EX-10.2 5 dex102.htm EMPLOYMENT AGREEMENT - MICHAEL KASBAR AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into effective as of the 26th day of July, 2002, by and between World Fuel Services Corporation, a Florida corporation (the “Company”), and Xxxxxxx X. Xxxxxx (the “Executive”).
RECITALS. Executive currently is employed by the Company pursuant to an employment agreement dated October 11, 2001, that expires March 31, 2005 (the “2001 Employment Agreement”) as the Chairman and Chief Executive Officer of the subsidiaries and affiliates of the Company engaged in the marine and related businesses, excluding aviation (the “Trans-Tec Group”). The Executive has been promoted to serve as President and Chief Operating Officer of the Company, effective July 26, 2002 (the “Effective Date”). The Company and the Executive now wish to amend and restate the 2001 Employment Agreement in its entirety, to reflect the increased duties and responsibilities of Executive as a result of his promotion.
NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and agreements herein contained, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree that the 2001 Employment Agreement is hereby amended and restated in its entirety to read as follows:
(a) Subject to the terms of the Company’s Annual Incentive Plan (the “AIP”), adopted by the Board of Directors on July 26, 2002, the Executive will be eligible to receive an annual bonus (the “Bonus”) for the period beginning April 1, 2002 and ending December 31, 2002, and for each 12 month period beginning each January 1 thereafter (each a “Bonus Period”). Executive has received and reviewed a copy of the AIP. Capitalized terms used in this Section 2.2 and not otherwise defined shall have the meanings assigned to them in the AIP. Executive understands that the AIP imposes various conditions and limitations on Performance Awards payable to Participants, and that, unless otherwise provided herein, such conditions and limitations apply to Executive’s Bonuses hereunder. The Bonus shall be equal to a percentage of the Executive’s Base Salary as of the last day of the Bonus Period for which the Bonus is being calculated, and will be conditioned on achievement of the Performance Goals shown below for the Bonus Period. The Bonus for the period from April 1, 2002 to December 31, 2002 has been determined by the Compensation Committee and accepted by the Executive. The Compensation Committee and the Executive have agreed that the principal Performance Goal for the remainder of the Employment Term will be Growth in EPS (as defined below) and that the Bonus for each Bonus Period commencing January 1, 2003 shall be determined pursuant to the formula set forth in the following table:
Growth in EPS Achieved |
| Amount of Bonus determined as a % of Base Salary |
|
|
| ||
Less than 5% |
| No Bonus |
|
5% |
| 15% |
|
6% |
| 23% |
|
7% |
| 33% |
|
8% |
| 45% |
|
9% |
| 59% |
|
10% |
| 75% |
|
11% |
| 93% |
|
12% |
| 113% |
|
13% |
| 138% |
|
14% |
| 168% |
|
15% or higher |
| 200% |
|
The Executive and the Compensation Committee have agreed that the target Performance Goal for each Bonus Period is Growth in EPS of 11.5%. If the Performance Goal achieved is between
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one of the thresholds set forth in the foregoing table, Executive shall be eligible to receive a pro-rated portion of the Bonus. For example, if 7.5% EPS growth is achieved, Executive would be eligible for a Bonus equal to 39% of Base Salary. The Bonus payable pursuant to this subsection (a) is referred to as the “Earnings Bonus,” and the Bonus payable pursuant to subsection (b)(ii) below is referred to as the “MBO Bonus.” Both such bonuses are hereinafter collectively referred to as the “Bonus.”
(b) Notwithstanding the foregoing:
(i) If in any Bonus Period the Company achieves or exceeds the target Performance Goal of 11.5% Growth in EPS, the aggregate of bonuses paid to the Company’s executive officers as a group in such year shall not exceed an amount equal to 50% of any increment in net earnings (after taxes and payment of bonuses) earned by the Company in excess of the net earnings required to achieve or exceed the target Performance Goal of 11.5% Growth in EPS. Executive’s Bonus shall be subject to the limitation set forth in the preceding sentence, and shall be reduced, but not below 100% of Base Salary, as necessary to comply with such limitation. In the event such a reduction is required, it shall be made pro-rata to all executive officers. For purposes of this provision, “executive officers” means the Company’s senior executive officers who are designated by the Compensation Committee (after consultation with the Chairman and President) as eligible to participate in the AIP for the Bonus Period in question.
(ii) If in any Bonus Period (1) the Company achieves the Growth in EPS necessary for Executive to receive an Earnings Bonus pursuant to subsection (a), and (2) the Executive also satisfies certain objectives (the “MBO’s”) for such Bonus Period (which MBO’s shall be agreed to by the Executive and the Compensation Committee within the first 90 days of each Bonus Period), then the Executive shall be eligible to receive an additional Bonus (the “MBO Bonus”) over and above the Earnings Bonus paid pursuant to subsection (a) above, which MBO Bonus shall be in an amount to be determined by the Compensation Committee in its discretion; provided, however, that (A) the MBO Bonus shall not exceed twenty percent (20%) of the Earnings Bonus, and (B) the MBO Bonus shall be reduced as required (x) to comply with the limitations set forth in subsection (b)(i) above, and (y) so that in no event shall the aggregate of the Earnings Bonus and the MBO Bonus in any Bonus Period exceed 200% of the Executive’s Base Salary.
(iii) Furthermore, in no event shall the aggregate of the Earnings Bonus and the MBO Bonus in any Bonus Period exceed the maximum Performance Award per year set forth in Section 4.2 of the AIP (currently $1,500,000), or such higher maximum as may be adopted by amendment to the AIP.
(c) For purposes of the foregoing formula, “Growth in EPS” for a Bonus Period shall mean the quotient obtained by dividing (x) the amount, if any, by which (i) the EPS for the 12 month period that ends on the last day of the Bonus Period exceeds (ii) the EPS for the 12 month period ending immediately prior to the Bonus Period (the “Prior Year’s EPS”), by (y) the Prior Year’s EPS. For purposes of the foregoing formula, EPS shall mean the Company’s earnings per share, on a fully diluted basis, computed in accordance with FASB Statement 128. However, the Compensation Committee has the right to adjust financial results
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to eliminate the effect of certain accounting adjustments and other one-time events, so that the bonus payouts reflect ongoing operating results and are not artificially inflated, or deflated, due to unusual, one-time events. Notwithstanding the terms of the AIP, the parties expressly agree that acquisitions of companies or assets by the Company will not be considered extraordinary or one-time events that would require an adjustment pursuant to the preceding sentence or the AIP.
(d) The requirements that the Company achieve the Performance Goals and the Executive achieve the MBO’s under this Section 2.2 are intended as “performance goals” for Executive, as that term is used in Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended (the “Code”) and Treasury Regulations promulgated thereunder. The Company hereby represents and warrants to Executive that such Performance Goals have been determined and approved by the Compensation Committee, consisting solely of at least two (2) outside directors, as required by Code § 162(m)(4)(C)(i) and Treasury Regulations promulgated thereunder.
(e) Notwithstanding anything to the contrary contained herein, in no event shall Executive receive any portion of his Bonus if and to the extent that the Company could not reasonably deduct such portion solely by operation of Code § 162(m). For purposes of this limitation: (i) no portion of the Executive’s compensation or benefits, the receipt or enjoyment of which Executive shall have effectively waived in writing prior to the date of payment, shall be taken into account; (ii) no portion of any compensation or benefits shall be taken into account which, in the opinion of tax counsel selected by the Company’s independent auditors and acceptable to Executive, does not constitute “applicable employee remuneration” within the meaning of Code §162(m) and Treasury Regulations promulgated thereunder; and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Executive’s remuneration shall be determined by the Company’s independent auditors in accordance with the Code. This subsection (e) shall not prohibit the payment of any Bonus (or portion thereof) which is deferred in accordance with subsection (h) below.
(f) At any time during the Employment Term, upon written request of Executive, the Company shall submit the Performance Goal and other material compensation terms provided herein for approval by the Company’s shareholders so as to comply with Code § 162(m)(4)(C)(ii) and Regulations promulgated thereunder, and the Company shall use reasonable efforts to secure such shareholder approval; provided, (i) the Company shall not be required to call a special shareholders meeting for the sole purpose of complying with this section; and (ii) in order to have such approval sought at the Company’s annual shareholders meeting, Executive shall provide written notice thereof to the Company no less than ninety (90) days prior to the scheduled date of the annual meeting. If any executive officer of the Company requests that his Performance Goals and compensation terms be submitted for shareholder approval pursuant to this Agreement, the Company shall have the right to submit the Performance Goals and compensation arrangements of all executive officers for shareholder approval at the same meeting.
(g) If required to comply with Code §162(m)(4)(C)(iii), the Company’s Compensation Committee shall, before the payment of any Bonus, certify in writing, if applicable, that the Performance Goal and any other material terms hereof were satisfied, as necessary to comply with Code § 162(m)(4)(C)(iii).
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(h) Unless the Company’s shareholders have approved the Performance Goal and other material compensation terms provided herein, the payment of any portion of the Bonus causing Executive’s compensation to exceed the limitation under Section 162(m)(i) of the Code during any fiscal year of the Company (the “Excess Amount”) will be deferred until a fiscal year during the Employment Term in which Executive earns less than the limitation under Section 162(m)(i) of the Code; provided, however, that in the event of Executive’s death, the termination of Executive for any reason, or the expiration of this Agreement, any Excess Amount, including any interest earned thereon, shall be paid to Executive within ten (10) days of such death, termination, or expiration. Any Excess Amount shall earn interest at the prime rate as published in the Wall Street Journal (the “Prime Rate”) until such amount is paid to the Executive. The Company shall hold any Excess Amount, including any interest earned thereon, in trust for Executive until such amount is paid to Executive in accordance with the terms hereof; provided, that all amounts held in trust for Executive shall be subject to the claims of the creditors of the Company.
(i) The provisions of this Section 2.2 are intended, and shall be interpreted, to comply with the requirements of Code § 162(m) so as to permit the Company to deduct all payments of applicable employee remuneration made to Executive pursuant to this Agreement.
(a) Pursuant to the 2001 Employment Agreement, the Company granted to the Executive options (the “Initial Options”) to purchase up to 55,000 shares of common stock (the “Common Stock”) of the Company under (and therefore subject to all terms and conditions of) the World Fuel Services Corporation 1996 Employee Stock Option Plan and the 2001 Omnibus Plan, and any successor plan thereto, and all rules of the Securities and Exchange Commission applicable to stock option plans then in effect. In addition to the Initial Options, the Executive shall be eligible to receive additional option grants under the 2001 Omnibus Plan in such number and on such terms and conditions as shall be determined by the Board or the Compensation Committee of the Board. The options granted to the Executive shall be incentive stock options (“ISO’s”), within the meaning of Section 422(b) of the Internal Revenue Code of 1986 as amended (the “Code”), to the extent that such options do not exceed the limitations imposed by Section 422(d) of the Code, and the balance of the options granted to the Executive shall be non-qualified stock options (“NSO’s”).
(b) The Initial Options, and all other options granted to Executive by the Company (collectively, the “Options”) shall become fully vested immediately in the event that: (i) a Change of Control of the Company as defined in Section 3.1 hereof occurs, or (ii) the Executive terminates his employment with the Company for Good Reason, as defined in Section 3.4 hereof, or (iii) the Company terminates the Executive’s employment with the Company, other than for Cause, as defined in Section 3.2 hereof.
(c) In the event the Executive’s employment terminates for any of the reasons set forth in subsections (ii) or (iii) of Section 2.3(b), the Executive may exercise all vested rights under the Options at any time after termination and until the earlier of: (1) the date that is two (2) years after the date on which the Executive’s employment terminates for the
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reasons provided above (except that for ISOs such period shall be three (3) months after termination, not two years); and (2) the Expiration Date for the options as defined in the applicable option agreement.
(a) Pursuant to the 2001 Employment Agreement, the Company granted to the Executive 25,000 shares of restricted Common Stock of the Company (the “Initial Restricted Stock”).
(b) Effective August 27, 2002, the Company shall grant to Executive 25,000 shares of restricted Common Stock (the “New Shares”). The New Shares shall vest in three equal installments on the third, fourth and fifth anniversaries of the Effective Date, and shall be subject to the terms of a restricted stock agreement to be entered into between Executive and the Company. The New Shares and the Initial Restricted Stock are collectively referred to herein as the “Restricted Stock.” The Executive’s rights with respect to the Restricted Stock shall become fully vested immediately in the event that (i) a Change of Control of the Company as defined in Section 3.1 hereof occurs, or (ii) the Executive terminates his employment with the Company for Good Reason, as defined in Section 3.4 hereof, or (iii) the Company terminates the Executive’s employment with the Company, other than for Cause, as defined in Section 3.2 hereof.
2.5 Other Benefits. Executive: (i) shall be entitled to receive all medical, health, disability, life and dental insurance, and other similar employee benefit programs, which may be provided by the Company to its executive employees from time-to-time; (ii) shall be entitled to reimbursement for reasonable and necessary out-of-pocket expenses incurred in the performance of his duties hereunder, including but not limited to travel and entertainment expenses (such expenses shall be reimbursed by the Company, from time to time, upon presentation of appropriate receipts therefor); (iii) shall be paid an auto allowance of $1,000.00 per month; (iv) shall be entitled to six (6) weeks paid vacation each calendar year, and any vacation time not taken during any calendar year shall be carried over into subsequent calendar years if and to the extent such carried over vacation time does not exceed six (6) weeks; and (v) shall be entitled to reimbursement from the Company for all of his legal fees and expenses incurred in connection with the preparation of this Employment Agreement.
(a) any person or “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), but excluding any employee benefit plan or plans of the Company and its subsidiaries, becomes the beneficial owner, directly or indirectly, of twenty percent (20%) or more of the combined voting power of the Company’s outstanding voting securities ordinarily having the right to vote for the election of directors of the Company; or
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(b) any merger, consolidation, reorganization or similar event of the Company or any of its subsidiaries, as a result of which the holders of the voting stock of the Company immediately prior to such merger, consolidation, reorganization or similar event do not directly or indirectly hold at least fifty-one percent (51%) of the aggregate voting power of the capital stock of the surviving entity; or
(c) the individuals who, as of March 1, 2003 (the “Effective Date”), constitute the Board of Directors of the Company (the “Board” generally and as of the date hereof the “Incumbent Board”) cease for any reason to constitute at least two-thirds (2/3) of the Board, or in the case of a merger or consolidation of the Company, do not constitute or cease to constitute at least two-thirds (2/3) of the board of directors of the surviving company (or in a case where the surviving corporation is controlled, directly or indirectly by another corporation or entity, do not constitute or cease to constitute at least two-thirds (2/3) of the board of such controlling corporation or do not have or cease to have at least two-thirds (2/3) of the voting seats on any body comparable to a board of directors of such controlling entity, or if there is no body comparable to a board of directors, at least two-thirds (2/3) voting control of such controlling entity); provided that any person becoming a director (or, in the case of a controlling non-corporate entity, obtaining a position comparable to a director or obtaining a voting interest in such entity) subsequent to the Effective Date hereof whose election, or nomination for election, was approved by a vote of the persons comprising at least two-thirds (2/3) of the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest), shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or
(d) there is a liquidation or dissolution of the Company or all or substantially all of the assets of the Company have been sold; or
(e) if the Company enters into an agreement or series of agreements or the Board passes a resolution which will result in the occurrence of any of the matters described in Subsections (a) through (d), and the Executive’s employ is terminated subsequent to the date of execution of such agreement or series of agreements or the passage of such resolution, but prior to the occurrence of any of the matters described in Subsections (a) through (d), then, upon the occurrence of any of the matters described in Subsections (a) through (d), a Change of Control shall be deemed to have retroactively occurred on the date of the execution of the earliest of such agreement(s) or the passage of such resolution.
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compensation and benefits provided under Section 2 until his employment is actually terminated, by a Notice of Termination pursuant to Section 4.2.
3.4 Good Reason. For purposes of this Agreement, “Good Reason” means:
(a) any failure by the Company to comply with any of the provisions of Section 2 of this Agreement other than an insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company within five (5) business days after receipt of notice thereof given by the Executive;
(b) following a Change in Control, any failure by the Company and/or its subsidiaries or affiliates to furnish the Executive and/or where applicable, his family, with: (i) total annual cash compensation (including annual bonus), (ii) total aggregate value of perquisites, (iii) total aggregate value of benefits, or (iv) total aggregate value of long term compensation, including but not limited to stock options, in each case at least equal to or exceeding or otherwise comparable to in the aggregate, the highest level received by the Executive from the Company and/or its subsidiaries or affiliates during the six (6) month period (or the one (1) year period for compensation, perquisites and benefits which are paid less frequently than every six (6) months) immediately preceding the Change of Control, other than an insubstantial and inadvertent failure remedied by the Company within five (5) business days after receipt of notice thereof given by the Executive;
(c) the Company’s and/or its subsidiaries’ or affiliates’ requiring the Executive to be based or to perform services at any site or location more than fifteen (15) miles from Miami, Florida, except for travel reasonably required in the performance of the Executive’s responsibilities (which does not materially exceed the level of travel previously required of the Executive);
(d) any failure by the Company to obtain the assumption and agreement to perform this Agreement by a successor as contemplated by Section 9; or
(e) without the express prior written consent of the Executive (which consent the Executive has the absolute right to withhold), (i) the assignment to the Executive of any duties inconsistent in any material respect with the Executive’s position (including titles and reporting relationships), authority, responsibilities or status, or (ii) any other material adverse change in such position, authority, responsibility or status.
For the purposes of this Section 3.4, any good faith interpretation by the Executive of the foregoing definitions of “Good Reason” shall be conclusive on the Company. No termination by Executive for Good Reason shall be deemed a voluntary termination by Executive for purposes of any stock option, employee benefit or similar plan of the Company.
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Date of Termination (which date shall be not more than fifteen (15) days after the giving of such notice).
(a) The death of Executive.
(b) The Disability of Executive.
(c) The discharge of Executive by the Company for Cause.
5. Obligations Upon Termination.
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option and other benefit plans provide certain rights and benefits after an employee’s termination, Executive shall continue to receive such rights and benefits in accordance with the terms of such plans. Amounts payable under subsection (i) of this Section 5.2 shall be paid within five (5) business days after the Date of Termination, and the Bonus payable under subsection (ii) shall be paid on or before May 15 of the fiscal year following the fiscal year in which the termination occurred.
(a) an amount equal to the cash payment described in Section I of Exhibit A attached hereto and made a part hereof; plus
(b) the benefits described in Sections II through IV of Exhibit A.
The amounts payable under subsection (a) of this Section 5.3 shall be paid to Executive by cashier’s check within five (5) business days after his Date of Termination. The payments and benefits paid and provided pursuant to this Section 5.3 (the “Default Payments”) shall be in lieu of all other compensation and benefits payable to Executive under this Agreement, and as liquidated damages and in full settlement of any and all claims by Executive against the Company as a result of the Company’s breach of this Agreement; except that, to the extent that the Company’s insurance, stock option and other benefit plans provide certain rights and benefits after an employee’s termination, Executive shall continue to receive such rights and benefits in accordance with the terms of such plans. Such Default Payments: (i) are not contingent on the occurrence of any change in the ownership or effective control of the Company; (ii) are not intended as a penalty; and (iii) are intended to compensate Executive for his damages incurred by reason of the Company’s breach of this Agreement, which damages are difficult to ascertain.
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insurance, stock option and other employee benefit plans provide certain rights and benefits after an employee’s termination, Executive shall continue to receive such rights and benefits in accordance with the terms of such plans. The Company agrees that following a Change of Control, the Company shall not, without the Executive’s consent, amend any employee insurance or benefit plan or program of the Company or its subsidiaries or affiliates in any manner that would adversely affect the Executive’s rights under such plan or program.
5.6 Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in the event that a Change of Control occurs prior to January 1, 2003, and it shall be determined that, as a result of such Change of Control, any payment, distribution or other action by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, including any additional payments required under this Section 5.6) (a “Payment”) would be subject to an excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any interest or penalties are incurred by the Executive with respect to any such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), the Company shall make a payment to the Executive (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any Excise Tax) imposed upon the Gross-
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Up Payment, the Executive retains (or has had paid to the Internal Revenue Service on his behalf) an amount of the Gross-Up Payment equal to the sum of (x) the Excise Tax imposed upon the Payments and (y) the product of any deductions disallowed because of the inclusion of the Gross-Up Payment in the Executive’s adjusted gross income and the highest applicable marginal rate of federal income taxation for the calendar year in which the Gross-Up Payment is to be made. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to (i) pay federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Gross-Up Payment is to be made, and (ii) pay applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.
(b) Subject to the provisions of paragraph (c) of this Section 5.6, all determinations required to be made under this Section 5.6, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by PriceWaterhouseCoopers (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 5.6, shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm’s determination. If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion that failure to report the Excise Tax on the Executive’s applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 5.6 and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given no later than fifteen (15) business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:
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(i) give the Company any information reasonably requested by the Company relating to such claim,
(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 5.6(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and xxx for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and xxx for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 5.6(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 5.6(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 5.6(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance
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shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.
6. Covenant Against Unfair Competition.
(a) Executive agrees that while he is employed by the Company, and for a period of three (3) years following any termination of his employment, for any reason, he will not, for his own account or jointly with another, directly or indirectly, for or on behalf of any individual, partnership, corporation or other legal entity, as principal, agent or otherwise:
(i) own, control, manage, be employed by, consult with, or otherwise participate in, a business (other than that of the Company) involved within the Trade Area (as hereinafter defined) with any of the following businesses (the “Businesses”): (1) the storage, handling, delivery, marketing, sale, distribution or brokerage of aviation fuel, marine fuel or lubricants, aviation flight services, or marine fuel services, or (2) any other service or activity which is competitive with the services or activities which are or have been performed by the Company or its subsidiaries or affiliates since January 1, 1998;
(ii) solicit, call upon, or attempt to solicit, the patronage of any individual, partnership, corporation or other legal entity to whom the Company or its subsidiaries or affiliates sold products or provided services, or from whom the Company or its subsidiaries or affiliates purchased products or services, at any time since January 1, 1998, for the purpose of obtaining the patronage in any of the Businesses of any such individual, partnership, corporation or other legal entity;
(iii) solicit or induce, or in any manner attempt to solicit or induce, any person employed by the Company or its subsidiaries or affiliates to leave such employment, whether or not such employment is pursuant to a written contract and whether or not such employment is at will; or
(iv) use, directly or indirectly, on behalf of himself or any other person or business entity, any trade secrets or confidential information concerning the business activities of the Company or any of the Company’s subsidiaries or affiliates. Trade secrets and confidential information shall include, but not be limited to, lists of names and addresses of customers and suppliers, sources of leads and methods of obtaining new business, methods of marketing and selling products and performing services, and methods of pricing.
(b) As used herein, the term “Trade Area” shall mean: (i) the States of Florida, Louisiana, Delaware, Pennsylvania, New York, California, Virginia, New Jersey, and Maryland, (ii) Xxxxxxxxx, Xxxxxx, Xxxxx Xxxxx, Xxxxxxx and Costa Rica, and (iii) any airports or seaports throughout the world which are or were serviced by the Company or its subsidiaries or affiliates at any time since January 1, 1998.
(c) Executive recognizes the importance of the covenant contained in this Section 6 and acknowledges that, based on his past experience and training as an executive of the Company, the projected expansion of the Company’s business, and the nature of his services to be provided under this Agreement, the restrictions imposed herein are: (i) reasonable as to scope, time and area; (ii) necessary for the protection of the Company’s legitimate business
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interests, including without limitation, the Company’s trade secrets, goodwill, and its relationship with customers and suppliers; and (iii) not unduly restrictive of Executive’s rights as an individual. Executive acknowledges and agrees that the covenants contained in this Section 6 are essential elements of this Agreement and that but for these covenants, the Company would not have agreed to enter into this Agreement.
(d) If Executive commits a breach or threatens to commit a breach of any of the provisions of this Section 6, the Company shall have the right and remedy, in addition to any others that may be available, at law or in equity, to have the provisions of this Section 6 specifically enforced by any court having equity jurisdiction, through injunctive or other relief, it being acknowledged that any such breach or threatened breach will cause irreparable injury to the Company, the amount of which will be difficult to determine, and that money damages will not provide an adequate remedy to the Company.
(e) If any covenant contained in this Section 6, or any part thereof, is hereafter construed to be invalid or unenforceable, the same shall not affect the remainder of the covenants, which shall be given full effect, without regard to the invalid portions, and any court having jurisdiction shall have the power to reduce the duration, scope and/or area of such covenant and, in its reduced form, said covenant shall then be enforceable.
(f) The provisions of this Section 6 shall survive the expiration and termination of this Agreement, and the termination of Executive’s employment hereunder, for any reason.
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any guarantee of performance thereof, in each case plus interest, compounded daily, on the total unpaid amount determined to be payable under this Agreement, such interest to be calculated on the basis of two percent (2%) over the Prime Rate in effect from time to time during the period of such nonpayment, but in no event greater than the highest interest rate permitted by law for such payments.
(b) Governing Law. The validity and effect of this Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Florida. In any action or proceeding arising out of or relating to this Agreement (an “Action”), each of the parties hereby irrevocably submits to the non-exclusive jurisdiction of any federal or state court sitting in Miami, Florida, and further agrees that any Action may be heard and determined in such federal court or in such state court. Each party hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of any action in Miami, Florida.
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(f) Integrated Agreement. This Agreement constitutes the entire understanding and agreement among the parties hereto with respect to the subject matter hereof, and supersedes any other employment agreements executed before the date hereof. There are no agreements, understandings, restrictions, representations or warranties among the parties other than those set forth herein or herein provided for.
If to the Executive: at the Executive’s last address appearing in the payroll/personnel records of the Company.
If to the Company:
World Fuel Services Corporation 0000 X.X. 00xx Xxxxxx Xxxxx 000 Xxxxx, XX 00000
or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective when actually received by addressee.
WITNESSES: |
| WORLD FUEL SERVICES CORPORATION | |
/s/ XXXXX X. XXXXX |
| By: | /s/ XXXX X. XXXXXXXX |
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Xxxxx X. Xxxxx |
| Title: | Chairman/CEO |
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/s/ XXXXX XXXXXXX |
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| /s/ XXXXXXX X. XXXXXX |
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Xxxxx Xxxxxxx |
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| Xxxxxxx X. Xxxxxx Executive |
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EXHIBIT A
SEVERANCE BENEFITS
(A) if not already paid, the Executive’s Base Salary, unused vacation entitlement and car allowance through the Date of Termination; and
(B) an amount equal to the annual Base Salary (the “Base Amount”) payable to the Executive immediately prior to the Date of Termination, multiplied by three (3) if the termination is pursuant to Section 5.4 hereof on or before the third anniversary following a Change of Control, or otherwise multiplied by two (2);
(C) an amount equal to the product of (x) the average annual bonus payable to the Executive for the three (3) fiscal years beginning on or after April 1, 2001 (or such lesser number of full fiscal years as shall have been completed after April 1, 2001) immediately preceding the fiscal year of termination, multiplied by (y) three (3) if the termination is pursuant to Section 5.4 hereof on or before the third anniversary following a Change of Control, or otherwise multiplied by two (2); provided, however, that for these purposes, the bonus payable by the Company to the Executive for the fiscal year ending March 31, 2002 shall be equal to the sum of (i) 75% of the bonus payable to the Executive pursuant to Section 2.2(a) of the 2001 Employment Agreement for the calendar year 2001 plus (ii) the bonus payable by the Company to the Executive under Section 2.2(b) of the 2001 Employment Agreement for the period from January 1, 2002 through March 31, 2002.
The Company shall pay to the Executive the aggregate of the amounts determined pursuant to clauses (A) through (C) above in a lump sum by cashier’s check within five (5) business days after the Executive’s Date of Termination.
(II) Medical, Dental, Disability, Life Insurance and Other Similar Plans and Programs. Until the earlier to occur of (i) the last day of the Severance Period, (ii) the date on which the Executive becomes eligible for the designated or comparable coverage as an employee of another employer which provides or offers such coverage to its employees, or (iii) in the case of benefits requiring employee contributions, the date the Executive fails to make such contributions pursuant to the Company’s or the plan’s instructions (which instructions shall be reasonable and given to the Executive by the Company within five (5) business days following the Executive’s Date of Termination) or otherwise cancels his coverage in accordance with plan provisions, the Company shall continue to provide all benefits which the Executive and/or his family is or would have been entitled to receive under all medical, dental, disability, supplemental life, group life, accidental death and executive accident insurance, and other similar plans and programs of the Company and/or its subsidiaries or affiliates not otherwise provided for in this Agreement, in each case on a basis
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providing the Executive and/or his family with the opportunity to receive benefits at least equal to the greatest level of benefits provided by the Company and/or its subsidiaries or affiliates for the Executive under such plans and programs as in effect at any time during the six (6) month period immediately preceding the Notice of Termination. The benefits will be paid for by the Company and, to the extent applicable, will be provided in accordance with the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”). If the Executive’s participation in any such plan or program is barred by COBRA or for any other reason, the Company shall pay or provide for payment of such benefits or substantially similar benefits to the Executive and/or his family.
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opinion of the tax counsel referred to in clause (ii); and (iv) the value of any non-cash benefit or any deferred payment or benefit included in the Section 5.4 Severance Benefits shall be determined by the Company’s independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
| Dated as of the 26th day of July, 2002. |
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| WORLD FUEL SERVICES CORPORATION |
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| By: | /s/ XXXX X. XXXXXXXX |
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| Title: | Chairman/CEO |
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