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, 1996
[ ] 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 _________________
COMMISSION FILE NUMBER 1-9533
WORLD FUEL SERVICES CORPORATION
(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:
NAME OF EXCHANGES
TITLE OF EACH CLASS: ON WHICH REGISTERED:
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Common Stock, par New York Stock Exchange
value $.01 per share 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 [ ].
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 $126,995,000
(computed by reference to the closing sale price as of May 16, 1996).
The registrant had 8,038,768 outstanding shares of common stock, par value $.01
per share, as of May 16, 1996.
Documents incorporated by reference:
Part III - Definitive Proxy Statement for the 1996 Annual Meeting of
Shareholders.
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TABLE OF CONTENTS
PAGE
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ITEM 1. BUSINESS 1
General 1
History 1
Aviation Fuel Services 2
Marine Fuel Services 3
Oil Recycling 4
Potential Liability and Insurance 4
Regulation 5
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 23
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE 23
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
OF THE REGISTRANT 24
ITEM 11. EXECUTIVE COMPENSATION 24
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT 24
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS 24
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K 25
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PART I
ITEM 1. BUSINESS
GENERAL
World Fuel Services Corporation (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 around-the-world single-supplier convenience, 24-hour service, and
competitively-priced aviation fuel to passenger, cargo and charter airlines. 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 international shipping companies and to the U.S. military.
Services include credit terms, 24-hour around-the-world service and
competitively priced fuel.
In its oil recycling business, the Company collects and recycles
non-hazardous petroleum products and petroleum contaminated liquids throughout
the Southern and Mid-Atlantic United States. The Company 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 7 in the accompanying financial
statements.
HISTORY
In August 1995, the stockholders of the Company approved a change in
the Company's name from International Recovery Corp. to World Fuel Services
Corporation.
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
five subsidiaries with principal offices in Florida, England, Singapore, and
Costa Rica; the Company conducts its marine fueling business through three
subsidiaries with principal offices in New Jersey, California, England and
Singapore, and its oil recycling business is conducted through five subsidiaries
with offices in Florida, Louisiana, 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.
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.
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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 6 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 Services group of companies. See "Item 7 -
Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 1 in the accompanying financial statements for additional
information.
In June 1995, the Company's common stock was split, on a 3-for-2 basis.
See Note 4 in the accompanying financial statements for additional information.
AVIATION FUEL SERVICES
The Company markets aviation fuel to passenger, cargo and charter
airlines. 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. 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.
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 collateralized 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
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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. 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, 1996.
During the fiscal years ended March 31, 1996, 1995 and 1994, none of
the Company's aviation fuel customers accounted for more than 10% of the
Company's consolidated revenue. The Company currently employs 65 persons in its
aviation fuel services segment.
MARINE FUEL SERVICES
The Company, through its Trans-Tec subsidiaries, markets marine fuel to
a broad base of customers, including international container and tanker
fleets, time charter operators, as well as U.S. military vessels. Fueling
services are provided throughout the world.
With strategic sales offices located in the United States, Singapore,
England, South Korea, South Africa and Costa Rica, Trans-Tec Services 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.
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 Services' 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. For this service, Trans-Tec
is paid a commission from the supplier.
Trans-Tec also acts as a reseller, when it purchases the fuel from a
supplier, marks it up, and resells the fuel to a customer at a profit. The
Company holds no inventory and assumes no price risk; however, in most resale
transactions the Company extends unsecured trade credit.
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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.
During the fiscal years ended March 31, 1996 and 1995, none of the
Company's marine fuel customers accounted for more than 10% of the Company's
consolidated revenue. The Company currently employs 67 persons in its marine
fueling segment.
OIL RECYCLING
The Company, through its International Petroleum Corporation
subsidiaries ("IPC"), collects, blends, and recycles petroleum products 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, anti-freeze 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
distillation process. The resulting recycled oil product is sold as is, or it
may be blended to customer specification. 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 utilizes a batch recycling process. The Company also has a collection
and transfer facility in Baltimore, Maryland, which has limited processing and
blending capabilities.
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 fiscal years ended March 31, 1996, 1995 and 1994, none of
the Company's recycled fuel customers accounted for more than 10% of the
Company's consolidated revenue. The Company currently employs 117 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
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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's financial position and
results of operations 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. The Company is
currently responsible to Federal and Florida 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. Under the terms of the sale, the
Company contractually transferred to the buyer the responsibility for the state
clean-up. The site has also qualified under the state reimbursement program,
which the Company anticipates will cover the cost of the clean-up. The Company
is actively involved in the coordination of clean-up requirements by the EPA and
the state at this site to assure the Company's compliance.
The Company continuously reviews the adequacy of its insurance
coverage. 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.
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.
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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.
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
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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.
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.
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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, record keeping,
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.
EXCISE TAX ON DIESEL, AVIATION AND MARINE FUEL The Company's aviation
and marine fueling operations are affected by various Federal and state taxes
imposed on the purchase and sale of aviation and marine fuel products in the
United States. Federal law imposes a manufacturer's excise tax in the amount of
4.3 cents per gallon on sales of aviation and marine fuel. Sales to aircraft and
vessel engaged in foreign trade are exempt from this tax. 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 and marine fuel, impose excise
and sales taxes on fuel sales; certain sales of the Company qualify for full or
partial exemptions from these state taxes.
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ITEM 2. PROPERTIES
The following page sets forth by segment and subsidiary the principal
properties owned or leased by the Company as of May 16, 1996. 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 2 and 5 to the
financial statements appearing elsewhere in this report.
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WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
PROPERTIES
<TABLE>
<CAPTION>
OWNER/LESSEE AND LOCATION
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CORPORATE PRINCIPAL USE OWNED OR LEASED
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<S> <C> <C>
WORLD FUEL SERVICES CORPORATION Executive offices Leased to June 1998
700 S. Royal Poinciana Blvd. Suite 800
Miami Springs, FL 33166
AVIATION FUELING
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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. Suite 800 and sales offices
Miami Springs, FL 33166
WORLD FUEL INTERNATIONAL S.A. Administrative, operations Leased to May 1997
Oficentro Ejecutivo La Sabana and sales offices
Edificio #5, Primer Piso
San Jose, Costa Rica
WORLD FUEL SERVICES LTD. Administrative, operations Leased month-to-month
London Gatwick Hilton Suite 1211 and sales offices
Gatwick Airport
West Sussex RH6 0LL
United Kingdom
WORLD FUEL SERVICES (SINGAPORE) Administrative, operations Leased to March 1997
PTE., LTD. and sales offices
5 Shenton Way #12-03/04
UIC Building
Singapore 0106
MARINE FUELING
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TRANS-TEC SERVICES, INC. Administrative, operations Leased to May 2002
Glenpointe Ctr. West and sales offices
500 Frank Burr Blvd
Teaneck, NJ 07666
60 East Sir Francis Drake, Administrative, operations Leased to December 1999
No. 301 and sales offices
Lakespur, CA 94939
2nd Floor Administrative, operations Leased to December 1997
200 NAEJA-Dong and sales Offices
Chongru-Ku Seoul, Korea
7-1 Centro Colon; Paseo Colon Administrative, operations Leased month-to-month
San Jose, Costa Rica and sales office
Seagram House - 2nd Floor Administrative, operations Leased to September 1998
71 Dock Road, Waterfront and sales office
Capetown, South Africa 8001
TRANS-TEC SERVICES (SINGAPORE) Administrative, operations Leased to March 1997
PTE., LTD. and sales offices
5 Shenton Way #12-03/04
UIC Building
Singapore 0106
TRANS-TEC SERVICES (UK) Ltd. Administrative, operations Leased to December 1997
65 Petty France and sales offices
London SW1H 9EU
OIL RECYCLING
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INTERNATIONAL PETROLEUM CORPORATION Storage tanks, recycling Leased to August 2001
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. Storage tanks, recycling Leased to August 2001
OF LA plant, laboratory, and
14890 Intracoastal Drive administrative offices
New Orleans, LA 70129
INTERNATIONAL PETROLEUM CORP. Storage tanks, blending Owned
OF MARYLAND facility, and adminis-
6305 E. Lombard Street trative offices
Baltimore, MD 21224
</TABLE>
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ITEM 3. LEGAL PROCEEDINGS
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 stockholders, through the
solicitation of proxies or otherwise, during the fourth quarter of fiscal year
1996.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's common stock is 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, 1996 and 1995, the sale
prices of the Company's common stock as reported by the New York Stock Exchange
and the quarterly cash dividends per share of common stock during the periods
indicated. The amounts shown have been restated to reflect a 3-for-2 stock split
of the Company's common stock which was effective June 19, 1995. See Note 4 to
the financial statements included as part of this report.
PRICES CASH
-------------- DIVIDENDS
HIGH LOW PER SHARE
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Year ended March 31, 1996
First quarter.................... $ 15 3/4 $ 11 1/8 $ 0.050
Second quarter................... 16 12 7/8 0.050
Third quarter.................... 15 7/8 13 1/4 0.050
Fourth quarter................... 18 3/8 15 1/8 0.050
Year ended March 31, 1995
First quarter.................... $ 9 3/4 $ 7 3/4 $ 0.033
Second quarter................... 10 7/8 8 1/2 0.033
Third quarter.................... 10 7/8 9 1/3 0.033
Fourth quarter................... 11 5/8 9 3/4 0.100
As of May 16, 1996, there were 348 holders of record of the Company's
common stock. The Board of Directors approved the following cash dividends for
fiscal year 1997:
DECLARATION DATE PER SHARE RECORD DATE PAYMENT DATE
- ----------------- --------- ------------------ ------------
June 5, 1996 $0.075 June 20, 1996 July 3, 1996
September 5, 1996 $0.075 September 20, 1996 October 3, 1996
December 5, 1996 $0.075 December 20, 1996 January 3, 1997
March 5, 1997 $0.075 March 20, 1997 April 3, 1997
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.
-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 notes set
forth at the end of these tables, the consolidated financial statements and the
related notes thereto, and "Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations."
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
(In thousands, except earnings per share data)
Consolidated Income Statement Data
<S> <C> <C> <C> <C> <C>
Revenue................... $642,299 $361,891 $250,527 $254,767 $190,574
Cost of sales............. 601,930 334,134 223,576 230,847 170,442
-------- -------- -------- -------- --------
Gross profit..... 40,369 27,757 26,951 23,920 20,132
-------- -------- -------- -------- --------
Operating expenses:
Salaries and wages...... 13,266 8,117 6,558 6,039 5,909
Provision for bad debts. 2,291 2,062 5,063 4,437 1,352
Other................... 9,866 6,329 5,560 5,378 4,622
-------- -------- -------- -------- --------
25,423 16,508 17,181 15,854 11,883
-------- -------- -------- -------- --------
Income from
operations.... 14,946 11,249 9,770 8,066 8,249
Other income (expense), net 1,875 1,774 (1,333) 180 359
-------- -------- -------- -------- --------
Income from continuing
operations before
income taxes..... 16,821 13,023 8,437 8,246 8,608
Provision for income taxes 5,876 4,935 3,242 2,984 2,898
-------- -------- -------- -------- --------
Net income from
continuing operations 10,945 8,088 5,195 5,262 5,710
-------- -------- -------- -------- --------
</TABLE>
(Continued)
-13-
<PAGE>
SELECTED FINANCIAL DATA
(Continued)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
(In thousands, except earnings per share data)
<S> <C> <C> <C> <C> <C>
Discontinued operations:
(Loss) income from operations
of discontinued environmental
services segment (net of
applicable income taxes) - - - (1,793) 170
Loss on disposal of
environmental services
segment (net of applicable
income taxes)......... - - - (1,922) -
-------- -------- -------- -------- --------
Net (loss) income from
discontinued
operations........ - - - (3,715) 170
-------- -------- -------- -------- --------
Net income.......... $10,945 $ 8,088 $ 5,195 $ 1,547 $ 5,880
======== ======== ======== ======== ========
Earnings (losses) per common
and common equivalent
share:
Income from continuing
operations............. $ 1.35 $ 1.10 $ .73 $ .74 $ .80
(Loss) income from
discontinued operations - - - (.52) .02
------- -------- -------- ------- --------
Net income.......... $ 1.35 $ 1.10 $ .73 $ .22 $ .82
======= ======== ======== ======= ========
Weighted average shares
outstanding ............ 8,100 7,359 7,101 7,124 7,145
======= ======== ======== ======= ========
</TABLE>
(Continued)
-14-
<PAGE>
SELECTED FINANCIAL DATA
(Continued)
<TABLE>
<CAPTION>
AS OF MARCH 31,
--------------------------------------------
1996 1995 1994 1993 1992
======== ======= ======= ======= =====
(In thousands)
<S> <C> <C> <C> <C> <C>
Consolidated Balance Sheet Data
Current assets............. $ 83,252 $58,006 $33,682 $39,263 $34,995
Total assets............... 111,974 89,536 53,687 54,717 53,210
Current liabilities ....... 43,706 30,486 13,141 15,587 17,954
Long-term liabilities...... 4,518 6,984 575 4,760 2,168
Stockholders' equity....... 63,750 52,066 39,971 34,370 32,689
</TABLE>
- ---------------------------
Notes:
(1) The consolidated financial statements of the Company as of, and for the
year ended March 31, 1992, 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
117,825 shares of the Company's common stock in payment of its 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) No cash dividends were declared or paid prior to fiscal year 1995. See
Item 5 - Market for Registrant's Common Equity and Related Stockholder
Matters.
(4) Effective January 1, 1995, the Company acquired the Trans-Tec group of
companies. 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.
(5) In June 1995, the Board of Directors approved a 3-for-2-stock split for
all shares of common stock outstanding as of June 19, 1995. The shares
were distributed on June 27, 1995. Accordingly, all share and per share
data, as appropriate, have been retroactively adjusted to reflect the
effects of this split.
-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 acquisition of the
Trans-Tec group of companies has been accounted for as a purchase by the
Company. 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.
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 sales, as well as the extent to which the Company is
required to provision for potential bad debts.
The Company's profit from oil recycling is principally determined by
the volume and margins of recycled oil sales and collection revenue.
FISCAL YEAR ENDED MARCH 31, 1996 COMPARED TO
THE FISCAL YEAR ENDED MARCH 31, 1995
The Company's revenue for the fiscal year ended March 31, 1996 was
$642,299,000, an increase of $280,408,000, or 77.5%, as compared to revenue of
$361,891,000 for the prior fiscal year. The Company's revenue during these
periods was attributable to the following segments:
FISCAL YEAR ENDED MARCH 31, PERCENT
1996 1995 INCREASE
------------ ------------ ---------
Aviation Fueling $302,101,000 $288,728,000 4.6%
Marine Fueling 321,216,000 54,578,000 *
Oil Recycling 18,993,000 18,591,000 2.2
Intersegment Eliminations (11,000) (6,000) *
------------ ------------
Total Revenue $642,299,000 $361,891,000 77.5%
============ ============ =====
* Percent not meaningful.
-16-
<PAGE>
The aviation fueling segment sold 445,846,000 gallons of fuel and
contributed $302,101,000 of revenue for the fiscal year ended March 31, 1996.
This represented an increase in revenue of $13,373,000, or 4.6%, and a
10,656,000 decrease in gallons as compared to the prior year. This increase in
revenue was due to an increase in the average price per gallon sold. Partially
offsetting was an overall volume decrease caused by a 62,754,000 gallon decline
in narrow margin bulk transactions, while domestic and international volume
increased by 52,098,000 gallons, or 17.5%, in the aggregate. Also contributing
to the decrease was the termination of the fuel terminaling operations conducted
at Miami International Airport, which contract was not renewed effective June
30, 1994.
The marine fueling segment sold 2,674,000 metric tons of fuel and
brokered 5,015,000 metric tons of fuel, contributing $314,495,000 and $3,831,000
of revenue, respectively. The Company also sold 759,000 gallons of marine
lubricants totaling $2,890,000 in revenue.
The oil recycling segment sold 34,354,000 gallons of recycled oil
products and contributed $18,993,000 of revenue for the fiscal year ended March
31, 1996. This was a revenue increase of $402,000, or 2.2%, and a volume
decrease of 661,000 gallons, as compared to the prior year. The revenue increase
was due to higher used oil and waste water collection revenue. Partially
offsetting was an overall volume decrease due primarily to the sale of the
Company's Georgia operations. See Note 1 to the accompanying financial
statements included in this report.
The Company's gross profit of $40,369,000 increased by $12,612,000, or
45.4%, as compared to the prior year. The Company's gross margin decreased from
7.7% for the fiscal year ended March 31, 1995, to 6.3% for the fiscal year ended
March 31, 1996.
The Company's aviation fueling business achieved a 6.7% gross margin
for the fiscal year ended March 31, 1996, as compared to 6.9% achieved for the
same period during the prior fiscal year. The decline in the gross margin was
attributable to the termination of the fuel terminaling operations conducted at
Miami International Airport, which was somewhat offset by an increase in the
average gross profit per gallon resulting from the reduction in narrow margin
bulk transactions.
The Company's marine fueling segment achieved a 4.3% gross margin for
the fiscal year ended March 31, 1996. The gross margin in the Company's oil
recycling segment increased from 30.9% for the fiscal year ended March 31, 1995,
to 33.5% for the fiscal year ended March 31, 1996. This resulted from higher
used oil and waste water collection revenue.
Total operating expenses for the fiscal year ended March 31, 1996 were
$25,423,000, an increase of $8,915,000, or 54.0%, as compared to the prior
fiscal year. Of this increase, $8,430,000 resulted from the full year impact of
operating expenses of the marine fueling segment. Also increasing operating
expenses were $1,065,000 in corporate overhead costs, discussed below. Partially
offsetting was a $471,000 decrease in the aviation segment provision for bad
debts. In relation to revenue, total operating expenses decreased from 4.6% to
4.0%.
-17-
<PAGE>
The Company's income from operations for the fiscal year ended March
31, 1996 was $14,946,000, an increase of $3,697,000, or 32.9%, as compared to
the prior fiscal year. Income from operations during these periods was
attributable to the following segments:
FISCAL YEAR ENDED MARCH 31, PERCENT
1996 1995 INCREASE
----------- ----------- --------
Aviation Fueling $12,858,000 $12,304,000 4.5%
Marine Fueling 3,425,000 220,000 *
Oil Recycling 3,976,000 2,973,000 33.7
Corporate Overhead (5,313,000) (4,248,000) 25.1
----------- -----------
Total Income from
Operations $14,946,000 $11,249,000 32.9%
=========== =========== =====
* Percent not meaningful.
Income from operations of the aviation fueling segment increased
$554,000, or 4.5%, for the fiscal year ended March 31, 1996, as compared to the
fiscal year ended March 31, 1995. This improvement resulted from an increase in
the average gross profit per gallon sold, and a decrease in operating expenses
due to a lower provision for bad debts. Partially offsetting were an overall
volume decrease in narrow margin bulk transactions, and the termination of the
Company's fuel terminaling activities.
The marine fueling segment earned $3,425,000 in income from operations
for the fiscal year ended March 31, 1996. The gross profit of this segment was
$13,766,000, reduced by $10,341,000 in operating expenses.
Income from operations of the oil recycling segment increased by
$1,003,000, or 33.7%, for the fiscal year ended March 31, 1996, as compared to
the prior fiscal year. This improvement resulted from lower operating expenses
and higher used oil and waste water collection revenue. Partially offsetting was
a volume decrease due primarily to the sale of the Georgia operations.
Corporate overhead costs not charged to the business segments totalled
$5,313,000 for the fiscal year ended March 31, 1996, an increase of $1,065,000,
or 25.1%, as compared to the prior fiscal year. This increase was due largely to
higher salaries and payroll related costs. In relation to revenue, total
corporate overhead decreased to 0.8% for the fiscal year ended March 31, 1996,
as compared to 1.2% for the prior fiscal year.
For the fiscal year ended March 31, 1996, the Company had other income,
net, of $1,875,000, an increase of $101,000 over the prior fiscal year. This
increase was due to a $1,204,000 increase in equity earnings of the Company's
aviation fueling joint venture in Ecuador. Partially offsetting was a $737,000
decline in foreign currency exchange gains realized in fiscal 1995 and $119,000
in foreign currency exchange losses during fiscal 1996.
Net income for the fiscal year ended March 31, 1996 was $10,945,000, an
increase of $2,857,000, as compared to net income for the fiscal year ended
March 31, 1995. Earnings per share of $1.35 for the fiscal year ended March 31,
1996 exhibited a $.25, or 22.7% increase over the $1.10 achieved during the
prior fiscal year.
-18-
<PAGE>
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 revenue of
$250,527,000 for the prior year. The Company's revenue 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.
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 sold 465,000 metric tons of fuel and
brokered 1,091,000 metric tons of fuel, contributing $53,298,000 and $824,000 in
revenue, respectively. The Company also sold 104,000 gallons in lubricants
totalling $456,000 in revenue.
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
revenue, 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.
-19-
<PAGE>
The Company's marine fueling segment achieved a 3.9% gross margin for
the fiscal year ended March 31, 1995. 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%.
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%
=========== =========== ======
* Percent not meaningful.
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
the prior fiscal 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 the prior fiscal year. The increase was due to
-20-
<PAGE>
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 $1.10 for the fiscal year ended March 31,
1995 exhibited a $0.37 increase over the $0.73 achieved during the same period
last 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 historically have not required significant capital
investment in fixed assets as the Company subcontracts fueling services and
maintains inventory at third party storage facilities.
In relation to the Company's aviation and marine fueling segments, the
oil recycling segment capital requirements are for the financing of property,
plant and equipment, and accounts receivable. 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 $12,856,000 at March 31, 1996, as
compared to $10,907,000 at March 31, 1995. The principal sources of cash during
the fiscal year ended March 31, 1996 were $3,702,000 in net cash provided by
operating activities, $2,046,000 from collections on notes receivable, and
$863,000 from the issuance of common stock in connection with the exercise of
options. Partially offsetting the increase in cash and cash equivalents was
$1,817,000 of repayments on notes payable, $1,854,000 in dividends paid on
common stock and $1,026,000 used for the purchase and construction of plant,
equipment and other capital expenditures, net of proceeds from sales of assets.
Working capital as of March 31, 1996 was $39,546,000, exhibiting a
$12,026,000 increase from working capital as of March 31, 1995. As of March 31,
1996, the Company's accounts receivable, excluding the allowance for bad debts,
amounted to $67,108,000, an increase of $23,742,000 as compared to the March 31,
1995 balance. In the aggregate, accounts payable, accrued expenses and customer
deposits increased $13,382,000. The increase in net trade
-21-
<PAGE>
receivables of $10,360,000 was attributed to the marine and aviation segments.
The allowance for doubtful accounts as of March 31, 1996 amounted to $4,363,000,
a decrease of $203,000 as compared to the balance at March 31, 1995. During the
fiscal years ended March 31, 1996 and 1995, the Company charged $2,291,000 and
$2,062,000, respectively, to the provision for bad debts and had charge-offs in
excess of recoveries of $2,494,000 and $210,000, respectively.
Inventories at March 31, 1996 were $878,000 higher as compared to March
31, 1995. This consisted of a $1,206,000 increase in inventories in the aviation
fueling segment, and a $328,000 decrease in the oil recycling segment.
Capital expenditures for the fiscal year ended March 31, 1996,
consisted primarily of $720,000 in office equipment and furniture, as well as
$288,000 to acquire trucks utilized in the collection of used oil and petroleum
contaminated water, and delivery of recycled products. During fiscal year 1997,
the Company anticipates spending approximately $1,000,000 to upgrade the storage
tank facilities of its Louisiana oil recycling plant and an additional
$1,000,000 for the upgrade of 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. The clean up costs will be capitalized as
part of the cost of the site, up to the fair market value of the site.
Other assets decreased $1,474,000, as compared to March 31, 1995. This
resulted from the repayment of $1,595,000 in notes receivable outstanding as of
March 31, 1995.
Accrued salaries and wages increased $1,308,000, principally as the
result of accrued sales and management performance bonuses pursuant to
employment agreements.
Long-term liabilities as of March 31, 1996 were $4,518,000, exhibiting
a $2,466,000 decrease as compared to March 31, 1995. This decrease was primarily
the result of the first installment payment on the promissory notes payable
related to the acquisition of the Trans-Tec group of companies, and the
settlement of the shareholders' class action litigation, described above.
Deferred income taxes increased $1,108,000 over the prior year,
principally due to the excess of tax over financial reporting depreciation and
amortization and the settlement of the shareholders' class action suit.
Stockholders' equity amounted to $63,750,000, or $7.93 per share, at
March 31, 1996, compared to $52,066,000, or $6.67 per share, at March 31, 1995.
This increase of $11,684,000 was due to $10,945,000 in earnings for the period,
$1,300,000 due to the issuance of common stock pursuant to the settlement of the
class action suit, and $863,000 due to the issuance of common stock pursuant to
the exercise of stock options. Partially offsetting was $1,464,000 in cash
dividends declared.
The Company expects to meet its capital investment and working capital
requirements for fiscal year 1997 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.
-22-
<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.
-23-
<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, appearing in the definitive Proxy
Statement of the Company for its 1996 Annual Meeting of Shareholders (the "1996
Proxy Statement"), is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth in the 1996 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 1996 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 1996 Proxy Statement is incorporated herein by
reference.
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<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(a)(1) The following consolidated 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, 1996 and 1995. 32
(iii) Consolidated Statements of Income for the
Years Ended March 31, 1996, 1995 and 1994. 34
(iv) Consolidated Statements of Stockholders'
Equity for the Years Ended March 31, 1996,
1995 and 1994. 35
(v) Consolidated Statements of Cash Flows for
the Years Ended March 31, 1996, 1995 and
1994. 36
(vi) Notes to Consolidated Financial Statements. 39
(a)(2) The following consolidated financial statement
schedule is filed as a part of this report:
(i) Schedule II - Valuation and Qualifying
Accounts. 55
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. (now
known as World Fuel Services Corporation),
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.
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<PAGE>
(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.
(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,
N.A. (South)), International
Recovery (now known as World Fuel
Services Corporation) and its
subsidiaries.
(ii) Promissory Note, dated March 1,
1991, executed by International
Recovery Corp. (now known as World
Fuel Services Corporation) and its
subsidiaries in favor of The
Citizens & Southern National Bank
(now known as NationsBank,
(South) N.A.)
(b) 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. (now known as
NationsBank, N.A. (South)),
International Recovery Corp. (now
known as World Fuel Services
Corporation) and its subsidiaries.
(ii) Promissory Note, dated January 21,
1994, executed by International
Recovery Corp. (now known as World
Fuel Services Corporation) and its
subsidiaries in favor of NationsBank
of Florida, N.A. (now known as
NationsBank, N.A. (South))
-26-
<PAGE>
(c) Material contracts incorporated by reference to the
Company's Report on Form 10-K filed May 30, 1995:
(i) Consolidated Amendment No. 3 dated
May 5, 1995, among NationsBank of
Florida, N.A. (now known as
NationsBank, N.A. (South)), and
International Recovery Corp. (now
known as World Fuel Services
Corporation) and its subsidiaries.
(ii) Promissory Note, dated January 3,
1995, executed by International
Recovery Corp. (now known as World
Fuel Services Corporation) in favor
of Theofilos A. Vatis.
(iii) Promissory Note, dated January 3,
1995, executed by International
Recovery Corp. (now known as World
Fuel Services Corporation) in favor
of Michael J. Kasbar.
(iv) Promissory Note, dated January 3,
1995, executed by International
Recovery Corp. (now known as World
Fuel Services Corporation) in favor
of Paul H. Stebbins.
(v) Promissory Note, dated January 3,
1995, executed by International
Recovery Corp. (now known as World
Fuel Services Corporation) in favor
of Stacey A. Polites.
(d) Material contracts filed with this Form 10-K:
(i) Amendment to Employment Agreement
with Jerrold Blair, dated
February 15, 1996.
(ii) Amendment to Employment Agreement
with Ralph Weiser, dated
February 15, 1996.
(iii) Amendment to Employment Agreement
with Jerrold Blair, dated
March 31, 1996.
(iv) Amendment to Employment Agreement
with Ralph Weiser, dated
March 31, 1996.
(v) Amendment to Employment Agreement
with Phillip S. Bradley, dated
June 2, 1995.
(vi) Consolidated Amendment No. 4 dated
September 25, 1995, among
NationsBank of Florida, N.A. (now
known as NationsBank, N.A.(South)),
World Fuel Services Corporation
and its subsidiaries.
-27-
<PAGE>
(vii) Consolidated Amendment No. 5 dated
May 15, 1996, among NationsBank
N.A., (South), and World Fuel
Services Corporation and its
subsidiaries.
(21) Subsidiaries of the Registrant
(23) Consent of Independent Certified
Public Accountants
(27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the Company's fiscal year
ended March 31, 1996.
-28-
<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.
WORLD FUEL SERVICES CORPORATION
Dated: May 21, 1996 By: /S/ Jerrold Blair
------------------------
Jerrold Blair, President
Dated: May 21, 1996 By: /S/ Carlos A. Abaunza
------------------------
Carlos A. Abaunza, Chief
Financial Officer
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<PAGE>
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 21, 1996 By: /S/ Ralph R. Weiser
-------------------------
Ralph R. Weiser, Director
Dated: May 21, 1996 By: /S/ Jerrold Blair
-------------------------
Jerrold Blair, Director
Dated: May 21, 1996 By: /S/ Phillip S. Bradley
-------------------------
Phillip S. Bradley, Director
Dated: May 21, 1996 By: /S/ Ralph Feuerring
-------------------------
Ralph Feuerring, Director
Dated: May 21, 1996 By: /S/ John R. Benbow
-------------------------
John R. Benbow, Director
Dated: May 21, 1996 By: /S/ Celestin Durand III
-------------------------
Celestin Durand III, Director
Dated: May 21, 1996 By: /S/ Myles Klein
-------------------------
Myles Klein, Director
Dated: May 21, 1996 By: /S/ Michael J. Kasbar
-------------------------
Michael J. Kasbar, Director
Dated: May 21, 1996 By: /S/ Paul H. Stebbins
-------------------------
Paul H. Stebbins, Director
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<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
World Fuel Services Corporation:
We have audited the accompanying consolidated balance sheets of World Fuel
Services Corporation (a Florida corporation) and subsidiaries as of March 31,
1996 and 1995, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period ended March 31,
1996. 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 World Fuel Services Corporation
and subsidiaries as of March 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
March 31, 1996 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.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Miami, Florida,
May 16, 1996.
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<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
MARCH 31,
----------------------------
1996 1995
============ ===========
CURRENT ASSETS:
Cash and cash equivalents $ 12,856,000 $10,907,000
Accounts receivable, net of allowance
for bad debts of $4,363,000 and
$4,566,000 at March 31, 1996 and
1995, respectively 62,745,000 38,800,000
Inventories 4,592,000 3,714,000
Prepaid expenses and other current assets 3,059,000 4,585,000
------------ -----------
Total current assets 83,252,000 58,006,000
------------ -----------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 601,000 705,000
Buildings and improvements 2,890,000 2,929,000
Office equipment and furniture 2,645,000 2,394,000
Plant, machinery and equipment 14,171,000 15,052,000
Construction in progress 67,000 184,000
------------ -----------
20,374,000 21,264,000
Less accumulated depreciation
and amortization 5,856,000 5,680,000
------------ -----------
14,518,000 15,584,000
------------ -----------
OTHER ASSETS:
Unamortized cost in excess of net
assets of acquired companies,
net of accumulated amortization 12,123,000 12,391,000
Other 2,081,000 3,555,000
------------ -----------
$111,974,000 $89,536,000
============ ===========
(Continued)
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<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
MARCH 31,
-----------------------------
1996 1995
============ ===========
CURRENT LIABILITIES:
Current maturities of long-term debt $ 1,944,000 $ 2,128,000
Accounts payable and accrued expenses 37,808,000 24,334,000
Customer deposits 1,467,000 1,559,000
Accrued salaries and wages 2,055,000 747,000
Income taxes payable 432,000 1,718,000
------------ -----------
Total current liabilities 43,706,000 30,486,000
------------ -----------
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities 2,103,000 4,447,000
Accrued litigation settlement expense - 1,300,000
Deferred compensation 1,572,000 1,237,000
Deferred income taxes 843,000 -
------------ -----------
4,518,000 6,984,000
------------ -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value;
100,000 shares authorized,
none issued - -
Common stock, $.01 par value;
10,000,000 shares authorized,
8,039,000 and 7,805,000 shares
issued and outstanding at March
31, 1996 and 1995, respectively 80,000 78,000
Capital in excess of par value 22,615,000 20,414,000
Retained earnings 41,112,000 31,631,000
Less treasury stock, at cost 57,000 57,000
------------ -----------
63,750,000 52,066,000
------------ -----------
$111,974,000 $89,536,000
============ ===========
The accompanying notes to the consolidated
financial statements are an integral part
of these consolidated balance sheets.
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<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED MARCH 31,
------------------------------------------
1996 1995 1994
============ ============ ============
Revenue $642,299,000 $361,891,000 $250,527,000
Cost of sales 601,930,000 334,134,000 223,576,000
------------ ------------ ------------
Gross profit 40,369,000 27,757,000 26,951,000
------------ ------------ ------------
Operating expenses:
Salaries and wages 13,266,000 8,117,000 6,558,000
Provision for bad debts 2,291,000 2,062,000 5,063,000
Other 9,866,000 6,329,000 5,560,000
------------ ------------ ------------
25,423,000 16,508,000 17,181,000
------------ ------------ ------------
Income from operations 14,946,000 11,249,000 9,770,000
------------ ------------ ------------
Other income (expense):
Litigation settlement - - (1,300,000)
Equity in earnings of
aviation joint venture 1,748,000 544,000 -
Other, net 127,000 1,230,000 (33,000)
------------ ------------ ------------
1,875,000 1,774,000 (1,333,000)
------------ ------------ ------------
Income before income taxes 16,821,000 13,023,000 8,437,000
Provision for income taxes 5,876,000 4,935,000 3,242,000
------------ ------------ ------------
Net income $ 10,945,000 $ 8,088,000 $ 5,195,000
============ ============ ============
Net income per share $ 1.35 $ 1.10 $ .73
============ ============ ============
Weighted average shares
outstanding 8,100,000 7,359,000 7,101,000
============ ============ ============
The accompanying notes to the consolidated
financial statements are an integral part
of these consolidated statements.
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<PAGE>
WORLD FUEL SERVICES CORPORATION 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,
1993 7,056,000 $71,000 $14,442,000 $19,857,000 $ -
Exercise of warrants 59,000 - 463,000 - -
Repurchase of common
stock (8,000) - - - (57,000)
Net income - - - 5,195,000 -
--------- ------- ----------- ----------- --------
Balance at March 31,
1994 7,107,000 71,000 14,905,000 25,052,000 (57,000)
Exercise of warrants 57,000 - 463,000 - -
Exercise of options 60,000 - 455,000 - -
Issuance of shares
for acquisition 581,000 7,000 4,577,000 - -
Cash dividends
declared - - - (1,509,000) -
Net income - - - 8,088,000 -
Other - - 14,000 - -
--------- ------- ----------- ----------- --------
Balance at March 31,
1995 7,805,000 78,000 20,414,000 31,631,000 (57,000)
Exercise of options 116,000 1,000 862,000 - -
Issuance of shares
for litigation
settlement 118,000 1,000 1,299,000 - -
Cash dividends
declared - - - (1,464,000) -
Net Income - - - 10,945,000 -
Other - - 40,000 - -
--------- ------- ----------- ----------- --------
Balance at March 31,
1996 8,039,000 $80,000 $22,615,000 $41,112,000 ($57,000)
========= ======= =========== =========== ========
The accompanying notes to the consolidated
financial statements are an integral part
of these consolidated statements.
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<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
----------------------------------------------------------------
1996 1995 1994
=========== =========== ===========
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $10,945,000 $ 8,088,000 $ 5,195,000
----------- ----------- -----------
Adjustments to reconcile net income
to net cash provided by
operating activities-
Depreciation and amortization 1,656,000 1,373,000 1,502,000
Provision for bad debts 2,291,000 2,062,000 5,063,000
Litigation settlement - - 1,300,000
Deferred income tax
provision (benefit) 1,108,000 181,000 (176,000)
Equity in earnings of aviation
joint venture, net (354,000) (544,000) -
Other non-cash operating
(credits) charges (83,000) 35,000 (4,000)
Changes in assets and liabilities,
net of acquisitions and dispositions:
(Increase) decrease in-
Accounts receivable (26,286,000) 1,959,000 223,000
Inventories (953,000) (933,000) 165,000
Prepaid expenses and
other current assets 1,371,000 (72,000) (1,347,000)
Other assets 11,000 (15,000) 332,000
Net cash provided by
discontinued operations - - 2,431,000
Increase (decrease) in-
Accounts payable and
accrued expenses 13,731,000 (4,290,000) (1,903,000)
Customer deposits (92,000) 166,000 152,000
Deferred compensation 335,000 (24,000) -
Accrued salaries
and wages 1,308,000 461,000 (299,000)
Income taxes payable (1,286,000) 852,000 (1,510,000)
----------- ----------- ------------
Total adjustments (7,243,000) 1,211,000 5,929,000
----------- ----------- -----------
Net cash provided by operating
activities 3,702,000 9,299,000 11,124,000
----------- ----------- -----------
</TABLE>
(Continued)
-36-
<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
FOR THE YEAR ENDED MARCH 31,
------------------------------------
1996 1995 1994
=========== =========== =========
Cash flows from investing activities:
Additions to property, plant and
equipment (1,407,000) (2,194,000) (3,114,000)
Proceeds from sales of assets 381,000 585,000 77,000
Payment for acquisition of
business, net of cash acquired (40,000) (3,184,000) -
Purchase of short-term investments - (3,500,000) -
Proceeds from short-term investments - 3,500,000 -
Proceeds from notes receivable 2,046,000 768,000 -
Repayments from (advances to)
aviation joint venture 338,000 (338,000) -
----------- ----------- ---------
Net cash provided by (used in)
investing activities 1,318,000 (4,363,000) (3,037,000)
----------- ----------- ----------
Cash flows from financing activities:
Net repayments under the revolving
line of credit - - (4,000,000)
Repayment of long-term debt (263,000) (286,000) (489,000)
Repayment of notes payable (1,817,000) (1,643,000) -
Proceeds from issuance of
common stock 863,000 918,000 463,000
Repurchase of common stock - - (57,000)
Dividends paid on common stock (1,854,000) (717,000) -
----------- ----------- ----------
Net cash used in
financing activities (3,071,000) (1,728,000) (4,083,000)
----------- ----------- ----------
Net increase in cash
and cash equivalents 1,949,000 3,208,000 4,004,000
Cash and cash equivalents, at
beginning of year 10,907,000 7,699,000 3,695,000
----------- ----------- ----------
Cash and cash equivalents, at
end of year $12,856,000 $10,907,000 $7,699,000
=========== =========== ==========
(Continued)
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<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
FOR THE YEAR ENDED MARCH 31,
------------------------------------
1996 1995 1994
========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the year for:
Interest, net of capitalized
interest $ 613,000 $ 129,000 $ 149,000
========== ========== ==========
Income taxes $6,368,000 $3,714,000 $3,219,000
========== ========== ==========
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
In connection with the January 1995 acquisition of the Trans-Tec group
of companies, the Company issued 581,000 shares of its common stock valued at
$4,584,000, and $6,000,000 in notes payable.
In April 1995, the Company paid $1,300,000, representing its share of a
litigation settlement, by issuing 117,825 shares of the Company's common stock
at an agreed upon price of $11.03 per share (restated to reflect the 3-for-2
stock split).
As partial consideration for the sale of certain assets on June 1,
1995, the Company received a $979,000 note receivable with an original maturity
date of July 1, 2007. In October 1995, the entire outstanding principal balance
was collected in cash, net of a $98,000 pre-payment discount.
Cash dividends declared, but not yet paid, totaling $402,000 and
$792,000, are included in accounts payable and accrued expenses as of March 31,
1996 and 1995, respectively.
The accompanying notes to the consolidated
financial statements are an integral
part of these consolidated statements.
-38-
<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In August 1995, the stockholders of the Company approved a change in the
Company's name from International Recovery Corp. to World Fuel Services
Corporation (the "Company"). The Company was incorporated in July 1984. 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.
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.
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 6 for additional information.
In January 1995, the Company entered the marine fueling business with the
acquisition of the Trans-Tec group of companies. 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 on 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 $ 1.10 $ 0.79
============ ============
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<PAGE>
Effective June 1, 1995, the Company sold substantially all of the operating
assets and liabilities of International Petroleum Corporation of Georgia
("IPC-GA"), a subsidiary of the Company engaged in the used oil recycling
business, to Universal Refining, LLC ("URL") and Mr. Barry Paul. URL's president
is Mr. Barry Paul, the former president of IPC-GA and of the entity from which
IPC-GA initially purchased these assets in August 1990. Mr. Paul is the cousin
of the Company's President. The sales price was $1,179,000, which closely
approximated the Company's carrying values of the net assets sold. At closing, a
cash payment of $200,000 and a note receivable for $979,000, with an original
maturity date of July 1, 2007, were received. In October 1995, the entire
outstanding principal balance of the note receivable was collected in cash, net
of a $98,000 pre-payment discount.
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. The Company uses the equity
method of accounting to record its proportionate share of the earnings of its
aviation joint venture.
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, 1996 and 1995 amounted to $11,395,000 and $8,863,000
respectively, and consisted principally of bank repurchase agreements
collateralized 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
$1,029,000, $765,000 and $182,000 for the years ended March 31, 1996, 1995 and
1994, respectively.
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
Office equipment and furniture 3-8
Plant, machinery and equipment 3-40
-40-
<PAGE>
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 and amortization are eliminated from the
accounts and any resultant gain or loss is credited or charged to income.
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 $775,000 and $413,000, as of March 31, 1996 and 1995,
respectively. Subsequent to an 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.
The Company's policy is to assess any impairment in value by making a comparison
of the current and projected undiscounted cash flows associated with the
acquired companies to the carrying amount of the unamortized cost in excess of
the net assets of the acquired companies. Such carrying amount would be
adjusted, if necessary, to reflect an impairment in the value of the asset.
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. The Company's revenue recognition
policy with respect to the aviation and marine fueling segment does not result
in amounts that are materially different than accounting under generally
accepted accounting principles.
INCOME TAXES
The Company and its United States subsidiaries file consolidated income tax
returns. In addition, the Company's foreign subsidiaries file income tax returns
in their respective countries of incorporation.
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 aviation 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 and are included in Other, net.
The Company's purchases from certain aviation fuel suppliers are denominated in
local currency. Foreign currency exchange gains and losses resulting from
-41-
<PAGE>
payments to aviation fuel suppliers are included in Other, net, in the period
incurred, and amounted to net losses of $119,000 and net gains of $737,000 for
the fiscal years ended March 31, 1996 and 1995, respectively. There were no
significant foreign currency gains or losses in fiscal year 1994.
EARNINGS PER SHARE
Earnings per common and common equivalent share have been computed by dividing
net income 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.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosure About Fair
Value of Financial Instruments" requires that the Company disclose the estimated
fair value of financial instruments, both assets and liabilities recognized and
not recognized in the accompanying consolidated balance sheets, for which it is
practicable to estimate fair value. The estimated fair values of financial
instruments which are presented herein have been determined by the Company's
management using available market information and appropriate valuation
methodologies. However, considerable judgement is required in interpreting
market data to develop estimates of fair value. Accordingly, the estimates
presented herein are not necessarily indicative of amounts the Company could
realize in a current market exchange.
Cash and cash equivalents, accounts receivable and accounts payable and accrued
expenses are reflected in the accompanying balance sheets at amounts considered
by management to reasonably approximate fair value due to their short-term
nature.
The Company estimates the fair value of its long-term debt generally using
discounted cash flow analysis based on the Company's current borrowing rates for
similar types of debt. At March 31, 1996, the carrying value of the long-term
debt and the fair value of such instruments was not considered to be
significantly different.
NEW ACCOUNTING PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board issued statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of" ("SFAS No. 121").
SFAS No. 121 will apply to the Company for the fiscal year ending March 31,
1997. The Company does not believe that SFAS No. 121 would have a material
effect on its financial position or the results of its operations had it been
applied in the fiscal year ended March 31, 1996.
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<PAGE>
(2) LONG-TERM DEBT
Long-term debt consists of the following at March 31:
1996 1995
========== ==========
Promissory notes issued in connection
with the acquisition of the Trans-tec
group of companies, payable annually
through January 1998, bearing interest
at 9%, unsecured $3,928,000 $6,000,000
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
$30,000 and $263,000 at March 31, 1996
and 1995, respectively) 18,000 251,000
Equipment notes, payable monthly through
May 1998, interest rates ranging from
6.76% to 7.00%, secured by equipment 101,000 147,000
Mortgage note, transferred effective June
1, 1995, to the buyer of IPC-GA - 177,000
---------- ----------
4,047,000 6,575,000
Less current maturities 1,944,000 2,128,000
---------- ----------
$2,103,000 $4,447,000
========== ==========
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. Approximately
$5,760,000 in standby letters of credit were outstanding as of March 31, 1996
under the credit facility. The Company also has $100,000 outstanding in standby
letters of credit from other financing institutions and has pledged $100,000 of
cash as collateral on these letters of credit.
The revolving line of credit bears interest, at the Company's option, at the
NationsBank Prime rate, or LIBOR, adjusted for the Bank's reserve requirement,
plus a margin ranging from .875% to 1.125%, depending on the Company's
consolidated fixed charge ratio as defined under the credit facility. Interest
is payable quarterly in arrears. As of March 31, 1996 and 1995, there were no
amounts outstanding under the revolving line of credit. Any outstanding
principal and interest will mature on March 31, 1998. The credit facility, 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 and
restricts the payment of dividends, except for the Company's quarterly dividend
which complies with the NationsBank facility. As of March 31, 1996, 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, 1996, are as
follows:
1997 $1,944,000
1998 2,099,000
1999 4,000
----------
$4,047,000
==========
Interest expense, which is included in Other, net, in the accompanying
consolidated statements of income, is as follows for the years ended March 31:
1996 1995 1994
======== ======== ========
Interest expense $565,000 $263,000 $175,000
Capitalized interest - - (32,000)
-------- -------- --------
Interest expense, net $565,000 $263,000 $143,000
======== ======== ========
(3) INCOME TAXES
The provision for income taxes consists of the following components for the
years ended March 31:
1996 1995 1994
========== ========== ==========
Current:
Federal $3,568,000 $3,540,000 $2,595,000
State 567,000 614,000 402,000
Foreign 633,000 600,000 152,000
---------- ---------- ----------
4,768,000 4,754,000 3,149,000
---------- ---------- ----------
Deferred:
Federal 998,000 217,000 158,000
State 138,000 39,000 24,000
Foreign (28,000) (75,000) (89,000)
---------- ---------- ----------
1,108,000 181,000 93,000
---------- ---------- ----------
Total $5,876,000 $4,935,000 $3,242,000
========== ========== ==========
The difference between the reported tax provision and the provision computed by
applying the statutory U.S. federal income tax rate currently in effect to
income before income taxes for each of the three years ended March 31, 1996, is
primarily due to state income taxes.
The Company's share of undistributed earnings of foreign subsidiaries not
included in its consolidated federal income tax return that could be subject to
additional income taxes if remitted, was approximately $6,007,000 and $4,888,000
at March 31, 1996 and March 31, 1995, respectively. The distribution of these
earnings would result in additional U.S. federal income taxes to the extent they
are not offset by foreign tax credits. No provision has been recorded for the
U.S. taxes that could result from the remittance of such earnings since the
Company intends to reinvest these earnings outside the U.S. indefinitely and it
is not practicable to estimate the amount of such taxes.
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<PAGE>
The temporary differences which comprise the Company's net deferred tax
(liability) asset are as follows:
MARCH 31,
--------------------------------
1996 1995
----------- -----------
Excess of provision for
bad debts over charge-offs $ 1,537,000 $ 1,340,000
Excess of tax over financial
reporting depreciation and
amortization (1,989,000) (1,284,000)
Accrued expenses recognized for
financial reporting purposes,
not currently deductible 161,000 481,000
Excess of tax over financial
reporting amortization of
identifiable intangibles (365,000) (248,000)
Other, net (187,000) (24,000)
----------- -----------
$ (843,000) $ 265,000
=========== ===========
The net deferred tax asset at March 31, 1995, is included in Other assets in the
accompanying consolidated balance sheets.
(4) STOCKHOLDERS' EQUITY
COMMON STOCK ACTIVITY
On June 5, 1995, the Board of Directors approved a 3-for-2 stock split for all
shares of common stock outstanding as of June 19, 1995. The shares were
distributed on June 27, 1995. Accordingly, all share and per share data, as
appropriate, have been retroactively adjusted to reflect the effects of this
split.
In April 1995, the Company paid $1,300,000, representing its share of the
stockholders class action settlement, by issuing 117,825 shares of the Company's
common stock at an agreed upon price of $11.03 per share (restated to reflect
the 3-for-2 stock split).
EMPLOYEE STOCK OPTIONS ACTIVITY
In January 1986, the stockholders approved an employee 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 (increased to
600,000 in August 1995) 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 employee stock
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<PAGE>
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.
In October 1995, the Financial Accounting Standards Board adopted SFAS No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123"). SFAS 123 will apply
to the Company for the fiscal year ending March 31, 1997. The Company does not
believe that this Statement would have a material effect on its financial
position or the results of its operations had it been applied in the fiscal year
ended March 31, 1996.
The following summarizes the status of the employee stock option plan at, and
for the year ended March 31:
1996 1995 1994
=============== =============== ===============
Granted 98,091 46,206 None
Per Share $10.33 - $12.58 $14.88 - $15.50
Adjustment for
3:2 stock split 85,714 None None
Expired None 20,000 None
Exercised 69,375 None None
Per Share $ 2.00 - $9.33
Outstanding 285,857 171,427 145,221
Per Share $9.08 - $12.58 $3.00 - $15.50 $3.00 - $14.75
Available for
future grant 153,489 37,294 63,500
Exercisable 120,707 125,221 63,721
Per Share $9.33 - $9.83 $3.00 - $14.75 $3.00 - $14.75
During fiscal year 1996, the Board of Directors granted options to several
executive officers for the purchase of 38,841 shares of the Company's common
stock under the employee stock option plan at an exercise price of $12.58 per
share. The Board of Directors also granted options to various employees for the
purchase of 59,250 shares of the Company's common stock under the employee stock
option plan at an exercise price of $10.33 per share. Options granted during the
1996 fiscal year have been adjusted to reflect the 3-for-2 stock split.
The adjustment for the 3-for-2 stock split of 85,714 shares of common stock
reflects the effect of the stock split on the 171,427 shares of common stock
outstanding under the employee stock option plan as of March 31, 1995.
In November 1995, previously granted options under the employee stock option
plan for the purchase of 69,375 shares of the Company's common stock were
exercised at prices ranging from $2.00 to $9.33 per share. The proceeds received
by the Company from the exercise of these options totalled $531,000.
In June 1994, the Company extended through December 31, 1995, the non-qualified
option of an executive officer and director of the Company, for the purchase
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of 37,500 shares of the Company's common stock, at an exercise price of $6.67
per share. The difference between the fair market value on the extension date of
$12.13, and the option price, was amortized over 1995 as compensation expense.
In May 1995, the Board of Directors granted a non-qualified option to an
executive officer to purchase 13,659 shares of the Company's common stock at an
exercise price of $12.58 per share. In November 1995, previously granted
non-qualified stock options for the purchase of 46,875 shares of the Company's
common stock were exercised at prices ranging from $6.67 to $10.08. The proceeds
received by the Company from the exercise of these options totalled $332,000. As
of March 31, 1996, non-qualified stock options to purchase a total of 63,089
shares of the Company's common stock at exercise prices ranging from $9.33 to
$13.88 per share, remain outstanding.
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
In August, 1994, at the annual meeting of the stockholders of the Company, the
1993 Non-Employee Directors Stock Option Plan ("1993 Directors Plan") was
adopted. An aggregate of 50,000 shares of the Company's common stock have been
reserved for issuance under the 1993 Directors Plan.
Under the 1993 Directors 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 and will receive a non-qualified option to purchase 2,500 shares
each year, starting in August 1995, that the individual is re-elected. As of
March 31, 1996, options to purchase 23,125 shares of the Company's common stock
remain outstanding under the 1993 Directors Plan and 25,000 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.
DIVIDEND DECLARATIONS
The Company declared and paid the following cash dividends for fiscal years 1996
and 1995, respectively (restated to reflect the 3-for-2 stock split):
DECLARATION DATE PER SHARE RECORD DATE PAYMENT DATE
- ----------------- --------- ------------------ ------------
June 5, 1995 $0.050 June 19, 1995 June 27, 1995
September 6, 1995 $0.050 September 22, 1995 October 16, 1995
December 8, 1995 $0.050 December 22, 1995 January 17, 1996
March 8, 1996 $0.050 March 22, 1996 April 15, 1996
DECLARATION DATE PER SHARE RECORD DATE PAYMENT DATE
- ----------------- --------- ------------------ ------------
May 9, 1994 $0.033 June 22, 1994 July 15, 1994
September 9, 1994 $0.033 September 22, 1994 October 14, 1994
December 9, 1994 $0.033 December 22, 1994 January 12, 1995
January 19, 1995 $0.033 March 22, 1995 April 13, 1995
February 22, 1995 $0.067 March 22, 1995 April 13, 1995
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(5) COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS
The Company leases premises in New Orleans, Louisiana and Plant City, Florida
from trusts co-managed by the President of the Company under two operating
leases with rent aggregating $90,000 per year. The leases expire in August 2001.
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.
At March 31, 1996, the future minimum lease payments under capital leases and
operating leases with an initial noncancellable term in excess of one year,
were as follows:
CAPITAL OPERATING
LEASES LEASES
======= ==========
1997 $19,000 $ 726,000
1998 - 585,000
1999 - 260,000
2000 - 226,000
2001 - 226,000
------- ----------
Total Minimum lease payments 19,000 $2,023,000
==========
Less amounts representing interest 1,000
-------
Present value of minimum lease
payments $18,000
=======
Rental expense under operating leases with an initial noncancellable term in
excess of one year was $722,000, $535,000, and $461,000 for the years ended
March 31, 1996, 1995 and 1994, respectively.
CAPITAL EXPENDITURES
During fiscal year 1997, the Company anticipates spending approximately
$1,000,000 to upgrade the storage tank facilities of its Louisiana oil recycling
plant and an additional $1,000,000 for the upgrade of 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. The clean up cost 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, 1996, the Company had
$2,401,000 in outstanding bonds.
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<PAGE>
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 $2,000,000. 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.
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. The Company is
currently responsible to Federal and Florida 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. Under the terms of the sale, the
Company contractually transferred to the buyer the responsibility for the state
clean-up. The site has also qualified under the state reimbursement program,
which the Company anticipates will cover the cost of the clean-up. The Company
is actively involved in the coordination of clean-up requirements by the EPA and
the state to assure the Company's compliance.
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<PAGE>
The Company's policy, which is in accordance with Statement of Financial
Accounting Standards No. 5, "Accounting for Contingencies," is to recognize
estimated losses resulting from potential environmental contingencies, as a
charge to income, if information available to the Company prior to issuance of
the financial statements indicates that it is probable that an environmental
liability has been incurred and the amount of the loss can be reasonably
estimated. As of March 31, 1996, the Company had a remaining accrued liability
of $11,000 related to clean-up costs associated with the Company's discontinued
operations. The Company did not identify any potential environmental
contingencies, which would require a charge to income, during the current fiscal
year.
The Company continuously reviews the adequacy of its insurance coverage.
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 December 1995, the Company settled a lawsuit filed in January 1993, by
Hillsborough County and other plaintiffs, arising from alleged environmental
contamination at the County's Sidney Mine disposal facility. The Company paid
$350,000, of which $175,000 was reimbursed by another potentially responsible
party. The net cost of the settlement to the Company was $175,000.
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 its employment agreements with the Chairman of the Board and
the President which expire on March 31, 2001. Each agreement provides for a
fixed salary and an annual bonus equal to 5% of the Company's income before
income taxes and bonus in excess of $2,000,000. In addition, the payment of any
portion of the bonus causing the executive's compensation to exceed $1,000,000
during any fiscal year will be deferred and earn interest at the Prime rate,
until a fiscal year during the employment term in which the executive earns less
than $1,000,000; provided, however, that in the event of executive's death, the
termination of the executive for any reason, or the expiration of the employment
agreement, any excess amount, including any interest earned thereon, shall be
paid to the executive within ten (10) days of such death, termination, or
expiration. As of March 31, 1996, $170,800 was deferred under the agreements.
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.
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<PAGE>
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, 1996, 1995 and 1994, approximately $4,407,000,
$3,963,000 and $3,124,000, respectively, was expensed under the terms of the
above described agreements.
The future minimum commitments under employment agreements, excluding bonuses,
at March 31, 1996 are as follows:
1997 $ 4,283,000
1998 3,671,000
1999 1,202,000
2000 533,000
2001 533,000
----------
$10,222,000
===========
DEFERRED COMPENSATION PLANS
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 Trans-Tec group of companies. The plan is
unfunded and is not a qualified plan under the Internal Revenue Code. Under the
plan, participants are awarded units for the allocation of 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 of employment. 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.
The Company maintains a 401(k) defined contribution plan which covers all
employees who meet minimum requirements and elect to participate. Participants
may contribute up to 15% of their compensation, subject to certain limitations.
The Company makes matching contributions of 25% of the participants'
contributions up to the first 4% contributed. The Company may also make annual
additional contributions at its sole discretion. During the fiscal years ended
March 31, 1996 and 1995, approximately $52,000 and $11,000, respectively, was
expensed as Company contributions. The Company did not make matching
contributions prior to fiscal year 1995.
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(6) AVIATION 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 joint venture was organized to distribute jet fuel in Ecuador
pursuant to a contract with the nationally owned oil company and the airport
authority. The contract with the government entities may be terminated at any
time. 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.
The Company's original ownership interest in the joint venture was 42% through
September 30, 1995. Effective October 1, 1995, the Company's ownership interest
was increased to 51%. As part of this new ownership agreement, the Company
agreed to a requirement of at least a 75% positive vote by the joint venture
owners on all significant decisions, as defined. Since this new arrangement
precluded the Company from having control under generally accepted accounting
principles, the Company continued to use the equity method of accounting to
record its proportionate share of joint venture earnings. Effective January 1,
1996, the Company's ownership interest in the joint venture was decreased to
50%.
The Company's proportionate share of the net earnings of the joint venture
amounted to $1,748,000 and $544,000 for the fiscal years ended March 31, 1996
and 1995, respectively. The amount of the investment in the joint venture
totalled $882,000 at March 31, 1996, as compared to $544,000 for the prior year,
and is included in Other assets in the accompanying consolidated balance sheet.
A summary of selected financial information for the joint venture is as follows:
AS OF MARCH 31, 1996
--------------------
BALANCE SHEET DATA:
Current assets $ 5,531,000
Noncurrent assets 47,000
Current liabilities 3,778,000
FOR THE YEAR ENDED MARCH 31, 1996
---------------------------------
INCOME STATEMENT DATA:
Revenue $ 39,406,000
Gross Profit 3,844,000
Income from operations 3,565,000
Net Income 3,966,000
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(7) 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,
-------------------------------------------
1996 1995 1994
============ ============ ============
REVENUE:
Aviation fueling $302,101,000 $288,728,000 $233,982,000
Marine fueling 321,216,000 54,578,000 -
Oil recycling 18,993,000 18,591,000 16,554,000
Intersegment eliminations (11,000) (6,000) (9,000)
------------ ------------ ------------
Consolidated revenue $642,299,000 $361,891,000 $250,527,000
============ ============ ============
INCOME FROM OPERATIONS:
Aviation fueling $ 12,858,000 $ 12,304,000 $ 12,066,000
Marine fueling 3,425,000 220,000 -
Oil recycling 3,976,000 2,973,000 1,075,000
Corporate (5,313,000) (4,248,000) (3,371,000)
------------ ------------ ------------
Consolidated income
from operations $ 14,946,000 $ 11,249,000 $ 9,770,000
============ ============ ============
IDENTIFIABLE ASSETS:
Aviation fueling $ 42,345,000 $ 27,920,000 $ 26,535,000
Marine fueling 39,948,000 34,313,000 -
Oil recycling 15,567,000 17,557,000 16,548,000
Corporate 14,114,000 9,746,000 10,604,000
------------ ------------ ------------
Consolidated identifiable
assets $111,974,000 $ 89,536,000 $ 53,687,000
============ ============ ============
CAPITAL EXPENDITURES:
Aviation fueling $ 66,000 $ 27,000 $ 101,000
Marine fueling 424,000 104,000 -
Oil recycling 623,000 1,901,000 3,078,000
Corporate 294,000 162,000 155,000
------------ ------------ ------------
Consolidated capital
expenditures $ 1,407,000 $ 2,194,000 $ 3,334,000
============ ============ ============
DEPRECIATION AND
AMORTIZATION:
Aviation fueling $ 116,000 $ 236,000 $ 194,000
Marine fueling 535,000 140,000 -
Oil recycling 819,000 824,000 1,150,000
Corporate 186,000 173,000 158,000
------------ ------------ ------------
Consolidated depreciation
and amortization $ 1,656,000 $ 1,373,000 $ 1,502,000
============ ============ ============
For the year ended March 31, 1995, the marine fueling segment reflects activity
from January 1, 1995 to March 31, 1995.
Net assets of the discontinued operations were transferred to continuing
operations as of March 31, 1994.
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FOREIGN OPERATIONS
A summary of financial data for foreign operations is shown below at, and for
the fiscal years ended March 31, 1996, 1995 and 1994. Non-U.S. operations of the
Company and its subsidiaries are conducted primarily in the United Kingdom and
Singapore. Income from operations is before the allocation of corporate general
and administrative expenses and income taxes.
1996 1995 1994
============ =========== ===========
Revenue $141,578,000 $47,045,000 $28,382,000
============ =========== ===========
Income from operations $ 2,099,000 $ 1,572,000 $ 190,000
============ =========== ===========
Identifiable assets $ 13,360,000 $11,770,000 $ 1,872,000
============ =========== ===========
MAJOR CUSTOMERS
No customer accounted for more than 10% of total consolidated revenue for the
years ended March 31, 1996, 1995 and 1994.
(8) QUARTERLY INFORMATION (UNAUDITED)
FOR THE THREE MONTHS ENDED,
--------------------------------------------------------
JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1995 1995 1995 1996
============ ============ ============ ============
Revenue $138,960,000 $145,658,000 $166,671,000 $191,010,000
============ ============ ============ ============
Gross profit $ 9,174,000 $ 9,911,000 $ 10,328,000 $ 10,956,000
============ ============ ============ ============
Net income $ 2,545,000 $ 2,655,000 $ 2,861,000 $ 2,884,000
============ ============ ============ ============
Earnings per
common and common
equivalent share $ 0.32 $ 0.33 $ 0.35 $ 0.35
============ ============ ============ ============
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 $ 0.27 $ 0.25 $ 0.28 $ 0.30
============ ============ ============ ============
-54-
<PAGE>
<TABLE>
SCHEDULE II
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<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, 1996
- -------------------------
Allowance for bad debts $4,566,000 $ -- $2,291,000 $ 785,000 $3,279,000 $4,363,000
========== ========== ========== ========== ========== ==========
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
========== ========== ========== ========== ========== ==========
<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>
-55-
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
<PAGE>
this Agreement, the net pre-tax profit of the Company shall be 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 ss. 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 ss. 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 ss.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 ss.
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
ss.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 ss. 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
ss. 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 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
-3-
<PAGE>
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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<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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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 R. 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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<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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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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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 R. 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 ss. 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 ss. 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 ss.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 ss.
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
ss.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 ss. 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
ss. 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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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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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/SONIA ASENCIO
- -----------------------
By: /S/JOHN R. BENBOW
----------------------------------
/S/JANET RUSAKOV John R. Benbow, Chairman of the
- ----------------------- Compensation Committee
/S/SONIA ASENCIO /S/RALPH R. 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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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 R. 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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AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of this 31st day of
March, 1996, by and between World Fuel Services Corporation, 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 March 31, 2001. Executive is a
senior executive officer of the Company and an integral part of its management.
The Company wishes to amend the terms of the bonus compensation Executive is
entitled to receive from the Company in order to ensure that such compensation
is deductible to the Company under the Internal Revenue Code of 1986, as amended
(the "Code"), without subjecting Executive's compensation arrangements to a vote
of the Company's shareholders. 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, 2001, 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),
(e), and (f) below, the Company shall pay Executive an annual bonus (the
"Bonus") for each fiscal year during the Employment Term, through March 31,
2001, 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 determined by the Company's certified public accountants in
accordance with generally accepted accounting principles, applied on a
consistent basis.
<PAGE>
(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 ss. 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 ss. 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 ss.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. This subsection (c) shall not prohibit the payment of any Bonus (or
portion thereof) which is deferred in accordance with subsection (f) below
(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 ss.
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.
(e) If required to comply with Code
ss.162(m)(4)(C)(iii), the Company's Compensation Committee shall,
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<PAGE>
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 ss. 162(m)(4)(C)(iii).
(f) Unless the Company's shareholders
have approved the Performance Goal and other material compensation terms
provided herein, the payment of any portion of the Bonus causing Executive's
compensation to exceed $1,000,000 during any fiscal year of the Company (the
"Excess Amount") will be deferred until a fiscal year during the Employment Term
in which Executive earns less than $1,000,000; PROVIDED, HOWEVER, that in the
event of Executive's death, the termination of Executive for any reason, or the
expiration of this Agreement, any Excess Amount, including any interest earned
thereon, shall be paid to Executive within ten (10) days of such death,
termination, or expiration. Any Excess Amount shall earn interest at the prime
rate as published in the Wall Street Journal until such amount is paid to the
Executive. The Company shall hold any Excess Amount, including any interest
earned thereon, in trust for Executive until such amount is paid to Executive in
accordance with the terms hereof; provided, that all amounts held in trust for
Executive shall be subject to the claims of the creditors of the Company.
(g) The provisions of this Section 2.2
are intended, and shall be interpreted, to comply with the requirements of Code
ss. 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
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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 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.
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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 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
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(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 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.
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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 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:
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(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.
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
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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, 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,
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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 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
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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 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.
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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 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.
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(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:
IF TO THE EXECUTIVE: at the Executive's last address
appearing in the payroll/personnel records of the Company.
IF TO THE COMPANY:
World Fuel Services Corporation
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: WORLD FUEL SERVICES CORPORATION
/S/SONIA ASENCIO
- ----------------------
By:/S/JOHN R. BENBOW
------------------------------------
/S/ILEANA GARCIA John R. Benbow, Chairman of the
- ---------------------- Compensation Committee
/S/SONIA ASENCIO /S/JERROLD BLAIR
- ---------------------- ---------------------------------------
Executive
/S/ILEANA GARCIA
- ----------------------
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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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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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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 31st day of March, 1996.
/S/SONIA ASENCIO /S/JERROLD BLAIR
- --------------------- -----------------------------------
Witness Executive
/S/ILEANA GARCIA
- ---------------------
Witness
WORLD FUEL SERVICES CORPORATION
/S/SONIA ASENCIO By:/S/JOHN R. BENBOW
- --------------------- ----------------------------------
Witness John R. Benbow, Chairman of the
Compensation Committee
/S/ILEANA GARCIA
- ---------------------
Witness
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of this 31st day of
March 31st, 1996, by and between World Fuel Services Corporation, 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 March 31, 2001. Executive is a
senior executive officer of the Company and an integral part of its management.
The Company wishes to amend the terms of the bonus compensation Executive is
entitled to receive from the Company in order to ensure that such compensation
is deductible by the Company under the Internal Revenue Code of 1986, as amended
(the "Code"). 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, 2001, 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),
(e), and (f) below, the Company shall pay Executive an annual bonus (the
"Bonus") for each fiscal year during the Employment Term, through March 31,
2001, 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 determined by the Company's certified public accountants in
accordance with generally accepted accounting principles, applied on a
consistent basis.
<PAGE>
(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 ss. 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 ss. 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 ss.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. This subsection (c) shall not prohibit the accrual or payment of any Bonus
(or portion thereof) which is deferred in accordance with subsection (f) below
(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 ss.
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.
(e) If required to comply with Code
ss.162(m)(4)(C)(iii), the Company's Compensation Committee shall,
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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 ss. 162(m)(4)(C)(iii).
(f) Unless the Company's shareholders
have approved the Performance Goal and other material compensation terms
provided herein, the payment of any portion of the Bonus causing Executive's
compensation to exceed $1,000,000 during any fiscal year of the Company (the
"Excess Amount") will be deferred until a fiscal year during the Employment Term
in which Executive earns less than $1,000,000; PROVIDED, HOWEVER, that in the
event of Executive's death, the termination of Executive's employment for any
reason (including without limitation termination by Executive for Good Reason,
as defined below), or the expiration of this Agreement, any Excess Amount,
including any interest earned thereon, shall be paid to Executive within ten
(10) days of such death, termination, or expiration. Any Excess Amount shall
earn interest at a variable rate of interest equal to the prime rate, as
published in the Wall Street Journal from time to time, until such amount is
paid to the Executive. The Company shall hold any Excess Amount, including any
interest earned thereon, for Executive until such amount is paid to Executive in
accordance with the terms hereof; provided, that all amounts held in trust for
Executive shall be subject to the claims of the creditors of the Company.
(g) The provisions of this Section 2.2
are intended, and shall be interpreted, to comply with the requirements of Code
ss. 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:
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(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 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
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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 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);
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(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 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.
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(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 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
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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.
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
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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, 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.
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(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 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
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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 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
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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 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
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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:
IF TO THE EXECUTIVE: at the Executive's last address
appearing in the payroll/personnel records of the Company.
IF TO THE COMPANY:
World Fuel Services Corporation
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: WORLD FUEL SERVICES CORPORATION
/s/SONIA ASENCIO
- -------------------- By:/s/JOHN R. BENBOW
--------------------
/s/JANET RUSAKOV John R. Benbow, Chairman of the
- -------------------- Compensation Committee
/s/SONIA ASENCIO /s/RALPH R. WEISER
- -------------------- --------------------
Executive
/s/JANET RUSAKOV
- --------------------
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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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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 31st day of March, 1996.
/s/SONIA ASENCIO /s/RALPH R. WEISER
- --------------------- ---------------------------
Witness Executive
/s/JANET RUSAKOV
- ---------------------
Witness
WORLD FUEL SERVICES CORPORATION
/s/SONIA ASENCIO By:/s/JOHN R. BENBOW
- --------------------- ----------------------------
Witness John R. Benbow, Chairman of the
Compensation Committee
/s/JANET RUSAKOV
- ---------------------
Witness
-16-
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, is made and entered into this 2nd day of June, 1995,
by and between International Recovery Corp., a Florida corporation (the
"Company"), and Phillip S. Bradley, (the "Executive").
R E C I T A L S
Pursuant to this Agreement, the parties wish to amend, extend and
restate the Executive's Employment Agreement and his Consulting and
Non-competition Agreement with the Company, each dated December 24, 1986, as
amended (collectively the "Old Agreements"). Effective January 1, 1996, this
Agreement substitutes, restates and replaces the Old Agreements for all
purposes.
A G R E E M E N T
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 is hereby acknowledged, the parties hereby
agree as follows:
1. Employment:
1.1 EMPLOYMENT. The Company hereby employs Executive for
a term of three (3) years (the "Employment Term"), commencing January 1, 1996,
to serve as Chairman of Advance Petroleum, Inc. d/b/a World Fuel Services of FL
("World Fuel Services of FL") and to serve in such other management capacities,
and to perform such services and duties, as the Board of Directors of the
company may from time to time designate. Executive hereby accepts such
employment. Executive hereby agrees that during the term of his employment
hereunder, he shall devote his full time to the diligent performance of his
duties hereunder and shall not engage in any venture or activity that may result
in adverse publicity for the Company or its affiliates, or that may materially
interfere with Executive's performance of his duties hereunder.
1.2 COMPENSATION AND BENEFITS. During the Employment Term,
the Company shall pay Executive the compensation and other amounts set forth
below:
(a) The Company shall pay Executive an annual
salary of $350,000 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.
(b) Executive: (i) shall be entitled to receive
all health and dental insurance, which may be provided by the Company to the
senior management of the Company from time-to-time; (ii) shall be entitled to
receive the same life insurance coverage of
<PAGE>
one million dollars ($1,000,000) currently in effect; (iii) shall be entitled to
reimbursement of 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 promptly reimbursed by the Company upon presentation of
appropriate receipts therefor); (iv) shall be provided an automobile by the
Company on the same terms as other senior management personnel of the Company,
or at the Company's option, and auto allowance equal to the highest allowance
provided to other senior management; and (v) shall be entitled to four (4) weeks
paid vacation each calendar year, provided however, any vacation time not taken
during any calendar year shall not be paid or carried over into any other
calendar year.
2. STOCK. The Company shall piggyback the Executive's
25,000 shares of stock remaining from the Executive's Share
Option Agreement dated May 24, 1989, as amended on June 3, 1994,
on any subsequent registration.
3. CONSULTING. Upon expiration of the Employment Term, so
long as Executive is then employed by the Company, the Company shall engage
Executive to perform consulting services for the Company for a term of seven (7)
years, commencing January 1, 1999 (the "Consulting Term"). During the Consulting
Term, Executive will be available to provide consulting services to the Company
for up to fifty (50) days per year. In the event that Ralph R. Weiser and
Jerrold Blair shall not be employed by the Company, the Executive shall have the
sole option to commence consulting services hereunder by resigning from his
employment at anytime during the term of this Agreement and notifying the
Employer in writing of his intent to commence consulting services.
3.1 COMPENSATION AND BENEFITS. During the Consulting Term, the
Executive will receive the annual consulting fee of One Hundred Thousand Dollars
($100,000) per year, and throughout such term will receive the insurance
benefits described in Section 1.2(b) (ii) above. Except for such fee and
insurance, Executive shall not be entitled to receive any bonus or other
compensation or benefits during the Consulting Term.
4. TERMINATION. Executive shall be terminated as an employee
or consultant of the Company upon the occurrence of any of the following events.
Except as expressly provided in Section 4.2 below, the Company shall be released
from all obligations hereunder upon any such termination, including without
limitation, the obligation to compensate Executive.
(a) The death of Executive.
(b) The Complete Disability of Executive. "Complete
Disability" as used herein shall mean the inability of Executive, due to
illness, accident or any other physical or mental incapacity, to perform the
services provided for in this Agreement for an aggregate of ninety (90) days
within any period of twelve
<PAGE>
(12) consecutive months during the term hereof.
(c) The discharge of Executive by the Company for
Cause. "Cause" as used herein shall mean any substance abuse, alcoholism,
conviction of any felony or a misdemeanor involving moral turpitude, act of
fraud, misappropriation, or embezzlement against the Company or its parent or
affiliates or in connection with their business, Executive's resignation, his
failure or refusal to comply with his obligations or perform his duties under
this Agreement or his willful failure to report for work, for any reason, for
more than thirty (3) continuous days not attributable to eligible vacation or a
licensed physician's statement.
4.1 In the event of any termination of Executive's employment or
consulting, for any reason the provisions of Section 5 hereof shall remain in
full force and effect.
4.2 In the event of the Complete Disability of Executive, (i) he
shall be entitled to receive his base salary payable under Section 1.2(a) for
the first one hundred and eighty (180) days of his disability; and (ii) if such
disability occurs during the Consulting Term, he shall continue to receive
consulting fees and life insurance for the remainder of the consulting term.
5. COVENANT AGAINST UNFAIR COMPETITION.
(a) Executive agrees that while he is employed by, or
providing consulting services to, the Company, and for a period of five (5)
years following any termination of his employment or consulting, 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 the storage,
handling, delivery, marketing, sale, distribution or brokerage of aviation fuel
or aviation flight services, or in 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, 1993 unless at
such time the Company no longer engages in such services or activities.
(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, 1993, for the purpose of obtaining the
patronage of any such individual, partnership, corporation or other legal entity
unless at such time the Company no longer engages in such services or
activities;
<PAGE>
(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;
(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 the State
of Florida and any other airport locations throughout the world which are or
were serviced by the Company or its subsidiaries at any time since January 1,
1993 unless at such time the Company no longer services or engages in business
activities with such airport locations.
(c) Executive recognizes the importance of the covenant
contained in this Section 4 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
interest, including without limitation, the 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 4 are essential elements of
this Agreement and that but for these covenants, the Company would not have
agreed to enter into this Agreement. Such covenants shall be construed as
agreements independent of any other provision of this Agreement. The existence
of any claim or cause of action against the Company by the Executive, whether
predicated on the Company's breach of this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of the covenants
contained in this Section 5.
(d) If Executive commits a breach or threatens to commit a
breach of any of the provisions of this Section 5, 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 5 specifically enforced by any
court having equity jurisdiction together with an accounting therefor, it being
acknowledged, that any such breach or threatened breach will cause irreparable
injury to the Company and that money damages will not provide an adequate remedy
to the Company.
<PAGE>
(e) If any covenant contained in this Section 5, 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.
6. SURVIVAL OF CERTAIN TERMS. The provisions of Section 5
hereof shall survive the expiration and termination of this Agreement, and the
termination of Executive's employment or consulting hereunder, for any reason.
7. 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 accordance with the
laws of the State of Florida.
(c) SUCCESSORS AND ASSIGNS. This Agreement required
the personal services of, and shall not be assignable by, Executive. This
Agreement shall be assignable by the Company. This Agreement shall be binding
upon, and shall inure to the benefit of, the Company and its successors and
assigns.
(d) SECTION CAPTIONS. Section and other captions
contained in this Agreement are for reference purposes only and area 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 there are not agreements,
understandings, restrictions, representations or warranties among the parties
other than those set forth herein or herein provided for.
<PAGE>
(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.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals the day and year first above written.
WITNESSES: INTERNATIONAL RECOVERY CORP.
/S/ CARLOS ABAUNZA By:/S/ ROBERT S. TOCCI
- --------------------- -------------------------------------
Robert S. Tocci
Executive Vice President
/S/ CARLOS ABAUNZA /S/PHILLIP S. BRADLEY
- --------------------- -------------------------------------
AMENDMENT AGREEMENT NO. 4
THIS AMENDMENT AGREEMENT NO. 4 (the "Amendment Agreement") is made and
entered into as of this 25 day of September, 1995, effective as of July 18,
1995, by and among WORLD FUEL SERVICES CORPORATION (formerly "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, that certain Letter Agreement dated January 21,
1994, that certain Letter Agreement dated October 3, 1994 and as further amended
by that Consolidated Amendment Agreement No. 3 dated May 5, 1995, whereby the
Lender has made revolving credit loans to the Borrower (as so amended and 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 requested certain amendments to
the Credit Agreement; and
WHEREAS, the Lender is willing to so amend the Credit
Agreement 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 July 18, 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:
"'Applicable Margin' means for purposes of calculating (i) the
applicable interest rate for the interest period
<PAGE>
for any LIBOR Loan and (ii) the applicable rate of the
Commitment Fee for any date for purposes of Section 6.2
hereof, that percent per annum set forth below, which shall be
(A) determined as of each Determination Date based upon the
computations set forth in the compliance certificates
delivered to the Lender pursuant to Section 8.4 hereof,
subject to review and approval of such computations by the
Lender within five (5) Banking Days of receipt thereof (the
"Compliance Date"), and delivered to the Lender not later than
the time set forth in Section 8.4 hereof and (B) applicable to
all LIBOR Loans outstanding, and any Commitment Fee due and
payable, on or after the most recent Compliance Date to occur
based upon the Consolidated Fixed Charge Coverage Ratio as at
the Determination Date for the Four-Quarter Period then ended,
as specified below:
CONSOLIDATED FIXED APPLICABLE APPLICABLE
CHARGE MARGIN MARGIN FOR
RATIO FOR LIBOR LOANS COMMITMENT FEE
Greater than 5.00
to 1.00 .875% .25%
Greater than 3.50
to 1.00 but
less than or equal
to 5.00 to 1.00 1.00% .3125%
Less than 3.50 to 1.00 1.125% .3750%
"'Determination Date' means the last day of each fiscal
quarter of the Borrower."
"'LIBOR Base Rate' means for any LIBOR Loan, in respect of the
interest period specified (or deemed specified) by the
Borrower for such LIBOR Loan, the rate (expressed as a
percentage and rounded upward if necessary to the nearest
1/100 of 1%) (which shall be the same for each day of such
Interest Period) determined by the Lender in good faith in
accordance with its usual procedures for its customers
generally to be the average of the rates per annum for
deposits in Dollars offered to major banks in the London
interbank market at approximately 11:00 A.M. Charlotte, North
Carolina time two (2) LIBOR Business Days prior to the
commencement of the applicable interest period in an amount
approximately equal to the principal amount of, and for a
period comparable to the interest period for, such LIBOR
Loan."
2
<PAGE>
"LIBOR Business Day" means a Banking Day on which the relevant
international financial markets are open for the transaction
of the business contemplated by this Agreement in London,
England and Miami, Florida.
"'LIBOR Loan' means any Advance for which the rate of
interest is determined by reference to the LIBOR Rate."
"LIBOR Rate" means, for the interest period for any LIBOR
Loan, the rate of interest per annum determined pursuant to
the following formula:
LIBOR LIBOR BASE RATE Applicable
Rate = ----------------------- + Margin
1 - Reserve Requirement
"'Reserve Requirement' means, for any LIBOR Loan, the maximum
aggregate rate at which reserves (including, without
limitation, any marginal, supplemental or emergency reserves)
are required to be maintained with respect thereto under
Regulation D by the member banks of the Federal Reserve System
with respect to Dollar funding in the London interbank market.
Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be
maintained by such member banks by reason of any regulatory
change against (i) any category of liabilities which includes
deposits by reference to which the LIBOR Base Rate is to be
determined or (ii) any category of extensions of credit or
other assets which include LIBOR Loans."
(b) Section 1 thereof is hereby further amended to
delete the definition of "LIBOR".
(c) The definition of "Banking Day" in Section 1 is
hereby amended and restated in its entirety as follows:
"'Banking Day' means any day which is not a Saturday, Sunday
or a day on which banks in the State of Florida are authorized
or obligated by law, executive order or governmental decree to
be closed."
(d) Section 4.2(e) thereof is hereby amended to replace
references therein to "one percent (1%)" with "three-quarters of one
percent (.075%)".
(e) Section 5.2 thereof is hereby amended and
restated in its entirety as follows:
"5.2 MANNER OF BORROWING. Provided there exists no Event of
Default at the time, the Borrower shall give the Bank written
notice of its intent to borrow hereunder. Such notice shall be
given to Bank prior to 12:00 noon on the proposed borrowing
date, except that if the Borrower
3
<PAGE>
selects the LIBOR Rate option, then the notice shall be given
three (3) LIBOR Business Days prior to the proposed borrowing
date. Such notice of intent to borrow shall be an irrevocable
notice on the part of the Borrower. Notice may also be given
by telephone or telecopy and promptly confirmed in writing
within three (3) Banking Days with the Draw Form described in
Section 5.6 hereof. All such notices of intent to borrow must
include the following information: (i) the date of the
borrowing, which shall be a Banking Day on which such advance
is to be made or the interest period is to commence; (ii) the
interest rate option (Base Rate or LIBOR Rate); and if LIBOR
Rate, to select the interest period in accordance with Section
5.5 hereof; and (iii) the aggregate principal amount to be
advanced. The Bank shall, subject to the terms and conditions
of this Agreement, make such Advances available to the
Borrower by crediting immediately available funds to the
Borrower's account maintained with the Bank."
(f) Section 5.5 thereof is hereby amended and
restated in its entirety to read as follows:
"5.5 LIBOR INTEREST. Borrower shall have the option to have
interest accrue on all or a portion of the Loan from time to
time from the date of advance of a certain specified portion
of funds until paid in full on such portion at the LIBOR Rate
as follows:
(a) The LIBOR Base Rate shall be determined by the interest
period requested by the Borrower of thirty (30), sixty (60) or
ninety (90) days, provided that if the last day of an interest
period would be a day that is not a LIBOR Business Day, such
interest period shall be extended to the next succeeding LIBOR
Business Day;
(b) Requests for advances at the LIBOR Rate must be completed
at least 3 business days prior to the date of the advance
being made. Telephone requests may be made, but they must be
verified as to the amount and the relevant interest period in
writing by letter or by facsimile. A request will be
considered completed upon the telephone request being made and
upon receipt by Bank of the written confirmation within three
(3) business days of the telephone request. If there is no
complete agreement as to the interest period of any such
advance (including the written confirmation) then upon
maturity of any LIBOR Loan under this Revolving Line, the rate
of interest shall automatically revert to the Base Rate and
shall be retroactively charged back to the time of the
advance;
4
<PAGE>
(c) If Borrower makes any payment of principal with respect to
any LIBOR Loan made hereunder, on any day other than the
scheduled expiration of the relevant interest period, Borrower
shall be obligated and shall reimburse the Bank, on demand,
for any funding loss incurred by the Bank.
(d) Portions of Advances to be borrowed at the LIBOR
Rate shall be in amounts of not less than $100,000
(though may be more than $100,000 in $10,000
increments)."
(g) Section 6.2 thereof is hereby amended and
restated in its entirety to read as follows:
"6.2 COMMITMENT FEE. In addition to the Facility Fee referred
to above, the Borrower shall pay to Bank a quarterly
Commitment Fee equal in amount to the product of the
Applicable Margin then in effect for calculating the
Commitment Fee multiplied by the average daily unused amount
of the Commitment for such period. The said quarterly
Commitment Fee shall be accrued in arrears and shall be paid
by the Borrower on the first banking day after the last day of
each month of each March, June, September and December. The
face amount of outstanding Letters of Credit shall be
considered as outstanding loans for purposes of computing the
Commitment Fee."
(h) Section 8.1 thereof is hereby amended and
restated in its entirety to read as follows:
"8.1 ACCOUNT RECEIVABLE AGING REPORT. Borrower shall
provide to Bank in form satisfactory to Bank, within
45 days of the end of each fiscal quarter, an Accounts
Receivable Aging Report in summary form for the
operations of the Borrower and its Subsidiaries,
prepared on a consolidated basis."
2. 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
Borrower 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
5
<PAGE>
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
(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.
3. CONDITIONS PRECEDENT. The effectiveness of this Amendment
Agreement is subject to the receipt by the Lender of the following:
(a) four counterparts of this Amendment Agreement
duly executed by all signatories hereto;
(b) 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;
(c) 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.
4. 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 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
6
<PAGE>
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.
5. 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.
6. 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.
7. 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.
8. 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.
9. CREDIT AGREEMENT. All references in any of the Loan
Documents to the Credit Agreement shall mean and include the Credit Agreement
as amended hereby.
10. 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 (ii) hereby confirming its obligations under
the Guaranty to which it is a party.
11. 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, without the prior consent of the Lender, may not
assign any rights, powers, duties or obligations hereunder.
7
<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:
WORLD FUEL SERVICES CORPORATION
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
WORLD FUEL SERVICES, (SINGAPORE) LTD, a
Singapore corporation
By: /S/ ROBERT S. TOCCI
--------------------------------------------
Robert S. Tocci, Executive Vice
President of World Fuel Services
Corporation, 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
AMENDMENT AGREEMENT NO. 5
THIS AMENDMENT AGREEMENT NO. 5 (the "Amendment Agreement") is made and
entered into as of this 15th day of May, 1996, effective as of March 15, 1996,
by and among WORLD FUEL SERVICES CORPORATION (formerly "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, NATIONAL
ASSOCIATION (SOUTH), successor to 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, that certain Letter Agreement dated January 21,
1994, that certain Letter Agreement dated October 3, 1994 and as further amended
by that Consolidated Amendment Agreement No. 3 dated May 5, 1995, and Amendment
Agreement No. 4 dated September 25, 1995, whereby the Lender has made revolving
credit loans to the Borrower (as so amended and 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 requested certain amendments to
the Credit Agreement; and
WHEREAS, the Lender is willing to so amend the Credit
Agreement 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
the effective date hereof as specified above, 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>
"'WFI' means World Fuel International, a corporation organized
under the laws of Costa Rica and a wholly-owned Subsidiary of
the Borrower; WFI also operates under the name 'Petromundo
Internacional, S.A.'"
"'WFI Capitalization' means, at any time at which the amount
thereof is to be determined, (A) the sum of (i) all
indebtedness for borrowed money of WFI (excluding current
liabilities of WFI other than current maturities of
indebtedness for borrowed money having a maturity of more than
one year from the date of its creation or that is renewable or
extendable at the option of WFI to a date more than one year
from the date of its creation) PLUS (ii) the face amount of
all outstanding standby letters of credit issued for the
account of WFI (whether as the sole applicant or a
co-applicant therefor) and all obligations of WFI arising in
connection with such letters of credit, PLUS (B) the sum of
(i) the amount of issued and outstanding share capital of WFI,
PLUS (ii) the amount of additional paid-in capital and
retained income of WFI (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 of WFI, all as
determined in accordance with Generally Accepted Accounting
Principles applied on a Consistent Basis."
(b) The definition of "Guarantors" in Section 1 is amended by
adding at the end thereof the following: "; provided, however, WFI
shall not be a Guarantor for any purpose unless and until WFI shall be
required to deliver its Guaranty in accordance with the last paragraph
of Section 8.18 hereof;"
(c) The first three lines and subsection (a) of Section 4.2
are hereby amended to read as follows:
"4.2 STANDBY LETTERS OF CREDIT. Provided there exists
no Event of Default, Bank will issue Standby Letters of Credit
upon application of the Borrower, or if such Standby Letter of
Credit is to be issued for the account or benefit of a
Subsidiary of the Borrower, upon application of both the
Borrower and such Subsidiary subject to the following:
(a) Borrower makes (or in the case of a
Standby Letter of Credit to be issued for the account
or benefit of a Subsidiary of the Borrower, the
Borrower and such Subsidiary jointly and severally as
co-applicants make) an appropriate
2
<PAGE>
application for each such Standby Letter of Credit
on Bank's Application and Agreement for Standby
Letters of Credit at least two business days prior
to the requested issue date;"
(d) The first four lines and subsection (a) of Section 4.3 are
hereby amended to read as follows:
"4.3 DOCUMENTARY LETTERS OF CREDIT. Provided there
exists no Event of Default, Bank will issue Documentary
Letters of Credit upon application of the Borrower, or if such
Documentary Letter of Credit is to be issued for the account
or benefit of a Subsidiary of the Borrower, upon application
of both the Borrower and such Subsidiary subject to the
following:
(a) Borrower makes (or in the case of a
Documentary Letter of Credit to be issued for the
account or benefit of a Subsidiary of the Borrower,
the Borrower and such Subsidiary jointly and
severally as co-applicants make) an appropriate
application for each such Documentary Letter of
Credit on Bank's Application and Agreement for
Commercial Credit at least two business days prior to
the requested issue date;"
(e) By its execution hereof, Borrower hereby acknowledges and
agrees that it is jointly and severally liable for all reimbursement
and other obligations with respect to Letters of Credit previously
issued or to be issued for the account of any Subsidiary as if and to
the same extent as if Borrower were the sole applicant therefor, and
that any Letters of Credit issued on application of a Subsidiary or the
joint application of the Borrower and a Subsidiary shall be subject to
all the terms of the Credit Agreement, including without limitation
applicable sublimits.
(f) Section 8.18 is amended by adding a new paragraph at the
end thereof, which shall read as follows:
"Notwithstanding the foregoing provisions of this
Section 8.18, the Borrower shall not be required to cause the
Guaranty and related documents of or pertaining to WFI to be
executed and delivered by or on behalf of WFI until the
earlier to occur of the following: (i) the date upon which the
amount of shareholders equity of WFI (calculated in the manner
described in clause (B) of the definition of "WFI
Capitalization" contained in Section 1 hereof) equals or
exceeds 25% of Consolidated Shareholders' Equity, or (ii) the
date upon which the sum of the aggregate Advances
(cumulatively from January 1, 1996) plus the aggregate face
amount of all outstanding Letters of Credit in each case made
or issued to fund
3
<PAGE>
contributions, loans or advances to, investments in, or
operations at, WFI, shall exceed $10,000,000."
(g) Section 9.1 and 9.8 are each hereby amended to the extent
necessary to permit the Borrower to create WFI, to make an equity
investment therein, to make loans (including from proceeds of Advances)
to WFI, and to transfer the assets more particularly described on
Schedule 1 attached hereto to WFI.
(h) Section 9.7 is amended by adding the following
sentence at the end of such Section:
"Notwithstanding the foregoing, Borrower shall not permit WFI
to incur indebtedness other than (i) to the Bank, (ii) to the
Borrower in connection with intercompany loans, (iii) trade
credit incurred in the ordinary course of business, and (iv)
additional unsecured indebtedness in connection with its
operations in the ordinary course of business not to exceed
$1,000,000 outstanding in the aggregate at any time; provided
that the incurring of such indebtedness does not cause, create
or result in the occurrence of an Event of Default hereunder."
(i) A new Section 9.17 is hereby added, which shall
read as follows:
"9.17 WFI CAPITALIZATION. Permit the initial WFI
Capitalization (to be determined following the completion of
all investments in, loans to, and transfers of assets to WFI
expressly permitted by Sections 9.1 and 9.8, as amended, and
prior to the commencement of operations of WFI) to exceed
$14,000,000."
(j) Section 11.2 is amended by adding the following
sentence at the end thereof:
"Notwithstanding the foregoing provisions of this Section
11.2, the rights and remedies provided with respect to the
Subsidiaries and their assets (including without limitation
bank accounts, certificates of deposit and other investments),
shall be applicable to and available against WFI only from the
date WFI shall be required to become a Guarantor in accordance
with the last paragraph of Section 8.18 hereof."
(k) Section 12.8 is amended by adding immediately after the word
"Subsidiary" in line 1 the phrase, ", other than WFI,".
2. 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:
4
<PAGE>
(a) The representations and warranties made by the
Borrower 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
(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.
3. CONDITIONS PRECEDENT. The effectiveness of this
Amendment Agreement is subject to the receipt by the Lender of the following:
(a) four counterparts of this Amendment Agreement
duly executed by all signatories hereto;
(b) 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;
(c) 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.
4. 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
5
<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.
5. 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.
6. 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.
7. 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) TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, WAIVES TRIAL BY JURY IN CONNECTION
WITH ANY SUCH LITIGATION.
8. 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.
9. CREDIT AGREEMENT. All references in any of the Loan Documents to
the Credit Agreement shall mean and include the Credit Agreement as amended
hereby.
10. 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, (ii) acknowledging, confirming and agreeing that the
obligations and liabilities of the Borrower with respect to all Letters of
Credit, including those issued for the account of any Subsidiary or jointly for
the account of any Subsidiary and the Borrower, shall constitute part of the
Borrower's Liabilities as defined in the
6
<PAGE>
Guaranty of such Subsidiary, and (iii) confirming its obligations under the
Guaranty to which it is a party.
11. SUCCESSORS AND ASSIGNS. This Amendment Agreement shall be binding
upon and inure to the benefit of each of the Borrower, the Lender and their
respective successors, assigns and legal representatives; PROVIDED, however,
that the Borrower, without the prior consent of the Lender, may not assign any
rights, powers, duties or obligations hereunder.
7
<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:
WORLD FUEL SERVICES CORPORATION
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 LA, 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 PTE INC., a Delaware
corporation
TRANS-TEC SERVICES (UK) LTD, a
United Kingdom corporation
TRANS-TEC SERVICES (SINGAPORE) PTE LTD,
a Singapore corporation
WORLD FUEL SERVICES, (SINGAPORE) LTD,
a Singapore corporation
AIR TERMINALING INC., a Florida
corporation
INTERNATIONAL PETROLEUM CORPORATION
OF PENNSYLVANIA, a Pennsylvania
corporation
PETRO SERVICIOS DE MEXICO S.A. DE
CV, a Mexico corporation
By: /S/ ROBERT S. TOCCI
----------------------------------------------
Robert S. Tocci, Executive Vice
President of World Fuel Services
Corporation, as attorney-in-fact
SIGNATURE PAGE 2 OF 3
<PAGE>
LENDER:
NATIONSBANK, NATIONAL ASSOCIATION
(SOUTH)
By: /S/ STEPHEN HANAS
---------------------------------------------------
Name: STEPHEN HANAS
--------------------------------------------
Title: Vice President
SIGNATURE PAGE 3 OF 3
Exhibit 21 - Subsidiaries of the Registrant
ADVANCE PETROLEUM, INC., a Florida corporation(1)
ADVANCE AVIATION SERVICES, INC., a Florida corporation
AIR TERMINALING, INC., a Florida corporation
CHEROKEE GROUP, INC., a Florida corporation(4)
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 GEORGIA, a Georgia corporation(8)
INTERNATIONAL PETROLEUM CORP. OF MARYLAND, a Maryland corporation(2)
INTERNATIONAL PETROLEUM CORP. OF DELAWARE, a Delaware corporation(2)
INTERNATIONAL PETROLEUM CORP. OF PENNSYLVANIA, a Pennsylvania corporation(8)
INTERNATIONAL ENVIRONMENTAL SERVICES, INC., a Florida corporation
PETROSERVICIOS DE MEXICO S.A. DE C.V., a Mexican corporation(6)
RESOURCE RECOVERY OF AMERICA, INC., a Florida corporation(4)
RESOURCE RECOVERY MID SOUTH, INC., a Virginia corporation(3)(4)(8)
RESOURCE RECOVERY ATLANTIC, INC., a Delaware corporation(3)(4)(8)
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(7)
WORLD FUEL SERVICES, INC., a Texas corporation
WORLD FUEL SERVICES LTD., a United Kingdom corporation
WORLD FUEL SERVICES (SINGAPORE) PTE., LTD. a Singapore corporation
WORLD FUEL INTERNATIONAL S.A., a Costa Rican corporation(5)
(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) These corporations are subsidiaries of Resource Recovery of America,
Inc.
(4) These operations were discontinued by the Company in fiscal year 1993.
(5) World Fuel International S.A., is also known as Petromundo
Internacional S.A.
(6) This corporation is owned 50% by Advance Aviation Services, Inc. and
50% by Air Terminaling, Inc.
(7) This corporation is a subsidiary of Trans-Tec Services (UK) LTD.
(8) Inactive.
Exhibit 23 - Consent of Independent Certified Public Accountants
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 World Fuel Services
Corporation's previously filed Form S-8 Registration Statement File No.
033-64227.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Miami, Florida
May 24, 1996:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE COMPANY'S MARCH 31, 1996 FINANCIAL STATEMENTS FILED ON FORM 10-
K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 12,856,000
<SECURITIES> 0
<RECEIVABLES> 67,108,000
<ALLOWANCES> 4,363,000
<INVENTORY> 4,592,000
<CURRENT-ASSETS> 83,252,000
<PP&E> 20,374,000
<DEPRECIATION> 5,856,000
<TOTAL-ASSETS> 111,974,000
<CURRENT-LIABILITIES> 43,706,000
<BONDS> 0
0
0
<COMMON> 80,000
<OTHER-SE> 63,670,000
<TOTAL-LIABILITY-AND-EQUITY> 111,974,000
<SALES> 642,299,000
<TOTAL-REVENUES> 642,299,000
<CGS> 601,930,000
<TOTAL-COSTS> 601,930,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,291,000
<INTEREST-EXPENSE> 565,000
<INCOME-PRETAX> 16,821,000
<INCOME-TAX> 5,876,000
<INCOME-CONTINUING> 10,945,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,945,000
<EPS-PRIMARY> 1.35
<EPS-DILUTED> 1.35
</TABLE>
