EXHIBIT 10.4

INTERCREDITOR AGREEMENT

THIS INTERCREDITOR AGREEMENT (this “Agreement”) is dated as of the 15th day of February, 2006, by and among PEMCO AVIATION GROUP, INC., a Delaware corporation, PEMCO AEROPLEX, INC., an Alabama corporation, PEMCO ENGINEERS, INC., a Delaware corporation, PEMCO WORLD AIR SERVICES, INC., a Delaware corporation, SPACE VECTOR CORPORATION, a Delaware corporation (collectively, the “Borrowers”), WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (successor by merger to SouthTrust Bank), as Agent (the “Agent”), WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (successor by merger to SouthTrust Bank) (“Wachovia”), COMPASS BANK, an Alabama banking corporation (“Compass”) (Wachovia and Compass hereinafter referred to collectively as the “Senior Lenders” and each singularly as a “Senior Lender”), WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as collateral agent for Subordinating Party (in such capacity, the “Collateral Agent”), and SILVER CANYON SERVICES, INC., a Nevada corporation (the “Subordinating Party”). Capitalized terms used herein but not defined shall have the meanings as set forth in the Credit Agreement (as hereinafter defined).

Borrowers, Agent, Senior Lenders and Subordinating Party agree that this Agreement shall constitute a “Subordination Agreement” under and as defined in the Credit Agreement, and that the “Subordinated Debt” as hereinafter defined shall constitute permitted “Subordinated Debt” under and as defined in the Credit Agreement.

1. Definitions. In this Agreement, the following terms shall have the meanings as hereinafter set forth:

“Credit Agreement” means that certain Credit Agreement dated as of December 16, 2002, among Borrowers, Agent and Senior Lenders, as amended from time to time.

“Enforcement Action” means any remedy available to Subordinating Party under any of the Subordinated Loan Documents or applicable law to enforce collection of any of the Subordinated Debt, including (a) the repossession, foreclosure, exercise of setoff rights upon or other act to realize upon any of the Collateral, and (b) any petition filed against any Borrower for relief under Bankruptcy Law or a petition or suit for the appointment of a receiver or other custodian therefore or for any of any Borrower’s assets.

“Purchase Agreement” means that certain Purchase Agreement dated as of February 15, 2006 among Borrowers and Subordinating Party.

“Senior Debt” means any and all amounts now or hereafter owing to Senior Lenders by Borrowers pursuant to or in connection with the Credit Agreement or any other Loan Document.

“Subordinated Agreement Event of Default” means an “Event of Default” as defined in the Purchase Agreement.

“Subordinated Agreements” means the Purchase Agreement, the Subordinated Notes and the Subordinated Security Agreement.

“Subordinated Debt” means all amounts owing by any Borrower to Subordinating Party, pursuant to or in connection with the Subordinated Agreements.

“Subordinated Notes” means those certain Pemco Aviation Group, Inc. Senior Secured Notes Due 2007 dated February 15, 2006 given by Pemco Aviation Group, Inc. in favor of Subordinating Party, as amended from time to time.

“Subordinated Security Agreement” means that certain Security Agreement dated as of February 15, 2006 given by Borrowers in favor of Subordinating Party, as amended from time to time.

2. Subordination.

(a) Subordinating Party hereby agrees that the Subordinated Debt is and shall be subject and subordinate to the Senior Debt, and except as permitted by Section 2(b) and 2(c) hereof, no Borrower shall pay, and Subordinating Party shall not make demand or accept, any payment with respect to, or on account of, the Subordinated Debt until the full and final indefeasible payment of all of the Senior Debt. Without limiting the generality of the foregoing, in the event of any distribution, division or application, partial or complete, voluntary or involuntary, by operation of law or otherwise, of all or any part of the assets of any Borrower or the proceeds thereof to the creditors of any Borrower or upon any indebtedness of any Borrower, by reason of the liquidation, dissolution or other winding up of any Borrower or any Borrower’s business, or in the event of any sale, receivership, insolvency or Bankruptcy proceeding, or assignment for the benefit of creditors, or any proceeding by or against any Borrower for any relief under any Bankruptcy or insolvency Law or Laws relating to the relief of debtors, readjustments or indebtedness, reorganization, compositions or extensions, then and in any such event any payment or distribution of any kind or character, either in cash, securities or other property of any kind, which shall be payable or deliverable upon or with respect to any of the Subordinated Debt shall, unless Senior Lenders shall, in their sole and absolute discretion, agree to the contrary, be paid or delivered directly to Agent for application to the Senior Debt (whether or not the same is then due) until all of the Senior Debt has been fully paid and discharged. This Agreement shall remain in full force and effect until such time as all of the Senior Debt, including any renewals or extensions thereof, has been paid in full and such payments of the Senior Debt have become final and are not subject to being refunded as a preference or fraudulent transfer under Bankruptcy Law or other applicable Law.

(b) So long as (i) no Event of Default has occurred on account of the failure to pay when due principal and interest owing under the Loan Documents (a “Senior Payment Default”), (ii) no Default on account of the failure to comply with the financial covenants set forth in Section 10.3(A) of the Credit Agreement is disclosed on the most recently received Compliance Certificate of the Borrowers (a “Senior Financial Covenant Default”), (iii) Borrowers are not in default of their obligation to deliver Compliance Certificates under Section 10.1(C) of the Credit Agreement (a “Compliance Certificate Default”), and (iv) no payment of any Subordinated Debt would give rise to a Financial Covenant Default, Borrowers may pay, and

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