exv10w1



 





Exhibit 10.1




FIRST AMENDMENT TO LOAN AGREEMENT




     This First Amendment to Loan Agreement (the “Amendment”) is dated as of
November 1, 2004, among Bank of America, N. A. (the “Bank”), Mercury Air
Group, Inc., a Delaware corporation (Borrower 1”); Maytag Aircraft Corporation,
a Colorado corporation (“Borrower 2”); Mercury Air Cargo, Inc., a California
corporation (“Borrower 3”); MercFuel, Inc., a Delaware corporation (“Borrower
4”); Hermes Aviation, Inc., a California corporation (“Borrower 5”), and
Mercury Air Center — Long Beach, Inc., a California corporation (Borrower 6”);
(Borrower 1, Borrower 2, Borrower 3, Borrower 4, Borrower 5, and Borrower 6 are
sometimes referred to, collectively as the “Borrowers” and individually as the
“Borrower”).



RECITALS




     A. The Borrowers and the Bank are parties to that certain Loan Agreement
dated as of July 29, 2004 (the “Agreement”).



     B. The Borrowers and the Bank desire to amend certain terms and provisions
of the Agreement.



AGREEMENT




     1. Definitions. Capitalized terms used but not defined in this Amendment
shall have the meaning given to them in the Agreement.



     2. Amendments. The Agreement is hereby amended as follows:



                  2.1 The definitions of “Basic Fixed Charge Coverage Ratio”, “Borrowing
Base” and “Tangible Net Worth” set forth in Section 1 of the Agreement are
amended in their entirety to read as follows:




          “Basic Fixed Charge Coverage Ratio” means the ratio of (a) the sum
of EBITDA plus lease expense and rent expense, minus income tax, minus
dividends (excluding cash dividends paid during the twelve month period
ending June 30, 2005 not exceeding $17,500,000), withdrawals, and other
distributions, to (b) the sum of interest expense (excluding capitalized
debt costs classified as interest expense and already paid), lease
expense, rent expense, the current portion of long term debt, excluding
any amounts due under this Agreement, and the current portion of
capitalized lease obligations.




          “Borrowing Base” means 80% of the balance due on Domestic
Acceptable Receivables minus $2,000,000. After calculating the Borrowing
Base, the Bank may, upon notice to the Borrower, deduct such reserves as
the Bank may establish from time to time in its reasonable credit
judgment, including, without limitation, reserves for 100% of outstanding
letters of credit, reserves for dilution (any non-cash reduction of
accounts receivable), and the amount of estimated maximum exposure, as
determined by the Bank from time to time, under any interest rate
contracts which the Borrower enters into with the Bank (including
interest rate swaps, caps, floors, options thereon, combinations thereof,
or similar contracts).



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          “Tangible Net Worth” means (a) total assets, less the amount of the
following to the extent included in total assets: (i) goodwill; (ii)
patents; (iii) trademarks; (iv) trade names; (v) deferred or capitalized
organization costs; (vi) capitalized or deferred research and development
costs; (vii) deferred marketing costs; (viii) amounts due from officers,
directors, employees, shareholders, and affiliates; plus (b) an amount
that will be the lesser of $800,000 or the total of any non-cash charge
and asset impairment associated with MercMed LLC; less (c) total
liabilities, less the non-current portion of Subordinated Liabilities to
the extent included in total liabilities.”



                  2.2 In Section 1 of the Agreement, clause (j) of definition of “Acceptable
Receivable” is amended to add subclause (iv) to read as follows:




"(iv) any person or entity with a
billing address outside of the United
States.”



                  2.3 The definitions of “Availability”, “Domestic Acceptable Receivable”,
“Foreign Acceptable Receivable” and “Liquidity” set forth in Section 1 of the
Agreement are deleted in their entirety.



                  2.4 In Section 9.3 of the Agreement, the figure “Nine Million Five Hundred
Thousand Dollars ($9,500,000) is substituted for the figure “Twenty Four
Million Dollars ($24,000,000).”



                  2.5 Section 9.4 of the Agreement is deleted in its entirety and the
following substituted therefor:




     “9.4 Intentionally Omitted”



                  2.6 Section 9.6 of the Agreement is amended in its entirety to
read as follows:




     “9.6 Capital Expenditures. Not to spend or incur
obligations (including the total amount of any capital
leases) to acquire fixed assets for more than Two Million
Dollars ($2,000,000) in any fiscal year on a consolidated
basis. Compliance with this covenant will be determined
annually, commencing with the fiscal year ending June 30,
2005.”



                  2.7 Section 9.7 of the Agreement is deleted in its entirety and the
following substituted therefor:




     “9.7 Intentionally Omitted.”



                  2.8 Section 9.10 of the Agreement is amended in its entirety to read as
follows:




     “9.10 Cash Dividends and Stock Repurchases. Not to
(a) declare or pay any cash dividends, except for cash
dividends in an amount not exceeding $17,500,000 to be paid
by June 30, 2005, on any of the



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Borrowers’ issued and outstanding stock, (b) repurchase any
of the Borrowers’ previously issued and outstanding stock
for cash, or (c) create any sinking fund(s) in relation to
the transactions noted in (a) or (b) above.”



     3. Representations and Warranties. Each Borrower hereby represents and
warrants to Bank that: (i) no default specified in the Agreement and no event
which with notice or lapse of time or both would become such a default has
occurred and is continuing and has not been previously waived, (ii) except as
set forth on Schedule 1 attached hereto, the representations and warranties of
each Borrower pursuant to the Agreement and all schedules thereto are true on
and as of the date hereof as if made on and as of said date, (iii) the making
and performance by each Borrower of this Amendment have been duly authorized by
all necessary action, and (iv) no consent, approval, authorization, permit or
license is required in connection with the making or performance of the
Agreement as amended hereby.



     4. Conditions. This Amendment will be effective when the Bank receives
the following items, in form and content acceptable to the Bank.



                  4.1 This Amendment duly executed by all parties hereto.



                  4.2 Payment of an amendment fee in the amount of $30,000.



                  4.3 Payment of all out-of-pocket expenses, including attorneys’ fees,
incurred by the Bank in connection with the preparation of this Amendment.



     5. Effect of Amendment. Except as provided in this Amendment, the
Agreement shall remain in full force and effect and shall be performed by the
parties hereto according to its terms and provisions.



[Signatures on Following Page]




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     This Amendment is executed as of the date stated at the top of the first page.



	 	 	 	 	 	 	 
	Bank of America, N.A.
	 	Mercury Air Group, Inc.
	 
	 	 	 	 	 	 
	By:

	 	/s/ Frances Martinez	 	 	 	 
	

	 	
 	 	 	 	 
	Typed Name: Frances R. Martinez
	 	By:	 	/s/ Joseph Czyzyk
	Title: Vice President
	 	 	 	

	 
	 	 	 	Typed Name: Joseph A. Czyzyk
	 
	 	 	 	Title: Chief Executive Officer
	 
	 	 	 	 	 	 
	 
	 	 	 	Mercury Air Cargo, Inc.
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ Joseph Czyzyk
	

	 	 	 	 	 	
 
	 
	 	 	 	Typed Name: Joseph A. Czyzyk
	 
	 	 	 	Title: Chief Executive Officer
	 
	 	 	 	 	 	 
	

	 	 	 	MercFuel, Inc.

	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ Joseph Czyzyk
	

	 	 	 	 	 	
 
	 
	 	 	 	Typed Name: Joseph A. Czyzyk
	 
	 	 	 	Title: Chief Executive Officer
	 
	 	 	 	 	 	 
	 
	 	 	 	Maytag Aircraft Corporation
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ Joseph Czyzyk
	

	 	 	 	 	 	
 
	 
	 	 	 	Typed Name: Joseph A. Czyzyk
	 
	 	 	 	Title: Chief Executive Officer
	 
	 	 	 	 	 	 
	 
	 	 	 	Hermes Aviation, Inc.
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ Joseph Czyzyk
	

	 	 	 	 	 	
 
	 
	 	 	 	Typed Name: Joseph A. Czyzyk
	 
	 	 	 	Title: Chief Executive Officer
	 
	 	 	 	 	 	 
	 
	 	 	 	Mercury Air Center-Long Beach, Inc.
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ Joseph Czyzyk
	

	 	 	 	 	 	
 
	 
	 	 	 	Typed Name: Joseph A. Czyzyk
	 
	 	 	 	Title: Chief Executive Officer








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