Document:

exv10w1

 

Exhibit 10.1

SETTLEMENT AGREEMENT

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

RECITALS

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

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

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

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

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

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

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

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

 

 

AGREEMENT

     NOW THEREFORE, in consideration of the premises and mutual promises herein
made, and in consideration of the representations, warranties and covenants
herein contained, the Company and the Investor hereby agree as follows:

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

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

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

     3.1     The Investor has the full power and authority to execute,
deliver and carry out the terms and provisions of this Agreement and to
consummate the transactions contemplated hereby, and has taken all
necessary action to authorize the execution, delivery and performance of
this Agreement;

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

     3.3     This Agreement has been duly and validly authorized, executed
and delivered by the Investor and constitutes a valid and binding
obligation of the Investor, enforceable in accordance with its terms,
subject to applicable principles of equity, bankruptcy, reorganization,
insolvency or other laws affecting the enforcement of creditors’ rights
generally and no other proceeding on the part of the Investor is
necessary to authorize the execution, delivery and performance of this
Agreement and the transactions contemplated hereby;

     3.4     The Investor is the sole “Beneficial Owner” (within the meaning
of rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) of the Repurchased Shares, has good and marketable title
to all such Repurchased Shares, and there exist no liens, claims,
options, proxies, voting agreements, charges or encumbrances of whatever
nature (collectively, “Liens”) affecting such Repurchased Shares;

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

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     3.6     The Repurchased Shares constitute all of the securities of the
Company beneficially owned, directly or indirectly, by the Investor or by
any “Affiliate” or “Associate” (as those terms are defined in Rule 12b-2
under the Exchange Act) of such Investor;

     3.7     Neither the Investor nor any of its Affiliates has outstanding
any option, warrant or other right to acquire, directly or indirectly,
any securities of the Company which are entitled to vote or any
securities which are convertible or exchangeable into or exercisable for
any securities of the Company which are entitled to vote, nor is the
Investor or any Affiliate of the Investor subject to any agreement
(whether written or in the nature of an informal understanding) which
allows or obligates the Investor or any such Affiliate to vote or acquire
any such securities;

     3.8     Neither the execution and the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, will (i)
violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Investor is
subject or any provision of the organizational documents of the Investor
or (ii) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any consent or
notice (other than those obtained or made) under any agreement, contract,
lease, license, instrument, judgment, decree, order or other arrangement
to which the Investor is a party or by which it is bound or to which any
of its assets is subject (or result in the imposition of any security
interest upon any of its assets), nor is the Investor required to obtain
the approval or consent of any person or entity to effect the exchange of
the Repurchased Shares;

     3.9     Neither the Investor nor any person or entity acting on behalf
of the Investor has agreed to pay a commission, finder’s fee or
investment banking fee, or similar payment in connection with this
Agreement or any matter related hereto, nor has the Investor, or any
person or entity taken any action on which a claim for such payment could
be based, in each case, for which the Company could become liable;

     3.10     The Investor has not made or threatened to make a public tender
offer (within the meaning of Section 5881 of the Internal Revenue Code of
1986, as amended) for securities of the Company;

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

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

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

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

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

     “Section 1542. Certain Claims not Affected by General Release. A
general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which, if known by him must have materially affected his
settlement with the debtor.”

     4.      The Company Representations and Warranties. The Company represents and
warrants to the Investor as follows:

     4.1     The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. The
Company has the full power and authority to execute, deliver and carry
out the terms and provisions of this Agreement and consummate the
transactions contemplated hereby, and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement;

     4.2     This Agreement has been duly and validly authorized, executed
and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms,
subject to applicable principles of equity, bankruptcy, reorganization,
insolvency or other laws affecting the enforcement of creditors’ rights
generally and no other proceeding on the part of the Company is necessary
to authorize the execution, delivery and performance of this Agreement,
and the transactions contemplated hereby;

     4.3     Neither the execution and the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, will (i)
violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Company is subject
or any provision of the certificate of incorporation or by-laws, as
amended to

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date, of the Company or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require
any consent or notice (other than those obtained or made) under any
agreement, contract, lease, license, instrument, judgment, decree, order
other arrangement to which the Company is a party or by which it is bound
or to which any of its assets is subject (or result in the imposition of
any security interest upon any of its assets), nor is the Company
required to obtain the approval or consent of any person or entity to
effect the repurchase of the Repurchased Shares;

     4.4     Neither the Company, nor any person or entity acting on behalf
of the Company, has agreed to pay a commission, finder’s fee or
investment banking fee, or similar payment in connection with this
Agreement or any matter related hereto, nor has the Company, person or
entity taken any action on which a claim for such payment could be based,
in each case, for which the Investors could become liable;

     4.5     The Company acknowledges and confirms that the Investor has not
made or threatened to make a public tender offer (within the meaning of
Section 5881 of the Internal Revenue Code of 1986, as amended) for
securities of the Company; and

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

     “Section 1542. Certain Claims not Affected by General Release. A
general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which, if known by him must have materially affected his
settlement with the debtor.”

     5.      Other Covenants.

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

     5.2     Publicity. No public announcement or disclosure will be made by
any party with respect to the subject matter of this Agreement without
the prior written consent of the Company and the Investor; provided,
however, that the provisions of this Section 5.2 will not prohibit (a)
any disclosure required by any applicable law (in which case the
disclosing party will provide the other party with the opportunity to
review and comment on the disclosure in advance) or (b) any disclosure
made in connection with the

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

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

     6.     Conditions to Closing.

     6.1     Precedent to the Obligations of the Investor. The obligation of
the Investor to tender the Repurchased Shares to the Company for
repurchase is subject to the satisfaction on or prior to the Closing Date
of each of the following conditions, unless expressly waived in writing
by the Investor at or prior to the Closing:

	 	(a)	 	Closing Deliveries. The Company shall have
transmitted to the Investor the amounts set forth in Section
1 and Section 5.1, in immediately available funds, along with
an executed original of the Mutual Release of Claims.
	 
	 	(b)	 	Representations and Warranties. The
representations and warranties made by the Company in this
Agreement shall be true and correct in all material respects
as of the Closing Date.
	 
	 	(c)	 	Adverse Proceedings. No action, suit or
proceeding by or before any court or other governmental body
shall have been instituted by any governmental body or other
person which seeks to restrain, prohibit or invalidate any
transaction contemplated hereby.

     6.2     Conditions Precedent to Obligations of the Company. The
Company’s obligations to repurchase the Repurchased Shares is subject to
the satisfaction on or prior to the Closing Date of each of the following
conditions, unless expressly waived in writing by the Company at or prior
to Closing:

	 	(a)	 	Closing Deliveries. The Investor shall have
surrendered to the Company certificates evidencing the
Repurchased Shares, duly endorsed (or accompanied by duly
executed stock transfer powers), along with an executed
original of the Mutual Release of Claims.
	 
	 	(b)	 	Representations and Warranties. The
representations and warranties made by the Investor in this
Agreement shall be true and correct in all material respects
as of the Closing Date.
	 
	 	(c)	 	Adverse Proceedings. No action, suit or
proceeding by or before any court or other governmental body
shall have been instituted by any governmental body or other
person which seeks to restrain, prohibit or invalidate any
transaction contemplated hereby.

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     7.      Miscellaneous.

     7.1     Notices. All notices, requests, demands, claims and other
communications required or permitted to be delivered, given or otherwise
provided under this Agreement must be in writing and must be delivered,
given or otherwise provided:

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

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

     by overnight delivery by a nationally recognized courier
service (in which case, it will be effective on the Business Day
after being deposited with such courier service);

in each case, to the address (or facsimile number) listed below:

	 	 	If to the Company, to it at:

          Mercury Air Group, Inc.

          5456 McConnell Avenue

          Los Angeles, CA 90066

          Telephone number: (310) 827-2737

          Facsimile number: (310) 827-6897

          Attention: Joseph Czyzyk

	 	 	with a copy to:

          McBreen & Kopko

          20 North Wacker Drive, Suite 2520

          Chicago, IL 60606

          Telephone number: (312) 332-6405

          Facsimile number: (312) 332-2059

          Attention: Frederick H. Kopko, Jr.

	 	 	If to the Investor, to it at:

          Pacific Holding Company

          10900 Wilshire Boulevard, Suite 1600

          Los Angeles, CA 90024

          Telephone number: (310) 209-3803

          Facsimile number: (310) 2824-7770

          Attention: General Counsel

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     with a copy to:

          O’Melveny & Myers, LLP

          7 Times Square

          New York, NY 10036

          Telephone number: (212) 326-2085

          Facsimile number: (212) 326-2061

          Attention: Charles F. Niemeth, Esq.

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

     7.2     Succession and Assignment; No Third-Party Beneficiaries.
Subject to the immediately following sentence, this Agreement will be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, each of which such
successors and permitted assigns will be deemed to be a party hereto for
all purposes hereof. No party may assign, delegate or otherwise transfer
either this Agreement or any of its rights, interests, or obligations
hereunder without the prior written approval of the other parties.
Except as expressly provided herein, this Agreement is for the sole
benefit of the parties and their permitted successors and assignees and
nothing herein expressed or implied will give or be construed to give any
person or entity, other than the parties and such successors and
assignees, any legal or equitable rights hereunder.

     7.3     Indemnification. The Company shall indemnify the Investor, its
Affiliates, and each of their respective directors, officers, employees,
agents, attorneys, accountants, consultants and each person, if any, who
controls the Investor or its Affiliates (the Investor, its Affiliates,
and each of such directors, officers, employees, agents, attorneys,
accountants, consultants and control persons is referred to as an
“Indemnified Party”) and hold each of them harmless from and against any
and all claims, damages, liabilities and reasonable expenses (including
reasonable fees and disbursements of counsel with whom any Indemnified
Party may consult in connection therewith and all reasonable expenses of
litigation or preparation therefor) which any Indemnified Party may incur
or which may be asserted against any Indemnified Party in connection with
(a) the Indemnified Party’s compliance with or contest of any subpoena or
other process issued against it in any proceeding involving the Company
or any of its Affiliates, or (b) this Agreement or any transaction
contemplated hereby; provided, however, that the foregoing indemnity
shall not apply to the extent such claims, damages, liabilities and
expenses result from the Indemnified Party’s own gross negligence or
willful misconduct.

     7.4     Amendments and Waivers. No amendment or waiver of any provision
of this Agreement will be valid and binding unless it is in writing and
signed, in the case of an amendment, by the Company and the Investor, or
in the case of a waiver, by the party against whom the waiver is to be
effective. No waiver by any party of any breach or violation or, default
under or inaccuracy in any representation, warranty or covenant
hereunder, whether intentional or not, will be deemed to extend to any
prior or subsequent breach, violation, default of, or inaccuracy in, any
such representation,

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warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence. No delay
or omission on the part of any party in exercising any right, power or
remedy under this Agreement will operate as a waiver thereof.

     7.5     Entire Agreement. This Agreement, and any documents,
instruments and certificates explicitly referred to herein, constitutes
the entire agreement among the parties hereto with respect to the subject
matter hereof and supersedes any and all prior discussions, negotiations,
proposals, undertakings, understandings and agreements, whether written
or oral, with respect thereto.

     7.6     Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute but one and the same instrument. This Agreement
will become effective when duly executed by each party hereto.

     7.7     Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction will not
affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term
or provision in any other situation or in any other jurisdiction. In the
event that any provision hereof would, under applicable law, be invalid
or unenforceable in any respect, each party hereto intends that such
provision will be construed by modifying or limiting it so as to be valid
and enforceable to the maximum extent compatible with, and possible
under, applicable law.

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

     7.9     Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement will be
construed as if drafted jointly by the parties and no presumption or
burden of proof will arise favoring or disfavoring any party by virtue of
the authorship of any of the provisions of this Agreement. The parties
intend that each representation, warranty and covenant contained herein
will have independent significance. If any party has breached or
violated, or if there is an inaccuracy in, any representation, warranty
or covenant contained herein in any material respect, the fact that there
exists another representation, warranty or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which
the party has not breached or violated, or in respect of which there is
not an inaccuracy in any material respect, will not detract from or
mitigate the fact that the party has breached or violated, or there is an
inaccuracy in a material respect in, the first representation, warranty
or covenant.

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

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

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     7.12     Specific Performance. Each of the parties acknowledges and
agrees that the other party would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the
parties agrees that, without posting bond or other undertaking, the other
party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any claim, action,
cause of action or suit (whether in contract or tort or otherwise),
litigation (whether at law or in equity, whether civil or criminal),
controversy, assessment, arbitration, investigation, hearing, charge,
complaint, demand, notice or proceeding to, from, by or before any
governmental authority (an “Action”) instituted in any court of the
United States or any state thereof having jurisdiction over the parties
and the matter in addition to any other remedy to which it may be
entitled, at law or in equity. Each party further agrees that, in the
event of any action for specific performance in respect of such breach,
it shall not assert the defense that a remedy at law would be adequate.

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

     7.14     Governing Law. This Agreement, the rights of the parties and
all Actions arising in whole or in part under or in connection herewith,
will be governed by and construed in accordance with the domestic
substantive laws of California, without giving effect to any choice or
conflict of law provision or rule that would cause the application of the
laws of any other jurisdiction.

     7.15     Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTIES HEREBY WAIVE, AND
COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR
IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT
ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN
EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE
PARTIES IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY IN ANY PROCEEDING
WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY OF THE
CONTEMPLATED TRANSACTIONS WILL INSTEAD BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

[Signatures on following page]

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

	 	 	 	 	 
	PURCHASER:	 	MERCURY AIR GROUP, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	

	 	By:
	 	/s/ Joseph Czyzyk
	

	 	 	 	
 
	

	 	 	 	Name: Joseph Czyzyk

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

	 	By:
	 	/s/ David H. Murdock
	

	 	 	 	
 
	

	 	 	 	David H. Murdock, Trustee

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Exhibit A

Mutual Release of Claims

 

[See attached]

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Exhibit A

MUTUAL RELEASE OF CLAIMS

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

RECITALS

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

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

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

WHEREAS, pursuant to the Settlement Agreement, Investor and Mercury agreed that
upon closing of the Settlement Agreement, the parties hereto would enter into
this Mutual Release of Claims with the intention of resolving and releasing any
and all claims between and among them.

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

1. Investor, on behalf of itself, its owned and/or affiliated entities, and any
and all present and former officers, directors, partners, employees, agents,
attorneys, successors, heirs and assigns of any of the foregoing (the
“Releasing Investor Parties”), do hereby release, remise, and forever discharge
Mercury, its owned and/or affiliated entities, and any and all its present and
former officers, directors, partners, employees, agents, attorneys, successors,
heirs and assigns of any of the foregoing (the “Released Mercury Parties”), of
and from all debts, demands, actions, causes of actions, suits, accounts,
covenants, contracts, agreements, torts, damages and any and all claims,
demands, and liabilities whatsoever, of every name and nature, both at law and
in equity, whether known or unknown (collectively “Claims”), that any of the
Releasing Investor Parties now has or ever had with or against any of the
Released Mercury Parties (the “Released Investor Claims”), including without
limitation any and all Claims that any of the Releasing Investor Parties now
has or ever had with or against any of the Released Mercury Parties arising out
of or relating to any matter in connection with any of the Releasing Investor
Parties’ attempts to purchase Mercury’s FBO Business or any part thereof.
Notwithstanding anything to the contrary in the preceding sentence, the
Released Investor Claims do not include the obligations of or any Claims
arising under the Settlement Agreement.

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

 

 

former officers, directors, partners, employees, agents, attorneys, successors,
heirs and assigns of any of the foregoing (the “Released Investor Parties”), of
and from all Claims, that any of the Releasing Mercury Parties now has or ever
had with or against any of the Released Investor Parties (the “Released Mercury
Claims”), including without limitation any and all Claims that any of the
Releasing Mercury Parties now has or ever had with or against any of the
Released Investor Parties arising out of or relating to any matter in
connection with any of the Releasing Investor Parties’ attempts to purchase
Mercury’s FBO business or any part thereof. Notwithstanding anything to the
contrary in the preceding sentence, the Released Mercury Claims do not include
the obligations of or any Claims arising under the Settlement Agreement.

3. The parties specifically waive the provisions of California Civil Code
Section 1542, which provides: “A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time
of executing the release, which if known by him must have materially affected
his settlement with the debtor.”

4. This Mutual Release of Claims shall be construed and enforced in accordance
with, and be governed by, the laws of California, and it may not modified,
amended or terminated, nor may the provisions hereof be waived, other than in a
written instrument executed by all parties hereto.

[Signatures on following page]

2

 

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

	 	 	 	 	 
	MERCURY:	 	MERCURY AIR GROUP, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Joseph Czyzyk
	

	 	 	 	
 
	

	 	 	 	Name: Joseph Czyzyk
	

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

	 	By:
	 	/s/ David H. Murdock
	

	 	 	 	
 
	

	 	 	 	David H. Murdock, Trustee

3<PAGE>

                                                                 EXHIBIT 10.1(a)

                                 AMENDMENT NO. 1

             TO 3-YEAR REVOLVING CREDIT AGREEMENT AND LOAN DOCUMENTS

            AMENDMENT NO. 1 dated as of July 14, 2004 (this "Amendment") to (i)
the Revolving Credit Agreement (as defined below) among HALLIBURTON COMPANY (the
"Borrower"), the Banks (as defined in the Revolving Credit Agreement) party
hereto, and CITICORP NORTH AMERICA, INC. ("CNAI"), as the Agent thereunder (the
"Agent") and (ii) certain other Loan Documents. Capitalized terms defined in the
Revolving Credit Agreement and not otherwise defined herein being used herein as
therein defined.

            PRELIMINARY STATEMENTS:

            (1)   The Borrower has entered into the 3-Year Revolving Credit
Agreement dated as of October 31, 2003 (as amended or otherwise modified through
the date hereof, the "Revolving Credit Agreement") with the Banks party thereto,
the Agent and the other agents named therein.

            (2)   The Borrower, the Required Banks and the Agent have agreed to
amend certain provisions of the Revolving Credit Agreement and certain other
Loan Documents as hereinafter set forth.

            NOW, THEREFORE, it is hereby agreed as follows:

            SECTION 1. Amendments to the Revolving Credit Agreement. The
Revolving Credit Agreement is, effective as of the Amendment Effective Date
(defined below), amended as follows:

            (a)   The definition of "Collateral Trust Agreement" contained in
      Section 1.01 is hereby amended and restated in full to read as follows:

            "`Collateral Trust Agreement' has the meaning specified in Section
3.01(e)(iv)."

            (b)   The definition of "Consolidated Debt to Total Consolidated
      Capitalization Ratio" contained in Section 1.01 is hereby amended and
      restated in full to read as follows:

            ""Consolidated Debt to Total Consolidated Capitalization Ratio"
means, as of any date of calculation, the ratio of the Borrower's Consolidated
Debt outstanding on such date to the sum of (i) Consolidated Debt and (ii)
Consolidated Net Worth outstanding on such date; provided, that during the
period from the date of this Agreement until the time that the Borrower records
the equity component of the Settlement Payments, any changes to Net Asbestos and
Silica Liability and any related reduction in equity as a result of required
accounting adjustments relating to the Settlement Payments, including changes
related to insurance coverage, shall be disregarded for purposes of calculating
the Consolidated Debt to Total Consolidated Capitalization Ratio."

<PAGE>

                                       2

            (c)   Section 1.01 is hereby further amended by adding a new
      definition in the appropriate alphabetical order to read as follows:

            "`364-Day Revolving Credit Agreement' means the senior secured
      revolving credit facility agreement, dated as of July 14, 2004, among the
      Borrower, the banks party thereto, CNAI, as agent, and the other agents
      named therein, as amended from time to time."

            (d)   Section 2.03(a) is hereby amended by adding immediately before
      the period at the end thereof a new proviso to read as follows:

            "; provided, further that no Issuing Bank shall be required to issue
      any Letter of Credit if after giving effect to such issuance the aggregate
      face amount of all outstanding letters of credit issued under this
      Agreement and the 364-Day Revolving Credit Agreement by such Issuing Bank
      would exceed $250,000,000, unless such Issuing Bank shall have otherwise
      agreed."

            (e)   Section 5.02(b) is hereby amended by adding "and the 364-Day
      Revolving Credit Agreement" immediately before the period at the end of
      clause (xiii) thereof.

            SECTION 2. Amendments to Certain Loan Documents.

            (a)   The Collateral Trust Agreement is, effective as of the
Amendment Effective Date, amended and restated in full in substantially the form
set forth in Exhibit A hereto.

            (b)   The Pledge Agreement is, effective as of the Amendment
Effective Date, amended and restated in full in substantially the form set forth
in Exhibit B hereto.

            (c)   The Subsidiary Guaranty is, effective as of the Amendment
Effective Date, amended and restated in full in substantially the form set forth
in Exhibit C hereto.

            SECTION 3. Effectiveness. This Amendment shall become effective as
of the date first above written (the "Amendment Effective Date") upon the
satisfaction of the conditions that (a) the Agent shall have received (i)
counterparts of this Amendment executed by the Borrower, the Agent and the
Required Banks or, as to any of the Banks, advice satisfactory to the Agent that
such Bank has executed this Amendment, (ii) counterparts of the Collateral Trust
Agreement, the Pledge Agreement and the Subsidiary Guaranty, each in the amended
and restated form as set forth in the appropriate exhibit hereto, executed by
all the parties thereto, (iii) evidence that Amendment No. 2, dated as of the
date hereof, to the Master LC Facility Agreement and the 364-Day Revolving
Credit Agreement dated as of the date hereof among the Borrower, the banks party
thereto, CNAI, as agent, and the other agents named therein, shall have become
effective, (iv) evidence that the Senior Unsecured Credit Facility Agreement and
all the "Commitments" (as defined therein) thereunder shall have been terminated
and all amounts payable by the Borrower thereunder shall have been paid in full
and (v) payment for all fees, costs and expenses of the Agent and the Banks that
have been invoiced to the Borrower and are due and payable (including, without
limitation, any fees, costs and expenses due and payable pursuant to Section 5
below) as of the date of the Borrower's execution hereof; and (b) the following
statements shall be true and the Agent shall have received a certificate signed
by a duly authorized officer of the Borrower, dated the Amendment Effective
Date, stating that: (i) the representations and warranties contained in Section
4.01 of the Revolving Credit Agreement

<PAGE>

                                       3

are correct on and as of the Amendment Effective Date as though made on and as
of such date (other than any such representations and warranties that expressly
relate solely to a specific earlier date), and (ii) no event has occurred and is
continuing that constitutes a Default.

            SECTION 4. Effect on Revolving Credit Agreement. On and after the
effectiveness of this Amendment, each reference in the Revolving Credit
Agreement, the Collateral Trust Agreement, the Pledge Agreement or the
Subsidiary Guaranty to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Revolving Credit Agreement, the Collateral Trust
Agreement, the Pledge Agreement or the Subsidiary Guaranty, and each reference
in each other Loan Document to "the Revolving Credit Agreement", "the Collateral
Trust Agreement", "the Pledge Agreement", "the Subsidiary Guaranty",
"thereunder", "thereof" or words of like import referring to the Revolving
Credit Agreement, the Collateral Trust Agreement, the Pledge Agreement or the
Subsidiary Guaranty, shall mean and be a reference to the Revolving Credit
Agreement, the Collateral Trust Agreement, the Pledge Agreement or the
Subsidiary Guaranty, as the case may be, as amended by this Amendment. Each of
the Revolving Credit Agreement, the Collateral Trust Agreement, the Pledge
Agreement and the Subsidiary Guaranty, as specifically amended by this
Amendment, is and shall continue to be in full force and effect and is hereby in
all respects ratified and confirmed. The execution, delivery and effectiveness
of this Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of any Bank or the Administrative Agent
under any of the Loan Documents, nor constitute a waiver of any provision of any
of the Loan Documents.

            SECTION 5. Payment of Fees. The Borrower agrees to pay on demand all
reasonable out-of-pocket costs and expenses of the Agent in connection with the
preparation, execution and delivery of this Amendment in accordance with the
terms of Section 8.04(a)(i) of the Revolving Credit Agreement.

            SECTION 6. Execution in Counterparts. This Amendment may be executed
in any number of counterparts and by different 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.
Delivery of an executed counterpart of a signature page to this Amendment by
telecopier shall be effective as delivery of a manually executed counterpart of
this Amendment.

            SECTION 7. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.

                  [Remainder of Page Intentionally Left Blank]

<PAGE>

            IN WITNESS WHEREOF, the undersigned have each caused this Amendment
to be executed and delivered by their respective duly authorized officer as of
the date first above written.

                                         HALLIBURTON COMPANY

                                        By /s/ CEDRIC W. BURGHER
                                           ____________________________________
                                           Name: Cedric W. Burgher
                                           Title: Vice President

* Bank signature pages omitted.

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