Mutual Release

Mutual Release

by TIMCO Aviation Services
July 31st, 2002

                                                                   Exhibit 10.26

                                 MUTUAL RELEASE

         This MUTUAL RELEASE (this "Release") is made this 17/th/ day of July,
2002, among JAMES VENTURES, L.P., a Texas limited partnership, ROBERT BELFER, an
individual resident of the State of New York, LJH LTD., a Texas limited
partnership and success-in-interest to LJH Corporation, and DON A. SANDERS, an
individual resident of the State of Texas (collectively, the "AVS Investors,"
and individually an "AVS Investor"); J. WILLIAM BOYAR, an individual resident of
the State of Texas not individually but solely as trustee for the AVS Investors
(the "AVS Investor Trustee"); BANK OF AMERICA, N.A. ("BofA"), in its capacity as
"Agent" (as defined below); each of the Lenders identified on the signature
pages below (each a "Lender" and, collectively, the "Lenders"); and BANC OF
AMERICA SECURITIES LLC, in its capacity as "Syndication Agent" (as defined
below).

                                    Preamble:

         Kellstrom Industries, Inc. ("Kellstrom") and certain of its
subsidiaries (together with Kellstrom, the "Borrowers") entered into a certain
Amended and Restated Loan and Security Agreement dated as of December 14, 1998
(as amended, the "Loan Agreement"), with various financial institutions as
lenders (the "Lenders"), BofA as agent for the Lenders (in such capacity, the
"Agent"), and Banc of America Securities LLC as syndication agent (in such
capacity, the "Syndication Agent"), pursuant to which Lenders from time to time
made loans to Borrowers secured by all or substantially all of each Borrower's
assets. To induce Lenders to make loans to Borrowers pursuant to the terms of
the Loan Agreement, AVS Investors procured certain standby letters of credit for
Agent as beneficiary, for itself and for the ratable benefit of Lenders, in the
aggregate face amount of $8,000,000 (the "AVS Investor Letters of Credit").

         On or about October 17 and 18, 2001, BofA submitted draw requests under
each of the AVS Investor Letters of Credit, with the result that the aggregate
amount of $8,000,000 was received by BofA for the ratable benefit of Lenders and
applied to the obligations then outstanding under the Loan Agreement. AVS
Investors contend that BofA's draws under the AVS Investor Letters of Credit
were not authorized. BofA, in turn, denies such contention by the AVS Investors.

         Kellstrom, TIMCO Aviation Services, Inc., a Delaware corporation
formerly known as Aviation Sales Company ("AVS"), and Aviation Sales
Distribution Services Company, a Delaware corporation ("AVSDC"), are parties to
a certain Post-Closing Resolution Agreement dated as of June 10, 2002 (as at any
time amended, the "Resolution Agreement"), pursuant to which, subject to the
approval of the United States Bankruptcy Court for the District of Delaware and
satisfaction of all conditions precedent set forth therein, the parties have
agreed to settle various claims that each party thereto may have against the
others.

         In connection with the Resolution Agreement, Agent, Syndication Agent,
Lenders, AVS Investors and AVS Investor Trustee are entering into a Proceeds
Sharing Agreement dated July ___, 2002 (the "Sharing Agreement"). A condition to
the effectiveness of the agreements contained in the Sharing Agreement is the
execution and delivery of this Release by the parties hereto.

         Agent, Syndication Agent and Lenders, on the one hand, and AVS
Investors and AVS Investor Trustee, on the other hand, desire that the Sharing
Agreement become effective and, therefore, are willing to execute and



deliver this Release to release, among things, all disputes and claims arising
from or relating to the AVS Investor Letters of Credit.

         NOW, THEREFORE, in consideration of the premises and the mutual
releases and covenants contained herein, the parties hereto, intending to be
legally bound hereby, agree as follows:

         Section 1. Definitions. As used herein, the following terms shall have
the following meanings ascribed to them:

                  "AVS Investor Indebtedness" shall mean indebtedness of any
         Borrower to any AVS Investor under or with respect to any AVS Investor
         Letter of Credit Document.

                  "AVS Investor Intercreditor Agreement" shall mean the
         intercreditor agreement dated as of December 1, 2000, between Agent and
         AVS Investors with respect to the liens of AVS Investors arising from
         the AVS Investor Letter of Credit Documents, as at any time amended.

                  "AVS Investor Letter of Credit Documents" shall mean all
         documents executed and/or delivered in connection with any AVS Investor
         Letter of Credit, including, without limitation, that certain Purchase
         and Sale Agreement between AVS Investor Trustee and Kellstrom dated
         December 1, 2000, and all reimbursement agreements, warrants,
         promissory notes, credit agreements, certificates and other documents
         with respect thereto, in each case as amended from time to time.

                  "AVSDC Asset Purchase Agreement" shall mean that certain Asset
         Purchase Agreement among Kellstrom, AVS and AVSDC dated as of September
         20, 2000, as amended by four letter agreements dated as of September
         20, 2000, a letter agreement dated as of November 14, 2000, a letter
         agreement dated as of November 17, 2000, and a letter agreement dated
         as of December 1, 2000.

                  "AVSDC Asset Purchase Documents" shall mean, collectively, the
         AVSDC Asset Purchase Agreement, the KAV Consignment Agreement and each
         other agreement, instrument, certificate or other document executed
         and/or delivered in connection with the AVSDC Asset Purchase Agreement.

                  "AVSDC Leased Assets" shall mean certain assets of AVSDC
         consisting of real estate, equipment and fixtures which was leased by
         AVSDC to Kellstrom.

                  "Bank Group Members" shall mean Agent, Syndication Agent and
         Lenders, and, for purposes of Section 2 of this Release, their
         respective officers, directors, agents, attorneys, shareholders,
         subsidiaries, affiliates, successors and assigns.

                  "Claim" shall mean (i) a right to payment, whether or not such
         right is reduced to judgment, liquidated, unliquidated, fixed,
         contingent, matured, unmatured, disputed, undisputed, legal, equitable,
         secured or unsecured; or (ii) a right to an equitable remedy for breach
         of performance if such breach gives rise to a right to payment, whether
         or not such right to an equitable remedy is reduced to judgment, fixed,
         contingent, matured, unmatured, disputed, undisputed, secured or
         unsecured.

                  "KAV" shall mean KAV Inventory, LLC, a Delaware limited
         liability company.

                  "KAV Consignment Agreement" shall mean that certain
         Consignment Agreement between Kellstrom and KAV dated as of December 1,
         2000, as at any time amended.

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                  "Party" shall mean a person or entity who is a party to this
         Release.

                  "Sunrise Purchase Documents" shall mean that certain Purchase
         and Sale Agreement between AVS Investor Trustee and Kellstrom dated
         December 1, 2000, and all documents executed and/or delivered in
         connection therewith.

                  "VRDN Real Estate" shall mean Kellstrom's owned real property
         located at 1100 International Parkway, Sunrise, Florida.

         Section 2. Release of Bank Group Members. Each of the AVS Investors and
the AVS Investor Trustee, for himself or itself (as appropriate) and its or his
respective heirs, representatives, successors and assigns, hereby releases,
acquits and forever discharges each of the Bank Group Members of and from any
and all Claims of any nature whatsoever arising prior to or on the date hereof,
which any of the AVS Investors or the AVS Investor Trustee ever had, now have or
claim to have against the Bank Group Members, or any one or more of them, or
which any of the AVS Investors or the AVS Investor Trustee at any time hereafter
acquires, by reason of any matter, cause, or thing arising out of or relating to
(i) any of the AVS Investor Letters of Credit, the AVS Investor Letter of Credit
Documents, the AVSDC Asset Purchase Documents, the AVS Investor Intercreditor
Agreement, the KAV Consignment Agreement, or the Sunrise Purchase Documents, or
any action or failure to act by any of the Bank Group Members under or in
connection with any of the aforesaid documents; (ii) any of the AVS Investor
Indebtedness; or (iii) the efforts by AVS Investors and AVS Investor Trustee, or
any of them, to purchase the VRDN Real Estate from Kellstrom; provided, however,
that the foregoing provisions of this Section 2 shall not be deemed in any
manner whatsoever to release, waive, or otherwise affect any liability of any
Bank Group Member in respect of any Claim arising solely under this Release or
under the Proceeds Sharing Agreement.

         Section 3. Release of AVS Investors and AVS Investor Trustee. Each of
the Bank Group Members, for itself and its respective successors and assigns,
hereby releases, acquits and forever discharges each of the AVS Investors and
the AVS Investor Trustee of and from any and all Claims of any nature whatsoever
arising prior to or on the date hereof, which any of the Bank Group Members ever
had, now have or claim to have against the AVS Investors and the AVS Investor
Trustee, or any one or more of them, or which any of the Bank Group Members at
any time hereafter acquires, by reason of any matter, cause, or thing arising
out of or relating to (i) any of the AVS Investor Letters of Credit, the AVS
Investor Letter of Credit Documents, the AVSDC Asset Purchase Documents, the AVS
Investor Intercreditor Agreement, the KAV Consignment Agreement, or the Sunrise
Purchase Documents, or any action or failure to act by any of the AVS Investors
or the AVS Investor Trustee under or in connection with any of the aforesaid
documents; (ii) any of the AVS Investor Indebtedness; or (iii) the efforts by
AVS Investors and AVS Investor Trustee, or any of them, to purchase the VRDN
Real Estate; provided, however, that the foregoing provisions of this Section 3
shall not be deemed in any manner whatsoever to release, waive or otherwise
affect any liability of any AVS Investor or the AVS Investor Trustee in respect
of any Claim arising solely under this Release or under the Proceeds Sharing
Agreement.

         Section 4. Covenant Not To Sue. Each Party, for and on behalf of such
Party and for each of such Party's respective successors, assigns, and personal
representatives, covenants and agrees never to commence, aid in any way,
prosecute or cause to be commenced or prosecuted, or permit any of its
subsidiaries or affiliates to commence or prosecute, against any other Party
hereto, any action, suit or other proceeding based upon a Claim that has been
released pursuant to the terms of this Release.

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         Section 5.  Representations and Warranties. Each Bank Group Member
hereby represents and warrants to each of the AVS Investors and the AVS Investor
Trustee that such Bank Group Member is duly authorized and empowered to execute
this Release; that it has taken such actions as may be required to obtain
corporate or shareholder approval for the execution and delivery of this
Release; that the individual signing on its behalf below is duly authorized and
empowered to execute this Release; and that it has not sold, assigned,
transferred, conveyed, or otherwise disposed of any Claim relating to any matter
covered by this Release. Each of the AVS Investors hereby represents and
warrants to each Bank Group Member that such AVS Investor is duly authorized and
empowered to execute this Release; that, in the case of any AVS Investor that is
a corporation, it has taken such actions as may be required to obtain corporate
or shareholder approval for the execution and delivery of this Release; that, in
the case of each AVS Investor that is a corporation or limited partnership, the
individual signing on its behalf below is duly authorized and empowered to
execute this Release; that, in the case of each AVS Investor that is an
individual, such individual is competent to execute and deliver this Release;
and that such AVS Investor has not sold, assigned, transferred, conveyed, or
otherwise disposed of any Claim relating to any matter covered by this Release.
The AVS Investor Trustee hereby represents and warrants to each Bank Group
Member that the AVS Investor Trustee is duly authorized and empowered to execute
this Release; that AVS Investor Trustee is competent to execute and deliver this
Release; and that AVS Investor Trustee has not sold, assigned, transferred,
conveyed, or otherwise disposed of any Claim relating to any matter covered by
this Release. Each of the Parties represents and warrants to each of the other
Parties hereto that such representing and warranting Party has freely and
voluntarily entered into and executed this Release, with the benefit of advice
of counsel of such Party's own selection.

         Section 6.  No Admission. This Release is made without admission or
concession by any Party of any liability whatsoever on the part of such Party to
any other Party. Without limiting the generality of the foregoing, each Bank
Group Member expressly disputes the existence of any Claim in favor of any AVS
Investor or the AVS Investor Trustee arising out of or relating to Agent's draws
upon any of the AVS Investor Letters of Credit.

         Section 7.  Acknowledgments. Each Party acknowledges and agrees that no
other consideration has been or will be paid or furnished to such Party on
account of or in connection with such Party's execution and delivery of this
Release and that such Party has not made or relied upon any other warranty or
representation or promise except as expressly set forth in this Release and the
Sharing Agreement.

         Section 8.  Mistake of Fact. If any fact with respect to which this
Release is executed is hereafter found to be other than or different from what
is now believed by any Party to be true, each Party hereto accepts and assumes
the risk of such possible difference in fact and agrees that this Release shall
be and remain effective, notwithstanding such difference in facts.

         Section 9.  Complete Defense. This Release shall be a full and complete
defense to and may be used as the basis for an injunction against any action,
suit, or other proceeding that may be instituted, prosecuted or attempted in
breach of this Release.

         Section 10. Execution; Effectiveness; Waiver of Jury Trial. This
Release may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which counterparts taken together
shall constitute but one and the same instrument. In proving this Release in any
judicial proceeding, it shall not be necessary to produce or account for more
than one such counterpart signed by the party against whom such

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enforcement is sought. Any signature delivered by a party by facsimile
transmission shall be deemed to be an original signature hereto. The
effectiveness of this Release is subject to the execution and delivery of this
Release by each Party shown on the signature pages hereof. Each of the Parties
hereby waives any right that such Party may have to a trial by jury in respect
of any litigation based hereon, or arising out of, under or in connection with
this Release, and this provision is material inducement for this Release.

                  [Remainder of page intentionally left blank]

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         Section 11. Miscellaneous. This Agreement, together with the Sharing
Agreement, expresses the entire understanding of the Parties with respect to the
subject matter hereof and thereof and supersedes any and all prior agreements or
understandings, written or oral, express or implied; may not be amended except
by written agreement of the Parties; shall be binding upon the parties hereto
and their respective successors and assigns; and shall be governed in all
respects by and construed in accordance with the internal laws of the State of
Georgia.

         IN WITNESS WHEREOF, the Parties have caused this Release to be signed,
sealed, and delivered on the day and year first above written.



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                [Signature Pages to Avs Investor Release Omitted]