusted EBITDA” is added in the appropriate
alphabetical sequence:

	 	 	“Adjusted EBITDA shall mean, in any period, EBITDA of the Companies
plus cash contributions to the equity of any Company (without duplication in
the event such cash contribution is made to Parent and is thereafter contributed by
Parent to any

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	 	 	other Company or is made to a Company other than Parent and is
thereafter contributed by such Company to one or more of its subsidiaries) made
after the date of the Amendment No. 4 to this Financing Agreement but excluding cash
contributions to the equity of any Company required pursuant to the terms and
provisions of any merger agreement and excluding any equity contributions arising
from the conversion of any Indebtedness.”

          (b) The definition of “Applicable Percentage” is amended in its entirety to read as
follows:

	 	 	“Applicable Percentage shall mean, with respect to the Revolving Loans, 0%
per annum for Prime Rate Loans and 2.5% per annum for LIBOR Loans.”

          (c) The following definition of “Cash Collateral” is added in the appropriate
alphabetical sequence:

	 	 	“Cash Collateral” shall mean the amount of $5,000,000 which shall be held by
Agent in a cash collateral account maintained at JPMorgan Chase Bank (or other bank
reasonably satisfactory to Agent and Borrowers) in the name of Agent as secured
party, and shall be under the sole dominion and control of Agent as security for the
payment of all Obligations, all upon such terms and pursuant to such documentation
as shall be reasonably satisfactory to Agent and Borrowers.”

          (d) The definition of “Domestic Borrowing Base” is amended in its entirety to read as
follows:

	 	 	“Domestic Borrowing Base shall mean, on any date of determination, the sum
of (a) eighty-five percent (85%) of the Borrowers’ aggregate outstanding Eligible
Domestic Accounts Receivable at such date, plus (b) the least of (i)
$11,000,000 or (ii) seventy percent (70%) of the Borrowers’ aggregate outstanding
Eligible Unbilled Accounts Receivable at such date or (iii) thirty five percent
(35%) of the Borrowers’ aggregate outstanding Eligible Domestic Accounts Receivable
at such date plus (c) the least of (i) forty-five percent (45%) of the
aggregate value of the Borrowers’ Eligible Inventory, valued at the lower of cost or
market, on a first in, first out basis, at such date or (ii) eighty-five percent
(85%) of the Net Orderly Liquidation Value of Eligible Inventory at such date or
(iii) the Inventory Loan Cap, less (d) any applicable Availability Reserves
which shall not include any Availability Reserves which have been subtracted from
the Foreign Borrowing Base, plus (e) the Cash Collateral.”

          (e) The definition of “FCC Level” is deleted in its entirety

          (f) The following definition of “Fiscal Month” is added in the appropriate
alphabetical sequence:

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	 	 	“Fiscal Month - shall mean a fiscal month in a Fiscal Year.”

          (g) The definition of “Fixed Charge Coverage Ratio” is amended in its entirety to read
as follows:

	 	 	“Fixed Charge Coverage Ratio shall mean with respect to any period of
determination, the ratio of (a) Adjusted EBITDA minus Capital Expenditures
of the Companies incurred during such period which are not financed by Indebtedness
secured by Purchase Money Liens for such period to (b) the sum of (i) payments of
principal on all Indebtedness required to be paid by the Companies during such
period (excluding non-cash interest paid on Subordinated Debt) plus (ii)
payments of interest on all Indebtedness required to be paid by the Companies during
such period (excluding non-cash interest paid on Subordinated Debt) plus
(iii) dividends or distributions by the Parent paid during such period plus
(iv) federal, state and local income taxes paid during such period, in each case as
determined in accordance with GAAP.”

          (h) The definition of “Hilco” is amended in its entirety to read as follows:

	 	 	“Hilco shall mean LJH, Ltd, its successors and assigns.”

          (i) The definition of “Hilco Documents” is amended in its entirety to read as follows:

	 	 	“Hilco Documents shall mean the Amended and Restated Financing Agreement,
dated April 8, 2005, as amended by First Amendment thereto, dated September 28,
2005, and by Second Amendment thereto, dated as of April 10, 2006 (“Hilco Financing
Agreement”), and all other documents, instruments and agreements executed or
delivered in connection therewith.”

          (j) The definition of “Hilco Intercreditor Agreement” is amended in its entirety to
read as follows:

	 	 	“Hilco Intercreditor Agreement shall mean the Intercreditor and
Subordination Agreement, dated as of April 20, 2006, between the Agent and Hilco, in
the form of Exhibit E attached hereto.”

          (k) The definition of “Hilco Loan”, is amended in its entirety to read as follows:

	 	 	“Hilco Loan shall collectively mean the loans in the aggregate original
principal amount of $24,313,255.08 as of the date of the Second Amendment to the
Hilco Financing Agreement made or to be made by Hilco to Borrowers pursuant to the
Hilco Documents.”

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          (l) The definition of “Letter of Credit Sub-Line” is amended in its entirety to read
as follows:

	 	 	“Letter of Credit Sub-Line shall mean the amount of $15,000,000 in the
aggregate for the Borrowers.”

          (m) The definition of “Level” is deleted in its entirety

          (n) The definition of “Leverage Ratio” is deleted in its entirety.

          (o) The definition of “Line of Credit” is amended in its entirety to read as follows:

	 	 	“Line of Credit shall mean the aggregate commitment of the Lenders to (a)
make Revolving Loans pursuant to Section 3 of this Financing Agreement, and (b)
assist the Borrowers in opening Letters of Credit pursuant to Section 5 of this
Financing Agreement, in the aggregate amount equal to $30,000,000.”

          (p) The definition of “LJH Documents” is deleted in its entirety.

          (q) The definition of “LJH Subordination Agreement” is deleted in its entirety.

          (r) The definition of “LJH Subordinated Debt” is deleted in its entirety.

          (s) The definition of “Minimum Availability Reserve” is amended in its entirety to
read as follows:

	 	 	“Minimum Availability Reserve shall mean the amount of $3,000,000.”

          (t) The definition of “Permitted Encumbrances” is amended by deleting the first clause
(k) in its entirety.

          (u) The definition of “Purchase Money Liens” is amended in its entirety to read as
follows:

	 	 	“Purchase Money Liens shall mean liens on any item of Equipment acquired
after the date of this Financing Agreement provided that (a) each such lien shall
attach only to the property to be acquired, (b) a description of the Equipment so
acquired is furnished to the Agent, and (c) the debt incurred in connection with such
acquisitions shall not exceed, in the aggregate, $2,500,000 in Fiscal Year ending
December 31, 2006, $2,500,000 in Fiscal Year ending December 31, 2007 and
$2,500,0000 in any Fiscal Year ending thereafter.”

          (v) The definition of “Revolving Line of Credit” is amended in its entirety to read as
follows:

5

 

	 	 	“Revolving Line of Credit shall mean the aggregate commitment of the Lenders
to make loans and advances pursuant to Section 3 of this Financing Agreement and
issue Letters of Credit Guaranties pursuant to Section 5 hereof to the Borrowers, in
the aggregate amount of $30,000,000.”

          (w) The definition of “Term Loan” is deleted in its entirety.

          (x) The definition of “Term Note” is deleted in its entirety.

          (y) The following definition of “Total Liquidity” is added in the appropriate
alphabetical sequence:

	 	 	“Total Liquidity shall mean as of any date of determination the sum of
Availability plus the aggregate amount of cash of Companies in which Agent
shall have a first priority perfected Lien other than the Cash Collateral.”

     1.2 Revolving Loans. Paragraph 3.1 of Section 5, Revolving Loans, is amended
by deleting from line 6 thereof the figure “$35,000,000” and by substituting in lieu thereof the
figure “$30,000,000”.

     1.3 Term Loan. Section 4, Term Loan, is deleted in its entirety and its
marked “INTENTIONALLY LEFT BLANK”.

     1.4 Collateral. Section 6, Collateral, is amended by adding the following
paragraph at the end thereof as follows:

     “6.11 As security for the prompt payment in full of all Obligations, each
Company hereby pledges and grants to the Agent for the benefit of the Lenders a
continuing general lien upon, and security interest in, all of the Cash Collateral.
If at any time the Obligations in respect of Letters of Credit and Letter of Credit
Guaranties are less than $5,000,000 and no Default or Event of Default has occurred,
then the Agent on behalf of the Lenders, at the written request of the Borrowers,
shall pay to or for the benefit of Borrowers the difference between the amount of
Cash Collateral then held by Agent for the benefit of Lenders and the amount of such
Obligations in respect of Letters of Credit and Letter of Credit Guaranties then
outstanding and release its Lien in such portion of the Cash
Collateral. If thereafter, the Borrowers request the issuance of Letters of Credit
or Letter of Credit Guaranties in excess of the amount of Cash Collateral subject to
the Lien in favor of the Agent, then Borrowers shall, as a condition to the issuance
of such Letters of Credit and Letter of Credit Guaranties, deposit such additional
Cash Collateral with the Agent equal to the lesser of the amount of Obligations in
respect of Letters of Credit and Letter of Credit Guaranties outstanding after such
issuance and $5,000,000. In the event that (a) no Letters of Credit or Letter of
Credit Guaranties are outstanding, (b) Agent and Lenders have no further obligation
to issue or assist in the issuance of

6

 

Letters of Credit or Letter of Credit
Guaranties, (c) Agent and Lenders’ commitments for the issuance of such Letters of
Credit or Letter of Credit Guaranties have been terminated by Borrowers, and (d) no
Default or Event of Default has occurred and is continuing, then the Lien in the
Cash Collateral then held by Agent for the benefit of Lenders shall be released by
Agent and any remaining Cash Collateral shall be paid to or for the benefit of
Borrowers.”

     1.5 Representations, Warranties and Covenants. Section 7, Representations,
Warranties and Covenants, is amended as follows:

          (a) Paragraph 7.2 is amended in its entirety to read as follows:

     “7.2 Each Company agrees to maintain books and records pertaining to the
Collateral in accordance with GAAP and in such additional detail, form and scope as
the Agent shall reasonably require. Each Company agrees that the Agent or its
agents may enter upon such Company’s premises at any time during normal business
hours, and from time to time in its reasonable business judgment, for the purpose of
inspecting the Collateral and any and all records pertaining thereto. Each Company
agrees to afford the Agent fifteen (15) days prior written notice of any change in
the location of any Collateral, other than to locations, that as of the Closing
Date, are known to the Agent. Each Company shall also advise the Agent promptly, in
sufficient detail, of any material adverse change relating to the type, quantity or
quality of the Collateral or on the security interests granted to the Agent herein.”

          (b) Paragraph 7.10 is amended in its entirety to read as follows:

     “7.10 Until termination of the Financing Agreement and payment and
satisfaction in full of all Obligations hereunder:

	 	(a)	 	The Companies shall maintain a Fixed Charge Coverage Ratio of not less
than the ratio set forth below as of the end of the applicable period with the
applicable test determined based on Total Liquidity as of the end of such
applicable period:

	 	 	 	 	 	 	 	 	 
	 	 	Ratio if Total	 	Ratio if Total
	 	 	Liquidity is Equal To or	 	Liquidity is Less
	Date	 	More than $13,000,000	 	than $13,000,000
	 
	 	 	 	 	 	 	 	 
	Three (3) Fiscal Months ending
July 2006
	 	no test	 	 	 	0.5 to 1.0	 
	Four (4) Fiscal Months ending
August 2006
	 	no test	 	 	 	0.85 to 1.0	 
	Five (5) Fiscal Months ending
September 2006
	 	no test	 	 	 	1.0 to 1.0	 
	Six (6) Fiscal Months ending
October 2006
	 	 	1.0 to 1.0	 	 	 	1.25 to 1.0	 

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	 	 	Ratio if Total	 	Ratio if Total
	 	 	Liquidity is Equal To or	 	Liquidity is Less
	Date	 	More than $13,000,000	 	than $13,000,000
	 

	Six (6) Fiscal Months ending
November 2006
	 	 	1.0 to 1.0	 	 	 	1.25 to 1.0	 
	Six (6) Fiscal Months ending
December 2006
	 	 	1.0 to 1.0	 	 	 	1.5 to 1.0	 
	Six (6) Fiscal Months ending
January 2007 and tested at the
end of each Fiscal Month for each
period of six (6) Fiscal Months
ending thereafter
	 	 	1.5 to 1.0	 	 	 	1.5 to 1.0	 

	 	(b)	 	The Companies shall achieve Adjusted EBITDA of not less than the
amount shown below for the period corresponding thereto:

	 	 	 	 	 	 	 	 	 
	 	 	Adjusted EBITDA if Total	 	Adjusted EBITDA if
	 	 	Liquidity is Equal To or	 	Total Liquidity is Less
	Date	 	More than $13,000,000	 	than $13,000,000
	 
	 	 	 	 	 	 	 	 
	Fiscal Month ending May 2006
	 	no test	 	$	300,000	 
	Two (2) Fiscal Months ending June 2006
	 	$	50,000	 	 	$	600,000	 
	Three (3) Fiscal Months ending July 2006
	 	$	400,000	 	 	$	1,250,000	 
	Four (4) Fiscal Months ending August 2006
	 	$	1,000,000	 	 	$	2,500,000	 
	Five (5) Fiscal Months ending September 2006
	 	$	2,000,000	 	 	$	4,000,000	 
	Six (6) Fiscal Months ending October 2006
	 	$	3,000,000	 	 	$	6,000,000	 
	Six (6) Fiscal Months ending November 2006
	 	$	4,000,000	 	 	$	7,000,000	 
	Six (6) Fiscal Months ending December 2006
	 	$	5,000,000	 	 	$	8,000,000	 

	 	 	 	 	 	 	 	 	 
	 	 	Adjusted EBITDA if Total	 	Adjusted EBITDA if
	 	 	Liquidity is Equal To or	 	Total Liquidity is Less
	Date	 	More than $13,000,000	 	than $13,000,000
	 
	 	 	 	 	 	 	 	 
	Six (6) Fiscal Months ending
January 2007 and tested at the
end of each Fiscal Month for each
period of six (6) Fiscal Months
ending thereafter
	 	$	8,000,000	 	 	$	8,000,000	 

	 	(c)	 	The Companies shall not make Capital Expenditures (including, without
limitation, by way of capitalized leases) which, in the aggregate, as to the
Companies exceed $2,500,000 during any Fiscal Year; provided,
however,

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	 	 	 	such limitation shall not apply to Capital Expenditures made
solely from the proceeds of cash contributions to the equity of the Company
making such Capital Expenditure which are made after the date of the Amendment
No. 4 to this Financing Agreement but excluding cash contributions to the
equity of any Company required pursuant to the terms and provisions of any
merger agreement and excluding any equity contributions arising from the
conversion of any Indebtedness.”

     1.6 Interest, Fees and Expenses. Section 8, Interest, Fees and Expenses, is
amended as follows:

          (a) Paragraph 8.2 is deleted and is marked “INTENTIONALLY LEFT BLANK”.

          (b) A new paragraph 8.21 is added at the end thereof as follows:

          “8.21 To induce the Agent and the Lenders to enter into the Amendment No. 4 to
this Financing Agreement, the Companies shall pay to the Agent, for the benefit of
the Lenders, an Amendment Fee in the amount of $150,000, which shall be fully earned
and nonrefundable upon execution of the Amendment No. 4 to this Financing Agreement
by the Companies.”

     1.7 Amendment to Indebtedness owing to LJH, Ltd. Paragraph 10.1(j) of Section 10,
Events of Default and Remedies, is amended in its entirety to read as follows:

	 	“(j) 	 	without the prior written consent of the Agent and, except as permitted
in the Hilco Intercreditor Agreement, any Company shall amend or modify the
Indebtedness described therein;”.

     1.8 Agreements Between Lenders. Section 14, Agreements Between Lenders, is
amended as follows:

          (a) Paragraph 14.5(b) is amended in its entirety to read as follows:

          “(b) The Companies authorize each Lender to disclose to (i) any participant or
purchasing lender (each, a “Transferee”) and any prospective Transferee, and (ii)
the affiliates of each Lender, which shall include the Agent, any and all financial
information and any and all information relating to the Collateral or any Company’s
Property which is in such Lender’s possession concerning the Companies and their
affiliates which has been delivered to such Lender by or on behalf of the Companies
pursuant to this Agreement or which has been delivered to such Lender by or on
behalf of the Companies in connection with such Lender’s credit evaluation of the
Companies and their affiliates prior to entering into this Agreement;
provided, however, in the case of any prospective Transferee or
affiliate of a Lender, they first agree in writing to maintain the confidentiality
of any confidential financial or other information they so obtain.”

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          (b) Paragraph 14.10 is amended in its entirety to read as follows:

     “14.10 If Hilco gives CIT an Exercise Notice (as defined in the Hilco
Intercreditor Agreement) under the Hilco Intercreditor Agreement, each other Lender
agrees to sell its rights under the Loan Documents and the Obligations owing to such
other Lender hereunder and thereunder, at the same time and on the same terms and
conditions as the sale by CIT to Hilco as set forth in Section 10 of the Hilco
Intercreditor Agreement.”

     1.9 Exhibits. Exhibit E attached to the Financing Agreement is deleted
and Exhibit E attached to this Amendment is substituted in lieu thereof.

     1.10 References to Term Loan and Term Note. All references in the Financing Agreement
and any of the other Loan Documents to “Term Note” and to “Term Loan” are deleted.

     1.11 References to LJH Documents and LJH Subordination Agreement. All references in
the Financing Agreement and any of the other Loan Documents to “LJH Documents” and to “LJH
Subordination Agreement” are deleted.

ARTICLE II

MODIFICATION OF LOAN DOCUMENTS;

CONSENT BY GUARANTORS

     2.1 Modification of Loan Documents. The Financing Agreement and each of the other
Loan Documents are amended to provide that any reference therein to the Financing Agreement or any
of the other Loan Documents shall mean, unless otherwise specifically
provided, the Financing Agreement and the other Loan Documents as amended hereby, and as further
amended, restated, supplemented or modified from time to time.

     2.2 Consent by Guarantors. Each Guarantor hereby consents to, and agrees to be bound
by, (a) each of the amendments to the Financing Agreement and the other Loan Documents as set forth
herein, (b) the waiver of the Events of Default set forth herein, and (c) the other agreements set
forth herein.

ARTICLE III

REPRESENTATIONS, WARRANTIES

AND ACKNOWLEDGMENTS

     Each Borrower and each Guarantor hereby represents and warrants to the Agent and the Lenders
that, as of the date hereof:

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     3.1 Compliance with the Financing Agreement and Other Loan Documents. Giving effect
to this Amendment, the Companies are in compliance with all of the terms and provisions set forth
in the Financing Agreement and in the other Loan Documents to be observed or performed by any
Company.

     3.2 Representations in Financing Agreement and other Loan Documents. Each Borrower
and each Guarantor represents and warrants that their respective representations and warranties set
forth in the Financing Agreement and the other Loan Documents to which such Borrower or such
Guarantor is a party are true and correct in all material respects except for changes in the nature
of such Borrower’s or such Guarantor’s business or operations which have occurred after the Closing
Date so long as the Agent or the Required Lenders as required by the Financing Agreement has or
have consented to such changes, or such changes are not prohibited by the terms of the Financing
Agreement.

     3.3 No Default or Event of Default. Giving effect to this Amendment, no Default or
Event of Default exists.

     3.4 Indebtedness and other Obligations Owing to LJH. Giving effect to this Amendment
and the transactions contemplated herein, each Company hereby acknowledges and agrees that, as of
the date hereof, no Indebtedness is owing by any Company to LJH, either directly or indirectly,
other than the Hilco Loan, Indebtedness arising pursuant to the LJH Dallas Lease and Indebtedness
arising pursuant to the LJH Goodyear Lease.

     3.5 Outstanding Obligations. Each Company hereby acknowledges and agrees that, as of
the opening of business on April 20, 2006, the principal balance of the Obligations outstanding
under the Financing Agreement is in the sum of $14,342,472.73, consisting of a credit balance in
the Revolving Loan Account in the amount of $1,454,707.64, an unpaid balance on the Term Loan in
the amount of $4,363,637, and Letter of Credit Obligations and Letter of Credit
Guaranties in the amount of $11,433,543.37, and that all of such Obligations outstanding are owed
to the Agent and the Lenders without any offset, deduction, defense or counterclaim of any nature.

ARTICLE IV

CONDITIONS PRECEDENT AND CONDITIONS SUBSEQUENT

     4.1 Conditions Precedent. It shall be a condition precedent to the effectiveness of
the amendments to the Financing Agreement as set forth in Article I of this Amendment that the
Agent shall have received originals (unless otherwise indicated) of the following, each in form and
substance satisfactory to the Agent and its counsel:

          (a) This Amendment, duly executed by each Company;

          (b) A Second Amended and Restated Fee Agreement, dated of even date herewith, duly executed by
each Borrower;

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          (c) An Assignment and Transfer Agreement, dated as of the date of this Amendment, duly
executed and delivered by Wells Fargo Foothill, LLC, as a lender, selling, and assigning to The CIT
Group/Business Credit, Inc., as a lender, its undivided interest in and to all the its rights and
obligations under the Financing Agreement;

          (d) Evidence of the payment by the Borrowers of, or reimbursement of the Agent and the Lenders
for the payment of, the early termination fee in the amount of $75,000 paid to Wells Fargo
Foothill, LLC as a part of the sale and assignment of its undivided interest to The CIT
Group/Business Credit, Inc., as a lender, as set forth in Section 4.1(c) above;

          (e) A copy of the duly executed Assignment and Acceptance, dated as of April 10, 2006,
pursuant to which Monroe Capital Advisors, LLC shall sell and assign to LJH, Ltd. all of the Hilco
Loan and the Hilco Loan Documents;

          (f) Copies of the each of the duly executed amendments to the Hilco Loan Documents which
shall, among other things, (i) provide for the making on or before the date of this Amendment a new
term loan to the Borrowers in the original principal amount of not less than $6,000,000, (ii) waive
the payment in cash of the fees payable pursuant to Section 8.1(i), 8.1(j), 8.1(k) and (l) of the
Hilco Financing Agreement and provide for the payment of such fees in kind to be added to the
outstanding principal amount of the Hilco Loan, unless payment of such fees is waived in whole or
in part, (iii) waive all events of default which have occurred under any of the Hilco Documents,
(iv) amend the Hilco Loan Documents to eliminate all financial covenants, including, without
limitation, those set forth in Section 7.10 of the Hilco Financing Agreement, and (v) provide for
the accrual of all interest on the Hilco Loan and deferral of the payment of interest in cash until
the conditions set forth in Section 7.5(b) of the Hilco Intercreditor Agreement allowing for the
payment of interest in cash on the portions of the Hilco Loan (other than the loan described in
clause (i) above) have been satisfied;

          (g) Evidence of the receipt by the Borrowers of the proceeds of the term loan referenced in
clause (f)(i) above in the original principal amount of not less than $6,000,000 made by LJH, Ltd.;

          (h) Receipt by the Agent on behalf of the Lenders of payment in full of the Obligations
evidenced by the Term Note (as defined in the Financing Agreement prior to the effectiveness of
this Amendment);

          (i) The Hilco Intercreditor Agreement in the form of Exhibit E attached hereto, duly
executed by LJH, Ltd.;

          (j) A closing certificate signed by the Senior Vice President — Finance, or other officer
acceptable to the Agent, or the General Partner of each Company, dated of even date herewith,
certifying that (i) the representations and warranties set forth in Section 7 of the Financing
Agreement and in this Amendment are true and correct in all material respects on and as of such
date, (ii) giving effect to this Amendment, each Company is on such date in compliance in all
material respects with all the terms and provisions set forth in the Financing Agreement and the

12

 

other Loan Documents, and (iii) giving effect to this Amendment, no Default or Event of Default
exists;

          (k) A certificate of the Secretary or an Assistant Secretary or the Secretary or an Assistant
Secretary of the General Partner of each Company certifying (i) that attached thereto are
certificates of existence for each Company issued by the secretary of state or other appropriate
official of the state of each Company’s state of formation, (ii) that except as set forth therein
there have been no amendments, modifications, restatements or supplements to or of any Company’s
articles of formation or its bylaws, partnership or operating agreement or other constituent
documents, (iii) that attached thereto are true and complete copies of the resolutions adopted by
the Board of Directors of each Company, authorizing the execution, delivery and performance of this
Amendment and the other Loan Documents executed in connection herewith, and (iv) as to the
incumbency and genuineness of the signature of each officer or general partner of each Company
executing this Amendment and the other Loan Documents executed in connection herewith;

          (l) Receipt by the Agent of the amendment fee required to be paid pursuant to Paragraph 8.21
of the Financing Agreement; and

          (m) Such other documents, instruments and agreements as the Agent, the Lender or its counsel
may request in connection herewith.

     4.2 Conditions Subsequent. It shall be a condition subsequent to the continued
effectiveness of the Financing Agreement that the Agent shall have received each of the following
documents, instruments or agreements, each in form and substance satisfactory to the Agent and its
counsel:

          (a) Within twenty (20) days of the forwarding to counsel to the Companies of amendments to
each of the Mortgages, duly executed and notarized amendments to each Mortgage; and

          (b) Within ten (10) days of the termination of the LJH Goodyear Lease, a copy or other
evidence of such termination.

     Failure to deliver such documents, instruments and agreements within the respective time
periods specified shall constitute a additional Events of Default under the Financing Agreement,
and, at the Required Lender’s option, entitle the Agent to exercise its rights and remedies under
the Financing Agreement and the other Loan Documents.

ARTICLE V

WAIVER OF EVENTS OF DEFAULT

     5.1 Waiver of Events of Default. Effective as of the date of the satisfaction of each
of the conditions precedent set forth in Section 4.1 of this Amendment, the Agent and the Required
Lenders hereby waive all Events of Default arising under the Financing Agreement by virtue of the

13

 

Companies’ failure to comply with any of the provisions of the Financing Agreement through the date
of this Amendment. This waiver shall be effective only for the Events of Default occurring or
arising on or prior to the date of this Amendment. Nothing herein shall constitute a waiver of any
other Default or Event of Default hereafter existing under the Financing Agreement or compliance by
the Companies with covenants set forth therein.

ARTICLE VI

CONSENTS

     6.1 Consents. The Lender hereby consents to the (a) the amendment and restatement of
the Hilco Intercreditor Agreement referenced in Section 4.1(i) of this Amendment, (b) the amendment
and modification of the Indebtedness described in the Hilco Financing Agreement as set forth in
that certain Second Amendment to Amended and Restated Financing Agreement, dated as of April 10,
2006, among Hilco and the Companies, and (c) the termination of the LJH Goodyear Lease. The
Lenders further agree with the Companies that the actions and events describe in the immediately
preceding sentence shall not constitute Defaults or Events of Default under the Financing
Agreement.

ARTICLE VII

GENERAL

     7.1 Full Force and Effect. As expressly amended hereby, the Financing Agreement shall
continue in full force and effect in accordance with the provisions thereof. As used in the
Financing Agreement, “hereinafter”, “hereto”, “hereof” or words of similar import, shall, unless
the context otherwise requires, mean the Financing Agreement as amended by this Amendment.

     7.2 Applicable Law. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AMENDMENT
AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NORTH CAROLINA.

     7.3 Counterparts. This Amendment may be executed in one or more counterparts, each of
which shall constitute an original, but all of which when taken together shall constitute but one
and the same instrument.

     7.4 Expenses. The Borrowers shall reimburse the Agent and the Lenders for all
reasonable legal fees and expenses, and other fees and expenses incurred by the Agent and the
Lenders in connection with the preparation, negotiation, execution and delivery of this Amendment
and all other agreements and documents or contemplated hereby.

     7.5 Headings. The headings in this Amendment are for the purpose of reference only
and shall not affect the construction of this Amendment.

14

 

     7.6 Waiver of Jury Trial. TO THE FULLEST EXTENT PROVIDED BY APPLICABLE LAW,
EACH COMPANY, THE AGENT AND EACH LENDER EACH HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING ARISING OUT OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREUNDER. EACH COMPANY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO
SERVICE OF PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED. IN NO EVENT WILL THE
AGENT OR ANY LENDER BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.

[SIGNATURES BEGIN ON NEXT PAGE]

15

 

     IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered as of the date first above written.

	 	 	 	 	 
	 

	 	AIRCRAFT INTERIOR DESIGN, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/
Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	BRICE MANUFACTURING COMPANY, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/
Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	TIMCO AVIATION SERVICES, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/
Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	TIMCO ENGINE CENTER, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/
Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	TIMCO ENGINEERED SYSTEMS, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/
Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance

16

 

	 	 	 	 	 
	 

	 	TRIAD INTERNATIONAL MAINTENANCE CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	/s/
Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	AVIATION SALES DISTRIBUTION SERVICES COMPANY
	 
	 	 	 	 
	 

	 	By:	 	/s/
Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	AVIATION SALES LEASING COMPANY
	 
	 	 	 	 
	 

	 	By:	 	/s/
Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	AVIATION SALES PROPERTY MANAGEMENT CORP.
	 
	 	 	 	 
	 

	 	By:	 	/s/
Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	AVS/CAI, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/
Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	AVS/M-1, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/
Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance

17

 

	 	 	 	 	 
	 

	 	AVS/M-2, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/
Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	AVS/M-3, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/
Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	AVSRE, L.P.
	 
	 	 	 	 
	 

	 	By: Aviation Sales Property Management Corp.,

        its general partner
	 
	 	 	 	 
	 

	 	By:	 	/s/
Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	HYDROSCIENCE, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/
Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	TMAS/ASI, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/
Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance

18

 

	 	 	 	 	 
	 

	 	WHITEHALL CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kevin Carter 
	 

	 	 	 	 
	 

	 	 	 	Name: Kevin Carter

Title: Senior Vice President — Finance
	 
	 	 	 	 
	 

	 	THE CIT
GROUP/BUSINESS CREDIT, INC.

     as the Agent
	 
	 	 	 	 
	 

	 	By:	 	/s/ Kenneth B. Butler 
	 

	 	 	 	 
	 

	 	 	 	Name: Kenneth B. Butler

Title: Vice President
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	THE CIT GROUP/BUSINESS CREDIT, INC.

     as the Lender
	 
	 	 	 	 
	 

	 	By:	 	/s/
Kenneth B. Butler 
	 

	 	 	 	 
	 

	 	 	 	Name: Kenneth B. Butler

Title: Vice President
	 
	 	 	 	 

19

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