Exhibit 10.1

SETTLEMENT AGREEMENT

     SETTLEMENT AGREEMENT, dated this 16th day of July 2004 (the “Agreement”),
by and among (i) David H. Murdock, as trustee of the David H. Murdock Living
Trust dated May 28, 1986, as amended, d/b/a Pacific Holding Company and using
nominee PCS 0001 (the “Investor”) and (ii) Mercury Air Group, Inc., a
corporation organized under the laws of Delaware (the “Company”).

RECITALS

     WHEREAS, Investor has alleged that the Company and an affiliate of Investor
had entered into negotiations involving certain transactions with the Company;
and

     WHEREAS, the Investor had made substantial expenditures in connection with
its due diligence investigation of Mercury’s business; and

     WHEREAS, the Investor has alleged it relied on the Company’s interest in
negotiating a transaction by undertaking due diligence of the Company; and

     WHEREAS, the Investor has asked for reimbursement of certain of these due
diligence expenditures; and

     WHEREAS, the Investor is the record and beneficial owner of 150,000 shares
of common stock, per value $0.01 per share (“Common Stock”), of the Company
(such 150,000 shares owned by the Investor being referred to as the “Repurchased
Shares”), and

     WHEREAS, the Company desires to settle this and other disputes between it
and the Investor and the Investor desires to settle its claims, asserted and
unasserted, against the Company; and

     WHEREAS, as part of such settlement, the Company will purchase from the
Investor, and the Investor will sell to the Company, the Repurchased Shares for
cash, upon the terms and subject to the conditions set forth in this Agreement,
including, without limitation, the obligation to execute and deliver at closing
the Mutual Release of Claims, a form of which is set forth in Exhibit A hereto
(the “Mutual Release of Claims”); and

     WHEREAS, the total consideration to be paid by the Company to the Investor
shall be for (i) the repurchase of the Repurchased Shares, (ii) the release of
the Released Claims (as defined in the Mutual Release of Claims), (iii)
reimbursement to the Investor of all costs, fees, and expenses (including legal
and accounting costs, fees and expenses) incurred by the Investor in connection
with this Agreement, along with the monies expended in connection with the
Investor’s and its affiliate’s due diligence investigation of the Company’s
business; and (iv) the defense of and preparations for anticipated lawsuits
between the parties.

 

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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 Investor hereby agree as follows:

     1.      Purchase and Sale of Repurchased Shares. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations,
warranties and covenants contained herein, at the Closing (as defined in
Section 2 hereof), Investor will sell, transfer and deliver to the Company the
Repurchased Shares for an aggregate purchase price of $900,000 (based on the
closing price of the Company’s common stock on June 2, 2004) (the “Purchase
Price”) in cash.

     2.     Closing. The closing (the “Closing”) of such exchange will take
place at the offices of McBreen & Kopko, 20 North Wacker Drive, Suite 2520,
Chicago, Illinois 60606, on June 16, 2004, or such later time or date as the
parties hereto may mutually agree (such dated being referred to herein as the
“Closing Date”). At the Closing, the Company will make payment of the Purchase
Price to the Investor in immediately available funds, against the surrender by
the Investor to the Company of the Repurchased Shares.

     3.      Investor’s Representations and Warranties. The Investor represents
and warrants to the Company as follows:

     3.1     The 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     The Investor is validly existing under the laws of California;

     3.3     This Agreement has been duly and validly authorized, executed and
delivered by the Investor and constitutes a valid and binding obligation of the
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 Investor is necessary to authorize the execution, delivery
and performance of this Agreement and the transactions contemplated hereby;

     3.4     The 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 Repurchased Shares, has good and marketable title to all such
Repurchased Shares, and there exist no liens, claims, options, proxies, voting
agreements, charges or encumbrances of whatever nature (collectively, “Liens”)
affecting such Repurchased Shares;

     3.5     Upon delivery of the Repurchased Shares to the Company pursuant to
the terms hereto, the Company will have good title to such Repurchased Shares,
free and clear of all Liens;

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     3.6     The Repurchased Shares constitute all of the securities of the
Company beneficially owned, directly or indirectly, by the Investor 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 the 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 the Investor or any Affiliate of the
Investor subject to any agreement (whether written or in the nature of an
informal understanding) which allows or obligates the 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 Investor is subject or any provision of the organizational
documents of the Investor 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 or other arrangement to which the
Investor 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 Investor required to obtain the approval or consent of any
person or entity to effect the exchange of the Repurchased Shares;

     3.9     Neither the Investor nor any person or entity acting on behalf of
the 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 the Investor, or any 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     The Investor has not 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;

     3.11     The Investor has received, read carefully and is familiar with
this Agreement and the Company’s documents on file with the Securities and
Exchange Commission (the “SEC Documents”). Respecting the Company, the Investor
is familiar with the Company’s business, plans and financial condition, the
terms of the transaction and any other matters relating to the transaction; the
Investor has received all materials which have been requested by the Investor;
has had a reasonable opportunity to ask questions of the Company and its
representatives; and the Company has answered all inquiries that the Investor or
the Investor’s representatives have put to it. The Investor has had access to
all additional information necessary to verify the accuracy of the

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information set forth in this Agreement and the SEC Documents and any other
materials furnished herewith;

     3.12     No oral or written representations have been made other than as
stated in the SEC Documents, including but not limited to any oral or written
representation regarding the value of the Company, or plans of the Company
regarding any anticipated transaction. No oral or written information furnished
to the Investor or the Investor’s representative in connection with this
transaction were in any way inconsistent with the information stated in the SEC
Documents;

     3.13     The Investor represents that it has had an opportunity to make
inquiries regarding any plans, commitments, capitalizations, financings,
transactions, or other events that may occur in the future regarding the
Company, that it has elected not to make such inquiries because it is interested
in pursuing this transaction due to its own internal plans, and that it deems
the plans, commitments, capitalizations, financings, transactions, or other
events immaterial to the Investor’s decision to undertake this transaction; and

     3.14     In connection with the Released Claims, Investor hereby expressly
waives the provisions of Section 1542 of the California Civil Code (or any
corresponding local law), which reads as follows:

     “Section 1542. Certain Claims not Affected by General Release. 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.      The Company Representations and Warranties. The Company represents
and warrants to the 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 consummate the transactions contemplated
hereby, and has taken all necessary action to authorize the execution, delivery
and performance of this Agreement;

     4.2     This Agreement has been duly and validly authorized, executed and
delivered by the Company and 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, and the transactions contemplated hereby;

     4.3     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 Company is subject or any provision of the certificate of
incorporation or by-laws, as amended to

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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 repurchase of the Repurchased Shares;

     4.4     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;

     4.5     The Company acknowledges and confirms that the Investor has not
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

     4.6     In connection with the Released Claims, the Company hereby
expressly waives the provisions of Section 1542 of the California Civil Code (or
any corresponding local law), which reads as follows:

     “Section 1542. Certain Claims not Affected by General Release. 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.”

     5.      Other Covenants.

     5.1     Expenses. Each party hereto shall bear its own costs, fees and
expenses in connection with this Agreement and matters arising hereunder, except
as provided in Section 7.13 and except that Investor shall be entitled to a
payment of $525,000 representing all costs, fees and expenses (including legal
and accounting costs, fees and expenses) incurred by Investor in connection with
this Agreement, all costs, fees and expenses of Investor’s and its affiliate’s
due diligence investigation of the Company’s business and consideration for
Investor’s execution and delivery of the Mutual Release of Claims. Such payment
shall be made by the Company to the Investor on the Closing Date in immediately
available funds.

     5.2     Publicity. 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 the Investor; provided, however, that the
provisions of this Section 5.2 will not prohibit (a) any disclosure required by
any applicable law (in which case the disclosing party will provide the other
party with the opportunity to review and comment on the disclosure in advance)
or (b) any disclosure made in connection with the

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enforcement of any right or remedy relating to this Agreement, or the other
documents contemplated hereby.

     5.3     Mutual Release of Claims. At the Closing, the Company and the
Investor will each execute and deliver the Mutual Release of Claims, in the form
set forth in Exhibit A hereto.

     6.     Conditions to Closing.

     6.1     Precedent to the Obligations of the Investor. The obligation of the
Investor to tender the Repurchased Shares to the Company for repurchase 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 Investor at or
prior to the Closing:

  (a)   Closing Deliveries. The Company shall have transmitted to the Investor
the amounts set forth in Section 1 and Section 5.1, in immediately available
funds, along with an executed original of the Mutual Release of Claims.     (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)   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.

     6.2     Conditions Precedent to Obligations of the Company. The Company’s
obligations to repurchase the Repurchased Shares 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. The Investor shall have surrendered to the Company
certificates evidencing the Repurchased Shares, duly endorsed (or accompanied by
duly executed stock transfer powers), along with an executed original of the
Mutual Release of Claims.     (b)   Representations and Warranties. The
representations and warranties made by the Investor in this Agreement shall be
true and correct in all material respects as of the Closing Date.     (c)  
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.

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     7.      Miscellaneous.

     7.1     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:

     by hand (in which case, it will be effective upon delivery);

     by facsimile (in which case, it will be effective upon receipt of
confirmation of good transmission); or

     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:

          Mercury Air Group, Inc.
          5456 McConnell Avenue
          Los Angeles, CA 90066
          Telephone number: (310) 827-2737
          Facsimile number: (310) 827-6897
          Attention: Joseph Czyzyk

    with a copy to:

          McBreen & Kopko
          20 North Wacker Drive, Suite 2520
          Chicago, IL 60606
          Telephone number: (312) 332-6405
          Facsimile number: (312) 332-2059
          Attention: Frederick H. Kopko, Jr.

    If to the Investor, to it at:

          Pacific Holding Company
          10900 Wilshire Boulevard, Suite 1600
          Los Angeles, CA 90024
          Telephone number: (310) 209-3803
          Facsimile number: (310) 2824-7770
          Attention: General Counsel

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     with a copy to:

          O’Melveny & Myers, LLP
          7 Times Square
          New York, NY 10036
          Telephone number: (212) 326-2085
          Facsimile number: (212) 326-2061
          Attention: Charles F. Niemeth, Esq.

Each of the parties to this Agreement may specify a different address or
facsimile number by giving notice in accordance with this Section 7.1 to the
other party hereto.

     7.2     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.

     7.3     Indemnification. The Company shall indemnify the Investor, its
Affiliates, and each of their respective directors, officers, employees, agents,
attorneys, accountants, consultants and each person, if any, who controls the
Investor or its Affiliates (the Investor, 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, or (b) this Agreement 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.

     7.4     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 Investor, 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,

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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.

     7.5     Entire Agreement. This Agreement, 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.

     7.6     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.

     7.7     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.

     7.8     Headings. The headings contained in this Agreement are for
convenience purposes only and will not in any way affect the meaning or
interpretation hereof.

     7.9     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 material 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 in any material respect, will not detract from or mitigate the
fact that the party has breached or violated, or there is an inaccuracy in a
material respect in, the first representation, warranty or covenant.

     7.10     Survival. All covenants, agreements, representations and
warranties made herein shall survive the execution and delivery hereof and the
Closing hereunder.

     7.11     Incorporation of Exhibits. The Exhibit identified in this
Agreement is incorporated herein by reference and made a part hereof.

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     7.12     Specific Performance. Each of the parties acknowledges and agrees
that the other party 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 party 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.

     7.13     Attorneys’ Fees. If an attorney is engaged by either the Investor
or the Company in connection with the enforcement of the Agreement, or in any
matter in connection herewith (except in the negotiation and documentation of
this Agreement), the prevailing party shall be entitled to recover all
reasonable attorneys’ fees and expenses incurred in connection therewith.

     7.14     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
California, 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.

     7.15     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.

[Signatures on following page]

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     IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as
an agreement under seal as of the date first above written.

          PURCHASER:   MERCURY AIR GROUP, INC.
 
       
 
       

  By:   /s/ Joseph Czyzyk

     

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      Name: Joseph Czyzyk
Title: President, CEO
 
       
 
        INVESTOR:   DAVID H. MURDOCK LIVING TRUST DATED MAY 28, 1986, AS
AMENDED, D/B/A PACIFIC HOLDING COMPANY AND USING NOMINEE PCS 0001
 
       
 
       

  By:   /s/ David H. Murdock

     

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      David H. Murdock, Trustee

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Exhibit A

Mutual Release of Claims

 

[See attached]

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Exhibit A

MUTUAL RELEASE OF CLAIMS

RELEASE OF CLAIMS, dated this 16th day July, 2004 (the “Agreement”), by and
among (i) David H. Murdock, as trustee of the David H. Murdock Living Trust
dated May 28, 1986, as amended, d/b/a Pacific Holding Company and using nominee
PCS 0001 (“Investor”) and (ii) Mercury Air Group, Inc., a corporation organized
under the laws of Delaware (“Mercury”).

RECITALS

WHEREAS, as of July 16, 2004, Investor was the record and beneficial owners of
150,000 shares of Mercury common stock, par value $.01 per share (the “Common
Stock”);

WHEREAS, on that date, Investor and Mercury entered into a Settlement Agreement
(the “Settlement Agreement”) whereby Investor agreed to exchange all of its
shares of Mercury Common Stock for cash;

WHEREAS, on the date hereof, the closing of the Settlement Agreement has
occurred; and

WHEREAS, pursuant to the Settlement Agreement, Investor and Mercury agreed that
upon closing of 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.

NOW THEREFORE, for good and valuable consideration the receipt of which is
acknowledged by all parties, Investor and Mercury agree as follows:

1. Investor, on behalf of itself, its owned and/or affiliated entities, and any
and all present and former officers, directors, partners, employees, agents,
attorneys, successors, heirs and assigns of any of the foregoing (the “Releasing
Investor Parties”), do hereby release, remise, and forever discharge Mercury,
its owned and/or affiliated entities, and any and all its present and former
officers, directors, partners, employees, agents, attorneys, successors, heirs
and assigns of any of the foregoing (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
Investor Parties now has or ever had with or against any of the Released Mercury
Parties (the “Released Investor Claims”), including without limitation any and
all Claims that any of the Releasing Investor Parties now has or ever had with
or against any of the Released Mercury Parties arising out of or relating to any
matter in connection with any of the Releasing Investor Parties’ attempts to
purchase Mercury’s FBO Business or any part thereof. Notwithstanding anything to
the contrary in the preceding sentence, the Released Investor Claims do not
include the obligations of or any Claims arising under the Settlement Agreement.

2. Mercury, on behalf of itself, its owned and/or affiliated entities, and any
and all present and former officers, directors, partners, employees, agents,
attorneys, successors, heirs and assigns of any of the foregoing (the “Releasing
Mercury Parties”), do hereby release, remise, and forever discharge Investor,
its owned and/or affiliated entities, and any and all present and

 

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former officers, directors, partners, employees, agents, attorneys, successors,
heirs and assigns of any of the foregoing (the “Released Investor 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 Investor 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 Investor Parties arising out of or relating to any matter in connection
with any of the Releasing Investor Parties’ attempts to purchase Mercury’s FBO
business or any part thereof. 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. This Mutual Release of Claims shall be construed and enforced in accordance
with, and be governed by, the laws of California, 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.

[Signatures on following page]

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     IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as
an agreement under seal as of the date first above written.

          MERCURY:   MERCURY AIR GROUP, INC.
 
       

  By:   /s/ Joseph Czyzyk

     

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      Name: Joseph Czyzyk

      Title: President, CEO
 
        INVESTOR:   DAVID H. MURDOCK LIVING TRUST DATED MAY 28, 1986, AS
AMENDED,     D/B/A PACIFIC HOLDING COMPANY AND USING NOMINEE PCS 0001
 
       

  By:   /s/ David H. Murdock

     

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      David H. Murdock, Trustee

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