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                                                                    EXHIBIT 10.9









                INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT



                                     BETWEEN



                             MERCURY AIR GROUP, INC.

                                       AND

                                 MERCFUEL, INC.





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                                TABLE OF CONTENTS


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                                                                                                               PAGE
                                                                                                              ------

<S>                                                                                                          <C>
ARTICLE I--- MUTUAL RELEASES; INDEMNIFICATION.............................................................        1

         Section 1.1       Release of Pre-Closing Claims..................................................        1

         Section 1.2       Indemnification by MercFuel....................................................        2

         Section 1.3       Indemnification by MAG.........................................................        3

         Section 1.4       Indemnification with Respect to Environmental Actions
                           and Conditions.................................................................        3

         Section 1.5       Reductions for Insurance Proceeds and Other Recoveries.........................        4

         Section 1.6       Procedures for Defense, Settlement and Indemnification of
                           Third Party Claims.............................................................        5

         Section 1.7       Additional Matters.............................................................        6

         Section 1.8       Survival of Indemnities........................................................        7

ARTICLE II--- INSURANCE MATTERS...........................................................................        7

         Section 2.1       MercFuel Insurance Coverage During the Transition Period.......................        7

         Section 2.2       Cooperation and Agreement Not to Release Carriers..............................        7

         Section 2.3       MercFuel Insurance Coverage After the Insurance Transition Period..............        8

         Section 2.4       Responsibilities for Deductibles and/or Self-insured Liabilities...............        8

         Section 2.5       Procedures With Respect to Insured MercFuel Liabilities........................        8

         Section 2.6       Insufficient Limits of Liability for MAG Liabilities
                           and MercFuel Liabilities.......................................................        8

         Section 2.7       Cooperation....................................................................        9

         Section 2.8       No Assignment or Waiver........................................................        9

         Section 2.9       No Liability...................................................................        9

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<S>                                                                                                          <C>
         Section 2.10      Additional or Alternate Insurance............................................          9

         Section 2.11      Further Agreements...........................................................          9

         Section 2.12      Matters Governed by Employee Matters Agreement...............................         10

ARTICLE III--- MISCELLANEOUS............................................................................         10

         Section 3.1       Entire Agreement.............................................................         10

         Section 3.2       Governing Law................................................................         10

         Section 3.3       Dispute Resolution...........................................................         10

         Section 3.4       Notices......................................................................         11

         Section 3.5       Parties in Interest..........................................................         12

         Section 3.6       Other Agreements Evidencing Indemnification Obligations......................         12

         Section 3.7       Counterparts.................................................................         12

         Section 3.8       Assignment...................................................................         12

         Section 3.9       Severability.................................................................         12

         Section 3.10      Failure or Indulgence Not Waiver.............................................         12

         Section 3.11      Amendment....................................................................         13

         Section 3.12      Authority....................................................................         13

         Section 3.13      Interpretation...............................................................         13

ARTICLE IV--- DEFINITIONS...............................................................................         13

         Section 4.1       Action.......................................................................         13

         Section 4.2       Affiliated Company...........................................................         13

         Section 4.3       Assets.......................................................................         13

         Section 4.4       Assignment Agreement.........................................................         13

         Section 4.5       Coverage Amount..............................................................         13

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<S>                                                                                                           <C>
         Section 4.6       Distribution Agreement.........................................................       13

         Section 4.7       Distribution Date..............................................................       14

         Section 4.8       Employee Matters Agreement.....................................................       14

         Section 4.9       Environmental Actions..........................................................       14

         Section 4.10      Environmental Conditions.......................................................       14

         Section 4.11      Environmental Laws.............................................................       14

         Section 4.12      Hazardous Materials............................................................       14

         Section 4.13      Indemnitee.....................................................................       14

         Section 4.14      Insurance Policies.............................................................       14

         Section 4.15      Insurance Proceeds.............................................................       14

         Section 4.16      Insurance Transition Period....................................................       15

         Section 4.17      Insured MercFuel Liability.....................................................       15

         Section 4.18      IPO Date.......................................................................       15

         Section 4.19      IPO Liabilities................................................................       15

         Section 4.20      IPO Registration Statement.....................................................       15

         Section 4.21      Liabilities....................................................................       15

         Section 4.22      MAG Business...................................................................       15

         Section 4.23      MAG Facilities.................................................................       15

         Section 4.24      MAG Group......................................................................       15

         Section 4.25      MAG Indemnitees................................................................       15

         Section 4.26      MercFuel Business..............................................................       15

         Section 4.27      MercFuel Contracts.............................................................       15

         Section 4.28      MercFuel Covered Parties.......................................................       15

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<TABLE>

<S>                                                                                                           <C>
         Section 4.29      MercFuel Facilities.............................................................      15

         Section 4.30      MercFuel Group..................................................................      15

         Section 4.31      MercFuel Indemnitees............................................................      16

         Section 4.32      MercFuel Liabilities............................................................      16

         Section 4.33      Non-U.S. Plan...................................................................      16

         Section 4.34      Person..........................................................................      16

         Section 4.35      Pre-Separation Third Party Site Liabilities.....................................      16

         Section 4.36      Release.........................................................................      16

         Section 4.37      Separation......................................................................      16

         Section 4.38      Separation Date.................................................................      16

         Section 4.39      Shared Percentage...............................................................      16

         Section 4.40      Subsidiary......................................................................      17

         Section 4.41      Tax Sharing Agreement...........................................................      17

         Section 4.42      Taxes...........................................................................      17

         Section 4.43      Third Party Claim...............................................................      17

</TABLE>


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                 INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT

     This Indemnification and Insurance Matters Agreement (this "Agreement") is
entered into as of _________, 2001 and effective as of January 1, 2001 (the
"Effective Date") between Mercury Air Group, Inc., a Delaware corporation
("MAG"), and MercFuel, Inc., a Delaware corporation ("MercFuel"). Capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Article IV below.

                                    RECITALS

     WHEREAS, MAG and its Subsidiaries have transferred or will transfer to
MercFuel and its Subsidiaries effective as of the Separation Date, substantially
all of the assets of the MercFuel Business.

     WHEREAS, MAG and MercFuel have entered into a Master Distribution Agreement
dated as of _____________, 2001 and effective as of ____________ (the
"Distribution Agreement").

     WHEREAS, the parties desire to set forth certain agreements regarding
indemnification and insurance.

     NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:

                                   ARTICLE I.
                        MUTUAL RELEASES; INDEMNIFICATION

     Section 1.1 Release of Pre-Closing Claims.

          (a) MercFuel Release. Except as provided in Section 1.1(c) and the
     attached Schedule 1.1(a) to this Agreement, effective as of the Separation
     Date, MercFuel does hereby, for itself and as agent for each member of the
     MercFuel Group, remise, release and forever discharge the MAG Indemnitees
     from any and all Liabilities whatsoever, whether at law or in equity
     (including any right of contribution), whether arising under any contract
     or agreement, by operation of law or otherwise, existing or arising from
     any acts or events occurring or failing to occur or alleged to have
     occurred or to have failed to occur or any conditions existing or alleged
     to have existed on or before the Separation Date, including in connection
     with the transactions and all other activities to implement the Separation,
     the IPO and the Distribution. Notwithstanding the foregoing language,
     MercFuel shall not release the MAG Indemnitees from any Liabilities that
     relate to, arise out of or result from claims related to the use of the
     name MercFuel or MercFuel, Inc., or the use of any trademarks, service
     marks or trade names associated with those names.



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          (b) MAG Release. Except as provided in Section 1.1(c) and the attached
     Schedule 1.1(b) to this Agreement, effective as of the Separation Date, MAG
     does hereby, for itself and as agent for each member of the MAG Group,
     remise, release and forever discharge the MercFuel Indemnitees from any and
     all Liabilities whatsoever, whether at law or in equity (including any
     right of contribution), whether arising under any contract or agreement, by
     operation of law or otherwise, existing or arising from any acts or events
     occurring or failing to occur or alleged to have occurred or to have failed
     to occur or any conditions existing or alleged to have existed on or before
     the Separation Date, including in connection with the transactions and all
     other activities to implement the Separation, the IPO and the Distribution.

          (c) No Impairment. Nothing contained in Section 1.1(a) or (b) shall
     impair any right of any Person to enforce the Distribution Agreement or any
     other Ancillary Agreement (including this Agreement), in each case in
     accordance with its terms.

          (d) No Actions as to Released Claims. MercFuel agrees, for itself and
     as agent for each member of the MercFuel Group, not to make any claim or
     demand, or commence any Action asserting any claim or demand, including any
     claim of contribution or any indemnification, against MAG or any member of
     the MAG Group, or any other Person released pursuant to Section 1.1(a),
     with respect to any Liabilities released pursuant to Section 1.1(a). MAG
     agrees, for itself and as agent for each member of the MAG Group, not to
     make any claim or demand, or commence any Action asserting any claim or
     demand, including any claim of contribution or any indemnification, against
     MercFuel or any member of the MercFuel Group, or any other Person released
     pursuant to Section 1.1(b), with respect to any Liabilities released
     pursuant to Section 1.1(b).

          (e) Further Instruments. At any time, at the request of any other
     party, each party shall cause each member of its respective Group to
     execute and deliver releases reflecting the provisions hereof.

     Section 1.2 Indemnification by MercFuel. Except as otherwise provided in
this Agreement, MercFuel shall, for itself and as agent for each member of the
MercFuel Group, indemnify, defend (or, where applicable, pay the defense costs
for) and hold harmless the MAG Indemnitees from and against any and all
Liabilities that any third party seeks to impose upon the MAG Indemnitees, or
which are imposed upon the MAG Indemnitees, and that relate to, arise out of or
result from any of the following items (without duplication):

          (i) the MercFuel Business, any MercFuel Liability or any MercFuel
     Contract; and

          (ii) any breach by MercFuel or any member of the MercFuel Group of the
     Distribution Agreement or any of the Ancillary Agreements (including this
     Agreement); and

          (iii) any IPO Liabilities.



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          Notwithstanding the foregoing language, MercFuel shall not indemnify
     the MAG Indemnitees from any Liabilities that any third party seeks to
     impose upon the MAG Indemnitees, or which are imposed upon the MAG
     Indemnitees, and that relate to, arise out of or result from claims related
     to the use of the name MercFuel or MercFuel, Inc., or the use of any
     trademarks, service marks or trade names associated with those names.

     In the event that any member of the MercFuel Group makes a payment to the
MAG Indemnitees hereunder, and any of the MAG Indemnitees subsequently
diminishes the Liability on account of which such payment was made, either
directly or through a third-party recovery, MAG will promptly repay (or will
procure a MAG Indemnitee to promptly repay) such member of the MercFuel Group
the amount by which the payment made by such member of the MercFuel Group
exceeds the actual cost of the associated indemnified Liability. This Section
1.2 shall not apply to any Liability indemnified under Section 1.4.

     Section 1.3 Indemnification by MAG. Except as otherwise provided in this
Agreement, MAG shall, for itself and as agent for each member of the MAG Group,
indemnify, defend (or, where applicable, pay the defense costs for) and hold
harmless the MercFuel Indemnitees from and against any and all Liabilities that
any third party seeks to impose upon the MercFuel Indemnitees, or which are
imposed upon the MercFuel Indemnitees, and that relate to, arise out of or
result from any of the following items (without duplication):

          (i) the MAG Business or any Liability of the MAG Group other than the
     MercFuel Liabilities; and

          (ii) any breach by MAG or any member of the MAG Group of the
     Distribution Agreement or any of the Ancillary Agreements (including this
     Agreement).

          Notwithstanding the foregoing language, MAG shall indemnify the
     MercFuel Indemnitees from any Liabilities that any third party seeks to
     impose upon the MercFuel Indemnitees, or which are imposed upon the
     MercFuel Indemnitees, and that relate to, arise out of or result from
     claims related to the use of the name MercFuel or MercFuel, Inc., or the
     use of any trademarks, service marks or trade names associated with those
     names.

     In the event that any member of the MAG Group makes a payment to the
MercFuel Indemnitees hereunder, and any of the MercFuel Indemnitees subsequently
diminishes the Liability on account of which such payment was made, either
directly or through a third-party recovery, MercFuel will promptly repay (or
will procure a MercFuel Indemnitee to promptly repay) such member of the MAG
Group the amount by which the payment made by such member of the MAG Group
exceeds the actual cost of the indemnified Liability. This Section 1.3 shall not
apply to any Liability indemnified under Section 1.4.

     Section 1.4 Indemnification With Respect to Environmental Actions and
Conditions.

          (a) Indemnification by MercFuel. MercFuel shall, for itself and as
     agent for each member of the MercFuel Group, indemnify, defend and hold
     harmless the MAG



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     Indemnitees from and against any and all Environmental Actions relating to,
     arising out of or resulting from Environmental Conditions (i) arising out
     of operations occurring on and after the Separation Date at any of the
     MercFuel Facilities, or (ii) on any of the MercFuel Facilities arising from
     an event causing contamination that first occurs on or after the Separation
     Date (including any Release of Hazardous Materials occurring after the
     Separation Date that migrates to any of the MercFuel Facilities), except to
     the extent that such Environmental Conditions arise out of the operations
     of the MAG Group on and after the Separation Date.

          (b) Indemnification by MAG. MAG shall, for itself and as agent for
     each member of the MAG Group, indemnify, defend and hold harmless the
     MercFuel Indemnitees from and against any and all Environmental Actions
     relating to, arising out of or resulting from any of the following items:

               (i) Environmental Conditions (x) existing on, under, about or in
          the vicinity of any of the MercFuel Facilities prior to the Separation
          Date, or (y) arising out of operations occurring on or before the
          Separation Date at any of the MercFuel Facilities;

               (ii) Except as arising out of the operations of the MercFuel
          Group on and after the Separation Date, Environmental Conditions on,
          under, about or arising out of operations occurring at any time,
          whether before or after the Separation Date, at any of the MAG
          Facilities; and

               (iii) Pre-Separation Third Party Site Liabilities.

          (c) Agreement Regarding Payments to Indemnitee. In the event an
     Indemnifying Party makes any payment to or on behalf of an Indemnitee with
     respect to an Environmental Action for which the Indemnifying Party is
     obligated to indemnify under this Section 1.4, and the Indemnitee
     subsequently receives any payment from a third party on account of the same
     financial obligation covered by the payment made by the Indemnifying Party
     for that Environmental Action or otherwise diminishes the financial
     obligation, the Indemnitee will promptly pay the Indemnifying Party the
     amount by which the payment made by the Indemnifying Party, exceeds the
     actual cost of the financial obligation.

     Section 1.5 Reductions for Insurance Proceeds and Other Recoveries. The
amount that any party (an "Indemnifying Party") is or may be required to pay to
any other Person (an "Indemnitee") pursuant to Section 1.2, 1.3 or 1.4, as
applicable, shall be reduced (retroactively or prospectively) by any Insurance
Proceeds or other amounts actually recovered from third parties by or on behalf
of such Indemnitee in respect of the related loss. The existence of a claim by
an Indemnitee for monies from an insurer or against a third party in respect of
any indemnifiable loss shall not, however, delay any payment pursuant to the
indemnification provisions contained herein and otherwise determined to be due
and owing by an Indemnifying Party. Rather the Indemnifying Party shall make
payment in full of the amount determined to be due and owing by it against an
assignment by the Indemnitee to the Indemnifying Party of the entire claim of
the


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Indemnitee for Insurance Proceeds or against such third party. Notwithstanding
any other provisions of this Agreement, it is the intention of the parties that
no insurer or any other third party shall be (i) entitled to a benefit it would
not be entitled to receive in the absence of the foregoing indemnification
provisions, or (ii) relieved of the responsibility to pay any claims for which
it is obligated. If an Indemnitee has received the payment required by this
Agreement from an Indemnifying Party in respect of any indemnifiable loss and
later receives Insurance Proceeds or other amounts in respect of such
indemnifiable loss, then such Indemnitee shall hold such Insurance Proceeds or
other amounts in trust for the benefit of the Indemnifying Party (or
Indemnifying Parties) and shall pay to the Indemnifying Party, as promptly as
practicable after receipt, a sum equal to the amount of such Insurance Proceeds
or other amounts received, up to the aggregate amount of any payments received
from the Indemnifying Party pursuant to this Agreement in respect of such
indemnifiable loss (or, if there is more than one Indemnifying Party, the
Indemnitee shall pay each Indemnifying Party, its proportionate share (based on
payments received from the Indemnifying Parties) of such Insurance Proceeds).

     Section 1.6 Procedures for Defense, Settlement and Indemnification of Third
Party Claims.

          (a) Notice of Claims. If an MAG Indemnitee or a MercFuel Indemnitee
     (as applicable) (an "Indemnitee") shall receive notice or otherwise learn
     of the assertion by a Person (including any Governmental Authority) who is
     not a member of the MAG Group or the MercFuel Group of any claim or of the
     commencement by any such Person of any Action (collectively, a "Third Party
     Claim") with respect to which a party (an "Indemnifying Party") may be
     obligated to provide indemnification to such Indemnitee pursuant to Section
     1.2, 1.3 or 1.4, or any other section of the Distribution Agreement or any
     Ancillary Agreement (including this Agreement), MAG and MercFuel (as
     applicable) will ensure that such Indemnitee shall give such Indemnifying
     Party written notice thereof within 30 days after becoming aware of such
     Third Party Claim. Any such notice shall describe the Third Party Claim in
     reasonable detail. Notwithstanding the foregoing, the delay or failure of
     any Indemnitee or other Person to give notice as provided in this Section
     1.6(a) shall not relieve the related Indemnifying Party of its obligations
     under this Article I, except to the extent that such Indemnifying Party is
     actually and substantially prejudiced by such delay or failure to give
     notice.

          (b) Defense By Indemnifying Party. An Indemnifying Party will manage
     the defense of and may settle or compromise any Third Party Claim. Within
     30 days after the receipt of notice from an Indemnitee in accordance with
     Section 1.6(a) (or sooner, if the nature of such Third Party Claim so
     requires), the Indemnifying Party shall notify the Indemnitee that the
     Indemnifying Party will assume responsibility for managing the defense of
     such Third Party Claim, which notice shall specify any reservations or
     exceptions.

          (c) Defense By Indemnitee. If an Indemnifying Party fails to assume
     responsibility for managing the defense of a Third Party Claim, or fails to
     notify an Indemnitee that it will assume responsibility as provided in
     Section 1.6(a), such Indemnitee may manage the defense of such Third Party
     Claim; provided, however, that



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     the Indemnifying Party shall reimburse all such costs and expenses in the
     event it is ultimately determined that the Indemnifying Party is obligated
     to indemnify the Indemnitee with respect to such Third Party Claim.

          (d) No Settlement By Indemnitee Without Consent. Unless the
     Indemnifying Party has failed to manage the defense of the Third Party
     Claim in accordance with the terms of this Agreement, no Indemnitee may
     settle or compromise any Third Party Claim without the consent of the
     Indemnifying Party.

          (e) No Consent to Certain Judgments or Settlements Without Consent.
     Notwithstanding any provision of this Section 1.6, no party shall consent
     to entry of any judgment or enter into any settlement of a Third Party
     Claim without the consent of the other party (such consent not to be
     unreasonably withheld) if the effect of such judgment or settlement is to
     (i) permit any injunction, declaratory judgment, other order or other
     nonmonetary relief to be entered, directly or indirectly, against the other
     party or (ii) affect the other party in a material fashion due to the
     allocation of Liabilities and related indemnities set forth in the
     Distribution Agreement, this Agreement or any other Ancillary Agreement.

     Section 1.7 Additional Matters.

          (a) Cooperation in Defense and Settlement. With respect to any Third
     Party Claim that implicates both MercFuel and MAG in a material fashion due
     to the allocation of Liabilities, responsibilities for management of
     defense and related indemnities set forth in the Distribution Agreement,
     this Agreement or any of the Ancillary Agreements, the parties agree to
     cooperate fully and maintain a joint defense (in a manner that will
     preserve the attorney-client privilege with respect thereto) so as to
     minimize such Liabilities and defense costs associated therewith. The party
     that is not responsible for managing the defense of such Third Party Claims
     shall, upon reasonable request, be consulted with respect to significant
     matters relating thereto and may, if necessary or helpful, associate
     counsel to assist in the defense of such claims.

          (b) Substitution. In the event of an Action in which the Indemnifying
     Party is not a named defendant, if either the Indemnitee or the
     Indemnifying Party shall so request, the parties shall endeavor to
     substitute the Indemnifying Party for the named defendant. If such
     substitution or addition cannot be achieved for any reason or is not
     requested, the rights and obligations of the parties regarding
     indemnification and the management of the defense of claims as set forth in
     this Article I shall not be altered.

          (c) Subrogation. In the event of payment by or on behalf of any
     Indemnifying Party to or on behalf of any Indemnitee in connection with any
     Third Party Claim, such Indemnifying Party shall be subrogated to and shall
     stand in the place of such Indemnitee, in whole or in part based upon
     whether the Indemnifying Party has paid all or only part of the
     Indemnitee's Liability, as to any events or circumstances in respect of
     which such Indemnitee may have any right, defense or claim relating to such
     Third Party Claim against any claimant or plaintiff asserting such Third
     Party Claim or against any



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     other person. Such Indemnitee shall cooperate with such Indemnifying Party
     in a reasonable manner, and at the cost and expense of such Indemnifying
     Party, in prosecuting any subrogated right, defense or claim.

          (d) Not Applicable to Taxes. This Agreement shall not apply to Taxes
     (which are covered by the Tax Sharing Agreement).

     Section 1.8 Survival of Indemnities. Subject to Section 3.8, the rights and
obligations of the members of the MAG Group and the MercFuel Group under this
Article I shall survive the sale or other transfer by any party of any Assets or
businesses or the assignment by it of any Liabilities or the sale by any member
of the MAG Group or the MercFuel Group of the capital stock or other equity
interests of any Subsidiary to any Person.

                                   ARTICLE II.
                                INSURANCE MATTERS

     Section 2.1 MercFuel Insurance Coverage During the Transition Period.

          (a) Maintain Comparable Insurance. Throughout the period beginning on
     the Separation Date and ending on the Distribution Date (i.e., the
     "Insurance Transition Period"), MAG shall, subject to insurance market
     conditions and other factors beyond its control, maintain policies of
     insurance, including for the benefit of MercFuel or any of its
     Subsidiaries, directors, officers, employees or other covered parties
     (collectively, the "MercFuel Covered Parties") which are comparable to
     those maintained generally by MAG; provided, however, that if MAG
     determines that (i) the amount or scope of such coverage will be reduced to
     a level materially inferior to the level of coverage in existence
     immediately prior to the Insurance Transition Period or (ii) the retention
     or deductible level applicable to such coverage, if any, will be increased
     to a level materially greater than the levels in existence immediately
     prior to the Insurance Transition Period, MAG shall give MercFuel notice of
     such determination as promptly as practicable. Upon notice of such
     determination, MercFuel shall be entitled to no less than sixty (60) days
     to evaluate its options regarding continuance of coverage hereunder and may
     cancel its interest in all or any portion of such coverage as of any day
     within such sixty (60) day period.

          (b) Reimbursement for Premiums. MercFuel shall promptly pay or
     reimburse MAG, as the case may be, for premium expenses, and MercFuel
     Covered Parties shall promptly pay or reimburse MAG for any costs and
     expenses which MAG may incur in connection with the insurance coverages
     maintained pursuant to this Section 2.1, including but not limited to any
     subsequent premium adjustments. All payments and reimbursements by MercFuel
     and MercFuel Covered Parties to MAG shall be made within thirty (30) days
     after MercFuel's receipt of an invoice from MAG.

     Section 2.2 Cooperation and Agreement Not to Release Carriers. Each of MAG
and MercFuel will share such information as is reasonably necessary in order to
permit the other to



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manage and conduct its insurance matters in an orderly fashion. Each of MAG and
MercFuel, at the request of the other, shall cooperate with and use commercially
reasonable efforts to assist the other in recoveries for claims made under any
insurance policy for the benefit of any insured party, and neither MAG nor
MercFuel, nor any of their Subsidiaries, shall take any action which would
intentionally jeopardize or otherwise interfere with either party's ability to
collect any proceeds payable pursuant to any insurance policy. Except as
otherwise contemplated by the Distribution Agreement, this Agreement or any
Ancillary Agreement, after the Separation Date, neither MAG nor MercFuel shall
(and shall ensure that no member of their respective Groups shall), without the
consent of the other, provide any insurance carrier with a release, or amend,
modify or waive any rights under any such policy or agreement, if such release,
amendment, modification or waiver would adversely affect any rights or potential
rights of any member of the other Group thereunder. However, nothing in this
Section 2.2 shall (a) preclude any member of any Group from presenting any claim
or from exhausting any policy limit, (b) require any member of any Group to pay
any premium or other amount or to incur any Liability, or (c) require any member
of any Group to renew, extend or continue any policy in force.

     Section 2.3 MercFuel Insurance Coverage After the Insurance Transition
Period. From and after expiration of the Insurance Transition Period, MercFuel
shall be responsible for obtaining and maintaining insurance programs for its
risk of loss and such insurance arrangements shall be separate and apart from
MAG's insurance programs. Notwithstanding the foregoing, MAG, upon the request
of MercFuel, shall use all commercially reasonable efforts to assist MercFuel in
the transition to its own separate insurance programs from and after the
Insurance Transition Period, and shall provide MercFuel with any information
that is in the possession of MAG and is reasonably available and necessary to
either obtain insurance coverages for MercFuel or to assist MercFuel in
preventing unintended self- insurance, in whatever form.

     Section 2.4 Responsibilities for Deductibles and/or Self-insured
Obligations. MercFuel will reimburse MAG for all amounts necessary to exhaust or
otherwise satisfy all applicable self-insured retentions, amounts for fronted
policies, deductibles and retrospective premium adjustments and similar amounts
not covered by Insurance Policies in connection with MercFuel Liabilities and
Insured MercFuel Liabilities.

     Section 2.5 Procedures With Respect to Insured MercFuel Liabilities.

          (a) Reimbursement. MercFuel will reimburse MAG for all amounts
     incurred to pursue insurance recoveries from Insurance Policies for Insured
     MercFuel Liabilities.

          (b) Management of Claims. The defense of claims, suits or actions
     giving rise to potential or actual Insured MercFuel Liabilities will be
     managed (in conjunction with MAG's insurers, as appropriate) by the party
     that would have had responsibility for managing such claims, suits or
     actions had such Insured MercFuel Liabilities been MercFuel Liabilities.

     Section 2.6 Insufficient Limits of Liability for MAG Liabilities and
MercFuel Liabilities. In the event that there are insufficient limits of
liability available under MAG's


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<PAGE>   14


Insurance Policies in effect prior to the Distribution Date to cover the
Liabilities of MAG and/or MercFuel that would otherwise be covered by such
Insurance Policies, then to the extent that other insurance is not available to
MAG and/or MercFuel for such Liabilities an adjustment will be made in
accordance with the following procedures:

          (a) Each party will be allocated an amount equal to their Shared
     Percentage of the lesser of (i) the available limits of liability available
     under MAG's Insurance Policies in effect prior to the Distribution Date net
     of uncollectible amounts attributable to insurer insolvencies, and (ii) the
     proceeds received from MAG's Insurance Policies if the Liabilities are the
     subject of disputed coverage claims and, following consultation with each
     other, MAG and/or MercFuel agree to accept less than full policy limits
     from MAG's and MercFuel's insurers (the "Coverage Amount").

          (b) A party who receives more than its share of the Coverage Amount
     (the "Overallocated Party") agrees to reimburse the other party (the
     "Underallocated Party") to the extent that the Liabilities of the
     Underallocated Party that would have been covered under such Insurance
     Policies is less than the Underallocated Party's share of the Coverage
     Amount.

          (c) This Section 2.6 shall terminate ten years following the
     Distribution Date.

     Section 2.7 Cooperation. MAG and MercFuel will cooperate with each other in
all respects, and they shall execute any additional documents which are
reasonably necessary to effectuate the provisions of this Article II.

     Section 2.8 No Assignment or Waiver. This Agreement shall not be considered
as an attempted assignment of any policy of insurance or as a contract of
insurance and shall not be construed to waive any right or remedy of any member
of the MAG Group in respect of any Insurance Policy or any other contract or
policy of insurance.

     Section 2.9 No Liability. MercFuel does hereby, for itself and as agent for
each other member of the MercFuel Group, agree that no member of the MAG Group
or any MAG Indemnitee shall have any Liability whatsoever as a result of the
insurance policies and practices of MAG and its Subsidiaries as in effect at any
time prior to the Distribution Date, including as a result of the level or scope
of any such insurance, the creditworthiness of any insurance carrier, the terms
and conditions of any policy, the adequacy or timeliness of any notice to any
insurance carrier with respect to any claim or potential claim or otherwise.

     Section 2.10 Additional or Alternate Insurance. Notwithstanding any
provision of this Agreement, during the Insurance Transition Period MAG and
MercFuel shall work together to evaluate insurance options and secure additional
or alternate insurance for MercFuel and/or MAG if desired and cost effective.
Nothing in this Agreement shall be deemed to restrict any member of the MercFuel
Group from acquiring at its own expense any other insurance policy in respect of
any Liabilities or covering any period.




                                      -9-
<PAGE>   15


     Section 2.11 Further Agreements. The Parties acknowledge that they intend
to allocate financial obligations without violating any laws regarding
insurance, self-insurance or other financial responsibility. If it is determined
that any action undertaken pursuant to the Distribution Agreement, this
Agreement or any Ancillary Agreement is violative of any insurance,
self-insurance or related financial responsibility law or regulation, the
parties agree to work together to do whatever is necessary to comply with such
law or regulation while trying to accomplish, as much as possible, the
allocation of financial obligations as intended in the Distribution Agreement,
this Agreement and any Ancillary Agreement.

     Section 2.12 Matters Governed by Employee Matters Agreement. This Article
II shall not apply to any insurance policies that are the subject of the
Employee Matters Agreement.

                                  ARTICLE III.
                                  MISCELLANEOUS

     Section 3.1 Entire Agreement. This Agreement, the Master Distribution
Agreement, the other Ancillary Agreements and the Exhibits and Schedules
attached hereto and thereto, constitute the entire agreement between the parties
with respect to the subject matter hereof and shall supersede all prior written
and oral and all contemporaneous oral agreements and understandings with respect
to the subject matter hereof.

     Section 3.2 Governing Law. This Agreement shall be construed in accordance
with and all Disputes hereunder shall be governed by the laws of the State of
California, excluding its conflict of law rules and the United Nations
Convention on Contracts for the International Sale of Goods. The Superior Court
of Los Angeles County and/or the United States District Court for the Central
District of California shall have jurisdiction and venue over all Disputes
between the parties that are permitted to be brought in a court of law pursuant
to Section 3.3.

     Section 3.3 Dispute Resolution. If a dispute, controversy or claim
("Dispute") arises between the parties relating to the interpretation or
performance of this Agreement, or the grounds for the termination hereof,
appropriate senior executives (e.g. director or V.P. level) of each party who
shall have the authority to resolve the matter shall meet to attempt in good
faith to negotiate a resolution of the Dispute prior to pursuing other available
remedies. The initial meeting between the appropriate senior executives shall be
referred to herein as the "Dispute Resolution Commencement Date". Discussions
and correspondence relating to trying to resolve such Dispute shall be treated
as confidential information developed for the purpose of settlement and shall be
exempt from discovery or production and shall not be admissible. If the senior
executives are unable to resolve the Dispute within thirty (30) days from the
Dispute Resolution Commencement Date, and either party wishes to pursue its
rights relating to such Dispute, then the Dispute will be mediated by a mutually
acceptable mediator within thirty (30) days after written notice by one party to
the other demanding non-binding mediation. Neither party may unreasonably
withhold consent to the selection of a mediator or the location of the
mediation. Both parties will share the costs of the mediation equally, except
that each party shall bear its own costs and expenses, including attorney's
fees, witness fees, travel expenses, and preparation


                                      -10-
<PAGE>   16

costs. The parties may also agree to replace mediation with some other form of
non-binding or binding alternative dispute resolution ("ADR").

     Any Dispute which the parties cannot resolve through mediation within
ninety (90) days of the Dispute Resolution Commencement Date, unless otherwise
mutually agreed, shall be submitted to final and binding arbitration under the
then current Commercial Arbitration Rules of the American Arbitration
Association ("AAA"), by three (3) arbitrators in Los Angeles County, California.
Such arbitrators shall be selected by the mutual agreement of the parties or,
failing such agreement, shall be selected according to the aforesaid AAA rules.
The arbitrators will be instructed to prepare and deliver a written, reasoned
opinion stating their decision within thirty (30) days of the completion of the
arbitration. The prevailing party in such arbitration shall be entitled to
expenses, including costs and attorneys' and other professional fees, incurred
in connection with the arbitration (but excluding any costs and fees associated
with prior negotiation or mediation). The decision of the arbitrator shall be
final and non-appealable and may be enforced in any court of competent
jurisdiction. The use of any ADR procedures will not be construed under the
doctrine of laches, waiver or estoppel to adversely affect the rights of either
party.

     Any Dispute regarding the following is not required to be negotiated,
mediated or arbitrated prior to seeking relief from a court of competent
jurisdiction: breach of any obligation of confidentiality; infringement,
misappropriation, or misuse of any intellectual property right; any other claim
where interim relief from the court is sought to prevent serious and irreparable
injury to one of the parties or to others.

     Section 3.4 Notices. Notices, offers, requests or other communications
required or permitted to be given by either party pursuant to the terms of this
Agreement shall be given in writing to the respective parties to the following
addresses:

if to MAG:                                 copy to:

Mercury Air Group, Inc.                    McBreen & Kopko
5456 McConnell Avenue                      20 North Wacker Drive, Suite 2520
Los Angeles, California 90066              Chicago, Illinois  60606
Attention:  Chief Executive Officer        Attention:  Frederick H. Kopko, Jr.
Fax:  (310) 827-0650                       Fax:  (312) 332-2657

if to MercFuel:                            copy to:

MercFuel, Inc.                             McBreen & Kopko
5456 McConnell Avenue                      20 North Wacker Drive, Suite 2520
Los Angeles, California  90066             Chicago, Illinois  60606
Attention:  Chief Executive Officer        Attention:  Frederick H. Kopko, Jr.
Fax:  (310) 827-0650                       Fax:  (312) 332-2657

or to such other address as the party to whom notice is given may have
previously furnished to the other in writing as provided herein. Any notice
involving non-performance, termination, or


                                      -11-
<PAGE>   17


renewal shall be sent by hand delivery, recognized overnight courier or, within
the United States, may also be sent via certified mail, return receipt
requested. All other notices may also be sent by fax, confirmed by first class
mail. All notices shall be deemed to have been given and received on the earlier
of actual delivery or three (3) days from the date of postmark.

     Section 3.5 Parties in Interest. This Agreement, including the Schedules
and Exhibits hereto, and the other documents referred to herein, shall be
binding upon MAG, MAG's Subsidiaries, MercFuel and MercFuel's Subsidiaries and
inure solely to the benefit of the MercFuel Indemnitees and the MAG Indemnitees
and their respective permitted assigns, and nothing in this Agreement, express
or implied, is intended to confer upon any other Person any rights or remedies
of any nature whatsoever under or by reason of this Agreement.

     Section 3.6 Other Agreements Evidencing Indemnification Obligations. MAG
hereby agrees to execute, for the benefit of any MercFuel Indemnitee, such
documents as may be reasonably requested by such MercFuel Indemnitee, evidencing
MAG's agreement that the indemnification obligations of MAG set forth in this
Agreement inure to the benefit of and are enforceable by such MercFuel
Indemnitee. MercFuel hereby agrees to execute, for the benefit of any MAG
Indemnitee, such documents as may be reasonably requested by such MAG
Indemnitee, evidencing MercFuel's agreement that the indemnification obligations
of MercFuel set forth in this Agreement inure to the benefit of and are
enforceable by such MAG Indemnitee.

     Section 3.7 Counterparts. This Agreement, including the Schedules and
Exhibits hereto, and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.

     Section 3.8 Assignment. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective legal representatives and
successors, and nothing in this Agreement, express or implied, is intended to
confer upon any other Person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. This Agreement may be enforced separately
by each member of the MAG Group and each member of the MercFuel Group. Neither
party may assign this Agreement or any rights or obligations hereunder, without
the prior written consent of the other party, and any such assignment shall be
void; provided, however, either party may assign this Agreement to a successor
entity in conjunction with such party's reincorporation.

     Section 3.9 Severability. If any term or other provision of this Agreement
or the Schedules or Exhibits attached hereto is determined by a nonappealable
decision by a court, administrative agency or arbitrator to be invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the fullest extent possible.



                                      -12-
<PAGE>   18


     Section 3.10 Failure or Indulgence Not Waiver. No failure or delay on the
part of either party hereto in the exercise of any right hereunder shall impair
such right or be construed to be a waiver of, or acquiescence in, any breach of
any representation, warranty or agreement herein, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof or
of any other right.

     Section 3.11 Amendment. No change or amendment will be made to this
Agreement except by an instrument in writing signed on behalf of each of the
parties to this Agreement.

     Section 3.12 Authority. Each of the parties hereto represents to the other
that (a) it has the corporate or other requisite power and authority to execute,
deliver and perform this Agreement, (b) the execution, delivery and performance
of this Agreement by it have been duly authorized by all necessary corporate or
other action, (c) it has duly and validly executed and delivered this Agreement,
and (d) this Agreement is a legal, valid and binding obligation, enforceable
against it in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equity principles.

     Section 3.13 Interpretation. The headings contained in this Agreement, in
any Exhibit or Schedule hereto and in the table or contents to this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any Schedule or
Exhibit but not otherwise defined therein, shall have the meaning assigned to
such term in this Agreement. When a reference is made in this Agreement to an
Article or a Section, Exhibit or Schedule, such reference shall be to an Article
or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated.

                                   ARTICLE IV
                                   DEFINITIONS

     Section 4.1 Action. "Action" means any demand, action, suit, countersuit,
arbitration, inquiry, proceeding or investigation by or before any federal,
state, local, foreign or international governmental authority or any arbitration
or mediation tribunal.

     Section 4.2 Affiliated Company. "Affiliated Company" of any Person means
any entity that controls, is controlled by, or is under common control with such
Person. As used herein, "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such entity, whether through ownership of voting securities or other interests,
by contract or otherwise.

     Section 4.3 Assets. "Assets" has the meaning set forth in Section 4.4 of
the Assignment Agreement.

     Section 4.4 Assignment Agreement. "Assignment Agreement" means the General
Assignment and Assumption Agreement attached as Exhibit C to the Distribution
Agreement.



                                      -13-
<PAGE>   19


     Section 4.5 Coverage Amount. "Coverage Amount" has the meaning set forth in
Section 2.6(a) of this Agreement.

     Section 4.6 Distribution Agreement. "Distribution Agreement" means the
Master Distribution Agreement dated as of _________, 2001, of which this is an
Exhibit thereto.

     Section 4.7 Distribution Date. "Distribution Date" has the meaning set
forth in Section 3.1 of the Distribution Agreement.

     Section 4.8 Employee Matters Agreement. "Employee Matters Agreement" means
the Employee Matters Agreement attached as Exhibit E to the Distribution
Agreement.

     Section 4.9 Environmental Actions. "Environmental Actions" means any
notice, claim, act, cause of action, order, decree or investigation by any third
party (including, without limitation, any Governmental Authority) alleging
potential liability (including potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, damage to
flora or fauna caused by Environmental Conditions, real property damages,
personal injuries or penalties) arising out of, based on or resulting from the
Release of or exposure of any individual to any Hazardous Materials.

     Section 4.10 Environmental Conditions. "Environmental Conditions" means the
presence in the environment, including the soil, groundwater, surface water or
ambient air, of any Hazardous Material at a level which exceeds any applicable
standard or threshold under any Environmental Law or otherwise requires
investigation or remediation (including, without limitation, investigation,
study, health or risk assessment, monitoring, removal, treatment or transport)
under any applicable Environmental Laws.

     Section 4.11 Environmental Laws. "Environmental Laws" means all laws and
regulations of any Governmental Authority with jurisdiction that relate to the
protection of the environment (including ambient air, surface water, ground
water, land surface or subsurface strata) including laws and regulations
relating to the Release of Hazardous Materials, or otherwise relating to the
treatment, storage, disposal, transport or handling of Hazardous Materials, or
to the exposure of any individual to a Release of Hazardous Materials.

     Section 4.12 Hazardous Materials. "Hazardous Materials" means chemicals,
pollutants, contaminants, wastes, toxic substances, radioactive and biological
materials, hazardous substances, petroleum and petroleum products or any
fraction thereof.

     Section 4.13 Indemnitee. "Indemnitee" has the meaning set forth in Section
1.5 hereof.

     Section 4.14 Insurance Policies. "Insurance Policies" means insurance
policies pursuant to which a Person makes a true risk transfer to an insurer.


                                      -14-
<PAGE>   20


     Section 4.15 Insurance Proceeds. "Insurance Proceeds" means those monies:
received by an insured from an insurance carrier; or paid by an insurance
carrier on behalf of the insured; from Insurance Policies.

     Section 4.16 Insurance Transition Period. "Insurance Transition Period" has
the meaning set forth in Section 2.1 of this Agreement.

     Section 4.17 Insured MercFuel Liability. "Insured MercFuel Liability" means
any MercFuel Liability to the extent that (a) it is covered under the terms of
MAG's Insurance Policies in effect prior to the Distribution Date, and (b)
MercFuel is not a named insured under, or otherwise entitled to the benefits of,
such Insurance Policies.

     Section 4.18 IPO Date. "IPO Date" means the date on which MercFuel effects
its initial public offering of common stock. Scheduled to occur on or before
_______, 2001.

     Section 4.19 IPO Liabilities. "IPO Liabilities" means any Liabilities
relating to, arising out of or resulting from any untrue statement or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, with respect to all information contained in the IPO
Registration Statement or any preliminary, final or supplemental prospectus
forming a part of an IPO Registration Statement.

     Section 4.20 IPO Registration Statement. "IPO Registration Statement" means
the Form S-1, registration number ________, filed with the SEC registering the
shares of common stock of MercFuel to be issued in the initial public offering,
together with all amendments thereto.

     Section 4.21 Liabilities. "Liabilities" has the meaning set forth in
Section 4.16 of the Assignment Agreement.

     Section 4.22 MAG Business. "MAG Business" means any business of MAG other
than the MercFuel Business.

     Section 4.23 MAG Facilities. "MAG Facilities" means all of the real
property and improvements thereon owned or occupied at any time on or before the
Separation Date by any member of the MAG Group, whether for the MAG Business or
the MercFuel Business, excluding the MercFuel Facilities.

     Section 4.24 MAG Group. "MAG Group" means MAG, each Subsidiary and
Affiliated Company of MAG (other than any member of the MercFuel Group)
immediately after the Separation Date, after giving effect to the Non-US Plan
and each Person that becomes a Subsidiary or Affiliate Company of MAG after the
Separation Date.

     Section 4.25 MAG Indemnitees. "MAG Indemnitees" means MAG, each member of
the MAG Group and each of their respective directors, officers and employees.


                                      -15-
<PAGE>   21


     Section 4.26 MercFuel Business. "MercFuel Business" means the business and
operations of MercFuel, as described in the Form 10 Registration Statement and
except as otherwise expressly provided herein, any terminated, divested or
discontinued businesses or operations that at the time of termination,
divestiture or discontinuation primarily related to the MercFuel Business as
then conducted.

     Section 4.27 MercFuel Contracts. "MercFuel Contracts" has the meaning set
forth in Section 4.23 of the Assignment Agreement.

     Section 4.28 MercFuel Covered Parties. "MercFuel Covered Parties" shall
have the meaning set forth in Section 2.1(a) of this Agreement.

     Section 4.29 MercFuel Facilities. "MercFuel Facilities" means all of those
facilities to be transferred, licensed or sublet to MercFuel on the Separation
Date as set forth on Schedules 1 and 2 to the Real Estate Matters Agreement.

     Section 4.30 MercFuel Group. "MercFuel Group" means MercFuel, each
Subsidiary and Affiliated Company of MercFuel immediately after the Separation
Date or that is contemplated to be a Subsidiary or Affiliated Company of
MercFuel pursuant to the Non-US Plan and each Person that becomes a Subsidiary
or Affiliate Company of MercFuel after the Separation Date.

     Section 4.31 MercFuel Indemnitees. "MercFuel Indemnitees" means MercFuel,
each member of the MercFuel Group and each of their respective directors,
officers and employees.

     Section 4.32 MercFuel Liabilities. "MercFuel Liabilities" has the meaning
set forth in Section 1.4 of the Assignment Agreement.

     Section 4.33 Non-US Plan. "Non-US Plan" means the plan of reorganization
described in Exhibit K of the Distribution Agreement.

     Section 4.34 Person. "Person" means an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof.

     Section 4.35 Pre-Separation Third Party Site Liabilities. "Pre-Separation
Third Party Site Liabilities" means any and all Environmental Actions arising
out of Hazardous Materials found on, under or about any landfill any waste,
storage, transfer or recycling site and resulting from or arising out of
Hazardous Materials stored, treated, recycled disposed or otherwise handled at
such site prior to the Separation Date (whether for the operation of the
MercFuel Business or for the operation of any past or presently (as of the date
hereof) existing MAG Business as operated on or before the Separation Date).

     Section 4.36 Release. "Release" means any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor


                                      -16-
<PAGE>   22


environment, including, without limitation, the movement of Hazardous Materials
through ambient air, soil, surface water, groundwater, wetlands, land or
subsurface strata.

     Section 4.37 Separation. "Separation" means the transfer and contribution
from MAG to MercFuel, and MercFuel's receipt and assumption of, directly or
indirectly, substantially all of the Assets and Liabilities currently associated
with the MercFuel Business.

     Section 4.38 Separation Date. "Separation Date" means the effective date
and time of each transfer of property, assumption of liability, license,
undertaking, or agreement in connection with the Separation, which was 12:01
a.m., Pacific Time, January 1, 2001.

     Section 4.39 Shared Percentage. "Shared Percentage" means the percent of
liability each party shall be allocated, as the case may be. The Shared
Percentage shall be agreed upon by the parties on a case by case basis. Any
dispute arising over the determination of the Shared Percentage shall be
resolved pursuant to Section 3.3.

     Section 4.40 Subsidiary. "Subsidiary" of any Person means a corporation or
other organization whether incorporated or unincorporated of which at least a
majority of the securities or interests having by the terms thereof ordinary
voting power to elect at least a majority of the board of directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries; provided, however, that no Person that is not directly or
indirectly wholly-owned by any other Person shall be a Subsidiary of such other
Person unless such other Person controls, or has the right, power or ability to
control, that Person.

     Section 4.41 Tax Sharing Agreement. "Tax Sharing Agreement" means the Tax
Sharing Agreement, attached as Exhibit F to the Distribution Agreement.

     Section 4.42 Taxes. "Taxes" has the meaning set forth in the Tax Sharing
Agreement.

     Section 4.43 Third Party Claim. "Third Party Claim" has the meaning set
forth in Section 1.6(a) of this Agreement.


                         [SIGNATURES ON FOLLOWING PAGE]




                                      -17-
<PAGE>   23


     IN WITNESS WHEREOF, each of the parties has caused this Indemnification and
Insurance Matters Agreement to be executed on its behalf by its officers
thereunto duly authorized on the day and year first above written.



MERCURY AIR GROUP, INC.


By:
   -----------------------------------------
Its:



MERCFUEL, INC.


By:
   -----------------------------------------
Its:



                                      -18-
<PAGE>   24




                                 SCHEDULE 1-1(a)

                         CLAIMS NOT RELEASED BY MERCFUEL


None.



                                      -19-
<PAGE>   25


                                 SCHEDULE 1-1(b)

                           CLAIMS NOT RELEASED BY MAG


None.
















                                      -20-