<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED MARCH 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 1-9533
INTERNATIONAL RECOVERY CORP.
(Exact name of registrant as specified in its charter)
Florida 59-2459427
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
700 South Royal Poinciana Blvd., Suite 800, Miami Springs, Florida 33166
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including area code: (305) 884-2001
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange
on which registered:
Common Stock, par
value $.01 per share New York Stock Exchange
Pacific Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K [ ]
The aggregate market value of the voting stock (which consists solely of shares
of common stock) held by non-affiliates of the registrant was $87,281,000
(computed by reference to the closing sale price as of May 15, 1995).
The registrant had 5,281,679 outstanding shares of common stock, par value $.01
per share, as of May 15, 1995.
Documents incorporated by reference:
Part III - Definitive Proxy Statement for the 1995 Annual Meeting of
Shareholders.
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TABLE OF CONTENTS
Page
ITEM 1. Business 1
General 1
History 1
Aviation Fuel Services 2
Marine Fuel Services 3
Oil Recycling 4
Potential Liability and Insurance 5
Regulation 6
ITEM 2. Properties 9
ITEM 3. Legal Proceedings 11
ITEM 4. Submission of Matters to a Vote
of Security Holders 11
ITEM 5. Market for Registrant's Common
Equity and Related Stockholder
Matters 12
ITEM 6. Selected Financial Data 13
ITEM 7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 16
Results of Operations 16
Liquidity and
Capital Resources 21
ITEM 8. Financial Statements and
Supplementary Data 24
ITEM 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure 24
ITEM 10. Directors and Executive Officers
of the Registrant 25
ITEM 11. Executive Compensation 25
ITEM 12. Security Ownership of Certain
Beneficial Owners and Management 25
ITEM 13. Certain Relationships and Related
Transactions 25
ITEM 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K 26
(i)
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PART I
ITEM 1. BUSINESS
General
International Recovery Corp. (the "Company"), is involved in three
principal businesses. The Company markets aviation and marine fuel and
recycles used oil.
In its aviation fueling business, the Company extends credit and
provides single-supplier convenience, 24 hour service, and
competitively-priced aviation fuel to cargo and passenger airlines, and
to charter, corporate, and private aircraft. The Company sells aviation
fuel to its customers at more than 1,100 airports located throughout the
world.
In its marine fueling business, the Company markets marine fuel to
a broad base of customers covering all market segments, including major
international container and tanker fleets, time charter operators,
as well as military vessels. Fueling services include credit terms and are
available 24 hours a day in over 1,000 ports, and in over 135 countries.
In its oil recycling business, the Company collects used oil
throughout the Southern and Mid-Atlantic United States from generators
which include service stations, quick lube shops, automobile
dealerships, and industrial, governmental, marine and utility
generators. The Company recycles used oil into various fuel products
and sells the recycled oil to industrial and commercial customers.
Financial information with respect to the Company's business
segments and foreign operations is provided in Note 8 in the
accompanying financial statements.
History
The Company was incorporated in Florida in July 1984. Its
executive offices are located at 700 South Royal Poinciana Boulevard,
Suite 800, Miami Springs, Florida 33166, and its telephone number at
this address is (305) 884-2001. The Company presently conducts its
aviation fueling business through four subsidiaries with principal
offices in Florida, England, and Singapore; the Company conducts its
marine fueling business through three subsidiaries with principal
offices in New York, California, England and Singapore, and its oil
recycling business is conducted through six subsidiaries with offices in
Florida, Louisiana, Georgia, Maryland, and Delaware. See "Item 2
PROPERTIES" for a list of principal offices by business and "Exhibit 21
- - Subsidiaries of the Registrant".
In December 1986, the Company entered the aviation fueling business
with the acquisition of Advance Petroleum, Inc. now doing business as
World Fuel Services of FL. In October 1989, the Company
expanded its aviation fueling capabilities by acquiring JCo Energy
Partners, Ltd. and shortly thereafter renamed these operations
World Fuel Services, Inc.
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<PAGE>
The Company formed a subsidiary, International Petroleum Corp. of
Delaware which began operations in April 1993, upon the
completion of its used oil and water recycling plant in Wilmington,
Delaware.
In August 1994, the Company began operations in Ecuador through a joint
venture which enables the Company to provide point-to-point aviation fuel sales
within Ecuador. See Note 7 in the accompanying financial statements for
additional information.
In January 1995, the Company entered the marine fuel business through
the acquisition of the Trans-Tec group of companies. The Company acquired
substantially all of the assets and assumed certain liabilities of
Trans-Tec Services, Inc., a New York corporation, and Trans-Tec Servicios,
S.A., a Costa Rica corporation, and acquired all of the outstanding stock
of Trans-Tec Services (UK), Ltd., a United Kingdom corporation ("UK"). The
UK company owns Trans-Tec Services (Singapore) PTE., Ltd. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
and Note 1 in the accompanying financial statements for additional
information.
Aviation Fuel Services
The Company markets aviation fuel to cargo and passenger airlines, and
to aircraft operated by charters, corporations and private individuals. The
Company has developed an extensive network which enables it to fuel customers
at airports throughout the world.
In general, the aviation industry is capital intensive and highly
leveraged. Recognizing the financial risks of the airline industry, fuel
suppliers generally refrain from extending unsecured lines of credit to smaller
airlines and avoid doing business with smaller airlines directly. Consequently,
most carriers either post a cash collateralized letter of credit or prepay for
fuel purchases. This impacts the airlines' working capital. The Company
recognizes that the extension of credit is a risk but also a significant area
of opportunity. Accordingly, the Company extends unsecured credit to many of
its customers.
The Company purchases its aviation fuel from various suppliers
worldwide. The Company's cost of fuel is generally tied to market-based
formulas or is government controlled. Anticipating future market
conditions, the Company may choose to enter into short term future
commitments fixing the cost of its purchases. The Company monitors these
positions daily and, when appropriate, unwinds the positions through end
market sales to aviation customers or through trading activities. The
Company is usually extended unsecured trade credit for its fuel purchases.
However, certain suppliers require a letter of credit. The Company may
pre-pay its fuel purchases to take advantage of financial discounts, or as
required to transact business in certain countries.
Outside of the United States, the Company generally does not maintain
fuel inventory and arranges to have the fuel delivered directly into the
customer's aircraft. The Company maintains fuel inventory at various
airports in Ecuador pursuant to a joint venture.
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In the United States, sales are made directly into a customer's
aircraft or the customer's designated storage with fuel provided by the
Company's suppliers or delivered from the Company's inventory. Inventory
is held at multiple locations in the United States for competitive reasons
and inventory levels are kept at an operating minimum.
The Company has arrangements with its suppliers and other third
parties for the delivery of fuel.
The primary risk in the Company's aviation fueling business is the
extension of unsecured trade credit. The Company's success in attracting
business has been due, in large part, to its willingness to extend credit on
an unsecured basis to customers which exhibit a higher credit risk profile
and would otherwise be required to pre-pay or post cash collaterized letters
of credit with their suppliers of fuel. The Company's management recognizes
that extending credit and setting appropriate reserves for receivables is
largely a subjective decision based on knowledge of the customer. Active
management of this risk is essential to the Company's success. A strong
capital position and liquidity provide the financial flexibility necessary to
respond to customer needs. Diversification of risk is difficult since the
Company sells primarily within the airline industry. The Company's
management meets regularly to evaluate credit exposure in the aggregate, and
by individual credit. This group is also responsible for setting and
maintaining credit standards and ensuring the overall quality of the credit
portfolio.
The level of credit granted to a customer is largely influenced by its
estimated fuel requirements for thirty days, and its credit history with the
Company for existing customers. This period of time represents the average
business cycle of the Company's typical customer. The Company regularly
monitors its credit portfolio by reviewing a customer's payment patterns and
estimated overall exposure, including estimated unbilled fuel sales. The
Company considers its credit portfolio to be of acceptable quality and has
established an allowance that in management's judgement is adequate to absorb
potential credit problems inherent in the portfolio as of March 31, 1995.
No single customer in this segment accounted for more than 10% of the
Company's consolidated revenue in the three fiscal years ended March 31,
1995. The Company currently employs 35 persons in its aviation fuel services
segment.
Marine Fuel Services
The Company, through its Trans-Tec subsidiaries which were acquired
effective January 1, 1995, markets marine fuel to a broad base of customers
covering all market segments, including international container and tanker
fleets, time charter operators, as well as military vessels. Fueling
services are provided at over 1,000 ports and in over 135 countries.
With strategic sales offices located in the United States, Singapore,
England, Korea, and Greece, Trans-Tec affords its customers global market
intelligence and rapid access to quality and competitively priced marine
fuel, 24 hours a day, every day of the year. The cost of fuel is a major
component of a vessel's operating overhead. Therefore, the need for cost
effective and professional fueling services is essential.
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As an increasing number of ship owners, time charter operators, and
suppliers look to outsource their marine fuel purchasing and/or marketing
needs, Trans-Tec's value added service has become an integral part of the oil
and transportation industries' push to shed non-core functions. Suppliers
use Trans-Tec's global sales, marketing and financial infrastructure to sell
a spot or ratable volume of product to a diverse, international purchasing
community. End customers use Trans-Tec's real time analysis of the
availability, quality, and price of marine fuels in ports worldwide to
maximize their competitive position.
In the majority of its transactions, Trans-Tec acts as a broker and as
a source of market information for the user, negotiates the transaction by
arranging the fuel purchase contract between the supplier and end user, and
expedites the arrangements for the delivery of fuel.
Trans-Tec also acts as a principal, or reseller, when it purchases the
fuel from a supplier, marks it up, and resells the fuel to a customer. The
Company holds no inventory and assumes no price risk; however, in most
instances the Company extends unsecured trade credit.
The Company's management meets regularly to evaluate credit exposure in
the aggregate, and by individual credit. This group is also responsible for
setting and maintaining credit standards and ensuring the overall quality of
the credit portfolio. The level of credit is largely influenced by a
customer's credit history with the Company, claims experience and payment
patterns.
No single customer in this segment accounted for more than 10% of the
Company's consolidated revenue in the fiscal year ended March 31, 1995. The
Company currently employs 48 persons in its marine fueling segment.
Oil Recycling
The Company, through its International Petroleum Corporation
subsidiaries ("IPC"), collects, blends, and recycles used oil and petroleum
contaminated water. The Company's recycled oil products are sold to
industrial and commercial customers.
IPC collects only non-hazardous waste oil, waste water, and petroleum
contaminated liquids from generators such as service stations, quick lube
shops, automobile dealerships, and industrial, governmental, marine, and
utility generators. The Company uses its own fleet of trucks to collect
approximately 40 percent of its needs from generators within close proximity
to its facilities. The balance is sourced from independent agents. Every
shipment is analyzed on-site or at the Company's laboratories to determine
its specifications and the treatment needed to convert the waste fluid into
marketable fuel products.
The Company has three recycling facilities. The facilities located in
Plant City, Florida and Wilmington, Delaware utilize a closed-loop, two stage
recycling process. The resulting recycled oil product is sold as is, or it
may be blended to customer specification into various non-hazardous oil
products. The Company's products range from commercial diesel fuel to #6
grade residual oil.
The Company's third recycling facility, located in New Orleans,
Louisiana, was opened in May 1994. This plant utilizes a batch recycling
process. The Company also has collection and transfer facilities in Atlanta,
Georgia and in Baltimore, Maryland, both of which have limited processing and
blending capabilities.
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<PAGE>
The used oil industry is highly fragmented and consists primarily of
small scale operators that collect and resell used oil, many of which lack
the necessary facilities to adequately test and recycle the oil. However,
the industry also consists of a few large-scale operators that have the
facilities to collect, re-refine, and market lubricating products.
During the three fiscal years ended March 31, 1995, none of the
Company's recycled fuel customers accounted for more than 10% of the
Company's consolidated revenue. The Company currently employs 106 persons in
the oil recycling segment.
Potential Liability and Insurance
The Company, through the use of subcontractors and its own operations,
transports, stores, or processes flammable aviation, marine and residual fuel
subjecting it to possible claims by employees, customers, regulators, and
others who may be injured. In addition, the Company may be held liable for
the clean-up costs of spills or releases of materials from its facilities or
vehicles, or for damages to natural resources arising out of such events.
The Company follows what it believes to be prudent procedures to protect its
employees and customers and to prevent spills or releases of these materials.
The Company's activities subject it to the risks of significant
potential liability under Federal and state statutes, common law, and
contractual indemnification agreements. The Company has general and
automobile liability insurance coverage, including the statutory Motor
Carrier Act/MCS 90 endorsement for sudden and accidental pollution.
In the aviation and marine fuel segments, the Company utilizes
subcontractors which provide various services to customers, including
intoplane fueling at airports, fueling of vessels in port and at sea, and
transportation and storage of fuel and fuel products. Although the Company
generally requires its subcontractors to carry liability insurance, not all
subcontractors carry adequate insurance. The Company's liability insurance
policy does not cover the acts or omissions of its subcontractors. If the
Company is held responsible for any liability caused by its subcontractors,
and such liability is not adequately covered by the subcontractor's
insurance, the Company will be adversely affected.
The Company has exited several environmental businesses which handled
hazardous wastes. These wastes were transported to various disposal
facilities and/or treated by the Company. The Company may be held liable as
a potentially responsible party for the clean-up of such disposal facilities
in certain cases pursuant to current Federal and state laws and regulations.
Due to the cost of insurance relative to potential exposure, tail coverages
were not purchased for businesses exited. The Company is currently
responsible to Federal and state environmental agencies for clean-up costs at
a site formerly operated by its subsidiary, Resource Recovery of America,
which has been sold by the Company.
The Company continuously reviews the adequacy of its insurance
coverages. However, the Company lacks coverage for various risks. A claim
arising out of the Company's activities, if successful and of sufficient
magnitude, could have a material adverse effect on the Company's financial
position or results of operations. See "Item 3 - Legal Proceedings",
appearing elsewhere in this report.
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<PAGE>
Regulation
The Company's operations are subject to substantial regulation by
Federal, state and local government agencies, including, but not limited to,
regulations which restrict the transportation, storage and disposal of
hazardous waste and the collection, transportation, processing, storage, use
and disposal of waste oil.
The principal U.S. Federal statutes affecting the business of the
Company and the markets it serves are as follows:
The Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("Superfund" or "CERCLA") establishes a program for Federally
directed response or remedial actions with respect to the uncontrolled
discharge of hazardous substances, pollutants or contaminants, including
waste oil, into the environment. The law authorizes the Federal government
either to seek a binding order directing responsible parties to undertake
such actions or authorizes the Federal government to undertake such actions
and then to seek compensation for the cost of clean-up and other damages
from potentially responsible parties. Congress established a
Federally-managed trust fund, commonly known as the Superfund, to fund
response and remedial actions undertaken by the Federal government. The
trust fund is used to fund Federally conducted actions when no financially
able or willing responsible party has been found.
The Superfund Amendments and Reauthorization Act of 1986 ("SARA")
adopted more detailed and stringent standards for remedial action at
Superfund sites, and clarified provisions requiring damage assessments to
determine the extent and monetary value of injury to natural resources. SARA
also provides a separate funding mechanism for the clean-up of underground
storage tanks.
The Resource Conservation and Recovery Act of 1976 ("RCRA") established
a comprehensive regulatory framework for the management of hazardous waste at
active facilities, complementing the Superfund program which addresses
inactive and abandoned waste sites. RCRA sets up a "cradle-to-grave" system
for the management of hazardous waste, imposing upon all parties who
generate, transport, treat, store or dispose of waste, above certain minimum
quantities, requirements for performance, testing and record keeping. RCRA
also requires new and existing facilities to obtain permits for construction,
operation and closure and requires 30 years of post-closure care and
monitoring. RCRA was amended in 1984 to increase the scope of RCRA
regulation of small quantity waste generators and waste oil handlers and
recyclers; require corrective action at hazardous waste facilities (including
remediation at certain previously closed solid waste management units); phase
in restrictions on land disposal of hazardous waste; and require the
identification and regulation of underground storage tanks containing
petroleum and certain chemicals.
On November 29, 1985, the Environmental Protection Agency ("EPA")
issued final regulations under RCRA which restrict the burning of waste
oil. These regulations prohibit burning waste oil in non-industrial boilers
unless the oil meets certain standards for levels of lead, arsenic,
chromium, chlorine, cadmium, and flashpoint. The regulations do not
restrict the burning of waste oil in industrial boilers and furnaces. These
regulations have not had a significant impact on the Company's business
because the Company does not presently sell burner fuel to non-industrial
burners. Industrial burners of recycled oil, however, must comply with
certain notification and administrative procedures.
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The National Environmental Policy Act of 1970 ("NEPA") requires the
preparation of an environmental impact statement ("EIS") for any major
Federal action significantly affecting the environment or the issuance of
Federal environmental permits for industrial facilities affecting the
environment. Such statements must evaluate and describe the effects of the
proposed activity on the environment and evaluate alternatives to the
proposed activity. Major energy and mineral developments require
construction and operating permits and may therefore trigger the EIS process.
The Toxic Substances Control Act of 1976 authorizes the EPA to gather
information on the risks of chemicals and to monitor and regulate the
manufacture, distribution, processing, use and disposal of a host of
chemicals, including asbestos and polychlorinated biphenyls.
The Clean Air Act of 1970, as amended in 1977, was the first major
Federal legislation enacted after NEPA became law. The Act authorized the
EPA to establish National Ambient Air Quality Standards for certain
pollutants, which are to be achieved by the individual states through State
Implementation Plans ("SIPs"). SIPs typically attempt to meet ambient
standards by regulating the quantity and quality of emissions from specific
industrial sources. For toxic emissions, the Act authorizes the EPA to
regulate emissions from industrial facilities directly. The EPA also
directly establishes emissions limits for new sources of pollution, and is
responsible for ensuring compliance with air quality standards. The Clean
Air Act Amendments of 1990 place the primary responsibility for the
prevention and control of air pollution upon state and local governments.
The 1990 amendments require regulated emission sources to obtain operating
permits, which will impose emission limitations, standards, and compliance
schedules.
The Clean Water Act of 1972, as amended in 1987, establishes water
pollutant discharge standards applicable to many basic types of manufacturing
plants and imposes standards on municipal sewage treatment plants. The Act
requires states to set water quality standards for significant bodies of
water within their boundaries and to ensure attainment and/or maintenance of
those standards. Most industrial and government facilities must apply for
and obtain discharge permits, monitor pollutant discharges, and under certain
conditions reduce certain discharges.
The Safe Drinking Water Act, as amended in 1986, regulates public water
supplies by requiring EPA to establish primary drinking water standards.
These standards are likely to be further expanded under the EPA's evolving
groundwater protection strategy which is intended to set levels of protection
or clean-up of the nation's groundwater resources. These groundwater quality
requirements will then be applied to RCRA facilities and CERCLA sites, and
remedial action will be required for releases of contaminants into
groundwater.
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The International Convention for the Prevention of Pollution from ships
("MARPOL") places strict limitations on the discharge of oil at sea and in
port and requires ships to transfer oily waste to certified reception
facilities. The U.S. Coast Guard has issued regulations effective March 10,
1986 which implement the requirements of MARPOL. Under these regulations,
each terminal and port of the United States that services oceangoing tankers
or cargo ships over 400 gross tons must be capable of receiving an average
amount of oily waste based on the type and number of ships it serves. The
reception facilities may be fixed or mobile, and may include tank trucks and
tank barges.
The National Pollutant Discharge Elimination System ("NPDES"), a
program promulgated under the Clean Water Act, permits States to issue
permits for the discharge of pollutants into the waters of the United
States in lieu of Federal EPA regulation. State programs must be consistent
with minimum Federal requirements, although they may always be more
stringent. NPDES permits are required for, among other things, certain
industrial discharges of storm water.
The Oil Pollution Act of 1990 imposes liability for oil discharges, or
threats of discharge, into the navigable waters of the United States on the
owner or operator of the responsible vessel or facility. Oil is defined to
include oil refuse and oil mixed with wastes other than dredged spoil, but
does not include oil designated as a hazardous substance under CERCLA. The
Act requires the responsible party to pay all removal costs, including the
costs to prevent, minimize or mitigate oil pollution in any case in which
there is a substantial threat or an actual discharge of oil. In addition,
the responsible party may be held liable for damages for injury to natural
resources, loss of use of natural resources and loss of revenues from the use
of such resources.
The Occupational Safety and Health Administration Act regulates
exposure to toxic substances and other forms of pollution in the workplace.
The law is administered by the Department of Labor. It specifies maximum
levels of toxic substances, such as asbestos, to which employees may be
exposed, and under the "right-to-know" rule requires that workers be
informed of, and receive training relating to, the physical and health
risks posed by hazardous materials in their workplaces.
State and Local Government Regulation. Many states have been
authorized by the EPA to enforce regulations promulgated under RCRA and
other Federal programs. In addition, there are numerous state and local
authorities that regulate the environment, some of which impose stricter
environmental standards than Federal laws and regulations. Some states,
including Florida, have enacted legislation which generally provides for
registration, recordkeeping, permitting, inspection, and reporting
requirements for transporters, collectors and recyclers of hazardous waste
and waste oil. The penalties for violations of state law include injunctive
relief, recovery of damages for injury to air, water or property and fines
for non-compliance. In addition, some local governments have established
local pollution control programs, which include environmental permitting,
monitoring and surveillance, data collection and local environmental
studies.
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Excise Tax on Diesel and Aviation Fuel. The Company's aviation fueling
operations are affected by various Federal and state taxes imposed on the
purchase and sale of aviation fuel products in the United States. Federal
law imposes a manufacturer's excise tax in the amount of 21.9 cents per
gallon on sales of aviation fuel. Sales to aircraft engaged in foreign trade
are exempt from this tax and sales to commercial airlines are partially
exempt. These exemptions may be realized either through tax-free or tax-
reduced sales if the seller qualifies as a producer under applicable
regulations, or, if the seller does not so qualify, through a tax-paid sale
followed by a refund to the exempt user. Several states where the Company
sells aviation fuel, including the state of Florida, impose excise and sales
taxes on fuel sales; and certain of the Company's sales qualify for full or
partial exemptions from these state taxes.
ITEM 2. PROPERTIES
The following page sets forth by segment and subsidiary the principal
properties owned or leased by the Company as of May 15, 1995. The Company
considers its properties and facilities to be suitable and adequate for its
present needs.
The Company generally enters into non-cancelable equipment leases and
installment notes to finance the replacement, upgrade or expansion of its
vehicles and equipment. For additional information with respect to
obligations under the Company's leases and installment notes, see Notes 3 and
6 to the financial statements appearing elsewhere in this report.
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<TABLE>
<CAPTION>
IRC AND SUBSIDIARIES
PROPERTIES
OWNER/LESSEE AND LOCATION
CORPORATE PRINCIPAL USE OWNED OR LEASED
<S> <C> <C>
INTERNATIONAL RECOVERY CORP. Executive Offices Leased to June 1998
700 S. Royal Poinciana Blvd.
Suite 800
Miami Springs, FL 33166
AVIATION FUELING
ADVANCE PETROLEUM, INC. Administrative, operations Leased to June 1998
D/B/A WORLD FUEL SERVICES OF FL. and sales offices
700 S. Royal Poinciana Blvd.
Suite 800
Miami Springs, FL 33166
WORLD FUEL SERVICES, INC. Administrative, operations Leased to June 1998
700 S. Royal Poinciana Blvd. and sales offices
Suite 800
Miami Springs, FL 33166
WORLD FUEL SERVICES LTD. Administrative, operations Leased month-to-month
London Gatwick Hilton and sales offices
Suite 1211
Gatwick Airport
West Sussex RH6 0LL
United Kingdom
WORLD FUEL SERVICES (SINGAPORE) PTE., LTD. Administrative, operations Leased to March 1997
5 Shenton Way #12-03/04 and sales offices
UIC Building
Singapore 0106
OIL RECYCLING
INTERNATIONAL PETROLEUM CORPORATION Storage Tanks, Recycling Leased to August 1996
105 South Alexander Street Plant, Laboratory, and
Plant City, FL 33566 Administrative Offices
INTERNATIONAL PETROLEUM CORP. OF DELAWARE Storage Tanks, Recycling Owned
505 South Market Street Plant, Laboratory, and
Wilmington, DE 19801 Administrative Offices
INTERNATIONAL PETROLEUM CORP. OF GEORGIA Storage Tanks, Blending Owned
109 Howell Avenue Facility, and Administrative
Fairburn, GA 30213 Offices
INTERNATIONAL PETROLEUM CORP. OF LOUISIANA Storage Tanks, Recycling Leased to August 1996
14890 Intracoastal Drive Plant, Laboratory, and
New Orleans, LA 70129 Administrative Offices
INTERNATIONAL PETROLEUM CORP. OF MARYLAND Storage Tanks, Blending Owned
6305 E. Lombard Street Facility, and Administrative
Baltimore, MD 21224 Offices
MARINE FUELING
TRANS-TEC SERVICES, INC. Administrative, operations Leased month-to-month
150 East 55th Street and sales Offices
New York, N.Y. 10022
60 East Sir Francis Drake, No. 301 Administrative, operations Leased to December 1999
Larkspur, CA 94939 and sales Offices
7-1 Centro Colon: Paseo Colon Administrative, operations Leased month-to-month
San Jose, Costa Rica and sales Offices
2nd Floor Administrative, operations Leased to December 1997
200 NAEJA-Dong and sales Offices
Chongru-Ku Seoul, Korea
1, Kanari St. & Akti Miaouli Administrative Offices Leased to November 1996
Piraeuss, 18537 Greece
TRANS-TEC SERVICES (SINGAPORE) PTE., LTD. Administrative, operations Leased to March 1997
5 Shenton Way #12-03/04 and sales Offices
UIC Building
Singapore 0106
TRANS-TEC SERVICES (UK) Ltd. Administrative, operations Leased to December 1997
65 Petty France and sales Offices
London SW1H 9EU
</TABLE>
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ITEM 3. LEGAL PROCEEDINGS
In January 1993, Hillsborough County, Florida sued International
Petroleum Corporation, the Company's Florida subsidiary, along with 170 other
defendants (or potentially responsible persons), in the U.S. District Court
of the Middle District of Florida. The complaint seeks to recover response
or cleanup costs for the Sydney Mine Waste Disposal Site under the
Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. section 9601 et. seq. (CERCLA or Superfund) and under Florida Statutes.
The Company intends to vigorously defend this action.
There can be no assurance the Company will prevail in the foregoing
legal proceeding, and management cannot estimate at this time the exposure of
the Company if it does not prevail in this proceeding. Except for the
foregoing, there are no material legal proceedings to which the Company or
any of its subsidiaries is a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of shareholders, through the
solicitation of proxies or otherwise, during the fourth quarter of fiscal
year 1995.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is currently traded on the New York Stock
Exchange and the Pacific Stock Exchange under the symbol INT. The following
table sets forth, for each quarter within the fiscal years ended March 31,
1995 and 1994, the sale prices of the Company's common stock as reported by
the New York Stock Exchange.
PRICES
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HIGH LOW
---- ---
Year ended March 31, 1995
First quarter.................... $ 14 5/8 $ 11 5/8
Second quarter................... 16 3/8 12 3/4
Third quarter.................... 16 3/8 14
Fourth quarter................... 17 3/8 14 5/8
Year ended March 31, 1994
First quarter.................... $ 12 1/2 $ 10 1/2
Second quarter................... 15 3/8 11
Third quarter.................... 16 12 1/2
Fourth quarter................... 16 1/8 12 1/2
As of May 25, 1995, there were 478 holders of record of the Company's
common stock. During fiscal year 1995, the Board of Directors approved the
payment of the following cash dividends:
Declaration Date Per Share Record Date Payment Date
- ---------------- --------- ----------- ------------
May 9, 1994 .05 cents June 22, 1994 July 15, 1994
September 9, 1994 .05 cents September 22, 1994 October 14, 1994
December 9, 1994 .05 cents December 22, 1994 January 12, 1995
January 19, 1995 .05 cents March 22, 1995 April 13, 1995
February 22, 1995 .10 cents March 22, 1995 April 13, 1995
The Company's loan agreement with NationsBank restricts the payment of
cash dividends to a maximum of 25% of net income for the preceding four
quarters. The Company's payment of the above dividends is in compliance with
the NationsBank loan agreement.
On April 12, 1993, the Board of Directors authorized the repurchase
from time to time of up to 400,000 shares of the Company's common stock.
The timing and quantity of shares to be repurchased will depend upon a
number of factors, including market price. As of March 31, 1995, a total of
5,000 shares had been purchased in the open market for approximately
$57,000 pursuant to the repurchase program.
-12-
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data has been summarized from the
Company's consolidated financial statements set forth in Item 8 of this
report. The selected financial data should be read in conjunction with the
consolidated financial statements and the related notes thereto, and with
"Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations."
SELECTED FINANCIAL DATA
FOR THE YEAR ENDED MARCH 31,
------------------------------------------------
1995(4) 1994 1993 1992(1) 1991(1)
======== ======== ======== ======== ========
(In thousands, except earnings per share data)
Consolidated Income Statement Data
Revenue................... $361,891 $250,527 $254,767 $190,574 $211,781
Cost of sales............. 334,134 223,576 230,847 170,442 191,907
-------- -------- -------- -------- --------
Gross profit..... 27,757 26,951 23,920 20,132 19,874
-------- -------- -------- -------- --------
Operating expenses:
Salaries and wages...... 8,117 6,558 6,039 5,909 5,394
Provision for bad debts. 2,062 5,063 4,437 1,352 1,137
Other................... 6,329 5,560 5,378 4,622 3,554
-------- -------- -------- -------- --------
16,508 17,181 15,854 11,883 10,085
-------- -------- -------- -------- --------
Income from
operations... 11,249 9,770 8,066 8,249 9,789
Other income (expense), net 1,774 (1,333) 180 359 (14)
-------- -------- -------- -------- --------
Income from continuing
operations before
income taxes..... 13,023 8,437 8,246 8,608 9,775
Provision for income taxes 4,935 3,242 2,984 2,898 3,705
-------- -------- -------- -------- --------
Net income from
continuing operations 8,088 5,195 5,262 5,710 6,070
-------- -------- -------- -------- --------
(Continued)
-13-
<PAGE>
SELECTED FINANCIAL DATA
(Continued)
FOR THE YEAR ENDED MARCH 31,
-------------------------------------------------
1995(4) 1994 1993 1992(1) 1991(1)
======= ======== ======== ======== =======
(In thousands, except earnings per share data)
Discontinued operations:
(Loss) income from operations
of discontinued environmental
services segment (net of
applicable income taxes) - - (1,793) 170 (1,264)
Loss on disposal of
environmental services
segment including a
provision of $1,350,000
for operating losses
during the phase-out
period (net of applicable
income taxes)......... - - (1,922) - -
------- -------- -------- -------- --------
Net (loss) income from
discontinued
operations........ - - (3,715) 170 (1,264)
------- -------- -------- -------- --------
Net income...... $ 8,088 $ 5,195 $ 1,547 $ 5,880 $ 4,806
======= ======== ======== ======== ========
Earnings (losses) per common
and common equivalent
share:
Income from continuing
operations............. $ 1.65 $ 1.10 $ 1.11 $ 1.20 $ 1.29
(Loss) income from
discontinued operations - - (.78) .03 (.27)
------- -------- -------- -------- --------
Net income.......... $ 1.65 $ 1.10 $ .33 $ 1.23 $ 1.02
======= ======== ======== ======== =======
Weighted average shares
outstanding............. 4,906 4,734 4,749 4,763 4,713
======= ======== ======== ======== =======
(Continued)
-14-
<PAGE>
SELECTED FINANCIAL DATA
(Continued)
AS OF MARCH 31,
----------------------------------------
1995(4) 1994 1993 1992(1) 1991(1)
======= ======= ======= ======= =======
(In thousands)
Consolidated Balance Sheet Data
Current assets........... $58,006 $33,682 $39,263 $34,995 $33,275
Total assets............. 89,536 53,687 54,717 53,210 48,415
Current liabilities (2).. 30,486 13,141 15,587 17,954 14,213
Long-term liabilities (2) 6,984 575 4,760 2,168 7,975
Stockholders' equity (3). 52,066 39,971 34,370 32,689 26,098
________________________
(1) The consolidated financial statements of the Company as of, and for the
years ended March 31, 1992 and 1991, have been restated to report
separately the net assets and operating results of the discontinued
Environmental Services segment.
(2) During the first quarter of fiscal year 1996, the Company issued 78,550
shares of the Company's common stock in payment of it's portion of the
class action settlement made in February 1994. Accordingly, the Company
reclassified $1,300,000 from current liabilities to accrued litigation
settlement expense, a long-term liability, as of March 31, 1995.
(3) Three cash dividends of 5 cents per share were declared and paid in
fiscal year 1995. Cash dividends of 5 cents and 10 cents per share were
declared on January 19, 1995 and February 22, 1995 respectively, and
both dividends had a payment date of April 13, 1995. No cash dividends
were declared or paid prior to fiscal year 1995.
(4) Effective January 1, 1995, the Company acquired substantially all of
the assets and assumed certain liabilities of Trans-Tec Services, Inc.
and Trans-Tec Servicios, S.A. The Company also purchased the stock of
Trans-Tec Services (UK) Ltd., which owns Trans-Tec Services (Singapore)
Pte., Ltd. The acquisition was accounted for under the purchase method.
Accordingly, the selected financial information for the year ended
March 31, 1995, includes the results of the Trans-Tec group since
January 1, 1995.
-15-
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with "Item 6 -
Selected Financial Data," and with the consolidated financial statements and
related notes thereto appearing elsewhere in this report.
Results of Operations
In January 1995, the Company entered the marine fuel business through
the acquisition of the Trans-Tec group of companies. The Company acquired
substantially all of the assets and assumed certain liabilities of Trans-Tec
Services, Inc., a New York corporation, and Trans-Tec Servicios, S.A., a
Costa Rica corporation, and acquired all of the outstanding stock of Trans-
Tec Services (UK), Ltd., a United Kingdom corporation ("UK"). The UK company
owns Trans-Tec Services (Singapore) PTE., Ltd. Accordingly, the consolidated
statement of income for the fiscal year ended March 31, 1995, includes the
results of operations of the Trans-Tec group of companies from the
acquisition date.
The aggregate purchase price was approximately $14,832,000, including
$321,000 in acquisition costs. At closing, the Company paid approximately
$3,927,000 in cash, $6,000,000 in the form of 9.0% promissory notes and
$4,584,000 in the form of 387,000 shares of newly issued common stock, which
were valued at $11.84 per share. The purchase price was determined as a
result of the Company's arms-length negotiations with Trans-Tec, and its
former shareholders.
Profit from the Company's aviation fuel business is directly related to
the volume and the margins achieved on sales, as well as the extent to which
the Company is required to provision for potential bad debts.
Profit from the Company's marine fuel business is determined primarily
by the volume of brokering business generated and by the volume and margins
achieved on marine fuel trades.
The Company's profit from oil recycling is principally determined by
the spread between the selling price of recycled oil and the cost of
collecting and processing waste oil.
Fiscal Year Ended March 31, 1995 Compared to
the Fiscal Year Ended March 31, 1994.
The Company's revenues for the fiscal year ended March 31, 1995 were
$361,891,000, an increase of $111,364,000, or 44.5%, as compared to revenues
of $250,527,000 for the prior year. The Company's revenues during these
periods were attributable to the following segments:
Fiscal Year Ended March 31, Percent
1995 1994 Increase
--------------------------------------
Aviation Fueling $288,728,000 $233,982,000 23.4%
Marine Fueling 54,578,000 - *
Oil Recycling 18,591,000 16,554,000 12.3
Intersegment Eliminations (6,000) (9,000) *
------------ ------------ ----
Total Revenue $361,891,000 $250,527,000 44.5%
============ ============ =====
* Percent not meaningful
-16-
<PAGE>
The aviation fueling segment sold 456,502,000 gallons of fuel and
contributed $288,728,000 of revenue for the fiscal year ended March 31, 1995.
This represented an increase in revenue of $54,746,000, or 23.4%, as compared
to the prior year when the Company sold 321,154,000 gallons of fuel. This
increase in revenue was due to an increase in volume, primarily the result of
increased bulk sales, partially offset by a price related revenue shortfall
which reflects general market conditions. Also offsetting was $4,688,000 in
lower fuel terminaling revenue. The Company's fuel terminaling business,
conducted solely at Miami International Airport pursuant to a month-to-month
contract, was awarded to another company effective June 30, 1994.
The marine fueling segment traded 465,000 metric tons of bunker fuel
and brokered 1,091,000 metric tons, contributing $53,298,000 and $824,000
in revenues, respectively. The Company also sold 104,000 gallons in
lubricants totalling $456,000 in revenues.
The oil recycling segment sold 35,015,000 gallons of recycled oil
products and contributed $18,591,000 of revenue for the fiscal year ended
March 31, 1995. This was an increase in revenue of $2,037,000, or 12.3%, as
compared to last year when the Company sold 32,756,000 gallons of recycled
oil products. The revenue increase reflects higher used oil and waste water
collection revenues, higher product volume sold, and a price related increase
on recycled product.
The Company's gross profit of $27,757,000 increased by $806,000, or
3.0%, as compared to last year. The Company's gross margin decreased from
10.8% for the fiscal year ended March 31, 1994 to 7.7% for the fiscal year
ended March 31, 1995.
The Company's aviation fueling segment achieved a 6.9% gross margin for
the fiscal year ended March 31, 1995, as compared to 9.8% achieved for the
prior fiscal year. The decline in the gross margin was attributed to a
narrower average gross profit per gallon, as well as a decline in fuel
terminaling gross profit. The decline in the average gross profit per gallon
was due to increased bulk sales.
The Company's marine fueling segment achieved a 3.9% gross margin for
the fiscal year ended March 31, 1995. The Company's gross margin on trading
activities was 2.5%.
The gross margin in the Company's oil recycling segment increased from
24.8% for fiscal year 1994 to 30.9% for fiscal year 1995. This resulted from
the combined effects of a higher average sales price of recycled oil, and a
lower average cost of collection and processing used oil, and blending
recycled oil. This decrease was primarily attributed to the higher volume
processed by the Company and the lower cost of operating a batch process in
Louisiana.
Total operating expenses for the fiscal year ended March 31, 1995 were
$16,508,000, a decrease of $673,000, or 3.9%, as compared to the same period
a year ago. This decrease resulted from a $3,001,000 decrease in the
provision for bad debts due to a year over year improvement in the quality of
accounts receivable, as well as a $255,000 decline in operating expenses of
the Company's used oil segment. Partially offsetting were the operating
expenses of the marine segment acquired in January 1995, which totalled
$1,912,000, and an $877,000 increase in corporate overhead costs, discussed
below. In relation to revenue, total operating expenses decreased from 6.9%
to 4.6%.
-17-
<PAGE>
The Company's income from operations for the fiscal year ended March
31, 1995 was $11,249,000, an increase of $1,479,000, or 15.1%, as compared to
income from operations of $9,770,000 for the fiscal year ended March 31, 1994.
Income from operations during these periods was attributable to the following
segments:
Fiscal Year Ended March 31, Percent
1995 1994 Increase
----------- ----------- --------
Aviation Fueling $12,304,000 $12,066,000 2.0%
Marine Fueling 220,000 - *
Oil Recycling 2,973,000 1,075,000 176.6
Corporate Overhead (4,248,000) (3,371,000) 26.0
----------- -----------
Total Income From
Operations $11,249,000 $ 9,770,000 15.1%
=========== =========== =====
Income from operations of the aviation fueling segment increased
$238,000, or 2.0%, for the fiscal year ended March 31, 1995, as compared to
the fiscal year ended March 31, 1994. This increase resulted from higher
product volume sold, and a decrease in operating expenses due to a lower
provision for bad debts. Partially offsetting were narrower margin fuel
sales due to bulk transactions, and lower operating income from the
Company's fuel terminaling activities.
The marine fueling segment earned $220,000 in income from operations
for fiscal year 1995. The gross profit for this segment was $2,132,000,
reduced by $1,912,000 in operating expenses.
Income from operations of the oil recycling segment increased by
$1,898,000, or 176.6%, for the fiscal year ended March 31, 1995, as compared to
last year. This increase resulted primarily from higher product volume sold,
higher margins on recycled oil and lower operating expenses.
Corporate overhead costs not charged to the business segments totalled
$4,248,000 for the fiscal year ended March 31, 1995, an increase of $877,000,
or 26.0%, as compared to last year. The increase was due to higher salaries and
payroll related costs. In relation to sales, total corporate overhead decreased
to 1.2% for the fiscal year ended March 31, 1995, as compared to 1.3% for the
prior year.
In the fiscal year ended March 31, 1995, the Company had $1,774,000 in
other income, net, an increase of $3,107,000 as compared to $1,333,000 in other
expense, net for the same period a year ago. In fiscal year 1994, the Company
incurred a $1,300,000 expense related to the settlement of a shareholders class
action, originally filed in June 1992. In fiscal year 1995, when compared to
the previous fiscal year, the Company earned $737,000 in foreign currency
transaction gains, $544,000 in equity earnings of a joint venture, and $502,000
in net interest income which is the result of the Company's improved liquidity.
Net income for the fiscal year ended March 31, 1995 was $8,088,000, an
increase of $2,893,000, as compared to net income for the fiscal year ended
March 31, 1994. Earnings per share of $1.65 for the fiscal year ended March 31,
1995 exhibited a $0.55 increase over the $1.10 achieved during the same period
last year.
-18-
<PAGE>
Fiscal Year Ended March 31, 1994 Compared to
the Fiscal Year Ended March 31, 1993.
The Company's revenues for the fiscal year ended March 31, 1994 were
$250,527,000, a decrease of $4,240,000, or 1.7%, as compared to revenues of
$254,767,000 for the prior year. The Company's revenues during these periods
were attributable to the following segments:
Percent
Fiscal Year Ended March 31, Increase
1994 1993 (Decrease)
------------ ------------ ----------
Aviation Fueling $233,982,000 $241,055,000 (2.9%)
Oil Recycling 16,554,000 14,014,000 18.1
Intersegment Eliminations (9,000) (302,000) *
------------ ------------
Total Revenue $250,527,000 $254,767,000 (1.7%)
============ ============ =====
* Percent not meaningful.
The aviation fueling segment sold 321,154,000 gallons of fuel and
contributed $233,982,000 of revenue for the fiscal year ended March 31, 1994.
This represented a decrease in revenue of $7,073,000, or 2.9%, as compared to
the prior year when the Company sold 312,485,000 gallons of fuel. This decrease
in revenue was due to a price related revenue shortfall which reflects general
market conditions as well as competitive pressures. Partially offsetting was
an increase in volume, attributed to market expansion (both domestic and
international), and $1,363,000 in higher revenue contributed by the fuel
terminaling operation.
The oil recycling segment sold 32,756,000 gallons of recycled oil
products and contributed $16,554,000 of revenue for the fiscal year ended
March 31, 1994. This was an increase in revenue of $2,540,000, or 18.1%, as
compared to the prior year when the Company sold 25,484,000 gallons of
recycled oil products. This reflects additional revenues provided by the
Company's used oil and waste water collection activities and an improvement
related to higher product volume sold. These increases reflect the opening
of the Wilmington, Delaware operation. Partially offsetting was a price
related decline on recycled product which resulted from an overall decline
in fuel prices.
The Company's gross profit of $26,951,000 increased by $3,031,000, or
12.7%, as compared to the prior year. The Company's gross margin increased from
9.4% for the fiscal year ended March 31, 1993 to 10.8% for the fiscal year ended
March 31, 1994. The gross margin improvement in the Company's aviation segment
offset the decline in the oil recycling segment gross margin, as explained
below.
The Company's aviation fuel business achieved a 9.8% gross margin for
the fiscal year ended March 31, 1994, as compared to 8.0% achieved for the
same period during the prior fiscal year. Excluding the fuel terminaling
operations, the aviation fueling business achieved a gross margin of 8.2%
in fiscal year 1994, as compared to 6.8% in fiscal year 1993. The
improvement in the gross margin was attributed to the decline in the
average sales price per gallon while the gross profit per gallon improved.
-19-
<PAGE>
The gross margin in the Company's oil recycling operations decreased
from 34.2% for the fiscal year ended March 31, 1993 to 24.8% for the fiscal
year ended March 31, 1994. This resulted from the combined effects of a
lower average sales price of recycled oil and a higher average cost of
collecting and processing used oil, and blending recycled oil. These costs
increased primarily because of the under-utilization of the Company's
facilities.
Total operating expenses for the fiscal year ended March 31, 1994 were
$17,181,000, an increase of $1,327,000, or 8.4%, as compared to the fiscal year
ended March 31, 1993. Of this increase, $626,000 was due to increased charges
to the provision for bad debts. For the fiscal year ended March 31, 1994, the
Company charged $5,063,000 to the provision for bad debts, primarily to
replenish the allowance for bad debts for charge-offs. The charge-offs and
increases to the provision for bad debts are due primarily to collection
problems encountered by the Company in its aviation segment. During fiscal year
1994, the Company has seen improvement in the quality of its accounts receivable
with a substantial reduction in accounts with balances over 90 days old. Also
contributing to the increase in total operating expenses was $398,000 related
to the opening of the Wilmington, Delaware plant and $500,000 in legal fees, an
increase related primarily to the collection of past due accounts receivable.
The Company's income from operations for the fiscal year ended March
31, 1994 was $9,770,000, an increase of $1,704,000, or 21.1%, as compared
to income from operations of $8,066,000 for the same period last year.
Income from operations during these periods was attributable to the
following segments:
Percent
Fiscal Year Ended March 31, Increase
1994 1993 (Decrease)
----------- ----------- ----------
Aviation Fueling $12,066,000 $ 8,911,000 35.4%
Oil Recycling 1,075,000 2,333,000 (53.9)
Corporate Overhead (3,371,000) (3,001,000) 12.3
Intersegment Eliminations - (177,000) *
----------- -----------
Total Income From
Operations $ 9,770,000 $ 8,066,000 21.1%
=========== =========== ======
* Percent not meaningful.
Income from operations of the aviation fueling segment increased
$3,155,000, or 35.4%, for the fiscal year ended March 31, 1994, as compared to
the prior year. This increase resulted from higher product volume
sold, improved margins on fuel sales, and higher operating income from the
Company's fuel terminaling activities. Partially offsetting was an increase in
operating expenses, which included higher charges to the provision for bad debts
and higher legal fees related to the collection of past due accounts
receivables. The increase in operating expenses was partly offset by a
reduction in salaries mostly associated with the December 31, 1992, expiration
of certain employment and non-compete agreements. Also offsetting the increase
in operating expenses was a decrease in administrative expenses.
The fuel terminaling business was conducted solely at Miami
International Airport, pursuant to a month-to-month contract, and accounted
for 34.3% of the aviation segment's operating income during the fiscal
year. This contract was awarded to another company effective June 30, 1994.
-20-
<PAGE>
Income from operations of the oil recycling segment decreased by
$1,258,000, or 53.9%, for the fiscal year ended March 31, 1994, as compared to
the prior year. This decrease in income from operations was in part
due to a decline in gross profit which resulted from the low utilization of the
Company's two main recycling plants. The Florida plant was impacted by a
slowdown in sales to phosphate mining customers and the Delaware plant was a
start-up operation. Although used oil collection revenues were up, sales of
recycled products were lower during fiscal year 1994, when compared to the prior
year. The balance of the decline in income from operations was due to an
increase in operating expenses which primarily related to the Delaware
operation.
Corporate overhead costs not charged to the business segments totalled
$3,371,000 for the fiscal year ended March 31, 1994, an increase of $370,000,
or 12.3%, as compared to the prior year. The increase was due to higher
salaries and payroll related costs. In relation to sales, total corporate
overhead increased from 1.2% in fiscal year 1993 to 1.3% in fiscal year 1994.
During the fiscal year ended March 31, 1993, the Company had other
income, net of $180,000, reflecting the capitalization of interest during
construction of the Delaware plant. In fiscal year 1994, the Company had
other expense, net of $1,333,000, which included a non-recurring charge in the
fourth quarter of fiscal year 1994 for the settlement of the shareholders class
action which was filed on June 23, 1992.
The Company's net income from continuing operations for the fiscal year
ended March 31, 1994 was $5,195,000, a decrease of $67,000, or 1.3%, as compared
to net income from continuing operations of $5,262,000 for the prior year.
Earnings per share from continuing operations was $1.10 for the fiscal year
ended March 31, 1994, and decreased 0.9%, as compared to the $1.11 earnings per
share achieved during fiscal year 1993.
Net income for the fiscal year ended March 31, 1994, was $5,195,000, an
increase of $3,648,000, as compared to net income for fiscal year 1993. Last
year's net income included a $3,715,000 after-tax loss from the Company's
discontinued environmental services segment operations. Earnings per share of
$1.10 for the fiscal year ended March 31, 1994, exhibited a $.77 increase over
the $.33 achieved during the prior year.
Liquidity and Capital Resources
In the Company's aviation and marine fuel businesses, the primary use
of capital is to finance accounts receivable. The Company maintains
aviation fuel inventories in the United States for competitive reasons. On
average, inventory levels represent less than a three week demand. The
Company's aviation and marine fuel businesses do not require significant
capital investment in fixed assets as the Company subcontracts fueling
services and maintains inventory at third party storage facilities.
-21-
<PAGE>
In relation to the Company's aviation and marine fueling segments, the
oil recycling segment is capital intensive. The Company normally utilizes
internally generated cash to fund capital expenditures, and secondarily the
Company will utilize its available line of credit or enter into leasing or
installment note arrangements to match-fund the useful life of certain
long-term assets with the related debt. The Company's oil recycling
operations also require working capital to purchase and carry an inventory
of used oil, as well as the costs of operating the plant until the proceeds
from the re-refined oil sales are received.
Cash and cash equivalents amounted to $10,907,000 at March 31, 1995, as
compared to $7,699,000 at March 31, 1994. The principal sources of cash during
the fiscal year ended March 31, 1995 were $9,299,000 in net cash provided by
operating activities, $768,000 from collections on notes receivable, and
$918,000 from the issuance of common stock in connection with the exercise of
warrants and options. Partially offsetting the increase in cash and cash
equivalents was $3,184,000 used for the purpose of acquiring the Trans-Tec group
of companies, $2,194,000 used for the purchase and construction of plant,
equipment and other capital expenditures, net of proceeds from sales of assets,
$717,000 in dividends paid on common stock, and $338,000 in advances to a joint
venture. Other components of changes in cash and cash equivalents are detailed
in the Consolidated Statements of Cash Flows.
Working capital as of March 31, 1995 was $27,520,000, exhibiting a
$6,979,000 increase from working capital as of March 31, 1994. As of March 31,
1995, the Company's accounts receivable, excluding the allowance for bad debts,
amounted to $43,366,000, an increase of $21,025,000 as compared to the March 31,
1994 balance. This increase was due primarily to the acquisition of the marine
segment which added $18,347,000 in accounts receivable. The allowance for
doubtful accounts as of March 31, 1995 amounted to $4,566,000, an increase of
$2,102,000, when compared to the March 31, 1994 balance. During the fiscal year
ended March 31, 1995, the Company charged $2,062,000 to the provision for bad
debts and had charge-offs in excess of recoveries of $271,000.
Inventories at March 31, 1995 were $933,000 higher as compared to
March 31, 1994. This consisted of a $427,000 increase in inventories in the
oil recycling segment, and a $506,000 increase in the aviation fueling
segment.
Capital expenditures for the fiscal year ended March 31, 1995
consisted primarily of $474,000 in construction costs
related to the Company's Louisiana plant, $958,000 to acquire trucks
utilized in the collection of used oil and petroleum contaminated water,
and delivery of recycled products, as well as $298,000 in office equipment
and furniture. During fiscal year 1996, the Company anticipates spending
approximately $1,000,000 to upgrade plant, machinery and equipment. The
Company also anticipates spending an additional estimated $1,000,000 over
the next several years to clean up contamination which was present at one
of the Company's sites when it was acquired by the Company. Clean up will
be capitalized as part of the cost of the site, up to the fair market value
of the site.
-22-
<PAGE>
Current maturities of long-term debt amounted to $2,128,000 as of
March 31, 1995, an increase of $1,842,000. This increase resulted from the
issuance of promissory notes, of which $1,830,000 is current, related to
the acquisition of the Trans-Tec group of companies.
In the aggregate, accounts payable, accrued expenses and customer
deposits increased $14,885,000. This increase was largely due to the
acquisition of the Trans-Tec group of companies which added
$12,316,000 in accounts payable, accrued expenses and customer deposits.
Accrued salaries and wages increased $461,000, principally as the result of
accrued sales and management performance bonuses pursuant to employment
agreements.
Long-term liabilities as of March 31, 1995, were $6,984,000,
exhibiting a $6,409,000 increase as compared to March 31, 1994. This
increase resulted from the issuance of promissory notes, of which
$4,170,000 is long-term, related to the acquisition of the Trans-Tec
group of companies. The balance of the increase is the result of
the reclassification of the $1,300,000 accrued litigation settlement expense
from current liabilities to a long-term liability and the assumption of
obligations under the Trans-Tec deferred compensation plan which
amounted to $1,237,000. For additional information, see the accompanying
financial statements.
Stockholders' equity amounted to $52,066,000, or $10.01 per share, at
March 31, 1995 compared to $39,971,000, or $8.44 per share, at March 31,
1994. This increase of $12,095,000 was due to $8,088,000 in earnings for
the period, $4,584,000 resulting from the issuance of common stock in
connection with the acquisition of the Trans-Tec group of companies, and
$455,000 and $463,000 due to the issuance of common stock pursuant to the
exercise of stock options and warrants, respectively. Partially offsetting
was $1,509,000 in cash dividends declared.
The Company's working capital requirements for fiscal year 1996 will
increase as a result of acquiring the Trans-Tec group of companies. The Company
expects to meet its working capital requirements for fiscal year 1996 from
existing cash, operations and additional borrowings, as necessary, under its
existing line of credit.
The Company's business has not been significantly affected by inflation
during the periods discussed in this report.
-23-
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Attached hereto and filed as a part of this Form 10-K are the
financial statements required by Regulation S-X and the supplementary data
required by Regulation S-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
No disagreements with accountants on any matter of accounting
principles or practices or financial statement disclosure have been
reported on a Form 8-K within the twenty-four months prior to the date of
the most recent financial statement.
-24-
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning the directors and executive officers of
the Company set forth under the captions "Election of Directors" and
"Information Concerning Executive Officers", respectively in the definitive
Proxy Statement of the Company for its 1995 Annual Meeting of Shareholders
(the "1995 Proxy Statement") is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth in the 1995 Proxy Statement under the
caption "Compensation of Officers" and "Board of Directors - Compensation
of Directors" is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the caption "Principal Stockholders
and Security Ownership of Management" in the 1995 Proxy Statement is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption "Transactions with
Management and Others" in the 1995 Proxy Statement is incorporated herein
by reference.
-25-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K
Sequential
Page
Number
==========
(a)(1) The following Financial Statements
are filed as a part of this report:
(i) Report of Independent Certified
Public Accountants 31
(ii) Consolidated Balance Sheets
as of March 31, 1995 and 1994 32
(iii) Consolidated Statements of Income
for the Years Ended March 31,
1995, 1994 and 1993 34
(iv) Consolidated Statements of Stock-
holders' Equity for the Years
Ended March 31, 1995, 1994 and
1993 36
(v) Consolidated Statements of Cash
Flows for the Years Ended March
31, 1995, 1994 and 1993 37
(vi) Notes to Consolidated Financial
Statements 40
(a)(2) The following Financial Statement
Schedule is filed as a part of
this report:
(i) Schedule II - Valuation and
Qualifying Accounts. 57
-26-
<PAGE>
Schedules not set forth herein
have been omitted either because
the required information is set
forth in the Consolidated Financial
Statements or Notes thereto, or the
information called for is not required.
(a)(3) The Exhibits set forth in the following
index of Exhibits are filed as a part
of this report:
EXHIBIT NO. DESCRIPTION
----------- -----------
(2) Plan of acquisition, reorganization, arrangement,
liquidation or succession:
(a) Acquisition Agreement dated December
9, 1994 among International Recovery
Corp., Trans-Tec Services, Inc.,
Trans-Tec Servicios, S.A., Theofilos
A. Vatis, Michael J. Kasbar, Paul H.
Stebbins, and Stacey A. Polites is
incorporated by reference to the
Company's Form 8-K filed January 18,
1995.
(3) Articles of Incorporation and By-laws:
(a) Articles of Incorporation are
incorporated by reference to
the Company's Registration
Statement on Form S-18 filed
February 3, 1986.
(b) By-laws are incorporated by
reference to the Company's
Registration Statement on Form
S-18 filed February 3, 1986.
(4) Instruments defining rights of security
holders:
(a) Employee Stock Option Plan is
incorporated by reference to
the Company's Registration
Statement on Form S-18 filed
February 3, 1986.
(b) 1993 Non-Employee Directors Stock
Option Plan is incorporated by
reference to the Company's Schedule
14A filed June 28, 1994.
-27-
<PAGE>
(10) Material Contracts
(a) Material Contracts incorporated by
reference to the Company's Report on
Form 10-K filed June 17, 1991:
(i) Revolving Loan Agreement and
Credit Facility, dated March 1,
1991, among The Citizens &
Southern National Bank (now known
as NationsBank of Florida, N.A.),
International Recovery and its
subsidiaries.
(ii) Promissory Note, dated March 1,
1991, executed by International
Recovery Corp. and its subsidiaries
in favor of The Citizens & Southern
National Bank (now known as
NationsBank of Florida, N.A.)
(b) Material Contract incorporated by
reference to the Company's Report
on Form 10-K filed May 24, 1993.
(i) Amended and Restated Employment
Agreement with Phillip S.
Bradley, dated November 10,
1992, amending and restating his
employment and non-competition
agreements.
(c) Material contracts incorporated by
reference to the Company's Report on
Form 10-K filed May 9, 1994.
(i) Consolidated Amendment No. 2
dated January 21, 1994 among
NationsBank of Florida, N.A.,
International Recovery Corp.
and its subsidiaries.
(ii) Promissory Note, dated January
21, 1994, executed by
International Recovery Corp.
and its subsidiaries in favor
of NationsBank of Florida, N.A.
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<PAGE>
(d) Material contracts filed with this Form 10-K.
(i) Amended and Restated Employment
Agreement with Jerrold Blair,
dated February 15, 1995.
(ii) Amended and Restated Employment
Agreement with Ralph Weiser,
dated February 15, 1995.
(iii) Consolidated Amendment Agreement
dated May 5, 1995, No. 3 among
NationsBank of Florida, N.A.,
International Recovery Corp. and
its subsidiaries.
(iv) Promissory Note dated January 3,
1995, executed by International
Recovery Corp. in favor of
Theofilos A. Vatis.
(v) Promissory Note dated January 3,
1995, executed by International
Recovery Corp. in favor of
Michael J. Kasbar.
(vi) Promissory Note dated January 3,
1995, executed by International
Recovery Corp. in favor of
Paul H. Stebbins.
(vii) Promissory Note dated January 3,
1995, executed by International
Recovery Corp. in favor of
Stacey A. Polites.
(21) Subsidiaries of the Registrant
(23) Consent of Independent Certified
Public Accountants
(27) Financial Data Schedule
(b) A Form 8-K was filed during the Company's fiscal year ended March 31,
1995.
-29-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
INTERNATIONAL RECOVERY CORP.
Dated: May 22, 1995 By: /S/ Jerrold Blair
------------------------
Jerrold Blair, President
Dated: May 22, 1995 By: /S/ Carlos A. Abaunza
------------------------
Carlos A. Abaunza, Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Dated: May 22, 1995 By: /S/ Ralph R. Weiser
-------------------------
Ralph R. Weiser, Director
Dated: May 22, 1995 By: /S/ Jerrold Blair
-------------------------
Jerrold Blair, Director
Dated: May 22, 1995 By: /S/ Phillip S. Bradley
-------------------------
Phillip S. Bradley, Director
Dated: May 22, 1995 By: /S/ Ralph Feuerring
-------------------------
Ralph Feuerring, Director
Dated: May 22, 1995 By: /S/ John R. Benbow
-------------------------
John R. Benbow, Director
Dated: May 22, 1995 By: /S/ Celestin Durand III
-------------------------
Celestin Durand III, Director
Dated: May 22, 1995 By: /S/ Myles Klein
-------------------------
Myles Klein, Director
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<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
International Recovery Corp.:
We have audited the accompanying consolidated balance sheets of
International Recovery Corp. (a Florida corporation) and subsidiaries as
of March 31, 1995 and 1994, and the related consolidated statements of
income, stockholders' equity and cash flows for each of the three years
in the period ended March 31, 1995. These consolidated financial
statements and the schedule referred to below are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements and the schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of International
Recovery Corp. and subsidiaries as of March 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the three
years in the period ended March 31, 1995 in conformity with generally
accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in Item 14
(a)(2) is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Miami, Florida,
May 19, 1995.
-31-
<PAGE>
INTERNATIONAL RECOVERY CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
MARCH 31,
---------------------------
1995 1994
=========== ===========
CURRENT ASSETS:
Cash and cash equivalents $10,907,000 $ 7,699,000
Accounts receivable, net of allowance
for bad debts of $4,566,000 and
$2,464,000 at March 31,1995
and 1994, respectively 38,800,000 19,877,000
Inventories 3,714,000 2,781,000
Prepaid expenses and other current
assets 4,585,000 3,325,000
----------- -----------
Total current assets 58,006,000 33,682,000
----------- -----------
PROPERTY, PLANT AND EQUIPMENT,
at cost:
Land 705,000 705,000
Buildings and improvements 2,929,000 3,272,000
Office equipment and furniture 2,394,000 1,549,000
Plant, machinery and equipment 15,052,000 12,751,000
Construction in progress 184,000 1,089,000
----------- -----------
21,264,000 19,366,000
Less accumulated depreciation
and amortization 5,680,000 4,950,000
----------- -----------
15,584,000 14,416,000
----------- -----------
OTHER ASSETS:
Unamortized cost in excess of net
assets of acquired companies, net of
accumulated amortization 12,391,000 1,847,000
Other 3,555,000 3,742,000
----------- -----------
$89,536,000 $53,687,000
=========== ===========
(Continued)
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<PAGE>
INTERNATIONAL RECOVERY CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
MARCH 31,
----------------------------
1995 1994
=========== ===========
CURRENT LIABILITIES:
Current maturities of long-term debt $ 2,128,000 $ 286,000
Accounts payable and accrued expenses 24,334,000 9,908,000
Customer deposits 1,559,000 1,100,000
Accrued salaries and wages 747,000 286,000
Accrued litigation settlement expense - 1,300,000
Income taxes payable 1,718,000 261,000
----------- -----------
Total current liabilities 30,486,000 13,141,000
----------- -----------
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities 4,447,000 575,000
Accrued litigation settlement expense 1,300,000 -
Deferred compensation 1,237,000 -
----------- -----------
6,984,000 575,000
----------- -----------
COMMITMENTS AND CONTINGENCIES
(Notes 2, 3, 5, 6, and 7)
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value;
100,000 shares authorized, none
issued - -
Common stock, $.01 par value;
10,000,000 shares authorized,
5,203,000 and 4,738,000 shares
issued and outstanding at
March 31, 1995 and 1994, respectively 52,000 47,000
Capital in excess of par value 20,440,000 14,929,000
Retained earnings 31,631,000 25,052,000
Less treasury stock, at cost 57,000 57,000
----------- -----------
52,066,000 39,971,000
----------- -----------
$89,536,000 $53,687,000
=========== ===========
The accompanying notes to the consolidated financial statements
are an integral part of these consolidated balance sheets.
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<PAGE>
INTERNATIONAL RECOVERY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Year Ended March 31,
------------------------------------------
1995 1994 1993
============ ============ ============
Revenue $361,891,000 $250,527,000 $254,767,000
Cost of sales 334,134,000 223,576,000 230,847,000
------------ ------------ ------------
Gross profit 27,757,000 26,951,000 23,920,000
------------ ------------ ------------
Operating expenses:
Salaries and wages 8,117,000 6,558,000 6,039,000
Provision for bad debts 2,062,000 5,063,000 4,437,000
Other 6,329,000 5,560,000 5,378,000
------------ ----------- ------------
16,508,000 17,181,000 15,854,000
------------ ----------- ------------
Income from operations 11,249,000 9,770,000 8,066,000
------------ ----------- ------------
Other income (expense):
Litigation settlement - (1,300,000) -
Other, net 1,774,000 (33,000) 180,000
------------ ----------- ------------
1,774,000 (1,333,000) 180,000
------------ ----------- ------------
Income from continuing
operations before
income taxes 13,023,000 8,437,000 8,246,000
Provision for income taxes 4,935,000 3,242,000 2,984,000
------------ ----------- ------------
Net income from
continuing operations 8,088,000 5,195,000 5,262,000
------------ ----------- ------------
(Continued)
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<PAGE>
INTERNATIONAL RECOVERY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Continued)
For the Year Ended March 31,
----------------------------------------
1995 1994 1993
========== ============ ==========
Discontinued operations:
Loss from operations
of discontinued
environmental services
segment (net of applicable
income tax benefit
of $1,033,000) - - (1,793,000)
Loss on disposal of
environmental services segment
including a provision of
$1,350,000 for operating
losses during the phase-out
period (net of applicable
income tax benefit
of $993,000) - - (1,922,000)
---------- ------------ ------------
Net loss from discontinued
operations - - (3,715,000)
---------- ------------ ------------
Net income $8,088,000 $ 5,195,000 $ 1,547,000
========== ============ ============
Earnings (losses) per common
and common equivalent
share:
Income from continuing
operations $ 1.65 $ 1.10 $ 1.11
Loss from discontinued
operations - - (.78)
---------- ------------ ------------
Net income $ 1.65 $ 1.10 $ .33
========== ============ ============
Weighted average shares
outstanding 4,906,000 4,734,000 4,749,000
========== ============ ============
The accompanying notes to the consolidated financial statements
are an integral part of these consolidated statements.
-35-
<PAGE>
INTERNATIONAL RECOVERY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock Capital in
------------------- Excess of Retained Treasury
Shares Amount Par Value Earnings Stock
========= ======== =========== =========== =========
Balance at March 31,
1992 4,689,000 $ 47,000 $14,332,000 $18,310,000 $ -
Exercise of warrants 15,000 - 105,000 - -
Net income - - - 1,547,000 -
Other - - 29,000 - -
---------- -------- ----------- ----------- ---------
Balance at March 31,
1993 4,704,000 47,000 14,466,000 19,857,000 -
Exercise of warrants 39,000 - 463,000 - -
Repurchase of common
stock (5,000) - - - (57,000)
Net income - - - 5,195,000 -
---------- -------- ----------- ----------- ---------
Balance at March 31,
1994 4,738,000 47,000 14,929,000 25,052,000 (57,000)
Exercise of warrants 38,000 - 463,000 - -
Exercise of options 40,000 - 455,000 - -
Issuance of shares
for acquisition 387,000 5,000 4,579,000 - -
Cash dividends
declared - - - (1,509,000) -
Net income - - - 8,088,000 -
Other - - 14,000 - -
--------- -------- ----------- ----------- ---------
Balance at March 31,
1995 5,203,000 $ 52,000 $20,440,000 $31,631,000 $ (57,000)
========= ======== =========== =========== =========
The accompanying notes to the consolidated financial statements
are an integral part of these consolidated statements.
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<PAGE>
INTERNATIONAL RECOVERY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Year Ended March 31,
------------------------------------
1995 1994 1993
=========== =========== ===========
Cash flows from operating activities:
Net income $ 8,088,000 $ 5,195,000 $ 1,547,000
----------- ----------- -----------
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities-
Estimated loss on disposal of
discontinued operations - - 1,233,000
Depreciation and amortization 1,373,000 1,502,000 1,473,000
Provision for bad debts 2,062,000 5,063,000 4,437,000
Litigation settlement - 1,300,000 -
Deferred income tax (benefit)
provision 181,000 (176,000) (441,000)
Equity in earnings of
joint venture (544,000) - -
Deferred compensation expense - - 29,000
Other non-cash operating charges
(credits) 35,000 (4,000) 19,000
Changes in assets and liabilities,
net of assets acquired and
liabilities assumed:
(Increase) decrease in-
Accounts receivable 1,959,000 223,000 (6,921,000)
Inventories (933,000) 165,000 (278,000)
Prepaid expenses and other
current assets (72,000) (1,347,000) (36,000)
Net cash provided by
discontinued operations - 2,431,000 1,033,000
Other assets (15,000) 332,000 (29,000)
Increase (decrease) in-
Accounts payable, accrued
expenses, customer deposits
and deferred compensation (4,148,000) (1,751,000) (3,957,000)
Accrued salaries and wages 461,000 (299,000) 79,000
Income taxes payable 852,000 (1,510,000) 1,703,000
----------- ----------- ----------
Total adjustments 1,211,000 5,929,000 (1,656,000)
----------- ----------- ----------
Net cash provided by (used in)
operating activities 9,299,000 11,124,000 (109,000)
----------- ----------- ----------
(Continued)
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<PAGE>
INTERNATIONAL RECOVERY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
For the Year Ended March 31,
------------------------------------
1995 1994 1993
=========== =========== ==========
Cash flows from investing activities:
Additions to property, plant and
equipment (2,194,000) (3,114,000) (3,885,000)
Proceeds from sales of assets 585,000 77,000 93,000
Payment for acquisition of
business, net of cash acquired (3,184,000) - -
Purchase of short-term investments (3,500,000) - -
Proceeds from short-term investments 3,500,000 - -
Proceeds from notes receivable 768,000 - -
Advances to joint venture (338,000) - -
---------- ---------- ----------
Net cash used in investing
activities (4,363,000) (3,037,000) (3,792,000)
---------- ---------- ----------
Cash flows from financing activities:
Net (repayments) borrowings under
the revolving line of credit - (4,000,000) 3,000,000
Repayment of long-term debt (286,000) (489,000) (511,000)
Proceeds from issuance of
notes payable - - 750,000
Repayment of notes payable (1,643,000) - (839,000)
Proceeds from issuance of
common stock 918,000 463,000 105,000
Repurchase of common stock - (57,000) -
Dividends paid on common stock (717,000) - -
---------- ---------- ----------
Net cash (used in) provided by
financing activities (1,728,000) (4,083,000) 2,505,000
---------- ---------- ----------
Net increase (decrease) in cash
and cash equivalents 3,208,000 4,004,000 (1,396,000)
Cash and cash equivalents, at
beginning of year 7,699,000 3,695,000 5,091,000
----------- ----------- ----------
Cash and cash equivalents, at
end of year $10,907,000 $ 7,699,000 $3,695,000
=========== =========== ==========
(Continued)
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<PAGE>
INTERNATIONAL RECOVERY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
For the Year Ended March 31,
------------------------------------
1995 1994 1993
========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION, including
discontinued operations:
Cash paid during the year for:
Interest, net of capitalized
interest $ 129,000 $ 149,000 $ 67,000
========== ========== ==========
Income taxes $3,714,000 $3,219,000 $1,912,000
========== ========== ==========
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
In April 1995, the Company paid $1,300,000, representing its share of
the stockholders class action settlement, by issuing 78,550 of the
Company's common stock at an agreed upon price of $16.55 per share.
Accordingly, as of March 31, 1995, the Company reclassified from
current liabilities to long-term liabilities the accrued litigation
settlement expense.
In connection with the acquisition of the Trans-Tec group of companies,
the Company also issued 387,000 of its common stock valued at
$4,584,000, and $6,000,000 in notes payable. See Note 1 for additional
information.
Cash dividends declared, but not yet paid totaling $792,000, are
included in accounts payable and accrued expenses as of March 31, 1995.
In connection with the sale of certain land and buildings, the Company
received $1,317,000 in notes receivable during fiscal year 1994.
Net assets totaling $419,000 were transferred from the Company's
discontinued operations to continuing operations during fiscal year
1994. Equipment totaling $185,000 was transferred from the Company's
discontinued operations to continuing operations during fiscal year
1993.
Borrowings totaling $220,000 were incurred during fiscal year 1994 in
connection with the acquisition of equipment.
Accounts receivable totaling $1,500,000 as of March 31, 1993, were
converted to long-term notes receivable during fiscal year 1994.
The accompanying notes to the consolidated financial statements
are an integral part of these consolidated statements.
-39-
<PAGE>
INTERNATIONAL RECOVERY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
International Recovery Corp. (the "Company") was incorporated on July 20,
1984. The Company is involved in three principal businesses. The Company
markets aviation and marine fuel and recycles used oil.
Organization and Nature of Acquisitions and Divestitures
In December 1986, the Company entered the aviation fueling business with the
acquisition of Advance Petroleum, Inc. ("Advance"). In October 1989, the
Company expanded its aviation fueling capabilities by acquiring JCo Energy
Partners, Ltd. and shortly thereafter renamed these operations World
Fuel Services, Inc.
The Company formed a subsidiary, Air-Terminaling, Inc. ("ATI") which began
operations in December 1991. ATI managed the fuel storage facilities owned
by the Metropolitan Dade County, Florida Aviation Department Authority which
are used to distribute aviation fuel at Miami International Airport. On May
3, 1994, the Metropolitan Dade County Board of Commissioners voted to award
the fuel management contract to another company effective June 30, 1994.
The Company formed a subsidiary, International Petroleum Corp. of Delaware
which began operations in April 1993, upon the completion of its
used oil and water recycling plant in Wilmington, Delaware.
In August 1994, the Company began aviation fueling operations in Ecuador
through a joint venture which enables the Company to provide point-to-point
aviation fuel sales within Ecuador. See Note 7 for additional information.
-40-
<PAGE>
On January 3, 1995, the Company entered the marine fueling business by
purchasing the assets and assuming certain liabilities of Trans-Tec Services,
Inc. and Trans-Tec Servicios, S.A. The Company also purchased the stock of
Trans-Tec Services (UK) Ltd., which owns Trans-Tec Services, (Singapore)
Pte., Ltd. The acquisition of Trans-Tec by the Company has been accounted
for as a purchase. The aggregate purchase price, including acquisition costs
of approximately $321,000, was $14,832,000. The Company paid approximately
$3,927,000 in cash, $6,000,000 in the form of 9% promissory notes, payable
over three years, of which $1,830,000 is due within one year, and $4,584,000
($11.84 per share, or approximately 78% of the quoted market price) in the
Company's restricted common stock. In accordance with the related
acquisition agreement, the Company can recover a portion of the purchase
price (by direct offset to the promissory notes issued to certain of the
sellers) in the event that certain representations and warranties related to
the collectability of accounts receivables are not met. The newly issued
shares of the Company's common stock issued in connection with the acquisition
were valued by the Company's Board of Directors. This valuation was made based
upon the volume of shares issued in relation to total shares outstanding and
the restricted nature of the newly issued shares. The difference between the
purchase price and the $4,158,000 fair value of the net assets of the acquired
companies, which amounted to $10,674,000, has been allocated to goodwill, and
is being amortized over a period of 35 years. The Company determined that no
other identifiable intangible assets existed.
The following unaudited pro-forma results of operations for the fiscal years
ended March 31, 1995 and 1994 assume that the Company acquired the Trans-Tec
companies, as of April 1, 1993.
For the Year Ended
March 31,
------------------------------
1995 1994
============ ============
Revenue $524,893,000 $388,094,000
============ ============
Net income $ 8,585,000 $ 6,117,000
============ ============
Net income per share $ 1.65 $ 1.19
============ ============
In December 1992, the Board of Directors approved the Company's exit from the
environmental services sector. The Company substantially completed its plan
of discontinuance in fiscal year 1994. See Note 2 for additional discussion.
Basis of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
-41-
<PAGE>
Cash and Cash Equivalents
The Company classifies as cash equivalents all highly liquid investments with
a maturity of three months or less from the date of purchase. The Company's
investments at March 31, 1995 and 1994, amounted to $8,863,000 and $7,712,000
respectively, and consisted principally of bank repurchase agreements
collaterized by United States Government Securities. Investment maturities
do not exceed 30 days and are not rated lower than A1-P1 by Standard & Poor's
Corporation - Moody's Investors Services, Inc. Interest income, which is
included in other, net, in the accompanying statements of income, totalled
$765,000, $182,000 and $83,000 for the years ended March 31, 1995, 1994 and
1993, respectively. Effective April 1, 1994, the Company adopted FASB No.
115, "Accounting for Certain Investments in Debt and Equity Securities" as
required. The adoption of this pronouncement did not have a material effect
on the Company's financial position or results of operations.
Inventories
Inventories are stated at the lower of cost (principally, first-in, first-
out) or market. Components of inventory cost include oil and fuel purchase
cost, direct materials, direct and indirect labor and factory overhead.
Property, Plant and Equipment
Property, plant and equipment are carried at cost less accumulated
depreciation and amortization. Depreciation and amortization are calculated
on a straight-line basis over the estimated useful lives of the assets as
follows:
YEARS
=========================
Buildings and improvements 10-40
Leasehold improvements Minimum term of the lease
Office equipment and furniture 3-8
Plant, machinery and equipment 3-40
The Company leases premises in New Orleans, Louisiana and Plant City,
Florida. The leases expire in August 1996. The Company has an option to
purchase the properties at current market value at any time during the lease
term. The Company intends to exercise the purchase options and, accordingly,
is depreciating the improvements to the premises over their estimated
economic lives. See Note 6 for additional information.
Costs of major additions and improvements are capitalized and expenditures
for maintenance and repairs which do not extend the lives of the assets are
expensed. Upon sale or disposition of property, plant and equipment, the
cost and related accumulated depreciation are eliminated from the accounts
and any resultant gain or loss is credited or charged to income.
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<PAGE>
Unamortized Cost in Excess of Net Assets of Acquired Companies
Unamortized cost in excess of net assets of acquired companies is being
amortized over 35-40 years using the straight-line method. Accumulated
amortization amounted to $413,000 and $284,000, as of March 31, 1995 and 1994,
respectively. Subsequent to its acquisition, the Company continually evaluates
whether later events and circumstances have occurred that indicate the remaining
estimated useful life of this asset may warrant revision or that the remaining
balance of this asset may not be recoverable.
Revenue Recognition
Revenue is generally recorded in the period when the sale is made or as the
services are performed. In the Company's aviation and marine fueling segments,
the Company contracts third parties to provide the fuel and/or intoplane
services. This may cause delays in receiving the necessary information for
invoicing. Accordingly, revenue may be recognized in a period subsequent to
when the delivery of fuel took place. Costs not yet billed are classified as
current assets and are included under "Inventories".
Income Taxes
The Company and its United States subsidiaries file consolidated income tax
returns. During the first quarter of fiscal year 1994, the Company adopted the
liability method of accounting for income taxes pursuant to the Financial
Accounting Standards Board's Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes". See Note 4 for additional information.
Foreign Currency Translation
The Company's primary functional currency is the U.S. Dollar which also serves
as its reporting currency. Most foreign entities translate monetary assets and
liabilities at fiscal year-end exchange rates while non-monetary items are
translated at historical rates. Income and expense accounts are translated at
the average rates in effect during the year, except for depreciation which is
translated at historical rates. The Company's joint venture uses the Company's
reporting currency as the functional currency (as it operates in a highly
inflationary economy) and translates net assets at fiscal year-end rates while
income and expense accounts are translated at average exchange rates. Gains or
losses from changes in exchange rates are recognized in consolidated income in
the year of occurrence.
The Company's purchases from certain aviation fuel suppliers are denominated in
local currency. Foreign currency exchange gains and losses resulting from
payments to aviation fuel suppliers are included in Other, net, in the period
incurred, and amounted to net gains of $737,000 for the fiscal year ended March
31, 1995. There were no significant foreign currency gains or losses in fiscal
years 1994 and 1993.
Earnings Per Share
Earnings (losses) per common and common equivalent share have been computed by
dividing net income (loss) by the weighted average number of shares of common
stock and common stock equivalents outstanding. Common stock equivalents
include all potentially dilutive outstanding stock options and warrants applying
the treasury stock method. Primary and fully diluted earnings per share are not
materially different.
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<PAGE>
(2) DISCONTINUED OPERATIONS
On December 10, 1992, the Company's Board of Directors authorized the sale of
the Company's environmental services segment. Accordingly, as of December 31,
1992, the Company reported its environmental services segment as a discontinued
operation.
As of March 31, 1995, assets included in the accompanying consolidated balance
sheet related to entities which were discontinued, consist primarily of
$1,288,000 in notes receivable, net of an allowance for bad debts.
On April 17, 1995 the Company obtained certified closure of its soil storage
permit from the Florida Department of Environmental Protection for the Part-B
facility. This enabled the Company to transfer the building ownership under a
previously agreed arrangement and to request permit closure from the
Environmental Protection Agency. At this time, the Company is unable to
determine the period of time or cost required to complete the Environmental
Protection Agency permit closure.
During fiscal year 1995, the Company was undergoing the completion of certain
environmental projects under state reimbursement programs. However, in March
1995, the State of Florida amended its environmental remediation program. This
resulted in the suspension of reimbursement for work performed effective March
27, 1995 on all of the sites at which the Company was contracted to perform
work. Pursuant to the enacted changes, the Company believes that it no longer
has contractual liability to complete these projects, and accordingly has
notified the project owners that pursuant to the legislation all work has
ceased, effective March 27, 1995.
The Company periodically reevaluates the adequacy of its accruals related to its
discontinued operations, including the amounts which may be realized from the
reimbursement for remediation work performed under the state reimbursement
programs. Any changes in those estimates have been included in discontinued
operations in the accompanying financial statements. As of March 31, 1995, the
Company had $50,000 in estimated accrued expenses related to its discontinued
operations.
Revenues applicable to the discontinued operations were $36,000, $49,000 and
$7,835,000 for the fiscal years 1995, 1994 and 1993, respectively.
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(3) LONG-TERM DEBT
Long-term debt consists of the following at March 31:
1995 1994
=========== ==========
Promissory notes issued in $ 6,000,000 $ -
connection with the acquisition of
the Trans-tec group of companies,
payable annually through January
1998, bearing interest at 9%,
unsecured
Capitalized lease obligations,
payable through August 1996,
interest at rates ranging from
10.19% to 10.70% (secured
by property with a net book
value of $263,000 and
$416,000 at March 31, 1995 and
1994, respectively) 251,000 479,000
Equipment notes, payable monthly
through May 1998, interest
rates ranging from 6.76% to
7.00%, secured by equipment 147,000 188,000
Mortgage note, bearing interest at
12.0%, payable monthly through
July 2001, secured by land, plant
and equipment 177,000 194,000
---------- ----------
6,575,000 861,000
Less current maturities 2,128,000 286,000
---------- ----------
$4,447,000 $ 575,000
========== ==========
The Company has an unsecured credit facility providing a $25,000,000 revolving
line of credit with sublimits of $8,000,000 and $6,000,000 for standby letters
of credit and documentary letters of credit, respectively. The amendment was
effective March 31, 1995. Approximately $2,554,000 in standby letters of credit
were outstanding as of March 31, 1995 under the credit facility. The Company
also has $1,635,000 outstanding in standby letters of credit from other
financing institutions and has pledged $1,635,000 of cash as collateral on these
letters of credit.
The revolving line of credit bears interest, at the Company's option,
at the Prime rate (9.0% at March 31, 1995), or LIBOR plus 1.45%. Interest
is payable quarterly in arrears. As of March 31, 1995 and 1994, there were
no amounts outstanding under the revolving line of credit. The outstanding
principal and interest will mature on March 31, 1998. The revolving line of
credit, in addition to other restrictions, requires the maintenance of
certain financial ratios and account balances, limits cash outlays for
capital expenditures, places certain restrictions on additional borrowings
outside of NationsBank of Florida, NA and restricts the payment of
dividends, except for the Company's quarterly dividend which complies with
the NationsBank facility. See Note 5 for additional discussion. As of March
31, 1995, the Company was in compliance with its debt covenants.
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<PAGE>
Aggregate annual maturities of long-term debt as of March 31, 1995, are as
follows:
1996 $2,128,000
1997 2,080,000
1998 2,249,000
1999 37,000
2000 32,000
Thereafter 49,000
----------
$6,575,000
==========
Interest expense, which is included in other, net, in the accompanying
statements of income, is as follows for the year ended March 31:
1995 1994 1993
======== ======== ========
Interest cost $263,000 $175,000 $272,000
Capitalized interest - 32,000 272,000
-------- -------- --------
Interest expense $263,000 $143,000 $ -
======== ======== ========
(4) INCOME TAXES
During fiscal year 1995, the U.S. Federal Income Tax Returns for the
Company's fiscal years ended March 31, 1992 and 1993, were audited by the
Internal Revenue Service. The adjustments for the years under audit and
the anticipated effect of amending fiscal year 1994, resulted in a tax
benefit which was recognized in fiscal year 1995 for financial reporting
purposes.
The provision for income taxes consists of the following components for the
year ended March 31:
1995 1994 1993
========== ========== ==========
Continuing
operations $4,935,000 $3,242,000 $2,984,000
Discontinued
operations - - (2,026,000)
---------- ---------- ----------
$4,935,000 $3,242,000 $ 958,000
========== ========== ==========
Current:
Federal $3,764,000 $2,648,000 $1,629,000
State 990,000 412,000 241,000
---------- ---------- ----------
4,754,000 3,060,000 1,870,000
---------- ---------- ----------
Deferred:
Federal 142,000 158,000 (800,000)
State 39,000 24,000 (112,000)
---------- ---------- ----------
181,000 182,000 (912,000)
---------- ---------- ----------
Total $4,935,000 $3,242,000 $ 958,000
========== ========== ==========
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<PAGE>
Effective April 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
This new statement supersedes Statement No. 96, previously implemented by
the Company, and also requires the liability method in accounting for
income taxes. The adoption of this new pronouncement did not have a
material effect on the Company's consolidated financial position or results
of operations.
The difference between the reported tax provision and the provision
computed by applying the statutory Federal income tax rate currently in
effect to income before income taxes for each of the three years ended
March 31, 1995, is primarily due to state income taxes.
The temporary differences which comprise the Company's net deferred tax
assets are as follows:
March 31,
--------------------------------
1995 1994
=========== ============
Excess of provision for
bad debts over charge-offs $ 1,340,000 $ 888,000
Excess of tax over financial
reporting depreciation and
amortization (1,284,000) (900,000)
Accrued litigation settlement
expense recognized for
financial reporting purposes,
not currently deductible 481,000 481,000
Excess of tax over financial
reporting amortization of
identifiable intangibles (248,000) -
Other, net (24,000) (111,000)
----------- -----------
$ 265,000 $ 358,000
=========== ===========
The net deferred tax assets as of March 31, 1995 and 1994, are included in
other assets in the accompanying consolidated balance sheets.
(5) STOCKHOLDERS' EQUITY
Common Stock Activity
On January 3, 1995, the Company issued 387,000 shares of the Company's
common stock pursuant to the Trans-Tec Services acquisition. See Note 1
for additional information.
In June 1994, the United States District Court for the Southern District
of Florida approved the settlement of the shareholders class action
pending against the Company. The settlement had a total value of
approximately $2,600,000, of which the Company's insurance company paid
$1,300,000 in cash and the Company paid the balance in April 1995, by
issuing 78,550 shares of the Company's common stock at an agreed upon
price of $16.55 per share.
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Stock Options Activity
In January 1986, the stockholders approved a stock option plan under the
terms of which the Board of Directors is authorized to grant options to
full-time employees of the Company and its subsidiaries. The plan
permits the issuance of options to purchase up to an aggregate of 300,000
shares of the Company's common stock. The minimum price at which any
option may be exercised will be the fair market value of the stock on the
date of grant; provided, however, that with respect to an option granted
to an individual owning more than 10% of the Company's outstanding common
stock, the minimum exercise price will be 110% of the fair market value
of the common stock on the date of grant. All options granted pursuant
to the plan must be exercised within ten years after the date of grant,
except that options granted to individuals owning more than 10% of the
Company's outstanding common stock must be exercised within five years
after the date of grant.
The following summarizes the status of the plan as of, and for the year
ended March 31:
1995 1994 1993
================ ============= =============
Granted 46,206 None 81,500
Per Share $14.875 - $15.50 $14.00
Expired 20,000 None None
Exercised None None None
Outstanding 171,427 145,221 145,221
Per Share $3.00 - $15.50 $3.00 - $14.75 $3.00 - $14.75
Available for
future grant 37,294 63,500 63,500
Exercisable 125,221 63,721 63,721
Per Share $3.00 - $14.75 $3.00 - $14.75 $3.00 - $14.75
During fiscal year 1995, the Board of Directors granted options to
several employees for the purchase of 46,206 shares of the Company's
common stock under the stock option plan. The exercise prices range from
$14.875 to $15.50 per share. On May 10, 1995, the Board of Directors
granted options to certain executive officers to purchase 25,894 shares
of the Company's common stock at an exercise price of $18.875 per share.
During fiscal year 1995, previously granted options to purchase 20,000
shares of the Company's common stock under the stock option plan expired.
Accordingly, as of March 31, 1995, options to purchase 171,427 shares of
the Company's common stock remain outstanding and 37,294 additional
shares are available for future grant.
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<PAGE>
On June 3, 1994, the Company extended through December 31, 1995, Mr.
Phillip Bradley's (an executive officer and director of the Company) non-
qualified option to purchase 25,000 shares of the Company's common stock.
The exercise price remained unchanged at $10.00 per share. The
difference between the fair market value on the extension date of $12.13,
and the option price, is being amortized over 1995 as compensation
expense. On January 3, 1995, the Board of Directors granted a non-
qualified option to two employees to each purchase 5,647 shares of the
Company's common stock at an exercise price of $15.50 per share. On May
10, 1995, the Board of Directors granted a non-qualified option to an
executive officer to purchase 9,106 shares of the Company's common stock
at an exercise price of $18.875 per share. As of March 31, 1995, non-
qualified options to purchase a total of 55,036 shares of the Company's
common stock at exercise prices ranging from $10.00 to $16.50 per share,
remain outstanding.
Non-Employee Directors Stock Option Plan
On August 8, 1994, at the annual meeting of the shareholders of the
Company, the 1993 Non-Employee Directors Stock Option Plan ("Plan") was
adopted. An aggregate of 50,000 shares of the Company's common stock
have been reserved for issuance under the Plan.
Under the Plan, members of the Board of Directors who are not employees
of the Company or any of its subsidiaries or affiliates will receive
annual stock options to purchase common stock in the Company pursuant to
the following formula. Each non-employee director will receive a non-
qualified option to purchase 2,500 shares when such person is first
elected to the Board of Directors (or when the Plan was adopted, for
those individuals already members of the Board), and will receive a non-
qualified option to purchase 2,500 shares each year, starting in August
1995, that the individual is re-elected. On the date the Plan was
adopted there were three individuals who qualified and each received an
option to purchase 2,500 shares of the Company's common stock at an
exercise price of $15.125. This price reflects the fair market value of
the Company's common stock on December 31, 1993, the date of grant. As
of March 31, 1995, options to purchase 7,500 shares of the Company's
common stock remain outstanding under the plan and 42,500 shares are
available for future grant.
The exercise price for options granted under the Plan may not be less
than the fair market value of the common stock, which is defined as the
closing bid quotation for the common stock at the end of the day
preceding the grant. Options granted under the Plan become fully
exercisable one year after the date of grant. All options expire five
years after the date of grant. The exercise price must be paid in cash
or in common stock, subject to certain restrictions.
Stock Warrants Activity
In April 1994, warrants to purchase a total of 38,625 shares of the
Company's common stock at $12.00 per share were exercised. No additional
warrants were issued or exercised during fiscal year 1995 and subsequent
to the April 1994 exercise, no additional warrants remain outstanding.
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<PAGE>
Stock Repurchase
On April 12, 1993, the Board of Directors authorized the repurchase from time
to time of up to 400,000 shares of the Company's common stock. The timing and
quantity of shares to be repurchased will depend upon a number of factors,
including market price. As of March 31, 1995, a total of 5,000 shares had been
purchased in the open market for approximately $57,000 pursuant to the
repurchase program.
Dividend Declarations
The Board of Directors approved the payment of the following cash dividends:
Declaration Date Per Share Record Date Payment Date
---------------- --------- ----------- ------------
May 9, 1994 .05 cents June 22, 1994 July 15, 1994
September 9, 1994 .05 cents September 22, 1994 October 14, 1994
December 9, 1994 .05 cents December 22, 1994 January 12, 1995
January 19, 1995 .05 cents March 22, 1995 April 13, 1995
February 22, 1995 .10 cents March 22, 1995 April 13, 1995
(6) COMMITMENTS AND CONTINGENCIES
Lease Commitments
The Company leases premises in New Orleans, Louisiana and Plant City, Florida
from a trust managed by the President of the Company under two operating
leases with rent aggregating $86,000 per year. The leases expire in August
1996. The Company has an option to purchase the properties at current market
value at any time during the lease term. The Company intends to exercise the
purchase options on both leases.
The Company also leases additional office space and railroad tank cars from
unrelated third parties.
The future minimum lease payments under capital leases and operating leases
with an initial noncancellable term in excess of one year, as of March 31,
1995 are as follows:
Capital Operating
Leases Leases
========= ==========
1996 $ 248,000 $ 596,000
1997 17,000 438,000
1998 - 324,000
1999 - 61,000
--------- ----------
Total minimum lease payments 265,000 $1,419,000
==========
Less amounts representing interest 14,000
---------
Present value of minimum lease payments $ 251,000
=========
Rental expense under operating leases with an initial noncancellable term in
excess of one year was $535,000, $461,000, and $514,000 for the years ended
March 31, 1995, 1994 and 1993, respectively.
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<PAGE>
Capital Expenditures
During fiscal year 1995, the Company completed the construction of a water
and used oil treatment plant in Louisiana at a total cost of $1,550,000.
During fiscal year 1996, the Company anticipates spending approximately
$1,000,000 to upgrade plant, machinery and equipment. The Company intends to
spend an estimated $1,000,000 over the next several years to clean up
contamination which was present at one of the Company's sites when it was
acquired by the Company. Clean up will be capitalized as part of the cost of
the site, up to the fair market value of the site.
Surety Bonds
In the normal course of business the Company is required to post bid,
performance and garnishment bonds. The majority of the bonds issued relate
to the Company's aviation fueling business. As of March 31, 1995, the
Company had $2,675,000 in outstanding bonds.
Purchase Commitments and Off-Balance Sheet Transaction
The Company may from time to time enter into short term fuel purchase
commitments. In order to fix the profit on the end market sale of the
purchase commitment, the Company may enter into a hedge transaction in the
financial futures market. As of March 31, 1995, the Company did not have any
outstanding purchase commitments or hedges.
Concentration of Credit Risk
Financial instruments which potentially subject the Company to credit
risk consist primarily of trade accounts receivable. The Company extends
credit on an unsecured basis to many of its aviation and marine customers,
some of which have a line of credit in excess of $1,000,000. The Company's
management recognizes that extending credit and setting appropriate
reserves for receivables is largely a subjective decision, based on
knowledge of the customer. Active management of this risk is essential to
the Company's success. A strong capital position and liquidity provide the
financial flexibility necessary to respond to customer needs. The Company's
management meets regularly to evaluate credit exposure in the aggregate,
and by individual credit. This group is also responsible for setting and
maintaining credit standards and ensuring the overall quality of the credit
portfolio.
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<PAGE>
Potential Liability and Insurance
The Company, through the use of subcontractors and its own operations,
transports, stores, or processes flammable aviation, marine and residual fuel
subjecting it to possible claims by employees, customers, regulators, and
others who may be injured. In addition, the Company may be held liable for
the clean-up costs of spills or releases of materials from its facilities or
vehicles, or for damages to natural resources arising out of such events.
The Company follows what it believes to be prudent procedures to protect its
employees and customers and to prevent spills or releases of these materials.
The Company's activities subject it to the risks of significant
potential liability under Federal and state statutes, common law, and
contractual indemnification agreements. The Company has general and
automobile liability insurance coverage, including the statutory Motor
Carrier Act/MCS 90 endorsement for sudden and accidental pollution.
In the aviation and marine fuel segments, the Company utilizes
subcontractors which provide various services to customers, including
intoplane fueling at airports, fueling of vessels in port and at sea, and
transportation and storage of fuel and fuel products. Although the Company
generally requires its subcontractors to carry liability insurance, not all
subcontractors carry adequate insurance. The Company's liability insurance
policy does not cover the acts or omissions of its subcontractors. If the
Company is held responsible for any liability caused by its subcontractors,
and such liability is not adequately covered by the subcontractor's
insurance, the Company will be adversely affected.
The Company has exited several environmental businesses which handled
hazardous wastes. These wastes were transported to various disposal
facilities and/or treated by the Company. The Company may be held liable as
a potentially responsible party for the clean-up of such disposal facilities
in certain cases pursuant to current Federal and state laws and regulations.
Due to the cost of insurance relative to potential exposure, tail coverages
were not purchased for businesses exited. The Company is currently
responsible to Federal and state environmental agencies for clean-up costs at
a site formerly operated by its subsidiary, Resource Recovery of America,
which has been sold by the Company.
The Company continuously reviews the adequacy of its insurance
coverages. However, the Company lacks coverage for various risks. A claim
arising out of the Company's activities, if successful and of sufficient
magnitude, could have a material adverse effect on the Company's financial
position or results of operations.
Legal Matters
In January 1993, Hillsborough County sued the Company's International
Petroleum Corporation of Florida subsidiary ("IPC"), along with 170 other
defendants (or potentially responsible persons), in the U.S. District Court
of the Middle District of Florida. The complaint seeks to recover response
or cleanup costs for the Sydney Mine Waste Disposal Site under the
Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. section 9601 et. seq. (CERCLA or Superfund) and under Florida Statutes.
The Company intends to vigorously defend this action.
There can be no assurance the Company will prevail in the foregoing legal
proceeding, and management cannot estimate at this time the exposure of the
Company if it does not prevail in this proceeding.
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<PAGE>
The Company is involved in other litigation and administrative proceedings
primarily arising in the normal course of its business. In the opinion of
management, the Company's liability, if any, under any other pending
litigation or administrative proceedings, would not materially affect its
financial condition or operations.
Employment Agreements
The Company amended and restated its employment agreements with the Chairman
of the Board and the President which expire on March 31, 2000. Each
agreement provides for a salary and an annual bonus equal to 5% of the
Company's income before income taxes in excess of $2,000,000. The agreements
also provide that if the Company terminates the employment of the executive
for reasons other than death, disability, or cause, or, if the executive
terminates employment with the Company for good reason, including under
certain circumstances, a change in control of the Company, the Company will
pay the executive compensation of up to three times his average salary and
bonus during the five year period preceding his termination.
The Company and its subsidiaries have also entered into employment,
consulting and non-competition agreements with certain of their executive
officers and previous and current employees. The agreements provide for
minimum salary levels, as well as bonuses which are payable if specified
management goals are attained.
During the years ended March 31, 1995, 1994 and 1993, approximately
$3,963,000, $3,124,000 and $2,795,000, respectively, was expensed under the
terms of the above described agreements.
The future minimum commitments under employment agreements, excluding
bonuses, as of March 31, 1995 are as follows:
1996 $2,709,000
1997 1,844,000
1998 1,425,000
1999 574,000
2000 662,000
----------
$7,214,000
==========
Deferred Compensation Plan
The Company has an incentive compensation plan which provides incentive
compensation to certain key personnel whose performance contributes to the
profitability and growth of the existing Trans-Tec group of companies. The
plan is unfunded and is not a qualified plan under the Internal Revenue Code.
Under the plan, participants will be awarded units equal to 20% of the Trans-
Tec group's net income, excluding the incentive compensation expense, and
earn interest on their deferred amounts. The plan allows for distributions
of vested amounts over a five year period, subject to certain requirements,
during and after employment with the Company. Participants become fully
vested over a five year period, fully vested participants must wait two years
from the year of contribution to be eligible for the distribution of deferred
account balances. The plan is administered by a plan committee appointed by
the Board of Directors of Trans-Tec Services, Inc. The plan committee has
the authority to suspend or terminate the plan, as well as the responsibility
to allocate the amount of incentive compensation among participants, during
each plan year. The plan's fiscal year corresponds to the Company's fiscal
year.
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<PAGE>
(7) JOINT VENTURE
In August 1994, the Company, through its wholly-owned subsidiary World Fuel
Services, Inc., began operation of a joint venture with Petrosur, an Ecuador
corporation. The Company's ownership interest in the joint venture is 42%.
The joint venture was organized under the name PetroSur-World Fuel
to distribute jet fuel in Ecuador pursuant to a contract with the nationally
owned oil company. The contract with the government may be terminated at any
time. The Company has management oversight of the business activities of the
joint venture. The joint venture arrangement has a term of five years and
will automatically renew for a similar term unless one of the partners
objects at least ninety days prior to the end of the term.
During fiscal year 1995, the Company has recorded in the accompanying
consolidated statement of income its proportionate share of the net earnings
of the joint venture which amounted to $544,000, included as part of Other,
net. The amount of the investment in the joint venture totalled $544,000,
and advances to the joint venture amounted to $338,000 as of March 31, 1995,
and are included in other assets and prepaid expenses and other current
assets, respectively, in the accompanying consolidated balance sheet.
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<PAGE>
(8) BUSINESS SEGMENTS, FOREIGN OPERATIONS AND MAJOR CUSTOMERS
Business Segments
The Company operates in three business segments: aviation fueling, marine
fueling and oil recycling. Information concerning the Company's operations
by business segment is as follows:
FOR THE YEAR ENDED MARCH 31,
-------------------------------------------
1995 1994 1993
============ ============ ============
REVENUE:
Aviation fueling $288,728,000 $233,982,000 $241,055,000
Marine fueling (1) 54,578,000 - -
Oil recycling 18,591,000 16,554,000 14,014,000
Intersegment eliminations (6,000) (9,000) (302,000)
------------ ------------ ------------
Consolidated revenues $361,891,000 $250,527,000 $254,767,000
============ ============ ============
INCOME FROM OPERATIONS:
Aviation fueling $ 12,304,000 $ 12,066,000 $ 8,911,000
Marine fueling (1) 220,000 - -
Oil recycling 2,973,000 1,075,000 2,333,000
Corporate (4,248,000) (3,371,000) (3,001,000)
Intersegment eliminations - - (177,000)
------------ ------------ ------------
Consolidated income
from operations $ 11,249,000 $ 9,770,000 $ 8,066,000
============ ============ ============
IDENTIFIABLE ASSETS:
Aviation fueling $ 27,920,000 $ 26,535,000 $ 32,039,000
Marine fueling 34,313,000 - -
Oil recycling 17,557,000 16,548,000 14,005,000
Corporate 9,746,000 10,604,000 4,506,000
Discontinued operations - - 4,167,000
------------ ------------ ------------
Consolidated identifiable
assets $ 89,536,000 $ 53,687,000 $ 54,717,000
============ ============ ============
CAPITAL EXPENDITURES:
Aviation fueling $ 27,000 $ 101,000 $ 58,000
Marine fueling (1) 104,000 - -
Oil recycling 1,901,000 3,078,000 3,755,000
Corporate 162,000 155,000 72,000
------------ ------------ ------------
Consolidated capital
expenditures $ 2,194,000 $ 3,334,000 $ 3,885,000
============ ============ ============
DEPRECIATION AND
AMORTIZATION:
Aviation fueling $ 236,000 $ 194,000 $ 222,000
Marine fueling (1) 140,000 - -
Oil recycling 824,000 1,150,000 1,071,000
Corporate 173,000 158,000 180,000
------------ ------------ ------------
Consolidated depreciation
and amortization $ 1,373,000 $ 1,502,000 $ 1,473,000
============ ============ ============
(1) The marine fueling segment reflects
activity from January 1, 1995 to March 31, 1995.
Net assets of the discontinued operations, as described in Note 2, were
transferred to continuing operations as of March 31, 1994.
-55-
<PAGE>
Foreign Operations
A summary of financial data for foreign operations is shown below as of, and
for the fiscal years ended March 31, 1995, 1994 and 1993. Non-U.S.
operations of the Company and its subsidiaries are conducted primarily in the
United Kingdom. Income from operations is before the allocation of corporate
general and administrative expenses and income taxes.
1995 1994 1993
=========== =========== ===========
Revenue $47,045,000 $28,382,000 $23,760,000
=========== =========== ===========
Income from operations $ 1,572,000 $ 190,000 $ 240,000
=========== =========== ===========
Identifiable assets $11,770,000 $ 1,872,000 $ 3,367,000
=========== =========== ===========
Major Customers
No customer accounted for more than 10% of total consolidated revenue for the
years ended March 31, 1995, 1994 and 1993.
(9) QUARTERLY INFORMATION (UNAUDITED)
FOR THE THREE MONTHS ENDED,
-------------------------------------------------------
June 30, September 30, December 31, March 31,
1994 1994 1994 1995
=========== =========== =========== ============
Revenue $72,524,000 $76,660,000 $78,103,000 $134,604,000
=========== =========== =========== ============
Gross profit $ 7,242,000 $ 5,731,000 $ 5,802,000 $ 8,982,000
=========== =========== =========== ============
Net income $ 1,944,000 $ 1,760,000 $ 2,054,000 $ 2,330,000
=========== =========== =========== ============
Earnings per
common and common
equivalent share $ 0.41 $ 0.37 $ 0.43 $ 0.45
=========== =========== =========== ============
FOR THE THREE MONTHS ENDED,
--------------------------------------------------------
June 30, September 30, December 31, March 31,
1993 1993 1993 1994
=========== =========== =========== ============
Revenue $61,403,000 $63,128,000 $62,529,000 $ 63,467,000
=========== =========== =========== ============
Gross profit $ 6,464,000 $ 6,958,000 $ 5,847,000 $ 7,682,000
=========== =========== =========== ============
Net income $ 1,446,000 $ 1,555,000 $ 1,259,000 $ 935,000
=========== =========== =========== ============
Earnings per
common and common
equivalent share $ 0.31 $ 0.33 $ 0.27 $ 0.19
=========== =========== =========== ============
-56-
<PAGE>
SCHEDULE II
INTERNATIONAL RECOVERY CORP. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
------------------------------------------------------
Balance at Charged to Charged to Balance at
beginning Acquisition costs and other end
of period of business expenses accounts (1) Deductions(2) of period
========== ========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C> <C>
Year Ended March 31, 1995
- -------------------------
Allowance for bad debts $2,464,000 $ 250,000 $2,062,000 $2,408,000 $2,618,000 $4,566,000
========== ========== ========== ========== ========== ==========
Year Ended March 31, 1994
- -------------------------
Allowance for bad debts $2,635,000 $ - $5,063,000 $ 867,000 $6,101,000 $2,464,000
========== ========== ========== ========== ========== ==========
Year Ended March 31, 1993
- -------------------------
Allowance for bad debts $ 963,000 $ - $4,437,000 $ 209,000 $2,974,000 $2,635,000
========== ========== ========== ========== ========== ==========
<FN>
Notes:
(1) Recoveries of bad debts and reclassifications. In fiscal year 1995, allowance for bad debts totaling $130,000
was transferred from the Company's discontinued operations to continued operations.
(2) Accounts determined to be uncollectible.
</FN>
</TABLE>
-57-
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of this 15th
day of February, 1995, by and between International Recovery Corp., a
Florida corporation (the "Company"), and Jerrold Blair (the "Executive").
RECITALS. Executive is currently employed by the Company
pursuant to an employment agreement which expires January 31, 1999.
Executive is a senior executive officer of the Company and an integral part
of its management. The Company wishes to extend the Executive's employment
for an additional one year term, and to extend and expand the scope of the
Executive's current non-compete covenant. In order to retain the Executive
and to assure both the Executive and the Company of the continuity of
management in the event of any actual or threatened Change of Control (as
defined in Section 3.1) of the Company, the Company desires to provide
severance benefits to the Executive if the Executive's employment with the
Company and/or its subsidiaries or affiliates terminates as provided herein
concurrent with or subsequent to a Change of Control. The parties have
agreed to amend and restate the Executive's employment agreement to reflect
the foregoing terms.
NOW, THEREFORE, for and in consideration of the premises
and the mutual covenants and agreements herein contained, and for other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs Executive
for a term (the "Employment Term"), commencing on the date hereof
and ending on March 31, 2000, to serve as President. Executive
hereby accepts such employment.
2. COMPENSATION AND BENEFITS. During the Employment
Term, the Company shall pay Executive the compensation and other
amounts set forth below.
2.1 BASE SALARY. The Company shall pay Executive
an annual salary ("Base Salary") of $250,000 during each year of the
Employment Term, payable in equal installments according to the Company's
regular payroll practices and subject to such deductions as may be required
by law.
2.2 BONUS.
(a) Subject to subsections (c), (d) and (e)
below, the Company shall pay Executive an annual bonus (the "Bonus") for
each fiscal year during the Employment Term, through March 31, 2000, equal
to five percent (5%) of the net pre-tax profit of the Company in excess of
$2,000,000. For purposes of this Agreement, the net pre-tax profit of the
Company shall be
<PAGE>
determined by the Company's certified public accountants in accordance with
generally accepted accounting principles, applied on a consistent basis.
(b) The requirement that the Company achieve
the net pre-tax profit required by this Section 2.2 (the "Performance
Goal") is intended as a "performance goal" for Executive, as that term is
used in Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as
amended (the "Code") and Regulations promulgated thereunder. The Company
hereby represents and warrants to Executive that such Performance Goal has
been determined and approved by a Compensation Committee of the Board of
Directors (the "Compensation Committee"), consisting of three (3) outside
directors, as required by Code section 162(m)(4)(C)(i) and Regulations
promulgated thereunder.
(c) Notwithstanding anything to the contrary
contained herein, in no event shall Executive receive any portion of his
Bonus if the Company could not reasonably deduct such portion solely by
operation of Code section 162(m). For purposes of this limitation: (i) no
portion of the Executive's compensation or benefits, the receipt or
enjoyment of which Executive shall have effectively waived in writing prior
to the date of payment, shall be taken into account; (ii) no portion of any
compensation or benefits shall be taken into account which, in the opinion
of tax counsel selected by the Company's independent auditors and
acceptable to Executive, does not constitute "applicable employee
remuneration" within the meaning of Code section 162(m) and Regulations
promulgated thereunder; and (iii) the value of any non-cash benefit or any
deferred payment or benefit included in the Executive's remuneration shall
be determined by the Company's independent auditors in accordance with the
Code.
(d) At any time during the Employment Term,
upon written request of Executive, the Company shall submit the Performance
Goal and other material compensation terms provided herein for approval by
the Company's shareholders so as to comply with Code section 162(m)(4)(C)(ii)
and Regulations promulgated thereunder, and the Company shall use
reasonable efforts to secure such shareholder approval; provided, (i) the
Company shall not be required to call a special shareholders meeting for
the sole purpose of complying with this section; and (ii) in order to have
such approval sought at the Company's annual shareholders meeting,
Executive shall provide written notice thereof to the Company no less than
ninety (90) days prior to the scheduled date of the annual meeting. If any
executive officer of the Company requests that his Performance Goal and
compensation terms be submitted for shareholder approval pursuant to this
Agreement, the Company shall have the right to submit the Performance Goals
and compensation arrangements of all executive officers for shareholder
approval at the same meeting.
-2-
<PAGE>
(e) If required to comply with Code
section 162(m)(4)(C)(iii), the Company's Compensation Committee shall, before
the payment of any Bonus, certify in writing, if applicable, that the
Performance Goal and any other material terms hereof were satisfied, as
necessary to comply with Code section 162(m)(4)(C)(iii).
(f) The provisions of this Section 2.2 are
intended, and shall be interpreted, to comply with the requirements of Code
section 162(m) so as to permit the Company to deduct all payments of applicable
employee remuneration made to Executive pursuant to this Agreement.
2.3 BENEFITS. Executive: (i) shall be entitled to
receive all medical, health, disability, life and dental insurance, and
other similar employee benefit programs, which may be provided by the
Company to its employees from time-to-time; (ii) shall be entitled to
reimbursement for reasonable and necessary out-of-pocket expenses incurred
in the performance of his duties hereunder, including but not limited to
travel and entertainment expenses (such expenses shall be reimbursed by the
Company, from time to time, upon presentation of appropriate receipts
therefor); (iii) shall be paid an auto allowance of $1,000.00 per month;
and (iv) shall be entitled to six (6) weeks paid vacation each calendar
year, and any vacation time not taken during any calendar year shall be
carried over into subsequent calendar years.
3. CERTAIN DEFINITIONS.
3.1 CHANGE OF CONTROL. For purposes of this
Agreement, a "Change of Control" shall be deemed to have occurred if:
(a) a third person, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), but excluding any employee benefit plan or
plans of the Company and its subsidiaries and affiliates, becomes the
beneficial owner, directly or indirectly, of twenty percent (20%) or more
of the combined voting power of the Company's outstanding voting securities
ordinarily having the right to vote for the election of directors of the
Company; or
(b) the individuals who, as of the date
hereof, constitute the Board of Directors of the Company (the "Board"
generally and as of the date hereof the "Incumbent Board") cease for any
reason to constitute a least two-thirds (2/3) of the Board, or in the case
of a merger or consolidation of the Company, do not constitute or cease to
constitute at least two-thirds (2/3) of the board of directors of the
surviving company (or in a case where the surviving corporation is
controlled, directly or indirectly, by another corporation or entity, do
not constitute or cease to constitute at least two-thirds (2/3) of the
board of such controlling corporation or do not have or cease to have at
least
-3-
<PAGE>
two-thirds (2/3) of the voting seats on any body comparable to a board of
directors of such controlling entity, or if there is no body comparable to
a board of directors, at least two-thirds (2/3) voting control of such
controlling entity); provided that any person becoming a director (or, in
the case of a controlling non-corporate entity, obtaining a position
comparable to a director or obtaining a voting interest in such entity)
subsequent to the date hereof whose election, or nomination for election,
was approved by a vote of the persons comprising at least two-thirds (2/3)
of the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an
actual or threatened election contest, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for
purposes of this Agreement, considered as though such person were a member
of the Incumbent Board; or
(c) there is a liquidation or dissolution of
the Company or a sale of all or substantially all of the assets of either
or both (i) the business group which constitutes the aviation and marine
fuel sales division of the Company as of the date hereof, or (ii) the
business group which constitutes the used oil division of the Company as of
the date hereof; or
(d) if the Company enters into an agreement or
series of agreements or the Board passes a resolution which will result in
the occurrence of any of the matters described in Subsections (a), (b) or
(c), and the Executive's employment is terminated subsequent to the date of
execution of such agreement or series of agreements or the passage of such
resolution, but prior to the occurrence of any of the matters described in
Subsection (a), (b) or (c), then, upon the occurrence of any of the matters
described in Subsections (a), (b) or (c), a Change of Control shall be
deemed to have retroactively occurred on the date of the execution of the
earliest of such agreement(s) or the passage of such resolution.
3.2 CAUSE. For purposes of this Agreement, "Cause"
means (i) an act or acts of fraud, misappropriation, or embezzlement on the
Executive's part which result in or are intended to result in his personal
enrichment at the expense of the Company or its subsidiaries or affiliates,
(ii) conviction of a felony, or (iii) willful failure to report to work for
more than thirty (30) continuous days not attributable to eligible vacation
or supported by a licensed physician's statement.
3.3 DISABILITY. For purposes of this Agreement,
"Disability" means disability which after the expiration of more than
twelve (12) months after its commencement is determined to be total and
permanent by an independent physician mutually agreeable to the parties.
Notwithstanding any disability of Executive, he shall continue to receive
all compensation and benefits provided
-4-
<PAGE>
under Section 2 until his employment is actually terminated, by a Notice of
Termination pursuant to Section 4.2.
3.4 GOOD REASON. For purposes of this Agreement,
"Good Reason" means:
(a) any failure by the Company and/or its
subsidiaries or affiliates to furnish the Executive and/or where
applicable, his family, with: (i) total annual cash compensation (including
annual bonus), (ii) total aggregate value of perquisites, (iii) total
aggregate value of benefits, or (iv) total aggregate value of long term
compensation, including but not limited to stock options, in each case at
least equal to or exceeding or otherwise comparable to in the aggregate,
the highest level received by the Executive from the Company and/or its
subsidiaries or affiliates during the six (6) month period (or the one (1)
year period for compensation, perquisites and benefits which are paid less
frequently than every six (6) months) immediately preceding the Change of
Control, other than an insubstantial and inadvertent failure remedied by
the Company within five (5) business days after receipt of notice thereof
given by the Executive;
(b) the Company's and/or its subsidiaries' or
affiliates' requiring the Executive to be based or to perform services at
any site or location more than fifteen (15) miles from the site or location
at which the Executive is based at the time of the Change of Control,
except for travel reasonably required in the performance of the Executive's
responsibilities (which does not materially exceed the level of travel
required of the Executive in the six (6) month period immediately preceding
the Change of Control);
(c) any failure by the Company to obtain the
assumption and agreement to perform this Agreement by a successor
as contemplated by Section 9; or
(d) without the express prior written consent
of the Executive (which consent the Executive has the absolute right to
withhold), (i) the assignment to the Executive of any duties inconsistent
in any material respect with the highest level of the Executive's position
(including titles and reporting relationships), authority, responsibilities
or status as in effect at any time during the six (6) month period
immediately preceding the Change of Control, or (ii) any other material
adverse change in such position, authority, responsibility or status.
For the purposes of this Section 3.4, any good faith
interpretation by the Executive of the foregoing definitions of
"Good Reason" shall be conclusive on the Company. No termination
by Executive for Good Reason shall be deemed a voluntary
-5-
<PAGE>
termination by Executive for purposes of any stock option, employee benefit
or similar plan of the Company.
3.5 NOTICE OF TERMINATION. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated, and (iii) if the termination date is other than the
date of receipt of such notice, specifies the termination date (which date
shall be not more than fifteen (15) days after the giving of such notice).
3.6 DATE OF TERMINATION. Date of Termination means
the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be.
3.7 SEVERANCE PERIOD. The Severance Period means
a period of two (2) years beginning on the day following the
Executive's Date of Termination.
4. TERMINATION.
4.1 EVENTS OF TERMINATION. The Executive may
terminate his employment with the Company, for Good Reason, at any time
during the first three (3) years following a Change in Control of the
Company. The Company may terminate Executive's employment with the Company
at any time upon the occurrence of one or more of the events set forth in
subsections (a) through (c) below. The death or Disability of Executive
shall in no event be deemed a termination of employment by Executive.
(a) The death of Executive.
(b) The Disability of Executive.
(c) The discharge of Executive by the Company for
Cause.
4.2 NOTICE OF TERMINATION. Any termination of the
Executive's employment by the Executive for Good Reason, or by the Company
for Cause or otherwise, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 10(h).
5. OBLIGATIONS UPON TERMINATION.
5.1 VOLUNTARY TERMINATION BY EXECUTIVE AND
TERMINATION FOR CAUSE. If the Executive's employment with the Company is
terminated (i) voluntarily by the Executive, for any reason other than Good
Reason, or (ii) by the Company for Cause, the Company shall pay Executive,
within five (5) business days
-6-
<PAGE>
after his Date of Termination, his Base Salary, unused vacation entitlement
and car allowance through the Date of Termination (if not already paid),
and the Company shall have no further obligation to provide compensation or
benefits to Executive under this Agreement; except that, to the extent that
the Company's insurance, stock option and other benefit plans provide
certain rights and benefits after an employee's termination, Executive may
continue to receive such rights and benefits in accordance with the terms
of such plans.
5.2 TERMINATION FOR DEATH OR DISABILITY. If
Executive's employment is terminated by the Company due to the Executive's
death or Disability, the Company shall pay Executive (or his heirs and/or
personal representatives): (i) Executive's Base Salary, unused vacation
entitlement and car allowance through the Date of Termination (if not
already paid); and (ii) the Bonus payable under Section 2.2, if any, for
the fiscal year in which Executive's termination occurred, as if Executive
had been employed by the Company for the full fiscal year; and the Company
shall have no further obligation to provide compensation or benefits to
Executive under this Agreement; except that, to the extent that the
Company's insurance, stock option and other benefit plans provide certain
rights and benefits after an employee's termination, Executive may continue
to receive such rights and benefits in accordance with the terms of such
plans. Amounts payable under subsection (i) of this Section 5.2 shall be
paid within five (5) business days after the Date of Termination, and the
Bonus payable under subsection (ii) shall be paid on or before May 15 of
the fiscal year following the fiscal year in which the termination
occurred.
5.3 TERMINATION BY THE COMPANY IN DEFAULT OF
AGREEMENT. If the Executive's employment with the Company is terminated by
the Company for any reason other than the Executive's death or Disability,
or Cause, the Company shall pay and provide Executive:
(a) Executive's Base Salary, unused vacation
entitlement and car allowance through the Date of Termination (if
not already paid); plus
(b) an amount equal to the greater of: (i) the
average annual cash compensation (Base Salary, car allowance and Bonus)
paid to Executive during the five (5) fiscal years immediately preceding
the Date of Termination, MULTIPLIED BY the number of years or portions
thereof remaining on the Employment Term on the Date of Termination; or
(ii) the cash payment described in Section I of Exhibit A attached hereto
and made a part hereof; plus
(c) the benefits described in Sections II through
IV of Exhibit A.
-7-
<PAGE>
The amounts payable under subsections (a) and (b) of this Section 5.3 shall
be paid to Executive by cashier's check within five (5) business days after
his Date of Termination. The payments and benefits paid and provided
pursuant to this Section 5.3 (the "Default Payments") shall be in lieu of
all other compensation and benefits payable to Executive under this
Agreement, and as liquidated damages and in full settlement of any and all
claims by Executive against the Company as a result of the Company's breach
of this Agreement; except that, to the extent that the Company's insurance,
stock option and other benefit plans provide certain rights and benefits
after an employee's termination, Executive may continue to receive such
rights and benefits in accordance with the terms of such plans. Such
Default Payments: (i) are not contingent on the occurrence of any change in
the ownership or effective control of the Company; (ii) are not intended as
a penalty; and (iii) are intended to compensate Executive for his damages
incurred by reason of the Company's breach of this Agreement, which damages
are difficult to ascertain.
5.4 TERMINATION BY EXECUTIVE FOR GOOD REASON. If
the Executive's employment with the Company is terminated by the Executive
for Good Reason, the Company shall pay and provide Executive, within five
(5) business days after the Date of Termination, as severance compensation,
the cash amounts and benefits (collectively, "Severance Benefits")
described in Exhibit A. The Severance Benefits paid and provided pursuant
to this Section 5.4 shall be in lieu of all other compensation and benefits
payable to Executive under this Agreement, and in full settlement of any
and all claims by Executive for such compensation or benefits; except that,
to the extent that the Company's insurance, stock option and other employee
benefit plans provide certain rights and benefits after an employee's
termination, Executive may continue to receive such rights and benefits in
accordance with the terms of such plans. The Company agrees that following
a Change of Control, the Company shall not, without the Executive's
consent, amend any employee insurance or benefit plan or program of the
Company or its subsidiaries or affiliates in any manner that would
adversely affect the Executive's rights under such plan or program.
6. COVENANT AGAINST UNFAIR COMPETITION.
(a) Executive agrees that while he is employed by
the Company, and for a period of three (3) years following any termination
of his employment, for any reason, he will not, for his own account or
jointly with another, directly or indirectly, for or on behalf of any
individual, partnership, corporation or other legal entity, as principal,
agent or otherwise:
(i) own, control, manage, be employed by,
consult with, or otherwise participate in, a business (other than that of
the Company) involved within the Trade Area (as hereinafter defined) in (1)
the storage, handling, delivery, marketing, sale,
-8-
<PAGE>
distribution or brokerage of aviation fuel, marine fuel or lubricants,
aviation flight services, or marine fuel services, (2) the collection,
storage, handling, recycling, processing, refining, sale, brokerage,
marketing or distribution of used oil or used oil products, or (3) any
other service or activity which is competitive with the services or
activities which are or have been performed by the Company or its
subsidiaries or affiliates since January 1, 1994;
(ii) solicit, call upon, or attempt to solicit,
the patronage of any individual, partnership, corporation or other legal
entity to whom the Company or its subsidiaries or affiliates sold products
or provided services, or from whom the Company or its subsidiaries or
affiliates purchased products or services, at any time since January 1,
1994, for the purpose of obtaining the patronage of any such individual,
partnership, corporation or other legal entity;
(iii) solicit or induce, or in any manner
attempt to solicit or induce, any person employed by the Company or its
subsidiaries or affiliates to leave such employment, whether or not such
employment is pursuant to a written contract and whether or not such
employment is at will; or
(iv) use, directly or indirectly, on behalf of
himself or any other person or business entity, any trade secrets or
confidential information concerning the business activities of the Company
or any of the Company's subsidiaries or affiliates. Trade secrets and
confidential information shall include, but not be limited to, lists of
names and addresses of customers and suppliers, sources of leads and
methods of obtaining new business, methods of marketing and selling
products and performing services, and methods of pricing.
(b) As used herein, the term "Trade Area" shall
mean: (i) the States of Florida, Louisiana, Georgia, Delaware,
Pennsylvania, New York, California, Virginia, New Jersey, and Maryland,
(ii) any other state where the Company and/or its subsidiaries or
affiliates collect or sell used oil or used oil products, (iii) Singapore,
Greece, South Korea, England and Costa Rica, and (iv) any airports or
seaports throughout the world which are or were serviced by the Company or
its subsidiaries or affiliates at any time since January 1, 1994.
(c) Executive recognizes the importance of the
covenant contained in this Section 6 and acknowledges that, based on his
past experience and training as an executive of the Company, the projected
expansion of the Company's business, and the nature of his services to be
provided under this Agreement, the restrictions imposed herein are: (i)
reasonable as to scope, time and area; (ii) necessary for the protection of
the Company's legitimate business interests, including without limitation,
the
-9-
<PAGE>
Company's trade secrets, goodwill, and its relationship with customers and
suppliers; and (iii) not unduly restrictive of Executive's rights as an
individual. Executive acknowledges and agrees that the covenants contained
in this Section 6 are essential elements of this Agreement and that but for
these covenants, the Company would not have agreed to enter into this
Agreement.
(d) If Executive commits a breach or threatens to
commit a breach of any of the provisions of this Section 6, the Company
shall have the right and remedy, in addition to any others that may be
available, at law or in equity, to have the provisions of this Section 6
specifically enforced by any court having equity jurisdiction, through
injunctive or other relief, it being acknowledged that any such breach or
threatened breach will cause irreparable injury to the Company, the amount
of which will be difficult to determine, and that money damages will not
provide an adequate remedy to the Company.
(e) If any covenant contained in this Section 6, or
any part thereof, is hereafter construed to be invalid or unenforceable,
the same shall not affect the remainder of the covenants, which shall be
given full effect, without regard to the invalid portions, and any court
having jurisdiction shall have the power to reduce the duration, scope
and/or area of such covenant and, in its reduced form, said covenant shall
then be enforceable.
(f) The provisions of this Section 6 shall survive
the expiration and termination of this Agreement, and the
termination of Executive's employment hereunder, for any reason.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this
Agreement shall prevent or limit the Executive's continuing or future
participation in any benefit, bonus, incentive or other plan or program
provided by the Company or any of its subsidiaries or affiliates and for
which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any
employment, stock option or other agreements with the Company or any of its
subsidiaries or affiliates. In the event there are any amounts which
represent vested benefits or which the Executive is otherwise entitled to
receive under any other plan or program of the Company or any of its
subsidiaries or affiliates at or subsequent to the Date of Termination, the
Company shall pay or cause the relevant plan or program to pay such
amounts, to the extent not already paid, in accordance with the provisions
of such plan or program.
8. FULL SETTLEMENT. Except as specifically provided
otherwise in this Agreement, the Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any setoff,
counterclaim, recoupment, defense or other right which the Company
-10-
<PAGE>
may have against the Executive or others. The Executive shall not be
obligated to seek other employment by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement.
Except as expressly provided in Section II(ii) of Exhibit A, the Severance
Benefits shall not be reduced by any compensation or benefits earned by the
Executive as the result of employment by another employer after the Date of
Termination, or otherwise. The Company agrees to pay all legal fees and
expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company or others of the
validity or enforceability of, or liability under any provision of this
Agreement or any guarantee of performance thereof, in each case plus
interest, compounded daily, on the total unpaid amount determined to be
payable under this Agreement, such interest to be calculated on the basis
of two percent (2%) over the base or prime rate announced by NationsBank of
Florida, N.A. in effect from time to time during the period of such
nonpayment, but in no event greater than the highest interest rate
permitted by law for such payments.
9. SUCCESSORS. This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives, executors, heirs and
legatees. This Agreement shall inure to the benefit of and be binding upon
the Company and its successors. The Company shall require any successor to
all or substantially all of the business and/or assets of the Company,
whether directly or indirectly, by purchase, merger, consolidation,
acquisition of stock, or otherwise, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent as the
Company would be required to perform if no such succession had taken place,
by a written agreement in form and substance reasonably satisfactory to the
Executive, delivered to the Executive within five (5) business days after
such succession.
10. MISCELLANEOUS.
(a) MODIFICATION AND WAIVER. Any term or condition
of this Agreement may be waived at any time by the party hereto that is
entitled to the benefit thereof; provided, however, that any such waiver
shall be in writing and signed by the waiving party, and no such waiver of
any breach or default hereunder is to be implied from the omission of the
other party to take any action on account thereof. A waiver on one occasion
shall not be deemed to be a waiver of the same or of any other breach on a
future occasion. This Agreement may be modified or amended only by a
writing signed by all of the parties hereto.
(b) GOVERNING LAW. The validity and effect of this
Agreement shall be governed by and construed and enforced in
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accordance with the laws of the State of Florida. In any action or
proceeding arising out of or relating to this Agreement (an "Action"), each
of the parties hereby irrevocably submits to the non-exclusive jurisdiction
of any federal or state court sitting in Miami, Florida, and further agrees
that any Action may be heard and determined in such federal court or in
such state court. Each party hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of any Action in Miami, Florida.
(c) TAX WITHHOLDING. The payments and benefits
under this Agreement may be compensation and as such may be included in
either the Executive's W-2 earnings statements or 1099 statements. The
Company may withhold from any amounts payable under this Agreement such
federal, state or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation, as well as any other deductions
consented to in writing by the Executive.
(d) SECTION CAPTIONS. Section and other captions
contained in this Agreement are for reference purposes only and are in no
way intended to describe, interpret, define or limit the scope, extent or
intent of this Agreement or any provision hereof.
(e) SEVERABILITY. Every provision of this
Agreement is intended to be severable. If any term or provision hereof is
illegal or invalid for any reason whatsoever, such illegality or invalidity
shall not affect the validity of the remainder of this Agreement.
(f) INTEGRATED AGREEMENT. This Agreement
constitutes the entire understanding and agreement among the parties hereto
with respect to the subject matter hereof, and supersedes any other
employment agreements executed before the date hereof. There are no
agreements, understandings, restrictions, representations or warranties
among the parties other than those set forth herein or herein provided for.
(g) INTERPRETATION. No provision of this Agreement
is to be interpreted for or against any party because that party or that
party's legal representative drafted such provision. For purposes of this
Agreement: "herein", "hereby", "hereunder", "herewith", "hereafter" and
"hereinafter" refer to this Agreement in its entirety, and not to any
particular subsection or paragraph. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, and all
of which shall constitute one and the same instrument.
(h) NOTICES. All notices and other communications
hereunder shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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IF TO THE EXECUTIVE: at the Executive's last address
appearing in the payroll/personnel records of the Company.
IF TO THE COMPANY:
International Recovery Corp.
700 S. Royal Poinciana Blvd.
Suite 800
Miami Springs, FL 33166
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notices and communications shall be
effective when actually received by addressee.
IN WITNESS WHEREOF, the undersigned have hereunto set
their hands and seals the day and year first above written.
WITNESSES: INTERNATIONAL RECOVERY CORP.
/S/ JANET RUSAKOV
By: /S/ JOHN BENBOW
--------------------
/S/ SONIA ASENCIO John R. Benbow, Chairman of the
Compensation Committee
/S/ JANET RUSAKOV /S/ JERROLD BLAIR
--------------------
Executive
/S/ SONIA ASENCIO
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EXHIBIT A
SEVERANCE BENEFITS
(I) CASH PAYMENT. The Company shall pay to the
Executive the aggregate of the amounts determined pursuant to
clauses (A) through (C) below:
(A) if not already paid, the Executive's Base
Salary, unused vacation entitlement and car allowance through the
Date of Termination; and
(B) an amount equal to the Executive's average
annual Base Salary and annual car allowance (collectively, the "Average
Base") paid to the Executive during the five (5) fiscal years immediately
preceding the fiscal year of termination, MULTIPLIED BY three (3);
provided, however, that if the Date of Termination is in the last two (2)
years of the Employment Term, the Average Base shall be MULTIPLIED BY two
(2); and
(C) an amount equal to the average annual bonus
paid to the Executive during the five (5) fiscal years immediately
preceding the fiscal year of termination (the "Average Bonus"); MULTIPLIED
BY three (3); provided, however, that if the Date of Termination is in the
last two (2) years of the Employment Term, the Average Bonus shall be
MULTIPLIED BY two (2).
The Company shall pay to the Executive the aggregate
of the amounts determined pursuant to clauses (A) through (C) above in a
lump sum by cashier's check within five (5) business days after the
Executive's Date of Termination.
(II) MEDICAL, DENTAL, DISABILITY, LIFE INSURANCE
AND OTHER SIMILAR PLANS AND PROGRAMS. Until the earlier to occur of (i) the
last day of the Severance Period, (ii) the date on which the Executive
becomes eligible for the designated or comparable coverage as an employee
of another employer which provides or offers such coverage to its
employees, or (iii) in the case of benefits requiring employee
contributions, the date the Executive fails to make such contributions
pursuant to the Company's or the plan's instructions (which instructions
shall be reasonable and given to the Executive by the Company within five
(5) business days following the Executive's Date of Termination) or
otherwise cancels his coverage in accordance with plan provisions, the
Company shall continue to provide all benefits which the Executive and/or
his family is or would have been entitled to receive under all medical,
dental, disability, supplemental life, group life, accidental death and
executive accident insurance, and other similar plans and programs of the
Company and/or its subsidiaries or affiliates not otherwise provided for in
this Agreement, in each case on a basis
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providing the Executive and/or his family with the opportunity to receive
benefits at least equal to the greatest level of benefits provided by the
Company and/or its subsidiaries or affiliates for the Executive under such
plans and programs as in effect at any time during the six (6) month period
immediately preceding the Notice of Termination. The benefits will be paid
for by the Company and, to the extent applicable, will be provided in
accordance with the provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"). If the Executive's
participation in any such plan or program is barred by COBRA or for any
other reason, the Company shall pay or provide for payment of such benefits
or substantially similar benefits to the Executive and/or his family.
(III) STOCK OPTIONS AND RIGHTS. If the Executive is
a participant in any stock option or stock purchase plan of the Company, or
if the Executive is the holder of any options, warrants or rights to
acquire capital stock of the Company (collectively "Stock Rights"), the
Executive shall have all of the rights set forth in the relevant plans and
Stock Rights. The phrase "Termination Date" as used in the Stock Rights
shall mean the end of the Severance Period with respect to Non-Qualified
Stock Options granted to the Executive, and the Executive's Date of
Termination with respect to Incentive Stock Options granted to Executive.
(IV) DEFERRED COMPENSATION. The Company shall pay
to the Executive the Executive's salary or incentive compensation awards
that have been previously deferred, if any, in accordance with the terms of
the Executive's individual deferred compensation agreement(s) or the
applicable plan(s), as appropriate. The last day of the Severance Period
will be considered to be the Executive's termination date for purposes of
such agreement(s).
(V) TAXES. Notwithstanding anything in the
foregoing to the contrary, the Company shall not be obligated to pay any
portion of the Severance Benefits otherwise payable to Executive pursuant
to Section 5.4 of this Agreement if the Company could not reasonably deduct
such portion solely by operation of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"). For purposes of this limitation: (i)
no portion of the Severance Benefits, the receipt or enjoyment of which
Executive shall have effectively waived in writing prior to the date of
payment, shall be taken into account; (ii) no portion of any Severance
Benefits shall be taken into account which, in the opinion of tax counsel
selected by the Company's independent auditors and acceptable to Executive,
does not constitute a "parachute payment" within the meaning of Section
280G(b)(2) of the Code; (iii) the Severance Benefits to Executive shall be
reduced only to the extent necessary so that the total Severance Benefits
(other than those referred to in clause (i or ii) ) in their entirety
constitute reasonable compensation for services actually rendered within
the meaning of Section 280G(b)(4) of the Code, in the opinion of the tax
counsel
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<PAGE>
referred to in clause (ii); and (iv) the value of any non-cash benefit or
any deferred payment or benefit included in the Severance Benefits shall be
determined by the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
Dated as of the 15th day of February, 1995.
/S/ JANET RUSAKOV /S/ JERROLD BLAIR
- ------------------- --------------------
Witness Executive
/S/ SONIA ASENCIO
- -------------------
Witness
INTERNATIONAL RECOVERY CORP.
/S/ JANET RUSAKOV By: /S/ JOHN BENBOW
- ------------------- --------------------
Witness John R. Benbow, Chairman of the
Compensation Committee
/S/ SONIA ASENCIO
- -------------------
Witness
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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of this 15th
day of February, 1995, by and between International Recovery Corp., a
Florida corporation (the "Company"), and Ralph R. Weiser (the "Executive").
RECITALS. Executive is currently employed by the Company
pursuant to an employment agreement which expires January 31, 1999.
Executive is a senior executive officer of the Company and an integral part
of its management. The Company wishes to extend the Executive's employment
for an additional one year term, and to extend and expand the scope of the
Executive's current non-compete covenant. In order to retain the Executive
and to assure both the Executive and the Company of the continuity of
management in the event of any actual or threatened Change of Control (as
defined in Section 3.1) of the Company, the Company desires to provide
severance benefits to the Executive if the Executive's employment with the
Company and/or its subsidiaries or affiliates terminates as provided herein
concurrent with or subsequent to a Change of Control. The parties have
agreed to amend and restate the Executive's employment agreement to reflect
the foregoing terms.
NOW, THEREFORE, for and in consideration of the premises
and the mutual covenants and agreements herein contained, and for other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs Executive
for a term (the "Employment Term"), commencing on the date hereof
and ending on March 31, 2000, to serve as Chairman of the Board.
Executive hereby accepts such employment.
2. COMPENSATION AND BENEFITS. During the Employment
Term, the Company shall pay Executive the compensation and other
amounts set forth below.
2.1 BASE SALARY. The Company shall pay Executive
an annual salary ("Base Salary") of $250,000 during each year of the
Employment Term, payable in equal installments according to the Company's
regular payroll practices and subject to such deductions as may be required
by law.
2.2 BONUS.
(a) Subject to subsections (c), (d) and (e)
below, the Company shall pay Executive an annual bonus (the "Bonus") for
each fiscal year during the Employment Term, through March 31, 2000, equal
to five percent (5%) of the net pre-tax profit of the Company in excess of
$2,000,000. For purposes of this Agreement, the net pre-tax profit of the
Company shall be
<PAGE>
determined by the Company's certified public accountants in accordance with
generally accepted accounting principles, applied on a consistent basis.
(b) The requirement that the Company achieve
the net pre-tax profit required by this Section 2.2 (the "Performance
Goal") is intended as a "performance goal" for Executive, as that term is
used in Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as
amended (the "Code") and Regulations promulgated thereunder. The Company
hereby represents and warrants to Executive that such Performance Goal has
been determined and approved by a Compensation Committee of the Board of
Directors (the "Compensation Committee"), consisting of three (3) outside
directors, as required by Code section 162(m)(4)(C)(i) and Regulations
promulgated thereunder.
(c) Notwithstanding anything to the contrary
contained herein, in no event shall Executive receive any portion of his
Bonus if the Company could not reasonably deduct such portion solely by
operation of Code section 162(m). For purposes of this limitation: (i) no
portion of the Executive's compensation or benefits, the receipt or
enjoyment of which Executive shall have effectively waived in writing prior
to the date of payment, shall be taken into account; (ii) no portion of any
compensation or benefits shall be taken into account which, in the opinion
of tax counsel selected by the Company's independent auditors and
acceptable to Executive, does not constitute "applicable employee
remuneration" within the meaning of Code section 162(m) and Regulations
promulgated thereunder; and (iii) the value of any non-cash benefit or any
deferred payment or benefit included in the Executive's remuneration shall
be determined by the Company's independent auditors in accordance with the
Code.
(d) At any time during the Employment Term,
upon written request of Executive, the Company shall submit the Performance
Goal and other material compensation terms provided herein for approval by
the Company's shareholders so as to comply with Code section
162(m)(4)(C)(ii) and Regulations promulgated thereunder, and the Company
shall use reasonable efforts to secure such shareholder approval; provided,
(i) the Company shall not be required to call a special shareholders
meeting for the sole purpose of complying with this section; and (ii) in
order to have such approval sought at the Company's annual shareholders
meeting, Executive shall provide written notice thereof to the Company no
less than ninety (90) days prior to the scheduled date of the annual
meeting. If any executive officer of the Company requests that his
Performance Goal and compensation terms be submitted for shareholder
approval pursuant to this Agreement, the Company shall have the right to
submit the Performance Goals and compensation arrangements of all executive
officers for shareholder approval at the same meeting.
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(e) If required to comply with Code
section 162(m)(4)(C)(iii), the Company's Compensation Committee shall,
before the payment of any Bonus, certify in writing, if applicable, that
the Performance Goal and any other material terms hereof were satisfied, as
necessary to comply with Code section 162(m)(4)(C)(iii).
(f) The provisions of this Section 2.2 are
intended, and shall be interpreted, to comply with the requirements of Code
section 162(m) so as to permit the Company to deduct all payments of applicable
employee remuneration made to Executive pursuant to this Agreement.
2.3 BENEFITS. Executive: (i) shall be entitled to
receive all medical, health, disability, life and dental insurance, and
other similar employee benefit programs, which may be provided by the
Company to its employees from time-to-time; (ii) shall be entitled to
reimbursement for reasonable and necessary out-of-pocket expenses incurred
in the performance of his duties hereunder, including but not limited to
travel and entertainment expenses (such expenses shall be reimbursed by the
Company, from time to time, upon presentation of appropriate receipts
therefor); (iii) shall be paid an auto allowance of $1,000.00 per month;
and (iv) shall be entitled to six (6) weeks paid vacation each calendar
year, and any vacation time not taken during any calendar year shall be
carried over into subsequent calendar years.
3. CERTAIN DEFINITIONS.
3.1 CHANGE OF CONTROL. For purposes of this
Agreement, a "Change of Control" shall be deemed to have occurred if:
(a) a third person, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), but excluding any employee benefit plan or
plans of the Company and its subsidiaries and affiliates, becomes the
beneficial owner, directly or indirectly, of twenty percent (20%) or more
of the combined voting power of the Company's outstanding voting securities
ordinarily having the right to vote for the election of directors of the
Company; or
(b) the individuals who, as of the date
hereof, constitute the Board of Directors of the Company (the "Board"
generally and as of the date hereof the "Incumbent Board") cease for any
reason to constitute a least two-thirds (2/3) of the Board, or in the case
of a merger or consolidation of the Company, do not constitute or cease to
constitute at least two-thirds (2/3) of the board of directors of the
surviving company (or in a case where the surviving corporation is
controlled, directly or indirectly, by another corporation or entity, do
not constitute or cease to constitute at least two-thirds (2/3) of the
board of such controlling corporation or do not have or cease to have at
least
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two-thirds (2/3) of the voting seats on any body comparable to a board of
directors of such controlling entity, or if there is no body comparable to
a board of directors, at least two-thirds (2/3) voting control of such
controlling entity); provided that any person becoming a director (or, in
the case of a controlling non-corporate entity, obtaining a position
comparable to a director or obtaining a voting interest in such entity)
subsequent to the date hereof whose election, or nomination for election,
was approved by a vote of the persons comprising at least two-thirds (2/3)
of the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an
actual or threatened election contest, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for
purposes of this Agreement, considered as though such person were a member
of the Incumbent Board; or
(c) there is a liquidation or dissolution of
the Company or a sale of all or substantially all of the assets of either
or both (i) the business group which constitutes the aviation and marine
fuel sales division of the Company as of the date hereof, or (ii) the
business group which constitutes the used oil division of the Company as of
the date hereof; or
(d) if the Company enters into an agreement
or series of agreements or the Board passes a resolution which will result
in the occurrence of any of the matters described in Subsections (a), (b)
or (c), and the Executive's employment is terminated subsequent to the date
of execution of such agreement or series of agreements or the passage of
such resolution, but prior to the occurrence of any of the matters
described in Subsection (a), (b) or (c), then, upon the occurrence of any
of the matters described in Subsections (a), (b) or (c), a Change of
Control shall be deemed to have retroactively occurred on the date of the
execution of the earliest of such agreement(s) or the passage of such
resolution.
3.2 CAUSE. For purposes of this Agreement, "Cause"
means (i) an act or acts of fraud, misappropriation, or embezzlement on the
Executive's part which result in or are intended to result in his personal
enrichment at the expense of the Company or its subsidiaries or affiliates,
(ii) conviction of a felony, or (iii) willful failure to report to work for
more than thirty (30) continuous days not attributable to eligible vacation
or supported by a licensed physician's statement.
3.3 DISABILITY. For purposes of this Agreement,
"Disability" means disability which after the expiration of more than
twelve (12) months after its commencement is determined to be total and
permanent by an independent physician mutually agreeable to the parties.
Notwithstanding any disability of Executive, he shall continue to receive
all compensation and benefits provided
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under Section 2 until his employment is actually terminated, by a Notice of
Termination pursuant to Section 4.2.
3.4 GOOD REASON. For purposes of this Agreement,
"Good Reason" means:
(a) any failure by the Company and/or its
subsidiaries or affiliates to furnish the Executive and/or where
applicable, his family, with: (i) total annual cash compensation (including
annual bonus), (ii) total aggregate value of perquisites, (iii) total
aggregate value of benefits, or (iv) total aggregate value of long term
compensation, including but not limited to stock options, in each case at
least equal to or exceeding or otherwise comparable to in the aggregate,
the highest level received by the Executive from the Company and/or its
subsidiaries or affiliates during the six (6) month period (or the one (1)
year period for compensation, perquisites and benefits which are paid less
frequently than every six (6) months) immediately preceding the Change of
Control, other than an insubstantial and inadvertent failure remedied by
the Company within five (5) business days after receipt of notice thereof
given by the Executive;
(b) the Company's and/or its subsidiaries' or
affiliates' requiring the Executive to be based or to perform services at
any site or location more than fifteen (15) miles from the site or location
at which the Executive is based at the time of the Change of Control,
except for travel reasonably required in the performance of the Executive's
responsibilities (which does not materially exceed the level of travel
required of the Executive in the six (6) month period immediately preceding
the Change of Control);
(c) any failure by the Company to obtain the
assumption and agreement to perform this Agreement by a successor
as contemplated by Section 9; or
(d) without the express prior written consent
of the Executive (which consent the Executive has the absolute right to
withhold), (i) the assignment to the Executive of any duties inconsistent
in any material respect with the highest level of the Executive's position
(including titles and reporting relationships), authority, responsibilities
or status as in effect at any time during the six (6) month period
immediately preceding the Change of Control, or (ii) any other material
adverse change in such position, authority, responsibility or status.
For the purposes of this Section 3.4, any good faith
interpretation by the Executive of the foregoing definitions of
"Good Reason" shall be conclusive on the Company. No termination
by Executive for Good Reason shall be deemed a voluntary
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termination by Executive for purposes of any stock option, employee benefit
or similar plan of the Company.
3.5 NOTICE OF TERMINATION. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated, and (iii) if the termination date is other than the
date of receipt of such notice, specifies the termination date (which date
shall be not more than fifteen (15) days after the giving of such notice).
3.6 DATE OF TERMINATION. Date of Termination means
the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be.
3.7 SEVERANCE PERIOD. The Severance Period means
a period of two (2) years beginning on the day following the
Executive's Date of Termination.
4. TERMINATION.
4.1 EVENTS OF TERMINATION. The Executive may
terminate his employment with the Company, for Good Reason, at any time
during the first three (3) years following a Change in Control of the
Company. The Company may terminate Executive's employment with the Company
at any time upon the occurrence of one or more of the events set forth in
subsections (a) through (c) below. The death or Disability of Executive
shall in no event be deemed a termination of employment by Executive.
(a) The death of Executive.
(b) The Disability of Executive.
(c) The discharge of Executive by the Company for
Cause.
4.2 NOTICE OF TERMINATION. Any termination of the
Executive's employment by the Executive for Good Reason, or by the Company
for Cause or otherwise, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 10(h).
5. OBLIGATIONS UPON TERMINATION.
5.1 VOLUNTARY TERMINATION BY EXECUTIVE AND
TERMINATION FOR CAUSE. If the Executive's employment with the Company is
terminated (i) voluntarily by the Executive, for any reason other than Good
Reason, or (ii) by the Company for Cause, the Company shall pay Executive,
within five (5) business days
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after his Date of Termination, his Base Salary, unused vacation entitlement
and car allowance through the Date of Termination (if not already paid),
and the Company shall have no further obligation to provide compensation or
benefits to Executive under this Agreement; except that, to the extent that
the Company's insurance, stock option and other benefit plans provide
certain rights and benefits after an employee's termination, Executive may
continue to receive such rights and benefits in accordance with the terms
of such plans.
5.2 TERMINATION FOR DEATH OR DISABILITY. If
Executive's employment is terminated by the Company due to the Executive's
death or Disability, the Company shall pay Executive (or his heirs and/or
personal representatives): (i) Executive's Base Salary, unused vacation
entitlement and car allowance through the Date of Termination (if not
already paid); and (ii) the Bonus payable under Section 2.2, if any, for
the fiscal year in which Executive's termination occurred, as if Executive
had been employed by the Company for the full fiscal year; and the Company
shall have no further obligation to provide compensation or benefits to
Executive under this Agreement; except that, to the extent that the
Company's insurance, stock option and other benefit plans provide certain
rights and benefits after an employee's termination, Executive may continue
to receive such rights and benefits in accordance with the terms of such
plans. Amounts payable under subsection (i) of this Section 5.2 shall be
paid within five (5) business days after the Date of Termination, and the
Bonus payable under subsection (ii) shall be paid on or before May 15 of
the fiscal year following the fiscal year in which the termination
occurred.
5.3 TERMINATION BY THE COMPANY IN DEFAULT OF
AGREEMENT. If the Executive's employment with the Company is terminated by
the Company for any reason other than the Executive's death or Disability,
or Cause, the Company shall pay and provide Executive:
(a) Executive's Base Salary, unused vacation
entitlement and car allowance through the Date of Termination (if
not already paid); plus
(b) an amount equal to the greater of: (i) the
average annual cash compensation (Base Salary, car allowance and Bonus)
paid to Executive during the five (5) fiscal years immediately preceding
the Date of Termination, MULTIPLIED BY the number of years or portions
thereof remaining on the Employment Term on the Date of Termination; or
(ii) the cash payment described in Section I of Exhibit A attached hereto
and made a part hereof; plus
(c) the benefits described in Sections II through
IV of Exhibit A.
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The amounts payable under subsections (a) and (b) of this Section 5.3 shall
be paid to Executive by cashier's check within five (5) business days after
his Date of Termination. The payments and benefits paid and provided
pursuant to this Section 5.3 (the "Default Payments") shall be in lieu of
all other compensation and benefits payable to Executive under this
Agreement, and as liquidated damages and in full settlement of any and all
claims by Executive against the Company as a result of the Company's breach
of this Agreement; except that, to the extent that the Company's insurance,
stock option and other benefit plans provide certain rights and benefits
after an employee's termination, Executive may continue to receive such
rights and benefits in accordance with the terms of such plans. Such
Default Payments: (i) are not contingent on the occurrence of any change in
the ownership or effective control of the Company; (ii) are not intended as
a penalty; and (iii) are intended to compensate Executive for his damages
incurred by reason of the Company's breach of this Agreement, which damages
are difficult to ascertain.
5.4 TERMINATION BY EXECUTIVE FOR GOOD REASON. If
the Executive's employment with the Company is terminated by the Executive
for Good Reason, the Company shall pay and provide Executive, within five
(5) business days after the Date of Termination, as severance compensation,
the cash amounts and benefits (collectively, "Severance Benefits")
described in Exhibit A. The Severance Benefits paid and provided pursuant
to this Section 5.4 shall be in lieu of all other compensation and benefits
payable to Executive under this Agreement, and in full settlement of any
and all claims by Executive for such compensation or benefits; except that,
to the extent that the Company's insurance, stock option and other employee
benefit plans provide certain rights and benefits after an employee's
termination, Executive may continue to receive such rights and benefits in
accordance with the terms of such plans. The Company agrees that following
a Change of Control, the Company shall not, without the Executive's
consent, amend any employee insurance or benefit plan or program of the
Company or its subsidiaries or affiliates in any manner that would
adversely affect the Executive's rights under such plan or program.
6. COVENANT AGAINST UNFAIR COMPETITION.
(a) Executive agrees that while he is employed by
the Company, and for a period of three (3) years following any termination
of his employment, for any reason, he will not, for his own account or
jointly with another, directly or indirectly, for or on behalf of any
individual, partnership, corporation or other legal entity, as principal,
agent or otherwise:
(i) own, control, manage, be employed by,
consult with, or otherwise participate in, a business (other than that of
the Company) involved within the Trade Area (as hereinafter defined) in (1)
the storage, handling, delivery, marketing, sale,
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distribution or brokerage of aviation fuel, marine fuel or lubricants,
aviation flight services, or marine fuel services, (2) the collection,
storage, handling, recycling, processing, refining, sale, brokerage,
marketing or distribution of used oil or used oil products, or (3) any
other service or activity which is competitive with the services or
activities which are or have been performed by the Company or its
subsidiaries or affiliates since January 1, 1994;
(ii) solicit, call upon, or attempt to solicit,
the patronage of any individual, partnership, corporation or other legal
entity to whom the Company or its subsidiaries or affiliates sold products
or provided services, or from whom the Company or its subsidiaries or
affiliates purchased products or services, at any time since January 1,
1994, for the purpose of obtaining the patronage of any such individual,
partnership, corporation or other legal entity;
(iii) solicit or induce, or in any manner
attempt to solicit or induce, any person employed by the Company or its
subsidiaries or affiliates to leave such employment, whether or not such
employment is pursuant to a written contract and whether or not such
employment is at will; or
(iv) use, directly or indirectly, on behalf of
himself or any other person or business entity, any trade secrets or
confidential information concerning the business activities of the Company
or any of the Company's subsidiaries or affiliates. Trade secrets and
confidential information shall include, but not be limited to, lists of
names and addresses of customers and suppliers, sources of leads and
methods of obtaining new business, methods of marketing and selling
products and performing services, and methods of pricing.
(b) As used herein, the term "Trade Area" shall
mean: (i) the States of Florida, Louisiana, Georgia, Delaware,
Pennsylvania, New York, California, Virginia, New Jersey, and Maryland,
(ii) any other state where the Company and/or its subsidiaries or
affiliates collect or sell used oil or used oil products, (iii) Singapore,
Greece, South Korea, England and Costa Rica, and (iv) any airports or
seaports throughout the world which are or were serviced by the Company or
its subsidiaries or affiliates at any time since January 1, 1994.
(c) Executive recognizes the importance of the
covenant contained in this Section 6 and acknowledges that, based on his
past experience and training as an executive of the Company, the projected
expansion of the Company's business, and the nature of his services to be
provided under this Agreement, the restrictions imposed herein are: (i)
reasonable as to scope, time and area; (ii) necessary for the protection of
the Company's legitimate business interests, including without limitation,
the
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<PAGE>
Company's trade secrets, goodwill, and its relationship with customers and
suppliers; and (iii) not unduly restrictive of Executive's rights as an
individual. Executive acknowledges and agrees that the covenants contained
in this Section 6 are essential elements of this Agreement and that but for
these covenants, the Company would not have agreed to enter into this
Agreement.
(d) If Executive commits a breach or threatens to
commit a breach of any of the provisions of this Section 6, the Company
shall have the right and remedy, in addition to any others that may be
available, at law or in equity, to have the provisions of this Section 6
specifically enforced by any court having equity jurisdiction, through
injunctive or other relief, it being acknowledged that any such breach or
threatened breach will cause irreparable injury to the Company, the amount
of which will be difficult to determine, and that money damages will not
provide an adequate remedy to the Company.
(e) If any covenant contained in this Section 6, or
any part thereof, is hereafter construed to be invalid or unenforceable,
the same shall not affect the remainder of the covenants, which shall be
given full effect, without regard to the invalid portions, and any court
having jurisdiction shall have the power to reduce the duration, scope
and/or area of such covenant and, in its reduced form, said covenant shall
then be enforceable.
(f) The provisions of this Section 6 shall survive
the expiration and termination of this Agreement, and the
termination of Executive's employment hereunder, for any reason.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this
Agreement shall prevent or limit the Executive's continuing or future
participation in any benefit, bonus, incentive or other plan or program
provided by the Company or any of its subsidiaries or affiliates and for
which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any
employment, stock option or other agreements with the Company or any of its
subsidiaries or affiliates. In the event there are any amounts which
represent vested benefits or which the Executive is otherwise entitled to
receive under any other plan or program of the Company or any of its
subsidiaries or affiliates at or subsequent to the Date of Termination, the
Company shall pay or cause the relevant plan or program to pay such
amounts, to the extent not already paid, in accordance with the provisions
of such plan or program.
8. FULL SETTLEMENT. Except as specifically provided
otherwise in this Agreement, the Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any setoff,
counterclaim, recoupment, defense or other right which the Company
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<PAGE>
may have against the Executive or others. The Executive shall not be
obligated to seek other employment by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement.
Except as expressly provided in Section II(ii) of Exhibit A, the Severance
Benefits shall not be reduced by any compensation or benefits earned by the
Executive as the result of employment by another employer after the Date of
Termination, or otherwise. The Company agrees to pay all legal fees and
expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company or others of the
validity or enforceability of, or liability under any provision of this
Agreement or any guarantee of performance thereof, in each case plus
interest, compounded daily, on the total unpaid amount determined to be
payable under this Agreement, such interest to be calculated on the basis
of two percent (2%) over the base or prime rate announced by NationsBank of
Florida, N.A. in effect from time to time during the period of such
nonpayment, but in no event greater than the highest interest rate
permitted by law for such payments.
9. SUCCESSORS. This Agreement is personal to the
Executive and without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of descent
and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives, executors, heirs and
legatees. This Agreement shall inure to the benefit of and be binding upon
the Company and its successors. The Company shall require any successor to
all or substantially all of the business and/or assets of the Company,
whether directly or indirectly, by purchase, merger, consolidation,
acquisition of stock, or otherwise, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent as the
Company would be required to perform if no such succession had taken place,
by a written agreement in form and substance reasonably satisfactory to the
Executive, delivered to the Executive within five (5) business days after
such succession.
10. MISCELLANEOUS.
(a) MODIFICATION AND WAIVER. Any term or condition
of this Agreement may be waived at any time by the party hereto that is
entitled to the benefit thereof; provided, however, that any such waiver
shall be in writing and signed by the waiving party, and no such waiver of
any breach or default hereunder is to be implied from the omission of the
other party to take any action on account thereof. A waiver on one occasion
shall not be deemed to be a waiver of the same or of any other breach on a
future occasion. This Agreement may be modified or amended only by a
writing signed by all of the parties hereto.
(b) GOVERNING LAW. The validity and effect of this
Agreement shall be governed by and construed and enforced in
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<PAGE>
accordance with the laws of the State of Florida. In any action or
proceeding arising out of or relating to this Agreement (an "Action"), each
of the parties hereby irrevocably submits to the non-exclusive jurisdiction
of any federal or state court sitting in Miami, Florida, and further agrees
that any Action may be heard and determined in such federal court or in
such state court. Each party hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of any Action in Miami, Florida.
(c) TAX WITHHOLDING. The payments and benefits
under this Agreement may be compensation and as such may be included in
either the Executive's W-2 earnings statements or 1099 statements. The
Company may withhold from any amounts payable under this Agreement such
federal, state or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation, as well as any other deductions
consented to in writing by the Executive.
(d) SECTION CAPTIONS. Section and other captions
contained in this Agreement are for reference purposes only and are in no
way intended to describe, interpret, define or limit the scope, extent or
intent of this Agreement or any provision hereof.
(e) SEVERABILITY. Every provision of this
Agreement is intended to be severable. If any term or provision hereof is
illegal or invalid for any reason whatsoever, such illegality or invalidity
shall not affect the validity of the remainder of this Agreement.
(f) INTEGRATED AGREEMENT. This Agreement
constitutes the entire understanding and agreement among the parties hereto
with respect to the subject matter hereof, and supersedes any other
employment agreements executed before the date hereof. There are no
agreements, understandings, restrictions, representations or warranties
among the parties other than those set forth herein or herein provided for.
(g) INTERPRETATION. No provision of this Agreement
is to be interpreted for or against any party because that party or that
party's legal representative drafted such provision. For purposes of this
Agreement: "herein", "hereby", "hereunder", "herewith", "hereafter" and
"hereinafter" refer to this Agreement in its entirety, and not to any
particular subsection or paragraph. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, and all
of which shall constitute one and the same instrument.
(h) NOTICES. All notices and other communications
hereunder shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
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<PAGE>
IF TO THE EXECUTIVE: at the Executive's last address
appearing in the payroll/personnel records of the Company.
IF TO THE COMPANY:
International Recovery Corp.
700 S. Royal Poinciana Blvd.
Suite 800
Miami Springs, FL 33166
or to such other address as either party shall have furnished to the other
in writing in accordance herewith. Notices and communications shall be
effective when actually received by addressee.
IN WITNESS WHEREOF, the undersigned have hereunto set
their hands and seals the day and year first above written.
WITNESSES: INTERNATIONAL RECOVERY CORP.
/S/ SONIA ASENCIO
- -------------------
By: /S/ JOHN BENBOW
-------------------
/S/ JANET RUSAKOV John R. Benbow, Chairman of the
- ------------------- Compensation Committee
/S/ SONIA ASCENCIO /S/ RALPH WEISER
- ------------------- -------------------
Executive
/S/ JANET RUSAKOV
- -------------------
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<PAGE>
EXHIBIT A
SEVERANCE BENEFITS
(I) CASH PAYMENT. The Company shall pay to the
Executive the aggregate of the amounts determined pursuant to
clauses (A) through (C) below:
(A) if not already paid, the Executive's Base
Salary, unused vacation entitlement and car allowance through the
Date of Termination; and
(B) an amount equal to the Executive's average
annual Base Salary and annual car allowance (collectively, the "Average
Base") paid to the Executive during the five (5) fiscal years immediately
preceding the fiscal year of termination, MULTIPLIED BY three (3);
provided, however, that if the Date of Termination is in the last two (2)
years of the Employment Term, the Average Base shall be MULTIPLIED BY two
(2); and
(C) an amount equal to the average annual bonus
paid to the Executive during the five (5) fiscal years immediately
preceding the fiscal year of termination (the "Average Bonus"); MULTIPLIED
BY three (3); provided, however, that if the Date of Termination is in the
last two (2) years of the Employment Term, the Average Bonus shall be
MULTIPLIED BY two (2).
The Company shall pay to the Executive the aggregate
of the amounts determined pursuant to clauses (A) through (C) above in a
lump sum by cashier's check within five (5) business days after the
Executive's Date of Termination.
(II) MEDICAL, DENTAL, DISABILITY, LIFE INSURANCE
AND OTHER SIMILAR PLANS AND PROGRAMS. Until the earlier to occur of (i) the
last day of the Severance Period, (ii) the date on which the Executive
becomes eligible for the designated or comparable coverage as an employee
of another employer which provides or offers such coverage to its
employees, or (iii) in the case of benefits requiring employee
contributions, the date the Executive fails to make such contributions
pursuant to the Company's or the plan's instructions (which instructions
shall be reasonable and given to the Executive by the Company within five
(5) business days following the Executive's Date of Termination) or
otherwise cancels his coverage in accordance with plan provisions, the
Company shall continue to provide all benefits which the Executive and/or
his family is or would have been entitled to receive under all medical,
dental, disability, supplemental life, group life, accidental death and
executive accident insurance, and other similar plans and programs of the
Company and/or its subsidiaries or affiliates not otherwise provided for in
this Agreement, in each case on a basis
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<PAGE>
providing the Executive and/or his family with the opportunity to receive
benefits at least equal to the greatest level of benefits provided by the
Company and/or its subsidiaries or affiliates for the Executive under such
plans and programs as in effect at any time during the six (6) month period
immediately preceding the Notice of Termination. The benefits will be paid
for by the Company and, to the extent applicable, will be provided in
accordance with the provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"). If the Executive's
participation in any such plan or program is barred by COBRA or for any
other reason, the Company shall pay or provide for payment of such benefits
or substantially similar benefits to the Executive and/or his family.
(III) STOCK OPTIONS AND RIGHTS. If the Executive is
a participant in any stock option or stock purchase plan of the Company, or
if the Executive is the holder of any options, warrants or rights to
acquire capital stock of the Company (collectively "Stock Rights"), the
Executive shall have all of the rights set forth in the relevant plans and
Stock Rights. The phrase "Termination Date" as used in the Stock Rights
shall mean the end of the Severance Period with respect to Non-Qualified
Stock Options granted to the Executive, and the Executive's Date of
Termination with respect to Incentive Stock Options granted to Executive.
(IV) DEFERRED COMPENSATION. The Company shall pay
to the Executive the Executive's salary or incentive compensation awards
that have been previously deferred, if any, in accordance with the terms of
the Executive's individual deferred compensation agreement(s) or the
applicable plan(s), as appropriate. The last day of the Severance Period
will be considered to be the Executive's termination date for purposes of
such agreement(s).
(V) TAXES. Notwithstanding anything in the
foregoing to the contrary, the Company shall not be obligated to pay any
portion of the Severance Benefits otherwise payable to Executive pursuant
to Section 5.4 of this Agreement if the Company could not reasonably deduct
such portion solely by operation of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"). For purposes of this limitation: (i)
no portion of the Severance Benefits, the receipt or enjoyment of which
Executive shall have effectively waived in writing prior to the date of
payment, shall be taken into account; (ii) no portion of any Severance
Benefits shall be taken into account which, in the opinion of tax counsel
selected by the Company's independent auditors and acceptable to Executive,
does not constitute a "parachute payment" within the meaning of Section
280G(b)(2) of the Code; (iii) the Severance Benefits to Executive shall be
reduced only to the extent necessary so that the total Severance Benefits
(other than those referred to in clause (i or ii) ) in their entirety
constitute reasonable compensation for services actually rendered within
the meaning of Section 280G(b)(4) of the Code, in the opinion of the tax
counsel
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<PAGE>
referred to in clause (ii); and (iv) the value of any non-cash benefit or
any deferred payment or benefit included in the Severance Benefits shall be
determined by the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
Dated as of the 15th day of February, 1995.
/S/ SONIA ASENCIO /S/ RALPH WEISER
- ------------------- -------------------
Witness Executive
/S/ JANET RUSAKOV
- -------------------
Witness
INTERNATIONAL RECOVERY CORP.
/S/ SONIA ASENCIO By: /S/ JOHN R. BENBOW
- ------------------- -------------------
Witness John R. Benbow, Chairman of the
Compensation Committee
/S/ JANET RUSAKOV
- -------------------
Witness
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CONSOLIDATED AMENDMENT AGREEMENT NO. 3
THIS AMENDMENT AGREEMENT NO. 3 (the "Amendment Agreement") is
made and entered into as of this 5th day of May, 1995, effective as
of March 31, 1995, by and among INTERNATIONAL RECOVERY CORP., a
Florida corporation having its principal place of business in Miami
Springs, Florida (the "Borrower"), each of the undersigned
guarantors (each a "Guarantor" and collectively the "Guarantors"),
and NATIONSBANK OF FLORIDA, NATIONAL ASSOCIATION, a national
banking association and successor by merger to Citizens & Southern
National Bank of Florida (the "Lender"). Unless the context
otherwise requires, all terms used herein without definition shall
have the respective definitions provided therefor in the Credit
Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the Borrower, the Guarantors and the Lender have
entered into that certain Revolving Loan Agreement and Credit
Facility dated as of March 1, 1991, as amended by First Amendment
to Revolving Loan Agreement and Credit Facility dated April 13,
1993 by and among the Borrower, the Lender and the Guarantors and
as further amended by that certain Letter Agreement by and among
the Borrower, the Lender and the Guarantors, whereby the Lender has
made revolving credit loans to the Borrower, as at any time
hereafter amended, restated, modified or supplemented, the "Credit
Agreement"; and
WHEREAS, each of the Guarantors has executed in favor of the
Lender a Guaranty Agreement pursuant to which it has guaranteed the
payment and performance of the Borrower's obligations under the
Loan Documents (each a "Guaranty" and collectively the
"Guaranties"); and
WHEREAS, the Borrower has completed its acquisition of Trans-
Tec Services, Inc. and certain affiliates thereof and has requested
that the Lender formally consent to such acquisition; and
WHEREAS, the Lender is willing to consent to such acquisition
upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and
conditions herein set forth, it is hereby agreed as follows:
1. CREDIT AGREEMENT AMENDMENT. Subject to the conditions
hereof, the Credit Agreement is hereby amended, effective as of
March 31, 1995, as follows:
(a) Section 1 thereof is hereby amended to include the
following definitions, which definitions shall be added in
alphabetical order therein and the subsections thereof
renumbered accordingly:
<PAGE>
"'Consolidated Capitalization' means, at any time at
which the amount thereof is to be determined, the sum of
Consolidated Funded Indebtedness plus Consolidated
Shareholders' Equity."
"'Consolidated Current Liabilities' means the aggregate
amount carried as current liabilities on the books of the
Borrower and its Subsidiaries, on a consolidated basis
and after eliminating all intercompany items, determined
in accordance with Generally Accepted Accounting
Principles applied on a Consistent Basis, less any such
amount constituting Obligations of the Borrower incurred
pursuant to this Agreement."
"'Consolidated EBITDA' means, with respect to the
Borrower and its Subsidiaries for any period of
computation thereof, the sum of, without duplication, (i)
Consolidated Net Income, (ii) Consolidated Interest
Expense, (iii) provision for taxes, (iv) depreciation,
and (v) amortization, all determined on a consolidated
basis in accordance with Generally Accepted Accounting
Principles applied on a Consistent Basis."
"'Consolidated Fixed Charge Coverage Ratio' means, with
respect to any Four-Quarter Period, the ratio of (i) the
sum, for such period, of Consolidated EBITDA, minus
maintenance capital expenditures to (ii) Consolidated
Fixed Charges for such period."
"'Consolidated Fixed Charges' means, with respect to
Borrower and its Subsidiaries for any period of
computation thereof, the sum of, without duplication, (i)
Consolidated Interest Expense, (ii) Current Maturities of
Long-Term Debt (including all capital lease obligations)
and (iii) all cash dividends and distributions paid
during such period (regardless of when declared) on any
shares of capital stock of the Borrower then outstanding,
all determined on a consolidated basis in accordance with
Generally Accepted Accounting Principles applied on a
Consistent Basis."
"'Consolidated Funded Indebtedness' means, at any time as
of which the amount thereof is to be determined, (i) all
Indebtedness for Money Borrowed (excluding from the
computation thereof Consolidated Current Liabilities
other than Current Maturities of Long-Term Debt), plus
(ii) the face amount of all outstanding standby letters
of credit issued for the account of the Borrower or any
of its Subsidiaries and all obligations (to the extent
not duplicative) arising under such letters of credit,
all determined on a consolidated basis in accordance with
Generally Accepted Accounting Principles applied on a
Consistent Basis."
2
<PAGE>
"'Consolidated Interest Expense' means, with respect to
any period of computation thereof, the gross interest
expense of the Borrower and its Subsidiaries, including
without limitation (i) the amortization of debt
discounts, (ii) the amortization of all fees payable in
connection with the incurrence of Indebtedness to the
extent included in interest expense and (iii) the portion
of any payments made in connection with Capital Leases
allocable to interest expense, all determined on a
consolidated basis in accordance with Generally Accepted
Accounting Principles applied on a Consistent Basis."
"'Consolidated Net Income' means, for the Borrower and
its Subsidiaries, for any period of computation thereof,
the amount which, in conformity with Generally Accepted
Accounting Principles, would be set forth opposite the
caption "Net Income" (or any like caption) on a
consolidated statement of earnings of the Borrower and
its Subsidiaries."
"'Consolidated Shareholders' Equity' means at any time as
of which the amount thereof is to be determined, the sum
of the following in respect of the Borrower and its
Subsidiaries (determined on a consolidated basis and
excluding intercompany items among the Borrower and its
Subsidiaries and any upward adjustment after December 31,
1994 due to revaluation of assets): (i) the amount of
issued and outstanding share capital, plus (ii) the
amount of additional paid-in capital and retained income
(or, in the case of a deficit, minus the amount of such
deficit), plus (iii) the amount of any foreign currency
translation adjustment (if positive, or, if negative,
minus the amount of such translation adjustment) minus
(iv) the book value of any treasury stock and the book
value of any stock subscription receivables, all as
determined in accordance with Generally Accepted
Accounting Principles applied on a Consistent Basis."
"'Consolidated Working Assets' means, at any time as of
which the amount thereof is to be determined, the sum of
cash plus the book value of cash equivalents, accounts
receivable net of allowance for doubtful accounts,
inventory and prepaid fuel, all determined on a
consolidated basis in accordance with Generally Accepted
Accounting Principles applied on a Consistent Basis."
"'Current Maturities of Long-Term Debt' means, with
respect to Indebtedness for Money Borrowed that matures
more than one year from the date of its creation or
matures within one year of the date of its creation but
is renewable or extendable, at the option of the Borrower
or any Subsidiary, to a date more than one year from the
date of its creation, all payments in respect thereof
3
<PAGE>
that are required to be made within one year from the
date of any determination thereof."
"'Four-Quarter Period' means any four consecutive fiscal
quarters of the Borrower and its Subsidiaries taken
together as one accounting period."
"'Indebtedness for Money Borrowed' means for the Borrower
and its Subsidiaries on a consolidated basis, all
indebtedness of the Borrower or any of its Subsidiaries
in respect of money borrowed, including without
limitation all capital leases and the deferred purchase
price of any property or asset, evidenced by a promissory
note, bond, debenture or similar written obligation for
the payment of money (including without limitation
conditional sales contracts or similar title retention
agreements)."
(b) Section 1 thereof is hereby further amended to
delete the definition of "Tangible Net Worth" and to replace
such definition in its entirety with the following:
"'Consolidated Tangible Net Worth' means at any time as
of which the amount thereof is to be determined,
Consolidated Shareholders' Equity less (without
duplication of deductions in respect of items already
deducted in arriving at surplus and retained earnings)
the net book value of all assets which would be treated
as intangible assets, all as determined on a consolidated
basis in accordance with Generally Accepted Accounting
Principles applied on a Consistent Basis."
(c) Section 8.4 thereof is hereby amended and restated
in its entirety to read as follows:
"8.4 Quarterly Compliance Certificate. Concurrently
with the delivery of the financial statements referred to
above, the Borrower shall provide the Bank written
calculations, certified as authentic by the Chief
Financial Officer, President, Executive Vice President or
Chairman of the Board of the Borrower, setting forth and
evidencing full compliance with all affirmative and
negative loan covenants as set forth in the Commitment
Letter and in this Agreement. The Chief Financial
Officer, President, Executive Vice President or Chairman
of the Board of Borrower shall also certify, in the
Quarterly Compliance Certificate, that the Borrower and
the Subsidiaries are (i) current with all trade payables,
except trade payables contested in good faith in the
ordinary course of business, and (ii) in full compliance
with the established Standby and Documentary Letters of
Credit sublimits and terms."
4
<PAGE>
(d) A new Section 8.18 is hereby added thereto to read
in its entirety as follows:
"8.18 New Subsidiaries. In the event of the acquisition
or creation of any new Subsidiary, cause to be delivered
to the Lender each of the following within thirty (30)
days of the acquisition or creation of such Subsidiary:
(i) a Guaranty, substantially in the form of
Exhibit "D" attached hereto, executed by such Subsidiary,
substantially in the form of the Guaranty;
(ii) an opinion of counsel to such Subsidiary dated
as of the date of delivery of such Guaranty and addressed
to the Lender, in form and substance reasonably
acceptable to the Lender, to the effect that:
(A) such Subsidiary is duly organized,
validly existing and in good standing in the
jurisdiction of its organization, has the requisite
power and authority to own its properties and
conduct its business as then owned and proposed to
be conducted and is duly qualified to transact
business and is in good standing as a foreign
corporation in each other jurisdiction in which the
character of the properties owned or leased, or the
business carried on by it, requires such
qualification and in which the failure to so
qualify could reasonably be expected to have a
material adverse effect on the condition, financial
or otherwise, of the Borrower and its Subsidiaries
taken as a whole; and
(B) the execution, delivery and
performance of such Guaranty have been duly
authorized by all requisite corporate action
(including any required shareholder approval), such
Guaranty has been duly executed and delivered and
constitutes a valid and binding obligation of such
Subsidiary, enforceable against such Subsidiary in
accordance with its terms, subject to applicable
bankruptcy, moratorium, insolvency, reorganization
or other similar law affecting the enforceability of
creditors' rights generally and to the effect of
general principles of equity which may limit the
availability of equitable remedies (whether in a
proceeding at law or in equity).
(iii) current copies of the charter or other
organizational documents, any bylaws of such Subsidiary,
minutes of duly called and conducted meetings (or duly
effected consent actions) of the Board of Directors, or
appropriate committees thereof (and, if required by such
5
<PAGE>
charter or other organizational documents, bylaws or by
applicable laws, of the shareholders) of such Subsidiary
authorizing the actions and the execution, delivery and
performance of such Guaranty."
(e) A new Section 8.19 is hereby added thereto to read
in its entirety as follows:
"8.19 Covenants Extending to Subsidiaries. Without
duplication, Borrower will cause each of its Subsidiaries
to do with respect to itself, its business and its
assets, each of the things required of the Borrower in
Sections 8.8, 8.9, 8.11, 8.12, 8.15 and 8.16 hereof."
(f) The first sentence of Section 9 thereof is hereby
amended in its entirety to read as follows:
"Borrower agrees that during the term of this Agreement
and so long thereafter as Obligations remain outstanding,
Borrower will not, nor will it permit any Subsidiary to:"
(g) Section 9.2 thereof is hereby amended in its
entirety to read as follows:
"9.2 Minimum Consolidated Tangible Net Worth. Permit its
Consolidated Tangible Net Worth at any time during any
period set forth to be less than the amounts set forth
opposite such period below:
Consolidated
Period Tangible Net Worth
March 31, 1995 through and including $36,000,000
March 30, 1996
March 31, 1996 through and including $41,000,000
March 30, 1997
March 31, 1997 and thereafter $46,000,000"
(h) Section 9.3 thereof is hereby amended in its
entirety to read as follows:
"9.3 Consolidated Funded Indebtedness to Consolidated
Capitalization. Permit at any time the ratio of
Consolidated Funded Indebtedness to Consolidated
Capitalization to be equal to or greater than .55 to
1.00.
(i) Section 9.4 thereof is hereby amended in its
entirety to read as follows:
"9.4 Consolidated Fixed Charge Coverage Ratio. Permit
the Consolidated Fixed Charge Coverage Ratio to be at any
time less than 1.35 to 1.00.
6
<PAGE>
(j) Section 9.5 thereof is hereby amended in its
entirety to read as follows:
"9.5 Working Asset Coverage Ratio. Permit at any time
the ratio of (i) Consolidated Working Assets to (ii) the
sum of (A) Obligations of the Borrower under this
Agreement plus (B) trade accounts payable to be less than
1.125 to 1.00.
(k) Section 9.13 thereof is hereby amended in its
entirety to read as follows:
"9.13 Dividends. Pay or declare any dividends (other
than dividends payable in capital stock of Borrower) or
apply any of its property or assets to the purchase,
redemption or other retirement of Borrower's capital
stock or in any way reduce its capital structure.
However, the Borrower may (a) purchase its capital stock
provided that (i) the aggregate number of shares
purchased through March 31, 1996 does not exceed 400,000
shares, and (ii) the aggregate total value of stock
purchased from the date of this Agreement through March
31, 1996 does not exceed $8,000,000; (b) issue stock as
a dividend up to 400,000 shares provided that the
aggregate total value of stock so issued shall not exceed
$8,000,000; and (c) declare and pay cash dividends on
outstanding shares of any class of its capital stock
provided that the aggregate amount of such dividends
declared or paid during any Four-Quarter Period shall not
exceed 25% of Consolidated Net Income for such Four-
Quarter Period so long as prior to such actions in (a),
(b) or (c) above and after giving effect thereto, the
Borrower is in compliance with all terms, conditions,
covenants, and representations and warranties in the
Agreement, and prior to such actions defined in (a), (b)
and (c) above and after giving effect thereto, no Event
of Default has or will occur.
(j) Section 12.13 thereof is hereby amended to provide
that the address for notices to be sent to the Lender is as
follows:
"NationsBank of Florida, National Association
150 S.E. Third Ave.
Miami, Florida 33131
Attention: Corporate Banking Department"
(l) Exhibit D as attached hereto is hereby added as
Exhibit "D" to the Credit Agreement.
2. AMENDMENT OF GUARANTY. The Guaranty is hereby amended,
effective as of March 31, 1995, as follows:
7
<PAGE>
(a) The introductory paragraph immediately preceding
Section 1 thereof is hereby amended and restated in its
entirety as follows:
"That for and in consideration of the sum of $10.00
and other good and valuable consideration in hand paid to
each Guarantor by Lender simultaneously with the
execution and delivery of these presents, the receipt
whereof is hereby acknowledged, and in consideration of
the making of the loan described in Exhibit "A", attached
hereto and made a part hereof, hereinafter referred to as
the "Loan" to the Borrower designated in said Exhibit "A"
hereinafter referred to as "Borrower", and in
consideration and acknowledgement that each Guarantor
will substantially benefit from the making of the Loan to
the Borrower, each Guarantor covenants and agrees with
Lender as follows:"
(b) Section 1 thereof is hereby amended and restated in
its entirety as follows:
"1. Guarantors absolutely and unconditionally
guaranty, jointly and severally, to Lender, with full
power to satisfy, discharge, release, foreclose, assign
and transfer the within Guaranty and to designate a
substitute nominee in the place of Lender and its
successors, participants, endorsees or assigns, the due
performance and full and prompt payment, whether at
maturity or by acceleration or otherwise, of any and all
Borrower's Liabilities (as hereinafter defined)
(hereinafter collectively referred to as the "Guarantors'
Obligations"); provided, however, that the liability of
any Guarantor hereunder with respect to the Guarantors
Obligations shall not exceed at any time the Maximum
Amount (as hereinafter defined). The "Maximum Amount"
means the greater of (x) the aggregate amount of all
advances to or investments in the Guarantor made directly
or indirectly with the proceeds of loans and advances
made to the Borrower under the Credit Agreement or (y)
95% of (a) the fair salable value of the assets of the
Guarantor as of the date hereof minus (b) the total
liabilities of the Guarantor (including contingent
liabilities, but excluding liabilities of the Guarantor
under this Guaranty and the other Loan Documents executed
by the Guarantor) as of the date hereof; provided,
further, that if the calculation of the Maximum Amount in
the manner provided above as of the date payment is
required of the Guarantor pursuant to this Guaranty would
result in a greater positive number, then the Maximum
Amount shall be deemed to be such greater positive
number."
8
<PAGE>
(c) Section 2 thereof is hereby amended and restated in
its entirety as follows:
"2. For purposes of this Guaranty, "Borrower's
Liabilities" shall mean and include any and all advances
(including those made by Lender to protect, enlarge or
preserve the priority, propriety, or amount of any lien
in favor of the Lender against mechanic's lien, equitable
lien, or statutory claimants, or otherwise), debts,
obligations and liabilities of Borrower pursuant to the
terms of the Credit Agreement, the Note and all other
Loan Documents executed in connection therewith
heretofore, now, or hereafter made, incurred or created,
extended, renewed, replaced, refinanced or restructured,
whether or not from time to time decreased or
extinguished and later increased, created or incurred,
whether voluntary or involuntary and, however arising,
whether due or not, absolute or contingent, liquidated or
non-liquidated, determined or undetermined, and whether
Borrower may be liable individually or jointly with
others, or whether recovery upon such indebtedness may be
or hereafter become barred by any statute of limitations,
or whether such indebtedness may be or hereafter become
otherwise unenforceable (collectively referred to
hereinafter as the "Borrower's Liabilities"). This is a
continuing Guaranty relating to the Borrower's
Liabilities, and any other indebtedness arising under
subsequent or successive transactions which increase the
Borrower's Liabilities, and said Guaranty shall be
irrevocable and remain outstanding until all the
Borrower's Liabilities are satisfied in full and the
Lender shall have no further obligation to make loans and
advances under the Credit Agreement."
(d) Section 4 thereof is hereby amended as follows:
(i) The reference in clause (a) thereof to
"indebtedness" is hereby amended to refer to "Borrower's
Liabilities".
(ii) The reference in clause (b) thereof to "or
the indebtedness guaranteed," shall be replaced with "and the
Guarantors' Obligations and".
(iii)The reference in clause (d) thereof to "of the
endorsers or guarantors" shall be replaced with
"endorsers or guarantors of the Borrower's Liabilities".
(e) Section 5 thereof is hereby amended and restated in
its entirety to read as follows:
"5. Each Guarantor waives any right to require
Lender to (a) proceed against Borrower; (b) proceed
9
<PAGE>
against or exhaust any security held from Borrower; or
(c) pursue any other remedy in Lender's power whatsoever.
Guarantor waives any defense arising by reason of any
disability or other defense of Borrower or by reason of
the cessation from any cause whatsoever of the liability
of Borrower to Lender. Until all the Borrower's
Liabilities shall have been paid in full and the Lender
shall have no further obligation to make loans and
advances under the Credit Agreement, each Guarantor
waives any right to endorse any remedy which Lender now
has or may hereafter have against Borrower, and waives
any benefit of, and any right to participate in, any
security now or hereafter held by Lender as collateral
security for the Borrower's Liabilities. Each Guarantor
waives all presentments, demands for performance, notices
of non-performance, protests, notices of dishonor,
notices of acceptance of this Guaranty and of the
existence, creation, or incurring of new or additional
indebtedness; any defense or circumstance which might
otherwise constitute a legal or equitable discharge of a
guarantor or a surety; and all rights under any state or
federal statute dealing with or affecting the rights of
creditors. Each Guarantor covenants to cause Borrower to
maintain and preserve the enforceability of any
instruments now or hereafter executed in favor of Lender,
and to take no action of any kind which might be the
basis for a claim that such Guarantor has any defense
hereunder in connection with the above-mentioned Loan
Documents, other than payment in full of the Borrower's
Liabilities. Each Guarantor waives any right or claim of
right to cause a marshalling of Borrower's assets or to
require Lender to proceed against the Guarantors or any
other guarantor of the Borrower's Liabilities in any
particular order. No delay on the part of Lender in the
exercise of any right, power or privilege under the Loan
Documents or under this Guaranty shall operate as a
waiver of any such privilege, power or right."
(f) Section 6 thereof is hereby amended as follows:
(i) The first word thereof is hereby deleted and
replaced with the following phrase:
"Until the Borrower's Liabilities are paid in full
and the Lender is under no further obligation to
make loans and advances under the Credit Agreement,
any"
(ii) References therein to "indebtedness of
Borrower to Lender" are hereby replaced with "Borrower's
Liabilities".
10
<PAGE>
(iii)The following two sentences are hereby added to
the end of such Section:
"Guarantor, at the request of the Lender, shall
execute such further documents in favor of the
Lender to further evidence and support the purpose
of this Section 6. Each Guarantor hereby
irrevocably waives and releases any right or rights
of subrogation or contribution existing at law, by
contract or otherwise to recover all or a portion
of any payment made hereunder from the Borrower or
any other guarantor.
(g) Section 7 thereof is hereby deleted in its entirety
and the remaining Sections thereof renumbered accordingly.
(h) Section 8 thereof is hereby amended as follows:
(i) The phrase "obligations and liabilities of
Borrower and/or Guarantor to Lender, whether direct or
contingent, in connection with the Loan Documents
hereinabove referred to," is hereby replaced with
"Guarantors' Obligations".
(ii) The last two words in such Section are
hereby deleted and replace with the following phrase:
", jointly and severally, by Guarantors without any
offset of any kind whatsoever, without the Lender
first being required to make demand upon the
Borrower or pursue any of its rights against
Borrower, or against any other person, including
other guarantors (whether or not party to this
Guaranty)."
(i) Section 9 thereof is hereby amended to replace the
phrase "covering said indebtedness" in each place that it
occurs with the phrase "executed in connection with this
Guaranty or the Guarantors' Obligations hereunder".
(j) Section 10 thereof is hereby amended to replace the
phrase "liabilities or obligations of Borrower" with the
phrase "of Borrower's Liabilities".
(k) The last sentence of Section 11 thereof is hereby
amended and restated in its entirety as follows:
"Any action taken by Lender pursuant to the provisions
herein contained or contained in the Credit Agreement,
the Note or the Loan Documents, shall not release the
Guarantor until all of the Borrower's Liabilities are
paid in full and the Lender shall have no further
11
<PAGE>
obligation to make loans and advances under the Credit
Agreement."
(l) Section 13 thereof is hereby renumbered Section 14
and the address of the Lender is hereby amended and restated
in is entirety as follows:
"NationsBank of Florida,
National Association
150 S.E. Third Avenue
Miami, Florida 33131
Attention: Corporate Banking"
(m) New Sections 12 and 13 (as renumbered in accordance
with Subsection 2(g) above) are hereby added thereto to read
in their entirety as follows:
"12. Guarantors will upon demand pay to the Lender,
jointly and severally, the amount of any and all
reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents,
which it may reasonably incur in connection with
enforcement of this Guaranty or the failure by any
Guarantor to perform or observe any of the provisions
hereof. Guarantors agree to indemnify and hold harmless
the Lender from and against any and all claims, demands,
losses, judgments and liabilities (including liabilities
for penalties) of whatsoever kind or nature, growing out
of or resulting from this Guaranty or the exercise by the
Lender of any right or remedy granted to it hereunder or
under the other Loan Documents, other than such items
arising out of the bad faith, gross negligence or willful
misconduct on the part of the Lender or an officer, co-
officer, director, co-director, employee, co-employee,
agent or co-agent thereof or breach of this Agreement by
the Lender or an officer, co-officer, director, co-
director, employee, co-employee, agent or co-agent
thereof. If and to the extent that the obligations of
the Guarantors under this Section 14 are unenforceable
for any reason, Guarantors hereby agree to make the
maximum contribution to the payment and satisfaction of
such obligations which is permissible under applicable
law.
13. If claim is ever made upon the Lender for
repayment or recovery of any amount or amounts received
in payment or on account of the Guarantors' Obligations
and the Lender repays all or part of said amount by
reason of (a) any judgment, decree or order of any court
or administrative body having jurisdiction over such
payee or any of its property, or (b) any settlement or
compromise of any such claim effected by the Lender with
any such claimant (including the original obligor), then
12
<PAGE>
and in such event each Guarantor agrees that any such
judgment, decree, order, settlement or compromise shall
be binding upon it, notwithstanding any revocation hereof
or the cancellation of any Note or other instrument
evidencing any Guaranteed Obligation or any security
therefor, and Guarantors shall be and remain jointly and
severally liable to the Lender for the amount so repaid
or recovered to the same extent as if such amount had
never originally been received by the Lender."
3. CONSENT TO TRANS-TEC, INC. ACQUISITION. The Lender
hereby consents to the acquisition of (i) certain assets of Trans-
Tec Services, Inc., a New York corporation, and Trans-Tec
Servicios, S.A., a Costa Rica corporation, by Trans-Tec Services,
Inc., a Delaware corporation ("Trans-Tec Delaware") and the
formation and operation of Trans-Tec Delaware as a new Subsidiary;
and (ii) all of the outstanding capital stock of Trans-Tec (UK)
Ltd., a United Kingdom corporation ("Trans-Tec UK") by Borrower,
and the operation of Trans-Tec UK and its subsidiary, Trans-Tec
(Singapore), Ltd., a Singapore corporation, as new Subsidiaries;
and the Lender agrees that the foregoing transactions, and the
indebtedness incurred by Borrower in connection therewith, do not
violate Sections 9.6, 9.7 or 9.11 of the Credit Agreement.
4. REPRESENTATIONS AND WARRANTIES. In order to induce the
Lender to enter into this Amendment Agreement, the Borrower hereby
represents and warrants that the Credit Agreement has been re-
examined by the Borrower and that except as disclosed by the
Borrower in writing to the Lender as of the date hereof:
(a) The representations and warranties made by the
Borrowers in Section 10 thereof are true on and as of the date
hereof;
(b) There has been no material adverse change in the
condition, financial or otherwise, of the Borrower and its
Subsidiaries since the date of the most recent consolidated
financial statements of the Borrower and its Subsidiaries
delivered to the Lender under Section 8.3 thereof, other than
changes in the ordinary course of business;
(c) The business and properties of the Borrower and its
Subsidiaries are not, and since the date of the most recent
consolidated financial statements of the Borrower and its
Subsidiaries delivered to the Lender under Section 8.3
thereof, have not been, adversely affected in any substantial
way as the result of any fire, explosion, earthquake,
accident, strike, lockout, combination of workers, flood,
embargo, riot, activities of armed forces, war or acts of God
or the public enemy, or cancellation or loss of any major
contracts; and
13
<PAGE>
(d) After giving effect to this Amendment Agreement, no
condition exists which, upon the effectiveness of the
amendment contemplated hereby, would constitute a Default or
an Event of Default on the part of the Borrower under the
Credit Agreement or the other Loan Documents, either
immediately or with the lapse of time or the giving of notice,
or both.
5. CONDITIONS PRECEDENT. The effectiveness of this Amendment
Agreement is subject to the receipt by the Lender of the following:
(i) four counterparts of this Amendment
Agreement duly executed by all signatories hereto;
(ii) opinion of counsel for the Borrower and the
Guarantors as to the authorization, execution and
delivery of this Amendment Agreement and the
enforceability of the same against the Borrower and the
Guarantors in accordance with its terms;
(iii) resolutions of the Board of Directors or
other governing body of the Borrower and the Guarantors
approving this Amendment Agreement certified by the
Secretary of such Borrower or Guarantor;
(iv) a Guaranty executed by Trans-Tec, Inc. and
all other Subsidiaries of the Borrower not party to a
Guaranty;
(v) a complete list as of the date hereof of the
Subsidiaries of the Borrower, stating the authorized and
issued capitalization of each Subsidiary, the number of
shares or other equity interests of each class of stock
or interests issued and outstanding of each such
Subsidiary and the number and/or percentage of
outstanding shares or other equity interest including
options, warrants and other rights to acquire any
interest of each such class of capital stock or equity
interest owned by the Borrower or by any such Subsidiary;
and
(vi) copies of all additional agreements,
instruments and documents which the Lender may reasonably
request, such documents, when appropriate, to be
certified by appropriate governmental authorities.
All proceedings of the Borrower relating to the matters provided
for herein shall be satisfactory to the Lender and its counsel.
6. ENTIRE AGREEMENT. This Amendment Agreement sets forth
the entire understanding and agreement of the parties hereto in
relation to the subject matter hereof and supersedes any prior
negotiations and agreements among the parties relative to such
14
<PAGE>
subject matter. No promise, condition, representation or warranty,
express or implied, not herein set forth shall bind any party
hereto, and no one of them has relied on any such promise,
condition, representation or warranty. Each of the parties hereto
acknowledges that, except as in this Amendment Agreement otherwise
expressly stated, no representations, warranties or commitments,
express or implied, have been made by any party to the other. None
of the terms or conditions of this Amendment Agreement may be
changed, modified, waived or canceled orally or otherwise, except
by writing, signed by all the parties hereto, specifying such
change, modification, waiver or cancellation of such terms or
conditions, or of any proceeding or succeeding breach thereof.
7. FULL FORCE AND EFFECT OF AGREEMENT. Except as hereby
specifically amended, modified or supplemented, the Credit
Agreement and all other Loan Documents are hereby confirmed and
ratified in all respects and shall remain in full force and effect
according to their respective terms.
8. COUNTERPARTS. This Amendment Agreement may be executed
in any number of counterparts, each of which shall be deemed an
original as against any party whose signature appears thereon, and
all of which shall together constitute one and the same instrument.
9. GOVERNING LAW. THIS AMENDMENT AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY THE LAW OF THE STATE OF FLORIDA, WITHOUT
REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
THE BORROWER HEREBY (i) SUBMITS TO THE JURISDICTION AND VENUE OF
THE STATE AND FEDERAL COURTS OF FLORIDA FOR THE PURPOSES OF
RESOLVING DISPUTES HEREUNDER OR UNDER ANY OF THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A PARTY OR FOR PURPOSES OF COLLECTION AND
(ii) WAIVES TRIAL BY JURY IN CONNECTION WITH ANY SUCH LITIGATION.
10. ENFORCEABILITY. Should any one or more of the provisions
of this Amendment Agreement be determined to be illegal or
unenforceable as to one or more of the parties hereto, all other
provisions nevertheless shall remain effective and binding on the
parties hereto.
11. CREDIT AGREEMENT. All references in any of the Loan
Documents to the Credit Agreement shall mean and include the Credit
Agreement as amended hereby.
12. GUARANTORS. Each of the Guarantors joins in the
execution of this Amendment Agreement for the purpose of
(i) consenting to the amendment hereby of the Credit Agreement and
the Guaranties and (ii) hereby confirming its obligations under the
Guaranty to which it is a party.
13. SUCCESSORS AND ASSIGNS. This Amendment Agreement shall
be binding upon and inure to the benefit of each of the Borrower,
the Lenders, the Lender and their respective successors, assigns
and legal representatives; provided, however, that the Borrower,
15
<PAGE>
without the prior consent of the Lenders, may not assign any
rights, powers, duties or obligations hereunder.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment Agreement to be duly executed by their duly authorized
officers, all as of the day and year first above written.
BORROWER:
INTERNATIONAL RECOVERY CORP.
By: /S/ ROBERT S. TOCCI
-------------------
Robert S. Tocci
Executive Vice President
Signature Page 1 of 3
<PAGE>
GUARANTORS:
ADVANCE PETROLEUM, INC., a Florida
corporation
INTERNATIONAL PETROLEUM CORPORATION,
a Florida corporation
INTERNATIONAL PETROLEUM CORPORATION
OF LOUISIANA, a Louisiana corporation
INTERNATIONAL PETROLEUM CORPORATION
OF LAFAYETTE, a Louisiana corporation
INTERNATIONAL ENVIRONMENTAL SERVICES,
INC., a Florida corporation
RESOURCE RECOVERY OF AMERICA, INC.,
a Florida corporation
CHEROKEE GROUP, INC., a Florida
corporation
INTERNATIONAL PETROLEUM CORPORATION
OF GEORGIA, a Georgia corporation
INTERNATIONAL PETROLEUM CORPORATION
OF MARYLAND, a Maryland corporation
INTERNATIONAL PETROLEUM CORPORATION
OF DELAWARE, a Delaware corporation
ADVANCE AVIATION SERVICES, INC.,
a Florida corporation
WORLD FUEL SERVICES, INC., a Texas
corporation
WORLD FUEL SERVICES, LTD., a
United Kingdom corporation
RESOURCE RECOVERY MID SOUTH, INC.,
a Virginia corporation
RESOURCE RECOVERY ATLANTIC, INC.,
a Delaware corporation
TRANS-TEC SERVICES, INC., a Delaware
corporation
TRANS-TEC SERVICES (UK) LTD, a
United Kingdom corporation
TRANS-TEC SERVICES (SINGAPORE) LTD, a
Singapore corporation
By: /S/ ROBERT S. TOCCI
-------------------
Robert S. Tocci, Executive Vice
President of International Recovery
Corp., as attorney-in-fact
Signature Page 2 of 3
<PAGE>
LENDER: NATIONSBANK OF FLORIDA, NATIONAL
ASSOCIATION
By: /S/ STEPHEN HANAS
--------------------
Name: Stephen Hanas
Title: Vice President
Signature Page 3 of 3
PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED (THE "1933 ACT"), OR ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT
BE NEGOTIATED, SOLD, ASSIGNED OR TRANSFERRED UNLESS SUCH TRANSFER IS
REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS, OR
UNLESS SUCH TRANSFER, IN THE REASONABLE OPINION OF COUNSEL TO THE DEBTOR,
IS EXEMPT FROM SUCH REGISTRATION OR IS NOT REQUIRED TO BE SO REGISTERED.
$1,605,000 January 3, 1995
INTERNATIONAL RECOVERY CORP., a Florida corporation (hereinafter
referred to as "Debtor"), for value received, hereby promises to pay to the
order of Theofilos A. Vatis (hereinafter referred to as "Payee"), the
principal sum of $1,605,000 which shall be payable in three (3) equal,
annual installments of principal and interest, commencing on the first
anniversary of the date of this Note, and continuing on the same day each
year thereafter until this Note is paid in full. The principal amount
outstanding shall bear interest (computed on the basis of a 360-day year of
twelve 30-day months) at the annual rate of nine percent (9%). Debtor may
prepay this Note, in whole or in part, at any time and from time to time
without fee, premium or penalty.
Debtor shall be in default under this Note:
(a) If Debtor shall fail to make any payment of principal and interest due
hereunder within ten (10) days after the date due;
(b) If Debtor shall: (i) voluntarily commence any proceedings or file any
petitions seeking relief under Title 11 of the United States Code or any
other federal, state or foreign bankruptcy, insolvency or similar law; (ii)
consent to the institution of, or fail to controvert in a timely manner,
any such proceeding or the filing of any such petition; (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator
or similar official for Debtor or for a substantial part of its property;
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceedings; or (v) make a general assignment for
the benefit of creditors; or
(c) If an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking relief in respect to Debtor, or a substantial part of its property,
under Title 11 of the United States Code or any other federal, state, or
foreign bankruptcy, insolvency or similar law, and such proceeding or
petition shall continue undismissed for 90 days.
<PAGE>
In the event Debtor shall be in default under this Note, then, at the
option of Payee, the entire unpaid principal balance of this Note, together
with accrued interest thereon, may be declared, and thereupon immediately
shall become, due and payable. While in default, such unpaid principal and
interest shall bear interest at the rate of twelve percent (12%) per year.
In the event of default, Payee shall be entitled to recover all the costs
of collection of this Note, including reasonable attorney's fees and court
costs.
This Note has been issued pursuant to an Acquisition Agreement, dated
December 9, 1994, among Debtor, Payee and others (the "Acquisition
Agreement"), which agreement is incorporated herein by this reference.
Unless otherwise defined in this Note, capitalized terms used herein will
have the meanings assigned to them in the Acquisition Agreement.
Notwithstanding anything to the contrary contained in this Note, Debtor
shall have the right to offset, against any and all amounts payable under
this Note, any Indemnified Losses incurred or sustained by an Indemnitee in
accordance with the indemnification and contribution provisions set forth
in Section 9 of the Acquisition Agreement, except as provided in Section
9.7.1 therein with respect to Receivable Claims. To the extent of any such
offset, the principal amount outstanding under this Note shall be reduced,
and interest as stated herein shall accrue from the date of such offset
only on the principal balance as so reduced.
Debtor waives presentment, protest, demand, and diligence in
collection, and notice of protest, presentment, demand, dishonor and non-
payment in connection with this Note. This Note is to be construed in
accordance with the laws of the State of Florida.
THE DEBTOR HEREBY, AND THE PAYEE BY ITS ACCEPTANCE OF THIS NOTE,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY
HAVE TO TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, ANY GUARANTEE SIGNED
IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (VERBAL OR WRITTEN) OR ACTION OF ANY PARTY HERETO. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PAYEE MAKING THE LOAN EVIDENCED
BY THIS NOTE.
IN WITNESS WHEREOF, Debtor has caused this Note to be executed in
Wilmington, Delaware, on its behalf by its duly authorized officer on the
day and year first above written.
INTERNATIONAL RECOVERY CORP.,
a Florida corporation
By: /s/ Jerrold Blair
---------------------------
Jerrold Blair, President
-2-
PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED (THE "1933 ACT"), OR ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT
BE NEGOTIATED, SOLD, ASSIGNED OR TRANSFERRED UNLESS SUCH TRANSFER IS
REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS, OR
UNLESS SUCH TRANSFER, IN THE REASONABLE OPINION OF COUNSEL TO THE DEBTOR,
IS EXEMPT FROM SUCH REGISTRATION OR IS NOT REQUIRED TO BE SO REGISTERED.
$1,425,000 January 3, 1995
INTERNATIONAL RECOVERY CORP., a Florida corporation (hereinafter
referred to as "Debtor"), for value received, hereby promises to pay to the
order of Michael J. Kasbar hereinafter referred to as "Payee"), the
principal sum of $1,425,000 which shall be payable in three (3) equal,
annual installments of principal and interest, commencing on the first
anniversary of the date of this Note, and continuing on the same day each
year thereafter until this Note is paid in full. The principal amount
outstanding shall bear interest (computed on the basis of a 360-day year of
twelve 30-day months) at the annual rate of nine percent (9%). Debtor may
prepay this Note, in whole or in part, at any time and from time to time
without fee, premium or penalty.
Debtor shall be in default under this Note:
(a) If Debtor shall fail to make any payment of principal and interest due
hereunder within ten (10) days after the date due;
(b) If Debtor shall: (i) voluntarily commence any proceedings or file any
petitions seeking relief under Title 11 of the United States Code or any
other federal, state or foreign bankruptcy, insolvency or similar law; (ii)
consent to the institution of, or fail to controvert in a timely manner,
any such proceeding or the filing of any such petition; (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator
or similar official for Debtor or for a substantial part of its property;
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceedings; or (v) make a general assignment for
the benefit of creditors; or
(c) If an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking relief in respect to Debtor, or a substantial part of its property,
under Title 11 of the United States Code or any other federal, state, or
foreign bankruptcy, insolvency or similar law, and such proceeding or
petition shall continue undismissed for 90 days.
<PAGE>
In the event Debtor shall be in default under this Note, then, at the
option of Payee, the entire unpaid principal balance of this Note, together
with accrued interest thereon, may be declared, and thereupon immediately
shall become, due and payable. While in default, such unpaid principal and
interest shall bear interest at the rate of twelve percent (12%) per year.
In the event of default, Payee shall be entitled to recover all the costs
of collection of this Note, including reasonable attorney's fees and court
costs.
This Note has been issued pursuant to an Acquisition Agreement, dated
December 9, 1994, among Debtor, Payee and others (the "Acquisition
Agreement"), which agreement is incorporated herein by this reference.
Unless otherwise defined in this Note, capitalized terms used herein will
have the meanings assigned to them in the Acquisition Agreement.
Notwithstanding anything to the contrary contained in this Note, Debtor
shall have the right to offset, against any and all amounts payable under
this Note, any Indemnified Losses incurred or sustained by an Indemnitee in
accordance with the indemnification and contribution provisions set forth
in Section 9 of the Acquisition Agreement. To the extent of any such
offset, the principal amount outstanding under this Note shall be reduced,
and interest as stated herein shall accrue from the date of such offset
only on the principal balance as so reduced.
Debtor waives presentment, protest, demand, and diligence in
collection, and notice of protest, presentment, demand, dishonor and non-
payment in connection with this Note. This Note is to be construed in
accordance with the laws of the State of Florida.
THE DEBTOR HEREBY, AND THE PAYEE BY ITS ACCEPTANCE OF THIS NOTE,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY
HAVE TO TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, ANY GUARANTEE SIGNED
IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (VERBAL OR WRITTEN) OR ACTION OF ANY PARTY HERETO. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PAYEE MAKING THE LOAN EVIDENCED
BY THIS NOTE.
IN WITNESS WHEREOF, Debtor has caused this Note to be executed in
Wilmington, Delaware, on its behalf by its duly authorized officer on the
day and year first above written.
INTERNATIONAL RECOVERY CORP.,
a Florida corporation
By: /s/ Jerrold Blair
--------------------------
Jerrold Blair, President
-2-
PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED (THE "1933 ACT"), OR ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT
BE NEGOTIATED, SOLD, ASSIGNED OR TRANSFERRED UNLESS SUCH TRANSFER IS
REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS, OR
UNLESS SUCH TRANSFER, IN THE REASONABLE OPINION OF COUNSEL TO THE DEBTOR,
IS EXEMPT FROM SUCH REGISTRATION OR IS NOT REQUIRED TO BE SO REGISTERED.
$1,365,000 January 3, 1995
INTERNATIONAL RECOVERY CORP., a Florida corporation (hereinafter
referred to as "Debtor"), for value received, hereby promises to pay to the
order of Paul H. Stebbins (hereinafter referred to as "Payee"), the
principal sum of $1,365,000 which shall be payable in three (3) equal,
annual installments of principal and interest, commencing on the first
anniversary of the date of this Note, and continuing on the same day each
year thereafter until this Note is paid in full. The principal amount
outstanding shall bear interest (computed on the basis of a 360-day year of
twelve 30-day months) at the annual rate of nine percent (9%). Debtor may
prepay this Note, in whole or in part, at any time and from time to time
without fee, premium or penalty.
Debtor shall be in default under this Note:
(a) If Debtor shall fail to make any payment of principal and interest due
hereunder within ten (10) days after the date due;
(b) If Debtor shall: (i) voluntarily commence any proceedings or file any
petitions seeking relief under Title 11 of the United States Code or any
other federal, state or foreign bankruptcy, insolvency or similar law; (ii)
consent to the institution of, or fail to controvert in a timely manner,
any such proceeding or the filing of any such petition; (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator
or similar official for Debtor or for a substantial part of its property;
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceedings; or (v) make a general assignment for
the benefit of creditors; or
(c) If an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking relief in respect to Debtor, or a substantial part of its property,
under Title 11 of the United States Code or any other federal, state, or
foreign bankruptcy, insolvency or similar law, and such proceeding or
petition shall continue undismissed for 90 days.
<PAGE>
In the event Debtor shall be in default under this Note, then, at the
option of Payee, the entire unpaid principal balance of this Note, together
with accrued interest thereon, may be declared, and thereupon immediately
shall become, due and payable. While in default, such unpaid principal and
interest shall bear interest at the rate of twelve percent (12%) per year.
In the event of default, Payee shall be entitled to recover all the costs
of collection of this Note, including reasonable attorney's fees and court
costs.
This Note has been issued pursuant to an Acquisition Agreement, dated
December 9, 1994, among Debtor, Payee and others (the "Acquisition
Agreement"), which agreement is incorporated herein by this reference.
Unless otherwise defined in this Note, capitalized terms used herein will
have the meanings assigned to them in the Acquisition Agreement.
Notwithstanding anything to the contrary contained in this Note, Debtor
shall have the right to offset, against any and all amounts payable under
this Note, any Indemnified Losses incurred or sustained by an Indemnitee in
accordance with the indemnification and contribution provisions set forth
in Section 9 of the Acquisition Agreement. To the extent of any such
offset, the principal amount outstanding under this Note shall be reduced,
and interest as stated herein shall accrue from the date of such offset
only on the principal balance as so reduced.
Debtor waives presentment, protest, demand, and diligence in
collection, and notice of protest, presentment, demand, dishonor and non-
payment in connection with this Note. This Note is to be construed in
accordance with the laws of the State of Florida.
THE DEBTOR HEREBY, AND THE PAYEE BY ITS ACCEPTANCE OF THIS NOTE,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY
HAVE TO TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, ANY GUARANTEE SIGNED
IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (VERBAL OR WRITTEN) OR ACTION OF ANY PARTY HERETO. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PAYEE MAKING THE LOAN EVIDENCED
BY THIS NOTE.
IN WITNESS WHEREOF, Debtor has caused this Note to be executed in
Wilmington, Delaware, on its behalf by its duly authorized officer on the
day and year first above written.
INTERNATIONAL RECOVERY CORP.,
a Florida corporation
By: /s/ Jerrold Blair
--------------------------
Jerrold Blair, President
-2-
PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS
AMENDED (THE "1933 ACT"), OR ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT
BE NEGOTIATED, SOLD, ASSIGNED OR TRANSFERRED UNLESS SUCH TRANSFER IS
REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS, OR
UNLESS SUCH TRANSFER, IN THE REASONABLE OPINION OF COUNSEL TO THE DEBTOR,
IS EXEMPT FROM SUCH REGISTRATION OR IS NOT REQUIRED TO BE SO REGISTERED.
$1,605,000 January 3, 1995
INTERNATIONAL RECOVERY CORP., a Florida corporation (hereinafter
referred to as "Debtor"), for value received, hereby promises to pay to the
order of Stacey A. Polites (hereinafter referred to as "Payee"), the
principal sum of $1,605,000 which shall be payable in three (3) equal,
annual installments of principal and interest, commencing on the first
anniversary of the date of this Note, and continuing on the same day each
year thereafter until this Note is paid in full. The principal amount
outstanding shall bear interest (computed on the basis of a 360-day year of
twelve 30-day months) at the annual rate of nine percent (9%). Debtor may
prepay this Note, in whole or in part, at any time and from time to time
without fee, premium or penalty.
Debtor shall be in default under this Note:
(a) If Debtor shall fail to make any payment of principal and interest due
hereunder within ten (10) days after the date due;
(b) If Debtor shall: (i) voluntarily commence any proceedings or file any
petitions seeking relief under Title 11 of the United States Code or any
other federal, state or foreign bankruptcy, insolvency or similar law; (ii)
consent to the institution of, or fail to controvert in a timely manner,
any such proceeding or the filing of any such petition; (iii) apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator
or similar official for Debtor or for a substantial part of its property;
(iv) file an answer admitting the material allegations of a petition filed
against it in any such proceedings; or (v) make a general assignment for
the benefit of creditors; or
(c) If an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction
seeking relief in respect to Debtor, or a substantial part of its property,
under Title 11 of the United States Code or any other federal, state, or
foreign bankruptcy, insolvency or similar law, and such proceeding or
petition shall continue undismissed for 90 days.
<PAGE>
In the event Debtor shall be in default under this Note, then, at the
option of Payee, the entire unpaid principal balance of this Note, together
with accrued interest thereon, may be declared, and thereupon immediately
shall become, due and payable. While in default, such unpaid principal and
interest shall bear interest at the rate of twelve percent (12%) per year.
In the event of default, Payee shall be entitled to recover all the costs
of collection of this Note, including reasonable attorney's fees and court
costs.
This Note has been issued pursuant to an Acquisition Agreement, dated
December 9, 1994, among Debtor, Payee and others (the "Acquisition
Agreement"), which agreement is incorporated herein by this reference.
Unless otherwise defined in this Note, capitalized terms used herein will
have the meanings assigned to them in the Acquisition Agreement.
Notwithstanding anything to the contrary contained in this Note, Debtor
shall have the right to offset, against any and all amounts payable under
this Note, any Indemnified Losses incurred or sustained by an Indemnitee in
accordance with the indemnification and contribution provisions set forth
in Section 9 of the Acquisition Agreement, except as provided in Section
9.7.1 therein with respect to Receivable Claims. To the extent of any such
offset, the principal amount outstanding under this Note shall be reduced,
and interest as stated herein shall accrue from the date of such offset
only on the principal balance as so reduced.
Debtor waives presentment, protest, demand, and diligence in
collection, and notice of protest, presentment, demand, dishonor and non-
payment in connection with this Note. This Note is to be construed in
accordance with the laws of the State of Florida.
THE DEBTOR HEREBY, AND THE PAYEE BY ITS ACCEPTANCE OF THIS NOTE,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY
HAVE TO TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, ANY GUARANTEE SIGNED
IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (VERBAL OR WRITTEN) OR ACTION OF ANY PARTY HERETO. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PAYEE MAKING THE LOAN EVIDENCED
BY THIS NOTE.
IN WITNESS WHEREOF, Debtor has caused this Note to be executed in
Wilmington, Delaware, on its behalf by its duly authorized officer on the
day and year first above written.
INTERNATIONAL RECOVERY CORP.,
a Florida corporation
By: /s/ Jerrold Blair
--------------------------
Jerrold Blair, President
-2-
Exhibit 21
Subsidiaries of the Registrant
ADVANCE PETROLEUM, INC., a Florida corporation(1)
ADVANCE AVIATION SERVICES, INC., a Florida corporation(3)
AIR TERMINALING, INC., a Florida corporation(3)
INTERNATIONAL PETROLEUM CORPORATION, a Florida corporation(2)
INTERNATIONAL PETROLEUM CORPORATION OF LA, a Louisiana corporation(2)
INTERNATIONAL PETROLEUM CORPORATION OF LAFAYETTE, a Louisiana corporation
INTERNATIONAL PETROLEUM CORP. OF MARYLAND, a Maryland corporation(2)
INTERNATIONAL PETROLEUM CORP. OF GEORGIA, a Georgia corporation(2)
INTERNATIONAL PETROLEUM CORP. OF DELAWARE, a Delaware corporation(2)
INTERNATIONAL PETROLEUM CORP. OF PENNSYLVANIA, a Pennsylvania corporation(3)
INTERNATIONAL ENVIRONMENTAL SERVICES, INC., a Florida corporation
RESOURCE RECOVERY OF AMERICA, INC., a Florida corporation(5)
RESOURCE RECOVERY MID SOUTH, INC., a Virginia corporation(3)(4)(5)
RESOURCE RECOVERY ATLANTIC, INC., a Delaware corporation(3)(4)(5)
WORLD FUEL SERVICES, INC., a Texas corporation
WORLD FUEL SERVICES LTD., a United Kingdom corporation
WORLD FUEL SERVICES (SINGAPORE) PTE., LTD. a Singapore corporation
CHEROKEE GROUP, INC., a Florida corporation(5)
TRANS-TEC SERVICES, INC., a Delaware Corporation
TRANS-TEC SERVICES (UK) Ltd., a United Kingdom Corporation
TRANS-TEC SERVICES (SINGAPORE) Pte. Ltd., a Singapore Corporation(6)
(1) Advance Petroleum, Inc., operates under the name "World Fuel
Services, of FL.".
(2) These corporations collect and purchase used oil under the name
"International Oil Service."
(3) Inactive
(4) These corporations are subsidiaries of Resource Recovery of America,
Inc.
(5) These operations were discontinued by the Company in fiscal year
1993.
(6) This corporation is a subsidiary of Trans-Tec Services (UK) LTD.
Exhibit 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K, into
International Recovery Corp.'s previously filed Form S-3 Registration
Statement File No. 33-57935.
ARTHUR ANDERSEN LLP
Miami, Florida,
May 26, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ITS MARCH 31,
1995 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 10,907,000
<SECURITIES> 0
<RECEIVABLES> 43,366,000
<ALLOWANCES> 4,566,000
<INVENTORY> 3,714,000
<CURRENT-ASSETS> 58,006,000
<PP&E> 21,264,000
<DEPRECIATION> 5,680,000
<TOTAL-ASSETS> 89,536,000
<CURRENT-LIABILITIES> 30,486,000
<BONDS> 0
<COMMON> 52,000
0
0
<OTHER-SE> 52,014,000
<TOTAL-LIABILITY-AND-EQUITY> 89,536,000
<SALES> 361,891,000
<TOTAL-REVENUES> 361,891,000
<CGS> 334,134,000
<TOTAL-COSTS> 334,134,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,062,000
<INTEREST-EXPENSE> 263,000
<INCOME-PRETAX> 13,023,000
<INCOME-TAX> 4,935,000
<INCOME-CONTINUING> 8,088,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,088,000
<EPS-PRIMARY> 1.65
<EPS-DILUTED> 1.65
</TABLE>
