Document:

Ex-10.2

 

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (“Agreement”), is made and entered into on the 8th day of
June, 2006, effective as of June 1, 2006 (“Effective Date”) by and between TIMCO AVIATION SERVICES,
INC., a Delaware corporation (the “Company”), and GENE HOUSE (the “Employee”).

     In consideration of the mutual representations, warranties, covenants and agreements contained
in this Agreement and other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:

     1. Employment.

          (a) Retention. The Company agrees to employ Employee as its Executive Vice President
and Chief Marketing Officer, and Employee agrees to accept such employment, subject to the terms
and conditions of this Agreement. This Agreement supersedes and replaces that certain Consulting
Agreement between Company and Employee dated August 1, 2005, which consulting agreement is hereby
cancelled.

          (b) Employment Period. The period during which the Employee shall serve as an
employee of the Company under this Agreement shall commence as of the Effective Date, and unless
earlier terminated pursuant to this Agreement or extended through agreement of the parties, shall
expire on May 31, 2008. Thereafter, this Agreement shall automatically renew for consecutive one
year periods unless terminated by either party by six months written notice prior to the expiration
of the initial term or any renewal term. For purposes of this Agreement, the initial employment
term and any renewal term thereof are collectively referred to herein as the “Employment Period.”

          (c) Duties and Responsibilities. During the Employment Period, the Employee shall
serve as Executive Vince President and Chief Marketing Officer of the Company. In such role,
Employee shall have such authority and responsibility and perform such duties as may be assigned to
him from time to time by the Chief Executive Officer, and in the absence of such assignment, such
duties as are customary to Employee’s office and as are necessary or appropriate to the business
and operations of the Company. During the Employment Period, the Employee’s employment shall be
full time, and services provided by Employee hereunder shall primarily either be provided at the
Company’s headquarters or at the offices of the Company’s customers. Employee shall perform his
duties honestly, diligently, in good faith and in the best interests of the Company, and Employee
shall use his best efforts to promote the interests of the Company.

          (d) Other Activities. Except upon the prior written consent of the Company, the
Employee, during the Employment Period, will not accept any other employment. The Employee shall
be permitted to serve in ventures such as passive real estate investments, serving on charitable
and civic boards and organizations, and similar activities, so long as such activities do not
materially interfere with or detract from the performance of Employee’s duties or constitute a
breach of any of the provisions contained in this Agreement.

 

 

     2. Compensation.

          (a) Base Salary. In consideration for the Employee’s services hereunder and the
restrictive covenants contained herein, the Employee shall be paid an annual base salary (“Salary”)
of $260,000 per annum from the Effective Date until the end of the Employment Period. Payments
hereunder shall be made in accordance with the Company’s customary payroll practices.
Notwithstanding the foregoing, Employee’s annual Salary may be increased at anytime and from time
to time to levels greater than the level set forth in the preceding sentence at the discretion of
the Compensation Committee (the “Committee”) of the Board of Directors (“Board”) of the Company to
reflect merit or other increases.

          (b) Bonus. In addition to the Salary, the Employee shall be eligible to receive an
annual bonus (“Bonus”) equal to 100% of the Employee’s Salary. The Bonus shall be based on the
achievement of corporate goals and objectives as established by the Committee or the Board. The
achievement of said goals and objectives shall be determined by the Committee or the Board. With
respect to any Fiscal Year during which the Employee is employed by the Company for less than the
entire Fiscal Year, the Bonus shall be prorated for the period during which the Employee was so
employed. Except as set forth above, all amounts of Bonus earned by Employee shall be payable
within thirty (30) days after completion of the audited financial statements for the previous
Fiscal Year. The term “Fiscal Year” as used herein shall mean each period of twelve (12) calendar
months commencing on January 1st of each calendar year during the Employment Period and expiring on
December 31st of such year.

          (c) Merit and Other Bonuses. Employee shall be entitled to such other bonuses,
payments and benefits as may be determined by the Committee or the Board, in their sole discretion.

          (d) Equity Incentives. Employee shall be eligible to receive grants of stock options,
restricted stock or other equity incentives, all at the discretion of the Committee or the Board.

          (e) Other Compensation Programs. The Employee shall be entitled to participate in
Company’s incentive and deferred compensation programs and such other programs as are established
and maintained generally for the benefit of Company’s employees or executive officers, subject to
the provisions of such plans or programs.

          (f) Vacations. The Employee shall be entitled to three weeks of vacation on an annual
basis. Employee shall be entitled to be reimbursed for any accrued and unused vacation time as of
the date he is no longer an employee of Company.

          (g) Other Benefits. During the term of this Agreement, the Employee shall also be
entitled to participate in any other health insurance programs, life insurance programs, disability
programs, stock option plans, bonus plans, pension plans and other fringe benefit plans and
programs as are from time to time established and maintained for the benefit of Company’s employees
or executive officers, subject to the provisions of such plans and programs.

          (h) Expenses. The Employee shall be reimbursed for all out-of-pocket expenses
reasonably incurred by him on behalf of or in connection with the business of the

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Company, pursuant to the normal standards and guidelines followed from time to time by the
Company.

          (i) Housing Allowance; Air Travel. The Company shall provide, at its expense, housing
in which the Employee may live while he is working in Greensboro, as well as a vehicle for
transportation when Employee is in Greensboro. Such housing and automobile shall be selected by the
Company and shall be reasonably acceptable to the Employee. In addition, the Company will pay
travel expenses for the Employee and the Employee’s spouse to travel to and from Greensboro from
their permanent residence in California. The total of all payments by the Company under this
Section 2(i) shall not exceed $42,000 in any calendar year.

          (j) Withholding. All payments made to the Employee hereunder shall be made net of any
applicable withholding for income taxes and the Employee’s share of FICA, FUTA or other taxes. The
Company shall withhold such amounts from such payments to the extent required by applicable law and
remit such amounts to the applicable governmental authorities in accordance with applicable law.

     3. Termination.

          (a) For Cause. The Company shall have the right to terminate this Agreement and to
discharge the Employee for Cause (as defined below), at any time during the term of this Agreement.
Termination for Cause shall mean, during the term of this Agreement, (i) Employee’s breach of this
Agreement; (ii) Employee’s failure or refusal to perform the duties and responsibilities of his
position as assigned to him by the Company’s Chief Executive Officer; (iii) Employee’s gross
negligence or willful misconduct in the performance of his duties hereunder; (iv) Employee’s
commission of an act of dishonesty affecting the Company or the commission of an act constituting
common law fraud or a felony; (v) Employee’s commission of an act (other than the good faith
exercise of his business judgment in the performance of his duties) resulting in harm to the
Company or the Company’s reputation; or (vi) Employee’s willful violation of the Company’s policies
or procedures involving discrimination, harassment, alcohol or substance abuse, or work place
violence. Any termination for Cause pursuant to this Section shall be given to the Employee in
writing and shall set forth in detail all acts or omissions upon which the Company is relying to
terminate the Employee for Cause.

     Upon any determination by the Company that Cause exists to terminate the Employee, the Company
shall cause a special meeting of the Board of Directors to be called and held at a time mutually
convenient to the Board of Directors and Employee, but in no event later than ten (10) business
days after Employee’s receipt of the notice that the Company intends to terminate the Employee for
Cause. Employee shall have the right to appear before such special meeting of the Board of
Directors with legal counsel of his choosing to refute such allegations. A majority of the members
of the Board of Directors must affirm that Cause exists to terminate the Employee. No finding by
the Board of Directors will prevent the Employee from contesting such determination through
appropriate legal proceedings provided that the Employee’s sole remedy shall be to sue for damages,
not reinstatement, and damages shall be limited to those that would be paid to the Employee if he
had been terminated without Cause. In the event the Company terminates the Employee for Cause, the
Company shall only be obligated to continue to pay in the ordinary and normal course of its
business to the Employee his Salary plus accrued

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but unused vacation time through the termination date and the Company shall have no further
obligations to Employee from and after the date of termination.

          (b) Resignation by Employee. If the Employee shall resign or otherwise terminate his
employment with the Company at anytime during the term of this Agreement, the Employee shall only
be entitled to receive his accrued and unpaid Salary and vacation pay through the termination date,
and the Company shall have no further obligations under this Agreement from and after the date of
resignation.

          (c) Termination by Company Without Cause. At any time during the term of this
Agreement the Company shall have the right to terminate this Agreement and to discharge the
Employee without Cause effective upon delivery of written notice to the Employee. Upon any such
termination by the Company without Cause, or upon the Company’s failure to renew this Agreement,
the Company shall pay to the Employee all of the Employee’s accrued but unpaid Salary and vacation
pay through the date of termination, and thereafter, the Company: (i) shall continue to pay to the
Employee his Salary payable in accordance with Section 2(a) for a period of one (1) year, and (ii)
shall continue Employee’s health benefits under the Company’s then health insurance program(s) for
a period of one (1) year (or until Employee’s death or the date on which Employee becomes covered
by the health plan of a subsequent employer, to the extent that either of these events occurs
earlier). All payments made to the Employee pursuant to this Section 2(c) are collectively,
referred to herein as the “Severance Payment.” Other than the Severance Payment, the Company
shall have no further obligation to the Employee except for the obligations set forth in Section 13
of this Agreement after the date of such termination; provided, however, that the Employee shall
only be entitled to continuation of the Severance Payments as long as he is in compliance with the
provisions of Sections 6 and 7 of this Agreement. Notwithstanding the foregoing, in no event shall
Employee receive less than an aggregate of two years of Salary under this Agreement.

          (d) Disability of the Employee. This Agreement may be terminated by the Company upon
the Disability of the Employee. “Disability” shall mean any mental or physical illness, condition,
disability or incapacity which prevents the Employee from reasonably discharging his duties and
responsibilities under this Agreement for a period of 180 consecutive days. In the event that any
disagreement or dispute shall arise between the Company and the Employee as to whether the Employee
suffers from any Disability, then, in such event, the Employee shall submit to the physical or
mental examination of a physician licensed under the laws of the State of North Carolina, who is
mutually agreeable to the Company and the Employee, and such physician shall determine whether the
Employee suffers from any Disability. In the absence of fraud or bad faith, the determination of
such physician shall be final and binding upon the Company and the Employee. The entire cost of
such examination shall be paid for solely by the Company. In the event the Company has purchased
Disability insurance for Employee, the Employee shall be deemed disabled if he is completely
(fully) disabled as defined by the terms of the Disability policy. In the event that at any time
during the term of this Agreement the Employee shall suffer a Disability and the Company terminates
the Employee’s employment for such Disability, the Company shall continue to pay to the Employee
his Salary, payable in accordance with Section 1(a) for three (3) months from the date of the
termination, when and as the same would have been due and payable hereunder but for such
termination, except that payment of the Salary in accordance with said paragraph shall be mitigated
to the

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extent payments are made to the Employee pursuant to disability insurance programs maintained
by the Company.

          (e) Death of the Employee. In the event of the death of Employee, the employment of
the Employee by the Company shall automatically terminate on the date of the Employee’s death and
the Company shall only be obligated to pay Employee’s estate Employee’s accrued and unpaid Salary
through the termination date plus accrued but unused vacation time through the termination date and
the Company shall have no further obligations to Employee from and after the date of termination.

     4. Termination of Employment by Employee for Change of Control.

          (a) Termination Rights. Notwithstanding the provisions of Section 3 of this
Agreement, in the event that there shall occur a Change of Control (as defined below) of the
Company and within two years after such Change of Control the Employee’s employment hereunder is
terminated by the Company without Cause, then the Company shall be required to pay to the Employee
all accrued but unpaid Salary and vacation pay through the date of termination, plus the product of
two (2) multiplied by the Employee’s then current Salary (collectively, the foregoing consideration
payable to the Employee shall be referred to herein as the “Change in Control Payment”). The
Change in Control Payment shall be made no later than 10 days after the Employee’s termination
pursuant to this Section 4. To the extent that payments are owed by the Company to the Employee
pursuant to this Section 4, they shall be made in lieu of payments pursuant to Section 3, and in no
event shall the Company be required to make payments or provide benefits to the Employee under both
Section 3 and Section 4. Additionally, Employee shall be entitled to receive the Change of Control
Payment set forth above in the event that within six months after the term of this Agreement, a
Change of Control shall occur.

          (b) Change of Control of the Company Defined. For purposes of this Section 4, a
“Change of Control of the Company” shall be deemed to have occurred if:

               (i) Any “person” (as such term is defined in Sections 13(d)(3) and Section 14(d)(3) of the
Exchange Act), other than the Company, any majority owned subsidiary of the Company, any
compensation plan of the Company, any majority owned subsidiary of the Company or Lacy J. Harber
and his affiliates and/or heirs, becomes the “beneficial owner” (as such term is defined in Rule
13d 3 of the Exchange Act), directly or indirectly, of securities of the Company representing more
than 50% of the combined voting power of the Company; or

               (ii) Any “person” (as such term is defined in Sections 13(d)(3) and Section 14(d)(3) of the
Exchange Act), other than the Company, any majority owned subsidiary of the Company, any
compensation plan of the Company, any majority owned subsidiary of the Company or Lacy J. Harber
and his affiliates and/or heirs), becomes the “beneficial owner” (as such term is defined in Rule
13d 3 of the Exchange Act), directly or indirectly, of securities of the Company representing more
than 35% of the combined voting power of the Company provided: (A) such person or person are not
acting as a “group” (as such term is defined in Rule 13(d) under the Exchange Act) with respect to
the Company’s voting securities with Lacy J. Harber and his affiliates and/or heirs and (B) such
person or persons own Company securities with more of the combined voting power of the Company than
those held by Lacy J. Harber and his affiliates and/or heirs; or

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               (iii) The shareholders of the Company approve (1) a reorganization, merger, or consolidation
with respect to which persons who were the shareholders of the Company immediately prior to such
reorganization, merger, or consolidation do not immediately thereafter own more than 50% of the
combined voting power entitled to vote generally in the election of the directors of the
reorganized, merged or consolidated entity; (2) a liquidation or dissolution of the Company; or (3)
the sale of all or substantially all of the assets of the Company or of a subsidiary of the Company
that accounts for more than 66 2/3% of the consolidated revenues of the Company, but not including
a reorganization, merger or consolidation of the Company; or

               (iv) John R. Cawthron is removed from his position as Chief Executive Officer of the Company.

     5. Successor To Company. The Company shall require any successor, whether direct or
indirect, to all or substantially all of the business, properties and assets of the Company whether
by purchase, merger, consolidation or otherwise, prior to or simultaneously with such purchase,
merger, consolidation or other acquisition to execute and to deliver to the Employee a written
instrument in form and in substance reasonably satisfactory to the Employee pursuant to which any
such successor shall agree to assume and to timely perform or to cause to be timely performed all
of the Company’s covenants, agreements and obligations set forth in this Agreement (a “Successor
Agreement”). The failure of the Company to cause any such successor to execute and deliver a
Successor Agreement to the Employee shall constitute a material breach of the provisions of this
Agreement by the Company.

     6. Restrictive Covenants. In consideration of his employment and the other benefits
arising under this Agreement, the Employee agrees that during the Employment Period and for a
period of twelve (12) months following the Employment Period, the Employee shall not directly or
indirectly:

          (a) alone or as a partner, joint venturer, officer, director, member, employee, consultant,
agent, independent contractor or stockholder of, or lender to, any company or business, engage in
any business which competes, directly or indirectly, with any business of the Company; provided,
however, that the beneficial ownership of less than one percent (1%) of the shares of stock of any
corporation having a class of equity securities actively traded on a national securities exchange
or over-the-counter market shall not be deemed, in and of itself, to violate the prohibitions of
this Section; or

          (b) for any reason, (i) induce any customer of the Company or any of its subsidiaries or
affiliates to patronize any business directly or indirectly in competition with the businesses
conducted by the Company or any of its subsidiaries or affiliates in any market in which the
Company or any of its subsidiaries or affiliates does business; (ii) canvass, solicit or accept
from any customer of the Company or any of its subsidiaries or affiliates any such competitive
business; or (iii) request or advise any customer or vendor of the Company or any of its
subsidiaries or affiliates to withdraw, curtail or cancel any such customer’s or vendor’s business
with the Company or any of its subsidiaries or affiliates; or

          (c) for any reason, employ, or knowingly permit any company or business directly or indirectly
controlled by him, to employ, any person who was employed by the

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Company or any of its subsidiaries or affiliates at or within the prior six months, or in any
manner seek to induce any such person to leave his or her employment.

The provisions of this Section 6 shall apply to Employee whether or not Employee’s employment with
the Company has been terminated for Cause or without Cause and whether or not the Company is
required to pay Employee severance benefits under Section 3 of this Agreement. Notwithstanding the
foregoing, if this Agreement expires by its terms at the end of the Employment Period, then the
provisions of this Section 6 shall only apply to Employee if the Company provides Employee with all
of the severance benefits which it would be obligated to provide to him under Section 3(c) of this
Agreement as if the Employee had been terminated from his employment with the Company without
Cause.

     7. Confidentiality. The Employee agrees that at all times during the term of this
Agreement and after the termination of employment for as long as such information remains
non-public information, the Employee shall (i) hold in confidence and refrain from disclosing to
any other party all information, whether written or oral, tangible or intangible, of a private,
secret, proprietary or confidential nature, of or concerning the Company or any of its subsidiaries
or affiliates and their business and operations, and all files, letters, memoranda, reports,
records, computer disks or other computer storage medium, data, models or any photographic or other
tangible materials containing such information (“Confidential Information”), including without
limitation, any sales, promotional or marketing plans, programs, techniques, practices or
strategies, any expansion plans (including existing and entry into new geographic and/or product
markets), and any customer lists, (ii) use the Confidential Information solely in connection with
his employment with the Company or any of its subsidiaries or affiliates and for no other purpose,
(iii) take all precautions necessary to ensure that the Confidential Information shall not be, or
be permitted to be, shown, copied or disclosed to third parties, without the prior written consent
of the Company or any of its subsidiaries or affiliates, and (iv) observe all security policies
implemented by the Company or any of its subsidiaries or affiliates from time to time with respect
to the Confidential Information. In the event that the Employee is ordered to disclose any
Confidential Information, whether in a legal or regulatory proceeding or otherwise, the Employee
shall provide the Company or any of its subsidiaries or affiliates with prompt notice of such
request or order so that the Company or any of its subsidiaries or affiliates may seek to prevent
disclosure. In addition to the foregoing the Employee shall not at any time libel, defame, ridicule
or otherwise disparage the Company.

     8. Specific Performance; Injunction. The parties agree and acknowledge that the
restrictions contained in Sections 6 and 7 are reasonable in scope and duration and are necessary
to protect the Company or any of its subsidiaries or affiliates. If any provision of Section 6 or
7 as applied to any party or to any circumstance is adjudged by a court to be invalid or
unenforceable, the same shall in no way affect any other circumstance or the validity or
enforceability of any other provision of this Agreement. If any such provision, or any part
thereof, is held to be unenforceable because of the duration of such provision or the area covered
thereby, the parties agree that the court making such determination shall have the power to reduce
the duration and/or area of such provision, and/or to delete specific words or phrases, and in its
reduced form, such provision shall then be enforceable and shall be enforced. The Employee agrees
and acknowledges that the breach of Section 6 or 7 will cause irreparable injury to the Company or
any of its subsidiaries or affiliates and upon breach of any provision of such Sections, the
Company or any of its subsidiaries or affiliates shall be entitled to injunctive

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relief, specific performance or other equitable relief, without being required to post a bond;
provided, however, that, this shall in no way limit any other remedies which the Company or any of
its subsidiaries or affiliates may have (including, without limitation, the right to seek monetary
damages).

     9. Notices. All notices, requests, demands, claims and other communications hereunder
shall be in writing and shall be deemed given if delivered by hand delivery, by certified or
registered mail (first class postage pre-paid), guaranteed overnight delivery or facsimile
transmission if such transmission is confirmed by delivery by certified or registered mail (first
class postage pre-paid) or guaranteed overnight delivery to, the following addresses and telecopy
numbers (or to such other addresses or telecopy numbers which such party shall designate in writing
to the other parties): (a) if to the Company, at its principal executive offices, addressed to the
Chief Executive Officer, with a copy to Philip B. Schwartz, Esq., Akerman, Senterfitt & Eidson,
P.A., One Southeast Third Avenue, Miami, Florida 33156; and (b) if to the Employee, at the address
listed on the signature page hereto.

     10. Amendment; Waiver. This Agreement may not be modified, amended, or supplemented,
except by written instrument executed by all parties. No failure to exercise, and no delay in
exercising, any right, power or privilege under this Agreement shall operate as a waiver, nor shall
any single or partial exercise of any right, power or privilege hereunder preclude the exercise of
any other right, power or privilege. No waiver of any breach of any provision shall be deemed to
be a waiver of any preceding or succeeding breach of the same or any other provision, nor shall any
waiver be implied from any course of dealing between the parties. No extension of time for
performance of any obligations or other acts hereunder or under any other agreement shall be deemed
to be an extension of the time for performance of any other obligations or any other acts. The
rights and remedies of the parties under this Agreement are in addition to all other rights and
remedies, at law or equity, that they may have against each other.

     11. Assignment; Third Party Beneficiary. This Agreement, and the Employee’s rights
and obligations hereunder, may not be assigned or delegated by him. The Company may assign its
rights, and delegate its obligations, hereunder to any affiliate of the Company, or any successor
to the Company or its aviation services business, specifically including the restrictive covenants
set forth in Section 6 hereof. The rights and obligations of the Company under this Agreement
shall inure to the benefit of and be binding upon its respective successors and assigns.

     12. Severability; Survival. In the event that any provision of this Agreement is
found to be void and unenforceable by a court of competent jurisdiction, then such unenforceable
provision shall be deemed modified so as to be enforceable (or if not subject to modification then
eliminated herefrom) to the extent necessary to permit the remaining provisions to be enforced in
accordance with the parties intention. The provisions of Sections 6, 7 and 8 will survive the
termination for any reason of the Employee’s relationship with the Company.

     13. Indemnification. The Company agrees to indemnify the Employee during the term and
after termination of this Agreement in accordance with the provisions of the Company’s certificate
of incorporation and bylaws and the Delaware General Corporation Law.

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     14. Counterparts. This Agreement may be signed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one and the same instrument.

     15. Governing Law. This Agreement shall be construed in accordance with and governed
for all purposes by the laws of the State of North Carolina applicable to contracts executed and to
be wholly performed within such State.

     16. Entire Agreement. This Agreement contains the entire understanding of the parties
in respect of its subject matter and supersedes all prior agreements and understandings (oral or
written) between or among the parties with respect to such subject matter.

     17. Headings. The headings of Paragraphs and Sections are for convenience of
reference and are not part of this Agreement and shall not affect the interpretation of any of its
terms.

     18. Construction. This Agreement shall be construed as a whole according to its fair
meaning and not strictly for or against any party. The parties acknowledge that each of them has
reviewed this Agreement and has had the opportunity to have it reviewed by their respective
attorneys and that any rule of construction to the effect that ambiguities are to be resolved
against the drafting party shall not apply in the interpretation of this Agreement.

     19. Resolution of Disputes. Any disputes arising under or in connection with this
Agreement shall be resolved by third party mediation of the dispute and, failing that, by binding
arbitration to be held in Greensboro, North Carolina in accordance with the rules and procedures of
the American Arbitration Association. Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.

[Signatures on Next Page]

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

	 	 	 	 	 
	 	TIMCO AVIATION SERVICES, INC.,

a Delaware corporation

 	 
	 	By:  	/s/
John R. Cawthron 	 
	 	 	John R. Cawthron, Chief Executive Officer 	 
	 	 	 	 
	 

	 	 	 	 	 	 	 
	 

	 	EMPLOYEE:	 	 	 	 
	 
	 	 	/s/
Gene House 	 	 
	 

	 	Gene House	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address for Notices:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 

	 	 	 	 

10Ex-10.3

 

ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of July 1, 2006,
by and between AEROTURBINE, INC., a Delaware corporation (“Buyer”), and TRIAD INTERNATIONAL
MAINTENANCE CORPORATION, a Delaware corporation (“Seller”).

Background Statement

     Seller is engaged in the business of providing aviation storage, maintenance, repair and
overhaul services in Goodyear, Arizona (the “Business”). Seller now desires to cease conducting
the Business and sell substantially all of the assets related to the Business. Buyer desires to
buy from Seller and Seller desires to sell to Buyer certain assets related to the Business, on the
terms and conditions set forth herein.

Statement of Agreement

     In consideration of the premises and the mutual covenants herein contained, the adequacy and
sufficiency of which are hereby acknowledged, the parties hereto, for themselves, their successors
and assigns, agree as follows:

1. Definitions.

     (a) The following capitalized terms shall have the following meanings:

     “Affiliate” means (i) with respect to any Person, any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with such specified Person,
or (ii) with respect to any individual, shall also mean the spouse, parent, grandparent, child,
stepchild or grandchild of such Person, or the spouse thereof, or any trust, charitable foundation
or similar entity of which there are no principal beneficiaries other than such Person and/or one
or more of such relatives or any undesignated charity. For purposes of this definition, “control”
of a Person means having 10% or more of the voting control of that Person or holding equity
securities representing 10% or more of the value of such Person.

     “Assignment and Assumption Agreement” means an agreement, substantially in the form of
Exhibit A, attached hereto, executed by Seller and Buyer at Closing.

     “Assumed Liabilities” means Seller’s obligations and liabilities under the Contracts
arising on and after the Closing Date, all of which are assumed by Buyer at Closing pursuant to the
Assignment and Assumption Agreement, and no others. For the avoidance of doubt, the Assumed
Liabilities shall not include any liability or obligation under the Contracts with respect to
claims for acts or omissions occurring prior to the Closing Date, whether such claims are asserted
before or after the Closing Date.

     “Bill of Sale” means a bill of sale, substantially in the form of Exhibit B,
attached hereto, executed by Seller and delivered to Buyer at Closing.

     “Business” shall have the meaning given to it in the Background Statement.

     “Closing” shall have the meaning given to it in Section 2.

     “Closing Date” means the date referred to in Section 2.

     “Consigned Inventory” shall have the meaning assigned to it in the Consignment
Agreement.

     “Consignment Agreement” means an agreement substantially in the form of Exhibit C, attached

 

 

hereto, executed by Seller and Buyer at Closing.

     “Contracts” means those contracts and other agreements set forth on Schedule 1
attached hereto and incorporated herein by reference.

     “Employees” means those employees of Seller which were actively employed by Seller on June 1,
2006, the names of such employees listed on Schedule 2, attached hereto and incorporated
herein by reference. “Employee” means any one of those employees individually.

     “Environmental Law” means all federal, state, local, and foreign statutes,
regulations, and ordinances concerning public health and safety, worker health and safety,
pollution, or protection of the environment, including all those relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal, distribution,
labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any
hazardous materials, substances, or wastes, as such requirements are enacted and in effect on or
prior to the Closing Date.

     “Equipment” means the tools, equipment, machines, vehicles and similar items listed on
Schedule 3, attached hereto and incorporated herein by reference.

     “Excluded Assets” means the following assets of Seller: (i) cash or cash equivalents;
(ii) all trade accounts receivable of Seller outstanding immediately prior to the Closing Date;
(iii) all amounts owed under the Contracts for materials and/or services provided by Seller,
whether provided by Seller before, on or after the Closing Date (such materials and/or services,
“Seller-Performed Work”); (iv) insurance policies of Seller and claims receivable thereunder, or
bonds, letters of credit or similar items or any cash surrender value in regard thereto; (v) the
corporate seals, charter documents, minute books, stock books and other similar documents
pertaining to the organization of Seller; (vi) Seller’s name, trade names, trademarks, copyrights,
licenses, patents (including patents pending and/or applied for), computer software or other
intellectual property of any kind whatsoever; (vii) Seller’s books, records and manuals pertaining
to the Business; (viii) telephone numbers currently used by Seller; and (ix) claims or rights
against third parties Seller may have or hereafter acquire arising out of any matters occurring
prior to the close of business on the Closing Date, including, without limitation, claims for
refunds of federal, state or local franchise, income or other taxes; (x) all inventory of Seller;
and (xi) the tangible personal property listed on Schedule 4.

     “Excluded Liabilities” means all liabilities or obligations of Seller not specifically
listed as Assumed Liabilities, notwithstanding any claimant’s assertion of any de facto merger or
successor liability theory of liability, including, without limitation, any liability for (i) a
WARN Act claim with respect to the termination of employment of any employee of Seller other than a
Selected Employee; (ii) the violation any Environmental Law or Release of Hazardous Substances on
the Leased Premises prior to the Closing Date; (iii) any use, sales or personal property tax owing
or accrued with respect to the period up to, but not including, the Closing Date; and (iv) any
violation of bulk sales laws.

     “Governmental Authority” means any nation, province, state or other political
subdivision thereof, and any agency, natural person or other entity exercising executive,
legislative, regulatory or administrative functions of or pertaining to government and having
jurisdiction over Buyer, Seller, the Business or any of the Purchased Assets.

     “Hazardous Substance” means and include each substance identified or designated as
such under CERCLA, as well as any other substance or material meeting any one or more of the
following criteria: (i) it is or contains a substance designated as a hazardous waste, hazardous substance,
pollutant, contaminant or toxic substance under any Environmental Law; or (ii) it is or contains,
without limiting the foregoing, petroleum hydrocarbons.

2

 

     “Indemnified Party” shall have the meaning given to it in Section 16(c).

     “Indemnifying Party” shall have the meaning given to it in Section 16(c).

     “Information” shall have the meaning given to it in Section 10.

     “Knowledge” or “known”. An individual shall be deemed to have “knowledge” of
or to have “known” a particular fact or other matter if such individual is actually aware of such
fact or other matter, without independent investigation. A corporation or other entity shall be
deemed to have “knowledge” of or to have “known” a particular fact or other matter if any
individual who is serving as a director or officer (or in any similar capacity) of the corporation
or entity, has actual knowledge of such fact or other matter, without independent investigation.

     “Leased Premises” means the premises leased by LJH, Ltd. to Buyer pursuant to that
certain Sublease Agreement dated of even date herewith.

     “Person” shall mean a corporation, a partnership, a limited liability company, an association,
a joint venture, an organization, a business, an individual, a trust or a government or political
subdivision thereof, a government agency, or any other legal entity.

     “Purchase Price” shall have the meaning given to it in Section 3(b).

     “Purchased Assets” shall mean the following assets of Seller: (i) the Equipment; (ii)
any tangible personal property located on the Leased Premises on July 1, 2006, that is not an
Excluded Asset; (iii) certain manuals, forms and records listed on Schedule 5, attached
hereto and incorporated herein by reference, and (iv) Seller’s rights and entitlements under the
Contracts.

     “Release” means any releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing or dumping in amounts or under
circumstances that violate any Environmental Law.

     “Selected Employees” means the seventy (70) Employees whose names are set forth on
Schedule 6 attached hereto and incorporated herein by reference. “Selected Employee” means
any one of those Employees individually.

     “Services Agreement” means an agreement, substantially in the form of Exhibit
D, attached hereto, executed by Seller and Buyer at Closing.

     “Transaction Documents” means this Agreement, the Assignment and Assumption Agreement,
the Bill of Sale, the Services Agreement and any other document necessary or desirable to
consummate the transactions contemplated hereby.

     “Transition Period” means the period of time commencing on the date hereof, up to, but
not including, the Closing Date.

     “Transition Period Loss” means the difference between Seller’s Business expenses and
revenues during the Transition Period, calculated in accordance with the accounts and formula set
forth on Schedule 8, attached hereto and incorporated herein by reference.

     (b) Other capitalized terms may be defined elsewhere in this Agreement.

2. Closing. Subject to Section 15 below, the closing of the transactions
contemplated hereby (the

3

 

“Closing”) shall take place on or before the latest of August 4, 2006, the
date that all the conditions listed in Section 15 are satisfied or waived and the date that
Seller’s FAA 145 Repair Station Certificate will be transferred to Buyer (the “Closing Date”), at
the Leased Premises, or at such other time or place as shall be mutually satisfactory to the
parties hereto. At Closing, the following documents in a form reasonably satisfactory to both
parties shall be delivered:

     (a) Certificates of the Secretaries of Seller and Buyer, respectively, attaching resolutions
duly adopted by the respective Boards of Directors of Seller and Buyer authorizing the execution of
this Agreement and consummation of the transactions contemplated hereby; and

     (b) Such other documents and certificates reasonably requested by Seller or Buyer in
connection with the conveyance of the Purchased Assets and consummation of the transactions
contemplated hereby.

3. Transactions at Closing.

     (a) Subject to satisfaction of the other terms and conditions of this Agreement, on the
Closing Date:

	 	(i)	 	Seller shall sell, transfer, convey and deliver to Buyer, and
Buyer will purchase and accept from Seller, the Purchased Assets, free and
clear of all liens or other encumbrances;
	 
	 	(ii)	 	Seller and Buyer shall execute and deliver to each other the
Assignment and Assumption Agreement, the Consignment Agreement and the Services
Agreement;
	 
	 	(iii)	 	Seller shall execute and deliver to Buyer the Bill of Sale;
	 
	 	(iv)	 	The FAA will transfer to Buyer Seller’s 145 Repair Station
Certificate; and
	 
	 	(v)	 	Buyer shall pay to Seller, in accordance with Section
3(b) below, an amount equal to $1,400,000.00, plus the Transition Period
Loss (the “Purchase Price”).

     (b) The Purchase Price shall be payable by Buyer as follows:

	 	(i)	 	$1,138,259.01, plus the Transition Period Loss, shall be paid
at Closing via wire transfer;
	 
	 	(ii)	 	$261,749.99 shall be paid by cancellation of Seller’s
outstanding indebtedness to Buyer under that certain Aircraft Engine Purchase
Agreement by and between Seller and AeroTurbine, Inc., dated March 1, 2006.

4. Assignment of Contracts. Subject to satisfaction of the other terms and conditions of
this Agreement, on the Closing Date Seller and Buyer shall execute the Assignment and Assumption
Agreement, pursuant to which Seller shall assign to Buyer and Buyer shall assume and pay, discharge
and perform the rights, obligations and liabilities of Seller under the Contracts arising on or after
the Closing Date. If any Contract is not assignable or transferable without the consent of any
third party, either by virtue of the provisions thereof or under applicable law, Seller shall use
its commercially reasonable efforts to obtain such consent prior to the Closing Date and shall
notify Buyer when such consent is obtained or if such consent is not so obtained. At the request
of Buyer, Seller shall use its commercially reasonable efforts to obtain any consents requested by
Buyer that were not previously obtained as soon as possible after the Closing Date and thereafter
assign such contracts to Buyer, at which time such contracts shall be Contracts for all purposes.
In addition, until such consents are obtained or for the life of any such contract for which a
consent cannot be

4

 

obtained, Seller shall subcontract to Buyer in writing the completion of any such
contracts at the price specified in each such contract (or an amount of the price specified
prorated by the amount of work completed by Seller, if such Contract is a fixed price contract)
without any additional mark-up and on the same terms and conditions, and Buyer shall be responsible
for the costs and liabilities associated with the performance of any such Contracts and will be
entitled to and shall receive all the revenues from any such Contracts. If subcontracting any such
Contract is not permitted under the Contract, Seller and Buyer will cooperate with one another to
design a reasonable arrangement to give Buyer the benefits of and obligations under such Contract.

5. Pre-Closing Conduct of Business. During the Transition Period:

     (a) Seller shall conduct the Business in the ordinary course, except that (i) Seller shall be
entitled to exercise its rights and perform its obligations hereunder, in accordance herewith; (ii)
Seller shall consult with Buyer with respect to the allocation of Employees to projects and other
tasks; (iii) Seller shall obtain Buyer’s written approval prior to entering into any new contracts
for the performance of aircraft maintenance or disassembly services at the Leased Premises or to
amending any Contracts; and (iv) Seller shall obtain Buyer’s written approval prior to engaging any
subcontractor to perform aircraft maintenance or disassembly services at the Leased Premises. In
the event that Seller makes any expenditures during the Transition Period that are not specifically
listed on Schedule 7 as a component of the Transition Period Loss, Buyer and Seller shall
include such expenditure in the calculation of the Transition Period Loss if such expenditure was
made in the ordinary course of the Business and falls within the categories of expenses included in
the Transition Period Loss calculation; provided, however, that Buyer may dispute, by written
notification to Seller, that any such expenditure falls within the requirements of this Section
5(a) and thereafter Buyer and Seller shall negotiate in good faith to resolve the dispute.
Anything herein to the contrary notwithstanding, any expenditure of Seller not specifically listed
on Schedule 7 and not otherwise qualifying for inclusion in the Transition Period Loss
calculation shall be solely for Seller’s account.

     (b) Seller shall account for its revenues, expenses, gains and losses in accordance with past
practice and generally-accepted accounting practices, consistently applied.

     (c) Buyer and Seller shall cooperate with each other to (i) achieve a smooth transition of the
Business from Seller to Buyer, (ii) maximize satisfaction of Seller’s customers, (iii) minimize any
liability Seller may have with respect to the termination of its operations in Goodyear, Arizona,
(iv) minimize any Transition Period Losses, (v) minimize any taxes resulting from the transactions
contemplated hereunder, and (vi) transfer Seller’s FAA Part 145 Repair Station Certificate to
Buyer.

6. Taxes. All ad valorem taxes on the Purchased Assets for the 2006 calendar year shall be
prorated per diem on a calendar-year basis up to the Closing Date. If the amount of any such taxes
is not known as of the Closing Date, such pro ration shall be based on the tax bills for the 2005
calendar year, and at either party’s request, the other party shall remit any additional amount due
with respect to their pro rata share of such taxes when the actual amounts for 2006 are known.
Prior to the Closing Date, Seller shall pay all ad valorem and other taxes levied with respect to the Purchased Assets or the Business for all periods
prior to 2006 and all unpaid assessments levied with respect to the Purchased Assets or the
Business prior to the Closing Date. The Buyer shall pay all sales taxes due of as a result of
the transactions contemplated hereunder; provided, however, that Seller and Buyer shall give
reasonable assistance to the other to document any tax exemptions or other benefits available. If
available, at Closing Seller will provide Buyer with a certificate from the Arizona Department of
Revenue and local taxing authority showing that there are no outstanding sales taxes (use and
personal property), interest or penalties due.

7. Seller’s Representations and Warranties. Seller represents and warrants to Buyer as
follows:

5

 

     (a) Seller is a corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and is duly qualified and in good standing to do business
as a foreign corporation in each jurisdiction in which the operation of the Business makes such
qualification necessary. Seller has the full power and authority to own and operate the Purchased
Assets and carry on the Business as such operations are now being conducted.

     (b) The issued and outstanding capital stock of Seller is owned entirely by TIMCO Aviation
Services, Inc., a Delaware corporation, and no other Person owns or controls any other interest in
Seller.

     (c) Seller has the full corporate power, authority and capacity to enter into and perform its
obligations under this Agreement and to consummate the transactions contemplated herein. The
execution, delivery and performance by Seller of this Agreement and the consummation of the
transactions contemplated herein have been duly and validly authorized and approved by all
requisite shareholder, corporate and other action on the part of Seller. This Agreement and all
other agreements and documents in to be executed in connection herewith, as of the date hereof,
have been duly and validly executed by Seller and each constitutes the legal, valid and binding
obligation of Seller, enforceable in accordance with its terms, except as enforceability may be
limited by equitable principles or by bankruptcy, fraudulent conveyance or insolvency laws
affecting the enforcement of creditors’ rights generally. All other agreements and documents to be
executed in connection herewith as of the Closing Date shall have been duly and validly executed by
Seller by or prior to the Closing Date, and each shall constitute the legal, valid and binding
obligation of Seller, enforceable in accordance with its terms, except as enforceability may be
limited by equitable principles or by bankruptcy, fraudulent conveyance or insolvency laws
effecting the enforcement of creditors’ rights generally.

     (d) Except as set forth on Schedule 8, attached hereto and incorporated herein by
reference, there is no requirement applicable to Seller to make any filing with, or to obtain any
permit, authorization, consent or approval of any Governmental Authority or any other Person
pursuant to applicable law, any contract or agreement, or otherwise, as a condition to the lawful
consummation by the Seller of the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Seller will not (a) conflict with any provision of the articles of
incorporation or bylaws of Seller, (b) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, agreement, lease or other instrument or obligation relating to the
Business and to which the Seller is a party or to which any of the Purchased Assets or Business may
be subject, (c) result in the creation of any lien or encumbrance on any of the Purchased Assets
pursuant to any indenture, mortgage, deed of trust, lease, note or other agreement or instrument to
which Seller is a party, or (d) violate any law, statute, rule, regulation, order, writ, injunction
or decree of any Governmental Authority that is applicable to Seller, the Business or any of the
Purchased Assets.

     (e) Seller owns and has good and valid title to all tangible personal property that is
included in the Purchased Assets and, at the Closing, shall convey to Buyer such good and valid
title, free and clear of all liens and encumbrances.

     (f) Schedule 1 identifies each Contract which requires consent of a third party prior
to Seller’s assignment to Buyer. Each Contract is valid, binding, in full force and effect and
enforceable by Seller and each other party thereto. The execution and delivery of this Agreement
by Seller and the performance of this Agreement by Seller will not relieve any other party to any
Contract from its obligations or enable it to terminate any such Contract; provided that consents
to assignment are obtained under those Contracts that require consent to assignment. Seller is not
nor will Seller, as a result of the sale of the Business contemplated hereby, be in default under
any of the Contracts; provided that consents to assignment are obtained under those Contracts that
require consent to assignment. No threat or claim of default under any of the Contracts has been
made and Seller has no Knowledge of anything that could reasonably be expected to result in a claim
of default. To the Knowledge of Seller, no other party to any of the Contracts is in material
breach,

6

 

violation or default thereof.

     (g) There are no legal, administrative, arbitration or other proceedings pending or, to the
Knowledge of Seller, threatened against or relating to the Business or the Purchased Assets, nor
any governmental investigation pending in connection with the operation of the Business or seeking
to enjoin the transactions contemplated herein.

     (h) Seller has no knowledge of any unreported act, condition or Release of a Regulated
Substance occurring on the Leased Premises during the Seller’s period of occupancy of the Leased
Premises which did constitute or may have constituted a violation of any Environmental Law.

     (i) EXCEPT AS EXPRESSLY SET FORTH IN SECTIONS 7(a) – (h), SELLER IS SELLING AND BUYER
IS PURCHASING THE PURCHASED ASSETS AS IS, WHERE IS, AND WITH ALL FAULTS AND BUYER
SPECIFICALLY WAIVES, RELEASES AND DISCHARGES SELLER FROM AND SELLER SPECIFICALLY EXCLUDES ANY AND
ALL OTHER WARRANTIES, REPRESENTATIONS OR GUARANTEES, EXPRESS OR IMPLIED, OF ANY KIND, NATURE OR
TYPE WHATSOEVER, INCLUDING, WITHOUT LIMITATION:

	 	(i)	 	ANY WARRANTIES OR REPRESENTATIONS, EXPRESS, IMPLIED OR ARISING
BY OPERATION OF LAW, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF CONDITION,
MERCHANTABILITY, HABITABILITY, OR FITNESS FOR A PARTICULAR PURPOSE, OR WITH
RESPECT TO THE VALUE, PROFITABILITY, OR MARKETABILITY OF THE BUSINESS OR ANY
OF THE PURCHASED ASSETS;
	 
	 	(ii)	 	ANY WARRANTY OR REPRESENTATION WITH RESPECT TO COMPLIANCE WITH
ANY ENVIRONMENTAL LAWS, LAND USE LAWS, RULES, REGULATIONS, ORDERS, OR
REQUIREMENTS, INCLUDING, WITHOUT LIMITATION, THOSE PERTAINING TO THE HANDLING,
GENERATING, TREATING, STORING, OR DISPOSING OF ANY HAZARDOUS SUBSTANCE;

     (j) Buyer has had and will have, pursuant to this Agreement, an adequate opportunity to make
such legal, factual, and other inquiries and investigations as it deems necessary, desirable, or
appropriate with respect to the assets, liabilities and Business of Seller. BUYER EXPRESSLY
ACKNOWLEDGES THAT IT IS SPECIFICALLY RELYING UPON SUCH INSPECTIONS AND INVESTIGATIONS IN MAKING ITS
DETERMINATION TO ACQUIRE THE PURCHASED ASSETS OF SELLER. Buyer further acknowledges that it is
relying upon the conclusions and advice of its own experts, consultants, and professionals in
evaluating the feasibility and desirability of the Purchased Assets for Buyer’s use, and that the availability of the rights to investigate and
inspect the Purchased Assets, and Buyer’s corresponding reliance upon the results of such
investigations and inspections, were a material factor in the determination of the Purchase Price.
Such inquiries and investigations of Buyer shall be deemed to include, but shall not be limited to,
any leases and contracts pertaining to the Purchased Assets, the physical components of all
portions of the Purchased Assets, the condition of the Purchased Assets. Nothing in this paragraph
shall be deemed to limit the representations and warranties given by Seller in this Section 7;

     (k) Buyer acknowledges and agrees that any manual of operation or procedures which it prepared
in connection with its change of control application with respect to the Part 145 Repair Station
Certificate currently held by Seller is the sole responsibility of Buyer, notwithstanding that
Buyer may have reviewed similar manuals maintained by Seller. Seller shall have no responsibility
for any such manuals, the contents thereof, or Buyer’s reliance on existing manuals of Seller, and
Buyer shall indemnify and hold harmless Seller and its Affiliates from any and all claims that may
hereafter be made based upon such

7

 

manuals. Buyer shall not be entitled to rely upon the contents
of Seller’s manuals with respect to any similar manuals prepared by Buyer.

8. Representations and Warranties of Buyer. Buyer represents and warrants to the Seller as
follows:

     (a) Buyer is a Delaware corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has the requisite power and authority to
own, lease and operate its properties and to carry on its business as now being conducted.

     (b) Buyer has the full corporate power, authority and legal right to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of Buyer and no other proceedings
on the part of Buyer are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and delivered by Buyer and
constitutes the legal, valid and binding agreement of Buyer enforceable against Buyer in accordance
with its terms, except as enforcement may be limited by equitable remedies or by applicable
bankruptcy, insolvency, fraudulent conveyance and similar laws affecting the rights of credits
generally.

     (c) Except as set forth on Schedule 9, there is no requirement applicable to Buyer to
make any filing with, or to obtain any permit, authorization, consent or approval of, any
Governmental Authority or any other Person pursuant to applicable law, any contract or agreement,
or otherwise, as a condition to the lawful consummation by Buyer of the transactions contemplated
hereby, other than the filings, if any, required under the HSR Act and the expiration of the
waiting period thereunder. The execution and delivery of this Agreement by Buyer and the
performance of this Agreement by Buyer will not: (a) conflict with or result in any breach of any
provision of the articles of incorporation or bylaws of Buyer; (b) result in a default (or give
rise to any right of termination, cancellation or acceleration) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, agreement, lease or other instrument or
obligation to which Buyer is a party or by which any of their respective assets may be bound; or
(c) violate any law, statute, rule, regulation, order, writ, injunction or decree of any federal,
state or local Governmental Authority or agency that is applicable to Buyer.

     (d) There are no legal, administrative, arbitration or other proceedings or governmental
investigations pending or, to the knowledge of Buyer, threatened against Buyer seeking to enjoin
the transactions contemplated hereby.

9. Survival of Representations and Warranties. All representations, warranties, covenants
and agreements made by Seller or Buyer in this Agreement or in any Transaction Document shall survive
the Closing for a period of four (4) years. All claims made by virtue of such representations,
warranties, covenants and agreements shall be made in accordance with Section 18(h).

10. Confidentiality. Each of Buyer and Seller: (i) will hold, and will use its best
efforts to cause its officers, directors, employees, lenders, accountants, representatives, agents,
consultants and advisors to hold, in strict confidence all information (other than such information
as may be publicly available) furnished to the other in connection with the transactions
contemplated by this Agreement (collectively, the “Information”); and (ii) will not, without the
prior written consent of the other, release or disclose any Information to any other Person, except
to its officers, directors, employees, lenders, attorneys, accountants, representatives, agents,
consultants and advisors who need to know the Information in connection with the consummation of
the transactions contemplated by this Agreement, who are informed by it of the confidential nature
of the Information, and who agree to be bound by the terms and conditions of this Section
10. In the event that a party that receives Information or any Person to whom such party
transmits the Information pursuant to this Agreement becomes compelled by any court, tribunal,
authority, regulatory body or stock exchange to

8

 

disclose any of the Information, such party will
provide the other with prompt notice so that the other may seek a protective order or other
appropriate remedy or waive compliance with the provisions of this Section 10, or both. If
the transactions contemplated by this Agreement are not consummated, the Information will be
returned to the owner immediately upon its request therefor.

11. Employees and Employee Benefits.

     (a) Buyer shall offer Selected Employees employment to commence on the Closing Date at
comparable salary, wages and benefits as those provided by Seller on the date hereof and shall
continuously employ Selected Employees on those terms for at least ninety (90) days thereafter (the
“Employment Period”).

     (b) During the Employment Period, Buyer shall maintain medical plans that provide to Selected
Employees a level of benefits no less favorable than those offered to Buyer’s other employees
working in a similar capacity at a cost to Selected Employees not materially greater than the cost
of the plans provided by Seller. In order to assist Buyer in meeting the requirements of this
Section 11(b), at Closing, Seller shall elect and Buyer shall reimburse Seller for COBRA
coverage for Selected Employees under Seller’s health plan for up to sixty (60) days after the
Closing. Buyer shall collect from Selected Employees, through wage withholding, the premium that
Seller collected from Selected Employees prior to the Closing Date and shall remit such premiums,
along with the remaining cost of such COBRA coverage to Seller within five (5) days after each
payroll date. Within five (5) days (or any longer period that may be required by applicable law)
after Buyer’s procurement of health insurance coverage for the Selected Employees, Seller shall
terminate its payment of the COBRA premiums. Anything herein to the contrary notwithstanding,
Buyer shall use its best efforts to obtain the above-described health plan for Selected Employees
as soon as possible after the Closing Date.

12. Publicity. Buyer and Seller shall negotiate in good faith as to the text, form,
content, and timing of any news release or other public announcement or disclosure concerning or
relating to the transactions contemplated hereby prior to its release for publication, and no such
release, announcement or disclosure shall be made without the other’s consent, subject to
compliance with all applicable laws, rules and regulations.

13. Letters to Customers and Vendors. Immediately following the Closing, Seller and Buyer
shall prepare and send a letter to the customers and vendors of Seller advising them that certain
of the assets of the Business have been sold to Buyer, that the accounts receivables and accounts
payable of Seller have been retained by Seller and of such other matters as Seller and Buyer agree upon.

14. Assistance with Accounts Receivable. Buyer, at no cost to Seller and at Seller’s
request, shall assist Seller in collecting accounts receivable of Seller with respect to the
Business. The primary responsibility for the collection of such receivables shall be with Seller;
however, if payments on receivables are sent to Buyer, it shall promptly account to Seller for such
receivables. If requested by Seller, Buyer shall cooperate with Seller in assisting in the
collection of such receivables.

15. Conditions Precedent to Closing.

     (a) Seller’s Conditions. The following are conditions precedent to Seller’s
obligation to perform in accordance with Section 3(a) above, the satisfaction of which may
be waived by Seller in writing:

	 	(i)	 	Buyer shall have delivered to Seller the Cash Payment.
	 
	 	(ii)	 	Neither party shall be subject, on the Closing Date, to any
order, decree or injunction of a court of competent jurisdiction that enjoins
or prohibits the

9

 

	 	 	 	consummation of this Agreement or the transactions
contemplated hereby, nor shall there be pending a suit or proceeding by any
Governmental Authority that seeks injunctive or other relief in connection with
this Agreement or the transactions contemplated hereby.
	 
	 	(iii)	 	All representations and warranties of Buyer contained in the
Transaction Documents shall be true and correct in all material respects as of
the Closing Date as though made as of such date (except as otherwise
contemplated by this Agreement). Buyer shall have performed and complied in
all material respects with all covenants and agreements contained in this
Agreement required to be performed and complied with by it at or prior to the
Closing Date. The Seller shall have received a certificate to the matters set
forth in this subparagraph signed on behalf of Buyer by its Chief Executive
Officer.
	 
	 	(iv)	 	All documents required to have been executed and/or delivered
by Buyer to the Seller, and all actions required to have been taken by Buyer,
at or prior to the Closing Date, shall have been delivered or taken.
	 
	 	(v)	 	Seller shall have received from Buyer copies, certified by its
Secretary or an Assistant Secretary, of resolutions of Buyer’s board of
directors authorizing the execution, delivery and performance of this Agreement
and all instruments and documents to be delivered in connection herewith and
the transactions contemplated hereby.

     (b) Buyer’s Conditions. The following are conditions precedent to Buyer’s obligation
to perform in accordance with Section 3(a) above, the satisfaction of which may be waived
by Buyer in writing:

	 	(i)	 	Seller shall have performed and provided to Buyer the results
of an internal audit of the Business’ FAA compliance and corrected any
deficiencies to Buyer’s reasonable satisfaction.
	 
	 	(ii)	 	All Excluded Assets, other than Consigned Inventory, shall have
been removed from the Leased Premises at Seller’s sole expense and Seller shall have
foreclosed upon any abandoned aircraft located at the Leased Premises;
provided, however, that Buyer may notify Seller at any time prior to Closing
that Buyer desires that Seller remove from the Leased Premises any tangible
personal property not listed on Schedule 3 or 4, and Seller shall remove
such personal property at Seller’s expense within fourteen (14) days after
such notification.
	 
	 	(iii)	 	Neither party shall be subject, on the Closing Date, to any
order, decree or injunction of a court of competent jurisdiction that enjoins
or prohibits the consummation of this Agreement or the transactions
contemplated hereby, nor shall there be pending a suit or proceeding by any
Governmental Authority that seeks injunctive or other relief in connection with
this Agreement or the transactions contemplated hereby.
	 
	 	(iv)	 	All representations and warranties of Seller contained in the
Transaction Documents shall be true and correct as of the Closing Date as
though made as of such date (except as otherwise contemplated by this
Agreement). Seller shall have performed and complied in all material respects
with all covenants and agreements contained in this Agreement required to be
performed and complied with by it at or prior to the Closing Date. Buyer shall
have received a certificate to the matters set forth in this subparagraph
signed by the Chief Executive Officer of Seller.

10

 

	 	(v)	 	All documents required to have been delivered by Seller to
Buyer, and all actions required to have been taken by Seller, at or prior to
the Closing Date, shall have been delivered or taken.
	 
	 	(vi)	 	Buyer shall have received from Seller copies, certified by its
Secretary or an Assistant Secretary, of resolutions adopted on behalf of Seller
authorizing the execution, delivery and performance of this Agreement and all
instruments and documents to be delivered in connection herewith and the
transactions contemplated hereby.
	 
	 	(vii)	 	Buyer shall have received such other documents, opinions and
certificates that it has reasonably requested in connection with the conveyance
of the Purchased Assets and the consummation of the other transactions
contemplated hereby.
	 
	 	(viii)	 	Buyer shall have received reasonably satisfactory evidence that Seller’s
senior lenders have consented to Seller’s sale of the Purchased Assets and have
released any and all liens on or other security interests in the Purchased
Assets.

16. Indemnifications.

     (a) Subject to the conditions below, Seller shall indemnify and hold harmless Buyer and its
shareholders, officers, directors and employees from and against and in respect of any and all
damages, losses, diminution of value, or expenses suffered or incurred by any such party (whether
as a result of third party or other claims (whether valid or not), demands, suits, causes of
action, proceedings, investigations, judgments or liabilities or otherwise), including costs of
investigation and defense and reasonable attorneys’ fees (“Claims”) assessed, incurred or sustained
by or against any of them with respect to or arising out of (i) any breach of the representations
or warranties of Seller set forth herein or in any Transaction Document, (ii) any Excluded Liabilities, and (iii) any breach or other
failure to perform any covenant, agreement or obligation of the Seller set forth herein or in any
Transaction Document if such breach or other failure is not cured within any applicable cure
period, provided, however, Seller shall not be obligated to indemnify or hold harmless Buyer to the
extent the claim giving rise to such obligation is caused or occasioned by the negligence of Buyer
or by Buyer’s breach of this Agreement.

     (b) Subject to the conditions below, Buyer shall indemnify and hold harmless Seller and its
shareholders, officers, directors and employees, against and in respect of any and all Claims
assessed or incurred or sustained by or against any of them, with respect to or arising out of (i)
any breach of the representations or warranties of the Buyer set forth herein or in any Transaction
Document; (ii) any breach or other failure to perform any covenant, agreement or obligation of the
Buyer set forth herein or in any Transaction Document, (iii) any of the Assumed Liabilities; and
(iv) any liability for the violation any Environmental Law or Release of Hazardous Substances on
the Leased Premises on or after the Closing Date, provided, however, Buyer shall not be obligated
to indemnify or hold harmless Seller to the extent the claim giving rise to such obligation is
caused or occasioned by the negligence of Seller or by the Sellers’ breach of the Agreement.

     (c) If any Person shall claim indemnification hereunder arising from any claim or demand of a
third party, the party seeking indemnification (the “Indemnified Party”) shall promptly notify the
party or parties from whom indemnification is sought (the “Indemnifying Party”) in writing of the
basis for such claim or demand setting forth the nature of the claim or demand in reasonable
detail. The failure of the Indemnified Party to so notify the Indemnifying Party shall not relieve
the Indemnifying Party of any indemnification obligation hereunder except to the extent the
Indemnifying Party demonstrates that the defense of such claim or demand is materially prejudiced
by the failure to give such notice.

11

 

     (d) If any legal proceeding or action is brought by a third party against an Indemnified Party
and the Indemnified Party gives notice to the Indemnifying Party pursuant to Section 16(c)
above, the Indemnifying Party will be entitled to participate in such proceeding and, to the
extent that it wishes, to assume the defense of such proceeding if (i) the Indemnifying Party
provides written notice to the Indemnified Party that the Indemnifying Party intends to undertake
such defense and the Indemnifying Party will indemnify the Indemnified Party against all claims for
indemnification resulting from or relating to such third party claim, (ii) the Indemnifying Party
provides to the Indemnified Party evidence acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the third party claim and to
fulfill its indemnification obligations hereunder, (iii) the Indemnifying Party conducts the
defense of the third party claim actively and diligently with counsel reasonably satisfactory to
the Indemnified Party, and (iv) if the Indemnifying Party is a party to the proceeding, joint
representation would not be inappropriate. The Indemnified Party shall, in its sole discretion,
have the right to employ separate additional counsel (who may be selected by the Indemnified Party
in its sole discretion) in any such action and to participate in the defense thereof, and the fees
and expenses of such additional counsel shall be paid by such Indemnified Party. The Indemnified
Party shall fully cooperate with the Indemnifying Party and its counsel in the defense or
compromise of such claim or demand, provided that all out-of-pocket expenses incurred by
Indemnified Party shall be paid by the Indemnifying Party (except as aforesaid).

     (e) If the Indemnifying Party assumes the defense of a proceeding, (i) no compromise or
settlement of such claims may be effected by the Indemnifying Party without the Indemnified Party’s
consent unless (A) there is no finding or admission of any violation of law or any violation of the
rights of any Person and no effect on any other claims that may be made against the Indemnified
Party, and (B) the sole relief provided is monetary damages that are paid in full by the
Indemnifying Party; and (ii) the Indemnified Party will have no liability with respect to any
compromise or settlement of such claims effected without its consent. Should one or more but not all of the Indemnifying Parties
agree to defend any such third party claim, the Indemnifying Party or parties not participating in
the defense of the claim shall be bound by the acts and agreements of the other or others.

     (f) If (i) notice is given to the Indemnifying Party of the commencement of any proceeding and
the Indemnifying Party does not, within ten (10) days after the Indemnified Party’s notice is
given, give notice to the Indemnified Party of its election to assume the defense of such
proceeding, (ii) any of the conditions set forth in clauses (i)-(iv) of Section 16(d) above
become unsatisfied, or (iii) an Indemnified Party determines in good faith that there is a
reasonable probability that a proceeding may adversely affect it other than as a result of monetary
damages for which it would be entitled to indemnification under this Agreement, the Indemnified
Party will (upon further notice to the Indemnifying Party) have the right to undertake the defense,
compromise or settlement of such claim, provided that the Indemnifying Party will reimburse the
Indemnified Party promptly and periodically for the costs of defending against the third party
claim (including reasonable attorneys’ fees and expenses) and the Indemnifying Party will remain
responsible for any indemnifiable amounts arising from or related to such third party claim to the
fullest extent provided in this Section 16. The Indemnifying Party may elect to
participate in such proceedings, negotiations or defense at any time at its own expense.

     (g) If any party shall claim indemnification hereunder for any claim other than third party
claims, the Indemnified Party shall promptly notify the Indemnifying Party in writing of the basis
for such claim setting forth the nature and amount of the damages resulting from such claim. The
Indemnifying Party shall give written notice of any disagreement with such claim within fifteen
(15) days following receipt of Indemnified Party’s notice of the claim, specifying in reasonable
detail the nature and extent of such disagreement.

     (h) Interest. Interest shall accrue on the unpaid amount of all indemnification obligations
actually paid by the Indemnified Party hereunder at the Prime Rate, such interest to be calculated
based on

12

 

the actual number of days elapsed from the date each indemnification obligation becomes
due and owing until paid in full and based on a 365-day year. For the purposes of this Agreement,
“Prime Rate” shall mean the per annum interest rate publicly announced from time to time by
The Wall Street Journal as its prime rate of interest.

     (i) Consequential and Other Damages. EXCEPT AS OTHERWISE SET FORTH HEREIN, NEITHER
PARTY SHALL BE LIABLE TO THE OTHER, FOR SPECIAL, INCIDENTAL, RESULTANT, CONSEQUENTIAL OR EXEMPLARY
DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, CLAIMS FOR LOST REVENUES, LOST PROFITS AND/OR
LOSS OF PROSPECTIVE ECONOMIC ADVANTAGE, RESULTING FROM ANY PERFORMANCE OR FAILURE TO PERFORM OR
OTHERWISE ARISING UNDER THIS AGREEMENT.

17. Termination. This Agreement may be terminated:

     (a) At any time by mutual consent of Seller and Buyer;

     (b) By either Buyer or Seller if the Closing hereunder has not taken place on or before August
11, 2006;

     (c) By Seller if all the conditions in Section 15(a) have not been satisfied or waived
by the Closing Date;

     (d) By Buyer if all the conditions set forth in Section 15(b) have not been satisfied
or waived by the Closing Date;

In the event of termination of this Agreement by either Seller or Buyer in accordance herewith and
abandonment of the transactions contemplated here pursuant to this Section, prompt written notice
thereof shall be given to the other parties, and this Agreement shall terminate and the
transactions contemplated hereby shall be abandoned, without further action by any of the parties
hereto. If this Agreement is terminated as provided herein:

	 	(i)	 	None of the parties hereto nor any of their partners,
directors, officers, shareholders, employees, agents, or Affiliates shall have
any liability or further obligation to the other parties or any of their
partners, directors, officers, shareholders, employees, agents, or Affiliates
pursuant to this Agreement with respect to which termination has occurred;
provided, however, that if such termination was the result of any party’s
breach of any representation, warranty, covenant or other provision of this
Agreement, or an act or omission that resulted in the breach of any
representation, warranty, covenant or other provision of this Agreement, the
other party may seek any remedy at law or in equity to which they may be
entitled for the violation or breach of this Agreement against the party who
breached such representation, warranty or other provision; and
	 
	 	(ii)	 	The parties hereto shall continue to be bound by the provisions
of Sections 10, 12, 16, 17, 18(b) and 18(h).

18. Miscellaneous Provisions.

     (a) Each of Seller and Buyer represent and warrant to the other that no broker, finder or
other Person is entitled to any brokerage fees, commissions or finder’s fees in connection with the
transactions contemplated hereby by reason of any action taken by the party making such
representation

13

 

     (b) Except as otherwise provided herein, all costs and expenses incurred in connection with
this Agreement, the other Transaction Documents and the transactions contemplated hereby and
thereby will be paid by the party incurring such costs and expenses.

     (c) Subject to the terms and conditions of this Agreement, each of the parties hereto will use
all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done,
all things necessary, proper or advisable under applicable laws and regulations to consummate and
make effective the sale of the Purchased Assets pursuant to this Agreement. From time to time
after the Closing Date, without further consideration, Seller will execute and deliver such
documents to Buyer as Buyer may reasonably request in order to more effectively vest in Buyer good
title to the Purchased Assets. From time to time after the Closing Date, without further
consideration, Buyer will execute and deliver such documents to Seller as they may reasonably
request in order to consummate the sale of the Purchased Assets pursuant to this Agreement.

     (d) This Agreement may not be amended, modified or supplemented except by written agreement
executed by Seller and Buyer.

     (e) Except as otherwise provided in this Agreement, any failure of any of the parties to
comply with any obligation, representation, warranty, covenant, agreement or condition herein may
be waived by the party entitled to the benefits thereof only by a written instrument signed by the
party granting such waiver, but such waiver or failure to insist upon strict compliance with such
obligation, representation, warranty, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits
consent by or on behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in this Section
18(e).

     (f) All notices and other communications hereunder shall be in writing and shall be deemed
given when delivered by hand or by facsimile transmission or mailed by registered or certified mail
(return receipt requested), postage prepaid, to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice; provided that notices of a change
of address shall be effective only upon receipt thereof):

	 	 	 	 	 
	 

	 	(i)
	 	If to Seller, to:
	 
	 	 	 	 
	 

	 	 	 	Triad International Maintenance Corporation
	 

	 	 	 	623 Radar Road
	 

	 	 	 	Greensboro, North Carolina 27410
	 

	 	 	 	Facsimile: (336) 665-9508
	 

	 	 	 	Attention: Chief Executive Officer
	 
	 	 	 	 
	 

	 	 	 	With a copy to:
	 
	 	 	 	 
	 

	 	 	 	TIMCO Aviation Services, Inc.
	 

	 	 	 	623 Radar Road
	 

	 	 	 	Greensboro, North Carolina
	 

	 	 	 	Facsimile: (336) 665-9014
	 

	 	 	 	Attention: Chief Legal Officer
	 
	 	 	 	 
	 

	 	(ii)
	 	If to Buyer, to:
	 
	 	 	 	 
	 

	 	 	 	AeroTurbine, Inc.

14

 

	 	 	 	 	 
	 

	 	 	 	2323 N.W. 82nd Ave.
	 

	 	 	 	Miami, Florida 33122-1522
	 

	 	 	 	Facsimile: (305) 590-2695
	 

	 	 	 	Attention: Nicolas Finazzo

     (g) This Agreement and all of the provisions hereof shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted assigns. This
Agreement and the rights, interests or obligations hereunder, may be assigned in whole or in part
by Buyer to any person or entity without the prior written consent of Seller, provided, that, such
assignment shall not relieve Buyer of its obligations hereunder. All agreements, covenants,
representations, warranties and other terms and provisions of this Agreement shall inure to the
benefit of and be enforceable by any such assignee. Seller shall not have the right to assign this
Agreement in whole or in part.

     (h) The execution, interpretation and performance of this Agreement shall be governed by the
internal laws and judicial decisions of the State of New York, without regard to its
conflicts-of-laws principles. SELLER AND BUYER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER
TRANSACTION DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW, STATUTORY, LEGAL OR EQUITABLE
CLAIMS. SELLER AND BUYER REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

     (i) 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.

     (j) The article and section headings contained in this Agreement are solely for the purpose of
reference, are not part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement.

     (k) This Agreement, including the Schedules and Exhibits hereto and the other Transaction
Documents delivered pursuant to this Agreement, embody the entire agreement and understanding of
the parties hereto in respect of the subject matter hereof. The Schedules, Exhibits and the other
Transaction Documents are an integral part of this Agreement and are incorporated by reference
herein. Each party hereto acknowledges to the other that it has not made any, and makes no,
promises, representations, warranties, covenants or undertakings, other than those expressly set
forth herein. This Agreement supersedes all prior agreements and understandings between the
parties with respect to the transactions contemplated by this Agreement.

     (l) Buyer waives compliance by Seller with respect to any bulk sales or other transfer laws
applicable to the transactions contemplated hereunder. Seller shall indemnify and hold Buyer
harmless from and against any and all losses, claims, costs, charges, and expenses arising out of
or resulting from noncompliance by Seller or Buyer with respect to any bulk sales laws or transfer
laws applicable to the transactions contemplated hereunder.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

15

 

     IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by its
duly authorized officer as of the date first set forth above.

	 	 	 	 	 
	 	TRIAD INTERNATIONAL MAINTENANCE CORPORATION

 	 
	 	By:  	/s/
Kevin Carter 	 
	 	 	Kevin Carter 	 
	 	 	Senior Vice President, Finance 	 
	 

	 	 	 	 	 
	 	AEROTURBINE, INC.

 	 
	 	By  	/s/
Nicolas Finazzo 	 
	 	 	Nicolas Finazzo 	 
	 	 	Chief Executive Officer 	 

16

 

	 	 	 	 	 

EXHIBITS

A      Assignment and Assumption Agreement

B      Bill of Sale

C      Consignment Agreement

D      Services Agreement

SCHEDULES

1      Contracts to be assigned

2      Employees for purposes of Transition Period Loss calculation

3      Equipment to be sold

4      Excluded personal property

5      Forms, manuals to be sold

6      Selected Employees

7      Transition Period Loss calculation

8      Seller filing requirements

9      Buyer filing requirements

17

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