Engine Sale Agreement dated September 22, 2017, by and between Contrail Aviation Support, LLC and MTU Maintenance Lease Services B.V

Definitions and Interpretation

Sale of Engine

Delivery, Acceptance, Title and Risk

Payments

Conditions precedent

Liability

Representations, Warranties and Undertakings

Notices

Taxes and Indemnities

Costs and Expenses

Termination

Assignment

Miscellaneous

Governing law and Jurisdiction

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Definitions and Interpretation

In this Agreement the following words shall have the following meanings unless the context otherwise requires:

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Sale of Engine

Delivery, Acceptance, Title and Risk

Seller will deliver the Engine in serviceable condition, subject to the terms and conditions of this Agreement, to Buyer at the Delivery Location. Buyer confirms that he will ship the Engine from the Delivery Location to the United Kingdom within ten (10) days from Delivery.

On the Delivery Date, and subject to the terms and conditions of this Agreement, the parties shall close the transaction in the following manner:

Buyer shall pay or have paid to Seller the Purchase Price relating to that Engine; and

Seller shall deliver to Buyer the Engine in serviceable condition; and

Buyer shall execute and deliver to Seller an Acceptance Certificate in respect of that Engine.

Immediately upon receipt by Seller of the Acceptance Certificate and the Purchase Price, Seller shall release to Buyer the Bill of Sale in respect of the Engine. Upon delivery of the Bill of Sale, title to the Engine shall be transferred from Seller to Buyer.

Buyer or its representatives may, at its own cost inspect and verify the condition of the Engine and the Engine Documents at the Delivery Location or any other location mutually agreed upon.

Upon completion of the closing under Section 3.2, risk of damage to or loss of the Engine shall pass from Seller to Buyer.

In the event between the date of signing of this Agreement and Delivery, the Engine suffers an Event of Loss, then Seller shall promptly notify Buyer of such damage and with effect from the date of such Event of Loss, neither Party shall have any further obligations under this Agreement with respect to the Engine, except that any property transferred or payments received by either Party shall be returned to the other Party with respect to the particular Engine. “Event of Loss” means any of the following events:

the loss of the Engine due to theft or disappearance for a period of at least thirty (30) days, destruction, damage beyond repair or rendition of the Engine permanently unfit for normal use for any reason whatsoever; or

the receipt of insurance proceeds based upon an event of loss with respect to the Engine under any insurance policy pertaining thereto; or

the condemnation, confiscation or seizure of, or requisition or loss of title to, or use for a period in excess of thirty (30) days of the Engine; or

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The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc. with the Securities Exchange Commission and filed separately with the Commission.

unrepaired damage to the Engine in which the costs of repair exceeds 20% (twenty percent) of the Purchase Price.

In the event between the date of signing of this Agreement and Delivery, the Engine suffers damage which does not constitute an Event of Loss, Seller shall promptly notify Buyer of such damage and the Parties shall jointly determine, each Party acting reasonably, as soon as reasonably practicable whether such damage can be repaired in a manner satisfactory to Buyer prior to the Delivery Date. If the Parties agree that such damage can be so repaired and Seller elects to do so prior to the Delivery Date, Seller shall procure the repair of such damage as soon as reasonably practicable and if Buyer or Seller determines that such damage cannot be satisfactorily repaired, or Seller determines that it will not elect to repair the Engine by the Delivery Date, the Party making such determination shall immediately notify the other Party, in writing, whereupon neither Party shall have any further obligation or liability to the other under this Agreement with respect to the Engine, except that any property transferred or payments received by either Party shall be returned to the other Party with respect to the particular Engine as if this Agreement had never been formed.

Payments

All payments to be made by Buyer to Seller under this Agreement shall be made in immediately available funds by telegraphic transfer in Dollars to the following account of Seller:

Buyer shall pay to Seller the Purchase Price in respect of the Engine before Delivery.

Conditions precedent

The obligation of Seller to sell the Engine to Buyer is subject to the following conditions being fulfilled to the satisfaction of Seller on or prior to the Delivery Date of an Engine:

a resolution of Buyer approving the terms of, and the transactions contemplated by this Agreement; and

the relevant power, or powers of attorney (If applicable) authorising a specified person or persons to execute this Agreement and the Acceptance Certificate.

The parties having agreed upon the terms for lease of the Engine for a minimum period of 12-months following arrival of the Engine in the UK in accordance with Clause 3.1 above.

Completion of VAT tax forms and related documents reasonably satisfactory to the parties.

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The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc. with the Securities Exchange Commission and filed separately with the Commission.

The obligation of Buyer to purchase the Engine from Seller is subject to the following conditions being fulfilled to the satisfaction of Buyer on or prior to the Delivery Date of that Engine (any one of which may be waived by Buyer to the extent permitted by Law in writing in whole or in part with or without conditions):

Receipt by Buyer of a certificate issued by a duly authorised officer of Seller, attaching and certifying as being true, complete and up-to-date copies of the relevant power, or powers of attorney (if applicable), and any other relevant documents, authorising a specified person or persons to execute this Agreement and the Bill of Sale and to tender delivery of the Engine on behalf of Seller to Buyer.

The Engine being free and clear of Liens.

Buyer’s completion of its inspection of the Engine and satisfaction with the results thereof.

The parties having agreed upon the terms for lease of the Engine for a minimum period of 12-months following arrival of the Engine in the UK in accordance with Clause 3.1 above.

Completion of VAT tax forms and related documents reasonably satisfactory to the parties.

Liability

Seller hereby covenants and agrees upon demand of Buyer and each of its respective affiliates, directors, officers, employees, partners, employees, successors, assigns, shareholders, investors, parent companies and agents (the “Buyer Indemnitees”) to pay and assume liability for, and to indemnify, protect, defend, save and keep harmless, the Buyer Indemnitees, on an after-tax basis, from and against any and all liabilities (including liability for negligence or strict liability in tort or under any statute), taxes, fees, duties, charges, withholdings, obligations, losses, damages, settlements, claims, actions, suits, penalties, costs and expenses (including, without limitation, reasonable fees and expenses of counsel) and expenses of successfully establishing such rights to indemnification under this indemnity of whatsoever kind and nature which may at any time or from time to time be imposed upon, incurred by or asserted against any Buyer Indemnitee for death of or injury to any persons whomsoever and for loss of, damage to, or delay in delivery of any property whatsoever (any such losses, the “Buyer Losses”) in any way relating to, resulting from or arising out of the possession, operation, condition, storage, maintenance or repair of the Engine arising or occurring prior to Delivery of the Engine, provided that the foregoing indemnity shall not apply to the extent that the Buyer Losses resulted from the negligence or wllful misconduct of a Buyer Indemnitee.

Buyer hereby covenants and agrees upon demand of Seller and each of its respective affiliates, directors, officers, employees, partners, employees, successors, assigns, shareholders, investors, parent companies and agents (the “Seller Indemnitees”) to pay and assume liability for, and to indemnify, protect, defend, save and keep harmless, the Seller Indemnitees, on an after-tax basis, from and against any and all liabilities (including liability for negligence or strict liability in tort or under any statute), taxes, fees, duties,

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Neither Party shall be liable for any special, incidental or consequential damages which may arise from or in connection with the performance or failure to perform under the Agreement.

Representations, Warranties and Undertakings

Seller represents and warrants to Buyer, on the date of this Agreement and as of the Delivery Date that:

Seller has sole legal and beneficial title in and to the Engine, free from Liens and Seller has full power and lawful authority to enter into this Agreement and to transfer such title in and to the Engine to Buyer.

Seller is a company established, duly incorporated and validly existing under the Laws of the Netherlands with full power and authority (corporate and other) to conduct its operations as presently conducted, to own its properties and to execute and deliver, and to perform all of its obligations under this Agreement;

The entry into and performance by it of, and the transactions contemplated by, this Agreement do not and will not:

conflict with any laws binding on it; or

conflict with the constitutional documents of it; or

conflict with or result in default under any document which is binding upon it or any of its assets, nor result in the creation of any Lien over any of its assets;

No Immunity:

It is subject to civil commercial law with respect to its obligations under this Agreement; and

neither it nor any of its assets is entitled to any right of immunity and the entry into and performance of this Agreement by Seller constitute private and commercial acts.

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Buyer represents and warrants to Seller, on the date of this Agreement and as of the Delivery Date that:

Buyer is a company established, duly incorporated and validly existing under the under the Laws of the State of North Carolina, U.S.A., with full power and authority (corporate and other) to conduct its operations as presently conducted, to own its properties and to execute and deliver, and to perform all of its obligations under this Agreement;

It has the power to execute, deliver and perform, and that execution, delivery and performance of this Agreement and the transactions contemplated therein have been properly authorised;

The entry into and performance by it of, and the transactions contemplated by, this Agreement do not and will not:

conflict with any laws binding on it; or

conflict with the constitutional documents of it; or

conflict with or result in default under any document which is binding upon it or any of its assets, nor result in the creation of any Lien over any of its assets;

No Immunity:

It is subject to civil commercial law with respect to its obligations under this Agreement; and

neither it nor any of its assets is entitled to any right of immunity and the entry into and performance of this Agreement by Buyer constitute private and commercial acts;

Export Control: The Engine and related components are subject to export controls under the U.S. Export Administration Regulations, 15 C.F.R. Parts 730-774, the International Traffic in Arms Regulations, 22 C.F.R. Parts 120-130 and other export control laws and regulations of the United States (“Regulations”). Buyer acknowledges that it will comply with all such laws and regulations, and obtain all licenses to export the Engine as may be required.

Notices

in the case of a letter, on the seventh day after posting;

in the case of a facsimile transmission, on the day immediately following the date of despatch or transmission;

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Taxes and Indemnities

The Purchase Price is exclusive of any and all taxes applicable thereto (including, without limitation, any VAT or other value added or sales taxes).

Buyer shall on demand pay and discharge any taxes (including any payable by Seller) imposed on or in connection with this Agreement, the Acceptance Certificate and/or the Bill of Sale or otherwise in connection with the transactions contemplated herein; provided, however, that Buyer shall not be liable for any taxes related to Seller’s income.

Gross-Up. Buyer shall increase the Purchase Price which would otherwise be required to be made hereunder so that the Seller is left in the same position as it would have been in had no Taxes been payable. All payments by the Buyer under or in connection with this Agreement shall be made without set-off or counterclaim, free and clear of and without deduction for or on account of all Taxes unless the Buyer is required by law to make any such deduction or withholding. If any Taxes are required to be deducted or withheld from any amount payable hereunder, the Buyer shall:

pay to the Seller such additional amounts in the same currency as such payment as may be necessary in order that the amount of such payment received by the Seller on the date of such payment, after deduction or withholding for all such taxes, will be equal to the amount that the Seller would have received If such taxes had not been deducted or withheld;

pay to the relevant authority within the period for payment permitted by applicable law the full amount of the deduction or withholding; and

furnish to the Seller evidence of payment to the relevant authority of all amounts deducted or withheld as aforesaid.

Costs and Expenses

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The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc. with the Securities Exchange Commission and filed separately with the Commission.

Termination

Assignment

Miscellaneous

This Agreement contains the entire agreement between Seller and Buyer relating to the sale and purchase of the Engine, and the terms and conditions of this Agreement shall not be varied otherwise than by an instrument in writing of even date herewith or subsequent hereto executed by or on behalf of each of Seller and Buyer.

No failure or delay on the part of either party hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise of any such right, power or remedy. The rights, powers and remedies provided in this Agreement are cumulative and additional to, and not exclusive of, any rights, powers or remedies provided by Law or otherwise.

This Agreement may be entered into in the form of any number of counterparts, each executed by at least one of the parties and, provided that all the parties shall so enter into this Agreement, each of the executed counterparts, when duly exchanged or delivered, shall be deemed to be an original but, taken together, they shall constitute one instrument. Facsimile and PDF copies of signatures shall be treated as original signatures for all purposes.

No term of this Agreement is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this Agreement, except a party’s successor in interest.

Each provision of this Agreement is severable and distinct from the others and, if any provision is or at any time becomes to any extent or in any circumstances Invalid, illegal or unenforceable for any reason, it shall to that extent or in those circumstances, be deemed not to form part of this Agreement but (except to that extent or in those circumstances in the case of that provision) the validity, legality and enforceability of that and all other provisions of this Agreement shall not be affected or impaired, it being the parties’ intention that every provision of this Agreement shall be and remain valid and enforceable to the fullest extent permitted by Law.

Each of the parties undertakes with the other to do and perform such other and further acts and execute and deliver any and all other instruments as may be required by Law or reasonably required by the other party in order to establish, maintain and protect the rights and remedies of that party and to carry out and effect the intent and purpose of this Agreement.

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Neither Seller nor Buyer shall without the other’s prior written consent, communicate or disclose the contents of this Agreement to any third party (other than to their respective external legal advisors, auditors, insurance brokers and for underwriters or those of the airframe) provided however that disclosure will be permitted:

pursuant to an order of any court of competent jurisdiction;

pursuant to any procedure for discovery of documents in any proceedings before any such court;

pursuant to any law or regulation having the force of law;

pursuant to a lawful requirement of any authority with whose requirements the disclosing party is legally obliged to comply; or

to effect any registrations, filings or recordations of the Engine.

Governing law and Jurisdiction

This Agreement and any contractual or non-contractual obligations arising out of or in connection with this Agreement shall be governed by, and construed in accordance with, the laws of New York, U.S.A., without reference to provisions governing conflicts of laws. The U.N. Convention on Contracts for the International Sales of Goods is not applicable to this Agreement.

Seller and Buyer each agree that in any legal action or proceedings against it or its assets in connection with this Agreement no immunity from such legal action or proceedings (which shall include, without limitation, suit, attachment prior to judgment, other attachment, the obtaining of judgment, execution or other enforcement) shall be claimed by or on behalf of Seller and/or Buyer or with respect to its assets, irrevocably waives any such right of immunity which it or its assets now have or may hereafter acquire or which may be attributed to it or its assets and consents generally in respect of any such legal action or proceedings to the giving of any relief or the issue of any process in connection with such action or proceedings including, without limitation, the making, enforcement or execution against any property whatsoever, (irrespective of its use or intended use) of any order or judgment which may be made or given in such action or proceedings.

Each party irrevocably agrees that the federal courts located in the State of New York shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with this agreement or its subject matter or formation (including non-contractual disputes or claims).

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President & CEO

Joseph Kuhn

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/s/ Joseph Kuhn

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one (1) CFM56-7B26/3 engine bearing engine serial number 874357 and all equipment, accessories and parts belonging to, installed in or appurtenant to such engine; and

the Engine Documents,

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874357

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The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc. with the Securities Exchange Commission and filed separately with the Commission.

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Latest EASA form 1 and FAA Form 8130-3.

Logbook or equivalent On/Off log showing aircraft tail number, date on & off, hours and cycles of engine since new, reason for removal and location of this action.

Latest LLP status listing all tracked parts in accordance with the applicable EMM Chapter 5 and listing the Manual revision date.

Latest and up to date AD Compliance Statement & SB applicability and compliance listing. Includes all dirty finger print workcards and certificates of all ADs carried out on any / all LLPs installed.

Latest ECM trent monitoring data including EGTM, Oil Pressure, Fuel Flow, Vibrations, Oil Temperature, Derate, RPMs etc at take off.

Accessory and QEC listing including MFG P/N and S/N.

All Engine shop visit report incl. workscope, history and dirty finger print cards, including LLP records.

All non incident statements issued

All preservation tags or records.

All warranties still applicable to each engine.

No DER repairs and PMA parts statements.

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agree, make, sign and execute any and all of the documents (the “Documents”) in connection with the purchase and leasing of one CFMS6-7 engine with ESN 874357 (the “Engine”) from and to MTU Maintenance Lease Services B.V., a legal entity organized under the laws of Amsterdam, The Netherlands;

to make, give, sign, execute and do all such deeds arrangements, instruments, applications, oaths, affidavits, declarations, notices, confirmations, certificates, approvals, acknowledgements, acceptances, deliveries and all other acts, matters and things whatsoever, in connection with the preparation, signature, execution and delivery of the Documents or any other documents required to be executed by the Company in connection with them, or the performance of any acts, matters and things therein contemplated; and

to acknowledge this Power of Attorney as the act and deed of the Company and generally to do all other acts which may be necessary and desirable for carrying the purpose of this Power of Attorney into effect.

Name

Title

Signature

/s/ Joseph Kuhn

The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc. with the Securities Exchange Commission and filed separately with the Commission.