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EHXIBIT 10.31
AGREEMENT
This Agreement is effective as of the 1st day of August, 1995, between
Xxxxx X. Xxxxxx ("Xxxxxx") and Mercury Air Group, Inc. ("Mercury"), collectively
referred to as "the parties." This Agreement, once properly executed by the
parties, is a contract which supersedes any and all prior contracts, whether
written, oral or implied in law or in fact between the parties.
RECITALS
WHEREAS Xxxxxx has resigned his employment with Mercury effective July 6,
1995, which resignation has been accepted by Mercury; and,
WHEREAS Xxxxxx and Mercury wish to resolve any and all disputes, claims,
or potential disputes or claims arising out of Xxxxxx'x employment with Mercury,
and/or arising out of any contracts which the parties entered into during the
time frame in which Xxxxxx was employed by Mercury; and
WHEREAS the parties wish to extinguish all obligations arising out of any
and all such contracts between them, or potentially arising out of any and all
such contracts between them, whether such contracts are claimed to be oral or
written, or implied in law or in fact, by entering into this Agreement which, in
return for the mutual considerations set forth below, establishes all present
and future rights and obligations of the parties, and specifically supersedes
any and all prior contracts, agreements, or commitments which either party
claims exist now, or may claim to exist at any time in the future; and
WHEREAS the parties wish to release one another from any and all claims,
demands and actions, whether known or unknown, and whether in law or in equity,
or of
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an administrative nature arising out of any conduct or activity of either party
at any time prior to the effective date of this Agreement,
NOW THEREFORE, in contemplation of the intentions of the parties as set
forth in the foregoing recitals, and in consideration for the covenants,
conditions, payments, and restrictions as they relate to one party, the other
party, or both, as set forth below, the parties do hereby agree as follows:
TERMS
1. In consideration for the payment to Xxxxxx by Mercury of Two Hundred
Seventy Five Thousand and No/100 Dollars ($275,000), in accordance with the
schedule set forth below, Xxxxxx specifically agrees:
a. to relinquish any and all claims he has, might have, or might claim
to have in any stock options issued to him by Mercury, or purportedly
issued to him by Mercury, at any time whatsoever; and
b. to sell to Mercury One Hundred Ten Thousand (110,000) shares of
common stock owned, or claimed to be owned by Xxxxxx, either in whole or
in part, under a stock purchase agreement previously executed by Xxxxxx,
which agreement is now expressly extinguished by virtue of this
Agreement. The sale of the One Hundred Ten Thousand (110,000) shares of
common stock shall be effective and all of Xxxxxx'x right, title and
interest to such shares shall be transferred to Mercury upon receipt by
Xxxxxx of the initial Seventy Five Thousand and No/100 Dollars ($75,000)
payment in accordance with the following payment schedule:
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Initial payment of Seventy Five Thousand and No/100 Dollars ($75,000) to
Xxxxxx by Mercury upon execution of this Agreement, followed by four (4)
additional quarterly payments in the amount of Fifty Thousand and No/100
Dollars ($50,000) each, commencing with an initial Fifty Thousand and
No/100 Dollars ($50,000) quarterly payment on November 1, 1995, and
followed thereafter by similar Fifty Thousand and No/100 Dollars
($50,000) payments on February 1, 1996, May 1, 1996, and August 1, 1996.
The only exception to this payment schedule involves the first quarterly
installment of Fifty Thousand and No/100 Dollars ($50,000) scheduled to
be paid on November 1, 1995. Xxxxxx specifically agrees that there is
presently due and owing to Mercury an obligation by Millionaire of Long
Beach in the amount of Forty Four Thousand, Seven Hundred Ninety Five
and 59/100 Dollars ($44,795.59). Millionaire of Long Beach is a company
in which Xxxxxx holds an ownership interest, and Xxxxxx agrees that he
will use his best efforts to assure that the amount owing is paid to
Mercury in full on or before November 1, 1995. Xxxxxx specifically
agrees that in the event the obligation by Millionaire of Long Beach
has not been paid in full by November 1, 1995, Mercury's obligation to
Xxxxxx to pay the first Fifty Thousand and No/100 Dollars ($50,000)
quarterly
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installment payment will be reduced by the amount of any remaining
obligation owed to Mercury by Millionaire of Long Beach. Xxxxxx will
only receive the difference between such amount as is owed by
Millionaire of Long Beach to Mercury and the Fifty Thousand and No/100
Dollars ($50,000) he otherwise would be scheduled to receive on
November 1, 1995, and Xxxxxx specifically agrees that no future claim or
demand will be made by him for any such amount by which his initial
quarterly installment payment is reduced, and in the event any claim or
demand is ever made by Millionaire of Long Beach or any stranger or third
party hereto, Xxxxxx will defend, indemnify and hold Mercury harmless
from and against any such claim or demand.
2. Upon execution of this Agreement, Xxxxxx releases, acquits and forever
discharges S.K. Acquisition, Inc., Xxxxxxx Xxxx, Mercury, and all of its
employees, agents, officers, directors, attorneys, affiliates, successors and
assigns from any and all claims, demands, and causes of action, whether in law
or in equity, including, but not limited to, any and all administrative claims,
for any compensation due, or allegedly due, whether for wages, commissions,
bonuses, benefits or any other form of compensation earned or claimed to have
been earned during Xxxxxx'x employment with Mercury.
3. As further consideration for Xxxxxx'x release of any and all claims
against Mercury, and its officers, directors, employees, agents, attorneys,
affiliates and/or assigns, whether known or unknown, and whether arising in law
or in equity, and whether for tort
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or contractual damages, or other relief arising under common law or statute,
Mercury agrees to pay all premiums due for continuation of the medical insurance
which currently affords coverage to Xxxxxx, through and including December,
1995.
4. As further consideration for Xxxxxx'x release of all claims, whether
known or unknown, as set forth herein, and in return for Xxxxxx'x acceptance of
all of the covenants, conditions and restrictions running in favor of Mercury as
also set forth herein, Mercury agrees to release Xxxxxx from any and all claims,
whether known or unknown, whether in law or in equity, and whether arising out
of any contract, written or oral, implied in law or in fact, previously entered
into or claimed to have been entered into between the parties during Xxxxxx'x
employment with Mercury.
5. In consideration for the payments to him by Mercury as set forth
herein, and in consideration for Mercury's release of all claims it has or may
have against him through and including the effective date of this Agreement,
Xxxxxx expressly covenants that he will not, at any time during the effective
term of this Agreement, which runs from date of execution through and including
August 1, 1996, the date for the final Fifty Thousand and No/100 Dollars
($50,000) installment payment by Mercury to Xxxxxx, engage in any activity of
any kind or nature whatsoever in direct or indirect competition with Mercury.
For purposes of this Agreement, "direct competition" is defined as any conduct
by Xxxxxx, or at his direction, involving the design, development, production,
promotion, consulting, or sale of products or services competing with Mercury's
products or services, and "indirect competition" is defined as any employment of
Xxxxxx by, or affiliation with, any competitor of Mercury or third party which
provides products or services which compete with Mercury's products or services.
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6. Xxxxxx acknowledges and by executing this Agreement confirms his
understanding that the covenant not to compete with Mercury contained in the
preceding paragraph number 5 is an essential condition of this contract.
Specifically, Xxxxxx acknowledges that he has had an opportunity to consider the
ramifications of such covenant not to compete, and he has had an opportunity to
consult freely with counsel of his choice, prior to execution of this Agreement,
concerning the ramifications of said covenant not to compete. Xxxxxx hereby
expressly confirms that he is voluntarily waiving any and all legal challenges
which he has, or might ever have, concerning the scope, duration or
enforceability of the covenant not to compete. Xxxxxx understands that by
executing this Agreement which contains this express covenant not to compete, he
is significantly restraining his own opportunities or potential opportunities
during the effective term of this Agreement to pursue employment, or any other
type of agency relationship or business affiliation with any business
organizations, individuals or entities which engage in or intend to engage in
business activities which compete with Mercury's business activities. Xxxxxx
hereby acknowledges his thorough understanding of the ramifications of executing
this Agreement, and freely and fully accepts the conditions of this Agreement
which preclude him from pursuing opportunities which he might otherwise pursue
during the effective term of this Agreement.
7. The parties recognize that the covenant not to compete by Xxxxxx
constitutes an essential, material term of this Agreement, any breach of which
would be substantially detrimental to Mercury. The parties further recognize
that in the event of any breach by Xxxxxx of the covenant not to compete, it
would be difficult, if not impossible to affix damages with sufficient
particularity to compensate Mercury for such breach. Therefore,
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and recognizing such difficulty, Xxxxxx specifically agrees that in the event of
a breach by him of the covenant not to compete with Mercury, liquidated damages
are fixed by this Agreement, in lieu of any and all other claims for damages
which Mercury would have, or might assert, as a consequence of such breach. The
measure of liquidated damages in the event Xxxxxx breaches the covenant not to
compete will be the immediate cessation of any and all payments then remaining
due to Xxxxxx from Mercury under the schedule for payments set forth above,
along with the immediate cessation of any and all other consideration due to
Xxxxxx under the terms of this Agreement, whether monetary or otherwise.
8. As further consideration for Xxxxxx'x covenant not to compete with
Mercury, Mercury agrees to negotiate with Xxxxxx in good faith to attempt to
enter into a separate agency agreement with Xxxxxx, whereby Xxxxxx will be
financially compensated by Mercury for procuring selected new business accounts
for Mercury, on terms to be agreed upon between the parties. The separate
agreement contemplated herein will allow the parties to identify certain
accounts with which Mercury presently does not have a business relationship, and
with whom a business relationship is desired by Mercury. In the event Xxxxxx
succeeds in procuring such identified new accounts for Mercury, and subject to
Mercury's receipt of payment for goods and/or services provided by Mercury to
said new accounts, Xxxxxx will be entitled to compensation pursuant to an agreed
upon formula between the parties, as set forth in the contemplated separate
agreement. Nothing in the contemplated separate agreement shall be construed to
create an employment relationship between the parties, but rather, the
contemplated separate agreement will be prepared to reflect an understanding
between the parties that Xxxxxx is to serve as an
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independent agent exclusively for Mercury and Mercury will treat any payments to
Xxxxxx under the terms of the separate agreement as though it was a "finder's
arrangement" to the extent Xxxxxx succeeds in generating new business with
select accounts as identified by the parties. In the event the parties are
unable to agree upon mutually acceptable terms for this contemplated separate
agreement, all remaining terms and conditions of this Agreement will remain in
full force and effect and continue to be binding upon the parties.
9. The parties acknowledge that in connection with the negotiations
leading up to the preparation and execution of this Agreement, Mercury was
furnished a letter dated July 21, 1995, from Xxxxxxx Xxxxxxx, on behalf of
Aircraft Commodities Corporation, specifically confirming that a contract dated
November 25, 1992, between Aircraft Commodities Corporation and Mercury was
void, of no further force and effect, and Aircraft Commodities Corporation
specifically released Mercury from any and all claims, known and unknown,
arising under or claimed to arise under said contract, in return for a similar
agreement by Mercury to release Aircraft Commodities Corporation from any
claims, commissions or actions of any nature that Mercury may have or claim to
have against Aircraft Commodities Corporation arising out of the contract with
Mercury dated November 25, 1992. A copy of the Aircraft Commodities Corporation
letter dated July 21, 1995 is attached hereto as Exhibit A, and incorporated
fully by this reference. A copy of Mercury's letter to Aircraft Commodities
Corporation dated August 8, 1995, is attached hereto as Exhibit B, and
incorporated fully by this reference. By virtue of these documents referenced
Exhibits A and B, respectively, the parties acknowledge that Mercury on the one
hand, and Aircraft Commodities Corporation on the other hand, have expressly
agreed that the contract between them dated November 25, 1992 is of no further
force and effect,
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and neither party will take action of any kind or make demand or claim of any
nature whatsoever against the other, as a consequence of, or arising out of the
business relationship contemplated by said contract. In the event, however, that
Aircraft Commodities Corporation initiates any action against Mercury arising
out of or in connection with said contract, or makes any demand or claim upon
Mercury for any commissions or other compensation due or allegedly due under the
terms of said contract, Xxxxxx expressly agrees hereby to defend, indemnify and
hold Mercury harmless from and against any and all such claims, demands,
actions, or causes of action as may be asserted by Aircraft Commodities
Corporation.
10. As further consideration to Xxxxxx under the terms of this Agreement,
Mercury agrees to forgive any and all debts or obligations owed by Xxxxxx or
claimed to be owed by Xxxxxx to Mercury, including, but not limited to, any
loans, advances or forgiveness of payments made by or on behalf of Xxxxxx at any
time prior to execution of this Agreement. In addition, Mercury expressly
acknowledges that prior to its execution of this Agreement, it has received the
original "Option Share Agreement" from Xxxxxx, representing Xxxxxx'x full and
complete relinquishment of any claim or entitlement under said Option Share
Agreement. Further, prior to execution of this Agreement, Mercury expressly
warrants that no claim or demand for payment will be made upon Xxxxxx with
respect to the promissory note executed by Xxxxxx in favor of SK Acquisition,
Inc., in connection with the loan to Xxxxxx for purposes of acquiring common
stock in Mercury. It is expressly agreed that Xxxxxx will have no further
obligations of any kind whatsoever in connection with said promissory note, upon
execution of this Agreement.
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11. This Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of California. With the exception of the
liquidated damages provision for any breach by Xxxxxx of the covenant not to
compete during the effective term of this Agreement, any and all other breaches
of this Agreement, or alleged breaches of this Agreement shall be subject to
resolution solely and exclusively by way of binding arbitration. The parties
expressly agree that in return for valuable consideration as set forth in this
Agreement, the parties waive any right or entitlement to proceed with any legal
action in the event of any breach or alleged breach of this Agreement. Rather,
and with the sole exception of any action involving the breach or alleged breach
of the covenant by Xxxxxx not to compete with Mercury, any and all other claims
or disputes shall be resolved exclusively and conclusively by way of mandatory
binding arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then existing, and judgment on the arbitration
award may be entered in any court having jurisdiction over the subject matter of
the controversy. In the event of arbitration, the parties shall each pay their
respective share for any and all fees or costs charged in connection with the
arbitration, and each party shall pay for his or its attorneys' fees in
connection with any such activity. The prevailing party in any action which
proceeds to binding arbitration shall be entitled to complete reimbursement for
his or its costs associated with the arbitration, and for his or its attorneys'
fees incurred in connection with prosecuting or defending his or its position.
12. Notwithstanding the liquidated damages provisions specified in this
Agreement for breach of the covenant by Xxxxxx not to compete with Mercury
during the effective term of this Agreement, nothing in this Agreement shall be
construed as to
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prevent Mercury from immediately seeking appropriate injunctive relief in any
court of competent jurisdiction in the event Xxxxxx breaches, or is alleged to
be breaching the covenant not to compete with Mercury. It is expressly
understood by Xxxxxx that in the event he breaches the covenant not to compete,
Mercury is entitled to pursue injunctive relief in any court of competent
jurisdiction, in addition to invoking the liquidated damages provisions of this
Agreement.
13. The parties agree that they will use their best efforts to facilitate
the prompt preparation and execution of the separate agreement contemplated in
paragraph 8 above. In addition, and prior to execution of this Agreement, the
parties will use their best efforts to procure, deliver, and/or sign any and all
such documents as are necessary to effect the purposes of this Agreement. One
such document which will require execution by the parties to effect the purposes
of this Agreement is a letter of instruction to Xxxxxx Xxxxxxxxx, Esq., escrow
agent for the common stock which is being relinquished by Xxxxxx and repurchased
by Mercury in accordance with the terms of this Agreement. A letter has been
prepared for this purpose, and is attached hereto as Exhibit C.
14. The parties confirm that this Agreement shall not be construed by
either Mercury or Xxxxxx as having been drafted by one party or the other. This
Agreement is the product of arms length negotiations between the parties, and
neither party shall argue or contend that this Agreement was drafted by the
other, so as to claim that any terms or provisions of this Agreement should be
construed in favor of one particular party or the other, on the basis that one
particular party or the other drafted this Agreement.
15. If any provision of this Agreement is held invalid or unenforceable,
the remainder of this Agreement shall nevertheless remain in full force and
effect for the term
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of this Agreement. If any provision is held invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date specified above.
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XXXXX X. XXXXXX
MERCURY AIR GROUP, INC.
By:
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XXXXXXX XXXX
Chairman
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