UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended October 31, 1997
Commission File Number 33-7870-NY
Travel Ports of America, Inc.
New York 16-1128554
3495 Winton Place, Building C, Rochester, New York 14623
716-272-1810
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.
[ X ] Yes [ ] No
Class Outstanding at October 31, 1997
Common Stock, Par Value
$.01 Per Share 5,612,595
TRAVEL PORTS OF AMERICA, INC.
INDEX
Page
PART I Financial Information
Balance Sheets, October 31, 1997 (unaudited) and
April 30, 1997................................. 3
Statement of Income (unaudited), quarter and six months ended
October 31, 1997 and 1996...................... 4
Statement of Cash Flows (unaudited), six months
ended October 31, 1997 and 1996................ 5
Notes to Financial Information......................... 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 7
PART II Other Information
Index to Exhibits and Legal Proceedings................ 10
Signatures............................................. 15
TRAVEL PORTS OF AMERICA, INC.
BALANCE SHEET
(UNAUDITED)
10/31/97 4/30/97
ASSETS
CURRENT ASSETS:
CASH AND EQUIVALENTS $ 2,990,105 $ 3,134,871
ACCOUNTS RECEIVABLE, LESS ALLOWANCE
FOR DOUBTFUL ACCOUNTS OF $206,000 AT
OCTOBER 1997 AND $156,000 AT APRIL 1997 4,805,384 4,357,665
NOTES RECEIVABLE 177,827 20,725
INVENTORIES 6,415,749 5,763,023
PREPAID AND OTHER CURRENT ASSETS 992,071 1,231,509
INCOME TAXES RECEIVABLE 491,941
DEFERRED TAXES - CURRENT 791,100 791,100
TOTAL CURRENT ASSETS 16,172,236 15,790,834
NOTES RECEIVABLE, DUE AFTER ONE YEAR 590,377 738,997
PROPERTY, PLANT AND EQUIPMENT, NET 43,765,744 41,686,254
COST IN EXCESS OF UNDERLYING NET ASSET
VALUE OF ACQUIRED COMPANIES 1,872,211 1,904,306
OTHER ASSETS, NET 2,154,243 2,315,603
$64,554,811 $62,435,994
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
CURRENT PORTION OF LONG-TERM DEBT $ 3,280,957 $ 3,207,254
ACCOUNTS PAYABLE 7,258,798 5,350,448
ACCOUNTS PAYABLE - AFFILIATE 929,039 1,179,927
INCOME TAXES PAYABLE 534,147
ACCRUED COMPENSATION 1,610,998 1,714,677
ACCRUED SALES AND FUEL TAX 2,159,960 1,925,570
ACCRUED EXPENSES AND OTHER
CURRENT LIABILITIES 1,052,872 1,158,607
TOTAL CURRENT LIABILITIES 16,826,771 14,536,483
LONG TERM DEBT 23,661,262 25,526,937
CONVERTIBLE SUBORDINATED DEBENTURES 4,650,000 4,650,000
DEFERRED INCOME TAXES 1,905,600 1,905,600
TOTAL LIABILITIES 47,043,633 46,619,020
SHAREHOLDERS' EQUITY
COMMON STOCK, $.01 PAR VALUE
AUTHORIZED - 10,000,000 SHARES, ISSUED
AND OUTSTANDING AT OCTOBER 1997 -
5,612,595 AND APRIL 1997 - 5,574,965 56,126 55,749
ADDITIONAL PAID-IN CAPITAL 4,709,230 4,649,414
RETAINED EARNINGS 12,745,822 11,111,811
TOTAL SHAREHOLDERS' EQUITY 17,511,178 15,816,974
$64,554,811 $62,435,994
TRAVEL PORTS OF AMERICA, INC.
STATEMENT OF INCOME
(UNAUDITED)
QUARTER ENDED SIX MONTHS ENDED
OCTOBER 31 OCTOBER 31
1997 1996 1997 1996
NET SALES AND OPERATING
REVENUE $54,732,274 $52,698,998 $111,130,059 $99,187,934
COST OF GOODS SOLD 42,246,294 40,627,845 85,283,116 75,468,223
GROSS PROFIT 12,485,980 12,071,153 25,846,943 23,719,711
OPERATING EXPENSE 9,330,000 9,381,477 19,092,266 18,121,616
GENERAL AND
ADMINISTRATIVE EXPENSE 1,250,790 1,104,156 2,560,095 2,254,854
INTEREST EXPENSE 790,885 772,950 1,600,607 1,386,954
OTHER INCOME, NET (136,165) (123,078) (194,436) (177,462)
11,235,510 11,135,505 23,058,532 21,585,962
INCOME BEFORE TAXES 1,250,470 935,648 2,788,411 2,133,749
PROVISION FOR TAXES
ON INCOME 517,700 398,900 1,154,400 906,600
NET INCOME $ 732,770 $ 536,748 $ 1,634,011 $ 1,227,149
PER SHARE DATA:
NET INCOME PER SHARE
- - PRIMARY $0.12 $0.09 $0.28 $0.21
NET INCOME PER SHARE
- - FULLY DILUTED $0.10 $0.08 $0.23 $0.18
WEIGHTED AVERAGE SHARES
OUTSTANDING - PRIMARY 5,950,329 5,742,728 5,849,536 5,742,906
WEIGHTED AVERAGE SHARES
OUTSTANDING
- - FULLY DILUTED 7,593,439 7,385,838 7,541,647 7,404,520
TRAVEL PORTS OF AMERICA, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED OCTOBER 31
1997 1996
OPERATING ACTIVITIES:
NET INCOME $1,634,011 $1,227,139
DEPRECIATION AND AMORTIZATION 1,722,108 1,562,065
CHANGES IN OPERATING ASSETS AND LIABILITIES -
ACCOUNTS RECEIVABLE (447,719) (838,881)
INVENTORIES (652,726) (1,033,676)
PREPAID AND OTHER CURRENT ASSETS 220,888 (181,077)
ACCOUNTS PAYABLE 1,657,462 2,216,414
ACCRUED COMPENSATION (103,679) (206,335)
ACCRUED SALES AND FUEL TAX 234,390 1,148,944
ACCRUED EXPENSES AND OTHER CURRENT
LIABILITIES (105,735) (142,475)
CHANGES IN INCOME TAXES
PAYABLE/RECEIVABLE 1,026,088 64,523
CHANGES IN OTHER NON-CURRENT ASSETS 78,217 (18,129)
NET CASH PROVIDED BY OPERATING
ACTIVITIES 5,263,305 3,798,512
INVESTING ACTIVITIES:
EXPENDITURES FOR PROPERTY, PLANT &
EQUIPMENT (3,701,238) (5,880,854)
PROCEEDS FROM DISPOSITION OF PROPERTY,
PLANT AND EQUIPMENT 14,879
NET PROCEEDS RECEIVED ON NOTES
RECEIVABLE 10,068 19,963
NET CASH USED IN INVESTING
ACTIVITIES (3,676,291) (5,860,891)
FINANCING ACTIVITIES:
NET SHORT-TERM BORROWING 2,550,000
PRINCIPAL PAYMENTS ON LONG-TERM DEBT (1,791,972) (1,258,042)
PROCEEDS FROM LONG-TERM BORROWING 1,289,000
PROCEEDS FROM EXERCISE OF STOCK OPTIO 60,192 23,270
NET CASH (USED) PROVIDED IN
FINANCING ACTIVITIES (1,731,780) 2,604,228
NET (DECREASE) INCREASE IN CASH AND
EQUIVALENTS (144,766) 541,849
CASH AND EQUIVALENTS - BEGINNING OF
PERIOD 3,134,871 1,667,062
CASH AND EQUIVALENTS - END OF PERIOD $2,990,105 $2,208,911
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD:
INTEREST PAID $1,710,405 $1,437,262
INCOME TAXES PAID $ 517,700 $ 577,480
TRAVEL PORTS OF AMERICA, INC.
NOTES TO FINANCIAL INFORMATION
OCTOBER 31, 1997
NOTE 1 BASIS OF PRESENTATION
The unaudited financial information has been prepared in accordance with the
Summary of Accounting Policies of the Company as outlined in Form 10-K filed
for the year ended April 30, 1997, and should be read in conjunction with the
Notes to Financial Statements appearing therein. In the opinion of management,
the unaudited financial information contains all adjustments (consisting only
of normal recurring adjustments) necessary to present fairly the Company's
financial position as of October 31, 1997 and for the three months and six
months ended October 31, 1997 and 1996. The financial information is based in
part on estimates and has not been audited by independent accountants.The
annual statements will be audited by Price Waterhouse LLP.
NOTE 2 INVENTORIES
Major classifications of inventories are as follows:
October 31, 1997 April 30, 1997
At first-in, first-out (FIFO) cost:
Petroleum Products $1,665,310 $1,047,017
Store Merchandise 2,475,559 2,328,955
Parts for repairs and tires 1,809,679 1,803,705
Other 465,201 583,346
$6,415,749 $5,763,023
NOTE 3 EARNINGS PER SHARE
Primary earnings per share is computed by dividing net income by the weighted
average number of common, and when applicable, common equivalent shares
outstanding during the period. Fully diluted earnings per share include the
dilutive impact of common equivalent shares and the convertible debentures.
Effective for the quarter ending Janaury 31, 1998, the Company will be
required to adopt SFAS No. 128, "Earnigs Per Share." SFAS No. 128 replaces the
presentation of primary earnings per share with a presentation of basic
earnings per share and requires dual presentation of basic and diluted earnings
per share on the face of the income statement. Had earnings per share been
determined consistent with SFAS No. 128, the Company's pro forma bsic and
diluted earnings per share would not have been materially different from
those presented as primary and fully diluted earnings per share.
NOTE 4 FINANCING AGREEMENTS
The Company's primary lending institution has renewed its commitment for the
Company's existing line of credit until September 29, 1998. The regular line
of credit is limited to the lesser of $3,750,000 or the sum of 80% of the
Company's accounts receivable under 90 days old, plus 45% of the Company's
inventory. As of October 31, 1997, the Company has utilized $200,000 of its
available line of credit as collateral for various letters of credit. In
addition the Company has $3,500,000 for a capital line of credit available
from its primary lender. The capital line of credit calls for interest only
at prime plus 1/4% until July 31, 1998. At that time the line can be repaid
or amortized over 42 months with interest at prime plus 1/2%. No advances
have been made against the capital line of credit.
On October 27, 1997, the Company restated and amended its credit agreement
with its primary lender. The revised agreement provides for a LIBOR Rate
option in addition to a Prime Rate option on all of the variable rate debt
except the Revolving Line. The ratio of Funded Debt to EBITDA allows for
changes in the basis points charged by the primary lender. These changes were
effective November 1, 1997.
On December 4, 1997, the Company completed the sale of (1) $2,000,000
principal amount of 7.81% Convertible Subordinated Debentures due December 4,
2007 and (2) Warrants to purchase 40,000 shares of Common Stock, par value
$.01 per share, of the Company at a price of $5.16 per share to Cephas Capital
Partners, L.P.
Note 5 SUBSIDIARY CORPORATIONS
On November 17, 1997, the Company formed two Delaware corporations, Travel
Port Systems, Inc. and Travel Port Franchising, Inc., to facilitate the
beginning of franchising Travel Port and Buckhorn Family Restaurant. The
Company has recently commenced its franchising effort.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Second Quarter ended October 31, 1997 and 1996
Sales from operations were $54,732,274 for the second quarter of fiscal 1998,
up $2,033,276, or 3.9%, from the second quarter of last year. Lower retail
selling prices on diesel fuel resulted in reduced sales revenues of $2,330,000
in fiscal 1998. Diesel gallons increased 9.9%, as did restaurants by .9%,
stores by 4.6% and shops by 9.3%.
Gross profit for the second quarter was $12,485,980, an increase of $414,827,
or 3.4%, from the prior year. Diesel fuel gross profit increased due to a
greater gallons sold and slightly improved margins. Restaurants, stores and
shops also showed improvement over last year; however gasoline was impacted
negatively by lower margins.
Operating expenses of $9,330,000 for the second quarter were relatively flat
as compared to last year. General and administrative expenses for the quarter
of $1,250,790 increased $146,634 or 13.3% from last year. The increase relates
to increased compensation, advertising and professional services. The Company
has expanded its advertising in truckers' magazines. Professional services
increased due to an expanded investment relations program. Other income and
interest expense were in line with last year.
Six months ended October 31, 1997 and 1996
Sales from operations were $111,130,059 for the first six months of fiscal
1998, up $11,942,125, or 12.0%, from the first six months of last year. As
noted for the quarter, lower selling prices for diesel fuel had a negative
impact on revenues in the amount of $2,780,000. Not withstanding this
negative impact total diesel sales increased approximately $8,000,000 from
last year due to increased gallons sold at previously existing locations and
at Harborcrek which was not open for the full six months of last year. All
other sales categories increased from last year.
Gross profit for the first six months was $25,846,943, an increase of
$2,126,232, or 9.0%, from the prior year. As noted in the discussion of
second quarter gross profit, all categories except gasoline improved over
last year.
Operating expenses of $19,092,266 for the first six months were $970,650 or
5.4% more than last year. Approximately $474,000 resulted from Harborcreek
being operated six more weeks this year versus last year, when it opened on
June 15, 1996.
General and administrative expenses for the first six months of $2,560,095
increased $305,241 or 13.5% from last year. The increase relates primarily
to increased compensation, advertising and professional services as noted
for the quarter. Interest expense increased from last year by $213,653 as
a result of increased level of debt and a higher prime rate.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position decreased by $144,766 to $2,990,105 during the
first six months ended October 31, 1997. Overall operating activities for the
six months ended October 31, 1997 provided $5,263,305 in cash compared to last
year's $3,798,512. Accounts receivable increased $523,713 from greater sales
activity. Inventories increased $652,726 to support the increased sales.
Accounts payable increased $1,657,462 as a result of increased inventories and
other expenditures on capital expenditures. Income taxes payable increased
$1,026,088 as a result of the increased earnings for the first six months.
Investing activities resulted in a net use of $3,676,291. Capital
expenditures during the first six months of the current fiscal year were
$3,701,238. Renovation projects continued at several locations.
Financing activities for the first six months of the current fiscal year
resulted in a net use of $1,731,780, primarily the result of principal
payments on debt.
The Company's primary lending institution has renewed its commitment for
the Company's existing line of credit until September 29, 1998. The regular
line of credit is limited to the lesser of $3,750,000 or the sum of 80% of
the Company's accounts receivable under 90 days old, plus 45% of the
Company's inventory. As of October 31, 1997, the Company has utilized
$200,000 of its available line of credit as collateral for various letters
of credit. In addition the Company has $3,500,000 for a capital line of
credit available from its primary lender. The capital line of credit calls
for interest only at prime plus 1/4% until July 31, 1998. At that time the
line can be repaid or amortized over 42 months with interest at prime plus
1/2%. No advances have been made against the capital line of credit.
On October 27, 1997, the Company restated and amended its credit agreement
with its primary lender. The revised agreement provides for a LIBOR Rate
option in addition to a Prime Rate option on all of the variable rate debt
except the Revolving Line. The ratio of Funded Debt to EBITDA allows for
changes in the basis points charged by the primary lender. These changes were
effective November 1, 1997.
On December 4, 1997, the Company completed the sale of (1) $2,000,000
principal amount of 7.81% Convertible Subordinated Debentures due December 4,
2007 and (2) Warrants to purchase 40,000 shares of Common Stock, par value
$.01 per share, of the Company at a price of $5.16 per share to Cephas Capital
Partners, L.P.
Authorized, but unissued stock is available for financing needs; however,
there are no current plans to use this source.
TRAVEL PORTS OF AMERICA, INC.
PART II -- OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is not presently a party to any litigation (i) that is
not covered by insurance or (ii) which singly or in the aggregate
would have a material adverse effect on the Company's financial
condition and results of operations, and management has no knowledge
that any other litigation has been threatened.
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
On December 4, 1997, the Company completed the sale of (1) $2,000,000
principal amount of 7.81% Convertible Subordinated Debentures due
December 4, 2007 and (2) Warrants to purchase 40,000 shares of Common
Stock, par value $.01 per share, of the Company at a price of $5.16
per share to Cephas Capital Partners, L.P.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
(2) Plan of acquisition, reorganization, agreement, liquidation,
or succession
Not applicable
(3) Articles of Incorporation and By-laws
Exhibit 3-a and exhibit 3-b to the Company's Registration
Statement on Form S-18, File No. 33-7870-NY are incorporated herein
by reference with respect to the Restated Certificate of
Incorporation and By-laws of the Company.
Certificate of Amendment of Certificate of Incorporation
changing the name of the Corporation, is incorporated herein by
reference to Exhibit 3-c of the Company's report of Form 10-K
dated July 27, 1993.
(4) Instruments defining the rights of security holders,
including indentures
Exhibit 4-a, Form of Common Stock Certificate, to the
Company's Registration Statement on Form S-18, File No. 33-7870-NY is
incorporated herein by reference with respect to instruments defining
the rights of security holders.
Exhibit 4-c, Form of Indenture dated as of January 24, 1995,
between Travel Ports of America, Inc. and American Stock Transfer and
Trust Company, as Trustee, with respect to up to $5,000,000 principal
amount of 8.5% Convertible Senior Subordinated Debentures due January
15, 2005 is incorporated by reference to Exhibit 4-c to the Company's
Current Report on Form 8-K dated February 15, 1995.
Exhibit 4-d, Form of Warrant to purchase Common Stock is
incorporated by reference to Exhibit 4-d to the Company's Current
Report on Form 8-K dated February 15, 1995.
Exhibit 4-e, Form of Indenture as of December 4, 1997, between
Travel Ports of America, Inc. and Cephas Capital Partners, L.P., with
respect to $2,000,000 principal amount of 7.81% Convertible
Subordinated Debentures due December 4, 2007, is set forth on page 68
of this report.
Exhibit 4-f, Form of Warrant to purchase Common Stock as set
forth on page 129 of this report.
(10) Material contracts
Exhibit 10.20, Restated and Amended Credit Agreement dated
October 27, 1997, executed and delivered to Fleet Bank is set forth
on page 17 of this report.
(11) Statement re: computation of earnings per share
Computation of earnings per share is set forth in Exhibit (11)
on page 13 of this report.
(15) Letter re: unaudited interim financial information
Not applicable
(18) Letter re: change in accounting principals
Not applicable
(19) Previously unfiled documents
None
(20) Report furnished to security holders
Not applicable
(22) Published report regarding matters submitted to vote of
security holders
None
(23) Consents of experts and counsel
Not applicable
(24) Power of attorney
None
(27) Supplemental Financial Information
Exhibit (27) on page 16 of this report.
(99) Additional exhibits
None
(b) REPORT ON FORM 8-K
None
EXHIBIT (11)
COMPUTATION OF PRIMARY EARNINGS PER SHARE
FOR THE QUARTER ENDED OCTOBER 31, 1997
Net income per share was computed by dividing net income by the weighted
average number of common shares outstanding and common stock equivalents.
Total Options
and Warrants Average Average
Qtr. Ended Below Market Exercise Price Market Price Shares
10/31/97 1,010,676 $2.60 $3.90 337,734
Average number of shares outstanding 5,612,595
5,950,329
Net income per common and common equivalent shares $.12
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
FOR THE QUARTER ENDED OCTOBER 31, 1997
Net income per share was computed by dividing net income by the weighted
average number of common shares outstanding, common stock equivalents, and
the assumed conversion of the convertible debentures.
Total Options
and Warrants Average
Qtr. Ended Below Market Exercise Price Market Price * Shares
10/31/97 1,010,676 $2.60 $3.90 337,734
Additional shares due to assumed exercise of convertible debentures 1,643,110
Average number of shares outstanding 5,612,595
7,593,439
Net income for quarter ended 10/31/97 $732,770
Interest on convertible debentures 59,288
$792,058
Net income per common and common equivalent shares - fully diluted $.10
COMPUTATION OF PRIMARY EARNINGS PER SHARE
FOR THE SIX MONTHS ENDED OCTOBER 31, 1997
Net income per share was computed by dividing net income by the weighted
average number of common shares outstanding and common stock equivalents.
Total Options
and Warrants Average Average
Qtr. Ended Below Market Exercise Price Market Price Shares
7/31/97 727,916 $2.30 $2.83 136,148
10/31/97 1,010,676 $2.60 $3.90 337,734
Total for Two Quarters 473,882
Average common stock equivalents outstanding during
six months ended October 31, 1997 236,941
Average number of shares outstanding 5,612,595
5,849,536
Net income per common and common equivalent shares $.28
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
FOR THE SIX MONTHS ENDED OCTOBER 31, 1997
Net income per share was computed by dividing net income by the weighted
average number of common shares outstanding, common stock equivalents, and
the assumed conversion of the convertible debentures.
Total Options
and Warrants Average
Qtr. Ended Below Market Exercise Price Market Price * Shares
7/31/97 833,916 $2.34 $3.25 234,149
10/31/97 1,010,676 $2.60 $3.90 337,734
Total for Two Quarters 571,883
Average common stock equivalents outstanding during
six months ended October 31, 1997 285,942
Additional shares due to assumed exercise of convertible
debentures 1,643,110
Average number of shares outstanding 5,612,595
7,541,647
Net income for six months ended 10/31/96 $1,634,011
Interest on convertible debentures 118,576
$1,752,587
Net income per common and common equivalent shares - fully diluted $.23
* Amount reflects higher of average or period end market price.
SIGNATURES
Pursuant to the requirements 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.
TRAVEL PORTS OF AMERICA, INC.
Date: December 12, 1997 s/ John M. Holahan
John M. Holahan, President
Date: December 12, 1997 s/ William Burslem III
William Burslem III
Vice President
RESTATED AND AMENDED CREDIT AGREEMENT
THIS RESTATED AND AMENDED CREDIT AGREEMENT is executed as of October 27, 1997
and is effective as of November 1, 1997 by and between FLEET BANK, a New York
bank and trust company and successor by merger to Norstar Bank, N.A. and Fleet
Bank of New York, with offices at One East Avenue, Rochester, New York 14638
(called the "Bank") and TRAVEL PORTS OF AMERICA, INC., formerly known as
Roadway Motor Plazas, Inc., a New York corporation with offices now at 3495
Winton Place, Building C, Rochester, New York 14623 (the "Borrower").
WHEREAS, the Bank and the Borrower entered into a Credit Agreement dated June
__, 1988, which Credit Agreement was amended and restated in a Restated and
Amended Credit Agreement dated January 28, 1991, which Restated and Amended
Credit Agreement was also been further amended, and which Credit Agreement
was further amended and restated in a Restated and Amended Credit Agreement
dated June 30, 1994, which Credit Agreement was further amended and restated
in a Restated and Amended Credit Agreement dated September 29, 1994, and
which Credit Agreement was further amended by Credit Agreement Amendment
Number 1 dated September 7, 1995, and which Credit Agreement was further
amended by Restated and Amended Credit Agreement dated December 21, 1995,
which Credit Agreement was further amended by Restated and Amended Credit
Agreement Amendment Number 1 dated as of January 31, 1997 (collectively, the
"1988 Agreement"), and
WHEREAS, the parties desire to further amend the 1988 Agreement, and deem it
in their respective best interest to restate and amend the 1988 Agreement in
its entirety for ease of reference,
NOW THEREFORE, the Bank and the Borrower agree to amend and restate the 1988
Agreement in its entirety as follows, and further agree that (a) except as
expressly changed herein this Agreement shall cover the same rights and
obligations as are covered by the 1988 Agreement, (b) all references in
mortgages, security agreements, notes, and other documents, instruments, and
agreements related to this Agreement or to the 1988 Agreement which refer to
the 1988 Agreement shall be deemed to refer to this Restated and Amended
Credit Agreement as the same may be modified, extended, or replaced from time
to time.
ARTICLE I - LOANS
A. Term Loans. The Bank shall consolidate existing loans to the Borrower in
an aggregate amount of, and the Borrower shall borrow an aggregate amount of,
$10,500,000 (the "Term Loan"). The Term Loan shall be evidenced by an amended,
consolidated, and restated Term Loan Note in the new principal amount of
$10,500,000, the form of which is attached hereto as Exhibit A (the "Term
Loan Note").
The amount outstanding on the date of closing under the Term Loan referenced
in the 1988 Agreement shall remain outstanding as a part of the Term Loan
hereunder and the terms thereof shall be modified to the terms of the Term
Loan hereunder. The remaining principal portion of the Term Loan shall be
available to the Borrower first to repay $1,500,000 in existing Bank line of
credit obligations on the date of closing. The remaining proceeds shall be
advanced into an escrow account to be held by the Bank for the benefit of the
Borrower.
The Bank will invest the funds held in the escrow account in income producing
accounts at the Bank or an Affiliate of the Bank mutually satisfactory to the
Bank and the Borrower. Advances will be made from the escrow account as
requested by Borrower for capital expenditures in Borrower's fiscal year 1995,
improvements to Borrower's property commonly known as Exit 3 Truckstop in
Greenland, New Hampshire, and infrastructure improvements to Borrower's
property in Harborcreek, Erie, Pennsylvania. Advance requests must be
accompanied by invoices for expenses incurred reasonably satisfactory to the
Bank.
Outstanding principal balances under the Term Loan shall bear interest at ten
and twelve/hundredths percent (10.12%) per annum, calculated based on actual
days elapsed in a year of 360 days. For purposes of this Agreement, the
"Prime Rate" is the Bank's rate of interest stated by the Bank from time to
time to be its prime rate (irrespective of any rate charged to any customer
in any actual transaction).
The Borrower shall pay all interest accrued on the Term Loan on the first day
of each month commencing on November 1, 1994 and continuing through March 1,
1995. On the first day of each month commencing on April 1, 1995, the Borrower
shall make a combined principal and interest payment of $166,957.84. Payments
shall be applied first to accrued interest and then to principal. In the event
that any payment is insufficient to pay all accrued interest, all such accrued
interest shall be immediately payable and the Bank reserves the right to
adjust the monthly payment amount to an amount deemed reasonably sufficient to
fully amortize the principal and interest of the Term Loan by the maturity
date. All remaining principal and interest shall be due and payable in full on
September 29, 2002.
The Borrower may prepay, in whole or in part, the Term Loan Note at any time.
The prepayment shall be accompanied by a prepayment charge computed as
follows:
The latest available yield preceding the date of prepayment, as available
through active market trading or published in the Wall Street Journal, for
United States Treasury Notes or Bills (with Bills on a discounted basis
converted to a bond equivalent) with a maturity date closest to September 29,
2002 shall be subtracted from 7.62%. If the result is zero or a negative
number, there shall be no prepayment charge. If the result is a positive
number, then the resulting percentage shall (i) be multiplied by the principal
amount prepaid, then (ii) divided by 360, then (iii) multiplied by the number
of days remaining prior to September 29, 2002, and then (iv) reduced to a
present value calculated using the above referenced Treasury Note or Bill
yield. The resulting amount shall be the amount of the prepayment charge due
to the Bank.
Principal prepayments shall be applied first to interest accrued on the amount
prepaid, and then to principal in inverse order of maturity.
B. Revolving Line of Credit. The Bank hereby establishes a revolving line
of credit (the "Revolving Line") in the maximum principal amount of Three
Million Seven Hundred Fifty Thousand Dollars ($3,750,000). The Revolving
Line replaces and supersedes existing revolving lines established by the Bank
for Borrower.
A Revolving Line Note (the "Revolving Line Note") in substantially the form
of Exhibit B hereto will evidence the Revolving Line.
All outstanding principal amounts under the Revolving Line shall bear interest
until paid at a rate per annum equal to the Prime Rate plus the Applicable
Prime Margin calculated based on actual days elapsed in a year of 360 days,
but never exceeding the maximum rate allowed by law. All changes in the
interest rate due to a change in the Prime Rate shall take place automatically
and without notice to Borrower as of the effective date of the change in the
Prime Rate.
The Borrower shall make a payment of all interest accrued under the Revolving
Line Note on the first day of each month.
The Borrower shall make principal payments sufficient to assure that the
aggregate principal amount outstanding under the Revolving Line never exceeds
the amount then available under the Borrowing Formula described below, and
also sufficient to assure that there is no outstanding principal under the
Revolving Line for at least thirty (30) consecutive days between each
September 1 and the next succeeding August 31. All remaining principal and
interest shall be due and payable in full on the date of expiration of the
Revolving Line.
The Revolving Line shall terminate on September 29, 1998 (or the date of an
Event of Default if earlier) unless extended in writing in the sole discretion
of and on such terms as are acceptable to the Bank, and no further advances
shall be made thereafter.
The Borrower may borrow, repay, and reborrow under the Revolving Line so long
as no Event of Default hereunder has occurred and the aggregate principal
amount outstanding at any one time does not exceed the lesser of $3,750,000
or the sum then available according to the following formula (the "Borrowing
Formula"): (a) eighty percent (80%) of all Borrower eligible accounts
receivable as defined below ("Eligible Accounts") plus (b) forty-five percent
(45%) of all Borrower eligible inventories as defined below ("Eligible
Inventories").
Eligible accounts receivable are defined as: (i) all trade accounts
receivable less than 90 days beyond date of invoice plus (ii) the less than
90 days beyond date of invoice portion of receivables from one customer of
which at least 50% of the outstanding amount is less than 90 days beyond date
of invoice, minus all (iii) marginal accounts receivable, contra accounts
receivable, affiliate company accounts receivable, foreign accounts
receivable, employee accounts receivable, bill and hold accounts receivable
(i.e. accounts relating to goods not yet shipped but invoiced), uncollectible
accounts receivable, accounts receivable arising from progressive billings
(ie. accounts receivable from billings for work performed on a partially
completed contract), accounts receivable arising from guaranteed sales with
buy-back provisions (ie. accounts receivable arising from sales in which the
Borrower is obligated to repurchase inventory or merchandise sold to
customers), and accounts receivable of companies or businesses actually known
to the Bank to be deteriorating. In the event that total accounts receivable
from any payor represent more than 20% of the Borrower's total accounts
receivable, the Bank reserves the right in its sole discretion to delete
those accounts receivable in excess of 20% of total accounts from eligible
accounts receivable unless the Borrower has provided to the Bank sufficient
information regarding the obligor on the accounts for the Bank to make a
determination as to the creditworthiness of that obligor.
Eligible inventories are defined as all inventories owned by the Borrower
valued at cost minus all perishable or non-saleable inventories.
Eligible accounts receivable and eligible inventories must arise from the
Borrower's ordinary course of business as it exists on the date hereof. The
Bank reserves the right in its sole discretion to modify the borrowing
formula or make changes in the definitions of eligible accounts or eligible
inventories, or to delete certain accounts or inventories from the borrowing
formula, all in the event of a material adverse change in the collateral or
its collectibility.
The amount available under the Revolving Line shall be reduced by the
aggregate amount of outstanding Letters of Credit issued by the Bank for the
account of the Borrower. Letters of Credit will be issued at the request of
the Borrower in the discretion of, and upon terms acceptable to, the Bank up
to an aggregate maximum outstanding face amount at any one time of $500,000.
The Borrower shall pay to the Bank a non-refundable commission of one and
one-half percent (1.5%) per annum with respect to the face amount of each
respective letter of credit on the date such letter of credit is issued.
Letters of credit shall have maturity dates no longer than one year following
the termination date of the Revolving Line described above.
Borrower agrees to allow the Bank complete access to all books and records of
the Borrower upon reasonable request. Borrower agrees to submit information
which the Bank may reasonably request from time to time in connection with
the Revolving Line. The Borrower will provide to the Bank such borrowing
reconciliation reports, agings, listings, and other reports and information
as the Bank requests in connection with the Revolving Line including without
limitation accounts agings and inventory reports as requested.
C. Mortgage Loans. The Borrower and the Bank hereby reaffirm the
Borrower's (and its predecessor's) existing mortgage secured obligations to
the Bank (the "Mortgage Loans"), as follows:
1. 1980 Livingston County Industrial Development Agency Industrial
Development Revenue Bonds (Interstate Travel Plaza, Inc. Facility) in the
original principal amount $950,000 secured by Mortgages on property in
Livingston County (Dansville), New York,
2. obligations covered by a Consolidation and Extension Agreement in the
original aggregate principal amount of $350,000 dated October 23, 1987 and
secured by a Mortgage on property in the Town of Amity (Belmont), New York,
3. obligations covered by a Deed of Trust Note in the original principal
amount of $2,000,000 dated July 5, 1988 and secured by a Deed of Trust on
property in Buncombe County (Asheville), North Carolina,
4. obligations covered by a Note in the original principal amount of
$4,400,000 dated January 5, 1989 and secured by a Mortgage on property in
Porter County (Porter), Indiana,
5. obligations covered by a Note in the original principal amount of
$500,000 dated January 5, 1989 secured by a Mortgage covering leasehold
interests in Lake County (Lake Station), Indiana, and
6. obligations covered by a Note in the original principal amount of
$5,500,000 dated January 4, 1990 secured by a Mortgage covering property in
Franklin County (Greencastle), Pennsylvania.
The interest rate and payment terms related to the obligations described in
2, 3, 4, 5, and 6 above shall be amended as provided in Exhibits H, I, J, K,
and L, respectively, attached to and made part of this Agreement. The
remaining terms of the Mortgage Loans shall remain in full force and effect,
but such loans also shall be covered by the terms of this Agreement.
D. 1992 Loan. [Intentionally omitted: On April 30, 1992 the Bank
made an additional term loan to the Borrower in the aggregate principal amount
of $1,966,685 (the "1992 Loan"). The 1992 Loan has been paid in full.]
E. 1994 Loan. The Bank made, on or about June 30, 1994, an
additional term loan to the Borrower in the aggregate principal amount of
$2,500,000 (the "1994 Loan"). The 1994 Loan shall be repaid according to the
terms of the 1994 Loan Note, the form of which is attached hereto as Exhibit
C (the "1994 Loan Note"). The Borrower was required to use the proceeds of
the 1994 Loan Note for the purchase of assets which constitute the Exit 3
Truckstop in Greenland, New Hampshire. The terms of the 1994 Loan shall
remain in full force and effect, and also shall be covered by the terms of
this Agreement.
F. Assumption of Interstate Travellers Debt. The Borrower has previously
assumed and hereby reaffirms its assumption of all of the obligations of any
kind or nature of Interstate Traveller Services, Inc. to the Bank, including
without limitation obligations related to the Mortgage Loans and to the
mortgages given to the Bank in 1988 covering properties located in Centre,
Luzerne, Columbia, and Franklin Counties, Pennsylvania. The Borrower shall
be deemed to be a party to, and shall be bound by all documents and agreements
relating to obligations of Interstate Traveller Services, Inc. to the Bank in
the same manner as if the Borrower had executed such documents and agreements
in the first instance. The Borrower shall provide such further instruments
and assurances regarding the aforesaid assumption as the Bank may reasonably
request from time to time.
G. Erie Term Loan. The Bank has made a term loan (the "Erie Loan") in
the original principal amount of Six Million Dollars ($6,000,000), the
proceeds of which were used to fund capital expenditures and construction
costs relating to construction of a truck stop/travel center located in
Harborcreek (Erie), Pennsylvania.
An Erie Loan Note (the "Erie Loan Note") in substantially the form of Exhibit
E hereto evidences the Erie Loan.
All outstanding principal amounts under the Erie Loan Note shall bear interest
until paid in full, at nine and forty-four hundredths percent (9.44%) per
annum. Interest shall be calculated based on actual days elapsed divided by
a year of 360 days.
Payments of all accrued interest, plus payments of principal of $33,333 each,
shall be due on the first day of every month. All remaining principal and
interest under the Erie Loan Note shall be due and payable on the date ten
(10) years after the date of the Erie Loan Note.
In the event that the Borrower chooses to prepay, in whole or in part, the
Erie Loan Note, the prepayment shall be accompanied by a premium as follows:
The latest available yield preceding the date of prepayment, as available
through active market trading or published in the Wall Street Journal, for
United States Treasury Notes or Bills (with Bills on a discounted basis
converted to a bond equivalent) with a maturity date closest to the maturity
date of the Erie Loan Note shall be subtracted from the cost of funds used in
establishing the initial fixed rate. If the result is zero or a negative
number, there shall be no prepayment charge. If the result is a positive
number, then the resulting percentage shall (i) be multiplied by the principal
amount prepaid, then (ii) divided by 360, then (iii) multiplied by the number
of days remaining prior to the maturity date of the Erie Loan Note, and then
(iv) reduced to a present value calculated using the above referenced Treasury
Note or Bill yield. The resulting amount shall be the amount of the
prepayment charge due to the Bank.
Principal prepayments shall be applied first to principal in inverse order of
maturity.
H. Capital Expenditure Line. The Bank hereby establishes a line of credit
for the purpose of funding capital expenditures and construction costs not
funded by other sources (the "Capital Line") in the maximum principal amount
of Three Million Five Hundred Thousand Dollars ($3,500,000).
A Capital Line Note (the "Capital Line Note") in substantially the form of
Exhibit F hereto will evidence the Capital Line.
Except to the extent that the LIBOR Rate option described below has been
exercised, all outstanding principal amounts under the Capital Line shall
bear interest until paid at a rate per annum equal to the Prime Rate plus the
Applicable Prime Rate Margin calculated based on actual days elapsed in a year
of 360 days, but never exceeding the maximum rate allowed by law. All changes
in the interest rate due to a change in the Prime Rate shall take place
automatically and without notice to Borrower as of the effective date of the
change in the Prime Rate. At the option of the Borrower, however, exercised
by giving the Bank notice at least two London Banking Days prior to the first
day of any month, the Borrower may elect to have the principal amount
outstanding under the Capital Line Note (which must not be less than
$500,000) bear interest for a LIBOR Interest Period, designated in the notice
and commencing on the first day of a month, at a fixed rate equal to the
LIBOR Rate plus the Applicable LIBOR Margin as of the date two London Banking
Days prior to the LIBOR Interest Period selected. The LIBOR Interest Period
shall be either one-month, two months, or three months, as elected by the
Borrower. The Borrower may make a maximum of six LIBOR Rate elections per
year related to the Capital Line Note.
The Borrower shall make a payment of all interest accrued under the Capital
Line Note with respect to principal which bears interest based upon the Prime
Rate on the first day of each month, and a payment of all interest accrued
with respect to principal for which a LIBOR Interest Period has been elected
on the last day of each such respective LIBOR Interest Period.
The Borrower may prepay principal under the Capital Line at any time. Any
prepayment of principal covered by a rate of interest based upon the LIBOR
Rate on a date other than the last day of the applicable LIBOR Interest
Period must be accompanied by a payment of Break Costs.
All remaining principal and interest shall be due and payable in full on the
date of expiration of the Capital Line, provided, however, if no Event of
Default has occurred the outstanding principal under the Capital Line may be
refinanced by the Capital Loan (described below in Article I. I.) at the
option of the Borrower on the Termination Date of the Capital Line .
The Capital Line shall terminate on July 31, 1998 (or if earlier, the date of
an Event of Default or the date of termination of the Revolving Line unless
such Revolving Line has been extended), and no further advances shall be made
thereafter.
The Borrower may borrow, repay, and reborrow under the Capital Line so long
as no Event of Default hereunder has occurred and the aggregate principal
amount outstanding at any one time does not exceed the lesser of (i)
$3,500,000 or (ii) the capital expenditures of the Borrower during the period
the Capital Line is available less $1,500,000 per Borrower's fiscal year.
Any advance made other than on the first day of a month shall bear interest
based upon the Prime Rate as described above; provided, however, that the
Borrower may elect a rate based upon the LIBOR Rate for such advance on the
first day of the next succeeding month in the manner described above and
subject to the restriction of six LIBOR Rate elections in any one year.
I. Capital Expenditure Loan. At the request of the Borrower and provided
that no Event of Default or termination date of the Revolving Line has
occurred, upon termination of the Capital Line the Bank will make a Capital
Loan to the Borrower in the amount of the then outstanding principal balance
of the Capital Line.
A Capital Loan Note (the "Capital Loan Note") in substantially the form of
Exhibit G hereto will evidence the Capital Loan.
Except to the extent that the LIBOR Rate option described below has been
exercised, all outstanding principal amounts under the Capital Loan shall
bear interest until paid at a rate per annum equal to the Prime Rate plus the
Applicable Prime Margin calculated based on actual days elapsed in a year of
360 days, but never exceeding the maximum rate allowed by law. All changes
in the interest rate due to a change in the Prime Rate shall take place
automatically and without notice to Borrower as of the effective date of the
change in the Prime Rate. At the option of the Borrower, however, exercised
by giving the Bank notice at least two London Banking Days prior to the first
day of any month, the Borrower may elect to have the principal amount
outstanding under the Capital Loan Note (which must not be less than
$500,000) bear interest for a LIBOR Interest Period, designated in the
notice and commencing on the first day of a month, at a fixed rate equal to
the LIBOR Rate plus the Applicable LIBOR Margin as of the date two London
Banking Days prior to the LIBOR Interest Period selected. The LIBOR Interest
Period shall be either one-month, two months, or three months, as elected by
the Borrower. The Borrower may make a maximum of six LIBOR Rate elections
per year related to the Capital Loan Note.
The Borrower shall make a payment of all interest accrued under the Capital
Loan Note with respect to principal which bears interest based upon the Prime
Rate on the first day of each month, and a payment of all interest accrued
with respect to principal for which a LIBOR Interest Period has been elected
on the last day of each such respective LIBOR Interest Period.
In addition, on the first day of each November 1, February 1, May 1, and
August 1 respectively a principal payment equal to 1/14th of the original
principal amount of the Capital Loan Note shall be due. All remaining
principal and interest shall be due and payable in full on January 31, 2002.
The Borrower may prepay principal under the Capital Loan Note at any time.
Any prepayment of principal covered by a rate of interest based upon the LIBOR
Rate on a date other than the last day of the applicable LIBOR Interest
Period must be accompanied by a payment of Break Costs. All principal
prepayments shall be applied in inverse order of maturity.
On the date the Capital Loan is made, the Borrower shall pay a conversion fee
to the Bank equal to one-fourth percent (.25%) of the original principal
amount of the Capital Loan.
ARTICLE II
For purposes of this Agreement, the following terms shall have the following
definitions:
"Applicable LIBOR Margin" shall mean the following amounts related to the
following obligations determined according to the ratio of Funded Debt to
EBITDA shown on the most recent quarterly or annual financial statement
submitted by the Borrower to the Bank:
Funded Debt/EBITDA Funded Debt/EBITDA
Obligation greater than or equal 3.0 less than 3.0
Capital Line 187.5 basis points (1.875%) 162.5 basis points (1.625%)
Capital Loan 225 basis points (2.25%) 200 basis points (2.00%)
Mortgage Loans 225 basis points (2.25%) 200 basis points (2.00%)
If the most recent financial statement was not received by the Bank more than
ten days prior to the date on which the Applicable LIBOR Margin is being
determined, the ratio of Funded Debt to EBITDA shall be based upon the
immediately prior quarterly or annual financial statement submitted by the
Borrower.
"Applicable Prime Margin" shall mean the following amounts related to the
following obligations determined according to the ratio of Funded Debt to
EBITDA shown on the most recent quarterly or annual financial statement
submitted by the Borrower to the Bank:
Funded Debt/EBITDA Funded Debt/EBITDA
Obligation greater than or equal 3.0 less than 3.0
Revolving Line 0 basis points (0%) minus 25 basis points (-.25%)
Capital Line 25 basis points (.25%) 0 basis points (0%)
Capital Loan 50 basis points (.50%) 25 basis points (.25%)
Mortgage Loans 50 basis points (.50%) 25 basis points (.25%)
If the most recent financial statement was not received by the Bank more than
ten days prior to the date on which the Applicable Prime Margin is being
determined, the ratio of Funded Debt to EBITDA shall be based upon the
immediately prior quarterly or annual financial statement submitted by the
Borrower.
"Break Costs" shall mean an amount equal to the amount (if any) required to
compensate the Bank for any additional losses (including without limitation
any loss, cost, or expense incurred by reason of the liquidation or
reemployment of deposits or funds acquired by the Bank to fund or maintain
the applicable obligation), costs, and expenses (including without limitation
penalties) it may reasonably incur as a result of or in connection with a
prepayment.
"EBITDA" shall mean net income before interest expense, taxes, depreciation,
and amortization, calculated for the quarter ending on the measurement date
plus the last three preceding quarters, as shown on the Borrower's quarterly
and annual financial statements delivered to the Bank.
"Funded Debt" shall mean shall mean all indebtedness of the Borrower for
borrowed money and the like including without limitation obligations to the
Bank and other financial institutions and lenders, obligations related to
subordinated debt, obligations related to capitalized leases, obligations
related to letters of credit, and guarantees of all of such obligations.
"Increased Cost" means any additional amounts sufficient to compensate the
Bank for any increased costs of funding or maintaining the applicable
obligations hereunder as a result of any law or guideline adopted pursuant to
or arising out of the July 1988 report of the Basle Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards", or the adoption after the date of
this Agreement of any law or guideline regarding capital adequacy, or any
change in any of the foregoing or in the interpretation or administration of
any of the foregoing by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or
compliance by the Bank or the Bank's holding company, if any, with any request
or directive regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency, which has or
would have the effect of reducing the rate of return on the Bank's capital or
on the capital of the Bank's holding company, if any, as a consequence of the
transactions contemplated by this Note, to a level below that which the Bank
or the Bank's holding company could have achieved but for such adoption,
change or compliance (taking into consideration such Bank's policies on
capital adequacy).
LIBOR" is the rate equal to the rate of interest per annum (rounded upward
if necessary, to the nearest 1/32 of one percent) as determined on the basis
of the offered rates for deposits in United States Dollars, for the respective
one-month, two-month, or three-month period which appears on the Telerate Page
3750 as of 11:00 a.m., London time on the day that is two London Banking Days
preceding the day of the applicable LIBOR Interest Period (the "Interest
Setting Date"); provided, however, if the rate described above does not
appear on the Telerate System on any applicable Interest Setting Date, the
LIBOR rate shall be the rate (rounded upwards as described above, if
necessary) for deposits in United States Dollars for the respective one-month,
two-month, or three-month period on the Reuters Page "LIBO" (or such other
page as may replace the LIBO Page on that service for the purpose of
displaying such rates, as of 11:00 a.m. London Time on the day that is two
London Banking Days prior to the beginning of such LIBOR Interest Period).
If both the Telerate and Reuters system are unavailable, then the rate for
that date will be determined on the basis of the offered rates for deposits
in United States Dollars for the respective one-month, two-month, or three-
month period which are offered by four major banks in the London interbank
market at approximately 11:00 a.m. London Time, on the date that is two
London Banking Days preceding the beginning of such LIBOR Interest Period.
In the event that the Bank is unable to obtain any such quotation as provided
above, or there is any change in any law or application thereof that makes it
unlawful, or any central bank or other governmental authority asserts that it
is unlawful, for the Bank to hold obligations if the rate is determined with
reference to the LIBOR (collectively, a "LIBOR End Date"), the Borrower shall
not be entitled to elect an interest rate based upon the LIBOR Rate until
LIBOR can again be determined.
"LIBOR Interest Period" shall mean any particular one-month, two-month, or
three-month period during which an applicable LIBOR Rate shall be in effect.
"LIBOR Rate" shall mean, with respect to any applicable interest rate period,
the rate per anum equal to the quotient obtained by dividing (and rounding to
the nearest 1/100 of 1%) (i) LIBOR as defined below by (ii) a percentage
equal to 100% minus the then stated maximum rate of all reserve requirements,
if any, imposed by the Federal Reserve Board with respect to LIBOR deposits
of the Bank. The LIBOR Rate shall be further adjusted to reflect any Increased
Cost.
"London Banking Day" shall mean any date on which commercial banks are
generally open for business and upon which commercial banks settle payments
in London.
"New York Banking Day" shall mean any date on which commercial banks are
generally open for business and upon which commercial banks settle payments
in New York.
"Prime Rate" shall mean the variable per annum rate of interest so designated
from time to time by the Bank as its prime rate. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
being charged to any customer.
"Rate Change Date" shall mean the date on which any rate of interest based
upon the LIBOR Rate shall become effective.
ARTICLE III - FEES AND EXPENSES
A. Placement and Administration Expense. The Borrower shall pay any
reasonable fees, expenses, and disbursements, including legal fees, of the
Bank related to preparation and execution of this Agreement and any loans
made hereunder. The Borrower shall pay the Bank's customary and reasonable
fees, expenses, and disbursements in connection with administration of this
Agreement including costs of periodic appraisals of the collateral and
monitoring of the Revolving Line.
B. Collection Costs. At the request of the Bank, the Borrower shall
promptly pay any expenses, reasonable attorney's fees, costs, or
disbursements in connection with collection of any of the obligations covered
hereby or enforcement of any of the Bank's rights hereunder or under any note,
security agreement, guarantee, or other agreement given to the Bank in
connection herewith. This obligation shall survive the payment of any notes
executed hereunder. The Bank may apply any payments of any nature received
by it first to the payment of obligations under this section, notwithstanding
any conflicting provision contained in any other agreement related hereto.
C. Origination Fee. The Borrower paid origination fees in connection
with (i) the consolidated Term Loan and (ii) the Bank's purchase of the LaBar
loans which were repaid with the proceeds of the 1992 Loan.
The Borrower paid an origination fee of $25,000 in connection with the making
of the 1994 Loan.
The Borrower paid an origination fee of Thirty Thousand Dollars ($30,000) in
connection with the making of the Term Loan.
The Borrower shall pay an origination fee equal to one-half percent (.5%) of
the original principal amount of the Erie Loan Note on the date of closing of
the Erie Loan.
The Borrower paid a facility fee to the Bank of $8750 in connection with the
Capital Line.
D. Default Interest Rate. Upon the failure of the Borrower to comply
with any covenant contained in Article VII, Sections A, J, or K, or Article
VIII, Sections H and J of this Agreement, the rate of interest on each of the
obligations covered hereby shall be increased to a rate at all times equal to
two percent (2%) above the rate of interest which would be in effect absent
such failure of compliance, such increased rate to remain in effect through
and including the end of the month in which such failure of compliance is
remedied. Upon the occurrence of an Event of Default, however, the
provisions of this paragraph shall be superseded by the provisions of the
next paragraph of this Section D.
Upon the occurrence of an Event of Default, the rate of interest on each of
the Obligations shall be increased to a rate at all times equal to two percent
(2%) above the rate of interest which would be in effect absent such failure
of compliance, such increased rate to remain in effect through and including
payment in full of all of the obligations covered by this Agreement and
cancellation of further commitments to lend under this Agreement, or written
waiver of such Event of Default by the Bank.
E. Late Payment Fees. Payments of principal and/or interest not made in
full before the date ten (10) days after the date due shall be subject to a
processing charge of five percent (5%) of the payment due.
ARTICLE IV - COLLATERAL
The Term Loan, the Mortgage Loans, and the Erie Loan shall be secured by
mortgage liens and assignments of mortgage liens on Borrower's interests in
real properties located in (i) Gloucester County, New Jersey, (ii) Montgomery,
Livingston, and Broome Counties, New York, (iii) Anderson and Oconee Counties,
South Carolina, (iv) Buncombe County, North Carolina, (v) Centre, Lehigh,
Luzerne, Columbia, Clinton, Franklin, and Erie Counties, Pennsylvania, (vi)
Rockingham County, New Hampshire, and (vii) Porter and Lake Counties, Indiana.
The 1992 Loan was secured by mortgage liens on Borrower's interests in real
properties in Gloucester County, New Jersey, Columbia County, Pennsylvania,
and Lehigh County, Pennsylvania.
The 1994 Loan shall be secured by mortgage liens on Borrower's interests in
real properties in Rockingham County, New Hampshire as well as by interests
in Borrower's other properties including without limitation properties in
Gloucester County, New Jersey and Franklin County, Pennsylvania.
All of the aforesaid mortgages shall be documented and perfected in a manner
satisfactory to the Bank and its legal counsel.
The Revolving Line, the Capital Line and the Capital Loan shall be secured by
the collateral for the Term Loan and the 1994 Loan as well as a sole first
lien in all assets of every kind and nature, now owned or hereafter acquired,
of Borrower, including without limitation goods, equipment, machinery,
furniture, fixtures, supplies, tools, parts, accounts, inventory, documents,
chattel paper, instruments, and general intangibles of Borrower, together
with additions, accessions, replacements, substitutions, and proceeds.
The Capital Loan shall be secured by a mortgage covering any of the
Borrower's property acquired with proceeds of the Capital Loan. The mortgage
shall be documented and perfected in a manner satisfactory to the Bank and
its legal counsel.
The Erie Term Loan shall be secured by all assets of every kind and nature,
now owned or hereafter acquired, of Borrower, including without limitation
goods, equipment, machinery, furniture, fixtures, supplies, tools, parts,
accounts, inventory, documents, chattel paper, instruments, and general
intangibles of Borrower, together with additions, accessions, replacements,
substitutions, and proceeds. In addition, the Erie Term Loan shall be secured
by a mortgage covering the Borrower's property in Erie County, Pennsylvania.
The existing collateral for the Mortgage Loans shall continue to secure such
Mortgage Loans.
The Borrower shall execute such documentation and deliver such items as the
Bank deems necessary from time to time to perfect its interests in all
collateral provided hereunder, and authorizes the Bank to file financing
statements without its signature from time to time.
ARTICLE V - REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants as follows:
A. Organization and Power. The Borrower is duly formed, validly existing
and in good standing under the laws of New York, and is duly qualified to
transact business and is in good standing in all states and countries in
which it owns properties or in which it conducts intrastate or international
business. The Borrower has full power and authority to own its properties,
to carry on its business as now being conducted, to execute and perform this
Agreement, and to borrow hereunder.
B. Proceedings of Borrower. All necessary action on the part of the
Borrower and any other required persons or entities relating to authorization
of the execution and delivery of this Agreement and the performance of other
obligations hereunder including, but not limited to, the delivery of any
notes, security agreements, and guarantees contemplated hereunder, has been
taken. All of the same are valid and enforceable in accordance with their
respective terms except as may be limited by bankruptcy, insolvency, or other
laws of general application relating to enforcement of creditor's rights, and
except as remedies may be limited by the application of equitable principles.
Said action will not violate any provision of law or the Borrower's or any
other required person's or entity's Certificate of Incorporation or By-laws.
Such action will not violate, be in conflict with, result in a breach of, or
constitute a default under any agreement to which the Borrower or any other
required person or entity is party or by which any of their properties are
bound, or any order, writ, injunction, or decree of any court or governmental
instrumentality, and will not result in the creation or imposition of any
lien, charge or encumbrance upon any of their properties with the sole
exception of those in favor of the Bank contemplated hereby.
C. Litigation. At the date of this Agreement, there is no action, suit or
proceeding at law or in equity or by or before any governmental
instrumentality or other agency pending or, to their knowledge, threatened
against or affecting the Borrower which, if adversely determined, would have
a material adverse effect on its financial condition or business.
D. Financial Statements. All financial statements furnished by the Borrower
to the Bank are complete and correct, have been prepared in accordance with
generally accepted accounting principles consistently followed throughout the
period indicated, and fairly present the financial condition of the Borrower
as of the respective dates thereof and the results of its operations for the
respective periods covered thereby; provided that interim financial statements
are subject to normal recurring year end adjustments and matters that
customarily would be set forth in the notes to audited financial statements.
E. Adverse Changes. Since the latest financial statements described in
Article V.D., there have been no material adverse changes in the condition,
financial or otherwise, of the Borrower.
F. Taxes. The Borrower have obtained extensions or have filed or caused to
be filed all tax returns which, to the knowledge of the officers of the
Borrower are required to be filed, and have paid or caused to be paid all
taxes or any assessments to the extent that such taxes have become due.
G. Properties. The Borrower has good and marketable title to all its
material property interests and assets, including without limitation, the
property and assets set forth in the financial statements referred to in
Article V.D. hereof, except as previously disclosed to the Bank. The
Borrower has undisturbed peaceable possession under all leases under which
it is operating, none of which contain unusual or burdensome provisions which
may materially affect the operations of the Borrower and all such leases are
in full force and effect.
H. Indebtedness. The Borrower has no outstanding indebtedness other than
indebtedness described in the financial statements referred to in Article
V.D. hereof, trade payables not yet due incurred in the ordinary course of
Borrower's business, and indebtedness to the Bank.
I. Franchises, Permits. The Borrower has all material franchises, permits,
licenses, and other authority as are necessary to enable it to conduct its
business as now being conducted, and is not in default under such franchises,
permits, licenses, and authority.
J. ERISA. No action, event, or transaction has occurred which could give
rise to a lien or encumbrance on Borrower's assets as a result of the
application of relevant provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA").
ARTICLE VI - CONDITIONS OF LENDING
The following conditions must be satisfied by Borrower before the Bank shall
have any obligation to make any advance or loan under this Agreement:
A. Representations and Warranties. The representations and warranties of
the Borrower contained in Article V shall be true and correct in all material
respects as of the time of the making of each such loan or advance with the
same effect as if made on and as of such date.
B. No Defaults. There shall exist no condition or event constituting an
Event of Default under Article IX hereof at the time of making of each loan
or advance hereunder.
C. Performance. The Borrower shall have performed and complied in all
material respects with all agreements and conditions required to be performed
or complied with by it prior to or at the time of making each loan or advance
hereunder.
D. Documents to be Delivered. The Borrower shall have delivered to the Bank
security agreements, guarantees, and other related documents as more
particularly described in Article IV hereof.
E. Certified Resolutions. The Borrower shall have delivered the certificate
of its Secretary, certifying as of the date of this Agreement, resolutions of
its Board of Directors authorizing execution and delivery of this Agreement
and of the notes, security agreements and other agreements to be delivered
hereunder.
F. Fees and Taxes. The Borrower shall have paid all filing fees, taxes, and
assessments related to the borrowings and the perfection of any collateral
security required hereunder.
G. Insurance. The Borrowers shall have delivered evidence satisfactory to
the Bank of the existence of insurance required hereby.
H. Opinion of Counsel. The Borrower shall have caused to be delivered the
opinion of its legal counsel as to such matters and in such form as may be
required by legal counsel to the Bank, including as to the existence of the
Borrower, its power and authority to take the actions contemplated hereby,
and the enforceability of the agreements and obligations contemplated hereby.
ARTICLE VII - AFFIRMATIVE COVENANTS OF BORROWER
So long as the Revolving Line commitment, the Capital Line commitment, the
Capital Loan, the Term Loan, the Mortgage Loans, the 1994 Loan, the Erie
Loan, or any loans hereunder or any other obligations of Borrower to the Bank
under or related to this Agreement shall be outstanding, unless the Bank
shall otherwise consent in writing, the Borrower shall:
A. Financial Statements. Furnish to the Bank as soon as available, but in
no event more than one hundred twenty (120) days after the close of each
fiscal year of Borrower, copies of annual financial statements of Borrower in
reasonable detail satisfactory to the Bank prepared in accordance with
generally accepted accounting principles, certified without qualification by
an independent certified public accountant satisfactory to the Bank. Said
financial statements shall include all financial disclosures required by
generally accepted accounting principles and shall include at least a balance
sheet and a statement of profit and loss.
Borrower also shall furnish to the Bank unaudited financial statements not
more than forty-five (45) days after the close of each fiscal month. Said
statements shall be in reasonable detail satisfactory to the Bank including
at least a balance sheet and statement of profit and loss, and shall be
prepared in accordance with generally accepted accounting principles. Said
financial statements shall be certified to be complete and correct by
officers of Borrower.
The Borrower also shall promptly provide to the Bank any interim financial
statements reviewed or certified by its independent accountants, as well as
copies of any of its filings with the Securities and Exchange Commission
including its Form 10K within 120 days after its fiscal year end and its Form
10Q within 60 days after the end of each of its fiscal quarters.
At the time of submission of annual financial statements the Borrower shall
submit to the Bank a signed certificate of its chief executive or financial
officer to the effect that no Events of Default have occurred, exist, or to
the knowledge of Borrower will exist in the future under Article IX of this
Agreement or any other agreements contemplated hereunder.
Borrower shall furnish to the Bank, quarterly at the time its Report 10Q is
required to be furnished, a report showing its capital expenditures during
the quarter and on a cumulative basis since the date of commitment of the
Capital Line, as well as sources of funding for the same, in form and with
detail reasonably satisfactory to the Bank.
B. Other Reports and Inspections. Furnish to the Bank such additional
information, reports or financial statements as the Bank may, from time to
time, reasonably request. Borrower shall permit any person designated by the
Bank to inspect its property, assets, and books and the Bank's collateral at
reasonable times, and shall discuss its affairs, finances and accounts at
reasonable times with the Bank from time to time as often as may be reasonably
requested.
C. Taxes. Pay and discharge all taxes, assessments, levies, and governmental
charges upon it, its income and property, prior to the date on which penalties
are attached thereto, provided that they shall not be required to pay any
such tax, assessment, levy or charge which is being contested in good faith
and by appropriate legal proceedings so long as no lien or similar encumbrance
is placed by taxing authorities on any of their property.
D. Insurance. Maintain or cause to be maintained insurance, of kinds and in
amounts satisfactory to the Bank, with responsible insurance companies on all
of its properties in such amounts and against such risks as are prudent
including but not limited to hazard insurance, worker's compensation
insurance, and liability insurance. All such hazard insurance policies shall
name the Bank as mortgagee/loss payee as its interest may appear and shall
provide for thirty days prior written notice of cancellation to the Bank.
Borrower shall provide to Bank, upon its request, a detailed list of its
insurance carriers and coverage and shall obtain such additional insurance as
the Bank may reasonably request from time to time.
E. Payments. Make all payments promptly and as the same become due under
this Agreement and the notes related hereto.
F. Existence. Cause to be done all things necessary to preserve and to keep
in full force and effect its existence, rights, and franchises and to comply
in all material respects with all valid laws and regulations now in effect or
hereafter promulgated by any properly constituted governmental authority
having jurisdiction.
G. Maintenance of Properties. At all times maintain, preserve, protect, and
keep its property used or useful in conducting its business in good repair,
working order, and condition and from time to time, and make all needful and
proper repairs, renewals, replacements, betterments and improvements thereto,
so that the business carried on may be properly and advantageously conducted
at all times.
H. Material Changes, Judgments. Notify the Bank immediately of any Event of
Default or material adverse business development or change in its financial
condition. Borrower shall notify the Bank of any change in its name,
identity, or corporate or organizational structure.
I. ERISA. Comply with all requirements of the Employee Retirement Income
Security Act, as amended ("ERISA") on a timely basis.
J. Minimum Net Worth. Maintain at all times net worth calculated by
generally accepted accounting principles ("GAAP") of at least $13,850,000.
K. Current Maturity Coverage Ratio. Maintain a current maturity coverage
ratio (net income plus depreciation plus amortization less dividends and
distributions divided by currently maturing long term debt) calculated by
GAAP. Such ratio shall be (a) reported on or before each December 15
commencing December 15, 1993 and measured as of the preceding October 31 and
shall not be lower than 1.2 to 1 on an annualized basis of six months results
for the period between the preceding May 1 and such preceding October 31, and
(b) shall be reported on or before each July 31 and measured as of the
preceding April 30 and shall not be lower than 1.2 to 1 for the twelve month
period ending on such April 30.
L. Proceeds of Sales. Cause the proceeds, after payment of expenses
related thereto, of any sales of properties covered by the mortgages, or
sales of other collateral, referenced in Article IV hereof to be delivered to
the Bank to be used to retire obligations first under the Term Loan, second
under the Mortgage Loans, third under the 1994 Loan, and fourth under the
Capital Loan; provided, however, that to the extent proceeds specifically
relate to a property covered by one of the Mortgage Loans, or the Erie Loan,
the 1994 Loan, or the Capital Loan, to the extent applicable, such proceeds
shall be used to reduce the respective Mortgage Loan, the Erie Loan, or the
Capital Loan respectively; and further provided, however, that if any
mortgaged property is the subject of a sale-leaseback, the Bank will not
unreasonably withhold its approval of the same on such terms and conditions
as may be mutually agreeable between the Bank and the Borrower.
M. Interest Exposure Coverage. Cause at all times to be subject to
fixed rates or interest rate caps or other interest rate protection
satisfactory to the Bank, at least fifty percent (50%) of the outstanding
principal amount of the aggregate of (i) its obligations to the Bank of any
kind or nature and (ii) its obligations with respect to the 8.5% Convertible
Senior Subordinated Debentures described in Article VIII.A. of this Agreement.
ARTICLE VIII - NEGATIVE COVENANTS OF BORROWER
So long as the Revolving Line commitment, the Term Loan, the Mortgage Loans,
the 1994 Loan, the Erie Loan, the Capital Line commitment, the Capital Loan,
or any loans hereunder or any other obligations of Borrower to the Bank under
or related to this Agreement shall be outstanding, unless the Bank otherwise
consents in writing, Borrower shall not, directly or indirectly:
A. Indebtedness, Mortgages and Liens. Create, incur, assume, or allow to
exist, voluntarily or involuntarily, any obligation for borrowed money, lease,
pledge, lien or other encumbrance of any kind (including the charge upon
property purchased under conditional sales or other title retention
agreements) upon, or any security interest in, any of their assets, whether
now owned or hereafter acquired, excluding only (i) interests or borrowings
held by the Bank, (ii) interests or borrowings in existence on the date hereof
and fully disclosed on the financial statements referred to in Article VI D
hereof, (iii) involuntary liens of any kind being contested in good faith by
appropriate legal proceedings with respect to which enforcement has been
stayed, (iv) purchase money liens, (v) obligations under the Indenture dated
January 24, 1995 between the Borrower and American Stock Transfer and Trust
Company, as Trustee, with respect to up to $5,000,000 principal amount of
8.5% Convertible Senior Subordinated Debentures due January 15, 2005 so long
as such obligations are not modified and so long as such obligations remain
expressly subordinated to the obligations of the Borrower to the Bank in form
satisfactory to the Bank, and (vi) indebtedness to other financial
institutions provided that the opportunity to finance such indebtedness on
similar terms has been given to the Bank and the Bank has refused to provide
such financing.
B. Contingent Liabilities. Assume, guarantee, endorse, contingently agree
to purchase, or otherwise become liable in any manner upon any obligation,
contingent or otherwise, whether funded or current, or guarantee the dividends
of any person, firm, corporation, or other entity, except for endorsement of
negotiable instruments for deposit or collection, or similar transactions
(including customary indemnity agreements with distributors) in the ordinary
course of business, and except in connection with asset purchases.
C. Loans. Make loans or advances to any person or entity, or investments of
any kind in any person or entity; provided however, that Borrower may make
(i) loans or advances to, or investments in, wholly owned subsidiary
corporations which are guarantors of its obligations hereunder and (ii) short
term loans or advances in reasonable amounts to officers and employees in the
ordinary course of business for relocation or similar purposes.
D. Mergers, Sales and Acquisitions. Enter into any merger or consolidation
with or among any person or entity, or sell, lease, transfer, or otherwise
dispose of substantially all of its assets, or allow a transfer of any
controlling interest in the Borrower.
E. Amendments. Amend or modify its Certificates of Incorporation, By-laws,
or other governing instruments in any manner that would be materially adverse
to the interests of the Bank hereunder.
F. Judgments. Allow any liens other than those expressly permitted by this
Agreement or final judgments to exist against it other than liens or judgments
which are bonded or covered by insurance or for which an appeal or other
proceeding for the review thereof shall have been taken and for which a stay
of execution pending such appeal shall have been obtained.
G. Material Changes. Permit any material adverse change to be made in the
basic character of its business or in the nature of its operations as carried
on at the date of execution of this Agreement.
H. Funded Debt/EBITDA. Permit its ratio of Funded Debt to EBITDA to
exceed 3.75 to 1.00 prior to July 31, 1998 and to exceed 3.50 to 1.00 on July
31, 1998 and thereafter.
I. Dividends. Declare any cash, property, or other dividends with respect
to their capital stock, apply any of their property or assets to the purchase,
redemption, or other retirement of their capital stock, or make any other
distribution of any kind with respect to any of their capital stock.
J. Total Liabilities To Net Worth. Permit the ratio, calculated by GAAP, of
its total balance sheet liabilities to total balance sheet net worth plus
outstanding indebtedness under the 8.5% Convertible Senior Subordinated
Debentures due January 15, 2005 as described in Article VIII.A. of this
Agreement, measured as of each of its quarterly financial statements, to
exceed 2.5 to 1.0 commencing September 1, 1995 and thereafter.
ARTICLE IX - DEFAULTS
A. Defaults. The following events (hereinafter called "Events of Default")
shall constitute defaults under this Agreement and under any notes or
agreements executed in connection herewith. Such Events of Default also
shall be deemed to be events of default with respect to Borrower's pre-
existing loans from the Bank.
1. Nonpayment. Failure of Borrower to make any payments of any type under
the terms of this Agreement, or of any of the agreements contemplated
hereunder, or under the terms of any notes hereunder, within fifteen days
after the same become due and payable.
2. Performance. Failure of Borrower to observe or perform any other
condition, covenant, or term of this Agreement or of any other agreement with
the Bank, after 30 days prior notice and opportunity to cure.
3. Reports. Failure of Borrower to provide any report or financial statement
or certificate of no default, or to allow any inspection for which this
Agreement provides after 30 days prior notice and opportunity to cure.
4. Representations. Failure of any representation or warranty made by
Borrower in connection with the execution and performance of this Agreement,
or any certificate of officers pursuant hereto, to be truthful, accurate or
correct in any material respect.
5. Financial Difficulties. Financial difficulties of Borrower as evidenced
by:
a. any admission in writing of inability to pay debts as they become
due; or
b. the filing of a voluntary or involuntary petition in bankruptcy,
or under any chapters of the Bankruptcy Code, or under any Federal or
state statute providing for the relief of debtors; or
c. making an assignment for the benefit of creditors; or
d. consenting to the appointment of a trustee or receiver for all or
a material part of any of its property; or
e. the entry of a court order appointing a receiver or a trustee for
all or a material part of any of its property; or
f. the occurrence of any event, action, or transaction which could
give rise to a lien or encumbrance on Borrower's assets as a result of
application of relevant provisions of ERISA; or
g. entry of any judgment against Borrower not fully covered by
insurance and not discharged or bonded for 60 days and for which a stay
pending appeal has not been obtained; or
h. default by the Borrower under any other material obligation for
borrowed money or its equivalent.
6. Cross-Default. Default by Borrower under any other material obligation
to the Bank outstanding at any time.
7. Mortgage Options. Failure by Borrower to provide a marketable first
mortgage lien to Bank on properties mortgaged in Columbia County, Pennsylvania
(Buckhorn) and Livingston County, New York (Dansville - lien on ground
leasehold interest) at such time as Borrower's option to purchase the premises
must be exercised or is exercisable in the ordinary course.
B. Remedies. If any one or more Events of Default listed in Section A.5.,
subsections b, c, d, and e occur, the Bank shall have no further commitments
or obligations and all obligations of Borrower to the Bank shall be
automatically accelerated such that the same become forthwith due and payable
without presentment, demand, protest, or other notice of any kind, all of
which are hereby expressly waived. If any other Event of Default listed in
Section A.5. occurs, the Bank may, at its option, take either or both of the
following actions at the same or different times: (i) terminate any further
commitments or obligations of the Bank, and (ii) accelerate all obligations
of Borrower to the Bank such that the same become forthwith due and payable
without presentment, demand, protest, or other notice of any kind, all of
which are hereby expressly waived.
In case any such Events of Default shall occur, the Bank shall be entitled to
use any legal remedy, and the Bank shall be entitled to recover judgment
against the Borrower for all obligations of Borrower to the Bank either
before, or after, or during the pendency of any proceedings for the
enforcement of any security interests, mortgages or guarantees and, in the
event of realization of any funds from any security or guarantee and
application thereof to the payment of the obligations due, the Bank shall be
entitled to enforce payment of and recover judgment for all amounts remaining
due and unpaid upon such obligations. The Bank may proceed to protect and
enforce its rights by any other appropriate proceedings, including action for
the specific performance of any covenant or agreement contained in this
Agreement and other agreements contemplated hereunder held by the Bank.
ARTICLE X - MISCELLANEOUS
A. Waiver. No delay or failure of the Bank to exercise any right, remedy,
power or privilege hereunder shall impair the same or be construed to be a
waiver of the same or of any Event of Default or acquiescence therein. No
single or partial exercise of any right, remedy, power or privilege shall
preclude other or further exercise thereof by the Bank. All rights, remedies,
powers, and privileges herein conferred upon the Bank shall be deemed
cumulative and not exclusive of any others available.
B. Survival of Representations. All representations and warranties contained
herein shall survive the execution and delivery of this Agreement and the
execution and delivery of other agreements hereunder, and shall continue in
full force and effect so long as any obligation of the Borrower to the Bank
is outstanding.
C. Set-off. The Bank shall have a right of set-off, in the full amount of
all of Borrower's obligations to the Bank, against any deposits, assets held
by, or other amounts owed by the Bank to or held by the Bank for, the Borrower
as well as a lien on any and all property of the Borrower, which is or may be
in the Bank's possession.
D. Notices. Any notice or demand upon the Borrower shall be deemed to have
been sufficiently given or served for all purposes thereof when delivered by
courier or mailed, first class, postage prepaid, addressed to the Borrower at
the address shown in this Agreement, or to such other address as may be
furnished in writing to the Bank for such purpose by the Borrower.
Any notice or demand to the Bank shall be deemed to have been sufficiently
given or served for all purposes hereof when delivered by courier or mailed,
first class, postage prepaid, to the Bank at the address shown in this
Agreement, or to such other address as may be furnished in writing to the
Borrower for such purpose by the Bank.
E. Business Days. Whenever any payment is due, or obligation is to be
performed hereunder of a Saturday, Sunday, or banking holiday, such payment
may be made or obligation performed on the next succeeding business day.
Such extension of time shall, in such case, be included in the computation of
any interest or fees.
F. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the Bank and the Borrower and supersedes all prior
agreements and understandings relating to the subject matter hereof. This
Agreement shall not be changed or amended without the written agreement of
both the Borrower and the Bank.
G. Parties in Interest. All the terms and provisions of this Agreement
shall inure to the benefit of and be binding upon and be enforceable by the
respective successors and assigns of the parties hereto and, in particular,
shall inure to the benefit of and be enforceable by any holder of notes
executed hereunder.
H. Governing Law. This Agreement and the notes and agreements related
hereto, together with all of the rights and obligations of the parties hereto,
shall be construed, governed, and enforced in accordance with the laws of the
State of New York.
I. Agreement Covers All Indebtedness. This Agreement is intended to
cover all indebtedness of the Borrower to the Bank existing now or in the
future, whether or not portions of the indebtedness are from time to time
repaid or new indebtedness is created, unless otherwise expressly agreed in
writing by the Bank.
ARTICLE XI - ENVIRONMENTAL MATTERS
A. Definitions. For purposes of this Article XI, the following
capitalized terms shall have the meanings indicated:
"Environment" means any water including but not limited to surface water and
ground water or water vapor; any land including land surface or subsurface;
stream sediments; air; fish; wildlife; plants; and all other natural resources
or environmental media.
"Environmental Laws" means all federal, state and local environmental, land
use, zoning, health, chemical use, safety and sanitation laws, statutes,
ordinances, regulations, codes and rules relating to the protection of the
Environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the regulations, rules, ordinances, bylaws, policies,
guidelines, procedures, interpretations, decisions, orders and directives of
federal, state and local governmental agencies and authorities with respect
thereto.
"Environmental Permits" means all licenses, permits, approvals,
authorizations, consents or registrations required by any applicable
Environmental Laws and all applicable judicial and administrative orders in
connection with ownership, lease, purchase, transfer, closure, use and/or
operation of the Mortgaged Property and/or as may be required for the storage,
treatment, generation, transportation, processing, handling, production or
disposal of Hazardous Substances.
"Environmental Report" means a written report prepared for the Mortgagor or
the Mortgagee by an environmental consulting or environmental engineering
firm.
"Hazardous Substances" means, without limitation, any explosives, radon,
radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane,
hazardous materials, hazardous wastes, hazardous or toxic substances and any
other material defined as a hazardous substance in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
42 U.S.C. Sections 9601, et. seq.; the Hazardous Materials Transportation Act,
as amended, 49 U.S.C. Sections 1801, et. seq.; the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. Sections 6901, et. seq.; Articles 15 and
27 of the New York State Environmental Conservation Law or any other federal,
state, or local law, regulation, rule, ordinance, bylaw, policy, guideline,
procedure, interpretation, decision, order, or directive, whether existing as
of the date hereof, previously enforced or subsequently enacted.
"Mortgagee" means the Bank.
"Mortgagor" means the Borrower, and to the extent that the mortgagor of the
Mortgaged Property is different from the Borrower, the Borrower will cause
the mortgagor to be bound by the representation, terms and conditions of this
Article XI.
"Mortgaged Property" means the properties covered by the mortgages referenced
in Article IV of this Agreement as well as any other properties owned or
occupied or used by Mortgagor.
"Release" has the same meaning as given to that term in Section 101(22) of
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. Section 9601(22), and the regulations promulgated
thereunder.
B. Representations. The Mortgagor represents and warrants that,
to the best of Mortgagor's knowledge, except as indicated in any Report
provided to Mortgagee prior to the date hereof and except with respect to
properties located in Fultonville (Montgomery County, New York), Paulsboro
(Gloucester County, New Jersey), Binghamton (Broome County, New York), Porter
(Porter County, Indiana), Bloomsburg (Columbia County, Pennsylvania), and
Milesburg (Luzerne County, Pennsylvania) which have been the subject of
disclosures by the Borrower to the Bank regarding environmental matters:
(1) Neither the Mortgaged Property nor any property adjacent to the
Mortgaged Property is being or has been used for the storage, treatment,
generation, transportation, processing, handling, production or disposal of
any Hazardous Substance or as a landfill or other waste disposal site or for
military, manufacturing or industrial purposes or for the storage of petroleum
or petroleum based products except in compliance with all Environmental Laws.
(2) Underground storage tanks are not and have not been located on the
Mortgaged Property except in compliance with all Environmental Laws.
(3) The soil, subsoil, bedrock, surface water and groundwater of the
Mortgaged Property are free of any Hazardous Substances.
(4) There has been no Release nor is there the threat of a Release of any
Hazardous Substance on, at or from the Mortgaged Property or any property
adjacent to or within the immediate vicinity of the Mortgaged Property which
through soil, subsoil, bedrock, surface water or groundwater migration could
come to be located on the Mortgaged Property, and Mortgagor has not received
any form of notice or inquiry from any federal, state or local governmental
agency or authority, any operator, tenant, subtenant, licensee or occupant of
the Mortgaged Property or any property adjacent to or within the immediate
vicinity of the Mortgaged Property or any other person with regard to a
Release or the threat of a Release of any Hazardous Substance on, at or from
the Mortgaged Property or any property adjacent to the Mortgaged Property.
(5) All Environmental Permits have been obtained and are in full force
and effect.
(6) No event has occurred with respect to the Mortgaged Property which
would constitute a violation of any applicable Environmental Law or non-
compliance with any Environmental Permit.
(7) There are no agreements, consent orders, decrees, judgments, license
or permit conditions or other orders or directives of any federal, state or
local court, governmental agency or authority relating to the past, present
or future ownership, use, operation, sale, transfer or conveyance of the
Mortgaged Property which require any change in the present condition of the
Mortgaged Property or any work, repairs, construction, containment, clean up,
investigations, studies, removal or other remedial action or capital
expenditures with respect to the Mortgaged Property.
(8) There are no actions, suits, claims or proceedings, pending or
threatened, which could cause the incurrence of expenses or costs of any name
or description or which seek money damages, injunctive relief, remedial
action or any other remedy that arise out of, relate to or result from (a) a
violation or alleged violation of any applicable Environmental Law or non-
compliance or alleged non-compliance with any Environmental Permit, (b) the
presence of any Hazardous Substance or a Release or the threat of a Release
of any Hazardous Substance on, at or from the Mortgaged Property or any
property adjacent to or within the immediate vicinity of the Mortgaged
Property or (c) human exposure to any Hazardous Substance, noises, vibrations
or nuisances of whatever kind to the extent the same arise from the condition
of the Mortgaged Property or the ownership, use, operation, sale, transfer or
conveyance thereof.
C. Covenants. The Mortgagor covenants and agrees with the Mortgagee
that so long as the Mortgagee holds liens on the Mortgaged Property or any of
it, that the Mortgagor shall:
(1) Keep, and shall cause all operators, tenants, subtenants, licensees
and occupants of the Mortgaged Property to keep, the Mortgaged Property free
of all Hazardous Substances except in compliance with all Environmental Laws,
and shall not cause or permit the Mortgaged Property or any part thereof to
be used for the storage, treatment, generation, transportation, processing,
handling, production or disposal of any Hazardous Substances except in
compliance with all Environmental Laws.
(2) Comply with, and shall cause all operators, tenants, subtenants,
licensees and occupants of the Mortgaged Property to comply with all
applicable Environmental Laws and shall obtain and comply with, and shall
cause all operators, tenants, subtenants, licensees and occupants of the
Mortgaged Property to obtain and comply with, all Environmental Permits.
(3) Not cause or permit any change to be made in the present or intended
use of the Mortgaged Property which would (a) involve the storage, treatment,
generation, transportation, processing, handling, production or disposal of
any Hazardous Substance or the use of the Mortgaged Property as a landfill or
other waste disposal site or for military, manufacturing or industrial
purposes or for the storage of petroleum or petroleum based products, except
in compliance with all Environmental Laws, (b) violate any applicable
Environmental Law, (c) constitute non-compliance with any Environmental
Permit or (d) increase the risk of a Release of any Hazardous Substance.
(4) Promptly provide Mortgagee with a copy of all notifications which it
gives or receives with respect to any past or present Release or the threat
of a Release of any Hazardous Substance on, at or from the Mortgaged Property
or any property adjacent to the Mortgaged Property.
(5) Undertake and complete all investigations, studies, sampling and
testing and all removal and other remedial actions required by law to contain,
remove and clean up all Hazardous Substances that are determined to be present
at the Mortgaged Property in accordance with all applicable Environmental Laws
and all Environmental Permits.
(6) At all times allow Mortgagee and its officers, employees, agents,
representatives, contractors and subcontractors reasonable access after
reasonable prior notice to the Mortgaged Property for the purposes of
ascertaining site conditions, including, but not limited to, subsurface
conditions.
(7) Deliver promptly to the Mortgagee: (a) copies of any documents
received from the Untied States Environmental Protection Agency, or any state,
county or municipal environmental or health agency concerning the Mortgagor's
operations at the Mortgaged Property; and (b) copies of any documents
submitted by the Mortgagor to the United States Environmental Protection
Agency or any state, county or municipal environmental or health agency
concerning its operations at the Mortgaged Property.
(8) If at any time Mortgagee obtains any reasonable evidence or
information which suggests that a material potential environmental problem
may exist at the Mortgaged Property, Mortgagee may require that a full or
supplemental environmental inspection and audit report with respect to the
Mortgaged Property of a scope and level of detail satisfactory to Mortgagee
be prepared by an environmental engineer or other qualified person acceptable
to Mortgagee at Mortgagor's expense. Such audit may include a physical
inspection of the Mortgaged Property, a visual inspection of any property
adjacent to or within the immediate vicinity of the Mortgaged Property,
personnel interviews and a review of all Environmental Permits. If Mortgagee
requires, such inspection shall also include a records search and/or
subsurface testing for the presence of Hazardous Substances in the soil,
subsoil, bedrock, surface water and/or groundwater. If such audit report
indicates the presence of any Hazardous Substance or a Release or the threat
of a Release of any Hazardous Substance on, at or from the Mortgaged
Property, Mortgagor shall promptly undertake and diligently pursue to
completion all necessary, appropriate and legally authorized investigative,
containment, removal, clean up and other remedial actions, using methods
recommended by the engineer or other person who prepared said audit report
and acceptable to the appropriate federal, state and local agencies or
authorities.
D. Indemnity. The Mortgagor agrees to indemnify, defend, and hold
harmless the Mortgagee from and against any and all liabilities, claims,
damages, penalties, expenditures, losses, or charges, including, but not
limited to, all costs of investigation, monitoring, legal representation,
remedial response, removal, restoration or permit acquisition of any kind
whatsoever, which may now or in the future be undertaken, suffered, paid,
awarded, assessed, or otherwise incurred by the Mortgagee or any other person
or entity relating to, resulting from or arising out of (1) the use of the
Mortgaged Property for the storage, treatment, generation, transportation,
processing, handling, production or disposal of any Hazardous Substance or as
a landfill or other waste disposal site or for military, manufacturing or
industrial purposes or for the storage of petroleum or petroleum based
products, (2) the presence of any Hazardous Substance or a Release or the
threat of a Release of any Hazardous Substance on, at or from the Mortgaged
Property, (3) the failure to promptly undertake and diligently pursue to
completion all necessary, appropriate and legally authorized investigative,
containment, removal, clean up and other remedial actions with respect to a
Release or the threat of a Release of any Hazardous Substance on, at or from
the Mortgaged Property, (4) human exposure to any Hazardous Substance, noises,
vibrations or nuisances of whatever kind to the extent the same arise from
the condition of the Mortgaged Property or the ownership, use, operation,
sale, transfer or conveyance thereof, (5) a violation of any applicable
Environmental Law, (6) non-compliance with any Environmental Permit or (7) a
material misrepresentation or inaccuracy in any representation or warranty or
a material breach of or failure to perform any covenant made by Mortgagor in
this Mortgage. Such costs or other liabilities incurred by the Mortgagee or
any other person or entity shall be deemed to include, without limitation,
any sums which the Mortgagee deems it necessary or desirable to expend to
protects its security interest in the Mortgaged Property.
The liability of Mortgagor hereunder shall in no way be limited, abridged,
impaired or otherwise affected by (1) any amendment or modification of this
Mortgage or any other document relating to the obligations covered by this
Agreement by or for the benefit of Mortgagor or any subsequent owner of the
Mortgaged Property, (2) any extensions of time for payment or performance
required by any of this Mortgage or any other document relating to the
obligations covered by this Agreement, (3) the release of Mortgagor, any
guarantor or any other person from the performance or observance of any of
the agreements, covenants, terms or conditions contained in this Agreement or
any other document relating to the obligations covered hereby by operation of
law, Mortgagee's voluntary act or otherwise, (4) the invalidity or
unenforceability of any of the terms of provisions of this Agreement or any
other mortgage or document relating to the obligations covered by this
Agreement, (5) any exculpatory provision contained in this Agreement or any
other mortgage or document relating to the obligations covered by this
Agreement limiting Mortgagee's recourse to the Mortgaged Property or to any
other security or limiting Mortgagee's rights to a deficiency judgment
against Mortgagor, (6) any applicable statute of limitations, (7) any
investigation or inquiry conducted by or on the behalf of Mortgagee or any
information which Mortgagee may have or obtain with respect to the
environmental or ecological condition of the Mortgaged Property, (8) the
sale, assignment or foreclosure of any mortgage covering the Mortgaged
Property, (9) the sale, transfer or conveyance of all or part of the
Mortgaged Property, (10) the dissolution and liquidation of Mortgagor, (11)
the release or discharge, in whole or in part, of Mortgagor in any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition,
liquidation or similar proceeding or (12) any other circumstances which might
otherwise constitute a legal or equitable release or discharge of Mortgagor,
in whole or in part.
E. Survival. Notwithstanding anything to the contrary contained
herein, the Mortgagor's liability shall survive the discharge, satisfaction
or assignment of this Agreement and any mortgages covered hereby by the
Mortgagee until all of the following conditions are satisfied in full:
(1) all principal, interest and other sums evidenced or covered by this
Agreement and the documents, notes, mortgages and other agreements related
hereto and any other costs and expenses incurred by Mortgagee in connection
with this Agreement and the obligations covered hereby are paid in full by
Mortgagor or by any guarantor;
(2) neither Mortgagee nor any affiliate of Mortgagee has at any time or
in any manner participated in the management or control of, taken possession
of or title to the Mortgaged Property or any portion thereof, whether by
foreclosure, deed in lieu of foreclosure or otherwise, or had the capacity or
ability to participate in the decisions or actions of the Mortgagor as the
same relate to Hazardous Substances;
(3) between the date of this Agreement and the date on which all
obligations covered hereby are paid in full, as provided in clause (1) above,
there has been no change in any applicable Environmental Law which would make
.a lender or mortgagee liable in respect of any of the indemnified matters
contained in this Article XI notwithstanding the fact that no event,
circumstance or condition of the nature described in clause (2) above ever
occurred; and
(4) there exist no indemnified matters which are then pending.
F. Default. If the Mortgagor defaults on any of its obligations
pursuant to this Agreement or any other document, mortgage, note, or agreement
related hereto, the Mortgagee or its designee shall have the right, upon
reasonable notice to the Mortgagor, to enter upon the Mortgaged Property and
conduct such tests, investigation and sampling, including but not limited to
installation of monitoring wells, as shall be reasonably necessary for the
Mortgagee to determine whether any disposal of Hazardous Substances has
occurred on, at or near the Mortgaged Property. The costs of all such tests,
investigations and samplings shall be considered as additional indebtedness
secured hereby and shall become immediately due and payable without notice
and with interest thereon at the rate provided in the Term Loan Note.
G. No Reliance On Information. The Mortgagor agrees that the
Mortgagee shall not be liable in any way for the completeness or accuracy of
any Environmental Report or the information contained therein. The Mortgagor
further agrees that the Mortgagee has no duty to warn the Mortgagor or any
other person or entity about any actual or potential environmental
contamination or other problem that may have become apparent or will become
apparent to Mortgagee.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized, respective officers as of the date first above written.
FLEET BANK
By: _________________________
Title: _________________________
TRAVEL PORTS OF AMERICA, INC.
By: _________________________
Title: _________________________
INDEX TO EXHIBITS
Exhibit A - Term Loan Note
Exhibit B - Replacement Revolving Line Note
Exhibit C - 1994 Loan Note
Exhibit D - [Intentionally Omitted]
Exhibit E - Erie Loan Note
Exhibit F - Capital Line Note
Exhibit G - Capital Loan Note
Exhibit H - Amended and Restated Mortgage Note (Belmont)
- Mortgage Modification
Exhibit I - Amended and Restated Deed of Trust Note (Asheville)
Exhibit J - Amended and Restated Mortgage Note (Porter)
Exhibit K - Amended and Restated Mortgage Note (Lake Station)
Exhibit L - Amended and Restated Mortgage Note (Greencastle)
EXHIBIT A
TERM LOAN NOTE
$ 10,500,000 September 29, 1994
FOR VALUE RECEIVED, TRAVEL PORTS OF AMERICA, INC., a New York corporation,
with offices at 3495 Winton Place, Building C, Rochester, New York 14623
("Borrower"), promises to pay to FLEET BANK, a New York bank and trust
company with offices at One East Avenue, Rochester, New York 14638 ("Bank"),
or order, at One East Avenue, Rochester, New York 14638, or at such other
place as may be designated, from time to time, in writing by Bank, the
principal sum of Ten Million Five Hundred Thousand Dollars ($10,500,000) in
lawful money of the United States of America, with interest thereon (the
"Debt") from the date of this Term Loan Note until paid.
Outstanding principal balances under this Term Loan Note shall bear interest
at ten and twelve/hundredths percent (10.12%) calculated based on actual days
elapsed in a year of 360 days.
Interest shall continue to accrue after maturity at the rate required by this
Term Loan Note until this Term Loan Note is paid in full. The rate of
interest on this Term Loan Note may be increased under the circumstances
provided in the Amended and Restated Credit Agreement between the Borrower
and the Bank dated September 29, 1994, as the same may be modified, extended,
or replaced from time to time (the "Credit Agreement"). The right of Bank to
receive such increased rate of interest shall not constitute a waiver of any
other right or remedy of Bank.
A payment of all interest accrued hereunder shall be due and payable on the
first day of each month commencing on October 1, 1994 and continuing through
March 1, 1995. On the first day of each month commencing on April 1, 1995, a
combined principal and interest payment of $166,957.84 shall be due and
payable. Payments shall be applied first to accrued interest and then to
principal. In the event that any payment is insufficient to pay all accrued
interest, all such accrued interest shall be immediately payable and the Bank
reserves the right to adjust the monthly payment amount to an amount deemed
reasonably sufficient to fully amortize the principal and interest of this
Term Loan Note by September 29, 2002 (the "Maturity Date"). All remaining
principal and interest shall be due and payable in full on the Maturity Date.
The Borrower may prepay, in whole or in part, this Term Loan Note at any time.
The prepayment shall be accompanied by a prepayment charge computed as
follows:
The latest available yield preceding the date of prepayment, as available
through active market trading or published in the Wall Street Journal, for
United States Treasury Notes or Bills (with Bills on a discounted basis
converted to a bond equivalent) with a maturity date closest to September 29,
2002 shall be subtracted from 7.62%. If the result is zero or a negative
number, there shall be no prepayment charge. If the result is a positive
number, then the resulting percentage shall (i) be multiplied by the
principal amount prepaid, then (ii) divided by 360, then (iii) multiplied by
the number of days remaining prior to September 29, 2002, and then (iv)
reduced to a present value calculated using the above referenced Treasury
Note or Bill yield. The resulting amount shall be the amount of the
prepayment charge due to the Bank.
Principal prepayments shall be applied first to interest accrued on the
amount prepaid, and then to principal in inverse order of maturity.
The term "Mortgage" as used in this Term Loan Note shall mean the mortgages,
as amended, extended, and replaced from time to time, referenced in the
Credit Agreement as more particularly described therein.
If any sum payable under this Term Loan Note is not paid within 10 days after
the date on which it is due, Borrower shall pay a late charge of four percent
(4%) of such unpaid sum.
IT IS HEREBY EXPRESSLY AGREED that the entire unpaid principal balance of
this Term Loan Note, together with all interest accrued and unpaid thereon
and all other sums due under this Term Loan Note and the Mortgage shall
without notice become immediately due and payable at the option of the Bank
on the failure to observe any term or condition hereunder or on the happening
of any default or event by which, under the terms of the Mortgage or the
Credit Agreement, the indebtedness may or shall become due and payable. All
of the terms, covenants and provisions contained in the Mortgage and the
Credit Agreement which are to be kept and performed by Borrower are hereby
made part of this Term Loan Note to the same extent and with the same force
and effect as if they were fully set forth herein.
Borrower hereby waives presentment and demand for payment, notice of dishonor,
protest and notice of protest of this Term Loan Note and agrees to pay all
costs of collection when incurred, including reasonable attorney's fees, such
costs may be added to the amount due under this Term Loan Note and be
receivable therewith and to perform and comply with each of the terms,
covenants and provisions contained in this Term Loan Note and the Mortgage on
the part of Borrower to be observed or performed. No release of any security
for the principal sum due under this Term Loan Note or extension of time for
payment of this Term Loan Note, or any installment hereof, or acceptance of
partial payments hereunder, and no alteration, amendment or waiver of any
provision of this Term Loan Note and Mortgage made by agreement between Bank
and any other person or party shall release, discharge, modify, change or
affect the liability of maker under this Term Loan Note or the Mortgage.
This Term Loan Note is subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the principal balance of
this Term Loan Note at a rate which could subject Bank to either civil or
criminal liability as a result of being in excess of the maximum rate which
Borrower is permitted by law to contract or agree to pay. If by the terms of
this Term Loan Note, Borrower is at any time required or obligated to pay
interest on the principal balance of this Term Loan Note at a rate in excess
of such maximum rate, the rate of interest under this Term Loan Note shall be
deemed to be immediately reduced to such maximum rate and interest payable
hereunder shall be computed at such maximum rate and the portion of all prior
interest payments in excess of such maximum rate shall be applied and shall
be deemed to have been payments in reduction of the principal balance of this
Term Loan Note.
If any payment hereunder becomes due on a Saturday, Sunday, or other holiday
on which banks doing business in New York are authorized to close, the due
date for this note or the payment may be extended to the next succeeding
business day, but interest and fees shall be calculated based upon the time
of actual payment.
Bank may set off toward payment of any obligations under this Term Loan Note
any indebtedness due or to become due from Bank to Borrower and any moneys or
other property of Borrower in possession of Bank at any time.
This Term Loan Note is secured by the Mortgage.
This Term Loan Note may not be changed or terminated orally, but only by an
agreement in writing signed by the party against whom enforcement of such
change or termination is sought.
Whenever used, the singular number shall include the plural, the plural the
singular, and the words "Bank" and "Borrower" shall include their respective
successors and assigns.
This Term Loan Note shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, Borrower by its duly authorized officers has duly executed
this Term Loan Note the day and year first above written.
TRAVEL PORTS OF AMERICA, INC.
By: __________________________
Title: __________________________
EXHIBIT B
REPLACEMENT REVOLVING LINE NOTE
$3,750,000 November 1, 1997
THIS REPLACEMENT REVOLVING LINE NOTE RESTATES, AMENDS, AND REPLACES IN ITS
ENTIRETY THE REVOLVING LINE NOTE DATED AS OF JANUARY 31, 1997 IN THE MAXIMUM
PRINCIPAL AMOUNT OF $3,750,000 GIVEN BY THE BORROWER IN FAVOR OF THE BANK.
Capitalized terms not otherwise defined herein shall have the meanings given
to them in the Restated and Amended Credit Agreement between the Borrower and
the Bank dated as of October 27, 1997, as the same has been and may be
modified, extended, or replaced from time to time (the "Credit Agreement").
FOR VALUE RECEIVED, TRAVEL PORTS OF AMERICA, INC. ("Borrower") hereby
promises to pay to the order of FLEET BANK ("Bank"), the principal sum of
Three Million Seven Hundred Fifty Thousand Dollars ($3,750,000) or if less,
the aggregate unpaid principal amount of all advances made by Bank of
Borrower. The Bank shall maintain a record of amounts of principal and
interest payable by Borrower from time to time, and the records of the Bank
maintained in the ordinary course of business shall be prima facie evidence
of the existence and amounts of Borrower's obligations recorded therein. In
the event of transfer of this Revolving Line Note, or if the Bank shall
otherwise deem it appropriate, the Borrower hereby authorizes the Bank to
endorse on this Revolving Line Note the amount of advances and payments to
reflect the principal balance outstanding from time to time. The Bank may
send written confirmation of advances to Borrower but any failure to do so
shall not relieve the Borrower of the obligation to repay any advance.
This Revolving Line Note shall bear interest at a rate equal to the Prime
Rate plus the Applicable Prime Margin calculated based on actual days elapsed
in a year of 360 days. All changes in the interest rate due to a change in
the Prime Rate shall take place automatically and without notice to Borrower
as of the effective date of the change in the Prime Rate.
Interest shall continue to accrue after maturity at the rate required by this
Revolving Line Note until this Revolving Line Note is paid in full. The rate
of interest on this Revolving Line Note may be increased under the
circumstances provided in the Credit Agreement. The right of Bank to receive
such increased rate of interest shall not constitute a waiver of any other
right or remedy of Bank.
All interest accrued under this Revolving Line Note shall be due and payable
on the first day of each month. Principal payments shall be due and payable
sufficient to assure that the aggregate principal amount outstanding under
the Revolving Line never exceeds the amount then available under the
Borrowing Formula described in Article I, Section B of the Credit Agreement,
and also sufficient to assure that there is no outstanding principal under
the Revolving Line for at least thirty (30) consecutive days between each
September 1 and the next succeeding August 31. All remaining principal and
interest shall be due and payable in full on the date of expiration of the
Revolving Line as specified in the Credit Agreement. Payments may be made
pursuant to a mutually agreeable cash management arrangement with the Bank.
All payments shall be in lawful money of the United States in immediately
available funds.
Any payment not received within ten days of when due may be subject to an
additional late charge equal to 5% of the payment due.
If this Revolving Line Note or any payment hereunder becomes due on a
Saturday, Sunday or other holiday on which the Bank is authorized to close,
the due date for the Revolving Line Note or payment shall be extended to the
next succeeding business day, but any interest or fees shall be calculated
based upon the actual time of payment.
This Revolving Line Note is freely prepayable in whole or in part at the
option of the Borrower without premium or penalty.
This Revolving Line Note shall, at the Bank's option, become immediately due
and payable without presentment, demand, protest, or other notice of any kind,
all of which are hereby expressly waived, upon the happening of any Event of
Default under the Credit Agreement.
This Revolving Line Note is subject to the express condition that at no time
shall Borrower be obligated or required to pay interest on the principal
balance of this Revolving Line Note at a rate which could subject Bank to
either civil or criminal liability as a result of being in excess of the
maximum rate which Borrower is permitted by law to contract or agree to pay.
If by the terms of this Revolving Line Note, Borrower is at any time required
or obligated to pay interest on the principal balance of this Revolving Line
Note at a rate in excess of such maximum rate, the rate of interest under
thisRevolving Line Note shall be deemed to be immediately reduced to such
maximum rate and interest payable hereunder shall be computed at such maximum
rate and the portion of all prior interest payments in excess of such maximum
rate shall be applied and shall be deemed to have been payments in reduction
of the principal balance of this Revolving Line Note.
The terms of this Revolving Line Note cannot be changed, nor may this
Revolving Line Note be discharged in whole or in part, except by a writing
executed by the holder. In the event that holder demands or accepts partial
payments of this Revolving Line Note, such demand or acceptance shall not be
deemed to constitute a waiver of the right to demand the entire unpaid balance
of this Revolving Line Note at any time in accordance with the terms hereof.
Any delay by holder in exercising any rights hereunder shall not operate as
a waiver of such rights.
Bank may set off toward payment of any obligations under this Revolving Line
Note any indebtedness due or to become due from Bank to Borrower and any
moneys or other property of Borrower in possession of Bank at any time.
Borrower on demand shall pay all expenses of Bank, including without
limitation reasonable attorneys' fees, in connection with enforcement and
collection of this Revolving Line Note.
This Revolving Line Note shall be governed by the laws of the State of New
York.
Whenever used, the singular number shall include the plural, the plural the
singular, and the words "Bank" and "Borrower" shall include their respective
successors and assigns.
TRAVEL PORTS OF AMERICA, INC.
By: __________________________
Title: __________________________
EXHIBIT C
1994 Loan Note
$ 2,500,000 June 30, 1994
FOR VALUE RECEIVED, TRAVEL PORTS OF AMERICA, INC., a New York corporation,
with offices at 3495 Winton Place, Building C, Rochester, New York 14623
("Maker"), promises to pay to FLEET BANK OF NEW YORK, a New York bank and
trust company with offices at One East Avenue, Rochester, New York 14638
("Payee"), or order, at One East Avenue, Rochester, New York 14638, or at
such other place as may be designated, from time to time, in writing by
Payee, the principal sum of Two Million Five Hundred Thousand Dollars
($2,500,000) in lawful money of the United States of America, with interest
thereon (the "Debt") from the date of this Note until paid.
This Note shall bear interest per annum until paid in full at nine and
sixty-five one-hundredths percent (9.65%) per annum, but never exceeding the
maximum rate allowed by law. Interest shall be calculated based on actual
days elapsed divided by a year of 360 days.
Payments of all accrued interest, plus payments of principal of $20,833 each,
shall be due on the fifteenth day of every month commencing July 15, 1994 and
continuing through the Maturity Date. All remaining principal and interest
hereunder shall be due and payable on June 30, 1999 (the "Maturity Date").
The term "Mortgage" as used in this Note shall mean the mortgage, as amended,
extended, and replaced from time to time, dated on or about the date of this
Note given by Maker to Payee, covering the interest of Maker in certain
premises located in Greenland, New Hampshire as more particularly described
therein.
If any sum payable under this Note is not paid within 10 days after the date
on which it is due, Maker shall pay a late charge of four percent (4%) of
such unpaid sum.
IT IS HEREBY EXPRESSLY AGREED that the entire unpaid principal balance of
this Note, together with all interest accrued and unpaid thereon and all
other sums due under this Note and the Mortgage shall without notice become
immediately due and payable at the option of the Payee on the failure to
observe any term or condition hereunder or on the happening of any default or
event by which, under the terms of the Mortgage or the Restated and Amended
Credit Agreement between Maker and Payee dated June 30, 1994, as the same is
modified, extended, or replaced from time to time (the "Credit Agreement"),
the indebtedness may or shall become due and payable. All of the terms,
covenants and provisions contained in the Mortgage and the Credit Agreement
which are to be kept and performed by Maker are hereby made part of this Note
to the same extent and with the same force and effect as if they were fully
set forth herein.
Maker hereby waives presentment and demand for payment, notice of dishonor,
protest and notice of protest of this Note and agrees to pay all costs of
collection when incurred, including reasonable attorney's fees, such costs
may be added to the amount due under this Note and be receivable therewith
and to perform and comply with each of the terms, covenants and provisions
contained in this Note and the Mortgage on the part of Maker to be observed
or performed. No release of any security for the principal sum due under
this Note or extension of time for payment of this Note, or any installment
hereof, or acceptance of partial payments hereunder, and no alteration,
amendment or waiver of any provision of this Note and Mortgage made by
agreement between Payee and any other person or party shall release,
discharge, modify, change or affect the liability of maker under this Note or
the Mortgage.
This Note is subject to the express condition that at no time shall Maker be
obligated or required to pay interest on the principal balance of this Note
at a rate which could subject Payee to either civil or criminal liability as
a result of being in excess of the maximum rate which Maker is permitted by
law to contract or agree to pay. If by the terms of this Note, Maker is at
any time required or obligated to pay interest on the principal balance of
this Note at a rate in excess of such maximum rate, the rate of interest
under this Note shall be deemed to be immediately reduced to such maximum
rate and interest payable hereunder shall be computed at such maximum rate
and the portion of all prior interest payments in excess of such maximum rate
shall be applied and shall be deemed to have been payments in reduction of
the principal balance of this Note.
If any payment hereunder becomes due on a Saturday, Sunday, or other holiday
on which banks doing business in New York are authorized to close, the due
date for this note or the payment may be extended to the next succeeding
business day, but interest and fees shall be calculated based upon the time
of actual payment.
This Note is freely prepayable in whole, or in part, at any time but any
prepayment is subject to and must be accompanied by a prepayment charge in an
amount computed as follows:
The latest available yield preceding the date of prepayment, as available
through active market trading or published in the Wall Street Journal, for
United States Treasury Notes or Bills (with Bills on a discounted basis
converted to a bond equivalent) with a maturity date closest to the maturity
date of this Note shall be subtracted from 7.15%. If the result is zero or a
negative number, there shall be no prepayment charge. If the result is a
positive number, then the resulting percentage shall (i) be multiplied by the
principal amount prepaid, then (ii) divided by 360, then (iii) multiplied by
the number of days remaining prior to the maturity date of this Note, and
then (iv) reduced to a present value calculated using the above referenced
Treasury Note or Bill yield. The resulting amount shall be the amount of the
prepayment charge due to the Bank.
Payee may set off toward payment of any obligations under this Note any
indebtedness due or to become due from Payee to Maker and any moneys or other
property of Maker in possession of Payee at any time.
This Note is secured by the Mortgage.
The terms of this Note shall be governed by and construed under the laws of
the State of New York.
This Note may not be changed or terminated orally, but only by an agreement
in writing signed by the party against whom enforcement of such change or
termination is sought.
Maker and the undersigned representative of Maker represent that Maker has
full power, authority and legal right to execute and deliver this Note and
that the indebtedness hereunder constitutes a valid and binding obligation of
Maker.
Whenever used, the singular number shall include the plural, the plural the
singular, and the words "Payee" and "Maker" shall include their respective
successors and assigns.
IN WITNESS WHEREOF, Maker by its duly authorized officers has duly executed
this Note the day and year first above written.
TRAVEL PORTS OF AMERICA, INC.
By: __________________________
Title: __________________________
EXHIBIT D
[Intentionally Omitted]
EXHIBIT E
ERIE LOAN NOTE
$6,000,000 October ___, 1996
FOR VALUE RECEIVED, TRAVEL PORTS OF AMERICA, INC., a New York corporation,
with offices at 3495 Winton Place, Building C, Rochester, New York 14623
("Maker"), promises to pay to FLEET BANK, a New York bank and trust company
with offices at One East Avenue, Rochester, New York 14638 ("Payee"), or
order, at One East Avenue, Rochester, New York 14638, or at such other place
as may be designated, from time to time, in writing by Payee, the principal
sum of Six Million Dollars ($6,000,000) in lawful money of the United States
of America, with interest thereon (the "Debt") from the date of this Note
until paid.
This Note shall bear interest per annum until paid in full at nine and forty-
four hundredths percent (9.44%) per annum. Interest shall be calculated
based on actual days elapsed divided by a year of 360 days.
Payments of all accrued interest, plus payments of principal of $33,333 each,
shall be due on the first day of every month and continuing through the
Maturity Date. All remaining principal and interest hereunder shall be due
and payable on the date ten (10) years after the date of this Note (the
"Maturity Date").
The term "Mortgage" as used in this Note shall mean the mortgage, as amended,
extended, and replaced from time to time, dated on or about the date of this
Note given by Maker to Payee, covering the interest of Maker in certain
premises located in Harborcreek, Erie, Pennsylvania as more particularly
described therein.
If any sum payable under this Note is not paid within 10 days after the date
on which it is due, Maker shall pay a late charge of five percent (5%) of
such unpaid sum.
IT IS HEREBY EXPRESSLY AGREED that the entire unpaid principal balance of
this Note, together with all interest accrued and unpaid thereon and all
other sums due under this Note and the Mortgage shall without notice become
immediately due and payable at the option of the Payee on the failure to
observe any term or condition hereunder or on the happening of any default or
event by which, under the terms of the Mortgage or the Restated and Amended
Credit Agreement between Maker and Payee dated December 21, 1995, as the same
is modified, extended, or replaced from time to time (the "Credit Agreement"),
the indebtedness may or shall become due and payable. All of the terms,
covenants and provisions contained in the Mortgage and the Credit Agreement
which are to be kept and performed by Maker are hereby made part of this Note
to the same extent and with the same force and effect as if they were fully
set forth herein.
Maker hereby waives presentment and demand for payment, notice of dishonor,
protest and notice of protest of this Note and agrees to pay all costs of
collection when incurred, including reasonable attorney's fees, such costs
may be added to the amount due under this Note and be receivable therewith
and to perform and comply with each of the terms, covenants and provisions
contained in this Note and the Mortgage on the part of Maker to be observed
or performed. No release of any security for the principal sum due under
this Note or extension of time for payment of this Note, or any installment
hereof, or acceptance of partial payments hereunder, and no alteration,
amendment or waiver of any provision of this Note and Mortgage made by
agreement between Payee and any other person or party shall release,
discharge, modify, change or affect the liability of maker under this Note or
the Mortgage.
This Note is subject to the express condition that at no time shall Maker be
obligated or required to pay interest on the principal balance of this Note
at a rate which could subject Payee to either civil or criminal liability as
a result of being in excess of the maximum rate which Maker is permitted by
law to contract or agree to pay. If by the terms of this Note, Maker is at
any time required or obligated to pay interest on the principal balance of
this Note at a rate in excess of such maximum rate, the rate of interest
under this Note shall be deemed to be immediately reduced to such maximum
rate and interest payable hereunder shall be computed at such maximum rate
and the portion of all prior interest payments in excess of such maximum rate
shall be applied and shall be deemed to have been payments in reduction of
the principal balance of this Note.
If any payment hereunder becomes due on a Saturday, Sunday, or other holiday
on which banks doing business in New York are authorized to close, the due
date for this note or the payment may be extended to the next succeeding
business day, but interest and fees shall be calculated based upon the time
of actual payment.
This Note is freely prepayable in whole, or in part, at any time but any
prepayment is subject to and must be accompanied by any prepayment charge
required by the Credit Agreement.
Payee may set off toward payment of any obligations under this Note any
indebtedness due or to become due from Payee to Maker and any moneys or other
property of Maker in possession of Payee at any time.
This Note is secured by the Mortgage.
The terms of this Note shall be governed by and construed under the laws of
the State of New York.
This Note may not be changed or terminated orally, but only by an agreement
in writing signed by the party against whom enforcement of such change or
termination is sought.
Maker and the undersigned representative of Maker represent that Maker has
full power, authority and legal right to execute and deliver this Note and
that the indebtedness hereunder constitutes a valid and binding obligation
of Maker.
Whenever used, the singular number shall include the plural, the plural the
singular, and the words "Payee" and "Maker" shall include their respective
successors and assigns.
IN WITNESS WHEREOF, Maker by its duly authorized officers has duly executed
this Note the day and year first above written.
TRAVEL PORTS OF AMERICA, INC.
By: __________________________
Title: __________________________
EXHIBIT F
CAPITAL LINE NOTE
$3,500,000 November 1, 1997
THIS CAPITAL LINE NOTE RESTATES, AMENDS, AND REPLACES IN ITS ENTIRETY THE
CAPITAL LINE NOTE DATED AS OF JANUARY 31, 1997 IN THE MAXIMUM PRINCIPAL
AMOUNT OF $3,500,000 GIVEN BY THE BORROWER IN FAVOR OF THE BANK.
Capitalized terms not otherwise defined herein shall have the meanings given
to them in the Restated and Amended Credit Agreement between the Borrower and
the Bank dated as of October 27, 1997, as the same has been and may be
modified, extended, or replaced from time to time (the "Credit Agreement").
FOR VALUE RECEIVED, TRAVEL PORTS OF AMERICA, INC. ("Borrower") hereby promises
to pay to the order of FLEET BANK ("Bank"), the principal sum of Three Million
Five Hundred Thousand Dollars ($3,500,000) or if less, the aggregate unpaid
principal amount of all advances made by Bank of Borrower. The Bank shall
maintain a record of amounts of principal and interest payable by Borrower
from time to time, and the records of the Bank maintained in the ordinary
course of business shall be prima facie evidence of the existence and amounts
of Borrower's obligations recorded therein. In the event of transfer of this
Capital Line Note, or if the Bank shall otherwise deem it appropriate, the
Borrower hereby authorizes the Bank to endorse on this Capital Line Note the
amount of advances and payments to reflect the principal balance outstanding
from time to time. The Bank may send written confirmation of advances to
Borrower but any failure to do so shall not relieve the Borrower of the
obligation to repay any advance.Except to the extent that the LIBOR Rate
option described below has been exercised, all outstanding principal amounts
under this Capital Line Note shall bear interest until paid at a rate per
annum equal to the Prime Rate plus the Applicable Prime Rate Margin calculated
based on actual days elapsed in a year of 360 days, but never exceeding the
maximum rate allowed by law.
All changes in the interest rate due to a change in the Prime Rate shall take
place automatically and without notice to Borrower as of the effective date
of the change in the Prime Rate. At the option of the Borrower, however,
exercised by giving the Bank notice at least two London Banking Days prior to
the first day of any month, the Borrower may elect to have the principal
amount outstanding under this Capital Line Note (which must not be less than
$500,000) bear interest for a LIBOR Interest Period, designated in the notice
and commencing on the first day of a month, at a fixed rate equal to the
LIBOR Rate plus the Applicable LIBORMargin as of the date two London Banking
Days prior to the LIBOR Interest Period selected. The LIBOR Interest Period
shall be either one-month, two months, or three months, as elected by the
Borrower. The Borrower may make a maximum of six LIBOR Rate elections per
year related to this Capital Line Note.
A payment of all interest accrued under this Capital Line Note with respect
to principal which bears interest based upon the Prime Rate shall be due on
the first day of each month, and a payment of all interest accrued with
respect to principal for which a LIBOR Interest Period has been elected
shall be due on the last day of each such respective LIBOR Interest Period.
All payments shall be in lawful money of the United States in immediately
available funds.
The Borrower may prepay principal under this Capital Line Note at any time.
Any prepayment of principal covered by a rate of interest based upon the
LIBOR Rate on a date other than the last day of the applicable LIBOR Interest
Period must be accompanied by a payment of Break Costs.
All remaining principal and interest shall be due and payable in full on the
date of expiration of the Capital Line as provided in the Credit Agreement.
Interest shall continue to accrue after maturity at the rate required by this
Capital Line Note until this Capital Line Note is paid in full. The rate of
interest on this Capital Line Note may be increased under the circumstances
provided in the Credit Agreement. The right of Bank to receive such
increased rate of interest shall not constitute a waiver of any other right
or remedy of Bank.
Any payment not received within ten days of when due may be subject to an
additional late charge equal to 5% of the payment due.
If this Capital Line Note or any payment hereunder becomes due on a Saturday,
Sunday or other holiday on which the Bank is authorized to close, the due
date for the Capital Line Note or payment shall be extended to the next
succeeding business day, but any interest or fees shall be calculated based
upon the actual time of payment.
This Capital Line Note shall, at the Bank's option, become immediately due
and payable without presentment, demand, protest, or other notice of any kind,
all of which are hereby expressly waived, upon the happening of any Event of
Default under the Credit Agreement.
This Capital Line Note is subject to the express condition that at no time
shall Borrower be obligated or required to pay interest on the principal
balance of this Capital Line Note at a rate which could subject Bank to either
civil or criminal liability as a result of being in excess of the maximum
rate which Borrower is permitted by law to contract or agree to pay. If by
the terms of this Capital Line Note, Borrower is at any time required or
obligated to pay interest on the principal balance of this Capital Line Note
at a rate in excess of such maximum rate, the rate of interest under this
Capital Line Note shall be deemed to be immediately reduced to such maximum
rate and interest payable hereunder shall be computed at such maximum rate
and the portion of all prior interest payments in excess of such maximum rate
shall be applied and shall be deemed to have been payments in reduction of
the principal balance of this Capital Line Note.
The terms of this Capital Line Note cannot be changed, nor may this Capital
Line Note be discharged in whole or in part, except by a writing executed by
the holder. In the event that holder demands or accepts partial payments of
this Capital Line Note, such demand or acceptance shall not be deemed to
constitute a waiver of the right to demand the entire unpaid balance of this
Capital Line Note at any time in accordance with the terms hereof. Any delay
by holder in exercising any rights hereunder shall not operate as a waiver of
such rights.
Bank may set off toward payment of any obligations under this Capital Line
Note any indebtedness due or to become due from Bank to Borrower and any
moneys or other property of Borrower in possession of Bank at any time.
Borrower on demand shall pay all expenses of Bank, including without
limitation reasonable attorneys' fees, in connection with enforcement and
collection of this Capital Line Note.
This Capital Line Note shall be governed by the laws of the State of New York.
Whenever used, the singular number shall include the plural, the plural the
singular, and the words "Bank" and "Borrower" shall include their respective
successors and assigns.
TRAVEL PORTS OF AMERICA, INC.
By: __________________________
Title: __________________________
EXHIBIT G
CAPITAL LOAN NOTE
$__________ July 31, 1998
Capitalized terms not otherwise defined herein shall have the meanings given
to them in the Restated and Amended Credit Agreement between the Borrower and
the Bank dated as of October 27, 1997, as the same has been and may be
modified, extended, or replaced from time to time (the "Credit Agreement").
FOR VALUE RECEIVED, TRAVEL PORTS OF AMERICA, INC., a New York corporation,
with offices at 3495 Winton Place, Building C, Rochester, New York 14623
("Borrower"), promises to pay to FLEET BANK, a New York bank and trust company
with offices at One East Avenue, Rochester, New York 14638 ("Bank"), or order,
at One East Avenue, Rochester, New York 14638, or at such other place as may
be designated, from time to time, in writing by Payee, the principal sum of
____________________________________ Dollars ($________________) in lawful
money of the United States of America, with interest thereon (the "Debt")
from the date of this Capital Loan Note until paid.
Except to the extent that the LIBOR Rate option described below has been
exercised, all outstanding principal amounts under this Capital Loan Note
shall bear interest until paid at a rate per annum equal to the Prime Rate
plus the Applicable Prime Margin calculated based on actual days elapsed in
a year of 360 days, but never exceeding the maximum rate allowed by law. All
changes in the interest rate due to a change in the Prime Rate shall take
place automatically and without notice to Borrower as of the effective date
of the change in the Prime Rate. At the option of the Borrower, however,
exercised by giving the Bank notice at least two London Banking Days prior to
the first day of any month, the Borrower may elect to have the principal
amount outstanding under this Capital Loan Note (which must not be less than
$500,000) bear interest for a LIBOR Interest Period, designated in the notice
and commencing on the first day of a month, at a fixed rate equal to the
LIBOR Rate plus the Applicable LIBOR Margin as of the date two London Banking
Days prior to the LIBOR Interest Period selected. The LIBOR Interest Period
shall be either one-month, two months, or three months, as elected by the
Borrower. The Borrower may make a maximum of six LIBOR Rate elections per
year related to this Capital Loan Note.
A payment of all interest accrued under this Capital Loan Note with respect
to principal which bears interest based upon the Prime Rate shall be due on
the first day of each month, and a payment of all interest accrued with
respect to principal for which a LIBOR Interest Period has been elected shall
be due on the last day of each such respective LIBOR Interest Period. All
payments shall be in lawful money of the United States in immediately
available funds.
In addition, on the first day of each November 1, February 1, May 1, and
August 1 respectively a principal payment of $_________ shall be due. All
remaining principal and interest shall be due and payable in full on January
31, 2002.
The Borrower may prepay principal under this Capital Loan Note at any time.
Any prepayment of principal covered by a rate of interest based upon the
LIBOR Rate on a date other than the last day of the applicable LIBOR Interest
Period must be accompanied by a payment of Break Costs. All principal
prepayments shall be applied in inverse order of maturity.
The rate of interest on this Capital Loan Note may be increased under the
circumstances provided in the Credit Agreement. The right of Bank to receive
such increased rate of interest shall not constitute a waiver of any other
right or remedy of Bank.
If any sum payable under this Capital Loan Note is not paid within 10 days
after the date on which it is due, Borrower shall pay a late charge of five
percent (5%) of such unpaid sum.
If this Capital Loan Note or any payment hereunder becomes due on a Saturday,
Sunday or other holiday on which the Bank is authorized to close, the due
date for this Capital Loan Note or payment shall be extended to the next
succeeding business day, but any interest or fees shall be calculated based
upon the actual time of payment.
This Capital Loan Note shall, at the Bank's option, become immediately due
and payable without presentment, demand, protest, or other notice of any kind,
all of which are hereby expressly waived, upon the happening of any Event of
Default under the Credit Agreement.
This Capital Loan Note is subject to the express condition that at no time
shall Borrower be obligated or required to pay interest on the principal
balance of this Capital Loan Note at a rate which could subject Bank to
either civil or criminal liability as a result of being in excess of the
maximum rate which Borrower is permitted by law to contract or agree to pay.
If by the terms of this Capital Loan Note, Borrower is at any time required
or obligated to pay interest on the principal balance of this Capital Loan
Note at a rate in excess of such maximum rate, the rate of interest under
this Capital Loan Note shall be deemed to be immediately reduced to such
maximum rate and interest payable hereunder shall be computed at such maximum
rate and the portion of all prior interest payments in excess of such maximum
rate shall be applied and shall be deemed to have been payments in reduction
of the principal balance of this Capital Loan Note.
The terms of this Capital Loan Note cannot be changed, nor may this Capital
Loan Note be discharged in whole or in part, except by a writing executed by
the holder. In the event that holder demands or accepts partial payments of
this Capital Loan Note, such demand or acceptance shall not be deemed to
constitute a waiver of the right to demand the entire unpaid balance of this
Capital Loan Note at any time in accordance with the terms hereof. Any delay
by holder in exercising any rights hereunder shall not operate as a waiver of
such rights.
Bank may set off toward payment of any obligations under this Capital Loan
Note any indebtedness due or to become due from Bank to Borrower and any
moneys or other property of Borrower in possession of Bank at any time.
Borrower on demand shall pay all expenses of Bank, including without
limitation reasonable attorneys' fees, in connection with enforcement and
collection of this Capital Loan Note.
This Capital Loan Note shall be governed by the laws of the State of New
York.
Whenever used, the singular number shall include the plural, the plural the
singular, and the words "Bank" and "Borrower" shall include their respective
successors and assigns.
TRAVEL PORTS OF AMERICA, INC.
By: __________________________
Title: __________________________
EXHIBIT H
AMENDED AND RESTATED MORTGAGE NOTE
(Belmont)
$114,513.39 November 1, 1997
THIS AMENDED AND RESTATED MORTGAGE NOTE EVIDENCES THE SAME OBLIGATION
EVIDENCED BY, AND RESTATES, AMENDS, AND REPLACES IN ITS ENTIRETY THE MORTGAGE
NOTE DATED AS OF OCTOBER 23, 1987 IN THE ORIGINAL PRINCIPAL FACE AMOUNT OF
$196,488.79 GIVEN BY THE BORROWER IN FAVOR OF THE BANK, AS MODIFIED AND
CONSOLIDATED IN THE AMOUNT OF $350,000 BY THE CONSOLIDATION AND EXTENSION
AGREEMENT DATED OCTOBER 23, 1987 BETWEEN THE BORROWER AND THE BANK RECORDED
IN LIBER 515, PAGE 73 IN THE OFFICE OF THE ALLEGANY COUNTY CLERK ON OCTOBER
26, 1987.
Capitalized terms not otherwise defined herein shall have the meanings given
to them in the Restated and Amended Credit Agreement between the Borrower and
the Bank dated as of October 27, 1997, as the same has been and may be
modified, extended, or replaced from time to time (the "Credit Agreement").
FOR VALUE RECEIVED, TRAVEL PORTS OF AMERICA, INC., a New York corporation,
with offices at 3495 Winton Place, Building C, Rochester, New York 14623 and
successor to Roadway Motor Plazas, Inc., ("Borrower") promises to pay to
FLEET BANK, a New York bank and trust company with offices at One East Avenue,
Rochester, New York 14638 and successor to Norstar Bank, N.A. ("Bank"), or
order, at One East Avenue, Rochester, New York 14638, or at such other place
as may be designated, from time to time, in writing by Payee, the principal
sum of One Hundred Fourteen Thousand Five Hundred Thirteen Dollars and Thirty
Nine Cents ($114,513.39) in lawful money of the United States of America,
with interest thereon (the "Debt") from the date of this Note until paid.
Except to the extent that the LIBOR Rate option described below has been
exercised, all outstanding principal amounts under this Note shall bear
interest until paid at a rate per annum equal to the Prime Rate plus the
Applicable Prime Margin calculated based on actual days elapsed in a year of
360 days, but never exceeding the maximum rate allowed by law. All changes
in the interest rate due to a change in the Prime Rate shall take place
automatically and without notice to Borrower as of the effective date of the
change in the Prime Rate. At the option of the Borrower, however, exercised
by giving the Bank notice at least two London Banking Days prior to the first
day of any month, the Borrower may elect to have the entire principal amount
outstanding under this Note bear interest for a LIBOR Interest Period,
designated in the notice and commencing on the first day of a month, at a
fixed rate equal to the LIBOR Rate plus the Applicable LIBOR Margin as of the
date two London Banking Days prior to the LIBOR Interest Period selected.
The LIBOR Interest Period shall be either one-month, two months, or three
months, as elected by the Borrower. The Borrower may make a maximum of six
LIBOR Rate elections per year related to this Note.
A payment of all interest accrued under the Note with respect to principal
which bears interest based upon the Prime Rate shall be due on the first day
of each month, and a payment of all interest accrued with respect to principal
for which a LIBOR Interest Period has been elected shall be due on the last
day of each such respective LIBOR Interest Period. All payments shall be in
lawful money of the United States in immediately available funds.
In addition, on the first day of each November 1, February 1, May 1, and
August 1 respectively, commencing November 1, 1997, a principal payment of
$5833.32 shall be due. All remaining principal and interest shall be due and
payable in full on November 30, 2002.
The Borrower may prepay principal under this Note at any time. Any prepayment
of principal covered by a rate of interest based upon the LIBOR Rate on a
date other than the last day of the applicable LIBOR Interest Period must be
accompanied by a payment of Break Costs. All principal prepayments shall be
applied in inverse order of maturity.
The rate of interest on this Note may be increased under the circumstances
provided in the Credit Agreement. The right of Bank to receive such increased
rate of interest shall not constitute a waiver of any other right or remedy
of Bank.
If any sum payable under this Note is not paid within 10 days after the date
on which it is due, Borrower shall pay a late charge of five percent (5%) of
such unpaid sum.
If this Note or any payment hereunder becomes due on a Saturday, Sunday or
other holiday on which the Bank is authorized to close, the due date for this
Note or payment shall be extended to the next succeeding business day, but
any interest or fees shall be calculated based upon the actual time of
payment.
This Note shall, at the Bank's option, become immediately due and payable
without presentment, demand, protest, or other notice of any kind, all of
which are hereby expressly waived, upon the happening of any Event of Default
under the Credit Agreement.
This Note is subject to the express condition that at no time shall Borrower
be obligated or required to pay interest on the principal balance of this
Note at a rate which could subject Bank to either civil or criminal liability
as a result of being in excess of the maximum rate which Borrower is permitted
by law to contract or agree to pay. If by the terms of this Note, Borrower
is at any time required or obligated to pay interest on the principal balance
of this Note at a rate in excess of such maximum rate, the rate of interest
under this Note shall be deemed to be immediately reduced to such maximum
rate and interest payable hereunder shall be computed at such maximum rate
and the portion of all prior interest payments in excess of such maximum rate
shall be applied and shall be deemed to have been payments in reduction of
the principal balance of this Note.
The terms of this Note cannot be changed, nor may this Note be discharged in
whole or in part, except by a writing executed by the holder. In the event
that holder demands or accepts partial payments of this Note, such demand or
acceptance shall not be deemed to constitute a waiver of the right to demand
the entire unpaid balance of this Note at any time in accordance with the
terms hereof. Any delay by holder in exercising any rights hereunder shall
not operate as a waiver of such rights.
Bank may set off toward payment of any obligations under this Note any
indebtedness due or to become due from Bank to Borrower and any moneys or
other property of Borrower in possession of Bank at any time.
Borrower on demand shall pay all expenses of Bank, including without
limitation reasonable attorneys' fees, in connection with enforcement and
collection of this Note.
This Note shall be governed by the laws of the State of New York.
Whenever used, the singular number shall include the plural, the plural the
singular, and the words "Bank" and "Borrower" shall include their respective
successors and assigns.
TRAVEL PORTS OF AMERICA, INC.
By: __________________________
Title: __________________________
FLEET BANK
By: __________________________
Title: __________________________
MORTGAGE MODIFICATION AGREEMENT
THIS MORTGAGE MODIFICATION AGREEMENT is made as of November 1, 1997 between
Fleet Bank, successor by merger to Norstar Bank, N.A., with offices at One
East Avenue, Rochester, New York 14638 ("Bank") and Travel Ports of America,
Inc., formerly known as Roadway Motor Plazas, Inc., with offices at 3495
Winton Place, Building C, Rochester, New York 14623 ("Borrower").
The Bank is the holder of:
Mortgage made by W.W. Griffith Oil Co., Inc. to secure the sum of $300,000
dated January 25, 1982 and recorded in the Office of the Allegany county
Clerk on January 25, 1982 in Liber 431 of Mortgages at page 86
Mortgage made by Borrower to secure the sum of $196,488.79 dated October 23,
1987 and recorded in the Office of the Allegany County Clerk on October 26,
1987 in Liber 515 of Mortgages at page 58 which Mortgages were consolidated
and extended by Consolidation and Extension Agreement securing the aggregate
sum of $350,000 dated October 23, 1987 and recorded in the Office of the
Allegany County Clerk on October 26, 1987 in Liber 515 of Mortgages at page
73 (collectively, the "Mortgage").
The Mortgage is hereby modified and amended to reflect that the terms of the
obligation secured thereby are as contained in the Amended and Restated
Mortgage Note attached hereto as Exhibit A.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers as of the date first above written.
TRAVEL PORTS OF AMERICA, INC.
By: __________________________
Title: __________________________
FLEET BANK
By: __________________________
Title: __________________________
STATE OF NEW YORK)
COUNTY OF MONROE) SS.:
On the ___ day of ___________________, 1997, before me personally came
William Burslem III, to me known, who, being by me duly sworn, did depose and
say that he resides in the Town of Mendon, New York; that he is the Chief
Financial Officer of Travel Ports of America, Inc., the corporation described
in the foregoing instrument, and that he executed said instrument by authority
of the Board of Directors of said corporation.
___________________________________
STATE OF NEW YORK)
COUNTY OF MONROE) SS.:
On the ____ day of ___________________, 1997, before me personally came
____________________, to me known, who, being by me duly sworn, did depose
and say that (s)he resides at ____________________________; that (s)he is the
_________________ of Fleet Bank, the banking corporation described in the
foregoing instrument, and that (s)he executed said instrument by authority
of the Board of Directors of said banking corporation.
EXHIBIT I
AMENDED AND RESTATED DEED OF TRUST NOTE
(Asheville)
THIS AMENDED AND RESTATED DEED OF TRUST NOTE EVIDENCES THE SAME OBLIGATION
EVIDENCED BY, AND RESTATES, AMENDS, AND REPLACES IN ITS ENTIRETY THE DEED OF
TRUST NOTE DATED AS OF JULY 5, 1988 IN THE ORIGINAL PRINCIPAL FACE AMOUNT OF
$2,000,000 GIVEN BY THE BORROWER IN FAVOR OF THE BANK.
Capitalized terms not otherwise defined herein shall have the meanings given
to them in the Restated and Amended Credit Agreement between the Borrower and
the Bank dated as of October 27, 1997, as the same has been and may be
modified, extended, or replaced from time to time (the "Credit Agreement").
FOR VALUE RECEIVED, TRAVEL PORTS OF AMERICA, INC., a New York corporation,
with offices at 3495 Winton Place, Building C, Rochester, New York 14623 and
successor to Roadway Motor Plazas, Inc., ("Borrower") promises to pay to
FLEET BANK, a New York bank and trust company with offices at One East Avenue,
Rochester, New York 14638 and successor to Norstar Bank, N.A. ("Bank"), or
order, at One East Avenue, Rochester, New York 14638, or at such other place
as may be designated, from time to time, in writing by Payee, the principal
sum of Seven Hundred Fifty Five Thousand Five Hundred Sixty Eight Dollars
($755,568) in lawful money of the United States of America, with interest
thereon (the "Debt") from the date of this Note until paid.
Except to the extent that the LIBOR Rate option described below has been
exercised, all outstanding principal amounts under this Note shall bear
interest until paid at a rate per annum equal to the Prime Rate plus the
Applicable Prime Margin calculated based on actual days elapsed in a year of
360 days, but never exceeding the maximum rate allowed by law. All changes
in the interest rate due to a change in the Prime Rate shall take place
automatically and without notice to Borrower as of the effective date of the
change in the Prime Rate. At the option of the Borrower, however, exercised
by giving the Bank notice at least two London Banking Days prior to the first
day of any month, the Borrower may elect to have the principal amount
outstanding under this Note (which must not be less than $500,000) bear
interest for a LIBOR Interest Period, designated in the notice and commencing
on the first day of a month, at a fixed rate equal to the LIBOR Rate plus the
Applicable LIBOR Margin as of the date two London Banking Days prior to the
LIBOR Interest Period selected. The LIBOR Interest Period shall be either
one-month, two months, or three months, as elected by the Borrower. The
Borrower may make a maximum of six LIBOR Rate elections per year related to
this Note.
A payment of all interest accrued under this Note with respect to principal
which bears interest based upon the Prime Rate shall be due on the first day
of each month, and a payment of all interest accrued with respect to
principal for which a LIBOR Interest Period has been elected shall be due on
the last day of each such respective LIBOR Interest Period. All payments
shall be in lawful money of the United States in immediately available funds.
In addition, on the first day of each November 1, February 1, May 1, and
August 1 respectively, commencing November 1, 1997, a principal payment of
$33,333 shall be due. All remaining principal and interest shall be due and
payable in full on June 30, 2003.
The Borrower may prepay principal under this Note at any time. Any prepayment
of principal covered by a rate of interest based upon the LIBOR Rate on a
date other than the last day of the applicable LIBOR Interest Period must be
accompanied by a payment of Break Costs. All principal prepayments shall be
applied in inverse order of maturity.
The rate of interest on this Note may be increased under the circumstances
provided in the Credit Agreement. The right of Bank to receive such
increased rate of interest shall not constitute a waiver of any other right
or remedy of Bank.
If any sum payable under this Note is not paid within 10 days after the date
on which it is due, Borrower shall pay a late charge of five percent (5%) of
such unpaid sum.
If this Note or any payment hereunder becomes due on a Saturday, Sunday or
other holiday on which the Bank is authorized to close, the due date for this
Note or payment shall be extended to the next succeeding business day, but
any interest or fees shall be calculated based upon the actual time of
payment.
This Note shall, at the Bank's option, become immediately due and payable
without presentment, demand, protest, or other notice of any kind, all of
which are hereby expressly waived, upon the happening of any Event of Default
under the Credit Agreement or a default in the performance of or compliance
with any one of the covenants and conditions of the Deed of Trust to Beth
Ela Wilkens, Trustee, dated July 5, 1988.
This Note is subject to the express condition that at no time shall Borrower
be obligated or required to pay interest on the principal balance of this
Note at a rate which could subject Bank to either civil or criminal liability
as a result of being in excess of the maximum rate which Borrower is
permitted by law to contract or agree to pay. If by the terms of this Note,
Borrower is at any time required or obligated to pay interest on the
principal balance of this Note at a rate in excess of such maximum rate, the
rate of interest under this Note shall be deemed to be immediately reduced to
such maximum rate and interest payable hereunder shall be computed at such
maximum rate and the portion of all prior interest payments in excess of such
maximum rate shall be applied and shall be deemed to have been payments in
reduction of the principal balance of this Note.
The terms of this Note cannot be changed, nor may this Note be discharged in
whole or in part, except by a writing executed by the holder. In the event
that holder demands or accepts partial payments of this Note, such demand or
acceptance shall not be deemed to constitute a waiver of the right to demand
the entire unpaid balance of this Note at any time in accordance with the
terms hereof. Any delay by holder in exercising any rights hereunder shall
not operate as a waiver of such rights. Borrower agrees to remain bound
until the principal and interest are paid in full and agrees that its
liabilities shall not be diminished or affected by an extension of time for
payment (or the performance of any obligation under this Note) which may be
granted from time to time, even though the period of extension may be
indefinite, or by any change by way of release, surrender, or substitution
of any collateral securing this Note. Borrower waives any right to require
Bank to pursue any remedy or legal right which it may have against any party
or property securing this Note.
Bank may set off toward payment of any obligations under this Note any
indebtedness due or to become due from Bank to Borrower and any moneys or
other property of Borrower in possession of Bank at any time.
Borrower on demand shall pay all expenses of Bank, including without
limitation reasonable attorneys' fees, in connection with enforcement and
collection of this Note.
Whenever used, the singular number shall include the plural, the plural the
singular, and the words "Bank" and "Borrower" shall include their respective
successors and assigns.
This Note is secured by a Deed of Trust to Beth Ela Wilkens, Trustee dated
July 5, 1988.
Each reference herein to this Note (or to its terms and provisions) shall
also be deemed to refer to all of the terms and provisions of the Deed of
Trust, and for any other instrument, including a loan agreement, if any,
evidencing or securing the obligations provided for in this Note, all of
which shall be construed and applied consistently with the laws of the State
of North Carolina, and to the extent not inconsistent therewith, the laws of
the State of New York.
Each of the undersigned has adopted as his seal the word "SEAL" appearing
beside his signature.
TRAVEL PORTS OF AMERICA, INC. (Seal)
(formerly known as Roadway Motor Plazas, Inc.)
By: __________________________
Title: __________________________
FLEET BANK (Seal)
(successor by merger to Norstar Bank, N.A.)
By: __________________________
Title: __________________________
EXHIBIT J
AMENDED AND RESTATED MORTGAGE NOTE
(Porter)
$1,809,072 November 1, 1997
THIS AMENDED AND RESTATED MORTGAGE NOTE EVIDENCES THE SAME OBLIGATION
EVIDENCED BY, AND RESTATES, AMENDS, AND REPLACES IN ITS ENTIRETY THE MORTGAGE
NOTE DATED AS OF JANUARY 12, 1989 IN THE ORIGINAL PRINCIPAL FACE AMOUNT OF
$4,400,000 GIVEN BY THE BORROWER IN FAVOR OF THE BANK.
Capitalized terms not otherwise defined herein shall have the meanings given
to them in the Restated and Amended Credit Agreement between the Borrower and
the Bank dated as of October 27, 1997, as the same has been and may be
modified, extended, or replaced from time to time (the "Credit Agreement").
FOR VALUE RECEIVED, TRAVEL PORTS OF AMERICA, INC., a New York corporation,
with offices at 3495 Winton Place, Building C, Rochester, New York 14623 and
successor to Roadway Motor Plazas, Inc., ("Borrower") promises to pay to
FLEET BANK, a New York bank and trust company with offices at One East Avenue,
Rochester, New York 14638 and successor to Norstar Bank, N.A. ("Bank"), or
order, at One East Avenue, Rochester, New York 14638, or at such other place
as may be designated, from time to time, in writing by Payee, the principal
sum of One Million Eight Hundred Nine Thousand Seventy-Two Dollars
($1,809,072) in lawful money of the United States of America, with interest
thereon (the "Debt") from the date of this Note until paid.
Except to the extent that the LIBOR Rate option described below has been
exercised, all outstanding principal amounts under this Note shall bear
interest until paid at a rate per annum equal to the Prime Rate plus the
Applicable Prime Margin calculated based on actual days elapsed in a year of
360 days, but never exceeding the maximum rate allowed by law. All changes
in the interest rate due to a change in the Prime Rate shall take place
automatically and without notice to Borrower as of the effective date of the
change in the Prime Rate. At the option of the Borrower, however, exercised
by giving the Bank notice at least two London Banking Days prior to the first
day of any month, the Borrower may elect to have the entire principal amount
outstanding under this Note (which must be at least $500,000) bear interest
for a LIBOR Interest Period, designated in the notice and commencing on the
first day of a month, at a fixed rate equal to the LIBOR Rate plus the
Applicable LIBOR Margin as of the date two London Banking Days prior to the
LIBOR Interest Period selected. The LIBOR Interest Period shall be either
one-month, two months, or three months, as elected by the Borrower. The
Borrower may make a maximum of six LIBOR Rate elections per year related to
this Note.
A payment of all interest accrued under this Note with respect to principal
which bears interest based upon the Prime Rate shall be due on the first day
of each month, and a payment of all interest accrued with respect to principal
for which a LIBOR Interest Period has been elected shall be due on the last
day of each such respective LIBOR Interest Period. All payments shall be in
lawful money of the United States in immediately available funds.
In addition, on the first day of each November 1, February 1, May 1, and
August 1 respectively, commencing November 1, 1997, a principal payment of
$73,320 shall be due. All remaining principal and interest shall be due and
payable in full on January 12, 2004.
The Borrower may prepay principal under this Note at any time. Any prepayment
of principal covered by a rate of interest based upon the LIBOR Rate on a date
other than the last day of the applicable LIBOR Interest Period must be
accompanied by a payment of Break Costs. All principal prepayments shall be
applied in inverse order of maturity.
The rate of interest on this Note may be increased under the circumstances
provided in the Credit Agreement. The right of Bank to receive such increased
rate of interest shall not constitute a waiver of any other right or remedy of
Bank.
If any sum payable under this Note is not paid within 10 days after the date
on which it is due, Borrower shall pay a late charge of five percent (5%) of
such unpaid sum.
If this Note or any payment hereunder becomes due on a Saturday, Sunday or
other holiday on which the Bank is authorized to close, the due date for this
Note or payment shall be extended to the next succeeding business day, but
any interest or fees shall be calculated based upon the actual time of
payment.
This Note shall, at the Bank's option, become immediately due and payable
without presentment, demand, protest, or other notice of any kind, all of
which are hereby expressly waived, upon the happening of any Event of Default
under the Credit Agreement.
This Note is subject to the express condition that at no time shall Borrower
be obligated or required to pay interest on the principal balance of this
Note at a rate which could subject Bank to either civil or criminal liability
as a result of being in excess of the maximum rate which Borrower is permitted
by law to contract or agree to pay. If by the terms of this Note, Borrower
is at any time required or obligated to pay interest on the principal balance
of this Note at a rate in excess of such maximum rate, the rate of interest
under this Note shall be deemed to be immediately reduced to such maximum
rate and interest payable hereunder shall be computed at such maximum rate
and the portion of all prior interest payments in excess of such maximum rate
shall be applied and shall be deemed to have been payments in reduction of
the principal balance of this Note.
The terms of this Note cannot be changed, nor may this Note be discharged in
whole or in part, except by a writing executed by the holder. In the event
that holder demands or accepts partial payments of this Note, such demand or
acceptance shall not be deemed to constitute a waiver of the right to demand
the entire unpaid balance of this Note at any time in accordance with the
terms hereof. Any delay by holder in exercising any rights hereunder shall
not operate as a waiver of such rights.
Bank may set off toward payment of any obligations under this Note any
indebtedness due or to become due from Bank to Borrower and any moneys or
other property of Borrower in possession of Bank at any time.
Borrower on demand shall pay all expenses of Bank, including without
limitation reasonable attorneys' fees, in connection with enforcement and
collection of this Note.
This Note shall be governed by the laws of the State of New York.
Whenever used, the singular number shall include the plural, the plural the
singular, and the words "Bank" and "Borrower" shall include their respective
successors and assigns.
TRAVEL PORTS OF AMERICA, INC.
By:__________________________
Title:_________________________
FLEET BANK
By:__________________________
Title:_________________________
EXHIBIT K
AMENDED AND RESTATED MORTGAGE NOTE
(Lake Station)
$205,556.38 November 1, 1997
THIS AMENDED AND RESTATED MORTGAGE NOTE EVIDENCES THE SAME OBLIGATION
EVIDENCED BY, AND RESTATES, AMENDS, AND REPLACES IN ITS ENTIRETY THE MORTGAGE
NOTE DATED AS OF JANUARY 12, 1989 IN THE ORIGINAL PRINCIPAL FACE AMOUNT OF
$500,000 GIVEN BY THE BORROWER IN FAVOR OF THE BANK.
Capitalized terms not otherwise defined herein shall have the meanings given
to them in the Restated and Amended Credit Agreement between the Borrower and
the Bank dated as of October 27, 1997, as the same has been and may be
modified, extended, or replaced from time to time (the "Credit Agreement").
FOR VALUE RECEIVED, TRAVEL PORTS OF AMERICA, INC., a New York corporation,
with offices at 3495 Winton Place, Building C, Rochester, New York 14623 and
successor to Roadway Motor Plazas, Inc., ("Borrower") promises to pay to
FLEET BANK, a New York bank and trust company with offices at One East Avenue,
Rochester, New York 14638 and successor to Norstar Bank, N.A. ("Bank"), or
order, at One East Avenue, Rochester, New York 14638, or at such other place
as may be designated, from time to time, in writing by Payee, the principal
sum of Two Hundred Five Thousand Five Hundred Fifty-Six Dollars and Thirty-
eight Cents ($205,556.38) in lawful money of the United States of America,
with interest thereon (the "Debt") from the date of this Note until paid.
Except to the extent that the LIBOR Rate option described below has been
exercised, all outstanding principal amounts under this Note shall bear
interest until paid at a rate per annum equal to the Prime Rate plus the
Applicable Prime Margin calculated based on actual days elapsed in a year of
360 days, but never exceeding the maximum rate allowed by law. All changes
in the interest rate due to a change in the Prime Rate shall take place
automatically and without notice to Borrower as of the effective date of the
change in the Prime Rate. At the option of the Borrower, however, exercised
by giving the Bank notice at least two London Banking Days prior to the first
day of any month, the Borrower may elect to have the entire principal amount
outstanding under this Note bear interest for a LIBOR Interest Period,
designated in the notice and commencing on the first day of a month, at a
fixed rate equal to the LIBOR Rate plus the Applicable LIBOR Margin as of the
date two London Banking Days prior to the LIBOR Interest Period selected.
The LIBOR Interest Period shall be either one-month, two months, or three
months, as elected by the Borrower. The Borrower may make a maximum of six
LIBOR Rate elections per year related to this Note.
A payment of all interest accrued under this Note with respect to principal
which bears interest based upon the Prime Rate shall be due on the first day
of each month, and a payment of all interest accrued with respect to principal
for which a LIBOR Interest Period has been elected shall be due on the last
day of each such respective LIBOR Interest Period. All payments shall be in
lawful money of the United States in immediately available funds.
In addition, on the first day of each November 1, February 1, May 1, and
August 1 respectively, commencing November 1, 1997, a principal payment of
$8,333 shall be due. All remaining principal and interest shall be due and
payable in full on November 30, 1998, provided, however, that the maturity
date will be extended automatically to January 12, 2004 if, on or before
November 30, 1998 either (i) Borrower has acquired good and marketable title
to the real property and improvements covered by the Mortgage dated January
12, 1989 and recorded as Document Number 018060 with the Recorder of Lake
County, Indiana, or (ii) the leasehold interest of Borrower covered by such
Mortgage has been extended at least through January 12, 2004.
The Borrower may prepay principal under this Note at any time. Any prepayment
of principal covered by a rate of interest based upon the LIBOR Rate on a
date other than the last day of the applicable LIBOR Interest Period must be
accompanied by a payment of Break Costs. All principal prepayments shall be
applied in inverse order of maturity.
The rate of interest on this Note may be increased under the circumstances
provided in the Credit Agreement. The right of Bank to receive such increased
rate of interest shall not constitute a waiver of any other right or remedy
of Bank.
If any sum payable under this Note is not paid within 10 days after the date
on which it is due, Borrower shall pay a late charge of five percent (5%) of
such unpaid sum.
If this Note or any payment hereunder becomes due on a Saturday, Sunday or
other holiday on which the Bank is authorized to close, the due date for this
Note or payment shall be extended to the next succeeding business day, but
any interest or fees shall be calculated based upon the actual time of
payment.
This Note shall, at the Bank's option, become immediately due and payable
without presentment, demand, protest, or other notice of any kind, all of
which are hereby expressly waived, upon the happening of any Event of Default
under the Credit Agreement.
This Note is subject to the express condition that at no time shall Borrower
be obligated or required to pay interest on the principal balance of this
Note at a rate which could subject Bank to either civil or criminal liability
as a result of being in excess of the maximum rate which Borrower is permitted
by law to contract or agree to pay. If by the terms of this Note, Borrower
is at any time required or obligated to pay interest on the principal balance
of this Note at a rate in excess of such maximum rate, the rate of interest
under this Note shall be deemed to be immediately reduced to such maximum rate
and interest payable hereunder shall be computed at such maximum rate and
the portion of all prior interest payments in excess of such maximum rate
shall be applied and shall be deemed to have been payments in reduction of
the principal balance of this Note.
The terms of this Note cannot be changed, nor may this Note be discharged in
whole or in part, except by a writing executed by the holder. In the event
that holder demands or accepts partial payments of this Note, such demand or
acceptance shall not be deemed to constitute a waiver of the right to demand
the entire unpaid balance of this Note at any time in accordance with the
terms hereof. Any delay by holder in exercising any rights hereunder shall
not operate as a waiver of such rights.
Bank may set off toward payment of any obligations under this Note any
indebtedness due or to become due from Bank to Borrower and any moneys or
other property of Borrower in possession of Bank at any time.
Borrower on demand shall pay all expenses of Bank, including without
limitation reasonable attorneys' fees, in connection with enforcement and
collection of this Note.
This Note shall be governed by the laws of the State of New York.
Whenever used, the singular number shall include the plural, the plural the
singular, and the words "Bank" and "Borrower" shall include their respective
successors and assigns.
TRAVEL PORTS OF AMERICA, INC.
By:__________________________
Title:_________________________
FLEET BANK
By:__________________________
Title:_________________________
EXHIBIT L
AMENDED AND RESTATED MORTGAGE NOTE
(Greencastle)
$2,627,396 November 1, 1997
THIS AMENDED AND RESTATED MORTGAGE NOTE EVIDENCES THE SAME OBLIGATION
EVIDENCED BY, AND RESTATES, AMENDS, AND REPLACES IN ITS ENTIRETY THE MORTGAGE
NOTE DATED AS OF JANUARY 4, 1990 IN THE ORIGINAL PRINCIPAL FACE AMOUNT OF
$5,500,000 GIVEN BY THE BORROWER IN FAVOR OF THE BANK.
Capitalized terms not otherwise defined herein shall have the meanings given
to them in the Restated and Amended Credit Agreement between the Borrower and
the Bank dated as of October 27, 1997, as the same has been and may be
modified, extended, or replaced from time to time (the "Credit Agreement").
FOR VALUE RECEIVED, TRAVEL PORTS OF AMERICA, INC., a New York corporation,
with offices at 3495 Winton Place, Building C, Rochester, New York 14623 and
successor to Roadway Motor Plazas, Inc. and successor by merger to ROADWAY
REALTY, INC. ("Borrower") jointly and severally promise to pay to FLEET BANK,
a New York bank and trust company with offices at One East Avenue, Rochester,
New York 14638 and successor to Norstar Bank, N.A. ("Bank"), or order, at One
East Avenue, Rochester, New York 14638, or at such other place as may be
designated, from time to time, in writing by Payee, the principal sum of Two
Million Six Hundred Twenty-Seven Thousand Three Hundred Ninety-Six Dollars
($2, 627,396) in lawful money of the United States of America, with interest
thereon (the "Debt") from the date of this Note until paid.
Except to the extent that the LIBOR Rate option described below has been
exercised, all outstanding principal amounts under this Note shall bear
interest until paid at a rate per annum equal to the Prime Rate plus the
Applicable Prime Margin calculated based on actual days elapsed in a year of
360 days, but never exceeding the maximum rate allowed by law. All changes
in the interest rate due to a change in the Prime Rate shall take place
automatically and without notice to Borrower as of the effective date of the
change in the Prime Rate. At the option of the Borrower, however, exercised
by giving the Bank notice at least two London Banking Days prior to the first
day of any month, the Borrower may elect to have the entire principal amount
outstanding under this Note (which must be at least $500,000) bear interest
for a LIBOR Interest Period, designated in the notice and commencing on the
first day of a month, at a fixed rate equal to the LIBOR Rate plus the
Applicable LIBOR Margin as of the date two London Banking Days prior to the
LIBOR Interest Period selected. The LIBOR Interest Period shall be either
one-month, two months, or three months, as elected by the Borrower. The
Borrower may make a maximum of six LIBOR Rate elections per year related to
this Note.
A payment of all interest accrued under this Note with respect to principal
which bears interest based upon the Prime Rate shall be due on the first day
of each month, and a payment of all interest accrued with respect to principal
for which a LIBOR Interest Period has been elected shall be due on the last
day of each such respective LIBOR Interest Period. All payments shall be in
lawful money of the United States in immediately available funds.
In addition, on the first day of each November 1, February 1, May 1, and
August 1 respectively, commencing November 1, 1997, a principal payment of
$91,698 shall be due. All remaining principal and interest shall be due and
payable in full on January 4, 2005.
The Borrower may prepay principal under this Note at any time. Any prepayment
of principal covered by a rate of interest based upon the LIBOR Rate on a date
other than the last day of the applicable LIBOR Interest Period must be
accompanied by a payment of Break Costs. All principal prepayments shall be
applied in inverse order of maturity.
The rate of interest on this Note may be increased under the circumstances
provided in the Credit Agreement. The right of Bank to receive such increased
rate of interest shall not constitute a waiver of any other right or remedy
of Bank.
If any sum payable under this Note is not paid within 10 days after the date
on which it is due, Borrower shall pay a late charge of five percent (5%) of
such unpaid sum.
If this Note or any payment hereunder becomes due on a Saturday, Sunday or
other holiday on which the Bank is authorized to close, the due date for this
Note or payment shall be extended to the next succeeding business day, but
any interest or fees shall be calculated based upon the actual time of
payment.
This Note shall, at the Bank's option, become immediately due and payable
without presentment, demand, protest, or other notice of any kind, all of
which are hereby expressly waived, upon the happening of any Event of Default
under the Credit Agreement.
This Note is subject to the express condition that at no time shall Borrower
be obligated or required to pay interest on the principal balance of this
Note at a rate which could subject Bank to either civil or criminal liability
as a result of being in excess of the maximum rate which Borrower is permitted
by law to contract or agree to pay. If by the terms of this Note, Borrower
is at any time required or obligated to pay interest on the principal balance
of this Note at a rate in excess of such maximum rate, the rate of interest
under this Note shall be deemed to be immediately reduced to such maximum rate
and interest payable hereunder shall be computed at such maximum rate and the
portion of all prior interest payments in excess of such maximum rate shall
be applied and shall be deemed to have been payments in reduction of the
principal balance of this Note.
The terms of this Note cannot be changed, nor may this Note be discharged in
whole or in part, except by a writing executed by the holder. In the event
that holder demands or accepts partial payments of this Note, such demand or
acceptance shall not be deemed to constitute a waiver of the right to demand
the entire unpaid balance of this Note at any time in accordance with the
terms hereof. Any delay by holder in exercising any rights hereunder shall
not operate as a waiver of such rights.
Bank may set off toward payment of any obligations under this Note any
indebtedness due or to become due from Bank to Borrower and any moneys or
other property of Borrower in possession of Bank at any time.
Borrower on demand shall pay all expenses of Bank, including without
limitation reasonable attorneys' fees, in connection with enforcement and
collection of this Note.
This Note shall be governed by the laws of the State of New York.
Whenever used, the singular number shall include the plural, the plural the
singular, and the words "Bank" and "Borrower" shall include their respective
successors and assigns.
TRAVEL PORTS OF AMERICA, INC.
By:__________________________
Title:_________________________
FLEET BANK
By:__________________________
Title:_________________________
NOTE AND WARRANT PURCHASE AGREEMENT
BETWEEN
TRAVEL PORTS OF AMERICA, INC.
AND
CEPHAS CAPITAL PARTNERS, L.P.
$2,000,000 Principal Amount
7.81% Convertible Subordinated Note Due December 4, 2007
Warrant for 40,000 Shares of Common Stock,
Par Value $.01 Per Share (subject to adjustment)
Dated as of December 4, 1997
TABLE OF CONTENTS
Section Page
1. AUTHORIZATION AND CLOSING 1
1.1 Authorization of the Note and the Warrant 1
1.2 Purchase and Sale of the Note and the Warrant 1
1.3 Application and Closing Fees and Expenses 1
1.4 The Closing 2
2. PREPAYMENTS AND PURCHASE OF NOTES 2
2.1 Required Prepayments 2
2.2 Option Prepayments 2
2.3 Optional Prepayment Notice 2
2.4 Purchase of Note on Decrease in
Consolidated Net Worth 3
2.5 Purchase of Note on Change of Control 3
2.6 Accelerated Payment and Prepayment Premium 3
3. PURCHASER'S CONDITIONS 4
3.1 Representations and Warranties; Covenants 4
3.2 Performance: No Default 4
3.3 Consents 4
3.4 Securities Law Compliance 4
3.5 Compliance with Applicable Laws 5
3.6 Proceedings 5
3.7 Registration Agreement 5
3.8 Opinion of the Company's Counsel 5
3.9 Closing Fee and Transaction Expenses 5
3.10 Subsidiary Guaranty 5
3.11 Closing Documents 5
4. AFFIRMATIVE COVENANTS 6
4.1 Financial Statements and Other Information 6
4.2 Inspection Rights 8
4.3 Maintenance of Properties, Etc. 8
4.4 Current Public Information 9
4.5 SBIC Regulatory Provisions 9
4.6 Regulatory Compliance Cooperation 10
5. NEGATIVE COVENANTS 10
5.1 Certain Restrictions 10
5.2 Restriction on Payment of Dividends and
Stock Repurchases 11
5.3 Restriction on Transfer with Affiliates 13
5.4 Incurrence of Indebtedness 13
5.5 Liens and Encumbrances 13
5.6 Disposition of Property 14
5.7 Loans 14
5.8 Investments 14
5.9 New Business; Acquisitions 14
5.10 Merger, Etc. 15
5.11 Liquidation 15
5.12 Material Agreements 16
5.13 Corporate Documents 16
5.14 Usury Laws 16
5.15 Prohibited Use of Proceeds 17
5.16 Investment Company Act 17
6. TRANSFER OF RESTRICTED SECURITIES 17
6.1 Investment Representations 17
6.2 Restrictions on Transfers 17
6.3 Legend 17
6.4 Opinion Delivery 18
6.5 Rule 144A 18
6.6 Legend Removal 18
7. COMPANY REPRESENTATIONS AND WARRANTIES 18
7.1 Organization, Corporate Power and Licenses 18
7.2 Capital Stock and Related Matters 19
7.3 Subsidiaries; Investments 19
7.4 Authorization; No Breach 20
7.5 Financial Statements 20
7.6 Absence of Undisclosed Liabilities 21
7.7 No Material Adverse Change 21
7.8 Absence of Certain Developments 21
7.9 Assets 22
7.10 Tax Matters 23
7.11 Contracts and Commitments 24
7.12 Intellectual Property Rights 24
7.13 Litigation, Etc. 24
7.14 Brokerage 25
7.15 Governmental Consent, Etc. 25
7.16 Insurance 25
7.17 Employees 25
7.18 ERISA 25
7.19 Compliance With Laws 26
7.20 Small Business Matters 26
7.21 Affiliated Transactions 27
7.22 Investment Company 27
7.23 Margin Securities 27
7.24 Disclosure 27
7.25 Reports with the Securities and Exchange Commission 27
7.26 Closing Date 28
8. CONVERSION OF NOTE 28
8.1 Conversion Rights and Procedures 28
8.2 Conversion Price 30
9. SUBORDINATION 35
9.1 Subordination 35
9.2 Liquidation; Dissolution; Bankruptcy 35
9.3 Default on Senior Indebtedness 36
9.4 Acceleration of Securities 37
9.5 Limitation on Right of Action 38
9.6 When Distribution Must be Paid Over 38
9.7 Notice 38
9.8 Subrogation 39
9.9 Relative Rights 39
9.10 Subordination May Not be Impaired by Company 40
9.11 Ranking of Securities 40
10. DEFAULTS AND REMEDIES 40
10.1 Events of Default 40
10.2 Acceleration 41
10.3 Other Remedies 42
10.4 Appointment of Director 42
11. MISCELLANEOUS 42
11.1 Notices; Reporting Date 42
11.2 Survival of Representations and Warranties 43
11.3 Successors and Assigns 43
11.4 Severability 43
11.5 Counterparts 43
11.6 Descriptive Headings, Interpretation 44
11.7 Governing law 44
11.8 Consideration for Warrants 44
11.9 No Strict Construction 44
11.10 Indemnification 44
11.11 Payment Set Aside 45
This NOTE AND WARRANT PURCHASE AGREEMENT, dated as of December 4, 1997
between TRAVEL PORTS OF AMERICA, INC., a New York corporation (the
"Company") and CEPHAS CAPITAL PARTNERS, L.P., a New York limited
partnership (the "Purchaser"). Certain defined terms used herein have
the meanings given thereto in Appendix A attached hereto.
The parties hereto agree as follows:
ARTICLE 1
AUTHORIZATION AND CLOSING
Section 1.1 Authorization of the Note and the Warrant. The
Company shall authorize the issuance and sale to the Purchaser of (a)
its Subordinated Convertible Note (together with any notes issued in
exchange therefor or replacement thereof, the "Note") in an aggregate
principal amount of $2,000,000.00 to be dated the Closing Date, to
mature December 4, 2007 , to bear interest on the unpaid principal
balance thereof from the Closing Date until the principal thereof
shall become due and payable quarterly in arrears on the first day of
each March, June, September and December of each year, commencing
March 1, 1998, at the rate of 7.81% per annum and on overdue
principal, premium and interest at the rate specified therein, to be
subordinated and convertible into shares of the Company's common
stock, par value $.01 per share (the "Common Stock"), on the terms set
forth herein and to have the other terms and conditions and be in the
form set forth in Exhibit A attached hereto and (b) its Stock Purchase
Warrant evidencing the right to acquire an aggregate of forty thousand
(40,000) shares of Common Stock (subject to adjustment) at an initial
exercise price of $5.16 per share of Common Stock, exercisable from
the Closing Date through December 4, 2007 on the terms and conditions
and in the form set forth in Exhibit B attached hereto (together with
any warrants issued in exchange therefor or replacement thereof, the
"Warrant" and together with the Note, the "Securities").
Section 1.2 Purchase and Sale of the Note and the Warrant. At the
Closing, the Company shall issue and sell to the Purchaser and,
subject to the terms and conditions set forth herein and in reliance
upon the Company's representations and warranties herein, the
Purchaser shall purchase from the Company the Note at an aggregate
purchase price of $2,000,000.00 and the Warrant at an aggregate
purchase price of $100.00.
Section 1.3 Application and Closing Fees and Expenses. In
consideration for purchasing the Securities and providing pre-closing
services, at or prior to the Closing, the Company shall pay the
Purchaser a $20,000.00 application fee and a $80,000 closing fee which
shall be fully earned and non-refundable as of the Closing. The
Purchaser acknowledges that as of December 4, 1997, the Company has
paid to the Purchaser $25,000 towards such fees, leaving a $75,000
balance for these fees due and owing at Closing. The Purchaser also
agrees to pay at Closing all fees, expenses and disbursements incurred
by the Purchaser at or prior to the Closing in connection with the
transactions contemplated herein, including, without limitation, the
fees, expenses and disbursement of the Purchaser's counsel.
Section 1.4 The Closing. The closing of the purchase and sale of
the Securities (the "Closing") shall take place at the offices of
Woods, Oviatt, Gilman, Sturman & Clarke LLP, at 10:00 a.m. on December
4, 1997, or at such other place or on such other date as may be
mutually agreeable to the Company and the Purchaser (the "Closing
Date"). At the Closing, the Company shall deliver to the Purchaser
instruments evidencing the Securities, payable to the order of the
Purchaser or its nominee or registered in the Purchaser's or its
nominee's name, respectively, against payment of the purchase price
thereof by a cashier's or certified check, or by wire transfer of
immediately available funds to the Company's account at Fleet Bank in
accordance with wire instructions provided by the Company.
ARTICLE 2
PREPAYMENTS AND PURCHASE OF NOTES
Section 2.1 Required Prepayments. In addition to paying the
entire outstanding principal amount of and interest due on the Note
on the maturity date thereof, commencing on December 4, 2002 and
continuing thereafter on the 4th day of each subsequent March, June,
September and December of each year thereafter until the Note is paid
in full, the Company shall apply to the prepayment of the Note,
without the premium described in Section 2.6, the sum of $100,000.00
and such principal amounts of the Note, together with interest thereon
to the prepayment date, shall become due and payable on such
prepayment dates. All remaining unpaid principal, together with
accrued and unpaid interest thereon shall become due and payable on
the Note's stated maturity date (i.e., December 4, 2007).
Section 2.2 Optional Prepayments. The Company may, at its option,
upon notice as set forth in Section 2.3, prepay the Note in whole at
any time, or from time to time in part (and if in part, only in
integral multiples of $100,000.00 or such lesser principal amount
thereof as shall then be outstanding), at an amount equal to sum of
(a) 100% of the principal amount so prepaid, (b) all accrued and
unpaid interest thereon through the prepayment date and (c) the
applicable premium due under Section 2.6. Any prepayment made on the
Note by the Company pursuant to this Section 2.2 shall reduce its
obligation to make any prepayment required by Section 2.1 and shall
be applied to the prepayments required by Section 2.1 in inverse order
of maturity.
Section 2.3 Optional Prepayment Notice. In the case of an
optional prepayment under Section 2.2, the Company shall give the
Purchaser prior written notice thereof at least forty-five (45) days
in advance of the fixed prepayment date thereof (unless a shorter
notice shall be satisfactory to the Purchaser). Each notice shall
specify the fixed prepayment date, the principal amount of the Note
to be prepaid on such date and the accrued interest and premium to be
paid therewith. Upon the Company giving a prepayment notice pursuant
to this Section 2.3, the principal amount specified in the notice to
be prepaid, the accrued and unpaid interest thereon and the applicable
premium shall become all due and payable on the prepayment date.
Section 2.4 Purchase of Note on Decrease in Net Worth. In the
event that the Company's Consolidated Net Worth as at the last day of
any fiscal quarter ending after the date hereof is equal to or less
than $5,000,000 (the "Minimum Equity") the Purchaser may require the
Company to repay 25% of the principal amount remaining on the Note on
the last day of the sixth month thereafter at a purchase price equal
to the sum of (a) 100% of the principal amount thereof (b) the accrued
and unpaid interest thereon to the date of such repayment and (c) the
applicable premium due pursuant to Section 2.6, and the Company shall
continue to make like payments semiannually thereafter, until such
time as the Note has been paid in full (the obligations to make such
payments being hereinafter referred to as "Section 2.4 Mandatory
Prepayments"); provided, however, that if the Company's Consolidated
Net Worth is above the Minimum Equity as at the last day of any fiscal
quarter ending after such payments have commenced, the Company's
obligation to make Section 2.4 Mandatory Prepayments on dates after
such quarter end shall terminate; further provided, however, that if
the Company's Consolidated Net Worth shall thereafter be equal to or
less than the Minimum Equity as at the last day of any fiscal quarter
ending thereafter, the Company's semiannual Section 2.4 Mandatory
Prepayment shall again commence on the last day of the sixth month
thereafter. Section 2.4 Mandatory Prepayments shall not reduce the
Scheduled Prepayments due under Section 2.2.
Section 2.5 Purchase of Note on Change of Control. If a Change
in Control has occurred or the Company obtains knowledge that a Change
in Control is proposed to occur, the Company shall give prompt written
notice of such Change in Control describing in reasonable detail the
material terms and date of consummation thereof to the holder of this
Note, but in any event such notice shall not be given later than five
(5) days after the occurrence of such Change in Control, and the
Company shall give the Purchaser prompt written notice of any material
change in the terms or timing of such transaction. Upon receipt of a
notice of Change in Control, the Purchaser may require the Company to
repay all or any portion of the principal amount remaining on the Note
by giving written notice to the Company of such election prior to the
later of (a) twenty-one (21) days after receipt of the Company's
notice and (b) five (5) days prior to the consummation of the Change
in Control (the "Expiration Date"). Upon receipt of such election,
the Company shall be obligated to pay (a) 100% of the principal amount
which the Purchaser has elected to be paid, (b) accrued and unpaid
interest thereon to the date of such repayment and (c) the applicable
premium due pursuant to Section 2.6. If any proposed Change in
Control does not occur, all requests for repayment in connection
therewith shall be automatically rescinded, or if there has been a
material change in the terms or the timing of the transaction, the
Purchaser may rescind its request for repayment by giving written
notice of such rescission to the Company.
Section 2.6 Accelerated Payment and Prepayment Premium. If the
Note is prepaid at any time prior to its stated maturity date other
than pursuant to Section 2.1, then such accelerated payment or
prepayment shall be accompanied by a premium equal to a percentage of
the principal amount so paid or prepaid based on the following table:
Payment Made During
12 months ended December__ Prepayment
of the Year Below Percentage
1998 5.0%
1999 5.0%
2000 4.0%
2001 4.0%
2002 3.0%
2003 3.0%
2004 2.0%
2005 2.0%
2006 1.0%
2007 1.0%
ARTICLE 3
PURCHASER'S CONDITIONS
The Purchaser's obligation to purchase and pay for the Securities at
the Closing is subject to the fulfillment to the Purchaser's
satisfaction as of the Closing of the following conditions:
Section 3.1 Representations and Warranties; Covenants. All
representations and warranties made by the Company herein and in any
other agreement, certificate or instrument furnished to the Purchaser
in connection herewith, shall be true and correct in all material
respects when made and as of the Closing as though then made, except
to the extent of changes caused by the transactions expressly
contemplated herein.
Section 3.2 Performance: No Default. The Company shall have
performed all agreements and complied with all conditions contained
herein required to be performed or complied with by it prior to or at
the Closing and, at the time of the Closing, no Default or Event of
Default shall exist.
Section 3.3 Consents. The Company shall have received all third
party and governmental consents, approvals and filings required in
connection with the consummation of the transactions hereunder,
including the consent of Fleet Bank and the holders of any preemptive
rights or rights of first refusal.
Section 3.4 Securities Law Compliance. The Company shall have
made all filings under all applicable federal and state securities
laws necessary to consummate the issuance of the Securities pursuant
to this Agreement in compliance with such laws.
Section 3.5 Compliance with Applicable Laws. The purchase of the
Securities by the Purchaser hereunder shall not be prohibited by any
applicable law or governmental rule or regulation and shall not
subject the Purchaser to any penalty, liability or, in the Purchaser's
sole judgement, other onerous condition under or pursuant to any
applicable law or governmental rule or regulation, and the purchase of
the Securities by the Purchaser hereunder shall be permitted by laws,
rules and regulations of the jurisdictions and governmental
authorities and agencies to which the Purchaser is subject.
Section 3.6 Proceedings. All corporate and other proceedings
taken or required to be taken by the Company in connection with the
transactions contemplated hereby to be consummated at or prior to the
Closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Purchaser and its counsel.
Section 3.7 Registration Agreement. The Company and the Purchaser
shall have entered into a registration agreement in form and substance
as set forth in Exhibit C attached hereto (the "Registration
Agreement"), and the Registration Agreement shall be in full force
and effect as of the Closing.
Section 3.8 Opinion of the Company's Counsel. The Purchaser shall
have received from Gullace & Weld, counsel for the Company, an opinion
with respect to the matters set forth in Exhibit D attached hereto,
which shall be addressed to the Purchaser, dated the date of the
Closing and be in form and substance reasonably satisfactory to the
Purchaser.
Section 3.9 Closing Fee and Transaction Expenses. At the Closing,
the Company shall have paid to the Purchaser in immediately available
funds the unpaid portion of the application and closing fees together
with all expenses and disbursements due the Purchaser pursuant to
Section 1.3.
Section 3.10 Subsidiary Guaranty. At the Closing, the Company's
Subsidiaries shall execute and deliver to Purchaser a guaranty of
payment of the Note and all other Indebtedness of the Company to the
Purchaser, now existing or hereafter arising which shall be in the
form of Exhibit E attached hereto.
Section 3.11 Closing Documents. The Company shall have delivered
to the Purchaser all of the following documents:
(a) an Officers' Certificate, dated the Closing Date,
stating that the conditions specified in Sections 3.1 through
3.4, inclusive, have been fully satisfied;
(b) certified copies of the resolutions duly adopted by
the Company's Board of Directors authorizing the execution,
delivery and performance of this Agreement, Note, the Warrant,
the Registration Agreement and each of the other agreements
contemplated hereby, the issuance and sale of the Securities,
the reservation for issuance upon conversion of the Note and
the exercise of the Warrant of an aggregate of 505,117 shares
of Common Stock and the consummation of all other transactions
contemplated by this Agreement;
(c) certified copies of the Company's Certificate of
Incorporation and By-Laws, each as in effect at the Closing;
(d) copies of all third party and governmental consents,
approvals and filings required in connection with the
consummation of the transactions hereunder (including the
Fleet Bank consent and waivers of all preemptive rights and
rights of first refusal);
(e) duly completed and executed SBA Forms 480 and 652
together with a three (3) year business plan showing the
Company's financial projections and a written statement from
the Company regarding its intended use of proceeds received
from the issuance of the Securities; and
(f) such other documents relating to the transactions
contemplated by this Agreement as the Purchaser or its counsel
may reasonably request.
Any condition specified in this Article 3 may be waived by the
Purchaser; provided that no such waiver shall be effective unless it
is set forth in a writing executed by the Purchaser.
ARTICLE 4
AFFIRMATIVE COVENANTS
Section 4.1 Financial Statements and Other Information. The
Company shall deliver to the Purchaser:
(a) as soon as available but in any event within sixty
(60) days after the end of each fiscal quarter of each Fiscal
Year, unaudited consolidated statements of income and cash
flows of the Company and its Subsidiaries for such quarterly
period and for the period from the beginning of the fiscal
year to the end of such quarter, and unaudited consolidating
and consolidated balance sheets of the Company and its
Subsidiaries as of the end of such quarterly period, setting
forth in each case comparisons to the Company's annual budget
and to the corresponding period in the preceding fiscal year,
and all such statements shall be prepared in accordance with
generally accepted accounting principles, consistently
applied, subject to the absence of footnote disclosures and
to normal year-end adjustments for recurring accruals, and
shall be certified by the Company's Chief Financial Officer;
(b) accompanying the financial statements referred to in
Section 4.1(a) an Officers' Certificate stating that there is
no Default or Event of Default in existence and that neither
the Company nor any of its Subsidiaries is in default under
any of its other material agreements or, if any Default or
Event of Default or any such default exists, specifying the
nature and period of existence thereof and what actions the
Company and its Subsidiaries have taken and propose to take
with respect thereto;
(c) within ninety (90) days after the end of each fiscal
year, consolidating and consolidated statements of income and
cash flows of the Company and its Subsidiaries for such fiscal
year, and consolidating and consolidated balance sheets of the
Company and its Subsidiaries as of the end of such fiscal
year, setting forth in each case comparisons to the Company's
annual budget and to the preceding fiscal year, all prepared
in accordance with generally accepted accounting principles,
consistently applied, and accompanied by (i) with respect to
the consolidated portions of such statements, an opinion
containing no exceptions or qualifications of an independent
accounting firm of recognized national standing, (ii) a
certificate from such accounting firm, stating that in the
course of its examination in connection with its customary
annual audit nothing came to its attention that caused it to
believe that there was a Default or Event of Default in
existence or that there was any other default by the Company
or any Subsidiary in the fulfillment of or compliance with any
of the terms, covenants, provisions or conditions of any other
material agreement to which the Company or any Subsidiary is a
party or, if such accountants have reason to believe any
Default or Event of Default or other default by the Company or
any Subsidiary exists, a certificate specifying the nature
and period of existence thereof and (iii) a copy of such
firm's annual management letter to the Board of Directors;
(d) promptly upon receipt thereof, any additional reports,
management letters or other detailed information concerning
significant aspects of the Company's operations or financial
affairs given to the Company by its independent accountants
(and not otherwise contained in other materials provided to
the Purchaser pursuant hereto);
(e) at least forty-five (45) days after each Fiscal Year
end, a budget prepared on a monthly basis for the Company and
its Subsidiaries for the next succeeding Fiscal Year and on
an annual basis for the second and third succeeding Fiscal
Years (displaying in each case anticipated statements of
income and cash flows and balance sheets), and promptly upon
preparation thereof any other significant budgets prepared by
the Company and any revisions of such budget, and within
thirty (30) days after any monthly period in which there is a
material adverse deviation from the annual budget, a written
explanation of such deviation;
(f) promptly (but in any event within five (5) business
days) after the discovery or receipt of notice of any Default
or Event of Default, any default under any other material
agreement to which it or any of its Subsidiaries is a party,
any condition or event which has resulted in or is reasonably
likely to result in any material liability under any federal,
state or local statute or regulation relating to public health
and safety, worker health and safety or pollution or
protection of the environment or any other material adverse
change, event or circumstance affecting the Company or any
Subsidiary (including the filing of any material litigation
against the Company or any Subsidiary or the existence of any
dispute with any Person which involves a reasonable likelihood
of such litigation being commenced), an Officers' Certificate
specifying the nature and period of existence thereof and what
actions the Company and its Subsidiaries have taken and
propose to take with respect thereto;
(g) within ten (10) days after transmission thereof,
copies of all financial statements, proxy statements, reports
and any other general written communications which the Company
sends to its shareholders or to its Subsidiaries' shareholders
and copies of all registration statements and all regular,
special or periodic reports which it or its Subsidiaries file,
or any of its officers or directors file with respect to the
Company, with the SEC or with any securities exchange on which
any of its securities are then listed, and copies of all press
releases and other statements made available generally by the
Company to the public concerning material developments in the
Company's and its Subsidiaries' businesses; and
(h) with reasonable promptness, such other information and
financial data concerning the Company and its Subsidiaries as
the Purchaser may reasonably request.
Each of the financial statements referred to in Section 4.1(a) and (c) shall
be true and correct in all material respects as of the dates and for the
periods stated therein, subject, in the case of the unaudited financial
statements, to changes resulting from normal year-end adjustments for
recurring accruals (none of which would, alone or in the aggregate, be
materially adverse to the financial condition, operating results, assets,
operations or business prospects of the Company and its Subsidiaries taken as
a whole).
Section 4.2 Inspection Rights. The Company shall permit, and
cause each of its Subsidiaries to permit, any representatives
designated by the Purchaser, upon reasonable notice and during normal
business hours and at such other times as the Purchaser may reasonably
request, to (a) visit and inspect any of their properties, (b) examine
the corporate and financial records and make copies thereof or
extracts therefrom and (c) discuss the affairs, finances and accounts
of any such corporations with their directors, officers and key
employees. The Company consents to its independent accountants
participating in discussions with such persons.
Section 4.3 Maintenance of Properties, Etc. The Company shall,
and shall cause each of its Subsidiaries to:
(a) Maintain its properties and assets in good working
order and condition and make all necessary repairs, renewals,
replacements, additions, betterments and improvements thereto.
(b) Maintain with financially sound and reputable
insurers such insurance as may be required by law and such
other insurance, to such extent and against such hazards and
liabilities, as is customarily maintained by companies
similarly situated.
(c) Discharge when payable all material taxes, assessments
and governmental charges imposed upon its properties or upon
the income or profits therefrom (in each case before the same
becomes delinquent and before penalties accrue thereon) and
all material claims for labor, materials or supplies which if
unpaid would by law become a Lien upon any of its property
unless and to the extent that the same is being contested in
good faith and by appropriate proceedings and adequate
reserves (as determined in accordance with generally accepted
accounting principles, consistently applied) have been
established on its books with respect thereto;
(d) Comply with all other material obligations which it
incurs pursuant to any contract or agreement, whether oral or
written, express or implied, as such obligations become due,
unless and to the extent that the same are being contested in
good faith and by appropriate proceedings and adequate
reserves (as determined in accordance with generally accepted
accounting principles, consistently applied) have been
established on its books with respect thereto;
(e) Keep true books of records and accounts in which full
and correct entries will be made of all its business
transactions, in accordance with sound business practices,
and reflect in its financial statements adequate accruals and
appropriations to reserves, all in accordance with generally
accepted accounting principles.
(f) Comply with all statutes, laws, ordinances, or
government rules and regulations to which it is subject,
noncompliance with which would materially adversely affect
the business, prospects, earnings, properties, assets or
condition, financial or otherwise, of the Company and its
Subsidiaries taken as a whole.
Section 4.4 Current Public Information. The Company shall file
all reports required to be filed by it under the Securities Act and
the Securities Exchange Act and the rules and regulations adopted by
the SEC thereunder and shall take such further action as the Purchaser
may reasonably request, all to the extent required to enable the
Purchaser to sell Restricted Securities pursuant to (a) Rule 144
adopted by the SEC under the Securities Act (as such rule may be
amended from time to time) or any similar rule or regulation hereafter
adopted by the SEC or (ii) a registration statement on Form S-2 or
S-3 or any similar registration form hereafter adopted by the SEC.
Upon request, the Company shall deliver to any the Purchaser a written
statement as to whether it has complied with such requirements.
Section 4.5 SBIC Regulatory Provisions.
(a) Within seventy-five (75) days after the Closing and
thereafter at the time that the Company delivers its quarterly
financial statements to the Purchaser pursuant to Section
4.1(a) until all of the proceeds from the Financing provided
hereunder have been used by the Company and its Subsidiaries,
the Company shall deliver to the Purchaser an Officers'
Certificate describing in reasonable detail the use of the
proceeds of the Financing hereunder by the Company and its
Subsidiaries. In addition to any other rights granted
hereunder, the Company shall permit the Purchaser and the
United States Small Business Administration (the "SBA") access
to the Company's records for the purpose of verifying the use
of such proceeds.
(b) Upon the occurrence of an SBIC Regulatory Violation or
in the event that the Purchaser determines in its reasonable
good faith judgment that a SBIC Regulatory Violation has
occurred, in addition to any other rights and remedies to
which it may be entitled as a holder of the Note, the Warrant
any and Common or other Capital Stock issuable pursuant
thereto, the Purchaser shall have the right to the extent
required under the SBIC Regulations to demand the immediate
repurchase of the Note, the Warrant and all Common Stock or
other Capital Stock issuable pursuant thereto at a price
equal to the aggregate unpaid principal amount of the Note
together with any accrued and unpaid interest thereon, any
premium due pursuant to Section 2.6 and the amount paid for
such stock, plus all accrued or declared and unpaid dividends
thereon, by delivering written notice of such demand to the
Company. The Company shall pay the purchase price for all
such securities by a cashier's or certified check or by wire
transfer of immediately available funds to the Purchaser
within thirty (30) days after the Company's receipt of the
demand notice, and upon such payment, the Purchaser shall
deliver the instruments and certificates evidencing the
securities to be repurchased duly endorsed for transfer or
accompanied by duly executed forms of assignment.
(c) The Company shall use the proceeds of the Financing
provided hereunder solely for working capital and other
purposes complying with the SBA Regulations, consistent with
representations and warranties made by the Company to the
Purchaser hereunder.
Section 4.6 Regulatory Compliance Cooperation. In the event that
the Purchaser determines that it has a Regulatory Problem (as defined
below), the Company shall take all such actions as are reasonably
requested by the Purchaser in order to effectuate and facilitate any
transfer by the Purchaser of any securities of the Company then held
by the Purchaser to any person designated by the Purchaser to
alleviate such Regulatory Problem.
ARTICLE 5
NEGATIVE COVENANTS
Section 5.1 Certain Restrictions. The Company will not, and will
not permit any of its Subsidiaries to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of (a) the
Company to perform the provisions of this Agreement, the Note, the
Warrant or the Registration Agreement or (b) any Subsidiary to (i)
pay dividends or make any other distributions on its Capital Stock or
any other interest or participation in, or measured by, its profits,
owned by the Company or any of the Subsidiaries or pay any
Indebtedness owed to the Company or any of the Subsidiaries, (ii) make
loans or advances to the Company or any of the Subsidiaries or (iii)
transfer any of its properties or assets to the Company or any of its
Subsidiaries, except for such encumbrances or restrictions as are
listed on the Schedule of Restrictions and Liens attached hereto,
including any renewal, refunding or refinancing thereof in principal
amounts not greater than exists on the date hereof, and encumbrances
or restrictions existing under or by reason of (1) this Agreement, (2)
applicable law, (3) any instrument governing Indebtedness or capital
stock of a Person acquired by the Company, or any of its Subsidiaries,
in existence at the time of such acquisition (but not in connection
with such acquisition), including any renewals, refundings or
refinancing thereof in principal amounts not greater than exists on
the date of acquisition, provided, that, the restrictions contained
in such renewals, refundings or refinancing are no more restrictive
than those contained in such instrument at the time of such
acquisition, which encumbrance or restriction is not applicable to
any Person, or to the properties or assets of any Person, other than
the Person, or the property or assets of the Person so acquired by
the Company or its Subsidiaries, (4) by reason of customary non-
assignment provisions in leases entered into in the ordinary course
of business and consistent with past practices (5) with respect to
clause (3) above, purchase money obligations for property acquired in
the ordinary course of business, or (6) the Bank Credit Documents.
Section 5.2 Restriction on Payment of Dividends and Stock
Repurchases. The Company may not, directly or indirectly: (a) declare
or pay any dividend on, or make any distribution with respect to any
shares of its Capital Stock of any class (other than dividends or
distributions payable in shares of Common Stock issued with respect
to outstanding shares of Common Stock) or (b) purchase, redeem or
otherwise acquire or retire for value any Equity Interest of the
Company, any Subsidiary or other Affiliate (other than Equity
Interests owned by the Company or any Subsidiary) or (c) permit any
Subsidiary to declare or pay any dividend on, or make any contribution
to its shareholders of, any shares of its capital stock, except to
the Company or any Subsidiary (other than dividends or distributions
payable in its common stock or the Common Stock of the Company issued
with respect to outstanding shares of the Subsidiary's Common Stock)
or (d) permit any Subsidiary to purchase, redeem or otherwise acquire
or retire for value any Equity Interests of the Company or any
Affiliate (other than any Equity Interests owned by the Company or
any Subsidiary) (such dividends, distributions, purchases,
redemptions or other acquisitions or retirements being collectively
referred to as "Restricted Payments") if at the time of such
Restricted Payment:
(a) a Default or an Event of Default shall exist and be
continuing or shall occur as a consequence thereof; or
(b) if, upon giving effect to such Restricted Payment,
the aggregate amount expended for all such Restricted Payments
subsequent to the Closing shall exceed the sum of the
following less all Restricted Payments made since October 31,
1997:
(i) twenty-five percent (25%) of the aggregate
Consolidated Net Income of the Company accrued during
fiscal quarters ending subsequent to October 31, 1997;
(ii) the aggregate net proceeds, including cash and
the fair market value of property other than cash (as
reasonably determined in good faith by the Board of
Directors as evidenced by a board resolution certified
to the Purchaser), received subsequent to the Closing
by the Company from the issue or sale (other than to a
Subsidiary) of Capital Stock of the Company (other
than Capital Stock subject to redemption under any
circumstances prior to the maturity of the Note
pursuant to a written agreement or instrument
(collectively, "Disqualified Stock")) or of warrants
to purchase such Capital Stock (other than warrants
to purchase such Disqualified Stock) other than in
connection with the conversion of any Indebtedness;
(iii) the aggregate net proceeds received by the
Company subsequent to the Closing from the issue or
sale (other than to a Subsidiary) of any debt
securities or Disqualified Stock of the Company, if,
at such time, such debt securities or Disqualified
Stock, as the case may be, have been converted into
Capital Stock of the Company other than Disqualified
Stock; and
(iv) $250,000.00.
For purposes of any calculation pursuant to the preceding
sentence which is required to be made within sixty (60) days
after the declaration of a dividend by the Company or any
Subsidiary, such dividend shall be deemed to be paid at the
date of declaration, and the subsequent payment of such
dividend during such sixty (60) day period shall not be
treated as an additional Restricted Payment.
(c) The Purchaser shall have received an Officers'
Certificate at least 15 days prior to the applicable record
or purchase date for any planned Restricted Payment,
certifying that each of the conditions to the Restricted
Payment listed above have been met and detailing the
calculation required by Section 5.2(b).
(d) Notwithstanding the foregoing, the provisions of this
Section 5.2 will not prevent (i) the payment of any dividend
within sixty (60) days after the date of declaration if the
payment complied with the requirements of this Section 5.2 on
the date of declaration; or (ii) the retirement of any shares
of the Company's Capital Stock by exchange for, or out of the
proceeds of the substantially concurrent sale (other than to
a Subsidiary) of, other shares of its Common Stock (other than
any Disqualified Stock), and neither such retirement nor the
proceeds of any such sale or exchange shall be included in
any computation made under this Section 5.2.
Section 5.3 Restriction on Transfer With Affiliates. The Company
will not, nor permit any Subsidiary to, directly or indirectly, (a)
enter into or permit to exist any transaction, including, without
limitation, the purchase, sale, lease or exchange of any property, or
the rendering of any service, with any Affiliate of the Company or any
officer or director of the Company or any Affiliate of such officer or
director, on terms that are less favorable to the Company or such
Subsidiary, as the case may be, than those which might be obtained at
the time of such transaction from persons who are not Affiliates on
an arms length basis or (c) purchase securities of any Affiliate or a
Person controlled by any Affiliate. The restrictions in this Section
5.3 shall not apply to intercompany advances or bona fide transactions
with or between Subsidiaries and/or the Company to the extent
otherwise permitted in this Agreement.
Section 5.4 Incurrence of Indebtedness. The Company will not,
nor permit any of its Subsidiaries to, directly or indirectly, create,
incur, issue, purchase, assume, guarantee or become liable with
respect to, contingently or otherwise, or extend the maturity of, any
Indebtedness except for: (a) the Senior Indebtedness; (b) the Senior
Subordinated Indebtedness; (b) other Indebtedness of the Company
outstanding as of October 30, 1997; (d) Capitalized Lease obligations,
letters of credit to finance trade payables, in each case to the
extent incurred in the ordinary course of business of the Company and
its Subsidiaries; (e) Indebtedness of the Company or a Subsidiary of
the Company secured by Liens on assets used in the ordinary course of
business by the Company or any Subsidiary, the value of which equals
at least fifty percent (50%) of the outstanding principal amount of
such Indebtedness; (f) Indebtedness which is expressly junior in
right of payment to the Company Indebtedness to the Purchaser on terms
and conditions satisfactory to the Purchaser; (g) any amendment,
removal, extension or refunding of Indebtedness described in clauses
(a) through (f), provided that the principal amount thereof is not
increased and no changes are made thereto which, in the Purchaser's
opinion, are materially adverse to the Purchaser; (h) endorsements of
negotiable instruments for deposit or collection in the ordinary
course of business; or (i) the Bank Credit Documents.
Section 5.5 Liens and Encumbrances. The Company will not, and
will not permit any of its Subsidiaries to, create or suffer to exist
any Lien in respect of any property or assets of any character whether
owned now or hereafter other than: (a) any Lien created pursuant to
the Bank Credit Documents to secure Indebtedness outstanding pursuant
thereto; (b) Liens existing on the date hereof and described in the
Schedule of Restrictions and Liens attached hereto; or (c) purchase
money Liens securing purchase money Indebtedness incurred with assets
acquired by the Company or any of its Subsidiaries in the ordinary
course of business to secure the purchase price of such property or
equipment or incurred solely for the purpose of financing the
acquisition, construction or improvement of any property or equipment
owned by the Company or any of its Subsidiaries, the value of which
equals at least fifty percent (50%) of the outstanding principal
amount of the Indebtedness secured thereby.
Section 5.6 Disposition of Property. The Company shall not and
it shall not permit any of its Subsidiaries, directly or indirectly,
to sell, transfer or dispose of any of their respective properties or
assets (or any right, title or interest therein), whether real,
personal or mixed, tangible or intangible, except for: (a) sales of
inventory in the ordinary course of business consistent with prudent
business practices; (b) sale by the Company of properties and assets
for fair consideration in any fiscal year which does not exceed in the
aggregate twenty percent (20%) of the Company's total assets as of the
end of the immediately preceding Fiscal Year, as reported in the
Company's audited balance sheet for such Fiscal Year and delivered to
the Purchaser; provided that, on the date of each such disposition and
after giving effect thereto, no Default or Event of Default shall
exist or occur and be the continuing; or (c) sales permitted under
Section 5.10.
Section 5.7 Loans. The Company shall not, and shall not permit
any Subsidiary to, lend money, or make or permit to be outstanding
loans or advances, to any Person, except: (a) loans or advances in
nature of deposits or prepayments to subcontractors, suppliers and
others in the ordinary course of business; (b) loans or advances by
wholly-owned Company Subsidiaries to the Company or other wholly-
owned Company Subsidiaries in ordinary course of business; (c) loans
or advances by the Company to any Subsidiary, provided the Subsidiary
shall have first guaranteed payment of the Company Indebtedness to the
Purchaser on terms and conditions satisfactory to the Purchaser; or
(d) loans or advances to employees not exceeding $100,000.00 in the
aggregate at any one time outstanding.
Section 5.8 Investments. The Company shall not, and shall not
permit any Subsidiary to, purchase, acquire or own or make any
Investment in, or permit any Subsidiary to purchase, acquire or own,
or make any Investment, except: (a) direct obligations of the United
States of America or agencies thereof, in each case with maturity of
less than one year; (b) certificates of deposit of or other time
deposits with banks having net worth in excess of $50,000,000.00,
maturing in not more than one year; and (c) shares of an open-ended
investment company registered under the Investment Company Act of
1940 having assets of not less than $5,000,000.00 which invests in
money market and other debt securities with maturities not exceeding
one year.
Section 5.9 New Business; Acquisitions The Company will not, and
will not permit any Subsidiary to: (a) allow its existence as a
corporation to cease or terminate or substantially change the nature
of the businesses in which they engage, as described in the Company's
Annual Report on Form 10-K filed by the Company with the SEC for the
fiscal year ended April 30, 1997; (b) purchase or lease any asset or
properties if such assets or properties would constitute a substantial
part of the assets or properties of the Company or any such Subsidiary
and the such purchase or lease would not be in the ordinary course of
the business of the Company or such Subsidiary; or (c) create any
Subsidiary unless such Subsidiary shall have first guaranteed payment
of the Company's Indebtedness to the Purchaser on terms and conditions
satisfactory to the Purchaser.
Section 5.10 Merger, Etc. The Company shall not consolidate with
or merge into, or transfer all or substantially all of its assets in
one or more related transactions, to, any person unless:
(a) (i) The Company shall be the surviving entity or (ii)
the Person formed by or surviving any consolidation or merger
(if other than the Company), or to which such sale, conveyance
or lease shall have been made, is a corporation organized and
existing under the laws of the United States or a State
thereof or the District of Columbia ("New Company");
(b) The New Company expressly assumes in writing all the
obligations of the Company under this Agreement and the
Securities, except that it need not assume the obligations of
the Company as to conversion of the Note or the issuance of
Common Stock under the Warrant if the Purchaser receives the
securities, cash or other assets deliverable upon conversion
of the Note and/or the exercise of the Warrant, as applicable,
as a result of such transaction if such rights have been
exercised by the Purchaser;
(c) Immediately after giving effect to such transaction no
Default or Event of Default shall have occurred and be
continuing;
(d) The New Company has a net worth that is not less than
the greater of the Consolidated Net Worth of the Company at
the date hereof or immediately prior to the closing of the
transaction; and
(e) The Company shall have delivered to the Purchaser, at
least fifteen (15) days prior to the closing of the proposed
transaction, true and complete copies of the documents to be
executed by the parties to such transaction in connection with
such transaction (all of which shall be satisfactory to the
Purchaser) and financial information requested by the
Purchaser together with an Officers' Certificate certifying
that each of the conditions set forth in this Section 5.10
have been satisfied and an opinion of counsel to the Purchaser
stating that the proposed transaction complies with this
Agreement.
Notwithstanding the foregoing, the Company shall not be released from
the obligation to pay the principal of and interest or premiums on the
Note or to honor any obligations hereunder or any of the other
Securities in the case of an asset sale, transfer or lease unless the
Purchaser expressly agrees to do so in writing.
Section 5.11 Liquidation.
(a) The Company may not wind up, liquidate its affairs or
dissolve (except pursuant to a plan of liquidation incident
to a merger, consolidation, sale of assets or other
transaction permitted under Section 5.10) which provides for,
contemplates or the effectuation of which is preceded by: (a)
the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company otherwise than
substantially as an entirety; and (b) the distribution of all
or substantially all of the proceeds of such sale, lease,
conveyance or other disposition and of the remaining assets
of the Company to the holders of Capital Stock of the Company,
unless the Company shall have made provision acceptable to
Purchaser for the satisfaction of all of the Company's
Indebtedness to the Purchaser (including all outstanding
principal, premiums, if any, and accrued and unpaid interest
owed under the Note).
(b) Notwithstanding the foregoing, no liquidating
distributions may be made by the Company if a Default or Event
of Default has occurred and is continuing nor may any such
liquidating distribution be made if for any reason the
proceeds to be paid the Purchaser are or could become subject
to any order or judgement of any court or governmental
authority enjoining, restraining or otherwise prohibiting such
application of the proceeds.
(c) At least ninety (90) days prior to the date on which
the Note is to be prepaid by the Company pursuant to this
Section 5.11, the Company shall mail, at the Company's
expense, a prepayment notice required under Section 2.2
containing the information required thereunder and also
stating that the Note is to be prepaid pursuant to this
Section 5.11.
Section 5.12 Material Agreements . The Company shall not, and shall
not permit any Subsidiary to, modify, amend, release or grant any
waiver or acquiescence under or in connection with or violate, any
term or provision of the Senior Subordinated Indebtedness Documents
or if any such modification, release, waiver or acquiescence or
violation can reasonably be expected to have a material adverse
effect on the business, operations, property or financial condition
the Company and its Subsidiaries, or on the ability of the Company
to perform its obligations under this Agreement, the Note, the
Registration Agreement or the Warrant; or modify or amend or the
Senior Subordinated Indebtedness Documents to authorize borrowings
thereunder at any time in excess of the amount permitted under
Article 9, or to increase to the rate of interest on (except for
existing floating rate loans) or to extend the maturity of borrowings
thereunder (except to extend or renew an expiring line to credit)
from those in effect on the date hereof, or to reduce the amount of
the revolving credit available to the Company.
Section 5.13 Corporate Documents. The Company shall not, and shall
not permit any Subsidiary to, amend or modify permit to be amended or
modified the charter or By-Laws of the Company or its Subsidiaries
from the forms thereof in effect on the Closing Date, except for
changes which do not adversely affect the rights of the Purchaser.
Section 5.14 Usury Laws. The Company will not assert, plead (as a
defense or otherwise) or in any manner whatsoever claim (and will
actively resist any attempt to compel it to assert, plead or claim)
in any action, suit or proceeding that the interest rate on the Note
violates present or future usury or other laws relating to the
interest payable on any Indebtedness and will not otherwise avail
itself (and will actively resist any attempt to compel it to avail
itself) of the benefits of any such laws.
Section 5.15 Prohibited Use of Proceeds. The Company shall not,
nor shall it permit any Subsidiary to, use any proceeds from the sale
of the Notes hereunder, directly or indirectly, for the purposes of
purchasing or carrying any "margin securities" within the meaning of
Regulation G or T promulgated by the Board of Governors of the Federal
Reserve Board or for the purpose of arranging for the extension of
credit secured, directly or indirectly, in whole or in part by
collateral that includes any "margin securities."
Section 5.16 Investment Company Act. The Company will not, and
will take such action so that none of the Subsidiaries will, register
as, or conduct their respective businesses or take any action which
shall cause any of them to become or be deemed to be, an investment
company as defined under the Investment Company Act of 1940 and the
rules and regulations of the SEC thereunder.
ARTICLE 6
TRANSFER OF RESTRICTED SECURITIES
Section 6.1 Investment Representations. The Purchaser hereby
represents that it is acquiring the Restricted Securities purchased
hereunder or acquired pursuant hereto for its own account with the
present intention of holding such securities for purposes of
investment, and that it has no intention of selling such securities
in a public distribution in violation of the federal securities laws
or any applicable state securities laws; provided that nothing
contained herein shall prevent the Purchaser and subsequent holders
of Restricted Securities from transferring such securities in
compliance with the provisions of this Article 6.
Section 6.2 Restrictions on Transfers. Restricted Securities are
transferable only pursuant to (a) public offerings registered under
the Securities Act, (b) Rule 144 or Rule 144A of the SEC (or any
similar rule or rules then in force) if such rule is available, (c)
upon satisfaction of the conditions specified in Section 6.4 or (d)
any other legally available means of transfer.
Section 6.3 Legend. Each certificate or instrument representing
Restricted Securities shall be imprinted with a legend in
substantially the following form:
"The securities represented hereby were originally issued on
December 4, 1997, and have not been registered under the
Securities Act of 1933, as amended. The transfer of the
securities represented by this certificate is subject to the
conditions specified in the Note and Warrant Purchase
Agreement, dated as of December 4, 1997 and as amended and
modified from time to time, between the issuer (the "Company")
and certain investors. A copy of such conditions shall be
furnished by the Company to the holder hereof upon written
request and without charge."
Section 6.4 Opinion Delivery. In connection with the transfer of
any Restricted Securities (other than a transfer described in Section
6.2(a) above), the holder thereof shall deliver written notice to the
Company describing in reasonable detail the transfer or proposed
transfer, together with an opinion of Woods, Oviatt, Gilman, Sturman &
Clarke LLP or other counsel which (to the Company's reasonable
satisfaction) is knowledgeable in securities law matters to the effect
that such transfer of Restricted Securities may be effected without
registration of such Restricted Securities under the Securities Act.
In addition, if the holder of the Restricted Securities delivers to
the Company an opinion of Woods, Oviatt, Gilman, Sturman & Clarke LLP
or such other counsel that no subsequent transfer of such Restricted
Securities shall require registration under the Securities Act, the
Company shall promptly upon such contemplated transfer deliver new
certificates for such Restricted Securities which do not bear the
Securities Act legend set forth in Section 6.3. If the Company is
not required to deliver new certificates for such Restricted
Securities not bearing such legend, the holder thereof shall not
transfer the same until the prospective transferee has confirmed to
the Company in writing its agreement to be bound by the conditions
contained in this Article 6.
Section 6.5 Rule 144A. Upon the request of the Purchaser, the
Company shall promptly supply to the Purchaser or its prospective
transferees all information regarding the Company required to be
delivered in connection with a transfer pursuant to Rule 144A of the
SEC.
Section 6.6 Legend Removal. If any Restricted Securities are
sold pursuant to Rule 144(k), the Company shall, upon the request of
the holder of such Restricted Securities, remove the legend set forth
in Section 6.3 from the certificates for such Restricted Securities.
ARTICLE 7
COMPANY REPRESENTATIONS AND WARRANTIES
As a material inducement to the Purchaser to enter into this Agreement
and purchase the Securities, the Company hereby represents and
warrants that:
Section 7.1 Organization, Corporate Power and Licenses. The
Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York and is qualified to
do business in every jurisdiction in which its ownership of property
or conduct of business requires it to qualify, except where the
failure to so qualify would not have a material adverse effect on the
Company. The Company possesses all requisite corporate power and
authority and all material licenses, permits and authorizations
necessary to own and operate its properties, to carry on its
businesses as now conducted and presently proposed to be conducted
and to carry out the transactions contemplated by this Agreement.
The copies of the Company's and each Subsidiary's charter documents
and By-Laws which have been furnished to the Purchaser's counsel
.reflect all amendments made thereto at any time prior to the date of
this Agreement and are correct and complete.
Section 7.2 Capital Stock and Related Matters.
(a) As of the Closing and immediately thereafter, the
authorized capital stock of the Company shall consist of
10,000,000 shares of Common Stock, of which 5,612,595 shares
shall be issued and outstanding and an aggregate of
__________ shares shall be reserved for issuance pursuant to
Options or Convertible Securities, of which 505,117 shares
shall be reserved for issuance upon conversion of the Note
and exercise of the Warrant. As of the Closing, neither the
Company nor any Subsidiary shall have outstanding any
Convertible Securities or any securities containing any
profit participation features, nor shall it have outstanding
any Options or any stock appreciation rights or phantom stock
plans, except for the Securities and as set forth on the
attached "Capitalization Schedule." The Capitalization
Schedule accurately sets forth the following information with
respect to all outstanding Options and Convertible Securities:
the holder, the number of shares covered, the exercise price
and the expiration date. As of the Closing, neither the
Company nor any Subsidiary shall be subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire
or retire any Equity Interests, except as set forth on the
Capitalization Schedule. As of the Closing, all of the
outstanding shares of the Company's Capital Stock shall be
validly issued, fully paid and nonassessable.
(b) There are no statutory or contractual shareholder
preemptive rights or rights of refusal with respect to the
issuance of the Securities hereunder or the issuance of the
Common Stock upon conversion of the Note or exercise of the
Warrant. The Company has not violated any applicable federal
or state securities laws in connection with the offer, sale
or issuance of any of its Capital Stock, and the offer, sale
and issuance of the Securities hereunder do not require
registration or qualification under the Securities Act or any
applicable state securities laws.
Section 7.3 Subsidiaries; Investments. The attached "Subsidiary
Schedule" correctly sets forth the name of each Subsidiary, the
jurisdiction of its incorporation and the Persons owning the
outstanding capital stock of such Subsidiary. Each Subsidiary is duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, possesses all requisite
corporate power and authority and all material licenses, permits and
authorizations necessary to own its properties and to carry on its
businesses as now being conducted and as presently proposed to be
conducted and is qualified to do business in every jurisdiction in
which its ownership of property or the conduct of business requires
it to qualify, except where the failure to so qualify would not have
a material adverse effect on the Company or such Subsidiary. Except
as set forth on the Subsidiary Schedule, all of the outstanding
shares of capital stock of each Subsidiary are validly issued, fully
paid and nonassessable, and all such shares are owned by the Company
or another Subsidiary free and clear of any Lien and not subject to
any option or right to purchase any such shares. Except as set forth
on the Subsidiary Schedule, neither the Company nor any Subsidiary
owns or holds the right to acquire any shares of stock or any other
security or interest in any other Person.
Section 7.4 Authorization; No Breach. The execution, delivery
and performance of this Agreement, the Note, the Registration
Agreement, the Warrant and all other agreements and instruments
contemplated hereby to which the Company is a party, have been duly
authorized by the Company and Company has obtained the consent of
Fleet Bank to Company's execution and deliver thereof. This
Agreement, the Registration Agreement, the Note, the Warrant and all
other agreements and instruments contemplated hereby to which the
Company is a party each constitutes a valid and binding obligation of
the Company, enforceable in accordance with its terms. Except as set
forth on the attached Restrictions and Liens Schedule, the execution
and delivery by the Company of this Agreement, the Notes, the
Registration Agreement, the Warrants, and all other agreements and
instruments contemplated hereby to which the Company is a party, the
offering, sale and issuance of the Securities hereunder, the issuance
of Common Stock upon conversion of the Note and the exercise of the
Warrant and the fulfillment of and compliance with the respective
terms hereof and thereof by the Company, do not and shall not (a)
conflict with or result in a breach of the terms, conditions or
provisions of, (b) constitute a default under, (c) result in the
creation of any Lien upon the Company's or any Subsidiary's Capital
Stock or assets pursuant to, (d) give any third party the right to
modify, terminate or accelerate any obligation under, (e) result in a
violation of or (f) require any authorization, consent, approval,
exemption or other action by or notice or declaration to, or filing
with, any court or administrative or governmental body or agency
pursuant to, the charter or bylaws of the Company or any Subsidiary,
or any law, statute, rule or regulation to which the Company or any
Subsidiary is subject (including, without limitation, any usury laws
applicable to the Note), or any material agreement, instrument, order,
judgement or decree to which the Company or any Subsidiary is subject.
Except as set forth on the Restrictions and Liens Schedule, none of
the Subsidiaries are subject to any restrictions upon making loans
or advances or paying dividends to, transferring property to, or
repaying any Indebtedness owed to, the Company or another Subsidiary.
Section 7.5 Financial Statements. Attached hereto as the
"Financial Statements Schedule" are the following financial
statements:
(a) the audited consolidated balance sheets of the Company
and its Subsidiaries as of April 30, 1997 (the "Latest Balance
Sheet"), April 30, 1996 and April 30, 1995, and the related
statements of income and cash flows (or the equivalent) for
the respective twelve (12) month periods then ended; and
(b) the unaudited consolidated balance sheet of the
Company and its Subsidiaries as of July 31, 1997, and the
related statements of income and cash flows (or the
equivalent) for the six (6) month period then ended.
Each of the foregoing financial statements (including in all cases
the notes thereto, if any) is accurate and complete in all material
respects, is consistent with the books and records of the Company and
its Subsidiaries (which, in turn, are accurate and complete in all
material respects) and has been prepared in accordance with generally
accepted accounting principles, consistently applied, subject in the
case of the unaudited financial statements to the absence of footnote
disclosure and changes resulting from normal year-end adjustments for
recurring accruals (none of which would, alone or in the aggregate, be
materially adverse to the financial condition, operating results,
assets, operations or business prospects of the Company and its
Subsidiaries taken as a whole).
Section 7.6 Absence of Undisclosed Liabilities. Except as set
forth on the attached "Liabilities Schedule," the Company and its
Subsidiaries do not have any material obligation or liability
(whether accrued, absolute, contingent, unliquidated or otherwise,
whether or not known to the Company or any Subsidiary, whether due or
to become due and regardless of when asserted) arising out of
transactions entered into at or prior to the Closing, or any action
or inaction at or prior to the Closing, or any state of facts existing
at or prior to the Closing other than: (a) liabilities set forth on
the Latest Balance Sheet (including any notes thereto) and (b)
liabilities and obligations which have arisen after the date of the
Latest Balance Sheet in the ordinary course of business (none of which
is a liability resulting from breach of contract, breach of warranty,
tort, infringement, claim or lawsuit).
Section 7.7 No Material Adverse Change. Since the date of the
Latest Balance Sheet, there has been no material adverse change in
the financial condition, operating results, assets, operations,
employee relations or customer or supplier relations of the Company
and its Subsidiaries taken as a whole.
Section 7.8 Absence of Certain Developments.
(a) Except as expressly contemplated by this Agreement or
as set forth on the attached "Developments Schedule," since
the date of the Latest Balance Sheet, neither the Company nor
any Subsidiary have:
(i) issued any notes, bonds or other debt
securities or any Capital Stock or other Equity
Interest or any securities convertible into or
exchangeable for any Capital Stock or other equity
securities;
(ii) borrowed any amount or incurred or become
subject to any material liabilities, except current
liabilities incurred in the ordinary course of
business and liabilities under contracts entered into
in the ordinary course of business;
(iii) discharged or satisfied any material Lien or
paid any material obligation or liability, other than
current liabilities paid in the ordinary course of
business;
(iv) declared or made any payment or distribution
of cash or other property to its shareholders with
respect to any Equity Interests or purchased or
redeemed any shares of its Capital Stock or other
Equity Interests;
(v) granted or permitted any material Liens to
attach to any of its properties or assets or subjected
them to any material Lien, except Liens for current
property taxes not yet due and payable;
(vi) sold, assigned or transferred any of its
tangible assets, except in the ordinary course of
business, or canceled any material debts or claims;
(vii) sold, assigned or transferred any patents or
patent applications, trademarks, service marks, trade
names, corporate names, copyrights or copyright
registrations, trade secrets or other intangible
assets, or disclosed any material proprietary
confidential information to any Person;
(viii) suffered any material extraordinary losses or
waived any rights of material value, whether or not
in the ordinary course of business or consistent with
past practice;
(ix) made capital expenditures or commitments
therefor which are not in the ordinary course of
business;
(x) made any loans or advances to, guarantees for
the benefit of, or any Investments in, any Persons in
excess of $50,000.00 in the aggregate;
(xi) made any charitable contributions or pledges
in excess of $50,000.00 in the aggregate;
(xii) suffered any damage, destruction or casualty
loss exceeding in the aggregate $50,000.00, whether or
not covered by insurance;
(xiii) made any Investment in or taken steps to
incorporate any Subsidiary;
(xiv) entered into any other material transaction
other than in the ordinary course of business; or
(xv) Made any bribes, kickback payments or other
illegal payments.
Section 7.9 Assets. Except as set forth on the Restrictions and
Liens Schedule attached hereto, the Company and each Subsidiary have
good and marketable title to, or a valid leasehold interest in, the
material properties and assets used by them, located on their premises
or shown on the Latest Balance Sheet or acquired thereafter, free and
clear of all Liens, except for properties and assets disposed of in
the ordinary course of business since the date of the Latest Balance
Sheet and except for current property taxes not yet due and payable.
The Company's and each Subsidiary's buildings, equipment and other
tangible assets are in good operating condition in all material
respects and are fit for use in the ordinary course of business. The
Company and each Subsidiary own, or have a valid leasehold interest
in, all material tangible assets necessary for the conduct of their
respective businesses as presently conducted and as presently proposed
to be conducted.
Section 7.10 Tax Matters.
(a) Except as set forth on the attached "Taxes Schedule," the
Company and each Subsidiary have filed all material Tax Returns which
they are required to file under applicable laws and regulations; all
such Tax Returns are complete and correct in all material respects
and have been prepared in compliance with all applicable laws and
regulations in all material respects; the Company and each Subsidiary
in all material respects have paid all Taxes due and owing by them
(whether or not such Taxes are required to be shown on a Tax Return)
and have withheld and paid over to the appropriate taxing authority
all Taxes which they are required to withhold from amounts paid or
owing to any employee, stockholder, creditor or other third party;
neither the Company nor any Subsidiary has waived any statute of
limitations with respect to any material Taxes or agreed to any
extension of time with respect to any material Tax assessment or
deficiency; the accrual for Taxes on the Latest Balance Sheet would
be adequate to pay all Tax liabilities of the Company and its
Subsidiaries if their current tax year were treated as ending on the
date of the Latest Balance Sheet (excluding any amount recorded which
is attributable solely to timing differences between book and Tax
income); since the date of the Latest Balance Sheet, the Company and
its Subsidiaries have not incurred any material liability for Taxes
other than in the ordinary course of business; the assessment of any
additional Taxes for periods for which Tax Returns have been filed by
the Company and each Subsidiary shall not exceed the recorded
liability therefor on the Latest Balance Sheet (excluding any amount
recorded which is attributable solely to timing differences between
book and Tax income); the federal income Tax Returns of the Company
and its Subsidiaries have been audited and closed for all tax years
through 1991; except as set forth on the Tax Audit Schedule attached
hereto, no foreign, federal, state or local tax audits or
administrative or judicial proceedings are pending or being conducted
with respect to the Company, any Subsidiary nor information related
to Tax matters has been requested by any foreign, federal, state or
local taxing authority and no written notice indicating an intent to
open an audit or other review has been received by the Company from
any foreign, federal, state or local taxing authority; and there are
no material unresolved questions or claims concerning the Company's,
any Subsidiary's Tax liability.
(b) Neither the Company nor any of its Subsidiaries has
made an election under Section 341(f) of the Internal Revenue
Code of 1986, as amended. Neither the Company nor any
Subsidiary has been or is currently a member of an Affiliated
Group, except for the Affiliated Group in which the Company
is the parent. Neither the Company nor any Subsidiary is
liable for the Taxes of another person that is not a
Subsidiary in a material amount under (i) Treas. Reg. Section
1.1502-6 (or comparable provisions of state, local or foreign
law), (ii) as a transferee or successor, (iii) by contract or
indemnity or (iv) otherwise. Neither the Company nor any
Subsidiary is a party to any tax sharing agreement. The
Company and each Subsidiary have disclosed on their federal
income Tax Returns any position taken for which substantial
.authority (within the meaning of IRC Section 6662(d)(2)(B)
(i)) did not exist at the time the return was filed. Neither
the Company nor any Subsidiary has made any payments, is
obligated to make payments or is a party to an agreement that
could obligate it to make any payments that would not be
deductible under IRC Section 280G.
Section 7.11 Contracts and Commitments. All of the material
contracts, agreements and instruments to which the Company and its
Subsidiaries are parties are valid, binding and enforceable against
the Company or the Subsidiary that is a party thereto in accordance
with their respective terms. The Company and each Subsidiary have
performed all material obligations required to be performed by them
under such contracts, agreements and are not in material default
under or in material breach of nor in receipt of any claim of default
or breach under any such contract, agreement or instrument; no event
has occurred which with the passage of time or the giving of notice
or both would result in a material default, breach or event of
noncompliance by the Company or any Subsidiary under any such
contract, agreement or instrument.
Section 7.12 Intellectual Property Rights. The Company or one of
its Subsidiaries owns all right, title and interest to, or has the
right to use pursuant to a valid license, all Intellectual Property
Rights necessary for the operation of the businesses of the Company
and its Subsidiaries as presently conducted and as presently proposed
to be conducted, free and clear of all Liens. There is no threatened,
pending or reasonably foreseeable loss or expiration of any
Intellectual Property Right or related group of Intellectual Property
Rights owned or used by the Company or any Subsidiary which would
reasonably be expected to have a material adverse effect on the
conduct of the Company's and its Subsidiaries' respective businesses.
The Company and its Subsidiaries have taken all reasonably necessary
and desirable actions to maintain and protect the material
Intellectual Property Rights which they own. There have been no
claims made against the Company or any Subsidiary asserting the
invalidity, misuse, infringement or unenforceability of any of such
Intellectual Property Rights.
Section 7.13 Litigation, Etc. There are no other actions, suits,
proceedings, orders, investigations or claims pending or, to the
Company's knowledge, threatened against or affecting the Company or
any Subsidiary which if adversely determined would have a material
adverse effect on the Company and its Subsidiaries, taken as a whole;
and neither the Company nor any Subsidiary is subject to any
arbitration proceedings under collective bargaining agreements or
otherwise or, to the best of the Company's knowledge, any
governmental investigations or inquiries (including inquiries as to
the qualification to hold or receive any license or permit). Neither
the Company nor any Subsidiary is subject to any material judgment,
order or decree of any court or other governmental agency.
Section 7.14 Brokerage. There are no claims for brokerage
commissions, finders' fees or similar compensation in connection with
the transactions contemplated by this Agreement based on any
arrangement or agreement binding upon the Company or any Subsidiary.
The Company shall pay, and hold the Purchaser harmless against, any
liability, loss or expense (including reasonable attorneys' fees and
out-of-pocket expenses) arising in connection with any such claim.
Section 7.15 Governmental Consent, Etc. No permit, consent,
approval or authorization of, or declaration to or filing by the
Company with, any governmental authority is required in connection
with the execution, delivery and performance by the Company of this
Agreement or the other agreements contemplated hereby, or the
consummation by the Company of any other transactions contemplated
hereby or thereby, except as set forth on the Consents Schedule
attached hereto.
Section 7.16 Insurance. Neither the Company nor any Subsidiary
is in material default with respect to its obligations under any
insurance policy maintained by it, and neither the Company nor any
Subsidiary has been denied insurance coverage in the past five years.
The insurance coverage of the Company and its Subsidiaries is
customary for corporations of similar size engaged in similar lines
of business. The Company and its Subsidiaries do not have any self-
insurance or co-insurance programs.
Section 7.17 Employees. The Company is not aware that any
executive or key employee of the Company or any Subsidiary or any
group of employees of the Company or any Subsidiary has any plans to
terminate employment with the Company or any Subsidiary. The Company
and each Subsidiary have complied in all material respects with all
laws relating to the employment of labor (including provisions thereof
relating to wages, hours, equal opportunity, collective bargaining and
the payment of social security and other taxes), the failure of which
could have a material adverse affect on the Company and its
Subsidiaries, taken as a whole. The Company is not aware that it or
any Subsidiary has any material labor relations problems (including
any union organization activities, threatened or actual strikes or
work stoppages or material grievances).
Section 7.18 ERISA.
(a) Compliance. Set forth on the Employee Benefit Plans
Schedule attached hereto is a description of all pension,
retirement and deferred compensation plans sponsored and
maintained by the Company (the "Plans"). The Plans and all
related trusts, insurance contracts and funds have been
maintained, funded and administered in compliance in all
material respects with the applicable provisions of ERISA,
the IRC and other applicable laws. Neither the Company nor
any trustee or administrator of any Plan has engaged in any
transaction with respect to the Plans which could subject the
Company or any trustee or administrator of the Plans, or any
party dealing with any such Plan, nor do the transactions
contemplated by this Agreement constitute transactions which
could subject any such party, to either a civil penalty
assessed pursuant to Section 502(i) of ERISA or the tax or
penalty on prohibited transactions imposed by Section 4975 of
the IRC. No actions, suits or claims with respect to the
assets of the Plans (other than routine claims for benefits)
are pending or threatened which could result in or subject
the Company to any liability, and there are no circumstances
which could give rise to or be expected to give rise to any
such actions, suits or claims.
(b) Tax Qualification. A favorable determination letter
from the IRS has been received by the Company with respect to
the Travel Ports of America, Inc. Section 4.01(k) Savings Plan
as amended to comply with the IRS as in effect up to the Tax
Reform Act of 1986 stating that it is a qualified plan under
Section 401(a) of the IRC and there are no circumstances which
would cause the Travel Ports of America, Inc. Section 4.01(k)
Savings Plan to lose such qualified status.
Section 7.19 Compliance With Laws. Except as set forth on the
attached "Compliance Schedule," neither the Company nor any Subsidiary
has violated any law or any governmental regulation or requirement
which violation has had or would reasonably be expected to have a
material adverse effect upon the financial condition, operating
results, assets, operations or business prospects of the Company and
its Subsidiaries taken as a whole, and neither the Company nor any
Subsidiary has received notice of any such violation. Except as set
forth on the Compliance Schedule and except for any liabilities fully
covered by insurance, neither the Company nor any Subsidiary is
subject to, or has reason to believe it may become subject to, any
material liability (contingent or otherwise) or corrective or
remedial obligation arising under any federal, state, local or foreign
law, rule or regulation (including the common law) relating to or
regulating health, safety, pollution or the protection of the
environment ("Environmental Laws"). Without limiting the generality
of the foregoing: (a) the Company and each Subsidiary have obtained
all material permits, licenses and authorizations required under, and
have complied in all material respects with, all Environmental Laws;
(b) no notice has been received by the Company or any Subsidiary
regarding any material violation of, or any material claim, liability
or corrective or remedial obligation under, any Environmental Laws;
and (c) to the Company's knowledge, no facts or circumstances exist
with respect to the past or present operations or facilities of the
Company or any Subsidiary which would give rise to a material
liability or corrective or remedial obligation under any Environmental
Laws.
Section 7.20 Small Business Matters. The Company, together with
its "affiliates" (as that term is defined in Title 13, Code of Federal
Regulations, Section 121.401), is a "small business concern" within
the meaning of the Small Business Investment Act of 1958 and the
regulations thereunder, including Title 13, Code of Federal
Regulations, Section 121.802. The information regarding the Company
and its affiliates set forth in the Small Business Administration Form
480 and Form 652 delivered at the Closing is accurate and complete.
Copies of such forms shall have been completed and executed by the
Company and delivered to the Purchaser at the Closing together with a
written statement of the Company regarding its planned use of the
proceeds from the sale of the Securities. Neither the Company nor
any Subsidiary presently engages in, and it shall not hereafter engage
in, any activities, nor shall the Company or any Subsidiary use
directly or indirectly the proceeds from the sale of the Securities
for any purpose, for which a Small Business Investment Company (as
defined under the SBIC Regulations) is prohibited from providing
funds by the SBIC Regulations.
Section 7.21 Affiliated Transactions. Except as described in the
Certain Business Relationships Section of the Company's Proxy
Statement, dated September 29, 1997, no officer, director, employee,
or Affiliate of the Company or any Subsidiary or any individual
related by blood, marriage or adoption to any such individual or any
entity in which any such person or individual owns any beneficial
interest, is a party to any agreement, contract, commitment or
transaction with the Company or any Subsidiary or has any material
interest in any material property used by the Company or any
Subsidiary.
Section 7.22 Investment Company. Neither the Company nor any of
its Subsidiaries is an "investment company" as defined under the
Investment Company Act of 1940.
Section 7.23 Margin Securities. Neither the Company nor any of
its Subsidiaries is engaged in the business of extending credit for
the purpose of buying or carrying "margin securities" within the
meaning of Regulations G, T, U or X promulgated by the Board of
Governors of the Federal Reserve Board, and no part of the proceeds
realized from the sale of the Note shall be used to buy or carry any
such margin securities or used in violation of Regulations G, T, U or
X.
Section 7.24 Disclosure. Neither this Agreement nor any of the
exhibits, schedules, attachments or certificates required to be
delivered with respect to the transactions contemplated hereby
contain any untrue statement of a material fact or omit a material
fact necessary to make each statement contained herein or therein not
misleading; provided that with respect to the financial projections
furnished to the Purchaser by the Company, the Company represents and
warrants only that such projections were based upon assumptions
reasonably believed by the Company to be reasonable and fair as of
the date the projections were prepared in the context of the Company's
history and current and reasonably foreseeable business conditions.
There is no fact (other than general economic conditions) which the
Company has not disclosed to the Purchaser in writing and which, to
the Company's knowledge, has had or would reasonably be expected to
have a material adverse effect on the Company and its Subsidiaries
taken as a whole.
Section 7.25 Reports with the Securities and Exchange Commission.
The Company has furnished the Purchaser with complete and accurate
copies of its Annual Report on Form 10-K for its three most recent
fiscal years, all other reports or documents required to be filed by
the Company pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act since the filing of its most recent Annual Report on
Form 10-K and its most recent annual report to its stockholders. As
of their respective filing dates, such reports and filings did not
contain any material false statements or any misstatement of any
material fact and did not omit to state any fact necessary to make the
statements set forth therein not misleading. The Company has made all
filings with the SEC which it is required to make, and the Company has
not received any request from the SEC to file any amendment or
supplement to any of the reports described in this Section 7.25.
Section 7.26 Closing Date. The representations and warranties of
the Company contained in this Article 7 and elsewhere in this
Agreement and all information contained in any exhibit, schedule or
attachment hereto or in any certificate or other writing delivered by,
or on behalf of, the Company to the Purchaser shall be true and
correct in all material respects on the date of the Closing as though
then made, except as affected by the transactions expressly
contemplated by this Agreement.
ARTICLE 8
CONVERSION OF NOTE
Section 8.1 Conversion Rights and Procedures.
(a) Conversion Rights. Notwithstanding any provision
herein to the contrary, at any time and from time to time
prior to the payment in full of the Note, the Purchaser may
convert all or any portion of the outstanding principal amount
of the Note into a number of shares of Conversion Stock
(excluding any fractional share) determined by dividing the
principal amount designated by the Purchaser to be converted
by the Conversion Price then in effect. Any partial
conversions shall be in the minimum principal amount $1,000
or integral multiples thereof.
(b) Effectiveness of Conversion. Except as otherwise
provided herein, each conversion of the Note shall be deemed
to have been effected as of the close of business on the date
on which the Note has been surrendered for conversion at the
Company's principal office. At the time any such conversion
has been effected, the rights of the Purchaser to the extent
of the conversion shall cease and the Person or Persons in
whose name or names any certificate or certificates for shares
of Conversion Stock are to be issued upon such conversion
shall be deemed to have become the holder or holders of record
of the shares of Conversion Stock represented thereby.
Notwithstanding any other provision hereof, if a conversion
of any portion of the Note is to be made after the Company
has notified the Purchaser of a Public Offering, a Change in
Control or other transaction affecting the Company, the
conversion of any portion of the Note may, at the election of
the holder hereof, be conditioned upon the consummation of
such transaction, in which case such conversion shall not be
deemed to be effective until such transaction has been
consummated.
(c) Deliveries. As soon as possible after a conversion
has been effected, the Company shall deliver to the Purchaser:
(i) a certificate or certificates representing the
number of shares of Conversion Stock issuable by
reason of such conversion in such name or names and
such denomination or denominations as the Purchaser
has specified;
(ii) payment in an amount equal to the sum of all
accrued interest with respect to the principal amount
of the Note converted, which has not been paid prior
thereto; and
(iii) a new convertible subordinated promissory note
in the form of Exhibit A attached hereto, except that
the principal amount thereof shall be the principal
amount the Purchaser has elected not to convert and
the converted amount shall be deemed the prepayments
last due under the Note in inverse order of maturity
so that the prepayment amounts shall remain the same,
but the number of remaining scheduled prepayments
shall be reduced accordingly.
(d) No Charges, Taxes, Etc. The issuance of certificates
for shares of Conversion Stock upon conversion of the Note
shall be made without charge to the Purchaser for any issuance
tax in respect thereof or other cost incurred by the Company
in connection with such conversion and the related issuance
of shares of Conversion Stock; provided, however, the
Purchaser shall pay any such tax which is due because the
shares are issued in a name other than the Purchaser's name.
(e) Transfer Books. The Company shall not close its books
against the transfer of Conversion Stock issued or issuable
upon conversion of the Note. The Company shall assist and
cooperate with the Purchaser in making any governmental
filings or obtain any governmental approval prior to or in
connection with the conversion of the Note (including making
any filings required to be made by the Company).
(f) Reservation of Shares. The Company shall at all times
reserve and keep available out of its authorized but unissued
shares of Conversion Stock, solely for the purpose of issuance
upon the conversion of the Note, such number of shares of
Conversion Stock issuable upon the conversion of the Note.
All shares of Conversion Stock which are so issuable shall,
when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, Liens and charges.
The Company shall take all such actions as may be necessary
to assure that all such shares of Conversion Stock may be so
issued without violation of any applicable law or governmental
regulation or any requirements of any securities exchange upon
which shares of Conversion Stock may be listed (except for
official notice of issuance which shall be immediately
delivered by the Company upon each such issuance).
(g) Fractional Shares. If any fractional interest in a
share of Conversion Stock would, except for the provisions of
this subparagraph, be delivered upon any conversion of the
Note, the Company, in lieu of delivering the fractional share
therefor, shall pay the Purchaser an amount equal to the
product of the Market Price of a full share multiplied by the
fractional amount.
(h) Compliance with Laws. The Company will comply with
all securities laws regulating the offer and delivery of
shares of Conversion Stock upon conversion of the Note and
will list such shares on each national securities exchange on
which the Conversion Stock is listed.
Section 8.2 Conversion Price. Subject to adjustment as provided
in this Section 8.2, the Conversion Price shall be $4.30. If,
however, the Company delivers to the Purchaser a prepayment notice
pursuant to Section 2.3 any time prior to December 4, 2000 and the
Market Price as of the date such notice is given is less than the
Conversion Price then in effect, then, upon the Purchaser's exercise
of its conversion rights hereunder, the Conversion Price shall
automatically decrease to equal the Market Price as of the prepayment
date.
In order to prevent dilution of the conversion rights granted
hereunder, the Conversion Price shall be subject to adjustment from
time to time as follows:
(a) Stock Dividends, Subdivisions or Combinations. If
the Company at any time: (i) pays a dividend or makes a
distribution on its Common Stock in shares of its Common
Stock, (ii) subdivides its outstanding shares of Common Stack
into a greater number of shares, (iii) combines its
outstanding shares of Common Stock into a smaller number of
shares, (iv) makes a distribution on its Common Stock in
shares of its Capital Stock other than Common Stock, or (v)
issues by reclassification of its Common Stock any shares of
its Capital Stock, then the Conversion Price in effect
immediately prior to such action shall be adjusted so that
the Purchaser, upon conversion of all or a portion of the
Note, may receive the number of shares of Capital Stock of the
Company which it would have owned immediately following such
action if it had converted the same portion of the Note
immediately prior to such action. The adjustment shall become
effective immediately after the record date in the case of a
stock dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or
reclassification. If after an adjustment the Purchaser may
receive shares of two or mare classes of Capital Stock of the
Company upon conversion of the Note, the Company shall
determine the allocation of the adjusted Conversion Price
between the classes of Capital Stock on a fair, reasonable
and equitable basis. After such allocation, the Conversion
Price of each class of Capital Stock shall thereafter be
subject to adjustment on terms comparable to those applicable
to Common Stock in this Section 8.2.
(b) Adjustment for Rights Issue. If the Company grants,
sells or distributes any Options pursuant to which one or
more shares of Common Stock are issuable at a price per share
less than the Market Price on the date of issuance of such
Option, then the Conversion Price in effect immediately prior
to such action shall be adjusted (i) proportionately by the
difference between the then Market Price and the Option's
exercise, purchase or offering price per share (the "Offering
Price") if such Offering Price is greater than the then
Conversion Price or (ii) to equal the Offering Price if such
Offering Price is less than the then Conversion Price. For
purposes of this Section 8.2(b), the Offering Price for which
any one share of Common Stock is issuable shall be equal to
the sum of the lowest amount of consideration (if any)
received or receivable by the Company for the issuance of one
share of Common Stock pursuant to the Option. The adjustment
required by this Section 8.2(b) shall be made successively
whenever any Options are issued and shall become effective
immediately upon the grant or issuance thereof.
(c) Adjustment for Convertible Securities Issue. If the
Company issues any Convertible Security for a consideration
per share of Common Stock (also referred to as the "Offering
Price") initially deliverable upon conversion or exchange of
such securities which is less than the Market Price per share
on the date of issuance of such Convertible Security, then
the Conversion Price in effect immediately prior to such
action shall be adjusted (i) proportionately by the difference
between such Market Price and the Offering Price if such
Offering Price is greater than the then effective Conversion
Price or (ii) to equal the Offering Price if such Offering
Price is less than the then effective Conversion Price. For
the purposes of this Section 8.2(c), the Offering Price for
which any one share of Common Stock is issuable under a
Convertible Security shall be equal to the sum of the lowest
amount of consideration (if any) received or receivable by
the Company for the issuance of one share of Common Stock
upon the conversion or exchange thereof. The adjustment
required by this Section 8.2(c) shall be made successively
whenever any such issuance is made, and shall become effective
immediately after such issuance.
This Section 8.2(c) does not apply to (i) Convertible
Securities issued to stockholders of any Person which merges
into the Company, or with a Subsidiary of the Company, in
proportion to their stockholdings immediately prior to such
merger and which requires an adjustment pursuant to Section
8.2(f) below or (ii) Convertible Securities issued in a bona
fide Public Offering pursuant to a firm commitment
underwriting.
(d) Adjustments for Common Stock Issue. If the Company
issues shares of Common Stock for a consideration per share
(also referred to as the "Offering Price") less than the
Market Price per share on the date the Company fixes the
Offering Price of such additional shares, then the Conversion
Price in effect immediately prior to such action shall be
adjusted (i) proportionately by the difference between the
then Market Price and the Offering Price per share of the
additional shares if such Offering Price is greater than the
then effective Conversion Price or (ii) to equal the Offering
Price if such Offering Price is less than the then effective
Conversion Price. The adjustment required by this Section
8.2(d) shall be made successively whenever any such issuance
is made, and shall become effective immediately after such
issuance.
This Section 8.2(d) does not apply to (i) the exercise of
Options for which an adjustment has already been made pursuant
to Section 8.2(a), (ii) the conversion or exchange of
Convertible Securities for which an adjustment has already
been made pursuant to Section 8.2(c), (iii) Common Stock
issued to the Company's employees under bona fide employee
benefit plans adopted by the Board of Directors and approved
by the holders of Common Stock when required by law, if such
Common Stock would otherwise be covered by this Section 8.2(d),
(iv) Common Stock issued to stockholders of any Person which
merges into the Company in proportion to their stockholdings
of such person immediately prior to such merger, upon such
merger, for which an adjustment has already been made under
Section 8.2(f), (v) Common Stock issued in a bona fide Public
Offering pursuant to a firm commitment underwriting, or (vii)
except as provided in Section 8.2(g), Common Stock issued upon
the exercise of Options or Convertible Securities issued by
the Company prior to the date of this Agreement.
(e) Adjustment for Other Distributions. If the Company
distributes to any holders of its Common Stock any of its
assets or debt securities or any rights or warrants to
purchase debt securities, assets or other securities of the
Company, the Conversion Price shall be adjusted in accordance
with the following formula:
M - F
C' = C x M
where:
C' = the adjusted Conversion Price.
C = the current Conversion Price.
M = the Market Price per share of Common
Stock on the record date mentioned
below.
F = the fair market value on the record
date of the assets, securities, rights
or warrants applicable to one share of
Common Stock. The Board of Directors
shall determine such fair market value
in a reasonable manner and in good
faith.
The adjustments required by this Section 8.2(e) shall be made
successively whenever any such distribution is made and shall
become effective immediately after the record date for the
determination of stockholders entitled to receive the
distribution. This Section 8.2(e) does not apply to cash
dividends or cash distributions paid out of consolidated
current or retained earnings as shown on the books of the
Company and otherwise permitted under Section 5.2. Also, this
Section does not apply to Options referred to in Section
8.2(a) and for which an adjustment in the Conversion Price is
made pursuant thereto.
(f) Reorganization, Reclassification, Consolidation,
Merger or Sale. Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or
substantially all of the Company's assets or other
transaction, in each case which is effected in such a manner
that the holders of Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for
Common Stock, is referred to herein as an "Organic Change".
Prior to the consummation of any Organic Change, the Company
shall make lawful and adequate provision in form and
substance satisfactory to the Purchaser to insure that the
Purchaser shall thereafter have the right to acquire and
receive, in lieu of or in addition to (as the case may be)
the shares of Conversion Stock immediately theretofore
acquirable and receivable upon the conversion of the Note or
such shares of stock, securities or assets as the Purchaser
would have received in connection with such Organic Change if
the Purchaser had converted its Note immediately prior to such
Organic Change. In each such case, the Company shall also
make appropriate provisions (in form and substance
satisfactory to the Purchaser) to insure that the provisions
of this Article 8 shall thereafter be applicable to the Note
in relation to any shares of stock, securities or assets
thereafter deliverable upon conversion of the Note (including,
in the case of any such consolidation, merger or sale in which
the successor entity or purchasing entity is other than the
Company, an immediate adjustment of the Conversion Price to
the value for the Common Stock reflected by the terms of such
consolidation, merger or sale, and a corresponding immediate
adjustment in the number of shares of Conversion Stock
acquirable and receivable upon conversion of Note, if the
value so reflected is less than the Conversion Price in effect
immediately prior to such Organic Change). The Company shall
not effect an Organic Change unless, prior to the
consummation thereof, the successor entity (if other than the
Company) resulting from consolidation or merger or the entity
purchasing such assets assumes by written instrument (in form
and substance satisfactory to the Purchaser), the obligation
to deliver to the Purchaser such shares of stock, securities
or assets as, in accordance with the foregoing provisions, the
Purchaser may be entitled to acquire.
(g) Change in Option Price or Conversion Rate. If the
Offering Price provided in any Option or any Convertible
Security or the rate at which any Convertible Security is
convertible into or exchangeable for Common Stock changes at
any time, the Conversion Price in effect at the time of such
change shall be adjusted immediately to the Conversion Price
which would have been in effect at such time had such Option
or Convertible Security originally provided for such changed
Offering Price at the time initially granted, issued or sold.
For purposes of this Section 8.2(g), if the terms of any
Option or Convertible Security which was outstanding as of
the date of issuance of the Note are changed in the manner
described in the immediately preceding sentence, then such
Option or Convertible Security and the Common Stock deemed
issuable upon exercise, conversion or exchange thereof shall
be deemed to have been issued as of the date of such change;
provided that no such change shall at any time cause the
Conversion Price hereunder to be increased.
(h) Other Events. If any event occurs of the type
contemplated by the provisions of this Section 8.2 but not
expressly provided for by such provisions (including the
granting of stock appreciation rights, phantom stock rights
or other rights with equity features), then the Company's
Board of Directors shall in good faith make a reasonable and
appropriate adjustment in the Conversion Price so as to
protect the rights of the Purchaser hereunder; provided that
no such adjustment shall increase the Conversion Price as
otherwise determined pursuant to this Article 8 or decrease
the number of shares of Conversion Stock issuable upon
conversion of the principal amount of the Note then
outstanding.
(i) Calculation of Consideration Received. If any Capital
Stock, Option or Convertible Security is issued or sold or
deemed to have been issued or sold for cash, the consideration
received therefor shall be deemed to be the amount received
by the Company therefor (net of discounts, commissions and
related expenses). If any Capital Stock, Option or
Convertible Security is issued or sold for a consideration
other than cash, the amount of the consideration other than
cash received by the Company shall be the fair value of such
consideration, except where such consideration consists of
securities, in which case the amount of consideration received
by the Company shall be the Market Price thereof as of the
date of receipt. If any Capital Stock, Option or Convertible
Security is issued to the owners of the non-surviving entity
in connection with any merger in which the Company is the
surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value of such portion of the
net assets and business of the non-surviving entity as is
attributable to such Capital Stock, Option or Convertible
Security, as the case may be. The fair value of any
consideration other than cash and securities shall be
determined jointly by the Company and the Purchaser. If such
parties are unable to reach agreement within a reasonable
period of time, the fair value of such consideration shall be
determined by an independent appraiser experienced in valuing
such type of consideration jointly selected by the Company
and the Purchaser. The determination of such appraiser shall
be final and binding upon the parties, and the fees and
expenses of such appraiser shall be borne by the Company. In
case any Option is issued in connection with the issue or sale
of other securities of the Company, together comprising one
integrated transaction in which no specific consideration is
allocated to such Option by the parties thereto, the Option
shall be deemed to have been issued for a consideration of
$.01.
(j) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned
or held by or for the account of the Company or any
Subsidiary, and the disposition of any shares so owned or held
shall be considered an issue or sale of Common Stock.
(k) Record Date. If the Company takes a record of the
holders of Capital Stock for the purpose of entitling them
(i) to receive a dividend or other distribution payable in
Capital Stock, Options or in Convertible Securities or (ii)
to subscribe for or purchase Capital Stock, Options or
Convertible Securities, then such record date shall be deemed
to be the date of the issue or sale of the shares of Capital
Stock, Options or Convertible Securities deemed to have been
issued or sold upon the declaration of such dividend or upon
the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the
case may be.
(l) Deferral of Adjustments, Etc. No adjustment in the
Conversion Price need be made unless the adjustment would
require an increase or decrease of at least one percent (1%)
in the Conversion Price. Any adjustments that are not made
shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Article 8
shall be made to the nearest cent or to the nearest 1/100th
of a share, as the case may be.
(m) Notices.
(i) Immediately upon any adjustment of the
Conversion Price, the Company shall give written
notice thereof to the Purchaser, setting forth in
reasonable detail and certifying the calculation of
such adjustment.
(ii) The Company shall give written notice to the
Purchaser at least twenty (20) days prior to (1) the
date on which the Company closes its books or takes a
record (A) with respect to any dividend or
distribution upon Common Stock, (B) with respect to
any pro rata subscription offer to holders of Common
Stock or (C) for determining rights to vote with
respect to any Organic Change, dissolution or
liquidation or (2) of any Change of Control (of which
it has notice) or Public Offering.
ARTICLE 9
SUBORDINATION
Section 9.1 Subordination. The Company and the Purchaser agree
that the Indebtedness evidenced by the Note is subordinated in right
of payment, to the extent and in the manner provided in this Article
9, to the prior payments in full of all Senior Indebtedness and Senior
Subordinated Indebtedness, whether outstanding at the date of this
Agreement or later incurred, and that the subordination is for the
benefit of the holders of the Senior Indebtedness and the Senior
Subordinated Indebtedness. Notwithstanding anything in this Agreement
or the Note to the contrary, any and all payments, distributions,
proceeds, moneys and/or other assets and properties paid to or
collected, realized, or otherwise received by the Purchaser in
connection with any payment or other action by the Company, any
Subsidiary or any other person acting on behalf of the Company, or
any exercise or other enforcement of rights under the Agreement or
the Note shall be subject to the terms and provisions of this Article
9.
Section 9.2 Liquidation: Dissolution: Bankruptcy. Upon any
distribution to creditors and/or shareholders of the Company in a
liquidation or dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding
relating to the Company or its property:
(a) Holders of Senior Indebtedness and Senior Subordinated
Debt shall be entitled to receive payment in full in cash of
the principal of and interest (including interest accruing
after the commencement of any such proceeding) to the date of
payment on the Senior Indebtedness and the Senior Subordinated
Debt, respectively, before the Purchaser shall be entitled to
receive any payment of principal of or interest on the Note;
and
(b) Until the Senior Indebtedness and Senior Subordinated
Indebtedness is paid in full in cash, any distribution to
which the Purchaser would be entitled but for this Article 9
shall be made first to holders of Senior Indebtedness and,
upon payment in full thereof, then to the holders of the
Senior Subordinated Indebtedness, as their interests may
appear, except that the Purchaser may receive securities that
are subordinated to Senior Indebtedness and Senior Subordinated
Indebtedness to at least the same extent as the Note.
Section 9.3 Default on Senior Indebtedness.
(a) Upon the maturity of any Senior Indebtedness or Senior
Subordinated Indebtedness by lapse of time, acceleration or
otherwise, all Senior Indebtedness and Senior Subordinated
Debt shall first be paid in full, or such payment duly
provided for in cash or in a manner satisfactory to the
holders of such thereof, before any payment is made by the
Company, or any other person acting on behalf of the Company
on account of the principal or interest on the Note.
(b) The Company may not pay or prepay any principal of,
interest on or other amount respecting the Note, or cause,
suffer or permit the Company or any other person acting on
behalf of the Company to do so, and neither the Purchaser
nor any person acting on behalf of any of them may accept or
receive any such payment or seek to receive or collect any
payment or offset amount under this Agreement or exercise or
otherwise enforce any of their respective rights, powers,
privileges, remedies and interests relating to the Note if:
(i) a default on the Senior Indebtedness and/or
the Senior Subordinated Indebtedness occurs and is
continuing that permits holders thereof to accelerate
its maturity, and
(ii) (1) the default is the subject of judicial
proceedings, (2) the Purchaser shall have received
notice ("Subordination Notice") from the holders of
the Senior Indebtedness or Senior Subordinated
Indebtedness with respect to which such default
occurred respecting the continuation of a default
under the Senior Indebtedness and/or Senior
Subordinated Indebtedness, as applicable, and
specifically requesting the imposition of the
standstill period provided by this Section 9.3, or
(3) the Company receives a notice of the acceleration
of any of the Senior Indebtedness and/or Senior
Subordinated Indebtedness, which notice is from a
person who may give them pursuant to such Senior
Indebtedness and/or Senior Subordinated Indebtedness.
(c) The Company may resume payments in respect of the
Note (including any payments which shall not have been made
on account of the provisions of this Article 10, but excluding
any payments which may have become due solely on account of
any acceleration of the maturity of the Note) or any judgement
with respect thereto upon the earlier to occur of any of the
following:
(i) the default is cured or waived;
(ii) one hundred fifty (150) days pass after the
notice is given if the default is a result of the
failure to make any payment due under the instruments
and agreements governing Senior Indebtedness and is
not the subject of judicial proceedings;
(iii) one hundred twenty (120) days pass after the
notice is given if the default is for any reason other
than a failure to make payment and is not the subject
of judicial proceedings, if this Article 9 otherwise
permits the payment at that time. (such one hundred
fifty (150) and one hundred twenty (120) day periods
being referred to as a "Blockage Period"); or
(iv) the termination of the Blockage Period by the
holders of Senior Indebtedness and/or the Senior
Subordinated Indebtedness, as applicable;
provided, however, that for purposes of this Section 9.3, with respect
to the Bank Credit Documents, if the Purchaser received a
Subordination Notice, a similar notice received within nine (9)
months thereafter relating to the same default on the Bank Credit
Documents shall not be effective for purposes of this Section 9.3,
and further provided that, with respect to the Senior Subordinated
Indentedness, (x) not more than one Blockage Period shall be in
effect during any period of three hundred sixty (360) consecutive
days, (y) Blockage Periods shall not be in effect on more than three
(3) occasions and (z) no facts or circumstances on the date a
Subordination Notice is given may be used or shall be effective as a
basis for any subsequent Subordination Notice by either the holder
of the Senior Indebtedness or the Senior Subordinated Indebtedness.
Section 9.4 Limitation on Right of Action. Notwithstanding
anything to the contrary, the Purchaser agrees that, if any Senior
Indebtedness or Senior Subordinated Indebtedness is outstanding, it
will not exercise any right or remedy available to it on account of
any default or Event of Default (other than the right to accelerate
the Note in accordance with the terms thereof and the right to
convert the Note or exercise the Warrant which the purchaser may do
notwithstanding anything herein or elsewhere to the contrary) at any
time at which payments may not be made in respect of the Note under
this Article 9 unless and until an Event of Default shall have
occurred and shall have continued uncured and unwaived beyond the
applicable Blockage Period, provided that, in any event, the Purchaser
may commence any legal proceeding or take any other appropriate action
if and to the extent necessary to prevent the imminent expiration of
any applicable period of limitations or the loss of any right under
any applicable statute of limitations or other law.
Section 9.5 Acceleration of Securities. If payment of the Note
is accelerated because of an Event of Default, the Company shall
promptly notify holders of the Senior Indebtedness and the Senior
Subordinated Debt of the acceleration. The Company may pay the Note
after such acceleration occurs if this Article 9 permits the payment
at that time.
Section 9.6 When Distribution Must Be Paid Over. Any payments,
distributions, proceeds, monies and/or other assets and properties
paid to or collected, realized or otherwise received by the Purchaser
or any person acting therefor or in connection with any payment or
other action by the Company, any Subsidiary or any other person
acting on behalf of the Company, or any exercise or other enforcement
under this Agreement or the Note, during any time when the Company is
not permitted to make payments on the Note under this Article 9, any
and all such payments, distributions, proceeds, monies or other
assets and properties shall be held by the recipient in trust for
the benefit of, and shall be paid forthwith over and delivered to
the holders of Senior Indebtedness (pro rata as to each of such
holders on the basis of the respective amounts of Senior Indebtedness
held by them) and if the Senior Indebtedness has been paid in full,
then to the holders of the Senior Subordinated Debt (pro rata as to
each of such holders on the basis of the respective amounts of Senior
Indebtedness held by them), or in each case to their representative
or the trustee under the indenture or other agreement (if any)
pursuant to which such Indebtedness may have been issued and as their
respective interest may appear, for application to the payment of
thereof to the extent necessary to pay the same in full in accordance
with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Indebtedness.
If a distribution is made to the Purchaser that because of this
Article 9 should not have been made to it, the Purchaser shall hold
it in trust for the party to such distribution should have been paid
and shall turn-over the same to the party who is entitled to such
payment as soon as practicable.
Section 9.7 Notice.
(a) The Company shall promptly notify the Purchaser of
any facts known to the Company that would cause a payment of
principal of or interest on the Note to violate this Article
9, but failure to give such notice shall not affect the
subordination of the Note to the extent provided in this
Article 9.
(b) The Purchaser shall not at any time be charged with
knowledge of the existence of any facts which would prohibit
the making of any payment to it by the Company, unless and
until the Purchaser shall have received written notice
thereof (given as provided in this Agreement) from the
Company or from any holder of Senior Indebtedness or Senior
Subordinated Indebtedness. Prior to the receipt of any such
notice, Purchaser shall be entitled to assume conclusively
that no such facts exist without, however, limiting any right
of any holder of Senior Indebtedness or Senior Subordinated
Indebtedness under this Article 9 to recover from the
Purchaser any payment made in contravention of this Article
9. Each payment on the Note by the Company shall be deemed
to constitute a representation of the Company that such
payment is permitted to be paid by the Company under this
Article 9.
(c) The Purchaser shall be entitled to rely on the
delivery to it of a written notice by a Person representing
himself to be an authorized representative of a holder of
Senior Indebtedness or Senior Subordinated Indebtedness, as
the case may be, to establish that such notice has been given
by any such Person. In the event that the Purchaser
determines in good faith that further evidence is required
with respect to the right of any such Person to participate
in any payment or distribution pursuant to this Article 9,
the Purchaser may request such Person to furnish evidence to
the reasonable satisfaction of the Purchaser as to any fact
pertinent to the rights of such Person under this Article 9,
and if such evidence is not furnished, the Purchaser may defer
any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
(d) The Purchaser shall provide Fleet National Bank of
any Event of Default hereunder by reason of which Purchaser
intends to accelerate any obligations of the Company or
exercise any right or remedy.
Section 9.8 Subrogation. After all Senior Indebtedness and Senior
Subordinated Indebtedness is paid in full and until the Note is paid
in full, the Purchaser shall be subrogated to the rights of holders
of Senior Indebtedness and the Senior Subordinated Debt to receive
distributions applicable thereto to the extent that distributions
otherwise payable to the Purchaser have been applied to the payment
of the Indebtedness held by such Persons. A distribution made under
this Article 9 to holders of Senior Indebtedness or Senior
Subordinated Indebtedness which otherwise would have been made to the
Purchaser is not, as between the Company and the Purchaser, a payment
by the Company on the Senior Indebtedness or the Senior Subordinated
Debt.
Section 9.9 Relative Rights. This Article 9 defines the relative
rights of the Purchaser and holders of Senior Indebtedness and Senior
Subordinated Indebtedness. Nothing in this Agreement shall:
(a) impair, as between the Company and the Purchaser, the
obligation of the Company, which is absolute and
unconditional, to pay principal of and interest on the Note
in accordance with their terms; or
(b) prevent the Purchaser from exercising its available
remedies upon a Default or Event of Default, subject to the
rights of holders of Senior Indebtedness and Senior
Subordinated Indebtedness to receive distribution otherwise
payable to the Purchaser, except as otherwise provided herein.
If the Company fails because of this Article 9 to pay principal on
the Note together with any interest, premiums, if any, fees, expenses
and/or other amount due thereon or payable with respect thereto on
the due date, the failure is still a Default or Event of Default
notwithstanding this Article 9.
Section 9.10 Subordination May Not Be Impaired By Company. No right
of any holder of Senior Indebtedness or Senior Subordinated
Indebtedness to enforce the subordination of the Indebtedness
evidenced by the Note shall be impaired by any act or failure to act
by the Company or by its failure to comply with this Agreement.
Section 9.11 Ranking of Securities. The Indebtedness evidenced by
the Note shall rank senior to all Indebtedness evidenced by securities
of the Company issued by the Company after the date of this Agreement,
any other evidence of Indebtedness of the Company except as expressly
provided for in Section 9.1, and the Capital Stock of the Company,
including any rights or warrants entitling holders thereof to
subscribe for or purchase shares of Capital Stock of the Company or
any securities convertible into or exchangeable for shares of Capital
Stock of the Company issued by the Company after the date of this
Agreement.
ARTICLE 10
DEFAULTS AND REMEDIES
Section 10.1 Events of Default. An "Event of Default" occurs if:
(a) The Company fails to pay (i) any principal of the
Note when due in accordance with the terms thereof, or (ii)
any interest on the Note or any other payment required under
the Note when the same becomes due and payable within ten
(10) days after such amount becomes due thereunder, whether
or not such payment is prohibited by Article 9;
(b) Any representation or warranty made in this Agreement
or in any agreement, instrument or certificate executed by
Company or any of its Subsidiary or officers as provided in
this Agreement or in connection with the transactions, is
false, inaccurate or misleading in any respect on the date as
of which made or which is deemed made;
(c) The Company fails to comply with or perform any of
its other covenants or agreements in, or provisions of,
Article 5 of this Agreement or any provision of the Note or
Warrant;
(d) The Company fails to comply with or perform any of
its other covenants or agreements in, or provisions of this
Agreement (other than those described in Section 10.1(a) or
(c) herein) and the default continues for thirty (30) days
after receipt of the notice of the Event of Default from
the Purchaser which notice shall specify the Event of Default
and demand that it be remedied and state that the notice is
being given pursuant to this Section 10.1(d);
(e) The Company or a Subsidiary defaults under any bond,
debenture, note or other evidence of Indebtedness for money
borrowed by the Company or a Subsidiary or under any mortgage,
indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness of
the Company or any Subsidiary (or which is guaranteed by the
Company or a Subsidiary) (whether such Indebtedness or
guarantee now exists or shall be created hereafter) including,
without limitation, any default or event of default under the
Bank Credit Documents (or any other agreements, notes or
instruments evidencing any of the Senior Subordinated
Indebtedness) or any of the Senior Subordinated Indebtedness
Documents, which default shall constitute a failure to pay
any portion of interest or principal when due after any
applicable grace period or if the effect of such event of
default is to cause or permit the acceleration of such
Indebtedness prior to its expressed maturity, and with
respect to the Bank Loan Documents, such event of default
results in an acceleration of a principal amount of such
indebtedness without such indebtedness having been discharged
or such acceleration having been rescinded or annulled,
provided, that the aggregate Indebtedness in default under
this Section 10.1(e) is in excess of $100,000.00;
(f) A final judgement or final judgements for the payment
of money are entered by a court of competent jurisdiction
against the Company or any Subsidiary which remains unpaid or
unstayed and undischarged for a period (during which execution
shall not be effectively stayed) of thirty (30) days after the
date on which the right to appeal has expired, provided, that,
the aggregate of all such judgements exceeds $100,000.00;
(g) The Company or any Subsidiary pursuant to or within
the meaning of any Bankruptcy Law: (i) commences a voluntary
case; (ii) consents to the entry of an order for relief
against it in an involuntary case; (iii) consents to the
appointment of a Custodian of it or for all or substantially
all of its property; (iv) makes a general assignment for the
benefit of its creditors; or (v) generally is unable to pay
its debts as the same become due;
(h) A court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that: (i) is for relief
against the Company or any Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company or any Subsidiary or
for all or substantially all of its property; or (iii) orders
the liquidation of the Company or any Subsidiary and the order
or decree remains unstayed and in effect for sixty (60) days;
and
(i) The Company's reporting obligations pursuant to
Section 13 or 15(d) of the Exchange Act are suspended or
terminated.
Section 10.2 Acceleration. If an Event of Default (other than an
Event of Default specified in Section 10.1(g) and (h)) occurs and is
continuing, the Purchaser, by written notice to the Company, may
declare to be due and payable immediately all Indebtedness of the
Company to the Purchaser, including the principal amount outstanding
under the Note plus accrued interest thereon and all such amounts
shall thereupon become immediately due and payable without any
presentment, demand or notice of any kind, all of which the Company
expressly waives. If any Event of Default specified in Section
10.1(g) or 10.1(h) occurs, all Indebtedness of the Company to the
Purchaser, including the principal amount outstanding under the Note
plus accrued interest thereon shall ipso facto become and be due and
payable immediately without presentment, demand or notice of any kind,
all of which the Company expressly waives. Upon the Note becoming
due and payable as a result of an Event of Default, the Company will
forthwith pay to the Purchaser the entire principal and interest
accrued thereon and a premium which is due and payable pursuant to
Section 2.6.
Section 10.3 Other Remedies. If an Event of Default occurs and
is continuing, the Purchaser may pursue any available remedy by
proceeding at law or in equity, to collect the payment of principal
of and premiums and interest on the Note or to enforce the performance
of any provision of the Note or this Agreement. No course of conduct
or delay or omission by the Purchaser in exercising any right or
remedy accruing upon an Event of Default shall impair the right or
remedy or constitute a waiver of or acquiescence in the Event of
Default or otherwise prejudice the Purchaser's rights, powers and
remedies. No remedy is exclusive of any other remedy. All remedies
are cumulative to the extent permitted by law. The Company further
agrees to pay the Purchaser all costs and expenses incurred by it in
the collection of the Note or any other Indebtedness of the Company
to the Purchaser, including attorneys' fees.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force,
which may affect the covenants or the performance of this Agreement;
and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Purchaser, but will suffer and permit
the execution of every such power as though no such law had been
enacted.
Section 10.4 Appointment of Director. Upon the occurrence
of an Event of Default, if the Purchaser requests, the Company shall
cause a Person selected by the Purchaser to serve as director of the
Company until the Event of Default is cured.
ARTICLE 11
MISCELLANEOUS
Section 11.1 Notices; Reporting Date. All notices, demands or
other communications to be given or delivered under or by reason of
the provisions of this Agreement shall be in writing and shall be
deemed to have been given when delivered personally to the recipient,
sent to the recipient by reputable overnight courier service (charges
prepaid) or five days after being mailed to the recipient by certified
or registered mail, return receipt requested and postage prepaid. Any
notice or communication shall be sent to the following addresses:
if to the Company:
Travel Ports of America, Inc.
3495 Winton Place
Building C
Rochester, New York 14623
Attention: John Holahan, President
if to the Purchaser:
Cephas Capital Partners, L.P.
16 West Main Street
Rochester, New York 14614
Attention: General Partner
The Company or the Purchaser, by notice to the other, may designate
additional or different addresses for subsequent notices or
communications.
Section 11.2 Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing
by any party in connection herewith shall survive the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby, regardless of the knowledge of the Purchaser or
any investigation made by the Purchaser or on its behalf, and neither
the knowledge of, nor any investigation by, the Purchaser shall affect
the occurrence or existence of a breach of any representation or
warranty contained herein as of the Closing.
Section 11.3 Successors and Assigns. Except as otherwise expressly
provided herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not. In addition, and whether
or not any express assignment has been made, the provisions of this
Agreement which are for the Purchaser's benefit as a purchaser or
holder of the Note, the Warrant or any Common Stock are also for the
benefit of, and enforceable by, any subsequent holder of the Note,
the Warrant or Common Stock.
Section 11.4 Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement
is held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of this Agreement.
Section 11.5 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not
contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same
Agreement.
Section 11.6 Descriptive Headings; Interpretation. The descriptive
headings of this Agreement are inserted for convenience only and do
not constitute a substantive part of this Agreement. The use of the
word "including" in this Agreement shall be by way of example rather
than by limitation.
Section 11.7 Governing Law. This Agreement shall be governed by
the laws of the State of New York, without giving effect to any choice
of law or conflict of law rules or provisions (whether of the State
of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
New York.
Section 11.8 Consideration for Warrants. The Purchaser and the
Company acknowledge and agree that the fair market value of the Note
issued hereunder is $2,000,000 and the fair market value of the
Warrant issued hereunder is $100. The Purchaser and the Company shall
file their respective federal, state and local tax returns in a
manner which is consistent with such valuation and allocation and
shall not take any contrary position with any taxing authority.
Section 11.9 No Strict Construction. The parties hereto have
participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties hereto, and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of
the authorship of any of the provisions of this Agreement.
Section 11.10 Indemnification. In consideration of the Purchaser's
execution and delivery of this Agreement and acquiring the Note and
Warrant hereunder and in addition to all of the Company's other
obligations under this Agreement, the Company shall defend, protect,
indemnify and hold harmless the Purchaser and all of its partners and
their respective officers, directors, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the "Indemnitees")
from and against any and all actions, causes of action, suits, claims,
losses, costs, penalties, fees, liabilities and damages, and expenses
in connection therewith (irrespective of whether any such Indemnitee
is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys' fees and disbursements
(the "Indemnified Liabilities"), incurred by the Indemnitees or any
of them as a result of, or arising out of, or relating to (a) any
transaction financed or to be financed in whole or in part, directly
or indirectly, with the proceeds of the issuance of the Note and
Warrant or (b) the execution, delivery, performance or enforcement of
this Agreement and any other instrument, document or agreement
executed pursuant hereto by any of the Indemnitees, except for any
such Indemnified Liabilities arising on account of the particular
Indemnitee's gross negligence or willful misconduct. To the extent
that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law.
Section 11.11 Payment Set Aside. To the extent that the Company
makes a payment or payments to the Purchaser hereunder or under the
Note or the Purchaser enforce or exercise its rights hereunder or
thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Company, a trustee, receiver or any other
person under any law (including, without limitation, any bankruptcy
law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
TRAVEL PORTS OF AMERICA, INC.
By:
Name: William Burslem III
Title: Vice President
CEPHAS CAPITAL PARTNERS, L.P.
By: Cephas LLC, General Partner
By:
Name: Jeffery S. Holmes
Title: Managing Member
LIST OF APPENDIXES, EXHIBITS AND SCHEDULES
Appendix A - Defined Terms
Exhibit A - Subordinated Convertible Note
Exhibit B - Warrant
Exhibit C - Registration Agreement
Exhibit D - Opinion
Exhibit E - Guaranty
Restrictions and Liens Schedule
Capitalization Schedule
Subsidiary Schedule
Financial Statements Schedule
Liabilities Schedule
Developments Schedule
Taxes Schedule
Tax Audit Schedule
Consents Schedule
Employee Benefit Plans Schedule
Compliance Schedule
APPENDIX A
DEFINITIONS
"Affiliate" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the
Company.
"Affiliated Group" means any affiliated group as defined in IRC
Section 1504 that has filed a consolidated return for federal income
tax purposes (or any similar group under state, local or foreign law)
for a period during which any of the Company or any of its
Subsidiaries was a member.
"Bank Credit Documents" means the Restated and Amended Credit
Agreement, dated October 27, 1997, effective as of November 1, 1997,
between Fleet National Bank (formerly known as Fleet Bank) and the
Company, and all agreements, notes, instruments and documents executed
in connection therewith, in each case as the same may be supplemented,
modified, amended or restated from time to time to the extent
permitted herein.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal or
State law for the relief of debtors.
"Capitalized Leases" means, with respect to any person, all
obligations of such person under any agreement to lease, or lease of,
any real or personal property that are required to be capitalized for
financial reporting purposes in accordance with generally accepted
accounting principles and the amount of Indebtedness shall be the
capitalized amount of such obligations determined in accordance with
such principles.
"Capital Stock" means any class of capital stock of the Company as it
exists on the date of this Agreement or as it may be constituted from
time to time and warrants, options and similar rights to acquire any
such capital stock.
"Change in Control" shall be deemed to have occurred at such time as
any of the following events shall occur: (a) any sale, transfer or
issuance or series of sales, transfers and/or issuances of Common
Stock by the Company or any holders thereof which results in any
Person or group of Persons (as the term "group" is used under the
Securities Exchange Act of 1934) owning more than fifty percent (50%)
of the Common Stock outstanding immediately after such sale, transfer
or issuance or series of sales, transfers and/or issuances or (b)
during any twelve (12) month period, individuals who at the beginning
of such period constituted the Company's Board of Directors (together
with any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of the Company was
approved by a majority vote of the directors who were either directors
at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority of the Company's Board of Directors then in
office.
"Common Stock" means the Company's Common Stock, par value $.01 per
share, and any capital stock of any class of the Company which is not
limited to a fixed sum or percentage of par or stated value in respect
to the rights of the holders thereof to participate in dividends or in
the distribution of assets upon any liquidation, dissolution or
winding up of the Company.
"Consolidated Net Income" means, for any period, the aggregate of the
Net Income of the Company and its Subsidiaries (if any) for such
period, on a consolidated basis, determined in accordance with
generally accepted accounting principles, provided that (a) the Net
Income of any person which is not a Subsidiary or is accounted for by
the Company by the equity method of accounting shall be included only
to the extent of the amount of dividends or distributions paid to the
Company or a Subsidiary, and (b) the Net Income of any person acquired
in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded. "Net Income" of any person
shall mean the net income (loss) of such person, determined in
accordance with generally accepted accounting principles; excluding,
however, from the determination of Net Income any gain (but not loss)
realized upon the sale or other disposition (including, without
limitation, dispositions pursuant to leaseback transactions) of any
real property or equipment of such person which is not sold or
otherwise disposed of in the ordinary course of business, or of any
capital stock of the Company or a Subsidiary owned by such person.
Should the Company not have a Subsidiary during any measuring period,
the Net Income for such period shall be determined on a separate
company basis.
"Consolidated Net Worth" means the consolidated equity of the common
stockholders of the Company and its consolidated Subsidiaries, as
determined in accordance with generally accepted accounting
principles, after excluding from the assets of the Company the
following: (a) patents, copyrights, trademarks, trade names, non-
compete agreements, franchises and other similar intangibles; (b)
goodwill; and (c) any surplus resulting from any write-up of assets
subsequent to October 31, 1997
"Convertible Securities" means any stock or securities (other than
Options) directly or indirectly convertible into or exchangeable for
Common Stock.
"Conversion Stock" means shares of the Company's authorized but
unissued Common Stock; provided that if there is a change such that
the securities issuable upon conversion of the Notes are issued by
an entity other than the Company or there is a change in the class
of securities so issuable, then the term "Conversion Stock" shall
mean one share of the security issuable upon conversion of this Note
if such security is issuable in shares, or shall mean the smallest
unit in which such security is issuable if such security is not
issuable in shares.
"Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice, or passage of
time or both would be, an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as in
effect on the date of execution of this Agreement and as may
thereafter be amended.
"Equity Interest" means Capital Stock or warrants, options or other
rights to acquire Capital Stock and stock appreciation rights,
phantom stock rights and similar rights.
"Financing" has the same meaning given to such term in the SBIC
Regulations.
"Indebtedness" means, without duplication, with respect to any
person, as of any date, the principal of and any premium or interest
on (a) all indebtedness of such person for borrowed money (including
all indebtedness evidenced by notes, bonds, debentures or other
securities sold by such person for money) or in respect of letters
of credit issued for its own account, (b) all indebtedness incurred
by such person in the acquisition (whether by way of purchase, merger,
consolidation or otherwise and whether by such person or another
person) of any business, real property or other assets (except assets
acquired in the ordinary course of the conduct of the acquiror's usual
business), (c) all Capitalized Leases, (d) guarantees by such person
of indebtedness described in clauses (a), (b) or (c) and (e) renewals,
extensions refundings, deferrals, restructurings, amendments and
modifications of any such indebtedness, obligation or guarantee.
"Intellectual Property Rights" means all (a) patents, patent
applications, patent disclosures and inventions, (b) trademarks,
service marks, trade dress, trade names, logos and corporate names
and registrations and applications for registration thereof together
with all of the goodwill associated therewith, (c) copyrights
(registered or unregistered) and copyrightable works and registrations
and applications for registration thereof, (d) mask works and
registrations and applications for registration thereof, (e) computer
software, data, data bases and documentation thereof, (f) trade
secrets and other confidential information (including, without
limitation, ideas, formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice),
know-how, manufacturing and production processes and techniques,
research and development information, drawings, specifications,
designs, plans, proposals, technical data, copyrightable works,
financial and marketing plans and customer and supplier lists and
information), (g) other intellectual property rights and (h) copies
and tangible embodiments thereof (in whatever form or medium).
"Investment" as applied to any person means (a) any direct or
indirect purchase or other acquisition by such person of any notes,
obligations, instruments, stock, securities or ownership interest
(including partnership interests and joint venture interests) of
any other person and (b) any capital contribution by such person to
any other person.
"IRC" means the Internal Revenue Code of 1986, as amended, and any
reference to any particular IRC section shall be interpreted to
include any revision of or successor to that section regardless of
how numbered or classified.
"IRS" means the United States Internal Revenue Service.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof), any sale
of receivables with recourse against the Company, any Subsidiary or
any Affiliate, any filing or agreement to file a financing statement
as debtor under the Uniform Commercial Code or any similar statute
other than to reflect ownership by a third party of property leased
to the Company or any Subsidiaries under a lease which is not in the
nature of a conditional sale or title retention agreement, or any
subordination arrangement in favor of another person (other than any
subordination arising in the ordinary course of business).
"Market Price" of a share of Common Stock means the average of the
Quoted Prices of the Common Stock for thirty (30) consecutive Trading
Days commencing forty-five (45) Trading Days before the date in
question. In the absence of quotations, the Company shall determine
the Market Price on the basis of such quotations as it considers
reasonably appropriate and equitable.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two (2) Officers
or by an Officer (other than the Secretary) and an Assistant Secretary
of the Company.
"Options" means any warrants, options or rights to subscribe for or
purchase Common Stock.
"Parent" with respect to a person, means any corporation, partnership,
joint venture or other business entity which owns, directly or through
one or more Subsidiaries, shares of stock or other interests having
general voting power under ordinary circumstances to elect a majority
of the board of directors, managers, trustees or other governing body
of such person.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision
thereof.
"Public Offering" means any offering by the Company of its capital
stock or equity securities to the public pursuant to an effective
registration statement under the Securities Act, or any comparable
statement under any similar federal statute then in force.
"Quoted Price" for a security means the price of quoted for such
security on the New York Stock Exchange, or, if there has been no
sales on any such exchange on any day, the average of the highest
bid and lowest asked prices on such exchange at the end of such day,
or, if on any day such security is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ System as of
4:00 P.M., New York time, or, if on any day such security is not
quoted in the NASDAQ System, the average of the highest bid and
lowest asked prices on such day in the domestic over-the-counter
market as reported by the National Quotation Bureau, Incorporated, or
any similar successor organization.
"Regulatory Problem" means any set of facts or circumstances wherein
it has been asserted by any governmental regulatory agency (or the
Purchaser believes that there is a substantial risk of such assertion)
that the Purchaser and its Affiliates are not entitled to hold, or
exercise any significant right with respect to the Common Stock.
"Restricted Securities" means (a) the Note and the Warrant issued
hereunder, (b) the Common Stock issued upon conversion of Note or
upon exercise of the Warrant and (c) any securities issued with
respect to the securities referred to in clauses (a) or (b) above by
way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or
other reorganization. As to any particular Restricted Securities,
such Securities shall cease to be Restricted Securities when they
have been (a) effectively registered under the Securities Act and
disposed of in accordance with the registration statement covering
them, (b) distributed to the public through a broker, dealer or
market maker pursuant to Rule 144 (or any similar provision then in
force) under the Securities Act or become eligible for sale pursuant
to Rule 144(k) (or any similar provision then in force) under the
Securities Act or (c) been otherwise transferred and new certificates
for them not bearing the Securities Act legend set forth in Section
5.3 have been delivered by the Company in accordance with Sections
6.4 or 6.6. Whenever any particular Securities cease to be Restricted
Securities, the holder thereof shall be entitled to receive from the
Company, without expense, new Securities of like tenor not bearing a
Securities Act legend of the character set forth in Section 6.3.
"SBIC Regulations" means the Small Business Investment Company Act of
1958, as amended, and the regulations issued by the Small Business
Administration thereunder,13 CFR 107 and 121, as amended.
"SBIC Regulatory Violation" means (a) a diversion of the proceeds of
the Financing provided hereunder from the reported use thereof on the
use of proceeds statement delivered by the Company on SBA Form 1031
delivered at the Closing, if such diversion was effected without
obtaining the prior written consent of the Purchaser (which may be
withheld in its sole discretion) or (b) a change in the principal
business activity of the Company and its Subsidiaries to an
ineligible business activity (within the meaning of the SBIC
Regulations) if such change occurs within one year after the date of
the initial Financing hereunder.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities described above and issued under
this Agreement.
"Securities Act" means the Securities Act of 1933, as in effect on
the date hereof and as hereafter amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as in effect on the date hereof and as hereafter amended.
"SEC" means the United States Securities & Exchange Commission.
"Senior Indebtedness" means all Indebtedness of the Company for money
now or hereafter borrowed from a bank, insurance company or any other
institutional lender, whether secured by assets of the Company or any
Subsidiary or unsecured, outstanding at any time (including future
advances), all Indebtedness of the Company which is secured by liens
or assets used in the ordinary course of business by the Company or
any Subsidiary and the value of the collateral is equal to at least
fifty percent (50%) of the then outstanding principal amount of such
Indebtedness, all together with interest thereon (including post-
petition interest) and all fees, reimbursements and other amounts
owing under the relevant instruments and agreements evidencing,
governing and/or securing such Indebtedness. Notwithstanding the
foregoing, the Senior Indebtedness does not include Indebtedness of
the Company to any of its Subsidiaries for money borrowed or advanced
from any such Subsidiary and Indebtedness which by its terms is not
superior in right of payment to the Note.
"Senior Subordinated Indebtedness" means all principal, interest,
fees, reimbursements and other amounts owed under the Senior
Subordinated Indebtedness Documents.
"Senior Subordinated Indebtedness Documents" means the Trust
Agreement between the Company and the American Stock & Transfer
Company pursuant to which the Company issued its 8 3/4% Senior
Subordinated Notes due January 15, 2005 in the original principal
amount of $5,000,000 and all agreements, notes, instruments and
documents executed in connection therewith, as the same may be
supplemented, modified, amended or restated from time to time to the
extent permitted herein.
"Subsidiary" means any person of which at the time of determination
made under this Agreement at least a majority of capital stock having
ordinary voting power for the election of directors or other governing
body of such person is owned by the Company directly or through one
or more Subsidiaries.
"Tax" or "Taxes" means federal, state, county, local, foreign or other
income, gross receipts, ad valorem, franchise, profits, sales or use,
transfer, registration, excise, utility, environmental,
communications, real or personal property, capital stock, license,
payroll, wage or other withholding, employment, social security,
severance, stamp, occupation, alternative or add-on minimum, estimated
and other taxes of any kind whatsoever (including, without limitation,
deficiencies, penalties, additions to tax, and interest attributable
thereto) whether disputed or not.
"Tax Return" means any return, information report or filing with
respect to Taxes, including any schedules attached thereto and
including any amendment thereof.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are not traded on the
exchange or in the market which is the principal United States market
for the Common Stock of the Company, as determined by the Board of
Directors of the Company.
EXHIBIT A
The security represented by this instrument was originally issued on
December 4, 1997, and has not been registered under the Securities
Act of 1933, as amended. The transfer of such security is subject
to the conditions specified in the Note and Warrant Purchase
Agreement, dated as of December 4, 1997, as amended and modified from
time to time, between the issuer (the "Company") and the original
holder of this instrument, and the Company reserves the right to
refuse the transfer of such security until such conditions have been
fulfilled with respect to such transfer. Upon written request, a copy
of such conditions shall be furnished by the Company to the holder
hereof without charge.
TRAVEL PORTS OF AMERICA, INC.
CONVERTIBLE SUBORDINATED
PROMISSORY NOTE
December 4, 1997 $2,000,000.00
Rochester, New York
FOR VALUE RECEIVED, TRAVEL PORTS OF AMERICA, INC., a New York
corporation (the "Company"), hereby promises to pay to the order of
CEPHAS CAPITAL PARTNERS, L.P., which has an address of 16 West Main
Street, Rochester, New York 14614, or registered assigns, ("Holder")
the principal sum of Two Million Dollars ($2,000,000.00) together
with interest thereon calculated from the date hereof in accordance
with the provisions of this Note on December 4, 2007.
This Note was issued pursuant to a Note and Warrant Purchase
Agreement, dated as of December 4, 1997 (as amended and modified from
time to time, the "Purchase Agreement"), between the Company and the
Holder and all provisions thereof are hereby incorporated herein in
full by reference. The Purchase Agreement contains terms governing
the rights of the Holder of this Note and the Holder is entitled to
the benefits thereof. All capitalized terms used herein and not
otherwise defined shall have the meanings given thereto in the
Purchase Agreement.
1. Interest. Except as otherwise expressly provided herein, interest
shall accrue on the unpaid principal amount of this Note outstanding
from the date hereof until such time as payment therefor is actually
delivered to the Holder at the rate of 7.81% per annum. Interest
shall be payable quarterly on the 1st day of March, June, September
and December in each year, commencing with March 1, 1998 and shall
continue thereafter until the principal hereof shall have become due
and payable, and on the maturity date hereof. All interest shall be
calculated on the basis of a 360 day year of twelve 30-day months.
2. Principal Payments. As provided in the Purchase Agreement, this
Note is subject to prepayment, in whole or from time to time in part,
in certain cases without premium and in other cases with a premium as
specified in the Agreement. The Company agrees to make such
prepayments of principal on the dates and in the amounts specified in
the Purchase Agreement.
3. Events of Default. In case an Event of Default, shall occur and
be continuing, the principal of this Note may be declared or become
immediately due and payable in the manner and with the effect provided
in the Purchase Agreement. In addition, upon the occurrence and during
the continuance of an Event of Default, interest on the outstanding
principal hereunder shall accrue at a rate per annum from time to
time equal to the greater of the rate of interest then in effect on
this Note, plus 1.5% per annum and, at Holder's option, shall be due
either quarterly as aforesaid or on demand. Any increase in the
interest rate shall not be the Holder's exclusive remedy in the event
of an Event of Default. The Holder shall also have any other rights
which the Holder may have been afforded under any contract or
agreement at any time and any other rights which such holder may have
pursuant to applicable law. The Company hereby waives diligence,
presentment, protest and demand and notice of protest and demand,
dishonor and nonpayment of this Note and expressly agrees that this
Note, or any payment hereunder, may be extended from time to time and
that the Holder may accept security for this Note or release security
for this Note, all without in any way affecting the liability of the
Company hereunder.
4. Conversion. Notwithstanding any provision contained herein or in
the Purchase Agreement, the Holder may convert all or any portion of
the outstanding principal amount of this Note pursuant to and as
provided in the Purchase Agreement until such time as such amount has
been deemed to have been paid.
5. Subordination. This Note is subordinated to the extent set forth
and on the terms and conditions set forth in the Purchase Agreement.
6. Amendment and Waiver. Except as otherwise expressly provided
herein, the provisions of this Note may be amended and the Company
may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company has
obtained the written consent of the Holder.
7. Cancellation. After all principal and accrued interest at any
time owed on this Note has been paid in full, this Note shall be
surrendered to the Company for cancellation and shall not be reissued.
8. Payments. Unless otherwise expressly provided herein, all
payments to be made to the Holders shall be made in the lawful money
of the United States of America in immediately available funds which
shall be delivered to the address designated by the Holder.
9. Transfer of Note. This Note may be transferred pursuant to
Article 6 of the Purchase Agreement and the Company shall treat the
Person to whom this Note is assigned in accordance therewith for the
purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
10. Business Days. If any payment is due, or any time period for
giving notice or taking action expires, on a day which is a Saturday,
Sunday or legal holiday in the State of New York, the payment shall
be due and payable on, and the time period shall automatically be
extended to, the next business day immediately following such
Saturday, Sunday or legal holiday, and interest shall continue to
accrue at the required rate hereunder until any such payment is made.
11. Usury Laws. It is the intention of the Company and the Holder
to conform strictly to all applicable usury laws now or hereafter in
force, and any interest payable under this Note shall be subject to
reduction to the amount not in excess of the maximum legal amount
allowed under the applicable usury laws as now or hereafter construed
by the courts having jurisdiction over such matters. If the maturity
of this Note is accelerated by reason of an election by the Holder
resulting from an Event of Default, voluntary prepayment by the
Company or otherwise, then earned interest may never include more
than the maximum amount permitted by law, computed from the date
hereof until payment, and any interest in excess of the maximum amount
permitted by law shall be canceled automatically and, if theretofore
paid, shall at the option of the Holder either be rebated to the
Company or credited on the principal amount of this Note, or if this
Note has been paid, then the excess shall be rebated to the Company.
The aggregate of all interest (whether designated as interest, service
charges, points or otherwise) contracted for, chargeable or receivable
under this Note shall under no circumstances exceed the maximum legal
rate upon the unpaid principal balance of this Note remaining unpaid
from time to time. If such interest does exceed the maximum legal
rate, it shall be deemed a mistake and such excess shall be canceled
automatically and, if theretofore paid, rebated to the Company or
credited on the principal amount of this Note, or if this Note has
been repaid, then such excess shall be rebated to the Company.
12. Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Note
shall be given in accordance with Section 10.1 of the Purchase
Agreement.
13. New York Law. This Note is intended to be performed in the
State of New York and shall be construed and enforced in accordance
with the laws of such State.
IN WITNESS WHEREOF, the Company has executed and delivered this Note
on the ___ of December, 1997.
TRAVEL PORTS OF AMERICA, INC.
By: ___________________________
Name: William Burslem III
Title: Vice President
EXHIBIT B
This Warrant was originally issued on December 4, 1997, and such
issuance was not registered under the Securities Act of 1933, as
amended. The transfer of this Warrant and the securities obtainable
upon exercise thereof is subject to the conditions on transfer
specified in the Note and Warrant Purchase Agreement, dated as of
December 4, 1997 (as amended and modified from time to time), between
the issuer hereof (the "Company") and the initial holder hereof.
Upon written request, a copy of such conditions shall be furnished
by the Company to the holder hereof without charge.
TRAVEL PORTS OF AMERICA, INC.
STOCK PURCHASE WARRANT
Date of Issuance: December 4, 1997 Certificate No. ____
FOR VALUE RECEIVED, TRAVEL PORTS OF AMERICA, INC., a New York
corporation (the "Company"), hereby grants to CEPHAS CAPITAL PARTNERS,
L.P. or its registered assigns (the "Registered Holder") the right to
purchase from the Company up to 40,000 shares of the Company's Common
Stock at a price per share of $5.16 (as adjusted from time to time
hereunder, the "Exercise Price"). This Warrant is the Warrant
(issued by the Company to the Registered Holder pursuant to the Note
and Warrant Purchase Agreement, dated as of December 4, 1997 (the
"Purchase Agreement"). Certain capitalized terms used herein are
defined in Section 5 hereof. The amount and kind of securities
obtainable pursuant to the rights granted hereunder and the purchase
price for such securities are subject to adjustment pursuant to the
provisions contained in this Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
(a) Exercise Period. The Registered Holder may exercise, in
whole or in part (but not as to a fractional share of Common Stock),
the purchase rights represented by this Warrant at any time and from
time to time after the Date of Issuance to and including the tenth
(10th) anniversary thereof (the "Exercise Period").
(b) Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised
when the Company has received all of the following items (the
"Exercise Time"):
(A) a completed Exercise Agreement in the form of
Exhibit I attached hereto and as described in
Paragraph 1(c) below, executed by the Person
exercising all or part of the purchase rights
represented by this Warrant (the "Registered Holder");
(B) this Warrant;
(C) if this Warrant is not registered in the name
of the Registered Holder, an Assignment or Assignments
in the form set forth in Exhibit II hereto evidencing
the assignment of this Warrant to the Registered
Holder, in which case the Registered Holder shall have
complied with the provisions set forth in Section 8
hereof; and
(D) either (i) a check payable to the Company (in
the case of the original Holder of this Warrant only),
a certified check payable to the Company or a wire
transfer of immediately available funds to an account
designated by the Company in an amount equal to the
product of the Exercise Price multiplied by the
number of shares of Common Stock being purchased upon
such exercise (the "Aggregate Exercise Price") or
(ii) the surrender to the Company of debt or equity
securities of the Company having a Market Price equal
to the Aggregate Exercise Price of the Common Stock
being purchased upon such exercise (provided that for
purposes of this subparagraph, the Market Price of
any note or other debt security or any preferred
stock shall be deemed to be equal to the aggregate
outstanding principal amount or liquidation value
thereof plus all accrued and unpaid interest thereon
or accrued or declared and unpaid dividends thereon).
(E) Certificates for shares of Common Stock
purchased upon exercise of this Warrant shall be
delivered by the Company to the Registered Holder
within five (5) business days after the date of the
Exercise Time. Unless this Warrant has expired or
all of the purchase rights represented hereby have
been exercised, the Company shall prepare a new
Warrant, substantially identical hereto, representing
the rights formerly represented by this Warrant which
have not expired or been exercised and shall within
such five (5) day period, deliver such new Warrant to
the Person designated for delivery in the Exercise
Agreement.
(F) The Common Stock issuable upon the exercise
of this Warrant shall be deemed to have been issued
to the Registered Holder at the Exercise Time, and
the Registered Holder shall be deemed for all purposes
to have become the record holder of such Common Stock
at the Exercise Time.
(G) The issuance of certificates for shares of
Common Stock upon exercise of this Warrant shall be
made without charge to the Registered Holder or the
Registered Holder for any issuance tax in respect
thereof or other cost incurred by the Company in
connection with such exercise and the related issuance
of shares of Common Stock. Each share of Common Stock
issuable upon exercise of this Warrant shall upon
payment of the Exercise Price therefor, be fully paid
and nonassessable and free from all liens and charges
with respect to the issuance thereof.
(H) The Company shall not close its books against
the transfer of this Warrant or of any share of Common
Stock issued or issuable upon the exercise of this
Warrant in any manner which interferes with the timely
exercise of this Warrant. The Company shall from time
to time take all such action as may be necessary to
assure that the par value per share of the unissued
Common Stock acquirable upon exercise of this Warrant
is at all times equal to or less than the Exercise
Price then in effect.
(I) The Company shall assist and cooperate with
any Registered Holder or Registered Holder required
to make any governmental filings or obtain any
governmental approvals prior to or in connection with
any exercise of this Warrant (including making any
filings required to be made by the Company).
(J) Notwithstanding any other provision hereof,
if an exercise of any portion of this Warrant is to
be made in connection with a registered public
offering or the sale of the Company, the exercise of
any portion of this Warrant may, at the election of
the holder hereof, be conditioned upon the
consummation of the public offering or sale of the
Company in which case such exercise shall not be
deemed to be effective until the consummation of such
transaction.
(K) The Company shall at all times reserve and
keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of
issuance upon the exercise of the Warrants, such
number of shares of Common Stock issuable upon the
exercise of all outstanding Warrants. All shares of
Common Stock which are so issuable shall, when issued,
be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and
charges. The Company shall take all such actions as
may be necessary to assure that all such shares of
Common Stock may be so issued without violation of
any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon
which shares of Common Stock may be listed (except for
official notice of issuance which shall be immediately
delivered by the Company upon each such issuance).
The Company shall not take any action which would
cause the number of authorized but unissued shares of
Common Stock to be less than the number of such shares
required to be reserved hereunder for issuance upon
exercise of the Warrants.
(c) Exercise Agreement. Upon any exercise of this
Warrant, the Exercise Agreement shall be substantially in the
form set forth in Exhibit I hereto, except that if the shares
of Common Stock are not to be issued in the name of the Person
in whose name this Warrant is registered, the Exercise
Agreement shall also state the name of the Person to whom the
certificates for the shares of Common Stock are to be issued,
and if the number of shares of Common Stock to be issued does
not include all the shares of Common Stock purchasable
hereunder, it shall also state the name of the Person to whom
a new Warrant for the unexercised portion of the rights
hereunder is to be delivered. Such Exercise Agreement shall
be dated the actual date of execution thereof.
(d) Fractional Shares. If a fractional share of Common Stock
would, but for the provisions of Paragraph 1(a), be issuable upon
exercise of the rights represented by this Warrant, the Company shall,
within five business days after the date of the Exercise Time, deliver
to the Registered Holder a check payable to the Registered Holder in
lieu of such fractional share in an amount equal to the difference
between Market Price of such fractional share as of the date of the
Exercise Time and the Exercise Price of such fractional share.
Section 2. Adjustment of Exercise Price and Number of Shares.
In order to prevent dilution of the rights granted under this Warrant,
the Exercise Price shall be subject to adjustment from time to time
as provided in this Section 2, and the number of shares of Common
Stock obtainable upon exercise of this Warrant shall be subject to
adjustment from time to time as provided in this Section 2.
(a) Stock Dividends, Subdivisions or Combinations. If the Company
at any time: (i) pays a dividend or makes a distribution on its
Common Stock in shares of its Common Stock, (ii) subdivides its
outstanding shares of Common Stack into a greater number of shares,
(iii) combines its outstanding shares of Common Stock into a smaller
number of shares, (iv) makes a distribution on its Common Stock in
shares of its Capital Stock other than Common Stock, or (v) issues by
reclassification of its Common Stock any shares of its Capital Stock,
then the Exercise Price in effect immediately prior to such action
shall be adjusted so that the Registered Holder may receive the number
of shares of Capital Stock of the Company which it would have owned
immediately following such action if it had exercised the Warrant
immediately prior to such action. The adjustment shall become
effective immediately after the record date in the case of a stock
dividend or distribution and immediately after the effective date in
the case of a subdivision, combination or reclassification. If after
an adjustment the Registered Holder may receive shares of two or mare
classes of Capital Stock of the Company as a result of exercising
this Warrant, the Company shall determine the allocation of the
adjusted Exercise Price between the classes of Capital Stock on a
fair, reasonable and equitable basis. After such allocation, the
Exercise Price of each class of Capital Stock shall thereafter be
subject to adjustment on terms comparable to those applicable to
Common Stock in this Section 2.
(b) Adjustment for Rights Issue. If the Company grants, sells or
distributes any Options pursuant to which one or more shares of Common
Stock are issuable at a price per share less than the Market Price on
the date of issuance of such Option, then the Exercise Price in effect
immediately prior to such action shall be adjusted (i) proportionately
by the difference between the then Market Price and the per share
exercise, purchase or offering price (the "Offering Price") if such
Offering Price is greater than the then Exercise Price or (ii) to
equal the Offering Price if such Offering Price is less than the then
Exercise Price. For purposes of this Section 2(b), the Offering Price
for which any one share of Common Stock is issuable shall be equal to
the sum of the lowest amounts of consideration (if any) received or
receivable by the Company for the issuance of one share of Common
Stock pursuant to the Option. The adjustment required by this Section
2(b) shall be made successively whenever any Options are issued and
shall become effective immediately upon the grant or issuance thereof.
(c) Adjustment for Convertible Securities Issue. If the Company
issues any Convertible Security for a consideration per share of
Common Stock (also referred to as the "Offering Price") initially
deliverable upon conversion or exchange of such securities which is
less than the Market Price per share on the date of issuance of such
Convertible Security, then the Exercise Price in effect immediately
prior to such action shall be adjusted (i) proportionately by the
difference between such Market Price and the Offering Price if the
Offering Price is greater than the then effective Exercise Price or
(ii) to equal the Offering Price if such Offering Price is less than
the then effective Exercise Price. For the purposes of this Section
2(c), the Offering Price for which any one share of Common Stock is
issuable under a Convertible Security shall be equal to the sum of
the lowest amounts of consideration (if any) received or receivable
by the Company for the issuance of one share of Common Stock upon the
conversion or exchange thereof. The adjustment required by this
Section 2(c) shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
This Section 2(c) does not apply to (i) Convertible Securities
issued to stockholders of any Person which merges into the Company,
or with a Subsidiary of the Company, in proportion to their
stockholdings immediately prior to such merger and which requires an
adjustment pursuant to Section 2(f) below or (ii) Convertible
Securities issued in a bona fide public offering pursuant to a firm
commitment underwriting at a minimum price of $7.00.
(d) Adjustments for Common Stock Issue. If the Company issues
shares of Common Stock for a consideration per share (also referred
to as the "Offering Price") less than the Market Price per share on
the date the Company fixes the Offering Price of such additional
shares, then the Exercise Price in effect immediately prior to such
action shall be adjusted (i) proportionately by the difference
between the then Market Price and the Offering Price per share of
the additional shares if such Offering Price is greater than the then
effective Exercise Price or (ii) to equal the Offering Price if such
Offering Price is less than the then effective Exercise Price. The
adjustment required by this Section 2(d) shall be made successively
whenever any such issuance is made, and shall become effective
immediately after such issuance.
This Section 2(d) does not apply to (i) the exercise of Options for
which an adjustment has already been made pursuant to Section 2(a),
(ii) the conversion or exchange of other securities convertible or
exchangeable for Common Stock for which an adjustment has already
been made pursuant to Section 2(c), (iii) Common Stock issued to the
Company's employees under bona fide employee benefit plans adopted
by the Board of Directors and approved by the holders of Common Stock
when required by law, if such Common Stock would otherwise be covered
by this Section 2(d), (iv) Common Stock issued to stockholders of any
Person which merges into the Company in proportion to their
stockholdings of such person immediately prior to such merger, upon
such merger, for which an adjustment has already been made under
Section 2(f), (v) Common Stock issued in a bona fide public offering
pursuant to a firm commitment underwriting at a minimum price of
$7.00 or (vii) except as provided in Section 2(g), Common Stock
issued upon the exercise of Options issued by the Company prior to
the date of this Agreement.
(e) Adjustment for Other Distributions. If the Company
distributes to any holders of its Common Stock any of its assets or
debt securities or any rights or warrants to purchase debt securities,
assets or other securities of the Company, the Exercise Price shall
be adjusted in accordance with the following formula:
M - F
C' = C x M
where:
C' = the adjusted Exercise Price.
C = the current Exercise Price.
M = the Market Price per share of Common
Stock on the record date mentioned
below.
F = the fair market value on the record
date of the assets, securities, rights
or warrants applicable to one share of
Common Stock. The Board of Directors
shall determine such fair market value
in a reasonable manner and in good
faith.
The adjustments required by this Section 2(e) shall be made
successively whenever any such distribution is made and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive the distribution. This Section 2(e)
does not apply to cash dividends or cash distributions paid out of
consolidated current or retained earnings as shown on the books of
the Company and otherwise permitted under Section 5.2 of the Purchase
Agreement. Also, this Section does not apply to Options referred to
in Section 2(a).
(f) Reorganization, Reclassification, Consolidation, Merger or
Sale. Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction, in each case which is effected
in such a manner that the holders of Common Stock are entitled to
receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock,
is referred to herein as an "Organic Change". Prior to the
consummation of any Organic Change, the Company shall make lawful and
adequate provision in form and substance satisfactory to the
Registered Holder to insure that the Registered Holder shall
thereafter have the right to acquire and receive, in lieu of or in
addition to (as the case may be) the shares of Common Stock
immediately theretofore acquirable and receivable upon the exercise
of this Warrant or such shares of stock, securities or assets as the
Registered Holder would have received in connection with such Organic
Change if the Registered Holder had exercised this Warrant immediately
prior to such Organic Change. In each such case, the Company shall
also make appropriate provisions (in form and substance satisfactory
to the Registered Holder) to insure that the provisions of this
Section 2 hereof shall thereafter be applicable to this Warrant in
relation to any shares of stock, securities or assets thereafter
deliverable upon exercise of this Warrant (including, in the case of
any such consolidation, merger or sale in which the successor entity
or purchasing entity is other than the Company, an immediate
adjustment of the Exercise Price to the value for the Common Stock
reflected by the terms of such consolidation, merger or sale, and a
corresponding immediate adjustment in the number of shares of Common
Stock acquirable and receivable upon exercise of this Warrant, if the
value so reflected is less than the Exercise Price in effect
immediately prior to such Organic Change). The Company shall not
effect an Organic Change unless, prior to the consummation thereof,
the successor entity (if other than the Company) resulting from
consolidation or merger or the entity purchasing such assets assumes
by written instrument (in form and substance satisfactory to the
Registered Holder), the obligation to deliver to the Registered Holder
such shares of stock, securities or assets as, in accordance with the
foregoing provisions, the Registered Holder may be entitled to
acquire.
(g) Change in Option Price or Conversion Rate. If the Offering
Price for any Option or any Convertible Security changes at any time,
the Exercise Price in effect at the time of such change shall be
adjusted immediately to the Exercise Price which would have been in
effect at such time had such Option or Convertible Security originally
provided for such changed Offering Price at the time initially
granted, issued or sold. For purposes of this Section 2(g), if the
terms of any Option or Convertible Security which was outstanding as
of the Date of Issuance are changed in the manner described in the
immediately preceding sentence, then such Option or Convertible
Security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as
of the date of such change; provided that no such change shall at any
time cause the Exercise Price hereunder to be increased.
(h) Other Events. If any event occurs of the type contemplated
by the provisions of this Section 2 but not expressly provided for by
such provisions (including the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then the
Company's Board of Directors shall in good faith make a reasonable
and appropriate adjustment in the Exercise Price so as to protect the
rights of the Registered Holder hereunder; provided that no such
adjustment shall increase the Exercise Price as otherwise determined
pursuant to this Section 2 or decrease the number of shares of Common
Stock issuable upon the exercise of this Warrant.
(i) Calculation of Consideration Received. If any Common Stock,
Option or Convertible Security is issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor
shall be deemed to be the amount received by the Company therefor (net
of discounts, commissions and related expenses). If any Common Stock,
Option or Convertible Security is issued or sold for a consideration
other than cash, the amount of the consideration other than cash
received by the Company shall be the fair market value of such
consideration, except where such consideration consists of
securities, in which case the amount of consideration received by
the Company shall be the Market Price thereof as of the date of
receipt. If any Common Stock, Option or Convertible Security is
issued to the owners of the non-surviving entity in connection with
any merger in which the Company is the surviving corporation, the
amount of consideration therefor shall be deemed to be the fair
market value of such portion of the net assets and business of the
non-surviving entity as is attributable to such Common Stock, Option
or Convertible Security, as the case may be. The fair market value
of any consideration other than cash and securities shall be
determined jointly by the Company and the Registered Holder. If
such parties are unable to reach agreement within a reasonable period
of time, the fair market value of such consideration shall be
determined by an independent appraiser experienced in valuing such
type of consideration jointly selected by the Company and the
Registered Holder. The determination of such appraiser shall be
final and binding upon the parties, and the fees and expenses of
such appraiser shall be borne by the Company. In case any Option is
issued in connection with the issue or sale of other securities of
the Company, together comprising one integrated transaction in which
no specific consideration is allocated to such Option by the parties
thereto, the Option shall be deemed to have been issued for a
consideration of $.01.
(j) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held
by or for the account of the Company or any Subsidiary, and the
disposition of any shares so owned or held shall be considered an
issue or sale of Common Stock.
(k) Record Date. If the Company takes a record of the holders of
Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (ii) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall
be deemed to be the date of the issue or sale of the shares of Common
Stock, Options or Convertible Securities deemed to have been issued or
sold upon the declaration of such dividend or upon the making of such
other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(l) Deferral of Adjustments, Etc. No adjustment in the Exercise
Price need be made unless the adjustment would require an increase or
decrease of at least one percent (1%) in the Exercise Price. Any
adjustments that are not made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this
Section 2 shall be made to the nearest cent or to the nearest 1/100th
of a share, as the case may be.
(m) Notices.
(i) Immediately upon any adjustment of the Exercise Price,
the Company shall give written notice thereof to the
Registered Holder, setting forth in reasonable detail and
certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the
Registered Holder at least twenty (20) days prior to (1) the
date on which the Company closes its books or takes a record
(A) with respect to any dividend or distribution upon Common
Stock, (B) with respect to any pro rata subscription offer to
holders of Common Stock or (C) for determining rights to vote
with respect to any Organic Change, dissolution or liquidation
or (2) of any Change of Control (of which it has notice) or
Public Offering.
Section 3. Purchase Rights. If at any time the Company grants,
issues or sells any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property pro rata to
the record holders of any class of Common Stock (the "Purchase
Rights"), then the Registered holder of this Warrant shall be entitled
to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which such holder could have acquired if
such holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant immediately before the date on
which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of which
the record holders of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights.
Section 4. Definitions. The following terms have meanings set
forth below:
"Common Stock" means the Company's Common Stock, par value $.01 per
share, and except for purposes of the shares obtainable upon exercise
of this Warrant, any capital stock of any class of the Company which
is not limited to a fixed sum or percentage of par or stated value in
respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation,
dissolution or winding up of the Company; provided that where such
term refers to the security receivable upon exercise of this Warrant
and there is a change such that the securities issuable upon exercise
of this Warrant are issued by an entity other than the Company or
there is a change in the type or class of securities so issuable, the
term "Common Stock" shall mean one share of the security issuable upon
conversion of this Warrant if such security is issuable in shares, or
shall mean the smallest unit in which such security is issuable if
such security is not issuable in shares.
"Convertible Security" means any stock or securities (directly or
indirectly) convertible into or exchangeable for Common Stock.
"Options" means any rights or options to subscribe for or purchase
Common Stock or Convertible Securities.
"Person" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
Other capitalized terms used in this Warrant but not defined herein
shall have the meanings set forth in the Purchase Agreement.
Section 5. No Voting Rights; Limitations of Liability. This
Warrant shall not entitle the holder hereof to any voting rights or
other rights as a stockholder of the Company. No provision hereof,
in the absence of affirmative action by the Registered Holder to
purchase Common Stock, and no enumeration herein of the rights or
privileges of the Registered Holder shall give rise to any liability
of such holder for the Exercise Price of Common Stock acquirable by
exercise hereof or as a stockholder of the Company.
Section 6. Warrant Transferable. Subject to the transfer
conditions referred to in the legend endorsed hereon, this Warrant
and all rights hereunder are transferable, in whole or in part,
without charge to the Registered Holder, upon surrender of this
Warrant with a properly executed Assignment (in the form of Exhibit
II hereto) at the principal office of the Company.
Section 7. Warrant Exchangeable for Different Denominations.
This Warrant is exchangeable, upon the surrender hereof by the
Registered Holder at the principal office of the Company, for new
Warrants of like tenor representing in the aggregate the purchase
rights hereunder, and each of such new Warrants shall represent such
portion of such rights as is designated by the Registered Holder at
the time of such surrender. The date the Company initially issues
this Warrant shall be deemed to be the "Date of Issuance" hereof
regardless of the number of times new certificates representing the
unexpired and unexercised rights formerly represented by this Warrant
shall be issued. All Warrants representing portions of the rights
hereunder are referred to herein as the "Warrants."
Section 8. Replacement. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Registered Holder
shall be satisfactory) of the ownership and the loss, theft,
destruction or mutilation of any certificate evidencing this Warrant,
and in the case of any such loss, theft or destruction, upon receipt
of indemnity reasonably satisfactory to the Company (provided that if
the holder is a financial institution or other institutional investor
its own agreement shall be satisfactory), or, in the case of any such
mutilation upon surrender of such certificate, the Company shall (at
its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the same rights represented by
such lost, stolen, destroyed or mutilated certificate and dated the
date of such lost, stolen, destroyed or mutilated certificate.
Section 9. Notices. Except as otherwise expressly provided
herein, all notices referred to in this Warrant shall be given in
accordance with Section 11.1 of the Purchase Agreement.
Section 10. Amendment and Waiver. Except as otherwise provided
herein, the provisions of this Warrant may only be amended and the
Company may take any action herein prohibited, or omit to perform any
act herein required to be performed by it, only if the Company has
obtained the written consent of the Registered Holder.
Section 11. Descriptive Headings; Governing Law. The descriptive
headings of the several Sections and paragraphs of this Warrant are
inserted for convenience only and do not constitute a part of this
Warrant. The corporation laws of the State of New York shall govern
all issues concerning the relative rights of the Company and its
Stockholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall also
be governed by the internal law of the State of New York, without
giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdictions
other than the State of New York.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal
and to be dated the Date of Issuance hereof.
TRAVEL PORTS OF AMERICA, INC.
By: __________________________________
Name: William Burslem III
Title: Vice President
EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached Warrant
(Certificate No. CW-----), hereby agrees to subscribe for the purchase of
____ shares of the Common Stock covered by such Warrant and makes payment
herewith in full therefor at the price per share provided by such Warrant.
Signature_____________________
Address_______________________
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, ______________ hereby sells, assigns and transfers all
of the rights of the undersigned under the attached Warrant (Certificate No.
CW__________) with respect to the number of shares of the Common Stock
covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
Signature ________________
Witness ________________
EXHIBIT C
REGISTRATION AGREEMENT
This REGISTRATION AGREEMENT is made as of December 4 , 1997, between
TRAVEL PORTS OF AMERICA, INC., a New York corporation (the "Company")
and CEPHAS CAPITAL PARTNERS, L.P., a New York limited partnership
("Investor").
The parties to this Agreement are parties to a Note and Warrant
Purchase Agreement of even date herewith (the "Purchase Agreement").
In order to induce the Investor to enter into the Purchase Agreement,
the Company has agreed to provide the registration rights set forth
in this Agreement. The execution and delivery of this Agreement is a
condition to the Closing under the Purchase Agreement. Unless
otherwise provided in this Agreement, capitalized terms used herein
shall have the meanings set forth in Paragraph 8 hereof.
The parties hereto agree as follows:
1. Demand Registrations.
(a) Requests for Registration. At any time, the Investor
may request a registration under the Securities Act of all or
any portion of their Registrable Securities ("Demand
Registrations"). The maximum number of Demand Registrations
which the Investor shall be entitled to is two. A request for
the Demand Registration shall specify the approximate number
of Registrable Securities requested to be registered and the
anticipated per share price range for such offering. The
Company shall use its best efforts to ensure that the Company
is eligible for use of Forms S-2 and S-3. A registration
shall not count until it has become effective; provided that
in any event the Company shall pay all Registration Expenses
in connection with any registration initiated as a Demand
Registration whether or not it has become effective.
(b) Priority on Demand Registrations. The Company shall
not include in any Demand Registration any securities which
are not Registrable Securities without the prior written
consent of the Investor. If a Demand Registration is an
underwritten offering and the managing underwriters advise
the Company in writing that in their opinion the number of
Registrable Securities and, if permitted hereunder, other
securities requested to be included in such offering exceeds
the number of Registrable Securities and other securities,
if any, which can be sold in an orderly manner in such
offering within a price range acceptable to the Investor, the
Company shall include in such registration prior to the
inclusion of any securities which are not Registrable
Securities the number of Registrable Securities requested to
be included which in the opinion of such underwriters can be
sold in an orderly manner within the price range of such
offering. Any Persons other than the Purchaser who
participates in Demand Registrations which are not at the
Company's expense must pay their share of the Registration
Expenses as provided in Paragraph 5 hereof.
(c) Selection of Underwriters. The Investor shall have
the right to select the investment banker(s) and manager(s)
to administer any offering made pursuant to a Demand
Registration, subject to the Company's approval which shall
not be unreasonably withheld.
2. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes
to register any of its securities under the Securities Act
(other than pursuant to a Demand Registration and other than
for employee benefit plans, stock purchase plan, or shares
issuable upon conversion of Convertible Securities) and the
registration form to be used may be used for the registration
of Registrable Securities (a "Piggyback Registration"), the
Company shall give prompt written notice (in any event within
three business days after its receipt of notice of any
exercise of demand registration rights other than under this
Agreement) to the Investor of its intention to effect such a
registration and shall include in such registration all
Registrable Securities with respect to which the Company has
received from the Investor a written request for inclusion
therein within 20 days after the receipt of the Company's
notice.
(b) Piggyback Expenses. The Registration Expenses of the
Investor shall be paid by the Company in all Piggyback
Registrations.
(c) Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf
of the Company, and the managing underwriters advise the
Company in writing that in their opinion the number of
securities requested to be included in such registration
exceeds the number which can be sold in an orderly manner in
such offering within a price range acceptable to the Company,
the Company shall include in such registration (i) first, the
securities the Company proposes to sell, (ii) second, the
Registrable Securities requested to be included in such
registration and (iii) third, other securities requested to
be included in such registration.
(d) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on
behalf of holders of the Company's securities, and the
managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be
included in such registration exceeds the number which can be
sold in an orderly manner in such offering within a price
range acceptable to the holders initially requesting such
registration, the Company shall include in such registration
(i) first, the securities requested to be included therein by
the holders requesting such registration and the Registrable
Securities requested to be included in such registration, and
(ii) second, other securities requested to be included in
such registration.
(e) Other Registrations. If the Company has previously
filed a registration statement with respect to Registrable
Securities pursuant to paragraph 1 or pursuant to this
paragraph 2, and if such previous registration has not been
withdrawn or abandoned, the Company shall not file or cause
to be effected any other registration of any of its equity
securities or securities convertible or exchangeable into or
exercisable for its equity securities under the Securities
Act (except on Form S-8 or any successor form), whether on
its own behalf or at the request of any holder or holders of
such securities, until a period of at least 90 days has
elapsed from the effective date of such previous registration.
3. Holdback Agreements.
(a) The Investor shall not effect any public sale or
distribution (including sales pursuant to Rule 144) of equity
securities of the Company, or any securities convertible into
or exchangeable or exercisable for such securities, during the
seven days prior to and the 90-day period beginning on the
effective date of any underwritten registration of the
Company's Common Stock (except as part of such underwritten
registration), unless the underwriters managing the
registered public offering otherwise agree.
(b) The Company shall not effect any public sale or
distribution of its equity securities, or any securities
convertible into or exchangeable or exercisable for such
securities, during the seven days prior to and during the
90-day period beginning on the effective date of any
underwritten Demand Registration or any underwritten Piggyback
Registration (except as part of such underwritten registration
or pursuant to registrations on Form S-8 or any successor
form), unless the underwriters managing the registered public
offering otherwise agree.
4. Registration Procedures. Whenever the Investor has requested
that any Registrable Securities be registered pursuant to this
Agreement, the Company shall use its best efforts to effect the
registration of such Registrable Securities in accordance with the
intended method of disposition thereof and pursuant thereto the
Company shall as expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such
Registrable Securities and use its best efforts to cause such
registration statement to become effective (provided that
before filing a registration statement or prospectus or any
amendments or supplements thereto, the Company shall furnish
to the counsel selected by the Investor copies of all such
documents proposed to be filed, which documents shall be
subject to the review and comment of such counsel);
(b) notify the Investor of the effectiveness of each
registration statement filed hereunder and prepare and file
with the Securities and Exchange Commission such amendments
and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary
to keep such registration statement effective for a period of
not less than 90 days and comply with the provisions of the
Securities Act with respect to the disposition of all
securities covered by such registration statement during such
period in accordance with the intended methods of disposition
by the sellers thereof set forth in such registration
statement;
(c) furnish to the Investor such number of copies of such
registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement
(including each preliminary prospectus) and such other
documents as such seller may reasonably request in order to
facilitate the disposition of the Registrable Securities owned
by the Investor;
(d) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue
sky laws of such jurisdictions as any seller reasonably
requests and do any and all other acts and things which may
be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller (provided that
the Company shall not be required to (i) qualify generally
to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph,
(ii) subject itself to taxation in any such jurisdiction or
(iii) consent to general service of process in any such
jurisdiction);
(e) notify each seller of such Registrable Securities, at
any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such
registration statement contains an untrue statement of a
material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any
such seller, the Company shall prepare a supplement or
amendment to such prospectus so that, as thereafter delivered
to the purchasers of such Registrable Securities, such
prospectus shall not contain an untrue statement of a material
fact or omit to state any fact necessary to make the
statements therein not misleading;
(f) cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued
by the Company are then listed and, if not so listed, to be
listed on the NASD automated quotation system and, if listed
on the NASD automated quotation system, use its best efforts
to secure designation of all such Registrable Securities
covered by such registration statement as a NASDAQ "national
market system security" within the meaning of Rule 11Aa2-1
of the Securities and Exchange Commission or, failing that,
to secure NASDAQ authorization for such Registrable Securities
and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register as such
with respect to such Registrable Securities with the NASD;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of
such registration statement;
(h) enter into such customary agreements (including
underwriting agreements in customary form for a firm
commitment underwriting) and take all such other actions as
the Investor requests in order to expedite or facilitate the
disposition of such Registrable Securities (including
effecting a stock split or a combination of shares);
(i) make available for inspection by any seller of
Registrable Securities, any underwriter participating in any
disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company,
and cause the Company's officers, directors, employees and
independent accountants to supply all information reasonably
requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration
statement;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the Securities and
Exchange Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months
beginning with the first day of the Company's first full
calendar quarter after the effective date of the registration
statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule
158 thereunder;
(k) permit Investor, unless, in its sole and exclusive
judgment, it might be deemed to be an underwriter or a
controlling person of the Company, to participate in the
preparation of such registration or comparable statement and
to require the insertion therein of material, furnished to
the Company in writing, which in the reasonable judgment of
the Investor and its counsel should be included; and
(l) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or
of any order suspending or preventing the use of any related
prospectus or suspending the qualification of any common
stock included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly
to obtain the withdrawal of such order.
5. Registration Expenses.
(a) All expenses incident to the Company's performance of
or compliance with this Agreement, including all registration
and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, messenger and
delivery expenses, fees and disbursements of custodians, and
fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters
(excluding discounts and commissions) and other Persons
retained by the Company (all such expenses being herein
called "Registration Expenses"), shall be borne as provided
in this Agreement, except that the Company shall, in any
event, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense
of any annual audit or quarterly review, the expense of any
liability insurance and the expenses and fees for listing the
securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed
or on the NASD automated quotation system.
(b) In connection with each Demand Registration and each
Piggyback Registration, the Company shall reimburse the
Investor for the reasonable fees and disbursements of counsel
chosen by the Investor.
(c) To the extent Registration Expenses are not required
to be paid by the Company, each holder of securities included
in any registration hereunder shall pay those Registration
Expenses allocable to the registration of such holder's
securities so included, and any Registration Expenses not so
allocable shall be borne by all sellers of securities included
in such registration in proportion to the aggregate selling
price of the securities to be so registered.
6. Indemnification.
(a) The Company agrees to indemnify, to the extent
permitted by law, the Investor and its partners and their
respective officers and directors and each Person who controls
the Investor (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses
caused by any untrue or alleged untrue statement of material
fact contained in any registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same
are caused by or contained in any information furnished in
writing to the Company by the Investor expressly for use
therein or by the Investor's failure to deliver a copy of the
registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished the
Investor with a sufficient number of copies of the same. In
connection with an underwritten offering, the Company shall
indemnify such underwriters, their officers and directors and
each Person who controls such underwriters (within the meaning
of the Securities Act) to the same extent as provided above
with respect to the indemnification of the Investor.
(b) In connection with any registration statement in which the
Investor is participating, the Investor shall furnish to the Company
in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement
or prospectus and, to the extent permitted by law, shall indemnify
the Company, its directors and officers and each Person who controls
the Company (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged
omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent
that such untrue statement or omission is contained in any information
or affidavit so furnished in writing by the Investor; provided that
the obligation shall be limited to the net amount of proceeds received
by the Investor pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder shall (i)
give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure
to give prompt notice shall not impair any Person's right to
indemnification hereunder to the extent such failure has not
prejudiced the indemnifying party) and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such
claim, permit such indemnifying party to assume the defense of such
claim with counsel reasonably satisfactory to the indemnified party.
If such defense is assumed, the indemnifying party shall not be
subject to any liability for any settlement made by the indemnified
party without its consent (but such consent shall not be unreasonably
withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay
the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict
of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim.
(d) The indemnification provided for under this Agreement shall
remain in full force and effect regardless of any investigation made
by or on behalf of the indemnified party or any officer, director or
controlling Person of such indemnified party and shall survive the
transfer of securities. The Company also agrees to make such
provisions, as are reasonably requested by any indemnified party, for
contribution to such party in the event the Company's indemnification
is unavailable for any reason.
7. Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless
such Person (i) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements; provided that the
Investor included in any underwritten registration shall note be
required to make any representations or warranties to the Company or
the underwriters (other than representations and warranties regarding
the Investor's intended method of distribution) or to undertake any
indemnification obligations to the Company or the underwriters with
respect thereto, except as otherwise provided in paragraph 6 hereof.
8. Definitions.
(a) "Registrable Securities" means (i) any Common Stock
issued upon the conversion of the Note issued pursuant to the
Purchase Agreement, (ii) any Common Stock issued upon exercise
of the Warrant issued pursuant to the Purchase Agreement and
(iii) any Common Stock issued or issuable with respect to the
securities referred to in clauses (i) or (ii) above by way of
.a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation
or other reorganization. As to any particular Registrable
Securities, such securities shall cease to be Registrable
Securities when they have been distributed to the public
pursuant to a offering registered under the Securities Act or
sold to the public through a broker, dealer or market maker in
compliance with Rule 144 under the Securities Act (or any
similar rule then in force). For purposes of this Agreement,
a Person shall be deemed to be a holder of Registrable
Securities, and the Registrable Securities shall be deemed to
be in existence, whenever such Person has the right to acquire
directly or indirectly such Registrable Securities (upon
conversion or exercise in connection with a transfer of
securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not
such acquisition has actually been effected, and such Person
shall be entitled to exercise the rights of a holder of
Registrable Securities hereunder.
(b) Unless otherwise stated, other capitalized terms
contained herein have the meanings set forth in the Purchase
Agreement.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company shall not
hereafter enter into any agreement with respect to its
securities which is inconsistent with or violates the rights
granted to the holders of Registrable Securities in this
Agreement.
(b) Adjustments Affecting Registrable Securities. The
Company shall not take any action, or permit any change to
occur, with respect to its securities which would materially
and adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities
in a registration undertaken pursuant to this Agreement or
which would materially and adversely affect the marketability
of such Registrable Securities in any such registration
(including, without limitation, effecting a stock split or a
combination of shares).
(c) Remedies. Any Person having rights under any
provision of this Agreement shall be entitled to enforce such
rights specifically to recover damages caused by reason of
any breach of any provision of this Agreement and to exercise
all other rights granted by law. The parties hereto agree
and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement and
that any party may in its sole discretion apply to any court
of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for
other injunctive relief in order to enforce or prevent
violation of the provisions of this Agreement.
(d) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may be amended or
waived only upon the prior written consent of the Company and
the Investor.
(e) Successors and Assigns. All covenants and agreements
in this Agreement by or on behalf of any of the parties hereto
shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so
expressed or not. In addition, whether or not any express
assignment has been made, the provisions of this Agreement
which are for the benefit of purchasers or holders of
Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable
Securities.
(f) Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
(g) Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which
need not contain the signatures of more than one party, but
all such counterparts taken together shall constitute one and
the same Agreement.
(h) Descriptive Headings. The descriptive headings of
this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
(i) Governing Law. This Agreement and the exhibits and
schedules hereto shall be governed by, and construed in
accordance with, the laws of the State of New York, without
giving effect to any choice of law or conflict of law rules
or provisions (whether of the State of New York or any other
jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
(j) Notices. All notices, demands or other
communications to be given or delivered under or by reason of
the provisions of this Agreement shall be given in accordance
with Section 11.1 of the Purchase Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
TRAVEL PORTS OF AMERICA, INC.
By: ___________________________
Name: William Burslem III
Title: Vice President
CEPHAS CAPITAL PARTNERS, L.P.
By: Cephas, LLC, a General Partner
By: _____________________________
Name: Jeffery S. Holmes
Title: Managing Member
EXHIBIT D
Form of Opinion of Company's Counsel
12. The Company and each of its Subsidiaries have been duly
incorporated and organized, are validly existing under the
corporation and franchise tax laws of their respective jurisdictions
of incorporation and to our knowledge, without independent
investigation, are duly qualified to transact business in and are in
good standing under the corporation and franchise tax laws of every
jurisdiction in which the failure to so qualify would have a material
adverse effect upon the business prospects, assets, operations,
financial condition or operating results of the Company and its
Subsidiaries taken as a whole;
13. The Company has all necessary corporate power and authority
to execute, deliver and perform its obligations under the Purchase
Agreement and the agreements and instruments set forth as exhibits
thereto (the "Related Agreements") to which the Company is a party,
and the Company and each of its Subsidiaries have all necessary
corporate power and authority and, to the best of our knowledge, all
material licenses, permits and authorizations necessary to own their
respective properties and to conduct their respective businesses in
the manner and the locations presently owned and conducted;
14. The Purchase Agreement and the Related Agreements to which
the Company is a party, have been duly authorized, executed and
delivered by the Company, and are each enforceable against the
Company;
15. The Common Stock issuable upon proper conversion of the Note
and upon exercise of the Warrant has been duly authorized and reserved
for issuance by the Company. There are no statutory, or to the best
of our knowledge after reasonable inquiry contractual, preemptive
rights of stockholders or rights of first refusal with respect to the
issuance of such Common Stock to be issued upon the conversion of the
Note or exercised of the Warrant, and such Common Stock to be issued
upon proper conversion of the Note and exercise of the Warrant shall
upon such issuance be validly issued, fully paid and nonassessable;
16. The execution and delivery by the Company of the Purchase
Agreement and the Related Agreements, the offering, sale and issuance
of the Note and the Warrant, the issuance of Common Stock upon
conversion of the Note and upon exercise of the Warrant and the
fulfillment of and the compliance with the respective terms thereof
by the Company do not and shall not (A) conflict with or result in a
breach of, (B) constitute a default under, (C) result in the creation
of any lien, mortgage, security interest, charge or other encumbrance
upon the Company's or any of its Subsidiaries' capital stock or assets
pursuant to, (D) by themselves give any third party the right to
accelerate any obligation under, (E) result in a violation of, or (F)
require any authorization, consent, approval, exemption or other
action by or notice to any court or administrative or governmental
body pursuant to (i) the Company's Certificate of Incorporate, the
Company's bylaws or the charter or bylaws of any of its Subsidiaries,
(ii) any law, statute, rule or regulation to which the Company or any
of its Subsidiaries is subject or (iii) any agreement, note or
instrument listed as an exhibit to any registration by order, judgment
or decree to which the Company or any of its Subsidiaries is subject;
17. To the best of our knowledge after reasonable inquiry, there
are not (A) outstanding shares of capital stock or securities
convertible into or exchangeable or exercisable for shares of the
Company's or any of its Subsidiaries' capital stock or for shares of
stock or securities convertible into or exchangeable or exercisable
for shares of the Company's or any of its Subsidiaries' capital stock,
except for the Note and the Warrant and as described in the
Capitalization Schedule attached to the Purchase Agreement, (B)
outstanding options for the purchase of, or any agreements providing
for the issuance (contingent or otherwise) of, or any such commitments
or claims of any character relating to, any such capital stock or
any shares of stock or securities convertible into or exchangeable
or exercisable for any such capital stock, except for those options,
plans or rights set forth in the Capitalization Schedule to the
Purchase Agreement or (C) obligations (contingent or otherwise) of
the Company or any of its Subsidiaries to repurchase, exchange or
otherwise acquire or retire any shares of such capital stock or any
shares of stock or securities convertible into or exchangeable or
exercisable for any such capital stock except pursuant to the Notes
or the Related Agreements and as described in the Capitalization
Schedule attached to the Purchase Agreement.
18. Based upon the representations and warranties of Purchaser
contained in the Agreement, the offering, sale and issuance of the
Note and the Warrant under the Purchase Agreement, the issuance of
the Common Stock upon conversion of the Note and the exercise of the
Warrant, do not require registration under the Securities Act of 1933,
as amended, or registration or qualification under any state
securities laws.
CONTINUING UNLIMITED GUARANTY
In consideration of CEPHAS CAPITAL PARTNERS, L.P. ("Cephas"),
entering into, on or about the date this Guaranty was executed, a
Note and Warrant Purchase Agreement with the undersigneds' parent
Travel Ports of America, Inc. ("Borrower"), and/or in consideration
of any extension of credit by Cephas to Borrower, the undersigned do
jointly and severally hereby guarantee to Cephas the full and prompt
payment, when due, whether accelerated or not, of any and all
indebtedness, liabilities and obligations of every nature and kind of
Borrower to Cephas, whether now existing or hereafter arising all of
which is collectively referred to below as the "Indebtedness". The
term "Indebtedness" includes but is not limited to, all amounts due
and to become due Cephas under a $2,000,000.00 Convertible
Subordinated Promissory Note executed and delivered to Cephas by
Borrower on or about the date this Guaranty was executed.
1. The undersigned further jointly and severally agree to pay
all costs, expenses and attorneys' fees at any time paid or incurred
by Cephas in endeavoring to collect the Indebtedness or any part
thereof and in and about the enforcement of this Guaranty.
2. This Guaranty is and is intended to be a continuing guaranty
of payment of the Indebtedness, irrespective of the aggregate amount
thereof, or changes in the same from time to time. This Guaranty
shall remain in full force and effect until Cephas or its successors
or assigns, shall actually receive written notice of its
discontinuance from the undersigned and all of the Indebtedness
contracted for or created before Cephas's actual receipt of such
notice, and any extensions or renewals of the Indebtedness or any
part thereof, whether made before or after the receipt of such notice,
together with unpaid interest accrued thereon, shall be paid in full.
In the event of the discontinuance of this Guaranty as to either of
the undersigned because of receipt by Cephas of written notice of
discontinuance and payment in full of all Indebtedness existing at
the time of receipt of such notice by Cephas, this Guaranty shall,
notwithstanding, still continue and remain in full force and effect
against the other of the undersigned until discontinued as to it in
the same manner. In the event all of the Indebtedness shall at any
time, or from time to time, be paid in full, this Guaranty shall
nevertheless, continue in full force and effect as to any Indebtedness
contracted for or incurred thereafter, from time to time, before
actual receipt by Cephas of written notice of discontinuance from
each of the undersigned.
3. If all or any of the Indebtedness is not paid when due, the
undersigned hereby jointly and severally agree to pay the same without
requiring demand, protest, notice of nonpayment or notice of default
to the undersigned, to Borrower, or to any other person or entity,
without proof of demand and without requiring Cephas to resort first
to Borrower or to any other guaranty, security or collateral which it
may have or hold. The undersigned hereby waive demand, presentment,
protest and notice of nonpayment and protest to the undersigned, to
Borrower, or to any other person or entity; notice of acceptance
hereof or assent hereto by Cephas; notice that any Indebtedness has
been incurred by Borrower to Cephas; and notice in the change of the
terms of payment of the Indebtedness or any part thereof, including
but not limited to a change in the interest rate on any or all of the
Indebtedness.
4. The undersigned also further agree that Cephas shall have the
irrevocable right, in Cephas's sole discretion, with or without notice
to the undersigned, either before or after the institution of
bankruptcy or other legal proceedings by or against the undersigned
or by or against either of them, or before or after receipt of
written notice of discontinuance of the undersigned's liability
hereunder from either or both of the undersigned, to extend the time
give for the payment of the Indebtedness or any part thereof.
Cephas may accept one or more renewal notes for the Indebtedness (or
any part thereof) which shall not be considered as new obligations
but as extensions of the obligations renewed, and no such extensions
shall discharge or in any manner affect the liability of the
undersigned, or the liability of the successors or assigns of the
undersigned under this Guaranty.
5. Cephas shall have the exclusive right to determine how, when
and what application of payments and credits, if any, shall be made
on the Indebtedness, or any part thereof, and may apply payments or
credits to principal or interest or fees and expenses, as Cephas
sees fit. The undersigned do hereby agree and consent that the Cephas
shall have the right to make any agreement with Borrower and/or with
any other entity or person liable for the payment of all or any part
of the Indebtedness (including but not limited to other guarantors,
if any), for the compounding, compromise, discharge or release of the
Indebtedness, or any part thereof, in whole or in part, or for any
modification or alteration of any of the terms of the Indebtedness or
any part thereof, including, but not limited to, a change in the
interest rate, or a change in any contract between Cephas and Borrower
or any other entity or person, without notice to or consent of the
undersigned or either of them, and without affecting the
undersigneds' obligations under this Guaranty to pay the Indebtedness
in full. Cephas shall also have the right, without notice to or
consent of the undersigned, to discharge or release either of the
undersigned from any or all obligations hereunder, in whole or part,
without in any way releasing, impairing or affecting its rights
against the other of the undersigned and without affecting the
obligations of the other of the undersigned under this Guaranty to
pay the Indebtedness in full.
6. This Guaranty is absolute and unconditional and shall not be
affected by any act or thing whatsoever, except the payment in full
of the Indebtedness and receipt by Cephas with regard to each of the
undersigned of written notice of the discontinuance of the liability
of the undersigned hereunder. This is a Guaranty of payment and not
collection. The failure of either of the undersigned to sign this
Guaranty shall not release or affect the liability of any signer
hereof. This Guaranty has been executed and unconditionally delivered
to Cephas by each of the entities who have signed it.
7. If a claim is made upon Cephas at any time for repayment or
recovery of any amount of all or any part of the Indebtedness, or
other value received by Cephas from any source, in payment of or on
account of the Indebtedness or any part thereof, and Cephas repays or
otherwise becomes liable for all or any part of such claim by reason
of (a) any judgment, decree, or order of any court or administrative
body, or (b) any settlement or compromise of such claim or claims,
the undersigned shall remain jointly and severally liable to Cephas
hereunder for the amount so repaid or for which Cephas is otherwise
liable, to the same extent as if any such amounts had not been
received by Cephas, notwithstanding any return or destruction of the
original of this Guaranty, or termination of this Guaranty, or
cancellation of any note, bond or other instrument or obligation
which evidences all or a portion of the Indebtedness, or delivery of
any release to the undersigned or to Borrower or to any other entity
or person.
8. This document is the final expression of this Guaranty of the
undersigned in favor of Cephas, and is the complete and exclusive
statement of the terms of this Guaranty. No course of prior dealings
between the undersigned and Cephas, nor any usage of trade, nor any
parol or extrinsic evidence of any nature or kind, shall be used or
be relevant to supplement, explain or modify this Guaranty.
9. All payments of principal or interest made by Borrower to
Cephas shall be deemed to have been made as agent for the undersigned
for the purpose of tolling the Statute of Limitations.
10. This Guaranty and every part hereof shall be binding upon the
undersigned and the successors and assigns of the undersigned and
shall inure to the benefit of the Cephas, and its successors and
assigns.
11. This Guaranty cannot be modified or terminated in whole or in
part, orally and is governed by New York law. Any litigation
involving this Guaranty shall, at Cephas's option, be tried only in a
court located in Monroe County, New York. THE UNDERSIGNED WAIVE THE
RIGHT TO A JURY TRIAL IN ANY LITIGATION INVOLVING THIS GUARANTY AND
IN ANY OTHER LITIGATION INVOLVING CEPHAS AND THE UNDERSIGNED, OR
EITHER OF THEM.
12. All obligations of the undersigned under this Guaranty are
joint and several, including but not limited to the obligation to pay
the Indebtedness in full.
IN WITNESS WHEREOF, the undersigned have executed and unconditionally
delivered this Guaranty to Cephas at Rochester, New York, on December
4, 1997.
TRAVEL PORT FRANCHISING, INC.
By: _________________________________
Name: William Burslem III
Title: Vice President
TRAVEL PORT SYSTEMS, INC.
By: __________________________________
Name: William Burslem III
Title: Vice President
STATE OF NEW YORK)
COUNTY OF MONROE ) SS:
On this ___ day of December, 1997, before me, the subscriber,
personally appeared WILLIAM BURSLEM III, to me known, who,
being by me duly sworn, did depose and say that he resides
in ____________________________, that he is the Vice President
of TRAVEL PORT FRANCHISING, INC., the corporation described
in, and which executed the within Instrument, and that he
signed his name thereto by order of the Board of Directors.
______________________________
Notary Public
STATE OF NEW YORK)
COUNTY OF MONROE ) SS:
On this ___ day of December, 1997, before me, the subscriber,
personally appeared WILLIAM BURSLEM III, to me known, who,
being by me duly sworn, did depose and say that he resides
in ____________________________, that he is the Vice President
of TRAVEL PORT SYSTEMS, INC., the corporation described in,
and which executed the within Instrument, and that he signed
his name thereto by order of the Board of Directors.
______________________________
Notary Public
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<PERIOD-END> OCT-31-1997
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0
0
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