exv10w6



 


Exhibit 10.6



REGISTRATION RIGHTS AGREEMENT



      AGREEMENT (this “Agreement”), dated as of September 10, 1999, by and
between MERCURY AIR GROUP, INC. (the “Company”), a New York corporation, and J.
H. WHITNEY MEZZANINE FUND, L.P. (“WMF”), a Delaware limited partnership.



W  I  T  N  E  S  S  E  T  H :



      WHEREAS,
pursuant to the terms of the Securities Purchase Agreement (the
“Purchase Agreement”), dated as of the date hereof, by and between the Company
and WMF, WMF will purchase from the Company (a) a Senior Subordinated
Promissory Note (the “WMF Note”) of the Company in the principal amount of
$24,000,000 and (b) a warrant (the “WMF Warrant”) to purchase an aggregate of
503,126 shares of common stock, par value $ .01 per share of the Company (the
“Common Stock”); and




      WHEREAS,
the Company and the other parties hereto desire to provide for
the circumstances under which the Company will register securities of the
Company on behalf of such other parties.




      NOW,
THEREFORE, as an inducement to WMF to consummate the transactions
contemplated by the Purchase Agreement and in consideration of the premises and
of the mutual covenants and obligations hereinafter set forth, the Company
hereby covenants and agrees with the other parties hereto, and with each
subsequent holder of Restricted Securities (as such term is defined herein), as
follows:




      SECTION
1. Definitions. As used herein, the following terms shall have the
following respective meanings:




      “Certificate of Incorporation” shall mean the Certificate of
Incorporation of the Company, as amended, in effect on the date hereof.




      “Commission” shall mean the Securities and Exchange Commission, or any
other Federal agency at the time administering the Securities Act.




      “Public Offering” shall mean the sale by the Company or any other person
or entity of equity securities of the Company pursuant to a registration
statement on Form S-1, S-2 or S-3 or otherwise under the Securities Act.



 








 



      “Institutional Investors” shall mean WMF and its successors and assigns.




      “Registration Expenses” shall mean the expenses so described in Section 7
hereof.




      “Restricted Securities” shall mean the Note, the Warrant and the
Restricted Stock, for so long as the instruments or certificates evidencing
such securities shall be required to bear the legend set forth in Section 2
hereof.




      “Restricted Stock” shall mean the shares of Common Stock underlying the
Warrant, the certificates for which are required to bear the legend set forth
in Section 2 hereof.




      “Securities
Act” shall mean the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.




      “Selling
Expenses” shall mean the expenses so described in
Section 7 hereof.




      “Threshold Amount” shall mean that number of Institutional Investors
holding at least 75% of the Restricted Stock then held by all Institutional
Investors.




      “Warrant” shall mean the WMF Warrant.




      “WMF Note” shall have the meaning ascribed to such term in the first
Whereas clause.




      SECTION 2. Restrictive Legend. The WMF Note and each certificate
representing the Restricted Securities and, except as otherwise provided in
Section 3 hereof, each certificate issued upon exchange or transfer of any such
securities shall be stamped or otherwise imprinted with a legend
substantially in the following form:




      “THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 NOR
UNDER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER SUCH LAWS OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE.”




      SECTION 3. Notice of Proposed Transfer. Prior to any proposed transfer of
any Restricted Securities (other than under the circumstances described in
Section 4 or 5 hereof), the holder thereof shall give written notice to the
Company of its intention to effect such transfer. Each such notice shall
describe the manner of the proposed transfer and, if requested by the Company,
shall be accompanied by an opinion of counsel reasonably satisfactory to the
Company to the effect



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that the proposed transfer may be effected without
registration under the Securities Act, whereupon such holder shall be entitled
to transfer such securities in accordance with the terms of its notice;
provided, however, that no such opinion of counsel shall be required for a
transfer by a holder of Restricted Securities which is a partnership to a
partner or employee of such holder or a retired partner or retired employee of
such holder who retires after the date hereof, or to the estate of any such
partner, retired partner, employee or retired employee, or a transfer by gift,
will or intestate succession from any holder of Restricted Securities to his or
her spouse or members of his or her or his or her spouse’s family or a trust
for the benefit of any of the foregoing persons, if the transferee agrees in
writing to be subject to the terms hereof to the same extent as if such
transferee were an original holder of Restricted Securities hereunder. All
Restricted Securities transferred as above provided shall bear the legend set
forth in Section 2, except that such securities shall not bear such legend if
(i) such transfer is in accordance with the provisions of Rule 144 of the
Securities Act (or any other rule permitting public sale without registration
under the Securities Act) or (ii) the opinion of counsel referred to above is
to the further effect that the transferee and any subsequent transferee (other
than an affiliate of the Company) would be entitled to transfer such securities
in a public sale without registration under the Securities Act.




      SECTION 4. Required Registration.




         (a) At any time beginning six (6) months following the date hereof, a
Threshold Amount of Institutional Investors may, by written notice, request
that the Company register under the Securities Act all or any portion of the
shares of Restricted Stock held by such requesting holders for sale in the
manner specified in such notice; provided, however, that the Company shall not
be obligated to register Restricted Stock pursuant to such request: (i) in any
particular jurisdiction in which the Company would be required to qualify to do
business or to execute a general consent to service of process in effecting
such registration when it was not then so qualified and had not filed such a
consent; (ii) subject to Section 5(a) below, during the period beginning 30
days prior to the filing, and ending on a date 90 days following the effective
date, of a registration statement filed by the Company relating to an
underwritten offering only of the Company’s capital stock; or (iii) if counsel
to the Company opines to the requesting Institutional Investors that the filing
of such a registration statement would require the disclosure of material
non-public information about the Company, the disclosure of which could have a
material adverse effect on the
business or financial condition of the Company, in which event no such
registration statement shall be filed until the earlier of the lapse of 90 days
from the issuance of the opinion of Company counsel or the issuance of a
subsequent opinion that such information is no longer required to be disclosed,
is not material or non-public, or its disclosure would not have a material
adverse effect on the business or financial condition of the Company; provided, however, that the Company may not exercise its right under this clause (iii)
more than once in any 12-month period. Notwithstanding anything to the contrary
contained herein, no request may be made under this Section 4 within 360 days
after the effective date of a registration statement filed by the Company
covering a firm commitment underwritten public offering in which the holders of
Restricted Stock shall have been



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entitled to join pursuant to this Section 4 or Section 5 hereof and in which there shall have been effectively registered all
shares of Restricted Stock as to which registration shall have been so
requested (and which requests shall total at least twenty-five percent of the
shares of Restricted Stock originally purchased by the Institutional
Investors).




         (b) Promptly following receipt of any notice under this Section 4, the
Company shall immediately notify all other Institutional Investors from whom
notice has not been received and shall file and use its best efforts to have
declared effective a registration statement under the Securities Act for the
public sale, in accordance with the method of disposition specified in such
notice from requesting holders, of the number of shares of Restricted Stock
specified in such notice (and in any notices received from other holders of
Restricted Stock within 20 days after the date of such notice from the
Company). If such method of disposition shall be an underwritten public
offering, the Company may designate the managing underwriter of such offering,
subject to the approval of the Institutional Investors participating in such
registration who own a majority in interest of the Restricted Stock requested
to be included in such registration by such Institutional Investors, which
approval shall not be unreasonably withheld. The number of shares of Restricted
Stock to be included in such an underwriting may be reduced (pro rata among all
holders requesting, under this Section 4, to participate in such registration)
if and to the extent that the managing underwriter shall be of the opinion that
such inclusion would adversely affect the marketing of the securities to be
sold therein. With respect to the preceding sentence, if the Company elects to
reduce pro rata the amount of Restricted Stock proposed to be offered in the
underwriting, for purposes of making any such reduction, each holder of
Restricted Stock which is a partnership, together with the affiliates,
partners, employees, retired partners and retired employees of such holder, the
estates and family members of any such partners, employees, retired partners
and retired employees and of their spouses, and any trusts for the benefit of
any of the foregoing persons shall be deemed to be a single “person”, and any
pro rata reduction with respect to such “person” shall be based upon the
aggregate number of shares of Restricted Stock owned by all entities and
individuals included as such “person,” as defined in this sentence (and the
aggregate number so allocated to such “person” shall be allocated among the
entities and individuals included in such “person” in such manner as such
holder of Restricted Stock may reasonably determine). The Company shall be
obligated to register Restricted Stock pursuant to requests made by a Threshold
Amount of the Institutional Investors under this Section 4 on two occasions
only; provided, however, that as to such occasion such obligation shall be
deemed satisfied only when a registration statement covering all shares of
Restricted Stock specified in notices received as aforesaid, for sale in
accordance with the method of disposition specified by the requesting holders,
shall have become effective and, if such method of disposition is a firm
commitment underwritten public offering, all such shares shall have been sold
pursuant thereto.




         (c) The Company shall be entitled to include in any registration statement
referred to in this Section 4 for which the method of distribution is an
underwritten public offering, for sale in accordance with the method of
disposition specified by the requesting holders, shares of Common Stock to be
sold by the Company for its own account, except as and to the extent that, in
the opinion of the managing underwriter (if such method of disposition shall be an



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underwritten public offering), such inclusion would adversely affect the
marketing of the Restricted Stock to be sold. Except as set forth in this
Section 4, no securities shall be included in any registration statement
referred to in this Section 4 without the prior written consent of the holders
of a majority in interest of the Institutional Investors’ Restricted Stock
requested to be included in such registration. Except with respect to
registration statements on Form S-8 (or other forms not available for
registering restricted stock for sale to the public), the Company will not file
with the Commission any other registration statement with respect to its Common
Stock, whether for its own account or that of other stockholders, from the date
of receipt of a notice from requesting holders pursuant to this Section 4 until the
completion of the period of distribution of the registration contemplated
thereby.




      SECTION 5. Incidental Registration; Form S-3 Registration.




         (a) If the Company at any time (other than pursuant to Section 4 hereof)
proposes to register any of its securities under the Securities Act for sale to
the public, whether for its own account or for the account of other security
holders or both (except with respect to registration statements on Form S-8 or
another form not available for registering Restricted Stock for sale to the
public), each such time it will give written notice to all holders of
Restricted Stock of its intention to do so. Upon the written request of any
such holder, given within 20 days after the date of any such notice, to
register any of its Restricted Stock (which request shall state the intended
method of disposition thereof), the Company will use its best efforts to cause
the Restricted Stock as to which registration shall have been so requested to
be included in the securities to be covered by the registration statement
proposed to be filed by the Company, all to the extent requisite to permit the
sale or other disposition by the holder (in accordance with its written
request) of such Restricted Stock so registered. The Company may withdraw any
such registration statement before it becomes effective or postpone the
offering of securities contemplated by such registration statement without any
obligation to the holders of any Restricted Stock. In the event that any
registration pursuant to this Section 5 shall be, in whole or in part, an
underwritten public offering of Common Stock, any request by a holder pursuant
to this Section 5 to register Restricted Stock shall specify that either (i)
such Restricted Stock is to be included in the underwriting on the same terms
and conditions as the shares of Common Stock otherwise being sold through underwriters under such registration or (ii) such Restricted Stock is to be sold in
the open market without any underwriting, on terms and conditions comparable to
those normally applicable to offerings of common stock in reasonably similar
circumstances. The number of shares of Restricted Stock to be included in such
an underwriting may be reduced (pro rata among the requesting holders) if and
to the extent that the managing underwriter shall be of the opinion that such
inclusion would adversely affect the marketing of the securities to be sold by
the Company therein; provided, however, that if any shares are to be included
in such underwriting for the account of any person other than the Company, the
number of shares to be included by any such person shall be reduced first; and
provided further, however, that the number of any such shares held by any
person other than the holders of Restricted Stock hereunder shall be reduced
before the number of any such shares held



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by the holders of Restricted Stock
hereunder is reduced. With respect to the first proviso of the preceding
sentence, if the Company elects to reduce pro rata the amount of Restricted
Stock proposed to be offered in the underwriting for the accounts of all
persons other than the Company, for purposes of making any such reduction, each
holder of Restricted Stock which is a partnership, together with the
affiliates, partners, employees, retired partners and retired employees of such
holder, the estates and family members of any such partners, employees, retired
partners and retired employees and of their spouses, and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single
“person,” and any pro rata reduction with respect to such “person” shall be based upon the aggregate number of shares of Restricted Stock owned by all
entities and individuals included as such “person”, as defined in this sentence
(and the aggregate number so allocated to such “person” shall be allocated
among the entities and individuals included in such “person” in such manner as
such holder of Restricted Stock may reasonably determine). Notwithstanding
anything to the contrary contained in this Section 5, in the event that there
is an underwritten offering of securities of the Company pursuant to a
registration covering Restricted Stock and a selling holder of Restricted Stock
does not elect to sell his, her or its Restricted Stock to the underwriters of
the Company’s securities in connection with such offering, such holder shall
refrain from selling such Restricted Stock not registered pursuant to this
Section 5 during the period of distribution of the Company’s securities by such
underwriters and the period in which the underwriting syndicate participates in
the after market; provided, however, that such holder shall, in any event, be
entitled to sell its Restricted Stock in connection with such registration
commencing on the 60th day after the effective date of such registration
statement.




         (b) If, at a time when Form S-3 is available for such registration, the
Company shall receive from any Institutional Investor a written request or
requests that the Company effect a registration on Form S-3 of any of such
holder’s Restricted Stock, the Company will promptly give written notice of the
proposed registration to all other holders of Restricted Stock and, as soon as
practicable, effect such registration and all such related qualifications and
compliances as may be requested and as would permit or facilitate the sale and
distribution of all Restricted Stock as are specified in such request and any
written requests of other holders given within 20 days after receipt of such
notice. The Company shall not be required to file a registration statement
under Form S-3 if it would not be required to file a registration statement
under Section 4 hereof pursuant to Section 4(a)(iii). The Company shall have no
obligation to effect a registration under this Section 5(b) unless either (i)
all the outstanding shares of Restricted Stock are requested to be sold
pursuant to such registration or (ii) the aggregate offering price of the
securities requested to be sold pursuant to such registration is, in the good
faith judgment of the Company, expected to be equal to or greater than $1,000,000. Any registration under this Section 5(b) will not be counted as a
registration under Section 4 above.




      SECTION 6. Registration Procedures. If and whenever the Company is
required by the provisions of Section 4 or 5 hereof to use its best efforts to
effect the registration of any shares of Restricted Stock under the Securities
Act, the Company will, as expeditiously as possible:



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         (a) prepare and file with the Commission a registration statement (which,
in the case of an underwritten public offering pursuant to Section 4 hereof,
shall be on Form S-1 or other form of general applicability satisfactory to the
managing underwriter selected as therein provided) with respect to such
securities and use its best efforts to cause such registration statement to
become and remain effective for the period of the distribution contemplated
thereby (determined as hereinafter provided);




         (b) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for the
period specified in Section 6 (a) above and as to comply with the provisions of
the Securities Act with respect to the disposition of all Restricted Stock
covered by such registration statement in accordance with the sellers’ intended
method of disposition set forth in such registration statement for such period;




         (c) furnish to each seller and to each underwriter such number of copies
of the registration statement and the prospectus included therein (including
each preliminary prospectus) as such persons may reasonably request in order to
facilitate the public sale or other disposition of the Restricted Stock covered
by such registration statement;




         (d) use its best efforts to register or qualify the Restricted Stock
covered by such registration statement under the securities or blue sky laws of
such jurisdictions as the sellers of Restricted Stock or, in the case of an
underwritten public offering, the managing underwriter shall reasonably
request;




         (e) immediately notify each seller under such registration statement and
each underwriter, at any time when a prospectus relating thereto is required to
be delivered under the Securities Act, of the happening of any event as a
result of which the prospectus contained in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;




         (f) use its best efforts to furnish, at the request of any seller, on the
date that Restricted Stock is delivered to the underwriters for sale pursuant
to such registration: (i) an opinion dated such date of counsel representing
the Company for the purposes of such registration, addressed to the
underwriters and to such seller, stating (A) that such registration statement
has become effective under the Securities Act, (B) that, to the best knowledge
of such counsel, no stop order suspending the effectiveness thereof has been
issued and no proceedings for that purpose have been instituted or are pending
or contemplated under the Securities Act and (C) that the registration
statement and the related prospectus, and each amendment or supplement thereof,
comply as to form in all material respects with the
requirements of the Securities Act and the applicable rules and
regulations of the Commission thereunder (except that such counsel need not
express any opinion as to financial statements contained therein), and to such
other effects as may reasonably be requested by counsel for the underwriters or
by such seller or its counsel, and (ii) a letter dated such



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date from the independent public accountants retained by the Company, addressed to the
underwriters and to such seller, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion
of such accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to
the period ending no more than five business days prior to the date of such
letter) with respect to the registration in respect of which such letter is
being given as such underwriters or such seller may reasonably request; and




         (g) make available for inspection by each seller, any underwriter
participating in any distribution pursuant to such registration statement, and
any attorney, accountant or other agent retained by such seller or underwriter,
all financial and other records, pertinent corporate documents and properties
of the Company, and cause the Company’s officers, directors and employees to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration statement.




      For purposes of Sections 6(a) and (b) above and of Section 4(c) hereof,
the period of distribution of Restricted Stock in a firm commitment
underwritten public offering shall be deemed to extend until each underwriter
has completed the distribution of all securities purchased by it, and the
period of distribution of Restricted Stock in any other registration shall be
deemed to extend until the earlier of the sale of all Restricted Stock covered
thereby or nine months after the effective date thereof.




      In connection with each registration hereunder, the selling holders of
Restricted Stock will furnish to the Company in writing such information with
respect to themselves and the proposed distribution by them as shall be
necessary in order to assure compliance with Federal and applicable state
securities laws.




      In connection with each registration pursuant to Sections 4 and 5 hereof
covering an underwritten public offering, the Company agrees to enter into a
written agreement with the managing underwriter selected in the manner herein
provided in such form and containing such provisions as are customary in the
securities business for such an arrangement between major underwriters and
companies of the Company’s size and investment stature, provided that such
agreement shall not contain any such provision applicable to the Company which
is inconsistent with the provisions hereof and provided, further, that the time
and place of the closing under said agreement shall be as mutually agreed upon
between the Company and such managing underwriter.




      SECTION 7. Expenses. All expenses incurred by the Company in complying
with Sections 4 and 5 hereof, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees of the National
Association of Securities Dealers, Inc., transfer taxes, fees of transfer
agents and registrars and costs of insurance and fees and expenses of one
counsel for the sellers of Restricted



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Stock, but excluding any Selling
Expenses, are herein called “Registration Expenses”. All underwriting
discounts and selling commissions applicable to the sale of Restricted Stock
are herein called “Selling Expenses.” The Company will pay all Registration
Expenses in connection with each registration statement filed pursuant to
Section 4 or 5 hereof. All Selling Expenses incurred in connection with any
sale of Restricted Stock by any participating seller shall be borne by such
participating seller, or by such persons other than the Company (except to the
extent the Company shall be a seller) as they may agree.




      SECTION 8. Indemnification. In the event of a registration of any of the
Restricted Stock under the Securities Act pursuant to Section 4 or 5 hereof,
the Company will indemnify and hold harmless each seller of such Restricted
Stock thereunder and each underwriter of such Restricted Stock thereunder and
each other person, if any, who controls such seller or underwriter within the
meaning of the Securities Act, against any and all losses, claims, damages, expenses or
liabilities, joint or several, to which such seller or underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which such Restricted Stock was registered under the Securities Act pursuant to
Section 4 or 5, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each such seller, each such underwriter and each
such controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability, expense or action; provided, however, that the Company will
not be liable in any such case if and to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by such seller, such underwriter or such controlling
person in writing specifically for use in such registration statement or
prospectus.




      In the event of a registration of any of the Restricted Stock under the
Securities Act pursuant to Section 4 or 5 hereof, each seller of such
Restricted Stock thereunder, severally and not jointly, will indemnify and hold
harmless the Company and each person, if any, who controls the Company within
the meaning of the Securities Act, each officer of the Company who signs the
registration statement, each director of the Company, each underwriter and each
person who controls any underwriter within the meaning of the Securities Act,
against all losses, claims, damages, expenses or liabilities, joint or several,
to which the Company or such officer or director or underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages, expenses or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the registration statement under
which such Restricted Stock was registered under the Securities Act pursuant to
Section 4 or 5, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the



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statements therein not
misleading, and will reimburse the Company and each such officer, director,
underwriter and controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that such seller will be
liable hereunder in any such case if and only to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in reliance
upon and in conformity with information pertaining to such seller, as such,
furnished in writing to the Company by such seller specifically for use in such
registration statement or prospectus; provided, further, however, that the
liability of each seller hereunder shall be limited to the proportion of any
such loss, claim, damage, liability or expense which is equal to the proportion
that the public offering price of the shares sold by such seller under such
registration statement bears to the total public offering price of all
securities sold thereunder, but not to exceed the proceeds received by such
seller from the sale of Restricted Stock covered by such registration
statement. Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party under this Section 8. In case any such action shall be
brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel reasonably satisfactory to such indemnified party,
and, after notice from the indemnifying party to such indemnified party of its
election to assume and undertake the defense thereof, the indemnifying party
shall not be liable to such indemnified party under this Section 8 for any
legal expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation and of
liaison with counsel so selected; provided, however, that, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
reasonable defenses available to it which are different from or additional to
those available to the indemnifying party or if the interests of the
indemnified party reasonably may be
deemed to conflict with the interests of the indemnifying party, the
indemnified party shall have the right to select a separate counsel and to
assume such legal defenses and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the indemnifying party as
incurred.




      Notwithstanding the foregoing, any indemnified party shall have the right
to retain its own counsel in any such action, but the fees and disbursements of
such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party shall have failed to retain counsel for the indemnified
party as aforesaid, (ii) the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party or that the
interests of the indemnified party conflict with the interests of the
indemnifying party, or (iii) the indemnifying party and such indemnified party
shall have mutually agreed to the retention of such counsel. It is understood
that the indemnifying party shall not, in connection with any action or related
actions in the same



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jurisdiction, be liable for the fees and disbursements of
more than one separate firm qualified in such jurisdiction to act as counsel
for the indemnified party. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment. If the
indemnification provided for in the first two paragraphs of this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under such
paragraphs in respect of any losses, claims, damages or liabilities or actions
referred to therein, then each indemnifying party shall in lieu of indemnifying
such indemnified party contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
actions in such proportion as appropriate to reflect the relative fault of the
Company, on the one hand, and the sellers of such Restricted Stock, on the
other, in connection with the statement or omissions which resulted in such
losses, claims, damages, liabilities or actions, as well as any other relevant
equitable considerations including, without limitation, the failure to give any
notice under the second paragraph of this Section 8. The relative fault shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company, on the
one hand, or by the sellers of such Restricted Stock, on the other hand, and to
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.




      The Company and the sellers of Restricted Stock agree that it would not be
just and equitable if contribution pursuant to this Section 8 were determined
by pro rata allocation (even if all of the sellers of Restricted Stock were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or action
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
and the immediately preceding paragraph, the sellers of such Restricted Stock
shall not be required to contribute any amount in excess of the amount, if any,
by which the total price at which the Common Stock sold by each of them was
offered to the public exceeds the amount of any damages which they would have
otherwise been required to pay by reason of such untrue or alleged untrue
statement of omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation. The indemnification of underwriters provided for in this
Section 8 shall be on such other terms and conditions as are at the time
customary and reasonably required by such underwriters and the
indemnification of the sellers of Restricted Stock in such underwriting shall,
at the sellers’ request, be modified to conform to such terms and conditions.
Upon the reasonable request of any stockholder selling Restricted Stock
pursuant to a registration statement or any underwriter of such stock, the
Company shall obtain, if reasonably available, an insurance policy covering the
risks described above in this Section 8 in an amount and with a deductible
reasonably requested by such seller or underwriter and naming such seller,
any underwriter of such stock and any person



11








 



controlling such seller or underwriter as beneficiaries. The costs of obtaining and maintaining any such
insurance shall be borne by the Company.




      SECTION 9. Changes in Common Stock.  If, and as often as, there are any
changes in the Common Stock by way of stock split, stock dividend, combination
or reclassification, or through merger, consolidation, reorganization or
recapitalization, or by any other means, appropriate adjustment shall be made
in the provisions hereof, as may be required, so that the rights and privileges
granted by this Agreement shall continue with respect to the Common Stock as so
changed.




      SECTION 10. Representations and Warranties of the Company. The Company
represents and warrants to each of the other parties hereto as follows (which
representations and warranties shall survive the execution and delivery of this
Agreement):




         (a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and will
not violate any provision of law, any order of any court or other agency of
government, the Certificate of Incorporation or By-laws of the Company, or any
provision of any indenture, agreement or other instrument to which it or any of
its properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of the Company or any of its subsidiaries.




         (b) This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company, enforceable
in accordance with its terms.




      SECTION 11. Rule 144 Reporting. The Company agrees with each of the other
parties hereto as follows:




         (a) The Company shall at all times make and keep public information
available as those terms are understood and defined in Rule 144 under the
Securities Act.




         (b) The Company shall at all times file with the Commission in a timely
manner all reports and other documents as the Commission may prescribe under
Section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder (the
“Exchange Act”).




         (c) The Company shall furnish to each holder of Restricted Securities
forthwith upon request (i) a written statement by the Company as to its
compliance with the reporting requirements of Rule 144, and of the Securities
Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly
report of the Company, and (iii) such other reports and documents so filed as
such holder may reasonably request to avail itself of any rule or regulation of



12








 



the Commission allowing a holder of Restricted Securities to sell any such
securities without registration.




      SECTION 12. Miscellaneous.



         (a) The obligations under Section 3 and the rights arising under Sections
4 and 5 shall terminate as to an Institutional Investor when (i) such
Institutional Investor is no longer an “affiliate” as used in Rule 144 and (ii)
such Institutional Investor is permitted to sell all Restricted Stock then held
by it pursuant to Rule 144(k).




         (b) All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. Without limiting the generality of the foregoing, the registration rights
conferred herein on the holders of Restricted Securities shall inure to the
benefit of any and all subsequent holders from time to time of the Restricted Securities for so
long as the certificates representing the Restricted Securities shall be
required to bear the legend specified in Section 2 hereof.




         (c) All notices, demands and other communications provided for or
permitted hereunder shall be made in writing and shall be by registered or
certified first-class mail, return receipt requested, telecopier (with receipt
confirmed), courier service or personal delivery:




	 	 	 	 	 	 	 
	 	 	(i)	 	if to the Company:
	 	 	 	 	 	 	 
	 	 	 	 	Mercury Air Group, Inc.

5456 McConnell Avenue

Los Angeles, California 90066
	 	 	 	 	Telecopier:

Attention:
	 	(310) 827-0650

Mr. Joseph A. Czyzyk

Wayne J. Lovett, Esq.
	 	 	 	 	 	 	 
	 	 	 	 	with a copy to:
	 	 	 	 	 	 	 
	 	 	 	 	McBreen, McBreen & Kopko

20 North Wacker Drive, Suite 252

Chicago, Illinois 60606
	 	 	 	 	Telecopier:

Attention:
	 	(312) 332-2657

Frederick Kopko, Esq.





13








 




	 	 	 	 	 	 	 
	 	 	(ii)	 	if to WMF:
	 	 	 	 	 	 	 
	 	 	 	 	J.H. Whitney Mezzanine Fund, L.P.

177 Broad Street

Stamford, Connecticut 06901
	 	 	 	 	Telecopier No.:

Attention:
	 	(203) 975-1422

Mr. James H. Fordyce

Mr. Daniel J. O’Brien
	 	 	 	 	 	 	 
	 	 	 	 	with a copy to:
	 	 	 	 	 	 	 
	 	 	 	 	Morrison Cohen Singer & Weinstein, LLP

750 Lexington Avenue

New York, New York 10022
	 	 	 	 	Telecopier No.:

Attention:
	 	(212) 735-8708

David A. Scherl, Esq.






or to such other address or addresses as shall have been furnished in
writing to the other parties hereto. Each holder agrees, at all times, to
provide the Company with an address for notices hereunder.




      All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; if mailed, five
Business Days (as defined in the Purchase Agreement) after being deposited in
the mail, postage prepaid; or if telecopied, when receipt is acknowledged.




         (d) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAW
PRINCIPLES THEREOF (INCLUDING GIVING EFFECT TO GOL SECTION 5-1401).




         (e) (I) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY AGREES THAT
ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY MAY BE BROUGHT
IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA
FOR THE SOUTHERN DISTRICT OF NEW YORK AND HEREBY EXPRESSLY SUBMITS TO THE
PERSONAL JURISDICTION AND VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND
EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM THAT SUCH COURTS
ARE AN INCONVENIENT FORUM. EACH PARTY HEREBY IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR



14








 



CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN SECTION 12(C),
SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING.




            (II) THE COMPANY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY
ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, THE COMPANY HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE
PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE COMPANY (X)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF WMF HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT WMF WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (Y) ACKNOWLEDGES THAT WMF
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.




         (f) This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and may not be modified or amended except
in writing.




         (g) Telefacsimile transmissions of any executed original document and/or
retransmission of any executed telefacsimile transmission shall be deemed to be
the same as the delivery of an executed original. At the request of any party
hereto, the other parties hereto shall confirm telefacsimile transmissions by
executing duplicate original documents and delivering the same to the
requesting party or parties. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.




         (h) The Company (on the one hand) and the Institutional Investors (on the
other hand) agree that any amendment to the Federal securities laws (and
regulations promulgated thereunder (and related registration forms), and
related state securities laws shall not affect the substantive registration
requirements (and other obligations of the Company) set forth in this
Agreement; and, following any such amendment, the Company shall continue to be
required to cause the registration of Restricted Stock (and pay all
Registration Expenses and provide indemnification) under the Federal securities
laws, as amended, in a manner consistent to carry out the intent and purposes
of (and on terms as similar as practicable as the terms set forth in) this
Agreement.




         (i) If any one or more of the provisions contained in this Agreement, or
the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, unless the
provisions held



15








 



invalid, illegal or unenforceable shall substantially impair
the benefits of the remaining provisions of this Agreement. The parties hereto
further agree to replace such invalid, illegal or unenforceable provision of
this Agreement with a valid, legal and enforceable provision that will achieve,
to the extent possible, the economic, business and other purposes of such
invalid, illegal or unenforceable provision.




      IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.




	 	 	 	 	 
	 	 	MERCURY AIR GROUP, INC,
	 	 	 	 	 
	 	 	
By:
	 	/s/ Joseph A. Czyzyk

	 	 	 	 	Name: Joseph A. Czyzyk

Title: President
	 	 	 	 	 
	 	 	J.H. WHITNEY MEZZANINE FUND, LP.
	 	 	 	 	 
	 	 	By: Whitney GP, L.L.C.,

           Its General Partner
	 	 	 	 	 
	 	 	
By:
	 	/s/ James H. Fordyce

	 	 	 	 	Name: James H. Fordyce

A Managing Member





[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]