EXHIBIT 10.1
SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT, dated this 12th day of December 2003 (the
"Agreement"), by and among (i) X X Xxxxxx Capital Management Group Limited, a
corporation organized under the laws of England, (ii) X X Xxxxxx Capital
Management Limited, a corporation organized under the laws of England, (iii)
American Opportunity Trust plc, an investment trust organized under the laws of
England, (iv) The Trident North Atlantic Fund, an exempted company organized
under the laws of the Cayman Islands (collectively, the "Investors") and (v)
Mercury Air Group, Inc., a corporation organized under the laws of Delaware (the
"Company").
RECITALS
WHEREAS, the Company desires to settle disputes between it and the
Investors and the Investors desire to settle their claims asserted and
unasserted, against the Company; and
WHEREAS, the Investors are collectively the record and beneficial owners
of an aggregate of 366,000 shares of common stock, par value $0.01 per share
("Common Stock"), of the Company (such 366,000 shares owned by the Investors
being referred to herein as the "Shares"), held in the amounts set forth on
Exhibit A hereto; and
WHEREAS, as part of such settlement the Company will purchase from the
Investors, and the Investors will sell to the Company, an aggregate of 343,600
Shares (the "Exchanged Shares"), in exchange for notes of the Company issued to
such Investors (the "Exchange Notes"), in the form set forth on Exhibit B
hereto, upon the terms and subject to the conditions set forth in this
Agreement, including, without limitation, the obligation to execute and deliver
the Mutual Release of Claims, a form of which is set forth on Exhibit C hereto
(the "Mutual Release of Claims") upon payment in full of the Exchange Notes; and
WHEREAS, the total consideration to be paid by the Company to the
Investors shall be for (i) the transfer of Exchanged Shares, (ii) the release of
the Released Hambro Claims (as defined in the Mutual Release of Claims), and
(iii) reimbursement to Investors of all costs, fees and expenses (including
legal and accounting costs, fees and expenses) incurred by the Investors in
connection with this Agreement, and the defense of and preparation of
anticipated lawsuits between the parties; and
WHEREAS, upon payment in full of the Exchange Notes in accordance with the
terms thereof, the parties hereto shall execute and deliver the Mutual Release
of Claims.
AGREEMENT
NOW THEREFORE, in consideration of the premises and mutual promises herein
made, and in consideration of the representations, warranties and covenants
herein contained, the Company and the Investors hereby agree as follows:
1. Purchase and Sale of Exchanged Shares. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations,
warranties and covenants contained
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Exhibit 10.1
herein, at the Closing (as defined in Section 2 hereof), each Investor will
sell, transfer and deliver to the Company the Exchanged Shares held by such
Investor in exchange for an Exchange Note, in the principal amount set forth
opposite the name of such Investor on Schedule 1 hereto. The aggregate principal
amount of each Exchange Note shall be net of any U.S. Federal or State taxes
payable by Investors solely by reason of receipt of payments for the Exchanged
Shares under this Agreement (a "U.S. Tax" or collectively, "U.S. Taxes"). The
Company will deliver to the Investors documentation of their foreign status on
an appropriate Internal Revenue Service Forms W-8 (other than W-8ECI).
2. Closing. The closing (the "Closing") of such exchange shall take place
at the offices of Ropes & Xxxx, Xxx Xxxxxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, at 10:00 a.m. on December 12, 2003, or such later time or date as the
parties hereto may mutually agree (such date being referred to herein as the
"Closing Date"). At the Closing, against the surrender by the Investors to the
Company of the Exchanged Shares, the Company will deliver the Exchange Notes to
the Investors.
3. Investors' Representations and Warranties. Each Investor, on behalf of
itself and not any other Investor, represents and warrants to the Company as
follows:
3.1 Such Investor has the full power and authority to execute,
deliver and carry out the terms and provisions of this Agreement and to
consummate the transactions contemplated hereby, and has taken all
necessary action to authorize the execution, delivery and performance of
this Agreement;
3.2 Such Investor is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization;
3.3 This Agreement has been duly and validly authorized, executed
and delivered by such Investor and constitutes a valid and binding
obligation of such Investor, enforceable in accordance with its terms,
subject to applicable principles of equity, bankruptcy, reorganization,
insolvency or other laws affecting the enforcement of creditors' rights
generally and no other proceeding on the part of the Investors is
necessary to authorize the execution, delivery and performance of this
Agreement and the transactions contemplated hereby;
3.4 Such Investor is the sole "Beneficial Owner" (within the meaning
of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of the Exchanged Shares set forth opposite its name on
Schedule 1, has good and marketable title to all such Exchanged Shares,
and there exist no liens, claims, options, proxies, voting agreements,
charges or encumbrances of whatever nature (collectively, "Liens")
affecting such Exchanged Shares;
3.5 Upon delivery of the Exchanged Shares to the Company pursuant to
the terms hereto, the Company will have good title to such Exchanged
Shares, free and clear of all Liens;
3.6 Except for Shares held by other Investors as set forth on
Exhibit A hereto, the Shares set forth opposite the name of such Investor
on Exhibit A hereto constitute all
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Exhibit 10.1
of the securities of the Company beneficially owned, directly or
indirectly, by the Investors or by any "Affiliate" or "Associate" (as
those terms are defined in Rule 12b-2 under the Exchange Act) of such
Investor;
3.7 Neither such Investor nor any of its Affiliates has outstanding
any option, warrant or other right to acquire, directly or indirectly, any
securities of the Company which are entitled to vote or any securities
which are convertible or exchangeable into or exercisable for any
securities of the Company which are entitled to vote, nor is such Investor
or any Affiliate of such Investor subject to any agreement (whether
written or in the nature of an informal understanding) which allows or
obligates such Investor or any such Affiliate to vote or acquire any such
securities;
3.8 Neither the execution and the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, will (i) violate
any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Investors are subject or any
provision of the organizational documents of the Investors or (ii)
conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any consent or notice (other than
those obtained or made) under any agreement, contract, lease, license,
instrument, judgment, decree, order other arrangement to which the
Investors are a party or by which they are bound or to which any of their
assets are subject (or result in the imposition of any security interest
upon any of their assets), nor are the Investors required to obtain the
approval or consent of any person or entity to effect the exchange of the
Exchanged Shares;
3.9 No such Investor nor any person or entity acting on behalf of
such Investor, has agreed to pay a commission, finder's fee or investment
banking fee, or similar payment in connection with this Agreement or any
matter related hereto, nor has such Investor, person or entity taken any
action on which a claim for such payment could be based, in each case, for
which the Company could become liable;
3.10 No Investor has made or threatened to make a public tender
offer (within the meaning of Section 5881 of the Internal Revenue Code of
1986, as amended) for securities of the Company; and
3.11 Such Investor is not a United States person, as defined in
Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended, and
is not engaged in a United States trade or business.
4. The Company Representations and Warranties. the Company represents and
warrants to each Investor as follows:
4.1 The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. The Company
has the full power and authority to execute, deliver and carry out the
terms and provisions of this Agreement and the Exchange Notes and
consummate the transactions contemplated hereby, and has
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Exhibit 10.1
taken all necessary action to authorize the execution, delivery and
performance of this Agreement and the Exchange Notes;
4.2 This Agreement and the Exchange Notes have been duly and validly
authorized, executed and delivered by the Company and each constitutes a
valid and binding obligation of the Company, enforceable in accordance
with its terms, subject to applicable principles of equity, bankruptcy,
reorganization, insolvency or other laws affecting the enforcement of
creditors' rights generally and no other proceeding on the part of the
Company is necessary to authorize the execution, delivery and performance
of this Agreement, the Exchange Notes and the transactions contemplated
hereby;
4.3 Neither the execution and the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, including the
issuance of the Exchange Notes, will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental agency, or
court to which the Company is subject or any provision of the certificate
of incorporation or by-laws, as amended to date, of the Company or (ii)
conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any consent or notice (other than
those obtained or made) under any agreement, contract, lease, license,
instrument, judgment, decree, order other arrangement to which the Company
is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any security interest upon any of
its assets), nor is the Company required to obtain the approval or consent
of any person or entity to effect the exchange of the Exchanged Shares or
the issuance of the Exchange Notes in exchange therefor;
4.4 The Exchange Notes that are being issued to the Investors
hereunder, when issued, sold and delivered in accordance with the terms
hereof for the consideration expressed herein, will be duly and validly
issued and free of Liens, pledges or other encumbrances or restrictions on
transfer, other than as explicitly set forth in the terms of the Exchange
Notes and applicable state and federal securities laws;
4.5 None of the Company and any of its Affiliates or any person or
entity acting on behalf of the Company or any of its Affiliates has
engaged in any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Securities Act of 1933, as
amended (the "Securities Act")) in connection with the offering of the
Exchange Notes. The Exchange Notes satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act;
4.6 Neither the Company, nor any person or entity acting on behalf
of the Company, has agreed to pay a commission, finder's fee or investment
banking fee, or similar payment in connection with this Agreement or any
matter related hereto, nor has the Company, person or entity taken any
action on which a claim for such payment could be based, in each case, for
which the Investors could become liable;
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Exhibit 10.1
4.7 The Company acknowledges and confirms that no Investor has made
or threatened to make a public tender offer (within the meaning of Section
5881 of the Internal Revenue Code of 1986, as amended) for securities of
the Company; and
4.8 Prior to the date hereof, the Company has filed or has caused to
be filed in the United States District Court for the Central District of
California, a notice of dismissal without prejudice of all claims against
the Investors asserted by the Company in the action captioned Mercury Air
Group, Inc. v. Acquisition Holdings (Bermuda) Ltd. et al., Case No.
03-4622 ABC (PJWx).
5. Standstill Provisions.
5.1 Term. The term (the "Term") of the provisions of this Section 5
shall commence on the date the Exchange Notes are paid in full and shall
continue until the fifth anniversary of the date thereof.
5.2 General Standstill. During the Term, except as set forth on
Schedule 5.2, each Investor shall not, and shall cause each of its
Affiliates and Associates not to, singly or as part of a Group (as defined
below), directly or indirectly, acquire or offer, make a proposal or agree
to acquire (whether publicly or otherwise), in any manner, any material
assets of the Company or its subsidiaries or have record or Beneficial
Ownership of any Common Stock of the Company; provided, however, that any
Investor or any of its Affiliates or Associates may acquire securities of
any other entity which owns Common Stock, but thereafter if such Investor
or such Affiliate or Associate acquires control of such other entity it
shall cause such other entity to dispose of such Common Stock within 180
days after such Investor or its Affiliate or Associate acquires control of
such entity and such Investor and its Affiliates and Associates shall
continue to be prohibited from making any purchases of Common Stock and
shall remain subject to the provisions of this Agreement. For purposes of
this Section 5.2, "Group" shall mean two or more persons or entities
acting as a partnership, limited partnership, limited liability company,
syndicate or other group for the purposes of acquiring, holding, or
disposing of securities or material assets of an issuer.
5.3 Solicitation of Proxies. During the Term, each Investor shall
not, and shall cause each Affiliate and Associate of such Investor not to,
directly or indirectly (a) induce or attempt to induce any other person or
entity to initiate, propose or otherwise solicit the Company stockholders
for the approval of one or more stockholder proposals (as described in
Rule 14a-8 under the Exchange Act) with respect to the Company in
opposition to any matter that has been recommended by the Board of
Directors of the Company or in favor of any matter that has not been
approved by the Board of Directors of the Company, or (b)(i) make or in
any way propose or participate in any "solicitation" of "proxies" to vote
(as such terms are defined in Rule 14a-1 under the Exchange Act), (ii)
solicit any consent, or (iii) communicate with or seek to advise or
influence any person or entity other than the Company, with respect to the
solicitation or voting of any Common Stock of the Company in opposition to
any matter that has been recommended by the Board of Directors of the
Company or in favor of any matter that has not been
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Exhibit 10.1
approved by the Board of Directors of the Company, including without
limitation with respect to the election of directors of the Company.
5.4 Board of Directors and Management. During the Term, each
Investor shall not, and shall cause each Affiliate and Associate of such
Investor not to, directly or indirectly (i) seek election to or seek to
place a representative on the Board of Directors of the Company or seek
the removal of any member of the Board of Directors of the Company, (ii)
interfere with the operation of the Company or, (iii) oppose or interfere
with, in any matter whatsoever, any transaction approved by the Board of
Directors of the Company.
5.5 Mergers, Acquisitions, Etc. During the Term, each Investor shall
not, and shall cause each Affiliate and Associate of such Investor not to,
directly or indirectly solicit, seek to effect, negotiate with or provide
any information to any other party with respect to, or make any statement
or proposal, whether written or oral, to the Board of Directors of the
Company or otherwise make any public announcement or proposal whatsoever
with respect to (a) a merger or acquisition of the Company, (b) the sale
of all or a substantial portion of the assets of the Company, (c) the
liquidation of the Company, (d) a recapitalization of the Company, (e) a
tender offer or exchange offer for any Common Stock of the Company, or (f)
a business transaction similar to any of the foregoing with respect to the
Company.
5.6 Call of Special Meetings. During the Term, each Investor shall
not, and shall cause each Affiliate and Associate of such Investor not to
call, or in any way encourage or participate in a call for, any special
meeting of stockholders of the Company (or take any action with respect to
acting by written consent of the stockholders of the Company); or initiate
or propose any stockholder proposal (including, without limitation, any
proposal to amend the charter or bylaws) or participate in or encourage
the making of, or solicit stockholders of the Company for the approval of,
one or more stockholder proposals.
5.7 Third Persons. During the Term, each Investor shall not, and
shall cause each Affiliate and Associate of such Investor not to seek to
encourage any third person to vote Common Stock of the Company in
opposition to a recommendation of a majority of the Board of Directors of
the Company.
5.8 Amendments or Waivers. During the term, each Investor shall not,
and shall cause each Affiliate and Associate of each Investor not to
request the Company or any of its directors, officers, employees or agents
to amend or waive any provisions of this Section 5 or seek to challenge
the legality or effect thereof.
6. Other Covenants.
6.1 Expenses. Except as otherwise provided herein, each party hereto
shall bear its own costs, fees and expenses. If after Closing a U.S. Tax
not reflected in the principal amount of the Exchange Notes paid at
Closing is determined to be due from any
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Exhibit 10.1
Investor, the Company shall promptly pay that investor an amount in cash
sufficient so that such Investor shall have received the amount due under
Section 1 net of U.S. Taxes.
6.2 Reinstituted Claims. Until such time as any Investor shall bring
a claim against the Company or any of its directors or executive officers
for breach of fiduciary duty or a similar stockholder action (other than
as may arise in connection with this Agreement, the Exchange Notes or
enforcement of any of the Investors' rights under the foregoing), the
Company shall not (i) reinstitute, file or cause to be filed in any court
in any jurisdiction, any action or cause of action, or (ii) make any
allegation against any of the Investors, in any case, with respect to any
claim that had been asserted against the Investors by the Company in the
action captioned Mercury Air Group, Inc. v. Acquisition Holdings (Bermuda)
Ltd. et al., Case No. 03-4622 ABC (PJWx).
6.3 Document Requests. The Investors acknowledge and agree that upon
the Closing hereunder, all requests and demands made by the Investors
prior to the date hereof pursuant to Section 220 of the General
Corporation Law of the State of Delaware and the common law of the State
of Delaware to inspect and to make copies or abstracts from certain
documents of the Company are hereby withdrawn; provided, that nothing in
this Section 6.3 shall prohibit any such request in the future, unless
otherwise prohibited by any other contractual obligation of the parties
hereto. Upon execution by the parties hereto of the Mutual Release of
Claims, all documents previously submitted to the Investors, including all
copies and abstracts thereof, shall be returned to the Company.
6.4 Publicity. Except for the issuance of the press release in the
form attached hereto as Exhibit D, no public announcement or disclosure
will be made by any party with respect to the subject matter of this
Agreement without the prior written consent of the Company and each of the
Investors; provided, however, that the provisions of this Section 6.4 will
not prohibit (a) any disclosure required by any applicable law (in which
case the disclosing party will provide the other parties with the
opportunity to review the disclosure in advance) or (b) any disclosure
made in connection with the enforcement of any right or remedy relating to
this Agreement, the Exchange Notes, or the other documents contemplated
hereby.
6.5 Mutual Release of Claims. Upon payment in full of the Exchange
Notes by the Company in accordance with the terms thereof, the Company and
the Investors will execute and deliver the Mutual Release of Claims, in
the form set forth on Exhibit C hereto.
6.6 Payment of the Term Loan and Allied Note. Immediately upon the
closing of the transaction contemplated by the Stock Purchase Agreement
dated as of October 28, 2003 by and among Allied Capital Corporation,
Mercury Air Centers, Inc. and the Company providing for the purchase and
sale of all or substantially all of the Company's FBO business and assets
or any similar transaction providing for the purchase and sale of all or
substantially all of the Company's FBO business or assets, the Company
shall take all action necessary in order to cause the immediate payment in
full, in cash, of the Exchange Notes, including without limitation, taking
all action required to pay to Xxxxx Fargo Foothill, Inc., the Company's
other senior lenders and Allied Capital
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Exhibit 10.1
Corporation, any amounts owing to them in order to allow the Investors to
immediately receive cash payments from the Company pursuant to the
Subordination Agreement dated as of December __, 2003 among Xxxxx Fargo
Foothill, Inc. and the Investors and the Subordination Agreement dated as
of December __, 2003 among Allied Capital Corporation and the Investors.
6.7 Remedy under the Exchange Notes. In the event the Company fails
to pay, when due, either upon maturity, mandatory prepayment, Event of
Default (as defined in the Exchange Notes), or otherwise, any amounts due
and payable under the Exchange Notes, or the Exchange Notes are not paid
in full by June 30, 2004, the Required Noteholders (as defined in the
Exchange Notes) may, at any time until the Exchange Notes shall be paid in
full, in addition to any other remedies available to them thereunder, by
equity or at law, at their option, request the Company to, and the Company
shall take all actions necessary (including without limitation increasing
the size of the Board of Directors if no vacancy then exists) to, appoint
a designee of the Required Noteholders to the Board of Directors of the
Company, to hold office until such time as the Exchange Notes are paid in
full. Upon payment in full of the Exchange Notes, upon request of the
Company, such director shall resign from his position as a director of the
Company.
7. Conditions to Closing.
7.1 Precedent to the Obligations of the Investors. The obligation of
the Investors to exchange the Exchanged Shares for the Exchange Notes and
such other consideration as is described herein is subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions, unless expressly waived in writing by all of the Investors at
or prior to the Closing:
(a) Closing Deliveries. The Company shall have duly issued and
delivered to each of the Investors the Exchange Notes in the amounts
set forth opposite such Investor's name on Schedule 1 hereto.
(b) Representations and Warranties. The representations and
warranties made by the Company in this Agreement shall be true and
correct in all material respects as of the Closing Date.
(c) Opinion of Counsel. The Company shall have furnished the
Investors with an opinion of XxXxxxx, XxXxxxx and Xxxxx, counsel to
the Company, in form and substance reasonably satisfactory to the
Investors.
(d) Consents. The Company shall have delivered to the
Investors, in a form reasonably satisfactory to the Investors, (i)
consents of Xxxxx Fargo Foothill, Inc. and Allied Capital
Corporation with respect to the issuance of the Exchange Notes, the
payments to be made thereunder and the other transactions
contemplated hereby, and (ii) any other consents required to
consummate the transactions contemplated hereby.
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Exhibit 10.1
(e) Adverse Proceedings. No action, suit or proceeding by or
before any court or other governmental body shall have been
instituted by any governmental body or other person which seeks to
restrain, prohibit or invalidate any transaction contemplated
hereby.
7.2 Conditions Precedent to Obligations of the Company. The
Company's obligations to issue the Exchange Notes in exchange for the
Exchanged Shares and such other consideration as is described herein is
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, unless expressly waived in writing by the Company at
or prior to Closing:
(a) Closing Deliveries. Each of the Investors shall have
surrendered to the Company certificates evidencing the Exchanged
Shares, duly endorsed (or accompanied by duly executed stock
transfer powers).
(b) Representations and Warranties. The representations and
warranties made by the Investors in this Agreement shall be true and
correct in all material respects as of the Closing Date.
(c) Consents. The Company shall have received, (i) consents of
Xxxxx Fargo Foothill, Inc. and Allied Capital Corporation, with
respect to the issuance of the Exchange Notes, the payments to be
made thereunder and the other transactions contemplated hereby, and
(ii) any other consents required to consummate the transactions
contemplated hereby.
(d) Adverse Proceedings. No action, suit or proceeding by or
before any court or other governmental body shall have been
instituted by any governmental body or other person which seeks to
restrain, prohibit or invalidate any transaction contemplated
hereby.
8. Miscellaneous.
8.1 Notices. All notices, requests, demands, claims and other
communications required or permitted to be delivered, given or otherwise
provided under this Agreement must be in writing and must be delivered,
given or otherwise provided:
(a) by hand (in which case, it will be effective upon
delivery);
(b) by facsimile (in which case, it will be effective upon
receipt of confirmation of good transmission); or
(c) by overnight delivery by a nationally recognized courier
service (in which case, it will be effective on the Business Day
after being deposited with such courier service);
in each case, to the address (or facsimile number) listed below:
If to the Company, to it at:
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Exhibit 10.1
Mercury Air Group, Inc.
0000 XxXxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Telephone number: (000) 000-0000
Facsimile number: (000) 000-0000
Attention: Xxxxxx Xxxxxx
with a copy to:
XxXxxxx & Xxxxx
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telephone number: (000) 000-0000
Facsimile number: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxx, Xx.
If to the Investors, to any of them c/o:
X X Xxxxxx Capital Management Limited
Ryder Court
00 Xxxxx Xxxxxx
Xxxxxx XX0X 0XX, Xxxxxxx
Telephone number: 000-00-000-000-0000
Facsimile number: 011-44-207-747-5647
Attention: Mr. Xxxxxxxxxxx Xxxxx
with a copy to:
Ropes & Xxxx LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telephone number: (000) 000-0000
Facsimile number: (000) 000-0000
Attention: Xxxxxx Xxxxxx, Esq.
Each of the parties to this Agreement may specify a different address or
facsimile number by giving notice in accordance with this Section 8.1 to
each of the other parties hereto.
8.2 Succession and Assignment; No Third-Party Beneficiaries. Subject
to the immediately following sentence, this Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, each of which such successors and
permitted assigns will be deemed to be a party hereto for all purposes
hereof. No party may assign, delegate or otherwise transfer either this
Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other parties. Except as
expressly provided herein, this Agreement is for the sole benefit of the
parties and their permitted successors and assignees and nothing herein
expressed or implied will give or be construed to give any person or
entity, other than the parties and such successors and assignees, any
legal or equitable rights hereunder.
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Exhibit 10.1
8.3 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement will be valid and binding unless it is in writing and
signed, in the case of an amendment, by the Company and the Investors, or
in the case of a waiver, by the party against whom the waiver is to be
effective. No waiver by any party of any breach or violation or, default
under or inaccuracy in any representation, warranty or covenant hereunder,
whether intentional or not, will be deemed to extend to any prior or
subsequent breach, violation, default of, or inaccuracy in, any such
representation, warranty or covenant hereunder or affect in any way any
rights arising by virtue of any prior or subsequent such occurrence. No
delay or omission on the part of any party in exercising any right, power
or remedy under this Agreement will operate as a waiver thereof.
8.4 Entire Agreement. This Agreement, together with the Exchange
Notes and any documents, instruments and certificates explicitly referred
to herein, constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof and supersedes any and all prior
discussions, negotiations, proposals, undertakings, understandings and
agreements, whether written or oral, with respect thereto.
8.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute but one and the same instrument. This Agreement
will become effective when duly executed by each party hereto.
8.6 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction will not
affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term
or provision in any other situation or in any other jurisdiction. In the
event that any provision hereof would, under applicable law, be invalid or
unenforceable in any respect, each party hereto intends that such
provision will be construed by modifying or limiting it so as to be valid
and enforceable to the maximum extent compatible with, and possible under,
applicable law.
8.7 Headings. The headings contained in this Agreement are for
convenience purposes only and will not in any way affect the meaning or
interpretation hereof.
8.8 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement will be
construed as if drafted jointly by the parties and no presumption or
burden of proof will arise favoring or disfavoring any party by virtue of
the authorship of any of the provisions of this Agreement. The parties
intend that each representation, warranty and covenant contained herein
will have independent significance. If any party has breached or violated,
or if there is an inaccuracy in, any representation, warranty or covenant
contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the party has not
breached or violated, or in respect of which there is not an inaccuracy,
will not detract from or
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Exhibit 10.1
mitigate the fact that the party has breached or violated, or there is an
inaccuracy in, the first representation, warranty or covenant.
8.9 Survival. All covenants, agreements, representations and
warranties made herein shall survive the execution and delivery hereof and
the issuance of the Exchange Notes at the Closing hereunder.
8.10 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
8.11 Specific Performance. Each of the parties acknowledges and
agrees that the other parties would be damaged irreparably in the event
any of the provisions of this Agreement are not performed in accordance
with their specific terms or otherwise are breached. Accordingly, each of
the parties agrees that, without posting bond or other undertaking, the
other parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any claim, action,
cause of action or suit (whether in contract or tort or otherwise),
litigation (whether at law or in equity, whether civil or criminal),
controversy, assessment, arbitration, investigation, hearing, charge,
complaint, demand, notice or proceeding to, from, by or before any
governmental authority (an "Action") instituted in any court of the United
States or any state thereof having jurisdiction over the parties and the
matter in addition to any other remedy to which it may be entitled, at law
or in equity. Each party further agrees that, in the event of any action
for specific performance in respect of such breach, it shall not assert
the defense that a remedy at law would be adequate.
8.12 Governing Law. This Agreement, the rights of the parties and
all Actions arising in whole or in part under or in connection herewith,
will be governed by and construed in accordance with the domestic
substantive laws of New York, without giving effect to any choice or
conflict of law provision or rule that would cause the application of the
laws of any other jurisdiction.
8.13 Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTIES HEREBY WAIVE, AND
COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR
IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT
ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE
PARTIES IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY IN ANY PROCEEDING
WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY OF THE
CONTEMPLATED TRANSACTIONS WILL INSTEAD BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
-12-
Exhibit 10.1
IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as
an agreement under seal as of the date first above written.
THE COMPANY: MERCURY AIR GROUP, INC.
By:___________________________________
Name:
Title:
THE INVESTORS: X X XXXXXX CAPITAL MANAGEMENT GROUP
LIMITED
By:___________________________________
Name:
Title:
X X XXXXXX CAPITAL MANAGEMENT LIMITED
By:___________________________________
Name:
Title:
AMERICAN OPPORTUNITY TRUST PLC
By:___________________________________
Name:
Title:
THE TRIDENT NORTH ATLANTIC FUND
By:___________________________________
Name:
Title:
Exhibit 10.1
Exhibit A
Investors' Interests
Investor Shares Owned
X X Xxxxxx Capital Management 96,840
Limited
American Opportunity Trust plc 157,500
The Trident North Atlantic Fund 111,660
* Note: X X Xxxxxx Capital Management Group Limited does not hold any Shares in
its name.
* Note: 22,400 Shares owned by X X Xxxxxx Capital Management Limited will not
be Exchanged Shares.
A-1
Exhibit B
FORM OF
EXCHANGE NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN EXEMPTION THEREFROM UNDER SUCH ACT.
THIS NOTE AND THE INDEBTEDNESS EVIDENCED HEREBY IS SUBORDINATE IN THE MANNER AND
TO THE EXTENT SET FORTH IN (I) THAT CERTAIN SUBORDINATION AGREEMENT, DATED AS OF
DECEMBER __, 2003, BY AND AMONG THE MAKER HEREOF, THE PAYEE NAMED HEREIN, AND
XXXXX FARGO FOOTHILL, INC., AS AGENT, AS SUCH AGREEMENT MAY BE AMENDED FROM TIME
TO TIME (THE "FOOTHILL SUBORDINATION AGREEMENT") AND (II) THAT CERTAIN
SUBORDINATION AGREEMENT, DATED AS OF DECEMBER __, 2003, BY AND AMONG THE MAKER
HEREOF, THE PAYEE NAMED HEREIN, AND ALLIED CAPITAL CORPORATION, AS SUCH
AGREEMENT MAY BE AMENDED FROM TIME TO TIME (THE "ALLIED SUBORDINATION AGREEMENT"
AND COLLECTIVELY WITH THE FOOTHILL SUBORDINATION AGREEMENT, THE "SUBORDINATION
AGREEMENTS"), AND EACH HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, SHALL BE
BOUND BY THE PROVISIONS OF SUCH SUBORDINATION AGREEMENTS.
MERCURY AIR GROUP, INC.
PROMISSORY NOTE
U.S. $______________ December __, 2003
FOR VALUE RECEIVED, the undersigned Mercury Air Group, Inc., a Delaware
corporation (the "Company"), hereby promises to pay to the order of
___________________ (the "Investor") or its successors or assigns (the
"Noteholder") on the earlier of (x) March 31, 2006 (provided, that if pursuant
to Section 3.4 of the Foothill Credit Agreement the Foothill Maturity Date shall
be December 30, 2007, such date shall be March 31, 2008) or (y) the ninetieth
day following payment in full of the Senior Indebtedness and termination of the
commitments to provide financing under the Foothill Credit Agreement (the
"Maturity Date"), the principal sum of ________________________ Dollars (U.S.
$_______.00), together with interest thereon as provided in Section 2 hereof.
Certain capitalized terms used herein shall have the meanings ascribed to them
in Section 6 hereof.
B-1
EXHIBIT 10.1
1. SETTLEMENT AGREEMENT.
This Note is one of a series of Promissory Notes in the initial aggregate
principal amount of $[______] (together with the other Promissory Notes of the
Company and any successor notes issued upon transfer or exchange thereof, the
"Notes"), issued by the Company on the date hereof pursuant to the Settlement
Agreement dated as of the date hereof, by and among the Company, the Investor
and certain other investors (the "Settlement Agreement").
2. PAYMENT PROVISIONS.
The Company covenants that so long as this Note is outstanding:
2.1 Interest.
(a) Commencing on December 31, 2003 through and including June
30, 2004, the unpaid principal amount of this Note shall bear and
accrue interest at a rate of 12% per annum, computed on the basis of
a 360-day year of twelve 30-day months. After June 30, 2004, the
unpaid principal amount of this Note shall bear and accrue interest
at a rate of 16% per annum, computed on the basis of a 360-day year
of twelve 30-day months. As used in this Note, the term "principal
amount" shall include any interest which is added to principal as
provided in Section 2.1(b). Interest shall accrue on overdue
principal and, to the extent permitted by applicable law, on overdue
installments of interest, at the rate borne by the Note plus 4% per
annum, it being understood that interest which is not paid in cash
but which is added to principal as provided in Section 2.1(b) is not
overdue by virtue of not so being paid in cash; provided, however,
that in the event interest shall accrue on overdue principal and, to
the extent permitted by applicable law, on overdue installments of
interest after the closing of the Stock Purchase Agreement (whether
before, on or after the Maturity Date), interest shall accrue at the
rate borne by the Note plus 13% per annum.
(b) Interest which accrues on this Note prior to maturity
(whether by mandatory prepayment, acceleration or otherwise) may, at
the option of the Company, be paid in cash or added to the principal
amount and be payable in cash on maturity. Interest which accrues on
this Note after the maturity (whether by mandatory prepayment,
acceleration or otherwise) shall be payable in cash upon demand.
(c) The payment of interest on this Note shall be net of any
U.S. Federal or State taxes payable by the Noteholder. The Company
will deliver to the Noteholder documentation of its foreign status
on an appropriate Internal Revenue Service Form W-8 (other than
W-8ECI).
(d) In the event that any interest rate provided for herein
shall be determined to be unlawful, such interest rate shall be
computed at the highest rate permitted by applicable law. Any
payment by the Company of any interest amount in excess of that
permitted by law shall be considered a mistake, with the
B-2
EXHIBIT 10.1
excess being applied to the principal of this Note without
prepayment premium or penalty.
2.2 Payment at Maturity of Note. On the Maturity Date, or on any
accelerated maturity of this Note, the Company shall pay in cash the
entire principal amount of this Note then outstanding, together with all
accrued and unpaid interest thereon.
2.3 Prepayments.
(a) Voluntary Prepayments. The Company may at any time and
from time to time prepay all or any part of the principal amount of
this Note, without premium or penalty of any type.
(b) Mandatory Prepayments. The Company shall prepay all
principal amount of this Note on the date of the closing under the
Stock Purchase Agreement.
2.4 Payment Provisions.
(a) Upon each payment of principal on this Note, in whole or
in part, the Company shall pay to the Noteholder in cash the
principal amount to be paid and any unpaid interest accrued thereon
to the payment date.
(b) From and after the date such payment is actually made,
interest on the principal amount so paid shall cease to accrue.
(c) Notes paid in full or otherwise acquired by the Company
shall be permanently retired and canceled and shall not under any
circumstance be reissued or resold.
(d) Notice of each voluntary prepayment of this Note pursuant
to Section 2.3(a) hereof shall be given not fewer than 10 days
before the prepayment date, in each case by mailing to each
Noteholder a notice of intention to prepay specifying (i) the date
of prepayment, (ii) the aggregate principal amount of the Notes that
will be outstanding immediately prior to such prepayment, (iii) the
aggregate principal amount of the Notes to be prepaid on such date,
(iv) the principal amount of the Notes to be prepaid on such date
held by the Noteholder to whom such notice is sent, and (v) the
accrued interest applicable to such prepayment.
(e) No payment of principal or of interest shall be made on
this Note and no repurchase or redemption of any or all of the Note
shall be made unless a proportionate payment, repurchase or
redemption (based upon the principal amount of the Notes then
outstanding) is made contemporaneously on all of the other Notes.
(f) All payments made by the Company pursuant to this Note
shall be made without defense, set off or counterclaim, by wire
transfer in same day funds
B-3
EXHIBIT 10.1
to the account of the Noteholder, designated in writing by notice
given as provided in Section 7.4, not later than noon, Eastern
Standard Time, on the date such payment is due; provided, that if no
such notice is given, payment shall be made to the Noteholder by
check at the address provided in Section 7.4, as updated from time
to time. Funds received by such holders after noon, Eastern Standard
Time, shall be deemed to have been paid by the Company on the next
succeeding Business Day. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day, the
payment shall be made on the next succeeding Business Day and such
additional period shall be included in the computation of the
payment of interest hereunder.
3. EVENTS OF DEFAULT.
If one or more of the following events (herein referred to as "Events of
Default") shall occur and be continuing:
3.1 Payment Default. The Company shall fail to pay (i) any principal
of this Note when the same becomes due and payable, whether upon maturity,
prepayment, acceleration or otherwise or (ii) any interest on this Note,
for a period of 10 days after the same shall become due and payable or
(iii) any other amount due hereunder within 30 days after demand therefor;
or
3.2 Acceleration of Other Indebtedness. Any payment default or any
other default or event of default shall have occurred under any
Indebtedness of the Company or any Subsidiary in excess of $1,000,000 in
the aggregate resulting in such Indebtedness having become or having been
declared due and payable by its terms, or such Indebtedness shall
otherwise have become due and payable prior to its stated maturity (other
than by reason of voluntary prepayments thereof); or
3.3 Change in Control Event. The closing of any tender or exchange
offer or other transaction pursuant to which the beneficial ownership of
at least 50% of the shares of capital stock of the Company issued and
outstanding prior to such transaction shall be acquired by a third party
or by the Company or any of its affiliates; or
3.4 Breach of Representations or Warranties; Covenants. Any
representation or warranty made by the Company in Section 4 of the
Settlement Agreement shall be false in any material respect on the date as
of when made or any covenant by the Company in Section 6 of the Settlement
Agreement shall be breached in any material respect; or
3.5 Involuntary Bankruptcy, Appointment of Receiver, etc. (a) A
court having jurisdiction shall enter a decree or order for relief in
respect of the Company or any of its Subsidiaries in an involuntary case
under the Bankruptcy Code or any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or any other similar relief
shall be granted and remain unstayed under any applicable federal or state
law; or (b) an involuntary case is commenced against the Company or any of
its Subsidiaries under any applicable bankruptcy, insolvency or other
similar law now or
B-4
EXHIBIT 10.1
hereafter in effect, or a decree or order of a court having jurisdiction
is entered for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over the Company
or any of its Subsidiaries or over all or a substantial part of any of
their respective properties, or an interim receiver, trustee or other
custodian of the Company or any of its Subsidiaries for all or a
substantial part of their respective properties is involuntarily
appointed, or a warrant of attachment, execution or similar process is
issued against any substantial part of the property of the Company or any
of its Subsidiaries, and in the case of each of the events specified in
this clause (b) such event continues for 60 days without being dismissed,
bonded, stayed, vacated or discharged; or
3.6 Voluntary Bankruptcy, Appointment of Receiver, etc. The Company
or any of its Subsidiaries shall have an order for relief entered with
respect to it or commence a voluntary case under the Bankruptcy Code or
any applicable bankruptcy, insolvency or other similar law, or shall
consent to the entry of an order for relief in an involuntary case, or to
the conversion of an involuntary case to a voluntary case, under any such
law, or shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of its
property; the Company or any of its Subsidiaries shall make any assignment
for the benefit of creditors; or the board of directors of the Company or
any of its Subsidiaries (or any committee thereof) shall adopt any
resolution or otherwise authorize any action to approve any of the
foregoing;
then, (i) upon the occurrence of any Event of Default described in Section 3.5
or 3.6, the unpaid principal amount of this Note, together with accrued interest
thereon, shall automatically become immediately due and payable, without
presentment, demand, protest or other requirements of any kind, all of which are
hereby expressly waived by the Company, and (ii) upon the occurrence of any
other Event of Default the Required Noteholders may, upon prior written notice
to the Company, declare the Notes to be due and payable, whereupon the principal
amount of this Note, together with accrued interest thereon, shall automatically
become immediately due and payable, without any other notice of any kind, and
without presentment, demand, protest or other requirements of any kind, all of
which are hereby expressly waived by the Company.
4. NOTEHOLDER OPTION UPON PAYMENT DEFAULT. In the event the Company fails
to pay, when due, either upon maturity, mandatory prepayment, Event of Default,
or otherwise, any amounts due and payable hereunder, or this Note shall not have
been paid in full on or prior to June 30, 2004, the Required Noteholders may, at
any time until this Note shall be paid in full, in addition to any other
remedies available to them hereunder, by equity or at law, at their option,
request the Company to, and the Company shall take all actions necessary
(including without limitation increasing the size of the Board of Directors if
no vacancy then exists) to, appoint a designee of the Required Noteholders to
the Board of Directors of the Company, to hold office until such time as the
Notes are paid in full. Upon payment in full of the Notes, upon request of the
Company, such director shall resign from his position as a director of the
Company.
5. INDEMNIFICATION. The Company shall indemnify the Noteholder, its
Affiliates, and each of their respective directors, officers, employees, agents,
attorneys, accountants, consultants and each Person, if any, who controls the
Noteholder or its Affiliates
B-5
EXHIBIT 10.1
(the Noteholder, its Affiliates, and each of such directors, officers,
employees, agents, attorneys, accountants, consultants and control Persons is
referred to as an "Indemnified Party") and hold each of them harmless from and
against any and all claims, damages, liabilities and reasonable expenses
(including reasonable fees and disbursements of counsel with whom any
Indemnified Party may consult in connection therewith and all reasonable
expenses of litigation or preparation therefor) which any Indemnified Party may
incur or which may be asserted against any Indemnified Party in connection with
(a) the Indemnified Party's compliance with or contest of any subpoena or other
process issued against it in any proceeding involving the Company or any of its
Affiliates, (b) any litigation or investigation involving the Company or any of
its Affiliates, or any officer, director or employee thereof, or (c) this Note
or any transaction contemplated hereby; provided, however, that the foregoing
indemnity shall not apply to the extent such claims, damages, liabilities and
expenses result from the Indemnified Party's own gross negligence or willful
misconduct.
6. DEFINITIONS.
The following terms used in this Note shall have the following meanings:
"Affiliate" shall mean "affiliate" as defined in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of 1934, as amended.
"Allied Subordination Agreement" shall have the meaning set forth in the
Legends.
"Bankruptcy Code" shall mean Title 11 of the United States Code and any
successor statute.
"Business Day" shall mean any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or is a day on
which banking institutions located in the State of New York, are authorized or
required by law or other governmental action to close.
"Company" shall have the meaning set forth in the preamble.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Events of Default" shall have the meaning set forth in Section 3.
"Foothill Credit Agreement" shall mean the Loan and Security Agreement
dated as of December 30, 2002 among the Company, certain of its subsidiaries,
Foothill Capital Corporation, as arranger and administrative agent and the other
lenders signatory thereto.
"Foothill Maturity Date" shall mean "Maturity Date" as defined in the
Foothill Credit Agreement.
"Foothill Subordination Agreement" shall have the meaning set forth in the
Legends.
B-6
EXHIBIT 10.1
"Guarantee" shall mean a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner including, without limitation, by way of a
pledge of assets or through letters of credit or reimbursement agreements in
respect thereof, of all or any part of any Indebtedness.
"Hedging Obligations" shall mean, with respect to any specified Person,
the obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements; and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Indebtedness" shall mean, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent (i) in respect of
borrowed money; (ii) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof); (iii) in respect of banker's acceptances; or (iv) representing any
Hedging Obligations. In addition, the term "Indebtedness" shall include the
Guarantee by the specified Person of any Indebtedness of any other Person.
"Indemnified Party" shall have the meaning set forth in Section 5.
"Investor" shall have the meaning set forth in the preamble.
"Maturity Date" shall have the meaning set forth in the preamble.
"Note" shall mean this Note.
"Noteholder" shall have the meaning set forth in the preamble.
"Noteholders" shall mean the holders of the Notes.
"Note Obligations" shall mean any and all obligations of the Company under
this Note or under the Agreement with respect to this Note, including without
limitation the obligation to pay principal, interest, expenses, attorneys' fees
and disbursements, indemnities and other amounts payable thereunder or in
connection therewith or related thereto.
"Notes" shall have the meaning set forth in Section 1.
"Person" shall mean any individual, corporation, limited liability
company, estate, partnership, joint venture, association, joint stock company,
trust (including any beneficiary thereof), unincorporated organization or
government or any agency or political subdivision thereof.
"Required Noteholders" shall mean the holders of more than 50% of the
aggregate principal amount of the Notes then outstanding.
"Senior Indebtedness" shall have the meaning set forth in the
Subordination Agreements.
"Settlement Agreement" shall have the meaning set forth in Section 1.
B-7
EXHIBIT 10.1
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement dated
as of October 28, 2003 by and among Allied Capital Corporation, Mercury Air
Centers, Inc. and Mercury Air Group, Inc. providing for the purchase and sale of
all or substantially all of the Company's FBO business and assets or any other
transaction whereby the Company sells all or substantially all of the Company's
FBO business or assets.
"Subordination Agreements" shall have the meaning set forth in the
Legends.
"Subsidiary" shall mean, with respect to any specified Person (i) any
corporation, association or other business entity of which more than 50% of the
total voting power entitled to vote in the election of directors, managers or
trustees of the corporation, association or business entity is at the time owned
or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person (or a combination thereof); and (ii) any
partnership (A) the sole general partner or the managing general partner of
which is such Person or a Subsidiary of such Person or (B) the only general
partners of which are that Person or one or more Subsidiaries of that Person (or
any combination thereof).
7. GENERAL.
7.1 Amendments and Waivers. This Note may be amended, modified,
terminated or waived, including to provide for the conversion or exchange
of this Note into or for other debt or equity securities of the Company,
with (a) the prior written consent of the Required Noteholders and (b) the
simultaneous identical amendment, modification, termination or waiver of
the other Notes. Notwithstanding the foregoing, no amendment,
modification, waiver or consent shall, unless in writing and signed by the
Noteholder, amend this Section 7.1. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which it was given. No notice to or demand on the Company in any case
shall entitle the Company to any further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or
consent effected in accordance with this Section 7.1 shall be binding upon
the Noteholders at the time outstanding and each future holder thereof.
7.2 Enforcement. No action for the enforcement hereof may be
instituted unless the Required Noteholders consent to such enforcement.
7.3 Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitation of,
another covenant shall not avoid the occurrence of an Event of Default or
Default if such action is taken or condition exists.
7.4 Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing and shall be sent by
facsimile, overnight courier, registered mail or certified mail. Any
notice, request, demand, claim, or other communication hereunder shall be
deemed duly given, as applicable, (a) upon confirmation of facsimile, (b)
one Business Day following the date sent when sent by overnight delivery
or (c) five
B-8
EXHIBIT 10.1
Business Days following the date mailed when mailed by registered or
certified mail return receipt requested and postage prepaid at the
following address:
If to the Company, to:
Mercury Air Group, Inc.
0000 XxXxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx
With a copy to:
XxXxxxx & Xxxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxxxx X. Xxxxx, Xx.
If to the Noteholder, to:
[ ]
[ ]
Tel:
Fax:
Attn:
Notwithstanding the foregoing, the Company or the Noteholder may send any
notice, request, demand, claim, or other communication hereunder to the
intended recipient at the address set forth above using any other means
(including personal delivery, expedited courier, messenger service,
facsimile, telex, ordinary mail, or electronic mail); provided, however,
that no such notice, request, demand, claim, or other communication shall
be deemed to have been duly given unless and until it actually is received
by the intended recipient. The Company and the Noteholder may change the
address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
7.5 Course of Dealing; Failure or Indulgence Not Waiver; Remedies
Cumulative. No course of dealing between the Company and the Noteholder
shall operate as a waiver of the Noteholder's rights under this Note. No
failure or delay on the
B-9
EXHIBIT 10.1
part of the Noteholder in the exercise of any power, right or privilege
hereunder or under the Note shall impair such power, right or privilege or
be construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege. All rights and remedies existing under this Note are cumulative
to and not exclusive of, any rights or remedies otherwise available.
7.6 Costs. The Company will pay on demand all costs of collection
and other costs and expenses, including without limitation reasonable
attorneys' fees and disbursements and court costs), paid or incurred by
the Noteholder in enforcing the obligations of the Company hereunder
and/or in exercising their rights and remedies hereunder (whether such
costs and expenses are incurred in any work-out, bankruptcy case or
proceeding, or otherwise).
7.7 Severability. In the event that any provision of this Note
would, under applicable law, be invalid or unenforceable in any respect,
such provision shall (to the extent permitted by applicable law) be
construed by modifying or limiting it so as to be valid and enforceable to
the maximum extent compatible with, and possible under, applicable law.
The provisions of this Note are severable, and in the event any provision
of this Note should be held invalid or unenforceable in any respect, it
shall not invalidate, render unenforceable or otherwise affect any other
provision of this Note.
7.8 Headings. The headings contained in this Note are inserted only
as a matter of convenience and for reference only and in no way define,
limit or describe the scope or intent of this Note.
7.9 Governing Law; Consent to Jurisdiction. This Note shall be
governed by and construed in accordance with the laws of the State of New
York. Each of the parties hereto hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the courts of the
State of New York and of the United States of America located in the State
of New York for any actions, suits or proceedings arising out of or
relating to this Note and the transactions contemplated hereby, and each
of the parties hereto agrees not to commence any action, suit or
proceeding relating hereto or thereto except in such courts. Each of the
parties hereto hereby irrevocably and unconditionally waives any objection
to the laying of venue of any action, suit or proceeding arising out of
this Note or the transactions contemplated hereby or thereby, in the
courts of the State of New York or the United States of America located in
the State of New York, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought in any such court has been brought in
an inconvenient forum. In any action or suit to enforce any right or
remedy under this Note or to interpret any provision of this Note, the
prevailing party shall be entitled to recover its costs, including
reasonable attorneys' fees.
7.10 Waivers of the Company. The Company waives to the extent not
prohibited by applicable law (a) all presentments, demands for
performance, notices of nonperformance (except to the extent, if any,
required by the provisions hereof), protests, notices of protest and
notices of dishonor; (b) any requirement of diligence or promptness
B-10
EXHIBIT 10.1
on the part of the Noteholder in the enforcement of its rights under this
Note; (c) all notices of every kind which may be required to be given by
any statute or rule of law; (d) any valuation, stay, appraisement or
redemption laws; and (e) any defense of any kind (other than payment)
which it may now or hereafter have with respect to its liability under
this Note.
7.11 Waiver of Jury Trial. To the extent not prohibited by
applicable law which cannot be waived, each of the parties hereto hereby
waives and covenants that it will not assert (whether as plaintiff,
defendant or otherwise) any right to trial by jury in any forum in respect
of any issue or action, claim, cause of action or suit (in contract, tort
or otherwise), inquiry, proceeding or investigation arising out of or
based upon this Note or the subject matter hereof or in any way connected
with or related or incidental to the transactions contemplated hereby, in
each case whether now existing or hereafter arising. Any party hereto may
file an original counterpart or a copy of this section 7.11 with any court
as written evidence of the consent of each such party to the waiver of its
right to trial by jury.
[The rest of this page intentionally left blank]
B-11
The undersigned has caused this Note to be executed by a duly authorized
officer as of the date first written above.
MERCURY AIR GROUP, INC.
By:________________________________
Name:
Title:
Exhibit C
FORM OF
MUTUAL RELEASE OF CLAIMS
MUTUAL RELEASE OF CLAIMS, dated this __ day of ______ 200_ (the
"Agreement"), by and among (i) X X Xxxxxx Capital Management Group Limited, a
corporation organized under the laws of England, (ii) X X Xxxxxx Capital
Management Limited, a corporation organized under the laws of England, (iii)
American Opportunity Trust plc, an investment trust organized under the laws of
England, (iv) The Trident North Atlantic Fund, an exempted company organized
under the laws of the Cayman Islands; (v) Xxxxxxxxxx X.X. Xxxxx (collectively,
the "Releasing Hambro Parties") and (vi) Mercury Air Group, Inc., a corporation
organized under the laws of Delaware ("Mercury").
RECITALS
WHEREAS, as of December __, 2003, the Releasing Hambro Parties were
collectively the record and beneficial owners of an aggregate of 366,000 shares
of Mercury common stock, par value $.01 per share (the "Common Stock");
WHEREAS, the Releasing Hambro Parties made a succession of filings
pursuant to Section 13(d) the Securities Act of 1933, as amended, declaring
their ownership of Mercury shares, as well as any plans or proposals they may
have had or have had concerning Mercury;
WHEREAS, on June 27, 2003, Mercury filed a lawsuit in the United States
District Court for the Central District of California captioned Mercury Air
Group, Inc. v. Acquisitor Holdings (Bermuda) Ltd., Case No. 03-4622 ABC (PJWx),
in which the Releasing Hambro Parties appeared as named defendants;
WHEREAS, by letter dated August 28, 0000, Xxxxxxx Xxxxx Xxxxxxxx Fund,
through its counsel, requested to receive copies of and review certain records
and information in the possession of Mercury;
WHEREAS, on December __, 2003, the Releasing Hambro Parties and Mercury
entered into a Settlement Agreement (the "Settlement Agreement") whereby the
Releasing Hambro Parties exchanged certain of their shares of Mercury Common
Stock for notes issued by Mercury;
WHEREAS, on the date hereof, the notes issued to the Releasing Hambro
Parties pursuant to the Settlement Agreement were paid in full; and
WHEREAS, pursuant to the Settlement Agreement, the Releasing Hambro
Parties and Mercury agreed that upon payment in full of the notes issued
pursuant to the Settlement Agreement, the parties hereto would enter into this
Mutual Release of Claims with the intention of resolving and releasing any and
all claims between and among them.
C-1
NOW THEREFORE, for good and valuable consideration the receipt of which is
acknowledged by all parties, the Releasing Hambro Parties and Mercury agree as
follows:
1. The Releasing Hambro Parties, on behalf of themselves, their affiliated
entities, and any and all present and former officers, directors, partners,
employees, agents, attorneys, successors, heirs and assigns, do hereby release,
remise, and forever discharge Mercury, its affiliated entities, its present and
former officers, directors, partners, employees, agents, attorneys, successors,
heirs and assigns (the "Released Mercury Parties"), of and from all debts,
demands, actions, causes of actions, suits, accounts, covenants, contracts,
agreements, torts, damages and any and all claims, demands, and liabilities
whatsoever, of every name and nature, both at law and in equity, whether known
or unknown (collectively "Claims"), that any of the Releasing Hambro Parties now
has or ever had with or against any of the Released Mercury Parties (the
"Released Hambro Claims"), including without limitation any and all Claims that
any of the Releasing Hambro Parties now has or ever had with or against any of
the Released Mercury Parties arising out of or relating to any of the matters at
issue in the action entitled Mercury Air Group, Inc. v. Acquisitor Holdings
(Bermuda) Ltd., Case No. 03-4622 ABC (PJWx), pending in the United States
District Court for the Central District of California. Notwithstanding anything
to the contrary in the preceding sentence, the Released Hambro Claims do not
include the obligations of or any Claims arising under the Settlement Agreement
or the notes issued by Mercury pursuant thereto.
2. Mercury, on behalf of itself, its affiliated entities, and any and all
present and former officers, directors, partners, employees, agents, attorneys,
successors, heirs and assigns (the "Releasing Mercury Parties"), do hereby
release, remise, and forever discharge X X Xxxxxx Capital Management Group
Limited, X X Xxxxxx Capital Management Limited, American Opportunity Trust plc,
The Trident North Atlantic Fund, and Xxxxxxxxxx X.X. Xxxxx, their affiliated
entities, present and former officers, directors, partners, employees, agents,
attorneys, successors, heirs and assigns (the "Released Hambro Parties"), of and
from all Claims, that any of the Releasing Mercury Parties now has or ever had
with or against any of the Released Mercury Parties (the "Released Mercury
Claims"), including without limitation any and all Claims that any of the
Releasing Mercury Parties now has or ever had with or against any of the
Released Hambro Parties arising out of or relating to any of the matters at
issue in the action entitled Mercury Air Group, Inc. v. Acquisitor Holdings
(Bermuda) Ltd., Case No. 03-4622 ABC (PJWx), pending in the United States
District Court for the Central District of California. Notwithstanding anything
to the contrary in the preceding sentence, the Released Mercury Claims do not
include the obligations of or any Claims arising under the Settlement Agreement.
3. The parties specifically waive the provisions of California Civil Code
Section 1542, which provides: "A general release does not extend to claims which
the creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected his
settlement with the debtor."
4. Promptly upon the execution of this Agreement, and in no event more
than one (1) business day following the execution of this Agreement, Mercury
shall file or cause to be filed in the United States District Court for the
Central District of California a notice of dismissal with prejudice of all
claims against the Releasing Hambro Parties asserted by Mercury in the action
captioned Mercury Air Group, Inc. v. Acquisition Holdings (Bermuda) Ltd. et al.,
Case
C-2
EXHIBIT 10.1
No. 03-4622 ABC (PJWx). Prior to such filing, the proposed form of any such
notice shall be submitted by Mercury to the Releasing Hambro Parties for
approval, which approval shall not be unreasonably withheld.
5. This Mutual Release of Claims shall be construed and enforced in
accordance with, and be governed by, the laws of New York, and it may not
modified, amended or terminated, nor may the provisions hereof be waived, other
than in a written instrument executed by all parties hereto.
IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as
an agreement under seal as of the date first above written.
MERCURY AIR GROUP, INC.
By:
------------------------------------
Name:
Title:
X X XXXXXX CAPITAL MANAGEMENT GROUP LIMITED
By:
------------------------------------
Name:
Title:
X X XXXXXX CAPITAL MANAGEMENT LIMITED
By:
------------------------------------
Name:
Title:
AMERICAN OPPORTUNITY TRUST PLC
By:
------------------------------------
Name:
Title:
EXHIBIT 10.1
THE TRIDENT NORTH ATLANTIC FUND
By:
------------------------------------
Name:
Title:
XXXXXXXXXXX X.X. XXXXX
------------------------------------
Exhibit D
Form of Press Release
Company Contact:
Xxxxxx Xxxxxx
Mercury Air Group, Inc.
(000) 000-0000
MERCURY AIR GROUP, INC. ANNOUNCES
SETTLEMENT OF LITIGATION
LOS ANGELES, CALIFORNIA - DECEMBER __, 2003 - Mercury Air Group, Inc. (AMEX/PCX:
MAX) announced that it entered into a settlement agreement relating to
litigation with X X Xxxxxx Capital Management Group Limited and certain of its
affiliates and private clients. In connection with such settlement Mercury
agreed to repurchase 343,600 shares of its common stock and pay certain costs
for the mutual release of claims. The settlement terms provided for Mercury to
issue notes to X X Xxxxxx and its affiliates in the aggregate amount of
$3,586,000. Both the Company's senior and subordinated lenders consented to the
terms and conditions of the settlement agreement.
Mercury also has dismissed a complaint against X X Xxxxxx Management Group,
among others, previously filed in the United States District Court for the
Central District of California. In dismissing the action against X X Xxxxxx
Management Group and its affiliates, Mercury determined that it was in the best
interest of Mercury to dismiss such claims. Mercury's Chief Executive Officer,
Xxxxxx X. Xxxxxx, said, "Mercury has no intention of pursuing claims asserted
against X X Xxxxxx and its affiliates and dismissal of the claims was the
appropriate step to take, as upon further investigation of such claims we found
them to be unworthy of pursuing. The estimated legal expenses in connection with
our claim and additional anticipated protracted litigation necessitated this
decision."
ABOUT MERCURY AIR GROUP
Los Angeles-based Mercury Air Group (AMEX/PCX/MAX) provides aviation petroleum
products, air cargo services and transportation, and support services for
international and domestic commercial airlines, general and government aircraft
and specialized contract services for the United States government. Mercury Air
Group operates four business segments worldwide: Mercury Air Centers, MercFuel,
Inc., Maytag Aircraft Corporation and Mercury Air Cargo, Inc. For more
information, please visit xxx.xxxxxxxxxxxxxxx.xxx.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this news release which are not historical facts
are forward- looking statements as that item is defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements are
subject to risks and uncertainties that could cause actual results to differ
materially from estimated results. Such risks and uncertainties are detailed in
the Company's filings with the Securities and Exchange Commission. The Company
intends these forward-looking statements to speak only as of the time of the
news release and does not undertake to update or revise the, as more information
become available.
For further information please contact Xxxxxx Xxxxxx of Mercury Air Group, Inc.
at (310) 827-237.
D-1
EXHIBIT 10.1
Schedule 1
Principal Amounts of Exchange Notes to be Issued
Principal Amount of
Investor Exchanged Shares Exchange Note to be Issued
-------- ---------------- --------------------------
X X Xxxxxx Capital 74,440* $776,897
Management Limited
American Opportunity Trust
plc 157,500 $1,643,757
The Trident North Atlantic
Fund 111,660 $1,165,346
Note: X X Xxxxxx owns an additional 22,400 Shares that will not be exchanged.
EXHIBIT 10.1
Schedule 5.2
Exceptions to the Standstill
1. The Investors may continue to hold the 22,400 Shares not exchanged hereunder.
