Document:

EX-10.03

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) is entered into this
28th day of October, 2004, effective as of November 1, 2004 (“Effective Date”) by and
between TIMCO AVIATION SERVICES, INC. (“TIMCO”), a Delaware corporation, and JACK M. AREHART (the
“Employee”).

RECITALS

TIMCO current employs Employee pursuant to that certain Employment Agreement dated February 11,
2001 (the “Old Agreement”);

TIMCO wishes to amend and restate the Old Agreement and to employ the Employee on the terms and
conditions set forth in this Agreement.

In consideration of the mutual representations, warranties, covenants and agreements contained in
this Agreement, the parties hereto agree as follows:

     1. Agreement to Supercede Old Agreement. This Agreement shall supercede the Old
Agreement, which shall be of no further force and effect.

     2. Employment.

A. Employment. TIMCO agrees to employ the Employee as Senior Vice President of
Business Development. Employee agrees to accept such employment and serve in such position, on the
terms and subject to the conditions of this Agreement.

B. Employment Period. The period during which the Employee shall serve as an employee
of TIMCO under this Agreement shall commence on the Effective Date, and unless earlier terminated
pursuant to this Agreement or extended through agreement of the parties, shall expire on December
31, 2007 (the period for which the Employee is an employee of TIMCO is hereinafter referred to as
the “Employment Period”).

C. Duties and Responsibilities. During the Employment Period, the Employee shall have
such authority and responsibility and perform such duties as may be assigned to him from time to
time at the direction of the Chief Operating Officer of TIMCO, and in the absence of such
assignment, such duties customary to Employee’s office as are necessary to the business and
operations of TIMCO and its affiliates. During the Employment Period, the Employee’s employment
shall be full time and the Employee shall perform his duties honestly, diligently, competently, in
good faith and in the best interests of TIMCO and shall use his best efforts to promote the
interests of TIMCO and shall refer to TIMCO opportunities in the aerospace industry that have been
referred to Employee.

 

 

     3. Compensation and Benefits.

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 of
$325,000 (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.

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 Base Salary. The Bonus shall be based on
the achievement of corporate goals and objectives as established by the Committee after
consultation with the management of TIMCO. The achievement of said goals and objectives shall be
determined by the Committee. With respect to any Fiscal Year during which the Employee is employed
by TIMCO for less than the entire Fiscal Year, the Bonus shall be prorated for the period during
which the Employee was so employed. The Bonus shall be payable within thirty (30) days after the
completion of the audited financial statements for the particular Fiscal Year as to which the Bonus
relates. 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. Retention Bonus. In consideration for Employee entering into the Agreement, and in
addition to the other compensation and benefits payable hereunder, Employee shall receive a
retention bonus (the “Retention Bonus”) in the amount of $100,000, $50,000 of which shall be paid
on the Effective Date $50,000 of which shall be paid on the date that is one year after the
Effective Date (so long as Employee has not been terminated for Cause or voluntarily resigned from
his employment with TIMCO at that date). Additionally, and notwithstanding the foregoing, if
Employee voluntarily leaves the employ of TIMCO or is terminated for Cause after the payment of the
second $50,000 retention bonus described above but before the end of the Employment Period,
Employee shall repay TIMCO the second $50,000 payment made hereunder.

D. Equity Compensation Grants. Employee shall be eligible to receive grants of stock
options or other equity incentives at the discretion of the Committee.

E. Other Compensation Programs. The Employee shall be entitled to participate in
TIMCO’s incentive and deferred compensation programs and such other programs as are established and
maintained generally for the benefit of TIMCO’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 TIMCO.

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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 TIMCO’s employees
or executive officers, subject to the provisions of such plans and programs.

H. Country Club Membership. During such period as Employee is employed by TIMCO
hereunder, TIMCO shall provide Employee with a corporate membership to a country club mutually
acceptable to Employee and TIMCO, up to a maximum of annual membership dues of $6,000 ($500 per
month).

I. Annual Executive Physical. TIMCO shall pay all direct costs of Employee’s annual
executive physical at the Mayo Clinic in Rochester, Minnesota.

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

K. 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.
TIMCO 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.

     4. Termination.

A. For Cause. TIMCO 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 conduct that
would constitute under federal or state law either a felony or a misdemeanor involving moral
turpitude, or a determination by TIMCO’s Board of Directors, after consideration of all available
information and following the procedures set forth below, that Employee has willfully violated
TIMCO’s policies or procedures involving discrimination, harassment, alcohol or substance abuse, or
work place violence causing material injury to the Company, (ii) Employee’s actions or omissions
that constitute fraud, dishonesty or gross misconduct, (iii) Employee’s knowing and intentional
breach of any fiduciary duty that causes material injury to TIMCO, and (iv) Employee’s inability to
perform his material duties, after reasonable notice and an opportunity to resolve the issues, due
to alcohol or other substance abuse. 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
TIMCO is relying to terminate the Employee for Cause.

     Upon any determination by TIMCO that Cause exists to terminate the Employee, TIMCO shall cause
a special meeting of its 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 TIMCO intends to terminate the Employee for Cause. Employee
shall have the right to appear before such special meeting of the Board of

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Directors with legal counsel of his choosing to refute such allegations and shall have a
reasonable period of time to cure any actions or omissions which provide TIMCO with a basis to
terminate the Employee for Cause (provided that such cure period shall not exceed 30 days). 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.

B. Without Cause. At any time during the Employment Period, TIMCO shall have the
right to terminate the Employment Period and to discharge the Employee without cause effective upon
delivery of written notice to the Employee. Upon any such termination by TIMCO without Cause, and
provided that Employee is otherwise in compliance with the provisions of Sections 6 and 7 hereof,
the Employee shall be entitled to receive the following: (i) TIMCO shall pay to the Employee all of
the Employee’s accrued but unpaid Salary and vacation pay through the date of termination, (ii)
TIMCO shall continue to pay the Employee his Salary payable in accordance with Section 2(a) for two
(2) years from the date of termination, when and as the same would have been due and payable
hereunder but for such termination, (iii) all health benefits in which Employee was entitled to
participate at any time during the 12-month period prior to the date of termination, until the
earliest to occur of the second anniversary of the date of termination, the Employee’s death, or
the date on which the Employee becomes covered by a comparable health benefit plan by a subsequent
employer; provided, however, that in the event that Employee’s continued participation in any
health benefit plan of the Company is prohibited, the Company will arrange to provide Employee with
benefits substantially similar to those which Employee would have been entitled to receive under
such plan for such period on a basis which provides Employee with no additional after tax cost,
(iv) all stock option grants, or other stock grants issued during the term of this Agreement, will
immediately vest and such options will remain exercisable for the lesser of the unexpired term of
the option without regard to the termination of Employee’s employment or two (2) years from the
date of termination of employment and (v) all long term incentive cash grants and bonuses provided
to the Employee shall immediately vest as if all targets and conditions had been met and shall be
paid by TIMCO to the Employee at such times as TIMCO would have been required to make such payments
if this Agreement had remained in effect, provided, however, that in the case of incentives
partially or completely contingent on the providing of service for a specific period of time, the
total amount to be paid by TIMCO shall be equal to the maximum amount payable if all conditions
were met, multiplied by a fraction, the numerator of which is the period of service that would have
been served if the Employee’s employment had terminated as of the last day of the fiscal year in
which his employment was terminated, and the denominator of which is the total period of time
specified as a condition to the incentive (collectively, the foregoing consideration payable to the
Employee shall be 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 12 of this Agreement after the date of such termination.

C. Disability. This Agreement may be terminated by TIMCO 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

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disagreement or dispute shall arise between TIMCO 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 TIMCO 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 TIMCO and the Employee. The entire cost of such
examination shall be paid for solely by TIMCO. In the event that TIMCO 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 TIMCO terminates the Employee’s
employment for such Disability, such Disability shall be considered to be a termination by TIMCO
without Cause and the Severance Payments shall be paid to the Employee to the same extent and in
the same manner as provided for in paragraph (c) above, except that payment of the Salary in
accordance with said paragraph shall be mitigated to the extent payments are made to the Employee
pursuant to disability insurance programs maintained by TIMCO.

D. Death. In the event of the death of Employee, the employment of the Employee by
TIMCO shall automatically terminate on the date of the Employee’s death and TIMCO 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 TIMCO shall have no
further obligations to Employee from and after the date of termination.

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

A. Termination Rights. Notwithstanding the provisions of Section 2 and Section 3 of
this Agreement, in the event that there shall occur a Change of Control (as defined below) of TIMCO
and within two years after such Change of Control the Employee’s employment hereunder is terminated
by TIMCO without Cause, or within such two year period the Employee terminates his employment with
the Company for Good Reason, then TIMCO shall be required to pay to the Employee (i) the Severance
Payment provided in Section 4(c), except that such Severance Payment shall be paid in a single lump
sum in full, and (ii) the product of two multiplied by the maximum Bonus that Employee received in
the Fiscal Year prior to the Fiscal Year in which such termination occurs, assuming that all
performance objectives are met, in a single lump sum. The foregoing payments shall be made no
later than 10 days after the Employee’s termination pursuant to this Section 5. To the extent that
payments are owed by TIMCO to the Employee pursuant to this Section 5, they shall be made in lieu
of payments pursuant to Section 4, and in no event shall TIMCO be required to make payments or
provide benefits to the Employee under both Section 4 and Section 5.

B. Change of Control of TIMCO Defined. For purposes of this Section 5, a “Change of
Control of TIMCO” 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 TIMCO, any majority owned subsidiary of TIMCO, any
compensation plan of TIMCO, any majority owned subsidiary of TIMCO or Lacy J. Harber and his
affiliates and/or heirs, becomes the “beneficial

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	 	 	owner” (as such term is defined in Rule 13d 3 of the Exchange Act), directly or
indirectly, of securities of TIMCO representing more than 50% of the combined voting power
of TIMCO; 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 TIMCO, any majority owned subsidiary of TIMCO, any
compensation plan of TIMCO, any majority owned subsidiary of TIMCO 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 TIMCO representing more
than 35% of the combined voting power of TIMCO 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 TIMCO’s voting securities with Lacy J. Harber and his affiliates and/or heirs and
(B) such person or persons own TIMCO securities with more of the combined voting power of
TIMCO than those held by Lacy J. Harber and his affiliates and/or heirs; or
	 
	 	 	          (iii) The shareholders of TIMCO approve (1) a reorganization, merger, or consolidation
with respect to which persons who were the shareholders of TIMCO 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 TIMCO; or
(3) the sale of all or substantially all of the assets of TIMCO or of a subsidiary of TIMCO
that accounts for more than 66 2/3% of the consolidated revenues of TIMCO, but not including
a reorganization, merger or consolidation of TIMCO.

C. Good Reason Defined. For purposes of this Agreement, “Good Reason” shall mean a
termination by Employee of his employment with TIMCO after a Change of Control based upon a
significant demotion or material adverse change in Employee’s duties and responsibilities, unless
such change has previously been agreed to in writing by Employee.

D. Successor to TIMCO. TIMCO shall require any successor, whether direct or indirect,
to all or substantially all of the business, properties and assets of TIMCO 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
TIMCO’s covenants, agreements and obligations set forth in this Agreement (a “Successor
Agreement”). The failure of TIMCO 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
TIMCO.

     6. Restrictive Covenants. In consideration of the foregoing, the Employee agrees that
he shall not:

A. during the Employment Period and for a period of one-year following the termination of the
Employment Period for any reason, directly or indirectly, alone or as a partner,

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joint venture, officer, director, member, employee, consultant, agent, independent contractor
or shareholder of, or lender to, any company or business, engage in any business in the aerospace
industry directly or indirectly in competition with the business of TIMCO or its affiliates (TIMCO
and its affiliates being referred to herein collectively as the “Companies”) as such business now
exists or as it may exist at the time of termination; provided, however, that, the beneficial
ownership of less than five percent (5%) of the shares of stock of any other 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;

B. for a period of one-year following the termination of the Employment Period, directly or
indirectly (i) induce any Person which is a customer of any of the Companies, to patronize any
business in the aerospace industry directly or indirectly in competition with business conducted by
any of the Companies; (ii) canvass, solicit or accept from any Person which is a customer of any of
the Companies, any such competitive business; or (iii) request or advise any Person which is a
customer or supplier of any of the Companies, to withdraw, curtail or cancel any such customer’s or
supplier’s business with any of the Companies, or its or their successors;

C. for a period of one-year following the Employment Period, directly or indirectly employ, or
knowingly permit any TIMCO or business directly or indirectly controlled by him, to employ, any
person who was employed by any of the Companies, at or within the prior three months, or in any
manner seek to induce any such person to leave his or her employment;

D. at any time following the date hereof, directly or indirectly, in any way outside of his
employment with any of the Companies utilize, disclose, copy, reproduce or retain in his possession
any of the Companies’ proprietary rights or records, including, but not limited to, any of its
customer lists.

Further, so long as Employee is in compliance with the provisions of Sections 6 and 7 hereof,
Employee shall be entitled to receive each month for the one-year restrictive covenant period
referred to above the amounts that Employee would have received under Section 4(B) of this
Agreement had Employee been terminated without Cause. Notwithstanding the foregoing, if Employee
has been was terminated for “Cause or has voluntarily resigned from his employment with TIMCO, this
restrictive covenant and the provisions of Section 7 below shall apply notwithstanding the
non-payment of severance hereunder.

     7. Confidentiality. The Employee agrees that at all times during and after the
Employment Period, 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 Companies 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 technical
specifications, any sales, promotional or marketing plans, programs, techniques, practices or
strategies, any expansion plans (including existing entry into new geographic and/or product

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markets), and any customer lists, (ii) use the Confidential Information solely in connection
with his employment with the Companies and for no other purpose, (iii) take all reasonable
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 TIMCO, and
(iv) observe all security policies implemented by the Companies 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 TIMCO with prompt notice of such request or order so that the Companies may seek to
prevent disclosure. In the case of any disclosure, the Employee shall disclose only that portion
of the Confidential Information that he is ordered to disclose.

     8. Acknowledgments of the Parties. 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 Companies. 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 Companies and upon breach of any provision of such Sections, the
Companies shall be entitled to injunctive relief, specific performance or other equitable relief;
provided, however, that, this shall in no way limit any other remedies which the Companies may
have.

     9. Notices. All notices, requests, demands, claims and other communications hereunder
shall be in writing and shall be deemed given on the date delivered if delivered by certified or
registered mail (first class postage pre-paid) or guaranteed overnight delivery and on the date
sent if sent by facsimile transmission if such transmission is confirmed by delivery by certified
or registered mail (first class postage pre-paid) or guaranteed overnight delivery, in each case to
the following addresses and facsimile numbers (or to such other addresses or telecopy numbers which
such party shall designate in writing to the other party): (a) if to TIMCO, at 623 Radar Road,
Greensboro, North Carolina 27410, Attention: Roy T. Rimmer, Jr., Chairman and Chief Executive
Officer (facsimile: 1-336-664-0339), with a copy to Philip B. Schwartz, Esq., One Southeast Third
Avenue, Miami, Florida 33131 (facsimile: 1-305-374-5095); and (b) if to the Employee at the address
and facsimile number listed on the signature page hereto.

     10. Amendment; Waiver. This Agreement may not be modified, amended, supplemented,
canceled or discharged, 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

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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; Guaranty. This Agreement, and the Employee’s
rights and obligations hereunder, may not be assigned or delegated by him. The rights and
obligations of TIMCO under this Agreement shall inure to the benefit of and be binding upon their
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) for the purpose of those procedures to the extent necessary to permit the
remaining provisions to be enforced. The provisions of Sections 6, 7, 11 and 12 will survive the
termination of this Agreement and the Employment Period for any reason.

     13. 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.

     14. 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.

     15. 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.

     16. 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.

     17. 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.

[Signatures on next page]

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SIGNATURE PAGE

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

	 	 	 	 	 
	 

	 	TIMCO AVIATION SERVICES, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Roy T. Rimmer, Jr.
	

	 	 	 	
 
	

	 	 	 	Roy T. Rimmer, Jr.
	

	 	 	 	Chairman and Chief Executive Officer
	 
	 	 	 	 
	

	 	EMPLOYEE:
	 
	 	 	 	 
	

	 	/s/ Jack M. Arehart
	

	 	
 
	

	 	Name: Jack M. Arehart
	 
	 	 	 	 
	

	 	Address for Notices:

10EX-10.04

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of April 1,
2004 (“Effective Date”) by and between TIMCO AVIATION SERVICES, INC. (“TIMCO”), a Delaware
corporation, and Rick Salanitri (the “Employee”).

RECITALS

TIMCO’S subsidiary, Triad International Maintenance Corporation, currently employs Employee
pursuant to that certain Employment Agreement, dated effective as of September 2001 (the “Old
Agreement”);

TIMCO wishes to amend and restate the Old Agreement and to employ the Employee on the terms and
conditions set forth in this Agreement.

In consideration of the mutual representations, warranties, covenants and agreements contained in
this Agreement, the parties hereto agree as follows:

     1. Agreement to Supercede Old Agreement. This Agreement shall supercede the Old
Agreement, which shall be of no further force and effect.

     2. Employment

(a) Employment. TIMCO agrees to employ the Employee as Senior Vice President of
Engineering and Interior Manufacturing. Employee agrees to accept such employment and serve in such
position, on the terms and subject to the conditions of this Agreement.

(b) Employment Period. The period during which the Employee shall serve as an
employee of TIMCO under this Agreement shall commence on the Effective Date, and unless earlier
terminated pursuant to this Agreement or extended through agreement of the parties, shall expire on
March 31, 2007 (the period for which the Employee is an employee of TIMCO is hereinafter referred
to as the “Employment Period”).

(c) Duties and Responsibilities. During the Employment Period, the Employee shall
have such authority and responsibility and perform such duties as may be assigned to him from time
to time at the direction of the Chief Operating Officer of TIMCO, and in the absence of such
assignment, such duties customary to Employee’s office as are necessary to the business and
operations of TIMCO and its affiliates. During the Employment Period, the Employee’s employment
shall be full time and the Employee shall perform his duties honestly, diligently, competently, in
good faith and in the best interests of TIMCO and shall use his best efforts to promote the
interests of TIMCO and shall refer to TIMCO opportunities in the aerospace industry that have been
referred to Employee.

 

 

     3. Compensation and Benefits.

(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 of
$225,000 (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.

(b) Bonus. In addition to the Salary, the Employee shall be eligible to receive an
annual bonus (“Bonus”) equal to 65% of the Employee’s Base Salary. The Bonus shall be based on the
achievement of corporate goals and objectives as established by the Committee after consultation
with the management of TIMCO. The achievement of said goals and objectives shall be determined by
the Committee. With respect to any Fiscal Year during which the Employee is employed by TIMCO for
less than the entire Fiscal Year, the Bonus shall be prorated for the period during which the
Employee was so employed. The Bonus shall be payable within thirty (30) days after the completion
of the financial statements for the particular Fiscal Year as to which the Bonus relates. 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) Retention Bonus. In consideration for Employee entering into the Agreement, and in
addition to the other compensation and benefits payable hereunder, Employee shall receive a
retention bonus (the “Retention Bonus”) in the amount of $37,500, $12,500 of which shall be paid on
the date of the execution of this agreement, $12,500 of which shall be paid on April 1, 2005 (so
long as Employee has not been terminated for Cause or voluntarily resigned from his employment with
TIMCO as of such date), and $12,500 of which shall be paid on April 1, 2006 (so long as Employee
has not been terminated for Cause or voluntarily resigned from his employment with TIMCO as of such
date).

(d) Stock Options. Employee shall be eligible to receive grants of stock options or
other equity incentives at the discretion of the Committee.

(e) Other Compensation Programs. The Employee shall be entitled to participate in
TIMCO’s incentive and deferred compensation programs and such other programs as are established and
maintained generally for the benefit of TIMCO’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 TIMCO.

(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

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programs as are from time to time established and maintained for the benefit of TIMCO’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 TIMCO, pursuant to
the normal standards and guidelines followed from time to time by TIMCO.

(i) Education Expenses. Employee shall be reimbursed for expenses as incurred (tuition
and books) in obtaining a mater’s degree in business administration (or such other degree as is
approved by TIMCO’s Chief Executive Officer), in an amount up to $30,000 per year and $60,000 in
the aggregate. Employee shall provide substantiation with respect to his tuition and books.
Notwithstanding the foregoing, if Employee voluntarily leaves the employ of TIMCO or is terminated
for Cause within two years after receiving his degree (or otherwise completing his studies), he
shall repay TIMCO the funds advanced with respect to his education.

(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.
TIMCO 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.

     4. Termination.

(a) For Cause. TIMCO 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 conduct that
would constitute under federal or state law either a felony or a misdemeanor involving moral
turpitude, or a determination by TIMCO’s Board of Directors, after consideration of all available
information and following the procedures set forth below, that Employee has willfully violated
TIMCO’s policies or procedures involving discrimination, harassment, alcohol or substance abuse, or
work place violence causing material injury to TIMCO, (ii) Employee’s actions or omissions that
constitute fraud, dishonesty or gross misconduct, (iii) Employee’s knowing and intentional breach
of any fiduciary duty that causes material injury to TIMCO, and (iv) Employee’s inability to
perform his material duties, after reasonable notice and an opportunity to resolve the issues, due
to alcohol or other substance abuse. 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
TIMCO is relying to terminate the Employee for Cause.

     Upon any determination by TIMCO that Cause exists to terminate the Employee, TIMCO 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 TIMCO 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 and shall have a reasonable period of time to
cure any actions or omissions which provide TIMCO with a basis to terminate the Employee for Cause
(provided that such cure period shall not exceed 30 days). A

3

 

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.

(b) Without Cause. At any time during the Employment Period, TIMCO shall have the
right to terminate the Employment Period and to discharge the Employee without cause effective upon
delivery of written notice to the Employee. Upon any such termination by TIMCO without cause,
provided that Employee is otherwise in compliance with the provisions of Sections 5 and 6 hereof,
the Employee shall be entitled to receive each month for every month remaining in the Employment
Period an amount equal to the monthly portion of his Salary, when and as the same would have been
due and payable hereunder but for such termination, and otherwise TIMCO shall not have any further
obligations hereunder from and after the date of such termination.

(c) Death or Disability. At any time during the Employment Period if Employee is
unable to perform his duties and responsibilities as provided herein, due to his death or due to a
physical or mental disability for more than one hundred eighty (180) days, TIMCO upon written
notice may terminate the Employment Period provided that Employee shall receive disability payments
during the term of Employees disability which Employee is entitled to receive under the applicable
Companies (as defined hereafter) Disability Plan.

     5. Restrictive Covenants. In consideration of the foregoing, the Employee agrees that
he shall not:

(a) during the Employment Period and for a period of one-year following the termination of the
Employment Period for any reason, directly or indirectly, alone or as a partner, joint venture,
officer, director, member, employee, consultant, agent, independent contractor or shareholder of,
or lender to, any company or business, engage in any business in the aerospace industry directly or
indirectly in competition with the business of TIMCO or its affiliates (TIMCO and its affiliates
being referred to herein collectively as the “Companies”) as such business now exists or as it may
exist at the time of termination; provided, however, that, the beneficial ownership of less than
five percent (5%) of the shares of stock of any other 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; and, provided further,
that Employee shall be entitled to receive each month for one-year following the termination of the
Employment Period Employee’s monthly portion of the Salary, unless Employee has been was terminated
for “Cause,” in which case this restrictive covenant shall apply notwithstanding the payment of
severance;

(b) for a period of one-year following the termination of the Employment Period, directly or
indirectly (i) induce any Person which is a customer of any of the Companies, to patronize any
business in the aerospace industry directly or indirectly in competition with business conducted by
any of the Companies; (ii) canvass, solicit or accept from any Person which is a customer of any of
the Companies, any such competitive business; or (iii) request or advise any Person which is a
customer or supplier of any of the Companies, to withdraw, curtail

4

 

or cancel any such customer’s or supplier’s business with any of the Companies, or its or
their successors;

(c) for a period of one year following the Employment Period, directly or indirectly employ,
or knowingly permit any company or business directly or indirectly controlled by him, to employ,
any person who was employed by any of the Companies, at or within the prior three months, or in any
manner seek to induce any such person to leave his or her employment;

(d) at any time following the date hereof, directly or indirectly, in any way outside of his
employment with any of the Companies utilize, disclose, copy, reproduce or retain in his possession
any of the Companies’ proprietary rights or records, including, but not limited to, any of its
customer lists.

     6. Confidentiality. The Employee agrees that at all times during and after the
Employment Period, 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 Companies 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 technical
specifications, any sales, promotional or marketing plans, programs, techniques, practices or
strategies, any expansion plans (including existing 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 Companies and for no other purpose, (iii) take all reasonable 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 TIMCO, and (iv) observe
all security policies implemented by the Companies 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
TIMCO with prompt notice of such request or order so that the Companies may seek to prevent
disclosure. In the case of any disclosure, the Employee shall disclose only that portion of the
Confidential Information that he is ordered to disclose.

     7. Acknowledgments of the Parties. The parties agree and acknowledge that the
restrictions contained in Sections 5 and 6 are reasonable in scope and duration and are necessary
to protect the Companies. If any provision of Section 5 or 6 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 5 or 6 will
cause irreparable injury to the Companies and upon breach of any provision of such Sections, the
Companies shall be entitled to injunctive relief, specific performance or

5

 

other equitable relief; provided, however, that, this shall in no way limit any other remedies
which the Companies may have.

     8. Notices. All notices, requests, demands, claims and other communications hereunder
shall be in writing and shall be deemed given on the date delivered if delivered by certified or
registered mail (first class postage pre-paid) or guaranteed overnight delivery and on the date
sent if sent by facsimile transmission if such transmission is confirmed by delivery by certified
or registered mail (first class postage pre-paid) or guaranteed overnight delivery, in each case to
the following addresses and facsimile numbers (or to such other addresses or telecopy numbers which
such party shall designate in writing to the other party): (a) if to TIMCO, at 623 Radar Road,
Greensboro, North Carolina 27410, Attention: Gil West, Chief Operating Officer (facsimile:
1-336-664-0339), with a copy to Philip B. Schwartz, Esq., One Southeast Third Avenue, Miami,
Florida 33131 (facsimile: 1-305-374-5095); and (b) if to the Employee at the address and facsimile
number listed on the signature page hereto.

     9. Amendment; Waiver. This Agreement may not be modified, amended, supplemented,
canceled or discharged, 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.

     10. Assignment; Third Party Beneficiary; Guaranty. This Agreement, and the Employee’s
rights and obligations hereunder, may not be assigned or delegated by him. The rights and
obligations of TIMCO under this Agreement shall inure to the benefit of and be binding upon their
respective successors and assigns.

     11. 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) for the purpose of those procedures to the extent necessary to permit the
remaining provisions to be enforced. The provisions of Sections 5, 6, 10 and 11 will survive the
termination of this Agreement and the Employment Period for any reason.

     12. 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.

     13. 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.

6

 

(a) 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.

     14. 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.

     15. 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.

[Signatures on next page]

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SIGNATURE PAGE

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

	 	 	 	 	 
	 

	 	TIMCO AVIATION SERVICES, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Gil West
	

	 	 	 	
 
	

	 	 	 	Name: Gil West
	

	 	 	 	Title: President
	 
	 	 	 	 
	

	 	EMPLOYEE:
	 
	 	 	 	 
	

	 	/s/ Rick Salanitri
	

	 	
 
	

	 	Name: Rick Salanitri
	 
	 	 	 	 
	

	 	Address for Notices:

8

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