EXHIBIT 10.A
[LOGO]
World
Fuel
Services
Corporation
January 31, 2001
Xx. Xxxxxxx Xxxxx
000 Xxxxx Xxxxx Xxxxxxxxx Xxxx., Xxxxx 000
Xxxxx Xxxxxxx, Xxxxxxx 00000
Re: Employment Agreement Between Xxxxxxx Xxxxx and World Fuel Services
Corporation (the "Company") dated March 31, 1996, as amended
Dear Xxxxx:
As approved by the Compensation Committee of the Board of Directors (the
"Committee"), at its meeting of December 8, 2000, this letter is intended to
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. For good and valuable
consideration, we have agreed as follows:
1. Position; Base Salary. Your position and title will be "Chairman of
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the Board and Chief Executive Officer," and, effective April 1, 2000, your base
salary will be $600,000 per year.
2. Renewals; Nonrenewal Payment. The following paragraphs are added to
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Section 1 of the Agreement:
1.1 The Employment Term expires March 31, 2005. The Company and
Executive may (but shall not be obligated to) mutually agree to extend the
Employment Term for subsequent one-year periods. At least twelve (12) months
prior to each date on which the Employment Term otherwise would terminate, the
Company and the Executive shall notify each other in writing whether they elect
to extend the Employment Term for an additional year, and the Employment Term
shall not be so extended unless both parties so elect to extend the Employment
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January 31, 2001
Term. If the Company is electing not to extend the Employment Term for Cause, or
the Executive is electing not to extend the Employment Term for Good Reason, it
or he shall so state in the notice.
1.2 If the Company elects not to extend the Employment Term pursuant
to Section 1.1 hereof other than for Cause, and the Employment Term expires
prior to, or more than three (3) years after, the date on which a Change of
Control has occurred, then the Company shall: (a) pay to the Executive his Base
Salary, unused vacation entitlement and car allowance through the Date of
Termination (if not already paid), by cashier's check within five (5) business
days after his Date of Termination; (b) pay Executive an amount equal to
$1,000,000, such sum to be payable in twenty-six (26) consecutive bi-weekly
installments commencing two weeks from the Date of Termination; and (c) continue
to provide the benefits described in Sections (II) and (IV) of Exhibit A for a
period of one (1) year following the Date of Termination. In addition, the
Executive shall be entitled to exercise his Stock Rights, as defined in Section
III of Exhibit A, for the period specified in said Section III.
1.3 The Company may discontinue the payment of any amounts and
provision of any benefits required under Section 1.2 above in the event that,
during the Continuation Period, either (i) the Executive fails to comply in any
material respect with any provision of Section 6 of the Agreement other than an
insubstantial and an inadvertent failure not occurring in bad faith and which is
remedied by the Executive within five (5) business days after receipt of notice
thereof given by the Company, or (ii) if requested by the Company to do so, the
Executive fails to provide up to ten hours per calendar month of consulting
services (including any travel time) to the Company as reasonably requested by
the Company, at such times and places as shall be mutually agreeable to the
Company and the Executive so as not to materially interfere with any other
obligations or commitments of the Executive and subject to the Company's
reimbursement to the Executive of his reasonable expenses incurred in providing
such consulting services.
2 Bonus. Subsections (a) and (b) of Section 2.2 of the Agreement are
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deleted and replaced with the following provisions:
(a) For the fiscal year ending March 31, 2001, the Company shall pay
to the Executive the bonus that would have been payable to the Executive for
such fiscal year under Section 2.2 of the Agreement; provided, however, that
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such Bonus shall be adjusted to the extent necessary so that total Salary and
Bonus paid to Executive for the fiscal year ended March 31, 2001 shall not
exceed $1,250,000.
(i) Subject to subsections (c), (d), (e), and (f) below, the
Company shall pay Executive an annual bonus (the "Bonus") for the period
beginning April 1, 2001 and ending March 31, 2002, and unless otherwise agreed
to in writing by the Compensation Committee and the Executive, for each 12 month
period beginning each April thereafter (each a "Bonus Period") equal to a
percentage of the Executive's Base Salary as of the last day of the Bonus Period
for which the
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January 31, 2001
Bonus is being calculated, determined as follows based upon the Growth in EPS
for the Bonus Period:
Growth in EPS for Bonus Period Bonus as Percentage of Base Salary
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Equal to or Greater Than But Less Than
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10% 0
10% 12.5% 25%
12.5% 15% 50%
15% 17.5% 75%
17.5% 100%
(ii) 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 Bonus Period exceeds (ii) the EPS for the
12 month period ending on the March 31 immediately preceding 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 basic earnings per share,
computed in accordance with FASB Statement 128. However, the Compensation
Committee has the right to adjust financial results 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.
(iii) After the Bonus Period ending March 31, 2002, the
Compensation Committee and the Executive shall review the bonus formula and make
such changes, if any, as they mutually agree in writing to be appropriate. If
the Compensation Committee and the Executive fail to come to such a mutual
agreement by June 30, 2002, then the bonus formula for each subsequent Bonus
Period shall be the formula as set forth in Section 2.2(a)(i) hereof, unless the
Company notifies the Executive in writing by no later than July 15, 2002, of a
different bonus formula that will apply for each subsequent Bonus Period.
(b) The requirement that the Company achieve the Growth in EPS goals
under this Section 2.2 (the "Performance Goal") is intended as a `performance
goal" for Executive, as that term is used in Section 162(m)(4)(C) of the
Internal Revenue Code of 1986, as amended (the "Code") and Treasury Regulations
promulgated thereunder. The Company hereby represents and warrants to Executive
that such Performance Goal has been determined and approved by the Compensation
Committee, consisting solely of at least two (2) outside directors, as required
by Code (S) 162(m)(4)(C)(i) and Treasury Regulations promulgated thereunder.
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January 31, 2001
3 Good Reason. The definition of "Good Reason" is amended by adding the
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following immediately after subsection (e) of Section 3.4 of the Agreement:
"(f) the Executive's termination of employment for any reason by
no later than August 15, 2002, in the event that the Company and the
Executive fail to mutually agree pursuant to Section 2.2(a)(iii) upon
a bonus formula for fiscal years ending after March 31, 2002, and the
Executive does not accept a formula selected by the Company that
differs from the formula set forth in Section 2.2(a); or
(g) any failure by the Company to comply with any of the
provisions of Section 2 of the 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; or
(h) the Executive's termination of his employment, for any
reason, during the thirty (30) day period that begins six (6) months
after the completion of any Change-in-Control.
4 Options. Prior to the date of this Agreement, the Company granted to
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the Executive non-qualified options (the "Initial Options") to purchase 200,000
shares of common stock (the "Common Stock") of the Company under (and therefore
subject to all terms and conditions of) the Company's 1996 World Fuel Services
Corporation Employee Stock Option Plan, and any successor plan thereto (the
"Stock Option Plan") and all rules and regulations of the Securities and
Exchange Commission applicable to stock option plans then in effect. The option
price per share for the right under the Initial Option to purchase 100,000
shares of Common Stock (the "FMV Options") shall be $7.40 per share, which
exceeds the Fair Market Value of a share of Common Stock on the effective date
of the grant, determined in accordance with the Stock Option Plan, and the
option price per share for the right to purchase the remaining 100,000 shares of
Common Stock (the "125% Options") under the Initial Option shall be $9.25 per
share. In addition to the Initial Option, the Executive shall be eligible to
receive additional option grants under the 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 FMV Options shall vest immediately upon granting and the 125%
Options shall vest one (1) year after the date of grant; provided, that any
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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.
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January 31, 2001
5 Stock Ownership. Executive acknowledges that the Committee has
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requested that Executive and the Company's President beneficially own a number
of shares of the Company's Common Stock (exclusive of shares subject to options)
which have an aggregate value of at least three (3) times his base salary (in
the case of Executive, $1,800,000 in 2001); provided, the foregoing shall not
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create any contractual other obligation on the part of Executive, and merely
reflects a non-binding recommendation of the Committee.
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 and prior
amendments, 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/ Xxxx Xxxxxx
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Xxxx X. Xxxxxx
Chairman of the Compensation Committee
AGREED AND ACCEPTED:
/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
