UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 of (I.R.S. Employer Identification No.)
incorporation or organization)
700 SOUTH ROYAL POINCIANA BLVD., SUITE 800
MIAMI SPRINGS, FLORIDA 33166
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(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 EACH EXCHANGE
TITLE OF EACH CLASS: ON WHICH REGISTERED:
----------------------- -----------------------------
Common Stock, New York Stock Exchange
par value $0.01 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 definite 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
$149,300,000 (computed by reference to the closing sale price as of May 19,
1999).
The registrant had 12,187,777 outstanding shares of common stock, par
value $.01 per share, as of May 19, 1999.
DOCUMENTS INCORPORATED BY REFERENCE:
Part III - Definitive Proxy Statement for the 1999 Annual Meeting of
Shareholders.
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TABLE OF CONTENTS
PAGE
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ITEM 1. Business
General 1
History 1
Description of Business 2
Aviation Fuel Services 2
Marine Fuel Services 2
Oil Recycling 3
Potential Risks and Insurance 4
Regulation 6
ITEM 2. Properties 9
ITEM 3. Legal Proceedings 11
ITEM 4. Submission of Matters to a Vote of Security Holders 11
ITEM 5. Market for Registrant's Common Equity and Related
Stockholder Matters 12
ITEM 6. Selected Financial Data 13
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
ITEM 7A Qualitative and Quantitative Disclosures about Market Risk 22
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") markets aviation and marine fuel
services, and recycles used oil. In its aviation fuel services business, the
Company extends credit and provides around-the-world single-supplier
convenience, 24-hour service, and competitively-priced aviation fuel and flight
plans, weather reports, and other aviation related services to passenger, cargo
and charter airlines, as well as corporate customers. In its marine fuel
services business, the Company markets marine fuel and fuel management services
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 to the accompanying financial
statements.
HISTORY
The Company was incorporated in Florida in July 1984. Its executive offices are
located at 700 South Royal Poinciana Boulevard, Suite 800, Miami Springs,
Florida 33166 and its telephone number at this address is (305) 884-2001. The
Company presently conducts its aviation fuel services business through ten
subsidiaries and a joint venture, with principal offices in Florida, Texas,
England, Singapore, Mexico, Ecuador and Costa Rica. The Company conducts its
marine fuel services business through nine subsidiaries with principal offices
in New Jersey, California, Washington, England, Costa Rica, South Korea 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 segment and "Exhibit 21
- - Subsidiaries of the Registrant".
The Company began operations in 1984 as a used oil recycler in the southeast
United States. The Company expanded this business through acquisitions, the
development of new processing technology and the establishment of new offices.
In 1986, the Company diversified its operations by entering, through an
acquisition, the aviation fuel services business. This new segment expanded
rapidly, from a business primarily concentrated in the state of Florida, to an
international sales company covering airports throughout the world. This
expansion resulted from acquisitions and the establishment of new offices. In
1995, the Company further diversified its fuel services operations through the
acquisition of a group of companies which are considered leaders in the marine
fuel services business.
In January 1998, the Company purchased all of the outstanding stock of Baseops
International, Inc. and its affiliates ("Baseops"). Baseops provides a
sophisticated array of aviation services to a diversified clientele of
corporate, government, and private aircraft worldwide.
In April 1999, the Company acquired substantially all of the operations of the
privately held Bunkerfuels group of companies, one of the world's leading
providers of bunker services. The
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acquisition will significantly increase World Fuel Services' share of the world
marine fuel market. The results of operations of the Bunkerfuels group will be
included with the results of the Company from April 1999.
See "Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations" and Note 1 to the accompanying financial statements for
additional information.
DESCRIPTION OF BUSINESS
AVIATION FUEL SERVICES
The Company markets aviation fuel and services to passenger, cargo and charter
airlines, as well as corporate customers. The Company has developed an extensive
network which enables it to provide fuel and aviation related services to
customers at airports throughout the world. The aviation services offered by the
Company include flight plans, weather reports, ground handling, and obtaining
flight permits.
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 are required to 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 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 prepay 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 does not maintain fuel inventory and
arranges to have the fuel delivered directly into the customer's aircraft. 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.
During the fiscal years ended March 31, 1999, 1998 and 1997, none of the
Company's aviation fuel customers accounted for more than 10% of the Company's
consolidated revenue. The Company currently employs 124 persons in its aviation
fuel services segment.
MARINE FUEL SERVICES
The Company, through its Trans-Tec Services and Bunkerfuels subsidiaries,
markets marine fuel and services related to the marine business to a broad base
of customers, including international container
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and tanker fleets, time charter operators, as well as U.S. military vessels.
Fuel and related services are provided throughout the world.
Through strategic sales offices located in the United States, Singapore,
England, Denmark, South Africa, South Korea and Costa Rica, the Company provides
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, the
Company's value added service has become an integral part of the oil and
transportation industries' push to shed non-core functions. Suppliers use the
Company's global sales, marketing and financial infrastructure to sell a spot or
ratable volume of product to a diverse, international purchasing community. End
customers use the Company's real time analysis of the availability, quality, and
price of marine fuels in ports worldwide to maximize their competitive position.
The Company, in its marine operations, acts as a broker and as a source of
market information for the end 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, the Company is paid a
commission from the supplier. The Company 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 inventory in its offshore fueling
operations and thus assumes price risk.
During the fiscal years ended March 31, 1999, 1998 and 1997, none of the
Company's marine fuel customers accounted for more than 10% of the Company's
consolidated revenue. The Company currently employs 97 persons in its marine
fuel services 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 primarily to
industrial and commercial customers. The Company generates revenue from the sale
of its recycled oil products and from fees paid by customers for the collection
of used oil, contaminated water and other non-hazardous liquids.
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 60 percent of its needs from generators within close proximity to
its facilities. The balance is sourced from independent collectors. Every
shipment is analyzed at the collection 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 Company's third recycling facility, located in New
Orleans, Louisiana, utilizes a batch recycling process. The Company
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also has collection and transfer facilities in Baltimore, Maryland,
Jacksonville, Florida, and Trenton, New Jersey. 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 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
includes a few large-scale operators that have the facilities to collect,
re-refine, and market lubricating products.
During the fiscal years ended March 31, 1999, 1998 and 1997, none of the
Company's recycled fuel customers accounted for more than 10% of the Company's
consolidated revenue. The Company currently employs 177 persons in the oil
recycling segment.
POTENTIAL RISKS AND INSURANCE
CREDIT. The Company's aviation and marine fueling businesses extend unsecured
credit to most of its customers. The Company's success in attracting business
has been due, in part, to its willingness to extend credit on an unsecured basis
to customers, which exhibit a high credit risk profile and would otherwise be
required to prepay or post letters of credit with their suppliers of fuel and
related services. The Company's management recognizes that extending credit and
setting the appropriate reserves for receivables is a largely subjective
decision based on knowledge of the customer. Active management of the Company's
credit risk is essential to its success. Diversification of credit risk is
difficult since the Company sells primarily within the aviation and marine
industries. The Company's sales executives and their respective staff meet
regularly to evaluate credit exposure, in the aggregate and by individual
credit. Credit exposure includes the amount of estimated unbilled sales. This
group is also responsible for setting and maintaining credit standards and
ensuring the overall quality of the credit portfolio.
In the Company's aviation segment, the level of credit granted to a customer is
largely influenced by its estimated fuel requirements for thirty to forty-five
days. This period represents the average business cycle of the Company's typical
customer. In the Company's marine segment, the level of credit granted to a
customer is influenced by a customer's credit history with the Company,
including claims experience and payment patterns.
Most of the Company's transactions are denominated in United States Dollars.
However, a rapid devaluation in currency affecting a customer of the Company
could have an adverse effect on the customer's operations and ability to convert
local currency to U.S. Dollars to make the required payments to the Company.
SENIOR MANAGEMENT. The Company's ability to maintain its competitive position is
dependent largely on the services of its senior management team. The Company may
not be able to retain the existing senior management personnel, or to attract
qualified senior management personnel. The Company provides employment
agreements to its senior management with terms ranging from two to five years.
The employment agreements have non-competitive provisions, which the Company
believes would prevent the individual from competing against the Company for the
period of the non-compete.
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YEAR 2000 READINESS. The Company's failure to make all of its systems year 2000
("Y2K") compliant before the end of 1999 may result in systems errors and
failures causing disruptions of normal business operations. In addition, the
Company is dependent on third parties to deliver its aviation and marine fuel
services on a global market basis. There can be no assurance that third parties
will be Y2K compliant by the end of 1999. See Liquidity and Capital Resources
section of Item 7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations appearing elsewhere in this Report.
REVOLVING LINE OF CREDIT. The Company's revolving credit agreement imposes
certain operating and financial restrictions. The Company's failure to comply
with the obligations under the revolving credit agreement, including meeting
certain financial ratios, could result in an event of default. An event of
default, if not cured or waived, would permit acceleration of the indebtedness
under the revolving credit facility.
MARKET RISKS. The Company's oil recycling segment was adversely affected by the
significant decline in oil prices during fiscal 1999. Lower fuel prices coupled
with the Company's fixed operating costs in its oil recycling operations
resulted in a decline in income from operations in this segment during fiscal
1999, when compared to the prior fiscal year. See Item 7 - Management's
Discussion and Analysis of Financial Condition and Results of Operations
appearing elsewhere in this Report.
The Company is a provider of aviation fuel services primarily to the secondary
passenger and cargo airlines, and a provider of marine fuel services to the
cargo container shipping lines. The Company's fuel services are provided through
relationships with the large independent oil suppliers, as well as the
government owned oil companies. The Company could be adversely affected by
industry consolidation, on the customer side, because of increased merger
activity in the airline and shipping industries and, on the supply side, because
of increased competition from the larger oil companies who could choose to
directly market to smaller airlines and shipping companies or by providing less
advantageous credit and price terms.
POLLUTION AND THIRD PARTY LIABILITY. 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 by a spill or
other accident. 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 domestic and
international fueling activities also subject it to the risks of significant
potential liability under federal, foreign and state statutes, common law and
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 into-plane 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
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adequately covered by the subcontractor's insurance and is of sufficient
magnitude, the Company's financial position and results of operations will be
adversely affected.
The Company has exited several environmental businesses which handled hazardous
waste. This waste was 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 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, will have a
material adverse effect on the Company's financial position and results of
operations.
REGULATION
The Company's operations are subject to substantial regulation by federal,
foreign, state and local government agencies, which enforce laws and regulations
which restrict the transportation, storage and disposal of hazardous waste and
the collection, transportation, processing, storage, use and disposal of waste
oil.
The principal laws and regulations 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 RE-AUTHORIZATION 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. 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 permits for
construction, operation and closure of facilities 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
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certain previously closed solid waste management units); phase in restrictions
on 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 of lead, arsenic, chromium, chlorine, cadmium, and
flashpoint levels. 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
recycled fuel to non-industrial burners. Industrial burners of recycled oil,
however, must comply with certain notification and administrative procedures.
THE CLEAN AIR ACT OF 1970, as amended in 1977, was the first major federal
environmental law to establish National Ambient Air Quality Standards for
certain air 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 could 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 the 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.
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
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United States in lieu of federal EPA regulation. State programs must be
consistent with minimum federal requirements, although they may 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 discharge or
a substantial threat of 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.
STATE AND LOCAL GOVERNMENT REGULATIONS. Many states have been authorized by the
EPA to enforce regulations promulgated under RCRA and other federal programs. In
addition, there are numerous state and local authorities that regulate the
environment, some of which impose stricter environmental standards than federal
laws and regulations. Some states, including Florida, have enacted legislation
which generally provides for registration, recordkeeping, permitting,
inspection, and reporting requirements for transporters, collectors and
recyclers of hazardous waste and waste oil. The penalties for violations of
state law include injunctive relief, recovery of damages for injury to air,
water or property and fines for non-compliance. In addition, some local
governments have established local pollution control programs, which include
environmental permitting, monitoring and surveillance, data collection and local
environmental studies.
FOREIGN GOVERNMENT REGULATIONS. Many foreign governments impose laws and
regulations relating to the protection of the environment and the discharge of
pollutants in the environment. Such laws and regulations could impose
significant liability on the Company for damages, clean-up costs and penalties
for discharges of pollutants in the environment, as well as injunctive relief.
In addition, some foreign government agencies have established pollution control
programs, which include environmental permitting, monitoring and surveillance,
data collection and environmental impact assessments.
EXCISE TAX ON DIESEL 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 on sales of aviation and marine fuel. Sales to
aircraft and vessels 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 pages set forth by segment and subsidiary the principal properties
owned or leased by the Company as of May 19, 1999. The Company considers its
properties and facilities to be suitable and adequate for its present needs.
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
PROPERTIES
<TABLE>
<CAPTION>
OWNER/LESSEE AND LOCATION PRINCIPAL USE OWNED OR LEASED
- ------------------------- ------------- ---------------
<S> <C> <C>
CORPORATE
World Fuel Services Corporation Executive offices Leased to December 2002
700 S. Royal Poinciana Blvd., Suite 800
Miami Springs, FL 33166
AVIATION FUELING
World Fuel Services of FL Administrative, operations Leased to December 2002
700 S. Royal Poinciana Blvd., Suite 800 and sales offices
Miami Springs, FL 33166
World Fuel Services, Inc.
700 S. Royal Poinciana Blvd., Suite 800 Administrative, operations Leased to December 2002
Miami Springs, FL 33166 and sales offices
4995 East Anderson Avenue Administrative, operations Leased month-to-month
Fresno, CA 93727 and sales offices
World Fuel International S.A. Administrative, operations Leased to April 2000
Petroservicios de Costa Rica S.A. and sales offices
Oficentro Ejecutivo La Sabana Sur
Edificio #5, Primer Piso
San Jose, Costa Rica
World Fuel Services Ltd. Administrative, operations Leased to December 2002
Baseops Europe Ltd. and sales offices
AirData Limited
Kingfisher House, Northwood Park, Gatwick Rd.
Crawley, West Sussex, RH10 2XN
United Kingdom
World Fuel Services (Singapore) Pte., Ltd. Administrative, operations Leased to June 2000
101 Thomson Road #09-03, United Square and sales offices
Singapore 307591
PetroServicios de Mexico S.A. de C.V. Administrative, operations Leased month-to-month
Servicios Auxiliares de Mexico S.A. de C.V. and sales offices
Avenida Fuerza Aerea Mexicana No. 465
Colonia Federal
15700 Mexico, D.F.
Baseops International, Inc. Administrative, operations Leased to February 2006
333 Cypress Run #200 and sales offices
Houston, Texas 77094
</TABLE>
(Continued)
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WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
PROPERTIES
(Continued)
<TABLE>
<CAPTION>
OWNER/LESSEE AND LOCATION PRINCIPAL USE OWNED OR LEASED
- ------------------------- ------------- ---------------
<S> <C> <C>
MARINE FUELING
Trans-Tec Services, Inc.
Glenpointe Center West Administrative, operations Leased to May 2002
500 Frank W. Burr Blvd. and sales offices
Teaneck, NJ 07666
60 East Sir Francis Drake, No. 301 Administrative, operations Leased to December 1999
Larkspur, CA 94939 and sales offices
2nd Floor Kipun Building Administrative, operations Leased to December 1999
200 Naeja-Dong and sales offices
Chongru-Ku
Seoul, South Korea
Seagram House, 2nd Floor Administrative, operations Leased to September 1999
71 Dock Road, Waterfront and sales offices
Capetown, South Africa 8001
Trans-Tec Services (UK) Ltd.
Millbank Tower, 21/24 Millbank Administrative, operations Leased to November 2002
London SW1P 4QP United Kingdom and sales offices
Gammelbyved 2 Administrative, operations Leased month-to-month
Karise, Denmark 4653 and sales offices
Trans-Tec International S.A. Administrative, operations Leased to April 2000
Casa Petro S.A. and sales offices
Atlantic Fuel Services, S.A.
Oficentro Ejecutivo La Sabana Sur
Edificio #5, Primer Piso
San Jose, Costa Rica
Trans-Tec Services (Singapore) PTE., LTD. Administrative, operations Leased to June 2000
101 Thomson Road #09-03, United Square and sales offices
Singapore 307591
Pacific Horizon Petroleum Services, Inc. Administrative, operations Leased to July 2000
2025 First Ave., Suite 1110 and sales offices
Seattle, WA 98121
</TABLE>
(Continued)
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WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
PROPERTIES
(Continued)
<TABLE>
<CAPTION>
OWNER/LESSEE AND LOCATION PRINCIPAL USE OWNED OR LEASED
- ------------------------- ------------- ---------------
<S> <C> <C>
MARINE FUELING-CONTINUED
Bunkerfuels Corporation Administrative, operations Leased to March 2001
45 Wyckoff's Mills Road and sales offices
Cranbury, NJ 08512
Three Harbor Drive, Suite 101 Administrative, operations Leased to April 2001
Sausalito, CA 94965 and sales offices
Room 2504, Jangkyo Bldg., 1 Jangko-Dong Administrative, operations Leased to April 2000
Seoul, Korea and sales offices
Bunkerfuels UK Limited Administrative, operations Owned
8 City Business Centre, Lower Road and sales offices
Rotherhithe, London SE16 2XB United Kingdom
OIL RECYCLING
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. of LA Storage tanks, recycling Partially owned;
14890 Intracostal Drive plant, laboratory and Partially leased to August 2001
New Orleans, LA 70129 administrative offices
International Petroleum Corp. of Maryland Collection and transfer Owned
6305 East Lombard Street facility and administrative
Baltimore, MD 21224 offices
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are from time to time involved in litigation
relating to claims arising out of their operations in the normal course of
business. Neither the Company nor its subsidiaries are currently involved in any
litigation that the Company believes is likely to have, individually or in the
aggregate, a material adverse effect on the financial condition or results of
operation of the Company or its subsidiaries.
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 1999.
Page 11
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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, 1999 and 1998, 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 declared 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 November 17, 1997.
See Note 4 to the financial statements included as part of this report.
Price Cash
---------------------------- Dividends
High Low Per Share
------------- ------------- --------------
Year ended March 31, 1999
First quarter $ 21 5/8 $ 16 1/4 $0.05
Second quarter 17 7/8 10 5/8 0.05
Third quarter 14 9 1/2 0.05
Fourth quarter 11 7/8 10 1/4 0.05
Year ended March 31, 1998
First quarter $ 14 13/16 $ 11 3/16 $0.05
Second quarter 16 7/8 13 7/16 0.05
Third quarter 21 15 11/16 0.05
Fourth quarter 23 9/16 18 13/16 0.05
As of May 19, 1999, there were 330 shareholders of record of the Company's
common stock. On March 3, 1999, the Company's Board of Directors approved the
following cash dividend schedule for the 2000 fiscal year:
<TABLE>
<CAPTION>
Declaration Date Per Share Record Date Payment Date
--------------------- ---------- ---------------------- ---------------
<S> <C> <C> <C>
June 3, 1999 $ 0.05 June 18, 1999 July 6, 1999
September 2, 1999 $ 0.05 September 17, 1999 October 5, 1999
December 2, 1999 $ 0.05 December 17, 1999 January 7, 2000
March 2, 2000 $ 0.05 March 17, 2000 April 5, 2000
</TABLE>
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.
During fiscal year 1999, the Company issued 39,845 shares of its common stock in
connection with the exercise of certain stock options. The aforementioned
issuance of common stock was made without registration under the Securities Act
of 1933, as amended (the "Securities Act"), in reliance upon the
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<PAGE>
exemptions from registration afforded by section 4(2) of the Securities Act. The
Company also began a stock grant program whereby each non-employee member of the
Board of Directors would be given an annual stock grant of 500 shares of the
Company's common stock.
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>
FISCAL YEAR ENDED MARCH 31,
----------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
--------------- ---------------- ---------------- ---------------- ---------------
(In thousands, except earnings per share data)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA
Revenue $ 744,182 $801,763 $772,618 $642,299 $361,891
Cost of sales 684,776 751,368 725,991 601,930 334,134
--------- -------- -------- -------- --------
Gross profit 59,406 50,395 46,627 40,369 27,757
Operating expenses 42,008 31,868 31,001 25,423 16,508
--------- -------- -------- -------- --------
Income from operations 17,398 18,527 15,626 14,946 11,249
Other income 1,506 2,219 2,243 1,875 1,774
--------- -------- -------- -------- --------
Income before income taxes 18,904 20,746 17,869 16,821 13,023
Provision for income taxes 3,797 4,893 4,604 5,876 4,935
--------- -------- -------- -------- --------
Net income $ 15,107 $ 15,853 $ 13,265 $ 10,945 $ 8,088
========= ======== ======== ======== ========
Basic earnings per common share $ 1.22 $ 1.30 $ 1.10 $ 0.92 $ 0.74
========= ======== ======== ======== ========
Weighted average shares 12,375 12,230 12,068 11,945 10,957
========= ======== ======== ======== ========
Diluted earnings per common share $ 1.21 $ 1.27 $ 1.08 $ 0.90 $ 0.73
========= ======== ======== ======== ========
Weighted average shares - diluted 12,533 12,528 12,295 12,150 11,038
========= ======== ======== ======== ========
</TABLE>
(Continued)
Page 13
<PAGE>
SELECTED FINANCIAL DATA
(Continued)
<TABLE>
<CAPTION>
AS OF MARCH 31,
-----------------------------------------------------------------------
1999 1998 1997 1996 1995
-------------- ----------- ----------- ------------ -------------
(In thousands)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA
Current assets $ 126,816 $107,548 $ 93,436 $ 83,252 $ 58,006
Total assets 165,934 143,259 123,139 111,974 89,536
Current liabilities 57,729 47,447 44,851 43,706 30,486
Long-term liabilities 7,408 3,901 3,030 4,518 6,984
Stockholders' equity 100,797 91,911 75,258 63,750 52,066
</TABLE>
NOTES TO SELECTED FINANCIAL DATA
The Company declared and paid cash dividends beginning in fiscal year
1995. See "Item 5 - Market for Registrant's Common Equity and Related
Stockholder Matters."
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.
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. In October 1997, the Board of Directors
approved a 3-for-2 stock split for all shares of common stock outstanding as
of November 17, 1997. The shares were distributed on December 1, 1997.
Accordingly, all share and per share data, as appropriate, have been
retroactively adjusted to reflect the effects of these splits.
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share" ("SFAS 128"). The Company adopted this standard as
of December 31, 1997. Earnings per share information for all prior periods
presented have been restated to conform to the requirements of SFAS 128.
In August 1998, the Company's Board of Directors authorized a stock
repurchase program whereby the Company could repurchase up to $6,000,000 of
the Company's common stock. During fiscal 1999, the Company repurchased
324,000 shares at an aggregate cost of $3,902,000.
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
Profit from the Company's aviation fuel services 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 services business is determined primarily by the volume
and commission rate of brokering business generated and by the volume and
margins achieved on trade 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 used oil and waste water collection revenue.
Page 14
<PAGE>
During fiscal year 1999, world oil prices declined substantially. The effects of
this decrease on the Company's results of operations caused revenue decreases
across all of the Company's segments. In addition, the gross margin in the
Company's used oil segment and offshore marine operations narrowed as a result
of the fixed costs associated with each of these businesses.
FISCAL YEAR ENDED MARCH 31, 1999 COMPARED TO THE FISCAL YEAR ENDED
MARCH 31, 1998
The Company's revenue for fiscal 1999 was $744,182,000, a decrease of
$57,581,000, or 7.2%, as compared to revenue of $801,763,000 for the prior
fiscal year. The revenue decrease is due to a substantial decline in world oil
prices. The Company's revenue during these periods was attributable to the
following segments:
FISCAL YEAR ENDED MARCH 31,
1999 1998
-------------- -------------
Aviation Fueling $ 327,844,000 $ 383,010,000
Marine Fueling 392,717,000 393,607,000
Oil Recycling 23,621,000 25,146,000
------------- -------------
Total Revenue $ 744,182,000 $ 801,763,000
============= =============
The aviation fueling segment contributed $327,844,000 in revenue for fiscal
1999. This represented a decrease in revenue of $55,166,000, or 14.4%, as
compared to the prior fiscal year. The decrease in revenue was due to a lower
average price per gallon and volume of gallons sold. The marine fueling segment
contributed $392,717,000 in revenue for fiscal 1999, a decrease of $890,000 over
the prior fiscal year. The decrease in revenue was related primarily to a lower
average sales price per metric ton sold, partially offset by an increase in the
volume of metric tons sold. The oil recycling segment contributed $23,621,000 in
revenue for fiscal 1999, a decrease of $1,525,000, or 6.1%, as compared to the
prior fiscal year. The decrease in revenue was due to a lower average sales
price per gallon of recycled oil sold, partially offset by higher used oil and
waste water collection revenue.
The Company's gross profit for the fiscal year ended March 31, 1999 was
$59,406,000, an increase of $9,011,000, or 17.9%, as compared to the prior
fiscal year. The Company's gross margin increased from 6.3% for fiscal 1998 to
8.0% for fiscal 1999, largely a result of the decline in the average price of
fuel.
The Company's aviation fueling business achieved a 9.7% gross margin for fiscal
1999, as compared to 6.1% achieved for the prior fiscal year. This resulted
principally from a decline in the average price per gallon sold, as well as an
increase in the average gross profit per gallon and the addition of Baseops, an
aviation services company which the Company acquired effective January 1998. The
Company's marine fueling segment achieved a 5.4% gross margin for fiscal 1999,
as compared to a 5.1% gross margin for the prior fiscal year. This was the
result of a lower average sales price per metric ton sold and a narrower average
gross profit per ton. The gross margin in the Company's oil recycling
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<PAGE>
segment decreased from 28.5% for fiscal 1998, to 26.0% for fiscal 1999. This
decrease resulted from a lower gross profit per gallon of recycled oil sold,
partially offset by an increase in service revenue.
Total operating expenses for fiscal 1999 were $42,008,000, an increase of
$10,140,000, or 31.8%, as compared to the prior fiscal year. The increase
resulted primarily from the inclusion of operating expenses for the Baseops
companies, higher salaries and wages related principally to staff additions and
performance bonuses, an increase in the provision for bad debts in the aviation
and marine segments, and expenses incurred in business expansion activities.
The Company's income from operations for fiscal 1999 was $17,398,000, a decrease
of $1,129,000, or 6.1%, as compared to the prior fiscal year. Income from
operations during these periods was attributable to the following segments:
Fiscal Year Ended March 31,
1999 1998
------------ ------------
Aviation Fueling $ 13,331,000 $ 12,558,000
Marine Fueling 7,515,000 7,403,000
Oil Recycling 2,593,000 4,155,000
Corporate Overhead (6,041,000) (5,589,000)
------------ ------------
Total Income from Operations $ 17,398,000 $ 18,527,000
============ ============
The aviation fueling segment's income from operations was $13,331,000 for fiscal
1999, an increase of $773,000, or 6.2%, as compared to the prior fiscal year.
The increase in the average gross profit per gallon sold offset the effects of a
decrease in the volume of gallons sold and an increase in operating expenses, as
previously discussed. The marine fueling segment earned $7,515,000 in income
from operations for fiscal 1999, an increase of $112,000, or 1.5%, as compared
to the prior fiscal year. This increase was primarily the result of a higher
volume of metric tons traded, largely offset by a narrower gross profit per
metric ton and higher operating expenses, as previously discussed. The oil
recycling segment contributed $2,593,000 in income from operations for fiscal
1999, a decrease of $1,562,000, or 37.6%, as compared to the prior fiscal year.
This resulted from a decrease in gross profit and higher operating expenses.
Corporate overhead costs not charged to the business segments totaled $6,041,000
in fiscal 1999, an increase of $452,000, or 8.1%, as compared to the prior
fiscal year. This increase resulted from higher salaries and wages related
principally to staff additions and performance bonuses.
Other income for fiscal 1999 decreased $713,000 or 32.1% compared to the prior
fiscal year, as a result of lower earnings from the Company's aviation joint
venture in Ecuador. The Company's effective income tax rate for fiscal 1999 was
20.1%, as compared to 23.6% for the prior fiscal year. This decrease is the
result of a true-up of U.S. income taxes for overaccruals in prior periods and
an overall increase in the Company's foreign operations, which are taxed at
rates lower than that of the U.S.
Page 16
<PAGE>
Net income for fiscal 1999 was $15,107,000, a decrease of $746,000, or 4.7%, as
compared to net income of $15,853,000 for fiscal 1998. Diluted earnings per
share of $1.21 for fiscal 1999 exhibited a $0.06, or 4.7%, decrease over the
$1.27 achieved during the prior fiscal year.
FISCAL YEAR ENDED MARCH 31, 1998 COMPARED TO THE FISCAL YEAR ENDED
MARCH 31, 1997
The Company's revenue for fiscal 1998 was $801,763,000, an increase of
$29,145,000, or 3.8%, as compared to revenue of $772,618,000 for the prior
fiscal year. The Company's revenue during these periods was attributable to the
following segments:
FISCAL YEAR ENDED MARCH 31,
1998 1997
------------- -------------
Aviation Fueling $ 383,010,000 $ 381,236,000
Marine Fueling 393,607,000 368,470,000
Oil Recycling 25,146,000 22,912,000
------------- -------------
Total Revenue $ 801,763,000 $ 772,618,000
============= =============
The aviation fueling segment contributed $383,010,000 in revenue for fiscal
1998. This represented an increase in revenue of $1,774,000, or 0.5%, as
compared to the prior fiscal year. The increase in revenue was due to a higher
volume of gallons sold, largely offset by a decrease in the average price per
gallon sold, which resulted primarily from a decrease in the world market price
of fuels. The marine fueling segment contributed $393,607,000 in revenue for
fiscal 1998, an increase of $25,137,000, or 6.8%, over the prior fiscal year.
The increase in revenue was related primarily to an increase in the volume of
metric tons traded, partially offset by a decrease in the average sales price of
metric tons traded. The oil recycling segment contributed $25,146,000 in revenue
for fiscal 1998, an increase of $2,234,000, or 9.7%, as compared to the prior
fiscal year. The increase in revenue was due to an increase in volume of
recycled oil sold and higher used oil and waste water collection revenue,
partially offset by a decrease in the average sales price per gallon of recycled
oil sold.
The Company's gross profit for fiscal 1998 was $50,395,000, an increase of
$3,768,000, or 8.1%, as compared to the prior fiscal year. The Company's gross
margin increased from 6.0% for fiscal 1997 to 6.3% for fiscal 1998.
The Company's aviation fueling business achieved a 6.1% gross margin for fiscal
1998, as compared to 6.0% achieved for the prior fiscal year. This resulted from
the decline in the average price per gallon sold. The Company's marine fueling
segment achieved a 5.1% gross margin for fiscal 1998, as compared to a 4.4%
gross margin for the prior fiscal year. This resulted from an increase in the
average gross profit per metric ton traded and lower fuel prices. The gross
margin in the Company's oil recycling segment decreased from 33.4% for fiscal
1997, to 28.5% for fiscal 1998. This decrease
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<PAGE>
resulted from a lower gross profit per gallon of recycled oil sold, due
primarily to lower world oil prices.
Total operating expenses for fiscal 1998 were $31,868,000, an increase of
$867,000, or 2.8%, as compared to the prior fiscal year. The increase resulted
from higher salaries and wages related principally to staff additions and
performance bonuses, and higher operating expenses in the aviation and marine
segments related to business expansion, partially offset by a lower provision
for bad debts over the corresponding period during the prior year. In relation
to revenue, total operating expenses remained unchanged at 4.0%.
The Company's income from operations for fiscal 1998 was $18,527,000, an
increase of $2,901,000, or 18.6%, as compared to the prior fiscal year. Income
from operations during these periods was attributable to the following segments:
FISCAL YEAR ENDED MARCH 31,
1998 1997
------------ -------------
Aviation Fueling $ 12,558,000 $ 10,620,000
Marine Fueling 7,403,000 5,013,000
Oil Recycling 4,155,000 5,020,000
Corporate Overhead (5,589,000) (5,027,000)
------------ ------------
Total Income from Operations $ 18,527,000 $ 15,626,000
============ ============
The aviation fueling segment's income from operations was $12,558,000 for fiscal
1998, an increase of $1,938,000, or 18.2%, as compared to the prior fiscal year.
This resulted from a higher volume of gallons sold and a decrease in operating
expenses, principally in the provision for bad debts, partially offset by a
decrease in average gross profit per gallon sold. The marine fueling segment
earned $7,403,000 in income from operations for fiscal 1998, an increase of
$2,390,000, or 47.7%, as compared to the prior fiscal year. The increase was due
to a higher volume and average gross profit per metric ton sold, partially
offset by an increase in operating expenses. The oil recycling segment
contributed $4,155,000 in income from operations for fiscal 1998, a decrease of
$865,000, or 17.2%, for fiscal 1998, as compared to the prior fiscal year. The
decrease is mostly the result of lower world oil prices, which caused a decrease
in gross profit per recycled gallon sold. Corporate overhead costs not charged
to the business segments totaled $5,589,000 for fiscal 1998, an increase of
$562,000, or 11.2%, as compared to the prior fiscal year. The increase resulted
from higher salaries and wages related principally to staff additions and
performance bonuses.
Net income for fiscal 1998 was $15,853,000, an increase of $2,588,000, or 19.5%,
as compared to net income of $13,265,000 for fiscal 1997. Diluted earnings per
share of $1.27 for fiscal 1998 exhibited a $0.19, or 17.6%, increase over the
$1.08 achieved during the prior fiscal year.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
In the Company's aviation and marine fuel businesses, the primary use of capital
is to finance receivables. The Company maintains aviation fuel inventories at
certain locations in the United States for competitive reasons, but inventory
levels are kept at an operating minimum. The Company also maintains inventory in
its offshore fueling operations. 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 contrast to the Company's aviation and marine fueling segments, the oil
recycling segment's capital requirements are for the financing of property,
plant and equipment, and accounts receivable. The Company generally 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. 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 $16,322,000 at March 31, 1999, as compared
to $14,459,000 at March 31, 1998. The principal uses of cash during the fiscal
year ended March 31, 1999 were $5,658,000 for capital expenditures and
$2,486,000 in dividends paid on common stock. Partially offsetting these cash
uses were $6,481,000 in net cash provided by operating activities and $3,780,000
from collections on notes receivable. Other components of changes in cash and
cash equivalents are detailed in the Consolidated Statements of Cash Flows.
Working capital as of March 31, 1999 was $69,087,000, exhibiting a $8,986,000
increase from working capital as of March 31, 1998. As of March 31, 1999, the
Company's accounts receivable and notes receivable, excluding the allowance for
bad debts, amounted to $106,820,000, an increase of $18,417,000 as compared to
the March 31, 1998 balance. In the aggregate, accounts payable, accrued expenses
and customer deposits increased $10,643,000. The net increase in trade credit of
$7,774,000 was attributed to the aviation segment and offshore marine
operations. The allowance for doubtful accounts as of March 31, 1999 amounted to
$6,829,000, an increase of $2,235,000 compared to the March 31, 1998 balance.
This increase is in response to the adverse economic conditions principally in
South America, which caused a slowdown in the payment of accounts receivable and
the extension of payment terms with certain customers. During the fiscal years
ended March 31, 1999 and 1998, the Company charged $5,133,000 and $1,417,000,
respectively, to the provision for bad debts and had charge-offs in excess of
recoveries of $2,898,000 and $1,301,000, respectively.
Capital expenditures, which amounted to $5,658,000 for the fiscal year ended
March 31, 1999, consisted primarily of $2,290,000 for the implementation of a
new financial system, $2,246,000 in plant, machinery and equipment related
primarily to the Company's recycled oil segment, and $746,000 for computer
equipment. During fiscal year 2000, the Company anticipates spending
approximately $700,000 to complete the implementation of the financial system
and $2,000,000 to upgrade existing plant, machinery and equipment. The Company
may also spend an estimated $1,000,000 sometime in the future, if required 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 will be capitalized as part of
the cost of the site, up to the fair market value of the site.
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<PAGE>
Long-term liabilities as of March 31, 1999 were $7,408,000, exhibiting a
$3,507,000 increase as compared to March 31, 1998. This increase was the result
of borrowings under the Company's revolving credit facility of $4,000,000,
mainly for the purchase of the Company's common stock, as discussed below. For a
description of the Company's revolving credit facility and borrowings capacity,
refer to Note 2 of the Consolidated Financial Statements included as part of
this Report.
Stockholders' equity amounted to $100,797,000, or $8.27 per share, at March 31,
1999, compared to $91,911,000, or $7.36 per share, at March 31, 1998. This
increase of $8,886,000 was due to $15,107,000 in earnings for the period.
Partially offsetting was $2,471,000 in cash dividends declared and $3,902,000
for the purchase of treasury stock.
The Company expects to meet its capital investment and working capital
requirements for fiscal year 2000 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.
EURO CURRENCY
On January 1, 1999, eleven of fifteen members of the European Union launched a
common legal currency called the Euro. The Euro trades on currency exchanges and
is available for business transactions. The conversion to the Euro will
eliminate currency exchange risk between the member countries. Beginning January
1, 2002, the participating countries will issue new Euro denominated bills and
coins for use in cash transactions, and the legal currencies will be withdrawn
from circulation.
The Company's functional currency for business throughout Europe is the U.S.
Dollar. Fuel suppliers invoice the Company in U.S. Dollars and the Company
invoices its customers in U.S. Dollars. The Company is currently implementing a
new financial accounting system, which is Euro ready and should address the
preparation of accounting and tax reports for filing with the U.K. authorities.
However, as a result of competitive pressures or regulatory requirements, there
can be no assurance that in the coming years the Euro will not replace the U.S.
Dollar as the Company's functional currency in Europe. If the Euro were to
replace the U.S. Dollar, the Company will be required to address currency risk
and strategies concerning continuity of existing arrangements with customers and
suppliers.
Based on its experience to date, the Company does not believe that the
implementation of the Euro will have a material adverse effect on the results of
operations or financial position.
YEAR 2000 READINESS DISCLOSURE
GENERAL. Because computers frequently use only two digits to recognize years, on
January 1, 2000, many computer systems, as well as equipment that uses embedded
computer chips, may be unable to distinguish between 1900 and 2000. If not
remediated, this problem could create systems errors and failures resulting in
the disruption of normal business operations. Since Year 2000 is a leap year,
there could also be business disruptions as a result of the inability of many
computer systems to recognize February 29, 2000.
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<PAGE>
In the first quarter of 1998, the Company's Information Technology Group began
to address these issues, as they pertain to the internal information and
telecommunications systems. This group continues to work on solving problems
related to the Year 2000, which include identification and analysis, and
correction and testing of computer systems throughout the Company. This group
has also taken inventory of equipment that uses embedded computer chips (i.e.,
non-information technology systems) and have scheduled remediation or
replacement of this equipment, as necessary.
STATE OF READINESS. The Company's Year 2000 efforts are generally divided into
phases for identification, remediation, and testing. In the identification
phase, the Company identifies systems that have Year 2000 issues and determines
the steps necessary to remediate these issues. In the remediation phase, the
Company replaces, modifies or retires systems, as necessary. During the testing
phase, the Company performs testing to determine whether the remediated systems
accurately process and identify dates.
As of March 31, 1999, the Company had identified all network software, end-user
computing programs and telephone systems at all of the Company's office
locations. The main Year 2000 non-compliant systems and equipment identified
were the Company's centralized financial systems and the vast majority of
personal computers.
During the remediation phase, the Company committed, and is in the process of
completing the implementation of a new financial system, which is Year 2000
compliant. In addition, the Company is making the necessary investment to
replace existing Year 2000 non-compliant hardware. Year 2000 Compliant
certificates were requested of vendors for products purchased by the Company. To
the extent that vendors either fail to provide the required compliancy
certificate, or have not made their products or systems Year 2000 ready, the
product is replaced to meet Year 2000 requirements. The Company believes that
approximately 75% of the vendor programs are Year 2000 compliant as of March 31,
1999. The Company has implemented the financial accounting system in two of its
three segments. The aviation segment implementation is scheduled for August
1999. The Company is currently undergoing implementation of Year 2000 compliant
telecommunications systems, as required.
The testing phase is scheduled for completion during September 1999. The testing
phase is intended to test only the systems and equipment utilized internally by
the Company throughout its offices worldwide. All clock driven systems and
equipment devices will be forwarded to December 31, 1999.
Ultimately, the potential impact of Year 2000 issues will depend not only on the
corrective measures taken by the Company, but also on the way in which Year 2000
issues are addressed by governmental agencies, third party fuel service
providers and other businesses which provide goods and services to the Company,
and provide data to, or receive data from the Company. In addition, the
Company's business may be affected by the corrective measures taken by the
landlords of office space leased by the Company.
COSTS. The Company currently estimates that the total cost of the Year 2000
project will be less than one million dollars, excluding the investment in the
new financial system. Of this estimated amount, the Company has already spent
approximately 75%.
Page 21
<PAGE>
CONTINGENCY PLANS. Once the testing phase is completed, the Company will
estimate the likelihood that certain systems or equipment devices may not be
Year 2000 compliant by December 31, 1999. The Company will develop the necessary
contingency plan to cover the compliance gaps.
RISKS. Although the Company's remediation efforts are directed at reducing its
Year 2000 exposure, there can be no assurance that these efforts will fully
mitigate the effect of Year 2000 issues and it is likely that one or more events
may disrupt the Company's normal business operations. In the event that the
Company fails to identify or correct a material Year 2000 problem, there could
be disruptions in normal business operations, which could have a material
adverse effect on the Company's results of operations, liquidity or financial
condition. In addition, there can be no assurance that significant foreign or
domestic vendors, customers and other third parties will adequately address
their Year 2000 issues. Further, there may be some parties, such as governmental
agencies, utilities, telecommunication companies, financial services vendors,
third parties contracted by the Company to deliver fuel to its customers, and
other providers, where alternative arrangements or resources may not be
available. Also, risks associated with some foreign third parties may be greater
since there is a general concern that some entities operating outside the United
States are not addressing the Year 2000 issues on a timely basis.
The Company is also subject to additional credit and performance risks to the
extent that customers and suppliers, respectively, fail to adequately address
Year 2000 issues. Although it is not possible to quantify the potential impact
of these risks at this time, there may be increases in account receivable
write-offs, as well as the risk of litigation and potential losses from
litigation related to the foregoing.
Forward-looking statements contained in this Year 2000 Readiness Disclosure
subsection, should be read in conjunction with the cautionary statements
included elsewhere in this Report.
FORWARD-LOOKING STATEMENTS
Except for the historical information contained herein, this document includes
forward-looking statements that involve risk and uncertainties, including, but
not limited to quarterly fluctuations in results; the management of growth;
fluctuations in world oil prices or foreign currency; major changes in
political, economic, regulatory or environmental conditions; the loss of key
customers, suppliers or members of senior management; uninsured losses;
competition; credit risk associated with accounts and notes receivable; and
other risks detailed in this Report and in the Company's other Securities and
Exchange Commission filings. Actual results may differ materially from any
forward-looking statements set forth herein.
ITEM 7A. QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET RISK
The Company conducts the vast majority of its business transactions in U.S.
Dollars. However, in certain markets, mainly in Ecuador through its aviation
joint venture and in Mexico for payments to its aviation fuel supplier, the
Company conducts its business in local currency. This subjects the Company to
foreign currency exchange risk, which may adversely affect its results of
operations and financial condition. The Company seeks to minimize the risks from
currency exchange rate fluctuations through its regular operating and financing
activities.
Page 22
<PAGE>
The Company's borrowings pursuant to its revolving credit facility provides for
various market driven variable interest rate options. These interest rates are
subject to interest rate changes in the United States and the Eurodollar market.
The Company does not currently use, nor has it historically used, derivative
financial instruments to manage or reduce market risk. See Note 2 to the
accompanying financial statements for additional information.
Recognizing favorable market conditions or for competitive reasons, the Company
may enter into short-term fuel purchase commitments for the physical delivery of
product in the United States. The Company simultaneously may hedge the physical
delivery through a commodity based derivative instrument, to minimize the
effects of commodity price fluctuations. As of March 31, 1999, the Company did
not have any outstanding purchase commitments.
The Company offers its customers swaps and caps as part of its fuel management
services. Typically, the Company simultaneously enters into the commodity based
derivative instruments with its customer and a counterparty. The counterparties
are major oil companies and derivative trading firms. Accordingly, the Company
does not anticipate non-performance by such conterparties. Pursuant to these
transactions, the Company is not affected by market price fluctuations since the
contracts have the same terms and conditions except for the fee or spread earned
by the Company. Performance risk under these contracts is considered a credit
risk. This risk is minimized by dealing with customers meeting additional credit
criteria. As of March 31, 1999, the Company had outstanding swap contracts for
65,000 metric tons expiring by December 1999, and $61,000 in deferred cap fees.
Gains on these contracts are recognized at the completion of each transaction.
The Company's policy is to not use financial instruments for speculative
purposes.
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.
Page 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 1999 Annual Meeting of Shareholders (the "1999 Proxy
Statement"), is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth in the 1999 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 1999 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 1999 Proxy Statement is incorporated herein by reference.
Page 24
<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. 28
(ii) Consolidated Balance Sheets as of March 31, 1999 and 1998. 29
(iii) Consolidated Statements of Income for the Years Ended
March 31, 1999, 1998 and 1997. 31
(iv) Consolidated Statements of Stockholders' Equity for the Years
Ended March 31, 1999, 1998 and 1997. 32
(v) Consolidated Statements of Cash Flows for the Years Ended
March 31, 1999, 1998 and 1997. 33
(vi) Notes to Consolidated Financial Statements. 35
(a)(2) The following consolidated financial statement schedule is filed as a
part of this report:
(I) Schedule II - Valuation and Qualifying Accounts. 51
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
----------- -----------
(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) 1986 Employee Stock Option Plan is incorporated by reference to
the Company's Registration Statement on Form S-18 filed
February 3, 1986.
Page 25
<PAGE>
(b) 1993 Non-Employee Directors Stock Option Plan is incorporated by
reference to the Company's Schedule 14A filed June 28, 1994.
(c) 1996 Employee Stock Option Plan is incorporated by reference to
the Company's Schedule 14A filed June 18, 1997.
(10) Material contracts filed with this Form 10-K:
(a) Amendment to Employment Agreement with Mr. Jerrold Blair, dated
April 11, 1999.
(b) Amendment to Employment Agreement with Mr. Ralph Weiser, dated
April 13, 1999.
(c) Revolving Credit and Reimbursement Agreement, dated November 30,
1998, by and among World Fuel Services Corporation and
NationsBank, N.A. (South).
(d) Promissory note, dated November 30, 1998, executed by World Fuel
Services Corporation, as borrower, and certain subsidiaries, as
guarantors in favor of NationsBank, N.A. (South).
(e) Revolving Credit and Reimbursement Agreement, dated November 30,
1998, by and among World Fuel International, S.A. and Trans-Tec
International, S.A., as borrowers, World Fuel Services
Corporation and certain subsidiaries, as guarantors, and
NationsBank, N.A. (South).
(f) Promissory note, dated November 30, 1998, executed by World
Fuel International, S.A. and Trans-Tec International, S.A., as
borrowers, World Fuel Services Corporation and a certain
subsidiary, as guarantor, in favor of NationsBank, N.A. (South).
(21) Subsidiaries of the Registrant.
(27) Financial Data Schedule.
(b) No reports on Form 8-K were filed during the fourth quarter of the Company's
fiscal year ended March 31, 1999.
Page 26
<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: June 2, 1999 By: /s/ JERROLD BLAIR
-------------------------------------
Jerrold Blair, President
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: June 2, 1999 By: /s/ RALPH R. WEISER
--------------------------------------
Ralph R. Weiser, Chairman of the Board
Dated: June 2, 1999 By: /s/ JERROLD BLAIR
--------------------------------------
Jerrold Blair, President and Director
Dated: June 2, 1999 By: /s/ CARLOS A. ABAUNZA
-------------------------------------
Carlos A. Abaunza, Chief Financial
Officer
Dated: June 2, 1999 By: /s/ PHILLIP S. BRADLEY
--------------------------------------
Phillip S. Bradley, Director
Dated: June 2, 1999 By: /s/ RALPH FEUERRING
--------------------------------------
Ralph Feuerring, Director
Dated: June 2, 1999 By: /s/ JOHN R. BENBOW
--------------------------------------
John R. Benbow, Director
Dated: June 2, 1999 By: /s/ MYLES KLEIN
--------------------------------------
Myles Klein, Director
Dated: June 2, 1999 By: /s/ MICHAEL J. KASBAR
--------------------------------------
Michael J. Kasbar, Director
Dated: June 2, 1999 By: /s/ PAUL H. STEBBINS
--------------------------------------
Paul H. Stebbins, Director
Dated: June 2, 1999 By: /s/ LUIS R. TINOCO
--------------------------------------
Luis R. Tinoco, Director
Page 27
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To 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,
1999 and 1998, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period ended March 31,
1999. 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, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
March 31, 1999 in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule II is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not a
required part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Miami, Florida,
May 25, 1999.
Page 28
<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 16,322,000 $ 14,459,000
Accounts receivable, net of allowance
for bad debts of $6,829,000 and $4,594,000
at March 31, 1999 and 1998, respectively 92,888,000 81,648,000
Inventories 6,199,000 5,504,000
Notes receivable 5,790,000 1,496,000
Prepaid expenses and other current assets 5,617,000 4,441,000
------------ ------------
Total current assets 126,816,000 107,548,000
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 1,054,000 1,054,000
Buildings and improvements 3,155,000 3,098,000
Office equipment and furniture 8,150,000 5,286,000
Plant, machinery and equipment 19,557,000 17,458,000
Construction in progress 196,000 230,000
------------ ------------
32,112,000 27,126,000
Less accumulated depreciation
and amortization 10,655,000 9,065,000
------------ ------------
21,457,000 18,061,000
------------ ------------
OTHER ASSETS:
Unamortized cost in excess of net
assets of acquired companies, net of
accumulated amortization 15,148,000 15,402,000
Other 2,513,000 2,248,000
------------ ------------
$165,934,000 $143,259,000
============ ============
</TABLE>
(Continued)
Page 29
<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31,
------------------------------
1999 1998
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt $ 125,000 $ 119,000
Accounts payable and accrued expenses 49,665,000 40,560,000
Customer deposits 4,074,000 2,536,000
Accrued salaries and wages 2,248,000 1,851,000
Income taxes payable 1,617,000 2,381,000
------------ ------------
Total current liabilities 57,729,000 47,447,000
------------ ------------
LONG-TERM LIABILITIES 7,408,000 3,901,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value;
100,000 shares authorized, none issued -- --
Common stock, $0.01 par value;
25,000,000 shares authorized; 12,534,000 and
12,492,000 shares issued and outstanding
at March 31, 1999 and 1998, respectively 125,000 125,000
Capital in excess of par value 26,769,000 26,479,000
Retained earnings 78,000,000 65,364,000
Less treasury stock, at cost; 346,000 and 11,000 shares
at March 31, 1999 and 1998, respectively 4,097,000 57,000
------------ ------------
100,797,000 91,911,000
------------ ------------
$165,934,000 $143,259,000
============ ============
</TABLE>
The accompanying notes to the consolidated financial statements
are an integral part of these consolidated balance sheets.
Page 30
<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Year Ended March 31,
------------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Revenue $744,182,000 $801,763,000 $772,618,000
Cost of sales 684,776,000 751,368,000 725,991,000
------------ ------------ ------------
Gross profit 59,406,000 50,395,000 46,627,000
------------ ------------ ------------
Operating expenses:
Salaries and wages 20,857,000 17,382,000 14,795,000
Provision for bad debts 5,133,000 1,417,000 5,107,000
Other 16,018,000 13,069,000 11,099,000
------------ ------------ ------------
42,008,000 31,868,000 31,001,000
------------ ------------ ------------
Income from operations 17,398,000 18,527,000 15,626,000
------------ ------------ ------------
Other income, net:
Equity in earnings of
aviation joint venture 199,000 1,100,000 1,773,000
Other, net 1,307,000 1,119,000 470,000
------------ ------------ ------------
1,506,000 2,219,000 2,243,000
------------ ------------ ------------
Income before income taxes 18,904,000 20,746,000 17,869,000
Provision for income taxes 3,797,000 4,893,000 4,604,000
------------ ------------ ------------
Net income $ 15,107,000 $ 15,853,000 $ 13,265,000
============ ============ ============
Basic earnings per common share $ 1.22 $ 1.30 $ 1.10
============ ============ ============
Weighted average shares 12,375,000 12,230,000 12,068,000
============ ============ ============
Diluted earnings per common share $ 1.21 $ 1.27 $ 1.08
============ ============ ============
Weighted average shares - diluted 12,533,000 12,528,000 12,295,000
============ ============ ============
</TABLE>
The accompanying notes to the consolidated financial statements
are an integral part of these consolidated financial statements.
Page 31
<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN
-------------------------------- EXCESS OF RETAINED TREASURY
SHARES AMOUNT PAR VALUE EARNINGS STOCK
------------- ----------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1996 12,069,000 $ 121,000 $ 22,574,000 $ 41,112,000 $ (57,000)
Exercise of options 105,000 1,000 660,000 -- --
Cash dividends declared -- -- -- (2,418,000) --
Net income -- -- -- 13,265,000 --
----------- ------------ ------------ ------------ ------------
Balance at March 31, 1997 12,174,000 122,000 23,234,000 51,959,000 (57,000)
Exercise of options 168,000 2,000 1,156,000 -- --
Issuance of shares
for acquisition 150,000 1,000 2,089,000 -- --
Cash dividends declared -- -- -- (2,448,000) --
Net income -- -- -- 15,853,000 --
----------- ------------ ------------ ------------ ------------
Balance at March 31, 1998 12,492,000 125,000 26,479,000 65,364,000 (57,000)
Exercise of options 40,000 -- 297,000 -- --
Purchases of stock -- -- -- -- (3,902,000)
Cash dividends declared -- -- -- (2,471,000) --
Other 2,000 -- (7,000) -- (138,000)
Net income -- -- -- 15,107,000 --
----------- ------------ ------------ ------------ ------------
Balance at March 31, 1999 12,534,000 $ 125,000 $ 26,769,000 $ 78,000,000 $ (4,097,000)
=========== ============ ============ ============ ============
</TABLE>
The accompanying notes to the consolidated financial statements
are an integral part of these consolidated financial statements.
Page 32
<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
--------------------------------------------------
1999 1998 1997
------------- ------------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 15,107,000 $ 15,853,000 $ 13,265,000
------------ ------------ ------------
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 2,799,000 2,418,000 1,938,000
Provision for bad debts 5,133,000 1,417,000 5,107,000
Deferred income tax (benefit) provision (504,000) 379,000 (369,000)
Equity in earnings of aviation joint venture, net (199,000) (526,000) (675,000)
Other non-cash operating credits (7,000) -- (19,000)
Changes in assets and liabilities, net of acquisitions
and dispositions:
(Increase) decrease in -
Accounts receivable (24,663,000) (10,889,000) (13,181,000)
Inventories (695,000) 945,000 (1,857,000)
Prepaid expenses and other current assets (1,391,000) (64,000) (2,067,000)
Other assets 484,000 (1,000) 250,000
Increase (decrease) in -
Accounts payable and accrued expenses 9,120,000 1,154,000 (64,000)
Customer deposits 1,538,000 (93,000) 774,000
Accrued salaries and wages 397,000 (336,000) 132,000
Income taxes payable (764,000) 2,081,000 (150,000)
Deferred compensation 126,000 556,000 594,000
------------ ------------ ------------
Total adjustments (8,626,000) (2,959,000) (9,587,000)
------------ ------------ ------------
Net cash provided by operating activities 6,481,000 12,894,000 3,678,000
------------ ------------ ------------
Cash flows from investing activities:
Additions to property, plant and equipment (5,658,000) (3,484,000) (3,156,000)
Repayments from (advances to) aviation joint venture, net 77,000 (319,000) (106,000)
Issuance of notes receivable (617,000) -- --
Proceeds from notes receivable 3,780,000 809,000 774,000
Payment for acquisition of business, net of cash acquired -- (807,000) --
------------ ------------ ------------
Net cash used in investing activities (2,418,000) (3,801,000) (2,488,000)
------------ ------------ ------------
</TABLE>
(Continued)
Page 33
<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MARCH 31,
----------------------------------------------------
1999 1998 1997
------------ -------------- ---------------
<S> <C> <C> <C>
Cash flows from financing activities:
Dividends paid on common stock $ (2,486,000) $ (2,432,000) $ (2,212,000)
Borrowings under revolving credit facility, net 98,000 -- --
Repayment of notes payable -- (4,245,000) (1,872,000)
Repayment of long-term debt (109,000) (150,000) (74,000)
Proceeds from issuance of long-term debt -- -- 486,000
Proceeds from issuance of common stock 297,000 1,158,000 661,000
------------ ------------ ------------
Net cash used in financing activities (2,200,000) (5,669,000) (3,011,000)
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 1,863,000 3,424,000 (1,821,000)
Cash and cash equivalents, at beginning of period 14,459,000 11,035,000 12,856,000
------------ ------------ ------------
Cash and cash equivalents, at end of period $ 16,322,000 $ 14,459,000 $ 11,035,000
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 257,000 $ 288,000 $ 423,000
============ ============ ============
Income taxes $ 5,088,000 $ 2,516,000 $ 5,182,000
============ ============ ============
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES:
Cash dividends declared, but not yet paid, totaling $609,000, $624,000 and
$608,000 are included in accounts payable and accrued expenses as of March
31, 1999, 1998 and 1997, respectively.
In January 1998, the Company issued 150,000 shares of its common stock valued
at $2,090,000 in connection with the acquisition of the Baseops group of
companies. Pursuant to an indemnification agreement, the Company received
10,754 shares of its common stock from the sellers of Baseops in settlement
for $138,000 of uncollectible accounts receivable.
During the year ended March 31, 1999, the Company borrowed $3,902,000 for the
repurchase of the Company's common stock. The repurchased common stock is
shown in the treasury stock section of the balance sheets. The stock
purchases were made pursuant to an August 1998 Board of Directors
authorization to repurchase up to $6,000,000 of the Company's common stock.
During fiscal year 1999 and 1998, the Company reclassified approximately
$8,290,000 and $1,000,000, respectively, from accounts receivable to notes
receivable. The notes receivable are shown in the prepaid expenses and other
current assets, and other assets sections of the balance sheets.
The accompanying notes to the consolidated financial statements
are an integral part of these consolidated financial statements.
Page 34
<PAGE>
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND NATURE OF ACQUISITIONS
World Fuel Services Corporation (the "Company") began operations in 1984 as a
used oil recycler in the southeast United States. The Company expanded this
business through acquisitions, the development of new processing technology and
the establishment of new offices. In 1986, the Company diversified its
operations by entering, through an acquisition, the aviation fuel services
business. This new segment expanded rapidly, from a business primarily
concentrated in the state of Florida, to an international sales company covering
airports throughout the world. This expansion resulted from acquisitions and the
establishment of new offices.
In 1995, the Company further diversified its fuel services operations through
the acquisition of a group of companies which are considered leaders in the
marine fuel services business. This new segment provided the Company with
operational and supplier side synergies and entry into fast growing markets in
the Far East and Eastern Europe.
In April 1999, the Company acquired substantially all of the operations of the
privately held Bunkerfuels Group of companies, one of the world's leading
providers of bunker services, which will significantly increase the Company's
share of the world marine fuel market. The acquisition will be accounted for as
a purchase. Accordingly, the results of operations of the Bunkerfuels Group will
be included with the results of the Company from April 1, 1999. The aggregate
purchase price of the acquisition was approximately $9,064,000, including an
estimated $150,000 in acquisition costs. The Company paid approximately
$4,617,000 in cash, $4,250,000 in the form of 7 3/4% promissory notes, payable
over three years, of which $1,410,000 is due within one year, and $197,000 in
short term payables due to sellers. The promissory notes are collateralized by
letters of credit. The difference between the purchase price and the $408,000
fair value of the net assets of the acquired companies, which amounted to
approximately $8,656,000, will be allocated to goodwill, and will be amortized
using the straight-line method over 35 years. The Company determined that no
other intangible assets exist.
In April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants ("AcSEC") issued Statement of Position
("SOP") 98-5, "Reporting on the Costs of Start-up Activities". SOP 98-5
establishes standards for the reporting and disclosure of start-up costs,
including organization costs. The Company adopted SOP 98-5 effective April 1,
1999, as required. The Company believes that the implementation of SOP 98-5 will
not have a material effect on the Company's financial position or results of
operations.
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.
Page 35
<PAGE>
CASH AND CASH EQUIVALENTS
The Company classifies as cash equivalents all highly liquid investments with a
maturity of three months or less from the date of purchase. The Company's
investments at March 31, 1999 and 1998 amounted to $5,784,000 and $11,988,000
respectively, consisting principally of bank repurchase agreements
collateralized by United States Government Securities and bank money market
accounts which invest primarily in A1P1 commercial paper. Interest income, which
is included in Other, net in the accompanying consolidated statements of income,
totaled $1,851,000, $1,460,000 and $862,000 for the years ended March 31, 1999,
1998 and 1997, 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 costs,
transportation costs, direct materials, direct and indirect labor and refining
overhead related to the Company's used oil recycling. Also included in
inventories are costs not yet billed, consistent with the Company's revenue
recognition policies.
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
Costs of major additions and improvements, including appropriate interest, 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 resulting gain or loss is credited or
charged to income.
In March 1998, the AcSEC issued SOP 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use". SOP 98-1 establishes criteria
for determining which costs of developing or obtaining internal-use computer
software should be charged to expense and which should be capitalized. The
Company adopted SOP 98-1 prospectively, effective April 1, 1999, as required.
The Company believes that the implementation of SOP 98-1 will not have a
material effect on the Company's financial position or results of operations.
Page 36
<PAGE>
UNAMORTIZED COST IN EXCESS OF NET ASSETS OF ACQUIRED COMPANIES
Unamortized cost in excess of net assets of acquired companies is being
amortized over 35-40 years using the straight-line method. Accumulated
amortization amounted to $2,010,000 and $1,529,000, as of March 31, 1999 and
1998, respectively. Subsequent to an acquisition, the Company continually
evaluates whether events and circumstances have occurred that indicate the
remaining 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 costs in excess of
the net assets of the acquired companies. Such carrying amount would be
adjusted, if necessary, to reflect any 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 with third parties to provide the fuel and/or delivery
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. 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.
ACCOUNTING FOR DERIVATIVES
Premiums received or paid for fuel price cap agreements are amortized to premium
revenue and expense, respectively, over the terms of the caps. Unamortized
premiums are included in Accounts payable and accrued expenses on a net basis.
Accounts receivable or payable under fuel price swap agreements related to the
physical delivery of product are recognized as deferred gains or losses, which
are included in Prepaid expenses and other current assets on a net basis, until
the underlying physical delivery transaction is recognized in income. The
Company follows the accrual method for fuel price swap agreements which do not
involve physical delivery. Under the accrual method, each net receipt due or
payment owed under the derivative instrument is recognized in income as fee
income or expense, respectively, during the period to which the receipt or
payment relates.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 establishes accounting
and reporting standards requiring that every derivative instrument be recorded
in the balance sheet as either an asset or liability measured at its fair value,
including certain derivative instruments embedded in other contracts. SFAS No.
133 is effective for fiscal years beginning after June 15, 2000. The Company
believes that the implementation of SFAS No. 133 will not have a material effect
on the Company's financial position or results of operations or disclosures.
Page 37
<PAGE>
INCOME TAXES
The Company and its United States subsidiaries file consolidated income tax
returns. 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 assets and
liabilities 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 Ecuador
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 are included in
Other, net, in the period incurred, and there were no significant foreign
currency gains or losses in fiscal years 1999, 1998 or 1997.
EARNINGS PER SHARE
Basic earnings per common share is computed based on the weighted average shares
outstanding. Diluted earnings per common share is based on the sum of the
weighted average number of common shares outstanding plus common stock
equivalents arising out of employee stock options and benefit plans. The
Company's net income is the same for basic and diluted earnings per share
calculations.
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, 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. Such estimates primarily relate to the realizability of accounts and
notes receivable, and unsettled transactions and events as of the date of the
financial statements. Accordingly, actual results could differ from estimated
amounts.
FAIR VALUE OF FINANCIAL INSTRUMENTS
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
judgment 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.
Page 38
<PAGE>
Cash and cash equivalents, accounts receivable, notes receivable and accounts
payable and accrued expenses are reflected in the accompanying consolidated
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, 1999, the carrying value of the long-term
debt and the fair value of such instruments was not considered to be
significantly different.
COMPREHENSIVE INCOME
The Company adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("SFAS No. 130"), effective April 1, 1998. SFAS
No. 130 establishes standards for the reporting and disclosure of comprehensive
income and its components, which are presented in association with a company's
financial statements. There were no items of comprehensive income, and, thus,
net income is equal to comprehensive income for all periods presented.
(2) LONG-TERM DEBT
Long-term debt consisted of the following at March 31:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Borrowings on revolving credit facility $ 4,000,000 $ --
Equipment notes, payable monthly through
January 2002, interest rates ranging from
6.76% to 11.00%, secured by equipment 342,000 451,000
----------- -----------
4,342,000 451,000
Less current maturities 125,000 119,000
----------- -----------
$ 4,217,000 $ 332,000
=========== ===========
</TABLE>
The Company has a $30,000,000 unsecured revolving credit facility with sublimits
of $15,000,000 for letters of credit. Approximately $10,364,000 in letters of
credit were outstanding as of March 31, 1999 under the credit facility. The
revolving line of credit bears interest at market rates, as defined under the
credit facility. Interest is payable quarterly in arrears. Any outstanding
principal and interest will mature on November 29, 2003. As of March 31, 1999,
the Company was in compliance with the requirements under the credit facility.
The credit facility imposes certain operating and financial restrictions. The
Company's failure to comply with the obligations under the revolving line of
credit, including meeting certain financial ratios, could result in an event of
default. An event of default, if not cured or waived, would permit accelerating
of the indebtedness under the credit facility.
Page 39
<PAGE>
Aggregate annual maturities of long-term debt as of March 31, 1999, are as
follows:
2000 $ 125,000
2001 113,000
2002 104,000
2003 --
2004 4,000,000
-----------
$ 4,342,000
===========
Interest expense, which is included in Other, net, in the accompanying
consolidated statements of income, is as follows for the years ended March 31:
<TABLE>
<CAPTION>
1999 1998 1997
--------------- --------------- ------------
<S> <C> <C> <C>
Interest cost $ 353,000 $ 284,000 $ 395,000
Less capitalized interest on capital expenditures 76,000 -- --
--------------- --------------- ------------
Interest expense $ 277,000 $ 284,000 $ 395,000
=============== =============== ============
</TABLE>
(3) INCOME TAXES
The provision for income taxes consists of the following components for the
years ended March 31:
1999 1998 1997
----------- ------------ -------------
Current:
Federal $ 992,000 $ 1,976,000 $ 3,061,000
State 342,000 251,000 417,000
Foreign 2,967,000 2,287,000 1,495,000
----------- ----------- -----------
4,301,000 4,514,000 4,973,000
----------- ----------- -----------
Deferred:
Federal (409,000) 403,000 (157,000)
State (35,000) 50,000 (22,000)
Foreign (60,000) (74,000) (190,000)
----------- ----------- -----------
(504,000) 379,000 (369,000)
----------- ----------- -----------
Total $ 3,797,000 $ 4,893,000 $ 4,604,000
=========== =========== ===========
Paqe 40
<PAGE>
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, 1999, is
primarily due to state income taxes and the effect of foreign income tax rates.
The Company's share of undistributed earnings of foreign subsidiaries not
included in its consolidated U.S. federal income tax return that could be
subject to additional U.S. federal income taxes if remitted, was approximately
$36,513,000 and $23,467,000 at March 31, 1999 and 1998, 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.
The temporary differences which comprise the Company's net deferred tax
liability, included in Long-term Liabilities in the accompanying consolidated
balance sheets are as follows:
<TABLE>
<CAPTION>
March 31,
--------------------------------
1999 1998
------------- -------------
<S> <C> <C>
Excess of provision for bad debts over charge-offs $ 1,979,000 $ 1,308,000
Excess of tax over financial reporting depreciation
and amortization (2,827,000) (2,481,000)
Accrued expenses recognized for financial reporting
purposes, not currently tax deductible 1,034,000 775,000
Excess of tax over financial reporting amortization
of identifiable intangibles (574,000) (504,000)
Other, net 45,000 55,000
----------- -----------
Total deferred tax liability $ (343,000) $ (847,000)
=========== ===========
</TABLE>
(4) STOCKHOLDERS' EQUITY
COMMON STOCK ACTIVITY
In October 1997, the Board of Directors approved a 3-for-2 stock split for all
shares of common stock outstanding as of November 17, 1997. The shares were
distributed on December 1, 1997. Accordingly, all share and per share data, as
appropriate, have been retroactively adjusted to reflect the effect of this
split.
In August 1998, the Board of Directors authorized the repurchase of up to
$6,000,000 of the Company's common stock. As of March 31, 1999, the Company has
repurchased 324,000 shares at an average price per share of $12.04, or
$3,902,000 in aggregate.
Page 41
<PAGE>
DIVIDENDS
The Company declared cash dividends of $0.20 per share of common stock for
fiscal years 1999, 1998, and 1997.
EMPLOYEE STOCK OPTION ACTIVITY
The Company has adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"), which was effective for
the Company's 1997 fiscal year, and relates to the accounting for stock-based
transactions with non-employees. The Company has evaluated the proforma effects
of SFAS 123 and determined the effects of SFAS 123 are not material to the
Company's consolidated financial position or results of operations. Accordingly,
the disclosure provisions of SFAS 123 have been omitted. The Company accounts
for its stock-based transactions with employees under the provisions of
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25"), as permitted by SFAS 123.
In August 1996, the Company's Board of Directors authorized the establishment of
the 1996 Employee Stock Option Plan (the "1996 Plan"), which received
stockholder approval at the Company's 1997 annual shareholders' meeting. Under
the provisions of the 1996 Plan, the Company's Board of Directors is authorized
to grant Incentive Stock Options ("ISO") to employees of the Company and its
subsidiaries and Non-Qualified Stock Options ("NSO") to employees, independent
contractors and agents. The 1996 Plan, as amended in August 1998, permits the
issuance of options to purchase up to an aggregate of 1,250,000 shares of the
Company's common stock, adjusted to reflect the 3-for-2 stock split. 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 ISOs
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 ISOs granted pursuant to the 1996
Plan must be exercised within ten years after the date of grant, except that
ISOs granted to individuals owning more than 10% of the Company's outstanding
common stock and NSOs must be exercised within five years after the date of
grant. The following summarizes the status of the 1996 Plan at, and for the year
ended, March 31:
<TABLE>
<CAPTION>
1999 1998 1997
-------------------- -------------------- --------------------
<S> <C> <C> <C>
Granted 457,500 117,500 243,000
Per Share Price Range $10.75 - $21.75 $11.67 - $21.00 $11.42
Increase in Plan 500,000
Outstanding 818,000 360,500 243,000
Per Share Price Range $10.75 - $21.75 $11.42 - $21.00 $11.42
Weighted Average Per Share Price $16.12 $13.76 $11.42
Weighted Average Contractual Life 8.6 years 8.8 years 9.4 years
Available for future grant 432,000 389,500 507,000
Exercisable 242,504 17,516 None
Per Share Price Range $11.42 - $21.00 $11.42
Weighted Average Per Share Price $11.85 $11.42
</TABLE>
Page 42
<PAGE>
The Company's 1986 Employee Stock Option Plan expired in January 1996. Options
granted, but not yet exercised, survive the 1986 Employee Stock Option Plan
until the options expire. The following summarizes the status of the 1986
Employee Stock Option Plan at, and for the year ended, March 31:
<TABLE>
<CAPTION>
1999 1998 1997
--------------------- -------------------- --------------------
<S> <C> <C> <C>
Expired None None 5,250
Exercised 32,344 167,634 54,375
Per Share Price Range $6.89 $6.55 - $8.39 $9.08 - $9.33
Proceeds received by the Company $223,000 $1,158,000 $499,000
Outstanding 142,747 175,091 342,725
Per Share Price Range $6.22 - $8.39 $6.22 - $8.39 $9.33 - $12.58
Weighted Average Per Share Price $7.22 $7.16 $10.55
Weighted Average Contractual Life 5.8 years 6.9 years 6.4 years
Exercisable 142,747 155,670 202,588
Per Share Price Range $6.22 - $8.39 $6.22 - $8.39 $9.33 - $10.33
Weighted Average Per Share Price $7.22 $7.00 $10.29
</TABLE>
In addition to the options shown in the above tables, prior to 1996, the Company
issued certain non-qualified options outside of the 1986 and 1996 stock option
plans. As of March 31, 1999, such non-qualified stock options entitled the
holders thereof to purchase a total of 45,898 shares of the Company's common
stock at an exercise price ranging from $6.89 to $8.39 per share. All such
options are currently exercisable. As of March 31, 1999, the weighted average
per share price and contracted life of these options is $7.56 and 3.2 years,
respectively.
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. The 1993 Directors Plan, as amended in August 1997, permits the
issuance of options to purchase up to an aggregate of 100,000 shares of the
Company's common stock.
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 that the individual is re-elected. As of March 31, 1999, options to
purchase 45,625 shares of the Company's common stock remain outstanding under
the 1993 Directors Plan and 29,375 shares are available for future grant.
Page 43
<PAGE>
The exercise price for options granted under the 1993 Directors 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 1993 Directors 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.
(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 $104,000 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 office space and
railroad tank cars from unrelated third parties.
At March 31, 1999, the future minimum lease payments under operating leases with
an initial non-cancelable term in excess of one year were as follows:
Operating
Leases
-----------------
2000 $1,234,000
2001 947,000
2002 742,000
2003 529,000
2004 139,000
Thereafter 269,000
-----------------
Total minimum lease payments $ 3,860,000
=================
Rental expense under operating leases with an initial non-cancellable term in
excess of one year was $1,362,000, $1,106,000, and $843,000 for the years ended
March 31, 1999, 1998 and 1997, respectively.
CAPITAL EXPENDITURES
During fiscal year 2000, the Company anticipates spending approximately $700,000
to complete the implementation of the financial sales system and $2,000,000 to
upgrade plant, machinery and equipment. The Company may spend an estimated
$1,000,000 sometime in the future, if required 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.
Page 44
<PAGE>
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, 1999, the Company had
$5,723,000 in outstanding bonds.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to credit risk
consist primarily of trade accounts receivable and notes 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 $3,000,000. The
Company's success in attracting business has been due, in part, to its
willingness to extend credit on an unsecured basis to customers which exhibit a
higher credit risk profile and otherwise would be required to prepay or post
cash collateralized letters of credit with their suppliers of fuel.
Diversification of credit risk is difficult since the Company sells primarily in
the aviation and marine industries. The Company's management recognizes that
extending credit and setting appropriate reserves for accounts receivable 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 sales executives and their respective staff meet
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.
In response to adverse economic conditions principally in South America, the
Company increased the allowance for bad debts during the fourth quarter of
fiscal 1999. The Company also extended repayment terms with certain customers,
converting approximately $8,290,000 from accounts receivable to notes
receivable. As of March 31, 1999, the Company had $7,103,000 in outstanding
notes receivable with maturities ranging from 1 month to 3.6 years, interest
rates ranging from 5% to 10%, and individual balances ranging from $17,000 to
$2,305,000. Of this amount, 5,790,000 is included in Notes receivable and
1,313,000 is included in Other assets in the accompanying consolidated balance
sheets.
POLLUTION AND THIRD PARTY LIABILITY
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 domestic and
international fueling activities also 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
Page 45
<PAGE>
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 and is
of sufficient magnitude, the Company's financial position and results of
operations will be adversely affected.
The Company has exited several environmental businesses which handled hazardous
waste. This waste was 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 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, will have a
material adverse effect on the Company's financial position and results of
operations.
LEGAL MATTERS
The Company is involved in 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 pending litigation or administrative
proceedings, will not materially affect its financial condition or results of
operations.
PURCHASE COMMITMENTS AND OFF -BALANCE SHEET TRANSACTIONS
Recognizing favorable market conditions or for competitive reasons, the Company
may enter into short term fuel purchase commitments for the physical delivery of
product in the United States. The Company simultaneously may hedge the physical
delivery through a commodity based derivative instrument, to minimize the
effects of commodity price fluctuations. As of March 31, 1999, the Company did
not have any outstanding purchase commitments.
The Company offers its customers swaps and caps as part of its fuel management
services. Typically, the Company simultaneously enters into the commodity based
derivative instruments with its customer and a counterparty. The counterparties
are major oil companies and derivative trading firms. Accordingly, the Company
does not anticipate non-performance by such counterparties. Pursuant to these
transactions, the Company is not affected by market price fluctuations since the
contracts have the same terms and conditions except for the fee or spread earned
by the Company. Performance risk under these contracts is considered a credit
risk. This risk is minimized by dealing with customers meeting additional credit
criteria. As of March 31, 1999, the Company had outstanding swap contracts for
65,000 metric tons expiring by December 1999, and $61,000 in deferred cap fees.
Gains on these contracts are recognized at the completion of each transaction.
EMPLOYMENT AGREEMENTS
The Company's amended and restated employment agreements with its Chairman of
the Board and President expire on March 31, 2004. Each agreement provides for a
fixed salary and an annual bonus
Page 46
<PAGE>
equal to 5% of the Company's income before income taxes in excess of $2,000,000
through fiscal year 2002, and $7,000,000 with a maximum bonus of $750,000, for
the balance of the employment term. 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 accrue 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 the 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, 1999 and 1998, $1,467,000 and $1,065,000,
respectively, was deferred under the agreement and is included in Long-term
Liabilities in the accompanying consolidated balance sheets. Additionally,
accrued interest of $152,000 and $56,000, 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.
The Company and its subsidiaries have also entered into employment, consulting
and non-competition agreements with certain of their executive officers and
current employees. The agreements provide for minimum salary levels, and for
certain executive officers and employees, bonus formulas which are payable if
specified management goals are attained. During the years ended March 31, 1999,
1998 and 1997, approximately $11,447,000, $10,411,000, and $9,136,000,
respectively, was expensed under the terms of the above described agreements.
The future minimum commitments under employment agreements, excluding bonuses,
as of March 31, 1999 are as follows:
2000 $ 6,906,000
2001 5,317,000
2002 2,975,000
2003 2,503,000
2004 1,834,000
Thereafter 1,050,000
---------------
$ 20,585,000
===============
DEFERRED COMPENSATION PLANS
The Company's Deferred Compensation Plan ("Deferred Plan") is administered by a
Deferred Plan Committee appointed by the Board of Directors of Trans-Tec
Services, Inc. The Deferred Plan was suspended effective August 1, 1997 by the
Deferred Plan Committee. The Deferred Plan is unfunded and is not a qualified
plan under the Internal Revenue Code. The Deferred Plan allows for distributions
of vested amounts over a five year period, subject to certain requirements,
during and after employment with the Company. Participants become fully vested
over a five year period. Fully vested participants must wait two years from the
year of contribution to be eligible for the distribution of deferred account
balances. As of March 31, 1999, the Company's liability under the Deferred Plan
was $1,381,000, and is included in Long-term Liabilities in the accompanying
consolidated balance sheets.
Page 47
<PAGE>
The Company maintains a 401(k) defined contribution plan which covers all United
States employees who meet minimum requirements and elect to participate.
Participants may contribute up to 15% of their compensation, subject to certain
limitations. During fiscal year 1999, the Company made matching contributions of
25% of the participants' contributions up to 4% of the participant's
compensation. Annual contributions are made at the Company's sole discretion.
During the fiscal years ended March 31, 1999, 1998 and 1997, approximately
$101,000, $96,000 and $82,000, respectively, was expensed as Company
contributions.
(6) AVIATION JOINT VENTURE
In August 1994, the Company began operation of an aviation joint venture with
Petrosur, an Ecuador corporation. The aviation 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 aviation joint venture arrangement has a term
of five years ending in May 2001 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 current ownership interest in the aviation joint venture is 50%.
Accordingly, the Company uses the equity method of accounting to record its
proportionate share of aviation joint venture earnings. The amount of the
investment in and advances to the aviation joint venture totaled $2,493,000 and
$2,271,000 at March 31, 1999 and 1998, respectively. Of these amounts,
$1,730,000 and $1,171,000 are included in Prepaid expenses and other current
assets as of March 31, 1999 and 1998, respectively, and $763,000 and $1,100,000
is included in Other assets as of March 31, 1999 and 1998, respectively.
Page 48
<PAGE>
(7) BUSINESS SEGMENTS, FOREIGN OPERATIONS AND MAJOR CUSTOMERS
BUSINESS SEGMENTS
The Company has adopted Statement of Financial Accounting Standards No. 131,
"Disclosures About Segments of an Enterprise and Related Information" ("SFAS No.
131"), which was effective for the Company's 1999 fiscal year. SFAS No. 131
establishes new standards for reporting operating segment information in annual
and interim financial statements. The Company evaluates performance for internal
management purposes in a manner consistent with reporting for external purposes.
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:
<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED MARCH 31,
-----------------------------------------------------
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
REVENUE
Aviation fueling $ 327,844,000 $ 383,010,000 $ 381,236,000
Marine fueling 392,717,000 393,607,000 368,470,000
Oil recycling 23,621,000 25,146,000 22,912,000
------------- ------------- -------------
Consolidated revenue $ 744,182,000 $ 801,763,000 $ 772,618,000
============= ============= =============
INCOME FROM OPERATIONS
Aviation fueling $ 13,331,000 $ 12,558,000 $ 10,620,000
Marine fueling 7,515,000 7,403,000 5,013,000
Oil recycling 2,593,000 4,155,000 5,020,000
Corporate (6,041,000) (5,589,000) (5,027,000)
------------- ------------- -------------
Consolidated income from operations $ 17,398,000 $ 18,527,000 $ 15,626,000
============= ============= =============
IDENTIFIABLE ASSETS
Aviation fueling $ 68,765,000 $ 57,867,000 $ 54,129,000
Marine fueling 69,250,000 53,819,000 43,013,000
Oil recycling 21,077,000 19,055,000 17,574,000
Corporate 6,842,000 12,518,000 8,423,000
------------- ------------- -------------
Consolidated identifiable assets $ 165,934,000 $ 143,259,000 $ 123,139,000
============= ============= =============
CAPITAL EXPENDITURES
Aviation fueling $ 419,000 $ 218,000 $ 369,000
Marine fueling 200,000 609,000 208,000
Oil recycling 2,238,000 1,793,000 2,383,000
Corporate 2,801,000 864,000 196,000
------------- ------------- -------------
Consolidated capital expenditures $ 5,658,000 $ 3,484,000 $ 3,156,000
============= ============= =============
DEPRECIATION AND AMORTIZATION
Aviation fueling $ 543,000 $ 312,000 $ 189,000
Marine fueling 695,000 708,000 599,000
Oil recycling 1,097,000 1,021,000 916,000
Corporate 464,000 377,000 234,000
------------- ------------- -------------
Consolidated depreciation and amortization $ 2,799,000 $ 2,418,000 $ 1,938,000
============= ============= =============
</TABLE>
Page 49
<PAGE>
FOREIGN OPERATIONS
A summary of financial data for foreign operations is shown below as of, and for
the fiscal years ended, March 31, 1999, 1998 and 1997. Non-U.S. operations of
the Company and its subsidiaries are conducted primarily from offices in the
United Kingdom, Singapore, Mexico, South Africa, South Korea, Denmark and Costa
Rica. Income from operations is before the allocation of corporate general and
administrative expenses and income taxes.
1999 1998 1997
------------ ------------ ------------
Revenue $371,104,000 $419,701,000 $287,589,000
============ ============ ============
Income from operations $ 16,349,000 $ 10,774,000 $ 7,753,000
============ ============ ============
Identifiable assets $ 63,718,000 $ 43,524,000 $ 37,313,000
============ ============ ============
MAJOR CUSTOMERS
No customer accounted for more than 10% of total consolidated revenue for the
years ended March 31, 1999, 1998 and 1997.
(8) QUARTERLY INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
------------------------------------------------------------------------
June 30, September 30, December 31, March 31,
1998 1998 1998 1999
-------------- -------------- --------------- ------------
<S> <C> <C> <C> <C>
Revenue $ 193,031,000 $ 180,320,000 $ 187,809,000 $183,022,000
============== ============== ============== ============
Gross profit $ 14,856,000 $ 14,803,000 $ 14,215,000 $ 15,532,000
============== ============== ============== ============
Net income $ 4,081,000 $ 3,520,000 $ 3,979,000 $ 3,527,000
============== ============== ============== ============
Basic earnings per share $ 0.33 $ 0.28 $ 0.32 $ 0.29
============== ============== ============== ============
Diluted earnings per share $ 0.32 $ 0.28 $ 0.32 $ 0.29
============== ============== ============== ============
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
------------------------------------------------------------------------
June 30, September 30, December 31, March 31,
1997 1997 1997 1998
-------------- -------------- --------------- ------------
<S> <C> <C> <C> <C>
Revenue $ 186,307,000 $ 205,792,000 $ 208,879,000 $200,785,000
============== ============== ============== ============
Gross profit $ 11,074,000 $ 12,233,000 $ 12,455,000 $ 14,633,000
============== ============== ============== ============
Net income $ 3,803,000 $ 4,125,000 $ 4,148,000 $ 3,777,000
============== ============== ============== ============
Basic earnings per share $ 0.31 $ 0.34 $ 0.34 $ 0.31
============== ============== ============== ============
Diluted earnings per share $ 0.31 $ 0.33 $ 0.33 $ 0.30
============== ============== ============== ============
</TABLE>
Page 50
<PAGE>
SCHEDULE II
WORLD FUEL SERVICES CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
----------------------------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING ACQUISITION COSTS AND OTHER END
OF PERIOD OF BUSINESS EXPENSES ACCOUNTS (1) DEDUCTIONS (2) OF PERIOD
========== ============= ========== ============= =============== =============
<S> <C> <C> <C> <C> <C> <C>
Year Ended March 31, 1999
Allowance for bad debts $4,594,000 $ -- $5,133,000 $ 917,000 $3,815,000 $6,829,000
========== ============= ========== ========== ========== ==========
Year Ended March 31, 1998
Allowance for bad debts $4,360,000 $ 118,000 $1,417,000 $ 919,000 $2,220,000 $4,594,000
========== ============= ========== ========== ========== ==========
Year Ended March 31, 1997
Allowance for bad debts $4,363,000 $ -- $5,107,000 $ 415,000 $5,525,000 $4,360,000
========== ============= ========== ========== ========== ==========
</TABLE>
Notes:
(1) Recoveries of bad debts and reclassifications.
(2) Accounts determined to be uncollectible.
Page 51
EXHIBIT 10.a
WORLD
FUEL
SERVICES
CORPORATION
May 11, 1999
Mr. Jerrold Blair
700 South Royal Poinciana Boulevard
Suite 800
Miami Springs, Florida 33166
Re: Employment Agreement Between Jerrold Blair and World Fuel Services
Corporation (the "Company") dated March 31, 1996, as amended
Dear Jerry:
As approved by the Compensation Committee of the Board of Directors, at its
meeting of March 24, 1999, this letter is intended to extend and amend the
above-referenced employment agreement (the "Agreement"). Unless otherwise
defined in this letter, all capitalized terms used herein will have the meanings
assigned to them in the Agreement. According to the terms of the current
Agreement, the Company has now agreed to employ you until March 31, 2002. The
Company has agreed to extend your employment from March 31, 2002 through March
31, 2004 (the "Extension") and in consideration for such extension, you have
agreed to cap the amount of the Bonus payable to you under the Agreement. In
this regard, for good and valuable consideration, we have agreed as follows:
1. The Company agrees to extend the term of Executive's employment with
the Company for two additional years so that it now expires on March
31, 2004.
2. During the Extension, your Base Salary shall be $500,000 per year, and
your Bonus shall be equal to five percent (5%) of the net pre-tax
profit of the Company in excess of $7,000,000; provided, however, that
the Bonus shall not exceed 150% of your Base Salary. Prior to the
Extension, your Base Salary and Bonus shall remain at the rates set
forth in the Agreement prior to this Amendment.
3. The following paragraph is added as new Section 2.4 of the Agreement:
<PAGE>
2.4 STOCK OPTIONS. Executive will be eligible to receive annual grants
of stock options as determined by the Compensation Committee of the
Board of Directors of the Company. The grant of such stock options
shall not exceed the maximum number of shares permitted under the
applicable stock option plan, and will be based on the Executive's
performance, the Company's performance and the availability of
shares. Any options granted to Executive hereunder, and any options
granted to Executive prior to the date hereof, shall upon the
occurrence of a Change of Control (as defined in the Agreement)
immediately vest and become exercisable, notwithstanding anything
to the contrary contained in Exhibit "A" to the Agreement or in the
applicable stock option agreement or stock option plan.
The terms of this amendment shall supersede any contrary terms set forth in the
Agreement. Except for the modifications of the Agreement set forth above, all of
the terms, provisions and conditions set forth in the Agreement, including
without limitation the Covenant Against Unfair Competition set forth in Section
6 of the Agreement, shall remain in full force and effect. If the foregoing
correctly sets forth our agreement, please sign this letter on the line provided
below whereupon this letter shall constitute a binding agreement between you and
the Company.
Sincerely yours,
/s/ JOHN R. BENBOW
- ---------------------------------
John R. Benbow
Chairman of the Compensation Committee
AGREED AND ACCEPTED:
/s/ JERROLD BLAIR
- ---------------------------------
Jerrold Blair
EXHIBIT 10.b
WORLD
FUEL
SERVICES
CORPORATION
May 13, 1999
Mr. Ralph R. Weiser
700 South Royal Poinciana Boulevard
Suite 800
Miami Springs, Florida 33166
Re: Employment Agreement Between Ralph R. Weiser and World Fuel
Services Corporation (the "Company") dated March 31, 1996,
as amended
Dear Ralph:
As approved by the Compensation Committee of the Board of Directors, at its
meeting of March 24, 1999, this letter is intended to extend and amend the
above-referenced employment agreement (the "Agreement"). Unless otherwise
defined in this letter, all capitalized terms used herein will have the meanings
assigned to them in the Agreement. According to the terms of the current
Agreement, the Company has now agreed to employ you until March 31, 2002. The
Company has agreed to extend your employment from March 31, 2002 through March
31, 2004 (the "Extension") and in consideration for such extension, you have
agreed to cap the amount of the Bonus payable to you under the Agreement. In
this regard, for good and valuable consideration, we have agreed as follows:
1. The Company agrees to extend the term of Executive's employment with
the Company for two additional years so that it now expires on March
31, 2004.
2. During the Extension, your Base Salary shall be $500,000 per year,
and your Bonus shall be equal to five percent (5%) of the net
pre-tax profit of the Company in excess of $7,000,000; provided,
however, that the Bonus shall not exceed 150% of your Base Salary.
Prior to the Extension, your Base Salary and Bonus shall remain at
the rates set forth in the Agreement prior to this Amendment.
3. The following paragraph is added as new Section 2.4 of the
Agreement:
<PAGE>
2.4 STOCK OPTIONS. Executive will be eligible to receive annual
grants of stock options as determined by the Compensation
Committee of the Board of Directors of the Company. The grant of
such stock options shall not exceed the maximum number of shares
permitted under the applicable stock option plan, and will be
based on the Executive's performance, the Company's performance
and the availability of shares. Any options granted to Executive
hereunder, and any options granted to Executive prior to the
date hereof, shall upon the occurrence of a Change of Control
(as defined in the Agreement) immediately vest and become
exercisable, notwithstanding anything to the contrary contained
in Exhibit "A" to the Agreement or in the applicable stock
option agreement or stock option plan.
The terms of this amendment shall supersede any contrary terms set forth in the
Agreement. Except for the modifications of the Agreement set forth above, all of
the terms, provisions and conditions set forth in the Agreement, including
without limitation the Covenant Against Unfair Competition set forth in Section
6 of the Agreement, shall remain in full force and effect. If the foregoing
correctly sets forth our agreement, please sign this letter on the line provided
below whereupon this letter shall constitute a binding agreement between you and
the Company.
Sincerely yours,
/s/ JOHN R. BENBOW
- -----------------------------------
John R. Benbow
Chairman of the Compensation Committee
AGREED AND ACCEPTED:
/s/ RALPH R. WEISER
- -----------------------------------
Ralph R. Weiser
EXHIBIT 10.c
REVOLVING CREDIT AND
REIMBURSEMENT AGREEMENT
by and among
WORLD FUEL SERVICES CORPORATION
as Borrower,
NATIONSBANK, N.A.,
as Lender
November 30, 1998
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
ARTICLE I
Definitions
1.1. Definitions................................................................. 2
1.2. Rules of Interpretation.....................................................19
ARTICLE II
The Revolving Credit Facility
2.1. Loans.......................................................................22
2.2. Payment of Interest.........................................................23
2.3. Payment of Principal........................................................24
2.4. Non-Conforming Payments.....................................................24
2.5. Notes.......................................................................24
2.6. Reductions..................................................................24
2.7. Conversions and Elections of Subsequent Interest Periods....................25
2.8. Increase and Decrease in Amounts............................................25
2.9. Fees........................................................................25
2.10. Use of Proceeds.............................................................26
ARTICLE III
Letters of Credit
3.1. Letters of Credit...........................................................27
3.2. Reimbursement...............................................................27
3.3. Letter of Credit Facility Fees..............................................29
3.4. Administrative Fees.........................................................30
ARTICLE IV
Change in Circumstances
4.1. Increased Cost and Reduced Return...........................................31
4.2. Limitation on Types of Loans................................................32
4.3. Illegality..................................................................33
4.4. Treatment of Affected Loans.................................................33
4.5. Compensation................................................................33
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
4.6. Taxes.......................................................................33
ARTICLE V
Conditions to Making Loans and Issuing Letters of Credit
5.1. Conditions of Initial Advance...............................................35
5.2. Conditions of Loans and Letter of Credit....................................36
ARTICLE VI
Representations and Warranties
6.1. Organization and Authority..................................................38
6.2. Loan Documents..............................................................38
6.3. Solvency....................................................................39
6.4. Subsidiaries and Stockholders...............................................39
6.5. Ownership Interests.........................................................39
6.6. Financial Condition.........................................................39
6.7. Title to Properties.........................................................40
6.8. Taxes.......................................................................40
6.9. Other Agreements............................................................40
6.10. Litigation..................................................................40
6.11. Margin Stock................................................................41
6.12. Investment Company..........................................................41
6.13. Patents, Etc................................................................41
6.14. No Untrue Statement.........................................................41
6.15. No Consents, Etc............................................................41
6.16. Employee Benefit Plans......................................................42
6.17. No Default..................................................................43
6.18. Hazardous Materials.........................................................43
6.19. RICO........................................................................43
6.20. Year 2000 Compliance........................................................43
ARTICLE VII
Affirmative Covenants
7.1. Financial Reports, Etc......................................................44
7.2. Maintain Properties.........................................................45
7.3. Existence, Qualification, Etc...............................................45
7.4. Regulations and Taxes.......................................................45
7.5. Insurance...................................................................46
7.6. True Books..................................................................46
7.7. Right of Inspection.........................................................46
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
7.8. Observe all Laws............................................................46
7.9. Governmental Licenses.......................................................46
7.10. Covenants Extending to Other Persons........................................46
7.11. Officer's Knowledge of Default..............................................46
7.12. Suits or Other Proceedings..................................................46
7.13. Notice of Discharge of Hazardous Material or Environmental Complaint........47
7.14. Environmental Compliance....................................................47
7.15. Indemnification.............................................................47
7.16. Further Assurances..........................................................47
7.17. Employee Benefit Plans......................................................48
7.18. Continued Operations........................................................48
7.19. New Subsidiaries............................................................48
7.20. Year 2000 Compliance........................................................49
ARTICLE VIII
Negative Covenants
8.1. Financial Covenants.........................................................50
8.2. Acquisitions................................................................50
8.3. Capital Expenditures........................................................50
8.4. Liens.......................................................................50
8.5. Indebtedness................................................................51
8.6. Transfer of Assets..........................................................53
8.7. Investments.................................................................53
8.8. Merger or Consolidation.....................................................54
8.9. Restricted Payments.........................................................54
8.10. Transactions with Affiliates................................................54
8.11. Compliance with ERISA.......................................................55
8.12. Fiscal Year.................................................................55
8.13. Dissolution, etc............................................................55
8.14. Negative Pledge Clauses.....................................................55
8.15. Partnerships................................................................56
ARTICLE IX
Events of Default and Acceleration
9.1. Events of Default...........................................................57
9.2. Lender to Act...............................................................60
9.3. Cumulative Rights...........................................................60
9.4. No Waiver...................................................................60
9.5. Allocation of Proceeds......................................................60
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
ARTICLE X
Miscellaneous
<S> <C>
10.1. Participations..............................................................61
10.2. Notices.....................................................................61
10.3. Setoff......................................................................62
10.4. Survival....................................................................62
10.5. Expenses....................................................................62
10.6. Amendments..................................................................63
10.7. Counterparts................................................................63
10.8. Termination.................................................................63
10.9. Indemnification; Limitation of Liability....................................64
10.10. Severability................................................................64
10.11. Entire Agreement............................................................64
10.12. Agreement Controls..........................................................64
10.13. Usury Savings Clause........................................................64
10.14. GOVERNING LAW; WAIVER OF JURY TRIAL.........................................65
EXHIBIT A Notice of Appointment (or Revocation) of Authorized Representative....A-1
EXHIBIT B Form of Borrowing Notice..............................................B-1
EXHIBIT C Form of Interest Rate Selection Notice................................C-1
EXHIBIT D Form of Revolving Note................................................D-1
EXHIBIT E Form of Opinion of Borrower's Counsel.................................E-1
EXHIBIT F Compliance Certificate................................................F-1
EXHIBIT G Form of Guaranty Agreement............................................G-1
Schedule 1.1 Existing Letters of Credit............................................S-1
Schedule 6.4 Subsidiaries and Investments in Other Persons.........................S-2
Schedule 6.6 Indebtedness..........................................................S-3
Schedule 6.7 Liens.................................................................S-4
Schedule 6.8 Tax Matters...........................................................S-5
Schedule 6.10 Litigation............................................................S-6
Schedule 6.18 Hazardous Materials...................................................S-7
Schedule 7.6 Indebtedness..........................................................S-8
</TABLE>
iv
<PAGE>
REVOLVING CREDIT AND REIMBURSEMENT AGREEMENT
THIS REVOLVING CREDIT AND REIMBURSEMENT AGREEMENT, dated as of November
30, 1998 (the "Agreement"), is made by and between WORLD FUEL SERVICES
CORPORATION, a Florida corporation having its principal place of business in
Miami Springs, Florida (the "Borrower"), NATIONSBANK, N.A., a national banking
association organized and existing under the laws of the United States, as a
Lender (the "Lender");
W I T N E S S E T H:
WHEREAS, the Borrower has requested and the Lender has agreed, subject
to terms and conditions of this Agreement, to make available to the Borrower a
revolving credit facility of up to $25,000,000, the proceeds of which are to be
used for working capital, capital expenditures and other general corporate
purposes and which shall include a letter of credit facility of up to
$10,000,000 for the issuance of documentary and standby letters of credit; and
NOW, THEREFORE, the Borrower and the Lender hereby agree as follows:
<PAGE>
ARTICLE I.
DEFINITIONS
1.1 DEFINITIONS. For the purposes of this Agreement, in addition
to the definitions set forth above, the following terms shall have the
respective meanings set forth below:
"Acquisition" means the acquisition of (i) a controlling
equity interest in another Person (including the purchase of an option,
warrant or convertible or similar type security to acquire such a
controlling interest at the time it becomes exercisable by the holder
thereof), whether by purchase of such equity interest or upon exercise
of an option or warrant for, or conversion of securities into, such
equity interest, or (ii) assets of another Person which constitute all
or substantially all of the assets of such Person or of a line or lines
of business conducted by such Person.
"Advance" means a borrowing under the Revolving Credit
Facility consisting of a Base Rate Loan or a Eurodollar Rate Loan.
"Affiliate" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with the Borrower; or (ii) which beneficially owns
or holds 20% or more of any class of the outstanding voting stock (or
in the case of a Person which is not a corporation, 20% or more of the
equity interest) of the Borrower; or 20% or more of any class of the
outstanding voting stock (or in the case of a Person which is not a
corporation, 20% or more of the equity interest) of which is
beneficially owned or held by the Borrower. The term "control" means
the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether
through ownership of voting stock, by contract or otherwise.
"Applicable Margin" means that percent per annum set forth
below, which shall be based upon the Consolidated Fixed Charge Coverage
Ratio for the Four-Quarter Period most recently ended as specified
below:
2
<PAGE>
APPLICABLE
MARGIN
----------
CONSOLIDATED FIXED EURODOLLAR
CHARGE COVERAGE RATIO RATE
--------------------- ----------
(a) Greater than or equal
to 7.00 to 1.0 .50%
(b) Greater than or equal
to 6.00 to 1.00 but
less than 7.00 to 1.00 .55%
(c) Greater than or equal
to 5.00 to 1.00 but
less than 6.00 to 1.00 .65%
(d) Greater than or equal
to 3.50 to 1.00 but
less than 5.00 to 1.00 .75%
(e) Greater than or equal
to 1.35 to 1.00 but
less than 3.50 to 1.00 1.00%
The Applicable Margin shall be established at the end of each fiscal
quarter of the Borrower (each, a "Determination Date"). Any change in
the Applicable Margin following each Determination Date shall be
determined based upon the computations set forth in the certificate
furnished to the Lender pursuant to SECTION 7.1(a)(II) and SECTION
7.1(b)(II), subject to review and approval of such computations by the
Lender, and shall be effective commencing on the date following the
date such certificate is received (or, if earlier, the date such
certificate was required to be delivered) until the date following the
date on which a new certificate is delivered or is required to be
delivered, whichever shall first occur.
"Applicable Unused Fee" means that percent per annum set forth
below, which shall be based upon the Consolidated Fixed Charge Coverage
Ratio for the Four-Quarter Period most recently ended as specified
below:
3
<PAGE>
APPLICABLE
CONSOLIDATED FIXED UNUSED
CHARGE COVERAGE RATIO FEE
--------------------- ----------
(a) Greater than or equal
to 7.00 to 1.0 .15%
(b) Greater than or equal
to 6.00 to 1.00 but
less than 7.00 to 1.00 .18%
(c) Greater than or equal
to 5.00 to 1.00 but
less than 6.00 to 1.00 .20%
(d) Greater than or equal
to 3.50 to 1.00 but
less than 5.00 to 1.00 .25%
(e) Greater than or equal
to 1.35 to 1.00 but
less than 3.50 to 1.00 .375%
The Applicable Unused Fee shall be established at the end of each
fiscal quarter of the Borrower (the "Determination Date"). Any change
in the Applicable Unused Fee following each Determination Date shall be
determined based upon the computations set forth in the certificate
furnished to the Lender pursuant to SECTION 7.1(A)(ii) and SECTION
7.1(B)(ii), subject to review and approval of such computations by the
Lender and shall be effective commencing on the date following the date
such certificate is received (or, if earlier, the date such certificate
was required to be delivered) until the date following the date on
which a new certificate is delivered or is required to be delivered,
whichever shall first occur.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit, or
similar documentation, executed by the Borrower from time to time and
delivered to the Issuing Bank to support the issuance of Letters of
Credit.
"Authorized Representative" means any of the President,
Executive Vice President, Chief Financial Officer or Chairman of the
Board of Directors of the Borrower, or any other Person expressly
designated by the Board of Directors of the Borrower (or the
appropriate committee thereof) as an Authorized Representative of the
Borrower, as set forth from time to time in a certificate in the form
of EXHIBIT A.
"Base Rate" means the per annum rate of interest equal to the
greater of (i) the Prime Rate or (ii) the Federal Funds Effective Rate
plus one-half of one percent (1/2%). Any change
4
<PAGE>
in the Base Rate resulting from a change in the Prime Rate or the
Federal Funds Effective Rate shall become effective as of 12:01 A.M. of
the Business Day on which each such change occurs. The Base Rate is a
reference rate used by the Lender in determining interest rates on
certain loans and is not intended to be the lowest rate of interest
charged on any extension of credit to any debtor.
"Base Rate Loan" means a Loan for which the rate of interest
is determined by reference to the Base Rate.
"Base Rate Refunding Loan" means a Base Rate Loan made to
satisfy Reimbursement Obligations arising from a drawing under a Letter
of Credit.
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body).
"Borrower's Account" means a demand deposit account with the
Lender, which may be maintained at one or more offices of the Lender.
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Revolving Credit
Facility, in the form of EXHIBIT B.
"Business Day" means, (i) with respect to any Base Rate Loan,
any day which is not a Saturday, Sunday or a day on which banks in the
States of New York and North Carolina are authorized or obligated by
law, executive order or governmental decree to be closed and, (ii) with
respect to any Eurodollar Rate Loan, any day which is a Business Day,
as described above, and on which the relevant international financial
markets are open for the transaction of business contemplated by this
Agreement in London, England, New York, New York and Charlotte, North
Carolina.
"Capital Expenditures" means, with respect to the Borrower
and its Subsidiaries, for any period the SUM of (without duplication)
(i) all expenditures (whether paid in cash or accrued as liabilities)
by the Borrower or any Subsidiary during such period for items that
would be classified as "property, plant or equipment" or comparable
items on the consolidated balance sheet of the Borrower and its
Subsidiaries, including without limitation all transactional costs
incurred in connection with such expenditures provided the same have
been capitalized, excluding, however, the amount of any Capital
Expenditures paid for with proceeds of casualty insurance as evidenced
in writing and submitted to the Lender together with any compliance
certificate delivered pursuant to SECTION 7.1(a) or (b), and (ii) with
respect to any Capital Lease entered into by the Borrower or its
Subsidiaries during such period, the present value of the lease
payments due under such Capital Lease over the term of such Capital
Lease applying a discount rate equal to the interest rate provided in
such lease (or in the absence of a stated interest rate, that rate used
in the preparation of the financial statements described in SECTION
7.1(a)), all the foregoing in accordance with GAAP applied on a
Consistent Basis.
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"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement No. 13 of the Financial Accounting Standards Board
and any successor thereof.
"Change of Control" means, at any time any "person" or "group"
(each as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act)
either (A) becomes the "beneficial owner" (as defined in Rule 13d-3 of
the Exchange Act), directly or indirectly, of Voting Stock of the
Borrower (or securities convertible into or exchangeable for such
Voting Stock) representing 33-1/3% or more of the combined voting power
of all Voting Stock of the Borrower (on a fully diluted basis) or (B)
otherwise has the ability, directly or indirectly, to elect a majority
of the board of directors of the Borrower.
"Closing Date" means the date as of which this Agreement is
executed by the Borrower and the Lender and on which the conditions set
forth in SECTION 5.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder.
"Consistent Basis" means, in reference to the application of
GAAP, that the accounting principles observed in the period referred to
are comparable in all material respects to those applied in the
preparation of the audited financial statements of the Borrower
referred to in SECTION 6.6(a).
"Consolidated Capitalization" means, at any time at which the
amount thereof is to be determined, the sum of Consolidated Funded
Indebtedness plus Consolidated Shareholders' Equity.
"Consolidated Current Liabilities" means, the aggregate amount
carried as current liabilities on the books of the Borrower and its
Subsidiaries, on a consolidated basis and after eliminating all
intercompany items, determined in accordance with GAAP applied on a
Consistent Basis, LESS any such amount constituting (i) Obligations of
the Borrower incurred pursuant to this Agreement and (ii) obligations
of WFI and TTI under the WFI/TTI Credit Agreement.
"Consolidated EBITDA" means, with respect to the Borrower and
its Subsidiaries for any Four-Quarter Period ending on the date of
computation thereof, the SUM of, without duplication, (i) Consolidated
Net Income, (ii) Consolidated Interest Expense, (iii) provisions for
income taxes, (iv) depreciation, and (v) amortization, all determined
on a consolidated basis in accordance with GAAP applied on a Consistent
Basis.
"Consolidated Fixed Charge Coverage Ratio" means, with respect
to the Borrower and its Subsidiaries for any Four-Quarter Period ending
on the date of computation thereof, the ratio of (i) the sum, for such
period, of Consolidated EBITDA, MINUS capital expenditures to (ii)
Consolidated Fixed Charges for such period.
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<PAGE>
"Consolidated Fixed Charges" means, with respect to Borrower
and its Subsidiaries for any Four-Quarter Period ending on the date of
computation thereof, the SUM of, without duplication, (i) Consolidated
Interest Expense,(ii) Current Maturities of Long-Term Debt (including
all Capital Lease obligations), and (iii) all cash dividends and
distributions paid during such period (regardless of when declared) on
any shares of capital stock of the Borrower then outstanding, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Funded Indebtedness" means, at any time as of
which the amount thereof is to be determined, (i) all Indebtedness for
Money Borrowed (excluding from the computation thereof Consolidated
Current Liabilities other than Current Maturities of Long-Term Debt),
PLUS (ii) the face amount of all outstanding Standby Letters of Credit
issued for the account of the Borrower or any of its Subsidiaries and
all obligations (to the extent not duplicative) arising under such
Letters of Credit, all determined on a consolidated basis in accordance
with GAAP applied on a Consistent Basis.
"Consolidated Interest Expense" means, with respect to any
period of computation thereof, the gross interest expense of the
Borrower and its Subsidiaries, including without limitation (i) the
amortization of debt discounts, (ii) the amortization of all fees
(including fees payable in respect of any Rate Hedging Obligation)
payable in connection with the incurrence of Indebtedness to the extent
included in interest expense, and (iii) the portion of any payments
made in connection with Capital Leases allocable to interest expense,
all determined on a consolidated basis in accordance with GAAP applied
on a Consistent Basis.
"Consolidated Net Income" means, for the Borrower and its
Subsidiaries, for any period of computation thereof, the amount which,
in conformity with GAAP, would be set forth opposite the caption "Net
Income" (or any like caption) on a consolidated statement of earnings
of the Borrower and its Subsidiaries.
"Consolidated Shareholders' Equity" means, as of any date on
which the amount thereof is to be determined, the sum of the following
in respect of the Borrower and its Subsidiaries (determined on a
consolidated basis and excluding intercompany items among the Borrower
and its Subsidiaries and any upward adjustment after the Closing Date
due to revaluation of assets): (i) the amount of issued and outstanding
share capital, PLUS (ii) the amount of additional paid-in capital and
retained income (or, in the case of a deficit, minus the amount of such
deficit), PLUS (iii) the amount of any foreign currency translation
adjustment (if positive, or, if negative, minus the amount of such
translation adjustment) MINUS (iv) the book value of any treasury stock
and the book value of any stock subscription receivables, all as
determined in accordance with GAAP applied on a Consistent Basis.
"Consolidated Tangible Net Worth" means, as of any date on
which the amount thereof is to be determined, Consolidated
Shareholders' Equity MINUS the net book value of all assets which would
be treated as intangible assets, all as determined on a consolidated
basis in accordance with GAAP applied on a Consistent Basis.
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<PAGE>
"Contingent Obligation" means any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise
becomes or is contingently liable upon (by direct or indirect agreement
to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss)
the Indebtedness of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of
dividends or other distributions upon the shares of any other Person.
The amount of any person's obligation under any Contingent Obligation
shall (subject to any limitation set forth therein) be deemed to be the
outstanding principal amount (or maximum principal amount, if larger)
of the Indebtedness guaranteed thereby.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to SECTION 2.7 hereof of a Eurodollar Rate Loan
of one Type as a Eurodollar Rate Loan of the same Type from one
Interest Period to the next Interest Period.
"Convert", "Conversion" and "Converted" shall refer to a
conversion pursuant to SECTION 2.7 or ARTICLE IV of one Type of Loan
into another Type of Loan.
"Credit Party" means, collectively, the Borrower and each
Guarantor.
"Current Maturities of Long-Term Debt" means, with respect to
Indebtedness for Money Borrowed that matures more than one year from
the date of its creation or matures within one year of the date of its
creation but is renewable or extendable, at the option of the Borrower
or any Subsidiary, to a date more than one year from the date of its
creation, all payments in respect thereof that are required to be made
within one year from the date of any determination thereof.
"Default" means any of the occurrences set forth as such in
SECTION 9.1 which, upon the expiration of any applicable grace period,
would constitute an Event of Default hereunder.
"Default Rate" means (i) with respect to each Eurodollar Rate
Loan, until the end of the Interest Period applicable thereto, a rate
of two percent (2%) above the Eurodollar Rate applicable to such Loan,
and thereafter at a rate of interest per annum which shall be two
percent (2%) above the Base Rate, (ii) with respect to Base Rate Loans,
at a rate of interest per annum which shall be two percent (2%) above
the Base Rate and (iii) in any case, the maximum rate permitted by
applicable law, if lower.
"Documentary Letters of Credit" means the documentary letters
of credit issued by the Issuing Bank for the account of the Borrower or
any of its Subsidiaries upon the terms and conditions of this
Agreement.
"Dollars" and the symbol "$" means dollars constituting legal
tender for the payment of public and private debts in the United States
of America.
"Eligible Securities" means the following obligations and any
other obligations previously approved in writing by the Lender:
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(a) Government Securities;
(b) obligations of any corporation organized under
the laws of any state of the United States of America or under
the laws of any other nation, payable in the United States of
America, expressed to mature not later than 92 days following
the date of issuance thereof and rated in an investment grade
rating category by S&P and Moody's;
(c) interest bearing demand or time deposits issued
by the Lender or certificates of deposit maturing within one
year days from the date of issuance thereof and issued by a
bank or trust company organized under the laws of the United
States or of any state thereof having capital surplus and
undivided profits aggregating at least $400,000,000 and being
rated "A-" or better by S&P or "A" or better by Moody's;
(d) Repurchase Agreements;
(e) Municipal Obligations;
(f) Pre-Refunded Municipal Obligations;
(g) shares of mutual funds which invest in
obligations described in paragraphs (a) through (f) above, the
shares of which mutual funds are at all times rated "AAA" by
S&P;
(h) tax-exempt or taxable adjustable rate preferred
stock issued by a Person having a rating of its long term
unsecured debt of "A" or better by S&P or "A-3" or better by
Moody's; and
(i) asset-backed remarketed certificates of
participation representing a fractional undivided interest in
the assets of a trust, which certificates are rated at least
"A-1" by S&P and "P-1" by Moody's.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (i) is maintained for
employees of the Borrower or any of its ERISA Affiliates or is assumed
by the Borrower or any of its ERISA Affiliates in connection with any
Acquisition or (ii) has at any time been maintained for the employees
of the Borrower or any current or former ERISA Affiliate.
"Environmental Laws" means any federal, state or local
statute, law, ordinance, code, rule, regulation, order, decree, permit
or license regulating, relating to, or imposing liability or standards
of conduct concerning any environmental matters or conditions,
environmental protection or conservation, including without limitation,
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended; the Superfund Amendments and Reauthorization
Act of 1986, the Resource Conservation and Recovery Act, as amended;
the Toxic Substances Control Act, as amended; the Clean Air Act, as
amended; the Clean
9
<PAGE>
Water Act, as amended; together with all regulations promulgated
thereunder, and any other "Superfund" or "Superlien" law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all
rules and regulations promulgated thereunder.
"ERISA Affiliate", as applied to the Borrower, means any
Person or trade or business which is a member of a group which is under
common control with the Borrower, who together with the Borrower, is
treated as a single employer within the meaning of Section 414(b) and
(c) of the Code.
"Eurodollar Rate Loan" means a Loan for which the rate of
interest is determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means the interest rate per annum calculated
according to the following formula:
Eurodollar = INTERBANK OFFERED RATE + Applicable
--------------------------------
Rate 1-Eurodollar Reserve Requirement Margin
"Event of Default" means any of the occurrences set forth as
such in SECTION 9.1, for which the applicable grace period, if any, has
expired.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"Existing Letters of Credit" means those Letters of Credit
described on SCHEDULE 1.1 previously issued by the Issuing Bank under
the Prior Agreement.
"Facility Guaranty" means the Guaranty and Suretyship
Agreement between the Guarantors and the Lender, delivered as of the
Closing Date and thereafter each Guaranty and Suretyship Agreement
between one or more Guarantors and the Lender delivered pursuant to
SECTION 7.19, as the same may be amended, modified or supplemented.
"Facility Termination Date" means the date on which the
Revolving Credit Termination Date shall have occurred, no Letters of
Credit shall remain outstanding and the Borrower shall have fully,
finally and irrevocably paid and satisfied all Obligations.
"Federal Funds Effective Rate" means, for any day, the rate
per annum (rounded upward to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers on such day, as published by the Federal Reserve Bank of New
York on the Business Day next succeeding such day, PROVIDED that (a) if
such day is not a Business Day, the Federal Funds Effective Rate for
such day shall be such rate on such transactions on the
10
<PAGE>
next preceding Business Day, and (b) if no such rate is so published on
such next succeeding Business Day, the Federal Funds Effective Rate for
such day shall be the average rate quoted to the Lender on such day on
such transaction as determined by the Lender.
"Fiscal Year" means the twelve month fiscal period of the
Borrower and its Subsidiaries commencing on April 1 of each calendar
year and ending on March 31 of the next following calendar year.
"Foreign Benefit Law" means any applicable statute, law,
ordinance, code, rule, regulation, order or decree of any foreign
nation or any province, state, territory, protectorate or other
political subdivision thereof regulating, relating to, or imposing
liability or standards of conduct concerning, any Employee Benefit
Plan.
"Four-Quarter Period" means a period of four full consecutive
fiscal quarters of the Borrower and its Subsidiaries, taken together as
one accounting period.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public Accountants
or which have other substantial authoritative support and are
applicable in the circumstances as of the date of a report.
"Government Securities" means direct obligations of, or
obligations the timely payment of principal and interest on which are
fully and unconditionally guaranteed by, the United States of America.
"Governmental Authority" shall mean any Federal, state,
municipal, national or other governmental department, commission,
board, bureau, court, agency or instrumentality or political
subdivision thereof or any entity or officer exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to any government or any court, in each case whether
associated with a state of the United States, the United States, or a
foreign entity or government.
"Guaranties" means all obligations of the Borrower or any
Subsidiary directly or indirectly guaranteeing, or in effect
guaranteeing, any Indebtedness or other obligation of any other Person.
"Guarantors" means, at any date, the Subsidiaries who are
required to be parties to a Facility Guaranty at such date; provided,
however, that neither of WFI and TTI shall be required to be
Guarantors.
"Hazardous Material" means and includes any pollutant,
contaminant, or hazardous, toxic or dangerous waste, substance or
material (including without limitation petroleum products,
asbestos-containing materials, and lead), the generation, handling,
storage, disposal, treatment or emission of which is subject to any
Environmental Law.
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"Indebtedness" means with respect to any Person, without
duplication, all Indebtedness for Money Borrowed, all indebtedness of
such Person for the acquisition of property or arising under Rate
Hedging Obligations, all indebtedness secured by any Lien on the
property of such Person whether or not such indebtedness is assumed,
all liability of such Person by way of endorsements (other than for
collection or deposit in the ordinary course of business), all
Contingent Obligations and Letters of Credit, and other items which in
accordance with GAAP is required to be classified as a liability on a
balance sheet; but excluding all accounts payable in the ordinary
course of business so long as payment therefor is due within one year;
provided that in no event shall the term Indebtedness include surplus
and retained earnings, lease obligations (other than pursuant to
Capital Leases), reserves for deferred income taxes and investment
credits, other deferred credits or reserves, or deferred compensation
obligations.
"Indebtedness for Money Borrowed" means with respect to the
Borrower and its Subsidiaries on a consolidated basis, all indebtedness
of the Borrower or any of its Subsidiaries in respect of money
borrowed, including without limitation all Capital Leases and the
deferred purchase price of any property or asset, evidenced by a
promissory note, bond, debenture or similar written obligation for the
payment of money (including without limitation conditional sales
contracts or similar title retention agreements).
"Interbank Offered Rate" means, for any Eurodollar Rate Loan
or Eurodollar Market Loan for the Interest Period applicable thereto,
the rate per annum (rounded upwards, if necessary, to the nearest
one-one hundredth (1/100) of one percent) appearing on Dow Jones
Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason
such rate is not available, the term "Interbank Offered Rate" shall
mean, for any Eurodollar Rate Loan or Eurodollar Market Loan for the
Interest Period applicable thereto, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable to
such Interest Period; PROVIDED, HOWEVER, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if necessary, to
the nearest 1/100 of 1%).
"Interest Period" means, for each Eurodollar Rate Loan, a
period commencing on the date such Eurodollar Rate Loan is made or
converted and ending, at the Borrower's option, on the date one, two,
three or six months thereafter as notified to the Lender by the
Authorized Representative three (3) Business Days prior to the
beginning of such Interest Period; PROVIDED, that,
(i) if the Authorized Representative fails to notify
the Lender of the length of an Interest Period three (3)
Business Days prior to the first day of such Interest Period,
the Loan for which such Interest Period was to be determined
shall be deemed to be a Base Rate Loan as of the first day
thereof;
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(ii) if an Interest Period for a Eurodollar Rate Loan
would end on a day which is not a Business Day, such Interest
Period shall be extended to the next Business Day (unless such
extension would cause the applicable Interest Period to end in
the succeeding calendar month, in which case such Interest
Period shall end on the next preceding Business Day);
(iii) any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of a calendar month;
(iv) no Interest Period with respect to any Loans
shall extend past the Stated Termination Date; and
(v) there shall not be more than five (5) Interest
Periods in effect on any day.
"Interest Rate Selection Notice" means the written notice
delivered by an Authorized Representative in connection with the
election of a subsequent Interest Period for any Eurodollar Rate
Loan or the conversion of any Eurodollar Rate Loan into a Base Rate
Loan or the conversion of any Base Rate Loan into a Eurodollar Rate
Loan, in the form of EXHIBIT C.
"Issuing Bank" means NationsBank as issuer of Letters of
Credit under ARTICLE III.
"LC Account Agreement" means the LC Account Agreement dated as
of the date hereof between the Borrower and the Issuing Bank, as
amended, modified or supplemented from time to time.
"Lending Office" means the Lending Office of the Lender
designated on the signature pages hereof or such other office of the
Lender (or of an affiliate of the Lender) as the Lender may from time
to time specify to the Authorized Representative as the office by which
its Loans are to be made and maintained.
"Letters of Credit" means, collectively, all Documentary
Letters of Credit, and all Standby Letters of Credit, advancing credit
or securing an obligation on behalf of the Borrower or any of its
Subsidiaries.
"Letter of Credit Commitment" means an amount not to exceed
$10,000,000.
"Letter of Credit Facility" means the facility described in
ARTICLE III hereof providing for the issuance by the Issuing Bank for
the account of the Borrower or any of its Subsidiaries, other than WFI
and TTI, of Letters of Credit in an aggregate stated amount at any time
outstanding not exceeding the Total Letter of Credit Commitment.
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<PAGE>
"Letter of Credit Outstandings" means, as of any date of
determination, the aggregate amount remaining undrawn under all Letters
of Credit plus Reimbursement Obligations then outstanding.
"Lien" means any interest in property securing any obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract,
and including but not limited to the lien or security interest arising
from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes. For the purposes of this Agreement, the Borrower and any
Subsidiary shall be deemed to be the owner of any property which it has
acquired or holds subject to a conditional sale agreement, financing
lease, or other arrangement pursuant to which title to the property has
been retained by or vested in some other Person for security purposes.
"Loan" or "Loans" means any borrowing pursuant to an Advance
under the Revolving Credit Facility.
"Loan Documents" means this Agreement, the Note, the Facility
Guaranties, the LC Account Agreement, the Applications and Agreements
for Letter of Credit, and all other instruments and documents
heretofore or hereafter executed or delivered to or in favor of the
Lender in connection with the Loans made and transactions contemplated
under this Agreement, as the same may be amended, supplemented or
replaced from the time to time.
"Material Adverse Effect" means a material adverse effect on
(i) the business, properties, operations or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole, (ii)
the ability of the Borrower or any of its Subsidiaries to pay or
perform its respective obligations, liabilities and indebtedness under
the Loan Documents as such payment or performance becomes due in
accordance with the terms thereof, or (iii) the rights, powers and
remedies of the Lender under any Loan Document or the validity,
legality or enforceability thereof (including for purposes of clauses
(ii) and (iii) the imposition of burdensome conditions thereon);
provided, however, that the termination of the aviation joint venture
in Ecuador shall not be deemed to have a Material Adverse Effect.
"Material Contracts" means, collectively, any contract, lease,
agreement or commitment of the Borrower or any Subsidiary, including,
without limitation, any fuel purchase agreements, the expiration or
termination of which could result in a Material Adverse Effect.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate is making, or is accruing an obligation to make,
contributions or has made, or been obligated to make, contributions
within the preceding six (6) Fiscal Years.
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"Municipal Obligations" means general obligations issued by,
and supported by the full taxing authority of, any state of the United
States of America or of any municipal corporation or other public body
organized under the laws of any such state which are rated in the
highest investment rating category by both S&P and Moody's.
"Note" means the promissory note of the Borrower evidencing
Loans executed and delivered to the Lender substantially in the form of
EXHIBIT D.
"Obligations" means the obligations, liabilities and
Indebtedness of the Borrower with respect to (i) the principal and
interest on the Loans as evidenced by the Note, (ii) the Reimbursement
Obligations and otherwise in respect of the Letters of Credit, (iii)
all liabilities of Borrower to the Lender which arise under a Swap
Agreement, and (iv) the payment and performance of all other
obligations, liabilities and Indebtedness of the Borrower to the Lender
hereunder, under any one or more of the other Loan Documents or with
respect to the Loans.
"Outstandings" means, collectively, at any date, the Letter of
Credit Outstandings and Revolving Credit Outstandings on such date.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" means any employee pension benefit plan within
the meaning of Section 3(2) of ERISA, other than a Multiemployer Plan,
which is subject to the provisions of Title IV of ERISA or Section 412
of the Code and which (i) is maintained for employees of the Borrower
or any of its ERISA Affiliates or is assumed by the Borrower or any of
its ERISA Affiliates in connection with any Acquisition or (ii) has at
any time been maintained for the employees of the Borrower or any
current or former ERISA Affiliate.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture or a government
or agency or political subdivision thereof.
"Pre-Refunded Municipal Obligations" means obligations of any
state of the United States of America or of any municipal corporation
or other public body organized under the laws of any such state which
are rated, based on the escrow, in the highest investment rating
category by both S&P and Moody's and which have been irrevocably called
for redemption and advance refunded through the deposit in escrow of
Government Securities or other debt securities which are (i) not
callable at the option of the issuer thereof prior to maturity, (ii)
irrevocably pledged solely to the payment of all principal and interest
on such obligations as the same becomes due and (iii) in a principal
amount and bear such rate or rates of interest as shall be sufficient
to pay in full all principal of, interest, and premium, if any, on such
obligations as the same becomes due as verified by a nationally
recognized firm of certified public accountants.
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<PAGE>
"Prime Rate" means the rate of interest per annum announced
publicly by the Lender as its prime rate from time to time. The Prime
Rate is not necessarily the best or the lowest rate of interest offered
by the Lender.
"Principal Office" means the office of the Lender at
NationsBank, N.A., Independence Center, 15th Floor, NC1 001-15-04,
Charlotte, North Carolina 28255, Attention: Agency Services, or such
other office and address as the Lender may from time to time designate.
"Prior Agreement" means the Amended and Restated Credit
Agreement dated February 21, 1997 between the Borrower and NationsBank,
N.A. (successor by merger of NationsBank, N.A. (South)).
"Rate Hedging Obligations" means any and all obligations of
the Borrower or any Subsidiary, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired
(including all renewals,extensions and modifications thereof and
substitutions therefor), under (i) any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto
from the fluctuations of interest rates, exchange rates or forward
rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, Dollar-denominated or
cross-currency interest rate exchange agreements, forward currency
exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts, warrants and
those commonly known as interest rate "swap" agreements; and (ii) any
and all cancellations, buybacks, reversals, terminations or assignments
of any of the foregoing.
"Regulation D" means Regulation D of the Board as the same may
be amended or supplemented from time to time.
"Regulatory Change" means any change effective after the
Closing Date in United States federal or state laws or regulations
(including Regulation D and capital adequacy regulations) or foreign
laws or regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks,
which includes the Lender, under any United States federal or state or
foreign laws or regulations (whether or not having the force of law) by
any court or governmental or monetary authority charged with the
interpretation or administration thereof or compliance by the Lender
with any request or directive regarding capital adequacy, including
those relating to "highly leveraged transactions," whether or not
having the force of law, and whether or not failure to comply therewith
would be unlawful and whether or not published or proposed prior to the
date hereof.
"Reimbursement Obligation" shall mean at any time, the
obligation of the Borrower with respect to any Letter of Credit to
reimburse the Issuing Bank (including by the receipt by the Issuing
Bank of proceeds of Loans pursuant to SECTION 3.2) for amounts
theretofore paid by the Issuing Bank pursuant to a drawing under such
Letter of Credit.
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"Repurchase Agreement" means a repurchase agreement entered
into with any financial institution whose debt obligations or
commercial paper are rated "A" by either of S&P or Moody's or "A-1" by
S&P or "P-1" by Moody's.
"Reserve Requirement" means, at any time, the maximum rate at
which reserves (including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained
under regulations issued from time to time by the Board by member banks
of the Federal Reserve System (or any successor) by member banks of the
Federal Reserve System against "Eurocurrency liabilities" (as such term
is used in Regulation D). Without limiting the effect of the foregoing,
the Reserve Requirement shall reflect any other reserves required to be
maintained by such member banks with respect to (i) any category of
liabilities which includes deposits by reference to which the
Eurodollar Rate is to be determined, or (ii) any category of extensions
of credit or other assets which include Eurodollar Rate Loans. The
Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
"Restricted Payment" means (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of stock of Borrower or any of its Subsidiaries (other than those
payable or distributable solely to the Borrower) now or hereafter
outstanding, except a dividend payable solely in shares of a class of
stock to the holders of that class; (b) any redemption, conversion,
exchange, retirement or similar payment, purchase or other acquisition
for value, direct or indirect, of any shares of any class of stock of
Borrower or any of its Subsidiaries (other than those payable or
distributable solely to the Borrower) now or hereafter outstanding; (c)
any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any
class of stock of Borrower or any of its Subsidiaries now or hereafter
outstanding; and (d) any issuance and sale of capital stock of any
Subsidiary of the Borrower (or any option, warrant or right to acquire
such stock) other than to the Borrower.
"Revolving Credit Commitment" means the obligation of the
Lender to make Loans to the Borrower up to an aggregate principal
amount at any one time outstanding equal to $25,000,000.
"Revolving Credit Facility" means the facility described in
ARTICLE II hereof providing for Loans to the Borrower by the Lender in
the aggregate principal amount of the Revolving Credit Commitment.
"Revolving Credit Outstandings" means, as of any date of
determination, the aggregate principal amount of all Loans then
outstanding and all interest accrued thereon.
"Revolving Credit Termination Date" means (i) the Stated
Termination Date or (ii) such earlier date of termination of Lender's
obligations pursuant to SECTION 9.1 upon the occurrence of an Event of
Default, or (iii) such date as the Borrower may voluntarily and
permanently terminate the Revolving Credit Facility by payment in full
of all Revolving Credit Outstandings and Letter of Credit Outstandings
and cancellation of all Letters of Credit.
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"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill.
"Single Employer Plan" means any employee pension benefit plan
covered by Title IV of ERISA in respect of which the Borrower or any
Subsidiary is an "employer" as described in Section 4001(b) of ERISA
and which is not a Multiemployer Plan.
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(i) the fair value of its assets (both at fair
valuation and at present fair saleable value on an orderly
basis) is in excess of the total amount of its liabilities,
including Contingent Obligations; and
(ii) it is then able and expects to be able to pay
its debts as they mature; and
(iii) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
"Standby Letters of Credit" means the standby letters of
credit issued by the Issuing Bank for the account of the Borrower or
any of its Subsidiaries upon the terms and conditions of this
Agreement.
"Stated Termination Date" means November 29, 2003.
"Subsidiary" means any corporation or other entity in which
more than 50% of its outstanding voting stock or more than 50% of all
equity interests is owned directly or indirectly by the Borrower and/or
by one or more of the Borrower's Subsidiaries.
"Swap Agreement" means one or more agreements between the
Borrower and any Person with respect to Indebtedness evidenced by any
or all of the Note, on terms mutually acceptable to Borrower and such
Person, which agreements create Rate Hedging Obligations; PROVIDED,
HOWEVER, that no such approval of the Lender shall be required to the
extent such agreements are entered into between the Borrower and the
Lender.
"Termination Event" means: (i) a "Reportable Event" described
in Section 4043 of ERISA and the regulations issued thereunder (unless
the notice requirement has been waived by applicable regulation); or
(ii) the withdrawal of the Borrower or any ERISA Affiliate from a
Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or was deemed such
under Section 4062(e) of ERISA; or (iii) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate a Pension Plan by the PBGC; or (v) any other event or
condition which would constitute grounds under Section 4042(a) of ERISA
for the termination of, or the appointment of a trustee to administer,
any Pension Plan; or (vi)
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the partial or complete withdrawal of the Borrower or any ERISA
Affiliate from a Multiemployer Plan; or (vii) the imposition of a Lien
pursuant to Section 412 of the Code or Section 302 of ERISA; or (viii)
any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or Section 4245
of ERISA, respectively; or (ix) any event or condition which results in
the termination of a Multiemployer Plan under Section 4041A of ERISA or
the institution by the PBGC of proceedings to terminate a Multiemployer
Plan under Section 4042 of ERISA.
"TTI" means Trans-Tec International, S.A., a corporation
organized under the laws of Costa Rica and a wholly-owned subsidiary of
the Borrower.
"Type" shall mean any type of Loan (i.e., a Base Rate Loan or
a Eurodollar Rate Loan).
"Voting Stock" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders
of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
"WFI" means World Fuel International, S.A., 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/TTI Credit Agreement" means the Revolving Credit and
Reimbursement Agreement dated of even date herewith among WFI, TTI and
NationsBank, N.A., as lender, as amended, modified or restated from
time to time.
"Year 2000 Compliant" means all computer applications
(including those affected by information received from its suppliers
and vendors) that are material to the Borrower's or any of its
Subsidiaries' business and operations will on a timely basis be able to
perform properly data-sensitive functions involving all dates on and
after January 1, 2000;
"Year 2000 Problem" means the risk that computer applications
used by the Borrower and any of its Subsidiaries (including those
affected by information received from its suppliers and vendors) may be
unable to recognize and perform properly data-sensitive functions
involving certain dates on and after January 1, 2000.
1.2 RULES OF INTERPRETATION.
(a) All accounting terms not specifically defined herein shall
have the meanings assigned to such terms and shall be interpreted in
accordance with GAAP applied on a Consistent Basis.
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(b) Each term defined in Article 1 or 9 of the Florida Uniform
Commercial Code shall have the meaning given therein unless otherwise
defined herein, except to the extent that the Uniform Commercial Code
of another jurisdiction is controlling, in which case such terms shall
have the meaning given in the Uniform Commercial Code of the applicable
jurisdiction.
(c) The headings, subheadings and table of contents used
herein or in any other Loan Document are solely for convenience of
reference and shall not constitute a part of any such document or
affect the meaning, construction or effect of any provision thereof.
(d) Except as otherwise expressly provided, references herein
to articles, sections, paragraphs, clauses, annexes, appendices,
exhibits and schedules are references to articles, sections,
paragraphs, clauses, annexes, appendices, exhibits and schedules in or
to this Agreement.
(e) All definitions set forth herein or in any other Loan
Document shall apply to the singular as well as the plural form of such
defined term, and all references to the masculine gender shall include
reference to the feminine or neuter gender, and VICE VERSA, as the
context may require.
(f) When used herein or in any other Loan Document, words such
as "hereunder", "hereto", "hereof" and "herein" and other words of like
import shall, unless the context clearly indicates to the contrary,
refer to the whole of the applicable document and not to any particular
article, section, subsection, paragraph or clause thereof.
(g) References to "including" means including without limiting
the generality of any description preceding such term, and for purposes
hereof the rule of EJUSDEM GENERIS shall not be applicable to limit a
general statement, followed by or referable to an enumeration of
specific matters, to matters similar to those specifically mentioned.
(h) All dates and times of day specified herein shall refer to
such dates and times at Charlotte, North Carolina.
(i) Each of the parties to the Loan Documents and their
counsel have reviewed and revised, or requested (or had the opportunity
to request) revisions to, the Loan Documents, and any rule of
construction that ambiguities are to be resolved against the drafting
party shall be inapplicable in the construing and interpretation of the
Loan Documents and all exhibits, schedules and appendices thereto.
(j) Any reference to an officer of the Borrower or any other
Person by reference to the title of such officer shall be deemed to
refer to each other officer of such Person, however titled, exercising
the same or substantially similar functions.
(k) All references to any agreement or document as amended,
modified or supplemented, or words of similar effect, shall mean such
document or agreement, as the case
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may be, as amended, modified or supplemented from time to time only as
and to the extent permitted therein and in the Loan Documents.
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ARTICLE II
THE REVOLVING CREDIT FACILITY
2.1 LOANS.
(a) COMMITMENT. Subject to the terms and conditions of this
Agreement, the Lender agrees to make Advances to the Borrower under the
Revolving Credit Facility from time to time from the Closing Date until the
Revolving Credit Termination Date up to but not exceeding the Revolving Credit
Commitment, PROVIDED, however, that the Lender will not be required and shall
have no obligation to make any such Advance (i) so long as a Default or an Event
of Default has occurred and is continuing or (ii) if the Lender has accelerated
the maturity of the Note as a result of an Event of Default; PROVIDED further,
however, that immediately after giving effect to each such Advance, the
principal amount of Revolving Credit Outstandings plus Letter of Credit
Outstandings shall not exceed the Revolving Credit Commitment. Within such
limits, the Borrower may borrow, repay and reborrow under the Revolving Credit
Facility on a Business Day from the Closing Date until, but (as to borrowings
and reborrowings) not including, the Revolving Credit Termination Date;
PROVIDED, however, that (y) no Loan that is a Eurodollar Rate Loan shall be made
which has an Interest Period that extends beyond the Stated Termination Date and
(z) each Loan that is a Eurodollar Rate Loan may, subject to the provisions of
SECTION 2.6, be repaid only on the last day of the Interest Period with respect
thereto unless such payment is accompanied by the additional payment, if any,
required by SECTION 4.4.
(b) AMOUNTS. Except as otherwise permitted by the Lender from
time to time, the aggregate unpaid principal amount of the Revolving Credit
Outstandings plus Letter of Credit Outstandings shall not exceed at any time the
Revolving Credit Commitment, and, in the event there shall be outstanding any
such excess, the Borrower shall immediately make such payments and prepayments
as shall be necessary to comply with this restriction. Each Loan hereunder,
other than Base Rate Refunding Loans, and each conversion under SECTION 2.7,
shall be in an amount of at least $100,000, and, if greater than $100,000, an
integral multiple of $100,000.
(c) ADVANCES. An Authorized Representative shall give the
Lender (1) at least three (3) Business Days' irrevocable written notice by
telefacsimile transmission of a Borrowing Notice or Interest Rate Selection
Notice (as applicable) with appropriate insertions, effective upon receipt, of
each Loan that is a Eurodollar Rate Loan (whether representing an additional
borrowing hereunder or the conversion of a borrowing hereunder from Base Rate
Loans to Eurodollar Rate Loans) prior to 10:30 A.M. and (2) irrevocable written
notice by telefacsimile transmission of a Borrowing Notice or Interest Rate
Selection Notice (as applicable) with appropriate insertions, effective upon
receipt, of each Loan (other than Base Rate Refunding Loans to the extent the
same are effected without notice pursuant to SECTION 2.1(c)(iv)) that is a Base
Rate Loan (whether representing an additional borrowing hereunder or the
conversion of borrowing hereunder from Eurodollar Rate Loans to Base Rate Loans)
prior to 10:30 A.M. on the day of such proposed Loan. Each such notice shall
specify the amount of the borrowing, the type of Loan (Base Rate or Eurodollar
Rate), the date of borrowing and, if a Eurodollar Rate Loan, the Interest Period
to be used in the computation of interest.
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(ii) Not later than 2:00 P.M. on the date specified for each borrowing
under this SECTION 2.1, the Lender shall, pursuant to the terms and subject to
the conditions of this Agreement, make the amount of the Advance or Advances
available to the Borrower by delivery of the proceeds thereof to the Borrower's
Account or otherwise as shall be directed in the applicable Borrowing Notice by
the Authorized Representative and reasonably acceptable to the Lender.
(iii) The Borrower shall have the option to elect the duration of the
initial and any subsequent Interest Periods and to Convert the Loans in
accordance with SECTION 2.7. Eurodollar Rate Loans and Base Rate Loans may be
outstanding at the same time, PROVIDED, HOWEVER, there shall not be outstanding
at any one time Eurodollar Rate Loans having more than five (5) different
Interest Periods. If the Lender does not receive a Borrowing Notice or an
Interest Rate Selection Notice giving notice of election of the duration of an
Interest Period or of Conversion of any Loan to or Continuation of a Loan as a
Eurodollar Rate Loan by the time prescribed by SECTION 2.1(c) OR 2.7, the
Borrower shall be deemed to have elected to Convert such Loan to (or Continue
such Loan as) a Base Rate Loan until the Borrower notifies the Lender in
accordance with SECTION 2.7.
(iv) Notwithstanding the foregoing, if a drawing is made under any
Letter of Credit, such drawing is honored by the Issuing Bank prior to the
Stated Termination Date, and the Borrower shall not immediately fully reimburse
the Issuing Bank in respect of such drawing, (A) provided that the conditions to
making a Loan as herein provided shall then be satisfied, the Reimbursement
Obligation arising from such drawing shall be paid to the Issuing Bank by the
Lender without the requirement of notice to or from the Borrower from
immediately available funds which shall be advanced as a Base Rate Refunding
Loan by the Lender under the Revolving Credit Facility, and (B) if the
conditions to making a Loan as herein provided shall not then be satisfied, the
Lender shall fund by payment to the Issuing Bank in immediately available funds
the purchase price from the Issuing Bank of the Reimbursement Obligation. Any
such Base Rate Refunding Loan shall be advanced as, and shall continue as, a
Base Rate Loan unless and until the Borrower Converts such Base Rate Loan in
accordance with the terms of SECTION 2.7.
2.2 PAYMENT OF INTEREST. (a) The Borrower shall pay interest to the
Lender on the outstanding and unpaid principal amount of each Loan for the
period commencing on the date of such Loan until such Loan shall be due at the
then applicable Base Rate for Base Rate Loans or applicable Eurodollar Rate for
Eurodollar Rate Loans, as designated by the Authorized Representative pursuant
to SECTION 2.1; PROVIDED, however, that if any amount shall not be paid when due
(at maturity, by acceleration or otherwise), all amounts outstanding hereunder
shall bear interest thereafter at the Default Rate.
(b) Interest on each Loan shall be computed on the basis of a year
of 360 days and calculated in each case for the actual number of days elapsed.
Interest on each Loan shall be paid (i) quarterly in arrears not later than
three (3) Business Days following the last Business Day of each March, June,
September and December, commencing December 31, 1998 for each Base Rate Loan,
(ii) on the last day of the applicable Interest Period for each Eurodollar Rate
Loan and, if such Interest Period extends for more than three (3) months, at
intervals of three (3) months after the first day of such Interest Period, and
(iii) upon payment in full of the principal amount of such Loan.
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2.3 PAYMENT OF PRINCIPAL. The principal amount of each Loan shall be
due and payable to the Lender in full on the Revolving Credit Termination Date,
or earlier as specifically provided herein. The principal amount of any Base
Rate Loan may be prepaid in whole or in part at any time. The principal amount
of any Eurodollar Rate Loan may be prepaid only at the end of the applicable
Interest Period unless the Borrower shall pay to the Lender the additional
amount, if any, required under SECTION 4.4. All prepayments of Loans made by the
Borrower shall be in the amount of $100,000 or such greater amount which is an
integral multiple of $100,000, or the amount equal to all Revolving Credit
Outstandings, or such other amount as necessary to comply with SECTION 2.1(b) or
SECTION 2.7.
2.4 NON-CONFORMING PAYMENTS. (a) Each payment of principal (including
any prepayment) and payment of interest and fees, and any other amount required
to be paid to the Lender with respect to the Loans, shall be made to the Lender
at the Principal Office in Dollars and in immediately available funds before
12:30 P.M. on the date such payment is due. The Lender may, but shall not be
obligated to, debit the amount of any such payment which is not made by such
time to any ordinary deposit account, if any, of the Borrower with the Lender.
(b) The Lender shall deem any payment made by or on behalf of the
Borrower hereunder that is not made both in Dollars and in immediately available
funds and prior to 12:30 P.M. to be a non-conforming payment. Any such payment
shall not be deemed to be received by the Lender until the later of (i) the time
such funds become available funds and (ii) the next Business Day. Any
non-conforming payment may constitute or become a Default or Event of Default.
Interest shall continue to accrue on any principal as to which a non-conforming
payment is made until the later of (x) the date such funds become available
funds or (y) the next Business Day at the Default Rate from the date such amount
was due and payable.
(c) In the event that any payment hereunder or under the Note becomes
due and payable on a day other than a Business Day, then such due date shall be
extended to the next succeeding Business Day unless provided otherwise under
clause (ii) of the definition of "Interest Period"; PROVIDED that interest shall
continue to accrue during the period of any such extension and PROVIDED further,
that in no event shall any such due date be extended beyond the Revolving Credit
Termination Date.
2.5 NOTES. Loans made or Continued by the Lender pursuant to the terms
and conditions of this Agreement shall be evidenced by the Note payable to the
order of the Lender in the amount of the Revolving Credit Commitment, which Note
shall be dated the Closing Date and shall be duly completed, executed and
delivered by the Borrower.
2.6 REDUCTIONS. The Borrower shall, by notice from an Authorized
Representative, have the right from time to time but not more frequently than
once each calendar month, upon not less than three (3) Business Days' written
notice to the Lender, effective upon receipt, to reduce the Revolving Credit
Commitment. Each such reduction shall be in the aggregate amount of $500,000 or
such greater amount which is in an integral multiple of $100,000, or the entire
remaining Revolving Credit Commitment, and shall permanently reduce the
Revolving Credit Commitment. Each reduction of the Revolving Credit Commitment
shall be accompanied by payment of the Loans to the extent that
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the principal amount of Revolving Credit Outstandings plus Letter of Credit
Outstandings exceeds the Revolving Credit Commitment after giving effect to such
reduction, together with accrued and unpaid interest on the amounts prepaid. No
such reduction shall result in the payment of any Eurodollar Rate Loan other
than on the last day of the Interest Period of such Eurodollar Rate Loan unless
such prepayment is accompanied by amounts due, if any, under SECTION 4.4.
2.7 CONVERSIONS AND ELECTIONS OF SUBSEQUENT INTEREST PERIODS. Subject
to the limitations set forth below and in ARTICLE IV, the Borrower may:
(a) upon delivery, effective upon receipt, of a properly completed
Interest Rate Selection Notice to the Lender on or before 10:30 A.M. on any
Business Day, Convert all or a part of Eurodollar Rate Loans to Base Rate Loans
on the last day of the Interest Period for such Eurodollar Rate Loans; and
(b) provided that no Default or Event of Default shall have
occurred and be continuing and upon delivery, effective upon receipt, of a
properly completed Interest Rate Selection Notice to the Lender on or before
10:30 A.M. three (3) Business Days' prior to the date of such election or
Conversion:
(i) elect a subsequent Interest Period for all or a portion of
Eurodollar Rate Loans to begin on the last day of the then current
Interest Period for such Eurodollar Rate Loans; and
(ii) Convert Base Rate Loans to Eurodollar Rate Loans on any
Business Day.
Each election and Conversion pursuant to this SECTION 2.7 shall be
subject to the limitations on Eurodollar Rate Loans set forth in the definition
of "Interest Period" herein and in SECTIONS 2.1, 2.3 and ARTICLE IV.
2.8 INCREASE AND DECREASE IN AMOUNTS. The amount of the Revolving
Credit Commitment which shall be available to the Borrower as Advances shall be
reduced by the aggregate amount of Outstanding Letters of Credit.
2.9 FEES.
(a) UNUSED FEE. For the period beginning on the Closing Date and ending
on the Revolving Credit Termination Date, the Borrower agrees to pay to the
Lender an unused fee equal to the Applicable Unused Fee multiplied by the
average daily amount by which the Revolving Credit Commitment exceeds the sum of
(i) Revolving Credit Outstandings plus (ii) Letter of Credit Outstandings. Such
fees shall be due in arrears not later than three (3) Business Days following
the last Business Day of each March, June, September and December commencing
December 31, 1998 to and on the Revolving Credit Termination Date (or such
earlier date as the Lenders refuse to fund hereunder).
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(b) FACILITY FEE. The Borrower agrees to pay to the Lender, for its own
account a one time fee upon terms and conditions as provided in that certain Fee
Letter dated April 17, 1998 for agreeing to amend and extend the terms of this
Agreement.
2.10 USE OF PROCEEDS. The proceeds of the Loans made pursuant to the
Revolving Credit Facility hereunder shall be used by the Borrower to repay
Indebtedness outstanding under the Prior Agreement, for general working capital
needs and other corporate purposes, including the making of Acquisitions and
Capital Expenditures permitted hereunder.
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ARTICLE III
LETTERS OF CREDIT
3.1 LETTERS OF CREDIT. The Issuing Bank agrees, subject to the terms
and conditions of this Agreement, upon request of the Borrower to issue from
time to time for the account or benefit of the Borrower or any of its
Subsidiaries, other than WFI and TTI, Letters of Credit upon delivery to the
Issuing Bank of an Application and Agreement for Letter of Credit relating
thereto in form and content acceptable to the Issuing Bank; PROVIDED, that if a
Letter of Credit is to be issued for the account or benefit of a Subsidiary of
the Borrower, both the Borrower and such Subsidiary jointly and severally as
co-applicants shall deliver to the Issuing Bank an Application and Agreement for
Letter of Credit, and PROVIDED FURTHER, that (i) the Letter of Credit
Outstandings shall not exceed the Letter of Credit Commitment and (ii) no Letter
of Credit shall be issued if, after giving effect thereto, Letter of Credit
Outstandings plus Revolving Credit Outstandings shall exceed the Revolving
Credit Commitment. No Letter of Credit shall have an expiry date (including all
rights of the Borrower or any Subsidiary named in such Letter of Credit to
require renewal) or payment date occurring later than the earlier to occur of
(A) one year after the date of its issuance with respect to Standby Letters of
Credit or one hundred eighty days after the date of its issuance with respect to
Documentary Letters of Credit; or (B) the fifth Business Day prior to the Stated
Termination Date. Borrower agrees that it is jointly and severally liable for
all Reimbursement Obligations and other obligations with respect to Letters of
Credit previously issued or to be issued for the account or benefit 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 this Agreement, including applicable sublimits.
3.2 REIMBURSEMENT.
(a) The Borrower hereby unconditionally agrees to pay to the
Issuing Bank immediately on demand at the Principal Office all amounts required
to pay all drafts drawn or purporting to be drawn under the Letters of Credit
and all reasonable expenses incurred by the Issuing Bank in connection with the
Letters of Credit, and in any event and without demand to place in possession of
the Issuing Bank (which shall include Advances under the Revolving Credit
Facility if permitted by SECTION 2.1) sufficient funds to pay all debts and
liabilities arising under any Letter of Credit. The Issuing Bank agrees to give
the Borrower prompt notice of any request for a draw under a Letter of Credit.
The Issuing Bank may charge any account the Borrower may have with it for any
and all amounts the Issuing Bank pays under a Letter of Credit, plus charges and
reasonable expenses as from time to time agreed to by the Issuing Bank and the
Borrower; provided that to the extent permitted by SECTION 2.1(c)(IV) , amounts
shall be paid pursuant to Advances under the Revolving Credit Facility. The
Borrower agrees to pay the Issuing Bank interest on any Reimbursement
Obligations not paid when due hereunder at the Base Rate, or the maximum rate
permitted by applicable law, if lower, such rate to be calculated on the basis
of a year of 360 days for actual days elapsed.
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(b) In accordance with the provisions of SECTION 2.1(C), the
Issuing Bank shall notify the Lender of any drawing under any Letter of Credit
promptly following the receipt by the Issuing Bank of such drawing.
(c) The issuance by the Issuing Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in ARTICLE V, be
subject to the conditions that such Letter of Credit be in such form and contain
such terms as shall be reasonably satisfactory to the Issuing Bank consistent
with the then current practices and procedures of the Issuing Bank with respect
to similar letters of credit, and the Borrower shall have executed and delivered
such other instruments and agreements relating to such Letters of Credit as the
Issuing Bank shall have reasonably requested consistent with such practices and
procedures. All Letters of Credit shall be issued pursuant to and subject to the
Uniform Customs and Practice for Documentary Credits, 1993 revision,
International Chamber of Commerce Publication No. 500 and all subsequent
amendments and revisions thereto.
(d) The Borrower agrees that the Issuing Bank may, in its sole
discretion, accept or pay, as complying with the terms of any Letter of Credit,
any drafts or other documents otherwise in order which may be signed or issued
by an administrator, executor, trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, liquidator, receiver, attorney in fact or
other legal representative of a party who is authorized under such Letter of
Credit to draw or issue any drafts or other documents.
(e) Without limiting the generality of the provisions of
SECTION 10.9, the Borrower hereby agrees to indemnify and hold harmless the
Issuing Bank from and against any and all claims and damages, losses,
liabilities, reasonable costs and expenses which the Issuing Bank may incur (or
which may be claimed against the Issuing Bank) by any Person by reason of or in
connection with the issuance or transfer of or payment or failure to pay under
any Letter of Credit; PROVIDED that the Borrower shall not be required to
indemnify the Issuing Bank for any claims, damages, losses, liabilities, costs
or expenses to the extent, but only to the extent, (i) caused by the willful
misconduct or gross negligence of the party to be indemnified or (ii) caused by
the failure of the Issuing Bank to pay under any Letter of Credit after the
presentation to it of a request for payment strictly complying with the terms
and conditions of such Letter of Credit, unless such payment is prohibited by
any law, regulation, court order or decree. The indemnification and hold
harmless provisions of this SECTION 3.2(E) shall survive repayment of the
Obligations, occurrence of the Revolving Credit Termination Date and expiration
or termination of this Agreement.
(f) Without limiting Borrower's rights as set forth in SECTION
3.2(e), the obligation of the Borrower to immediately reimburse the Issuing Bank
for drawings made under Letters of Credit and the Issuing Bank's right to
receive such payment shall be absolute, unconditional and irrevocable, and that
such obligations of the Borrower shall be performed strictly in accordance with
the terms of this Agreement and such Letters of Credit and the related
Applications and Agreement for any Letter of Credit, under all circumstances
whatsoever, including the following circumstances:
(i) any lack of validity or enforceability of the
Letters of Credit, the obligation supported by the Letters of
Credit or any other agreement or instrument relating thereto
(collectively, the "Related LC Documents");
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(ii) any amendment or waiver of or any consent to or
departure from all or any of the Related LC Documents;
(iii) the existence of any claim, setoff, defense
(other than the defense of payment in accordance with the
terms of this Agreement) or other rights which the Borrower
may have at any time against any beneficiary or any transferee
of a Letter of Credit (or any persons or entities for whom any
such beneficiary or any such transferee may be acting), the
Lender or any other Person, whether in connection with the
Loan Documents, the Related LC Documents or any unrelated
transaction;
(iv) any breach of contract or other dispute between
the Borrower and any beneficiary or any transferee of a Letter
of Credit (or any persons or entities for whom such
beneficiary or any such transferee may be acting), the Lender
or any other Person;
(v) any draft, statement or any other document
presented under the Letters of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect
whatsoever;
(vi) any delay, extension of time, renewal,
compromise or other indulgence or modification granted or
agreed to by the Lender, with or without notice to or approval
by the Borrower in respect of any of Borrower's Obligations
under this Agreement; or
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
Nothing contained in this subsection (f) shall relieve the Issuing Bank of its
obligations under the Uniform Customs and Practices for Documentary Credits,
1993 revision, International Chamber of Commerce Publication No. 500.
3.3 LETTER OF CREDIT FACILITY FEES. The Borrower shall pay to the
Issuing Bank a fee on the aggregate amount available to be drawn on each
outstanding Letter of Credit at a rate equal to (a) the Applicable Margin for
each outstanding Standby Letter of Credit, and (b) .10% per annum for each
outstanding Documentary Letter of Credit. Such fees shall be due with respect to
each Letter of Credit quarterly in advance on the first day of each January,
April, July and October, the first such payment to be made (x) on the Closing
Date with respect to Letters of Credit outstanding and to the extent such fees
have not yet been paid for such Letters of Credit with respect to the then
current calendar quarter, or (y) on the date of issuance of a Letter of Credit,
and thereafter on the first day of the calendar quarter occurring after either
the Closing Date or the date of issuance of a Letter of Credit as applicable.
The fees described in this SECTION 3.3 shall be calculated on the basis of a
year of 360 days for the actual number of days elapsed.
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3.4 ADMINISTRATIVE FEES. The Borrower shall pay to the Issuing Bank
such administrative fee and other fees, if any, in connection with the Letters
of Credit in such amounts and at such times as the Issuing Bank and the Borrower
shall agree from time to time.
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ARTICLE IV
CHANGE IN CIRCUMSTANCES
4.1 INCREASED COST AND REDUCED RETURN.
(a) If, after the date hereof, the adoption of any applicable
law, rule, or regulation, or any change in any applicable law, rule, or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by the Lender (or its
Lending Office) with any request or directive (whether or not having the force
of law) of any such governmental authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Lending Office)
to any tax, duty, or other charge with respect to any
Eurodollar Rate Loans, its Note, or its obligation to make
Eurodollar Rate Loans, or change the basis of taxation of any
amounts payable to the Lender (or its Lending Office) under
this Agreement or its Note in respect of any Eurodollar Rate
Loans (other than taxes imposed on the overall net income of
the Lender by the jurisdiction in which the Lender has its
principal office or such Lending Office);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement
(other than the Reserve Requirement utilized in the
determination of the Eurodollar Rate) relating to any
extensions of credit or other assets of, or any deposits with
or other liabilities or commitments of, the Lender (or its
Lending Office), including the Revolving Credit Commitment of
the Lender hereunder; or
(iii) shall impose on the Lender (or its Lending
Office) or on the London interbank market any other condition
affecting this Agreement or its Note or any of such extensions
of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Lending Office) of making, Converting into, Continuing, or maintaining
any Eurodollar Rate Loans or to reduce any sum received or receivable by such
Lender (or its Lending Office) under this Agreement or its Note with respect to
any Eurodollar Rate Loans, then the Borrower shall pay to the Lender on demand
such amount or amounts as will compensate the Lender for such increased cost or
reduction; PROVIDED that the Lender not will be entitled to any compensation for
any such increased cost or reduction if demand for payment thereof is made by
the Lender more than 180 days after the occurrence of the circumstances giving
rise to such claim. If the Lender requests compensation by the Borrower under
this SECTION 4.1(a), the Borrower may, by notice to the Lender, suspend the
obligation of the Lender to make or Continue Loans of the Type with respect to
which such compensation is requested, or to Convert Loans of any other Type into
Loans of such Type, until the event or condition giving rise to such request
ceases to be in effect (in which case the provisions of
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SECTION 4.4 shall be applicable); PROVIDED that such suspension shall not affect
the right of the Lender to receive the compensation so requested.
(b) If, after the date hereof, the Lender shall have determined that
the adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank, or comparable agency, has or
would have the effect of reducing the rate of return on the capital of the
Lender or any corporation controlling the Lender as a consequence of the
Lender's obligations hereunder to a level below that which the Lender or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand the Borrower shall pay to the
Lender such additional amount or amounts as will compensate the Lender for such
reduction.
(c) The Lender shall promptly notify the Borrower of any event of which
it has knowledge, occurring after the date hereof, which will entitle the Lender
to compensation pursuant to this Section and will designate a different Lending
Office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the reasonable judgment of the Lender, be
otherwise disadvantageous to it. The Lender claiming compensation under this
Section shall furnish to the Borrower a statement setting forth the additional
amount or amounts to be paid to it hereunder which shall be conclusive in the
absence of manifest error. In determining such amount, the Lender may use any
reasonable averaging and attribution methods that the Lender uses for its
customers that are similarly situated to the Borrower.
4.2 LIMITATION ON TYPES OF LOANS. If on or prior to the first day of
any Interest Period for any Eurodollar Rate Loan:
(a) the Lender reasonably determines (which determination
shall be conclusive) that by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period; or
(b) the Lender reasonably determines (which determination
shall be conclusive) that the Eurodollar Rate will not adequately and
fairly reflect the cost to the Lender of funding Eurodollar Rate Loans
for such Interest Period;
then the Lender shall give the Borrower prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lender shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and the Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Loans of the
affected Type, either prepay such Loans or Convert such Loans into another Type
of Loan in accordance with the terms of this Agreement.
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4.3 ILLEGALITY. Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for the Lender or its Lending Office to
make, maintain, or fund Eurodollar Rate Loans hereunder, then the Lender shall
promptly notify the Borrower thereof and the Lender's obligation to make or
Continue Eurodollar Rate Loans and to Convert other Types of Loans into
Eurodollar Rate Loans shall be suspended until such time as the Lender may again
make, maintain, and fund Eurodollar Rate Loans (in which case the provisions of
SECTION 4.4 shall be applicable).
4.4 TREATMENT OF AFFECTED LOANS. If the obligation of the Lender to
make a Eurodollar Rate Loan or to Continue, or to Convert Loans of any other
Type into, Loans of a particular Type shall be suspended pursuant to SECTION 4.1
or 4.3 hereof (Loans of such Type being herein called "Affected Loans" and such
Type being herein called the "Affected Type"), the Lender's Affected Loans shall
be automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for Affected Loans (or, in the case of a Conversion
required by SECTION 4.3 hereof, on such earlier date as the Lender may specify
to the Borrower) and, unless and until the Lender gives notice as provided below
that the circumstances specified in SECTION 4.1 or 4.3 hereof that gave rise to
such Conversion no longer exist:
(a) to the extent that the Lender's Affected Loans have been
so Converted, all payments and prepayments of principal that would
otherwise be applied to the Lender's Affected Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by the
Lender as Loans of the Affected Type shall be made or Continued instead
as Base Rate Loans, and all Loans of the Lender that would otherwise be
Converted into Loans of the Affected Type shall be Converted instead
into (or shall remain as) Base Rate Loans.
4.5 COMPENSATION. Upon the request of the Lender, the Borrower shall
pay to the Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of the Lender) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar
Rate Loan for any reason (including, without limitation, the
acceleration of the Loans pursuant to SECTION 9.1) on a date other than
the last day of the Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any condition precedent specified in
ARTICLE V to be satisfied) to borrow, Convert, Continue, or prepay a
Eurodollar Rate Loan on the date for such borrowing, Conversion,
Continuation, or prepayment specified in the relevant notice of
borrowing, prepayment, Continuation, or Conversion under this
Agreement.
4.6 TAXES. (a) Any and all payments by the Borrower to or for the
account of the Lender hereunder or under any other Loan Document shall be made
free and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, EXCLUDING, in the case of the Lender, taxes
imposed on its income, and franchise taxes imposed on it, by the jurisdiction
under the laws of which the Lender (or
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its Lending Office) is organized or any political subdivision thereof (all such
non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings,
and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
under this Agreement or any other Loan Document to the Lender, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this SECTION 4.6) the Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions, (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law, and (iv) the Borrower shall furnish to the Lender, at its address referred
to in SECTION 10.2, the original or a certified copy of a receipt evidencing
payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this Agreement
or any other Loan Document or from the execution or delivery of, or otherwise
with respect to, this Agreement or any other Loan Document (hereinafter referred
to as "Other Taxes").
(c) The Borrower agrees to indemnify the Lender for the full amount of
Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed or asserted by any jurisdiction on amounts payable under this SECTION
4.6) paid by the Lender and any liability (including penalties, interest, and
expenses) arising therefrom or with respect thereto.
(d) If the Borrower is required to pay additional amounts to or for the
account of the Lender pursuant to this SECTION 4.6, then the Lender will agree
to use reasonable efforts to change the jurisdiction of its Lending Office so as
to eliminate or reduce any such additional payment which may thereafter accrue
if such change, in the judgment of the Lender, is not otherwise disadvantageous
to the Lender.
(e) Within thirty (30) days after the date of any payment of Taxes, the
Borrower shall furnish to the Lender the original or a certified copy of a
receipt evidencing such payment.
(f) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this SECTION 4.6 shall survive the termination of the Revolving Credit
Commitments and the payment in full of the Notes.
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ARTICLE V
CONDITIONS TO MAKING LOANS AND ISSUING LETTERS OF CREDIT
5.1 CONDITIONS OF INITIAL ADVANCE. The obligation of the Lender to make
the initial Advance under the Revolving Credit Facility, and of the Issuing Bank
to issue any additional Letter of Credit, is subject to the conditions precedent
that:
(a) the Lender shall have received on the Closing Date, in
form and substance satisfactory to the Lender, the following:
(i) executed originals of each of this Agreement,
the Note, the initial Facility Guaranties, the LC Account
Agreement and the other Loan Documents, together with all
schedules and exhibits thereto;
(ii) the favorable written opinion or opinions with
respect to the Loan Documents and the transactions
contemplated thereby of counsel to the Credit Parties dated
the Closing Date, addressed to the Lender and satisfactory to
Smith Helms Mulliss & Moore, L.L.P., special counsel to the
Lender, substantially in the form of EXHIBIT E;
(iii) resolutions of the boards of directors or
other appropriate governing body (or of the appropriate
committee thereof) of each Credit Party certified by its
secretary or assistant secretary as of the Closing Date,
approving and adopting the Loan Documents to be executed by
such Person, and authorizing the execution and delivery
thereof;
(iv) specimen signatures of officers of each Credit
Party executing the Loan Documents on behalf of such Credit
Party, certified by the secretary or assistant secretary of
such Credit Party;
(v) the charter documents of each Credit Party
certified as of a recent date by the Secretary or Assistant
Secretary of the Borrower;
(vi) the bylaws of each Credit Party certified as of
the Closing Date as true and correct by its secretary or
assistant secretary;
(vii) certificates issued as of a recent date by the
Secretaries of State of the respective jurisdictions of
formation of each Credit Party as to the due existence and
good standing of each Credit Party;
(viii) notice of appointment of the initial
Authorized Representative(s);
(ix) certificate of an Authorized Representative
dated the Closing Date demonstrating compliance with the
financial covenants contained in SECTIONS 8.1(a)
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through 8.1(d) as of the most recently ended fiscal quarter
period, substantially in the form of EXHIBIT F;
(x) an initial Borrowing Notice, if any, and, if
elected by the Borrower, Interest Rate Selection Notice;
(xi) evidence that all fees payable by the Borrower
on the Closing Date to the Lender have been paid in full;
(xii) such other documents, instruments,
certificates and opinions as the Lender may reasonably request
on or prior to the Closing Date in connection with the
consummation of the transactions contemplated hereby; and
(b) In the good faith judgment of the Lender:
(i) there shall not have occurred or become known to
the Lender any event, condition, situation or status since the
date of the information contained in the financial and
business projections, budgets, pro forma data and forecasts
concerning the Borrower and its Subsidiaries delivered to the
Lender prior to the Closing Date that has had or could
reasonably be expected to result in a Material Adverse Effect;
(ii) no litigation, action, suit, investigation or
other arbitral, administrative or judicial proceeding shall be
pending or threatened which could reasonably be likely to
result in a Material Adverse Effect; and
(iii) the Borrower and its Subsidiaries shall have
received all approvals, consents and waivers, and shall have
made or given all necessary filings and notices as shall be
required to consummate the transactions contemplated hereby
without the occurrence of any default under, conflict with or
violation of (A) any applicable law, rule, regulation, order
or decree of any Governmental Authority or arbitral authority
or (B) any agreement, document or instrument to which any of
the Borrower or any Subsidiary is a party or by which any of
them or their properties is bound.
5.2 CONDITIONS OF LOANS AND LETTER OF CREDIT. The obligations of the
Lender to make any Loans, and the Issuing Bank to issue Letters of Credit,
hereunder on or subsequent to the Closing Date are subject to the satisfaction
of the following conditions:
(a) the Lender shall have received a Borrowing Notice if
required by ARTICLE II;
(b) the representations and warranties of the Borrower and the
Subsidiaries set forth in ARTICLE VI and in each of the other Loan
Documents shall be true and correct in all material respects on and as
of the date of such Advance, with the same effect as though such
representations and warranties had been made on and as of such date,
except to the extent that such representations and warranties expressly
relate to an earlier date and except that the financial statements
referred to in SECTION 6.6(a) shall be deemed to be those financial
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statements most recently delivered to the Lender pursuant to SECTION
7.1 from the date financial statements are delivered to the Lender in
accordance with such Section;
(c) in the case of the issuance of a Letter of Credit, the
Borrower with any of its Subsidiaries as co-applicant, as applicable,
shall have executed and delivered to the Issuing Bank an Application
and Agreement for Letter of Credit in form and content acceptable to
the Issuing Bank together with such other instruments and documents as
it shall request;
(d) at the time of (and after giving effect to) each Advance
or the issuance of a Letter of Credit, no Default or Event of Default
specified in ARTICLE IX shall have occurred and be continuing; and
(e) immediately after giving effect to:
(i) a Loan, the aggregate principal balance of all
outstanding Loans shall not exceed the Revolving Credit
Commitment;
(ii) a Letter of Credit or renewal thereof, the
aggregate principal balance of all outstanding Letters of
Credit and Reimbursement Obligations for the Lender shall not
exceed the Letter of Credit Commitment;
(iii) a Loan or a Letter of Credit or renewal
thereof, the sum of Letter of Credit Outstandings plus
Revolving Credit Outstandings shall not exceed the Revolving
Credit Commitment.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants with respect to itself and to its
Subsidiaries (which representations and warranties shall survive the delivery of
the documents mentioned herein and the making of Loans), that:
6.1 ORGANIZATION AND AUTHORITY.
(a) The Borrower and each Subsidiary is a corporation or
partnership duly organized and validly existing under the laws of the
jurisdiction of its formation;
(b) The Borrower and each Subsidiary (x) has the requisite
power and authority to own its properties and assets and to carry on
its business as now being conducted and as contemplated in the Loan
Documents, and (y) is qualified to do business in every jurisdiction in
which failure so to qualify would have a Material Adverse Effect;
(c) The Borrower has the power and authority to execute,
deliver and perform this Agreement and the Notes, and to borrow
hereunder, and to execute, deliver and perform each of the other Loan
Documents to which it is a party;
(d) Each Subsidiary executing a Facility Guaranty has the
power and authority to execute, deliver and perform the Facility
Guaranty and each of the other Loan Documents to which it is a party;
and
(e) When executed and delivered, each of the Loan Documents to
which the Borrower or any Subsidiary is a party will be the legal,
valid and binding obligation or agreement, as the case may be, of the
Borrower or such Subsidiary, enforceable against the Borrower or such
Subsidiary in accordance with its terms, subject to the effect of any
applicable bankruptcy, moratorium, insolvency, reorganization or other
similar law affecting the enforceability of creditors' rights generally
and to the effect of general principles of equity (whether considered
in a proceeding at law or in equity).
6.2 LOAN DOCUMENTS. The execution, delivery and performance by the
Borrower and each Subsidiary of each of the Loan Documents to which it is a
party:
(a) have been duly authorized by all requisite corporate
action (including any required shareholder or partner approval) of the
Borrower and each Subsidiary required for the lawful execution,
delivery and performance thereof;
(b) do not violate any provisions of (i) applicable law, rule
or regulation, (ii) any judgment, writ, order, determination, decree or
arbitral award of any Governmental Authority or arbitral authority
binding on the Borrower or any Subsidiary or its properties, or (iii)
the charter documents, partnership agreement or bylaws of the Borrower
or any Subsidiary;
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(c) does not and will not be in conflict with, result in a
breach of or constitute an event of default, or an event which, with
notice or lapse of time or both, would constitute an event of default,
under any contract (including without limitation any Material
Contract), indenture, agreement or other instrument or document to
which Borrower or any Subsidiary is a party, or by which the properties
or assets of Borrower or any Subsidiary are bound; and
(d) does not and will not result in the creation or imposition
of any Lien upon any of the properties or assets of Borrower or any
Subsidiary.
6.3 SOLVENCY. The Borrower and each Subsidiary is Solvent after giving
effect to the transactions contemplated by the Loan Documents.
6.4 SUBSIDIARIES AND STOCKHOLDERS. The Borrower has no Subsidiaries
other than those Persons listed as Subsidiaries in SCHEDULE 6.4 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
SECTION 7.19; SCHEDULE 6.4 states as of the date hereof the organizational form
of each entity, the authorized and issued capitalization of each Subsidiary
listed thereon, the number of shares or other equity interests of each class of
capital stock or interest issued and outstanding of each such Subsidiary and the
number and/or percentage of outstanding shares or other equity interest
(including options, warrants and other rights to acquire any interest) of each
such class of capital stock or other equity interest owned by Borrower or by any
such Subsidiary; the outstanding shares or other equity interests of each such
Subsidiary have been duly authorized and validly issued and are fully paid and
nonassessable; and Borrower and each such Subsidiary owns beneficially and of
record all the shares and other interests it is listed as owning in SCHEDULE
6.4, free and clear of any Lien.
6.5 OWNERSHIP INTERESTS. Borrower owns no interest in any Person other
than the Persons listed in SCHEDULE 6.4, equity investments in Persons not
constituting Subsidiaries permitted under SECTION 8.7 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
SECTION 7.19.
6.6 FINANCIAL CONDITION.
(a) The Borrower has heretofore furnished to the Lender an
audited consolidated balance sheet of the Borrower and its Subsidiaries
as of March 31, 1997 and March 31, 1998 and the notes thereto and the
related consolidated statements of income, stockholders' equity and
cash flows for the Fiscal Year then ended as examined and certified by
Arthur Andersen LLP and unaudited consolidated interim financial
statements of the Borrower and its Subsidiaries consisting of
consolidated balance sheets and related consolidated statements of
income, stockholders' equity and cash flows, in each case without
notes, for and as of the end of the three (3) month period ending June
30, 1998. Except as set forth therein, such financial statements
(including the notes thereto) present fairly the financial condition of
the Borrower and its Subsidiaries as of the end of such Fiscal Year and
three (3) month period and results of their operations and the changes
in its stockholders' equity for the Fiscal Year and interim period then
ended, all in conformity with GAAP applied on a Consistent Basis,
subject however, in the case of unaudited interim statements to year
end audit adjustments;
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(b) since June 30, 1998 there has been no material adverse
change in the condition, financial or otherwise, of the Borrower and
its Subsidiaries taken as a whole or in the businesses, properties,
performance, prospects or operations of the Borrower and its
Subsidiaries taken as a whole, nor have such businesses or properties
been materially adversely affected as a result of any fire, explosion,
earthquake, accident, strike, lockout, combination of workers, flood,
embargo or act of God; and
(c) except as set forth in the financial statements referred
to in SECTION 6.6(a) or in SCHEDULE 6.6 or permitted by SECTION 8.5,
neither Borrower nor any Subsidiary has incurred, other than in the
ordinary course of business, any material Indebtedness, Contingent
Obligation or other commitment or liability which remains outstanding
or unsatisfied.
6.7 TITLE TO PROPERTIES. The Borrower and each of its Subsidiaries has
good and marketable title to all its real and personal properties, subject to no
transfer restrictions or Liens of any kind, except for the transfer restrictions
and Liens described in SCHEDULE 6.7 and Liens permitted by SECTION 8.4.
6.8 TAXES. Except as set forth in SCHEDULE 6.8, the Borrower and each
of its Subsidiaries has filed or caused to be filed all federal, state and local
tax returns which are required to be filed by it and, except for taxes and
assessments being contested in good faith by appropriate proceedings diligently
conducted and against which reserves reflected in the financial statements
described in SECTION 6.6(A) and satisfactory to the Borrower's independent
certified public accountants have been established, have paid or caused to be
paid all taxes as shown on said returns or on any assessment received by it, to
the extent that such taxes have become due.
6.9 OTHER AGREEMENTS. Neither the Borrower nor any Subsidiary is
(a) a party to or subject to any judgment, order, decree,
agreement, lease or instrument, or subject to other restrictions, which
individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect; or
(b) in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any agreement
or instrument, including without limitation any Material Contract, to
which the Borrower or any Subsidiary is a party, which default has, or
if not remedied within any applicable grace period could reasonably be
likely to have, a Material Adverse Effect.
6.10 LITIGATION. Except as set forth in SCHEDULE 6.10, there is no
action, suit, investigation or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body pending, or, to the
knowledge of the Borrower, threatened by or against the Borrower or any
Subsidiary or affecting the Borrower or any Subsidiary or any properties or
rights of the Borrower or any Subsidiary or other Credit Party, which could
reasonably be likely to have a Material Adverse Effect.
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6.11 MARGIN STOCK. The proceeds of the borrowings made hereunder will
be used by the Borrower only for the purposes expressly authorized herein. None
of such proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute any of the Loans
under this Agreement a "purpose credit" within the meaning of said Regulation U
or Regulation X (12 C.F.R. Part 224) of the Board. Neither the Borrower nor any
agent acting in its behalf has taken or will take any action which might cause
this Agreement or any of the documents or instruments delivered pursuant hereto
to violate any regulation of the Board or to violate the Securities Exchange Act
of 1934, as amended, or the Securities Act of 1933, as amended, or any state
securities laws, in each case as in effect on the date hereof.
6.12 INVESTMENT COMPANY. Neither the Borrower nor any of its
Subsidiaries is an "investment company," or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended (15 U.S.C.
ss. 80a-1, et seq.). The application of the proceeds of the Loans and repayment
thereof by the Borrower and the performance by the Borrower and its Subsidiaries
of the transactions contemplated by the Loan Documents will not violate any
provision of said Act, or any rule, regulation or order issued by the Securities
and Exchange Commission thereunder, in each case as in effect on the date
hereof.
6.13 PATENTS, ETC. The Borrower and each of its Subsidiaries owns or
has the right to use, under valid license agreements or otherwise, all material
patents, licenses, franchises, trademarks, trademark rights, trade names, trade
name rights, trade secrets and copyrights necessary to or used in the conduct of
its businesses as now conducted and as contemplated by the Loan Documents,
without known conflict with any patent, license, franchise, trademark, trade
secret, trade name, copyright, other proprietary right of any other Person.
6.14 NO UNTRUE STATEMENT. Neither (a) this Agreement nor any other Loan
Document or certificate or document executed and delivered by or on behalf of
the Borrower or any Subsidiary in accordance with or pursuant to any Loan
Document nor (b) any statement, representation, or warranty provided to the
Lender in connection with the negotiation or preparation of the Loan Documents
contains any misrepresentation or untrue statement of material fact or omits to
state a material fact necessary, in light of the circumstance under which it was
made, in order to make any such warranty, representation or statement contained
therein not misleading.
6.15 NO CONSENTS, ETC. Neither the respective businesses or properties
of the Borrower or any Subsidiary, nor any relationship between the Borrower or
any Subsidiary and any other Person, nor any circumstance in connection with the
execution, delivery and performance of the Loan Documents and the transactions
contemplated thereby, is such as to require a consent, approval or authorization
of, or filing, registration or qualification with, any Governmental Authority or
any other Person on the part of the Borrower or any Subsidiary as a condition to
the execution, delivery and performance of, or consummation of the transactions
contemplated by the Loan Documents, which, if not obtained or effected, would be
reasonably likely to have a Material Adverse Effect, or if so,
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such consent, approval, authorization, filing, registration or qualification has
been duly obtained or effected, as the case may be.
6.16 EMPLOYEE BENEFIT PLANS.
(a) The Borrower and each ERISA Affiliate is in compliance
with all applicable provisions of ERISA and the regulations and
published interpretations thereunder and in compliance with all Foreign
Benefit Laws with respect to all Employee Benefit Plans except for any
required amendments for which the remedial amendment period as defined
in Section 401(b) of the Code has not yet expired. Each Employee
Benefit Plan that is intended to be qualified under Section 401(a) of
the Code has been determined by the Internal Revenue Service to be so
qualified, and each trust related to such plan has been determined to
be exempt under Section 501(a) of the Code. No material liability has
been incurred by the Borrower or any ERISA Affiliate which remains
unsatisfied for any taxes or penalties with respect to any Employee
Benefit Plan or any Multiemployer Plan;
(b) Neither the Borrower nor any ERISA Affiliate has (i)
engaged in a nonexempt prohibited transaction described in Section 4975
of the Code or Section 406 of ERISA affecting any of the Employee
Benefit Plans or the trusts created thereunder which could subject any
such Employee Benefit Plan or trust to a material tax or penalty on
prohibited transactions imposed under Internal Revenue Code Section
4975 or ERISA, (ii) incurred any accumulated funding deficiency with
respect to any Employee Benefit Plan, whether or not waived, or any
other liability to the PBGC which remains outstanding other than the
payment of premiums and there are no premium payments which are due and
unpaid, (iii) failed to make a required contribution or payment to a
Multiemployer Plan, or (iv) failed to make a required installment or
other required payment under Section 412 of the Code, Section 302 of
ERISA or the terms of such Employee Benefit Plan;
(c) No Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan or Multiemployer
Plan, and neither the Borrower nor any ERISA Affiliate has incurred any
unpaid withdrawal liability with respect to any Multiemployer Plan;
(d) The present value of all vested accrued benefits under
each Employee Benefit Plan which is subject to Title IV of ERISA, did
not, as of the most recent valuation date for each such plan, exceed
the then current value of the assets of such Employee Benefit Plan
allocable to such benefits;
(e) To the best of the Borrower's knowledge, each Employee
Benefit Plan subject to Title IV of ERISA, maintained by the Borrower
or any ERISA Affiliate, has been administered in accordance with its
terms in all material respects and is in compliance in all material
respects with all applicable requirements of ERISA and other applicable
laws, regulations and rules;
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(f) The consummation of the Loans and the issuance of the
Letters of Credit provided for herein will not involve any prohibited
transaction under ERISA which is not subject to a statutory or
administrative exemption; and
(g) No material proceeding, claim, lawsuit and/or
investigation exists or, to the best knowledge of the Borrower after
due inquiry, is threatened concerning or involving any Employee Benefit
Plan.
6.17 NO DEFAULT. As of the date hereof, there does not exist any
Default or Event of Default hereunder.
6.18 HAZARDOUS MATERIALS. Except as set forth on SCHEDULE 6.18, the
Borrower and each Subsidiary is in compliance with all applicable Environmental
Laws in all material respects. Neither the Borrower nor any Subsidiary has been
notified of any action, suit, proceeding or investigation which, and neither the
Borrower nor any Subsidiary is aware of any facts which, (i) calls into
question, or could reasonably be expected to call into question, compliance by
the Borrower or any Subsidiary with any Environmental Laws, (ii) which seeks, or
could reasonably be expected to form the basis of a meritorious proceeding, to
suspend, revoke or terminate any license, permit or approval necessary for the
generation, handling, storage, treatment or disposal of any Hazardous Material,
or (iii) seeks to cause, or could reasonably be expected to form the basis of a
meritorious proceeding to cause, any property of the Borrower or any Subsidiary
to be subject to any restrictions on ownership, use, occupancy or
transferability under any Environmental Law.
6.19 RICO. Neither the Borrower nor any Subsidiary is engaged in or has
engaged in any course of conduct that could subject any of their respective
properties to any Lien, seizure or other forfeiture under any criminal law,
racketeer influenced and corrupt organizations law, civil or criminal, or other
similar laws.
6.20 YEAR 2000 COMPLIANCE. The Borrower and its Subsidiaries have (i)
initiated a review and assessment of all areas within its and each of its
Subsidiaries' business and operations (including those affected by information
received from suppliers and vendors) that could reasonably be expected to be
adversely affected by the Year 2000 Problem, (ii) developed a plan and timeline
for addressing the Year 2000 Problem by not later than September 30, 1999, and
(iii) to date, implemented that plan substantially in accordance with that
timetable. The Borrower reasonably believes that all computer applications
(including those affected by information received from its suppliers and
vendors) that are material to its or any of its Subsidiaries' business and
operations will on a timely basis be Year 2000 Compliant, except to the extent
that a failure to do so could not reasonably be expected to have Material
Adverse Effect.
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ARTICLE VII
AFFIRMATIVE COVENANTS
Until the Facility Termination Date, unless the Lender shall otherwise
consent in writing, the Borrower will, and where applicable will cause each
Subsidiary to:
7.1 FINANCIAL REPORTS, ETC. (a) As soon as practical and in any event
within 90 days after the end of each Fiscal Year of the Borrower, deliver or
cause to be delivered to the Lender (i) a consolidated balance sheet of the
Borrower and its Subsidiaries of at the end of such Fiscal Year, and the notes
thereto, and the related consolidated statements of income, stockholders' equity
and cash flows, and the respective notes thereto, for such Fiscal Year, setting
forth comparative financial statements for the preceding Fiscal Year, all
prepared in accordance with GAAP applied on a Consistent Basis and containing,
with respect to the consolidated financial statements, opinions of Arthur
Andersen LLP, or other such independent certified public accountants selected by
the Borrower and approved by the Lender, which are unqualified as to the scope
of the audit performed and as to the "going concern" status of the Borrower and
without any exception not acceptable to the Lender, and (ii) a certificate of an
Authorized Representative demonstrating compliance with SECTIONS 8.1(A) through
8.1(D) and 8.3, which certificate shall be in the form of EXHIBIT F and which
shall include a certification by an Authorized Representative that the Borrower
and the Subsidiaries are (x) current with all trade payables, except trade
payables contested in good faith in the ordinary course of business, and (y) in
full compliance with the established sublimits and terms of the Letters of
Credit issued pursuant this Agreement;
(b) as soon as practical and in any event within 45 days after the end
of each fiscal quarter (except the last fiscal quarter of the Fiscal Year),
deliver to the Lender (i) a consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such fiscal quarter, and the related consolidated
statements of income, stockholders' equity and cash flows for such fiscal
quarter and for the period from the beginning of the then current Fiscal Year
through the end of such reporting period, and accompanied by a certificate of an
Authorized Representative to the effect that such financial statements present
fairly the financial position of the Borrower and its Subsidiaries as of the end
of such fiscal period and the results of their operations and the changes in
their financial position for such fiscal period, in conformity with the
standards set forth in SECTION 6.6(A) with respect to interim financial
statements, and (ii) a certificate of an Authorized Representative containing
computations for such quarter comparable to that required pursuant to SECTION
7.1(A)(II);
(c) together with each delivery of the financial statements required by
SECTION 7.1(A)(I), deliver to the Lender a letter from the Borrower's
accountants specified in SECTION 7.1(A)(I) stating that in performing the audit
necessary to render an opinion on the financial statements delivered under
SECTION 7.1(a)(I), they obtained no knowledge of any Default or Event of Default
by the Borrower in the fulfillment of the terms and provisions of this Agreement
insofar as they relate to financial matters (which at the date of such statement
remains uncured); or if the accountants have obtained knowledge of such Default
or Event of Default, a statement specifying the nature and period of existence
thereof;
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(d) promptly upon their becoming available to the Borrower, the
Borrower shall deliver to the Lender a copy of (i) all regular or special
reports or effective registration statements which Borrower or any Subsidiary
shall file with the Securities and Exchange Commission (or any successor
thereto) or any securities exchange, (ii) any proxy statement distributed by the
Borrower or any Subsidiary to its shareholders, bondholders or the financial
community in general, and (iii) any management letter or other report submitted
to the Borrower or any Subsidiary by independent accountants in connection with
any annual, interim or special audit of the Borrower or any Subsidiary;
(e) as soon as practicable and in any event within 45 days following
the end of each of the first three fiscal quarters and within ninety (90) days
following each fiscal year end, deliver to the Lender an accounts receivable
aging report in form and detail substantially similar to that furnished to the
Lender prior to the Closing Date; and
(f) promptly, from time to time, deliver or cause to be delivered to
the Lender such other information regarding Borrower's and any Subsidiary's
operations, business affairs and financial condition as the Lender may
reasonably request;
The Lender is hereby authorized to deliver a copy of any such financial
or other information delivered hereunder to the Lender (or any affiliate of the
Lender), to any Governmental Authority having jurisdiction over the Lender
pursuant to any written request therefor or in the ordinary course of
examination of loan files, or to any other Person who shall acquire or consider
the assignment of, or acquisition of any participation interest in, any
Obligation permitted by this Agreement.
7.2 MAINTAIN PROPERTIES. Maintain all properties necessary to its
operations in good working order and condition, make all needed repairs,
replacements and renewals to such properties, and maintain free from Liens all
Material Contracts, trademarks, trade names, patents, copyrights, trade secrets,
know-how, and other intellectual property and proprietary information (or
adequate licenses thereto), in each case as are reasonably necessary to conduct
its business as currently conducted or as contemplated hereby, all in accordance
with customary and prudent business practices.
7.3 EXISTENCE, QUALIFICATION, ETC. Except as otherwise expressly
permitted under SECTION 8.8, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material rights
and franchises, and maintain its license or qualification to do business as a
foreign corporation and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary.
7.4 REGULATIONS AND TAXES. Comply in all material respects with or
contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien against any of its
properties except liabilities being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves acceptable
to the Borrower's independent certified public accountants have been established
unless and until any Lien resulting therefrom attaches to any of its property
and becomes enforceable against its creditors.
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7.5 INSURANCE. (a) Keep all of its insurable properties adequately
insured at all times with responsible insurance carriers against loss or damage
by fire and other hazards to the extent and in the manner as are customarily
insured against by similar businesses owning such properties similarly situated,
(b) maintain general public liability insurance at all times with responsible
insurance carriers against liability on account of damage to persons and
property and (c) maintain insurance under all applicable workers' compensation
laws (or in the alternative, maintain required reserves if self-insured for
workers' compensation purposes) and against loss by reason by business
interruption such policies of insurance to have such limits, deductibles,
exclusions, co-insurance and other provisions providing no less coverages than
are maintained by similar businesses that are similarly situated, such insurance
policies to be in form reasonably satisfactory to the Lender.
7.6 TRUE BOOKS. Keep true books of record and account in which full,
true and correct entries will be made of all of its dealings and transactions,
and set up on its books such reserves as may be required by GAAP with respect to
doubtful accounts and all taxes, assessments, charges, levies and claims and
with respect to its business in general, and include such reserves in interim as
well as year-end financial statements.
7.7 RIGHT OF INSPECTION. Permit any Person designated by the Lender to
visit and inspect any of the properties, corporate books and financial reports
of the Borrower or any Subsidiary and to discuss its affairs, finances and
accounts with its principal officers and independent certified public
accountants, all at reasonable times, at reasonable intervals and with
reasonable prior notice.
7.8 OBSERVE ALL LAWS. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of any
Governmental Authority with respect to the conduct of its business.
7.9 GOVERNMENTAL LICENSES. Obtain and maintain all licenses, permits,
certifications and approvals of all applicable Governmental Authorities as are
required for the conduct of its business as currently conducted and as
contemplated by the Loan Documents.
7.10 COVENANTS EXTENDING TO OTHER PERSONS. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each of
the things required of the Borrower in SECTIONS 7.2 through 7.9, and 7.18
inclusive.
7.11 OFFICER'S KNOWLEDGE OF DEFAULT. Upon any officer of the Borrower
obtaining knowledge of any Default or Event of Default hereunder or under any
other obligation of the Borrower or any Subsidiary cause such officer or an
Authorized Representative to promptly notify the Lender of the nature thereof,
the period of existence thereof, and what action the Borrower or such Subsidiary
proposes to take with respect thereto.
7.12 SUITS OR OTHER PROCEEDINGS. Upon any officer of the Borrower
obtaining knowledge of any litigation or other proceedings being instituted
against the Borrower or any Subsidiary, or any attachment, levy, execution or
other process being instituted against any assets of the Borrower or any
Subsidiary, making a claim or claims in an aggregate amount greater than
$1,000,000 not
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otherwise covered by insurance, promptly deliver to the Lender written notice
thereof stating the nature and status of such litigation, dispute, proceeding,
levy, execution or other process.
7.13 NOTICE OF DISCHARGE OF HAZARDOUS MATERIAL OR ENVIRONMENTAL
COMPLAINT. Promptly provide to the Lender true, accurate and complete copies of
any and all notices, complaints, orders, directives, claims, or citations
received by the Borrower or any Subsidiary relating to any (a) violation or
alleged violation by the Borrower or any Subsidiary of any applicable
Environmental Law; (b) release or threatened release by the Borrower or any
Subsidiary, or at any facility or property owned or leased or operated by the
Borrower or any Subsidiary, of any Hazardous Material, except where occurring
legally; or (c) liability or alleged liability of the Borrower or any Subsidiary
for the costs of cleaning up, removing, remediating or responding to a release
of Hazardous Materials where, in any of the foregoing events, the aggregate
amount at any time involved exceeds $1,000,000.
7.14 ENVIRONMENTAL COMPLIANCE. If the Borrower or any Subsidiary shall
receive any letter, notice, complaint, order, directive, claim or citation
alleging that the Borrower or any Subsidiary has violated any Environmental Law
or is liable for the costs of cleaning up, removing, remediating or responding
to a release of Hazardous Materials, the Borrower shall, within the time period
permitted by the applicable Environmental Law or the Governmental Authority
responsible for enforcing such Environmental Law, remove or remedy, or cause the
applicable Subsidiary to remove or remedy, such violation or release or satisfy
such liability unless and only during the period that the applicability of the
Environmental Law, the fact of such violation or liability or what is required
to remove or remedy such violation is being contested by the Borrower or the
applicable Subsidiary by appropriate proceedings diligently conducted and all
reserves with respect thereto as may be required under Generally Accepted
Accounting Principles, if any, have been made, and no Lien in connection
therewith shall have attached to any property of the Borrower or the applicable
Subsidiary which shall have become enforceable against creditors of such Person.
7.15 INDEMNIFICATION. Without limiting the generality of SECTION 10.9,
the Borrower hereby agrees to indemnify and hold the Lender and its officers,
directors, employees and agents, harmless from and against any and all claims,
losses, penalties, liabilities, damages and expenses (including assessment and
cleanup costs and reasonable attorneys' fees and disbursements) arising directly
or indirectly from, out of or by reason of (a) the violation of any
Environmental Law by the Borrower or any Subsidiary or with respect to any
property owned, operated or leased by the Borrower or any Subsidiary or (b) the
handling, storage, treatment, emission or disposal of any Hazardous Materials by
or on behalf of the Borrower or any Subsidiary or on or with respect to property
owned or leased or operated by the Borrower or any Subsidiary. The provisions of
this SECTION 7.15 shall survive the Facility Termination Date and expiration or
termination of this Agreement.
7.16 FURTHER ASSURANCES. At the Borrower's cost and expense, upon
request of the Lender, duly execute and deliver or cause to be duly executed and
delivered, to the Lender such further instruments, documents, certificates,
financing and continuation statements, and do and cause to be done such further
acts that may be reasonably necessary or advisable in the reasonable opinion of
the Lender to carry out more effectively the provisions and purposes of this
Agreement and the other Loan Documents.
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7.17 EMPLOYEE BENEFIT PLANS. (a) With reasonable promptness, and in any
event within thirty (30) days thereof, give notice to the Lender of (a) the
establishment of any new Pension Plan (which notice shall include a copy of such
plan), (b) the commencement of contributions to any Employee Benefit Plan to
which the Borrower or any of its ERISA Affiliates was not previously
contributing, (c) any material increase in the benefits of any existing Employee
Benefit Plan, (d) each funding waiver request filed with respect to any Employee
Benefit Plan and all communications received or sent by the Borrower or any
ERISA Affiliate with respect to such request and (e) the failure of the Borrower
or any ERISA Affiliate to make a required installment or payment under Section
302 of ERISA or Section 412 of the Code by the due date; and
(b) Promptly and in any event within thirty (30) days of becoming aware
of the occurrence or forthcoming occurrence of any (a) Termination Event or (b)
nonexempt "prohibited transaction," as such term is defined in Section 406 of
ERISA or Section 4975 of the Code, in connection with any Pension Plan or any
trust created thereunder, deliver to the Lender a notice specifying the nature
thereof, what action the Borrower or any ERISA Affiliate has taken, is taking or
proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor or the PBGC
with respect thereto.
7.18 CONTINUED OPERATIONS. Continue at all times to conduct its
business and engage principally in the same line or lines of business
substantially as heretofore conducted.
7.19 NEW SUBSIDIARIES. In the event of the acquisition or creation of
any Subsidiary, cause to be delivered to the Lender each of the following within
sixty (60) days of the acquisition or creation of such Subsidiary.
(a) a Facility Guaranty executed by such Subsidiary
substantially in the form of EXHIBIT G;
(b) an opinion of counsel to the Subsidiary dated as of the
date of delivery of the Facility Guaranty provided for in this SECTION
7.19 and addressed to the Lender, in form and substance reasonably
acceptable to the Lender (which opinion may include assumptions and
qualifications of similar effect to those contained in the opinions of
counsel delivered pursuant to SECTION 5.1(a)), to the effect that:
(A) such Subsidiary is duly organized, validly
existing and in good standing in the jurisdiction of its
formation, has the requisite power and authority to own its
properties and conduct its business as then owned and then
conducted and proposed to be conducted, and is duly qualified
to transact business and is in good standing as a foreign
corporation or partnership in each other jurisdiction in which
the character of the properties owned or leased, or the
business carried on by it, requires such qualification and the
failure to be so qualified would reasonably be likely to
result in a Material Adverse Effect; and
(B) the execution, delivery and performance of the
Facility Guaranty described in this SECTION 7.19 to which such
Subsidiary is a signatory have been duly
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authorized by all requisite corporate or partnership action
(including any required shareholder or partner approval), such
agreement has been duly executed and delivered and constitutes
the valid and binding agreement of such Subsidiary,
enforceable against such Subsidiary in accordance with its
terms, subject to the effect of any applicable bankruptcy,
moratorium, insolvency, reorganization or other similar law
affecting the enforceability of creditors' rights generally
and to the effect of general principles of equity (whether
considered in a proceeding at law or in equity);
(c) current copies of the charter documents, including
partnership agreements and certificate of limited partnership, if
applicable, and bylaws of such Subsidiary, minutes of duly called and
conducted meetings (or duly effected consent actions) of the Board of
Directors, partners, or appropriate committees thereof (and, if
required by such charter documents, bylaws or by applicable law, of the
shareholders) of such Subsidiary authorizing the actions and the
execution and delivery of documents described in this SECTION 7.19.
7.20 YEAR 2000 COMPLIANCE. The Borrower will promptly notify the Lender
in the event the Borrower discovers or determines that any computer application
(including those affected by information received from its suppliers and
vendors) that is material to its or any of its Subsidiaries' business and
operations will not be Year 2000 Compliant by not later than September 30, 1999,
except to the extent that such failure could not reasonably be expected to have
a Material Adverse Effect.
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ARTICLE VIII
NEGATIVE COVENANTS
Until the Obligations have been paid and satisfied in full, no Letters
of Credit remain outstanding and this Agreement has been terminated in
accordance with the terms hereof, unless the Lender shall otherwise consent in
writing, the Borrower will not, nor will it permit any Subsidiary to:
8.1 FINANCIAL COVENANTS.
(a) CONSOLIDATED TANGIBLE NET WORTH. Permit at any time its
Consolidated Tangible Net Worth to be less than $61,000,000;
(b) CONSOLIDATED FUNDED INDEBTEDNESS TO CONSOLIDATED
CAPITALIZATION. Permit at any time the ratio of Consolidated Funded
Indebtedness to Consolidated Capitalization to be equal to or greater
than .55 to 1.00;
(c) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Permit the
Consolidated Fixed Charge Coverage Ratio to be at any time less than
1.35 to 1.00.
8.2 ACQUISITIONS. Enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or take any
action to solicit the tender of securities or proxies in respect thereof in
order to effect any Acquisition, unless (i) the Person to be (or whose assets
are to be) acquired does not oppose such Acquisition and the line or lines of
business of the Person to be acquired are substantially the same as one or more
line or lines of business conducted by the Borrower and its Subsidiaries, (ii)
no Default or Event of Default shall have occurred and be continuing either
immediately prior to or immediately after giving effect to such Acquisition and
the Borrower shall have furnished to the Lender (A) pro forma historical
financial statements as of the end of the most recently completed Fiscal Year of
the Borrower giving effect to such Acquisition and (B) a certificate in the form
of EXHIBIT G prepared on a historical pro forma basis giving effect to such
Acquisition, which certificate shall demonstrate that no Default or Event of
Default would exist immediately after giving effect thereto, (iii) the Person
acquired shall be a wholly-owned Subsidiary, or be merged into the Borrower or a
wholly-owned Subsidiary, immediately upon consummation of the Acquisition (or if
assets are being acquired, the acquiror shall be the Borrower or a wholly-owned
Subsidiary), and (iv) the cost of acquisition shall not exceed $25,000,000.
8.3 CAPITAL EXPENDITURES. Make or become committed to make Capital
Expenditures, excluding Costs of Acquisitions, which exceed in the aggregate in
any Fiscal Year of the Borrower $6,000,000 (on a noncumulative basis, with the
effect that amounts not expended in any Fiscal Year may not be carried forward
to a subsequent period).
8.4 LIENS. Incur, create or permit to exist any Lien, charge or other
encumbrance of any nature whatsoever with respect to any property or assets now
owned or hereafter acquired by the Borrower or any Subsidiary, other than
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(a) Liens existing as of the date hereof and as set forth in
SCHEDULE 6.7;
(b) Liens imposed by law for taxes, assessments or charges of
any Governmental Authority for claims not yet due or which are being
contested in good faith by appropriate proceedings diligently conducted
and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP and which Liens
are not yet enforceable against other creditors;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than
90 days from the date of creation thereof for amounts not yet due or
which are being contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
GAAP and which Liens are not yet enforceable against other creditors;
(d) Liens incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds)
in connection with workers' compensation, unemployment insurance and
other types of social security benefits or to secure the performance of
tenders, bids, leases, contracts (other than for the repayment of
Indebtedness), statutory obligations and other similar obligations or
arising as a result of progress payments under government contracts;
(e) easements (including reciprocal easement agreements and
utility agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and zoning and other restrictions, charges or
encumbrances (whether or not recorded), which do not interfere
materially with the ordinary conduct of the business of the Borrower or
any Subsidiary and which do not materially detract from the value of
the property to which they attach or materially impair the use thereof
to the Borrower or any Subsidiary;
(f) purchase money Liens to secure Indebtedness permitted
under SECTION 8.5(d) and incurred to purchase fixed assets, provided
such Indebtedness represents not less than 75% of the purchase price of
such assets as of the date of purchase thereof and no property other
than the assets so purchased secures such Indebtedness; and
(g) Liens arising in connection with Capital Leases permitted
under SECTION 8.5(d); provided that no such Lien shall extend to any
Collateral or to any other property other than the assets subject to
such Capital Leases.
8.5 INDEBTEDNESS. Incur, create, assume or permit to exist any
Indebtedness, howsoever evidenced, except:
(a) Indebtedness existing as of the Closing Date as set forth
in SCHEDULE 6.6; PROVIDED, none of the instruments and agreements
evidencing or governing such Indebtedness shall be amended, modified or
supplemented after the Closing Date to change any terms of
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subordination, repayment or rights of conversion, put, exchange or
other rights from such terms and rights as in effect on the Closing
Date;
(b) Indebtedness owing to the Lender in connection with this
Agreement, the Note or other Loan Document;
(c) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(d) purchase money Indebtedness of the Borrower or a Guarantor
described in SECTION 8.4(F) and Indebtedness arising from Capital
Leases entered into by the Borrower or a Guarantor described in SECTION
8.4(G), collectively not to exceed an aggregate outstanding amount at
any time of $5,000,000;
(e) unsecured intercompany Indebtedness for loans and advances
made by the Borrower or any Guarantor to the Borrower or any Guarantor,
provided that such intercompany Indebtedness is evidenced by a
promissory note or similar written instrument acceptable to the Lender
which provides that such Indebtedness is subordinated to obligations,
liabilities and undertakings of the holder or owner thereof under the
Loan Documents on terms acceptable to the Lender;
(f) trade credit from vendors incurred in the ordinary course
of business and the guaranty of the same by the Borrower in the case of
trade credit of Subsidiaries and the bonding thereof;
(g) loans made by the Borrower to the Petro Sur-World Fuel
joint-venture in Ecuador in an amount not to exceed in the aggregate
$2,000,000;
(h) insurance notes payable;
(i) any installment note or capitalized leases assumed through
a permitted Acquisition which by virtue of its terms contains a
prepayment fee;
(j) Indebtedness arising from Rate Hedging Obligations
(provided that such Indebtedness is incurred to limit risks of currency
or interest rate fluctuations to which the Borrower and its
Subsidiaries are otherwise subject by virtue of the operations of their
business, and not for speculative purposes) of the Borrower and its
Subsidiaries in an aggregate notional, in the case of currency and
interest rate obligations and speculative fuel transaction, amount not
to exceed $10,000,000 at any time; provided, however, that the Borrower
and its Subsidiaries may enter into non-speculative fuel hedging
transactions without limitation;
(k) Indebtedness of the Borrower, as guarantor, and WFI and
TTI as borrowers, under the WFI/TTI Credit Agreement; and
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(l) Indebtedness extending the maturity of, or renewing,
refunding or refinancing, in whole or in part, Indebtedness incurred
under clauses (a) and (d) of this SECTION 8.5, provided that the terms
of any such extension, renewal, refunding or refinancing Indebtedness
(and of any agreement or instrument entered into in connection
therewith) are no less favorable to the Lender than the terms of the
Indebtedness as in effect prior to such action, and provided further
that (1) the aggregate principal amount of such extended, renewed,
refunded or refinanced Indebtedness shall not be increased by such
action, (2) the group of direct or contingent obligors on such
Indebtedness shall not be expanded as a result of any such action, and
(3) immediately before and immediately after giving effect to any such
extension, renewal, refunding or refinancing, no Default or Event of
Default shall have occurred and be continuing; PROVIDED, the Borrower
shall not permit WFI or TTI to incur, create, assume or permit to exist
any Indebtedness, howsoever evidenced, other than (i) to the Lender,
(ii) trade credit to customers incurred in the ordinary course of
business, and (iii) additional Indebtedness permitted under the WFI/TTI
Credit Agreement, and PROVIDED, further that the incurring of any such
Indebtedness does not cause, create or result in the occurrence or
continuation of a Default or Event of Default hereunder.
8.6 TRANSFER OF ASSETS. Sell, lease, transfer or otherwise dispose of
any assets of Borrower or any Subsidiary other than (a) dispositions of assets
in the ordinary course of business, (b) dispositions of property that is
substantially worn, damaged, obsolete or, in the judgment of the Borrower, no
longer best used or useful in its business or that of any Subsidiary, and (c)
transfers of assets necessary to give effect to merger or consolidation
transactions permitted by SECTION 8.8, and (d) the disposition of Eligible
Securities in the ordinary course of management of the investment portfolio of
the Borrower and its Subsidiaries.
8.7 INVESTMENTS. Purchase, own, invest in or otherwise acquire,
directly or indirectly, any stock or other securities, or make or permit to
exist any interest whatsoever in any other Person or permit to exist any loans
or advances to any Person, except that Borrower may maintain investments or
invest in:
(a) securities of any Person acquired in an Acquisition
permitted hereunder;
(b) Eligible Securities;
(c) investments existing as of the date hereof and as set
forth in SCHEDULE 6.4;
(d) accounts receivable arising and trade credit granted in
the ordinary course of business and any securities received in
satisfaction or partial satisfaction thereof in connection with
accounts of financially troubled Persons to the extent reasonably
necessary in order to prevent or limit loss;
(e) investments in Subsidiaries which are Guarantors;
(f) loans made by the Borrower to the Petro Sur-World Fuel
joint-venture described in SECTION 8.5(g);
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(g) loans between the Borrower and the Guarantors described in
SECTION 8.5(e); and
(h) loans or investments in or to a joint venture of which the
Borrower or a Subsidiary is a party, so long as the aggregate amount of
such loans or investments do not exceed 5% of Consolidated Tangible Net
Worth.
8.8 MERGER OR CONSOLIDATION. (a) Consolidate with or merge into any
other Person, or (b) permit any other Person to merge into it, or (c) liquidate,
wind-up or dissolve or sell, transfer or lease or otherwise dispose of all or a
substantial part of its assets (other than sales permitted under SECTION 8.6(a),
(b) AND (d)); PROVIDED, HOWEVER, (i) any Subsidiary of the Borrower may merge or
transfer all or substantially all of its assets into or consolidate with the
Borrower or any Guarantor, and (ii) any other Person may merge into or
consolidate with the Borrower or any Guarantor and any Subsidiary may merge into
or consolidate with any other Person in order to consummate an Acquisition
permitted by SECTION 8.2, PROVIDED FURTHER, that any resulting or surviving
entity shall execute and deliver such agreements and other documents, including
a Facility Guaranty, and take such other action as the Lender may require to
evidence or confirm its express assumption of the obligations and liabilities of
its predecessor entities under the Loan Documents.
8.9 RESTRICTED PAYMENTS. Make any Restricted Payment or apply or set
apart any of their assets therefor or agree to do any of the foregoing; PROVIDED
HOWEVER, the Borrower may (a) issue stock as a dividend up to 10% of total
outstanding shares immediately prior to such dividend; (b) declare and pay cash
dividends on outstanding shares of any class of its capital stock provided that
the aggregate amount of such dividends declared or paid during any Four-Quarter
Period shall not exceed 25% of Consolidated Net Income for such Four-Quarter
Period; and (c) repurchase for an aggregate purchase price not to exceed
$6,000,000 shares of its Voting Stock from Persons which are not Affiliates or
directors, officers or employees of the Borrower or its Subsidiaries, so long as
prior to such actions described in (a) or (b) or (c) above and after giving
effect thereto, the Borrower is in compliance with all terms, conditions,
covenants, and representations and warranties in the Agreement, and prior to
such actions defined in (a) and (b) and (c) above and after giving effect
thereto, no Default or Event of Default has or will occur.
8.10 TRANSACTIONS WITH AFFILIATES. Other than transactions permitted
under SECTIONS 8.7 and 8.8, enter into any transaction after the Closing Date,
including, without limitation, the purchase, sale, lease or exchange of
property, real or personal, or the rendering of any service, with any Affiliate
of the Borrower, except (a) that such Persons may render services to the
Borrower or its Subsidiaries for compensation at the same rates generally paid
by Persons engaged in the same or similar businesses for the same or similar
services, (b) that the Borrower or any Subsidiary may render services to such
Persons for compensation at the same rates generally charged by the Borrower or
such Subsidiary and (c) in either case in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's (or any Subsidiary's)
business consistent with past practice of the Borrower and its Subsidiaries and
upon fair and reasonable terms no less favorable to the Borrower (or any
Subsidiary) than would be obtained in a comparable arm's-length transaction with
a Person not an Affiliate.
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8.11 COMPLIANCE WITH ERISA. With respect to any Pension Plan, Employee
Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which would
result in a liability on the part of the Borrower or any ERISA
Affiliate to the PBGC; or
(b) permit the present value of all benefit liabilities under
all Pension Plans to exceed the current value of the assets of such
Pension Plans allocable to such benefit liabilities; or
(c) permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) with respect to any
Pension Plan, whether or not waived; or
(d) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto; or
(e) engage, or permit any Borrower or any ERISA Affiliate to
engage, in any prohibited transaction under Section 406 of ERISA or
Sections 4975 of the Code for which a civil penalty pursuant to Section
502(I) of ERISA or a tax pursuant to Section 4975 of the Code may be
imposed; or
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in
liability to the Borrower or any ERISA Affiliate or increase the
obligation of the Borrower or any ERISA Affiliate to a Multiemployer
Plan; or
(g) fail, or permit the Borrower or any ERISA Affiliate to
fail, to establish, maintain and operate each Employee Benefit Plan in
compliance in all material respects with the provisions of ERISA, the
Code, all applicable Foreign Benefit Laws and all other applicable laws
and the regulations and interpretations thereof.
8.12 FISCAL YEAR. Change its Fiscal Year.
8.13 DISSOLUTION, ETC. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to SECTION 8.8.
8.14 NEGATIVE PLEDGE CLAUSES. Enter into or cause, suffer or permit to
exist any agreement with any Person other than the Lender pursuant to this
Agreement or any other Loan Documents which prohibits or limits the ability of
any of the Borrower or any Subsidiary to create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, PROVIDED that the Borrower and any Subsidiary may enter
into such an agreement
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in connection with property subject to any Lien permitted by this Agreement and
not released after the date hereof, when such prohibition or limitation is by
its terms effective only against the assets subject to such Lien.
8.15 PARTNERSHIPS. Become a general partner in any general or limited
partnership except a partnership which complies with the provisions of SECTION
8.07(h).
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ARTICLE IX
EVENTS OF DEFAULT AND ACCELERATION
9.1. EVENTS OF DEFAULT. (A) If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:
(a) if default shall be made in the due and punctual payment of the
principal of any Loan, Reimbursement Obligation or other Obligation,
when and as the same shall be due and payable whether pursuant to any
provision of ARTICLE II or ARTICLE III, at maturity, by acceleration
or otherwise; or
(b) if default shall be made in the due and punctual payment of any
amount of interest on any Loan, Reimbursement Obligation or other
Obligation or of any fees or other amounts payable to the Lender on
the date on which the same shall be due and payable; or
(c) if default shall be made in the performance or observance of
any covenant set forth in SECTION 7.7, 7.11, 7.12, 7.19 or ARTICLE
VIII;
(d) if a default shall be made in the performance or observance of,
or shall occur under, any covenant, agreement or provision contained
in this Agreement or the Note (other than as described in clauses (a),
(b) or (c) above) and such default shall continue for 30 or more days
after the earlier of receipt of notice of such default by the
Authorized Representative from the Lender or an Authorized
Representative of the Borrower has actual knowledge of such default,
or if a default shall be made in the performance or observance of, or
shall occur under, any covenant, agreement or provision contained in
any of the other Loan Documents (beyond any applicable grace period,
if any, contained therein) or in any instrument or document evidencing
or creating any obligation, guaranty, or Lien in favor of the Lender
or delivered to the Lender in connection with or pursuant to this
Agreement or any of the Obligations, or if any Loan Document ceases to
be in full force and effect (other than by reason of any action by the
Lender), or if without the written consent of the Lender, this
Agreement or any other Loan Document shall be disaffirmed or shall
terminate, be terminable or be terminated or become void or
unenforceable for any reason whatsoever (other than in accordance with
its terms in the absence of default or by reason of any action by the
Lender); or
(e) if there shall occur (i) a default, which is not waived, in the
payment of any principal, interest, premium or other amount with
respect to any Indebtedness or Rate Hedging Obligations (other than
the Loans and other Obligations) of the Borrower or any Subsidiary in
an amount not less than $1,000,000 in the aggregate outstanding, or
(ii) a default, which is not waived, in the performance, observance or
fulfillment of any term or covenant contained in any agreement or
instrument under or pursuant to which any such
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Indebtedness or Rate Hedging Obligation may have been issued,
created, assumed, guaranteed or secured by the Borrower or any
Subsidiary, or (iii) any other event of default as specified in any
agreement or instrument under or pursuant to which any such
Indebtedness or Rate Hedging Obligation may have been issued, created,
assumed, guaranteed or secured by the Borrower or any Subsidiary, and
such default or event of default shall continue for more than the
period of grace, if any, therein specified, or such default or event
of default shall permit the holder of any such Indebtedness (or any
agent or trustee acting on behalf of one or more holders) to
accelerate the maturity thereof; or
(f) if any representation, warranty or other statement of fact
contained in any Loan Document or in any writing, certificate, report
or statement at any time furnished to the Lender by or on behalf of
the Borrower or any other Credit Party pursuant to or in connection
with any Loan Document, or otherwise, shall be false or misleading in
any material respect when given; or
(g) if the Borrower or any Subsidiary or other Credit Party shall
be unable to pay its debts generally as they become due; file a
petition to take advantage of any insolvency statute; make an
assignment for the benefit of its creditors; commence a proceeding for
the appointment of a receiver, trustee, liquidator or conservator of
itself or of the whole or any substantial part of its property; file a
petition or answer seeking liquidation, reorganization or arrangement
or similar relief under the federal bankruptcy laws or any other
applicable law or statute; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of the Borrower or any Subsidiary or of the
whole or any substantial part of its properties and such order,
judgment or decree continues unstayed and in effect for a period of
sixty (60) days, or approve a petition filed against the Borrower or
any Subsidiary seeking liquidation, reorganization or arrangement or
similar relief under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any
state, which petition is not dismissed within sixty (60) days; or if,
under the provisions of any other law for the relief or aid of
debtors, a court of competent jurisdiction shall assume custody or
control of the Borrower or any Subsidiary or of the whole or any
substantial part of its properties, which control is not relinquished
within sixty (60) days; or if there is commenced against the Borrower
or any Subsidiary any proceeding or petition seeking reorganization,
arrangement or similar relief under the federal bankruptcy laws or any
other applicable law or statute of the United States of America or any
state which proceeding or petition remains undismissed for a period of
sixty (60) days; or if the Borrower or any Subsidiary takes any action
to indicate its consent to or approval of any such proceeding or
petition; or
(i) if (i) one or more final judgments or orders where the amount
not covered by insurance (or the amount as to which the insurer denies
liability) is in excess of $1,000,000 is rendered against the Borrower
or any Subsidiary, or (ii) there is any attachment, injunction or
execution against any of the Borrower's or Subsidiaries' properties
for any amount in excess of $1,000,000 in the aggregate; and such
judgment, attachment, injunction or
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execution remains unpaid, unstayed, undischarged, unbonded or
undismissed for a period of thirty (30) days; or
(j) if the Borrower or any Subsidiary shall, other than in the
ordinary course of business (as determined by past practices), or,
except as specifically permitted by this Agreement, suspend all or any
part of its operations material to the conduct of the business of the
Borrower or such Subsidiary for a period of more than 60 days;
(k) if there shall occur a Change in Control in the Borrower; or
(l) if there shall occur and not be waived an Event of Default as
defined in any of the other Loan Documents; or
(m) if there shall occur and not be waived an Event of Default as
defined in the WFI/TTI Credit Agreement;
(B) then, and in any such event and at any time thereafter, if such
Event of Default or any other Event of Default shall have not been waived,
(a) either or both of the following actions may be taken: (i) the
Lender may declare any obligation of the Lender and the Issuing Bank
to make further Loans or to issue additional Letters of Credit
terminated, whereupon the obligation of the Lender to make further
Loans and of the Issuing Bank to issue additional Letters of Credit,
hereunder shall terminate immediately, and (ii) the Lender, at its
option, declare by notice to the Borrower any or all of the
Obligations to be immediately due and payable, and the same, including
all interest accrued thereon and all other obligations of the Borrower
to the Lender, shall forthwith become immediately due and payable
without presentment, demand, protest, notice or other formality of any
kind, all of which are hereby expressly waived, anything contained
herein or in any instrument evidencing the Obligations to the contrary
notwithstanding; PROVIDED, however, that notwithstanding the above, if
there shall occur an Event of Default under clause (g) or (h) above,
then the obligation of the Lender to make Loans and of the Issuing
Bank to issue Letters of Credit hereunder shall automatically
terminate and any and all of the Obligations shall be immediately due
and payable without the necessity of any action by the Lender or
notice to the Lender;
(b) the Borrower shall, upon demand of the Lender, deposit cash
with the Issuing Bank in an amount equal to the amount of any Letter
of Credit Outstandings, as collateral security for the repayment of
any future drawings or payments under such Letters of Credit, and such
amounts shall be held by the Issuing Bank pursuant to the terms of the
LC Account Agreement; and
(c) the Lender shall have all of the rights and remedies available
under the Loan Documents or under any applicable law.
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9.2. LENDER TO ACT. In case any one or more Events of Default shall
occur and not have been waived, the Lender may proceed to protect and enforce
its rights or remedies either by suit in equity or by action at law, or both,
whether for the specific performance of any covenant, agreement or other
provision contained herein or in any other Loan Document, or to enforce the
payment of the Obligations or any other legal or equitable right or remedy.
9.3. CUMULATIVE RIGHTS. No right or remedy herein conferred upon the
Lender is intended to be exclusive of any other rights or remedies contained
herein or in any other Loan Document, and every such right or remedy shall be
cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
9.4. NO WAIVER. No course of dealing between the Borrower and the
Lender or any failure or delay on the part of the Lender in exercising any
rights or remedies under any Loan Document or otherwise available to it shall
operate as a waiver of any rights or remedies and no single or partial exercise
of any rights or remedies shall operate as a waiver or preclude the exercise of
any other rights or remedies hereunder or of the same right or remedy on a
future occasion.
9.5. ALLOCATION OF PROCEEDS. If an Event of Default has occurred and
not been waived, and the maturity of the Note has been accelerated pursuant to
ARTICLE IX hereof, all payments received by the Lender hereunder, in respect of
any principal of or interest on the Obligations or any other amounts payable by
the Borrower hereunder, shall be applied by the Lender in the following order:
(a) amounts due to the Lender pursuant to SECTIONS 2.9, 3.3, 3.4
AND 10.5;
(b) payments of interest on Loans and Reimbursement Obligations;
(c) payments of principal of Loans and Reimbursement Obligations;
(d) payments of cash amounts to the Lender in respect of
outstanding Letters of Credit pursuant to SECTION 9.1(B);
(e) amounts due to the Lender pursuant to SECTIONS 3.2(E), 7.15 and
10.9;
(f) payments of all other amounts due under any of the Loan
Documents, if any;
(g) amounts due to any of the Lender in respect of Obligations
consisting of liabilities under any Swap Agreement with the Lender;
and
(h) any surplus remaining after application as provided for herein,
to the Borrower or otherwise as may be required by applicable law.
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ARTICLE X
MISCELLANEOUS
10.1. PARTICIPATIONS. The Lender may sell participations at its expense
to one or more banks or other entities as to all or a portion of its rights and
obligations under this Agreement; PROVIDED, that (i) the Lender's obligations
under this Agreement shall remain unchanged, (ii) the Lender shall remain solely
responsible to the Borrower for the performance of such obligations, (iii) the
Lender shall remain the holder of any Note issued to it for the purpose of this
Agreement, (iv) such participations shall be in a minimum amount of $1,000,000
and, if greater, an amount which is an integral multiple of $1,000,000, (v) the
Borrower shall continue to deal solely and directly with the Lender in
connection with the Lender's rights and obligations under this Agreement and
with regard to any and all payments to be made under this Agreement; PROVIDED,
that the participation agreement between the Lender and its participants may
provide that the Lender will obtain the approval of such participant prior to
the Lender's agreeing to any amendment or waiver of any provisions of any Loan
Document which would (A) extend the maturity of the Note, (B) reduce the
interest rates hereunder or (C) increase the Revolving Credit Commitment or
Letter of Credit Commitment, and (vi) the sale of any such participations which
require Borrower to file a registration statement with the United States
Securities and Exchange Commission or under the securities regulations or laws
of any state shall not be permitted.
10.2. NOTICES. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of receipt at such address, telefacsimile
number or telex number as may from time to time be specified by such party in
written notice to the other parties hereto or otherwise received), in the case
of notice by telegram, telefacsimile or telex, respectively (where the receipt
of such message is verified by return), or (iii) on the fifth Business Day after
the day on which mailed, if sent prepaid by certified or registered mail, return
receipt requested, in each case delivered, transmitted or mailed, as the case
may be, to the address, telex number or telefacsimile number, as appropriate,
set forth below or such other address or number as such party shall specify by
notice hereunder:
(a) if to the Borrower:
World Fuel Services Corporation
700 South Royal Poinciana Blvd.
Suite 800
Miami Springs, Florida 33166
Attn: Chief Financial Officer
Telephone: (305) 884-2001
Telefacsimile: (305) 883-0186
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(b) if to the Lender:
NationsBank, N.A.
101 North Tryon Street
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Corporate Credit Support
Telephone: (704) 388-1112
Telefacsimile: (704) 386-8694
(c) if to any Guarantor, at the address set forth in SECTION 14 of
the Facility Guaranty executed by such Guarantor.
10.3. SETOFF. From and after the occurrence of a Default or an Event of
Default the Lender may set off the obligations and liabilities of Borrower
against any and all monies then owed by the Lender to the Borrower in any
capacity whatsoever whether or not then due and the Lender shall be deemed to
have exercised its right to set off immediately at the time its right to elect
such set off accrues even though no charge is made or entered on the books of
the Lender at that time and the same is made subsequent thereto; the Lender may
proceed against the Borrower's bank account(s), certificates of deposit or any
other investments and the Subsidiary's bank account(s) and certificates of
deposit or any other investments. For the purposes of this paragraph, all
remittances and property shall be deemed to be in the possession of the Lender
as soon as the same may be put in transit to it by mail or carrier or by other
bailee.
10.4. SURVIVAL. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lender of the Loans and
the issuance of the Letters of Credit and the execution and delivery to the
Lender of this Agreement and the Notes and shall continue in full force and
effect so long as any of Obligations remain outstanding or the Lender has any
commitment hereunder or the Borrower has continuing obligations hereunder unless
otherwise provided herein. Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the successors and
permitted assigns of such party and all covenants, provisions and agreements by
or on behalf of the Borrower which are contained in the Loan Documents shall
inure to the benefit of the successors and permitted assigns of the Lender.
10.5. EXPENSES. The Borrower agrees (a) to pay or reimburse the Lender
for all its reasonable out-of-pocket costs and expenses incurred in connection
with the preparation, negotiation and execution of, and any amendment,
supplement or modification to, any of the Loan Documents (including due
diligence expenses and travel expenses relating to closing), and the
consummation of the transactions contemplated thereby, including the reasonable
fees, which shall not exceed $20,000 (including legal fees incurred in
connection with the WFI/TTI Credit Agreement), and disbursements of counsel to
the Lender, (b) to pay or reimburse the Lender for all of its costs and expenses
incurred in connection with the enforcement or preservation of any rights under
the Loan Documents, including the reasonable fees and disbursements of their
counsel and any payments in indemnification or otherwise payable by the Lender
pursuant to the Loan Documents, and (c) to pay, indemnify and hold the Lender
harmless from any and all recording and filing fees and any and all liabilities
with
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respect to, or resulting from any failure to pay or delay in paying,
documentary, stamp, excise and other similar taxes, if any, which may be payable
or determined to be payable in connection with the execution and delivery of any
of the Loan Documents, or consummation of any amendment, supplement or
modification of, or any waiver or consent under or in respect of, any Loan
Document.
10.6. AMENDMENTS. No amendment, modification or waiver of any provision
of any Loan Document and no consent by the Lender to any departure therefrom by
the Borrower or any other Credit Party shall be effective unless such amendment,
modification or waiver shall be in writing and signed by the Lender, shall have
been approved by the Lender through its written consent, and the same shall then
be effective only for the period and on the conditions and for the specific
instances and purposes specified in such writing. No notice to or demand on the
Borrower in any case shall entitle the Borrower to any other or further notice
or demand in similar or other circumstances, except as otherwise expressly
provided herein. No delay or omission on the Lender's part in exercising any
right, remedy or option shall operate as a waiver of such or any other right,
remedy or option or of any Default or Event of Default.
10.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
10.8. TERMINATION. The termination of this Agreement shall not affect
any rights of the Borrower or the Lender or any obligation of the Borrower or
the Lender, arising prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into or rights created or obligations incurred prior to such termination
have been fully disposed of, concluded or liquidated and the Obligations arising
prior to or after such termination have been irrevocably paid in full. The
rights granted to the Lender under the Loan Documents shall continue in full
force and effect, notwithstanding the termination of this Agreement, until all
of the Obligations have been paid in full after the termination hereof (other
than Obligations in the nature of continuing indemnities or expense
reimbursement obligations not yet due and payable, which shall continue) or the
Borrower has furnished the Lender with an indemnification satisfactory to the
Lender with respect thereto. All representations, warranties, covenants, waivers
and agreements contained herein shall survive termination hereof until payment
in full of the Obligations unless otherwise provided herein. Notwithstanding the
foregoing, if after receipt of any payment of all or any part of the
Obligations, the Lender is for any reason compelled to surrender such payment to
any Person because such payment is determined to be void or voidable as a
preference, impermissible setoff, a diversion of trust funds or for any other
reason, this Agreement shall continue in full force and the Borrower shall be
liable to, and shall indemnify and hold the Lender harmless for, the amount of
such payment surrendered until the Lender shall have been finally and
irrevocably paid in full. The provisions of the foregoing sentence shall be and
remain effective notwithstanding any contrary action which may have been taken
by the Lender in reliance upon such payment, and any such contrary action so
taken shall be without prejudice to the Lender's rights under this Agreement and
shall be deemed to have been conditioned upon such payment having become final
and irrevocable.
63
<PAGE>
10.9. INDEMNIFICATION; LIMITATION OF LIABILITY. In consideration of the
execution and delivery of this Agreement by the Lender and the extension of
credit under the Loans, the Borrower hereby indemnifies, exonerates and holds
the Lender and its affiliates, officers, directors, employees, agents and
advisors (collectively, the "Indemnified Parties") free and harmless from and
against any and all claims, actions, causes of action, suits, losses, costs,
liabilities and damages, and expenses incurred in connection therewith
(irrespective of whether any such Indemnified Party is a party to the action for
which indemnification hereunder is sought), including reasonable attorneys' fees
and disbursements (collectively, the "Indemnified Liabilities") that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of, or in connection with the
execution, delivery, enforcement, performance or administration of this
Agreement and the other Loan Documents, or any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of any
Loan or Letter of Credit, whether or not such action is brought against the
Lender, the shareholders or creditors of the Lender or an Indemnified Party or
an Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated herein are consummated, except to the extent such
claim, damage, loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct, and if and to the
extent that the foregoing undertaking may be unenforceable for any reason, the
Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. The Borrower agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to it,
any of its Subsidiaries, any Credit Party, or any security holders or creditors
thereof arising out of, related to or in connection with the transactions
contemplated herein, except to the extent that such liability is found in a
final non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct;
provided, however, in no event shall any Indemnified Party be liable for
consequential, indirect or special, as opposed to direct, damages.
10.10. SEVERABILITY. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more of
the parties hereto, then such provision shall remain in effect with respect to
all parties, if any, as to whom such provision is neither illegal nor invalid,
and in any event all other provisions hereof shall remain effective and binding
on the parties hereto.
10.11. ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all previous proposals, negotiations,
representations, commitments and other communications between or among the
parties, both oral and written, with respect thereto.
10.12. AGREEMENT CONTROLS. In the event that any term of any of the
Loan Documents other than this Agreement conflicts with any express term of this
Agreement, the terms and provisions of this Agreement shall control to the
extent of such conflict.
10.13. USURY SAVINGS CLAUSE. Notwithstanding any other provision
herein, the aggregate interest rate charged under any of the Notes, including
all charges or fees in connection therewith deemed in the nature of interest
under applicable law shall not exceed the Highest Lawful Rate (as
64
<PAGE>
such term is defined below). If the rate of interest (determined without regard
to the preceding sentence) under this Agreement at any time exceeds the Highest
Lawful Rate (as defined below), the outstanding amount of the Loans made
hereunder shall bear interest at the Highest Lawful Rate until the total amount
of interest due hereunder equals the amount of interest which would have been
due hereunder if the stated rates of interest set forth in this Agreement had at
all times been in effect. In addition, if when the Loans made hereunder are
repaid in full the total interest due hereunder (taking into account the
increase provided for above) is less than the total amount of interest which
would have been due hereunder if the stated rates of interest set forth in this
Agreement had at all times been in effect, then to the extent permitted by law,
the Borrower shall pay to the Lender an amount equal to the difference between
the amount of interest paid and the amount of interest which would have been
paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding
the foregoing, it is the intention of the Lender and the Borrower to conform
strictly to any applicable usury laws. Accordingly, if the Lender contracts for,
charges, or receives any consideration which constitutes interest in excess of
the Highest Lawful Rate, then any such excess shall be cancelled automatically
and, if previously paid, shall at the Lender's option be applied to the
outstanding amount of the Loans made hereunder or be refunded to the Borrower.
As used in this paragraph, the term "Highest Lawful Rate" means the maximum
lawful interest rate, if any, that at any time or from time to time may be
contracted for, charged, or received under the laws applicable to the Lender
which are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
10.14. GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN THOSE
SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE
GOVERNED BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA
APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH
STATE.
(b) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN
MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE STATE
OF FLORIDA, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE BORROWER EXPRESSLY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN,
OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY, ANY
SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND THE BORROWER
HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
65
<PAGE>
(c) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER
LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY
REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE
BORROWER PROVIDED IN SECTION 10.2, OR BY ANY OTHER METHOD OF SERVICE
PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF
FLORIDA.
(d) NOTHING CONTAINED IN SUBSECTIONS (A) OR (B) HEREOF SHALL
PRECLUDE THE LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY
JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S PROPERTY OR
ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE
APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND
EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING,
OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY
ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE
UNDER APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE
BE DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE LENDER HEREBY
AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY
SUCH ACTION OR PROCEEDING.
[Signatures on following pages]
66
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.
WORLD FUEL SERVICES CORPORATION
WITNESS:
/s/ B.M. REYNOLDS
- ---------------------- By: /s/ CARLOS ABAUNZA
--------------------
/s/ TERRY L. WITCHER Name: Carlos Abaunza
- ---------------------- Title: Vice President & Chief
Financial Officer
CREDIT AGREEMENT
Page 1 of 2
<PAGE>
NATIONSBANK, N.A.
By: /s/ RICHARD M. STARKE
---------------------------
Name: Richard M. Starke
Title: Senior Vice President
Lending Office:
NationsBank, N.A.
101 North Tryon Street
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Corporate Credit Support
Telephone: (704) 388-1112
Telefacsimile: (704) 386-8694
Wire Transfer Instructions:
NationsBank, N.A.
ABA#053000196
Account No.:
Reference: World Fuel Services
Attention: Corporate Credit Services
CREDIT AGREEMENT
Page 2 of 2
<PAGE>
EXHIBIT A
Notice of Appointment (or Revocation) of Authorized Representative
Reference is hereby made to the Revolving Credit and Reimbursement
Agreement dated as of November 30, 1998 (the "Agreement") by and between World
Fuel Services Corporation, a Florida corporation (the "Borrower") and
NationsBank, N.A. as Lender (the "Lender"). Capitalized terms used but not
defined herein shall have the respective meanings therefor set forth in the
Agreement.
The Borrower hereby nominates, constitutes and appoints each individual
named below as an Authorized Representative under the Loan Documents, and hereby
represents and warrants that (i) set forth opposite each such individual's name
is a true and correct statement of such individual's office (to which such
individual has been duly elected or appointed), a genuine specimen signature of
such individual and an address for the giving of notice, and (ii) each such
individual has been duly authorized by the Borrower to act as Authorized
Representative under the Loan Documents:
Name and Address Office Specimen Signature
Carlos Abaunza
- --------------------- ------------------- ----------------------
- --------------------- Vice President & /s/ CARLOS ABAUNZA
- --------------------- Chief Financial
Officer
- --------------------- ------------------- ----------------------
- ---------------------
- ---------------------
Borrower hereby revokes (effective upon receipt hereof by the Lender) the prior
appointment of ________________ as an Authorized Representative.
This the 30th day of November, 1998.
WORLD FUEL SERVICES CORPORATION
By: /s/ CARLOS ABAUNZA
Name: Carlos Abaunza
Title: Vice President & Chief
Financial Officer
A-1
<PAGE>
EXHIBIT B
Form of Borrowing Notice
To: NationsBank, N.A.
101 North Tryon Street
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Corporate Credit Support
Telefacsimile: (704) 386-8694
Reference is hereby made to the Revolving Credit and Reimbursement
Agreement dated as of November 30, 1998 (the "Agreement") by and between World
Fuel Services Corporation (the "Borrower") and NationsBank, N.A., as Lender (the
"Lender"). Capitalized terms used but not defined herein shall have the
respective meanings therefor set forth in the Agreement.
The Borrower through its Authorized Representative hereby gives notice
to the Lender that Loans of the type and amount set forth below be made on the
date indicated:
TYPE OF LOAN INTEREST AGGREGATE
(CHECK ONE) PERIOD(1) AMOUNT(2) DATE OF LOAN(3)
Base Rate Loan ______ _________ ____________
Eurodollar Rate Loan ______ _________ ____________
- -----------------------
(1) For any Eurodollar Rate Loan, one, two, three or six months.
(2) Must be $100,000 or if greater an integral multiple of $100,000, unless a
Base Rate Refunding Loan.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan;
The Borrower hereby requests that the proceeds of Loans described in
this Borrowing Notice be made available to the Borrower as follows: [INSERT
TRANSMITTAL INSTRUCTIONS] .
The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or after giving
effect to the borrowing described herein; and
2. All the representations and warranties set forth in ARTICLE VI of
the Agreement and in the Loan Documents (other than those expressly stated to
refer to a particular date) are true and correct as of the date hereof except
that the reference to the financial statements in SECTION 6.6(A) of the
Agreement are to those financial statements most recently delivered to you
pursuant to SECTION
B-1
<PAGE>
7.1 of the Agreement (it being understood that any financial statements
delivered pursuant to SECTION 7.1(B) have not been certified by independent
public accountants) and attached hereto are any changes to the Schedules
referred to in connection with such representations and warranties.
3. All conditions contained in the agreement to the making of any Loan
requested hereby have been met or satisfied in full.
WORLD FUEL SERVICES CORPORATION
BY:
-----------------------------
Authorized Representative
DATE:
---------------------------
B-2
<PAGE>
EXHIBIT C
Form of Interest Rate Selection Notice
To: NationsBank, N.A.
101 North Tryon Street
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Corporate Credit Support
Telefacsimile: (704) 386-8694
Reference is hereby made to the Revolving Credit and Reimbursement
Agreement dated as of November 30, 1998 (the "Agreement") by and between World
Fuel Services Corporation, a Florida corporation (the "Borrower") and
NationsBank, N.A., as Lender (the "Lender"). Capitalized terms used but not
defined herein shall have the respective meanings therefor set forth in the
Agreement.
The Borrower through its Authorized Representative hereby gives notice
to the Lender of the following selection of a type of Loan and Interest Period:
TYPE OF LOAN INTEREST AGGREGATE
(CHECK ONE) PERIOD(1) AMOUNT(2) DATE OF LOAN(3)
Base Rate Loan ______ _________ ____________
Eurodollar Rate Loan ______ _________ ____________
- -----------------------
(1) For any Eurodollar Rate Loan, one, two, three or six months.
(2) Must be $100,000 or if greater an integral multiple of $100,000, unless a
Base Rate Refunding Loan.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan;
WORLD FUEL SERVICES CORPORATION
BY:
-----------------------------
Authorized Representative
DATE:
---------------------------
C-1
<PAGE>
EXHIBIT D
Form of Revolving Note
Promissory Note
(Revolving Credit Facility)
SEE EXHIBIT 10.d
<PAGE>
EXHIBIT E
Form of Opinion of Borrower's Counsel
SEE ATTACHED.
E-1
<PAGE>
[SHUTTS & BOWEN LETTERHEAD]
November 9, 1998
NationsBank, N.A.
NationsBank Corporate Center
Charlotte, North Carolina 28255-0065
RE: $25,000,000 REVOLVING CREDIT AND REIMBURSEMENT AGREEMENT BY AND
BETWEEN NATIONSBANK, N.A., AS LENDER, AND WORLD FUEL SERVICES
CORPORATION, AS BORROWER
Ladies and Gentlemen:
We have acted as counsel to World Fuel Services Corporation, a Florida
corporation (the "Borrower"), and to each of its Subsidiaries listed on EXHIBIT
A to the Credit and Reimbursement Agreement (as defined below), (each a
"Guarantor" and collectively the "Guarantors" and together with the Borrower,
the "Credit Parties") in connection with a Revolving Credit Facility of up to
$25,000,000, including a $10,000,000 Letter of Credit Facility constituting part
of the Revolving Credit Facility, each being made available to the Borrower by
you on this date pursuant to the Revolving Credit and Reimbursement Agreement of
even date herewith by and between NationsBank, N.A. (the "Lender") and the
Borrower (the "Credit and Reimbursement Agreement"), and the other transactions
contemplated under the Credit and Reimbursement Agreement.
This opinion is being delivered in accordance with the conditions set forth
in SECTION 5.1(a) of the Credit and Reimbursement Agreement. All capitalized
terms not otherwise defined herein shall have the meanings provided therefor in
the Credit and Reimbursement Agreement.
As such counsel, we have reviewed the following documents:
1. the Credit and Reimbursement Agreement;
2. the Note;
<PAGE>
NationsBank, N.A.
November 9, 1998
Page 2
3. the Facility Guaranty; and
4. The LC Account Agreement.
The documents described in items 1 through 4 immediately above are referred to
herein as the "Loan Documents".
For purposes of giving this opinion, we have examined such corporate records
of the Borrower and the other Credit Parties, certificates of public officials,
certificates of appropriate officials of the Borrower and the other Credit
Parties, and such other documents, and have made such inquires of the Credit
Parties, as we have deemed appropriate.
Based upon and subject to the foregoing, and subject to the qualifications
set forth elsewhere herein, it is our opinion that:
1. The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida and to our knowledge is
duly qualified to transact business as a foreign corporation and is in good
standing in all jurisdictions in which the nature of its business requires such
qualification, and in which the failure to so qualify could reasonably be
expected to have a Material Adverse Effect. The Borrower has full corporate
power and authority to own its assets and conduct the businesses in which it is
now engaged and as are expressly contemplated by the Loan Documents, and has
full corporate power and authority to enter into each of the Loan Documents to
which it is a party and to perform its obligations thereunder.
2. Each of the Loan Documents to which the Borrower is a party had been duly
authorized by the Board of Directors of the Borrower (and by any required
shareholder action), has been duly executed and delivered by the Borrower, and
constitutes the legal, valid and binding obligation, agreement, instrument or
conveyance, as the case may be, of the Borrower, enforceable against the
Borrower in accordance with its respective terms, except as the enforceabiity
thereof may be limited by applicable bankruptcy, insolvency, reorganization and
other similar laws relating to or affecting creditors' rights generally and by
the application of general equitable principles (whether considered in
proceedings at law or in equity).
<PAGE>
NationsBank, N.A.
November 9, 1998
Page 3
3. Each Credit Party (other than the Borrower) is a corporation duly
organized, validly existing and in good standing under the laws of the
respective jurisdiction of its formation and to our knowledge is duly qualified
to transact business as a foreign entity and is in good standing in all
jurisdictions in which the nature of its business requires such qualification,
and in which the failure to so qualify could reasonably be expected to have a
Material Adverse Effect. Each Credit Party (other than the Borrower) has full
corporate power and authority to own its assets and conduct the businesses in
which it is now engaged and as expressly contemplated in the Loan Documents, and
has full corporate power and authority to enter into each of the Loan Documents
to which it is a party and to perform its obligations thereunder.
4. Each of the Loan Documents to which each Credit Party (other than the
Borrower) is a party has been duly authorized by the Board of Directors of such
Credit Party (and by any required shareholder action), has been duly executed
and delivered by such Credit Party, and constitutes the legal, valid and binding
obligation, agreement or instrument, as the case may be, of such Credit Party,
enforceable against such Credit Party in accordance with its respective terms,
except as the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization and other similar laws relating to or affecting
creditors' rights generally and by the application of general equitable
principles (whether considered in proceedings at law or in equity).
5. Neither the execution or delivery of, nor performance by the Borrower or
any other Credit Party of its obligations under, the Loan Documents (a) does or
will conflict with, violate or constitute a breach of (i) the charter or bylaws
of the Borrower or any other Credit Party, (ii) any laws, rules or regulations
applicable to the Borrower or any other Credit Party, or (iii) any contract,
agreement, indenture, lease, instrument, judgment, writ, determination, order,
decree or arbitral award known to us to which the Borrower or any other Credit
Party is a party or by which the Borrower or any other Credit Party or any of
their properties is bound, (b) requires the prior consent of, notice to, license
from or filing with any Governmental Authority which has not been duly obtained
or made on or prior to the date hereof, or (c) to our knowledge, does or will
result in the creation or imposition of any lien, pledge, charge or encumbrance
of any nature upon or with respect to any of the properties of the Borrower or
any other Credit Party.
6. To our knowledge, there is no pending or threatened action, suit,
investigation or proceeding (including, without limitation, any action, suit,
investigation, or proceeding under any environmental or labor law), nor is there
any basis therefor, before
<PAGE>
NationsBank, N.A.
November 9, 1998
Page 4
or by any court, or governmental department, commission, board, bureau,
instrumentality, agency or arbitral authority, (i) which calls into question the
validity or enforceability of any of the Loan Documents, or the titles to their
respective offices or authority of any officers of the Borrower or any other
Credit Party or (ii) an adverse result in which would reasonably be likely to
have a Material Adverse Effect.
7. The Borrower is not subject to any charter, bylaw, or other corporate
restrictions, nor, to the best of our knowledge, is the Borrower party to or
bound by any contract or agreement, which restricts, limits, or prohibits
performance of any of its obligations pursuant to the terms of the Loan
Documents.
8. None of the transactions contemplated by the Credit and Reimbursement
Agreement, including, without limitation, the use of the proceeds of the Loans
provided for in the Loan Documents, will violate or result in a violation of
Section 7 of the Securities Exchange Act of 1934, as amended, any regulations
issued pursuant thereto, or regulations, G, T, U or X of the Board of Governors
of the Federal Reserve System.
The foregoing opinions are subject to the qualifications, limitations and
assumptions noted therein, as well as the following qualifications, limitations
and assumptions:
A. Our opinion concerning the validity, binding effect and
enforceability of the Loan Documents means that: (a) the Loan Documents
constitute effective contracts under the applicable law, (b) the Loan Documents
are not invalid in their entirety because of a specific statutory prohibition or
public policy and are not subject in their entirety to a contractual defense,
and (c) subject to the last sentence of this paragraph, some remedy is available
if Borrower is in material default under the Loan Documents. This opinion does
not mean that: (a) any particular remedy is available upon a material default,
or (b) every provision of the loan Documents will be upheld or enforced in any
or each circumstance by a court. Furthermore, the validity, binding effect and
enforceability of the Loan Documents may be limited or otherwise affected by:
(a) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar statues, rules, regulations or other laws affecting the
enforcement of creditors' rights and remedies generally, and (b) the
unavailability of, or limitation on the availability of, a particular right or
remedy (whether in a proceeding in equity or at law) because of any equitable
principle or a requirement as to commercial reasonableness, conscionability or
good faith.
<PAGE>
NationsBank, N.A.
November 9, 1998
Page 5
B. In rendering the opinions set forth herein, we have made the
following assumptions:
i. The legal capacity of each natural person.
ii. The legal existence of all persons other than the Borrower and
an other Credit Party.
iii. The power and authority of each person (other than the
Borrower and any other Credit Party) to execute, deliver, and perform each
document executed and delivered and to do each other act done or to be done by
such person for the authorization, execution and delivery by such person of each
document executed and delivered or to be executed and delivered by such person.
iv. The due execution and delivery of the Loan Documents by each
party hereto other than the Borrower and any other Credit Party, and the
legality, validity, binding effect and enforceability of the Loan Documents as
to each party other than the Borrower and any other Credit Party.
v. The genuineness of all signature (other than those of the
Borrower and any other Credit Party), the completeness of each of the documents
submitted to us, the authenticity of each document submitted to us as an
original, the conformity of the original of each document submitted to us as a
copy and the authenticity of the original of each document reviewed by us as a
copy.
C. No opinion is given or expressed and none shall be inferred or
implied as to any matters other than as expressly set forth herein.
D. Whenever our opinion herein is qualified by the phrase "to our
knowledge" or "known to us" it is intended to indicate that during the course of
our representation of the Borrower and the other Credit Parties, no information
has come to our attention which would give us actual knowledge that any matter
is other than as opined to herein. However, except to the extent expressly set
forth herein, we have not inspected the operations or properties of the Borrower
or the other Credit Parties, nor have we undertaken any independent
investigation to determine the existence or absence of any such matters and no
inference as to our knowledge of such matters shall be drawn from the fact of
our representation of the Borrower or the other Credit Parties.
<PAGE>
NationsBank, N.A.
November 9, 1998
Page 6
E. We are members of the Florida Bar and do not hold ourselves out as
experts on, nor are we, in rendering our opinions herein, passing upon any
matter of, the laws of any jurisdiction other than the laws of the United State,
the internal laws of Florida and the corporate law of Delaware, as now existing.
With respect to the Foreign Subsidiaries (defined below), we express no opinion
herein as to whether, under the corporate and other laws of the Foreign
Subsidiary's jurisdiction of incorporation: (1) the Guaranty Agreements are
supported by sufficient consideration so as to make then enforceable, or (2) the
execution and delivery of the Guaranty Agreements constitutes an ultra vires act
of any such Foreign Subsidiary. The "Foreign Subsidiaries" refers to each of the
Credit Parties whose jurisdiction of incorporation is outside of the United
States.
Our opinions contained herein are rendered solely in connection with the
transactions contemplated under the Loan Documents and may not be relied upon in
any manner by any Person other than the addressees hereof, any successor or
assignee of any addressee (including successive assignees) and any Person who
shall acquire a participation interest in the interest of the Lender
(collectively, the "Reliance Parties"), or by any Reliance Party for any other
purpose. Our opinions herein shall not be quoted or otherwise included,
summarized or referred to in any publication or document, in whole or in part,
for any purposes whatsoever, or furnished to any Person other than a Reliance
Party (or Person considering whether to become a Reliance Party), except as may
be required of any Reliance party by applicable law or regulation or in
accordance with any auditing or oversight function or request of regulatory
agencies to which a Reliance Party is subject
Very truly yours,
/s/ SHUTTS & BOWEN
------------------
SHUTTS & BOWEN LLP
<PAGE>
EXHIBIT F
Compliance Certificate
NationsBank, N.A.
101 North Tryon Street
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Corporate Credit Support
Telefacsimile: (704) 386-8694
Reference is hereby made to the Revolving Credit and Reimbursement
Agreement dated as of November 30, 1998 (the "Agreement") by and between World
Fuel Services Corporation, a Florida corporation (the "Borrower") and
NationsBank, N.A., as Lender (the "Lender"). Capitalized terms used but not
otherwise defined herein shall have the respective meanings therefor set forth
in the Agreement. The undersigned, a duly authorized and acting Authorized
Representative, hereby certifies to you as of __________ (the "Determination
Date") as follows:
1. Calculations:
A. Consolidated Tangible Net Worth as of the Determination Date
was $__________.
Required: Not less than $__________.
[See Section 8.1(a) of the Agreement]
B. Consolidated Funded Indebtedness to Consolidated Capitalization
as of the Determination Date was _____ to 1.00 calculated as follows:
(i) Consolidated Funded Indebtedness as of the
Determination Date: $__________
(ii) Consolidated Capitalization as of the
Determination Date: $__________
(iii) (i) divided by (ii): __________
required: Less than .55 to 1.00.
[See Section 8.1(b) of the Agreement]
C. Consolidated Fixed Charge Coverage Ratio as of the
Determination Date was _____ to 1.00 calculated as follows:
F-1
<PAGE>
(i) Consolidated EBITDA (for the Four Quarter
Period ending on (or most recently ended
prior to) the Determination Date): $__________
(ii) capital expenditures (for the Four Quarter
Period ending on (or most recently ended
prior to) the Determination Date): $__________
(iii) (i) MINUS (ii): $__________
(iv) Consolidated Fixed Charges (for the Four
Quarter Period ending on (or most recently
ended prior to) the Determination Date): $__________
(v) (iii) divided by (iv): __________
Required: Equal or greater than 1.35 to 1.00.
[See Section 8.1(c) of the Agreement]
D. Applicable Margin is _______%
Applicable Unused Fee is _______%
2. No Default
A. Since __________ (the date of the last similar certification),
(a) the Borrower has not defaulted in the keeping, observance,
performance or fulfillment of its obligations pursuant to any of the
Loan Documents; and (b) no Default or Event of Default specified in
ARTICLE IX of the Agreement has occurred and is continuing.
B. If a Default or Event of Default has occurred since __________
(the date of the last similar certification), the Borrower proposes to
take the following action with respect to such Default or Event of
Default:_______________________________________________________________
_____________________________.
(NOTE, if no Default or Event of Default has occurred, insert "Not
Applicable").
C. The Borrower and its Subsidiaries are current with all trade
payables, except trade payables contested in good faith in the ordinary
course of business.
D. As of the Determination Date, the Borrower and its Subsidiaries
are in full compliance with the established sublimits and terms of the
Letters of Credit issued pursuant to the Agreement.
F-2
<PAGE>
The Determination Date is the date of the last required financial statements
submitted to the Lender in accordance with SECTION 7.1 of the Agreement.
IN WITNESS WHEREOF, I have executed this Certificate this _____ day of
__________, 19___.
By:____________________________
Authorized Representative
Name:_______________________
Title:______________________
F-3
<PAGE>
EXHIBIT G
FORM OF GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (the "Guaranty") is entered into as of this ___
day of _________, 199_, by and among the undersigned Subsidiaries of World Fuel
Services Corporation, a Florida corporation (individually a "Guarantor" and
collectively the "Guarantors"), and NATIONSBANK, N.A., as Lender (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, World Fuel Services Corporation (the "Borrower") and the
Lender have entered into that certain Revolving Credit and Reimbursement
Agreement, dated as of November 30, 1998, whereby the Lender has made available
to the Borrower a Revolving Credit Facility (as at any time hereafter amended,
restated, modified or supplemented, the "Credit Agreement"); and
WHEREAS, the Credit Agreement requires the execution of this Guaranty
by any Subsidiary of the Borrower acquired or created after the date thereof,
and
WHEREAS, the Guarantors will substantially benefit from the loans and
advances made or to be made by the Lender and the letters of credit issued or to
be issued by the Issuing Bank to the Borrower under the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and conditions herein
set forth, it is hereby agreed as follows:
1. Guarantors hereby absolutely and unconditionally guaranty, jointly
and severally, to the Lender, with full power to satisfy, discharge, release,
foreclose, assign and transfer the within Guaranty, the due performance and full
and prompt payment, whether at maturity or by acceleration or otherwise, of any
and all Borrower's Liabilities (as hereinafter defined) (hereinafter
collectively referred to as the "Guarantors' Obligations"); PROVIDED, HOWEVER,
that the liability of any Guarantor hereunder with respect to the Guarantors'
Obligations shall be limited to an aggregate amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance under
Section 548 of the United States Bankruptcy Code or any comparable provisions of
any applicable state law.
2. For purposes of this Guaranty, "Borrower's Liabilities" shall mean
and include any and all advances (including those made by the Lender to protect,
enlarge or preserve the priority, propriety, or amount of any lien in favor of
the Lender against mechanic's lien, equitable lien, or statutory claimants, or
otherwise), debts, obligations and liabilities of Borrower pursuant to the terms
of the Credit Agreement, the Notes, any Swap Agreement and all other Loan
Documents executed in connection therewith heretofore, now, or hereafter made,
incurred or created, extended, renewed, replaced, refinanced or restructured,
whether or not from time to time decreased or extinguished and
G-1
<PAGE>
later increased, created or incurred, whether voluntary or involuntary and,
however arising, whether due or not, absolute or contingent, liquidated or
non-liquidated, determined or undetermined, and whether Borrower may be liable
individually or jointly with others, or whether recovery upon such indebtedness
may be or hereafter become barred by any statute of limitations, or whether such
indebtedness may be or hereafter become otherwise unenforceable (collectively
referred to hereinafter as the "Borrower's Liabilities"). This is a continuing
Guaranty relating to the Borrower's Liabilities, and any other indebtedness
arising under subsequent or successive transactions which increase the
Borrower's Liabilities, and said Guaranty shall be irrevocable and remain
outstanding until all the Borrower's Liabilities are satisfied in full and the
Lender shall have no further obligation to make Loans and Advances and the
Issuing Bank to issue Letters of Credit under the Credit Agreement.
3. The obligations of the Guarantors hereunder are independent of the
obligations of Borrower, and a separate action or actions may be brought and
prosecuted against any Guarantor, whether such action is brought against
Borrower or whether Borrower be joined in any such action or actions.
4. Each Guarantor authorizes the Lender, without notice or demand and
without affecting such Guarantor's liability hereunder, from time to time to (a)
renew, amend, compromise, extend, accelerate or otherwise change the time for
payment of, or otherwise change the terms of the Borrower's Liabilities or any
part thereof, including increase or decrease of the rate of interest thereon;
(b) take and hold security for the payment of this Guaranty and the Guarantors'
Obligations and exchange, enforce, waive and release any such security; (c)
apply such security and direct the order or manner of sale thereof as the Lender
may determine; and (d) release or substitute any one or more endorsers or
guarantors of the Borrower's Liabilities. The Lender may without notice assign
this Guaranty in whole or in part in connection with an assignment as permitted
under the Credit Agreement.
5. Each Guarantor waives any right to require the Lender to (a) proceed
against Borrower; (b) proceed against or exhaust any security held from
Borrower; or (c) pursue any other remedy in the Lender's power whatsoever. Each
Guarantor waives any defense arising by reason of any disability or other
defense of Borrower or by reason of the cessation from any cause whatsoever of
the liability of the Borrower to the Lender. Until all the Borrower's
Liabilities shall have been paid in full and the Lender shall have no further
obligation to make Loans and Advances and the Issuing Bank to issue Letters of
Credit under the Credit Agreement, each Guarantor waives any right to endorse
any remedy which the Lender now has or may hereafter have against the Borrower,
and waives any benefit of, and any right to participate in, any security now or
hereafter held by the Lender as collateral security for the Borrower's
Liabilities. Each Guarantor waives all presentments, demands for performance,
notices of non-performance, protests, notices of dishonor, notices of acceptance
of this Guaranty and of the existence, creation, or incurring of new or
additional indebtedness; any defense or circumstance which might otherwise
constitute a legal or equitable discharge of a guarantor or a surety; and all
rights under any state or federal statute dealing with or affecting the rights
of creditors. Each Guarantor covenants to cause Borrower to maintain and
preserve the enforceability of any instruments now or hereafter executed in
favor of the Lender, and to take no action of any kind which might be the basis
for a claim that such Guarantor has any defense hereunder in connection with the
above-mentioned Loan Documents, other than payment in full of
G-2
<PAGE>
the Borrower's Liabilities. Each Guarantor waives any right or claim of right to
cause a marshaling of Borrower's assets or to require the Lender to proceed
against the Guarantors or any other guarantor of the Borrower's Liabilities in
any particular order. No delay on the part of the Lender in the exercise of any
right, power or privilege under the Loan Documents or under this Guaranty shall
operate as a waiver of any such privilege, power or right.
6. Until the Borrower's Liabilities are paid in full and the Lender is
under no further obligation to make Loans and Advances and the Issuing Bank to
issue Letters of Credit under the Credit Agreement, any indebtedness of Borrower
now or hereafter held by any Guarantor is hereby subordinated to the Borrower's
Liabilities; and such indebtedness of Borrower to any Guarantor, if the Lender
so requests, shall be collected, enforced and received by such Guarantor as
trustee for the Lender and be paid over to the Lender on account of the
Borrower's Liabilities, but without reducing or affecting in any manner the
liability of such Guarantor under the other provisions of this Guaranty. Each
Guarantor, at the request of the Lender, shall execute such further documents in
favor of the Lender to further evidence and support the purpose of this Section
6. Each Guarantor hereby irrevocably waives and releases any right or rights of
subrogation or contribution existing at law, by contract or otherwise to recover
all or a portion of any payment made hereunder from the Borrower or any other
guarantor.
7. Upon the default of Borrower with respect to any of its obligations
or liabilities to the Lender in connection with the Loan Documents, or in case
Borrower or any Guarantor shall become insolvent or make an assignment for the
benefit of creditors, or if a petition in bankruptcy or for corporate
reorganization or for an arrangement be filed by or against Borrower or any
Guarantor (and if such petition is filed against Borrower or any Guarantor and
is not stayed or dismissed within sixty (60) days), or in the event of the
appointment of a receiver for Borrower or any Guarantor of their properties, or
in the event a judgment is obtained or warrant of attachment is issued against
Borrower or any Guarantor (which judgment or warrant is not satisfied or bonded
or removed within sixty (60) days), all or any part of the Guarantors'
Obligations shall, without notice or demand, at the option of the Lender, become
immediately due and payable and shall be paid forthwith, jointly and severally,
by Guarantors without any offset of any kind whatsoever, without the Lender
first being required to make demand upon the Borrower or pursue any of its
rights against Borrower, or against any other person, including other guarantors
(whether or not party to this Guaranty).
8. Notwithstanding any provision herein or in any instrument now or
hereafter executed in connection with this Guaranty or the Guarantors'
Obligations hereunder, the total liability for payments in the nature of
interest shall not exceed the limits now imposed by the usury laws of the State
of Florida governing the provisions of this Guaranty or in any instrument now or
hereafter executed in connection with this Guaranty or the Guarantors'
Obligations hereunder.
9. Each Guarantor acknowledges that the Lender has been induced by this
Guaranty to make and to continue to make Loans and Advances to the Borrower and
the Issuing Bank to issue and continue to issue Letters of Credit on behalf of
the Borrower and its Subsidiaries under the Credit Agreement, and this Guaranty
shall, without further reference or assignment, pass to, and may be relied upon
and enforced by, any successor or participant or assignee of the Lender in and
to any of Borrower's Liabilities.
G-3
<PAGE>
10. Each Guarantor hereby warrants and represents to the Lender, that:
(a) it is a duly organized and validly existing corporation under the laws of
the state of its incorporation; (b) it is qualified to do business in each state
in which qualification is necessary; (c) it has the power to execute this
Guaranty; (d) that the execution of this Guaranty has been duly authorized; and
(e) that this Guaranty is a binding and valid corporate obligation.
11. Each Guarantor acknowledges that the liabilities of said Guarantor
shall be independent of the Obligations of Borrower, and separate or joint
actions may be instituted by the Lender, against such Guarantors; and said
actions may be instituted against Borrower and any of the Guarantors, or
separately against any of the Guarantors. Any action taken by the Lender
pursuant to the provisions herein contained or contained in the Credit
Agreement, the Notes or the Loan Documents, shall not release the party to this
Guaranty until all of the Borrower's Liabilities are paid in full and the Lender
shall have no further obligation to make Loans and Advances and the Issuing Bank
to issue Letters of Credit under the Credit Agreement.
12. The Guarantors will upon demand pay to the Lender, jointly and
severally, the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, which
it may reasonably incur in connection with enforcement of this Guaranty or the
failure by any Guarantor to perform or observe any of the provisions hereof. The
Guarantors agree to indemnify and hold harmless the Lender from and against any
and all claims, demands, losses, judgments and liabilities (including
liabilities for penalties) of whatsoever kind or nature, growing out of or
resulting from this Guaranty or the exercise by the Lender of any right or
remedy granted to it hereunder or under the other Loan Documents, other than
such items arising out of the bad faith, gross negligence or willful misconduct
on the part of the Lender. If and to the extent that the obligations of the
Guarantors under this Section 12 are unenforceable for any reason, Guarantors
hereby agree to make the maximum contribution to the payment and satisfaction of
such obligations which is permissible under applicable law.
13. If claim is ever made upon the Lender for repayment or recovery of
any amount or amounts received in payment or on account of the Guarantors'
Obligations and the Lender repays all or part of said amount by reason of (a)
any judgment, decree or order of any court or administrative body having
jurisdiction over such payee or any of its property, or (b) any settlement or
compromise of any such claim effected by the Lender with any such claimant
(including the original obligor), then and in such event each Guarantor agrees
that any such judgment, decree, order, settlement or compromise shall be binding
upon it, notwithstanding any revocation hereof or the cancellation of any Notes
or other instrument evidencing any Guarantied Obligations or any security
therefor, and the Guarantors shall be and remain jointly and severally liable to
the Lender for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by the Lender.
14. All notices required to be given hereunder shall be in writing, and
shall be given by certified mail, return receipt requested, and shall be deemed
given when they shall have been deposited in the United States Mail, with
sufficient postage prepaid thereon to carry them to their addressed destination,
addressed to the party for whom it is intended, as follows:
G-4
<PAGE>
For a Guarantor: such Guarantor
c/o World Fuel Services Corporation
700 South Royal Poinciana Blvd.
Suite 800
Miami Springs, FL 33166
Attention: Chief Financial Officer
For Lender: NationsBank, N.A.
101 N. Tryon Street
Independence Center, 15th Floor
Charlotte, North Carolina 28255
Attention: Corporate Credit Support
15. Whenever the text of this instrument so requires, the use of any
gender shall be deemed to include all genders, and the use of the singular shall
include the plural, and in such event, wherever the word "Guarantor" is used
herein, then such word shall be deemed to be "Guarantors" or either or any of
them.
16. This Guaranty shall be binding upon each Guarantor, successors,
legal representatives and assigns of each Guarantor.
17. This Guaranty shall, for all purposes, be governed by and construed
in accordance with the laws of the State of Florida.
18. THE LENDER AND EACH GUARANTOR KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN
CONNECTION WITH ANY MATTER DIRECTLY OR INDIRECTLY RELATING TO THIS GUARANTY OR
ANY OTHER LOAN DOCUMENT.
G-5
<PAGE>
SIGNATURE PAGE 1 OF 2
IN WITNESS WHEREOF, the parties hereto have caused this Guaranty to be
duly executed by their duly authorized officers, all as of the day and year
first above written.
[GUARANTOR]:
By:______________________________
Name:_________________________
Title:________________________
[GUARANTOR]:
By:______________________________
Name:_________________________
Title:________________________
SIGNATURE PAGE 1 0F 2
G-6
<PAGE>
LENDER:
NATIONSBANK, N.A.
By:______________________________
Name:_________________________
Title:________________________
SIGNATURE PAGE 2 0F 2
G-7
<PAGE>
<TABLE>
<CAPTION>
WORLD FUEL SERVICES CORPORATION
LETTERS OF CREDIT
AS OF: 04-Nov-98
LC DATE
ISSUING BANK # SUB NUMBER TYPE EXPIRES BENEFICIARY AMOUNT %
- ------------ -- ------ ------- ---- ------- -------------------------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Nations 2 WFSLTD 017574 A30 3/15/99 Enamalta 100,000.00
Bank
3
4 WSFLTD 017572 A30 11/1/98 * Ceylon Petroleum Corp.
5 WFS, SNG 920033 N 4/29/99 Petronas Dagangan Berhad 200,000.00
8 TTS SNG 049678 N 10/30/98 * ESSO Singapore
BG95/024 8/30/98 *
9 TTS INC 000273 N 3/31/99 Hyundai Oil Refinery Co. Ltd. 500,000.00
10 TTS INC 000949 N 5/4/99 Ssangyong Oil Refinery Co. Ltd. 750,000.00
11 TTS INC 000841 N 4/30/99 LG - Caltex Oil Corporation 1,000,000.00
Uk/a Honam Oil Refinery Co. Ltd.
12 WFS LTD 0001843 A 2/2/99 Shell UK Ltd. 200,000.00
C Open
13 TTS INC 001039 N 2/12/99 * Hanwha Internationsl (S) Pte Ltd. 500,000.00
BG95/032 11/13/98 *
14 WFS INC 003566 N 8/31/98 Condor Fuel Corporation 396,375.00
15 TTS INC 0000266 N 8/31/99 * Petroles Del Peru 150,000.00
16 WFS LTD 000289 A 12/31/98 * LLoyds Bank PLC 210,000.00
G90/51192 C Open Naftal
GTS70-082 N 12/31/98 * Agip Petroli SPA
GTS70-250 C Open Reposol Comercial Productos
GTS70-188 N 9/27/99 AbuDhabi Nati Oil Co.
17 WFS LTD C000152 N 7/31/99 Cella Aviation Services 15,000.00
20 TTS INC 003568 N 6/30/98 Societe Cooperative Des Petroles 500,000.00
21 TTS INC 003567 N 5/23/99 Misr Petroleum Company 1,000,000.00
22 WFST SNG 920046 N 10/5/99 Pakistan State Oil Company Limited 50,000.00
23 WFS SNG 98002 A 1/14/99 PERTAMINA 100,000.00
-------------
Subtotal 5,671,375.00
-------------
ILLEGIBLE 27 TTS INC 5933222201 Open Ministry of Economy 50,000.00
ILLEGIBLE PETROSUR-WORLD FUEL 11/19/98 Petrocomercial $1,689,387.95
PETROSUR-WORLD FUEL 11/19/98 Petrocomercial $1,407,000.00
A=Automatic Total Outstanding $8,817,762.95
N=Non-automatic =============
C=Continuous
*=Cancellation Deadline in 30 days
</TABLE>
ISSUING BANK # COMMENTS
- ------------ -- ---------------------------------------------------
Nations 2 Fuel Purchases - Malta
Bank
3
4 Fuel Purchases - SirLanka
5 Fuel Purchases - Singapore
8 L/C Issued to Nationsbank SGA
B/G Issued from Nationsbank SGA
9 Steve Scoppeluoio
10 Korea
11 Korea
12 L/C Issued to Nationsbank UK
B/G Issued from Nastionsbank Uk
13 L/C Issued to Nationsbank SGA
B/G Issued from Nationsbank SGA
14 Ed Hayman
15 L/C Issued to Banco Continental
16 L/C FOR 5 LLOYDS' BANK GUARANTEES:
Fuel Purchases - Algeria must be in French: $25,000
Fuel Purchases - Italy, Kenya Seychelles: $35,000
Fuel Purchases - Spain: $50,000
Fuel Purchases - UAE: $100,000
17 Fuel purchases Angola
20 Steve Scoppeluclo
21 Steve Scoppetuclo
22 Katherine Lee
23 Katherine Lee
ILLEGIBLE 27 TTS - Services
ILLEGIBLE Fuel Purchases - Ecuador-Sucres S/. 10,682,000,000
Fuel Purchases - Ecuador-US Dollar
<PAGE>
SCHEDULE 6.4
Subsidiaries and Investments in Other Persons
Advance Petroleum, Inc., a Florida corporation (1)
Advance Aviation Services, Inc., a Florida corporation (10)
AirData Limited, a United Kingdom corporation (2)
Air Terminaling, Inc., a Florida corporation (10)
Baseops Europe Limited, a United Kingdom corporation (3)
Baseops International, Inc., a Texas corporation
Casa Petro S.A., a Costa Rica corporation
Cherokee Group, Inc., a Florida corporation
International Environmental Services, Inc. a Florida corporation
International Petroleum Corporation, a Florida corporation (4)
International Petroleum Corporation of LA, a Louisiana corporation
International Petroleum Corporation of Maryland, a Maryland corporation (4)
International Petroleum Corp. of Delaware, a Delaware corporation (4)
International Petroleum Corp. of Georgia, a Georgia corporation (10)
International Petroleum Corp. of Pennsylvania, a Pennsylvania corporation (10)
Jet Fuel Supplier del Peru S.A., a Peru corporation
Pacific Horizon Petroleum Services, Inc., a Delaware corporation
PetroServicios de Costa Rica S.A., a Costa Rica corporation (5)
PetroServicios de Mexico S.A. de C.V., a Mexico corporation (5)
PetroServicios WFS del Peru, S.A., a Peru corporation (9)(10)
Resource Recovery Atlantic, Inc., a Delaware corporation (7)(10)
Resource Recovery Mid South, Inc., a Virginia corporation (7)(10)
Resource Recovery of America, Inc., a Florida corporation (10)
Servicios Auxiliares de Mexico S.A. de C.V., a Mexico corporation (6)
Servicios Turbo Jet del Peru S.A., a Peru corporation
Trans-Tec Argantina S.A., an Argentina corporation (10)
Trans-Tec International S.A., a Costa Rica corporation
Trans-Tec Services, Inc., a Delaware corporation
Trabs-Tec Services (UK) Ltd., a United Kingdom corporation
Trans-Tec Services (Singapore) PTE. Ltd., a Singapore corporation (8)
World Fuel International S.A., a Costa Rica corporation
World Fuel Miami, Inc., a Florida corporation (10)
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 Services of Chile S.A., a Chile corporation (6)(10)
World Fuel Services del Peru, S.A., a Peru corporation (9)(10)
(1) Advance Petroleum, Inc., operates under the name "World Fuel Services of
FL."
(2) This corporation is a wholly-owned subsidiary of Baseops Europe Ltd.
(3) This corporation is a wholly-owned subsidiary of Baseops International,
Inc.
(4) These corporations collect and purchase used oil under the name
"International Oil Service."
(5) This corporation is owned 55% by Casa Petro S.A. and 45% by World Fuel
Services Corporation.
(6) This corporation is owned 50% by Advance Aviation Services, Inc. and 50% by
Air Terminaling, Inc.
(7) These corporations are wholly-owned subsidiaries of Resource Recovery of
America, Inc.
(8) This corporation is a wholly-owned subsidiary of Trans-Tec Services (UK)
Ltd.
(9) These corporations are owned 99% by World Fuel Services Corporation and 1%
by Advance Aviation Services, Inc.
(10) Inactive.
<PAGE>
SCHEDULE 6.6
Indebtedness
SEE SCHEDULE 7.6
<PAGE>
SCHEDULE 6.7
Liens
SEE SCHEDULE 7.6 FOR EQUIPMENT LIENS
<PAGE>
SCHEDULE 6.8
Tax Matters
NONE
<PAGE>
SCHEDULE 6.10
Litigation
NONE
<PAGE>
SCHEDULE 6.18
Hazardous Materials
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 cleanup 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 cleanup costs at the Mulberry, Florida 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 cleanup. However, the buyer has been
unwilling to fund expenses incurred to date. The site also qualified under the
state reimbursement program, which the Company anticipates will cover the cost
of the cleanup. The Company is actively involved in the coordination of cleanup
requirements by the EPA and the state to assure the Company's compliance.
The Company intends to pay an estimated $1,000,000 over the next several years
to cleanup contamination which was present at the Company's Delaware used oil
recycling facility when it was acquired by the Company. The cleanup costs will
be capitalized as part of the cost of the site, up to the fair market value of
the site.
<PAGE>
SCHEDULE 7.6
Indebtedness
As of September 30, 1998
LONG-TERM DEBT:
NationsBank Line-Of-Credit:
Base Rate Loan $1,100,000
Libor Rate Loan (30 Days) 1,000,000
Equipment Notes:
Money Equipment 11.00% 51,468
Polar Trailer and Mack Truck 8.52% 68,771
Polar Trailers and Mack Trucks 8.52% 275,082
Total Indebtedness $2,495,321
==========
LETTERS OF CREDIT - NON-NATIONSBANK:
ISSUING BANK SUBSIDIARY BENEFICIARY AMOUNT
- ------------ ---------- ----------- ------
Citibank Trans-Tec Services, Inc. Ministry of Economy $ 50,000
Filanbanco PetroSur - World Fuel Petrocomercial $1,689,388
Services (denominated in
Sucres)
Petrocomercial $1,407,000
EXHIBIT 10.d
Form of Revolving Note
Promissory Note
(Revolving Credit Facility)
$25,000,000 Charlotte, North Carolina
November 30, 1998
FOR VALUE RECEIVED, WORLD FUEL SERVICES CORPORATION, a Florida
corporation having its principal place of business located in Miami Springs,
Florida (the "Borrower"), hereby promises to pay to the order of NATIONSBANK,
N.A. (the "Lender"), in its individual capacity, at the office of the Lender
located at One Independence Center, 101 North Tryon Street, NC1-001-15-04,
Charlotte, North Carolina 28255 (or at such other place or places as the Lender
may designate in writing) at the times set forth in the Revolving Credit and
Reimbursement Agreement dated as of November 30, 1998 by and between the
Borrower and the Lender (the "Agreement" -- all capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the Agreement),
in lawful money of the United States of America, in immediately available funds,
the principal amount of TWENTY-FIVE MILLION AND NO/100 DOLLARS ($25,000,000) or,
if less than such principal amount, the aggregate unpaid principal amount of all
Loans made by the Lender to the Borrower pursuant to the Agreement on the
Revolving Credit Termination Date or such earlier date as may be required
pursuant to the terms of the Agreement, and to pay interest from the date hereof
on the unpaid principal amount hereof, in like money, at said office, on the
dates and at the rates provided in ARTICLE II of the Agreement. All or any
portion of the principal amount of Loans may be prepaid or required to be
prepaid as provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of
the Agreement or under the terms of the other Loan Documents executed in
connection with the Agreement, the then remaining principal amount and accrued
but unpaid interest shall bear interest which shall be payable on demand at the
rates per annum set forth in the proviso to SECTION 2.2 (A) of the Agreement.
Further, in the event of such acceleration, this Note shall become immediately
due and payable, without presentation, demand, protest or notice of any kind,
all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees, and
interest due hereunder thereon at the rates set forth above.
Interest hereunder shall be computed as provided in the Agreement.
This Note is one of the Notes referred to in the Agreement and is
issued pursuant to and entitled to the benefits and security of the Agreement to
which reference is hereby made for a more
D-1
<PAGE>
complete statement of the terms and conditions upon which the Loans evidenced
hereby were or are made and are to be repaid. This Note is subject to certain
restrictions on transfer or assignment as provided in the Agreement.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law the benefits of all provisions of law for
stay or delay of execution or sale of property or other satisfaction of judgment
against any of them on account of liability hereon until judgment be obtained
and execution issues against any other of them and returned satisfied or until
it can be shown that the maker or any other party hereto had no property
available for the satisfaction of the debt evidenced by this instrument, or
until any other proceedings can be had against any of them, also their right, if
any, to require the holder hereof to hold as security for this Note any
collateral deposited by any of said Persons as security. Protest, notice of
protest, notice of dishonor, diligence or any other formality are hereby waived
by all parties bound hereon.
D-2
<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Note to be made,
executed and delivered by its duly authorized representative as of the date and
year first above written, all pursuant to authority duly granted.
WORLD FUEL SERVICES CORPORATION
WITNESS:
- ------------------------------- By: /s/ CARLOS ABAUNZA
-----------------------
- ------------------------------- Name: CARLOS ABAUNZA
----------------------
Title: Chief Financial Officer
----------------------
D-3
<PAGE>
ACKNOWLEDGMENT OF EXECUTION ON BEHALF OF
WORLD FUEL SERVICES CORPORATION
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
Before me, the undersigned, a Notary Public in and for said County and
State on this 9th day of November, 1998 A.D., personally appeared Carlos Abaunza
known to be the Chief Financial Officer of World Fuel Services Corporation (the
"Borrower"), who, being by me duly sworn, says he works at World Fuel Services
Corporation and that by authority duly given by, and as the act of, the
Borrower, the foregoing and annexed Note dated November 30, 1998, was signed by
him as said Chief Financial Officer on behalf of the Borrower.
Witness my hand and official seal this 9th day of November, 1998.
Terry Witcher
-------------
Notary Public
(SEAL)
My commission expires: August 18, 1999
D-4
<PAGE>
AFFIDAVIT OF RICHARD M. STARKE
The undersigned, being first duly sworn, deposes and says that:
1. He is a Senior Vice President of NationsBank, N.A (the "Lender") and
works at 100 S.E. Second Street, 14th Floor, Miami, Florida 33131.
2. The Note of World Fuel Services Corporation to the Bank in the
principal amount of $25,000,000 dated November 30, 1998 was executed before him
and delivered to him on behalf of the Lender in Charlotte, North Carolina on
November 9th, 1998.
This the 9th day of November, 1998.
Name: Richard M. Starke
ACKNOWLEDGMENT OF EXECUTION
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
Before me, the undersigned, a Notary Public in and for said County and
State on this 9th day of November, 1998 A.D., personally appeared Richard M.
Starke who before me affixed his signature to the above Affidavit.
Witness my hand and official seal this 9th day of November, 1998.
Terry Witcher
-------------
Notary Public
(SEAL)
My Commission Expires: August 18, 1999
D-5
EXHIBIT 10.e
REVOLVING CREDIT AND
REIMBURSEMENT AGREEMENT
BY AND AMONG
WORLD FUEL INTERNATIONAL, S.A.
AND
TRANS-TEC INTERNATIONAL, S.A.
AS BORROWERS,
WORLD FUEL SERVICES CORPORATION
AS GUARANTOR
NATIONSBANK, N.A.,
AS LENDER
NOVEMBER 30, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
Definitions
1.1. Definitions.................................................... 2
1.2. Rules of Interpretation........................................19
ARTICLE II
The Revolving Credit Facility
2.1. Loans..........................................................21
2.2. Payment of Interest............................................22
2.3. Payment of Principal...........................................23
2.4. Non-Conforming Payments........................................23
2.5. Notes..........................................................25
2.6. Reductions.....................................................25
2.7. Conversions and Elections of Subsequent Interest Periods.......25
2.8. Increase and Decrease in Amounts...............................26
2.9. Fees...........................................................26
2.10. Use of Proceeds................................................26
ARTICLE III
Letters of Credit
3.1. Letters of Credit..............................................27
3.2. Reimbursement..................................................27
3.3. Letter of Credit Facility Fees.................................29
3.4. Administrative Fees............................................29
ARTICLE IV
Change in Circumstances
4.1. Increased Cost and Reduced Return..............................30
4.2. Limitation on Types of Loans...................................31
4.3. Illegality.....................................................32
4.4. Treatment of Affected Loans....................................32
4.5. Compensation...................................................32
<PAGE>
4.6. Taxes..........................................................32
ARTICLE V
Facility Guaranty
5.1. Facility Guaranty..............................................34
5.2. Payment........................................................34
5.3. Guaranty Absolute..............................................34
5.4. Reinstatement..................................................35
5.5. Waiver; Subrogation............................................35
ARTICLE VI
Conditions to Making Loans and Issuing Letters of Credit
6.1. Conditions of Initial Advance..................................37
6.2. Conditions of Loans and Letter of Credit.......................38
ARTICLE VII
Representations and Warranties
7.1. Organization and Authority.....................................40
7.2. Loan Documents.................................................40
7.3. Solvency.......................................................41
7.4. Subsidiaries and Stockholders..................................41
7.5. Ownership Interests............................................41
7.6. Financial Condition............................................41
7.7. Title to Properties............................................42
7.8. Taxes..........................................................42
7.9. Other Agreements...............................................42
7.10. Litigation.....................................................42
7.11. Margin Stock...................................................42
7.12. Investment Company.............................................43
7.13. Patents, Etc...................................................43
7.14. No Untrue Statement............................................43
7.15. No Consents, Etc...............................................43
7.16. Employee Benefit Plans.........................................44
7.17. No Default.....................................................45
7.18. Hazardous Materials............................................45
7.19. RICO...........................................................45
7.20. Year 2000 Compliance...........................................45
ii
<PAGE>
ARTICLE VIII
Affirmative Covenants
8.1. Financial Reports, Etc.........................................46
8.2. Maintain Properties............................................47
8.3. Existence, Qualification, Etc..................................47
8.4. Regulations and Taxes..........................................47
8.5. Insurance......................................................48
8.6. True Books.....................................................48
8.7. Right of Inspection............................................48
8.8. Observe all Laws...............................................48
8.9. Governmental Licenses..........................................48
8.10. Covenants Extending to Other Persons...........................48
8.11. Officer's Knowledge of Default.................................48
8.12. Suits or Other Proceedings.....................................48
8.13. Notice of Discharge of Hazardous Material or
Environmental Complaint......................................49
8.14. Environmental Compliance.......................................49
8.15. Indemnification................................................49
8.16. Further Assurances.............................................49
8.17. Employee Benefit Plans.........................................50
8.18. Continued Operations...........................................50
8.19. New Subsidiaries...............................................50
8.20. Year 2000 Compliance...........................................51
ARTICLE IX
Negative Covenants
9.1. Financial Covenants............................................52
9.2. Acquisitions...................................................52
9.3. Capital Expenditures...........................................52
9.4. Liens..........................................................52
9.5. Indebtedness...................................................53
9.6. Transfer of Assets.............................................55
9.7. Investments....................................................55
9.8. Merger or Consolidation........................................55
9.9. Restricted Payments............................................56
9.10. Transactions with Affiliates...................................56
9.11. Compliance with ERISA..........................................56
9.12. Fiscal Year....................................................57
9.13. Dissolution, etc...............................................57
9.14. Negative Pledge Clauses........................................57
9.15. Partnerships...................................................57
iii
<PAGE>
ARTICLE X
Events of Default and Acceleration
10.1. Events of Default..............................................58
10.2. Lender to Act..................................................61
10.3. Cumulative Rights..............................................61
10.4. No Waiver......................................................61
10.5. Allocation of Proceeds.........................................61
ARTICLE XI
Miscellaneous
11.1. Participations.................................................62
11.2. Notices........................................................62
11.3. Setoff.........................................................63
11.4. Survival.......................................................63
11.5. Expenses.......................................................63
11.6. Amendments.....................................................64
11.7. Counterparts...................................................64
11.8. Termination....................................................64
11.9. Indemnification; Limitation of Liability.......................65
11.10. Severability...................................................65
11.11. Entire Agreement...............................................65
11.12. Agreement Controls.............................................65
11.13. Usury Savings Clause...........................................65
11.14. GOVERNING LAW; WAIVER OF JURY TRIAL............................66
EXHIBIT A Notice of Appointment (or Revocation) of
Authorized Representative..............................A-1
EXHIBIT B Form of Borrowing Notice.................................B-1
EXHIBIT C Form of Interest Rate Selection Notice...................C-1
EXHIBIT D Form of Revolving Note...................................D-1
EXHIBIT E Form of Opinion of Borrowers'Counsel.....................E-1
EXHIBIT F Compliance Certificate...................................F-1
EXHIBIT G Form of Guaranty Agreement...............................G-1
Schedule 1.1 Existing Letters of Credit...............................S-1
Schedule 7.4 Subsidiaries and Investments in Other Persons............S-1
Schedule 7.6 Indebtedness.............................................S-2
Schedule 7.7 Liens....................................................S-3
Schedule 7.8 Tax Matters..............................................S-4
Schedule 7.10 Litigation...............................................S-5
Schedule 7.18 Hazardous Materials......................................S-6
iv
<PAGE>
REVOLVING CREDIT AND REIMBURSEMENT AGREEMENT
THIS REVOLVING CREDIT AND REIMBURSEMENT AGREEMENT, dated as of November
30, 1998 (the "Agreement"), is made by and
WORLD FUEL INTERNATIONAL, S.A., a corporation organized and existing
under the laws of Costa Rica ("WFI"), with its principal place of business in
Miami Springs, Florida;
TRANS-TEC INTERNATIONAL, S.A., a corporation organized and existing
under the laws of Costa Rica ("TTI" and collectively with WFI the "Borrowers"
and individually a "Borrower") with its principal place of business in Miami
Springs, Florida;
WORLD FUEL SERVICES CORPORATION, a Florida corporation ("WFS") with its
principal place of business in Miami Springs, Florida, and owner of all of the
issued and outstanding capital stock of each of the Borrowers;
NATIONSBANK, N.A., a national banking association organized and
existing under the laws of the United States, as a Lender (the "Lender");
W I T N E S S E T H:
WHEREAS, the Borrowers have requested and the Lender has agreed,
subject to terms and conditions of this Agreement, to make available to the
Borrowers a revolving credit facility of up to $5,000,000, the proceeds of which
are to be used for working capital, capital expenditures and other general
corporate purposes and which shall include a letter of credit facility of up to
$5,000,000 for the issuance of documentary and standby letters of credit; and
WHEREAS, as a condition to making the facility available the Lender has
required that WFS guaranty payment of the obligations of the Borrowers arising
hereunder;
NOW, THEREFORE, the Borrowers, WFS and the Lender hereby agree as
follows:
<PAGE>
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. For the purposes of this Agreement, in addition to
the definitions set forth above, the following terms shall have the respective
meanings set forth below:
"Acquisition" means the acquisition of (i) a controlling
equity interest in another Person (including the purchase of an option,
warrant or convertible or similar type security to acquire such a
controlling interest at the time it becomes exercisable by the holder
thereof), whether by purchase of such equity interest or upon exercise
of an option or warrant for, or conversion of securities into, such
equity interest, or (ii) assets of another Person which constitute all
or substantially all of the assets of such Person or of a line or lines
of business conducted by such Person.
"Advance" means a borrowing under the Revolving Credit
Facility consisting of a Base Rate Loan or a Eurodollar Rate Loan.
"Affiliate" means any Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with either Borrower; or (ii) which beneficially
owns or holds 20% or more of any class of the outstanding voting stock
(or in the case of a Person which is not a corporation, 20% or more of
the equity interest) of either Borrower; or 20% or more of any class of
the outstanding voting stock (or in the case of a Person which is not a
corporation, 20% or more of the equity interest) of which is
beneficially owned or held by a Borrower. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
ownership of voting stock, by contract or otherwise.
"Applicable Margin" means that percent per annum set forth
below, which shall be based upon the Consolidated Fixed Charge Coverage
Ratio for the Four-Quarter Period most recently ended as specified
below:
2
<PAGE>
APPLICABLE
MARGIN
CONSOLIDATED FIXED EURODOLLAR
CHARGE COVERAGE RATIO RATE
--------------------- ----------
(a) Greater than or equal
to 7.00 to 1.0 .50%
(b) Greater than or equal
to 6.00 to 1.00 but
less than 7.00 to 1.00 .55%
(c) Greater than or equal
to 5.00 to 1.00 but
less than 6.00 to 1.00 .65%
(d) Greater than or equal
to 3.50 to 1.00 but
less than 5.00 to 1.00 .75%
(e) Greater than or equal
to 1.35 to 1.00 but
less than 3.50 to 1.00 1.00%
The Applicable Margin shall be established at the end of each fiscal
quarter of WFS (each, a "Determination Date"). Any change in the
Applicable Margin following each Determination Date shall be determined
based upon the computations set forth in the certificate furnished to
the Lender pursuant to SECTION 8.1(A)(II) and SECTION 8.1(B)(II),
subject to review and approval of such computations by the Lender, and
shall be effective commencing on the date following the date such
certificate is received (or, if earlier, the date such certificate was
required to be delivered) until the date following the date on which a
new certificate is delivered or is required to be delivered, whichever
shall first occur.
"Applicable Unused Fee" means that percent per annum set forth
below, which shall be based upon the Consolidated Fixed Charge Coverage
Ratio for the Four-Quarter Period most recently ended as specified
below:
3
<PAGE>
APPLICABLE
CONSOLIDATED FIXED UNUSED
CHARGE COVERAGE RATIO FEE
--------------------- ----------
(a) Greater than or equal
to 7.00 to 1.0 .15%
(b) Greater than or equal
to 6.00 to 1.00 but
less than 7.00 to 1.00 .18%
(c) Greater than or equal
to 5.00 to 1.00 but
less than 6.00 to 1.00 .20%
(d) Greater than or equal
to 3.50 to 1.00 but
less than 5.00 to 1.00 .25%
(e) Greater than or equal
to 1.35 to 1.00 but
less than 3.50 to 1.00 .375%
The Applicable Unused Fee shall be established at the end of each
fiscal quarter of WFS (the "Determination Date"). Any change in the
Applicable Unused Fee following each Determination Date shall be
determined based upon the computations set forth in the certificate
furnished to the Lender pursuant to SECTION 8.1(A)(II) and SECTION
8.1(B)(II), subject to review and approval of such computations by the
Lender and shall be effective commencing on the date following the date
such certificate is received (or, if earlier, the date such certificate
was required to be delivered) until the date following the date on
which a new certificate is delivered or is required to be delivered,
whichever shall first occur.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit, or
similar documentation, executed by either of the Borrowers and WFS from
time to time and delivered to the Issuing Bank to support the issuance
of Letters of Credit.
"Authorized Representative" means any of the President,
Executive Vice President, Chief Financial Officer or Chairman of the
Board of Directors of WFI, or any other Person expressly designated by
the Board of Directors of WFI (or the appropriate committee thereof) as
an Authorized Representative of the Borrowers, as set forth from time
to time in a certificate in the form of EXHIBIT A.
4
<PAGE>
"Base Rate" means the per annum rate of interest equal to the
greater of (i) the Prime Rate or (ii) the Federal Funds Effective Rate
plus one-half of one percent (1/2%). Any change in the Base RatE
resulting from a change in the Prime Rate or the Federal Funds
Effective Rate shall become effective as of 12:01 A.M. of the Business
Day on which each such change occurs. The Base Rate is a reference rate
used by the Lender in determining interest rates on certain loans and
is not intended to be the lowest rate of interest charged on any
extension of credit to any debtor.
"Base Rate Loan" means a Loan for which the rate of interest
is determined by reference to the Base Rate.
"Base Rate Refunding Loan" means a Base Rate Loan made to
satisfy Reimbursement Obligations arising from a drawing under a Letter
of Credit.
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body).
"Borrowers' Account" means a demand deposit account with the
Lender, which may be maintained at one or more offices of the Lender.
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Revolving Credit
Facility, in the form of EXHIBIT B.
"Business Day" means, (i) with respect to any Base Rate Loan,
any day which is not a Saturday, Sunday or a day on which banks in the
States of New York and North Carolina are authorized or obligated by
law, executive order or governmental decree to be closed and, (ii) with
respect to any Eurodollar Rate Loan, any day which is a Business Day,
as described above, and on which the relevant international financial
markets are open for the transaction of business contemplated by this
Agreement in London, England, New York, New York and Charlotte, North
Carolina.
"Capital Expenditures" means, with respect to WFS and its
Subsidiaries, for any period the SUM of (without duplication) (i) all
expenditures (whether paid in cash or accrued as liabilities) by WFS or
any Subsidiary during such period for items that would be classified as
"property, plant or equipment" or comparable items on the balance sheet
of WFS and its Subsidiaries, including without limitation all
transactional costs incurred in connection with such expenditures
provided the same have been capitalized, excluding, however, the amount
of any Capital Expenditures paid for with proceeds of casualty
insurance as evidenced in writing and submitted to the Lender together
with any compliance certificate delivered pursuant to SECTION 8.1(A) or
(B), and (ii) with respect to any Capital Lease entered into by WFS or
its Subsidiaries during such period, the present value of the lease
payments due under such Capital Lease over the term of such Capital
Lease applying a discount rate equal to the interest rate provided in
such lease (or in the absence of a stated interest rate, that rate used
in the preparation of the financial statements described in SECTION
8.1(A)), all the foregoing in accordance with GAAP applied on a
Consistent Basis.
5
<PAGE>
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement No. 13 of the Financial Accounting Standards Board
and any successor thereof.
"Closing Date" means the date as of which this Agreement is
executed by the Borrowers, WFS and the Lender and on which the
conditions set forth in SECTION 6.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder.
"Consistent Basis" means, in reference to the application of
GAAP, that the accounting principles observed in the period referred to
are comparable in all material respects to those applied in the
preparation of the audited financial statements of WFS referred to in
SECTION 7.6(A).
"Consolidated Capitalization" means, at any time at which the
amount thereof is to be determined, the sum of Consolidated Funded
Indebtedness plus Consolidated Shareholders' Equity.
"Consolidated Current Liabilities" means, the aggregate amount
carried as current liabilities on the books of WFS and its
Subsidiaries, on a consolidated basis and after eliminating all
intercompany items, determined in accordance with GAAP applied on a
Consistent Basis, LESS any such amount constituting (i) Obligations of
the Borrowers incurred pursuant to this Agreement and (ii) obligations
of WFS under the WFS Credit Agreement.
"Consolidated EBITDA" means, with respect to the WFS and its
Subsidiaries for any Four-Quarter Period ending on the date of
computation thereof, the SUM of, without duplication, (i) Consolidated
Net Income, (ii) Consolidated Interest Expense, (iii) provisions for
income taxes, (iv) depreciation, and (v) amortization, all determined
on a consolidated basis in accordance with GAAP applied on a Consistent
Basis.
"Consolidated Fixed Charge Coverage Ratio" means, with respect
to the WFS and its Subsidiaries for any Four-Quarter Period ending on
the date of computation thereof, the ratio of (i) the sum, for such
period, of Consolidated EBITDA, MINUS capital expenditures to(ii)
Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges" means, with respect to WFS and
its Subsidiaries for any Four-Quarter Period ending on the date of
computation thereof, the SUM of, without duplication, (i) Consolidated
Interest Expense,(ii) Current Maturities of Long-Term Debt (including
all Capital Lease obligations), and (iii) all cash dividends and
distributions paid during such period (regardless of when declared) on
any shares of capital stock of the Borrower then outstanding, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis.
6
<PAGE>
"Consolidated Funded Indebtedness" means, at any time as of
which the amount thereof is to be determined, (i) all Indebtedness for
Money Borrowed (excluding from the computation thereof Consolidated
Current Liabilities other than Current Maturities of Long-Term Debt),
PLUS (ii) the face amount of all outstanding Standby Letters of Credit
issued for the account of WFS or any of its Subsidiaries and all
obligations (to the extent not duplicative) arising under such Letters
of Credit, all determined on a consolidated basis in accordance with
GAAP applied on a Consistent Basis.
"Consolidated Interest Expense" means, with respect to any
period of computation thereof, the gross interest expense of WFS and
its Subsidiaries, including without limitation (i) the amortization of
debt discounts, (ii) the amortization of all fees (including fees
payable in respect of any Rate Hedging Obligation) payable in
connection with the incurrence of Indebtedness to the extent included
in interest expense, and (iii) the portion of any payments made in
connection with Capital Leases allocable to interest expense, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Net Income" means, for WFS and its Subsidiaries,
for any period of computation thereof, the amount which, in conformity
with GAAP, would be set forth opposite the caption "Net Income" (or any
like caption) on a consolidated statement of earnings of the Borrower
and its Subsidiaries.
"Consolidated Shareholders' Equity" means, as of any date on
which the amount thereof is to be determined, the sum of the following
in respect of WFS and its Subsidiaries (determined on a consolidated
basis and excluding intercompany items among WFS and its Subsidiaries
and any upward adjustment after the Closing Date due to revaluation of
assets): (i) the amount of issued and outstanding share capital, PLUS
(ii) the amount of additional paid-in capital and retained income (or,
in the case of a deficit, minus the amount of such deficit), PLUS (iii)
the amount of any foreign currency translation adjustment (if positive,
or, if negative, minus the amount of such translation adjustment) MINUS
(iv) the book value of any treasury stock and the book value of any
stock subscription receivables, all as determined in accordance with
GAAP applied on a Consistent Basis.
"Consolidated Tangible Net Worth" means, as of any date on
which the amount thereof is to be determined, Consolidated
Shareholders' Equity MINUS the net book value of all assets which would
be treated as intangible assets, all as determined on a consolidated
basis in accordance with GAAP applied on a Consistent Basis.
"Contingent Obligation" means any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise
becomes or is contingently liable upon (by direct or indirect agreement
to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss)
the Indebtedness of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of
dividends or other distributions upon the shares of any other Person.
The amount of any person's obligation under any Contingent Obligation
shall
7
<PAGE>
(subject to any limitation set forth therein) be deemed to be the
outstanding principal amount (or maximum principal amount, if larger)
of the Indebtedness guaranteed thereby.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to SECTION 2.7 hereof of a Eurodollar Rate Loan
of one Type as a Eurodollar Rate Loan of the same Type from one
Interest Period to the next Interest Period.
"Convert", "Conversion" and "Converted" shall refer to a
conversion pursuant to SECTION 2.7 or ARTICLE IV of one Type of Loan
into another Type of Loan.
"Credit Party" means, collectively, each of the Borrowers and
WFS.
"Current Maturities of Long-Term Debt" means, with respect to
Indebtedness for Money Borrowed that matures more than one year from
the date of its creation or matures within one year of the date of its
creation but is renewable or extendable, at the option of WFS or any
Subsidiary, to a date more than one year from the date of its creation,
all payments in respect thereof that are required to be made within one
year from the date of any determination thereof.
"Default" means any of the occurrences set forth as such in
SECTION 10.1 which, upon the expiration of any applicable grace period,
would constitute an Event of Default hereunder.
"Default Rate" means (i) with respect to each Eurodollar Rate
Loan, until the end of the Interest Period applicable thereto, a rate
of two percent (2%) above the Eurodollar Rate applicable to such Loan,
and thereafter at a rate of interest per annum which shall be two
percent (2%) above the Base Rate, (ii) with respect to Base Rate Loans,
at a rate of interest per annum which shall be two percent (2%) above
the Base Rate and (iii) in any case, the maximum rate permitted by
applicable law, if lower.
"Documentary Letters of Credit" means the documentary letters
of credit issued by the Issuing Bank for the account of either Borrower
upon the terms and conditions of this Agreement.
"Dollars" and the symbol "$" means dollars constituting legal
tender for the payment of public and private debts in the United States
of America.
"Eligible Securities" means the following obligations and any
other obligations previously approved in writing by the Lender:
(a) Government Securities;
(b) obligations of any corporation organized under
the laws of any state of the United States of America or under
the laws of any other nation, payable in the United States of
America, expressed to mature not later than 92 days following
the
8
<PAGE>
date of issuance thereof and rated in an investment grade
rating category by S&P and Moody's;
(c) interest bearing demand or time deposits issued
by the Lender or certificates of deposit maturing within one
year days from the date of issuance thereof and issued by a
bank or trust company organized under the laws of the United
States or of any state thereof having capital surplus and
undivided profits aggregating at least $400,000,000 and being
rated "A-" or better by S&P or "A" or better by Moody's;
(d) Repurchase Agreements;
(e) Municipal Obligations;
(f) Pre-Refunded Municipal Obligations;
(g) shares of mutual funds which invest in
obligations described in paragraphs (a) through (f) above, the
shares of which mutual funds are at all times rated "AAA" by
S&P;
(h) tax-exempt or taxable adjustable rate preferred
stock issued by a Person having a rating of its long term
unsecured debt of "A" or better by S&P or "A-3" or better by
Moody's; and
(i) asset-backed remarketed certificates of
participation representing a fractional undivided interest in
the assets of a trust, which certificates are rated at least
"A-1" by S&P and "P-1" by Moody's.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (i) is maintained for
employees of either Borrower or any of its ERISA Affiliates or is
assumed by either Borrower or any of its ERISA Affiliates in connection
with any Acquisition or (ii) has at any time been maintained for the
employees of either Borrower or any current or former ERISA Affiliate.
"Environmental Laws" means any federal, state or local
statute, law, ordinance, code, rule, regulation, order, decree, permit
or license regulating, relating to, or imposing liability or standards
of conduct concerning any environmental matters or conditions,
environmental protection or conservation, including without limitation,
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended; the Superfund Amendments and Reauthorization
Act of 1986, the Resource Conservation and Recovery Act, as amended;
the Toxic Substances Control Act, as amended; the Clean Air Act, as
amended; the Clean Water Act, as amended; together with all regulations
promulgated thereunder, and any other "Superfund" or "Superlien" law.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all
rules and regulations promulgated thereunder.
"ERISA Affiliate", as applied to either Borrower, means any
Person or trade or business which is a member of a group which is under
common control with the Borrower, who together with the Borrower, is
treated as a single employer within the meaning of Section 414(b) and
(c) of the Code.
"Eurodollar Rate Loan" means a Loan for which the rate of
interest is determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means the interest rate per annum calculated
according to the following formula:
Eurodollar = INTERBANK OFFERED RATE + Applicable
---------------------------------
Rate 1- Eurodollar Reserve Requirement Margin
"Event of Default" means any of the occurrences set forth as
such in SECTION 10.1, for which the applicable grace period, if any,
has expired.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"Existing Letters of Credit" means those Letters of Credit
described on SCHEDULE 1.1 previously issued by the Issuing Bank under
the Prior Agreement.
"Facility Guaranty" means each Guaranty and Suretyship
Agreement between one or more Guarantors and the Lender delivered
pursuant to SECTION 8.19, as the same may be amended, modified or
supplemented.
"Facility Termination Date" means the date on which the
Revolving Credit Termination Date shall have occurred, no Letters of
Credit shall remain outstanding and the Borrowers shall have fully,
finally and irrevocably paid and satisfied all Obligations.
"Federal Funds Effective Rate" means, for any day, the rate
per annum (rounded upward to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers on such day, as published by the Federal Reserve Bank of New
York on the Business Day next succeeding such day, PROVIDED that (a) if
such day is not a Business Day, the Federal Funds Effective Rate for
such day shall be such rate on such transactions on the next preceding
Business Day, and (b) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Effective Rate for such day
shall be the average rate quoted to the Lender on such day on such
transaction as determined by the Lender.
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"Fiscal Year" means the twelve month fiscal period of WFS and
its Subsidiaries commencing on April 1 of each calendar year and ending
on March 31 of the next following calendar year.
"Foreign Benefit Law" means any applicable statute, law,
ordinance, code, rule, regulation, order or decree of any foreign
nation or any province, state, territory, protectorate or other
political subdivision thereof regulating, relating to, or imposing
liability or standards of conduct concerning, any Employee Benefit
Plan.
"Four-Quarter Period" means a period of four full consecutive
fiscal quarters of WFS and its Subsidiaries, taken together as one
accounting period.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board, the American Institute of Certified Public Accountants
or which have other substantial authoritative support and are
applicable in the circumstances as of the date of a report.
"Government Securities" means direct obligations of, or
obligations the timely payment of principal and interest on which are
fully and unconditionally guaranteed by, the United States of America.
"Governmental Authority" shall mean any Federal, state,
municipal, national or other governmental department, commission,
board, bureau, court, agency or instrumentality or political
subdivision thereof or any entity or officer exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to any government or any court, in each case whether
associated with a state of the United States, the United States, or a
foreign entity or government.
"Guaranties" means all obligations of WFS or any Subsidiary
directly or indirectly guaranteeing, or in effect guaranteeing, any
Indebtedness or other obligation of any other Person.
"Guarantors" means, at any date, the Subsidiaries who are
required to be parties to a Facility Guaranty at such date.
"Hazardous Material" means and includes any pollutant,
contaminant, or hazardous, toxic or dangerous waste, substance or
material (including without limitation petroleum products,
asbestos-containing materials, and lead), the generation, handling,
storage, disposal, treatment or emission of which is subject to any
Environmental Law.
"Indebtedness" means with respect to any Person, without
duplication, all Indebtedness for Money Borrowed, all indebtedness of
such Person for the acquisition of property or arising under Rate
Hedging Obligations, all indebtedness secured by any Lien on the
property of such Person whether or not such indebtedness is assumed,
all liability of such
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Person by way of endorsements (other than for collection or deposit in
the ordinary course of business), all Contingent Obligations and
Letters of Credit, and other items which in accordance with GAAP is
required to be classified as a liability on a balance sheet; but
excluding all accounts payable in the ordinary course of business so
long as payment therefor is due within one year; provided that in no
event shall the term Indebtedness include surplus and retained
earnings, lease obligations (other than pursuant to Capital Leases),
reserves for deferred income taxes and investment credits, other
deferred credits or reserves, or deferred compensation obligations.
"Indebtedness for Money Borrowed" means with respect to WFS
and its Subsidiaries on a consolidated basis, all indebtedness of WFS
or any of its Subsidiaries in respect of money borrowed, including
without limitation all Capital Leases and the deferred purchase price
of any property or asset, evidenced by a promissory note, bond,
debenture or similar written obligation for the payment of money
(including without limitation conditional sales contracts or similar
title retention agreements).
"Interbank Offered Rate" means, for any Eurodollar Rate Loan
or Eurodollar Market Loan for the Interest Period applicable thereto,
the rate per annum (rounded upwards, if necessary, to the nearest
one-one hundredth (1/100) of one percent) appearing on Dow Jones
Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason
such rate is not available, the term "Interbank Offered Rate" shall
mean, for any Eurodollar Rate Loan or Eurodollar Market Loan for the
Interest Period applicable thereto, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable to
such Interest Period; PROVIDED, HOWEVER, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if necessary, to
the nearest 1/100 of 1%).
"Interest Period" means, for each Eurodollar Rate Loan, a
period commencing on the date such Eurodollar Rate Loan is made or
converted and ending, at the Borrowers' option, on the date one, two,
three or six months thereafter as notified to the Lender by the
Authorized Representative three (3) Business Days prior to the
beginning of such Interest Period; PROVIDED, that,
(i) if the Authorized Representative fails to notify
the Lender of the length of an Interest Period three (3)
Business Days prior to the first day of such Interest Period,
the Loan for which such Interest Period was to be determined
shall be deemed to be a Base Rate Loan as of the first day
thereof;
(ii) if an Interest Period for a Eurodollar Rate Loan
would end on a day which is not a Business Day, such Interest
Period shall be extended to the next Business Day (unless such
extension would cause the applicable Interest Period to end
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<PAGE>
in the succeeding calendar month, in which case such Interest
Period shall end on the next preceding Business Day);
(iii) any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of a calendar month;
(iv) no Interest Period with respect to any Loans
shall extend past the Stated Termination Date; and
(v) there shall not be more than five (5) Interest
Periods in effect on any day.
"Interest Rate Selection Notice" means the written notice
delivered by an Authorized Representative in connection with the
election of a subsequent Interest Period for any Eurodollar Rate Loan
or the conversion of any Eurodollar Rate Loan into a Base Rate Loan or
the conversion of any Base Rate Loan into a Eurodollar Rate Loan, in
the form of EXHIBIT C.
"Issuing Bank" means NationsBank as issuer of Letters of
Credit under ARTICLE III.
"LC Account Agreement" means the LC Account Agreement dated as
of the date hereof among the Borrowers and the Issuing Bank, as
amended, modified or supplemented from time to time.
"Lending Office" means the Lending Office of the Lender
designated on the signature pages hereof or such other office of the
Lender (or of an affiliate of the Lender) as the Lender may from time
to time specify to the Authorized Representative as the office by which
its Loans are to be made and maintained.
"Letters of Credit" means, collectively, all Documentary
Letters of Credit, and all Standby Letters of Credit, advancing credit
or securing an obligation on behalf of either or both of the Borrowers.
"Letter of Credit Commitment" means an amount not to exceed
$5,000,000.
"Letter of Credit Facility" means the facility described in
ARTICLE III hereof providing for the issuance by the Issuing Bank for
the account of either or both of the Borrowers of Letters of Credit in
an aggregate stated amount at any time outstanding not exceeding the
Total Letter of Credit Commitment.
"Letter of Credit Outstandings" means, as of any date of
determination, the aggregate amount remaining undrawn under all Letters
of Credit plus Reimbursement Obligations then outstanding.
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"Lien" means any interest in property securing any obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract,
and including but not limited to the lien or security interest arising
from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes. For the purposes of this Agreement, the Borrower and any
Subsidiary shall be deemed to be the owner of any property which it has
acquired or holds subject to a conditional sale agreement, financing
lease, or other arrangement pursuant to which title to the property has
been retained by or vested in some other Person for security purposes.
"Loan" or "Loans" means any borrowing pursuant to an Advance
under the Revolving Credit Facility.
"Loan Documents" means this Agreement, the Note, the Facility
Guaranties, the LC Account Agreement, the Applications and Agreements
for Letter of Credit, and all other instruments and documents
heretofore or hereafter executed or delivered to or in favor of the
Lender in connection with the Loans made and transactions contemplated
under this Agreement, as the same may be amended, supplemented or
replaced from the time to time.
"Material Adverse Effect" means a material adverse effect on
(i) the business, properties, operations or condition, financial or
otherwise, of the Borrowers and their Subsidiaries, taken as a whole,
(ii) the ability of the Borrowers or any of their Subsidiaries to pay
or perform its respective obligations, liabilities and indebtedness
under the Loan Documents as such payment or performance becomes due in
accordance with the terms thereof, or (iii) the rights, powers and
remedies of the Lender under any Loan Document or the validity,
legality or enforceability thereof (including for purposes of clauses
(ii) and (iii) the imposition of burdensome conditions thereon);
provided, however, that the termination of the aviation joint venture
in Ecuador shall not be deemed to have a Material Adverse Effect.
"Material Contracts" means, collectively, any contract, lease,
agreement or commitment of either of the Borrowers or any Subsidiary,
including, without limitation, any fuel purchase agreements, the
expiration or termination of which could result in a Material Adverse
Effect.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which either of the Borrowers or any
ERISA Affiliate is making, or is accruing an obligation to make,
contributions or has made, or been obligated to make, contributions
within the preceding six (6) Fiscal Years.
"Municipal Obligations" means general obligations issued by,
and supported by the full taxing authority of, any state of the United
States of America or of any municipal
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<PAGE>
corporation or other public body organized under the laws of any such
state which are rated in the highest investment rating category by both
S&P and Moody's.
"Note" means the promissory note of the Borrowers evidencing
Loans executed and delivered to the Lender substantially in the form of
EXHIBIT D.
"Obligations" means the obligations, liabilities and
Indebtedness of the Borrowers with respect to (i) the principal and
interest on the Loans as evidenced by the Note, (ii) the Reimbursement
Obligations and otherwise in respect of the Letters of Credit, (iii)
all liabilities of Borrowers to the Lender which arise under a Swap
Agreement, and (iv) the payment and performance of all other
obligations, liabilities and Indebtedness of the Borrowers to the
Lender hereunder, under any one or more of the other Loan Documents or
with respect to the Loans.
"Outstandings" means, collectively, at any date, the Letter of
Credit Outstandings and Revolving Credit Outstandings on such date.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" means any employee pension benefit plan within
the meaning of Section 3(2) of ERISA, other than a Multiemployer Plan,
which is subject to the provisions of Title IV of ERISA or Section 412
of the Code and which (i) is maintained for employees of either of the
Borrowers or any of their ERISA Affiliates or is assumed by either of
the Borrowers or any of their ERISA Affiliates in connection with any
Acquisition or (ii) has at any time been maintained for the employees
of either of the Borrowers or any current or former ERISA Affiliate.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture or a government
or agency or political subdivision thereof.
"Pre-Refunded Municipal Obligations" means obligations of any
state of the United States of America or of any municipal corporation
or other public body organized under the laws of any such state which
are rated, based on the escrow, in the highest investment rating
category by both S&P and Moody's and which have been irrevocably called
for redemption and advance refunded through the deposit in escrow of
Government Securities or other debt securities which are (i) not
callable at the option of the issuer thereof prior to maturity, (ii)
irrevocably pledged solely to the payment of all principal and interest
on such obligations as the same becomes due and (iii) in a principal
amount and bear such rate or rates of interest as shall be sufficient
to pay in full all principal of, interest, and premium, if any, on such
obligations as the same becomes due as verified by a nationally
recognized firm of certified public accountants.
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<PAGE>
"Prime Rate" means the rate of interest per annum announced
publicly by the Lender as its prime rate from time to time. The Prime
Rate is not necessarily the best or the lowest rate of interest offered
by the Lender.
"Principal Office" means the office of the Lender at
NationsBank, N.A., Independence Center, 15th Floor, NC1 001-15-04,
Charlotte, North Carolina 28255, Attention: Agency Services, or such
other office and address as the Lender may from time to time designate.
"Prior Agreement" means the Amended and Restated Credit
Agreement dated February 21, 1997 between WFS and NationsBank, N.A.
(successor by merger of NationsBank, N.A. (South)).
"Rate Hedging Obligations" means any and all obligations of
WFS or any Subsidiary, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions
therefor), under (i) any and all agreements, devices or arrangements
designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates
applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, Dollar-denominated or
cross-currency interest rate exchange agreements, forward currency
exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts, warrants and
those commonly known as interest rate "swap" agreements; and (ii) any
and all cancellations, buybacks, reversals, terminations or assignments
of any of the foregoing.
"Regulation D" means Regulation D of the Board as the same may
be amended or supplemented from time to time.
"Regulatory Change" means any change effective after the
Closing Date in United States federal or state laws or regulations
(including Regulation D and capital adequacy regulations) or foreign
laws or regulations or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks,
which includes the Lender, under any United States federal or state or
foreign laws or regulations (whether or not having the force of law) by
any court or governmental or monetary authority charged with the
interpretation or administration thereof or compliance by the Lender
with any request or directive regarding capital adequacy, including
those relating to "highly leveraged transactions," whether or not
having the force of law, and whether or not failure to comply therewith
would be unlawful and whether or not published or proposed prior to the
date hereof.
"Reimbursement Obligation" shall mean at any time, the
obligation of the Borrowers with respect to any Letter of Credit to
reimburse the Issuing Bank (including by the receipt by the Issuing
Bank of proceeds of Loans pursuant to SECTION 3.2) for amounts
theretofore paid by the Issuing Bank pursuant to a drawing under such
Letter of Credit.
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"Repurchase Agreement" means a repurchase agreement entered
into with any financial institution whose debt obligations or
commercial paper are rated "A" by either of S&P or Moody's or "A-1" by
S&P or "P-1" by Moody's.
"Reserve Requirement" means, at any time, the maximum rate at
which reserves (including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained
under regulations issued from time to time by the Board by member banks
of the Federal Reserve System (or any successor) by member banks of the
Federal Reserve System against "Eurocurrency liabilities" (as such term
is used in Regulation D). Without limiting the effect of the foregoing,
the Reserve Requirement shall reflect any other reserves required to be
maintained by such member banks with respect to (i) any category of
liabilities which includes deposits by reference to which the
Eurodollar Rate is to be determined, or (ii) any category of extensions
of credit or other assets which include Eurodollar Rate Loans. The
Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
"Restricted Payment" means (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of stock of WFS or any of its Subsidiaries (other than those payable or
distributable solely to WFS) now or hereafter outstanding, except a
dividend payable solely in shares of a class of stock to the holders of
that class; (b) any redemption, conversion, exchange, retirement or
similar payment, purchase or other acquisition for value, direct or
indirect, of any shares of any class of stock of WFS or any of its
Subsidiaries (other than those payable or distributable solely to the
Borrower) now or hereafter outstanding; (c) any payment made to retire,
or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire shares of any class of stock of WFS or any of
its Subsidiaries now or hereafter outstanding; and (d) any issuance and
sale of capital stock of any Subsidiary of WFS (or any option, warrant
or right to acquire such stock) other than to WFS.
"Revolving Credit Commitment" means the obligation of the
Lender to make Loans to the Borrowers up to an aggregate principal
amount at any one time outstanding equal to $5,000,000.
"Revolving Credit Facility" means the facility described in
ARTICLE II hereof providing for Loans to the Borrowers by the Lender in
the aggregate principal amount of the Revolving Credit Commitment.
"Revolving Credit Outstandings" means, as of any date of
determination, the aggregate principal amount of all Loans then
outstanding and all interest accrued thereon.
"Revolving Credit Termination Date" means (i) the Stated
Termination Date or (ii) such earlier date of termination of Lender's
obligations pursuant to SECTION 10.1 upon the occurrence of an Event of
Default, or (iii) such date as the Borrowers may voluntarily and
permanently terminate the Revolving Credit Facility by payment in full
of all Revolving Credit Outstandings and Letter of Credit Outstandings
and cancellation of all Letters of Credit.
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"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill.
"Single Employer Plan" means any employee pension benefit plan
covered by Title IV of ERISA in respect of which either of the
Borrowers or any Subsidiary is an "employer" as described in Section
4001(b) of ERISA and which is not a Multiemployer Plan.
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(i) the fair value of its assets (both at fair
valuation and at present fair saleable value on an orderly
basis) is in excess of the total amount of its liabilities,
including Contingent Obligations; and
(ii) it is then able and expects to be able to pay
its debts as they mature; and
(iii) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
"Standby Letters of Credit" means the standby letters of
credit issued by the Issuing Bank for the account of either of the
Borrowers upon the terms and conditions of this Agreement.
"Stated Termination Date" means November 29, 2003.
"Subsidiary" means any corporation or other entity in which
more than 50% of its outstanding voting stock or more than 50% of all
equity interests is owned directly or indirectly by WFS and/or by one
or more of WFS's Subsidiaries.
"Swap Agreement" means one or more agreements between either
of the Borrowers and any Person with respect to Indebtedness evidenced
by any or all of the Note, on terms mutually acceptable to Borrower and
such Person, which agreements create Rate Hedging Obligations;
PROVIDED, HOWEVER, that no such approval of the Lender shall be requird
to the extent such agreements are entered into between a Borrower and
the Lender.
"Termination Event" means: (i) a "Reportable Event" described
in Section 4043 of ERISA and the regulations issued thereunder (unless
the notice requirement has been waived by applicable regulation); or
(ii) the withdrawal of either of the Borrowers or any ERISA Affiliate
from a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or was deemed such
under Section 4062(e) of ERISA; or (iii) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate a Pension Plan by the PBGC; or (v) any other event or
condition which would constitute grounds under Section 4042(a) of ERISA
for the termination of, or the appointment of a trustee to administer,
any
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Pension Plan; or (vi) the partial or complete withdrawal of either of
the Borrowers or any ERISA Affiliate from a Multiemployer Plan; or
(vii) the imposition of a Lien pursuant to Section 412 of the Code or
Section 302 of ERISA; or (viii) any event or condition which results in
the reorganization or insolvency of a Multiemployer Plan under Section
4241 or Section 4245 of ERISA, respectively; or (ix) any event or
condition which results in the termination of a Multiemployer Plan
under Section 4041A of ERISA or the institution by the PBGC of
proceedings to terminate a Multiemployer Plan under Section 4042 of
ERISA.
"Type" shall mean any type of Loan (i.e., a Base Rate Loan or
a Eurodollar Rate Loan).
"Voting Stock" means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders
of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
"WFS Credit Agreement" means the Revolving Credit and
Reimbursement Agreement dated of even date herewith between WFS and
NationsBank, N.A., as lender, as amended, modified or restated from
time to time.
"Year 2000 Compliant" means all computer applications
(including those affected by information received from its suppliers
and vendors) that are material to the Borrower's or any of its
Subsidiaries' business and operations will on a timely basis be able to
perform properly data-sensitive functions involving all dates on and
after January 1, 2000;
"Year 2000 Problem" means the risk that computer applications
used by the Borrower and any of its Subsidiaries (including those
affected by information received from its suppliers and vendors) may be
unable to recognize and perform properly data-sensitive functions
involving certain dates on and after January 1, 2000.
1.2. RULES OF INTERPRETATION.
(a) All accounting terms not specifically defined herein shall
have the meanings assigned to such terms and shall be interpreted in
accordance with GAAP applied on a Consistent Basis.
(b) Each term defined in Article 1 or 9 of the Florida Uniform
Commercial Code shall have the meaning given therein unless otherwise
defined herein, except to the extent that the Uniform Commercial Code
of another jurisdiction is controlling, in which case such terms shall
have the meaning given in the Uniform Commercial Code of the applicable
jurisdiction.
(c) The headings, subheadings and table of contents used
herein or in any other Loan Document are solely for convenience of
reference and shall not constitute a part of any such document or
affect the meaning, construction or effect of any provision thereof.
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(d) Except as otherwise expressly provided, references herein
to articles, sections, paragraphs, clauses, annexes, appendices,
exhibits and schedules are references to articles, sections,
paragraphs, clauses, annexes, appendices, exhibits and schedules in or
to this Agreement.
(e) All definitions set forth herein or in any other Loan
Document shall apply to the singular as well as the plural form of such
defined term, and all references to the masculine gender shall include
reference to the feminine or neuter gender, and VICE VERSA, as the
context may require.
(f) When used herein or in any other Loan Document, words such
as "hereunder", "hereto", "hereof" and "herein" and other words of like
import shall, unless the context clearly indicates to the contrary,
refer to the whole of the applicable document and not to any particular
article, section, subsection, paragraph or clause thereof.
(g) References to "including" means including without limiting
the generality of any description preceding such term, and for purposes
hereof the rule of EJUSDEM GENERIS shall not be applicable to limit a
general statement, followed by or referable to an enumeration of
specific matters, to matters similar to those specifically mentioned.
(h) All dates and times of day specified herein shall refer to
such dates and times at Charlotte, North Carolina.
(i) Each of the parties to the Loan Documents and their
counsel have reviewed and revised, or requested (or had the opportunity
to request) revisions to, the Loan Documents, and any rule of
construction that ambiguities are to be resolved against the drafting
party shall be inapplicable in the construing and interpretation of the
Loan Documents and all exhibits, schedules and appendices thereto.
(j) Any reference to an officer of any Credit Party or any
other Person by reference to the title of such officer shall be deemed
to refer to each other officer of such Person, however titled,
exercising the same or substantially similar functions.
(k) All references to any agreement or document as amended,
modified or supplemented, or words of similar effect, shall mean such
document or agreement, as the case may be, as amended, modified or
supplemented from time to time only as and to the extent permitted
therein and in the Loan Documents.
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ARTICLE II
THE REVOLVING CREDIT FACILITY
2.1. LOANS.
(a) COMMITMENT. Subject to the terms and conditions of this
Agreement, the Lender agrees to make Advances to the Borrowers under
the Revolving Credit Facility from time to time from the Closing Date
until the Revolving Credit Termination Date up to but not exceeding the
Revolving Credit Commitment, PROVIDED, however, that the Lender will
not be required and shall have no obligation to make any such Advance
(i) so long as a Default or an Event of Default has occurred and is
continuing or (ii) if the Lender has accelerated the maturity of the
Note as a result of an Event of Default; PROVIDED further, however,
that immediately after giving effect to each such Advance, the
principal amount of Revolving Credit Outstandings plus Letter of Credit
Outstandings shall not exceed the Revolving Credit Commitment. Within
such limits, the Borrowers may borrow, repay and reborrow under the
Revolving Credit Facility on a Business Day from the Closing Date
until, but (as to borrowings and reborrowings) not including, the
Revolving Credit Termination Date; PROVIDED, however, that (y) no Loan
that is a Eurodollar Rate Loan shall be made which has an Interest
Period that extends beyond the Stated Termination Date and (z) each
Loan that is a Eurodollar Rate Loan may, subject to the provisions of
SECTION 2.6, be repaid only on the last day of the Interest Period with
respect thereto unless such payment is accompanied by the additional
payment, if any, required by SECTION 4.4.
(b) AMOUNTS. Except as otherwise permitted by the Lender from
time to time, the aggregate unpaid principal amount of the Revolving
Credit Outstandings plus Letter of Credit Outstandings shall not exceed
at any time the Revolving Credit Commitment, and, in the event there
shall be outstanding any such excess, the Borrowers shall immediately
make such payments and prepayments as shall be necessary to comply with
this restriction. Each Loan hereunder, other than Base Rate Refunding
Loans, and each conversion under SECTION 2.7, shall be in an amount of
at least $100,000, and, if greater than $100,000, an integral multiple
of $100,000.
(c) ADVANCES. An Authorized Representative shall give the
Lender (1) at least three (3) Business Days' irrevocable written notice
by telefacsimile transmission of a Borrowing Notice or Interest Rate
Selection Notice (as applicable) with appropriate insertions, effective
upon receipt, of each Loan that is a Eurodollar Rate Loan (whether
representing an additional borrowing hereunder or the conversion of a
borrowing hereunder from Base Rate Loans to Eurodollar Rate Loans)
prior to 10:30 A.M. and (2) irrevocable written notice by telefacsimile
transmission of a Borrowing Notice or Interest Rate Selection Notice
(as applicable) with appropriate insertions, effective upon receipt, of
each Loan (other than Base Rate Refunding Loans to the extent the same
are effected without notice pursuant to SECTION 2.1(C)(IV)) that is a
Base Rate Loan (whether representing an additional borrowing hereunder
or the conversion of borrowing hereunder from Eurodollar Rate Loans to
Base Rate Loans) prior to 10:30 A.M. on the day of such proposed Loan.
Each such notice shall specify the amount of the borrowing, the type of
Loan (Base Rate or Eurodollar Rate), the date of borrowing and, if a
Eurodollar Rate Loan, the Interest Period to be used in the computation
of interest.
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(ii) Not later than 2:00 P.M. on the date specified
for each borrowing under this SECTION 2.1, the Lender shall,
pursuant to the terms and subject to the conditions of this
Agreement, make the amount of the Advance or Advances
available to the Borrowers by delivery of the proceeds thereof
to the Borrowers' Account or otherwise as shall be directed in
the applicable Borrowing Notice by the Authorized
Representative and reasonably acceptable to the Lender.
(iii) The Borrowers shall have the option to elect
the duration of the initial and any subsequent Interest
Periods and to Convert the Loans in accordance with SECTION
2.7. Eurodollar Rate Loans and Base Rate Loans may be
outstanding at the same time, PROVIDED, HOWEVER, there shall
not be outstanding at any one time Eurodollar Rate Loans
having more than five (5) different Interest Periods. If the
Lender does not receive a Borrowing Notice or an Interest Rate
Selection Notice giving notice of election of the duration of
an Interest Period or of Conversion of any Loan to or
Continuation of a Loan as a Eurodollar Rate Loan by the time
prescribed by SECTION 2.1(C) OR 2.7, the Borrowers shall be
deemed to have elected to Convert such Loan to (or Continue
such Loan as) a Base Rate Loan until the Borrower notifies the
Lender in accordance with SECTION 2.7.
(iv) Notwithstanding the foregoing, if a drawing is
made under any Letter of Credit, such drawing is honored by
the Issuing Bank prior to the Stated Termination Date, and the
Borrowers shall not immediately fully reimburse the Issuing
Bank in respect of such drawing, (A) provided that the
conditions to making a Loan as herein provided shall then be
satisfied, the Reimbursement Obligation arising from such
drawing shall be paid to the Issuing Bank by the Lender
without the requirement of notice to or from the Borrowers
from immediately available funds which shall be advanced as a
Base Rate Refunding Loan by the Lender under the Revolving
Credit Facility, and (B) if the conditions to making a Loan as
herein provided shall not then be satisfied, the Lender shall
fund by payment to the Issuing Bank in immediately available
funds the purchase price from the Issuing Bank of the
Reimbursement Obligation. Any such Base Rate Refunding Loan
shall be advanced as, and shall continue as, a Base Rate Loan
unless and until the Borrower Converts such Base Rate Loan in
accordance with the terms of SECTION 2.7.
2.2. PAYMENT OF INTEREST. (a) The Borrowers shall pay interest to the
Lender on the outstanding and unpaid principal amount of each Loan for the
period commencing on the date of such Loan until such Loan shall be due at the
then applicable Base Rate for Base Rate Loans or applicable Eurodollar Rate for
Eurodollar Rate Loans, as designated by the Authorized Representative pursuant
to SECTION 2.1; PROVIDED, however, that if any amount shall not be paid when due
(at maturity, by acceleration or otherwise), all amounts outstanding hereunder
shall bear interest thereafter at the Default Rate.
(b) Interest on each Loan shall be computed on the basis of a
year of 360 days and calculated in each case for the actual number of days
elapsed. Interest on each Loan shall be paid (i) quarterly in arrears not later
than three (3) Business Days following the last Business Day of each March,
June, September and December, commencing December 31, 1998 for each Base Rate
Loan, (ii) on the last day of the applicable Interest Period for each Eurodollar
Rate Loan and, if such Interest Period extends for more than three (3) months,
at intervals of three (3) months after the first day of such Interest Period,
and (iii) upon payment in full of the principal amount of such Loan.
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2.3. PAYMENT OF PRINCIPAL. The principal amount of each Loan shall be
due and payable to the Lender in full on the Revolving Credit Termination Date,
or earlier as specifically provided herein. The principal amount of any Base
Rate Loan may be prepaid in whole or in part at any time. The principal amount
of any Eurodollar Rate Loan may be prepaid only at the end of the applicable
Interest Period unless the Borrowers shall pay to the Lender the additional
amount, if any, required under SECTION 4.4. All prepayments of Loans made by the
Borrowers shall be in the amount of $100,000 or such greater amount which is an
integral multiple of $100,000, or the amount equal to all Revolving Credit
Outstandings, or such other amount as necessary to comply with SECTION 2.1(B) or
SECTION 2.7.
2.4. NON-CONFORMING PAYMENTS. Each payment of principal (including any
prepayment) and payment of interest and fees, and any other amount required to
be paid to the Lender with respect to the Loans, shall be made to the Lender at
the Principal Office in Dollars and in immediately available funds before 12:30
P.M. on the date such payment is due. The Lender may, but shall not be obligated
to, debit the amount of any such payment which is not made by such time to any
ordinary deposit account, if any, of the Borrowers with the Lender.
(b) The Lender shall deem any payment made by or on behalf of
the Borrowers hereunder that is not made both in Dollars and in immediately
available funds and prior to 12:30 P.M. to be a non-conforming payment. Any such
payment shall not be deemed to be received by the Lender until the later of (i)
the time such funds become available funds and (ii) the next Business Day. Any
non-conforming payment may constitute or become a Default or Event of Default.
Interest shall continue to accrue on any principal as to which a non-conforming
payment is made until the later of (x) the date such funds become available
funds or (y) the next Business Day at the Default Rate from the date such amount
was due and payable.
(c) In the event that any payment hereunder or under the Note
becomes due and payable on a day other than a Business Day, then such due date
shall be extended to the next succeeding Business Day unless provided otherwise
under clause (ii) of the definition of "Interest Period"; PROVIDED that interest
shall continue to accrue during the period of any such extension and PROVIDED
further, that in no event shall any such due date be extended beyond the
Revolving Credit Termination Date.
(d) Notwithstanding any other provision of this Agreement,
each Borrower shall be jointly and severally liable as primary obligor and not
merely as surety for repayment of all Obligations arising under the Loan
Documents. Such joint and several liability shall apply to each Borrower
regardless of whether (i) any Loan was only requested by or made to the other
Borrower or the proceeds of any Loan were used only by the other Borrower, (ii)
any Letter of Credit was issued on the application of the other Borrower, (iii)
any interest rate election was made only by the other Borrower, or (iv) any
indemnification obligation or any other obligation arose only as a result of the
actions of the other Borrower; provided the liability of each Borrower under
this Agreement, the Notes and the other Loan Documents shall be limited to the
maximum amount of the Obligations for which such other Borrower may be liable
without violating any applicable fraudulent conveyance, fraudulent transfer or
comparable laws. Each Borrower shall retain any
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right of contribution arising under applicable law against the other
Borrower as the result of the satisfaction of any Obligations;
provided, neither Borrower shall assert such right of contribution
against the other Borrower until the Obligations shall have been paid
in full.
Without limiting the foregoing, each Borrower hereby irrevocably,
absolutely and unconditionally guarantees the full and punctual payment or
performance when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise, of all Obligations of the other
Borrower owing to Lender. This guarantee constitutes a guaranty of payment and
not of collection. The liability of each Borrower under the immediately
preceding two sentences shall be limited to the maximum amount for which such
other Borrower may be liable without violating any applicable fraudulent
conveyance, fraudulent transfer or comparable laws.
It is the intention of the parties that with respect to each Borrower
its obligations hereunder and under the other Loan Documents shall be absolute,
unconditional and irrevocable irrespective of:
(i) any lack of validity, legality or enforceability
of this Agreement, any Note or any other Loan Document as to
the other Borrower;
(ii) the failure of the Lender
(A) to enforce any right or remedy
against the other Borrower or any other Person
under the provisions of this Agreement, any
Note, any other Loan Document or otherwise, or
(B) to exercise any right or remedy
against any guarantor of, or collateral
securing, any Obligations;
(iii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
Obligations, or any other extension, compromise or renewal of
any Obligations;
(iv) any reduction, limitation, impairment or
termination of any Obligations with respect to the other
Borrower or any other Person (including any guarantor) for any
reason including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to (and
each Borrower hereby waives any right to or claim of) any
defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise or unenforceability
of, or any other event or occurrence affecting, any
Obligations with respect to the other Borrower;
(v) any addition, exchange, release, surrender or
nonperfection of any collateral, or any amendment to or waiver
or release or addition of, or consent to departure from, any
guaranty, held by the Lender or any holder of any Note
securing any of the Obligations; or
(vi) any other circumstance which might otherwise
constitute a defense available to, or a legal or equitable
discharge of, the other Borrower, any surety or any guarantor.
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Each Borrower agrees that its joint and several liability hereunder
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment (in whole or in part) of any of the Obligations is rescinded or
must be restored by the Lender or any holder of any Note, upon the insolvency,
bankruptcy or reorganization of either Borrower as though such payment had not
been made.
Each Borrower hereby expressly waives: (a) notice of the Lender's
acceptance of this Agreement; (b) notice of the existence or creation or
non-payment of all or any of the Obligations; (c) presentment, demand, notice of
dishonor, protest, and all other notices whatsoever other than notices expressly
provided for in this Agreement and (d) all diligence in collection or protection
of or realization upon the Obligations or any thereof, any obligation hereunder,
or any security for or guaranty of any of the foregoing.
No delay on the Lender's part in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by the
Lender of any right or remedy shall preclude any other or further exercise
thereof or the exercise of any other right or remedy. No action of the Lender
permitted hereunder shall in any way affect or impair any of their rights or any
of their obligations to either of the Borrowers under this Agreement.
2.5. NOTES. Loans made or Continued by the Lender pursuant to the terms
and conditions of this Agreement shall be evidenced by the Note payable to the
order of the Lender in the amount of the Revolving Credit Commitment, which Note
shall be dated the Closing Date and shall be duly completed, executed and
delivered by the Borrowers.
2.6. REDUCTIONS. The Borrowers shall, by notice from an Authorized
Representative, have the right from time to time but not more frequently than
once each calendar month, upon not less than three (3) Business Days' written
notice to the Lender, effective upon receipt, to reduce the Revolving Credit
Commitment. Each such reduction shall be in the aggregate amount of $500,000 or
such greater amount which is in an integral multiple of $100,000, or the entire
remaining Revolving Credit Commitment, and shall permanently reduce the
Revolving Credit Commitment. Each reduction of the Revolving Credit Commitment
shall be accompanied by payment of the Loans to the extent that the principal
amount of Revolving Credit Outstandings plus Letter of Credit Outstandings
exceeds the Revolving Credit Commitment after giving effect to such reduction,
together with accrued and unpaid interest on the amounts prepaid. No such
reduction shall result in the payment of any Eurodollar Rate Loan other than on
the last day of the Interest Period of such Eurodollar Rate Loan unless such
prepayment is accompanied by amounts due, if any, under SECTION 4.4.
2.7. CONVERSIONS AND ELECTIONS OF SUBSEQUENT INTEREST PERIODS. Subject
to the limitations set forth below and in ARTICLE IV, the Borrowers may:
(a) upon delivery, effective upon receipt, of a properly
completed Interest Rate Selection Notice to the Lender on or before 10:30 A.M.
on any Business Day, Convert all or a part of Eurodollar Rate Loans to Base Rate
Loans on the last day of the Interest Period for such Eurodollar Rate Loans; and
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(b) provided that no Default or Event of Default shall have
occurred and be continuing and upon delivery, effective upon receipt, of a
properly completed Interest Rate Selection Notice to the Lender on or before
10:30 A.M. three (3) Business Days' prior to the date of such election or
Conversion:
(i) elect a subsequent Interest Period for all or a
portion of Eurodollar Rate Loans to begin on the last day of
the then current Interest Period for such Eurodollar Rate
Loans; and
(ii) Convert Base Rate Loans to Eurodollar Rate Loans
on any Business Day.
Each election and Conversion pursuant to this SECTION 2.7 shall be
subject to the limitations on Eurodollar Rate Loans set forth in the definition
of "Interest Period" herein and in SECTIONS 2.1, 2.3 and ARTICLE IV.
2.8. INCREASE AND DECREASE IN AMOUNTS. The amount of the Revolving
Credit Commitment which shall be available to the Borrowers as Advances shall be
reduced by the aggregate amount of Outstanding Letters of Credit.
2.9. FEES.
(a) UNUSED FEE. For the period beginning on the Closing Date
and ending on the Revolving Credit Termination Date, the Borrowers agree to pay
to the Lender an unused fee equal to the Applicable Unused Fee multiplied by the
average daily amount by which the Revolving Credit Commitment exceeds the sum of
(i) Revolving Credit Outstandings plus (ii) Letter of Credit Outstandings. Such
fees shall be due in arrears not later than three (3) Business Days following
the last Business Day of each March, June, September and December commencing
December 31, 1998 to and on the Revolving Credit Termination Date (or such
earlier date as the Lenders refuse to fund hereunder).
(b) FACILITY FEE. The Borrowers agree to pay to the Lender,
for its own account a one time fee upon terms and conditions as provided in that
certain Fee Letter dated April 17, 1998 for agreeing to amend and extend the
terms of this Agreement.
2.10. USE OF PROCEEDS. The proceeds of the Loans made pursuant to the
Revolving Credit Facility hereunder shall be used by the Borrowers to repay
Indebtedness outstanding under the Prior Agreement, for general working capital
needs and other corporate purposes, including the making of Acquisitions and
Capital Expenditures permitted hereunder.
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ARTICLE III
LETTERS OF CREDIT
3.1. LETTERS OF CREDIT. The Issuing Bank agrees, subject to the terms
and conditions of this Agreement, upon request of either of the Borrowers to
issue from time to time for the account or benefit of either or both of the
Borrowers, Letters of Credit upon delivery to the Issuing Bank of an Application
and Agreement for Letter of Credit relating thereto in form and content
acceptable to the Issuing Bank; PROVIDED that (i) the Letter of Credit
Outstandings shall not exceed the Letter of Credit Commitment and (ii) no Letter
of Credit shall be issued if, after giving effect thereto, Letter of Credit
Outstandings plus Revolving Credit Outstandings shall exceed the Revolving
Credit Commitment. No Letter of Credit shall have an expiry date (including all
rights of the Borrowers named in such Letter of Credit to require renewal) or
payment date occurring later than the earlier to occur of (A) one year after the
date of its issuance with respect to Standby Letters of Credit or one hundred
eighty days after the date of its issuance with respect to Documentary Letters
of Credit; or (B) the fifth Business Day prior to the Stated Termination Date.
Each Credit Party agrees that it is jointly and severally liable for all
Reimbursement Obligations and other obligations with respect to Letters of
Credit previously issued or to be issued for the account or benefit of either
Borrower as if and to the same extent as if such Credit Party were the sole
applicant therefor, and that any Letters of Credit issued on application of a
Borrower or the joint application of the Borrowers and WFS shall be subject to
all the terms of this Agreement, including applicable sublimits.
3.2. REIMBURSEMENT.
(a) The Borrowers hereby unconditionally agrees to pay to the
Issuing Bank immediately on demand at the Principal Office all amounts required
to pay all drafts drawn or purporting to be drawn under the Letters of Credit
and all reasonable expenses incurred by the Issuing Bank in connection with the
Letters of Credit, and in any event and without demand to place in possession of
the Issuing Bank (which shall include Advances under the Revolving Credit
Facility if permitted by SECTION 2.1) sufficient funds to pay all debts and
liabilities arising under any Letter of Credit. The Issuing Bank agrees to give
the Borrowers prompt notice of any request for a draw under a Letter of Credit.
The Issuing Bank may charge any account either Borrower may have with it for any
and all amounts the Issuing Bank pays under a Letter of Credit, plus charges and
reasonable expenses as from time to time agreed to by the Issuing Bank and the
Borrowers; provided that to the extent permitted by SECTION 2.1(C)(IV) , amounts
shall be paid pursuant to Advances under the Revolving Credit Facility. The
Borrowers agree to pay the Issuing Bank interest on any Reimbursement
Obligations not paid when due hereunder at the Base Rate, or the maximum rate
permitted by applicable law, if lower, such rate to be calculated on the basis
of a year of 360 days for actual days elapsed.
(b) In accordance with the provisions of SECTION 2.1(C), the
Issuing Bank shall notify the Lender of any drawing under any Letter of Credit
promptly following the receipt by the Issuing Bank of such drawing.
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(c) The issuance by the Issuing Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in ARTICLE V, be
subject to the conditions that such Letter of Credit be in such form and contain
such terms as shall be reasonably satisfactory to the Issuing Bank consistent
with the then current practices and procedures of the Issuing Bank with respect
to similar letters of credit, and the Borrower or Borrowers shall have executed
and delivered such other instruments and agreements relating to such Letters of
Credit as the Issuing Bank shall have reasonably requested consistent with such
practices and procedures. All Letters of Credit shall be issued pursuant to and
subject to the Uniform Customs and Practice for Documentary Credits, 1993
revision, International Chamber of Commerce Publication No. 500 and all
subsequent amendments and revisions thereto.
(d) The Borrowers agree that the Issuing Bank may, in its sole
discretion, accept or pay, as complying with the terms of any Letter of Credit,
any drafts or other documents otherwise in order which may be signed or issued
by an administrator, executor, trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, liquidator, receiver, attorney in fact or
other legal representative of a party who is authorized under such Letter of
Credit to draw or issue any drafts or other documents.
(e) Without limiting the generality of the provisions of
SECTION 11.9, each Borrower hereby agrees to indemnify and hold harmless the
Issuing Bank from and against any and all claims and damages, losses,
liabilities, reasonable costs and expenses which the Issuing Bank may incur (or
which may be claimed against the Issuing Bank) by any Person by reason of or in
connection with the issuance or transfer of or payment or failure to pay under
any Letter of Credit; PROVIDED that the Borrowers shall not be required to
indemnify the Issuing Bank for any claims, damages, losses, liabilities, costs
or expenses to the extent, but only to the extent, (i) caused by the willful
misconduct or gross negligence of the party to be indemnified or (ii) caused by
the failure of the Issuing Bank to pay under any Letter of Credit after the
presentation to it of a request for payment strictly complying with the terms
and conditions of such Letter of Credit, unless such payment is prohibited by
any law, regulation, court order or decree. The indemnification and hold
harmless provisions of this SECTION 3.2(E) shall survive repayment of the
Obligations, occurrence of the Revolving Credit Termination Date and expiration
or termination of this Agreement.
(f) Without limiting Borrowers' rights as set forth in SECTION
3.2(E), the obligation of the Borrowers to immediately reimburse the Issuing
Bank for drawings made under Letters of Credit and the Issuing Bank's right to
receive such payment shall be absolute, unconditional and irrevocable, and that
such obligations of the Borrowers shall be performed strictly in accordance with
the terms of this Agreement and such Letters of Credit and the related
Applications and Agreement for any Letter of Credit, under all circumstances
whatsoever, including the following circumstances:
(i) any lack of validity or enforceability of the
Letters of Credit, the obligation supported by the Letters of
Credit or any other agreement or instrument relating thereto
(collectively, the "Related LC Documents");
(ii) any amendment or waiver of or any consent to or
departure from all or any of the Related LC Documents;
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(iii) the existence of any claim, setoff, defense
(other than the defense of payment in accordance with the
terms of this Agreement) or other rights which the Borrower
may have at any time against any beneficiary or any transferee
of a Letter of Credit (or any persons or entities for whom any
such beneficiary or any such transferee may be acting), the
Lender or any other Person, whether in connection with the
Loan Documents, the Related LC Documents or any unrelated
transaction;
(iv) any breach of contract or other dispute between
either of the Borrowers and any beneficiary or any transferee
of a Letter of Credit (or any persons or entities for whom
such beneficiary or any such transferee may be acting), the
Lender or any other Person;
(v) any draft, statement or any other document
presented under the Letters of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect
whatsoever;
(vi) any delay, extension of time, renewal,
compromise or other indulgence or modification granted or
agreed to by the Lender, with or without notice to or approval
by the Borrowers in respect of any of Borrower's Obligations
under this Agreement; or
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
Nothing contained in this subsection (f) shall relieve the Issuing Bank of its
obligations under the Uniform Customs and Practices for Documentary Credits,
1993 revision, International Chamber of Commerce Publication No. 500.
3.3. LETTER OF CREDIT FACILITY FEES. The Borrowers shall pay to the
Issuing Bank a fee on the aggregate amount available to be drawn on each
outstanding Letter of Credit at a rate equal to (a) the Applicable Margin for
each outstanding Standby Letter of Credit, and (b) .10% per annum for each
outstanding Documentary Letter of Credit. Such fees shall be due with respect to
each Letter of Credit quarterly in advance on the first day of each January,
April, July and October, the first such payment to be made (x) on the Closing
Date with respect to Letters of Credit outstanding and to the extent such fees
have not yet been paid for such Letters of Credit with respect to the then
current calendar quarter, or (y) on the date of issuance of a Letter of Credit,
and thereafter on the first day of the calendar quarter occurring after either
the Closing Date or the date of issuance of a Letter of Credit as applicable.
The fees described in this SECTION 3.3 shall be calculated on the basis of a
year of 360 days for the actual number of days elapsed.
3.4. ADMINISTRATIVE FEES. The Borrowers shall pay to the Issuing Bank
such administrative fee and other fees, if any, in connection with the Letters
of Credit in such amounts and at such times as the Issuing Bank and the
Borrowers shall agree from time to time.
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ARTICLE IV
CHANGE IN CIRCUMSTANCES
4.1. INCREASED COST AND REDUCED RETURN.
(a) If, after the date hereof, the adoption of any applicable
law, rule, or regulation, or any change in any applicable law, rule, or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by the Lender (or its
Lending Office) with any request or directive (whether or not having the force
of law) of any such governmental authority, central bank, or comparable agency:
(i) shall subject the Lender (or its Lending Office)
to any tax, duty, or other charge with respect to any
Eurodollar Rate Loans, its Note, or its obligation to make
Eurodollar Rate Loans, or change the basis of taxation of any
amounts payable to the Lender (or its Lending Office) under
this Agreement or its Note in respect of any Eurodollar Rate
Loans (other than taxes imposed on the overall net income of
the Lender by the jurisdiction in which the Lender has its
principal office or such Lending Office);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement
(other than the Reserve Requirement utilized in the
determination of the Eurodollar Rate) relating to any
extensions of credit or other assets of, or any deposits with
or other liabilities or commitments of, the Lender (or its
Lending Office), including the Revolving Credit Commitment of
the Lender hereunder; or
(iii) shall impose on the Lender (or its Lending
Office) or on the London interbank market any other condition
affecting this Agreement or its Note or any of such extensions
of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to the Lender (or
its Lending Office) of making, Converting into, Continuing, or maintaining any
Eurodollar Rate Loans or to reduce any sum received or receivable by the Lender
(or its Lending Office) under this Agreement or the Note with respect to any
Eurodollar Rate Loans, then the Borrowers shall pay to the Lender on demand such
amount or amounts as will compensate the Lender for such increased cost or
reduction; PROVIDED that the Lender will not be entitled to any compensation for
any such increased cost or reduction if demand for payment thereof is made by
the Lender more than 180 days after the occurrence of the circumstances giving
rise to such claim. If the Lender requests compensation by the Borrowers under
this SECTION 4.1(A), the Borrowers may, by notice to the Lender, suspend the
obligation of the Lender to make or Continue Loans of the Type with respect to
which such compensation is requested, or to Convert Loans of any other Type into
Loans of such Type, until the event or condition giving rise to such request
ceases to be in effect (in which case the provisions of SECTION 4.4 shall be
applicable);
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PROVIDED that such suspension shall not affect the right of the Lender to
receive the compensation so requested.
(b) If, after the date hereof, the Lender shall have
determined that the adoption of any applicable law, rule, or regulation
regarding capital adequacy or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such governmental authority, central bank, or comparable
agency, has or would have the effect of reducing the rate of return on the
capital of the Lender or any corporation controlling the Lender as a consequence
of the Lender's obligations hereunder to a level below that which the Lender or
such corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand the Borrowers shall pay to the
Lender such additional amount or amounts as will compensate the Lender for such
reduction.
(c) The Lender shall promptly notify the Borrowers of any
event of which it has knowledge, occurring after the date hereof, which will
entitle the Lender to compensation pursuant to this Section and will designate a
different Lending Office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the reasonable judgment of the
Lender, be otherwise disadvantageous to it. The Lender claiming compensation
under this Section shall furnish to the Borrowers a statement setting forth the
additional amount or amounts to be paid to it hereunder which shall be
conclusive in the absence of manifest error. In determining such amount, the
Lender may use any reasonable averaging and attribution methods that the Lender
uses for its customers that are similarly situated to the Borrowers.
4.2. LIMITATION ON TYPES OF LOANS. If on or prior to the first day of
any Interest Period for any Eurodollar Rate Loan:
(a) the Lender reasonably determines (which determination
shall be conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
(b) the Lender reasonably determines (which determination
shall be conclusive) that the Eurodollar Rate will not adequately and fairly
reflect the cost to the Lender of funding Eurodollar Rate Loans for such
Interest Period;
then the Lender shall give the Borrowers prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lender shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and the Borrowers shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Loans of the
affected Type, either prepay such Loans or Convert such Loans into another Type
of Loan in accordance with the terms of this Agreement.
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4.3. ILLEGALITY. Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for the Lender or its Lending Office to
make, maintain, or fund Eurodollar Rate Loans hereunder, then the Lender shall
promptly notify the Borrowers thereof and the Lender's obligation to make or
Continue Eurodollar Rate Loans and to Convert other Types of Loans into
Eurodollar Rate Loans shall be suspended until such time as the Lender may again
make, maintain, and fund Eurodollar Rate Loans (in which case the provisions of
SECTION 4.4 shall be applicable).
4.4. TREATMENT OF AFFECTED LOANS. If the obligation of the Lender to
make a Eurodollar Rate Loan or to Continue, or to Convert Loans of any other
Type into, Loans of a particular Type shall be suspended pursuant to SECTION 4.1
or 4.3 hereof (Loans of such Type being herein called "Affected Loans" and such
Type being herein called the "Affected Type"), the Lender's Affected Loans shall
be automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for Affected Loans (or, in the case of a Conversion
required by SECTION 4.3 hereof, on such earlier date as the Lender may specify
to the Borrower) and, unless and until the Lender gives notice as provided below
that the circumstances specified in SECTION 4.1 or 4.3 hereof that gave rise to
such Conversion no longer exist:
(a) to the extent that the Lender's Affected Loans have been
so Converted, all payments and prepayments of principal that would
otherwise be applied to the Lender's Affected Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by the
Lender as Loans of the Affected Type shall be made or Continued instead
as Base Rate Loans, and all Loans of the Lender that would otherwise be
Converted into Loans of the Affected Type shall be Converted instead
into (or shall remain as) Base Rate Loans.
4.5. COMPENSATION. Upon the request of the Lender, the Borrowers shall
pay to the Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of the Lender) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar
Rate Loan for any reason (including, without limitation, the acceleration of the
Loans pursuant to SECTION 9.1) on a date other than the last day of the Interest
Period for such Loan; or
(b) any failure by the Borrowers for any reason (including,
without limitation, the failure of any condition precedent specified in ARTICLE
V to be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Rate
Loan on the date for such borrowing, Conversion, Continuation, or prepayment
specified in the relevant notice of borrowing, prepayment, Continuation, or
Conversion under this Agreement.
4.6. TAXES. (a) Any and all payments by the Borrowers to or for the
account of the Lender hereunder or under any other Loan Document shall be made
free and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, EXCLUDING, in the case of the Lender, taxes
imposed on its income, and franchise taxes imposed on it, by the jurisdiction
under the laws of which
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the Lender (or its Lending Office) is organized or any political subdivision
thereof (all such non-excluded taxes, duties, levies, imposts, deductions,
charges, withholdings, and liabilities being hereinafter referred to as
"Taxes"). If either of the Borrowers shall be required by law to deduct any
Taxes from or in respect of any sum payable under this Agreement or any other
Loan Document to the Lender, (i) the sum payable shall be increased as necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this SECTION 4.6) the Lender receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law, and (iv) the Borrower shall furnish to the
Lender, at its address referred to in SECTION 11.2, the original or a certified
copy of a receipt evidencing payment thereof.
(b) In addition, the Borrowers agree to pay any and all
present or future stamp or documentary taxes and any other excise or property
taxes or charges or similar levies which arise from any payment made under this
Agreement or any other Loan Document or from the execution or delivery of, or
otherwise with respect to, this Agreement or any other Loan Document
(hereinafter referred to as "Other Taxes").
(c) The Borrowers agree to indemnify the Lender for the full
amount of Taxes and Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this SECTION 4.6) paid by the Lender and any liability (including penalties,
interest, and expenses) arising therefrom or with respect thereto.
(d) If either of the Borrowers is required to pay additional
amounts to or for the account of the Lender pursuant to this SECTION 4.6, then
the Lender will agree to use reasonable efforts to change the jurisdiction of
its Lending Office so as to eliminate or reduce any such additional payment
which may thereafter accrue if such change, in the judgment of the Lender, is
not otherwise disadvantageous to the Lender.
(e) Within thirty (30) days after the date of any payment of
Taxes, the Borrower shall furnish to the Lender the original or a certified copy
of a receipt evidencing such payment.
(f) Without prejudice to the survival of any other agreement
of the Borrowers hereunder, the agreements and obligations of the Borrowers
contained in this SECTION 4.6 shall survive the termination of the Revolving
Credit Commitments and the payment in full of the Notes.
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ARTICLE V
FACILITY GUARANTY
5.1. FACILITY GUARANTY. WFS hereby unconditionally, absolutely,
continually and irrevocably guarantees to the Lender the payment and performance
in full of (a) the Borrowers' prompt payment in full, when due or declared due
and at all such times, of all Obligations and all other amounts pursuant to the
terms hereof, the Notes, and all other Loan Documents and all Rate Hedging
Obligations heretofore, now or at any time or times hereafter owing, arising,
due or payable from the Borrowers to the Lender, including without limitation
principal, interest, premium or fee (including, but not limited to, loan fees
and attorneys' fees and expenses); and (b) the Borrowers' prompt, full and
faithful performance, observance and discharge of each and every agreement,
undertaking, covenant and provision to be performed, observed or discharged by
the Borrowers hereunder and all other Loan Documents; and (c) the Borrowers'
prompt payment in full, when due or declared due and at all such times, of Rate
Hedging Obligations arising under Swap Agreements (collectively, the
"Guarantor's Obligations"); PROVIDED, HOWEVER, that the liability of WFS with
respect to the Guarantors' Obligations shall be limited to an aggregate amount
equal to the largest amount that would not render its obligations hereunder
subject to avoidance under Section 548 of the United States Bankruptcy Code or
any comparable provisions of any applicable state law.
5.2. PAYMENT. If the Borrowers shall default in payment or performance
of any of the Obligations, whether principal, interest, premium, fee (including,
but not limited to, loan fees and attorneys' fees and expenses), or otherwise,
when and as the same shall become due, whether according to the terms hereof, by
acceleration, or otherwise, or upon the occurrence of any Event of Default
hereunder that has not been cured or waived, then WFS shall, upon demand thereof
by the Lender or its successors or assigns AS OF THE DATE OF SUCH DEMAND, fully
pay to the Lender, subject to any restriction set forth in SECTION 5.1, an
amount equal to all of the Guarantor's Obligations then due and owing.
5.3. GUARANTY ABSOLUTE. The guaranty made under this ARTICLE V is a
guaranty of payment and not of collection. The Guarantor's Obligations shall be
absolute and unconditional irrespective of the validity, legality or
enforceability of this Agreement, the Note or any other Loan Document or any
other guaranty of the Borrowers' Obligations, and shall not be affected by any
action taken under this Agreement, the Note or any other Loan Document, any
other guaranty of the Borrowers' Obligations, or any other agreement between the
Lender and the Borrowers or any other Person, in the exercise of any right or
power therein conferred, or by any failure or omission to enforce any right
conferred thereby, or by any waiver of any covenant or condition therein
provided, or by any acceleration of the maturity of any of the Borrowers'
Obligations, or by the release or other disposal of any security for any of the
Borrowers' Obligations, or by the dissolution of the Borrowers or the
combination or consolidation of the Borrowers into or with another entity or any
transfer or disposition of any assets of the Borrowers or by any extension or
renewal of this Agreement, the Note or any other Loan Document, in whole or in
part, or by any modification, alteration, amendment or addition of or to this
Agreement, the Note or any other Loan Document, any other guaranty of the
Borrowers' Obligations, or any other agreement between any Secured Party and the
Borrowers or any other Person, or by any other circumstance whatsoever (with or
without notice to or knowledge
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of WFS) which may or might in any manner or to any extent vary the risks of WFS,
or might otherwise constitute a legal or equitable discharge of a surety or a
guarantor; it being the purpose and intent of the parties hereto that the
guaranty made under this ARTICLE V shall be absolute and unconditional under any
and all circumstances and shall not be discharged except by payment as herein
provided.
5.4. REINSTATEMENT. WFS agrees that the guaranty made under this
ARTICLE V shall continue to be effective or be reinstated, as the case may be,
at any time payment received by the Lender under this Agreement is rescinded or
must be restored for any reason.
5.5. WAIVER; SUBROGATION.
(a) WFS hereby waives notice of the following events or
occurrences: (i) the Lender's heretofore, now or from time to time hereafter
making Advances and issuing Letters of Credit and otherwise loaning monies or
giving or extending credit to or for the benefit of the Borrowers, whether
pursuant to this Agreement or the Note or any other Loan Document or any
amendments, modifications, or supplements thereto, or replacements or extensions
thereof; (ii) the Lender or the Borrower heretofore, now or at any time
hereafter, obtaining, amending, substituting for, releasing, waiving or
modifying this Agreement, the Note or any other Loan Documents; (iii)
presentment, demand, default, non-payment, partial payment and protest; (iv) the
Lender heretofore, now or at any time hereafter granting to the Borrower (or any
other party liable to the Lender on account of the Borrower's Obligations) or to
any other Guarantor any indulgence or extensions of time of payment of the
Borrowers' Obligations, and (v) the Lender heretofore, now or at any time
hereafter accepting from either of the Borrowers, any other Guarantor or any
other Person, any partial payment or payments on account of the Borrowers'
Obligations or any collateral securing the payment thereof or the Agent
settling, subordinating, compromising, discharging or releasing the same.
(b) WFS hereby agrees that payment or performance by WFS of
the guaranty made under this ARTICLE V may be enforced by the Lender upon demand
by the Lender to WFS without the Lender being required, CPV expressly waiving
any right it may have to require the Lender, to (i) prosecute collection or seek
to enforce or resort to any remedies against the Borrower or any other
Guarantor, or (ii) seek to enforce or resort to any remedies with respect to any
security interests, Liens or encumbrances granted to the Lender by the Borrower,
any other Guarantor or any other Person on account of the Borrowers' Liabilities
or any guaranty thereof, IT BEING EXPRESSLY UNDERSTOOD, ACKNOWLEDGED AND AGREED
TO BY WFS THAT DEMAND UNDER THIS ARTICLE V MAY BE MADE BY THE LENDER, AND THE
PROVISIONS HEREOF ENFORCED BY THE LENDER, EFFECTIVE AS OF THE FIRST DATE ANY
EVENT OF DEFAULT OCCURS AND IS CONTINUING UNDER THIS AGREEMENT. The Lender shall
not have any obligation to protect, secure or insure any of the foregoing
security interests, Liens or encumbrances on the properties or interests in
properties subject thereto.
(c) WFS further agrees that it shall have no right of
subrogation, reimbursement or indemnity, nor any right of recourse to security
for the Borrowers' Obligations. This waiver is expressly intended to prevent the
existence of any claim in respect to such reimbursement by WFS against the
estate of the Borrowers within the meaning of Section 101 of the Bankruptcy
Code, and
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to prevent WFS from constituting a creditor of the Borrowers in respect of such
reimbursement within the meaning of Section 547(b) of the Bankruptcy Code in the
event of a subsequent case involving the Borrowers. If an amount shall be paid
to WFS on account of such subrogation rights at any time prior to termination of
this Agreement in accordance with the provisions of SECTION 11.8, such amount
shall be held in trust for the benefit of the Lender and shall forthwith be paid
to the Lender to be credited and applied upon the Guarantors' Obligations,
whether matured or unmatured, in accordance with the terms of this Agreement.
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ARTICLE VI
CONDITIONS TO MAKING LOANS AND ISSUING LETTERS OF CREDIT
6.1. CONDITIONS OF INITIAL ADVANCE. The obligation of the Lender to
make the initial Advance under the Revolving Credit Facility, and of the Issuing
Bank to issue any additional Letter of Credit, is subject to the conditions
precedent that:
(a) the Lender shall have received on the Closing Date, in
form and substance satisfactory to the Lender, the following:
(i) executed originals of each of this Agreement, the
Note, the LC Account Agreement and the other Loan Documents,
together with all schedules and exhibits thereto;
(ii) the favorable written opinion or opinions with
respect to the Loan Documents and the transactions
contemplated thereby of counsel to the Credit Parties dated
the Closing Date, addressed to the Lender and satisfactory to
Smith Helms Mulliss & Moore, L.L.P., special counsel to the
Lender, substantially in the form of EXHIBIT E;
(iii) resolutions of the boards of directors or other
appropriate governing body (or of the appropriate committee
thereof) of each Credit Party certified by its secretary or
assistant secretary as of the Closing Date, approving and
adopting the Loan Documents to be executed by such Person, and
authorizing the execution and delivery thereof;
(iv) specimen signatures of officers of each Credit
Party executing the Loan Documents on behalf of such Credit
Party, certified by the secretary or assistant secretary of
such Credit Party;
(v) the charter documents of each Credit Party
certified as of a recent date by the Secretary or Assistant
Secretary of the Credit Party;
(vi) the bylaws of each Credit Party certified as of
the Closing Date as true and correct by its secretary or
assistant secretary;
(vii) certificates issued as of a recent date by the
Secretaries of State of the respective jurisdictions of
formation of each Credit Party as to the due existence and
good standing of each Credit Party;
(viii) notice of appointment of the initial
Authorized Representative(s);
(ix) certificate of an Authorized Representative
dated the Closing Date demonstrating compliance with the
financial covenants contained in SECTIONS 9.1(A)
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through 9.1(D) as of the most recently ended fiscal quarter
period, substantially in the form of EXHIBIT F;
(x) an initial Borrowing Notice, if any, and, if
elected by the Borrowers, Interest Rate Selection Notice;
(xi) evidence that all fees payable by the Borrower
on the Closing Date to the Lender have been paid in full;
(xii) such other documents, instruments, certificates
and opinions as the Lender may reasonably request on or prior
to the Closing Date in connection with the consummation of the
transactions contemplated hereby; and
(b) In the good faith judgment of the Lender:
(i) there shall not have occurred or become known to
the Lender any event, condition, situation or status since the
date of the information contained in the financial and
business projections, budgets, pro forma data and forecasts
concerning WFS and its Subsidiaries delivered to the Lender
prior to the Closing Date that has had or could reasonably be
expected to result in a Material Adverse Effect;
(ii) no litigation, action, suit, investigation or
other arbitral, administrative or judicial proceeding shall be
pending or threatened which could reasonably be likely to
result in a Material Adverse Effect; and
(iii) the Credit Parties shall have received all
approvals, consents and waivers, and shall have made or given
all necessary filings and notices as shall be required to
consummate the transactions contemplated hereby without the
occurrence of any default under, conflict with or violation of
(A) any applicable law, rule, regulation, order or decree of
any Governmental Authority or arbitral authority or (B) any
agreement, document or instrument to which any of the Credit
Parties is a party or by which any of them or their properties
is bound.
6.2. CONDITIONS OF LOANS AND LETTER OF CREDIT. The obligations of the
Lender to make any Loans, and the Issuing Bank to issue Letters of Credit,
hereunder on or subsequent to the Closing Date are subject to the satisfaction
of the following conditions:
(a) the Lender shall have received a Borrowing Notice if
required by ARTICLE II;
(b) the representations and warranties of WFS, the Borrowers
and the Subsidiaries set forth in ARTICLE VII and in each of the other Loan
Documents shall be true and correct in all material respects on and as of the
date of such Advance, with the same effect as though such representations and
warranties had been made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date and except
that the financial statements referred to in SECTION 7.6(A) shall be deemed to
be those financial
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statements most recently delivered to the Lender pursuant to SECTION 8.1 from
the date financial statements are delivered to the Lender in accordance with
such Section;
(c) in the case of the issuance of a Letter of Credit, either
of or both of the Borrowers shall have executed and delivered to the Issuing
Bank an Application and Agreement for Letter of Credit in form and content
acceptable to the Issuing Bank together with such other instruments and
documents as it shall request;
(d) at the time of (and after giving effect to) each Advance
or the issuance of a Letter of Credit, no Default or Event of Default specified
in ARTICLE X shall have occurred and be continuing; and
(e) immediately after giving effect to:
(i) a Loan, the aggregate principal balance of all
outstanding Loans shall not exceed the Revolving Credit
Commitment;
(ii) a Letter of Credit or renewal thereof, the
aggregate principal balance of all outstanding Letters of
Credit and Reimbursement Obligations for the Lender shall not
exceed the Letter of Credit Commitment;
(iii) a Loan or a Letter of Credit or renewal
thereof, the sum of Letter of Credit Outstandings plus
Revolving Credit Outstandings shall not exceed the Revolving
Credit Commitment.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Each of WFS and the Borrowers represents and warrants with respect to
itself and to its Subsidiaries (which representations and warranties shall
survive the delivery of the documents mentioned herein and the making of Loans),
that:
7.1. ORGANIZATION AND AUTHORITY.
(a) WFS, each Borrower and each Subsidiary is a corporation or
partnership duly organized and validly existing under the laws of the
jurisdiction of its formation;
(b) WFS, each Borrower and each Subsidiary (x) has the
requisite power and authority to own its properties and assets and to carry on
its business as now being conducted and as contemplated in the Loan Documents,
and (y) is qualified to do business in every jurisdiction in which failure so to
qualify would have a Material Adverse Effect;
(c) WFS and each Borrower has the power and authority to
execute, deliver and perform this Agreement and the Notes, and to borrow
hereunder, and to execute, deliver and perform each of the other Loan Documents
to which it is a party;
(d) When executed and delivered, each of the Loan Documents to
which WFS, each Borrower or any Subsidiary is a party will be the legal, valid
and binding obligation or agreement, as the case may be, of WFS, the Borrower or
such Subsidiary, enforceable against WFS, each Borrower or such Subsidiary in
accordance with its terms, subject to the effect of any applicable bankruptcy,
moratorium, insolvency, reorganization or other similar law affecting the
enforceability of creditors' rights generally and to the effect of general
principles of equity (whether considered in a proceeding at law or in equity).
7.2. LOAN DOCUMENTS. The execution, delivery and performance by WFS,
each Borrower and each Subsidiary of each of the Loan Documents to which it is a
party:
(a) have been duly authorized by all requisite corporate
action (including any required shareholder or partner approval) of WFS, each
Borrower and each Subsidiary required for the lawful execution, delivery and
performance thereof;
(b) do not violate any provisions of (i) applicable law, rule
or regulation, (ii) any judgment, writ, order, determination, decree or arbitral
award of any Governmental Authority or arbitral authority binding on WFS, each
Borrower or any Subsidiary or its properties, or (iii) the charter documents,
partnership agreement or bylaws of WFS, each Borrower or any Subsidiary;
(c) does not and will not be in conflict with, result in a
breach of or constitute an event of default, or an event which, with notice or
lapse of time or both, would constitute an
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event of default, under any contract (including without limitation any Material
Contract), indenture, agreement or other instrument or document to which WFS, a
Borrower or any Subsidiary is a party, or by which the properties or assets of
Borrower or any Subsidiary are bound; and
(d) does not and will not result in the creation or imposition
of any Lien upon any of the properties or assets of WFS, a Borrower or any
Subsidiary.
7.3. SOLVENCY. WFS and each Subsidiary is Solvent after giving effect
to the transactions contemplated by the Loan Documents.
7.4. SUBSIDIARIES AND STOCKHOLDERS. WFS has no Subsidiaries other than
those Persons listed as Subsidiaries in SCHEDULE 7.4 and additional Subsidiaries
created or acquired after the Closing Date in compliance with SECTION 8.19;
SCHEDULE 7.4 states as of the date hereof the organizational form of each
entity, the authorized and issued capitalization of each Subsidiary listed
thereon, the number of shares or other equity interests of each class of capital
stock or interest issued and outstanding of each such Subsidiary and the number
and/or percentage of outstanding shares or other equity interest (including
options, warrants and other rights to acquire any interest) of each such class
of capital stock or other equity interest owned by WFS or by any such
Subsidiary; the outstanding shares or other equity interests of each such
Subsidiary have been duly authorized and validly issued and are fully paid and
nonassessable; and WFS and each such Subsidiary owns beneficially and of record
all the shares and other interests it is listed as owning in SCHEDULE 7.4, free
and clear of any Lien.
7.5. OWNERSHIP INTERESTS. Neither WFS nor the Borrowers own an interest
in any Person other than the Persons listed in SCHEDULE 7.4, equity investments
in Persons not constituting Subsidiaries permitted under SECTION 9.7 and
additional Subsidiaries created or acquired after the Closing Date in compliance
with SECTION 8.19.
7.6. FINANCIAL CONDITION.
(a) WFS has heretofore furnished to the Lender an audited
consolidated balance sheet of WFS and its Subsidiaries as of March 31, 1997 and
March 31, 1998 and the notes thereto and the related consolidated statements of
income, stockholders' equity and cash flows for the Fiscal Year then ended as
examined and certified by Arthur Andersen LLP and unaudited consolidated interim
financial statements of WFS and its Subsidiaries consisting of consolidated
balance sheets and related consolidated statements of income, stockholders'
equity and cash flows, in each case without notes, for and as of the end of the
three (3) month period ending June 30, 1998. Except as set forth therein, such
financial statements (including the notes thereto) present fairly the financial
condition of WFS and its Subsidiaries as of the end of such Fiscal Year and
three (3) month period and results of their operations and the changes in its
stockholders' equity for the Fiscal Year and interim period then ended, all in
conformity with GAAP applied on a Consistent Basis, subject however, in the case
of unaudited interim statements to year end audit adjustments;
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(b) since June 30, 1998 there has been no material adverse
change in the condition, financial or otherwise, of WFS and its Subsidiaries
taken as a whole or in the businesses, properties, performance, prospects or
operations of WFS and its Subsidiaries taken as a whole, nor have such
businesses or properties been materially adversely affected as a result of any
fire, explosion, earthquake, accident, strike, lockout, combination of workers,
flood, embargo or act of God; and
(c) except as set forth in the financial statements referred
to in SECTION 7.6(A) or in SCHEDULE 7.6 or permitted by SECTION 9.5, neither WFS
nor any Subsidiary has incurred, other than in the ordinary course of business,
any material Indebtedness, Contingent Obligation or other commitment or
liability which remains outstanding or unsatisfied.
7.7. TITLE TO PROPERTIES. WFS and each of its Subsidiaries has good and
marketable title to all its real and personal properties, subject to no transfer
restrictions or Liens of any kind, except for the transfer restrictions and
Liens described in SCHEDULE 7.7 and Liens permitted by SECTION 9.4.
7.8. TAXES. Except as set forth in SCHEDULE 7.8, WFS and each of its
Subsidiaries has filed or caused to be filed all federal, state and local tax
returns which are required to be filed by it and, except for taxes and
assessments being contested in good faith by appropriate proceedings diligently
conducted and against which reserves reflected in the financial statements
described in SECTION 7.6(A) and satisfactory to the Borrower's independent
certified public accountants have been established, have paid or caused to be
paid all taxes as shown on said returns or on any assessment received by it, to
the extent that such taxes have become due.
7.9. OTHER AGREEMENTS. Neither WFS nor any Subsidiary is
(a) a party to or subject to any judgment, order, decree,
agreement, lease or instrument, or subject to other restrictions, which
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect; or
(b) in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any agreement or
instrument, including without limitation any Material Contract, to which WFS,
either Borrower or any Subsidiary is a party, which default has, or if not
remedied within any applicable grace period could reasonably be likely to have,
a Material Adverse Effect.
7.10. LITIGATION. Except as set forth in SCHEDULE 7.10, there is no
action, suit, investigation or proceeding at law or in equity or by or before
any governmental instrumentality or agency or arbitral body pending, or, to the
knowledge of WFS or either Borrower, threatened by or against WFS, either
Borrower or any Subsidiary or affecting WFS, either Borrower or any Subsidiary
or any properties or rights of WFS, either Borrower or any Subsidiary, which
could reasonably be likely to have a Material Adverse Effect.
7.11. MARGIN STOCK. The proceeds of the borrowings made hereunder will
be used by the Borrowers only for the purposes expressly authorized herein. None
of such proceeds will be used,
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directly or indirectly, for the purpose of purchasing or carrying any margin
stock or for the purpose of reducing or retiring any Indebtedness which was
originally incurred to purchase or carry margin stock or for any other purpose
which might constitute any of the Loans under this Agreement a "purpose credit"
within the meaning of said Regulation U or Regulation X (12 C.F.R. Part 224) of
the Board. Neither Borrower nor any agent acting in their behalf has taken or
will take any action which might cause this Agreement or any of the documents or
instruments delivered pursuant hereto to violate any regulation of the Board or
to violate the Securities Exchange Act of 1934, as amended, or the Securities
Act of 1933, as amended, or any state securities laws, in each case as in effect
on the date hereof.
7.12. INVESTMENT COMPANY. Neither Borrower nor any of its Subsidiaries
is an "investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company", as such terms are defined
in the Investment Company Act of 1940, as amended (15 U.S.C. ss. 80a-1, et
seq.). ThE application of the proceeds of the Loans and repayment thereof by the
Borrowers and the performance by the Borrowers and their Subsidiaries of the
transactions contemplated by the Loan Documents will not violate any provision
of said Act, or any rule, regulation or order issued by the Securities and
Exchange Commission thereunder, in each case as in effect on the date hereof.
7.13. PATENTS, ETC. Each Borrower and each of its Subsidiaries owns or
has the right to use, under valid license agreements or otherwise, all material
patents, licenses, franchises, trademarks, trademark rights, trade names, trade
name rights, trade secrets and copyrights necessary to or used in the conduct of
its businesses as now conducted and as contemplated by the Loan Documents,
without known conflict with any patent, license, franchise, trademark, trade
secret, trade name, copyright, other proprietary right of any other Person.
7.14. NO UNTRUE STATEMENT. Neither (a) this Agreement nor any other
Loan Document or certificate or document executed and delivered by or on behalf
of WFS, the Borrowers or any Subsidiary in accordance with or pursuant to any
Loan Document nor (b) any statement, representation, or warranty provided to the
Lender in connection with the negotiation or preparation of the Loan Documents
contains any misrepresentation or untrue statement of material fact or omits to
state a material fact necessary, in light of the circumstance under which it was
made, in order to make any such warranty, representation or statement contained
therein not misleading.
7.15. NO CONSENTS, ETC. Neither the respective businesses or properties
of WFS, or the Borrowers or any Subsidiary, nor any relationship between WFS,
the Borrowers or any Subsidiary and any other Person, nor any circumstance in
connection with the execution, delivery and performance of the Loan Documents
and the transactions contemplated thereby, is such as to require a consent,
approval or authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person on the part of WFS, the Borrowers or
any Subsidiary as a condition to the execution, delivery and performance of, or
consummation of the transactions contemplated by the Loan Documents, which, if
not obtained or effected, would be reasonably likely to have a Material Adverse
Effect, or if so, such consent, approval, authorization, filing, registration or
qualification has been duly obtained or effected, as the case may be.
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7.16. EMPLOYEE BENEFIT PLANS.
(a) The Borrowers and each ERISA Affiliate is in compliance
with all applicable provisions of ERISA and the regulations and published
interpretations thereunder and in compliance with all Foreign Benefit Laws with
respect to all Employee Benefit Plans except for any required amendments for
which the remedial amendment period as defined in Section 401(b) of the Code has
not yet expired. Each Employee Benefit Plan that is intended to be qualified
under Section 401(a) of the Code has been determined by the Internal Revenue
Service to be so qualified, and each trust related to such plan has been
determined to be exempt under Section 501(a) of the Code. No material liability
has been incurred by the Borrowers or any ERISA Affiliate which remains
unsatisfied for any taxes or penalties with respect to any Employee Benefit Plan
or any Multiemployer Plan;
(b) Neither the Borrowers nor any ERISA Affiliate has (i)
engaged in a nonexempt prohibited transaction described in Section 4975 of the
Code or Section 406 of ERISA affecting any of the Employee Benefit Plans or the
trusts created thereunder which could subject any such Employee Benefit Plan or
trust to a material tax or penalty on prohibited transactions imposed under
Internal Revenue Code Section 4975 or ERISA, (ii) incurred any accumulated
funding deficiency with respect to any Employee Benefit Plan, whether or not
waived, or any other liability to the PBGC which remains outstanding other than
the payment of premiums and there are no premium payments which are due and
unpaid, (iii) failed to make a required contribution or payment to a
Multiemployer Plan, or (iv) failed to make a required installment or other
required payment under Section 412 of the Code, Section 302 of ERISA or the
terms of such Employee Benefit Plan;
(c) No Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan or Multiemployer Plan, and
neither the Borrowers nor any ERISA Affiliate has incurred any unpaid withdrawal
liability with respect to any Multiemployer Plan;
(d) The present value of all vested accrued benefits under
each Employee Benefit Plan which is subject to Title IV of ERISA, did not, as of
the most recent valuation date for each such plan, exceed the then current value
of the assets of such Employee Benefit Plan allocable to such benefits;
(e) To the best of each of the Borrower's knowledge, each
Employee Benefit Plan subject to Title IV of ERISA, maintained by each of the
Borrowers or any ERISA Affiliate, has been administered in accordance with its
terms in all material respects and is in compliance in all material respects
with all applicable requirements of ERISA and other applicable laws, regulations
and rules;
(f) The consummation of the Loans and the issuance of the
Letters of Credit provided for herein will not involve any prohibited
transaction under ERISA which is not subject to a statutory or administrative
exemption; and
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(g) No material proceeding, claim, lawsuit and/or
investigation exists or, to the best knowledge of the Borrower after due
inquiry, is threatened concerning or involving any Employee Benefit Plan.
7.17. NO DEFAULT. As of the date hereof, there does not exist any
Default or Event of Default hereunder.
7.18. HAZARDOUS MATERIALS. Except as set forth on SCHEDULE 7.18, each
Borrower and each Subsidiary is in compliance with all applicable Environmental
Laws in all material respects. Neither Borrower nor any Subsidiary has been
notified of any action, suit, proceeding or investigation which, and neither
Borrower nor any Subsidiary is aware of any facts which, (i) calls into
question, or could reasonably be expected to call into question, compliance by
either Borrower or any Subsidiary with any Environmental Laws, (ii) which seeks,
or could reasonably be expected to form the basis of a meritorious proceeding,
to suspend, revoke or terminate any license, permit or approval necessary for
the generation, handling, storage, treatment or disposal of any Hazardous
Material, or (iii) seeks to cause, or could reasonably be expected to form the
basis of a meritorious proceeding to cause, any property of either Borrower or
any Subsidiary to be subject to any restrictions on ownership, use, occupancy or
transferability under any Environmental Law.
7.19. RICO. Neither Borrower nor any Subsidiary is engaged in or has
engaged in any course of conduct that could subject any of their respective
properties to any Lien, seizure or other forfeiture under any criminal law,
racketeer influenced and corrupt organizations law, civil or criminal, or other
similar laws.
7.20. YEAR 2000 COMPLIANCE. The Borrower and its Subsidiaries have (i)
initiated a review and assessment of all areas within its and each of its
Subsidiaries' business and operations (including those affected by information
received from suppliers and vendors) that could reasonably be expected to be
adversely affected by the Year 2000 Problem, (ii) developed a plan and timeline
for addressing the Year 2000 Problem by not later than September 30, 1999, and
(iii) to date, implemented that plan substantially in accordance with that
timetable. The Borrower reasonably believes that all computer applications
(including those affected by information received from its suppliers and
vendors) that are material to its or any of its Subsidiaries' business and
operations will on a timely basis be Year 2000 Compliant, except to the extent
that a failure to do so could not reasonably be expected to have Material
Adverse Effect.
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ARTICLE VIII
AFFIRMATIVE COVENANTS
Until the Facility Termination Date, unless the Lender shall otherwise
consent in writing, WFS and each Borrower will, and where applicable will cause
each Subsidiary to:
8.1. FINANCIAL REPORTS, ETC. (a) As soon as practical and in any event
within 90 days after the end of each Fiscal Year of WFS, deliver or cause to be
delivered to the Lender (i) a consolidated balance sheet of WFS and its
Subsidiaries of at the end of such Fiscal Year, and the notes thereto, and the
related consolidated statements of income, stockholders' equity and cash flows,
and the respective notes thereto, for such Fiscal Year, setting forth
comparative financial statements for the preceding Fiscal Year, all prepared in
accordance with GAAP applied on a Consistent Basis and containing, with respect
to the consolidated financial statements, opinions of Arthur Andersen LLP, or
other such independent certified public accountants selected by WFS and approved
by the Lender, which are unqualified as to the scope of the audit performed and
as to the "going concern" status of WFS and without any exception not acceptable
to the Lender, and (ii) a certificate of an Authorized Representative
demonstrating compliance with SECTIONS 9.1(A) through 9.1(D) and 9.3, which
certificate shall be in the form of EXHIBIT F and which shall include a
certification by an Authorized Representative that the Borrower and the
Subsidiaries are (x) current with all trade payables, except trade payables
contested in good faith in the ordinary course of business, and (y) in full
compliance with the established sublimits and terms of the Letters of Credit
issued pursuant this Agreement;
(b) as soon as practical and in any event within 45 days after
the end of each fiscal quarter (except the last fiscal quarter of the Fiscal
Year), deliver to the Lender (i) a consolidated balance sheet of WFS and its
Subsidiaries as of the end of such fiscal quarter, and the related consolidated
statements of income, stockholders' equity and cash flows for such fiscal
quarter and for the period from the beginning of the then current Fiscal Year
through the end of such reporting period, and accompanied by a certificate of an
Authorized Representative to the effect that such financial statements present
fairly the financial position of WFS and its Subsidiaries as of the end of such
fiscal period and the results of their operations and the changes in their
financial position for such fiscal period, in conformity with the standards set
forth in SECTION 7.6(A) with respect to interim financial statements, and (ii) a
certificate of an Authorized Representative containing computations for such
quarter comparable to that required pursuant to SECTION 8.1(A)(II);
(c) together with each delivery of the financial statements
required by SECTION 8.1(A)(I), deliver to the Lender a letter from WFS's
accountants specified in SECTION 8.1(A)(I) stating that in performing the audit
necessary to render an opinion on the financial statements delivered under
SECTION 8.1(A)(I), they obtained no knowledge of any Default or Event of Default
by WFS or the Borrowers in the fulfillment of the terms and provisions of this
Agreement insofar as they relate to financial matters (which at the date of such
statement remains uncured); or if the accountants have obtained knowledge of
such Default or Event of Default, a statement specifying the nature and period
of existence thereof;
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(d) promptly upon their becoming available to WFS, WFS shall
deliver to the Lender a copy of (i) all regular or special reports or effective
registration statements which WFS or any Subsidiary shall file with the
Securities and Exchange Commission (or any successor thereto) or any securities
exchange, (ii) any proxy statement distributed by WFS or any Subsidiary to its
shareholders, bondholders or the financial community in general, and (iii) any
management letter or other report submitted to WFS or any Subsidiary by
independent accountants in connection with any annual, interim or special audit
of WFS or any Subsidiary;
(e) as soon as practicable and in any event within 45 days
following the end of each of the first three fiscal quarters and within ninety
(90) days following each fiscal year end, deliver to the Lender an accounts
receivable aging report in form and detail substantially similar to that
furnished to the Lender prior to the Closing Date; and
(f) promptly, from time to time, deliver or cause to be
delivered to the Lender such other information regarding WFS, each of the
Borrower's and any Subsidiary's operations, business affairs and financial
condition as the Lender may reasonably request;
The Lender is hereby authorized to deliver a copy of any such financial
or other information delivered hereunder to the Lender (or any affiliate of the
Lender), to any Governmental Authority having jurisdiction over the Lender
pursuant to any written request therefor or in the ordinary course of
examination of loan files, or to any other Person who shall acquire or consider
the assignment of, or acquisition of any participation interest in, any
Obligation permitted by this Agreement.
8.2. MAINTAIN PROPERTIES. Maintain all properties necessary to its
operations in good working order and condition, make all needed repairs,
replacements and renewals to such properties, and maintain free from Liens all
Material Contracts, trademarks, trade names, patents, copyrights, trade secrets,
know-how, and other intellectual property and proprietary information (or
adequate licenses thereto), in each case as are reasonably necessary to conduct
its business as currently conducted or as contemplated hereby, all in accordance
with customary and prudent business practices.
8.3. EXISTENCE, QUALIFICATION, ETC. Except as otherwise expressly
permitted under SECTION 9.8, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material rights
and franchises, and maintain its license or qualification to do business as a
foreign corporation and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary.
8.4. REGULATIONS AND TAXES. Comply in all material respects with or
contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien against any of its
properties except liabilities being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves acceptable
to WFS's independent certified public accountants have been established unless
and until any Lien resulting therefrom attaches to any of its property and
becomes enforceable against its creditors.
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8.5. INSURANCE. (a) Keep all of its insurable properties adequately
insured at all times with responsible insurance carriers against loss or damage
by fire and other hazards to the extent and in the manner as are customarily
insured against by similar businesses owning such properties similarly situated,
(b) maintain general public liability insurance at all times with responsible
insurance carriers against liability on account of damage to persons and
property and (c) maintain insurance under all applicable workers' compensation
laws (or in the alternative, maintain required reserves if self-insured for
workers' compensation purposes) and against loss by reason by business
interruption such policies of insurance to have such limits, deductibles,
exclusions, co-insurance and other provisions providing no less coverages than
are maintained by similar businesses that are similarly situated, such insurance
policies to be in form reasonably satisfactory to the Lender.
8.6. TRUE BOOKS. Keep true books of record and account in which full,
true and correct entries will be made of all of its dealings and transactions,
and set up on its books such reserves as may be required by GAAP with respect to
doubtful accounts and all taxes, assessments, charges, levies and claims and
with respect to its business in general, and include such reserves in interim as
well as year-end financial statements.
8.7. RIGHT OF INSPECTION. Permit any Person designated by the Lender to
visit and inspect any of the properties, corporate books and financial reports
of WFS, each of the Borrowers or any Subsidiary and to discuss its affairs,
finances and accounts with its principal officers and independent certified
public accountants, all at reasonable times, at reasonable intervals and with
reasonable prior notice.
8.8. OBSERVE ALL LAWS. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of any
Governmental Authority with respect to the conduct of its business.
8.9. GOVERNMENTAL LICENSES. Obtain and maintain all licenses, permits,
certifications and approvals of all applicable Governmental Authorities as are
required for the conduct of its business as currently conducted and as
contemplated by the Loan Documents.
8.10. COVENANTS EXTENDING TO OTHER PERSONS. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each of
the things required of the Borrower in SECTIONS 8.2 through 8.9, and 8.18
inclusive.
8.11. OFFICER'S KNOWLEDGE OF DEFAULT. Upon any officer of WFS, or
either Borrower obtaining knowledge of any Default or Event of Default hereunder
or under any other obligation of WFS or either Borrower or any Subsidiary cause
such officer or an Authorized Representative to promptly notify the Lender of
the nature thereof, the period of existence thereof, and what action WFS, or
either Borrower or such Subsidiary proposes to take with respect thereto.
8.12. SUITS OR OTHER PROCEEDINGS. Upon any officer of either Borrower
or WFS obtaining knowledge of any litigation or other proceedings being
instituted against WFS, either Borrower or any Subsidiary, or any attachment,
levy, execution or other process being instituted against any assets of WFS,
either Borrower or any Subsidiary, making a claim or claims in an aggregate
amount greater
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than $1,000,000 not otherwise covered by insurance, promptly deliver to the
Lender written notice thereof stating the nature and status of such litigation,
dispute, proceeding, levy, execution or other process.
8.13. NOTICE OF DISCHARGE OF HAZARDOUS MATERIAL OR ENVIRONMENTAL
COMPLAINT. Promptly provide to the Lender true, accurate and complete copies of
any and all notices, complaints, orders, directives, claims, or citations
received by WFS, either Borrower or any Subsidiary relating to any (a) violation
or alleged violation by WFS, either Borrower or any Subsidiary of any applicable
Environmental Law; (b) release or threatened release by WFS, either Borrower or
any Subsidiary, or at any facility or property owned or leased or operated by
WFS, either Borrower or any Subsidiary, of any Hazardous Material, except where
occurring legally; or (c) liability or alleged liability of WFS, either Borrower
or any Subsidiary for the costs of cleaning up, removing, remediating or
responding to a release of Hazardous Materials where, in any of the foregoing
events, the aggregate amount at any time involved exceeds $1,000,000.
8.14. ENVIRONMENTAL COMPLIANCE. If WFS, either Borrower or any
Subsidiary shall receive any letter, notice, complaint, order, directive, claim
or citation alleging that WFS, either Borrower or any Subsidiary has violated
any Environmental Law or is liable for the costs of cleaning up, removing,
remediating or responding to a release of Hazardous Materials, the Borrower
shall, within the time period permitted by the applicable Environmental Law or
the Governmental Authority responsible for enforcing such Environmental Law,
remove or remedy, or cause the applicable Subsidiary to remove or remedy, such
violation or release or satisfy such liability unless and only during the period
that the applicability of the Environmental Law, the fact of such violation or
liability or what is required to remove or remedy such violation is being
contested by WFS, either Borrower or the applicable Subsidiary by appropriate
proceedings diligently conducted and all reserves with respect thereto as may be
required under Generally Accepted Accounting Principles, if any, have been made,
and no Lien in connection therewith shall have attached to any property of WFS,
either Borrower or the applicable Subsidiary which shall have become enforceable
against creditors of such Person.
8.15. INDEMNIFICATION. Without limiting the generality of SECTION 11.9,
WFS and each Borrower hereby agrees to indemnify and hold the Lender and its
officers, directors, employees and agents, harmless from and against any and all
claims, losses, penalties, liabilities, damages and expenses (including
assessment and cleanup costs and reasonable attorneys' fees and disbursements)
arising directly or indirectly from, out of or by reason of (a) the violation of
any Environmental Law by WFS or either Borrower or any Subsidiary or with
respect to any property owned, operated or leased by WFS or either Borrower or
any Subsidiary or (b) the handling, storage, treatment, emission or disposal of
any Hazardous Materials by or on behalf of WFS, either Borrower or any
Subsidiary or on or with respect to property owned or leased or operated by WFS,
either Borrower or any Subsidiary. The provisions of this SECTION 8.15 shall
survive the Facility Termination Date and expiration or termination of this
Agreement.
8.16. FURTHER ASSURANCES. At each Borrower's cost and expense, upon
request of the Lender, duly execute and deliver or cause to be duly executed and
delivered, to the Lender such further instruments, documents, certificates,
financing and continuation statements, and do and cause
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to be done such further acts that may be reasonably necessary or advisable in
the reasonable opinion of the Lender to carry out more effectively the
provisions and purposes of this Agreement and the other Loan Documents.
8.17. EMPLOYEE BENEFIT PLANS. (a) With reasonable promptness, and in
any event within thirty (30) days thereof, give notice to the Lender of (a) the
establishment of any new Pension Plan (which notice shall include a copy of such
plan), (b) the commencement of contributions to any Employee Benefit Plan to
which either Borrower or any of its ERISA Affiliates was not previously
contributing, (c) any material increase in the benefits of any existing Employee
Benefit Plan, (d) each funding waiver request filed with respect to any Employee
Benefit Plan and all communications received or sent by either Borrower or any
ERISA Affiliate with respect to such request and (e) the failure of the Borrower
or any ERISA Affiliate to make a required installment or payment under Section
302 of ERISA or Section 412 of the Code by the due date; and
(b) Promptly and in any event within thirty (30) days of
becoming aware of the occurrence or forthcoming occurrence of any (a)
Termination Event or (b) nonexempt "prohibited transaction," as such term is
defined in Section 406 of ERISA or Section 4975 of the Code, in connection with
any Pension Plan or any trust created thereunder, deliver to the Lender a notice
specifying the nature thereof, what action either Borrower or any ERISA
Affiliate has taken, is taking or proposes to take with respect thereto and,
when known, any action taken or threatened by the Internal Revenue Service, the
Department of Labor or the PBGC with respect thereto.
8.18. CONTINUED OPERATIONS. Continue at all times to conduct its
business and engage principally in the same line or lines of business
substantially as heretofore conducted.
8.19. NEW SUBSIDIARIES. In the event of the acquisition or creation of
any Subsidiary of either Borrower, cause to be delivered to the Lender each of
the following within sixty (60) days of the acquisition or creation of such
Subsidiary.
(a) a Facility Guaranty executed by such Subsidiary
substantially in the form of EXHIBIT G;
(b) an opinion of counsel to the Subsidiary dated as of the
date of delivery of the Facility Guaranty provided for in this SECTION 8.19 and
addressed to the Lender, in form and substance reasonably acceptable to the
Lender (which opinion may include assumptions and qualifications of similar
effect to those contained in the opinions of counsel delivered pursuant to
SECTION 6.1(A)), to the effect that:
(A) such Subsidiary is duly organized, validly
existing and in good standing in the jurisdiction of its
formation, has the requisite power and authority to own its
properties and conduct its business as then owned and then
conducted and proposed to be conducted, and is duly qualified
to transact business and is in good standing as a foreign
corporation or partnership in each other jurisdiction in which
the character of the properties owned or leased, or the
business carried on by it, requires such
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qualification and the failure to be so qualified would
reasonably be likely to result in a Material Adverse Effect;
and
(B) the execution, delivery and performance of the
Facility Guaranty described in this SECTION 8.19 to which such
Subsidiary is a signatory have been duly authorized by all
requisite corporate or partnership action (including any
required shareholder or partner approval), such agreement has
been duly executed and delivered and constitutes the valid and
binding agreement of such Subsidiary, enforceable against such
Subsidiary in accordance with its terms, subject to the effect
of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the
enforceability of creditors' rights generally and to the
effect of general principles of equity (whether considered in
a proceeding at law or in equity);
(c) current copies of the charter documents, including
partnership agreements and certificate of limited partnership, if applicable,
and bylaws of such Subsidiary, minutes of duly called and conducted meetings (or
duly effected consent actions) of the Board of Directors, partners, or
appropriate committees thereof (and, if required by such charter documents,
bylaws or by applicable law, of the shareholders) of such Subsidiary authorizing
the actions and the execution and delivery of documents described in this
SECTION 8.19.
8.20. YEAR 2000 COMPLIANCE. The Borrower will promptly notify the
Lender in the event the Borrower discovers or determines that any computer
application (including those affected by information received from its suppliers
and vendors) that is material to its or any of its Subsidiaries' business and
operations will not be Year 2000 Compliant by not later than September 30, 1999,
except to the extent that such failure could not reasonably be expected to have
a Material Adverse Effect.
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ARTICLE IX
NEGATIVE COVENANTS
Until the Obligations have been paid and satisfied in full, no Letters
of Credit remain outstanding and this Agreement has been terminated in
accordance with the terms hereof, unless the Lender shall otherwise consent in
writing, each of WFS and the Borrowers, to the extent set forth herein, will
not, nor will it permit any Subsidiary to:
9.1. FINANCIAL COVENANTS.
(a) CONSOLIDATED TANGIBLE NET WORTH. Permit at any time its
Consolidated Tangible Net Worth to be less than $61,000,000.
(b) CONSOLIDATED FUNDED INDEBTEDNESS TO CONSOLIDATED
CAPITALIZATION. Permit at any time the ratio of Consolidated Funded Indebtedness
to Consolidated Capitalization to be equal to or greater than .55 to 1.00;
(c) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Permit the
Consolidated Fixed Charge Coverage Ratio to be at any time less than 1.35 to
1.00.
9.2. ACQUISITIONS. Enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or take any
action to solicit the tender of securities or proxies in respect thereof in
order to effect any Acquisition, unless (i) the Person to be (or whose assets
are to be) acquired does not oppose such Acquisition and the line or lines of
business of the Person to be acquired are substantially the same as one or more
line or lines of business conducted by WFS and its Subsidiaries, (ii) no Default
or Event of Default shall have occurred and be continuing either immediately
prior to or immediately after giving effect to such Acquisition and WFS shall
have furnished to the Lender (A) pro forma historical financial statements as of
the end of the most recently completed Fiscal Year of WFS giving effect to such
Acquisition and (B) a certificate in the form of EXHIBIT G prepared on a
historical pro forma basis giving effect to such Acquisition, which certificate
shall demonstrate that no Default or Event of Default would exist immediately
after giving effect thereto, (iii) the Person acquired shall be a wholly-owned
Subsidiary, or be merged into WFS or a wholly-owned Subsidiary, immediately upon
consummation of the Acquisition (or if assets are being acquired, the acquiror
shall be WFS or a wholly-owned Subsidiary), and (iv) the cost of acquisition
shall not exceed $25,000,000.
9.3. CAPITAL EXPENDITURES. Make or become committed to make Capital
Expenditures, excluding Costs of Acquisitions, which exceed in the aggregate in
any Fiscal Year of WFS $6,000,000 (on a noncumulative basis, with the effect
that amounts not expended in any Fiscal Year may not be carried forward to a
subsequent period).
9.4. LIENS. Incur, create or permit to exist any Lien, charge or other
encumbrance of any nature whatsoever with respect to any property or assets now
owned or hereafter acquired by WFS or any Subsidiary, other than
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(a) Liens existing as of the date hereof and as set forth in
SCHEDULE 7.7;
(b) Liens imposed by law for taxes, assessments or charges of
any Governmental Authority for claims not yet due or which are being contested
in good faith by appropriate proceedings diligently conducted and with respect
to which adequate reserves or other appropriate provisions are being maintained
in accordance with GAAP and which Liens are not yet enforceable against other
creditors;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or created
in the ordinary course of business and in existence less than 90 days from the
date of creation thereof for amounts not yet due or which are being contested in
good faith by appropriate proceedings diligently conducted and with respect to
which adequate reserves or other appropriate provisions are being maintained in
accordance with GAAP and which Liens are not yet enforceable against other
creditors;
(d) Liens incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other types of
social security benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations or arising as a result of progress payments under
government contracts;
(e) easements (including reciprocal easement agreements and
utility agreements), rights-of-way, covenants, consents, reservations,
encroachments, variations and zoning and other restrictions, charges or
encumbrances (whether or not recorded), which do not interfere materially with
the ordinary conduct of the business of WFS or any Subsidiary and which do not
materially detract from the value of the property to which they attach or
materially impair the use thereof to WFS or any Subsidiary;
(f) purchase money Liens to secure Indebtedness permitted
under SECTION 9.5(D) and incurred to purchase fixed assets, provided such
Indebtedness represents not less than 75% of the purchase price of such assets
as of the date of purchase thereof and no property other than the assets so
purchased secures such Indebtedness; and
(g) Liens arising in connection with Capital Leases permitted
under SECTION 9.5(D); provided that no such Lien shall extend to any Collateral
or to any other property other than the assets subject to such Capital Leases.
9.5. INDEBTEDNESS. Incur, create, assume or permit to exist any
Indebtedness, howsoever evidenced, except:
(a) Indebtedness existing as of the Closing Date as set forth
in SCHEDULE 7.6; PROVIDED, none of the instruments and agreements evidencing or
governing such Indebtedness shall be amended, modified or supplemented after the
Closing Date to change any terms of
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subordination, repayment or rights of conversion, put, exchange or other rights
from such terms and rights as in effect on the Closing Date;
(b) Indebtedness owing to the Lender in connection with this
Agreement, the Note or other Loan Document;
(c) the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
(d) purchase money Indebtedness of the Borrowers described in
SECTION 9.4(F) and Indebtedness arising from Capital Leases entered into by the
Borrowers described in SECTION 9.4(G), collectively not to exceed an aggregate
outstanding amount at any time of $500,000;
(e) additional unsecured Indebtedness in an aggregate
outstanding amount at any time outstanding not to exceed $1,000,000;
(f) trade credit from vendors incurred in the ordinary course
of business and the guaranty thereof by the Guarantor and the bonding of such
Obligation;
(g) insurance notes payable;
(h) Indebtedness arising from Rate Hedging Obligations
(provided that such Indebtedness is incurred to limit risks of currency or
interest rate fluctuations to which the Borrowers are otherwise subject by
virtue of the operations of their business, and not for speculative purposes) of
the Borrowers in an aggregate notional amount, in the case of currency and
interest rate obligations and speculative fuel transaction not to exceed
$2,500,000 at any time; provided, however, that the Borrowers may enter into
non-speculative fuel heding transactions without limitation;
(i) Indebtedness of WFS under the WFS Credit Agreement; and
(j) Indebtedness extending the maturity of, or renewing,
refunding or refinancing, in whole or in part, Indebtedness incurred under
clauses (a) and (d) of this SECTION 9.5, provided that the terms of any such
extension, renewal, refunding or refinancing Indebtedness (and of any agreement
or instrument entered into in connection therewith) are no less favorable to the
Lender than the terms of the Indebtedness as in effect prior to such action, and
provided further that (1) the aggregate principal amount of such extended,
renewed, refunded or refinanced Indebtedness shall not be increased by such
action, (2) the group of direct or contingent obligors on such Indebtedness
shall not be expanded as a result of any such action, and (3) immediately before
and immediately after giving effect to any such extension, renewal, refunding or
refinancing, no Default or Event of Default shall have occurred and be
continuing; PROVIDED that the incurring of any such Indebtedness does not cause,
create or result in the occurrence or continuation of a Default or Event of
Default hereunder.
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9.6. TRANSFER OF ASSETS. Sell, lease, transfer or otherwise dispose of
any assets of either Borrower or any Subsidiary other than (a) dispositions of
assets in the ordinary course of business, (b) dispositions of property that is
substantially worn, damaged, obsolete or, in the judgment of the Borrowers, no
longer best used or useful in its or their business or that of any Subsidiary,
and (c) transfers of assets necessary to give effect to merger or consolidation
transactions permitted by SECTION 9.8, and (d) the disposition of Eligible
Securities in the ordinary course of management of the investment portfolio of
the Borrower and its Subsidiaries.
9.7. INVESTMENTS. Purchase, own, invest in or otherwise acquire,
directly or indirectly, any stock or other securities, or make or permit to
exist any interest whatsoever in any other Person or permit to exist any loans
or advances to any Person, except that the Borrowers may maintain investments or
invest in:
(a) securities of any Person acquired in an Acquisition
permitted hereunder;
(b) Eligible Securities;
(c) investments existing as of the date hereof and as set
forth in SCHEDULE 7.4;
(d) accounts receivable arising and trade credit granted in
the ordinary course of business and any securities received in satisfaction or
partial satisfaction thereof in connection with accounts of financially troubled
Persons to the extent reasonably necessary in order to prevent or limit loss;
(e) investments in Subsidiaries which are Guarantors; and
(f) loans or investments in or to WFS or a Subsidiary of WFS
which is a Guarantor (as defined in the WFS Credit Agreement); and
(g) loans and investments in Subsidiaries which are not
Guarantors so long as the aggregate amount of such outstanding loans and
investments, including those described in clause (a) of this SECTION 9.7, shall
not exceed $250,000.
9.8. MERGER OR CONSOLIDATION. (a) Consolidate with or merge into any
other Person, or (b) permit any other Person to merge into it, or (c) liquidate,
wind-up or dissolve or sell, transfer or lease or otherwise dispose of all or a
substantial part of its assets (other than sales permitted under SECTION 9.6(A),
(B) AND (D)); PROVIDED, HOWEVER, (i) any Subsidiary of WFS or a Borrower may
merge or transfer all or substantially all of its assets into or consolidate
with WFS or a Borrower or any Guarantor, and (ii) any other Person may merge
into or consolidate with WFS or a Borrower or any Guarantor and any Subsidiary
may merge into or consolidate with any other Person in order to consummate an
Acquisition permitted by SECTION 9.2, PROVIDED further, that any resulting or
surviving entity shall execute and deliver such agreements and other documents,
including a Facility Guaranty, and take such other action as the Lender may
require to evidence or confirm its express assumption of the obligations and
liabilities of its predecessor entities under the Loan Documents.
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9.9. RESTRICTED PAYMENTS. Make any Restricted Payment or apply or set
apart any of their assets therefor or agree to do any of the foregoing; PROVIDED
HOWEVER, the Borrowers may pay dividends or make distributions to WFS.
9.10. TRANSACTIONS WITH AFFILIATES. Other than transactions permitted
under SECTIONS 9.7 and 9.8, enter into any transaction after the Closing Date,
including, without limitation, the purchase, sale, lease or exchange of
property, real or personal, or the rendering of any service, with any Affiliate
of either Borrower, except (a) that such Persons may render services to the
Borrowers or their Subsidiaries for compensation at the same rates generally
paid by Persons engaged in the same or similar businesses for the same or
similar services, (b) that the Borrowers or any Subsidiary may render services
to such Persons for compensation at the same rates generally charged by the
Borrowers or such Subsidiary and (c) in either case in the ordinary course of
business and pursuant to the reasonable requirements of either of the Borrower's
(or any Subsidiary's) business consistent with past practice of the Borrowers
and its Subsidiaries and upon fair and reasonable terms no less favorable to the
Borrowers (or any Subsidiary) than would be obtained in a comparable
arm's-length transaction with a Person not an Affiliate.
9.11. COMPLIANCE WITH ERISA. With respect to any Pension Plan, Employee
Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which would
result in a liability on the part of either of the Borrowers or any ERISA
Affiliate to the PBGC; or
(b) permit the present value of all benefit liabilities under
all Pension Plans to exceed the current value of the assets of such Pension
Plans allocable to such benefit liabilities; or
(c) permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) with respect to any Pension
Plan, whether or not waived; or
(d) fail to make any contribution or payment to any
Multiemployer Plan which either Borrower or any ERISA Affiliate may be required
to make under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto; or
(e) engage, or permit any Borrower or any ERISA Affiliate to
engage, in any prohibited transaction under Section 406 of ERISA or Sections
4975 of the Code for which a civil penalty pursuant to Section 502(I) of ERISA
or a tax pursuant to Section 4975 of the Code may be imposed; or
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any Employee
Benefit Plan which establishment or amendment could result in liability to the
Borrower or any ERISA Affiliate or increase the obligation of either Borrower or
any ERISA Affiliate to a Multiemployer Plan; or
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(g) fail, or permit either Borrower or any ERISA Affiliate to
fail, to establish, maintain and operate each Employee Benefit Plan in
compliance in all material respects with the provisions of ERISA, the Code, all
applicable Foreign Benefit Laws and all other applicable laws and the
regulations and interpretations thereof.
9.12. FISCAL YEAR. Change its Fiscal Year.
9.13. DISSOLUTION, ETC. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to SECTION 9.8.
9.14. NEGATIVE PLEDGE CLAUSES. Enter into or cause, suffer or permit to
exist any agreement with any Person other than the Lender pursuant to this
Agreement or any other Loan Documents which prohibits or limits the ability of
any of WFS, the Borrowers or any Subsidiary to create, incur, assume or suffer
to exist any Lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired, PROVIDED that the Borrower and any Subsidiary may
enter into such an agreement in connection with property subject to any Lien
permitted by this Agreement and not released after the date hereof, when such
prohibition or limitation is by its terms effective only against the assets
subject to such Lien.
9.15. PARTNERSHIPS. Become a general partner in any general or limited
partnership except a partnership which complies with the provisions of SECTION
8.07(H).
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ARTICLE X
EVENTS OF DEFAULT AND ACCELERATION
10.1. EVENTS OF DEFAULT. (A) If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:
(a) if default shall be made in the due and punctual payment
of the principal of any Loan, Reimbursement Obligation or other Obligation, when
and as the same shall be due and payable whether pursuant to any provision of
ARTICLE II or ARTICLE III, at maturity, by acceleration or otherwise; or
(b) if default shall be made in the due and punctual payment
of any amount of interest on any Loan, Reimbursement Obligation or other
Obligation or of any fees or other amounts payable to the Lender on the date on
which the same shall be due and payable; or
(c) if default shall be made in the performance or observance
of any covenant set forth in SECTION 8.7, 8.11, 8.12, 8.19 or ARTICLE IX;
(d) if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or provision
contained in this Agreement or the Note (other than as described in clauses (a),
(b) or (c) above) and such default shall continue for 30 or more days after the
earlier of receipt of notice of such default by the Authorized Representative
from the Lender or an Authorized Representative of the Borrowers has actual
knowledge of such default, or if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or provision
contained in any of the other Loan Documents (beyond any applicable grace
period, if any, contained therein) or in any instrument or document evidencing
or creating any obligation, guaranty, or Lien in favor of the Lender or
delivered to the Lender in connection with or pursuant to this Agreement or any
of the Obligations, or if any Loan Document ceases to be in full force and
effect (other than by reason of any action by the Lender), or if without the
written consent of the Lender, this Agreement or any other Loan Document shall
be disaffirmed or shall terminate, be terminable or be terminated or become void
or unenforceable for any reason whatsoever (other than in accordance with its
terms in the absence of default or by reason of any action by the Lender); or
(e) if there shall occur (i) a default, which is not waived,
in the payment of any principal, interest, premium or other amount with respect
to any Indebtedness or Rate Hedging Obligations (other than the Loans and other
Obligations) of either or both of the Borrowers or any Subsidiary in an amount
not less than $1,000,000 in the aggregate outstanding, or (ii) a default, which
is not waived, in the performance, observance or fulfillment of any term or
covenant contained in any agreement or instrument under or
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pursuant to which any such Indebtedness or Rate Hedging Obligation may have been
issued, created, assumed, guaranteed or secured by the Borrowers or any
Subsidiary, or (iii) any other event of default as specified in any agreement or
instrument under or pursuant to which any such Indebtedness or Rate Hedging
Obligation may have been issued, created, assumed, guaranteed or secured by the
Borrowers or any Subsidiary, and such default or event of default shall continue
for more than the period of grace, if any, therein specified, or such default or
event of default shall permit the holder of any such Indebtedness (or any agent
or trustee acting on behalf of one or more holders) to accelerate the maturity
thereof; or
(f) if any representation, warranty or other statement of fact
contained in any Loan Document or in any writing, certificate, report or
statement at any time furnished to the Lender by or on behalf of the Borrowers
or any other Credit Party pursuant to or in connection with any Loan Document,
or otherwise, shall be false or misleading in any material respect when given;
or
(g) if either Borrower or any Subsidiary shall be unable to
pay its debts generally as they become due; file a petition to take advantage of
any insolvency statute; make an assignment for the benefit of its creditors;
commence a proceeding for the appointment of a receiver, trustee, liquidator or
conservator of itself or of the whole or any substantial part of its property;
file a petition or answer seeking liquidation, reorganization or arrangement or
similar relief under the federal bankruptcy laws or any other applicable law or
statute; or
(h) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of either Borrower or any Subsidiary or of the whole or any
substantial part of its properties and such order, judgment or decree continues
unstayed and in effect for a period of sixty (60) days, or approve a petition
filed against either Borrower or any Subsidiary seeking liquidation,
reorganization or arrangement or similar relief under the federal bankruptcy
laws or any other applicable law or statute of the United States of America or
any state, which petition is not dismissed within sixty (60) days; or if, under
the provisions of any other law for the relief or aid of debtors, a court of
competent jurisdiction shall assume custody or control of either Borrower or any
Subsidiary or of the whole or any substantial part of its properties, which
control is not relinquished within sixty (60) days; or if there is commenced
against either Borrower or any Subsidiary any proceeding or petition seeking
reorganization, arrangement or similar relief under the federal bankruptcy laws
or any other applicable law or statute of the United States of America or any
state which proceeding or petition remains undismissed for a period of sixty
(60) days; or if either Borrower or any Subsidiary takes any action to indicate
its consent to or approval of any such proceeding or petition; or
(i) if (i) one or more final judgments or orders where the
amount not covered by insurance (or the amount as to which the insurer denies
liability) is in excess of $1,000,000 is rendered against either Borrower or any
Subsidiary, or (ii) there is any attachment, injunction or execution against any
of the Borrower's or Subsidiaries' properties for any amount in excess of
$1,000,000 in the aggregate; and such judgment, attachment, injunction
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or execution remains unpaid, unstayed, undischarged, unbonded or undismissed for
a period of thirty (30) days; or
(j) if either Borrower or any Subsidiary shall, other than in
the ordinary course of business (as determined by past practices), or, except as
specifically permitted by this Agreement, suspend all or any part of its
operations material to the conduct of the business of the Borrower or such
Subsidiary for a period of more than 60 days;
(k) if either (i) all of the capital stock of either Borrower
shall not be owned and controlled by WFS, or (ii) WFS shall not at all times
have the sole right to vote all of the capital stock of both Borrowers; or
(l) if there shall occur and not be waived an Event of Default
as defined in any of the other Loan Documents; or
(m) if there shall occur and not be waived an Event of Default
under the WFS Agreement;
(B) then, and in any such event and at any time thereafter, if such
Event of Default or any other Event of Default shall have not been waived,
(a) either or both of the following actions may be taken: (i)
the Lender may declare any obligation of the Lender and the Issuing Bank to make
further Loans or to issue additional Letters of Credit terminated, whereupon the
obligation of the Lender to make further Loans and of the Issuing Bank to issue
additional Letters of Credit, hereunder shall terminate immediately, and (ii)
the Lender, at its option, declare by notice to the Borrowers any or all of the
Obligations to be immediately due and payable, and the same, including all
interest accrued thereon and all other obligations of the Borrowers to the
Lender, shall forthwith become immediately due and payable without presentment,
demand, protest, notice or other formality of any kind, all of which are hereby
expressly waived, anything contained herein or in any instrument evidencing the
Obligations to the contrary notwithstanding; PROVIDED, however, that
notwithstanding the above, if there shall occur an Event of Default under clause
(g) or (h) above, then the obligation of the Lender to make Loans and of the
Issuing Bank to issue Letters of Credit hereunder shall automatically terminate
and any and all of the Obligations shall be immediately due and payable without
the necessity of any action by the Lender or notice to the Lender;
(b) the Borrowers shall, upon demand of the Lender, deposit
cash with the Issuing Bank in an amount equal to the amount of any Letter of
Credit Outstandings, as collateral security for the repayment of any future
drawings or payments under such Letters of Credit, and such amounts shall be
held by the Issuing Bank pursuant to the terms of the LC Account Agreement; and
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(c) the Lender shall have all of the rights and remedies
available under the Loan Documents or under any applicable law.
10.2. LENDER TO ACT. In case any one or more Events of Default shall
occur and not have been waived, the Lender may proceed to protect and enforce
its rights or remedies either by suit in equity or by action at law, or both,
whether for the specific performance of any covenant, agreement or other
provision contained herein or in any other Loan Document, or to enforce the
payment of the Obligations or any other legal or equitable right or remedy.
10.3. CUMULATIVE RIGHTS. No right or remedy herein conferred upon the
Lender is intended to be exclusive of any other rights or remedies contained
herein or in any other Loan Document, and every such right or remedy shall be
cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
10.4. NO WAIVER. No course of dealing among the Borrowers and the
Lender or any failure or delay on the part of the Lender in exercising any
rights or remedies under any Loan Document or otherwise available to it shall
operate as a waiver of any rights or remedies and no single or partial exercise
of any rights or remedies shall operate as a waiver or preclude the exercise of
any other rights or remedies hereunder or of the same right or remedy on a
future occasion.
10.5. ALLOCATION OF PROCEEDS. If an Event of Default has occurred and
not been waived, and the maturity of the Note has been accelerated pursuant to
ARTICLE X hereof, all payments received by the Lender hereunder, in respect of
any principal of or interest on the Obligations or any other amounts payable by
the Borrowers hereunder, shall be applied by the Lender in the following order:
(a) amounts due to the Lender pursuant to SECTIONS 2.9, 3.3,
3.4 AND 11.5;
(b) payments of interest on Loans and Reimbursement
Obligations;
(c) payments of principal of Loans and Reimbursement
Obligations;
(d) payments of cash amounts to the Lender in respect of
outstanding Letters of Credit pursuant to SECTION 10.1(B);
(e) amounts due to the Lender pursuant to SECTIONS 3.2(E),
8.15 and 11.9;
(f) payments of all other amounts due under any of the Loan
Documents, if any;
(g) amounts due to any of the Lender in respect of Obligations
consisting of liabilities under any Swap Agreement with the Lender; and
(h) any surplus remaining after application as provided for
herein, to the Borrowers or otherwise as may be required by applicable law.
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ARTICLE XI
MISCELLANEOUS
11.1. PARTICIPATIONS. The Lender may sell participations at its expense
to one or more banks or other entities as to all or a portion of its rights and
obligations under this Agreement; PROVIDED, that (i) the Lender's obligations
under this Agreement shall remain unchanged, (ii) the Lender shall remain solely
responsible to the Borrowers for the performance of such obligations, (iii) the
Lender shall remain the holder of any Note issued to it for the purpose of this
Agreement, (iv) such participations shall be in a minimum amount of $1,000,000
and, if greater, an amount which is an integral multiple of $1,000,000, (v) the
Borrowers shall continue to deal solely and directly with the Lender in
connection with the Lender's rights and obligations under this Agreement and
with regard to any and all payments to be made under this Agreement; PROVIDED,
that the participation agreement between the Lender and its participants may
provide that the Lender will obtain the approval of such participant prior to
the Lender's agreeing to any amendment or waiver of any provisions of any Loan
Document which would (A) extend the maturity of the Note, (B) reduce the
interest rates hereunder or (C) increase the Revolving Credit Commitment or
Letter of Credit Commitment, and (vi) the sale of any such participations which
require either Borrower to file a registration statement with the United States
Securities and Exchange Commission or under the securities regulations or laws
of any state shall not be permitted.
11.2. NOTICES. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of receipt at such address, telefacsimile
number or telex number as may from time to time be specified by such party in
written notice to the other parties hereto or otherwise received), in the case
of notice by telegram, telefacsimile or telex, respectively (where the receipt
of such message is verified by return), or (iii) on the fifth Business Day after
the day on which mailed, if sent prepaid by certified or registered mail, return
receipt requested, in each case delivered, transmitted or mailed, as the case
may be, to the address, telex number or telefacsimile number, as appropriate,
set forth below or such other address or number as such party shall specify by
notice hereunder:
(a) if to the Borrowers:
c/o World Fuel Services Corporation
700 South Royal Poinciana Blvd.
Suite 800
Miami Springs, Florida 33166
Attn: Chief Financial Officer
Telephone: (305) 884-2001
Telefacsimile: (305) 883-0186
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(b) if to the Lender:
NationsBank, N.A.
101 North Tryon Street
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Corporate Credit Support
Telephone: (704) 388-1112
Telefacsimile: (704) 386-8694
(c) if to any Guarantor, at the address set forth in
SECTION 14 of the Facility Guaranty executed by such
Guarantor.
11.3. SETOFF. From and after the occurrence of a Default or an Event of
Default the Lender may set off the obligations and liabilities of the Borrowers
against any and all monies then owed by the Lender to either Borrower in any
capacity whatsoever whether or not then due and the Lender shall be deemed to
have exercised its right to set off immediately at the time its right to elect
such set off accrues even though no charge is made or entered on the books of
the Lender at that time and the same is made subsequent thereto; the Lender may
proceed against either or both of the Borrowers' bank account(s), certificates
of deposit or any other investments and the Subsidiary's bank account(s) and
certificates of deposit or any other investments. For the purposes of this
paragraph, all remittances and property shall be deemed to be in the possession
of the Lender as soon as the same may be put in transit to it by mail or carrier
or by other bailee.
11.4. SURVIVAL. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lender of the Loans and
the issuance of the Letters of Credit and the execution and delivery to the
Lender of this Agreement and the Note and shall continue in full force and
effect so long as any of Obligations remain outstanding or the Lender has any
commitment hereunder or either Borrower has continuing obligations hereunder
unless otherwise provided herein. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and permitted assigns of such party and all covenants, provisions and agreements
by or on behalf of the Borrowers which are contained in the Loan Documents shall
inure to the benefit of the successors and permitted assigns of the Lender.
11.5. EXPENSES. The Borrowers agree (a) to pay or reimburse the Lender
for all its reasonable out-of-pocket costs and expenses incurred in connection
with the preparation, negotiation and execution of, and any amendment,
supplement or modification to, any of the Loan Documents (including due
diligence expenses and travel expenses relating to closing), and the
consummation of the transactions contemplated thereby, including the reasonable
fees, which shall not exceed $20,000 (including legal fees incurred in
connection with the WFS Credit Agreement), and disbursements of counsel to the
Lender, (b) to pay or reimburse the Lender for all of its costs and expenses
incurred in connection with the enforcement or preservation of any rights under
the Loan Documents, including the reasonable fees and disbursements of their
counsel and any payments in indemnification or otherwise payable by the Lender
pursuant to the Loan Documents, and (c) to pay, indemnify and hold the Lender
harmless from any and all recording and filing fees and any and all liabilities
with
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respect to, or resulting from any failure to pay or delay in paying,
documentary, stamp, excise and other similar taxes, if any, which may be payable
or determined to be payable in connection with the execution and delivery of any
of the Loan Documents, or consummation of any amendment, supplement or
modification of, or any waiver or consent under or in respect of, any Loan
Document.
11.6. AMENDMENTS. No amendment, modification or waiver of any provision
of any Loan Document and no consent by the Lender to any departure therefrom by
the Borrowers or any other Credit Party shall be effective unless such
amendment, modification or waiver shall be in writing and signed by the Lender,
shall have been approved by the Lender through its written consent, and the same
shall then be effective only for the period and on the conditions and for the
specific instances and purposes specified in such writing. No notice to or
demand on the Borrowers in any case shall entitle the Borrowers to any other or
further notice or demand in similar or other circumstances, except as otherwise
expressly provided herein. No delay or omission on the Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any Default or Event of Default.
11.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
11.8. TERMINATION. The termination of this Agreement shall not affect
any rights of the Borrowers or the Lender or any obligation of the Borrowers or
the Lender, arising prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into or rights created or obligations incurred prior to such termination
have been fully disposed of, concluded or liquidated and the Obligations arising
prior to or after such termination have been irrevocably paid in full. The
rights granted to the Lender under the Loan Documents shall continue in full
force and effect, notwithstanding the termination of this Agreement, until all
of the Obligations have been paid in full after the termination hereof (other
than Obligations in the nature of continuing indemnities or expense
reimbursement obligations not yet due and payable, which shall continue) or the
Borrowers have furnished the Lender with an indemnification satisfactory to the
Lender with respect thereto. All representations, warranties, covenants, waivers
and agreements contained herein shall survive termination hereof until payment
in full of the Obligations unless otherwise provided herein. Notwithstanding the
foregoing, if after receipt of any payment of all or any part of the
Obligations, the Lender is for any reason compelled to surrender such payment to
any Person because such payment is determined to be void or voidable as a
preference, impermissible setoff, a diversion of trust funds or for any other
reason, this Agreement shall continue in full force and the Borrowers shall be
liable to, and shall indemnify and hold the Lender harmless for, the amount of
such payment surrendered until the Lender shall have been finally and
irrevocably paid in full. The provisions of the foregoing sentence shall be and
remain effective notwithstanding any contrary action which may have been taken
by the Lender in reliance upon such payment, and any such contrary action so
taken shall be without prejudice to the Lender's rights under this Agreement and
shall be deemed to have been conditioned upon such payment having become final
and irrevocable.
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11.9. INDEMNIFICATION; LIMITATION OF LIABILITY. In consideration of the
execution and delivery of this Agreement by the Lender and the extension of
credit under the Loans, each Borrower hereby indemnifies, exonerates and holds
the Lender and its affiliates, officers, directors, employees, agents and
advisors (collectively, the "Indemnified Parties") free and harmless from and
against any and all claims, actions, causes of action, suits, losses, costs,
liabilities and damages, and expenses incurred in connection therewith
(irrespective of whether any such Indemnified Party is a party to the action for
which indemnification hereunder is sought), including reasonable attorneys' fees
and disbursements (collectively, the "Indemnified Liabilities") that may be
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of, or in connection with the
execution, delivery, enforcement, performance or administration of this
Agreement and the other Loan Documents, or any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of any
Loan or Letter of Credit, whether or not such action is brought against the
Lender, the shareholders or creditors of the Lender or an Indemnified Party or
an Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated herein are consummated, except to the extent such
claim, damage, loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct, and if and to the
extent that the foregoing undertaking may be unenforceable for any reason, the
Borrowers hereby agree to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. The Borrowers agree that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to it,
any of its Subsidiaries, any Credit Party, or any security holders or creditors
thereof arising out of, related to or in connection with the transactions
contemplated herein, except to the extent that such liability is found in a
final non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct;
provided, however, in no event shall any Indemnified Party be liable for
consequential, indirect or special, as opposed to direct, damages.
11.10. SEVERABILITY. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more of
the parties hereto, then such provision shall remain in effect with respect to
all parties, if any, as to whom such provision is neither illegal nor invalid,
and in any event all other provisions hereof shall remain effective and binding
on the parties hereto.
11.11. ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all previous proposals, negotiations,
representations, commitments and other communications between or among the
parties, both oral and written, with respect thereto.
11.12. AGREEMENT CONTROLS. In the event that any term of any of the
Loan Documents other than this Agreement conflicts with any express term of this
Agreement, the terms and provisions of this Agreement shall control to the
extent of such conflict.
11.13. USURY SAVINGS CLAUSE. Notwithstanding any other provision
herein, the aggregate interest rate charged under any of the Notes, including
all charges or fees in connection therewith deemed in the nature of interest
under applicable law shall not exceed the Highest Lawful Rate (as
65
<PAGE>
such term is defined below). If the rate of interest (determined without regard
to the preceding sentence) under this Agreement at any time exceeds the Highest
Lawful Rate (as defined below), the outstanding amount of the Loans made
hereunder shall bear interest at the Highest Lawful Rate until the total amount
of interest due hereunder equals the amount of interest which would have been
due hereunder if the stated rates of interest set forth in this Agreement had at
all times been in effect. In addition, if when the Loans made hereunder are
repaid in full the total interest due hereunder (taking into account the
increase provided for above) is less than the total amount of interest which
would have been due hereunder if the stated rates of interest set forth in this
Agreement had at all times been in effect, then to the extent permitted by law,
the Borrowers shall pay to the Lender an amount equal to the difference between
the amount of interest paid and the amount of interest which would have been
paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding
the foregoing, it is the intention of the Lender and the Borrowers to conform
strictly to any applicable usury laws. Accordingly, if the Lender contracts for,
charges, or receives any consideration which constitutes interest in excess of
the Highest Lawful Rate, then any such excess shall be cancelled automatically
and, if previously paid, shall at the Lender's option be applied to the
outstanding amount of the Loans made hereunder or be refunded to the Borrowers.
As used in this paragraph, the term "Highest Lawful Rate" means the maximum
lawful interest rate, if any, that at any time or from time to time may be
contracted for, charged, or received under the laws applicable to the Lender
which are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
11.14. GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN
THOSE SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE GOVERNED
BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO CONTRACTS
EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
(b) THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY AGREE AND
CONSENT THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY
STATE OR FEDERAL COURT SITTING IN THE STATE OF FLORIDA, UNITED STATES OF AMERICA
AND, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWERS EXPRESSLY
WAIVE ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
IN, OR TO THE EXERCISE OF JURISDICTION OVER THEM AND THEIR PROPERTY BY, ANY SUCH
COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND THE BORROWERS HEREBY
IRREVOCABLY SUBMIT GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH
COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
66
<PAGE>
(c) THE BORROWERS AGREE THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS
IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL
(POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWERS PROVIDED IN SECTION 11.2, OR
BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT
IN THE STATE OF FLORIDA.
(d) NOTHING CONTAINED IN SUBSECTIONS (A) OR (B) HEREOF SHALL
PRECLUDE THE LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO ANY LOAN DOCUMENT IN THE COURTS OF ANY JURISDICTION WHERE THE
BORROWERS OR ANY OF THE BORROWERS' PROPERTY OR ASSETS MAY BE FOUND OR LOCATED.
TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE
BORROWERS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY SUCH COURT AND
EXPRESSLY WAIVE, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, OBJECTION TO
THE EXERCISE OF JURISDICTION OVER THEM AND THEIR PROPERTY BY ANY SUCH OTHER
COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE UNDER APPLICABLE LAW.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE
DELIVERED IN CONNECTION THEREWITH, THE BORROWERS AND THE LENDER HEREBY AGREE, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL
BY JURY IN ANY SUCH ACTION OR PROCEEDING.
[Signatures on following pages]
67
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.
WITNESS: WORLD SERVICES INTERNATIONAL, S.A.
B.M. REYNOLDS By: /s/ CARLOS ABAUNZA
- ------------------------- ------------------------------
Name: Carlos Abaunza
TERRY L. WITCHER Title: Vice President & Chief
- ------------------------- Financial Officer
TRANS-TEC INTERNATIONAL, S.A.
WITNESS:
By: /s/ CARLOS ABAUNZA
B.M. REYNOLDS ------------------------------
- ------------------------ Name: Carlos Abaunza
Title: Vice President & Chief
TERRY L. WITCHER Financial Officer
- ------------------------
CREDIT AGREEMENT
Page 1 of 2
<PAGE>
NATIONSBANK, N.A.
By: /s/ RICHARD M. STARKE
-----------------------------
Name: Richard M. Starke
Title: Senior Vice President
Lending Office:
NationsBank, N.A.
101 North Tryon Street
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Corporate Credit
Support
Telephone: (704) 388-1112
Telefacsimile: (704) 386-8694
Wire Transfer Instructions:
NationsBank, N.A.
ABA#053000196
Account No.: _____________________
Reference: World Fuel Services
Attention: _______________________
CREDIT AGREEMENT
Page 2 of 2
<PAGE>
EXHIBIT A
Notice of Appointment (or Revocation) of Authorized Representative
Reference is hereby made to the Revolving Credit and Reimbursement
Agreement dated as of November 30, 1998 (the "Agreement") by and among World
Fuel International, S.A., Trans-Tec International, S.A., each a corporation
organized and existing under the laws of Costa Rica (collectively, the
"Borrowers"), World Fuel Services Corporation, a Florida corporation, as
guarantor, and NationsBank, N.A., as Lender (the "Lender"). Capitalized terms
used but not defined herein shall have the respective meanings therefor set
forth in the Agreement.
The Borrowers hereby nominate, constitute and appoint each individual
named below as an Authorized Representative under the Loan Documents, and hereby
represents and warrants that (i) set forth opposite each such individual's name
is a true and correct statement of such individual's office (to which such
individual has been duly elected or appointed), a genuine specimen signature of
such individual and an address for the giving of notice, and (ii) each such
individual has been duly authorized by the Borrowers to act as Authorized
Representative under the Loan Documents:
Name and Address Office Specimen Signature
- --------------------------------- -------------------- ------------------
Carlos Abaunza Vice President & /s/ CARLOS ABAUNZA
- --------------------------------- Chief Financial
Officer
- ---------------------------------
- --------------------------------- -------------------- ------------------
- ---------------------------------
- ---------------------------------
Borrowers hereby revoke (effective upon receipt hereof by the Lender) the prior
appointment of ________________ as an Authorized Representative.
This the 30th day of November, 1998.
WORLD FUEL INTERNATIONAL, S.A.
By: /s/ CARLOS ABAUNZA
---------------------------
Name: Carlos Abaunza
-------------------------
Title: Vice President & Chief
Financial Officer
------------------------
TRANS-TEC INTERNATIONAL, S.A.
By: /s/ CARLOS ABAUNZA
---------------------------
Name: Carlos Abaunza
-------------------------
Title: Vice President & Chief
Financial Officer
------------------------
A-1
<PAGE>
EXHIBIT B
Form of Borrowing Notice
To: NationsBank, N.A.
101 North Tryon Street
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Corporate Credit Support
Telefacsimile: (704) 386-8694
Reference is hereby made to the Revolving Credit and Reimbursement
Agreement dated as of November 30, 1998 (the "Agreement") by and among World
Fuel International, S.A., Trans-Tec International, S.A., each a corporation
organized and existing under the laws of Costa Rica (collectively, the
"Borrowers"), World Fuel Services Corporation, a Florida corporation, as
guarantor, and NationsBank, N.A., as Lender (the "Lender"). Capitalized terms
used but not defined herein shall have the respective meanings therefor set
forth in the Agreement.
The Borrowers through their Authorized Representative hereby give
notice to the Lender that Loans of the type and amount set forth below be made
on the date indicated:
TYPE OF LOAN INTEREST AGGREGATE
(CHECK ONE) PERIOD(1) AMOUNT(2) DATE OF LOAN(3)
Base Rate Loan ______ _________ ____________
Eurodollar Rate Loan ______ _________ ____________
- -----------------------
(1) For any Eurodollar Rate Loan, one, two, three or six months.
(2) Must be $100,000 or if greater an integral multiple of $100,000, unless a
Base Rate Refunding Loan.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan;
The Borrowers hereby request that the proceeds of Loans described in
this Borrowing Notice be made available to the Borrowers as follows: [INSERT
TRANSMITTAL INSTRUCTIONS].
The undersigned hereby certify that:
1. No Default or Event of Default exists either now or after giving
effect to the borrowing described herein; and
2. All the representations and warranties set forth in ARTICLE VII of
the Agreement and in the Loan Documents (other than those expressly stated to
refer to a particular date) are true and
B-1
<PAGE>
correct as of the date hereof except that the reference to the financial
statements in SECTION 7.6(A) of the Agreement are to those financial statements
most recently delivered to you pursuant to SECTION 8.1 of the Agreement (it
being understood that any financial statements delivered pursuant to SECTION
8.1(B) have not been certified by independent public accountants) and attached
hereto are any changes to the Schedules referred to in connection with such
representations and warranties.
3. All conditions contained in the agreement to the making of any Loan
requested hereby have been met or satisfied in full.
WORLD FUEL INTERNATIONAL, S.A.
TRANS-TEC INTERNATIONAL, S.A.
BY:
------------------------------
Authorized Representative
DATE:
----------------------------
B-2
<PAGE>
EXHIBIT C
Form of Interest Rate Selection Notice
To: NationsBank, N.A.
101 North Tryon Street
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Corporate Credit Support
Telefacsimile: (704) 386-8694
Reference is hereby made to the Revolving Credit and Reimbursement
Agreement dated as of November 30, 1998 (the "Agreement") by and among World
Fuel International, S.A., Trans-Tec International, S.A., each a corporation
organized and existing under the laws of Costa Rica (collectively, the
"Borrowers"), World Fuel Services Corporation, a Florida corporation, as
guarantor, and NationsBank, N.A., as Lender (the "Lender"). Capitalized terms
used but not defined herein shall have the respective meanings therefor set
forth in the Agreement.
The Borrowers through their Authorized Representative hereby give
notice to the Lender of the following selection of a type of Loan and Interest
Period:
TYPE OF LOAN INTEREST AGGREGATE
(CHECK ONE) PERIOD(1) AMOUNT(2) DATE OF LOAN(3)
Base Rate Loan ______ _________ ____________
Eurodollar Rate Loan ______ _________ ____________
- -----------------------
(1) For any Eurodollar Rate Loan, one, two, three or six months.
(2) Must be $100,000 or if greater an integral multiple of $100,000, unless a
Base Rate Refunding Loan.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan;
WORLD FUEL INTERNATIONAL, S.A.
TRANS-TEC INTERNATIONAL, S.A.
BY:
------------------------------
Authorized Representative
DATE:
----------------------------
C-1
<PAGE>
EXHIBIT D
Form of Revolving Note
Promissory Note
(Revolving Credit Facility)
SEE EXHIBIT 10.f
<PAGE>
EXHIBIT E
Form of Opinion of Borrowers' Counsel
SEE ATTACHED.
E-1
<PAGE>
[SHUTTS & BOWEN LETTERHEAD]
November 9, 1998
NationsBank, N.A.
NationsBank Corporation Center
Charlotte, North Carolina 28255-0065
RE: $5,000,000 REVOLVING CREDIT AND REIMBURSEMENT AGREEMENT BY AND AMONG
NATIONSBANK, N.A., AS LENDER, WORLD FUEL INTERNATIONAL, S.A. AND
TRANS-TEC INTERNATIONAL, S.A., AS BORROWERS, AND WORLD FUEL SERVICES
CORPORATION, AS GUARANTOR
Ladies and Gentlemen:
We have acted as counsel to World Fuel International, S.A. ("WFI") and
Trans-Tec International, S.A. ("TTI"), each a Costa Rica corporation (WFI and
TTI are together referred to as the "Borrowers") and World Fuel Services
Corporation, a Florida corporation (the "Guarantor" and collectively with the
Borrowers, the "Credit Parties") in connection with a Revolving Credit Facility
of up to $5,000,000, including a $5,000,000 Letter of Credit Facility
constituting part of the Revolving Credit Facility, each being made available to
the Borrowers by you on this date pursuant to the Revolving Credit and
Reimbursement Agreement of even date herewith by and among NationsBank, N.A.
(the "Lender") and the Borrowers (the "WFI/TTI Credit and Reimbursement
Agreement"), and the other transactions contemplated under the WFI/TTI Credit
and Reimbursement Agreement.
This option is being delivered in accordance with the conditions set forth
in SECTION 6.1(a) of the WFI/TTI Credit and Reimbursement Agreement. All
capitalized terms not otherwise defined herein shall have the meanings
provided therefor in the WFI/TTI Credit and Reimbursement Agreement.
As such counsel, we have reviewed the following documents:
1. the WFI/TTI Credit and Reimbursement Agreement;
2. the Note;
3. the Facility Guaranty; and
<PAGE>
NationsBank, N.A.
November 9, 1998
Page 2
4. The LC Account Agreement.
The documents described in items 1 through 4 immediately above are referred to
herein as the "Loan Documents".
For purposes of giving this opinion, we have examined such corporate
records of each of the Credit Parties, certificates of public officials,
certificates of appropriate officials of each of the Credit Parties, and such
other documents, and have made such inquiries of the Credit Parties, as we have
deemed appropriate.
Based upon and subject to the foregoing, and subject to the qualifications
set forth elsewhere herein, it is our opinion that:
1. The Guarantor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida and to our knowledge is
duly qualified to transact buisness as a foreign entity and is in good standing
in all jurisdictions in which the nature of its business requires such
qualification, and in which the failure to do so qualify could reasonably be
executed to have a Material Adverse Effect. The Guarantor has full corporate
power and authority to own its assets and conduct the businesses in which it is
now engaged and as expressly contemplated in the Loan Documents, and has full
corporate power and authority to enter into each of the Loan Documents to which
it is a party and to perform its obligations thereunder.
2. Each of the Loan Documents to which the Guarantor is a party has been
duly authorized by the Board of Directors of the Guarantor (and by any required
shareholder action), has been duly executed and delivered by the Guarantor,
and constitutes the legal, valid and binding obligation, agreement or
instrument, as the case may be, of the Guarantor, enforceable agains the
Guarantor in accordance with its respective terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency, reorganization and
other similar laws relating to or affecting creditors' rights generally and by
the application of general equitable principles (whether considered in
proceedings at law or in equity).
3. Neither the execution or delivery of, nor performance by the Guarantor
of its obligations under, the Loan Documents (a) does or will conflict with,
violate or constitute a breach of (i) the charter or bylaws of the Guarantor,
(ii) any laws, rules or regulations applicable to the Guarantor, or (iii) any
contract, agreement, indenture, lease, instrument, judgment, writ,
determination, order, decree or arbitral award known to us to which the
Guarantor is a party or by which the Guarantor or any of its properties is
bound, (b) requires the prior consent of notice to, license from or filing with
any Governmental
<PAGE>
NationsBank, N.A.
November 9, 1998
Page 3
Authority which has not been duly obtained or made on or prior to the date
hereof, or (c) to our knowledge, does or will result in the creation or
imposition of any lien, pledge, charge or encumbrance of any nature upon or with
respect to any of the properties of the Guarantor.
4. To our knowledge, there is no pending or threatened action, suit,
investigation or proceeding (including, without limitation, any action, suit
investigation, or proceeding under any environmental or labor law), nor is there
any basis therefor, before or by any court, or governmental department,
commission, board, bureau, instrumentality, agency or arbitral authority, (i)
which calls into question the validity or enforceability of any of the Loan
Documents, or the titles to their respective offices or authority of any
officers of the Guarantor or (ii) an adverse result in which would reasonable be
likely to have a Material Adverse Effect.
5. The Guarantor is not subject to any charter, bylaw, or other corporate
restrictions, nor, to the best of our knowledge, is the Guarantor a party to or
bound by any contract or agreement which restricts, limits, or prohibits
performance of any of its obligations pursuant to the terms of the Loan
Documents.
6. None of the transactions contemplated by the WFI/TTI Credit and
Reimbursement Agreement, including, without limitation, the use of the proceeds
of the Loans provided for in the Loan Documents, will violate or result in a
violation of Section 7 of the Securities Exchange Act of 1934, as amended, any
regulations issued pursuant thereto, or regulations G, T, U or X of the Board
of Governors of the Federal Reserve System.
The foregoing options are subject to the qualifications, limitations and
assumptions noted therein, as well as the following qualifications,
limitations and assumptions:
A. Our opinion concerning the validity, binding effect and
enforceability of the Loan Documents means that: (a) the Loan Documents
constitute effective contracts under applicable law, (b) the Loan Documents are
not invalid in their entirety because of a specific statutory prohibition or
public policy and are not subject in their entirety to a contractual defense,
and (c) subject to the last sentence of this paragraph, some remedy is
available if Guarantor is in material default under the Loan Documents. This
opinion does not mean that: (a) any particular remedy is available upon a
material default, or (b) every provision of the Loan Documents will be upheld or
enforced in any or each circumstance by a court. Furthermore, the validity,
binding effect and enforceability of the Loan Documents may be limited or
otherwise affected by: (a) bankruptcy, insolvency, reorganization, moratorium,
fradulent conveyance or other similar statutes, rules, regulations or other
laws affecting the enforcement of creditors' rights and remedies.
<PAGE>
NationsBank, N.A.
November 9, 1998
Page 4
generally, and (b) the unavailability of, or limitation on the availability of,
a particular right or remedy (whether in a proceeding in equity or at law)
because of an equitable principle or a requirement to commercial reasonableness,
conscionability or good faith.
B. In rendering the opinions set forth herein, we have made the
following assumptions:
i. The legal capacity of each natural person.
ii. The legal existence of all persons other than the Borrowers
and the Guarantor.
iii. The power and authority of each person (other than the
Borrowers and the Guarantor) to execute, deliver, and perform each document
executed and delivered and to do each other act done or to be done by such
person for the authorization, execution and delivery by such person of each
document executed and delivered or to be executed and delivered by such person.
iv. The due execution and delivery of the Loan Documents by
each party hereto other than the Borrowers and the Guarantor, and the legality,
validity, binding effect and enforceability of the Loan Documents as to each
party other than the Borrowers and the Guarantor.
v. The genuineness of all signatures (other than those of the
Borrowers and the Guarantor), the completeness of each of the documents
submitted to us, the authenticity of each document submitted to us as an
original, the conformity of the original of each document submitted to us as a
copy and the authenticity of the original of each document reviewed by us as a
copy.
C. No opinion is given or expressed and none shall be inferred or
implied as to any matters other than as expressly set forth herein.
D. Whenever our opinion herein is qualified by the phrase "to our
knowledge" or "known to us" it is intended to indicate that during the course of
our representation of the Credit Parties, no information has come to our
attention which would give us actual knowledge that any matter is other than as
opined to herein. However, except to the extent expressly set forth herein, we
have not inspected the operations or properties of the Credit Parties, nor have
we undertaken any independent investigation to determine the existence or
absense of any such matters and no inference as to our knowledge of such
matters shall be drawn from the fact of our representation of the Credit
Parties.
<PAGE>
NationsBank, N.A.
November 9, 1998
Page 5
E. We are members of the Florida Bar and do not hold ourselves out as
experts on, nor are we, in rendering our opinions herein, passing upon any
matter of, the laws of any jurisdiction other than the laws of the United
States, the internal laws of Florida, and the corporate law of Delaware, as now
existing.
Our opinions contained herein are rendered solely in connection with the
transactions contemplated under the Loan Documents and may not be relied upon in
any manner by any Person other than the addressees hereof, any successor or
assignee of any addressee (including successive assignees) and any Person who
shall acquire a participation interest in the interest of the Lender
(collectively, the "Reliance Parties"), or by any Reliance Party for any other
purpose. Our opinions herein shall not be quoted or otherwise included,
summarized or referred to any publication or document, in whole or in part, for
any purposes whatsoever, or furnished to any person other than a Reliance Party
(or a Person considering whether to become a Reliance Party), except as may be
required of any Reliance Party by applicable law or regulation or in accordance
with any auditing or oversight function or request of regulatory agencies to
which a Reliance Party is subject.
Very truly yours,
/s/ SHUTTS & BOWEN
SHUTTS & BOWEN LLP
<PAGE>
EXHIBIT F
Compliance Certificate
NationsBank, N.A.
101 North Tryon Street
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Corporate Credit Support
Telefacsimile: (704) 386-8694
Reference is hereby made to the Revolving Credit and Reimbursement
Agreement dated as of November 30, 1998 (the "Agreement") by and among World
Fuel International, S.A., Trans-Tec International, S.A., each a Costa Rican
corporation (collectively, the "Borrowers"), World Fuel Services, Inc., a
Florida corporation (the "Guarantor") and NationsBank, N.A., as Lender (the
"Lender"). Capitalized terms used but not otherwise defined herein shall have
the respective meanings therefor set forth in the Agreement. The undersigned, a
duly authorized and acting Authorized Representative, hereby certifies to you as
of __________ (the "Determination Date") as follows:
1. Calculations:
A. Consolidated Tangible Net Worth as of the
Determination Date was $__________.
Required: Not less than $__________.
[See Section 9.1(a) of the Agreement]
B. Consolidated Funded Indebtedness to Consolidated
Capitalization as of the Determination Date was _____ to 1.00
calculated as follows:
(i) Consolidated Funded Indebtedness as of the
Determination Date: $__________
(ii) Consolidated Capitalization as of the
Determination Date: $__________
(iii) (i) Divided by (ii): __________
Required: Less than .55 to 1.00.
[See Section 9.1(b) of the Agreement]
F-1
<PAGE>
C. Consolidated Fixed Charge Coverage Ratio as of
the Determination Date was _____ to 1.00 calculated as follows:
(i) Consolidated EBITDA (for the Four Quarter
Period ending $__________ on (or most
recently ended prior to) the
Determination Date): $__________
(ii) capital expenditures (for the Four
Quarter Period ending on (or most
recently ended prior to) the
Determination Date): $__________
(iii) (i) MINUS (ii): $__________
(iv) Consolidated Fixed Charges (for the
Four Quarter Period ending on (or most
recently ended prior to) the
Determination Date): $__________
(v) (iii) divided by (iv): __________
Required: Equal or greater than 1.35 to 1.00.
[See Section 9.1(c) of the Agreement]
D. Applicable Margin is _______%
Applicable Unused Fee is _______%
2. No Default
A. Since __________ (the date of the last similar
certification), (a) the Borrower has not defaulted in the
keeping, observance, performance or fulfillment of its
obligations pursuant to any of the Loan Documents; and (b) no
Default or Event of Default specified in ARTICLE X of the
Agreement has occurred and is continuing.
B. If a Default or Event of Default has occurred
since __________ (the date of the last similar certification),
the Borrower proposes to take the following action with
respect to such Default or Event of Default:__________________
______________________________________________________________
___________.
(NOTE, if no Default or Event of Default has occurred,
insert "Not Applicable").
C. The Borrower and its Subsidiaries are current with
all trade payables, except trade payables contested in good
faith in the ordinary course of business.
F-2
<PAGE>
D. As of the Determination Date, the Borrower and its
Subsidiaries are in full compliance with the established
sublimits and terms of the Letters of Credit issued pursuant
to the Agreement.
The Determination Date is the date of the last required financial
statements submitted to the Lender in accordance with SECTION 8.1 of the
Agreement.
IN WITNESS WHEREOF, I have executed this Certificate this _____ day of
__________, 19___.
By:______________________________
Authorized Representative
Name:_____________________________
Title:____________________________
F-3
<PAGE>
EXHIBIT G
FORM OF GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (the "Guaranty") is entered into as of this ___
day of _________, 199_, by and among the undersigned (individually a "Guarantor"
and collectively the "Guarantors") Subsidiaries of World Fuel International,
S.A. or Trans-Tec International, S.A., each a Costa Rican corporation, and
NATIONSBANK, N.A., as Lender (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, World Fuel International, S.A. and Trans-Tec International,
collectively the "Borrowers", World Fuel Services Corporation, as a guarantor,
and the Lender have entered into that certain Revolving Credit and Reimbursement
Agreement, dated as of November 30, 1998, whereby the Lender has made available
to the Borrowers a revolving credit facility pursuant to a Revolving Credit and
Reimbursement Agreement dated November 30, 1998 (as at any time hereafter
amended, restated, modified or supplemented, the "Credit Agreement"); and
WHEREAS, the Credit Agreement requires the execution of this Guaranty
by any Subsidiary of either Borrower acquired or created after the date thereof,
and
WHEREAS, the Guarantors will substantially benefit from the loans and
advances made or to be made by the Lender and the letters of credit issued or to
be issued by the Issuing Bank to the Borrower under the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and conditions herein
set forth, it is hereby agreed as follows:
1. Guarantors hereby absolutely and unconditionally guaranty, jointly
and severally, to the Lender, with full power to satisfy, discharge, release,
foreclose, assign and transfer the within Guaranty, the due performance and full
and prompt payment, whether at maturity or by acceleration or otherwise, of any
and all Borrowers' Liabilities (as hereinafter defined) (hereinafter
collectively referred to as the "Guarantors' Obligations"); PROVIDED, HOWEVER,
that the liability of any Guarantor hereunder with respect to the Guarantors'
Obligations shall be limited to an aggregate amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance under
Section 548 of the United States Bankruptcy Code or any comparable provisions of
any applicable state law.
2. For purposes of this Guaranty, "Borrowers' Liabilities" shall mean
and include any and all advances (including those made by the Lender to protect,
enlarge or preserve the priority, propriety, or amount of any lien in favor of
the Lender against mechanic's lien, equitable lien, or statutory claimants, or
otherwise), debts, obligations and liabilities of Borrowers pursuant to the
terms of the Credit Agreement, the Note, any Swap Agreement and all other Loan
Documents
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executed in connection therewith heretofore, now, or hereafter made, incurred or
created, extended, renewed, replaced, refinanced or restructured, whether or not
from time to time decreased or extinguished and later increased, created or
incurred, whether voluntary or involuntary and, however arising, whether due or
not, absolute or contingent, liquidated or non-liquidated, determined or
undetermined, and whether the Borrowers may be liable individually or jointly
with others, or whether recovery upon such indebtedness may be or hereafter
become barred by any statute of limitations, or whether such indebtedness may be
or hereafter become otherwise unenforceable (collectively referred to
hereinafter as the "Borrowers' Liabilities"). This is a continuing Guaranty
relating to the Borrowers' Liabilities, and any other indebtedness arising under
subsequent or successive transactions which increase the Borrowers' Liabilities,
and said Guaranty shall be irrevocable and remain outstanding until all the
Borrowers' Liabilities are satisfied in full and the Lender shall have no
further obligation to make Loans and Advances and the Issuing Bank to issue
Letters of Credit under the Credit Agreement.
3. The obligations of the Guarantors hereunder are independent of the
obligations of the Borrowers, and a separate action or actions may be brought
and prosecuted against any Guarantor, whether such action is brought against the
Borrowers or whether the Borrower be joined in any such action or actions.
4. Each Guarantor authorizes the Lender, without notice or demand and
without affecting such Guarantor's liability hereunder, from time to time to (a)
renew, amend, compromise, extend, accelerate or otherwise change the time for
payment of, or otherwise change the terms of the Borrowers' Liabilities or any
part thereof, including increase or decrease of the rate of interest thereon;
(b) take and hold security for the payment of this Guaranty and the Guarantors'
Obligations and exchange, enforce, waive and release any such security; (c)
apply such security and direct the order or manner of sale thereof as the Lender
may determine; and (d) release or substitute any one or more endorsers or
guarantors of the Borrowers' Liabilities. The Lender may without notice assign
this Guaranty in whole or in part in connection with an assignment as permitted
under the Credit Agreement.
5. Each Guarantor waives any right to require the Lender to (a) proceed
against the Borrowers; (b) proceed against or exhaust any security held from the
Borrowers; or (c) pursue any other remedy in the Lender's power whatsoever. Each
Guarantor waives any defense arising by reason of any disability or other
defense of the Borrowers or by reason of the cessation from any cause whatsoever
of the liability of the Borrowers to the Lender. Until all the Borrowers'
Liabilities shall have been paid in full and the Lender shall have no further
obligation to make Loans and Advances and the Issuing Bank to issue Letters of
Credit under the Credit Agreement, each Guarantor waives any right to endorse
any remedy which the Lender now has or may hereafter have against the Borrowers,
and waives any benefit of, and any right to participate in, any security now or
hereafter held by the Lender as collateral security for the Borrowers'
Liabilities. Each Guarantor waives all presentments, demands for performance,
notices of non-performance, protests, notices of dishonor, notices of acceptance
of this Guaranty and of the existence, creation, or incurring of new or
additional indebtedness; any defense or circumstance which might otherwise
constitute a legal or equitable discharge of a guarantor or a surety; and all
rights under any state or federal statute dealing with or affecting the rights
of creditors. Each Guarantor covenants to cause the Borrowers to
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maintain and preserve the enforceability of any instruments now or hereafter
executed in favor of the Lender, and to take no action of any kind which might
be the basis for a claim that such Guarantor has any defense hereunder in
connection with the above-mentioned Loan Documents, other than payment in full
of the Borrowers' Liabilities. Each Guarantor waives any right or claim of right
to cause a marshaling of either Borrower's assets or to require the Lender to
proceed against the Guarantors or any other guarantor of the Borrowers'
Liabilities in any particular order. No delay on the part of the Lender in the
exercise of any right, power or privilege under the Loan Documents or under this
Guaranty shall operate as a waiver of any such privilege, power or right.
6. Until the Borrowers' Liabilities are paid in full and the Lender is
under no further obligation to make Loans and Advances and the Issuing Bank to
issue Letters of Credit under the Credit Agreement, any indebtedness of the
Borrowers now or hereafter held by any Guarantor is hereby subordinated to the
Borrowers' Liabilities; and such indebtedness of the Borrowers to any Guarantor,
if the Lender so requests, shall be collected, enforced and received by such
Guarantor as trustee for the Lender and be paid over to the Lender on account of
the Borrowers' Liabilities, but without reducing or affecting in any manner the
liability of such Guarantor under the other provisions of this Guaranty. Each
Guarantor, at the request of the Lender, shall execute such further documents in
favor of the Lender to further evidence and support the purpose of this Section
6. Each Guarantor hereby irrevocably waives and releases any right or rights of
subrogation or contribution existing at law, by contract or otherwise to recover
all or a portion of any payment made hereunder from the Borrowers or any other
guarantor.
7. Upon the default of the Borrowers with respect to any of their
obligations or liabilities to the Lender in connection with the Loan Documents,
or in case either Borrower or any Guarantor shall become insolvent or make an
assignment for the benefit of creditors, or if a petition in bankruptcy or for
corporate reorganization or for an arrangement be filed by or against Borrower
or any Guarantor (and if such petition is filed against either Borrower or any
Guarantor and is not stayed or dismissed within sixty (60) days), or in the
event of the appointment of a receiver for either Borrower or any Guarantor of
their properties, or in the event a judgment is obtained or warrant of
attachment is issued against either Borrower or any Guarantor (which judgment or
warrant is not satisfied or bonded or removed within sixty (60) days), all or
any part of the Guarantors' Obligations shall, without notice or demand, at the
option of the Lender, become immediately due and payable and shall be paid
forthwith, jointly and severally, by Guarantors without any offset of any kind
whatsoever, without the Lender first being required to make demand upon the
Borrowers or pursue any of its rights against Borrower, or against any other
person, including other guarantors (whether or not party to this Guaranty).
8. Notwithstanding any provision herein or in any instrument now or
hereafter executed in connection with this Guaranty or the Guarantors'
Obligations hereunder, the total liability for payments in the nature of
interest shall not exceed the limits now imposed by the usury laws of the State
of Florida governing the provisions of this Guaranty or in any instrument now or
hereafter executed in connection with this Guaranty or the Guarantors'
Obligations hereunder.
9. Each Guarantor acknowledges that the Lender has been induced by this
Guaranty to make and to continue to make Loans and Advances to the Borrowers and
the Issuing Bank to issue
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and continue to issue Letters of Credit on behalf of the Borrowers under the
Credit Agreement, and this Guaranty shall, without further reference or
assignment, pass to, and may be relied upon and enforced by, any successor or
participant or assignee of the Lender in and to any of Borrowers' Liabilities.
10. Each Guarantor hereby warrants and represents to the Lender, that:
(a) it is a duly organized and validly existing corporation under the laws of
the state of its incorporation; (b) it is qualified to do business in each state
in which qualification is necessary; (c) it has the power to execute this
Guaranty; (d) that the execution of this Guaranty has been duly authorized; and
(e) that this Guaranty is a binding and valid corporate obligation.
11. Each Guarantor acknowledges that the liabilities of said Guarantor
shall be independent of the Obligations of the Borrowers, and separate or joint
actions may be instituted by the Lender, against such Guarantors; and said
actions may be instituted against the Borrowers and any of the Guarantors, or
separately against any of the Guarantors. Any action taken by the Lender
pursuant to the provisions herein contained or contained in the Credit
Agreement, the Note or the Loan Documents, shall not release the party to this
Guaranty until all of the Borrowers' Liabilities are paid in full and the Lender
shall have no further obligation to make Loans and Advances and the Issuing Bank
to issue Letters of Credit under the Credit Agreement.
12. The Guarantors will upon demand pay to the Lender, jointly and
severally, the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, which
it may reasonably incur in connection with enforcement of this Guaranty or the
failure by any Guarantor to perform or observe any of the provisions hereof. The
Guarantors agree to indemnify and hold harmless the Lender from and against any
and all claims, demands, losses, judgments and liabilities (including
liabilities for penalties) of whatsoever kind or nature, growing out of or
resulting from this Guaranty or the exercise by the Lender of any right or
remedy granted to it hereunder or under the other Loan Documents, other than
such items arising out of the bad faith, gross negligence or willful misconduct
on the part of the Lender. If and to the extent that the obligations of the
Guarantors under this Section 12 are unenforceable for any reason, Guarantors
hereby agree to make the maximum contribution to the payment and satisfaction of
such obligations which is permissible under applicable law.
13. If claim is ever made upon the Lender for repayment or recovery of
any amount or amounts received in payment or on account of the Guarantors'
Obligations and the Lender repays all or part of said amount by reason of (a)
any judgment, decree or order of any court or administrative body having
jurisdiction over such payee or any of its property, or (b) any settlement or
compromise of any such claim effected by the Lender with any such claimant
(including the original obligor), then and in such event each Guarantor agrees
that any such judgment, decree, order, settlement or compromise shall be binding
upon it, notwithstanding any revocation hereof or the cancellation of any Notes
or other instrument evidencing any Guarantied Obligations or any security
therefor, and the Guarantors shall be and remain jointly and severally liable to
the Lender for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by the Lender.
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14. All notices required to be given hereunder shall be in writing, and
shall be given by certified mail, return receipt requested, and shall be deemed
given when they shall have been deposited in the United States Mail, with
sufficient postage prepaid thereon to carry them to their addressed destination,
addressed to the party for whom it is intended, as follows:
For a Guarantor: such Guarantor
c/o World Fuel Services Corporation
700 South Royal Poinciana Blvd.
Suite 800
Miami Springs, FL 33166
Attention: Chief Financial Officer
For Lender: NationsBank, N.A.
101 N. Tryon Street
Independence Center, 15th Floor
Charlotte, North Carolina 28255
Attention: Corporate Credit Support
15. Whenever the text of this instrument so requires, the use of any
gender shall be deemed to include all genders, and the use of the singular shall
include the plural, and in such event, wherever the word "Guarantor" is used
herein, then such word shall be deemed to be "Guarantors" or either or any of
them.
16. This Guaranty shall be binding upon each Guarantor, successors,
legal representatives and assigns of each Guarantor.
17. This Guaranty shall, for all purposes, be governed by and construed
in accordance with the laws of the State of Florida.
18. THE LENDER AND EACH GUARANTOR KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN
CONNECTION WITH ANY MATTER DIRECTLY OR INDIRECTLY RELATING TO THIS GUARANTY OR
ANY OTHER LOAN DOCUMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Guaranty to be
duly executed by their duly authorized officers, all as of the day and year
first above written.
[GUARANTOR]:
By: ___________________________________
Name:______________________________
Title:_____________________________
[GUARANTOR]:
By: ___________________________________
Name:______________________________
Title:_____________________________
SIGNATURE PAGE 1 OF 2
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<PAGE>
LENDER:
NATIONSBANK, N.A.
By:_________________________________
Name:____________________________
Title:___________________________
SIGNATURE PAGE 2 OF 2
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SCHEDULE 1.1
Existing Letters of Credit
NONE.
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SCHEDULE 7.4
Subsidiaries and Investments in Other Persons
NONE.
S-1
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SCHEDULE 7.6
Indebtedness
NONE.
S-2
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SCHEDULE 7.7
Liens
NONE.
S-3
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SCHEDULE 7.8
Tax Matters
NONE.
S-4
<PAGE>
SCHEDULE 7.10
Litigation
NONE.
S-5
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SCHEDULE 7.18
Hazardous Materials
NONE.
S-6
EXHIBIT 10.f
Form of Revolving Note
Promissory Note
(Revolving Credit Facility)
$5,000,000 Charlotte, North Carolina
November 30, 1998
FOR VALUE RECEIVED, WORLD FUEL INTERNATIONAL, S.A. and TRANS-TEC
INTERNATIONAL, S.A., each a corporation organized and existing under the laws of
Costa Rica and having their principal place of business located in Miami
Springs, Florida (collectively, the "Borrowers"), hereby promise to pay to the
order of NATIONSBANK, N.A. (the "Lender"), in its individual capacity, at the
office of the Lender located at 101 North Tryon Street, NC1-001-15-04,
Charlotte, North Carolina 28255 (or at such other place or places as the Lender
may designate in writing) at the times set forth in the Revolving Credit and
Reimbursement Agreement dated as of November 30, 1998 by and among the
Borrowers, World Fuel Services Corporation, a guarantor, and the Lender (the
"Agreement" -- all capitalized terms not otherwise defined herein shall have the
respective meanings set forth in the Agreement), in lawful money of the United
States of America, in immediately available funds, the principal amount of FIVE
MILLION AND NO/100 DOLLARS ($5,000,000) or, if less than such principal amount,
the aggregate unpaid principal amount of all Loans made by the Lender to the
Borrowers pursuant to the Agreement on the Revolving Credit Termination Date or
such earlier date as may be required pursuant to the terms of the Agreement, and
to pay interest from the date hereof on the unpaid principal amount hereof, in
like money, at said office, on the dates and at the rates provided in ARTICLE II
of the Agreement. All or any portion of the principal amount of Loans may be
prepaid or required to be prepaid as provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of
the Agreement or under the terms of the other Loan Documents executed in
connection with the Agreement, the then remaining principal amount and accrued
but unpaid interest shall bear interest which shall be payable on demand at the
rates per annum set forth in the proviso to SECTION 2.2 (A) of the Agreement.
Further, in the event of such acceleration, this Note shall become immediately
due and payable, without presentation, demand, protest or notice of any kind,
all of which are hereby waived by the Borrowers.
In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrowers agree to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees, and
interest due hereunder thereon at the rates set forth above.
Interest hereunder shall be computed as provided in the Agreement.
F-1
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This Note is the Note referred to in the Agreement and is issued
pursuant to and entitled to the benefits and security of the Agreement to which
reference is hereby made for a more complete statement of the terms and
conditions upon which the Loans evidenced hereby were or are made and are to be
repaid. This Note is subject to certain restrictions on transfer or assignment
as provided in the Agreement.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law the benefits of all provisions of law for
stay or delay of execution or sale of property or other satisfaction of judgment
against any of them on account of liability hereon until judgment be obtained
and execution issues against any other of them and returned satisfied or until
it can be shown that the maker or any other party hereto had no property
available for the satisfaction of the debt evidenced by this instrument, or
until any other proceedings can be had against any of them, also their right, if
any, to require the holder hereof to hold as security for this Note any
collateral deposited by any of said Persons as security. Protest, notice of
protest, notice of dishonor, diligence or any other formality are hereby waived
by all parties bound hereon.
F-2
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IN WITNESS WHEREOF, the Borrowers have caused this Note to be made,
executed and delivered by their duly authorized representative as of the date
and year first above written, all pursuant to authority duly granted.
WITNESS: WORLD FUEL INTERNATIONAL, S.A.
TERRY WITCHER By: /s/ CARLOS ABAUNZA
- ------------------------- ------------------------------
Name: Carlos Abaunza
Title: Vice President & Chief
- ------------------------- Financial Officer
TRANS-TEC INTERNATIONAL, S.A.
WITNESS:
By: /s/ CARLOS ABAUNZA
TERRY WITCHER -------------------------------
- ------------------------ Name: Carlos Abaunza
Title: Vice President & Chief
- ------------------------ Financial Officer
F-3
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ACKNOWLEDGMENT OF EXECUTION ON BEHALF OF
WORLD FUEL INTERNATIONAL, S.A.
TRANS-TEC INTERNATIONAL, S.A.
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
Before me, the undersigned, a Notary Public in and for said County and
State on this 9th day of November, 1998 A.D., personally appeared Carlos Abaunza
known to be the Chief Financial Officer of World Fuel International, S.A. and
Trans-Tec International S.A., (the "Borrowers"), who, being by me duly sworn,
says he works at 700 Royal Poinciana Boulevard, Suite 800, Miami Springs,
Florida 33166, and that by authority duly given by, and as the act of, the
Borrowers, the foregoing and annexed Note dated November 30, 1998, was signed by
him as said Vice President and Chief Financial Officer on behalf of the
Borrowers.
Witness my hand and official seal this 9th day of November, 1998.
TERRY WITCHER
Notary Public
(SEAL)
My commission expires: August 18, 1999
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<PAGE>
AFFIDAVIT OF RICHARD M. STARKE
The undersigned, being first duly sworn, deposes and says that:
1. He is a Senior Vice President of NationsBank, N.A (the "Lender") and
works at 100 S.E. Second Street, 14th Floor, Miami, Florida 33131.
2. The Note of World Fuel Services Corporation to the Lender in the
principal amount of $5,000,000 dated November 30, 1998 was executed before him
and delivered to him on behalf of the Lender in Charlotte, North Carolina on
November 5th, 1998.
This the 9th day of November, 1998.
Name: Richard M. Starke
ACKNOWLEDGMENT OF EXECUTION
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
Before me, the undersigned, a Notary Public in and for said County and
State on this 9th day of November, 1998 A.D., personally appeared Richard M.
Starke who before me affixed his signature to the above Affidavit.
Witness my hand and official seal this 9th day of November, 1998.
TERRY WITCHER
Notary Public
(SEAL)
My Commission Expires: August 18, 1999
F-5
Exhibit 21 - Subsidiaries of the Registrant
Advance Petroleum, Inc., a Florida corporation, operates under the name
"World Fuel Services of FL."
Advance Aviation Services, Inc., a Florida corporation (6)
AirData Limited, a United Kingdom corporation, a wholly owned subsidiary of
Baseops Europe Ltd.
Air Terminaling, Inc., a Florida corporation (6)
Atlantic Fuel Services, S.A., a Costa Rica corporation
Baseops Europe Limited, a United Kingdom corporation, a wholly owned subsidiary
of Baseops International, Inc.
Baseops International, Inc., a Texas corporation
Bunkerfuels (Del), Inc., a Delaware corporation
Bunkerfuels UK Limited, a United Kingdom corporation
Casa Petro S.A., a Costa Rica corporation
Cherokee Group, Inc., a Florida corporation (6)
International Environmental Services, Inc., a Florida corporation
International Petroleum Corporation, a Florida corporation (1)
International Petroleum Corporation of LA, a Louisiana corporation (1)
International Petroleum Corporation of Lafayette, a Louisiana corporation
International Petroleum Corp. of Maryland, a Maryland corporation (1)
International Petroleum Corp. of Delaware, a Delaware corporation (1)
International Petroleum Corp. of Georgia, a Georgia corporation (6)
International Petroleum Corp. of Pennsylvania, a Pennsylvania corporation (6)
Pacific Horizon Petroleum Services, Inc., a Delaware corporation
PetroServicios de Costa Rica S.A., a Costa Rica corporation (5)
PetroServicios de Mexico S.A. de C.V., a Mexico corporation (3)
PetroServicios WFS del Peru, S.A., a Peru corporation (4)(6)
Resource Recovery Atlantic, Inc., a Virginia corporation (2)(6)
Resource Recovery Mid South, Inc., a Virginia corporation (2)(6)
Resource Recovery of America, Inc., a Florida corporation (6)
Servicios Auxiliares de Mexico S.A. de C.V., a Mexico corporation (3)
Trans-Tec International S.A., a Costa Rica corporation
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, a wholly
owned subsidiary of Trans-Tec Services (UK) Ltd.
World Fuel International S.A., a Costa Rica corporation
World Fuel Miami, Inc., a Florida corporation (6)
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 Services of Chile S.A., a Chile corporation (3)(6)
World Fuel Services del Peru, S.A., a Peru corporation (4)(6)
(1) These corporations collect and purchase used oil under the name
"International Oil Service."
(2) These corporations are wholly owned subsidiaries of Resource Recovery
of America, Inc.
(3) This corporation is owned 50% by Advance Aviation Services, Inc. and
50% by Air Terminaling, Inc.
(4) These corporations are owned 99% by World Fuel Services Corporation
and 1% by Advance Aviation Services, Inc.
(5) This corporation is owned 55% by Casa Petro S.A. and 45% by World Fuel
Services Corporation.
(6) These corporations are inactive.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S MARCH 31, 1999 AUDITED FINANCIAL STATEMENTS FILED ON FORM 10-K
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 16,322,000
<SECURITIES> 0
<RECEIVABLES> 99,717,000
<ALLOWANCES> 6,829,000
<INVENTORY> 6,199,000
<CURRENT-ASSETS> 126,816,000
<PP&E> 32,112,000
<DEPRECIATION> 10,655,000
<TOTAL-ASSETS> 165,934,000
<CURRENT-LIABILITIES> 57,729,000
<BONDS> 0
0
0
<COMMON> 125,000
<OTHER-SE> 100,672,000
<TOTAL-LIABILITY-AND-EQUITY> 165,934,000
<SALES> 744,182,000
<TOTAL-REVENUES> 744,182,000
<CGS> 684,776,000
<TOTAL-COSTS> 684,776,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,133,000
<INTEREST-EXPENSE> 277,000
<INCOME-PRETAX> 18,904,000
<INCOME-TAX> 3,797,000
<INCOME-CONTINUING> 15,107,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,107,000
<EPS-BASIC> 1.22
<EPS-DILUTED> 1.21
</TABLE>
