EXHIBIT 10.5
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") dated as of
October _, 2003 is entered into by and among X.X. XXXXXXX MEZZANINE FUND, L.P.,
a Delaware limited partnership ("JWF") and X.X. XXXXXXX MEZZANINE DEBT FUND,
L.P. ("JWD" and together with JWF, the "Seller"), ALLIED CAPITAL CORPORATION, a
Maryland corporation ("Buyer"), and MERCURY AIR GROUP, INC., a Delaware
corporation (the "Company").
1. Purchase and Payment. Upon the terms of this Agreement, the
Buyer purchases, and the Seller hereby sells and assigns to the Buyer for a
total purchase price of $24,208,000: (i) a warrant (the "Warrant") to purchase
up to 226,407 shares of common stock, par value $0.01 per share (the "Common
Stock") of the Company pursuant to Sections 8 and 9; (ii) a 12% Senior
Subordinated Promissory Note from the Company in the amount of $24,000,000 (the
"Note" and together with the Warrant, the "Securities"); and (iii) all rights
of the Seller under all other documents or instruments executed in connection
with the Securities Purchase Agreement between the Company and the Seller dated
September 10, 1999, as amended by Amendment No. 1 dated as of September 30,
2000, Amendment No. 2 dated as of September 30, 2001 and Amendment Xx. 0
("Xxxxxxxxx Xx. 0") dated as of December 30, 2002, including, without
limitation, the Security Agreement dated December 30, 2002, the Registration
Rights Agreement dated September 10, 1999 (as amended by Amendment No. 3) and
the Preemptive Rights Agreement dated September 10, 1999 between the Company and
JWF, the certain Subsidiary Guarantee entered into by certain subsidiaries of
the Company in favor of JWF dated December 30, 2002, the Validity and Support
Agreement entered into by the Company and Xxxxxx Xxxxxx in favor of JWF dated
December 30, 2003, those certain Stock Pledge Agreements dated as of December
30, 2002 by and among the Company and certain of its subsidiaries and JWF, and
the Subordination Agreement (the "Subordination Agreement") dated as of December
30, 2002 among JWF, Foothill Capital Corporation, as agent for the senior
lenders, and the Company (collectively, the "Investment Documents"). Upon
payment of the purchase price, the Seller shall deliver one or more notes or
certificates evidencing the Buyer's ownership of each of the Securities.
2. Assumption of Liabilities. Upon the terms of this Agreement,
the Buyer hereby assumes and becomes responsible for the obligations and
responsibilities of the Seller under the Securities and the Investment
Documents.
3. Ownership of Securities. The Seller represents and warrants to
the Buyer that it is the true and rightful owner of the Securities and has good
and marketable title to the Securities, free and clear of any liens or other
encumbrances of any kind. The Seller represents and warrants to the Buyer that
it has the power and authority to transfer the Securities to the Buyer pursuant
to this Agreement. The Seller represents and warrants to the Buyer that the
Securities and the Investment Documents it has delivered to the Buyer are true
and complete originally-executed copies thereof.
4. Non-Recourse. Except with respect to the representations and
warranties of the Seller set forth in Section 3, the sale and transfer of the
Securities is without recourse to the Seller and
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the Seller does not guarantee the collectability of the Note, and Buyer, on
behalf of itself and its heirs, executors, attorneys, administrators, successors
and assigns, hereby unconditionally fully releases and forever discharges the
Seller and its respective predecessors, successors and assignees, and each of
their respective affiliates, subsidiaries, officers, directors, partners,
members, employees, agents and attorneys, past and present, from any and all
claims related to or arising in connection with, or related to, the Securities
and the Investment Documents, as well as any and all claims, demands, liens,
agreements, contracts, covenants, actions, suits, causes of action, obligations,
controversies, debts, costs, expenses, damages, judgments, orders and
liabilities of whatever kind or nature, in law or equity, by statute or
otherwise, whether now known or unknown, vested or contingent, suspected or
unsuspected, and whether or not concealed or hidden, which have existed or may
have existed from the beginning of the world, or which do exist.
5. Consent to Amendment of Financing Statements. The Seller
hereby consents to the amendment of any UCC-1 financing statement securing the
obligations under the Note to designate the Buyer as secured party thereon, and
agrees to execute any other documents or instruments reasonably requested by the
Buyer in order to effectuate the foregoing.
6. Subordination. The parties acknowledge that the Investment
Documents are subject to the provisions of the Subordination Agreement. The
Buyer hereby agrees to release the Seller from its obligations under the
Subordination Agreement and agrees to indemnify the Seller and to hold the
Seller harmless for all claims (other than claims related to a breach by Seller
of the Subordination Agreement related thereto).
7. Investment Representations. The Buyer hereby makes the
following representations and warranties to the Seller:
a. Investment. The Buyer is acquiring the Note
for its own account for investment and not with a view to, or for sale in
connection with, any distribution thereof, nor with any present intention of
distributing or selling the same; and the Buyer has no present or contemplated
agreement, undertaking, arrangement, obligation, indebtedness or commitment
providing for the disposition thereof.
b. Authority. The Buyer has full power and
authority to enter into and to perform this Agreement in accordance with its
terms and to consummate the transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Buyer and constitutes valid and binding
obligation of the Buyer enforceable in accordance with its respective terms. The
Buyer represents that it has not been organized, reorganized or recapitalized
specifically for the purpose of investing in the Company.
c. Accredited Investor. The Buyer is an
Accredited Investor within the definition set forth in Rule 501(a) of the
Securities Act.
d. Confidential Information. (i) The Buyer is
aware that the Seller may have access to certain non-public information which
may be material regarding the Company and its
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businesses (the "Confidential Information"); (ii) the Buyer is aware that such
Confidential Information may be indicative of a value of the Securities that is
substantially different from the purchase price hereunder; (iii) the Buyer is
experienced, sophisticated and knowledgeable in the trading in securities of
private and public companies and understands the disadvantage to which it is
subject on account of the disparity of information as between the Buyer and the
Seller; and (iv) the Buyer has examined or been given the opportunity to examine
all information which has been made publicly available by the Company in its
press releases and through the various filings made by the Company with the
Securities and Exchange Commission.
e. Reliance. The Buyer understands and
acknowledges that the Seller is relying on the representations contained herein
in engaging in the sale of the Securities and would not engage in the sale of
the Securities in the absence of the representations contained herein.
8. Closing. The closing on the purchase and sale of the
Securities (the "Closing") shall take place at the offices of Xxxxx Xxxxxxx LLP,
counsel to the Buyer, located at 0000 00xx Xxxxxx, XX, Xxxxxxxxxx, XX 00000,
commencing at 10:00 a.m. local time on October _, 2003 or at such other place or
such other date as may be mutually agreed upon by the Seller and the Buyer. At
the Closing, (a) Buyer shall execute and deliver to Seller an Assignment and
Assumption Agreement in the form attached hereto as Exhibit I and (b) Seller
shall deliver its warrant to purchase 251,563 shares of Common Stock to the
Company.
9. Issuance of New Warrants. Promptly after the Closing, and in
any event no later than two business days after the Closing, the Company shall
issue (a) a warrant to purchase 226,407 shares of the Common Stock to the Buyer
in the form attached hereto as Exhibit II (the "Buyer Warrant") and (b) a
warrant to purchase 25,156 shares of Common Stock to the Seller in the form
attached hereto as Exhibit III (the "Seller Warrant" and together with the Buyer
Warrant, the "New Warrants"). The Company shall cause the per share exercise
price of the Seller Warrant and any other warrants, options, convertible
securities or other rights to purchase shares of Common Stock issued by the
Company to the Seller from time to time to be equal to the lesser of (i) $7.484
per share and (ii) the per share exercise price payable by Buyer (or its
transferees or assignees) under the Buyer Warrant (or any replacement warrant),
in either case subject to adjustment as provided in the Seller Warrant.
10. Acknowledgement and Release. The Company hereby acknowledges
the assignment of the Securities and the Investment Documents to, and the
assumption of the obligations and responsibilities of the Seller thereunder by,
the Buyer and affirms that all rights and privileges that previously inured to
the benefit of the Seller pursuant to the Securities and the Investment
Documents shall hereafter inure to the benefit of the Buyer. The undersigned
further acknowledges and agrees, on behalf of itself and its heirs, executors,
attorneys, administrators, successors and assigns, hereby unconditionally fully
releases and forever discharges the Seller and its respective predecessors,
successors and assignees, and each of their respective affiliates, subsidiaries,
officers, directors, partners, members, employees, agents, and attorneys, past
and present, from any and all claims related to or arising in connection with,
or related to, the Securities and Investment Documents, as well as any and all
claims, demands, liens, agreements, contracts, covenants, actions, suits, causes
of action, obligations, controversies, debts, costs,
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expenses, damages, judgments, orders and liabilities of whatever kind or nature,
in law or equity, by statute or otherwise, whether now known or unknown, vested
or contingent, suspected or unsuspected, and whether or not concealed or hidden,
which have existed or may have existed from the beginning of the world, or which
do exist.
11. Miscellaneous.
a. Severability. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.
b. Governing Law. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
Delaware (without reference to the choice of law or conflicts of law provisions
thereof which might result in application of the laws of any other
jurisdiction).
c. Complete Agreement. This Agreement, the
Assignment of Note, the Assignment of Warrant, the Assignment and Assumption
Agreement and the New Warrants constitute the entire agreement and understanding
of the parties hereto with respect to the subject matter hereof and supersede
all prior agreements and understandings relating to such subject matter.
d. Successors and Assigns. All of the terms and
provisions of this Agreement shall be binding upon the Seller, the Buyer and the
Company and their respective successors and assigns, and shall inure to the
benefit of the Seller, the Buyer and the Company and their respective successors
and assigns.
e. Counterparts; Facsimile Signatures. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, and all of which together shall constitute one and the
same document. This Agreement may be executed by facsimile signatures.
f. Section Headings. The section headings are
for the convenience of the parties and in no way alter, modify, amend, limit or
restrict the contractual obligations of the parties.
{Signatures on following page}
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IN WITNESS WHEREOF, the parties have executed this Securities Purchase
Agreement as of the date first written above.
X.X. XXXXXXX MEZZANINE FUND, L.P.
By: XXXXXXX XX, L.L.C., its General Partner
By: -s- Xxxxxx X. X'Xxxxx
-------------------------------------------
Name: Xxxxxx X. X'Xxxxx
Title: A Managing Member
X.X. XXXXXXX MEZZANINE DEBT FUND, L.P.
By: XXXXXXX XX, L.L.C., its General Partner
By: -s- Xxxxxx X. X'Xxxxx
-------------------------------------------
Name: Xxxxxx X. X'Xxxxx
Title: A Managing Member
ALLIED CAPITAL CORPORATION
By: [ILLEGIBLE]
-------------------------------------------
Name: [ILLEGIBLE]
Title: Managing Director
MERCURY AIR GROUP, INC,
By: [ILLEGIBLE]
-------------------------------------------
Name: [ILLEGIBLE]
Title: [ILLEGIBLE]
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