<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
MERCURY AIR GROUP, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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<PAGE> 2
MERCURY AIR GROUP, INC.
----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
--------------------------
TO BE HELD DECEMBER 14, 2000
To the Shareholders of Mercury Air Group, Inc.:
NOTICE IS HEREBY GIVEN that an Annual Meeting of the Shareholders (the
"Meeting") of Mercury Air Group, Inc. ("Mercury" or the "Company") will be held
on December 14, 2000 at 10:00 o'clock a.m. Pacific Standard Time at the
principal office of the Company located at 5456 McConnell Avenue, Los Angeles,
California 90066, for the following purposes:
1. To elect 5 directors to serve until the next Annual Meeting of
Shareholders and until their successors are elected and
qualified.
2. To consider and vote upon a proposed reincorporation that would
change the Company's state of incorporation from New York to
Delaware.
3. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
Only holders of record of the Company's Common Stock at the close of
business on October 26, 2000 which has been fixed as the record date for the
Meeting, shall be entitled to notice of and to vote at the Meeting and any
adjournment or postponement thereof.
Shareholders are cordially invited to attend the Meeting in person.
Whether or not you plan to attend the Meeting, please sign, date and return the
enclosed proxy to ensure that your shares are represented at the Meeting.
Shareholders who attend the Meeting may vote their shares personally even though
they have sent in their proxies.
Wayne J. Lovett
Secretary
Los Angeles, California
November 3, 2000
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MERCURY AIR GROUP, INC.
5456 MCCONNELL AVENUE
LOS ANGELES, CALIFORNIA 90066
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 14, 2000
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Mercury Air Group, Inc., a New York
corporation ("Mercury" or the "Company"), to be voted at the Annual Meeting of
Shareholders of the Company (the "Meeting") which will be held on December 14,
2000 at 10:00 o'clock a.m. Pacific Standard Time at the principal offices of the
Company located at 5456 McConnell Avenue, Los Angeles, California 90066, and any
adjournment or postponement thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders and in this Proxy
Statement.
The Company will bear the entire cost of solicitation of proxies,
including preparation, assembly, printing and mailing of this Proxy Statement,
the proxy and any additional information furnished to shareholders. Copies of
solicitation material will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward proxy materials to such beneficial owners. The Company may
reimburse persons representing beneficial owners of shares for their expenses in
forwarding solicitation material to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by telephone, telegram,
facsimile, or personal solicitation by directors, officers or other regular
employees of the Company. No additional compensation will be paid to directors,
officers or other regular employees for such services.
Proxies duly executed and received in time for the Meeting will be voted
at the Meeting in accordance with the instructions on the proxies. Unless
previously revoked or unless other instructions are on the proxy, proxies will
be voted at the Meeting: (a) for the five director nominees named herein; (b)
for the change of the Company's corporate residence state from New York to
Delaware; and (c) as determined by the persons holding the proxies with regard
to all other matters which come before the Meeting.
The approximate date on which this Proxy Statement and accompanying
proxy will first be sent or given to shareholders is November 3, 2000.
VOTING SECURITIES
At the record date for the Meeting, the close of business on October 26,
2000 (the "Record Date"), the Company had outstanding 6,531,305 shares of common
stock, par value $0.01 ("Common Stock"). Each shareholder is entitled to one
vote for every share of Common Stock standing in his name as of the Record Date.
A shareholder who has given a proxy may revoke it at any time before it is
exercised at the Meeting by filing with the Secretary of the Company a written
notice of revocation, by executing and delivering a subsequent proxy bearing a
later date, or by attending the Meeting and voting in person. The presence at
the Meeting or any adjournments or postponements thereof, in person or by proxy,
of the holders of record of one-third of the shares of Common Stock will
constitute a quorum for the transaction of business. Shareholders who either (a)
specifically abstained from voting on one or more matters by so marking their
ballot or proxy card (abstentions) or (b) are nominees holding shares for
beneficial owners who, although they may have voted on certain matters at the
Meeting pursuant to discretionary authority or instructions from the beneficial
owners, have not voted on the specific matter in question because they have not
received instructions from the beneficial owners with respect to such
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<PAGE> 4
matter and they do not have discretionary authority with respect thereto (broker
non-votes) will be considered as present at the Meeting for purposes of
determining whether a quorum exists with respect to all matters considered at
the Meeting. Messrs. Czyzyk, Kopko and Dr. Fagan, as partners of CFK Partners,
which is the beneficial owner of 30.9% of the Company's outstanding stock, have
agreed to vote for such individuals as directors, and have indicated that they
intend to vote for the other two director nominees named herein and in favor
of the proposed reincorporation of the Company.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Board of Directors has nominated five individuals for election to
the Company's Board of Directors. Seymour Kahn, former President, Chief
Executive Officer and a long-time director of the Company, retired from the
Company in July, 2000. In connection with the retirement of Mr. Kahn, the Board
of Directors has decreased the size of the Board to five members, as authorized
under the Company's bylaws. The solicited proxies may be voted to fill only the
five vacancies on the Board of Directors for which nominees are named in this
Proxy Statement. Each director elected will hold office until the next annual
meeting of shareholders and until his successor is elected and qualified or
until the director's earlier death, resignation or removal. All of the nominees
are currently directors of the Company previously elected by the shareholders
except for Harold T. Bowling who was elected by the Board of Directors to fill a
vacancy caused by the resignation of William G. Langton.
Unless otherwise indicated thereon, all proxies received will be voted
in favor of the election of the indicated five nominees of the Board of
Directors named below as directors of the Company. Should any of the nominees
not remain a candidate for election on the date of the Meeting (which
contingency is not now contemplated or foreseen by the Board of Directors),
proxies solicited hereunder may be voted for substitute nominees selected by the
Board of Directors. Directors shall be elected by a plurality of the votes cast
by the Common Stock at the Meeting.
INFORMATION REGARDING NOMINEES
Listed below are the persons who have been nominated to serve as
directors for the ensuing year, together with their ages and all Company
positions held by them.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<S> <C> <C>
Philip J. Fagan, Jr., M.D. 56 Chairman of the Board
Joseph A. Czyzyk 53 President, Chief Executive Officer and
Director
Frederick H. Kopko, Jr. 45 Director
Harold T. Bowling 65 Director
Robert L. List 63 Director
</TABLE>
Philip J. Fagan, Jr., M.D. has been Chairman of the Board of Directors
in a non-executive capacity since July 2000 and served as a director of Mercury
from September 1989 to June 2000. Dr. Fagan has been the Chief Executive Officer
and President of the Emergency Department Physicians Medical Group, Inc. since
its inception in 1978. Dr. Fagan has also been President of Fagan Emergency Room
Medical Group since its inception in 1989. Both companies are currently located
in Burbank, California.
Joseph A. Czyzyk has been President and a Director of Mercury since
November 1994 and has served
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as Chief Executive Officer since December 1998. Mr. Czyzyk also served as
President of Mercury Service, Inc., a discontinued division of Mercury which
sold aviation fuel and provided refueling services for commercial aircrafts,
from August 1985 until August 1988, and President of Mercury Air Cargo, Inc.
("Mercury Air Cargo") from August 1988 until August 1997. Mr. Czyzyk served as
an Executive Vice President of Mercury from November 1990 through November 1994.
Pursuant to his employment agreement, the Board of Directors will continue to
nominate Mr. Czyzyk as a candidate for election to the Board of Directors while
Mr. Czyzyk remains employed by Mercury. See "Employment Agreements."
Frederick H. Kopko, Jr. has been a director of Mercury since October
1992. Mr. Kopko has been a partner in the law firm of McBreen & Kopko since
January 1990. Mr. Kopko presently serves on the board of directors of Butler
International, Inc. and Sonic Foundry, Inc.
Harold T. Bowling has been a director of Mercury since August 2000. Mr.
Bowling retired from Lockheed Martin in February 1997 after 43 years. He was
President of Lockheed Aircraft Service Company and Lockheed Martin Aeronautics
International from 1986 to 1997. Prior to that assignment, he served as Vice
President of Corporate Development from 1983 to 1986. Mr. Bowling presently
serves on the board of directors of Pemco Aviation Group, Inc.
Robert L. List has been a director of Mercury since 1990. From May 1997
to present, Mr. List has been the President of Hammond's Candies. In addition,
Mr. List has been President of West Indies Candy Company based in Denver,
Colorado from March 1993 to present. From December 1989 to August 1992, Mr. List
was President of Yellowstone Environmental Services, Inc. of Phoenix, Arizona,
an environmental/engineering consulting firm. Mr. List serves on the board of
directors of Pancho's Mexican Buffet, Inc.
There were five regular scheduled meetings and three telephonic meetings
of the Board of Directors of the Company held during fiscal 2000, the period
from July 1, 1999 through June 30, 2000.
The Company has a standing audit committee. Information regarding the
functions performed by the committee, its membership, and the number of meetings
held during the year, is set forth in the "Report of the Audit Committee"
included in this annual proxy statement.
The Compensation Committee makes all decisions regarding cash and
non-cash compensation (excluding standard employee benefits) paid or given to
executive officers of the Company; negotiates and approves all employment
agreements with executive officers; and negotiates and approves all transactions
between the Company and its executive officers (whether or not the primary
purpose of such transactions are compensatory). During fiscal 2000, the
Compensation Committee consisted of Messrs. Kopko, List and Dr. Fagan and met
two times. The Compensation Committee currently consists of Messrs. Bowling,
List and Kopko.
On April 23, 1998, the Board of Directors created the Stock Option
Committee, a special subcommittee of the Compensation Committee. The Stock
Option Committee administers the Company's non-cash employee incentive plans,
including stock purchase and stock option grants. During fiscal 2000, the Stock
Option Committee consisted of Messrs. Langton, List and Dr. Fagan and met three
times. The Stock Option Committee currently consists of Messrs. Bowling, List
and Kopko.
On August 22, 2000, the Board of Directors created a Board Nominating
Committee. The Board Nominating Committee considers future nominees for the
Corporation's Board of Directors. The Board Nominating Committee consists of
Messrs. Czyzyk, Kopko, and Dr. Fagan.
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<PAGE> 6
During fiscal 2000, each member of the Board of Directors attended at
least 75% of the Board meetings and committee meetings for the committees on
which he served.
In order to be elected, a nominee must receive the vote of a plurality
of the votes cast by the Common Stock at the Meeting. Shares may be voted for or
withheld from each nominee. Shares that are withheld and broker non-votes will
have no effect on the outcome of the election because directors will be elected
by a plurality of the shares voted for directors at a meeting at which a quorum
is present.
THE MERCURY BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE HOLDERS
OF COMMON STOCK VOTE FOR THE ELECTION OF ALL NOMINEES.
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PRINCIPAL SHAREHOLDERS
The following table sets forth certain information as of October 26,
2000, with respect to the ownership of the Company's Common Stock by: (a) each
director of the Company; (b) each officer named in the Summary Compensation
Table; (c) the directors and executive officers of the Company, as a group; and
(d) all persons known to the Company to be the beneficial owners of more than
five percent (5%) of its outstanding Common Stock. As of October 26, 2000, there
were 6,531,305 shares of Common Stock outstanding.
The stock ownership information includes current shareholdings and
shares with respect to which the named individual has the right to acquire
beneficial ownership under options exercisable or other securities convertible
within 60 days.
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS (1) OF COMMON PERCENT
-------------------- ------------ ---------
<S> <C> <C>
Joseph A. Czyzyk 2,023,921 (2) 30.9%
Randolph E. Ajer 190,125 (3) 2.9%
William L. Silva 189,062 (4) 2.9%
Robert L. List 40,593 (5) *
511 17th Street
Golden, CO 80401
Philip J. Fagan, Jr., M.D 2,023,921 (6) 30.9%
1130 West Olive Avenue
Burbank, CA 91506
Frederick H. Kopko, Jr 2,023,921 (7) 30.9%
20 North Wacker Drive, Suite 2520
Chicago, IL 60606
Harold T. Bowling 0 *
3335 Dona Rosa Drive
Studio City, CA 91604
CFK Partners 2,023,921 (8) 30.9%
Seymour Kahn 0 0
213 Fowling
Playa Del Rey, CA 90293
FMR Corp. 542,940 (9) 8.3%
82 Devonshire Street
Boston, Massachusetts 02109
J. H. Whitney Mezzanine Fund, L.L.P 503,126(10) 7.7%
177 Broad Street
Stamford, CT 06901
All directors and executive officers as a group (7 persons) 2,443,701(11) 37.4%
</TABLE>
* Less than one percent.
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<PAGE> 8
(1) Unless otherwise indicated in the table, the address for each of the
individuals named in the table is 5456 McConnell Avenue, Los Angeles, California
90066.
(2) Mr. Czyzyk owns 538,391 shares including, 31,460 shares issuable upon
exercise of options exercisable within 60 days from the date hereof, 764 shares
held by Mr. Czyzyk, as custodian for his children, and 3,228 shares held by Mr.
Czyzyk's wife as custodian for their children, as to which Mr. Czyzyk disclaims
beneficial ownership. CFK Partners holds a proxy to vote all shares owned by Mr.
Czyzyk. See "Change in Control". Also includes shares held by CFK Partners (see
note 8 below).
(3) Includes 23,750 shares issuable upon exercise of options exercisable within
60 days from the date hereof.
(4) Includes 37,812 shares issuable upon exercise of options exercisable within
60 days from the date hereof. Includes 151,250 shares beneficially owned by Mr.
Silva and which are subject to a security interest in favor of Mercury.
(5) Consists of 40,250 shares issuable upon exercise of options exercisable
within 60 days from the date hereof.
(6) Dr. Fagan owns 146,125 shares consisting of shares issuable upon exercise of
options exercisable within 60 days from the date hereof. CFK Partners holds a
proxy to vote all shares owned by Dr. Fagan. See "Change in Control". Also
includes shares held by CFK Partners (see note 8 below).
(7) Mr. Kopko owns 107,625 shares, consisting of shares issuable upon exercise
of options exercisable within 60 days from the date hereof. CFK Partners holds a
proxy to vote all shares owned by Mr. Kopko. See "Change in Control". Also
includes shares held by CFK Partners (see note 8 below).
(8) Consists of (i) 1,140,780 Shares beneficially owned, (ii) 91,000 Shares and
options to acquire 146,125 shares owned by Dr. Philip J. Fagan, (iii) 107,625
options owned by Mr. Frederick H. Kopko, Jr., and (iv) 538,391 Shares owned by
Mr. Czyzyk (collectively, the "Shares"). On August 7, 2000, CFK Partners f/k/a
FK Partners, Dr. Fagan and Messrs. Kopko and Czyzyk filed a Form 13D with the
Securities and Exchange Commission with respect to the Shares owned by them.
Reference is made to that Form 13D for a complete description of the terms and
conditions, including voting terms and conditions, upon which the Shares are
being held. See also "Change in Control".
(9) Based on publicly available information reported on February 14, 2000,
Fidelity Management & Research Company ("Fidelity"), a wholly-owned subsidiary
of FMR Corp., is a beneficial owner of 542,940 shares as a result of acting as
an investment advisor to various investment companies (the "Funds"). In
addition, FMR Corp. and Edward C. Johnson 3d, each has sole power to dispose of
542,940 shares owned by the Funds. Through their ownership of voting common
stock and the execution of shareholder's voting agreement, Abigail P. Johnson
and other members of the Johnson family may be deemed to be a controlling group
with respect to FMR Corp.
(10) Based on publicly available information reported September 10, 1999, J.H.
Whitney Mezzanine Fund, L.L.P., ("J. H. Whitney") is the beneficial owner of
503,126 shares which consist of 503,126 shares issuable upon exercise of
warrants exercisable within 60 days from the date hereof.
(11) Includes 387,022 shares issuable upon exercise of options exercisable
within 60 days from the date hereof.
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<PAGE> 9
EXECUTIVE OFFICERS, COMPENSATION AND OTHER INFORMATION
EXECUTIVE OFFICERS
Set forth in the table below are the names, ages and positions held by
all executive officers of the Company during fiscal year 2000.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<S> <C> <C>
Seymour Kahn 73 Former Chairman of the Board of Directors
Joseph A. Czyzyk 53 President, Chief Executive Officer, and
Director
Randolph E. Ajer 47 Executive Vice President, Chief Financial
Officer, and Treasurer
William L. Silva 50 Executive Vice President and President of
Maytag Aircraft Corporation ("Maytag")
</TABLE>
Executive officers of the Company are elected and serve at the
discretion of the Board of Directors. Set forth below is a brief description of
the business experience for the previous five years of all executive officers
other than Mr. Czyzyk, who is also a director and whose business experiences are
described above under the caption "Information Regarding Nominees."
Seymour Kahn served as President of Mercury from 1969 until 1989, served
as Chief Executive Officer from 1974 until 1998 and served as Chairman of the
Board of Directors of Mercury from 1974 until July 2000.
Randolph E. Ajer has been Chief Financial Officer of Mercury since 1987
and Treasurer since May 1985. Mr. Ajer served as Secretary of Mercury from May
1985 until May 1999. He served as a director of Mercury from September 1989
until December 1990. Mr. Ajer was appointed an Executive Vice President of
Mercury in November 1990.
William L. Silva has been an Executive Vice President of Mercury since
August 1993. He has been President and Chief Operating Officer of Maytag
Aircraft Corporation since March 2000. He also served as Executive Vice
President of Maytag Aircraft Corporation from August 1993 through February 2000,
Vice President from November 1987 through July 1993, and Director of Operations
from October 1982 through 1987.
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<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid or accrued by
the Company for the Chief Executive Officer and for each of the executive
officers (collectively, the "named executive officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------
AWARDS PAYOUTS
---------- ------------
ANNUAL COMPENSATION SECURITIES LONG-TERM
FISCAL ------------------------- UNDERLYING COMPENSATION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR(1) SALARY(2)($) BONUS($) OPTIONS(#) PAYOUTS($) COMPENSATION($)
--------------------------- ------- ------------ -------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Seymour Kahn (3) 2000 367,500 -0- -0- -0- 14,289(4)
Chairman of the Board 1999 368,283 286,000 -0- -0- 14,589
1998 366,042 83,000 -0- -0- 12,729
Joseph A. Czyzyk 2000 278,694 150,000 -0- -0- 980(5)
President/CEO 1999 278,694 155,000 -0- -0- 980
1998 331,371 71,000 -0- -0- 723
Randolph E. Ajer 2000 139,467 -0- -0- -0- 685(6)
Executive Vice President 1999 140,013 185,000 -0- -0- 685
1998 192,913 44,000 -0- -0- 590
William L. Silva 2000 189,250 -0- -0- -0- 558(7)
Executive Vice President 1999 189,780 135,000 -0- -0- 558
1998 233,748 135,000 -0- -0- 558
</TABLE>
------------
(1) The period July 1, 1997 through June 30, 1998 is referred to as Fiscal
Year 1998; the period July 1, 1998 through June 30, 1999 is referred to as
Fiscal Year 1999; and the period July 1, 1999 through June 30, 2000 is
referred to as Fiscal Year 2000.
(2) Includes and has been restated to include loan forgiveness with respect to
Mercury financed purchases of Common Stock.
(3) Mr. Kahn served as Chairman of the Board until his retirement in July,
2000, at which time Dr. Fagan was elected to serve as Chairman of the
Board. Under the Company's Amended and Restated Bylaws, the Chairman of
the Board is currently a non-executive officer position.
(4) Consists of life insurance premiums in the amount of $14,289.
(5) Consists of 401(k) contributions and life insurance premiums in the
amounts of $300 and $680, respectively.
(6) Consists of 401(k) contributions and life insurance premiums in the
amounts of $300 and $385, respectively.
(7) Consists of 401(k) contributions and life insurance premiums in the
amounts of $300 and $258, respectively.
No named executive officer was granted options during fiscal 2000.
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<PAGE> 11
The following table sets forth information regarding option exercises
during fiscal 2000, as well as the number and total of in-the-money options at
June 30, 2000, for each of the named executive officers:
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES (1)
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED UNEXERCISED IN-THE-
SHARES VALUE OPTIONS AT FISCAL MONEY OPTIONS AT
ACQUIRED ON REALIZED YEAR-END (#) FISCAL YEAR-END ($)(3)(4)
NAME EXERCISE (#) ($)(2)(3) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ --------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Seymour Kahn -0- -0- 144,625/-0-(5) 399,416/-0-(5)
Joseph A. Czyzyk -0- -0- 31,460/-0- 112,312/-0-
Randolph E. Ajer -0- -0- 23,750/-0- 82,650/-0-
William L. Silva -0- -0- 37,812/-0- 111,364/-0-
</TABLE>
-----------
(1) As adjusted to effect stock dividends and stock splits since date of
issuance.
(2) In accordance with the rules of the Securities and Exchange Commission,
the amounts set forth in the "Value Realized" column of this table are
calculated by subtracting the exercise price from the fair market value of
the underlying Common Stock on the exercise date. The amounts reported
thus reflect the increase in the price of the Common Stock from the option
grant date to the option exercise date, but do not necessarily reflect
actual proceeds received upon option exercises.
(3) For purposes of this table, fair market value is deemed to be the average
of the high and low Common Stock price reported by the American Stock
Exchange Composite Transactions on the date indicated.
(4) Based upon a fair market value of $4.97 per share at June 30, 2000.
(5) Includes 45,375 options issued to SKAI, a corporation wholly-owned by
Seymour Kahn.
EMPLOYMENT AGREEMENTS
Mr. Kahn had an employment agreement with Mercury dated as of December
10, 1993 pursuant to which Mercury employed him as Chairman of the Board and
Chief Executive Officer for a three year period with automatic one year
extensions at the end of each year until either party terminated the agreement
in writing prior to such renewal. Under the employment agreement, Mr. Kahn's
annual compensation was $367,500 per year. Mr. Kahn resigned as Chief Executive
Officer in December 1998 and as Chairman of the Board of Directors in July 2000
and did not receive a bonus for fiscal 2000.
Mr. Czyzyk has an employment agreement with Mercury, dated as of
November 15, 1994, amended as of October 15, 1998, April 1, 1999 and September
11, 2000 pursuant to which Mercury will employ him as its President/Chief
Executive Officer for a term ending on November 15, 1997, subject to automatic
one-year extensions each successive November 15, unless either party gives 30
days' notice of non-renewal. As of the date hereof, neither Mr. Czyzyk nor
Mercury has given notice of non-renewal. The original agreement provided that
Mr. Czyzyk's tenure as President/Chief Operating Officer shall serve as a period
of training and evaluation for appointment as Chief Executive Officer of
Mercury, when and as such position may be vacated by Mr. Kahn, subject to the
sole discretion and judgment of the Board of Directors. Mr. Czyzyk assumed the
position of Chief Executive Officer in December 1998. The agreement further
provides for the continued nomination of Mr. Czyzyk to the Board of Directors of
Mercury, so long as Mr. Czyzyk continues to serve as President/Chief Operating
Officer.
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<PAGE> 12
Mr. Czyzyk's annual salary under the agreement is $520,000. Mr. Czyzyk
also receives a bonus equal to: (i) 25% of his base compensation to the extent
that Mercury's operating income on a consolidated basis minus sales and general
administrative expense and depreciation (EBIT) for the most recently completed
fiscal year exceeds the average of EBIT for the prior three fiscal years; and
(ii) 4.166% of the amount by which EBIT for the most recently completed fiscal
year exceeds the average of EBIT for the prior three fiscal years. The amendment
of October 15, 1998 provided that EBIT for fiscal 1998 will be deemed to be
$15,156,000 (effectively adding back the $7,050,000 loss attributable to an
airline bankruptcy). See "Report of the Compensation Committee of the Board of
Directors."
In the event Mr. Czyzyk's employment is terminated for cause, Mr. Czyzyk
will not be entitled to receive or be paid a bonus. In the event Mr. Czyzyk's
employment is terminated without cause, Mercury will be obligated to pay Mr.
Czyzyk the lesser of one year's base compensation or the base compensation that
would otherwise be paid to him over the remaining term of the agreement, and a
bonus for the fiscal year of termination in an amount which would otherwise be
paid to him prorated over the days Mr. Czyzyk was employed by Mercury during the
fiscal year of termination. "Cause" is defined in the employment agreement as
misappropriation of corporate funds, negligence, Mr. Czyzyk's voluntary
abandonment of his job (other than following a Change in Control) or a breach of
the employment agreement. In the event of Mr. Czyzyk's death, Mr. Czyzyk's
estate or beneficiary will be entitled to receive the death benefits of a
$1,000,000 insurance policy, but all other obligations under his employment
agreement will terminate and Mercury's only obligation will be to pay Mr. Czyzyk
or his estate all accrued salary through the end of the month of his death. In
the event of Mr. Czyzyk's disability for a period of more than six (6) weeks,
Mr. Czyzyk's base salary will be reduced by 50% during the period of disability.
If Mr. Czyzyk is disabled for a period of more than 12 months, Mercury will be
obligated to pay Mr. Czyzyk the same amount that would have been paid to Mr.
Czyzyk if his employment was terminated without cause, except that all amounts
paid to Mr. Czyzyk under any long-term disability insurance policy maintained by
Mercury will be credited as if paid by Mercury to Mr. Czyzyk and after giving
effect to any federal or state income tax savings resulting from the payment
under a disability policy (as opposed to taxable salary). The employment
agreement further provides that Mr. Czyzyk may terminate his employment
following a "Change in Control", in which event Mr. Czyzyk will be entitled to
be paid the lesser of one year's base compensation or the entire balance of his
base compensation remaining to be paid to Mr. Czyzyk over the remaining term of
the agreement. The agreement provides for a five-year post-employment,
non-competition covenant.
CERTAIN TRANSACTIONS
Pursuant to a Stock Purchase Agreement (the "Stock Purchase Agreement")
dated August 9, 1993 between Mercury, SK Acquisition, Inc., a Delaware
corporation wholly owned by Seymour Kahn ("SKAI") and William L. Silva, SKAI
sold 151,250 shares of Common Stock to Mr. Silva at a price of $1.98 per share
(as adjusted to reflect stock splits and dividends since the date of the
transaction), with Mr. Silva paying a total purchase price of $300,000. On
August 9, 1993, the closing price of the Common Stock on the American Stock
Exchange was $2.06 per share, as adjusted. Mr. Silva paid $30,000 cash at the
closing of his purchase, and agreed to pay the remaining $270,000 over a period
of five years from the date of purchase, together with interest at the rate of
10% per annum on the outstanding balance. SKAI advanced the purchase price
pursuant to a non-recourse loan, secured by a first security interest in the
Common Stock sold to Mr. Silva which has expired by its terms. Mr. Silva also
gave SKAI an irrevocable proxy to vote the Common Stock purchased by him for all
purposes until June 30, 2000.
As part of the Stock Purchase Agreement, Mercury agreed to loan the
principal balance of the unpaid purchase price to Mr. Silva during the five-year
payment period as each payment was required to be made to
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SKAI on March 1, June 1, September 1 and December 1 of each year until payment
in full on December 1, 1998. Such loan was non-recourse, bears no interest, and
was secured by a second security interest in the purchased stock. Mr. Silva paid
his own interest on the balance of the purchase price due SKAI from personal
funds. Commencing January 1, 1997, and annually thereafter, if he remains
employed by Mercury, one-fifth of Mr. Silva's loan will be forgiven. If Mr.
Silva remains employed by Mercury through January 1, 2001, his loans will be
forgiven in full and his shares of Common Stock will be owned without any
further lien in favor of Mercury.
During fiscal 2000, Mercury loaned Mr. Silva $21,085 which was used to
pay withholding taxes associated with the loan forgiveness ($54,000) under the
Stock Purchase Agreement. Such loan bears no interest and was repaid with Mr.
Silva's year-end bonus.
Mercury has Indemnity Agreements with each of its directors and
executive officers which require Mercury, among other things, to indemnify them
against certain liabilities that may arise by reason of their status or service
as directors, officers, employees or agents of Mercury, and, under certain
circumstances, to advance their expenses incurred as a result of proceedings
brought against them. In order to be entitled to indemnification, the executive
officer or director must have acted in a manner reasonably believed to be in, or
not opposed to, the best interests of Mercury and, with respect to a criminal
matter, in a manner which he had no reason to believe was illegal.
COMPENSATION OF DIRECTORS
During fiscal 2000, directors who were not employees of the Company were
paid an annual minimum of $15,000 in fees paid in advance on the annual meeting
date and $500 per telephonic meeting paid in arrears after each telephonic
meeting. Directors were also reimbursed for their travel, meals, lodging and
out-of-pocket expenses incurred in connection with attending Board meetings. In
addition, during fiscal 2000 and continuing through fiscal 2001, the law firm of
McBreen & Kopko, of which Mr. Kopko is a partner, has been providing legal
services to the Company at its standard billing rates. On September 11, 2000 the
Board of Directors set Dr. Fagan's compensation as Chairman of the Board at
$350,000 for services performed as Chairman pursuant to the Employment contract
between Mercury and Dr. Fagan signed September 11, 2000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consists of Messrs. List, Kopko and
Bowling. The Stock Option Committee consists of Messrs. List, Bowling and Kopko.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
This report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing made by the Company under the Securities
Act of 1933 or under the Securities Exchange Act of 1934, except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such acts.
Under the rules established by the Securities and Exchange Commission,
the Company is required to provide certain data and information regarding the
compensation and benefits provided to the Company's Chief Executive Officer, Mr.
Czyzyk, and the Company's other executive officers, Messrs. Ajer and Silva. The
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<PAGE> 14
disclosure requirements for the named executive officers include the use of
tables and a report explaining the rationale and considerations that led to
fundamental executive compensation decisions affecting those individuals. In
fulfillment of this requirement, the Compensation Committee, at the direction of
the Board of Directors, has prepared the following report for inclusion in this
Proxy Statement.
COMPENSATION PHILOSOPHY
This report reflects the Company's compensation philosophy as endorsed
by the Compensation Committee and resulting actions taken by the Company for the
reporting periods shown in the various compensation tables supporting this
report. The Compensation Committee determines salary and bonus amounts, other
award levels and benefits for all executive officers of the Company. Effective
April 23, 1998, the Board of Directors formed the Stock Option Committee which
is responsible for administering the Company's non-cash compensation plans,
including stock option and stock purchase arrangements. During fiscal 2000, the
Stock Option Committee did not make any decisions which affected the
compensation of the executive officers of the Company. In connection with its
decisions, the Compensation Committee reviews and considers the written
recommendations of its Chief Executive Officer, Joseph A. Czyzyk and until his
resignation in July 2000, the Company's former Chairman of the Board, Mr. Kahn.
As described below, a large portion of Mr. Czyzyk's compensation is based on the
earnings of the Company and he is a significant shareholder of the Company.
Accordingly, the Compensation Committee believes that the recommendations are
likely to be consistent with the Compensation Committee's philosophy of
encouraging earnings growth and strategic decisions designed to maximize
shareholder return.
The executive compensation programs of the Company have been designed
to:
- Embody a pay for performance policy where compensation amounts
are affected by corporate, operating unit and individual performance as measured
by earnings;
- Motivate key senior executives to achieve strategic business
initiatives and reward them for their achievements;
- Provide compensation opportunities which are, in the judgment of
the Compensation Committee, comparable to those offered by other leading
companies, thus allowing the Company to compete for and retain talented
executives who are critical to the Company's long-term success; and
- Align the interest of executives with long-term interests of the
shareholders through common stock ownership and stock option programs.
COMPENSATION MECHANISMS
At present, the executive compensation program is comprised of salary,
annual cash bonus programs, long-term incentive opportunities in the form of
Company financed stock ownership opportunities and stock options and other
benefits typically provided to executives by major corporations.
Executive officer salaries are determined based on individual
performance, position, tenure, salary history, internal comparability
considerations and in some instances the results of arm's length negotiations in
connection with the start-up of a new operating unit. In determining salaries,
the Compensation Committee uses the personal knowledge of its members regarding
compensation levels for similar positions at other companies generally. The
Compensation Committee has not commissioned peer group or other salary surveys
to determine salaries at comparable companies. For each executive officer, a
significant portion of total compensation is a
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bonus based on the earnings of the Company or the specific operating unit for
which he has profit and loss statement responsibility. As a result, an executive
officer's compensation can vary substantially from year-to-year based on the
Company's or a specific operating unit's earnings performance. For fiscal 2000
and 2001, the bonus for executive officers with operating unit responsibility
was/will be based on an individual's success in exceeding the budgeted earnings
for his operating unit. The budgeted earnings for each unit are based on a
comprehensive review of unit operations conducted by Messrs. Czyzyk and Ajer and
the responsible executive officer at the start of each fiscal year and are
subject to approval by the Board of Directors. During the budget process,
Messrs. Czyzyk and Ajer focus on challenging each executive officer to attain
revenue growth and cost savings for his operating unit. As described below, the
bonus plan for Messrs. Czyzyk and Ajer is based on exceeding the Company's
average earnings for the prior three years, encouraging Messrs. Czyzyk and Ajer
to budget for aggressive growth. The Compensation Committee also retains
discretion to reward exceptional achievement or correct over-all inequities
through discretionary bonuses.
Each of the Company's executive officers is also compensated in part
through Company financed common stock ownership and stock options. The Company
currently has in place the 1990 Long-Term Incentive Plan and 1998 Long-Term
Incentive Stock Option Plan which provides for stock option grants to key
employees at the current fair market value on the date of grant. Each of the
Company's executive officers currently holds options granted under the 1990
Long-Term Incentive Plan. Option awards to each executive officer have been
based on the executive's level of responsibility, past performance and internal
comparability considerations. In addition, the Company financed the purchase of
151,250 shares of Common Stock at $1.98 per share for each of Messrs. Ajer and
Czyzyk over a seven-year period ended March 31, 1998 and is currently financing
a purchase of 151,250 shares of Common Stock at $1.98 per share over a
seven-year period ending January 1, 2001 subject to continued employment for Mr.
Silva. The shares were purchased from SKAI, a corporation wholly-owned by Mr.
Kahn. In addition to serving as a compensation device, the stock purchase
program was designed to insure an orderly transition in control of the Company,
to avoid excessive dilution and to some degree to maintain internal
comparability in officer compensation. As a result of the stock options and
company financed stock purchases, each executive officer has a strong incentive
to continue his association with the Company and to enhance the value of the
Company's equity securities in the long-term.
During fiscal 2000, one of the executive officers requested assistance
in paying taxes associated with the annual forgiveness of the stock purchase
loans. The Compensation Committee determined that such officer should invest in
his own future and the Company by personally bearing the taxes associated with
the loan forgiveness. The Compensation Committee agreed, however, to somewhat
mitigate the cash flow effects of the withholding for taxes by providing annual,
interest-free loans to be paid back from bonus or payroll deductions. See
"Certain Transactions."
EXECUTIVE OFFICER COMPENSATION
During fiscal 1998, the Company experienced a loss of $7,050,000
associated with a customer bankruptcy. The effect of such loss was to reduce
fiscal 1999 EBIT below the applicable trailing three-year average. Without such
loss, EBIT growth during fiscal 1998 was extremely strong. Accordingly, the
Compensation Committee determined to reward Messrs. Ajer and Czyzyk (who have
EBIT based bonus formulas) for adjusted EBIT growth by awarding discretionary
bonuses equal to 25% of each such officer's base salary. On the other hand, to
avoid lowering the trailing three-year EBIT average in future years, and
inflating future years' bonuses, the Compensation Committee adjusted fiscal 1998
EBIT upward for purposes of all future bonus calculations by the amount of the
bankruptcy loss.
Mr. Czyzyk is compensated pursuant to an employment agreement described
under "Employment Agreements." A cash bonus plan for Mr. Ajer was approved by
the Board of Directors in November 1990
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<PAGE> 16
(commencing fiscal 1991). The Compensation Committee continued the bonus plan
during fiscal 2000 and will continue the bonus plan during fiscal 2001, subject
to the adjustment to fiscal 1998 EBIT for a bankruptcy loss describe above. The
two-part bonus plan is based on EBIT of the Company for the year in which the
bonus is calculated. Under Part I of the bonus plan, if the bonus year's EBIT
meets or exceeds the trailing three-year EBIT average, Mr. Ajer is entitled to a
bonus equal to 25% of his salary. For years where EBIT falls below the trailing
three-year average, any bonus paid to Mr. Ajer is solely at the discretion of
the Compensation Committee. Under Part II of the bonus plan, an additional bonus
is paid to Mr. Ajer in an amount equal to 4.166% of any increase in the bonus
year's EBIT level over the trailing three-year average EBIT level.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for annual compensation over $1 million paid to a
corporation's chief executive officer and four other most highly compensated
individuals. Qualifying performance-based compensation will not be subject to
the deduction limit if certain requirements are met. Because the current
compensation levels of the Company's executive officers are well below the $1
million threshold, the Compensation Committee has not determined what steps are
required to structure qualifying performance-based compensation and whether or
not the required steps would be in the best interest of the Company.
Compensation Committee Members
Robert L. List
Frederick H. Kopko, Jr.
Harold T. Bowling
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<PAGE> 17
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee oversees the Company's financial reporting process
on behalf of the board of directors. Management has the primary responsibility
for the financial statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities, the committee
reviewed the audited financial statements in the Annual Report with management
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Audit Committee under generally accepted auditing standards. In
addition, the committee has discussed with the independent auditors the
auditors' independence from management and the Company including the matters in
the written disclosures required by the Independence Standards Board.
The Audit Committee discussed with the Company's internal and
independent auditors the overall scope and plans for their respective audits.
The Audit Committee meets with the internal and independent auditors, with and
without management present, to discuss the results of their examinations, their
evaluations of the Company's internal controls, and the overall quality of the
Company's financial reporting. The Audit Committee held one meeting during
fiscal 2000.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the board of directors (and the board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended June 30, 2000 for filing with the Securities and
Exchange Commission. The Audit Committee and the board have also recommended,
subject to shareholder approval, the selection of the Company's independent
auditors.
A copy of the Audit Committee Charter is attached hereto as Appendix D.
Robert L. List, Audit Committee Chair
Harold T. Bowling, Audit Committee Member
Frederick H. Kopko, Jr., Committee Member
NOVEMBER 3, 2000
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<PAGE> 18
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph set forth below shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing made by the Company under the Securities
Act of 1933 or under the Securities Exchange Act of 1934, except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such acts.
The graph below compares cumulative total return of Mercury Air Group,
Inc., the AMEX Market Value and the S & P Transportation Index.
* $100 INVESTED ON 06/30/95 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG MERCURY AIR GROUP, INC., THE AMEX MARKET VALUE INDEX,
AND THE S & P TRANSPORTATION INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
6/95 6/96 6/97 6/98 6/99 6/00
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
MERCURY AIR GROUP, INC. 100.00 105.57 104.83 127.92 110.24 83.20
AMEX MARKET VALUE 100.00 115.09 123.53 154.95 174.66 205.72
S & P TRANSPORTATION 100.00 125.60 157.09 175.19 188.33 145.15
</TABLE>
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<PAGE> 19
CHANGE IN CONTROL
On July 27, 2000, Philip J. Fagan, M.D., Frederick H. Kopko, Jr. and
Joseph A. Czyzyk (collectively, the "Partners") formed CFK Partners f/k/a FK
Partners, an Illinois general partnership ("CFK Partners"), to hold
beneficially, pursuant to a partnership agreement, 2,023,921 shares of common
stock, which represents 30.9% of the voting securities of the Issuer.
CFK Partners holds all Shares beneficially owned by the Partners.
Effective on July 27, 2000, the date of the Partnership Agreement, all Shares
and options to acquire Shares formerly held by Dr. Fagan (91,000 Shares and
options to acquire 146,125 Shares), Mr. Kopko (options to acquire 107,625
Shares), and Mr. Czyzyk (506,931 Shares and options to acquire 31,460 Shares)
are held by CFK Partners. CFK Partners did not pay for any of the Shares or
options to acquire Shares formerly held by the Partners. In addition, CFK
Partners acquired 1,140,780 Shares from Mr. Seymour Kahn for $10.00 per share on
July 27, 2000 payable in cash per share for a total of $7,985,460 and $3.00 per
Share in the form of a Promissory Note to Seymour Kahn (the "Kahn Note") for a
total of $3,422,340. No Partners are required to make an initial capital
contribution to the Partnership. However, each Partner guaranteed (i) a loan in
the amount of $7,985,460 from Bank of America, N.A. in the form of a note (the
"Bank Note") and (ii) a note to Seymour Kahn in the amount of $3,422,340 in the
form of a note (the "Kahn Note"). In order to pay interest on the Bank Note and
the Kahn Note, the Partners will contribute to the Partnership such additional
amounts described in the Partnership Agreement.
Pursuant to Section 7 of the Partnership Agreement, the Partners have
agreed that the Shares shall be voted for Mr. Czyzyk, Dr. Fagan, and Mr. Kopko,
or as designated by Mr. Czyzyk, Dr. Fagan and Mr. Kopko, respectively. In the
event of death or withdrawal of a Partner, the two remaining Partners will
decide upon the third director for whom the Shares shall be voted. In all other
matters with respect to the Issuer, each Partner agrees that the Shares will be
voted as directed by a majority vote of the Partners. In the event of the death
or withdrawal of a Partner, the Shares will be voted as directed by the
remaining Partners, acting unanimously. Pursuant to the Partnership Agreement,
the Partners agreed to elect Dr. Fagan as the Chairman of the Board of Directors
of the Issuer and to enact a change to the Issuers' bylaws to make the Chairman
of the Board's position a non-executive officer position.
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PROPOSAL 2 - ADOPTION OF REINCORPORATION
The board of directors has unanimously approved and declared advisable a
proposed reincorporation to change our state of incorporation form New York to
Delaware.
REQUIRED VOTE
The reincorporation will be approved if it receives vote equal to
two-thirds of the shares of stock entitled to vote at the meeting.
The board of directors recommends that you vote FOR the approval of the
proposed reincorporation that would change our state of incorporation from New
York to Delaware.
DESCRIPTION OF REINCORPORATION
Prior to effecting the reincorporation, we will form a wholly owned
subsidiary in the State of Delaware called "Mercury Air Group, Inc." The
reincorporation will be effected by merging the New York corporation with and
into the Delaware corporation in accordance with the terms of an Agreement and
Plan of Merger. The address and phone number of the principal executive office
of the Delaware corporation will be the same as ours.
Upon completion of the merger:
- the New York corporation will cease to exist;
- the Delaware corporation will continue to operate under the name
"Mercury Air Group, Inc.";
- our shareholders will automatically become the stockholders of
the Delaware corporation;
- our shareholders will have rights as stockholders of the Delaware
corporation and no longer as shareholders of the New York
corporation, and such rights will be governed by Delaware law,
the Delaware corporation's certificate of incorporation and the
Delaware corporation's bylaws rather than by New York law, our
existing certificate of incorporation and our existing bylaws;
and
- options and warrants to purchase shares of our common stock
automatically will be converted into options and warrants to
acquire an equal number of shares of the Delaware corporation's
common stock. The reincorporation will not result in any change
in our physical location, business, management, assets,
liabilities, net worth or employee benefit plans. Our directors
and officers immediately prior to the merger will serve as the
directors and officers of the Delaware corporation following the
merger. Approval of the reincorporation will constitute approval
of the merger and the merger agreement. Following the annual
meeting, if the reincorporation is approved by our shareholders,
we, upon satisfaction of applicable regulatory requirements and
the obtaining of third party consents, will submit the
appropriate documents to the offices of the New York Secretary of
State and the Secretary of State of the State of Delaware for
filing.
The shareholders' approval of the reincorporation will constitute their
approval of all of the provisions of the Delaware corporation's certificate of
incorporation and the Delaware corporation's bylaws, including the
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limitation of director liability and indemnification of directors and officers
under Delaware law, and including those provisions having "anti-takeover"
implications, which may be significant to us and our shareholders in the future.
The governance of the Delaware corporation by Delaware law, the Delaware
corporation's certificate of incorporation and bylaws will alter certain rights
of the shareholders.
The shareholders' approval of the reincorporation will mean that after
the merger, the Delaware's certificate of incorporation and bylaws as they exist
immediately prior to the merger will be the certificate of incorporation and
bylaws of the Delaware corporation as the surviving company. Such certificate of
incorporation and bylaws will be substantially in the form attached to this
proxy statement as Appendix A and Appendix B, respectively.
Under the merger agreement, each outstanding share of our common stock
will automatically be converted into one share of the Delaware corporation's
common stock upon the effective date of the merger. Each stock certificate
representing issued and outstanding shares of common stock will continue to
represent the same number of shares of common stock of the Delaware corporation.
It will not be necessary for shareholders to exchange their existing stock
certificates for the Delaware corporation's stock certificates. However,
shareholders may exchange their certificates if they so choose.
SUMMARY OF THE MERGER AGREEMENT AND ITS EFFECTS
The discussion set forth below is a summary of the merger agreement and
certain of its effects. It is qualified in its entirety by reference to the
merger agreement attached to this proxy statement as Appendix C.
The reincorporation and the merger agreement have been unanimously
approved and declared advisable by the board of directors. If approved by the
shareholders, the reincorporation and the merger will become effective upon the
filing of the merger agreement and related documentation with the Secretary of
State of the State of Delaware. The board of directors intends that the
reincorporation be consummated as soon as practicable following the annual
meeting, the obtaining of third party consents and the satisfaction of
applicable regulatory requirements, if any. Nonetheless, the merger agreement
allows for the board of directors to abandon or postpone the merger or to amend
the merger agreement either before or after the shareholders' approval has been
obtained and before the effective time, if circumstances arise causing the board
of directors to deem either such action advisable.
REASONS FOR THE REINCORPORATION
In recent years, a number of major public corporations have obtained the
approval of their shareholders to reincorporate in Delaware. The board of
directors believes it is beneficial and important that we also obtain the
advantages of Delaware law. The board of directors believes the proposed change
in domicile is in the best interests of the company and our shareholders for
several reasons, including:
- the greater predictability and flexibility afforded by Delaware
corporate law and its greater responsiveness to corporate needs;
- the more predictable corporate environment afforded by Delaware
to directors and officers; and
- the greater certainty afforded by Delaware law with respect to
directors' duties in the face of takeover offers and with respect
to anti-takeover measures.
Delaware has long been a leading state in adopting, construing and
implementing comprehensive and flexible corporate laws responsive to the legal
and business needs of corporations. As a result, the General
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Corporation Law of the State of Delaware has become widely regarded as the most
well-defined body of corporate law in the United States. Because of Delaware's
prominence in this area, both the legislature and courts in Delaware have acted
quickly and effectively to meet changing business needs. The Delaware courts
have developed expertise in dealing with corporate issues and a substantial body
of case law with respect to corporate legal affairs. These factors often provide
the directors and officers of Delaware corporations with greater certainty and
predictability in managing the affairs of the corporation.
AFFECT ON DIRECTORS AND OFFICERS
The board of directors believes that reincorporation under Delaware law
will enhance our ability to attract and retain qualified directors and officers
as well as encourage directors and officers to continue to make independent
decisions in good faith on behalf of the company. The law of Delaware offers
reduced risk, greater certainty and stability from the perspective of those who
serve as corporate officers and directors. To date, we have not experienced
difficulty in retaining directors or officers. However, as a result of the
significant potential liability and relatively small compensation associated
with service as a director, we believe that the better understood, more
developed, and comparatively stable corporate environment afforded by Delaware
case law will enable us to compete more effectively with other public companies,
many of which are incorporated in Delaware, in the recruitment of talented and
experienced directors and officers.
The parameters of director and officer liability are more extensively
addressed in Delaware court decisions and are therefore better defined and
better understood than under New York law. In addition, the protection from
liability and ability to provide indemnification for directors and officers is
somewhat greater under Delaware law than under existing New York law.
Accordingly, the board of directors believes that our corporate objectives can
be better achieved by reincorporating in Delaware, and by including provisions
in the certificate of incorporation and bylaws of the Delaware corporation to
eliminate personal liability of directors and officers and to provide for their
indemnification to the maximum extent permitted by Delaware law.
DISADVANTAGES OF THE REINCORPORATION
Despite the unanimous belief of the board of directors that the
reincorporation is in the best interests of the company and our shareholders,
Delaware law has been criticized by some commentators on the grounds that it
does not afford minority stockholders the same substantive rights and
protections as are available in a number of other states.
AUTHORIZED SHARES OF CAPITAL STOCK
Our certificate of incorporation authorizes 18,000,000 shares of common
stock, par value $.01 per share, and 3,000,000 shares of preferred stock, par
value $.01 per share of which 6,472,955 shares of common stock are issued and
outstanding and no shares of preferred stock are issued and outstanding as of
September 13, 2000. The Delaware corporation's certificate of incorporation also
provides for 18,000,000 shares of common stock, par value $.01 per share and
3,000,000 of preferred stock, $.01 par value per share ("Delaware Shares"). The
Delaware corporation will not issue any shares of any stock in connection with
the reincorporation, other than the shares into which our shares of common stock
will convert.
CONVERSION OF THE STOCK
After the reincorporation becomes effective, the Delaware corporation
will issue a press release announcing that the transaction has occurred. At the
effective date, the holders of the shares of our common stock will become
holders of shares of the Delaware corporation. Our shares of common stock will
automatically convert into shares of common stock of the Delaware corporation on
the effective date, on these terms:
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- The conversion will be on a one-for-one basis; and
- Each share of the common stock of the company which is issued and
outstanding immediately prior to the effective date will become
one share of the common stock of the Delaware corporation.
NEW STOCK CERTIFICATES
At the Effective Date, each stock certificate representing shares of our
common stock that were issued and outstanding just before the merger will
automatically represent the same number of shares of common stock of the
Delaware corporation. Therefore, our shareholders will not need to exchange
their stock certificates for new Delaware corporation stock certificates
following merger.
The Delaware corporation will issue new certificates representing shares
of the Delaware corporation's common stock in connection with stock transfers
occurring after the effective date. In addition, on written request, the
Delaware corporation will issue new certificates of the Delaware corporation to
anyone who holds our stock certificates.
FREELY TRADABLE SHARES
After the merger, shareholders may continue to make sales or transfers
of shares of common stock of the Delaware corporation using our stock
certificates. Shareholders whose shares of common stock were freely tradable
before the merger will own shares of common stock of the Delaware corporation
which are freely tradable after the merger. Similarly, any shareholder holding
securities with transfer restrictions before the merger will hold securities of
the Delaware corporation which have the same transfer restrictions after the
merger. For purposes of computing the holding period under Rule 144 of the
Securities Act of 1933, as amended, those who hold the Delaware corporation's
stock certificates will be deemed to have acquired their shares on the same date
they are deemed to have acquired their Mercury shares.
After the merger, the Delaware corporation will continue to be a
publicly held company. The Delaware corporation will also file with the
Securities and Exchange Commission and provide to its stockholders the same
types of information that we have previously filed and provided.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
The discussion of United States federal income tax consequences set
forth below is for general information only and does not purport to be a
complete discussion or analysis of all potential tax consequences which may
apply to a shareholder. You are strongly urged to consult your tax advisors to
determine the particular tax consequences to you of the reincorporation,
including the applicability and effect of federal, state, local, foreign and
other tax laws.
The following discussion sets forth the principal United States federal
income tax consequences of the reincorporation to our shareholders. The
following disclosure addresses only the United States federal income tax
consequences to our shareholders who hold their shares as a capital asset. The
following disclosure does not address all of the federal income tax consequences
that may be relevant to particular shareholders based upon their individual
circumstances or to shareholders who are subject to special rules, such as
financial institutions, tax-exempt organizations, insurance companies, dealers
in securities, foreign holders or holders who acquired
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their shares pursuant to the exercise of employee stock options or otherwise as
compensation. The following disclosure is based upon the Internal Revenue Code
of 1986, as amended, laws, regulations, rulings and decisions in effect as of
the date hereof, all of which are subject to change, possibly with retroactive
effect, and to differing interpretations. The following disclosure does not
address the tax consequences to our shareholders under state, local and foreign
laws. We have neither requested nor received a tax opinion from legal counsel
with respect to any of the matters discussed herein. No rulings have been or
will be requested from the IRS with respect to any of the matters discussed
herein. There can be no assurance that future legislation, regulations,
administrative rulings or court decisions would not alter the consequences set
forth below.
Our shareholders who receive Delaware corporation shares upon the
automatic conversion of their New York corporation common stock into Delaware
corporation common stock pursuant to the plan of merger will not recognize gain
or loss for United States federal income tax purposes. Each of our shareholder's
aggregate tax basis in the Delaware corporation shares received will equal his,
her or its aggregate tax basis in the New York corporation shares automatically
converted pursuant to the plan of merger. The holding period of the Delaware
corporation shares will include the holding period of the New York corporation
shares automatically converted pursuant to the plan of merger.
ACCOUNTING TREATMENT
In accordance with generally accepted accounting principles, we expect
that the merger will be accounted for as a reorganization of entities under
common control at historical cost.
REGULATORY APPROVALS
The merger is not expected to be consummated until we have obtained all
required consents of governmental authorities. To our knowledge, the only
required consents to the consummation of the merger will be the filing of a
Certificate of Merger by the Tax Commissioner of the State of New York with the
Secretary of State of the State of New York and the filing of a Certificate of
Merger with the Secretary of State of the State of Delaware.
Third party consents to the merger are not expected to be consummated
until we have obtained all required consents of third parties. We believe
consents may be required from various airports, lenders, and holders of
significant contracts.
ABANDONMENT OF THE REINCORPORATION
The board of directors will have the right to abandon the merger
agreement and thus the reincorporation and take no further action towards
reincorporating us in Delaware at any time before the effective date, even after
shareholder approval, if for any reason the board of directors determines that
it is not advisable to proceed with the reincorporation.
COMPARISON OF SHAREHOLDER/STOCKHOLDER RIGHTS
The relative rights of the stockholders of the Delaware corporation and
the shareholders of the New
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York corporation and a number of other corporate governance matters will differ
between the Delaware corporation and the New York corporation. These differences
arise as a result of differences between the General Corporation Law of Delaware
and the New York Business Corporation Law and differences between each company's
respective certificates of incorporation and bylaws. The following discussion
identifies what the board of directors, with the advice of counsel, believes to
be the most significant of these differences.
Shareholders are advised that many provisions of Delaware law and New
York Law may be subject to differing interpretations, and that those offered
herein may be incomplete in certain respects. The following discussion is not a
substitute for direct reference to the statutes themselves or for professional
interpretation of them. In addition, the following discussion is qualified in
its entirety by reference to Delaware law, New York law, case law applicable in
Delaware and in New York, and the charter documents of each of the companies.
Copies of the charter documents are available for inspection at our principal
office and will be sent to shareholders upon request.
SELECTED DIFFERENCES IN THE CORPORATE LAWS
OF DELAWARE AND NEW YORK
INDEMNIFICATION OF DIRECTORS AND OFFICERS
New York law and Delaware law both allow a corporation to indemnify its
directors and officers in connection with derivative and non-derivative actions.
Moreover, both generally require that the person to be indemnified must have
acted in good faith and in a manner the person reasonably believed to be
consistent with the best interests of the corporation. Both certificates of
incorporation generally provide for indemnification to the maximum extent
permitted by applicable law.
INSURANCE FOR DIRECTORS AND OFFICERS
New York law permits a corporation to purchase insurance for its
directors and officers against liabilities arising from actions and omissions of
the insured person, provided that such insurance does not provide for any
payment, other than cost of defense, where a final adjudication adverse to the
insured director or officer establishes that his acts of active and deliberate
dishonesty were material to the cause of action so adjudicated, or that he
personally gained a financial profit or other advantage to which he was not
legally entitled. Delaware law permits a corporation to purchase insurance for
its directors, officers, employees or agents against any liability incurred in
such capacity and does not contain the limitations described above.
LIMITATION OF DIRECTORS' LIABILITY
The certificate of incorporation and bylaws of the Delaware corporation
contain provisions eliminating the personal liability of directors to the
fullest extent permitted by Delaware law. Our certificate and bylaws do not
contain these provisions.
NUMBER OF DIRECTORS
Our bylaws, in accordance with New York law, provide that the number of
directors constituting the board shall be determined by resolution of the
shareholders or the board of directors, but in no event shall be less than
three. Currently, there are five members of the board of directors.
Delaware law provides that the number of directors shall be fixed by or
in the manner provided in the bylaws, unless the certificate of incorporation
fixes the number. The Delaware corporation's bylaws provide that the board shall
consist of at least three directors, as set by the board. The Delaware
corporation's organizational
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consent provides for an initial board of directors made up of five members.
TRANSACTIONS WITH INTERESTED DIRECTORS
New York law provides several methods for establishing the validity of
transactions between a corporation and interested directors including a vote by
the uninterested directors. The comparable provision of Delaware law provides
that no transaction between a corporation and an interested director is void or
voidable solely because such director is present at or participates in the
meeting or because such director's votes are counted if the material facts of
such interest are known to the board and the board in good faith authorizes the
transaction by vote of a majority of the disinterested directors or such
interest is disclosed to stockholders and the stockholders in good faith approve
the transaction.
LOANS AND GUARANTEES OF OBLIGATIONS OF DIRECTORS
Under New York law, we may not lend money to or guarantee the obligation
of a director unless the loan or guarantee is approved by the shareholders, with
the holders of a majority of the votes of the shares entitled to vote thereon
constituting a quorum. Shares held by directors who are benefited by such loan
or guarantee are not entitled to vote or to be included in the determination of
a quorum.
Delaware law contains no similar provision, and the board of directors
may authorize loans or assistance to or guarantees of indebtedness of employees
and officers, including any employee or officer who is a director, whenever, in
the judgment of the board of directors, such loan, assistance or guaranty is in
the best interest of the corporation.
SHAREHOLDER ACTION BY WRITTEN CONSENT
New York law allows shareholder action without a meeting upon the
written consent of all outstanding shares entitled to vote on the matter, unless
the certificate of incorporation expressly permits majority shareholder consent.
Our certificate of incorporation does not permit majority consent.
Delaware law permits stockholder action without a meeting upon the
written consent of holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize such action at a meeting at
which all shares entitled to vote thereon were present and voted, unless the
certificate of incorporation provides otherwise. The Delaware corporation's
certificate of incorporation provides for action by majority written consent. As
a result, a small number of stockholders in the Delaware corporation will have
the ability to approve certain matters without a shareholder vote. See
"Principal Shareholders" and "Change in Control".
VOTE REQUIRED FOR CERTAIN TRANSACTIONS
New York law requires that the holders of two-thirds of our outstanding
stock approve certain mergers, consolidations, or sales of all or substantially
all assets that may occur outside the ordinary course of business or
dissolution. Under Delaware law and the Delaware corporation's certificate of
incorporation, holders of a majority of the outstanding stock entitled to vote
on such transactions have the power to approve a merger, consolidation or sale
of all or substantially all the assets. Furthermore, in the case of certain
mergers under Delaware law, stockholders of the surviving corporation do not
have to approve the merger at all.
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DISSENTERS' RIGHTS
New York law provides that a dissenting shareholder has the right to
receive the fair value of his shares if he complies with certain procedures and
objects to certain mergers and consolidations, certain dispositions of assets
requiring shareholder approval, certain share exchanges, or certain amendments
to the certificate of incorporation which adversely affect the rights of such
shareholder.
Delaware law provides such dissenters' rights only in the case of
stockholders objecting to certain mergers or consolidations (which class of
mergers or consolidations is somewhat narrower than the class giving rise to
appraisal rights under New York law), unless additional appraisal rights are
provided in the certificate of incorporation. The Delaware corporation's
certificate of incorporation does not provide for any additional appraisal
rights.
BUSINESS COMBINATIONS WITH INTERESTED SHAREHOLDERS; ANTI-TAKEOVER IMPLICATIONS
Provisions in both New York law and Delaware Law may help to prevent or
delay changes of corporate control. In particular, both New York law and
Delaware law restrict or prohibit an interested shareholder from entering into
certain types of business combinations unless the board of directors approves
the transaction in advance.
Under New York law, an interested shareholder is generally prohibited
from entering into certain types of business combinations with a New York
corporation for a period of five years after becoming an "interested
shareholder", unless the board of directors approved either the business
combination or the acquisition of stock by the interested shareholder before the
interested shareholder acquired his or her shares. An "interested shareholder"
under New York law is generally a beneficial owner of at least 20% of the
corporation's outstanding voting stock.
Delaware law generally prohibits an "interested stockholder" from
entering into certain types of business combinations with a Delaware corporation
for three years after becoming an interested stockholder unless the business
combination is approved in advance by the board of directors, or at or
subsequent to such time, the business combination is approved by the board of
directors and by the affirmative vote at a meeting of at least two-thirds of the
outstanding voting stock of the corporation not owned by the interested
stockholder. An "interested stockholder" under Delaware law is any person other
than the corporation and its majority-owned subsidiaries who beneficially owns
at least 15% of the outstanding voting stock, or who owned at least 15% within
the preceding three years. Delaware law also provides that a corporation's
certificate of incorporation may elect to not apply this rule in certain
instances. The Delaware corporation's certificate of incorporation does not
apply this rule.
Delaware law, like the comparable provision of New York law, may have
anti-takeover effects because it restricts "business combinations" with
"interested stockholders". The reincorporation is not being proposed in order to
prevent a business combination or change in control and the board of directors
is not aware of any present attempt to acquire control of us or to obtain
representation on our board of directors.
PROXIES
Under New York law, a proxy cannot be voted or acted upon after 11
months from its date unless such proxy provides for a longer period. Under
Delaware law and the Delaware corporation's bylaws, a proxy cannot be voted or
acted upon after three years from its date unless such proxy provides for a
longer period.
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SELECTED DIFFERENCES IN THE CHARTER DOCUMENTS
The Delaware corporation's certificate of incorporation and bylaws will
be in effect and will govern the rights of stockholders in the event the
reincorporation is approved and the merger takes place. The Delaware
corporation's charter documents are substantially similar to our charter
documents. The differences between the two are primarily a result of differences
between New York law and Delaware law as discussed above. Set forth below is a
summary of the material changes in the Delaware corporation's charter documents
from our current charter documents.
The following summary does not purport to be a complete statement of
such changes or of the Delaware corporation's certificate of incorporation and
bylaws and is qualified in its entirety by reference to such charter documents.
Copies of the charter documents are available for inspection at our principal
office and copies will be sent to shareholders upon request.
SPECIAL MEETINGS
Our bylaws provide that special meetings of shareholders may be called
at the behest of the President (or, in the absence or disability of the
President, any Vice President) or by the board of directors. The Delaware
corporation's bylaws provide that special meetings of stockholders may be called
at the behest of the chief executive officer, president, a majority of the board
of directors or the holders of a majority of the shares of the company entitled
to vote at such meeting.
QUORUM
Our bylaws provide that the presence, in person or represented by proxy,
of one-third of the shareholders entitled to vote at a meeting of shareholders
shall constitute a quorum. The Delaware corporation's bylaws provide that the
presence of a majority of the shares entitled to vote, in person or represented
by proxy, shall constitute a quorum.
INDEMNIFICATION AND LIMITATION OF LIABILITY
The Delaware corporation's certificate of incorporation and our bylaws
each provide for indemnification of directors and officers to the fullest extent
permitted by law and expressly authorize the corporation to purchase and
maintain directors' and officers' liability insurance to insure against
liabilities or losses incurred in such capacities whether or not the corporation
would have the power to indemnify the individual.
SECTION 16 DISCLOSURE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
the Common Stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the American Stock Exchange. Based solely
on its review of the copies of such forms received by it, or written
representations from certain reporting persons that no annual corrective filings
were required for those persons, the Company believes that except for Harold T.
Bowling who filed one late Form 3, all filing requirements applicable to its
officers, directors and greater than ten-percent beneficial owners were complied
with.
INFORMATION RELATING TO INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants for fiscal year 2000 were
Deloitte & Touche and the Board of Directors of the Company has selected
Deloitte & Touche as the Company's independent public accountants for fiscal
year 2001. Representatives of Deloitte & Touche are expected to be present at
the Meeting and will have an opportunity to respond to appropriate questions and
to make a statement if they desire to do so.
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ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K to Shareholders for
the fiscal year ended June 30, 2000, (the "10-K"), has been mailed to each
shareholder of record as of October 26, 2000. Any such shareholder may request
copies of the exhibits to the 10-K by mailing such request to Wayne J. Lovett,
Secretary, Mercury Air Group, Inc., 5456 McConnell Avenue, Los Angeles,
California 90066. Such request must indicate the name of the shareholder, the
shareholder's telephone number, the amount of shares held on October 26, 2000,
the specific exhibits requested and the address to which the exhibits are to be
sent. The Company reserves the right to charge for its copying expenses before
providing any requested exhibits.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any shareholder proposal intended to be presented at the Company's next
annual meeting must be received by Wayne J. Lovett, the Secretary of the
Company, at 5456 McConnell Avenue, Los Angeles, California 90066, no later than
June 30, 2001 in order to be considered for inclusion in the proxy statement and
form of proxy for such meeting.
OTHER MATTERS
Management knows of no other matter to be presented at the Meeting which
are proper subjects for action by the shareholders. However, if any other
matters should properly come before the Meeting, it is intended that proxies in
the accompanying form will be voted thereon in accordance with the judgment of
the person or persons voting such proxies.
The Annual Report on Form 10-K to Shareholders of the Company for the
fiscal year ended June 30, 2000 has been mailed to the shareholders of the
Company with this Proxy Statement. Except to the extent that portions of such
report are specifically referenced in this Proxy Statement, such report is not
to be regarded as proxy soliciting material and is not incorporated in this
Proxy Statement.
By Order of the Board of Directors
Los Angeles, California Wayne J. Lovett
November 3, 2000 Secretary
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CERTIFICATE OF INCORPORATION
OF
MERCURY AIR GROUP, INC.
The undersigned natural person, acting as an incorporator of a
corporation under the General Corporation Law of Delaware, hereby adopts the
following Certificate of Incorporation for such corporation:
ARTICLE I
NAME
The name of the corporation is Mercury Air Group, Inc. (the
"CORPORATION").
ARTICLE II
PURPOSE
The purpose for which the Corporation is organized is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
ARTICLE III
SHARES
The aggregate number of shares which the Corporation has authority to
issue is eighteen million (18,000,000) shares of common stock, $.01 par value
per share, and three million (3,000,000) shares of preferred stock, $.01 par
value per share. The shares are designated as common stock and have identical
rights and privileges in every respect.
ARTICLE IV
DENIAL OF PREEMPTIVE RIGHTS
Except as may be set forth in a written agreement executed by an
authorized representative of the Corporation, no stockholder of the Corporation
or other person shall have any preemptive right to purchase or subscribe to any
shares of any class or any notes, debentures, options, warrants or other
securities, now or hereafter authorized.
ARTICLE V
REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the Corporation
is 1209 Orange Street, Wilmington, Delaware 19801 and the name of its initial
registered agent at such address is The Corporation Trust Company.
ARTICLE VI
INITIAL DIRECTORS
The number of directors constituting the initial Board of Directors is
five (5) and the names and addresses of the persons who are to serve as
directors until the first annual meeting of the stockholders, or until their
successor or successors are elected and qualify are:
Appendix "A"
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Philip J. Fagan, Jr., M.D. Harold T. Bowling
P.O. Box 438 3335 Dona Rosa Drive
Zephyr Cove, NV 89448 Studio City, CA 91604
Joseph A. Czyzyk Robert L. List
Mercury Air Group, Inc. 511 17th Street
5456 McConnell Avenue Golden, CO 80401
Los Angeles, CA 90066
Frederick H. Kopko, Jr.
McBreen & Kopko
20 North Wacker Drive, Suite 2520
Chicago, IL 60606
ARTICLE VII
LIMITATION OF PERSONAL LIABILITY OF DIRECTORS
To the greatest extent permitted by applicable law, no director
(including any advisory director) of the Corporation shall be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, the foregoing shall not limit the
liability of a director (including any advisory director) (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of Title 8 of the Delaware
General Corporation Law, or (iv) for any transaction from which the director
derived an improper personal benefit.
ARTICLE VIII
INDEMNITY
SECTION 8.1 The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, or by reason of any action alleged to
have been taken or omitted in such capacity, against costs, charges, expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person or on such person's behalf in
connection with such action, suit or proceeding and any appeal therefrom, if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
such person's conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not meet the standards of conduct set forth in this Section 8.1.
SECTION 8.2 The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that such person is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, or
by reason of any action alleged to have been taken or omitted in such capacity,
against costs, charges and expenses (including attorneys' fees) actually and
reasonably incurred by such person or on such person's behalf in connection with
the defense or settlement of such action or suit and any appeal therefrom, if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for gross negligence or
misconduct in the performance of such person's duty to the Corporation unless
and only to the extent that the Court of Chancery of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of such liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
costs, charges and expenses which the Court of Chancery or such other court
shall deem proper.
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SECTION 8.3 Notwithstanding the other provisions of this Article VIII,
to the extent that a Director, officer, employee or agent of the Corporation has
been successful on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, in defense of any action, suit or
proceeding referred to in Sections 8.1 and 8.2, or in the defense of any claim,
issue or matter therein, such person shall be indemnified against all costs,
charges and expenses (including attorneys' fees) actually and reasonably
incurred by such person or on such person's behalf in connection therewith.
SECTION 8.4 Any indemnification under Sections 8.1 and 8.2 (unless
ordered by a court) shall be paid by the Corporation unless a determination is
made (i) by the Board of Directors by a majority vote of a quorum consisting of
Directors who were not parties to such action, suit or proceeding, or (ii) if
such a quorum is not obtainable, or even if obtainable a quorum of disinterested
Directors so directs, by independent legal counsel in a written opinion, or
(iii) by the stockholders, that indemnification of the Director, officer,
employee or agent is not proper in the circumstances because such person has not
met the applicable standards of conduct set forth in Sections 8.1 and 8.2.
SECTION 8.5 Costs, charges and expenses (including attorneys, fees)
incurred by a person referred to in Sections 8.1 and 8.2 in defending a civil or
criminal action, suit or proceeding (including investigations by any government
agency and all costs, charges and expenses incurred in preparing for any
threatened action, suit or proceeding) shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding; provided,
however, that the payment of such costs, charges and expenses incurred by a
Director or officer in such person's capacity as a Director or officer (and not
in any other capacity in which service was or is rendered by such person while a
Director or officer) in advance of the final disposition of such action, suit or
proceeding shall be made only upon receipt of an undertaking by or on behalf of
the Director or officer to repay all amounts so advanced in the event that it
shall ultimately be determined that such Director or officer is not entitled to
be indemnified by the Corporation as authorized in this Article VIII. No
security shall be required for such undertaking and such undertaking shall be
accepted without reference to the recipient's financial ability to make
repayment. The repayment of such charges and expenses incurred by other
employees and agents of the Corporation which are paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as permitted
by this Section 8.5 may be required upon such terms and conditions, if any, as
the Board of Directors deems appropriate. The Board of Directors may, in the
manner set forth above, and subject to the approval of such Director, officer,
employee or agent of the Corporation, authorize the Corporation's counsel to
represent such person, in any action, suit or proceeding, whether or not the
Corporation is a party to such action, suit or proceeding.
SECTION 8.6 Any indemnification under Sections 8.1, 8.2 or 8.3 or
advance of costs, charges and expenses under Section 8.5 shall be made promptly,
and in any event within 30 days, upon the written request of the Director,
officer, employee or agent directed to the Secretary of the Corporation. The
right to indemnification or advances as granted by this Article VIII shall be
enforceable by the Director, officer, employee or agent in any court of
competent jurisdiction if the Corporation denies such request, in whole or in
part, or if no disposition thereof is made within 30 days. Such person's costs
and expenses incurred in connection with successfully establishing such person's
right to indemnification or advances, in whole or in part, in any such action
shall also be indemnified by the Corporation. It shall be a defense to any such
action (other than an action brought to enforce a claim for the advance of
costs, charges and expenses under Section 8.5 where the required undertaking, if
any, has been received by the Corporation) that the claimant has not met the
standard of conduct set forth in Sections 8.1 or 8.2, but the burden of proving
that such standard of conduct has not been met shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors, its
independent legal counsel, and its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because such person has met the applicable standard
of conduct set forth in Sections 8.1 and 8.2, nor the fact that there has been
an actual determination by the Corporation (including its Board of Directors,
its independent legal counsel, and its stockholders) that the claimant has not
met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
SECTION 8.7 The indemnification provided by this Article VIII shall not
be deemed exclusive of any other rights to which a person seeking
indemnification may be entitled under any law (common or statutory), agreement,
vote of stockholders or disinterested Directors or otherwise, both as to action
in such person's official capacity and as to action in another capacity while
holding office or while employed by or acting as agent for the Corporation, and
shall continue as to a person who has ceased to be a Director, officer, employee
or agent and shall inure to the benefit of the estate, heirs, executors and
administrators of such person. All rights to indemnification under this Article
VIII shall be deemed to be a contract between the Corporation and each Director,
officer, employee or agent of the Corporation who serves or served in such
capacity at any time while this Article VIII is in effect. No amendment or
repeal of this Article VIII or of any relevant provisions of the Delaware
General Corporation Law or any other applicable laws shall adversely affect or
deny to any Director, officer, employee or agent any rights to indemnification
which such person may have, or change or release any obligations of the
Corporation, under this Article VIII with respect to any costs, charges,
expenses (including
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attorneys' fees), judgments, fines, and amounts paid in settlement which arise
out of an action, suit or proceeding based in whole or substantial part on any
act or failure to act, actual or alleged, which takes place before or while this
Article VIII is in effect. The provisions of this Section 8.7 shall apply to any
such action, suit or proceeding whenever commenced, including any such action,
suit or proceeding commenced after any amendment or repeal of this Article VIII.
SECTION 8.8 For purposes of this Article VIII:
(i) "THE CORPORATION" shall include any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation
or merger which, if its separate existence had continued, would have had
power and authority to indemnify its Directors, officers, and employees
or agents, so that any person who is or was a Director, officer,
employee or agent of such constituent corporation, or is or was serving
at the request of such constituent corporation as a Director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the
provisions of this Article VIII with respect to the resulting or
surviving corporation as such person would have with respect to such
constituent corporation if its separate existence had continued;
(ii) "OTHER ENTERPRISES" shall include employee benefit plans,
including, but not limited to, any employee benefit plan of the
Corporation;
(iii) "SERVING AT THE REQUEST OF THE CORPORATION" shall include
any service which imposes duties on, or involves services by, a
Director, officer, employee, or agent of the Corporation with respect to
an employee benefit plan, its participants, or beneficiaries, including
acting as a fiduciary thereof;
(iv) "FINES" shall include any penalties and any excise or
similar taxes assessed on a person with respect to an employee benefit
plan;
(v) A person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the Corporation" as
referred to in Sections 8.1 and 8.2; and
(vi) Service as a partner, trustee or member of management or
similar committee of a partnership or joint venture, or as a Director,
officer, employee or agent of a corporation which is a partner, trustee
or joint venturer, shall be considered service as a Director, officer,
employee or agent of the partnership, joint venture, trust or other
enterprise.
SECTION 8.9 If this Article VIII or any portion hereof shall be
invalidated on any ground by a court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Director, officer, employee and
agent of the Corporation as to costs, charges and expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement with respect to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Corporation, to the
full extent permitted by any applicable portion of this Article VIII that shall
not have been invalidated and to the full extent permitted by applicable law.
SECTION 8.10 The Corporation shall purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against such
person and incurred by such person or on such person's behalf in any such
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such liability
under the provisions of this Article VIII, provided that such insurance is
available on acceptable terms as determined by a vote of a majority of the
entire Board of Directors.
ARTICLE IX
BYLAWS
The Bylaws of the Corporation may be amended or repealed, or new Bylaws
may be adopted, (i) by the Board of Directors of the Corporation at any duly
held meeting or pursuant to a written consent in lieu of such meeting, or (ii)
by the holders of a majority of the shares represented at any duly held meeting
of stockholders, provided that notice of such proposed action shall have been
contained in the notice of any such meeting, or pursuant to a written consent
signed by the holders of a majority of the outstanding shares entitled to vote
thereon.
A-4
<PAGE> 34
ARTICLE X
INCORPORATOR
The name and address of the incorporator is:
The Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801
The undersigned, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, does make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly I have hereunto set my hand this the ___ day of October, 2000.
A-5
<PAGE> 35
BYLAWS
OF
MERCURY AIR GROUP, INC.
<PAGE> 36
APPENDIX "B"
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
------
<S> <C> <C>
Article 1 - Offices ...................................................................... 1
Section 1.1 Registered Office ............................................ 1
Section 1.2 Other Offices ................................................ 1
Article 2 - Meetings of Stockholders ..................................................... 1
Section 2.1 Place of Meetings ............................................ 1
Section 2.2 Annual Meeting ............................................... 1
Section 2.3 Special Meetings ............................................. 1
Section 2.4 Notice ....................................................... 1
Section 2.5 Voting List .................................................. 2
Section 2.6 Quorum ....................................................... 2
Section 2.7 Required Vote ................................................ 2
Section 2.8 Proxies ...................................................... 2
Section 2.9 Record Date .................................................. 3
Section 2.10 Action Without a Meeting ..................................... 4
Section 2.11 Inspectors of Elections ...................................... 5
Article 3 - Directors .................................................................... 5
Section 3.1 Management ................................................... 5
Section 3.2 Number; Classes; Election .................................... 5
Section 3.3 Change in Number ............................................. 5
Section 3.4 Removal ...................................................... 5
Section 3.5 Vacancies and Newly Created Directorships .................... 6
Section 3.6 Cumulative Voting Prohibited ................................. 6
Section 3.7 Place of Meetings ............................................ 6
Section 3.8 Annual Meetings .............................................. 6
Section 3.9 Regular Meetings ............................................. 6
Section 3.10 Special Meetings ............................................. 6
Section 3.11 Quorum ....................................................... 6
Section 3.12 Action Without Meeting; Telephone Meetings ................... 7
Section 3.13 Chairman of the Board ........................................ 7
Section 3.14 Compensation ................................................. 7
Article 4 - Committees ................................................................... 7
</TABLE>
<PAGE> 37
<TABLE>
<S> <C> <C>
Section 4.1 Designation .................................................. 7
Section 4.2 Number; Term ................................................. 7
Section 4.3 Authority .................................................... 7
Section 4.4 Committee Changes; Removal ................................... 8
Section 4.5 Alternate Members; Acting Members ............................ 8
Section 4.6 Regular Meetings ............................................. 8
Section 4.7 Special Meetings ............................................. 8
Section 4.8 Quorum; Majority Vote ........................................ 8
Section 4.9 Minutes ...................................................... 8
Section 4.10 Compensation ................................................. 8
Article 5 - Notices ...................................................................... 9
Section 5.1 Method ....................................................... 9
Section 5.2 Waiver ....................................................... 9
Section 5.3 Exception to Notice Requirement .............................. 9
Article 6 - Officers ..................................................................... 10
Section 6.1 Officers ..................................................... 10
Section 6.2 Election ..................................................... 10
Section 6.3 Compensation ................................................. 10
Section 6.4 Removal and Vacancies ........................................ 10
Section 6.5 Chief Executive Officer/President ............................ 10
Section 6.6 Chairman of the Board ........................................ 11
Section 6.7 Executive Vice Presidents/Vice Presidents .................... 11
Section 6.8 Secretary .................................................... 11
Section 6.9 Assistant Secretaries ........................................ 11
Section 6.10 Chief Financial Officer ...................................... 12
Section 6.11 Other Officers ............................................... 12
Article 7 - Certificates Representing Shares ............................................. 12
Section 7.1 Certificates ................................................. 12
Section 7.2 Legends ...................................................... 12
Section 7.3 Lost Certificates ............................................ 12
Section 7.4 Transfer of Shares ........................................... 13
Section 7.5 Registered Stockholders ...................................... 13
Article 8 - Indemnification .............................................................. 13
Section 8.1 Actions, Suits or Proceedings other than by or in the
Right of the Corporation ..................................... 13
Section 8.2 Actions or Suits by or in the Right of the
Corporation .................................................. 13
Section 8.3 Indemnification for Costs, Charges and Expenses of
Successful Party ............................................. 14
Section 8.4 Determination of Right to Indemnification .................... 14
Section 8.5 Advance of Costs, Charges and Expenses ....................... 14
Section 8.6 Procedure for Indemnification ................................ 15
Section 8.7 Other Rights; Continuation of Right to Indemnification ....... 15
Section 8.8 Construction ................................................. 16
Section 8.9 Savings Clause ............................................... 16
Section 8.10 Insurance .................................................... 17
Article 9 - General Provisions ........................................................... 17
Section 9.1 Dividends .................................................... 17
Section 9.2 Reserves ..................................................... 17
Section 9.3 Authority to Sign Instruments ................................ 17
Section 9.4 Fiscal Year .................................................. 18
Section 9.5 Seal ......................................................... 18
Section 9.6 Transactions with Directors and Officers ..................... 18
Section 9.7 Amendments ................................................... 18
</TABLE>
<PAGE> 38
BYLAWS
OF
MERCURY AIR GROUP, INC.
ARTICLE 1
OFFICES
Section 1.1 Registered Office. The registered office and registered
agent Mercury Air Group, Inc., a Delaware corporation (the "Corporation"), will
be as from time to time set forth in the Corporation's Certificate of
Incorporation or in any certificate filed with the Secretary of State of the
State of Delaware to amend such information.
Section 1.2 Other Offices. The Corporation may also have offices at such
other places, both within and without the State of Delaware, as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
Section 2.1 Place of Meetings. Meetings of stockholders for all purposes
may be held at such time and place, either within or without the State of
Delaware, as shall be stated in the notice of the meeting or in a
<PAGE> 39
duly executed waiver of notice thereof.
Section 2.2 Annual Meeting. An annual meeting of stockholders of the
Corporation shall be held each calendar year at such time as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice of such meeting. At such meeting,
the stockholders shall elect directors and transact such other business as may
properly be brought before the meeting.
Section 2.3 Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute, the Certificate
of Incorporation or these Bylaws, may be called by the Chief Executive Officer ,
the President, or a majority of the Board of Directors. Business transacted at
all special meetings shall be confined to the purposes stated in the notice of
the meeting.
Section 2.4 Notice. Written or printed notice stating the place, date,
and hour of each meeting of the stockholders and, in the case of a special
meeting, the purpose or purposes for which the meeting is called, shall be given
not less than ten (10) or, in the event of merger or consolidation, not less
than twenty (20), nor more than sixty (60) days before the date of the meeting,
to each stockholder entitled to vote at such meeting. If such notice is sent by
mail, notice is given when deposited in the United States mail, postage prepaid,
directed to the stockholder at the stockholder's address as it appears on the
records of the Corporation. Notice of any meeting of stockholders shall not be
required to be given to any stockholder who shall attend such meeting in person
or by proxy and shall not, at the beginning of such meeting, object to the
transaction of any business because the meeting is not lawfully called or
convened, or who shall, either before or after the meeting, submit a signed
waiver of notice, in person or by proxy.
Section 2.5 Voting List. At least ten (10) days before each meeting of
stockholders, the Secretary or other officer of the Corporation who has charge
of the Corporation's stock ledger, either directly or through another officer
appointed by the Secretary or such other officer or through a transfer agent
appointed by the Board of Directors, shall prepare a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order and
showing the address of each stockholder and the number of shares registered in
the name of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. Such list shall also be produced and kept at
the time and place of the meeting at all times during such meeting and may be
inspected by any stockholder who is present.
Section 2.6 Quorum. A majority of the shares entitled to vote, present
in person or represented by proxy, shall constitute a quorum at any meeting of
stockholders, except as otherwise provided by statute, the Certificate of
Incorporation or these Bylaws. The stockholders present at a duly constituted
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum. If a quorum shall
not be present at any meeting of stockholders, the stockholders entitled to vote
thereat who are present, in person or by proxy, or, if no stockholder entitled
to vote is present, any officer of the Corporation presiding over such meeting,
may adjourn the meeting from time to time until a quorum shall be present. When
a meeting is adjourned to another time or place, notice need not be given of the
adjourned meeting if the time and place are announced at the meeting at which
the adjournment is taken. At any adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted at the
original meeting had a quorum been present. If the adjournment is for more than
thirty (30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 2.7 Required Vote. In all matters other than the election of
directors, the affirmative vote of the majority of shares present in person or
represented by proxy at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders, unless the question is one on which, by
express
<PAGE> 40
provision of statute, the Certificate of Incorporation or these Bylaws, a
different vote is required, in which case such express provision shall govern
and control the decision of the question. Directors of the Corporation shall be
elected by a plurality. In determining the number of shares entitled to vote,
shares abstaining from voting or not voted on a matter (including elections)
will be treated as not entitled to vote.
Section 2.8 Proxies.
(a) Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act
for such stockholder by proxy, but no such proxy shall be voted or acted
upon after three (3) years from its date, unless the proxy provides for
a longer period. Each proxy shall be filed with the Secretary of the
Corporation prior to or at the time of the meeting.
(b) Without limiting the manner in which a stockholder may
authorize another person or persons to act for such stockholder as proxy
pursuant to subsection (a) of this section, the following shall
constitute a valid means by which a stockholder may grant such
authority:
(1) A stockholder may execute a writing authorizing
another person or persons to act for such stockholder as proxy.
Execution may be accomplished by the stockholder or by an
authorized officer, director, employee or agent of the
stockholder signing such writing or causing such stockholder's
signature to be affixed to such writing by any reasonable means
including, but not limited to, by facsimile signature.
(2) A stockholder may authorize another person or
persons to act for such stockholder as proxy by transmitting or
authorizing the transmission of a telegram, cablegram, or other
means of electronic transmission to the person who will be the
holder of the proxy or to a proxy solicitation firm, proxy
support service organization or like agent duly authorized by
the person who will be the holder of the proxy to receive such
transmission, provided that any such telegram, cablegram or
other means of electronic transmission must either set forth or
be submitted with information from which it can be determined
that the telegram, cablegram or other electronic transmission
was authorized by the stockholder. If it is determined that such
telegrams, cablegrams or other electronic transmissions are
valid, the inspectors or, if there are no inspectors, such other
persons making that determination shall specify the information
upon which they relied.
(c) Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to
subsection (b) of this section may be substituted or used in lieu of the
original writing or transmission for any and all purposes for which the
original writing or transmission could be used, provided that such copy,
facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission.
(d) A duly executed proxy shall be irrevocable if it states that
it is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power.
Section 2.9 Record Date.
(a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing
the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty (60) nor less than ten (10) days
before the date of such meeting. If no record date is fixed by the Board
of Directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close
of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall
29
<PAGE> 41
apply to any adjournment of the meeting; provided, however, that the
Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or
allotment of any rights or the stockholders entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for
the purpose of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted, and which record date
shall be not more than sixty (60) days prior to such payment, exercise,
or other action. If no record date is fixed, the record date for
determining stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopts the
resolution relating thereto.
Section 2.10 Action Without Meeting.
(a) Unless otherwise provided in the Certificate of
Incorporation, any action required or permitted to be taken at a meeting
of the stockholders of the Corporation may be taken without a meeting or
a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holder or holders of shares having not
less than the minimum number of votes that would be necessary to take
such action at a meeting at which the holders of all shares entitled to
vote on the action were present and voted. Such consent or consents
shall be delivered to the Corporation at its registered office in
Delaware, at its principal place of business, or to an officer or agent
of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Such delivery shall be by hand,
by overnight courier service or by certified or registered mail, return
receipt requested.
(b) Every written consent shall bear the date of signature of
each stockholder who signs the written consent, and no consent shall be
effective to take the corporate action referred to therein unless,
within sixty (60) days of the earliest dated consent delivered in the
manner required by this Section 2.11 to the Corporation, written
consents signed by a sufficient number of stockholders to take action
are delivered to the Corporation in the manner required by this Section
2.11.
(c) Prompt notice of the taking of the corporate action without
a meeting by less than unanimous written consent shall be given by the
Corporation to those stockholders who have not consented to the action
in writing.
Section 2.11 Inspectors of Elections. The Board of Directors shall, in
advance of any meeting of stockholders, appoint one or more inspectors to act at
such meeting or any adjournment thereof. If any of the inspectors so appointed
shall fail to appear or act, the chairman of the meeting shall appoint one or
more inspectors. Each inspector, before entering upon the discharge of such
inspector's duties, shall take and sign an oath faithfully to execute the duties
of inspector at such meeting with strict impartiality and according to the best
of such inspector's ability. The inspectors shall determine the number of shares
of capital stock of the Corporation outstanding and the voting power of each,
the number of shares represented at the meeting, the existence of a quorum, and
the validity and effect of proxies and shall receive votes, ballots, or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots, or consents,
determine the results, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the chairman of the
meeting, the inspectors shall make a report in writing of any challenge,
request, or matter determined by them and shall execute a certificate of any
fact found by them. No director or candidate for the office of director shall
act as an inspector of an election of directors. Inspectors need not be
stockholders.
<PAGE> 42
ARTICLE 3
DIRECTORS
Section 3.1 Management. The business and affairs of the Corporation
shall be managed by or under the direction of a Board of Directors, who may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute, the Certificate of Incorporation or these Bylaws
directed or required to be exercised or done by the stockholders. The Board of
Directors shall keep regular minutes of its proceedings.
Section 3.2 Number; Election. The Board of Directors shall consist of at
least three (3) members. Directors shall be elected at the annual meeting of the
stockholders, except as hereinafter provided, and each Director elected shall
hold office until his successor shall be elected and shall qualify.
Section 3.3 Change in Number. The number of directors constituting the
whole Board of Directors may be fixed from time to time in a resolution adopted
by the Board of Directors, or, if no such resolution has been adopted, the
number of directors constituting the whole Board of Directors shall be the same
as the number of directors of the initial Board of Directors as set forth in the
Certificate of Incorporation. No decrease in the number of directors
constituting the whole Board of Directors shall have the effect of shortening
the term of any incumbent director.
Section 3.4 Removal. Any Director may be removed either for or without
cause at any annual or special meeting of stockholders by the affirmative vote
of a majority in number of shares of the stockholders present in person or by
proxy at such meeting and entitled to vote for the election of such Director, if
notice of the intention to act upon such matters shall have been given in the
notice calling such meeting.
Section 3.5 Vacancies and Newly Created Directorships. Except as
otherwise provided in the Certificate of Incorporation, vacancies and newly
created directorships resulting from any increase in the authorized number of
directors shall be filled only by the affirmative vote of a majority of the
directors then in office, even though less than a quorum or by a sole remaining
director, and not by the stockholders. Any director elected in accordance with
this Bylaw shall hold office until such director's successor shall have been
elected and qualified. If at any time there are no directors in office, an
election of directors may be held in the manner provided by statute. Except as
otherwise provided in these Bylaws, when one or more directors shall resign from
the Board of Directors, effective at a future date, a majority of the directors
then in office, including those who have so resigned, shall have the power to
fill such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective, and each director so chosen
shall hold office as provided in these Bylaws with respect to the filling of
other vacancies.
Section 3.6 Cumulative Voting Prohibited. Cumulative voting shall be
prohibited.
Section 3.7 Place of Meetings. The directors of the Corporation may hold
their meetings, both regular and special, either within or without the State of
Delaware.
Section 3.8 Annual Meetings. The annual meeting of each newly elected
Board shall be held without further notice immediately following the annual
meeting of stockholders, and at the same place, unless by unanimous consent of
the directors then elected and serving, such time or place shall be changed.
Section 3.9 Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at such time and place as shall from time to time be
determined by the Board of Directors.
<PAGE> 43
Section 3.10 Special Meetings. Special meetings of the Board of
Directors may be called by the Chief Executive Officer on twenty-four (24)
hours' notice to each director, if by telecopier, electronic facsimile, telegram
or other electronic means, or hand delivery, or on three (3) days' notice to
each director, if by mail. Except as may be otherwise expressly provided by law
or the Certificate of Incorporation, neither the business to be transacted at,
nor the purpose of, any special meeting need be specified in a notice or waiver
of notice.
Section 3.11 Quorum. At all meetings of the Board of Directors, a
majority of the total number of directors shall constitute a quorum for the
transaction of business, and the vote of a majority of the directors present at
any meeting at which a quorum is present shall be the act of the Board of
Directors, except as may be otherwise specifically provided by law or the
Certificate of Incorporation. If a quorum shall not be present at any meeting of
directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 3.12 Action Without Meeting; Telephone Meetings. Any action
required or permitted to be taken at a meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if a consent in writing,
setting forth the action so taken, is signed by all the members of the Board of
Directors or committee, as the case may be. Such consent shall have the same
force and effect as a unanimous vote at a meeting. Subject to applicable notice
provisions and unless otherwise restricted by the Certificate of Incorporation,
members of the Board of Directors, or any committee designated by the Board of
Directors, may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in such
meeting shall constitute presence in person at such meeting, except where a
person's participation is for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
Section 3.13 Chairman of the Board. The Board of Directors may elect a
Chairman of the Board to preside at their meetings and to perform such other
duties as the Board of Directors may from time to time assign to such person.
Section 3.14 Compensation. The Board of Directors may fix the
compensation of the members of the Board of Directors at any time and from time
to time. Nothing herein contained shall be construed to preclude any director
from serving the Corporation in any other capacity and receiving compensation
therefor.
ARTICLE 4
COMMITTEES
Section 4.1 Designation. The Board of Directors may designate one or
more committees.
Section 4.2 Number; Term. Each committee shall consist of one or more
directors. The number of committee members may be increased or decreased from
time to time by the Board of Directors. Each committee member shall serve as
such until the earliest of (i) the expiration of such committee member's term as
director, (ii) such committee member's resignation as a committee member or as a
director, or (iii) such committee member's removal as a committee member or as a
director.
Section 4.3 Authority. Each committee, to the extent expressly provided
in the resolution of the Board of Directors establishing such committee, shall
have and may exercise all of the authority of the Board of Directors in the
management of the business and affairs of the Corporation except to the extent
expressly restricted by statute, the Certificate of Incorporation or these
Bylaws.
Section 4.4 Committee Changes; Removal. The Board of Directors shall
have the power at any time to fill vacancies in, to change the membership of,
act in place of and to discharge any committee. The Board of Directors may
remove any committee member, at any time, with or without cause.
<PAGE> 44
Section 4.5 Alternate Members; Acting Members. The Board of Directors
may designate one or more directors as alternate members of any committee. Any
such alternate member may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of a
committee, the member or members present at any meeting and not disqualified
from voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member.
Section 4.6 Regular Meetings. Regular meetings of any committee may be
held without notice at such time and place as may be designated from time to
time by the committee and communicated to all members thereof.
Section 4.7 Special Meetings. Special meetings of any committee may be
held whenever called by the Chairman of the committee, or, if the committee
members have not elected a Chairman, by any committee member. The Chairman of
the committee or the committee member calling any special meeting shall cause
notice of such special meeting, including therein the time and place of such
special meeting, to be given to each committee member at least (i) twenty-four
(24) hours before such special meeting if notice is given by telecopy,
electronic facsimile, telegram or other electronic means, or hand delivery or
(ii) at least three (3) days before such special meeting if notice is given by
mail. Neither the business to be transacted at, nor the purpose of, any special
meeting of any committee need be specified in the notice or waiver of notice of
any special meeting.
Section 4.8 Quorum; Majority Vote. At meetings of any committee, a
majority of the number of members designated as the committee by the Board of
Directors shall constitute a quorum for the transaction of business. Alternate
members and acting members shall be counted in determining the presence of a
quorum. If a quorum is not present at a meeting of any committee, a majority of
the members present may adjourn the meeting from time to time, without notice
other than an announcement at the meeting, until a quorum is present. The vote
of a majority of the members, including alternate members and acting members,
present at any meeting at which a quorum is present shall be the act of a
committee, unless the act of a greater number is required by law or the
Certificate of Incorporation.
Section 4.9 Minutes. Each committee shall cause minutes of its
proceedings to be prepared and shall report the same to the Board of Directors
upon the request of the Board of Directors. The minutes of the proceedings of
each committee shall be delivered to the Secretary of the Corporation for
placement in the minute books of the Corporation.
Section 4.10 Compensation. Committee members may, by resolution of the
Board of Directors, be allowed a fixed sum and expenses of attendance, if any,
for attending any committee meetings or a stated salary.
ARTICLE 5
NOTICES
Section 5.1 Method. Whenever by statute, the Certificate of
Incorporation, or these Bylaws, notice is required to be given to any
stockholder, director or committee member, and no provision is made as to how
such notice shall be given, personal notice shall not be required, and any such
notice may be given (a) in writing, by mail, postage prepaid, addressed to such
committee member, director, or stockholder at such person's address as it
appears on the books or (in the case of a stockholder) the stock transfer
records of the Corporation, or (b) by any other method permitted by law
(including, but not limited to, overnight courier service, electronic facsimile
transmission, electronic mail, telegram, telex, telefax or other means of
electronic transmission). Any notice required or permitted to be given by mail
shall be deemed to be given when deposited in the United States mail as
aforesaid. Any notice required or permitted to be given by overnight courier
service shall be deemed to be given at the time delivered to such service with
all charges prepaid and addressed as aforesaid. Any notice required or permitted
to be given by electronic facsimile transmission, electronic mail, telegram,
telex, telefax or other means of electronic transmission shall be deemed to be
delivered and given at the time transmitted with all charges prepaid and
addressed as aforesaid.
<PAGE> 45
Section 5.2 Waiver. Whenever any notice is required to be given to any
stockholder, director, or committee member of the Corporation by law, the
Certificate of Incorporation or these Bylaws, a written waiver thereof, signed
by the person or persons entitled to such notice, whether before or after the
time stated therein, shall be equivalent to notice. Attendance of a stockholder,
director, or committee member at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends for the express purpose of
objecting at the beginning of the meeting to the transaction of any business on
the ground that the meeting is not lawfully called or convened.
Section 5.3 Exception to Notice Requirement. The giving of any notice
required under any provision of the General Corporation Law of Delaware, the
Certificate of Incorporation or these Bylaws shall not be required to be given
to any stockholder to whom (i) notice of two consecutive annual meetings, and
all notices of meetings or of the taking of action by written consent without a
meeting to such stockholder during the period between such two consecutive
annual meetings, or (ii) all, and at least two, payments (if sent by first class
mail) of dividends or interest on securities during a twelve-month period, have
been mailed addressed to such person at such person's address as shown on the
records of the Corporation and have been returned undeliverable. If any such
stockholder shall deliver to the Corporation a written notice setting forth such
stockholder's then current address, the requirement that notice be given to such
stockholder shall be reinstated.
ARTICLE 6
OFFICERS
Section 6.1 Officers. The officers of the Corporation shall be elected
by the Board of Directors and shall be the Chairman of the Board, a Chief
Executive Officer (Chief Executive Officer and President), one or more Executive
Vice Presidents or Vice Presidents, a Secretary and Chief Financial Officer
(Chief Financial Officer and Principal Accounting Officer). The Board of
Directors may also elect one or more Assistant Secretaries and one or more
Assistant Chief Financial Officers. Any two offices may be held by the same
person, except the offices of Chairman of the Board, Chief Executive Officer and
Secretary. No officer need be a director of the Corporation.
Section 6.2 Election. The Board of Directors at its first meeting after
each annual meeting of stockholders shall elect the officers of the Corporation,
none of whom need be a member of the Board, a stockholder or a resident of the
State of Delaware. The Board of Directors may appoint such other officers and
agents as it shall deem necessary, who shall be appointed for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors.
Section 6.3 Compensation. The compensation of all officers and agents of
the Corporation shall be fixed by the Board of Directors.
Section 6.4 Removal and Vacancies. Each officer of the Corporation shall
hold office until such officer's successor is elected and qualified or until
such officer's earlier death, resignation or removal. Any officer or agent
elected or appointed by the Board of Directors may be removed either for or
without cause by a majority of the directors represented at a meeting of the
Board of Directors at which a quorum is represented, whenever in the judgment of
the Board of Directors the best interests of the Corporation will be served
thereby, but such removal shall be without prejudice to the contract rights, if
any, of the person so removed. If the office of any officer becomes vacant for
any reason, the vacancy may be filled by the Board of Directors.
Section 6.5 Chief Executive Officer/President. The Chief Executive
Officer/President of the Corporation shall have the following powers and duties:
(a) He shall be the Chief Executive Officer and President of the
Corporation, and, subject to the directions of the Board of Directors,
shall have general charge of the business, affairs and property of the
Corporation on a day-to-day basis; charge of implementing strategic
direction for the Corporation; and general supervision over all of the
Corporation's officers, employees and agents.
<PAGE> 46
(b) At the request of the Chairman of the Board, or in his
absence or disability, the Chief Executive Officer shall perform all of
the duties of the Chairman of the Board and, when so acting, shall have
all of the powers and be subject to all of the restrictions upon the
powers of the Chairman of the Board.
(c) Subject to the direction of the Board of Directors, he shall
exercise all powers and perform all duties incident to the office of the
President of the Corporation, and shall exercise such other powers and
perform such other duties as from time-to-time may be assigned to him by
the Board. References to the "President" in these Bylaws shall be deemed
references to the Chief Executive Officer.
(d) He shall perform such duties as the Board of Directors shall
from time-to-time assign to him.
Section 6.6 Chairman of the Board. The Chairman of the Board shall have
the following powers and duties:
(a) He shall hold a non officer position.
(b) He shall perform such duties as may be assigned to him by
the Board.
(c) He shall be the Chairman and shall conduct each of the Board
of Directors meetings.
Section 6.7 Executive Vice Presidents/Vice Presidents. Each Executive
Vice President or Vice President shall perform such duties as from time-to-time
shall be assigned to him by Chief Operating Officer or the Board of Directors.
Any Executive Vice President or Vice President may sign certificates
representing shares of the Corporation of issuance of which shall have been
authorized by the Board of Directors.
Section 6.8 Secretary. The Secretary shall attend all sessions of the
Board of Directors and all meetings of the stockholders and record all votes and
the minutes of all proceedings in a book to be kept for that purpose and shall
perform like duties for any committee when required. In the event the Secretary
is absent from such session or meeting, the presiding officer at such session or
meeting shall appoint another person to record the votes and minutes of said
proceedings. Except as otherwise provided herein, the Secretary shall give, or
cause to be given, notice of all meetings of the stockholders and special
meetings of the Board of Directors, and shall perform such other duties as may
be prescribed by the Board of Directors or Chief Executive Officer or President,
under whose supervision the Secretary shall be. The Secretary shall keep in safe
custody the seal of the Corporation and, when authorized by the Chief Executive
officer or the Board of Directors, affix the same to any instrument requiring
it, and, when so affixed, it shall be attested by the signature of the Secretary
or by the signature of the Chief Financial Officer or an Assistant Secretary.
Section 6.9 Assistant Secretaries. Each Assistant Secretary shall have
only such powers and perform only such duties as the Board of Directors may from
time to time prescribe or as the Chief Executive Officer may from time to time
delegate.
Section 6.10 Chief Financial Officer. The Chief Financial Officer shall
have the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements of the Corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. The Chief Financial Officer shall disburse the funds of the
Corporation as may be ordered by the Chief Executive Officer or the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the Chief Executive Officer, the President and directors, at the regular
meetings of the Board of Directors, or whenever they may require it, an account
of all the Chief
<PAGE> 47
Financial Officer's transactions as Chief Financial Officer and of the financial
condition of the Corporation, and shall perform such other duties as the Board
of Directors may prescribe. If required by the Board of Directors, the Chief
Financial Officer shall give the Corporation a bond in such form, in such sum,
and with such surety or sureties as shall be satisfactory to the Board of
Directors for the faithful performance of the duties of the office of Chief
Financial Officer and for the restoration to the Corporation, in case of the
Chief Financial Officer's death, resignation, retirement or removal from office,
of all books, papers, vouchers, money, and other property of whatever kind in
the Chief Financial Officer's possession or under the Chief Financial Officer's
control belonging to the Corporation. The Chief Financial Officer shall also be
the principal accounting officer of the Corporation.
Section 6.11 Other Officers. The Board of Directors may appoint such
other officers and agents as it shall deem necessary who shall be appointed for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
ARTICLE 7
CERTIFICATES REPRESENTING SHARES
Section 7.1 Certificates. The shares of the Corporation shall be
represented by certificates in such form as shall be determined by the Board of
Directors. Such certificates shall be consecutively numbered and shall be
entered in the books of the Corporation as they are issued. Each certificate
shall state on the face thereof the holder's name, the number and class of
shares, and the par value of such shares or a statement that such shares are
without par value. Each certificate shall be signed by the President or a Vice
President and by the Secretary or an Assistant Secretary and may be sealed with
the seal of the Corporation or a facsimile thereof. Any or all of the signatures
on a certificate may be facsimile.
Section 7.2 Legends. The Board of Directors shall have the power and
authority to provide that certificates representing shares of stock shall bear
such legends as the Board of Directors shall authorize, including, without
limitation, such legends as the Board of Directors deems appropriate to assure
that the Corporation does not become liable for violations of federal or state
securities laws or other applicable law.
Section 7.3 Lost Certificates. The Corporation may issue a new
certificate representing shares in place of any certificate theretofore issued
by the Corporation, alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate to be
lost, stolen or destroyed. The Board of Directors, in its discretion and as a
condition precedent to the issuance thereof, may require the owner of such lost,
stolen or destroyed certificate, or such owner's legal representative, to
advertise the same in such manner as it shall specify and/or to give the
Corporation a bond in such form, in such sum, and with such surety or sureties
as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.
Section 7.4 Transfer of Shares. Shares of stock shall be transferable
only on the books of the Corporation by the holder thereof in person or by such
holder's duly authorized attorney. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate representing shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation or the transfer
agent of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 7.5 Registered Stockholders. The Corporation shall be entitled
to treat the holder of record of any share or shares of stock as the holder in
fact thereof for any and all purposes, and, accordingly, shall not be bound to
recognize any equitable or other claim or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by law.
<PAGE> 48
ARTICLE 8
INDEMNIFICATION
Section 8.1 Actions, Suits or Proceedings Other Than By or in the Right
of the Corporation. The Corporation shall, to the fullest extent authorized or
permitted by law, indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation) by reason of the fact that such
person is or was or has agreed to become a Director, officer, employee or agent
of the Corporation, or is or was serving or has agreed to serve at the request
of the Corporation as a Director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or by reason
of any action alleged to have been taken or omitted in such capacity, against
costs, charges, expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person or on
such person's behalf in connection with such action, suit or proceeding and any
appeal therefrom, if such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe such person's conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not meet the standards of conduct set forth in
this Section 8.1.
Section 8.2 Actions or Suits By or in the Right of the Corporation. The
Corporation shall, to the fullest extent authorized or permitted by law,
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that such
person is or was a Director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a Director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, against costs, charges and expenses (including
attorneys' fees) actually and reasonably incurred by such person or on such
person's behalf in connection with the defense or settlement of such action or
suit and any appeal therefrom, if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the Corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for gross negligence or misconduct in the performance of
such person's duty to the Corporation unless and only to the extent that the
Court of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of such
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such costs, charges and expenses
which the Court of Chancery or such other court shall deem proper.
Section 8.3 Indemnification for Costs, Charges and Expenses of
Successful Party. Notwithstanding the other provisions of this Article 8, to the
extent that a Director, officer, employee or agent of the Corporation has been
successful on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, in defense of any action, suit or
proceeding referred to in Sections 8.1 and 8.2, or in the defense of any claim,
issue or matter therein, such person shall be indemnified against all costs,
charges and expenses (including attorneys' fees) actually and reasonably
incurred by such person or on such person's behalf in connection therewith.
Section 8.4 Determination of Right to Indemnification. Any
indemnification under Sections 8.1 and 8.2 (unless ordered by a court) shall be
paid by the Corporation unless a determination is made (a) by the Board of
Directors by a majority vote of a quorum consisting of Directors who were not
parties to such action, suit or proceeding, or (b) if such a quorum is not
obtainable, or even if obtainable a quorum of disinterested Directors so
directs, by independent legal counsel in a written opinion, or (c) by the
stockholders, that indemnification of the Director, officer, employee or agent
is not proper in the circumstances because such person has not met the
applicable standards of conduct set forth in Sections 8.1 and 8.2.
Section 8.5 Advance of Costs, Charges and Expenses. Costs, charges and
expenses (including attorneys fees) incurred by a person referred to in Sections
8.1 and 8.2 in defending a civil or criminal action,
<PAGE> 49
suit or proceeding (including investigations by any government agency and all
costs, charges and expenses incurred in preparing for any threatened action,
suit or proceeding) shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding; provided, however, that the
payment of such costs, charges and expenses incurred by a Director or officer in
such person's capacity as a Director or officer (and not in any other capacity
in which service was or is rendered by such person while a Director or officer)
in advance of the final disposition of such action, suit or proceeding shall be
made only upon receipt of an undertaking by or on behalf of the Director or
officer to repay all amounts so advanced in the event that it shall ultimately
be determined that such Director or officer is not entitled to be indemnified by
the Corporation as authorized in this Article 8. No security shall be required
for such undertaking and such undertaking shall be accepted without reference to
the recipient's financial ability to make repayment. The repayment of such
charges and expenses incurred by other employees and agents of the Corporation
which are paid by the Corporation in advance of the final disposition of such
action, suit or proceeding as permitted by this Section 8.5 may be required upon
such terms and conditions, if any, as the Board of Directors deems appropriate.
The Board of Directors may, in the manner set forth above, and subject to the
approval of such Director, officer, employee or agent of the Corporation,
authorize the Corporation's counsel to represent such person, in any action,
suit or proceeding, whether or not the Corporation is a party to such action,
suit or proceeding.
Section 8.6 Procedure for Indemnification. Any indemnification under
Sections 8.1, 8.2 or 8.3 or advance of costs, charges and expenses under Section
8.5 shall be made promptly, and in any event within 30 days, upon the written
request of the Director, officer, employee or agent directed to the Secretary of
the Corporation. The right to indemnification or advances as granted by this
Article 8 shall be enforceable by the Director, officer, employee or agent in
any court of competent jurisdiction if the Corporation denies such request, in
whole or in part, or if no disposition thereof is made within 30 days. Such
person's costs and expenses incurred in connection with successfully
establishing such person's right to indemnification or advances, in whole or in
part, in any such action shall also be indemnified by the Corporation. It shall
be a defense to any such action (other than an action brought to enforce a claim
for the advance of costs, charges and expenses under Section 8.5 where the
required undertaking, if any, has been received by the Corporation) that the
claimant has not met the standard of conduct set forth in Sections 8.1 or 8.2,
but the burden of proving that such standard of conduct has not been met shall
be on the Corporation. Neither the failure of the Corporation (including its
Board of Directors, its independent legal counsel, and its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because such
person has met the applicable standard of conduct set forth in Sections 8.1 and
8.2, nor the fact that there has been an actual determination by the Corporation
(including its Board of Directors, its independent legal counsel, and its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
Section 8.7 Other Rights; Continuation of Right to Indemnification. The
indemnification provided by this Article 8 shall not be deemed exclusive of any
other rights to which a person seeking indemnification may be entitled under any
law (common or statutory), agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action in such person's official capacity and
as to action in another capacity while holding office or while employed by or
acting as agent for the Corporation, and shall continue as to a person who has
ceased to be a Director, officer, employee or agent and shall inure to the
benefit of the estate, heirs, executors and administrators of such person. All
rights to indemnification under this Article 8 shall be deemed to be a contract
between the Corporation and each Director, officer, employee or agent of the
Corporation who serves or served in such capacity at any time while this Article
8 is in effect. No amendment or repeal of this Article 8 or of any relevant
provisions of the Delaware General Corporation Law or any other applicable laws
shall adversely affect or deny to any Director, officer, employee or agent any
rights to indemnification which such person may have, or change or release any
obligations of the Corporation, under this Article 8 with respect to any costs,
charges, expenses (including attorneys' fees), judgments, fines, and amounts
paid in settlement which arise out of an action, suit or proceeding based in
whole or substantial part on any act or failure to act, actual or alleged, which
takes place before or while this Article 8 is in effect. The provisions of this
Section 8.7 shall apply to any such action, suit or proceeding whenever
commenced, including any such action, suit or proceeding commenced after any
amendment or repeal of this Article 8.
<PAGE> 50
Section 8.8 Construction. For purposes of this Article 8:
(i) "the Corporation" shall include any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation
or merger which, if its separate existence had continued, would have had
power and authority to indemnify its Directors, officers, and employees
or agents, so that any person who is or was a Director, officer,
employee or agent of such constituent corporation, or is or was serving
at the request of such constituent corporation as a Director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the
provisions of this Article 8 with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued;
(ii) "Other enterprises" shall include employee benefit plans,
including, but not limited to, any employee benefit plan of the
Corporation;
(iii) "Serving at the request of the Corporation" shall include
any service which imposes duties on, or involves services by, a
Director, officer, employee, or agent of the Corporation with respect to
an employee benefit plan, its participants, or beneficiaries, including
acting as a fiduciary thereof;
(iv) "fines" shall include any penalties and any excise or
similar taxes assessed on a person with respect to an employee benefit
plan;
(v) A person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the Corporation" as
referred to in Sections 8.1 and 8.2; and
(vi) Service as a partner, trustee or member of management or
similar committee of a partnership or joint venture, or as a Director,
officer, employee or agent of a corporation which is a partner, trustee
or joint venturer, shall be considered service as a Director, officer,
employee or agent of the partnership, joint venture, trust or other
enterprise.
Section 8.9 Savings Clause. If this Article 8 or any portion hereof
shall be invalidated on any ground by a court of competent jurisdiction, then
the Corporation shall nevertheless indemnify each Director, officer, employee
and agent of the Corporation as to costs, charges and expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement with respect
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Corporation, to the
full extent permitted by any applicable portion of this Article 8 that shall not
have been invalidated and to the full extent permitted by applicable law.
Section 8.10 Insurance. The Corporation shall purchase and maintain
insurance on behalf of any person who is or was or has agreed to become a
Director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a Director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against such person and incurred by such person
or on such person's behalf in any such capacity, or arising out of such person's
status as such, whether or not the Corporation would have the power to indemnify
such person against such liability under the provisions of this Article 8,
provided that such insurance is available on acceptable terms as determined by a
vote of a majority of the entire Board of Directors.
<PAGE> 51
ARTICLE 9
GENERAL PROVISIONS
Section 9.1 Dividends. The Board of Directors, subject to any
restrictions contained in the Certificate of Incorporation, may declare
dividends upon the shares of the Corporation's capital stock. Dividends may be
paid in cash, in property, or in shares of the Corporation, subject to the
provisions of the General Corporation Law of Delaware and the Certificate of
Incorporation.
Section 9.2 Reserves. By resolution of the Board of Directors, the
directors may set apart out of any of the funds of the Corporation such reserve
or reserves as the directors from time to time, in their discretion, think
proper to provide for contingencies, or to equalize dividends, or to repair or
maintain any property of the Corporation, or for such other purposes as the
directors shall think beneficial to the Corporation, and the directors may
modify or abolish any such reserve in the manner in which it was created.
Section 9.3 Authority to Sign Instruments. Any checks, drafts, bills of
exchange, acceptances, bonds, notes or other obligations or evidences of
indebtedness of the Corporation, and all deeds, mortgages, indentures, bills of
sale, conveyances, endorsements, assignments, transfers, stock powers, or other
instruments of transfer, contracts, agreements, dividend and other orders,
powers of attorney, proxies, waivers, consents, returns, reports, certificates,
demands, notices, or documents and other instruments or writings of any nature
whatsoever may be signed, executed, verified, acknowledged, and delivered, for
and in the name and on behalf of the Corporation, by such officers, agents, or
employees of the Corporation, or any of them, and in such manner, as from time
to time may be authorized by the Board of Directors, and such authority may be
general or confined to specific instances.
Section 9.4 Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 9.5 Seal. The corporate seal shall have inscribed thereon the
name of the Corporation. Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
Section 9.6 Transactions With Directors and Officers. No contract or
other transaction between the Corporation and any other corporation and no other
act of the Corporation shall, in the absence of fraud, be invalidated or in any
way affected by the fact that any of the directors of the Corporation are
pecuniarily or otherwise interested in such contract, transaction or other act,
or are directors or officers of such other corporation. Any director of the
Corporation, individually, or any firm or corporation of which any such director
may be a member, may be a party to, or may be pecuniarily or otherwise
interested in, any contract or transaction of the Corporation; provided,
however, that the fact that the director, individually, or the firm or
corporation is so interested shall be disclosed or shall have been known to the
Board of Directors or a majority of such members thereof as shall be present at
any annual meeting or at any special meeting, called for that purpose, of the
Board of Directors at which action upon any such contract or transaction shall
be taken. Any director of the Corporation who is so interested may be counted in
determining the existence of a quorum at any such annual or special meeting of
the Board of Directors which authorizes such contract or transaction. Every
director of the Corporation is hereby relieved from any disability which might
otherwise prevent such director from carrying out transactions with or
contracting with the Corporation for the benefit of such director or any firm,
corporation, trust or organization in which or with which such director may be
in anywise interested or connected.
Section 9.7 Amendments. These Bylaws may be amended or repealed, or new
Bylaws may be adopted, only (i) by the Board of Directors at any duly held
meeting or pursuant to a written consent in lieu of such meeting, or (ii) by the
holders of a majority of the shares entitled to vote thereon represented at any
duly held meeting of stockholders, provided that notice of such proposed action
shall have been contained in the notice of any such meeting, or pursuant to a
written consent signed by the holders of a majority of the outstanding shares
entitled to vote thereon.
<PAGE> 52
CERTIFICATE BY SECRETARY
The undersigned, being the secretary of the Corporation, hereby
certifies that the foregoing Bylaws were duly adopted by the Directors and the
Stockholders of the Corporation effective on October , 2000.
IN WITNESS WHEREOF, I have signed this certification as of the day
of October, 2000.
/s/ Wayne J. Lovett
-----------------------------------
Wayne J. Lovett, Secretary
<PAGE> 53
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Merger Agreement"), is entered
into as of ____________, 2000, by and between Mercury Air Group, Inc., a New
York corporation ("Mercury New York"), and Mercury Air Group, Inc., a Delaware
corporation ("Mercury Delaware").
WITNESSETH:
WHEREAS, Mercury New York is a corporation duly organized and existing
under the laws of the State of New York having at the date hereof authorized
capital stock of 18,000,000 shares of common stock, par value $.01 per share
("New York Common Stock"), and 3,000,000 shares of preferred stock, par value
$.01 per share ("New York Preferred Stock") of which ____________ shares of New
York Common Stock and shares of New York Preferred Stock are issued and
outstanding; and
WHEREAS, Mercury Delaware is a corporation duly organized and existing
under the laws of the State of Delaware having at the date hereof authorized
capital stock of 18,000,000 shares of common stock, par value $.01 per share
("Delaware Common Stock"), and 3,000,000 shares of preferred stock, par value
$.01 per share ("Delaware Preferred Stock") of which 100 shares of Delaware
Common Stock are issued and outstanding and held by Mercury New York and no
shares of Delaware Preferred Stock are issued outstanding; and
WHEREAS, Mercury New York desires to reincorporate into the State of
Delaware by merging with and into Mercury Delaware with Mercury Delaware
continuing as the surviving corporation in such merger, upon the terms and
subject to the conditions herein set forth and in accordance with the laws of
the State of Delaware.
NOW, THEREFORE, in consideration of the premises and mutual agreements,
provisions and covenants contained herein, and subject to the terms and
conditions hereof, the parties hereto do hereby agree as follows:
ARTICLE 1
PRINCIPAL TERMS OF THE MERGER
Section 1.1. Merger of Mercury New York into Mercury Delaware. At the
Effective Time of the Merger (as defined in Section 1.2 hereof), Mercury New
York shall merge with and into Mercury Delaware in accordance with the New York
Business Corporation Law (the "NYBCL") and the General Corporation Law of the
State of Delaware (the "DGCL"). The separate existence of Mercury New York shall
thereupon cease and Mercury Delaware shall be the surviving corporation
(hereinafter sometimes referred to as the "Surviving Corporation") and shall
continue its corporate existence under the laws of the State of Delaware.
Section 1.2. Effective Time of the Merger. The Merger shall become
effective upon the date Certificate of Merger is filed by the Surviving
Corporation with the Department of State of the State of New York pursuant to
Section 907(c)(2) of the NYBCL, or the date a Certificate of Ownership and
Merger is filed by the Surviving Corporation with the Secretary of State of the
State of Delaware pursuant to Section 253 of the DGCL whichever filing occurs
last (such date being hereinafter referred to as the "Effective Time of the
Merger").
<PAGE> 54
Section 1.3. Effects of the Merger. At the Effective Time of the Merger,
the Merger shall have the effects specified in the NYBCL, the DGCL and this
Merger Agreement.
Section 1.4. Certificate of Incorporation. At the Effective Time of the
Merger, the Certificate of Incorporation of Mercury Delaware as in effect
immediately prior to the Effective Time of the Merger shall become the
Certificate of Incorporation of the Surviving Corporation until duly amended in
accordance with its terms and as provided by the DGCL.
Section 1.5. Bylaws. At the Effective Time of the Merger, the Bylaws of
Mercury Delaware as in effect immediately prior to the Effective Time of the
Merger shall become the Bylaws of the Surviving Corporation until duly amended
in accordance with their terms and as provided by the DGCL.
Section 1.6. Directors and Officers. At the Effective Time of the
Merger, the directors and officers of Mercury New York in office at the
Effective Time of the Merger shall retain their positions as the directors and
officers, respectively, of the Surviving Corporation, each of such directors and
officers to hold office, subject to the applicable provisions of the Certificate
of Incorporation and Bylaws of the Surviving Corporation and the DGCL, until his
or her successor is duly elected or appointed and shall qualify, or until his or
her earlier death, incompetency or removal.
APPENDIX "C"
<PAGE> 55
ARTICLE 2
CONVERSION AND CANCELLATION OF STOCK
Section 2.1. Conversion. At the Effective Time of the Merger, each share
of New York Common Stock issued and outstanding immediately prior to the
Effective Time, shall by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and become one share of Delaware Common
Stock. At the Effective Time, each option and warrant to purchase shares of New
York Common Stock outstanding immediately prior to the Effective Time shall be
automatically converted into options and warrants to acquire an equal number of
shares of Delaware Common Stock.
Section 2.2. Cancellation. At the Effective Time of the Merger, each
share of Delaware Common Stock issued and outstanding immediately prior to the
Effective Time of the Merger and held by Mercury New York shall be canceled
without any consideration being issued or paid therefor.
Section 2.3 Exchange of Certificates. At any time on or after the
Effective Time of the Merger, the holders of New York Common Stock will be
entitled, upon surrender of such certificates to the Surviving Corporation, to
receive in exchange therefor one or more new stock certificates evidencing
ownership of the same number of shares of Delaware Common Stock. If any
certificate representing shares of Delaware Common Stock is to be issued in a
name other than that in which the certificate surrendered in exchange therefor
is registered, it shall be a condition of the issuance thereof that the
certificate or other writing so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange shall pay to the Surviving Corporation or its transfer agent any
transfer or other taxes required by reason of the issuance of a certificate
representing shares of Delaware Common Stock in any name other than that of the
registered holder of the certificate surrendered, or otherwise required, or
shall establish to the satisfaction of the transfer agent that such tax has been
paid or is not payable.
ARTICLE 3
CONDITIONS
Consummation of the Merger is subject to the satisfaction at or prior to
the Effective Time of the Merger of the following conditions:
Section 3.1. Approval. This Merger Agreement and the Merger shall have
been adopted and approved by Mercury New York in the manner provided in Section
905 of the NYBCL and by Mercury Delaware in the manner provided in Section 253
of the DGCL.
Section 3.2. Third Party Consents. The parties shall have received all
required consents to and approvals of the Merger.
ARTICLE 4
MISCELLANEOUS
Section 4.1. Amendment. This Merger Agreement may be amended, modified
or supplemented, in whole or in part, at any time prior to the Effective Time of
the Merger with the mutual consent of the Board of Directors of Mercury New York
and the Board of Directors of Mercury Delaware to the full extent permitted
under applicable law.
Section 4.2. Termination. This Merger Agreement may be terminated at any
time prior to the Effective Time of the Merger by either the Board of Directors
of Mercury New York or the Board of Directors of Mercury Delaware, without any
action of the stockholders of Mercury New York or Mercury Delaware,
notwithstanding the approval of this Merger Agreement by the stockholders or
Boards of Directors of either Mercury New York or Mercury Delaware.
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<PAGE> 56
Section 4.3. Necessary Actions, etc. If at any time after the Effective
Time of the Merger, the Surviving Corporation shall consider that any
assignments, transfers, deeds or other assurances in law are necessary or
desirable to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, title to any property or rights of Mercury New York, Mercury New
York and its directors and officers at the Effective Time of the Merger shall
execute and deliver such documents and do all things necessary and proper to
vest, perfect or confirm title to such property or rights in the Surviving
Corporation, and the officers and directors of the Surviving Corporation are
fully authorized in the name of Mercury New York or otherwise to take any and
all such action.
Section 4.4. Counterparts. This Merger Agreement may be executed in any
number of counterparts, all of which shall be considered to be an original
instrument.
Section 4.5. Governing Law. This Merger Agreement shall be construed in
accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties to this Merger Agreement have executed
this Merger Agreement on and as of the day first written above.
MERCURY AIR GROUP, INC.,
a New York corporation
By:
--------------------------------------
Joseph A. Czyzyk
President and Chief Executive Officer
MERCURY AIR GROUP, INC.,
a Delaware corporation
By:
--------------------------------------
Joseph A. Czyzyk
President and Chief Executive Officer
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<PAGE> 57
Audit Committee Charter
ORGANIZATION
The Audit Committee of the board of directors shall be comprised of a
least three directors who are independent of management and the Company. Members
of the audit committee shall be considered independent if they have no
relationship to the Company that may interfere with the exercise of their
independence from management and the Company. All audit committee members will
be financially literate, and at least one member will have accounting or related
financial management expertise.
STATEMENT OF POLICY
The audit committee shall provide assistance to the directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the company, and the quality and integrity of financial reports of the company.
In so doing, it is the responsibility of the audit committee to maintain free
and open communication between the directors, the independent auditors, the
internal auditors, and the financial management of the company.
RESPONSIBILITIES
In carrying out its responsibilities, the audit committee believes its
policies and procedures should
APPENDIX "D"
<PAGE> 58
remain flexible, in order to best react to changing conditions and to ensure to
the directors and shareholders that the corporate accounting and reporting
practices of the company are in accordance with all requirements and are of the
highest quality.
In carrying out these responsibilities, the audit committee will:
- Obtain the full board of directors' approval to this Charter and
review and reassess this Charter as conditions dictate (at least
annually).
- Review and recommend to the directors the independent auditors to
be selected to audit the financial statements of the company ant
its divisions and subsidiaries.
- Have a clear understanding with the independent auditors that
they are ultimately accountable to the board of directors and the
audit committee, as the shareholders' representatives, who have
the ultimate authority in deciding to engage, evaluate, and if
appropriate, terminate their services.
- Review and concur with management's appointment, termination or
replacement of the director of internal audit.
- Meet with the independent auditors and financial management of
the Company to review the scope of the proposed audit and timely
quarterly reviews for the current year and the procedures to be
utilized, the adequacy of the independent auditor's compensation,
and at the conclusion thereof review such audit or review,
including any comments or recommendations of the independent
auditors.
- Review with the independent auditors, the company's internal
auditor, and financial and accounting personnel, the adequacy and
effectiveness of the accounting and financial controls of the
company, and elicit any recommendations for the improvement of
such internal controls or particular areas where new or more
detailed controls or procedures are desirable. Particular
emphasis should be given to expose any payments, transactions, or
procedures that might be deemed illegal or otherwise improper.
Further, the committee periodically should review company policy
statements to determined their adherence to the code of conduct.
- Review reports received from regulators and other legal and
regulatory matters that may have a material effect on the
financial statements or related compliance policies.
- Review the internal audit function of the company including the
independence and authority of its reporting obligations, the
proposed audit plans for the coming year, and the coordination of
such with the independent auditors.
- Inquire of management, the internal auditor, and the independent
auditors about significant risks or exposure and assess the steps
management has taken to minimize such risks to the Company.
- Receive prior to each meeting, a summary of findings from
completed internal audits and a progress report on the proposed
internal audit plan, with explanations for any deviations
<PAGE> 59
from the original plan.
- Review the quarterly financial statements with financial
management and the independent auditors prior to the filing of
the Form 10-Q (or prior to the press release of the results, if
possible) to determine that the independent auditors do not take
exception to the disclosure and content of the financial
statements, and discuss any other matters required to be
communicated to the committee by the auditors. The chair of the
committee may represent the entire committee for purposes of this
review.
- Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to
determine that the independent auditors are satisfied with the
disclosure and content of the financial statements to be
presented to the shareholders. Review with financial management
and the independent auditors the results of their timely analysis
of significant financial reporting issues and practices,
including changes in, or adoptions of, accounting principles and
disclosure practices and discuss any other matters required to be
communicated to the committee by the auditors. Also review with
financial management and the independent auditors their judgments
about the quality, not just acceptability, of accounting
principles and the clarity of the financial disclosure practices
used or proposed to be used, and particularly, the degree of
aggressiveness or conservatism of the organization's accounting
principles and underlying estimates, and other significant
decisions made in preparing the financial statements.
- Provide sufficient opportunity for the internal and independent
auditors to meet with the members of the audit committee without
members of the management present.
- Among the items to be discussed in these meetings are the
independent auditor's evaluation of the company's financial,
accounting, and auditing personnel, and the cooperation that the
independent auditors received during the course of audit.
- Review accounting and financial human resources and succession
planning within the Company.
- Report results of the annual audit to the board of directors. If
requested by the board, invite the independent auditors to attend
the full board of directors meeting to assist in reporting the
results of the annual audit or to answer other directors's
questions (alternatively, the other directors, may be invited to
attend the audit committee meeting during which the results of
the annual audit are reviewed).
- On an annual basis, obtain from independent auditors a written
communication delineating all their relationships and
professional services as required by Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committee .
In addition, review with the independent auditors the nature and
scope of any disclosed relationship or professional services and
take, or recommend that the board of directors take , appropriate
action to ensure the continuing independence of the auditors.
- Review the report of the audit committee in the annual report to
shareholders and the Annual Report on Form 10-K disclosing
whether or not the committee had reviewed and discussed with
management and the independent auditors, as well as discussed
within the committee (without management or the independent
auditors present), the financial statements and the quality of
accounting principles and significant judgments affecting the
financial statements . In addition, disclose the committee's
conclusion on the fairness of presentation of the financial
statements in conformity with GAAP based on those
<PAGE> 60
discussions.
- Submit the minutes of all meeting of the audit committee to, or
discuss the matters discussed at each committee meeting with, the
board of directors.
- Investigate any matter brought to its attention within the scope
of its duties, with the power to retain outside counsel for this
procedure if in its judgment, that is appropriate.
- Review the Company's disclosure in the proxy statement for its
annual meeting of shareholders that describes that the Committee
has satisfied its responsibilities under this Charter, for the
prior year. In addition, include a copy of this charter in the
annual report to shareholders or the proxy statement at least
triennially of the year after any significant amendment to the
Charter.
<PAGE> 61
MERCURY AIR GROUP, INC.
-----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
-----------------------
TO BE HELD DECEMBER 14, 2000
The undersigned shareholder of Mercury Air Group, Inc., a New York
corporation (the "Company"), acting under the New York General Corporation law,
hereby constitutes and appoints Joseph A. Czyzyk and Randolph E. Ajer, and each
of them the attorneys and proxies of the undersigned, each with the power of
substitution, to attend and act for the undersigned at the Annual Meeting of
Shareholders of the Company (the "Meeting") to be held on December 14, 2000 at
10:00 a.m., Pacific Standard Time, at the principal office of the Company
located at 5456 McConnell Avenue, Los Angeles, California 90066 and at any
adjournments thereof, and in connection therewith to vote and represent all of
the shares of Common Stock of the Company which the undersigned would be
entitled to vote, as specified on the reverse side.
Said attorney and proxies, and each of them, shall have all the powers
which the undersigned would have if acting in person. The undersigned hereby
revokes any other proxy to vote at the Meeting and hereby ratifies and confirms
that said attorneys and proxies, and each of them, are specifically authorized
to vote in accordance with their best judgment with respect to matters incident
to the solicitation of this Proxy; and with respect to the election of any
person as a director if a bona fide nominee for that office is named in the
Proxy Statement and such nominee is unable to serve or for good cause will not
serve.
IMPORTANT - PLEASE SIGN ON THE OTHER SIDE
<PAGE> 62
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<S><C>
| |
V PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED V
------------------------------------------------------------------------------------------------------------------------------------
A PLEASE MARK YOUR
[X] VOTE AS IN THIS
EXAMPLE.
FOR WITHHOLD
all nominees AUTHORITY
(except as marked to to vote for
the contrary below). all nominees FOR AGAINST ABSTAIN
1. To elect five NOMINEES: 2. To consider and [ ] [ ] [ ]
directors to [ ] [ ] Philip J. Fagan, Jr., M.D. vote upon a pro-
serve until the Joseph A. Czyzyk posed reincorporation that would
next Annual Meeting of Shareholders and until their Fredrick H. Kopko, Jr. change the Company's state of
successors are elected and qualified. Harold T. Bowling incorporation from New York to
Robert L. Lisi Delaware.
Instructions: To withhold authority to vote for any
nominee, write that nominee's name in the space provided. 3. To transact such other business as
may properly come before the Meeting
_________________________________________________________ or any adjournment thereof.
A MAJORITY OF THE NAMED PROXIES
PRESENT AT THE MEETING, EITHER IN PERSON
OR BY SUBSTITUTE (OR IF ONLY ONE THEREOF
SHALL BE PRESENT AND ACT, THEN THAT
ONE), SHALL HAVE AND EXERCISE ALL THE
POWERS OF SAID PROXIES HEREUNDER. THIS
PROXY WILL BE VOTED IN ACCORDANCE WITH
THE CHOICES SPECIFIED BY THE UNDERSIGNED
BELOW. IF NO INSTRUCTIONS TO THE
CONTRARY ARE INDICATED HEREON, THIS
PROXY WILL BE TREATED AS A GRANT OF
AUTHORITY FOR THE NOMINEES AND PROPOSALS
NAMED ABOVE.
The undersigned hereby acknowledges
receipt of a copy of the Notice of
Annual Meeting and Proxy Statement and a
copy of the Company's Annual Report to
Shareholders for the year ended
June 30, 2000.
Check here if you plan to attend the Meeting. [ ]
Shareholder's Signature(s) __________________________________________ __________________________________________ DATE __________
IMPORTANT. Sign your name or names on the signature line in the same way it is stenciled on this proxy.
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